[Letterhead Pruco Life Insurance Company]
July 10, 2012
Sally Samuel, Esq.
Office of Insurance Products
Division of Investment Management
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re:Post-effective Amendments under Rule 485(a) to Certain Form N-4 Registration
Statements - Pruco Life Flexible Premium Variable Annuity Account and Pruco
Life of New Jersey Flexible Premium Variable Annuity Account
Dear Ms. Samuel:
This letter responds to your comments on post-effective amendments we filed on
May 14, 2012, under Rule 485(a) under the Securities Act of 1933 on behalf of
Pruco Life Insurance Company ("Pruco Life") and Pruco Life Insurance Company of
New Jersey ("PLNJ").
The Form N-4 registration statements being amended are as follows:
. Pruco Life's and PLNJ's Prudential Premier Retirement Variable Annuities
(File Nos. 333-162673 and 333-162678);
. Pruco Life's and PLNJ's Prudential Premier Advisor Variable Annuities
(File Nos. 333-162680 and 333-162676);
. Pruco Life's and PLNJ's Prudential Premier Retirement Variable Annuity
(File Nos. 333-170466 and 333-170468)
Today, we are making a correspondence filing through EDGAR, which consists of
the prospectus for the Pruco Life Flexible Premium Variable Annuity Account,
File Nos. 333-162673 and 811-07325. All changes made since the May 14, 2012
filing are marked. The enclosed prospectus is also now typeset.
A summary of your comments, along with our proposed responses, follows.
1. Comment: The prospectus is very long and includes many appendices. Its
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size may make it difficult for potential and existing customers to
understand. Please consider filing new registration statements for new
sales. In the alternative, please consider how the prospectus can be
streamlined.
1
Response: We have revised the prospectus to make it streamlined and to
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make it clearer what benefits are currently being offered.
2. Comment: Please file complete Parts B and C (including complete exhibit
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list) and revise the "Explanatory Note."
Response: We will file complete Parts B and C and revise the
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"Explanatory Note."
3. Comment: Please add the effective date.
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Response: We have added the effective date to the prospectuses and SAIs.
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4. Comment: Please disclose on the cover page of the prospectus that the
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guarantees offered in the riders are the obligations of the insurance
company and are subject to the claims-pay ability of the insurance
company.
Response: We have added the requested disclosure.
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5. Comment: Under "Variable Investment Options" on the cover page please
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spell out which investment options may be elected with which benefits.
This can be done in a footnote. Please make it more clear that the AST
Quantitative Modeling Portfolio is not available if you elect any
optional benefit.
Response: We have revised the disclosure accordingly.
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6. Comment: Fee Table - if the fee waivers and/or reimbursements are not
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available for one year, please delete footnotes 1 and 6.
Response: In that these prospectuses will be updated for May 1, 2013,
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the fee waivers and/or reimbursements currently in place until April 30,
2013, and June 30, 2013, respectively, will be in effect when the
prospectuses are next updated. Therefore, we believe we should not
delete the footnotes.
7. Comment: In the "Expense Examples" please confirm that the purchase
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credits are not reflected but the fees are included.
Response: This confirms that the purchase credits are not reflected but
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the fees are included in the examples.
8. Comment: Please identify the time period during which each benefit was
--------
offered. Also include at the beginning of each Appendix.
Response: We have indicated benefit availability dates for discontinued
---------
benefits, including at the beginning of each Appendix. We believe this
makes it clear which benefits are currently offered.
2
9. Comment: On page 21 (typeset page 14) under "Optional Living Benefits",
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clarify the time period during which each benefit was available and
identify the Appendix which describes the benefit. Please also add
disclosure in other places in prospectus.
Response: We have revised the disclosure as requested.
---------
10.Comment: On page 68, (typeset page 60) please revise the second bullet
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under "Other Important Considerations" to clarify what is subject to the
CDSC.
Response: We have clarified the disclosure.
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11.Comment: On page 70 (typeset page 62), please add disclosure to the last
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paragraph under "Overview of The Predetermined Mathematical Formula" to
clarify how exactly the purchase of this benefit works.
Response: We have added clarifying disclosure.
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12.Comment: On page 85 (typeset page 77) and elsewhere in the prospectus,
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please clarify whether or not excess income is aggregated when reduced
to zero.
Response: We have clarified the disclosure to make it clear the
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withdrawals of excess income are not aggregated when the account value
is reduced to zero.
13.Comment: On page 85 (typeset page 77) under "Key Feature - Protected
--------
Withdrawal Value", with respect to the 200%, please explain why it is
beneficial to wait until the 12th anniversary. Please explain in plain
English why there is an advantage to waiting.
Response: We have clarified this disclosure accordingly.
---------
14.Comment: On page 88 (typeset page 81) under "Non-Lifetime Withdrawal
--------
Feature" please make it more clear that if you do not make a
Non-Lifetime Withdrawal before you make a Lifetime Withdrawal, you lose
the ability to make a Non-Lifetime Withdrawal.
Response: We have clarified this disclosure accordingly.
---------
15.Comment: On page 90 (typeset page 83) - with respect to the sentence,
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"All other provisions applicable to Death Benefits under your Annuity
will continue to apply" --please add a cross reference to the Death
Benefit section.
Response: We have added the cross reference.
---------
16.Comment: On page 91 (typeset page 84) with respect to the last sentence
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before "Other Important Considerations", please disclose whether there
is an advantage if you do not take Lifetime Withdrawals.
3
Response: We have revised the disclosure accordingly to explain this.
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17.Comment: On page 91 (typeset page 85), last bullet under "Other
--------
Important Considerations", please revise to clarify whether this applies
to withdrawals of excess income.
Response: We have revised the disclosure to indicate that it is any
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withdrawal that reduces the account value to zero.
18.Comment: On page 92 (typeset page 85) under "Election of and
--------
Designations under the Benefit", please provide parameters to the
disclosure in the first paragraph regarding "ownership is transferred
from one entity to another entity that is satisfactory to us."
Response: We have chosen not to specify parameters to prevent certain
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inappropriate ownership changes (e.g., stranger-owned transactions).
19.Comment: On page 93 (typeset page 86) with respect to the first
--------
paragraph, please clarify the requirements for "Due Proof of Death",
i.e., disclose the representations that are required.
Response: We have revised the disclosure accordingly.
---------
20.Comment: On page 101 (typeset page 94) under "Remaining Designated
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Life", please clarify the disclosure (what happens in the event of a
divorce).
Response: We have clarified the disclosure accordingly.
---------
21.Comment: On page 101 (typeset page 94) with respect to the paragraph
--------
that begins, "Spousal Highest Daily Lifetime Income 2.0 with HD DB",
please clarify whether the last sentence refers only to new elections of
this benefit.
Response: We have clarified the last sentence to indicate it is for new
---------
elections of this benefit.
22.Comment: On page 111 (typeset page 106) in the paragraph entitled,
--------
"Submission of Due Proof of Death within one year" please clarify under
what circumstances the one-year period would be waived or extended.
Response: We have deleted this sentence.
---------
23.Comment: One page 111 (typeset page 106) in the paragraph entitled,
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"Death Benefit Suspension Period", please clarify the disclosure.
Response: We have clarified the disclosure accordingly.
---------
4
24.Comment: With respect to the Exhibits, please provide a full, cumulative
--------
list of Exhibits. Please also include a complete Part C and a consent of
auditors.
Response: We will file a complete Part C, including a full list of
---------
exhibits and a consent of auditors.
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 Registrant is responsible for the adequacy and accuracy of the
disclosure in the filings;
. The Staff's comments, the Registrant's changes to the disclosure in
response to the Staff's comments, or the action of the Commission or
the Staff, acting pursuant to delegated authority, in declaring the
filings effective, does not relieve the Registrant from this
responsibility; and
. The Registrant may not assert this action or the Staff's comments as
a defense in any proceeding initiated by the Commission or any person
under the federal securities laws of the United States.
We will make the corresponding changes to the other filings, as applicable. We
appreciate your attention to these filings.
Sincerely,
Pruco Life Insurance Company
By: /s/ Lynn K. Stone
-----------------------------
Lynn K. Stone
Vice President
5
PRUCO LIFE INSURANCE COMPANY
A Prudential Financial Company
751 Broad Street, Newark, NJ 07102-3777
PRUDENTIAL PREMIER(R) RETIREMENT VARIABLE ANNUITY X SERIES/SM/ ("X SERIES")
PRUDENTIAL PREMIER(R) RETIREMENT VARIABLE ANNUITY B SERIES/SM/ ("B SERIES")
PRUDENTIAL PREMIER(R) RETIREMENT VARIABLE ANNUITY L SERIES/SM/ ("L SERIES")
PRUDENTIAL PREMIER(R) RETIREMENT VARIABLE ANNUITY C SERIES/SM/ ("C SERIES")
FLEXIBLE PREMIUM DEFERRED ANNUITIES
PROSPECTUS: AUGUST 20, 2012
This prospectus describes four different flexible premium deferred annuity
classes offered by Pruco Life Insurance Company ("Pruco Life", "we", "our", or
"us"). For convenience in this prospectus, we sometimes refer to each of these
annuity contracts as an "Annuity", and to the annuity contracts collectively
as the "Annuities." We also sometimes refer to each class by its specific name
(e.g., the "B Series"). Each Annuity may be offered as an individual annuity
contract or as an interest in a group annuity. Each Annuity has different
features and benefits that may be appropriate for you based on your financial
situation, your age and how you intend to use the Annuity. There are
differences among the Annuities that are discussed throughout the prospectus
and summarized in Appendix B entitled "Selecting the Variable Annuity That's
Right for You". Financial Professionals may be compensated for the sale of
each Annuity. Selling broker-dealer firms through which each Annuity is sold
may decline to recommend to their customers certain of the optional features
and Investment Options offered generally under the Annuity or may impose
restrictions (e.g., a lower maximum issue age for certain Annuities and/or
optional benefits). Selling broker-dealer firms may not make available or may
not recommend all the Annuities and/or benefits described in this prospectus.
Please speak to your Financial Professional for further details. EACH ANNUITY
OR CERTAIN OF ITS INVESTMENT OPTIONS AND/OR FEATURES MAY NOT BE AVAILABLE IN
ALL STATES. The guarantees provided by the optional benefits are backed by and
subject to the claims paying ability of Pruco Life. Certain terms are
capitalized in this prospectus. Those terms are either defined in the Glossary
of Terms or in the context of the particular section. BECAUSE THE X SERIES
ANNUITY GRANTS PURCHASE CREDITS WITH RESPECT TO CERTAIN PURCHASE PAYMENTS YOU
MAKE, THE EXPENSES OF THE X SERIES ANNUITY ARE HIGHER THAN EXPENSES FOR AN
ANNUITY WITHOUT A PURCHASE CREDIT. IN ADDITION, THE AMOUNT OF THE PURCHASE
CREDITS THAT YOU RECEIVE UNDER THE X SERIES ANNUITY MAY BE MORE THAN OFFSET BY
THE ADDITIONAL FEES AND CHARGES ASSOCIATED WITH THE PURCHASE CREDIT.
THE SUB-ACCOUNTS
The Pruco Life Flexible Premium Variable Annuity Account is a Separate Account
of Pruco Life, and is the investment vehicle in which your Purchase Payments
invested in the Sub-accounts are held. Each Sub-account of the Pruco Life
Flexible Premium Variable Annuity Account invests in an underlying mutual fund
- see the following page for a complete list of the Sub-accounts. Currently,
portfolios of Advanced Series Trust are being offered. Certain Sub-accounts
are not available if you participate in an optional living benefit - see
"Limitations With Optional Benefits" later in this prospectus for details.
PLEASE READ THIS PROSPECTUS
THIS PROSPECTUS SETS FORTH INFORMATION ABOUT THE ANNUITIES THAT YOU OUGHT TO
KNOW BEFORE INVESTING. PLEASE READ THIS PROSPECTUS AND THE CURRENT PROSPECTUS
FOR THE UNDERLYING MUTUAL FUNDS. KEEP THEM FOR FUTURE REFERENCE. If you are
purchasing one of the Annuities as a replacement for an existing variable
annuity or variable life coverage, or a fixed insurance policy, you should
consider any surrender or penalty charges you may incur and any benefits you
may also be forfeiting when replacing your existing coverage and that this
Annuity may be subject to a Contingent Deferred Sales Charge if you elect to
surrender the Annuity or take a partial withdrawal. You should consider your
need to access the Annuity's Account Value and whether the Annuity's liquidity
features will satisfy that need. Please note that if you are investing in this
Annuity through a tax-advantaged retirement plan (such as an Individual
Retirement Account or 401(k) plan), you will get no additional tax advantage
through the Annuity itself.
AVAILABLE INFORMATION
We have also filed a Statement of Additional Information dated the same date
as this prospectus that is available from us, without charge, upon your
request. The contents of the Statement of Additional Information are described
at the end of this prospectus - see Table of Contents. The Statement of
Additional Information is incorporated by reference into this prospectus. This
prospectus is part of the registration statement we filed with the SEC
regarding this offering. Additional information on us and this offering is
available in the registration statement and the exhibits thereto. You may
review and obtain copies of these materials at no cost to you by contacting
us. These documents, as well as documents incorporated by reference, may also
be obtained through the SEC's Internet Website (www.sec.gov) for this
registration statement as well as for other registrants that file
electronically with the SEC. Please see the section of this prospectus
entitled "How to Contact Us" for our Service Office address.
THESE ANNUITIES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ISSUED, GUARANTEED OR
ENDORSED BY, ANY BANK, ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT,
THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC), THE FEDERAL RESERVE BOARD OR
ANY OTHER AGENCY. AN INVESTMENT IN AN ANNUITY INVOLVES INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF VALUE, EVEN WITH RESPECT TO AMOUNTS ALLOCATED TO
THE AST MONEY MARKET SUB-ACCOUNT.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PRUDENTIAL, PRUDENTIAL FINANCIAL, PRUDENTIAL ANNUITIES AND THE ROCK LOGO ARE
SERVICEMARKS OF THE PRUDENTIAL INSURANCE COMPANY OF AMERICA AND ITS
AFFILIATES. OTHER PROPRIETARY PRUDENTIAL MARKS MAY BE DESIGNATED AS SUCH
THROUGH USE OF THE/ SM/ OR (R) SYMBOLS.
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FOR FURTHER INFORMATION CALL: 1-888-PRU-2888 OR GO TO OUR WEBSITE
AT HTTP://WWW.PRUDENTIALANNUITIES.COM
Prospectus dated: August 20, 2012
Statement of Additional Information dated: August
20, 2012
PLEASE SEE OUR IRA, ROTH IRA AND FINANCIAL DISCLOSURE STATEMENTS ATTACHED TO
THE BACK COVER OF THIS PROSPECTUS.
VARIABLE INVESTMENT OPTIONS
ADVANCED SERIES TRUST
AST Academic Strategies Asset Allocation Portfolio /1/
AST Advanced Strategies Portfolio/1/
AST Balanced Asset Allocation Portfolio/1/
AST BlackRock Global Strategies Portfolio/1/
AST BlackRock Value Portfolio/3/
AST Bond Portfolio 2017/2/
AST Bond Portfolio 2018/2/
AST Bond Portfolio 2019/2/
AST Bond Portfolio 2020/2/
AST Bond Portfolio 2021/2/
AST Bond Portfolio 2022/2/
AST Bond Portfolio 2023/2/
AST Capital Growth Asset Allocation Portfolio/1/
AST CLS Moderate Asset Allocation Portfolio/1/
AST Cohen & Steers Realty Portfolio/3/
AST Federated Aggressive Growth Portfolio/1/
AST FI Pyramis(R) Asset Allocation Portfolio/1/
AST First Trust Balanced Target Portfolio/1/
AST First Trust Capital Appreciation Target Portfolio/1/
AST Franklin Templeton Founding Funds Allocation Portfolio/1/
AST Global Real Estate Portfolio/3/
AST Goldman Sachs Concentrated Growth Portfolio/3/
AST Goldman Sachs Large-Cap Value Portfolio/3/
AST Goldman Sachs Mid-Cap Growth Portfolio/3/
AST Goldman Sachs Small-Cap Value Portfolio/3/
AST High Yield Portfolio/3/
AST Horizon Moderate Asset Allocation Portfolio/1/
AST International Growth Portfolio/3/
AST International Value Portfolio/3/
AST Investment Grade Bond Portfolio/2/
AST Jennison Large-Cap Growth Portfolio/3/
AST Jennison Large-Cap Value Portfolio/3/
AST J.P. Morgan Global Thematic Portfolio/1/
AST JPMorgan International Equity Portfolio/3/
AST JPMorgan Strategic Opportunities Portfolio/1/
AST Large-Cap Value Portfolio/3/
AST Lord Abbett Core-Fixed Income Portfolio/3/
AST Marsico Capital Growth Portfolio/3/
AST MFS Global Equity Portfolio/3/
AST MFS Growth Portfolio/3/
AST MFS Large-Cap Value Portfolio/3/
AST Mid-Cap Value Portfolio/3/
AST Money Market Portfolio/3/
AST Neuberger Berman Core Bond Portfolio/3/
AST Neuberger Berman Mid-Cap Growth Portfolio/3/
AST Neuberger Berman/LSV Mid-Cap Value Portfolio/3/
AST New Discovery Asset Allocation Portfolio/1/
AST Parametric Emerging Markets Equity Portfolio/3/
AST PIMCO Limited Maturity Bond Portfolio/3/
AST PIMCO Total Return Bond Portfolio/3/
AST Preservation Asset Allocation Portfolio/1/
AST Prudential Core Bond Portfolio/3/
AST QMA US Equity Alpha Portfolio/3/
AST Quantitative Modeling Portfolio/4/
(1) Available with all living and death benefits.
(2) Not available for Purchase Payments or contract owner transfers.
(3) Not available with HDI 2.0 Suite of benefits.
(4) Not available with any optional benefit.
AST Schroders Global Tactical Portfolio/1/
AST Schroders Multi-Asset World Strategies Portfolio/1/
AST Small-Cap Growth Portfolio/3/
AST Small-Cap Value Portfolio/3/
AST T. Rowe Price Asset Allocation Portfolio/1/
AST T. Rowe Price Equity Income Portfolio/3/
AST T. Rowe Price Global Bond Portfolio/3/
AST T. Rowe Price Large-Cap Growth Portfolio/3/
AST T. Rowe Price Natural Resources Portfolio/3/
AST Wellington Management Hedged Equity Portfolio/1/
AST Western Asset Core Plus Bond Portfolio/3/
AST Western Asset Emerging Markets Debt Portfolio/3/
CONTENTS
GLOSSARY OF TERMS.................................................................................. 1
SUMMARY OF CONTRACT FEES AND CHARGES............................................................... 3
EXPENSE EXAMPLES................................................................................... 12
SUMMARY............................................................................................ 13
INVESTMENT OPTIONS................................................................................. 16
VARIABLE INVESTMENT OPTIONS....................................................................... 16
LIMITATIONS WITH OPTIONAL BENEFITS................................................................ 29
MARKET VALUE ADJUSTMENT OPTIONS................................................................... 31
RATES FOR MVA OPTIONS............................................................................. 32
MARKET VALUE ADJUSTMENT........................................................................... 32
LONG-TERM MVA OPTIONS............................................................................. 33
DCA MVA OPTIONS................................................................................... 33
GUARANTEE PERIOD TERMINATION...................................................................... 33
FEES, CHARGES AND DEDUCTIONS....................................................................... 34
MVA OPTION CHARGES................................................................................ 36
ANNUITY PAYMENT OPTION CHARGES.................................................................... 36
EXCEPTIONS/REDUCTIONS TO FEES AND CHARGES......................................................... 36
PURCHASING YOUR ANNUITY............................................................................ 37
REQUIREMENTS FOR PURCHASING THE ANNUITY........................................................... 37
PURCHASE CREDITS UNDER THE X SERIES............................................................... 38
DESIGNATION OF OWNER, ANNUITANT, AND BENEFICIARY.................................................. 39
RIGHT TO CANCEL................................................................................... 40
SCHEDULED PAYMENTS DIRECTLY FROM A BANK ACCOUNT................................................... 40
SALARY REDUCTION PROGRAMS......................................................................... 40
MANAGING YOUR ANNUITY.............................................................................. 41
CHANGE OF OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS........................................... 41
MANAGING YOUR ACCOUNT VALUE........................................................................ 42
DOLLAR COST AVERAGING PROGRAMS.................................................................... 42
6 OR 12 MONTH DOLLAR COST AVERAGING PROGRAM....................................................... 42
AUTOMATIC REBALANCING PROGRAMS.................................................................... 43
FINANCIAL PROFESSIONAL PERMISSION TO FORWARD TRANSACTION INSTRUCTIONS............................. 43
RESTRICTIONS ON TRANSFERS BETWEEN INVESTMENT OPTIONS.............................................. 44
ACCESS TO ACCOUNT VALUE............................................................................ 46
TYPES OF DISTRIBUTIONS AVAILABLE TO YOU........................................................... 46
TAX IMPLICATIONS FOR DISTRIBUTIONS FROM NON-QUALIFIED ANNUITIES................................... 46
FREE WITHDRAWAL AMOUNTS........................................................................... 46
SYSTEMATIC WITHDRAWALS FROM MY ANNUITY DURING THE ACCUMULATION PERIOD............................. 47
SYSTEMATIC WITHDRAWALS UNDER SECTIONS 72(t)/72(q) OF THE INTERNAL REVENUE CODE.................... 47
REQUIRED MINIMUM DISTRIBUTIONS.................................................................... 48
SURRENDERS......................................................................................... 49
SURRENDER VALUE................................................................................... 49
MEDICALLY-RELATED SURRENDERS...................................................................... 49
ANNUITY OPTIONS.................................................................................... 50
LIVING BENEFITS.................................................................................... 52
HIGHEST DAILY LIFETIME(R) INCOME 2.0 BENEFIT...................................................... 53
HIGHEST DAILY LIFETIME(R) INCOME 2.0 BENEFIT WITH LIFETIME INCOME ACCELERATOR/SM/ (HDI - LIA/SM/). 65
SPOUSAL HIGHEST DAILY LIFETIME(R) INCOME 2.0 BENEFIT.............................................. 68
HIGHEST DAILY LIFETIME(R) INCOME 2.0 BENEFIT WITH HIGHEST DAILY DEATH BENEFIT..................... 77
SPOUSAL HIGHEST DAILY LIFETIME(R) INCOME 2.0 WITH HIGHEST DAILY DEATH BENEFIT..................... 86
GUARANTEED RETURN OPTION/SM/ PLUS II (GRO PLUS II)................................................ 96
HIGHEST DAILY/SM/ GUARANTEED RETURN OPTION/SM/ II (HD GRO II/SM/)................................. 100
(i)
DEATH BENEFITS.................................................................................. 106
TRIGGERS FOR PAYMENT OF THE DEATH BENEFIT...................................................... 106
MINIMUM DEATH BENEFIT.......................................................................... 107
OPTIONAL DEATH BENEFITS........................................................................ 107
PAYMENT OF DEATH BENEFITS...................................................................... 110
BENEFICIARY CONTINUATION OPTION................................................................ 111
VALUING YOUR INVESTMENT......................................................................... 112
VALUING THE SUB-ACCOUNTS....................................................................... 112
PROCESSING AND VALUING TRANSACTIONS............................................................ 112
TAX CONSIDERATIONS.............................................................................. 114
OTHER INFORMATION............................................................................... 123
PRUCO LIFE AND THE SEPARATE ACCOUNT............................................................ 123
LEGAL STRUCTURE OF THE UNDERLYING FUNDS........................................................ 125
DISTRIBUTION OF ANNUITIES OFFERED BY PRUCO LIFE................................................ 126
FINANCIAL STATEMENTS........................................................................... 129
INDEMNIFICATION................................................................................ 129
LEGAL PROCEEDINGS.............................................................................. 129
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION............................................ 130
HOW TO CONTACT US.............................................................................. 130
APPENDIX A - ACCUMULATION UNIT VALUES........................................................... A-1
APPENDIX B - SELECTING THE VARIABLE ANNUITY THAT'S RIGHT FOR YOU................................ B-1
APPENDIX C - HIGHEST DAILY LIFETIME 6 PLUS INCOME, HIGHEST DAILY LIFETIME 6 PLUS INCOME
WITH LIFETIME INCOME ACCELERATOR, AND SPOUSAL HIGHEST DAILY LIFETIME 6 PLUS INCOME -
OFFERED FOR SALE: MARCH 15, 2010 TO JANUARY 23, 2011.......................................... C-1
APPENDIX D - HIGHEST DAILY LIFETIME INCOME, HIGHEST DAILY LIFETIME INCOME WITH LIFETIME
INCOME ACCELERATOR, AND SPOUSAL HIGHEST DAILY LIFETIME INCOME - OFFERED FOR SALE: JANUARY 24,
2011 TO AUGUST 20, 2012....................................................................... D-1
APPENDIX E - FORMULA FOR GRO PLUS II............................................................ E-1
APPENDIX F - SPECIAL CONTRACT PROVISIONS FOR ANNUITIES ISSUED IN CERTAIN STATES................. F-1
APPENDIX G - MVA FORMULAS....................................................................... G-1
APPENDIX H - FORMULA FOR HIGHEST DAILY GRO II................................................... H-1
APPENDIX I - FORMULA FOR HIGHEST DAILY LIFETIME INCOME 2.0 SUITE, HIGHEST DAILY LIFETIME
INCOME SUITE AND HIGHEST DAILY LIFETIME 6 PLUS SUITE OF LIVING BENEFITS....................... I-1
(ii)
GLOSSARY OF TERMS
We set forth here definitions of some of the key terms used throughout this
prospectus. In addition to the definitions here, we also define certain terms
in the section of the prospectus that uses such terms.
ACCOUNT VALUE: The total value of all allocations to the Sub-accounts and/or
the MVA Options on any Valuation Day. The Account Value is determined
separately for each Sub-account and for each MVA Option, and then totaled to
determine the Account Value for your entire Annuity. The Account Value of each
MVA Option will be calculated using any applicable MVA.
ACCUMULATION PERIOD: The period of time from the Issue Date through the last
Valuation Day immediately preceding the Annuity Date.
ANNUITANT: The natural person upon whose life annuity payments made to the
Owner are based.
ANNUITIZATION: Annuitization is the process by which you "annuitize" your
Unadjusted Account Value. When you annuitize, we apply the Unadjusted Account
Value to one of the available annuity options to begin making periodic
payments to the Owner.
ANNUITY DATE: The date on which we apply your Unadjusted Account Value to the
applicable annuity option and begin the payout period. As discussed in the
Annuity Options section, there is an age by which you must begin receiving
annuity payments, which we call the "Latest Annuity Date."
ANNUITY YEAR: The first Annuity Year begins on the Issue Date and continues
through and includes the day immediately preceding the first anniversary of
the Issue Date. Subsequent Annuity Years begin on the anniversary of the Issue
Date and continue through and include the day immediately preceding the next
anniversary of the Issue Date.
BENEFICIARY(IES): The natural person(s) or entity(ies) designated as the
recipient(s) of the Death Benefit or to whom any remaining period certain
payments may be paid in accordance with the annuity payout options section of
this Annuity.
BENEFICIARY ANNUITY: You may purchase an Annuity if you are a Beneficiary of
an account that was owned by a decedent, subject to the requirements discussed
in this prospectus. You may transfer the proceeds of the decedent's account
into one of the Annuities described in this prospectus and continue receiving
the distributions that are required by the tax laws. This transfer option is
only available for purchase of an IRA, Roth IRA, or a non-qualified
Beneficiary Annuity.
CODE: The Internal Revenue Code of 1986, as amended from time to time and the
regulations promulgated thereunder.
CONTINGENT DEFERRED SALES CHARGE (CDSC): This is a sales charge that may be
deducted when you make a surrender or take a partial withdrawal from your
Annuity. We refer to this as a "contingent" charge because it is imposed only
if you surrender or take a withdrawal from your Annuity. The charge is a
percentage of each applicable Purchase Payment that is being surrendered
or withdrawn.
DOLLAR COST AVERAGING ("DCA") MVA OPTION: An Investment Option that offers a
fixed rate of interest for a specified period. The DCA MVA Option is used only
with our 6 or 12 Month Dollar Cost Averaging Program, under which the Purchase
Payments that you have allocated to that DCA MVA Option are transferred to the
designated Sub-accounts over a 6 month or 12 month period. Withdrawals or
transfers from the DCA MVA Option will be subject to a Market Value Adjustment
if made other than pursuant to the 6 or 12 month DCA Program.
DUE PROOF OF DEATH: Due Proof of Death is satisfied when we receive all of the
following in Good Order: (a) a death certificate or similar documentation
acceptable to us; (b) all representations we require or which are mandated by
applicable law or regulation in relation to the death claim and the payment of
death proceeds; and (c) any applicable election of the method of payment of
the death benefit, if not previously elected by the Owner, by at least one
Beneficiary.
FREE LOOK: The right to examine your Annuity, during a limited period of time,
to decide if you want to keep it or cancel it. The length of this time period,
and the amount of refund, depends on applicable law and thus may vary. In
addition, there is a different Free Look period that applies if your Annuity
is held within an IRA. In your Annuity contract, your Free Look right is
referred to as your "Right to Cancel."
GOOD ORDER: Good Order is the standard that we apply when we determine whether
an instruction is satisfactory. An instruction will be considered in Good
Order if it is received at our Service Office: (a) in a manner that is
satisfactory to us such that it is sufficiently complete and clear that we do
not need to exercise any discretion to follow such instruction and complies
with all relevant laws and regulations; (b) on specific forms, or by other
means we then permit (such as via telephone or electronic submission); and/or
(c) with any signatures and dates as we may require. We will notify you if an
instruction is not in Good Order.
1
GUARANTEE PERIOD: The period of time during which we credit a fixed rate of
interest to an MVA Option.
INVESTMENT OPTION: A Sub-account or MVA Option available as of any given time
to which Account Value may be allocated.
ISSUE DATE: The effective date of your Annuity.
KEY LIFE: Under the Beneficiary Continuation Option, or the Beneficiary
Annuity, the person whose life expectancy is used to determine the required
distributions.
MARKET VALUE ADJUSTMENT ("MVA"): A positive or negative adjustment used to
determine the Account Value in an MVA Option.
MARKET VALUE ADJUSTMENT OPTIONS ("MVA OPTIONS"): Investment Options to which a
fixed rate of interest is credited for a specified Guarantee Period and to
which an MVA may apply. The MVA Options consist of (a) the DCA MVA Option used
with our 6 or 12 Month DCA Program and (b) the "Long-Term MVA Options", under
which Guarantee Periods of different yearly lengths are offered.
MATURITY DATE: With respect to an MVA Option, the last day in a Guarantee
Period.
OWNER: With an Annuity issued as an individual annuity contract, the Owner is
either an eligible entity or person named as having ownership rights in
relation to the Annuity. In certain states, with an Annuity issued as a
certificate under a group annuity contract, the "Owner" refers to the person
or entity that has the rights and benefits designated to the "participant" in
the certificate. Thus, an Owner who is a participant has rights that are
comparable to those of the Owner of an individual annuity contract.
PURCHASE CREDIT: Under the X Series only, an amount that we add to your
Annuity when you make a Purchase Payment during the first four Annuity Years.
We are entitled to recapture Purchase Credits under certain circumstances.
PURCHASE PAYMENT: A cash consideration in currency of the United States of
America given to us in exchange for the rights, privileges, and benefits of
the Annuity.
SERVICE OFFICE: The place to which all requests and payments regarding the
Annuity are to be sent. We may change the address of the Service Office at any
time, and will notify you in advance of any such change of address. Please see
the section of this prospectus entitled "How to Contact Us" for the Service
Office address.
SEPARATE ACCOUNT: Referred to as the "Variable Separate Account" in your
Annuity, this is the variable Separate Account(s) shown in the Annuity.
SUB-ACCOUNT: A division of the Separate Account.
SURRENDER VALUE: The Account Value (which includes the effect of any MVA) less
any applicable CDSC, any applicable tax charges, any charges assessable as a
deduction from the Account Value for any optional benefits provided by rider
or endorsement, and any Annual Maintenance Fee.
UNADJUSTED ACCOUNT VALUE: The Unadjusted Account Value is equal to the Account
Value prior to the application of any MVA.
UNIT: A share of participation in a Sub-account used to calculate your
Unadjusted Account Value prior to the Annuity Date.
VALUATION DAY: Every day the New York Stock Exchange is open for trading or
any other day the Securities and Exchange Commission requires mutual funds or
unit investment trusts to be valued.
WE, US, OUR: Pruco Life Insurance Company.
YOU, YOUR: The Owner(s) shown in the Annuity.
2
SUMMARY OF CONTRACT FEES AND CHARGES
The following tables describe the fees and expenses that you will pay when
buying, owning, and surrendering one of the Annuities. The first table
describes the fees and expenses that you will pay at the time you surrender an
Annuity, take a partial withdrawal, or transfer Account Value between the
Investment Options. State premium taxes also may be deducted.
-------------------------------------
ANNUITY OWNER TRANSACTION EXPENSES
-------------------------------------
CONTINGENT DEFERRED SALES CHARGE/ 1/
X SERIES
PERCENTAGE APPLIED
AGAINST PURCHASE
PAYMENT BEING
AGE OF PURCHASE PAYMENT BEING WITHDRAWN WITHDRAWN
------------------------------------------------------------------
Less than one year old 9.0%
1 year old or older, but not yet 2 years old 9.0%
2 years old or older, but not yet 3 years old 9.0%
3 years old or older, but not yet 4 years old 9.0%
4 years old or older, but not yet 5 years old 8.0%
5 years old or older, but not yet 6 years old 8.0%
6 years old or older, but not yet 7 years old 8.0%
7 years old or older, but not yet 8 years old 5.0%
8 years old or older, but not yet 9 years old 2.5%
9 or more years old 0.0%
B SERIES
PERCENTAGE APPLIED
AGAINST PURCHASE
PAYMENT BEING
AGE OF PURCHASE PAYMENT BEING WITHDRAWN WITHDRAWN
------------------------------------------------------------------
Less than one year old 7.0%
1 year old or older, but not yet 2 years old 7.0%
2 years old or older, but not yet 3 years old 6.0%
3 years old or older, but not yet 4 years old 6.0%
4 years old or older, but not yet 5 years old 5.0%
5 years old or older, but not yet 6 years old 5.0%
6 years old or older, but not yet 7 years old 5.0%
7 years old, or older 0.0%
L SERIES
PERCENTAGE APPLIED
AGAINST PURCHASE
PAYMENT BEING
AGE OF PURCHASE PAYMENT BEING WITHDRAWN WITHDRAWN
------------------------------------------------------------------
Less than one year old 7.0%
1 year old or older, but not yet 2 years old 7.0%
2 years old or older, but not yet 3 years old 6.0%
3 years old or older, but not yet 4 years old 5.0%
4 or more years old 0.0%
3
C SERIES
There is no CDSC or other sales load applicable to the C Series.
For X Series Annuities issued in Connecticut, the CDSC amounts are different.
See Appendix F.
-----------------------------------------------------------------
FEE/CHARGE X SERIES B SERIES L SERIES C SERIES
-----------------------------------------------------------------
TRANSFER FEE/ 2/ $10 $10 $10 $10
-----------------------------------------------------------------
TAX CHARGE 0% to 3.5% 0% to 3.5% 0% to 3.5% 0% to 3.5%
(CURRENT)/3/
-----------------------------------------------------------------
1 The years referenced in the above CDSC tables refer to the length of time
since a Purchase Payment was made (i.e., the age of the Purchase Payment).
Contingent Deferred Sales Charges are applied against the Purchase
Payment(s) being withdrawn. Thus, the appropriate percentage is multiplied
by the Purchase Payment(s) being withdrawn to determine the amount of the
CDSC. For example, if with respect to the X Series on November 1, 2016 you
withdrew a Purchase Payment made on August 1, 2011, that Purchase Payment
would be between 5 and 6 years old, and thus subject to an 8% CDSC.
Purchase Payments are withdrawn on a "first-in, first-out" basis.
2 Currently, we deduct the fee after the 20/th/ transfer each Annuity Year.
3 We reserve the right to deduct the charge either at the time the tax is
imposed, upon a full surrender of the Annuity, or upon Annuitization.
The following table provides a summary of the periodic fees and charges you
will pay while you own your Annuity, excluding the underlying portfolio annual
expenses. These fees and charges are described in more detail within this
prospectus.
-------------------------------------------------------------------------------------------------------------------
PERIODIC FEES AND CHARGES
-------------------------------------------------------------------------------------------------------------------
FEE/CHARGE X SERIES B SERIES L SERIES C SERIES
ANNUAL MAINTENANCE Lesser of $50 or 2% of Lesser of $50 or 2% of Lesser of $50 or 2% of Lesser of $50 or 2% of
FEE /4/ Unadjusted Account Unadjusted Account Unadjusted Account Unadjusted Account
Value Value Value Value
---------------------------------------------------------------------------
ANNUALIZED INSURANCE FEES/CHARGES
(assessed daily as a percentage of the net assets of the Sub-accounts)
---------------------------------------------------------------------------
FEE/CHARGE X SERIES B SERIES L SERIES C SERIES
MORTALITY & EXPENSE 1.70% 1.15% 1.55% 1.60%
RISK CHARGE: DURING
FIRST 9 ANNUITY YEARS
---------------------------------------------------------------------------
AFTER 9/TH/ ANNUITY 1.15% 1.15% 1.15% 1.15%
YEAR
---------------------------------------------------------------------------
ADMINISTRATION 0.15% 0.15% 0.15% 0.15%
CHARGE
---------------------------------------------------------------------------
TOTAL ANNUALIZED 1.85% 1.30% 1.70% 1.75%
INSURANCE FEES/
CHARGES: DURING FIRST
9 ANNUITY YEARS /5,6/
---------------------------------------------------------------------------
AFTER 9/TH/ ANNUITY 1.30% 1.30% 1.30% 1.30%
YEAR /5,6/
---------------------------------------------------------------------------
4 Assessed annually on the Annuity's anniversary date or upon surrender. Only
applicable if the sum of the Purchase Payments at the time the fee is due
is less than $100,000.
5 The Insurance Charge is the combination of Mortality & Expense Risk Charge
and the Administration Charge. For the X Series, C Series, and L Series, on
the Valuation Day immediately following the 9/th/ Annuity Anniversary, the
Mortality & Expense Risk Charge drops to 1.15% annually (the B Series is a
constant 1.15% annually).
6 For Beneficiaries who elect the Beneficiary Continuation Option, the Annual
Maintenance Fee is the lesser of $30 or 2% of Unadjusted Account Value and
is only applicable if Unadjusted Account Value is less than $25,000 at the
time the fee is assessed. For Beneficiaries who elect the Beneficiary
Continuation Option, the Mortality and Expense and Administration Charges
do not apply. However, a Settlement Service Charge equal to 1.00% is
assessed as a percentage of the daily net assets of the Sub-accounts as an
annual charge.
4
The following table sets forth the charge for each optional benefit under the
Annuity. These fees would be in addition to the periodic fees and transaction
fees set forth in the tables above. The first column shows the charge for each
optional benefit on a maximum and current basis. The next four columns show
the total expenses you would pay for each class of Annuity if you purchased
the relevant optional benefit. More specifically, these columns show the total
charge for the optional benefit plus the Total Annualized Insurance
Fees/Charges (during the first 9 Annuity Years) applicable to the Annuity
class (as shown in the prior table). Where the charges cannot actually be
totaled (because they are assessed against different base values), we show
both individual charges.
------------------------------------------------------------------------------------------------------------------
YOUR OPTIONAL BENEFIT FEES AND CHARGES
------------------------------------------------------------------------------------------------------------------
OPTIONAL BENEFIT ANNUALIZED TOTAL TOTAL TOTAL TOTAL
OPTIONAL ANNUALIZED ANNUALIZED ANNUALIZED ANNUALIZED
BENEFIT CHARGE/ 8/ CHARGE/ 8/ CHARGE/ 8/ CHARGE/ 8/
FEE/CHARGE/ 7/ FOR X SERIES FOR B SERIES FOR L SERIES FOR C SERIES
------------------------------------------------------------------------------------------------------------------
HIGHEST DAILY LIFETIME INCOME 2.0
(ASSESSED AGAINST GREATER OF
UNADJUSTED ACCOUNT VALUE AND
PROTECTED WITHDRAWAL VALUE)
MAXIMUM CHARGE/ 9/ 2.00% 1.85% + 2.00% 1.30% + 2.00% 1.70% + 2.00% 1.75% + 2.00%
CURRENT CHARGE 1.00% 1.85% + 1.00% 1.30% + 1.00% 1.70% + 1.00% 1.75% + 1.00%
------------------------------------------------------------------------------------------------------------------
SPOUSAL HIGHEST DAILY LIFETIME INCOME
2.0
(ASSESSED AGAINST GREATER OF
UNADJUSTED ACCOUNT VALUE AND
PROTECTED WITHDRAWAL VALUE)
MAXIMUM CHARGE/ 9/ 2.00% 1.85% + 2.00% 1.30% + 2.00% 1.70% + 2.00% 1.75% + 2.00%
CURRENT CHARGE 1.10% 1.85% + 1.10% 1.30% + 1.10% 1.70% + 1.10% 1.75% + 1.10%
------------------------------------------------------------------------------------------------------------------
HIGHEST DAILY LIFETIME INCOME 2.0
WITH LIFETIME INCOME ACCELERATOR
(ASSESSED AGAINST GREATER OF
UNADJUSTED ACCOUNT VALUE AND
PROTECTED WITHDRAWAL VALUE)
MAXIMUM CHARGE/ 9/ 2.00% 1.85% + 2.00% 1.30% + 2.00% 1.70% + 2.00% 1.75% + 2.00%
CURRENT CHARGE 1.50% 1.85% + 1.50% 1.30% + 1.50% 1.70% + 1.50% 1.75% + 1.50%
------------------------------------------------------------------------------------------------------------------
HIGHEST DAILY LIFETIME INCOME 2.0
WITH HIGHEST DAILY DEATH BENEFIT
(ASSESSED AGAINST GREATER OF
UNADJUSTED ACCOUNT VALUE AND
PROTECTED WITHDRAWAL VALUE)
MAXIMUM CHARGE/ 9/ 2.00% 1.85% + 2.00% 1.30% + 2.00% 1.70% + 2.00% 1.75% + 2.00%
CURRENT CHARGE 1.50% 1.85% + 1.50% 1.30% + 1.50% 1.70% + 1.50% 1.75% + 1.50%
------------------------------------------------------------------------------------------------------------------
5
------------------------------------------------------------------------------------------------------------------
YOUR OPTIONAL BENEFIT FEES AND CHARGES
------------------------------------------------------------------------------------------------------------------
OPTIONAL BENEFIT ANNUALIZED TOTAL TOTAL TOTAL TOTAL
OPTIONAL ANNUALIZED ANNUALIZED ANNUALIZED ANNUALIZED
BENEFIT CHARGE/ 8/ CHARGE/ 8/ CHARGE/ 8/ CHARGE/ 8/
FEE/CHARGE/ 7/ FOR X SERIES FOR B SERIES FOR L SERIES FOR C SERIES
------------------------------------------------------------------------------------------------------------------
SPOUSAL HIGHEST DAILY LIFETIME
INCOME 2.0 WITH HIGHEST DAILY DEATH
BENEFIT
(ASSESSED AGAINST GREATER OF
UNADJUSTED ACCOUNT VALUE AND
PROTECTED WITHDRAWAL VALUE)
MAXIMUM CHARGE/ 9/ 2.00% 1.85% + 2.00% 1.30% + 2.00% 1.70% + 2.00% 1.75% + 2.00%
CURRENT CHARGE 1.60% 1.85% + 1.60% 1.30% + 1.60% 1.70% + 1.60% 1.75% + 1.60%
------------------------------------------------------------------------------------------------------------------
HIGHEST DAILY LIFETIME INCOME AND
SPOUSAL HIGHEST DAILY LIFETIME
INCOME /11/
(ASSESSED AGAINST GREATER OF
UNADJUSTED ACCOUNT VALUE AND
PROTECTED WITHDRAWAL VALUE)
MAXIMUM CHARGE/ 9/ 1.50% 1.85% + 1.50% 1.30% + 1.50% 1.70% + 1.50% 1.75% + 1.50%
CURRENT CHARGE 0.95% 1.85% + 0.95% 1.30% + 0.95% 1.70% + 0.95% 1.75% + 0.95%
------------------------------------------------------------------------------------------------------------------
HIGHEST DAILY LIFETIME INCOME WITH
LIFETIME INCOME ACCELERATOR /11/
(ASSESSED AGAINST GREATER OF
UNADJUSTED ACCOUNT VALUE AND
PROTECTED WITHDRAWAL VALUE)
MAXIMUM CHARGE/ 9/ 2.00% 1.85% + 2.00% 1.30% + 2.00% 1.70% + 2.00% 1.75% + 2.00%
CURRENT CHARGE 1.30% 1.85% + 1.30% 1.30% + 1.30% 1.70% + 1.30% 1.75% + 1.30%
------------------------------------------------------------------------------------------------------------------
HIGHEST DAILY LIFETIME 6 PLUS
INCOME /12/
(ASSESSED AGAINST GREATER OF
UNADJUSTED ACCOUNT VALUE AND
PROTECTED WITHDRAWAL VALUE)
MAXIMUM CHARGE/ 9/ 1.50% 1.85% + 1.50% 1.30% + 1.50% 1.70% + 1.50% 1.75% + 1.50%
CURRENT CHARGE 0.85% 1.85% + 0.85% 1.30% + 0.85% 1.70% + 0.85% 1.75% + 0.85%
------------------------------------------------------------------------------------------------------------------
6
------------------------------------------------------------------------------------------------------------------
YOUR OPTIONAL BENEFIT FEES AND CHARGES
------------------------------------------------------------------------------------------------------------------
OPTIONAL BENEFIT ANNUALIZED TOTAL TOTAL TOTAL TOTAL
OPTIONAL ANNUALIZED ANNUALIZED ANNUALIZED ANNUALIZED
BENEFIT CHARGE/ 8/ CHARGE/ 8/ CHARGE/ 8/ CHARGE/ 8/
FEE/CHARGE/ 7/ FOR X SERIES FOR B SERIES FOR L SERIES FOR C SERIES
------------------------------------------------------------------------------------------------------------------
HIGHEST DAILY LIFETIME 6 PLUS INCOME
WITH LIFETIME INCOME ACCELERATOR /12/
(ASSESSED AGAINST GREATER OF
UNADJUSTED ACCOUNT VALUE AND
PROTECTED WITHDRAWAL VALUE)
MAXIMUM CHARGE/ 9/ 2.00% 1.85% + 2.00% 1.30% + 2.00% 1.70% + 2.00% 1.75% + 2.00%
CURRENT CHARGE 1.20% 1.85% + 1.20% 1.30% + 1.20% 1.70% + 1.20% 1.75% + 1.20%
------------------------------------------------------------------------------------------------------------------
SPOUSAL HIGHEST DAILY LIFETIME 6 PLUS
INCOME /12/
(ASSESSED AGAINST GREATER OF
UNADJUSTED ACCOUNT VALUE AND
PROTECTED WITHDRAWAL VALUE)
MAXIMUM CHARGE/ 9/ 1.50% 1.85% + 1.50% 1.30% + 1.50% 1.70% + 1.50% 1.75% + 1.50%
CURRENT CHARGE 0.95% 1.85% + 0.95% 1.30% + 0.95% 1.70% + 0.95% 1.75% + 0.95%
------------------------------------------------------------------------------------------------------------------
GUARANTEED RETURN OPTION PLUS II (GRO 0.60% 2.45% 1.90% 2.30% 2.35%
PLUS II) CHARGE/ 10/
(ASSESSED AS A PERCENTAGE OF THE
AVERAGE DAILY NET ASSETS OF THE
SUB-ACCOUNTS)
------------------------------------------------------------------------------------------------------------------
HIGHEST DAILY GUARANTEED RETURN 0.60% 2.45% 1.90% 2.30% 2.35%
OPTION II (HD GRO II) CHARGE/ 10/
(ASSESSED AS A PERCENTAGE OF THE
AVERAGE DAILY NET ASSETS OF THE
SUB-ACCOUNTS)
------------------------------------------------------------------------------------------------------------------
HIGHEST ANNIVERSARY VALUE DEATH 0.40% 2.25% 1.70% 2.10% 2.15%
BENEFIT ("HAV") CHARGE/ 10/
(ASSESSED AS A PERCENTAGE OF THE
AVERAGE DAILY NET ASSETS OF THE
SUB-ACCOUNTS)
------------------------------------------------------------------------------------------------------------------
7
--------------------------------------------------------------------------------------------------------------
YOUR OPTIONAL BENEFIT FEES AND CHARGES
--------------------------------------------------------------------------------------------------------------
OPTIONAL BENEFIT ANNUALIZED TOTAL TOTAL TOTAL TOTAL
OPTIONAL ANNUALIZED ANNUALIZED ANNUALIZED ANNUALIZED
BENEFIT CHARGE/ 8/ CHARGE/ 8/ CHARGE/ 8/ CHARGE/ 8/
FEE/CHARGE/ 7/ FOR X SERIES FOR B SERIES FOR L SERIES FOR C SERIES
--------------------------------------------------------------------------------------------------------------
COMBINATION 5% ROLL-UP AND HAV DEATH 0.80% 2.65% 2.10% 2.50% 2.55%
BENEFIT CHARGE/ 10/
(ASSESSED AS A PERCENTAGE OF THE
AVERAGE DAILY NET ASSETS OF THE
SUB-ACCOUNTS)
--------------------------------------------------------------------------------------------------------------
7 The charge for each of Highest Daily Lifetime Income Suite of Benefits
listed above is assessed against the greater of Unadjusted Account Value
and the Protected Withdrawal Value (PWV). PWV is described in the Living
Benefits section of this prospectus. The charge for each of GRO Plus II,
Highest Daily GRO II, Highest Anniversary Value Death Benefit, and
Combination 5% Roll-Up and HAV Death Benefit is assessed as a percentage of
the average daily net assets of the Sub-accounts.
8 HOW THE OPTIONAL BENEFIT FEES AND CHARGES ARE DETERMINED
For Highest Daily Lifetime Income Suite of Benefits listed above: The
charge is taken out of the Sub-accounts. For B Series, in all Annuity
Years, the current optional benefit charge is in addition to the 1.30%
annualized charge of amounts invested in the Sub-accounts. For each of the
L Series, X Series, and C Series the annualized charge for the base Annuity
drops after Annuity Year 9 as described below:
Highest Daily Lifetime Income 2.0: 1.00% current optional benefit charge is
in addition to 1.30% annualized charge of amounts invested in the
Sub-accounts for base Annuity after the 9/th/ Annuity Year.
Spousal Highest Daily Lifetime Income 2.0: 1.10% current optional benefit
charge is in addition to 1.30% annualized charge of amounts invested in the
Sub-accounts for base Annuity after the 9/th/ Annuity Year.
Highest Daily Lifetime Income 2.0 with LIA: 1.50% current optional benefit
charge is in addition to 1.30% annualized charge of amounts invested in the
Sub-accounts for base Annuity after the 9/th/ Annuity Year.
Highest Daily Lifetime Income 2.0 with Highest Daily Death Benefit: 1.50%
current optional benefit charge is in addition to 1.30% annualized charge
of amounts invested in the Sub-accounts for base Annuity after the 9/th/
Annuity Year.
Spousal Highest Daily Lifetime Income 2.0 with Highest Daily Death Benefit:
1.60% current optional benefit charge is in addition to 1.30% annualized
charge of amounts invested in the Sub-accounts for base Annuity after the
9/th/ Annuity Year.
Highest Daily Lifetime Income and Spousal Highest Daily Lifetime Income:
0.95% current optional benefit charge is in addition to 1.30% annualized
charge of amounts invested in the Sub-accounts for base Annuity after the
9/th/ Annuity Year.
Highest Daily Lifetime Income with LIA: 1.30% current optional benefit
charge is in addition to 1.30% annualized charge of amounts invested in the
Sub-accounts for base Annuity after the 9/th/ Annuity Year.
Highest Daily Lifetime 6 Plus: 0.85% current optional benefit charge is in
addition to 1.30% annualized charge of amounts invested in the Sub-accounts
for base Annuity after the 9/th/ Annuity Year.
Highest Daily Lifetime 6 Plus with LIA: 1.20% current optional benefit
charge is in addition to 1.30% annualized charge of amounts invested in the
Sub-accounts for base Annuity after the 9/th/ Annuity Year.
Spousal Highest Daily Lifetime 6 Plus: 0.95% current optional benefit
charge is in addition to 1.30% annualized charge of amounts invested in the
Sub-accounts for base Annuity after the 9/th/ Annuity Year.
For GRO Plus II and Highest Daily GRO II: For B Series, the optional
benefit charge plus base Annuity charge is 1.90% in all Annuity Years. In
the case of L Series, X Series, and C Series, the optional benefit charge
plus base Annuity charge drops to 1.90% after the 9th Annuity Year.
Highest Anniversary Value Death Benefit: For B Series, the optional benefit
charge plus base Annuity charge is 1.70% in all Annuity Years. In the case
of the L Series, X Series, and C Series, the optional benefit charge plus
base Annuity charge drops to 1.70% after the 9/th/ Annuity Year.
Combination 5% Roll-Up and HAV Death Benefit: For B Series, the optional
benefit charge plus base Annuity charge is 2.10% in all Annuity Years. In
the case of the L Series, X Series, and C Series, total charge drops to
2.10% after the 9/th/ Annuity Year.
9 We reserve the right to increase the charge to the maximum charge
indicated, upon any step-up under the benefit. We also reserve the right to
increase the charge to the maximum charge indicated if you elect or re-add
the benefit post-issue.
10 Because there is no higher charge to which we could increase the current
charge, the current charge and maximum charge are one and the same. Thus,
so long as you retain the benefit, we cannot increase your charge for the
benefit.
11 This benefit was offered from January 24, 2011 to August 20, 2012.
12 This benefit was offered from March 15, 2010 to January 23, 2011.
The following table provides the range (minimum and maximum) of the total
annual expenses for the underlying mutual funds ("Portfolios") as of
December 31, 2011 before any contractual waivers and expense reimbursements.
Each figure is stated as a percentage of the underlying Portfolio's average
daily net assets.
----------------------------------------------------
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES
----------------------------------------------------
MINIMUM MAXIMUM
----------------------------------------------------
TOTAL PORTFOLIO OPERATING EXPENSE 0.62% 1.66%
----------------------------------------------------
8
The following are the total annual expenses for each underlying mutual fund
("Portfolio") as of December 31, 2011, except as noted and except if the
underlying Portfolio's inception date is subsequent to December 31, 2011. The
"Total Annual Portfolio Operating Expenses" reflect the combination of the
underlying Portfolio's investment management fee, other expenses, any 12b-1
fees, and certain other expenses. Each figure is stated as a percentage of the
underlying Portfolio's average daily net assets. For certain of the
Portfolios, a portion of the management fee has been contractually waived
and/or other expenses have been contractually partially reimbursed, which is
shown in the table. The following expenses are deducted by the underlying
Portfolio before it provides Pruco Life with the daily net asset value. The
underlying Portfolio information was provided by the underlying mutual funds
and has not been independently verified by us. See the prospectuses or
statements of additional information of the underlying Portfolios for further
details. The current prospectus and statement of additional information for
the underlying Portfolios can be obtained by calling 1-888-PRU-2888.
------------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
(as a percentage of the average net assets of the underlying Portfolios)
------------------------------------------------------------------------------------------------------------------------------------
For the year ended December 31, 2011
-------------------------------------------------------------------------------------------
UNDERLYING Total
PORTFOLIO Broker Fees Acquired Annual Contractual
Dividend and Expenses Portfolio Portfolio Fee Waiver
Management Other Distribution Expense on on Short Fees & Operating or Expense
Fees Expenses (12b-1) Fees Short Sales Sales Expenses Expenses Reimbursement
--------------------------------------------------------------------------------------------------------------------------
ADVANCED SERIES TRUST
AST Academic Strategies
Asset Allocation 0.72% 0.07% 0.00% 0.05% 0.01% 0.68% 1.53% 0.00%
AST Advanced Strategies 0.85% 0.14% 0.00% 0.00% 0.00% 0.03% 1.02% 0.00%
AST Balanced Asset
Allocation 0.15% 0.01% 0.00% 0.00% 0.00% 0.85% 1.01% 0.00%
AST BlackRock Global
Strategies 1.00% 0.15% 0.00% 0.00% 0.00% 0.02% 1.17% 0.00%
AST BlackRock Value 0.85% 0.12% 0.00% 0.00% 0.00% 0.00% 0.97% 0.00%
AST Bond Portfolio 2017/ 1/ 0.64% 0.16% 0.00% 0.00% 0.00% 0.00% 0.80% 0.00%
AST Bond Portfolio 2018/ 1/ 0.64% 0.14% 0.00% 0.00% 0.00% 0.00% 0.78% 0.00%
AST Bond Portfolio 2019/ 1/ 0.64% 0.31% 0.00% 0.00% 0.00% 0.00% 0.95% 0.00%
AST Bond Portfolio 2020/ 1/ 0.64% 0.32% 0.00% 0.00% 0.00% 0.00% 0.96% 0.00%
AST Bond Portfolio 2021/ 1/ 0.64% 0.14% 0.00% 0.00% 0.00% 0.00% 0.78% 0.00%
AST Bond Portfolio 2022/ 1/ 0.64% 0.27% 0.00% 0.00% 0.00% 0.00% 0.91% 0.00%
AST Bond Portfolio 2023/ 1/ 0.64% 0.34% 0.00% 0.00% 0.00% 0.00% 0.98% 0.00%
AST Capital Growth Asset
Allocation 0.15% 0.01% 0.00% 0.00% 0.00% 0.88% 1.04% 0.00%
AST CLS Moderate Asset
Allocation 0.30% 0.02% 0.00% 0.00% 0.00% 0.71% 1.03% 0.00%
AST Cohen & Steers Realty 1.00% 0.14% 0.00% 0.00% 0.00% 0.00% 1.14% 0.00%
AST Federated Aggressive
Growth 0.95% 0.17% 0.00% 0.00% 0.00% 0.00% 1.12% 0.00%
AST FI Pyramis(R) Asset
Allocation /2/ 0.85% 0.20% 0.00% 0.24% 0.04% 0.00% 1.33% 0.00%
AST First Trust Balanced
Target 0.85% 0.13% 0.00% 0.00% 0.00% 0.00% 0.98% 0.00%
AST First Trust Capital
Appreciation Target 0.85% 0.13% 0.00% 0.00% 0.00% 0.00% 0.98% 0.00%
AST Franklin Templeton
Founding Funds
Allocation /3/ 0.95% 0.16% 0.00% 0.00% 0.00% 0.00% 1.11% -0.01%
AST Global Real Estate 1.00% 0.18% 0.00% 0.00% 0.00% 0.00% 1.18% 0.00%
AST Goldman Sachs
Concentrated Growth 0.90% 0.12% 0.00% 0.00% 0.00% 0.00% 1.02% 0.00%
AST Goldman Sachs
Large-Cap Value 0.75% 0.12% 0.00% 0.00% 0.00% 0.00% 0.87% 0.00%
AST Goldman Sachs Mid-Cap
Growth 1.00% 0.13% 0.00% 0.00% 0.00% 0.00% 1.13% 0.00%
AST Goldman Sachs
Small-Cap Value 0.95% 0.15% 0.00% 0.00% 0.00% 0.09% 1.19% 0.00%
------------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
(as a percentage of the average net assets of the underlying Portfolios)
------------------------------------------------------------------------------------------------------------------------------------
-----------
UNDERLYING
PORTFOLIO Net Annual
Fund
Operating
Expenses
----------------------------------------
ADVANCED SERIES TRUST
AST Academic Strategies
Asset Allocation 1.53%
AST Advanced Strategies 1.02%
AST Balanced Asset
Allocation 1.01%
AST BlackRock Global
Strategies 1.17%
AST BlackRock Value 0.97%
AST Bond Portfolio 2017/ 1/ 0.80%
AST Bond Portfolio 2018/ 1/ 0.78%
AST Bond Portfolio 2019/ 1/ 0.95%
AST Bond Portfolio 2020/ 1/ 0.96%
AST Bond Portfolio 2021/ 1/ 0.78%
AST Bond Portfolio 2022/ 1/ 0.91%
AST Bond Portfolio 2023/ 1/ 0.98%
AST Capital Growth Asset
Allocation 1.04%
AST CLS Moderate Asset
Allocation 1.03%
AST Cohen & Steers Realty 1.14%
AST Federated Aggressive
Growth 1.12%
AST FI Pyramis(R) Asset
Allocation /2/ 1.33%
AST First Trust Balanced
Target 0.98%
AST First Trust Capital
Appreciation Target 0.98%
AST Franklin Templeton
Founding Funds
Allocation /3/ 1.10%
AST Global Real Estate 1.18%
AST Goldman Sachs
Concentrated Growth 1.02%
AST Goldman Sachs
Large-Cap Value 0.87%
AST Goldman Sachs Mid-Cap
Growth 1.13%
AST Goldman Sachs
Small-Cap Value 1.19%
9
-----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND PORTFOLIO
ANNUAL EXPENSES
(as a percentage of the average net
assets of the underlying Portfolios)
-----------------------------------------------------------------------------------------------------------------------------------
For the year ended December 31, 2011
-------------------------------------------------------------------------------------------
UNDERLYING PORTFOLIO Total
Broker Fees Acquired Annual Contractual
Dividend and Expenses Portfolio Portfolio Fee Waiver
Management Other Distribution Expense on on Short Fees & Operating or Expense
Fees Expenses (12b-1) Fees Short Sales Sales Expenses Expenses Reimbursement
-------------------------------------------------------------------------------------------------------------------------
ADVANCED SERIES TRUST
CONTINUED
AST High Yield 0.75% 0.13% 0.00% 0.00% 0.00% 0.00% 0.88% 0.00%
AST Horizon Moderate Asset
Allocation 0.30% 0.02% 0.00% 0.00% 0.00% 0.71% 1.03% 0.00%
AST International Growth 1.00% 0.15% 0.00% 0.00% 0.00% 0.00% 1.15% 0.00%
AST International Value 1.00% 0.15% 0.00% 0.00% 0.00% 0.00% 1.15% 0.00%
AST Investment Grade Bond/
1/ 0.64% 0.11% 0.00% 0.00% 0.00% 0.00% 0.75% 0.00%
AST Jennison Large-Cap
Growth 0.90% 0.12% 0.00% 0.00% 0.00% 0.00% 1.02% 0.00%
AST Jennison Large-Cap
Value 0.75% 0.12% 0.00% 0.00% 0.00% 0.00% 0.87% 0.00%
AST J.P. Morgan Global
Thematic/4/ 0.95% 0.15% 0.00% 0.00% 0.00% 0.00% 1.10% 0.00%
AST JPMorgan International
Equity 0.88% 0.17% 0.00% 0.00% 0.00% 0.00% 1.05% 0.00%
AST JPMorgan Strategic
Opportunities 1.00% 0.16% 0.00% 0.10% 0.01% 0.00% 1.27% 0.00%
AST Large-Cap Value 0.75% 0.12% 0.00% 0.00% 0.00% 0.00% 0.87% 0.00%
AST Lord Abbett Core-Fixed
Income/ 5/ 0.80% 0.13% 0.00% 0.00% 0.00% 0.00% 0.93% -0.11%
AST Marsico Capital Growth 0.90% 0.12% 0.00% 0.00% 0.00% 0.00% 1.02% 0.00%
AST MFS Global Equity 1.00% 0.20% 0.00% 0.00% 0.00% 0.00% 1.20% 0.00%
AST MFS Growth 0.90% 0.13% 0.00% 0.00% 0.00% 0.00% 1.03% 0.00%
AST MFS Large-Cap Value /6/ 0.85% 0.16% 0.00% 0.00% 0.00% 0.00% 1.01% 0.00%
AST Mid-Cap Value 0.95% 0.14% 0.00% 0.00% 0.00% 0.00% 1.09% 0.00%
AST Money Market 0.50% 0.12% 0.00% 0.00% 0.00% 0.00% 0.62% 0.00%
AST Neuberger Berman Core
Bond/ 7/ 0.70% 0.17% 0.00% 0.00% 0.00% 0.00% 0.87% -0.01%
AST Neuberger Berman
Mid-Cap Growth 0.90% 0.13% 0.00% 0.00% 0.00% 0.00% 1.03% 0.00%
AST Neuberger Berman/LSV
Mid-Cap Value 0.90% 0.14% 0.00% 0.00% 0.00% 0.00% 1.04% 0.00%
AST New Discovery Asset
Allocation/ 8/ 0.85% 0.26% 0.00% 0.00% 0.00% 0.00% 1.11% -0.03%
AST Parametric Emerging
Markets Equity 1.10% 0.35% 0.00% 0.00% 0.00% 0.00% 1.45% 0.00%
AST PIMCO Limited Maturity
Bond 0.65% 0.13% 0.00% 0.00% 0.00% 0.00% 0.78% 0.00%
AST PIMCO Total Return Bond 0.65% 0.12% 0.00% 0.00% 0.00% 0.00% 0.77% 0.00%
AST Preservation Asset
Allocation 0.15% 0.01% 0.00% 0.00% 0.00% 0.80% 0.96% 0.00%
AST Prudential Core Bond/
7/ 0.70% 0.14% 0.00% 0.00% 0.00% 0.00% 0.84% -0.03%
AST QMA US Equity Alpha 1.00% 0.17% 0.00% 0.25% 0.24% 0.00% 1.66% 0.00%
AST Quantitative Modeling 0.25% 0.30% 0.00% 0.00% 0.00% 0.87% 1.42% 0.00%
AST Schroders Global
Tactical 0.95% 0.14% 0.00% 0.00% 0.00% 0.15% 1.24% 0.00%
AST Schroders Multi-Asset
World Strategies 1.10% 0.14% 0.00% 0.00% 0.00% 0.00% 1.24% 0.00%
AST Small-Cap Growth 0.90% 0.14% 0.00% 0.00% 0.00% 0.00% 1.04% 0.00%
AST Small-Cap Value 0.90% 0.14% 0.00% 0.00% 0.00% 0.03% 1.07% 0.00%
AST T. Rowe Price Asset
Allocation 0.85% 0.13% 0.00% 0.00% 0.00% 0.00% 0.98% 0.00%
-----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND PORTFOLIO
ANNUAL EXPENSES
(as a percentage of the average net
assets of the underlying Portfolios)
-----------------------------------------------------------------------------------------------------------------------------------
-----------
UNDERLYING PORTFOLIO
Net Annual
Fund
Operating
Expenses
---------------------------------------
ADVANCED SERIES TRUST
CONTINUED
AST High Yield 0.88%
AST Horizon Moderate Asset
Allocation 1.03%
AST International Growth 1.15%
AST International Value 1.15%
AST Investment Grade Bond/
1/ 0.75%
AST Jennison Large-Cap
Growth 1.02%
AST Jennison Large-Cap
Value 0.87%
AST J.P. Morgan Global
Thematic/4/ 1.10%
AST JPMorgan International
Equity 1.05%
AST JPMorgan Strategic
Opportunities 1.27%
AST Large-Cap Value 0.87%
AST Lord Abbett Core-Fixed
Income/ 5/ 0.82%
AST Marsico Capital Growth 1.02%
AST MFS Global Equity 1.20%
AST MFS Growth 1.03%
AST MFS Large-Cap Value /6/ 1.01%
AST Mid-Cap Value 1.09%
AST Money Market 0.62%
AST Neuberger Berman Core
Bond/ 7/ 0.86%
AST Neuberger Berman
Mid-Cap Growth 1.03%
AST Neuberger Berman/LSV
Mid-Cap Value 1.04%
AST New Discovery Asset
Allocation/ 8/ 1.08%
AST Parametric Emerging
Markets Equity 1.45%
AST PIMCO Limited Maturity
Bond 0.78%
AST PIMCO Total Return Bond 0.77%
AST Preservation Asset
Allocation 0.96%
AST Prudential Core Bond/
7/ 0.81%
AST QMA US Equity Alpha 1.66%
AST Quantitative Modeling 1.42%
AST Schroders Global
Tactical 1.24%
AST Schroders Multi-Asset
World Strategies 1.24%
AST Small-Cap Growth 1.04%
AST Small-Cap Value 1.07%
AST T. Rowe Price Asset
Allocation 0.98%
10
------------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
(as a percentage of the average net assets of the underlying Portfolios)
------------------------------------------------------------------------------------------------------------------------------------
For the year ended December 31, 2011
-------------------------------------------------------------------------------------------
UNDERLYING Total
PORTFOLIO Broker Fees Acquired Annual Contractual
Dividend and Expenses Portfolio Portfolio Fee Waiver
Management Other Distribution Expense on on Short Fees & Operating or Expense
Fees Expenses (12b-1) Fees Short Sales Sales Expenses Expenses Reimbursement
--------------------------------------------------------------------------------------------------------------------------
ADVANCED SERIES TRUST
CONTINUED
AST T. Rowe Price Equity
Income 0.75% 0.16% 0.00% 0.00% 0.00% 0.00% 0.91% 0.00%
AST T. Rowe Price Global
Bond 0.80% 0.18% 0.00% 0.00% 0.00% 0.00% 0.98% 0.00%
AST T. Rowe Price
Large-Cap Growth 0.88% 0.12% 0.00% 0.00% 0.00% 0.00% 1.00% 0.00%
AST T. Rowe Price Natural
Resources 0.90% 0.14% 0.00% 0.00% 0.00% 0.00% 1.04% 0.00%
AST Wellington Management
Hedged Equity 1.00% 0.14% 0.00% 0.00% 0.00% 0.00% 1.14% 0.00%
AST Western Asset Core Plus
Bond 0.70% 0.13% 0.00% 0.00% 0.00% 0.00% 0.83% 0.00%
AST Western Asset Emerging
Markets Debt/9/ 0.85% 0.21% 0.00% 0.00% 0.00% 0.00% 1.06% 0.05%/10/
------------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
(as a percentage of the average net assets of the underlying Portfolios)
------------------------------------------------------------------------------------------------------------------------------------
-----------
UNDERLYING
PORTFOLIO Net Annual
Fund
Operating
Expenses
----------------------------------------
ADVANCED SERIES TRUST
CONTINUED
AST T. Rowe Price Equity
Income 0.91%
AST T. Rowe Price Global
Bond 0.98%
AST T. Rowe Price
Large-Cap Growth 1.00%
AST T. Rowe Price Natural
Resources 1.04%
AST Wellington Management
Hedged Equity 1.14%
AST Western Asset Core Plus
Bond 0.83%
AST Western Asset Emerging
Markets Debt/9/ 1.01%
1 The Investment Managers (Prudential Investments LLC and AST Investment
Services, Inc.) have contractually agreed to waive a portion of their
investment management fees and/or reimburse certain expenses for the
Portfolio so that the Portfolio's investment management fees plus other
expenses (exclusive in all cases of taxes, interest, brokerage commissions,
distribution fees, acquired fund fees and expenses and extraordinary
expenses) do not exceed 1.00% of the Portfolio's average daily net assets
through April 30, 2013. This arrangement may not be terminated or modified
prior to April 30, 2013, and may be discontinued or modified thereafter.
The decision on whether to renew, modify or discontinue the arrangement
after April 30, 2013 will be subject to review by the Investment Managers
and the Fund's Board of Trustees.
2 Pyramis is a registered service mark of FMR LLC. Used under license.
3 The Investment Managers (Prudential Investments LLC and AST Investment
Services, Inc.) have contractually agreed to waive a portion of their
investment management fees and/or reimburse certain expenses so that the
investment management fees plus other expenses (exclusive in all cases of
taxes, short sale interest and dividend expenses, brokerage commissions,
distribution fees, underlying fund fees and expenses, and extraordinary
expenses) for the Portfolio do not exceed 1.10% of the average daily net
assets of the Portfolio through June 30, 2014. This expense limitation may
not be terminated or modified prior to June 30, 2014, but may be
discontinued or modified thereafter.
4 Effective August 20, 2012, the AST Horizon Growth Asset Allocation
Portfolio will change its subadviser, investment objective, policies,
strategy, expense structure, and its name to the AST J.P. Morgan Global
Thematic Portfolio. The fees and expenses identified in this table reflect
these changes and are estimates based in part on assumed average daily net
assets of $1.5 billion for the Portfolio (i.e., the approximate amount of
the Portfolio's net assets as of December 31, 2011) for the fiscal year
ending December 31, 2012.
5 The Investment Managers (Prudential Investments LLC and AST Investment
Services, Inc.) have contractually agreed to waive a portion of their
investment management fee, so that the effective management fee rate paid
by the Portfolio is as follows: 0.70% to $500 million of average daily net
assets; 0.675% over $500 million in average daily net assets up to and
including $1 billion in average daily net assets; and 0.65% over $1 billion
in average daily net assets. This arrangement may not be terminated or
modified prior to June 30, 2014, and may be discontinued or modified
thereafter. The decision on whether to renew, modify or discontinue the
arrangement after June 30, 2014 will be subject to review by the Investment
Managers and the Fund's Board of Trustees.
6 The AST MFS Large-Cap Value Portfolio will commence operations on or about
August 20, 2012. Estimate based in part on assumed average daily net assets
of approximately $500 million for the Portfolio for the fiscal period
ending December 31, 2012.
7 Prudential Investments LLC and AST Investment Services, Inc. (together, the
Investment Managers) have contractually agreed to waive a portion of their
investment management fees so that the Portfolio's investment management
fee would equal 0.70% of the Portfolio's first $500 million of average
daily net assets, 0.675% of the Portfolio's average daily net assets
between $500 million and $1 billion, and 0.65% of the Portfolio's average
daily net assets in excess of $1 billion through May 1, 2014. This
contractual investment management fee waiver may not be terminated or
modified prior to May 1, 2014, but may be discontinued or modified
thereafter. The decision on whether to renew, modify, or discontinue this
expense limitation after May 1, 2014 will be subject to review by the
Investment Managers and the Board of Trustees of the Trust.
8 The Investment Managers (Prudential Investments LLC and AST Investment
Services, Inc.) have contractually agreed to waive a portion of their
investment management fees and/or reimburse certain expenses, so that the
investment management fees plus other expenses (exclusive in all cases of
taxes, short sale interest and dividend expenses, brokerage commissions,
distribution fees, acquired fund fees and expenses, and extraordinary
expenses) for the Portfolio do not exceed 1.08% of its average daily net
assets through June 30, 2013. This expense limitation may not be terminated
or modified prior to June 30, 2013, and may be discontinued or modified
thereafter. The decision on whether to renew, modify or discontinue the
expense limitation after June 30, 2013 will be subject to review by the
Investment Managers and the Fund's Board of Trustees.
9 The AST Western Asset Emerging Markets Debt Portfolio will commence
operations on or about August 20, 2012. Estimate based in part on assumed
average daily net assets of approximately $650 million for the Portfolio
for the fiscal period ending December 31, 2012.
10 Prudential Investments LLC ("PI") and AST Investment Services, Inc. ("AST")
have contractually agreed to waive a portion of their investment management
fee so that the effective management fee rate paid by the Portfolio is
0.80% of the average daily net assets of the Portfolio through July 1,
2014. This arrangement may not be terminated or modified prior to July 1,
2014 and may be discontinued or modified thereafter. The decision on
whether to renew, modify or discontinue the arrangement after July 1, 2014
will be subject to review by PI, AST and the Portfolio's Board of Trustees.
11
EXPENSE EXAMPLES
These examples are intended to help you compare the cost of investing in one
Pruco Life Annuity with the cost of investing in other Pruco Life Annuities
and/or other variable annuities. Below are examples for each Annuity showing
what you would pay cumulatively 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
. Contingent Deferred Sales Charge (when and if applicable)
. Annual Maintenance Fee
. Optional benefit fees, as described below
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 operating expenses for 2011, 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 Spousal Highest Daily Lifetime Income 2.0 and Combination
5% Roll-Up and HAV Death Benefit (which is the maximum combination of
optional benefit charges)
. For the X Series example, no Purchase Credit is granted under the
Annuity. If Purchase Credits were reflected in the calculations,
expenses would be higher, because the charges would have been applied to
a larger Account Value.
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 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 YR 3 YRS 5 YRS 10 YRS
-------------------------------------
X SERIES $1,579 $2,953 $4,250 $7,048
-------------------------------------
B SERIES $1,327 $2,506 $3,721 $6,670
-------------------------------------
L SERIES $1,365 $2,613 $3,388 $6,947
-------------------------------------
C SERIES $670 $2,027 $3,049 $6,981
-------------------------------------
IF YOU DO NOT SURRENDER YOUR ANNUITY, OR IF YOU ANNUITIZE YOUR ANNUITY:
1 YR 3 YRS 5 YRS 10 YRS
-----------------------------------
X SERIES $679 $2,053 $3,450 $7,048
-----------------------------------
B SERIES $627 $1,906 $3,221 $6,670
-----------------------------------
L SERIES $665 $2,013 $3,388 $6,947
-----------------------------------
C SERIES $670 $2,027 $3,049 $6,981
-----------------------------------
PLEASE SEE APPENDIX A FOR A TABLE OF ACCUMULATION UNIT VALUES.
12
SUMMARY
This Summary describes key features of the Annuities offered in this
prospectus. It is intended to give you an overview, and to point you to
sections of the prospectus that provide greater detail. You should not rely on
the Summary alone for all the information you need to know before purchasing
an Annuity. You should read the entire prospectus for a complete description
of the Annuities. Your Financial Professional can also help you if you have
questions.
THE ANNUITY: The variable annuity contract issued by Pruco Life is a contract
between you, the Owner, and Pruco Life, an insurance company. It is designed
for retirement purposes, or other long-term investing, to help you save money
for retirement, on a tax deferred basis, and provide income during your
retirement. Although this prospectus describes key features of the variable
annuity contract, the prospectus is a distinct document, and is not part of
the contract.
The Annuity offers various investment portfolios. With the help of your
Financial Professional, you choose how to invest your money within your
Annuity. Investing in a variable annuity involves risk and you can lose your
money. On the other hand, investing in a variable annuity can provide you with
the opportunity to grow your money through participation in "underlying"
mutual funds.
This prospectus describes four different Annuities. The Annuities differ
primarily in the fees and charges deducted and whether the Annuity provides
Purchase Credits in certain circumstances. With the help of your Financial
Professional, you choose the Annuity based on your time horizon, liquidity
needs, and desire for Purchase Credits.
Please see Appendix B "Selecting the Variable Annuity That's Right For You,"
for a side-by-side comparison of the key features of each of these Annuities.
GENERALLY SPEAKING, VARIABLE ANNUITIES ARE INVESTMENTS DESIGNED TO BE HELD FOR
THE LONG TERM. WORKING WITH YOUR FINANCIAL PROFESSIONAL, YOU SHOULD CAREFULLY
CONSIDER WHETHER A VARIABLE ANNUITY IS APPROPRIATE FOR YOU, GIVEN YOUR LIFE
EXPECTANCY, NEED FOR INCOME, AND OTHER PERTINENT FACTORS.
PURCHASE: Your eligibility to purchase is based on your age and the amount of
your initial Purchase Payment. See your Financial Professional to complete an
application.
ANNUITY MAXIMUM AGE FOR MINIMUM INITIAL
INITIAL PURCHASE PURCHASE PAYMENT
-------------------------------------------
X SERIES 80 $10,000
-------------------------------------------
B SERIES 85 $1,000
-------------------------------------------
L SERIES 85 $10,000
-------------------------------------------
C SERIES 85 $10,000
-------------------------------------------
The "Maximum Age for Initial Purchase" applies to the oldest Owner as of the
day we would issue the Annuity. If the Annuity is to be owned by an entity,
the maximum age applies to the Annuitant as of the day we would issue the
Annuity. For Annuities purchased as a Beneficiary Annuity, the maximum issue
age is 70 and applies to the Key Life.
After you purchase your Annuity, you will have a limited period of time during
which you may cancel (or "Free Look") the purchase of your Annuity. Your
request for a Free Look must be received in Good Order.
Please see "Requirements for Purchasing One of the Annuities" for more detail.
INVESTMENT OPTIONS: You may choose from a variety of variable Investment
Options ranging from conservative to aggressive. Certain optional benefits may
limit your ability to invest in the variable Investment Options otherwise
available to you under the Annuity. Each of the underlying mutual funds is
described in its own prospectus, which you should read before investing. There
is no assurance that any variable Investment Option will meet its investment
objective.
You may also allocate money to an MVA Option that earns interest for a
specific time period. In general, if you withdraw your money from this option
more than 30 days prior to the end of the "Guarantee Period", you will be
subject to a "Market Value Adjustment", which can either increase or decrease
your Account Value. We also offer a 6 or 12 Month DCA Program under which your
money is transferred monthly from a DCA MVA Option to the other Investment
Options you have designated. Premature withdrawals from the DCA MVA Option may
also be subject to a Market Value Adjustment.
13
Please see "Investment Options," and "Managing Your Account Value" for
information.
ACCESS TO YOUR MONEY: You can receive income by taking withdrawals or electing
annuity payments. Please note that withdrawals may be subject to tax, and may
be subject to a Contingent Deferred Sales Charge (discussed below). You may
withdraw up to 10% of your Purchase Payments each year without being subject
to a Contingent Deferred Sales Charge.
You may elect to receive income through annuity payments over your lifetime,
also called "Annuitization". If you elect to receive annuity payments, you
convert your Account Value into a stream of future payments. This means in
most cases you no longer have an Account Value and therefore cannot make
withdrawals. We offer different types of annuity options to meet your needs.
Please see "Access to Account Value" and "Annuity Options" for more
information.
OPTIONAL LIVING BENEFITS
GUARANTEED LIFETIME WITHDRAWAL BENEFITS. We offer optional living benefits,
for an additional charge, that guarantee your ability to take withdrawals for
life as a percentage of "Protected Withdrawal Value", even if your Account
Value falls to zero. The Protected Withdrawal Value is not the same as your
Account Value, and it is not available for a lump sum withdrawal. The Account
Value has no guarantees, may fluctuate, and can lose value. If you withdraw
more than the allowable amount during any year (referred to as "Excess
Income"), your future level of guaranteed withdrawals decreases.
We currently offer the following benefits:
.. Highest Daily Lifetime Income 2.0
.. Highest Daily Lifetime Income 2.0 with Lifetime Income Accelerator
.. Spousal Highest Daily Lifetime Income 2.0
.. Highest Daily Lifetime Income 2.0 with Highest Daily Death Benefit
.. Spousal Highest Daily Lifetime Income 2.0 with Highest Daily Death Benefit
We previously offered the following optional living benefits during the
periods indicated.
Offered from January 24, 2011 to August 20, 2012:
.. Highest Daily Lifetime Income
.. Highest Daily Lifetime Income with Lifetime Income Accelerator
.. Spousal Highest Daily Lifetime Income
Please see Appendix D for information pertaining to the Highest Daily Lifetime
Income suite of benefits.
Offered from March 15, 2010 to January 23, 2011:
.. Highest Daily Lifetime 6 Plus Income
.. Highest Daily Lifetime 6 Plus Income with Lifetime Income Accelerator
.. Spousal Highest Daily Lifetime 6 Plus Income
Please see Appendix C for information pertaining to the Highest Daily Lifetime
6 Plus suite of benefits.
These benefits utilize predetermined mathematical formulas to help us manage
your guarantee through all market cycles. Under the predetermined mathematical
formula, your Account Value may be transferred between certain "permitted
Sub-accounts" on the one hand and the AST Investment Grade Bond Sub-account on
the other hand. Please see the applicable optional benefits section as well as
the Appendices to this prospectus for more information on the formulas.
In the Living Benefits section, we describe guaranteed minimum withdrawal
benefits that allow you to withdraw a specified amount each year for life (or
joint lives, for the spousal version of the benefit). Please be aware that if
you withdraw more than that amount in a given year (i.e., excess income), that
may permanently reduce the guaranteed amount you can withdraw in future years.
Thus, you should think carefully before taking such excess income.
GUARANTEED MINIMUM ACCUMULATION BENEFITS. For Annuities issued with an
application signed prior to January 24, 2011, subject to availability which
may vary by firm, we offer two optional benefits, for an additional charge,
that guarantee your Account Value to a certain level after a stated period of
years. As part of these benefits you may invest only in certain permitted
Investment Options. These benefits each utilize a predetermined mathematical
formula to help manage your guarantee through all market cycles. Under each
predetermined mathematical formula, your Account Value may be transferred
between certain "permitted Sub-accounts" and a Sub-account within a group of
bond portfolio Sub-accounts differing with respect to their target maturity
date. Please see the applicable optional benefits section as well as the
Appendices to this prospectus for more information on the formulas.
14
These benefits are:
.. Highest Daily Guaranteed Return Option II*
.. Guaranteed Return Option Plus II*
* Available only for Annuities issued with an application signed prior to
January 24, 2011, subject to availability which may vary by firm.
Please see "Living Benefits" for more information.
DEATH BENEFITS: You may name a Beneficiary to receive the proceeds of your
Annuity upon your death. Your death benefit must be distributed within the
time period required by the tax laws. Each of our Annuities offers a minimum
death benefit.
Please see "Death Benefits" for more information.
PURCHASE CREDITS: We apply a "Purchase Credit" to your Annuity's Account Value
with respect to certain Purchase Payments you make under the X Series Annuity.
The Purchase Credit is equal to a percentage of each Purchase Payment. The
amount of the Purchase Credit depends on your age at the time the Purchase
Payment is made and the number of years that the Annuity has been in force.
Because the X Series Annuity grants Purchase Credits with respect to your
Purchase Payments, the expenses of the X Series Annuity are higher than
expenses for an Annuity without a Purchase Credit. In addition, the amount of
the Purchase Credits that you receive under the X Series Annuity may be more
than offset by the additional fees and charges associated with the Purchase
Credit.
FEES AND CHARGES: Each Annuity, and the optional living benefits and optional
death benefits, are subject to certain fees and charges, as discussed in the
"Summary of Contract Fees and Charges" table in the prospectus. In addition,
there are fees and expenses of the underlying Portfolios.
WHAT DOES IT MEAN THAT MY ANNUITY IS "TAX-DEFERRED"? Variable annuities are
"tax deferred", meaning you pay no taxes on any earnings from your Annuity
until you withdraw the money. You may also transfer among your Investment
Options without paying a tax at the time of the transfer. When you take your
money out of the Annuity, however, you will be taxed on the earnings at
ordinary income tax rates. If you withdraw money before you reach age 59 1/2,
you also may be subject to a 10% federal tax penalty.
You may also purchase one of our Annuities as a tax-qualified retirement
investment such as an IRA, SEP-IRA, Roth IRA, 401(a) plan, or non-ERISA 403(b)
plan. Although there is no additional tax advantage to a variable annuity
purchased through one of these plans, the Annuity has features and benefits
other than tax deferral that may make it an important investment for a
qualified plan. You should consult your tax advisor regarding these features
and benefits prior to purchasing a contract for use with a tax-qualified plan.
MARKET TIMING: We have market timing policies and procedures that attempt to
detect transfer activity that may adversely affect other Owners or portfolio
shareholders in situations where there is potential for pricing inefficiencies
or that involve certain other types of disruptive trading activity (i.e.,
market timing). Our market timing policies and procedures are discussed in
more detail in the section entitled "Restrictions on Transfers Between
Investment Options."
OTHER INFORMATION: Please see the section entitled "General Information" for
more information about our Annuities, including legal information about Pruco
Life, the Separate Account, and underlying funds.
15
INVESTMENT OPTIONS
The Investment Options under each Annuity consist of the Sub-accounts and the
MVA Options. In this section, we describe the portfolios. We then discuss the
investment restrictions that apply if you elect certain optional benefits.
Finally, we discuss the MVA Options. Each Sub-account invests in an underlying
portfolio whose share price generally fluctuates each Valuation Day. The
portfolios that you select, among those that are available, are your choice -
we do not provide investment advice, nor do we recommend any particular
portfolio. You bear the investment risk for amounts allocated to the
portfolios.
In contrast to the Sub-accounts, Account Value allocated to an MVA Option
earns a fixed rate of interest during the Guarantee Period. We guarantee both
the stated amount of interest and the principal amount of your Account Value
in an MVA Option, so long as you remain invested in the MVA Option for the
duration of the Guarantee Period. In general, if you withdraw Account Value
prior to the end of the MVA Option's Guarantee Period, you will be subject to
a Market Value Adjustment or "MVA", which can be positive or negative. A
"Guarantee Period" is the period of time during which we credit a fixed rate
of interest to an MVA Option.
As a condition of participating in the optional benefits, you may be
restricted from investing in certain Sub-accounts or MVA Options. We describe
those restrictions below. In addition, the optional living benefits (e.g.,
Highest Daily Lifetime Income 2.0) employ a predetermined mathematical
formula, under which money is transferred between your chosen Sub-accounts and
a bond portfolio (e.g., the AST Investment Grade Bond Portfolio).
You should be aware that the operation of the formula may result in
large-scale asset flows into and out of your chosen Sub-accounts and the AST
Investment Grade Bond Portfolio, which could subject those portfolios to
certain risks and adversely impact their expenses and performance. Even if you
do not elect an optional living benefit that employs a predetermined
mathematical formula, the expenses, performance, and risk profile of your
investment may be adversely impacted as described below to the extent you
select Permitted Sub-accounts. The mathematical formula may adversely affect a
portfolio's investment performance by requiring the sub-advisor to purchase
and sell securities at inopportune times and by otherwise limiting the
sub-advisor's ability to fully implement that portfolio's investment
strategies. Because transfers to and from your chosen Sub-accounts and the AST
Investment Grade Bond Portfolio can be frequent and the amount transferred can
vary, any of these portfolios could experience the following additional
effects, among others:
(a)the sub-advisor may be required to hold a larger portion of assets in
highly liquid securities than it otherwise would, which could diminish
performance if the highly liquid securities underperform other securities
(e.g., equities) that otherwise would have been held;
(b)a portfolio may experience higher turnover, which could result in higher
operating expense ratios and transaction costs for the portfolio compared
to other similar funds; and,
(c)if the sub-advisor must sell securities that are thinly-traded to satisfy
redemption requests initiated pursuant to the formula, such sales could
have a significant adverse impact on the price of such securities and the
cash proceeds received by the portfolio.
Please consult the prospectus for the applicable portfolio for additional
information about these effects.
VARIABLE INVESTMENT OPTIONS
Each variable Investment Option is a Sub-account of the Pruco Life Flexible
Premium Variable Annuity Account (see "Pruco Life and the Separate Account"
for more detailed information). Each Sub-account invests exclusively in one
portfolio. You should carefully read the prospectus for any portfolio in which
you are interested. The Investment Objectives/Policies Chart below classifies
each of the portfolios based on our assessment of their investment style. The
chart also provides a description of each portfolio's investment objective (in
italics) and a short, summary description of their key policies to assist you
in determining which Portfolios may be of interest to you.
Not all portfolios offered as Sub-accounts may be available depending on
optional benefit selection. Thus, if you selected particular optional
benefits, you would be precluded from investing in certain portfolios and
therefore would not receive investment appreciation (or depreciation)
affecting those portfolios.
The portfolios are not publicly traded mutual funds. They are only available
as Investment Options in variable annuity contracts and variable life
insurance policies issued by insurance companies, or in some cases, to
participants in certain qualified retirement plans. However, some of the
portfolios available as Sub-accounts under the Annuities are managed by the
same portfolio advisor or sub-advisor as a retail mutual fund of the same or
similar name that the portfolio may have been modeled after at its inception.
Conversely, certain retail mutual funds may be managed by the same portfolio
advisor or sub-advisor of a Portfolio available as a Sub-account or have a
similar name. While the investment objective and policies of the retail mutual
funds and the portfolios may be substantially similar, the actual investments
will differ to varying degrees. Differences in the performance of the funds
can be expected, and in some cases could be substantial. You should not
compare the performance of a publicly traded mutual fund with the performance
of any similarly named portfolio offered as a Sub-account. Details about the
investment objectives, policies, risks,
16
costs and management of the portfolios are found in the prospectuses for the
portfolios. THE CURRENT PROSPECTUSES AND STATEMENTS OF ADDITIONAL INFORMATION
FOR THE UNDERLYING PORTFOLIOS CAN BE OBTAINED BY CALLING 1-888-PRU-2888.
PLEASE READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
The name of the advisor/sub-advisor for each portfolio appears next to the
description. Those portfolios whose name includes the prefix "AST" are
portfolios of the Advanced Series Trust. The portfolios of the Advanced Series
Trust are co-managed by AST Investment Services, Inc. and Prudential
Investments LLC, both of which are affiliated companies of Pruco Life.
However, one or more sub-advisors, as noted below, are engaged to conduct
day-to-day management.
Please see the Additional Information section, under the heading concerning
"Service Fees Payable to Pruco Life" for a discussion of fees that we may
receive from underlying mutual funds and/or their affiliates. You may select
portfolios individually, create your own combination of portfolios (certain
limitations apply), or select from among combinations of portfolios that we
have created called "Prudential Portfolio Combinations." Under Prudential
Portfolio Combinations, each Portfolio Combination consists of several asset
allocation portfolios, each of which represents a specified percentage of your
allocations. If you elect to invest according to one of these Portfolio
Combinations, we will allocate your initial Purchase Payment among the
Sub-accounts within the Portfolio Combination according to the percentage
allocations. You may elect to allocate additional Purchase Payments according
to the composition of the Portfolio Combination, although if you do not make
such an explicit election, we will allocate additional Purchase Payments as
discussed below under "Additional Purchase Payments." Once you have selected a
Portfolio Combination, we will not rebalance your Account Value to take into
account differences in performance among the Sub-accounts. This is a static,
point of sale model allocation. Over time, the percentages in each asset
allocation portfolio may vary from the Portfolio Combination you selected when
you purchased your Annuity based on the performance of each of the portfolios
within the Portfolio Combination. However, you may elect to participate in an
automatic rebalancing program, under which we would transfer Account Value
periodically so that your Account Value allocated to the Sub-accounts is
brought back to the exact percentage allocations stipulated by the Portfolio
Combination you elected. Please see "Automatic Rebalancing Programs" below for
details about how such a program operates. If you are participating in an
optional living benefit (such as Highest Daily Lifetime Income 2.0) that uses
a predetermined mathematical formula under which your Account Value may be
transferred between certain "Permitted Sub-accounts" and a bond portfolio
sub-account, and you have opted for automatic rebalancing in addition to
Prudential Portfolio Combinations, you should be aware that: (a) the AST bond
portfolio used as part of the predetermined mathematical formula will not be
included as part of automatic rebalancing and (b) the operation of the formula
may result in the rebalancing not conforming to the percentage allocations
that existed originally as part of Prudential Portfolio Combinations.
If you are interested in a Portfolio Combination, you should work with your
Financial Professional to select the Portfolio Combination that is appropriate
for you, in light of your investment time horizon, investment goals and
expectations and market risk tolerance, and other relevant factors. In
providing these Portfolio Combinations, we are not providing investment
advice. You are responsible for determining which Portfolio Combination or
Sub-account(s) is best for you. Asset allocation does not ensure a profit or
protect against a loss.
17
INVESTMENT OBJECTIVES/POLICIES STYLE/ PORTFOLIO
TYPE ADVISOR/
SUBADVISOR
-----------------------------------------------------------------------
ADVANCED SERIES TRUST
-----------------------------------------------------------------------
AST ACADEMIC STRATEGIES ASSET ASSET AlphaSimplex
ALLOCATION PORTFOLIO: seeks long ALLOCA Group, LLC; AQR
term capital appreciation. The TION Capital
Portfolio is a multi-asset class Management, LLC
fund that pursues both top-down and CNH Partners,
asset allocation strategies and LLC;
bottom-up selection of securities, CoreCommodity
investment managers, and mutual Management, LLC;
funds. Under normal circumstances, First Quadrant,
approximately 60% of the assets will L.P.; Jennison
be allocated to traditional asset Associates LLC;
classes (including US and J.P. Morgan
international equities and bonds) Investment
and approximately 40% of the assets Management, Inc.;
will be allocated to nontraditional Pacific Investment
asset classes and strategies Management
(including real estate, commodities, Company LLC
and alternative strategies). Those (PIMCO);
percentages are subject to change at Prudential
the discretion of the advisor. Investments LLC;
Quantitative
Management
Associates LLC
-----------------------------------------------------------------------
AST ADVANCED STRATEGIES PORTFOLIO: ASSET LSV Asset
seeks a high level of absolute ALLOCA Management;
return by using traditional and TION Marsico Capital
non-traditional investment Management, LLC;
strategies and by investing in Pacific Investment
domestic and foreign equity and Management
fixed-income securities, derivative Company LLC
instruments and other investment (PIMCO);
companies. The Portfolio uses Quantitative
traditional and non-traditional Management
investment strategies by investing Associates LLC;
in domestic and foreign equity and T. Rowe Price
fixed-income securities, derivative Associates, Inc.;
instruments and other investment William Blair &
companies. The asset allocation Company, LLC
generally provides for an allotment
of 60% of the portfolio's assets to
a combination of domestic and
international equity strategies and
the remaining 40% of assets in a
combination of U.S. fixed income,
hedged international bond, real
return assets and other investment
companies. Quantitative Management
Associates LLC allocates the assets
of the portfolio across different
investment categories and
subadvisors.
-----------------------------------------------------------------------
AST BALANCED ASSET ALLOCATION ASSET Prudential
PORTFOLIO: seeks to obtain the ALLOCA Investments LLC;
highest potential total return TION Quantitative
consistent with its specified level Management
of risk. The Portfolio primarily Associates LLC
invests its assets in a diversified
portfolio of other mutual funds,
within the Advanced Series Trust and
certain affiliated money market
funds. Under normal market
conditions, the Portfolio will
devote approximately 60% of its net
assets to underlying portfolios
investing primarily in equity
securities (with a range of 52.5% to
67.5%), and 40% of its net assets to
underlying portfolios investing
primarily in debt securities and
money market instruments (with a
range of 32.5% to 47.5%). The
Portfolio is not limited to
investing exclusively in shares of
the underlying portfolios and may
invest in securities, exchange
traded funds (ETFs), and futures
contracts, swap agreements and other
financial and derivative instruments.
-----------------------------------------------------------------------
AST BLACKROCK GLOBAL STRATEGIES ASSET BlackRock
PORTFOLIO: seeks a high total return ALLOCA Financial
consistent with a moderate level of TION Management, Inc.
risk. The Portfolio is a global,
multi asset-class portfolio that
invests directly in, among other
things, equity and equity-related
securities, investment grade debt
securities (including, without
limitation, U.S. Treasuries and U.S.
government securities),
non-investment grade bonds (also
known as "high yield bonds" or "junk
bonds"), real estate investment
trusts (REITs), exchange traded
funds (ETFs), and derivative
instruments, including
commodity-linked derivative
instruments.
-----------------------------------------------------------------------
18
INVESTMENT OBJECTIVES/POLICIES STYLE/ PORTFOLIO
TYPE ADVISOR/
SUBADVISOR
---------------------------------------------------------------------
AST BLACKROCK VALUE PORTFOLIO: seeks LARGE CAP BlackRock
maximum growth of capital by VALUE Investment
investing primarily in the value Management, LLC
stocks of larger companies. The
Portfolio pursues its objective,
under normal market conditions, by
investing at least 80% of the value
of its assets in the equity
securities of large-sized companies
included in the Russell 1000(R)
Value Index. The subadvisor employs
an investment strategy designed to
maintain a portfolio of equity
securities which approximates the
market risk of those stocks included
in the Russell 1000(R) Value Index,
but which attempts to outperform the
Russell 1000(R) Value Index through
active stock selection.
---------------------------------------------------------------------
AST BOND PORTFOLIO 2017: seeks the FIXED Prudential
highest total return for a specific INCOME Investment
period of time, consistent with the Management, Inc.
preservation of capital and
liquidity needs. Total return is
comprised of current income and
capital appreciation. Under normal
market conditions, the Portfolio
invests at least 80% of its
investable assets in bonds. The
Portfolio is designed to meet the
parameters established to support
certain living benefits for variable
annuities that mature on
December 31, 2017. Please note that
you may not make purchase payments
to this Portfolio, and that this
Portfolio is available only with
certain living benefits.
---------------------------------------------------------------------
AST BOND PORTFOLIO 2018: seeks the FIXED Prudential
highest total return for a specific INCOME Investment
period of time, consistent with the Management, Inc.
preservation of capital and
liquidity needs. Total return is
comprised of current income and
capital appreciation. Under normal
market conditions, the Portfolio
invests at least 80% of its
investable assets in bonds. The
Portfolio is designed to meet the
parameters established to support
certain living benefits for variable
annuities that mature on
December 31, 2018. Please note that
you may not make purchase payments
to this Portfolio, and that this
Portfolio is available only with
certain living benefits.
---------------------------------------------------------------------
AST BOND PORTFOLIO 2019: seeks the FIXED Prudential
highest total return for a specific INCOME Investment
period of time, consistent with the Management, Inc.
preservation of capital and
liquidity needs. Total return is
comprised of current income and
capital appreciation. Under normal
market conditions, the Portfolio
invests at least 80% of its
investable assets in bonds. The
Portfolio is designed to meet the
parameters established to support
certain living benefits for variable
annuities that mature on
December 31, 2019. Please note that
you may not make purchase payments
to this Portfolio, and that this
Portfolio is available only with
certain living benefits.
---------------------------------------------------------------------
AST BOND PORTFOLIO 2020: seeks the FIXED Prudential
highest total return for a specific INCOME Investment
period of time, consistent with the Management, Inc.
preservation of capital and
liquidity needs. Total return is
comprised of current income and
capital appreciation. Under normal
market conditions, the Portfolio
invests at least 80% of its
investable assets in bonds. The
Portfolio is designed to meet the
parameters established to support
certain living benefits for variable
annuities that mature on
December 31, 2020. Please note that
you may not make purchase payments
to this Portfolio, and that this
Portfolio is available only with
certain living benefits.
---------------------------------------------------------------------
AST BOND PORTFOLIO 2021: seeks the FIXED Prudential
highest total return for a specific INCOME Investment
period of time, consistent with the Management, Inc.
preservation of capital and
liquidity needs. Total return is
comprised of current income and
capital appreciation. Under normal
market conditions, the Portfolio
invests at least 80% of its
investable assets in bonds. The
Portfolio is designed to meet the
parameters established to support
certain living benefits for variable
annuities that mature on
December 31, 2021. Please note that
you may not make purchase payments
to this Portfolio, and that this
Portfolio is available only with
certain living benefits.
---------------------------------------------------------------------
AST BOND PORTFOLIO 2022: seeks the FIXED Prudential
highest total return for a specific INCOME Investment
period of time, consistent with the Management, Inc.
preservation of capital and
liquidity needs. Total return is
comprised of current income and
capital appreciation. Under normal
market conditions, the Portfolio
invests at least 80% of its
investable assets in bonds. The
Portfolio is designed to meet the
parameters established to support
certain living benefits for variable
annuities that mature on
December 31, 2022. Please note that
you may not make purchase payments
to this Portfolio, and that this
Portfolio is available only with
certain living benefits.
---------------------------------------------------------------------
19
INVESTMENT OBJECTIVES/POLICIES STYLE/ PORTFOLIO
TYPE ADVISOR/
SUBADVISOR
----------------------------------------------------------------------
AST BOND PORTFOLIO 2023: seeks the FIXED Prudential
highest total return for a specific INCOME Investment
period of time, consistent with the Management, Inc.
preservation of capital and
liquidity needs. Total return is
comprised of current income and
capital appreciation. Under normal
market conditions, the Portfolio
invests at least 80% of its
investable assets in bonds. The
Portfolio is designed to meet the
parameters established to support
certain living benefits for variable
annuities that mature on
December 31, 2023. Please note that
you may not make purchase payments
to this Portfolio, and that this
Portfolio is available only with
certain living benefits.
----------------------------------------------------------------------
AST CAPITAL GROWTH ASSET ALLOCATION ASSET Prudential
PORTFOLIO: seeks to obtain a total ALLOCA- Investments LLC;
return consistent with its specified TION Quantitative
level of risk. The Portfolio Management
primarily invests its assets in a Associates LLC
diversified portfolio of other
mutual funds, within the Advanced
Series Trust and certain affiliated
money market funds. Under normal
market conditions, the Portfolio
will devote approximately 75% of its
net assets to underlying portfolios
investing primarily in equity
securities (with a range of 67.5% to
80%), and 25% of its net assets to
underlying portfolios investing
primarily in debt securities and
money market instruments (with a
range of 20.0% to 32.5%). The
Portfolio is not limited to
investing exclusively in shares of
the underlying portfolios and may
invest in securities, exchange
traded funds (ETFs), and futures
contracts, swap agreements and other
financial and derivative instruments.
----------------------------------------------------------------------
AST CLS MODERATE ASSET ALLOCATION ASSET CLS Investments,
PORTFOLIO: seeks the highest ALLOCA- LLC
potential total return consistent TION
with its specified level of risk
tolerance. Under normal
circumstances, at least 90% of the
Portfolio's assets will be invested
in other portfolios of Advanced
Series Trust (the underlying
portfolios) while no more than 10%
of the Portfolio's assets may be
invested in exchange traded funds
(ETFs). Under normal market
conditions, the Portfolio will
invest approximately 50% of its net
assets to equity securities and
approximately 50% of its net assets
to debt securities and money market
instruments. The equity portion may
range from 40% to 60% of net assets
to underlying portfolios and ETFs
investing primarily in equity
securities, and from 40% to 60% of
net assets to underlying portfolios
and ETFs investing primarily in
money market instruments and debt
securities, which may include
non-investment grade bonds.
"Non-investment grade bonds" are
commonly referred to as "junk bonds".
----------------------------------------------------------------------
AST COHEN & STEERS REALTY PORTFOLIO: SPECIALTY Cohen & Steers
seeks to maximize total return Capital
through investment in real estate Management, Inc.
securities. The Portfolio pursues
its investment objective by
investing, under normal
circumstances, at least 80% of its
net assets in securities issued by
companies associated with the real
estate industry, such as real estate
investment trusts (REITs). Under
normal circumstances, the Portfolio
will invest substantially all of its
assets in the equity securities of
real estate related issuers, i.e., a
company that derives at least 50% of
its revenues from the ownership,
construction, financing, management
or sale of real estate or that has
at least 50% of its assets in real
estate.
----------------------------------------------------------------------
AST FEDERATED AGGRESSIVE GROWTH SMALL CAP Federated Equity
PORTFOLIO: seeks capital growth. The GROWTH Management
Portfolio pursues its investment Company of
objective by investing primarily in Pennsylvania/
the stocks of small companies that Federated Global
are traded on national security Investment
exchanges, NASDAQ stock exchange and Management Corp.
the over- the-counter-market. Small
companies are defined as companies
with market capitalizations similar
to companies in the Russell 2000
Index and S&P 600 Small Cap Index.
----------------------------------------------------------------------
AST FI PYRAMIS(R) ASSET ALLOCATION ASSET Pyramis Global
PORTFOLIO: seeks to maximize total ALLOCA- Advisors, LLC a
return. In seeking to achieve the TION Fidelity
Portfolio's investment objective, Investments
the Portfolio's assets are allocated Company
across eight uniquely specialized
investment strategies. The Portfolio
has five strategies that invest
primarily in equity securities, two
fixed-income strategies (the Broad
Market Duration Strategy and the
High Yield Bond Strategy), and one
strategy designed to provide
liquidity (the Liquidity Strategy).
----------------------------------------------------------------------
Pyramis is a registered service mark of FMR LLC. Used under license.
20
INVESTMENT OBJECTIVES/POLICIES STYLE/ PORTFOLIO
TYPE ADVISOR/
SUBADVISOR
-------------------------------------------------------------------------
AST FIRST TRUST BALANCED TARGET ASSET First Trust Advisors
PORTFOLIO: seeks long-term capital ALLOCA- L.P.
growth balanced by current income. TION
The Portfolio seeks to achieve its
objective by investing approximately
65% of its net assets in equity
securities and approximately 35% of
its net assets in fixed- income
securities as of the annual security
selection date. Depending on market
conditions, the equity portion may
range between 60-70% of the
Portfolio's net assets and the
fixed-income portion may range
between 30-40% of the Portfolio's
net assets. The revised allocations
do not take into account the
potential investment of up to 5% of
the Portfolio's assets in the
"liquidity" investment sleeve. In
seeking to achieve its investment
objective, the Portfolio allocates
its assets across multiple uniquely
specialized investment strategies.
On or about the annual selection
date (currently March 1 under normal
circumstances), the Portfolio
establishes both the percentage
allocations among the various
investment strategies under normal
circumstances and the percentage
allocation of each security's
position within each of the
investment strategies that invest
primarily in equity securities.
-------------------------------------------------------------------------
AST FIRST TRUST CAPITAL APPRECIATION ASSET First Trust Advisors
TARGET PORTFOLIO: seeks long-term ALLOCA- L.P.
capital growth. The Portfolio seeks TION
to achieve its objective by
investing approximately 80% of its
net assets in equity securities and
approximately 20% of its net assets
in fixed-income securities as of the
annual security selection date.
Depending on market conditions, the
equity portion may range between
75-85% of the Portfolio's net assets
and the fixed- income portion may
range between 15-25% of the
Portfolio's net assets. The revised
allocations do not take into account
the potential investment of up to 5%
of the Portfolio's assets in the
"liquidity" investment sleeve. In
seeking to achieve its investment
objective, the Portfolio allocates
its assets across multiple uniquely
specialized investment strategies.
On or about the annual selection
date (currently March 1 under normal
circumstances), the Portfolio
establishes both the percentage
allocations among the various
investment strategies under normal
circumstances and the percentage
allocation of each security's
position within each of the
investment strategies that invest
primarily in equity securities.
-------------------------------------------------------------------------
AST FRANKLIN TEMPLETON FOUNDING ASSET Franklin Advisers,
FUNDS ALLOCATION PORTFOLIO: seeks ALLOCA- Inc.; Franklin
capital appreciation while its TION Mutual Advisers,
secondary investment objective will LLC; Templeton
be to seek income. Under normal Global Advisors
market conditions the Portfolio will Limited
seek to achieve its investment
objectives by allocating 33 1/3% of
its assets to each of the
Portfolio's three subadvisors. The
Portfolio will normally invest in a
combination of domestic and foreign
equity and fixed-income and money
market securities. Depending upon
the Portfolio's ability to achieve
the necessary asset scale, the
Trust's ability to implement certain
legal agreements and custody
arrangements, and market, economic,
and financial conditions as of the
Portfolio's commencement of
operations, it may take several
weeks for the Portfolio's assets to
be fully invested in accordance with
its investment objective and
policies. During that time, it is
anticipated that all or a portion of
the Portfolio's assets will be
invested in high grade, short term
debt securities (both fixed and
floating rate), money market funds,
short-term bond funds,
exchange-traded funds, and/or index
futures contracts. A relatively long
initial investment period may
negatively affect the Portfolio's
investment return and ability to
achieve its investment objective.
-------------------------------------------------------------------------
AST GLOBAL REAL ESTATE PORTFOLIO: SPECIALTY Prudential Real
seeks capital appreciation and Estate Investors
income. The Portfolio will normally
invest at least 80% of its
investable assets (net assets plus
any borrowing made for investment
purposes) in equity-related
securities of real estate companies.
The Portfolio will invest in
equity-related securities of real
estate companies on a global basis
and the Portfolio may invest up to
15% of its net assets in ownership
interests in commercial real estate
through investments in private real
estate.
-------------------------------------------------------------------------
AST GOLDMAN SACHS CONCENTRATED LARGE CAP Goldman Sachs
GROWTH PORTFOLIO: seeks long-term GROWTH Asset Management,
growth of capital. The Portfolio L.P.
will pursue its objective by
investing primarily in equity
securities of companies that the
subadvisor believes have the
potential to achieve capital
appreciation over the long-term. The
Portfolio seeks to achieve its
investment objective by investing,
under normal circumstances, in
approximately 30 - 45 companies that
are considered by the subadvisor to
be positioned for long-term growth.
-------------------------------------------------------------------------
21
INVESTMENT OBJECTIVES/POLICIES STYLE/ PORTFOLIO
TYPE ADVISOR/
SUBADVISOR
------------------------------------------------------------------------
AST GOLDMAN SACHS LARGE-CAP VALUE LARGE CAP Goldman Sachs
PORTFOLIO: seeks long-term growth of VALUE Asset Management,
capital. The Portfolio seeks to L.P.
achieve its investment objective by
investing in value opportunities
that the subadvisor, defines as
companies with identifiable
competitive advantages whose
intrinsic value is not reflected in
the stock price. The Portfolio
invests, under normal circumstances,
at least 80% of its net assets in a
diversified portfolio of equity
investments in large-cap U.S.
issuers with public stock market
capitalizations within the range of
the market capitalization of
companies in the Russell 1000 Value
Index at the time of investment.
------------------------------------------------------------------------
AST GOLDMAN SACHS MID-CAP GROWTH MID CAP Goldman Sachs
PORTFOLIO: seeks long-term growth of GROWTH Asset Management,
capital. The Portfolio pursues its L.P.
investment objective, by investing
primarily in equity securities
selected for their growth potential,
and normally invests at least 80% of
the value of its assets in
medium-sized companies. Medium-sized
companies are those whose market
capitalizations (measured at the
time of investment) fall within the
range of companies in the Russell
Mid Cap Growth Index. The subadvisor
seeks to identify individual
companies with earnings growth
potential that may not be recognized
by the market at large.
------------------------------------------------------------------------
AST GOLDMAN SACHS SMALL-CAP VALUE SMALL CAP Goldman Sachs
PORTFOLIO: seeks long-term capital VALUE Asset Management,
appreciation. The Portfolio will L.P.
seek its objective through
investments primarily in equity
securities that are believed to be
undervalued in the marketplace. The
Portfolio will invest, under normal
circumstances, at least 80% of the
value of its assets in small
capitalization companies. The
Portfolio generally defines small
capitalization companies as
companies with market
capitalizations that are within the
range of the Russell 2000 Value
Index at the time of purchase.
------------------------------------------------------------------------
AST HIGH YIELD PORTFOLIO: seeks FIXED J.P. Morgan
maximum total return, consistent INCOME Investment
with preservation of capital and Management, Inc.;
prudent investment management. The Prudential
Portfolio will invest, under normal Investment
circumstances, at least 80% of its Management, Inc.
net assets plus any borrowings for
investment purposes (measured at
time of purchase) in non-investment
grade high yield (also known as
"junk bonds") fixed-income
investments which may be represented
by forwards or derivatives such as
options, futures contracts, or swap
agreements. Non-investment grade
investments are securities rated Ba
or lower by Moody's Investors
Services, Inc. or equivalently rated
by Standard & Poor's Corporation, or
Fitch, or, if unrated, determined by
the subadvisor to be of comparable
quality.
------------------------------------------------------------------------
AST HORIZON MODERATE ASSET ASSET Horizon
ALLOCATION PORTFOLIO: seeks the ALLOCA Investments, LLC
highest potential total return TION
consistent with its specified level
of risk tolerance. Under normal
circumstances, at least 90% of the
Portfolio's assets will be invested
in other portfolios of Advanced
Series Trust (the underlying
portfolios) while no more than 10%
of the Portfolio's assets may be
invested in exchange traded funds
(ETFs). Under normal market
conditions, the Portfolio will
devote from 40% to 60% of its net
assets to underlying portfolios and
ETFs investing primarily in equity
securities, and from 40% to 60% of
its net assets to underlying
portfolios and ETFs investing
primarily in debt securities and
money market instruments.
------------------------------------------------------------------------
AST INTERNATIONAL GROWTH PORTFOLIO: INTER Jennison Associates
seeks long-term capital growth. NATIONAL LLC; Marsico
Under normal circumstances, the EQUITY Capital
Portfolio invests at least 80% of Management, LLC;
the value of its assets in William Blair &
securities of issuers that are Company, LLC
economically tied to countries other
than the United States. Although the
Portfolio intends to invest at least
80% of its assets in the securities
of issuers located outside the
United States, it may at times
invest in U.S. issuers and it may
invest all of its assets in fewer
than five countries or even a single
country. The Portfolio looks
primarily for stocks of companies
whose earnings are growing at a
faster rate than other companies or
which offer attractive growth.
------------------------------------------------------------------------
22
INVESTMENT OBJECTIVES/POLICIES STYLE/ PORTFOLIO
TYPE ADVISOR/
SUBADVISOR
-------------------------------------------------------------------------
AST INTERNATIONAL VALUE PORTFOLIO: INTER LSV Asset
seeks capital growth. The Portfolio NATIONAL Management;
normally invests at least 80% of the EQUITY Thornburg
Portfolio's investable assets in Investment
equity securities. The Portfolio Management, Inc.
will invest at least 65% of its net
assets in the equity securities of
companies in at least three
different countries, without limit
as to the amount of assets that may
be invested in a single country.
-------------------------------------------------------------------------
AST INVESTMENT GRADE BOND PORTFOLIO: FIXED Prudential
seeks to maximize total return, INCOME Investment
consistent with the preservation of Management, Inc.
capital and liquidity needs. Under
normal market conditions the
Portfolio invests at least 80% of
its investable assets in bonds.
Please note that you may not make
purchase payments to this Portfolio,
and that this Portfolio is available
only with certain living benefits.
-------------------------------------------------------------------------
AST JENNISON LARGE-CAP GROWTH LARGE CAP Jennison Associates
PORTFOLIO: seeks long-term growth of GROWTH LLC
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. Stocks are selected on a
company-by-company basis using
fundamental analysis. The companies
in which the subadvisor will invest
generally tend to have a unique
market niche, a strong new product
profile or superior management.
-------------------------------------------------------------------------
AST JENNISON LARGE-CAP VALUE LARGE CAP Jennison Associates
PORTFOLIO: seeks capital VALUE LLC
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
intrinsic value, 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.
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AST J.P. MORGAN GLOBAL THEMATIC ASSET J.P. Morgan
PORTFOLIO (formerly AST Horizon ALLOCATION Investment
Growth Asset Allocation Portfolio): Management, Inc.
seeks capital appreciation
consistent with its specified level
of risk tolerance. The Portfolio
will provide exposure to a long-term
strategic asset allocation while
having the flexibility to express
shorter-term tactical views by
capitalizing upon market
opportunities globally. The
Portfolio will invest across a broad
range of asset classes, including,
without limitation, domestic equity
and debt, international and global
developed equity, emerging markets
equity and debt, high yield debt,
convertible bonds, and real estate
investment trusts. The Portfolio
will invest primarily in individual
securities in order to meet its
investment objective and will also
utilize derivative instruments for
tactical positioning and risk
management. Under normal
circumstances, approximately 65% of
the Portfolio's net assets (ranging
between 55-75% depending on market
conditions) will be invested to
provide exposure to equity
securities and approximately 35% of
its net assets (ranging between
25-45% depending on market
conditions) will be invested to
provide exposure to fixed-income
securities. Such exposures may be
obtained through: (i) the purchase
of "physical" securities (e.g.,
common stocks, bonds, etc.); (ii)
the use of derivatives (e.g.,
options and futures contracts on
indices, securities, and
commodities, currency forwards,
etc.); and (iii) the purchase of
certain exchange-traded funds.
-------------------------------------------------------------------------
AST JPMORGAN INTERNATIONAL EQUITY INTER J.P. Morgan
PORTFOLIO: seeks capital growth. The NATIONAL Investment
Portfolio seeks to meet its EQUITY Management, Inc.
objective by investing, under normal
market conditions, at least 80% of
its assets in equity securities. The
Portfolio seeks to meet its
investment objective by normally
investing primarily in a diversified
portfolio of equity securities of
companies located or operating in
developed non-U.S. countries and
emerging markets of the world. The
equity securities will ordinarily be
traded on a recognized foreign
securities exchange or traded in a
foreign over-the-counter market in
the country where the issuer is
principally based, but may also be
traded in other countries including
the United States.
-------------------------------------------------------------------------
23
INVESTMENT OBJECTIVES/POLICIES STYLE/ PORTFOLIO
TYPE ADVISOR/
SUBADVISOR
-----------------------------------------------------------------------
AST JPMORGAN STRATEGIC OPPORTUNITIES ASSET J.P. Morgan
PORTFOLIO: seeks to maximize return ALLOCA- Investment
compared to the benchmark through TION Management, Inc.
security selection and tactical
asset allocation. The Portfolio
invests in securities and financial
instruments (including derivatives)
to gain exposure to global equity,
global fixed income and cash
equivalent markets, including global
currencies. The Portfolio may invest
in developed and emerging markets
securities, domestic and foreign
fixed income securities (including
non-investment grade bonds or "junk
bonds"), and real estate investment
trusts (REITs) of issuers located
within and outside the United States
or in open-end investment companies
advised by J.P. Morgan Investment
Management, Inc., the Portfolio's
subadvisor, to gain exposure to
certain global equity and global
fixed income markets.
-----------------------------------------------------------------------
AST LARGE-CAP VALUE PORTFOLIO: seeks LARGE CAP Hotchkis and Wiley
current income and long-term growth VALUE Capital
of income, as well as capital Management, LLC
appreciation. The Portfolio invests,
under normal circumstances, at least
80% of its net assets in securities
of large capitalization companies.
Large capitalization companies are
those companies with market
capitalizations within the market
capitalization range of the Russell
1000 Value Index.
-----------------------------------------------------------------------
AST LORD ABBETT CORE-FIXED INCOME FIXED Lord, Abbett & Co.
PORTFOLIO: seeks income and capital INCOME LLC
appreciation to produce a high total
return. Under normal market
conditions, the Portfolio pursues
its investment objective by
investing at least 80% of its net
assets in fixed-income securities.
The Portfolio primarily invests in
securities issued or guaranteed by
the U.S. government, its agencies or
government-sponsored enterprises;
investment grade debt securities of
U.S. issuers; investment grade debt
securities of non-U.S. issuers that
are denominated in U.S. dollars;
mortgage-backed and other
asset-backed securities; senior
loans, and loan participations and
assignments; and derivative
instruments, such as options,
futures contracts, forward contracts
and swap agreements.
-----------------------------------------------------------------------
AST MARSICO CAPITAL GROWTH LARGE CAP Marsico Capital
PORTFOLIO: seeks capital growth. GROWTH Management, LLC
Income realization is not an
investment objective and any income
realized on the Portfolio's
investments, therefore, will be
incidental to the Portfolio's
objective. The Portfolio will pursue
its objective by investing primarily
in common stocks of large companies
that are selected for their growth
potential. Large capitalization
companies are companies with market
capitalizations within the market
capitalization range of the Russell
1000 Growth Index. In selecting
investments for the Portfolio, the
subadvisor uses an approach that
combines "top down" macroeconomic
analysis with "bottom up" stock
selection. The "top down" approach
identifies sectors, industries and
companies that may benefit from the
trends the subadvisor has observed.
The subadvisor then looks for
individual companies that are
expected to offer earnings growth
potential that may not be recognized
by the market at large, utilizing a
"bottom up" stock selection process.
The Portfolio will normally hold a
core position of between 35 and 50
common stocks. The Portfolio may
hold a limited number of additional
common stocks at times when the
portfolio manager is accumulating
new positions, phasing out and
replacing existing positions or
responding to exceptional market
conditions.
-----------------------------------------------------------------------
AST MFS GLOBAL EQUITY PORTFOLIO: INTER Massachusetts
seeks capital growth. Under normal NATIONAL Financial Services
circumstances the Portfolio invests EQUITY Company
at least 80% of its net assets in
equity securities. The Portfolio may
invest in the securities of U.S. and
foreign issuers (including issuers
in emerging market countries). While
the Portfolio may invest its assets
in companies of any size, the
Portfolio generally focuses on
companies with relatively large
market capitalizations.
-----------------------------------------------------------------------
AST MFS GROWTH PORTFOLIO: seeks LARGE CAP Massachusetts
long-term capital growth and future, GROWTH Financial Services
rather than current income. Under Company
normal market conditions, the
Portfolio invests at least 80% of
its net assets in common stocks and
related securities, such as
preferred stocks, convertible
securities and depositary receipts.
The subadvisor focuses on investing
the Portfolio's assets in the stocks
of companies it believes to have
above-average earnings growth
potential compared to other
companies. The subadvisor uses a
"bottom up" as opposed to a "top
down" investment style in managing
the Portfolio.
-----------------------------------------------------------------------
24
INVESTMENT OBJECTIVES/POLICIES STYLE/ PORTFOLIO
TYPE ADVISOR/
SUBADVISOR
------------------------------------------------------------------------
AST MFS LARGE-CAP VALUE PORTFOLIO: LARGE-CAP Massachusetts
seeks capital appreciation. The VALUE Financial Services
Portfolio seeks to achieve its Company
investment objective by investing at
least 80% of its net assets in
issuers with large market
capitalizations of at least $5
billion at the time of purchase. The
Portfolio will invest primarily in
equity securities and may invest in
foreign securities. The subadviser
focuses on investing the Portfolio's
assets in the stocks of companies it
believes are undervalued compared to
their perceived worth (value
companies). The subadviser uses a
"bottom-up" investment approach to
buying and selling investments for
the Portfolio. Investments are
selected primarily based on
fundamental analysis of individual
issuers. Quantitative models that
systematically evaluate issuers may
also be considered
------------------------------------------------------------------------
AST MID-CAP VALUE PORTFOLIO: seeks MID CAP EARNEST
to provide capital growth by VALUE Partners, LLC;
investing primarily in WEDGE Capital
mid-capitalization stocks that Management L.L.P.
appear to be undervalued. The
Portfolio invests, under normal
circumstances, at least 80% of the
value of its net assets in
mid-capitalization companies.
Mid-capitalization companies are
generally those that have market
capitalizations, at the time of
purchase, within the market
capitalization range of companies
included in the Russell Midcap(R)
Value Index during the previous 12
months based on month-end data.
------------------------------------------------------------------------
AST MONEY MARKET PORTFOLIO: seeks FIXED Prudential
high current income and maintain INCOME Investment
high levels of liquidity. The Management, Inc.
Portfolio invests in high-quality
money market instruments and seeks
to maintain a stable net asset value
(NAV) of $1 per share.
------------------------------------------------------------------------
AST NEUBERGER BERMAN CORE BOND FIXED Neuberger Berman
PORTFOLIO: seeks to maximize total INCOME Fixed Income LLC
return consistent with the
preservation of capital. Under
normal circumstances the Portfolio
invests at least 80% of its
investable assets in bonds and other
debt securities. All of the debt
securities in which the Portfolio
invests will be investment grade
under normal circumstances.
------------------------------------------------------------------------
AST NEUBERGER BERMAN MID-CAP GROWTH MID CAP Neuberger Berman
PORTFOLIO: seeks capital growth. GROWTH Management LLC
Under normal market conditions, the
Portfolio invests at least 80% of
its net assets in the common stocks
of mid-capitalization companies.
Mid-capitalization companies are
those companies whose market
capitalization is within the range
of market capitalizations of
companies in the Russell Midcap(R)
Growth Index. Using fundamental
research and quantitative analysis,
the subadvisor looks for
fast-growing companies with
above-average sales and competitive
returns on equity relative to their
peers.
------------------------------------------------------------------------
AST NEUBERGER BERMAN/LSV MID-CAP MID CAP LSV Asset
VALUE PORTFOLIO: seeks capital VALUE Management;
growth. Under normal market Neuberger Berman
conditions, the Portfolio invests at Management LLC
least 80% of its net assets in the
common stocks of medium
capitalization companies. Companies
with market capitalizations that
fall within the range of the Russell
Midcap(R) Value Index at the time of
investment are considered medium
capitalization companies. Some of
the Portfolio's assets may be
invested in the securities of
large-cap companies as well as in
small-cap companies.
------------------------------------------------------------------------
AST NEW DISCOVERY ASSET ALLOCATION ASSET Bradford & Marzec,
PORTFOLIO (formerly AST American ALLOCA- LLC; Brown
Century Income & Growth Portfolio): TION Advisory, LLC;
seeks total return. Total return is C.S. McKee, LP;
comprised of capital appreciation EARNEST
and income. Under normal Partners, LLC;
circumstances, approximately 70% of Epoch Investment
the Portfolio's assets will be Partners, Inc.;
allocated to a combination of Security Investors,
domestic and international equity LLC; Thompson,
strategies and approximately 30% of Siegel & Walmsley
Portfolio's assets will be allocated LLC
to certain U.S. fixed-income
investment strategies and a
liquidity strategy. Depending upon
the Portfolio's ability to achieve
the necessary asset scale, the
Trust's ability to implement certain
legal agreements and custody
arrangements, and market, economic,
and financial conditions as of the
Portfolio's commencement of
operations, it may take several
weeks for the Portfolio's assets to
be fully invested in accordance with
its investment objective and
policies. During that time, it is
anticipated that all or a portion of
the Portfolio's assets will be
invested in high grade, short term
debt securities (both fixed and
floating rate), money market funds,
short-term bond funds,
exchange-traded funds, and/or index
futures contracts. A relatively long
initial investment period may
negatively affect the Portfolio's
investment return and ability to
achieve its investment objective.
------------------------------------------------------------------------
25
INVESTMENT OBJECTIVES/POLICIES STYLE/ PORTFOLIO
TYPE ADVISOR/
SUBADVISOR
-------------------------------------------------------------------------
AST PARAMETRIC EMERGING MARKETS INTER Parametric Portfolio
EQUITY PORTFOLIO: seeks long-term NATIONAL Associates LLC
capital appreciation. The Portfolio EQUITY
normally invests at least 80% of its
net assets in equity securities of
issuers (i) located in emerging
market countries, which are
generally those not considered to be
developed market countries, or (ii)
included (or considered for
inclusion) as emerging markets
issuers in one or more broad-based
market indices. Emerging market
countries are generally countries
not considered to be developed
market countries, and therefore not
included in the MSCI World Index.
The Portfolio seeks to employ a top-
down, disciplined and structured
investment process that emphasizes
broad exposure and diversification
among emerging market countries,
economic sectors and issuers.
-------------------------------------------------------------------------
AST PIMCO LIMITED MATURITY BOND FIXED Pacific Investment
PORTFOLIO: seeks to maximize total INCOME Management
return consistent with preservation Company LLC
of capital and prudent investment (PIMCO)
management. The Portfolio will
invest, under normal circumstances,
at least 80% of the value of its net
assets in fixed- income investments,
which may be represented by forwards
or derivatives such as options,
futures contracts, or swap
agreements. The average portfolio
duration normally varies within a
one-to-three year time-frame based
on the subadvisor's forecast of
interest rates. Portfolio holdings
are concentrated in areas of the
bond market (based on quality,
sector, interest rate or maturity)
that the subadvisor believes to be
relatively undervalued. The
Portfolio may invest up to 10% total
assets in non-investment grade bonds
which are commonly known as "junk
bonds".
-------------------------------------------------------------------------
AST PIMCO TOTAL RETURN BOND FIXED Pacific Investment
PORTFOLIO: seeks to maximize total INCOME Management
return consistent with preservation Company LLC
of capital and prudent investment (PIMCO)
management. The Portfolio will
invest, under normal circumstances,
at least 80% of the value of its net
assets in fixed income investments,
which may be represented by forwards
or derivatives such as options,
futures contracts, or swap
agreements. The average portfolio
duration normally varies within two
years (+/-) of the duration of the
Barclay's Capital U.S. Aggregate
Bond Index. Portfolio holdings are
concentrated in areas of the bond
market (based on quality, sector,
interest rate or maturity) that the
subadvisor believes to be relatively
undervalued. The Portfolio may
invest up to 10% total assets in
non-investment grade bonds which are
commonly known as "junk bonds".
-------------------------------------------------------------------------
AST PRESERVATION ASSET ALLOCATION ASSET Prudential
PORTFOLIO: seeks to obtain a total ALLOCA- Investments LLC;
return consistent with its specified TION Quantitative
level of risk. The Portfolio Management
primarily invests its assets in a Associates LLC
diversified portfolio of other
mutual funds, within the Advanced
Series Trust and certain affiliated
money market funds. Under normal
market conditions, the Portfolio
will devote approximately 35% of its
net assets to underlying portfolios
investing primarily in equity
securities (with a range of 27.5% to
42.5%), and 65% of its net assets to
underlying portfolios investing
primarily in debt securities and
money market instruments (with a
range of 57.5% to 72.5%). The
Portfolio is not limited to
investing exclusively in shares of
the underlying portfolios and may
invest in securities, exchange
traded funds (ETFs), and futures
contracts, swap agreements and other
financial and derivative instruments.
-------------------------------------------------------------------------
AST PRUDENTIAL CORE BOND PORTFOLIO: FIXED Prudential
seeks to maximize total return INCOME Investment
consistent with the long-term Management, Inc.
preservation of capital. The
Portfolio will invest, under normal
circumstances, at least 80% of its
net assets in intermediate and
long-term debt obligations and high
quality money market instruments.
The Portfolio will invest, under
normal circumstances, at least 80%
of its net assets in intermediate
and long-term debt obligations that
are rated investment grade by the
major ratings services, or if
unrated, considered to be of
comparable quality by the
subadvisor, and high quality money
market instruments. Likewise, the
Portfolio may invest up to 20% of
its net assets in
high-yield/high-risk debt securities
(commonly known as "junk bonds").
The Portfolio also may invest up to
20% of its total assets in debt
securities issued outside the U.S.
by U.S. or foreign issuers, whether
or not such securities are
denominated in the U.S. dollar.
-------------------------------------------------------------------------
26
INVESTMENT OBJECTIVES/POLICIES STYLE/ PORTFOLIO
TYPE ADVISOR/
SUBADVISOR
----------------------------------------------------------------------
AST QMA US EQUITY ALPHA PORTFOLIO: LARGE CAP Quantitative
seeks long term capital BLEND Management
appreciation. The Portfolio utilizes Associates LLC
a long/short investment strategy and
will normally invest at least 80% of
its net assets plus borrowings in
equity and equity related securities
of US issuers. The Portfolio seeks
to produce returns that exceed those
of its benchmark index, the Russell
1000(R), which is comprised of
stocks representing more than 90% of
the market cap of the US market and
includes the largest 1000 securities
in the Russell 3000(R) Index.
----------------------------------------------------------------------
AST QUANTITATIVE MODELING PORTFOLIO: ASSET Quantitative
seeks a high potential return while ALLOCA- Management
attempting to mitigate downside risk TION Associates LLC
during adverse market cycles. The
Portfolio operates as a
"fund-of-funds", meaning that the
Portfolio invests substantially all
of its assets in a combination of
other mutual funds. The assets of
the Portfolio are allocated to a
capital growth segment and a
fixed-income segment. Under normal
circumstances, approximately 75% of
the Portfolio's net assets
attributable to the capital growth
segment are invested in underlying
portfolios that invest primarily in
equity securities, while the
remaining 25% of the Portfolio's net
assets attributable to the capital
growth segment are invested in
underlying portfolios that invest
primarily in debt securities and
money market instruments. All of the
assets attributable to the
fixed-income segment are invested in
the AST Investment Grade Bond
Portfolio, which in turn invests at
least 80% of its assets in bonds.
Portfolio assets are normally
transferred between the capital
growth segment and the fixed-income
segment based upon the application
of a quantitative model to the
Portfolio's overall net asset value
(NAV) per share. In general terms,
the model seeks to transfer
Portfolio assets from the capital
growth segment to the fixed-income
segment when the Portfolio's NAV per
share experiences certain declines
and from the fixed- income segment
to the capital growth segment when
the Portfolio's NAV per share
experiences certain increases or
remains flat over certain periods of
time.
----------------------------------------------------------------------
AST SCHRODERS GLOBAL TACTICAL ASSET Schroder
PORTFOLIO (formerly AST CLS Growth ALLOCA Investment
Asset Allocation Portfolio): seeks TION Management North
to outperform its blended America Inc./
performance benchmark. The blended Schroder
benchmark is comprised of 45% Investment
Russell 3000, 12.5% MSCI EAFE (USD Management North
Hedged), 12.5% MSCI EAFE (Local), America Ltd.
and 30% Barclays Capital U.S.
Aggregate Bond Index. The Portfolio
is a multi asset-class fund that
allocates its assets among various
regions and countries throughout the
world, including the United States
(but in no less than three
countries). The subadvisors use
various investment strategies,
currency hedging, and a global
tactical asset allocation strategy
in order to help the Portfolio
achieve its investment objective.
Under normal circumstances,
approximately 70% of the Portfolio's
net assets are invested to provide
exposure to equity securities and
approximately 30% of its net assets
are invested to provide exposure to
fixed-income securities. Depending
on market conditions, such equity
exposure may range between 60-80% of
the Portfolio's net assets and such
fixed-income exposure may range
between 20-40% of its net assets.
----------------------------------------------------------------------
AST SCHRODERS MULTI-ASSET WORLD ASSET Schroder
STRATEGIES PORTFOLIO: seeks ALLOCA- Investment
long-term capital appreciation. The TION Management North
Portfolio seeks to achieve its America Inc./
objective through a flexible global Schroder
asset allocation approach. This Investment
approach entails investing in Management North
traditional asset classes, such as America Ltd.
equity and fixed-income investments,
and alternative asset classes, such
as investments in real estate,
commodities, currencies, private
equity, non-investment grade bonds,
Emerging Market Debt and absolute
return strategies. The subadvisors
seek to emphasize the management of
risk and volatility. Exposure to
different asset classes and
investment strategies will vary over
time based upon the subadvisor's
assessments of changing market,
economic, financial and political
factors and events.
----------------------------------------------------------------------
AST SMALL-CAP GROWTH PORTFOLIO: SMALL CAP Eagle Asset
seeks long-term capital growth. The GROWTH Management, Inc.;
Portfolio pursues its objective by Emerald Mutual
investing, under normal Fund Advisers
circumstances, at least 80% of the Trust
value of its assets in
small-capitalization companies.
Small-capitalization companies are
those companies with a market
capitalization, at the time of
purchase, no larger than the largest
capitalized company included in the
Russell 2000(R) Growth Index at the
time of the Portfolio's investment.
----------------------------------------------------------------------
27
INVESTMENT OBJECTIVES/POLICIES STYLE/ PORTFOLIO
TYPE ADVISOR/
SUBADVISOR
------------------------------------------------------------------------
AST SMALL-CAP VALUE PORTFOLIO: seeks SMALL CAP ClearBridge
to provide long-term capital growth VALUE Advisors, LLC; J.P.
by investing primarily in Morgan Investment
small-capitalization stocks that Management, Inc.;
appear to be undervalued. The Lee Munder Capital
Portfolio invests, under normal Group, LLC
circumstances, at least 80% of the
value of its net assets in small
capitalization stocks. Small
capitalization stocks are the stocks
of companies with market
capitalization that are within the
market capitalization range of the
Russell 2000(R) Value Index at the
time of purchase. Each subadvisor
expects to utilize different
investment strategies to achieve the
Portfolio's objective.
------------------------------------------------------------------------
AST T. ROWE PRICE ASSET ALLOCATION ASSET T. Rowe Price
PORTFOLIO: seeks a high level of ALLOCA Associates, Inc.
total return by investing primarily TION
in a diversified portfolio of equity
and fixed income securities. The
Portfolio normally invests
approximately 60% of its total
assets in equity securities and 40%
in fixed income securities. This mix
may vary over shorter time periods:
the equity portion may range between
50-70% and the fixed-income portion
may range between 30-50%. The
subadvisor concentrates common stock
investments in larger, more
established companies, but the
Portfolio may include small and
medium-sized companies with good
growth prospects. The fixed income
portion of the Portfolio will be
allocated among investment grade
securities, high yield or "junk"
bonds, emerging market securities,
foreign high quality debt securities
and cash reserves.
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AST T. ROWE PRICE EQUITY INCOME LARGE CAP T. Rowe Price
PORTFOLIO (formerly AST VALUE Associates, Inc.
AllianceBernstein Core Value
Portfolio): seeks substantial
dividend income as well as long-term
growth of capital through
investments in the common stocks of
established companies. The Portfolio
will normally invest at least 80% of
its net assets (including any
borrowings for investment purposes)
in common stocks, with 65% of net
assets (including any borrowings for
investment purposes) in
dividend-paying common stocks of
well-established companies. The
Portfolio will typically employ a
"value" approach in selecting
investments. T. Rowe Price's
research team will seek companies
that appear to be undervalued by
various measures and may be
temporarily out of favor but have
good prospects for capital
appreciation and dividend growth. In
selecting investments, T. Rowe Price
generally will look for companies in
the aggregate with an established
operating history, above-average
dividend yield relative to the S&P
500 Index, low price/earnings ratio
relative to the S&P 500 Index, a
sound balance sheet and other
positive financial characteristics,
and low stock price relative to a
company's underlying value as
measured by assets, cash flow, or
business franchises.
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AST T. ROWE PRICE GLOBAL BOND FIXED T. Rowe Price
PORTFOLIO: seeks to provide high INCOME Associates, Inc. /
current income and capital growth by T. Rowe Price
investing in high-quality foreign International Ltd
and U.S. dollar-denominated bonds. (TRPIL)
The Portfolio will normally invest
at least 80% of its total assets in
fixed income securities. The
Portfolio invests in all types of
bonds, including those issued or
guaranteed by U.S. or foreign
governments or their agencies and by
foreign authorities, provinces and
municipalities as well as investment
grade corporate bonds,
mortgage-related and asset- backed
securities, and high-yield bonds of
U.S. and foreign issuers. The
Portfolio generally invests in
countries where the combination of
fixed-income returns and currency
exchange rates appears attractive,
or, if the currency trend is
unfavorable, where the subadvisor
believes that the currency risk can
be minimized through hedging. The
Portfolio may also invest in
convertible securities, commercial
paper and bank debt and loan
participations. The Portfolio may
invest up to 20% of its assets in
the aggregate in below
investment-grade, high-risk bonds
("junk bonds") and emerging market
bonds. In addition, the Portfolio
may invest up to 30% of its assets
in mortgage-related (including
mortgage dollar rolls and
derivatives, such as collateralized
mortgage obligations and stripped
mortgage securities) and
asset-backed securities. The
Portfolio may invest in futures,
swaps and other derivatives in
keeping with its objective.
------------------------------------------------------------------------
28
INVESTMENT OBJECTIVES/POLICIES STYLE/ PORTFOLIO
TYPE ADVISOR/
SUBADVISOR
---------------------------------------------------------------------
AST T. ROWE PRICE LARGE-CAP GROWTH LARGE CAP T. Rowe Price
PORTFOLIO: seeks long-term growth of GROWTH Associates, Inc.
capital by investing predominantly
in the equity securities of a
limited number of large, carefully
selected, high-quality U.S.
companies that are judged likely to
achieve superior earnings growth.
The Portfolio takes a growth
approach to investment selection and
normally invests at least 80% of its
net assets in the common stocks of
large companies. Large companies are
defined as those whose market
capitalization is larger than the
median market capitalization of
companies in the Russell 1000 Growth
Index as of the time of purchase.
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AST T. ROWE PRICE NATURAL RESOURCES SPECIALTY T. Rowe Price
PORTFOLIO: seeks long-term capital Associates, Inc.
growth primarily through investing
in the common stocks of companies
that own or develop natural
resources (such as energy products,
precious metals and forest products)
and other basic commodities. The
Portfolio invests, under normal
circumstances, at least 80% of the
value of its assets in natural
resource companies. The Portfolio
may also invest in non-resource
companies with the potential for
growth. The Portfolio looks for
companies that have the ability to
expand production, to maintain
superior exploration programs and
production facilities, and the
potential to accumulate new
resources. Although the Portfolio is
primarily invested in U.S.
securities, up to 50% of total
assets also may be invested in
foreign securities.
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AST WELLINGTON MANAGEMENT HEDGED ASSET Wellington
EQUITY PORTFOLIO: seeks to ALLOCA Management
outperform a mix of 50% Russell 3000 TION Company, LLP
Index, 20% MSCI EAFE Index, and 30%
Treasury Bill Index over a full
market cycle by preserving capital
in adverse markets utilizing an
options strategy while maintaining
equity exposure to benefit from up
markets through investments in
Wellington Management's equity
investment strategies. The Portfolio
will use a broad spectrum of
Wellington Management's equity
investment strategies to invest in a
broadly diversified portfolio of
common stocks while also pursuing an
equity index option overlay
strategy. The equity index option
overlay strategy is designed to help
mitigate capital losses in adverse
market environments and employs a
put/spread collar to meet this goal.
The Portfolio will normally invest
at least 80% of its assets in common
stocks of small, medium and large
companies and may also invest up to
30% of its assets in equity
securities of foreign issuers and
non-dollar denominated securities.
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AST WESTERN ASSET CORE PLUS BOND FIXED Western Asset
PORTFOLIO: seeks to maximize total INCOME Management
return, consistent with prudent Company
investment management and liquidity
needs, by investing to obtain the
average duration specified for the
Portfolio. The Portfolio invests,
under normal circumstances, at least
80% of the value of its assets in
debt and fixed-income securities.
The Portfolio's current target
average duration is generally 2.5 to
7 years. The Portfolio pursues this
objective by investing in all major
fixed income sectors with a bias
towards non-Treasuries. The
Portfolio has the ability to invest
up to 20% in below investment grade
securities. Securities rated below
investment grade are commonly known
as "junk bonds" or "high yield"
securities.
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AST WESTERN ASSET EMERGING MARKETS FIXED Western Asset
DEBT PORTFOLIO: seeks to maximize INCOME Management
total return. The Portfolio pursues Company; Western
its objective, under normal market Asset Management
conditions, by investing at least Company Limited
80% of its assets in fixed-income
securities issued by governments,
government related entities and
corporations located in emerging
markets, and related instruments.
The Portfolio may invest without
limit in high yield debt securities
and related investments rated below
investment grade (that is,
securities rated below Baa/BBB), or,
if unrated, determined to be of
comparable credit quality by one of
the subadvisers. The Portfolio may
invest in Below-investment grade
securities are commonly referred to
as "junk bonds". The Western Asset
Emerging Markets Debt Portfolio also
may invest up to 50% of its assets
in non-U.S. dollar denominated fixed
income securities.
---------------------------------------------------------------------
LIMITATIONS WITH OPTIONAL BENEFITS
As a condition to your participating in certain optional benefits, we limit
the Investment Options to which you may allocate your Account Value. Broadly
speaking, we offer two groups of "Permitted Sub-accounts". Under the first
group (Group I), your allowable Investment Options are more limited, but you
are not subject to mandatory quarterly re-balancing. We call the second
29
group (Group II) our "Custom Portfolios Program." The Custom Portfolios
Program offers a larger menu of portfolios, but you are subject to certain
other restrictions. Specifically:
.. you must allocate at least 20% of your Account Value to certain fixed
income portfolios (currently, the AST PIMCO Total Return Bond Portfolio,
the AST Western Asset Core Plus Bond Portfolio, the AST Lord Abbett Core
Fixed Income Portfolio, the AST Neuberger Berman Core Bond Portfolio, and
the AST Prudential Core Bond Portfolio); and
.. you may allocate up to 80% in the portfolios listed in the table below; and
.. on each benefit quarter (or the next Valuation Day, if the quarter-end is
not a Valuation Day), we will automatically re-balance your Sub-accounts
used with this Program, so that the percentages devoted to each portfolio
remain the same as those in effect on the immediately preceding
quarter-end, subject to the predetermined mathematical formula inherent in
the benefit. Note that on the first quarter-end following your
participation in the Custom Portfolios Program, we will re-balance your
Sub-accounts so that the percentages devoted to each portfolio remain the
same as those in effect when you began the Custom Portfolios Program
(subject to the predetermined mathematical formula inherent in the
benefit); and
.. between quarter-ends, you may re-allocate your Account Value among the
Investment Options permitted within this category. If you reallocate, the
next quarterly rebalancing will restore the percentages to those of your
most recent reallocation; and
.. if you are already participating in the Custom Portfolios Program and add a
new benefit that also participates in this program, your rebalancing date
will continue to be based upon the quarterly anniversary of your initial
benefit election.
While those who do not participate in any optional benefit generally may
invest in any of the Investment Options described in the prospectus, only
those who participate in the optional benefits listed in Group II below may
participate in the Custom Portfolios Program. Please note that the Custom
Portfolios Program is not available with any of the Highest Daily Lifetime
Income 2.0 benefits. If you currently have elected an optional death benefit
and wish to elect a Highest Daily Lifetime Income 2.0 benefit, you may not
continue to invest under the Custom Portfolios Program. If you participate in
the Custom Portfolios Program, you may not participate in other Automatic
Rebalancing Programs. WE MAY MODIFY OR TERMINATE THE CUSTOM PORTFOLIOS PROGRAM
AT ANY TIME. ANY SUCH MODIFICATION OR TERMINATION WILL (I) BE IMPLEMENTED ONLY
AFTER WE HAVE NOTIFIED YOU IN ADVANCE, (II) NOT AFFECT THE GUARANTEES YOU HAD
ACCRUED UNDER THE OPTIONAL BENEFIT OR YOUR ABILITY TO CONTINUE TO PARTICIPATE
IN THOSE OPTIONAL BENEFITS, AND (III) NOT REQUIRE YOU TO TRANSFER ACCOUNT
VALUE OUT OF ANY PORTFOLIO IN WHICH YOU PARTICIPATED IMMEDIATELY PRIOR TO THE
MODIFICATION OR TERMINATION. If you are not participating in the Custom
Portfolios Program at the time of any modification or termination, or if you
voluntarily transfer your Account Value out of the Custom Portfolios Program
after any modification or termination, we may restrict your further
eligibility to participate in the Custom Portfolios Program.
In the following tables, we set forth the optional benefits that you may have
if you also participate in the Group I or Group II programs.
Group I: Allowable Benefit Allocations
Highest Daily Lifetime Income 2.0 AST Academic Strategies Asset Allocation
Highest Daily Lifetime Income 2.0 with Lifetime Income AST Advanced Strategies
Accelerator AST Balanced Asset Allocation
Spousal Highest Daily Lifetime Income 2.0 AST BlackRock Global Strategies
Highest Daily Lifetime Income 2.0 with Highest Daily Death AST Capital Growth Asset Allocation
Benefit AST CLS Moderate Asset Allocation
Spousal Highest Daily Lifetime Income 2.0 with Highest Daily AST FI Pyramis(R) Asset Allocation
Death Benefit AST First Trust Balanced Target
Highest Daily Lifetime Income AST First Trust Capital Appreciation Target
Highest Daily Lifetime Income with Lifetime Income Accelerator AST Franklin Templeton Founding Funds Allocation
Spousal Highest Daily Lifetime Income AST Horizon Moderate Asset Allocation
Highest Daily Lifetime 6 Plus AST J.P. Morgan Global Thematic
Highest Daily Lifetime 6 Plus with LIA AST JPMorgan Strategic Opportunities
Spousal Highest Daily Lifetime 6 Plus AST New Discovery Asset Allocation
GRO Plus II AST Preservation Asset Allocation
Highest Daily GRO II AST Schroders Global Tactical
Highest Anniversary Value Death Benefit AST Schroders Multi-Asset World Strategies
Combination 5% Roll-Up and HAV Death Benefit AST T. Rowe Price Asset Allocation
AST Wellington Management Hedged Equity
Group II: Custom Portfolios Program
Highest Daily Lifetime Income AST Academic Strategies Asset Allocation
Highest Daily Lifetime Income with Lifetime Income Accelerator AST Advanced Strategies
Spousal Highest Daily Lifetime Income AST Balanced Asset Allocation
Highest Daily Lifetime 6 Plus AST BlackRock Global Strategies
30
Highest Daily Lifetime 6 Plus with LIA AST BlackRock Value
Spousal Highest Daily Lifetime 6 Plus AST CLS Moderate Asset Allocation
GRO Plus II AST Capital Growth Asset Allocation
Highest Daily GRO II AST Cohen & Steers Realty
Highest Anniversary Value Death Benefit AST Federated Aggressive Growth
Combination 5% Roll-Up and HAV Death Benefit AST FI Pyramis(R) Asset Allocation
AST First Trust Balanced Target
AST First Trust Capital Appreciation Target
AST Franklin Templeton Founding Funds Allocation
AST Global Real Estate
AST Goldman Sachs Concentrated Growth
AST Goldman Sachs Large-Cap Value
AST Goldman Sachs Mid-Cap Growth
AST Goldman Sachs Small-Cap Value
AST High Yield
AST Horizon Moderate Asset Allocation
AST International Growth
AST International Value
AST Jennison Large-Cap Growth
AST Jennison Large-Cap Value
AST J.P. Morgan Global Thematic
AST JPMorgan International Equity
AST JPMorgan Strategic Opportunities
AST Large-Cap Value
AST Lord Abbett Core-Fixed Income
AST Marsico Capital Growth
AST MFS Global Equity
AST MFS Growth
AST MFS Large-Cap Value
AST Mid-Cap Value
AST Money Market
AST Neuberger Berman Core Bond
AST Neuberger Berman Mid-Cap Growth
AST Neuberger Berman/LSV Mid-Cap Value
AST New Discovery Asset Allocation
AST Parametric Emerging Markets Equity
AST PIMCO Limited Maturity Bond
AST PIMCO Total Return Bond
AST Preservation Asset Allocation
AST Prudential Core Bond
AST QMA US Equity Alpha
AST Schroders Global Tactical
AST Schroders Multi-Asset World Strategies
AST Small-Cap Growth
AST Small-Cap Value
AST T. Rowe Price Asset Allocation
AST T. Rowe Price Equity Income
AST T. Rowe Price Global Bond
AST T. Rowe Price Large-Cap Growth
AST T. Rowe Price Natural Resources
AST Wellington Management Hedged Equity
AST Western Asset Core Plus Bond
AST Western Asset Emerging Markets Debt
MARKET VALUE ADJUSTMENT OPTIONS
When you allocate your Account Value to an MVA Option, you earn a fixed rate
of interest over a set period of time called a Guarantee Period. There are two
types of MVA Options available under each Annuity - the Long-Term MVA Options
and the DCA MVA Options. We discuss each MVA Option below. In brief, under the
Long-Term MVA Options, you earn interest over a multi-year time period that
you have selected. Currently, the Guarantee Periods we offer are 3 years, 5
years, 7 years, and 10 years. We reserve the right to eliminate any or all of
these Guarantee Periods or offer Guarantee Periods of different durations.
Under the DCA MVA Options, you earn interest over a 6 month or 12 month period
while your Account Value in that option is systematically transferred monthly
to the Sub-accounts you have designated.
31
For the Long-Term MVA Option, a Guarantee Period for an MVA Option begins:
. when all or part of a Purchase Payment is allocated to that MVA Option;
. upon transfer of any of your Account Value to a Long-Term MVA Option for
that particular Guarantee Period; or
. when you "renew" an MVA Option into a new Guarantee Period.
RATES FOR MVA OPTIONS
We do not have a single method for determining the fixed interest rates for
the MVA Options. In general, the interest rates we offer for MVA Options will
reflect the investment returns available on the types of investments we make
to support our fixed rate guarantees. These investment types may include cash,
debt securities guaranteed by the United States government and its agencies
and instrumentalities, money market instruments, corporate debt obligations of
different durations, private placements, asset-backed obligations and
municipal bonds. In determining rates we also consider factors such as the
length of the Guarantee Period for the MVA Option, regulatory and tax
requirements, liquidity of the markets for the type of investments we make,
commissions, administrative and investment expenses, our insurance risks in
relation to the MVA Options, general economic trends and competition. We also
take into consideration mortality, expense, administration, profit and other
factors in determining the interest rates we credit to MVA Options, and
therefore, we credit lower interest rates due to the existence of these
factors than we otherwise would.
The interest rate credited to an MVA Option is the rate in effect when the
Guarantee Period begins and does not change during the Guarantee Period. The
rates are an effective annual rate of interest. We determine, in our sole
discretion, the interest rates for the various Guarantee Periods. At the time
that we confirm your MVA Option, we will advise you of the interest rate in
effect and the date your MVA Option matures. We may change the rates we credit
to new MVA Options at any time. To inquire as to the current rates for the MVA
Options, please call 1-888-PRU-2888. MVA Options may not be available in all
States and are subject to a minimum rate.
To the extent permitted by law, we may establish different interest rates for
MVA Options offered to a class of Owners who choose to participate in various
optional investment programs we make available. This may include, but is not
limited to, Owners who elect to use DCA MVA Options.
For any MVA Option, you will not be permitted to allocate or renew to the MVA
Option if the Guarantee Period associated with that MVA Option would end after
your Annuity Date. Thus, for example, we would not allow you to start a new
Guarantee Period of 5 years if the Owner/Annuitant were aged 94, because the 5
year period would end after the Latest Annuity Date.
MARKET VALUE ADJUSTMENT
With certain exceptions, if you transfer or withdraw Account Value from an MVA
Option prior to the end of the applicable Guarantee Period, you will be
subject to a Market Value Adjustment or "MVA". We assess an MVA (whether
positive or negative) upon:
. any surrender, partial withdrawal (including a systematic withdrawal,
Medically Related Surrender, or a withdrawal program under Sections
72(t) or 72(q) of the Code), or transfer out of an MVA Option made
outside the 30 days immediately preceding the maturity of the Guarantee
Period; and
. your exercise of the Free Look right under your Annuity, unless
prohibited by law.
We will NOT assess an MVA (whether positive or negative) in connection with
any of the following:
. partial withdrawals made to meet Required Minimum Distribution
requirements under the Code in relation to your Annuity or a required
distribution if your Annuity is held as a Beneficiary Annuity, but only
if the Required Minimum Distribution or required distribution from
Beneficiary Annuity is an amount that we calculate and is distributed
through a program that we offer;
. transfers or partial withdrawals from an MVA Option during the 30 days
immediately prior to the end of the applicable Guarantee Period,
including the Maturity Date of the MVA option;
. transfers made in accordance with our 6 or 12 Month DCA Program;
. when a Death Benefit is determined;
. deduction of a Annual Maintenance Fee for the Annuity;
. Annuitization under the Annuity; and
. transfers made pursuant to a mathematical formula used with an optional
benefit (e.g., Highest Daily Lifetime Income).
The amount of the MVA is determined according to the formulas set forth in
Appendix F. We use one formula for the Long-Term MVA Option and another
formula for the DCA MVA Option. In general, the amount of the MVA is dependent
on the difference between interest rates at the time your MVA Option was
established and current interest rates for the remaining Guarantee Period of
your MVA Option. For the Long-Term MVA Option, as detailed in the formula, we
essentially (i) divide the current interest rate you are receiving under the
Guarantee Period by the interest rate we are crediting for a Guarantee Period
equal in duration to the time remaining under the Guarantee Period (plus a
Liquidity Factor as defined below) and (ii) raise that quotient by a
mathematical power that represents the time remaining until the maturity of
the Guarantee Period. That result produces the MVA factor. The Liquidity
Factor is an element of the MVA formula currently equal to 0.0025 or 25 basis
points. It is an adjustment that is applied
32
when an MVA is assessed (regardless of whether the MVA is positive or
negative) and, relative to when no Liquidity Factor is applied, will reduce
the amount being surrendered or transferred from the MVA Option. If we have no
interest rate for a Guarantee Period equal in duration to the time remaining
under the Guarantee Period, we may use certain US Treasury interest rates to
calculate a proxy for that interest rate. All else being equal, the longer the
time remaining until the maturity of the MVA Option from which you are making
the withdrawal, the larger the mathematical power that is applied to the
quotient in (i) above, and thus the larger the MVA itself. The formula for the
DCA MVA Option works in a similar fashion, including the Liquidity Factor
described above, except that both interest rates used in the MVA formula are
derived directly from the Federal Reserve's "Constant Maturity (CMT) rate."
Under either formula, the MVA may be positive or negative, and a negative MVA
could result in a loss of interest previously earned as well as some portion
of your Purchase Payments.
LONG-TERM MVA OPTIONS
We offer Long-Term MVA Options, offering a range of durations. When you select
this option, your payment will earn interest at the established rate for the
applicable Guarantee Period. A new Long-Term MVA Option is established every
time you allocate or transfer money into a Long-Term MVA Option. You may have
money allocated in more than one Guarantee Period at the same time. This could
result in your money earning interest at different rates and each Guarantee
Period maturing at a different time. While the interest rates we credit to the
MVA Options may change from time to time, the minimum interest rate is what is
set forth in your Annuity.
We retain the right to limit the amount of Account Value that may be
transferred into a new or out of an existing a Long-Term MVA Option and/or to
require advance notice for transfers exceeding a specified amount. In
addition, we reserve the right to limit or restrict the availability of
certain Guarantee Periods from time to time.
DCA MVA OPTIONS
In addition to the Long-Term MVA Options, we offer DCA MVA Options that are
used with our 6 or 12 Month DCA Program. Amounts allocated to the DCA MVA
Options earn the declared rate of interest while the amount is transferred
over a 6 or 12 month period into the Sub-accounts that you have designated.
Because the interest we credit is applied against a balance that declines as
transfers are made periodically to the Subaccounts, you do not earn interest
on the full amount you allocated initially to the DCA MVA Options. A dollar
cost averaging program does not assure a profit, or protect against a loss.
For a complete description of our 6 or 12 month DCA Program, see the
applicable section of this prospectus within the section entitled "Managing
Your Account Value."
GUARANTEE PERIOD TERMINATION
An MVA Option ends on the earliest of (a) the "Maturity Date" of the Guarantee
Period (b) the date the entire amount in the MVA Option is withdrawn or
transferred (c) the Annuity Date (d) the date the Annuity is surrendered and
(e) the date as of which a Death Benefit is determined, unless the Annuity is
continued by a spousal Beneficiary. "Annuity Date" means the date on which we
apply your Unadjusted Account Value to the applicable annuity option and begin
the payout period. As discussed in the Annuity Options section, there is an
age by which you must begin receiving annuity payments, which we call the
"Latest Annuity Date."
We will notify you before the end of the Guarantee Period. You may elect to
have the value of the Long-Term MVA Option on its Maturity Date transferred to
any Investment Option, including any Long-Term MVA Option, we then make
available. If we do not receive instructions from you in Good Order at our
Service Office before the Maturity Date of the Long-Term MVA Option, regarding
how the Account Value in your maturing Long-Term MVA Option is to be
allocated, we will allocate the Account Value in the maturing Long-Term MVA
Option to the AST Money Market Sub-account, unless the Maturity Date is the
Annuity Date. We will not assess an MVA if you choose to renew an MVA Option
on its Maturity Date or transfer the Account Value to another Investment
Option on the Maturity Date (or at any time during the 30 days immediately
preceding the Maturity Date).
33
FEES, CHARGES AND DEDUCTIONS
In this section, we provide detail about the charges you incur if you own the
Annuity.
The charges under each Annuity are designed to cover, in the aggregate, our
direct and indirect costs of selling, administering and providing benefits
under each Annuity. They are also designed, in the aggregate, to compensate us
for the risks of loss we assume. If, as we expect, the charges that we collect
from the Annuities exceed our total costs in connection with the Annuities, we
will earn a profit. Otherwise we will incur a loss. For example, Pruco Life
may make a profit on the Insurance Charge if, over time, the actual costs of
providing the guaranteed insurance obligations and other expenses under an
Annuity are less than the amount we deduct for the Insurance Charge. To the
extent we make a profit on the Insurance Charge, such profit may be used for
any other corporate purpose.
The rates of certain of our charges have been set with reference to estimates
of the amount of specific types of expenses or risks that we will incur. In
general, a given charge under the Annuity compensates us for our costs and
risks related to that charge and may provide for a profit. However, it is
possible that with respect to a particular obligation we have under this
Annuity, we may be compensated not only by the charge specifically tied to
that obligation, but also from one or more other charges we impose.
With regard to charges that are assessed as a percentage of the value of the
Sub-accounts, please note that such charges are assessed through a reduction
to the Unit value of your investment in each Sub-account, and in that way
reduce your Account Value. A "Unit" refers to a share of participation in a
Sub-account used to calculate your Unadjusted Account Value prior to the
Annuity Date.
CONTINGENT DEFERRED SALES CHARGE ("CDSC"): The CDSC reimburses us for expenses
related to sales and distribution of the Annuity, including commissions,
marketing materials, other promotional expenses and, in the case of the X
Series, the cost of providing a Purchase Credit. We may deduct a CDSC if you
surrender your Annuity or when you make a partial withdrawal (except that
there is no CDSC on the C Series Annuity). The CDSC is calculated as a
percentage of your Purchase Payment (not including any Purchase Credit applied
on the X Series) being surrendered or withdrawn. The CDSC percentage varies
with the number of years that have elapsed since each Purchase Payment being
withdrawn was made. If a withdrawal is effective on the day before the
anniversary of the date that the Purchase Payment being withdrawn was made,
then the CDSC percentage as of the next following year will apply. The CDSC
percentages for the X Series, the B Series, and the L Series are shown under
"Summary of Contract Fees and Charges."
With respect to a partial withdrawal, we calculate the CDSC by assuming that
any available free withdrawal amount is taken out first (see "Free Withdrawal
Amounts" later in this prospectus). If the free withdrawal amount is not
sufficient, we then assume that partial withdrawals are taken from Purchase
Payments that have not been previously withdrawn, on a first-in, first-out
basis, and subsequently from any other Account Value in the Annuity (such as
gains or purchase credits). In a "gross" withdrawal, you request a specific
withdrawal amount, with the understanding that the amount you actually receive
is reduced by each applicable amount. In a "net" withdrawal, you request a
withdrawal for an exact dollar amount, with the understanding that any amount
deducted (e.g., for a CDSC) is taken from your remaining Unadjusted Account
Value. If you request a gross withdrawal, you may receive less than the
specified dollar amount, as any applicable CDSC and tax withholding would be
deducted from the amount you requested (although any MVA will not be applied
to the amount you receive, but instead will be applied to your Unadjusted
Account Value). If you request a net withdrawal, a larger amount may be
deducted from your Unadjusted Account Value in order for you to receive the
specified dollar amount after any applicable CDSC, MVA and tax withholding is
assessed. See "Free Withdrawal Amounts" below for further detail on net and
gross withdrawals, as well as how this might affect an optional living benefit
you may have. Please be aware that under the Highest Daily Lifetime Income
2.0, Highest Daily Lifetime Income and Highest Daily Lifetime 6 Plus suite of
benefits: (a) for a gross withdrawal, if the amount requested exceeds the
Annual Income Amount, the excess portion will be treated as Excess Income and
(b) for a net withdrawal, if the amount you receive plus the amount of the
CDSC deducted from your Unadjusted Account Value exceeds the Annual Income
Amount, the excess portion will be treated as Excess Income (which has
negative consequences under these optional benefits).
Upon surrender, we calculate a CDSC based on any Purchase Payments that have
not been withdrawn. The amount of such Purchase Payments could be greater than
your remaining Account Value. This could occur if you have made prior partial
withdrawals or if your Account Value has declined in value due to negative
market performance. Thus, for example, the CDSC could be greater than if it
were calculated as percentage of remaining Account Value.
We may waive any applicable CDSC under certain circumstances described herein.
TRANSFER FEE: Currently, you may make twenty free transfers between Investment
Options each Annuity Year. We may charge $10 for each transfer after the
twentieth in each Annuity Year. We do not consider transfers made as part of a
Dollar Cost Averaging, Automatic Rebalancing or Custom Portfolio Program when
we count the twenty free transfers. All transfers made on the same day will be
treated as one transfer. Renewals or transfers of Account Value from an MVA
Option within the 30 days
34
immediately preceding the end of its Guarantee Period are not subject to the
Transfer Fee and are not counted toward the twenty free transfers. Similarly,
transfers made under our 6 or 12 Month DCA Program and transfers made pursuant
to a formula used with an optional benefit are not subject to the Transfer Fee
and are not counted toward the twenty free transfers. Transfers made through
any electronic method or program we specify are not counted toward the twenty
free transfers. The transfer fee is deducted pro rata from all Sub-accounts in
which you maintain Account Value immediately subsequent to the transfer.
ANNUAL MAINTENANCE FEE: Prior to Annuitization, we deduct an Annual
Maintenance Fee. The Annual Maintenance Fee is equal to $50 or 2% of your
Unadjusted Account Value, whichever is less. This fee will be deducted
annually on the anniversary of the Issue Date of your Annuity or, if you
surrender your Annuity during the Annuity Year, the fee is deducted at the
time of surrender unless the surrender is taken within 30 days of most
recently assessed Annual Maintenance Fee. The fee is taken out first from the
Sub-accounts pro rata, and then from the MVA Options (if the amount in the
Sub-accounts is insufficient to pay the fee). The Annual Maintenance Fee is
only deducted if the sum of the Purchase Payments at the time the fee is
deducted is less than $100,000. We do not impose the Annual Maintenance Fee
upon Annuitization (unless Annuitization occurs on an Annuity anniversary), or
the payment of a Death Benefit. For Beneficiaries that elect the Beneficiary
Continuation Option, the Annual Maintenance Fee is the lesser of $30 or 2% of
Unadjusted Account Value and is only assessed if the Unadjusted Account Value
is less than $25,000 at the time the fee is assessed. The amount of the Annual
Maintenance Fee may differ in certain states.
TAX CHARGE: Some states and some municipalities charge premium taxes or
similar taxes on annuities that we are required to pay. The amount of tax will
vary from jurisdiction to jurisdiction and is subject to change. We reserve
the right to deduct the tax either when Purchase Payments are received, upon
surrender or upon Annuitization. If deducted upon Annuitization, we would
deduct the tax from your Unadjusted Account Value. The Tax Charge is designed
to approximate the taxes that we are required to pay and is assessed as a
percentage of Purchase Payments, Surrender Value, or Account Value as
applicable. The Tax Charge currently ranges up to 3.5%. We may assess a charge
against the Sub-accounts and the MVA Options equal to any taxes which may be
imposed upon the Separate Accounts. "Surrender Value" refers to the Account
Value (which includes the effect of any MVA) less any applicable CDSC, any
applicable tax charges, any charges assessable as a deduction from the Account
Value for any optional benefits provided by rider or endorsement, and any
Annual Maintenance Fee.
We will pay company income taxes on the taxable corporate earnings created by
this Annuity. While we may consider company income taxes when pricing our
products, we do not currently include such income taxes in the tax charges you
pay under the Annuity. We will periodically review the issue of charging for
these taxes, and we may charge for these taxes in the future. We reserve the
right to impose a charge for federal income taxes if we determine, in our sole
discretion, that we will incur a tax as a result of the operation of the
Separate Account.
In calculating our corporate income tax liability, we may derive certain
corporate income tax benefits associated with the investment of company
assets, including Separate Account assets, which are treated as company assets
under applicable income tax law. These benefits reduce our overall corporate
income tax liability. We do not pass these tax benefits through to holders of
the Separate Account annuity contracts because (i) the contract Owners are not
the Owners of the assets generating these benefits under applicable income tax
law and (ii) we do not currently include company income taxes in the tax
charges you pay under the Annuity.
INSURANCE CHARGE: We deduct an Insurance Charge daily based on the annualized
rate shown in the "Summary of Contract Fees and Charges." The charge is
assessed against the assets allocated to the Sub-accounts. The Insurance
Charge is the combination of the Mortality & Expense Risk Charge and the
Administration Charge. The Insurance Charge is intended to compensate Pruco
Life for providing the insurance benefits under each Annuity, including each
Annuity's basic Death Benefit that provides guaranteed benefits to your
Beneficiaries even if your Account Value declines, and the risk that persons
we guarantee annuity payments to will live longer than our assumptions. The
charge also covers administrative costs associated with providing the Annuity
benefits, including preparation of the contract and prospectus, confirmation
statements, annual account statements and annual reports, legal and accounting
fees as well as various related expenses. Finally, the charge covers the risk
that our assumptions about the mortality risks and expenses under each Annuity
are incorrect and that we have agreed not to increase these charges over time
despite our actual costs. Each Annuity has a different Insurance Charge during
the first 9 Annuity Years. However, for the L Series, X Series, and C Series,
on the Valuation Day immediately following the 9/th/ Annuity Anniversary, the
Insurance Charge drops to 1.30% annually (the B Series Insurance Charge is a
constant 1.30%).
OPTIONAL BENEFITS FOR WHICH WE ASSESS A CHARGE: If you elect to purchase
optional benefits, we will deduct an additional charge. For some optional
benefits, the charge is assessed against your Account Value allocated to the
Sub-accounts. These charges are included in the daily calculation of the Unit
price for each Sub-account. For certain other optional benefits, such as
Highest Daily Lifetime Income 2.0, the charge is assessed against the greater
of the Unadjusted Account Value and the Protected Withdrawal Value and is
taken out of the Sub-accounts quarterly. Please refer to the section entitled
"Summary of Contract Fees and Charges" for the list of charges for each
optional benefit.
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SETTLEMENT SERVICE CHARGE: If your Beneficiary takes the death benefit under a
Beneficiary Continuation Option, the Insurance Charge no longer applies.
However, we then begin to deduct a Settlement Service Charge which is assessed
daily against the assets allocated to the Sub-accounts and is equal to an
annualized charge of 1.00%.
FEES AND EXPENSES INCURRED BY THE PORTFOLIOS: Each portfolio incurs total
annualized operating expenses comprised of an investment management fee, other
expenses and any distribution and service (12b-1) fees or short sale expenses
that may apply. These fees and expenses are reflected daily by each portfolio
before it provides Pruco Life with the net asset value as of the close of
business each Valuation Day. More detailed information about fees and expenses
can be found in the prospectuses for the portfolios.
MVA OPTION CHARGES
No specific fees or expenses are deducted when determining the rates we credit
to an MVA Option. However, for some of the same reasons that we deduct the
Insurance Charge against the Account Value allocated to the Sub-accounts, we
also take into consideration mortality, expense, administration, profit and
other factors in determining the interest rates we credit to an MVA Option.
ANNUITY PAYMENT OPTION CHARGES
If you select a fixed payment option, the amount of each fixed payment will
depend on the Unadjusted Account Value of your Annuity when you elected to
annuitize. There is no specific charge deducted from these payments; however,
the amount of each annuity payment reflects assumptions about our insurance
expenses. Also, a tax charge may apply.
EXCEPTIONS/REDUCTIONS TO FEES AND CHARGES
We may reduce or eliminate certain fees and charges or alter the manner in
which the particular fee or charge is deducted. For example, we may reduce the
amount of any CDSC or the length of time it applies, reduce or eliminate the
amount of the Annual Maintenance Fee or reduce the portion of the total
Insurance Charge that is deducted as an Administration Charge. We will not
discriminate unfairly between Annuity purchasers if and when we reduce any
fees and charges.
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PURCHASING YOUR ANNUITY
REQUIREMENTS FOR PURCHASING THE ANNUITY
INITIAL PURCHASE PAYMENT: An initial Purchase Payment is considered the first
Purchase Payment received by us in Good Order. This is the payment that issues
your Annuity. All subsequent Purchase Payments allocated to the Annuity will
be considered Additional Purchase Payments. Unless we agree otherwise and
subject to our rules, you must make a minimum initial Purchase Payment as
follows: $1,000 for the B Series and $10,000 for the X Series, L Series, and C
Series. However, if you decide to make payments under a systematic investment
or an electronic funds transfer program, we may accept a lower initial
Purchase Payment provided that, within the first Annuity Year, your subsequent
Purchase Payments plus your initial Purchase Payment total the minimum initial
Purchase Payment amount required for the Annuity purchased.
We must approve any initial and additional Purchase Payments where the total
amount of Purchase Payments equals $1,000,000 or more with respect to this
Annuity and any other annuities you are purchasing from us (or that you
already own) and/or our affiliates. To the extent allowed by state law, that
required approval also will apply to a proposed change of owner of the
Annuity, if as a result of the ownership change, total Purchase Payments would
equal or exceed that $1 million threshold. WE MAY APPLY CERTAIN LIMITATIONS,
RESTRICTIONS, AND/OR UNDERWRITING STANDARDS AS A CONDITION OF OUR ISSUANCE OF
AN ANNUITY AND/OR ACCEPTANCE OF PURCHASE PAYMENTS. Applicable laws designed to
counter terrorists and prevent money laundering might, in certain
circumstances, require us to block an Annuity Owner's ability to make certain
transactions, and thereby refuse to accept Purchase Payments or requests for
transfers, partial withdrawals, total withdrawals, death benefits, or income
payments until instructions are received from the appropriate regulator. We
also may be required to provide additional information about you and your
Annuity to government regulators.
SPECULATIVE INVESTING: Do not purchase this Annuity if you, anyone acting on
your behalf, and/or anyone providing advice to you plan to use it, or any of
its riders, for speculation, arbitrage, viatication or any other type of
collective investment scheme now or at any time prior to termination of the
Annuity. Your Annuity may not be traded on any stock exchange or secondary
market. By purchasing this Annuity, you represent and warrant that you are not
using this Annuity, or any of its riders, for speculation, arbitrage,
viatication or any other type of collective investment scheme.
Currently, we will not issue an Annuity, permit changes in ownership or allow
assignments to certain ownership types, including but not limited to:
corporations, partnerships, endowments and grantor trusts with multiple
grantors. Further, we will only issue an Annuity, allow changes of ownership
and/or permit assignments to certain ownership types if the Annuity is held
exclusively for the benefit of the designated annuitant. These rules are
subject to state law. Additionally, we will not permit election or re-election
of any optional death benefit or optional living benefit by certain ownership
types. We may issue an Annuity in ownership structures where the annuitant is
also the participant in a Qualified or Non-Qualified employer sponsored plan
and the Annuity represents his or her segregated interest in such plan. We
reserve the right to further limit, restrict and/or change to whom we will
issue an Annuity in the future, to the extent permitted by state law. Further,
please be aware that we do not provide administration for employer-sponsored
plans and may also limit the number of plan participants that elect to use our
Annuity as a funding vehicle.
Except as noted below, Purchase Payments must be submitted by check drawn on a
U.S. bank, in U.S. dollars, and made payable to Pruco Life. Purchase Payments
may also be submitted via 1035 exchange or direct transfer of funds. Under
certain circumstances, Purchase Payments may be transmitted to Pruco Life via
wiring funds through your Financial Professional's broker-dealer firm.
Additional Purchase Payments may also be applied to your Annuity under an
electronic funds transfer, an arrangement where you authorize us to deduct
money directly from your bank account. We may reject any payment if it is
received in an unacceptable form. Our acceptance of a check is subject to our
ability to collect funds.
Once we accept your application, we invest your Purchase Payment in your
Annuity according to your instructions. You can allocate Purchase Payments to
one or more available Investment Options. Investment restrictions will apply
if you elect optional benefits.
AGE RESTRICTIONS: Unless we agree otherwise and subject to our rules, each of
the Owner(s) and Annuitant(s) must not be older than a maximum issue age as of
the Issue Date of the Annuity as follows: age 80 for the X Series and age 85
for the B Series, L Series, and C Series. No additional Purchase Payments will
be permitted after age 85 for any of the Annuities. If you purchase a
Beneficiary Annuity, the maximum issue age is 70 based on the Key Life. The
availability and level of protection of certain optional benefits may vary
based on the age of the oldest Owner (or Annuitant, if entity owned) on the
Issue Date of the Annuity or the date of the Owner's death. In addition, the
broker-dealer firm through which you are purchasing an Annuity may impose a
younger maximum issue age than what is described above - check with the
broker-dealer firm for details. The "Annuitant" refers to the natural person
upon whose life annuity payments payable to the Owner are based.
ADDITIONAL PURCHASE PAYMENTS: If allowed by applicable state law, you may make
additional Purchase Payments, provided that the payment is at least $100 (we
impose a $50 minimum for electronic funds transfer ("EFT") purchases). We may
amend this Purchase Payment minimum, and/or limit the Investment Options to
which you may direct Purchase Payments. You may make
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additional Purchase Payments, unless the Annuity is held as a Beneficiary
Annuity, at any time before the earlier of the Annuity Date and (i) for
Annuities that are not entity-owned, the oldest Owner's 86/th/ birthday or
(ii) for entity-owned Annuities, the Annuitant's 86/th/ birthday. However,
Purchase Payments are not permitted after the Account Value is reduced to
zero. WE MAY LIMIT OR REJECT ANY PURCHASE PAYMENT, BUT WOULD DO SO ONLY ON A
NON-DISCRIMINATORY BASIS. Depending on the tax status of your Annuity (e.g.,
if you own the Annuity through an IRA), there may be annual contribution
limits dictated by applicable law. Please see the Tax Considerations section
for additional information on these contribution limits.
Each additional Purchase Payment will be allocated to the Investment Options
according to the instructions you provide with such Purchase Payment. You may
not provide allocation instructions that apply to more than one additional
Purchase Payment. Thus, if you have not provided allocation instructions with
a particular additional Purchase Payment, we will allocate the Purchase
Payment on a pro rata basis to the Sub-accounts in which your Account Value is
then allocated, excluding Sub-accounts to which you may not electively
allocate Account Value.
If you have elected to participate in the 6 or 12 Month DCA Program, your
initial Purchase Payment will be applied to your chosen program. Each time you
make an additional Purchase Payment, you will need to elect a new 6 or 12
Month DCA Program for that additional Purchase Payment. If you do not provide
such instructions, we will allocate that additional Purchase Payment on a pro
rata basis to the Sub-accounts in which your Account Value is then allocated,
excluding Sub-accounts to which you may not electively allocate Account Value.
Additionally, if your initial Purchase Payment is funded from multiple sources
(e.g., a transfer of assets/1035 exchange) then the total amount that you have
designated to fund your annuity will be treated as the initial Purchase
Payment for purposes of your participation in the 6 or 12 Month DCA Program.
PURCHASE CREDITS UNDER THE X SERIES
As detailed below, we apply a "Purchase Credit" to your Annuity's Account
Value with respect to certain Purchase Payments you make under the X Series
Annuity. The Purchase Credit is equal to a percentage of each Purchase
Payment. To determine the amount of the Purchase Credit, we multiply the
amount of the Purchase Payment by the applicable Purchase Credit percentage.
With respect to Purchase Payments (of any amount) received during Annuity
Years 1 through 4, the credit percentage will equal 6%, so long as the oldest
Owner (or Annuitant, if entity owned) of the Annuity is younger than 82 at the
time the Purchase Payment is made. If the oldest Owner (or Annuitant, if
entity owned) is aged 82-85 at the time the Purchase Payment (of any amount)
is made, the credit percentage will equal 3% during Annuity Years 1-4. With
respect to Purchase Payments received on the fourth anniversary of the Issue
Date and thereafter, regardless of the Owner or Annuitant's age, the credit
percentage will be 0%.
Each Purchase Credit is allocated to your Account Value at the time the
Purchase Payment is applied to your Account Value. The amount of the Purchase
Credit is allocated to the Investment Options in the same ratio as the
applicable Purchase Payment is applied.
We do not consider the Purchase Credit as an "investment in the contract" for
income tax purposes.
EXAMPLE OF APPLYING THE PURCHASE CREDIT
INITIAL PURCHASE PAYMENT
Assume you are 65 years old and you make an initial Purchase Payment of
$450,000. We would apply a 6.0% Purchase Credit to your Purchase Payment and
allocate the amount of the Purchase Credit ($27,000 = $450,000 X .06) to your
Account Value in the proportion that your Purchase Payment is allocated.
RECAPTURE OF PURCHASE CREDITS. The amount of any Purchase Credit applied to
your X Series Account Value can be recaptured by Pruco Life under certain
circumstances:
. any Purchase Credit applied to your Account Value on Purchase Payments
made within the period beginning 12 months prior to the Owner's date of
death and ending on the date of Due Proof of Death will be recaptured.
We do not currently recapture any Purchase Credits at the time of
spousal assumption of the Annuity.
. the amount available under the medically-related surrender portion of
the Annuity will not include the amount of any Purchase Credit
associated with any Purchase Payments made within 12 months of the date
the medically-related surrender is received in Good Order at our Service
Office; and
. if you Free Look your Annuity, the amount returned to you will not
include the amount of any Purchase Credit.
The amount we recapture will equal the Purchase Credit, without adjustment up
or down for investment performance. Therefore, any gain on the Purchase Credit
amount will not be recaptured. But if there was a loss on the Purchase Credit,
the amount we recapture will still equal the amount of the Purchase Credit.
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DESIGNATION OF OWNER, ANNUITANT, AND BENEFICIARY
OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS: We will ask you to name the
Owner(s), Annuitant and one or more Beneficiaries for your Annuity.
. Owner: Each Owner holds all rights under the Annuity. You may name up to
two Owners in which case all ownership rights are held jointly.
Generally, joint Owners are required to act jointly; however, if each
Owner provides us with an instruction that we find acceptable, we will
permit each Owner to act independently on behalf of both Owners. All
information and documents that we are required to send you will be sent
to the first named Owner. Co-ownership by entity Owners or an entity
Owner and an individual is not permitted. Refer to the Glossary of Terms
for a complete description of the term "Owner." Prior to Annuitization,
there is no right of survivorship (other than any spousal continuance
right that may be available to a surviving spouse).
. Annuitant: The Annuitant is the person upon whose life we make annuity
payments. You must name an Annuitant who is a natural person. We do not
accept a designation of joint Annuitants during the Accumulation Period.
In limited circumstances and where allowed by law, we may allow you to
name one or more "Contingent Annuitants" with our prior approval.
Generally, a Contingent Annuitant will become the Annuitant if the
Annuitant dies before the Annuity Date. Please refer to the discussion
of "Considerations for Contingent Annuitants" in the Tax Considerations
section of the prospectus. For Beneficiary Annuities, instead of an
Annuitant there is a "Key Life" which is used to determine the annual
required distributions.
. Beneficiary: The Beneficiary is the person(s) or entity you name to
receive the Death Benefit. Your Beneficiary designation should be the
exact name of your Beneficiary, not only a reference to the
Beneficiary's relationship to you. If you use a class designation in
lieu of designating individuals (e.g. "surviving children"), we will pay
the class of Beneficiaries as determined at the time of your death and
not the class of Beneficiaries that existed at the time the designation
was made. If no Beneficiary is named, the Death Benefit will be paid to
you or your estate. For Beneficiary Annuities, instead of a Beneficiary,
the term "Successor" is used. If an Annuity is co-owned by spouses, we
will assume that the sole primary Beneficiary is the surviving spouse
that was named as the co-Owner, unless you elect an alternative
Beneficiary designation.
Your right to make certain designations may be limited if your Annuity is to
be used as an IRA, Beneficiary Annuity or other "qualified" investment that is
given beneficial tax treatment under the Code. You should seek competent tax
advice on the income, estate and gift tax implications of your designations.
"BENEFICIARY" ANNUITY
You may purchase an Annuity if you are a Beneficiary of an account that was
owned by a decedent, subject to the following requirements. You may transfer
the proceeds of the decedent's account into one of the Annuities described in
this prospectus and receive distributions that are required by the tax laws.
This transfer option is not available if the proceeds are being transferred
from an annuity issued by us or one of our affiliates and the annuity offers a
"Beneficiary Continuation Option".
Upon purchase, the Annuity will be issued in the name of the decedent for your
benefit. You must take required distributions at least annually, which we will
calculate based on the applicable life expectancy in the year of the
decedent's death, using Table 1 in IRS Publication 590. We do not assess a
CDSC (if applicable) on distributions from your Annuity if you are required by
law to take such distributions from your Annuity at the time it is taken,
provided the amount withdrawn is the amount we calculate and is paid out
through a program of systematic withdrawals that we make available.
For IRAs and Roth IRAs, distributions must begin by December 31 of the year
following the year of the decedent's death. If you are the surviving spouse
Beneficiary, distributions may be deferred until the decedent would have
attained age 70 1/2, however if you choose to defer distributions, you are
responsible for complying with the distribution requirements under the Code,
and you must notify us when you would like distributions to begin. For
additional information regarding the tax considerations applicable to
Beneficiaries of an IRA or Roth IRA, see "Required Distributions Upon Your
Death for Qualified Annuity Contracts" in the Tax Considerations section of
this prospectus.
For non-qualified Annuities, distributions must begin within one year of the
decedent's death. For additional information regarding the tax considerations
applicable to Beneficiaries of a non-qualified Annuity see "Required
Distributions Upon Your Death for Nonqualified Annuity Contracts" in the Tax
Considerations section of this prospectus.
You may take withdrawals in excess of your required distributions, however
such withdrawals may be subject to the Contingent Deferred Sales Charge. Any
withdrawals you take count toward the required distribution for the year. All
applicable charges will be assessed against your Annuity, such as the
Insurance Charge and the Annual Maintenance Fee.
The Annuity provides a basic Death Benefit upon death, and you may name
"successors" who may either receive the Death Benefit as a lump sum or
continue receiving distributions after your death under the Beneficiary
Continuation Option.
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Please note the following additional limitations for a Beneficiary Annuity:
.. No additional Purchase Payments are permitted. You may only make a one-time
initial Purchase Payment transferred to us directly from another annuity or
eligible account. You may not make your Purchase Payment as an indirect
rollover, or combine multiple assets or death benefits into a single
contract as part of this Beneficiary Annuity.
.. You may not elect any optional living or death benefits.
.. You may not annuitize the Annuity; no annuity options are available.
.. You may participate only in the following programs: Auto-Rebalancing,
Dollar Cost Averaging (but not the 6 or 12 Month DCA Program), or
Systematic Withdrawals.
.. You may not assign or change ownership of the Annuity, and you may not
change or designate another life upon which distributions are based. A
Beneficiary Annuity may not be co-owned.
.. If the Annuity is funded by means of transfer from another Beneficiary
Annuity with another company, we require that the sending company or the
beneficial Owner provide certain information in order to ensure that
applicable required distributions have been made prior to the transfer of
the contract proceeds to us. We further require appropriate information to
enable us to accurately determine future distributions from the Annuity.
Please note we are unable to accept a transfer of another Beneficiary
Annuity where taxes are calculated based on an exclusion amount or an
exclusion ratio of earnings to original investment. We are also unable to
accept a transfer of an annuity that has annuitized.
.. The beneficial Owner of the Annuity can be an individual, grantor trust,
or, for an IRA or Roth IRA, a qualified trust. In general, a qualified
trust (1) must be valid under state law; (2) must be irrevocable or became
irrevocable by its terms upon the death of the IRA or Roth IRA Owner; and
(3) the Beneficiaries of the trust who are Beneficiaries with respect to
the trust's interest in this Annuity must be identifiable from the trust
instrument and must be individuals. A qualified trust may be required to
provide us with a list of all Beneficiaries to the trust (including
contingent and remainder Beneficiaries with a description of the conditions
on their entitlement), all of whom must be individuals, as of
September 30/th/ of the year following the year of death of the IRA or Roth
IRA Owner, or date of Annuity application if later. The trustee may also be
required to provide a copy of the trust document upon request. If the
beneficial Owner of the Annuity is a grantor trust, distributions must be
based on the life expectancy of the grantor. If the beneficial Owner of the
Annuity is a qualified trust, distributions must be based on the life
expectancy of the oldest Beneficiary under the trust.
.. If this Beneficiary Annuity is transferred to another company as a tax-free
exchange with the intention of qualifying as a Beneficiary annuity with the
receiving company, we may require certifications from the receiving company
that required distributions will be made as required by law.
.. If you are transferring proceeds as Beneficiary of an annuity that is owned
by a decedent, we must receive your transfer request at least 45 days prior
to your first or next required distribution. If, for any reason, your
transfer request impedes our ability to complete your required distribution
by the required date, we will be unable to accept your transfer request.
RIGHT TO CANCEL
You may cancel (or "Free Look") your Annuity for a refund by notifying us in
Good Order or by returning the Annuity to our Service Office or to the
representative who sold it to you within 10 days after you receive it (or such
other period as may be required by applicable law). The Annuity can be mailed
or delivered either to us, at our Service Office, or to the representative who
sold it to you. Return of the Annuity by mail is effective on being
postmarked, properly addressed and postage prepaid. Unless required by
applicable law, the amount of the refund will equal the Account Value as of
the Valuation Day we receive the returned Annuity at our Service Office or the
cancellation request in Good Order, plus any fees or tax charges deducted from
the Purchase Payment. However, where we are required by applicable law to
return Purchase Payments, we will return the greater of Account Value and
Purchase Payments. With respect to the X Series, if you return your Annuity,
we will not return any Purchase Credits we applied to your Annuity based on
your Purchase Payments. If you had Account Value allocated to any MVA Option
upon your exercise of the Free Look, we will, to the extent allowed by
applicable state law, calculate any applicable MVA with a zero "liquidity
factor". See the section of this prospectus entitled "Market Value Adjustment
Options."
SCHEDULED PAYMENTS DIRECTLY FROM A BANK ACCOUNT
You can make additional Purchase Payments to your Annuity by authorizing us to
deduct money directly from your bank account and applying it to your Annuity,
unless the Annuity is held as a Beneficiary Annuity. Investment restrictions
will apply if you elect optional benefits. No additional Purchase Payments are
permitted if you have elected the Beneficiary Annuity. We may suspend or
cancel electronic funds transfer privileges if sufficient funds are not
available from the applicable financial institution on any date that a
transaction is scheduled to occur.
SALARY REDUCTION PROGRAMS
These types of programs are only available with certain types of qualified
investments. If your employer sponsors such a program, we may agree to accept
periodic Purchase Payments through a salary reduction program as long as the
allocations are not directed to the MVA Options.
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MANAGING YOUR ANNUITY
CHANGE OF OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS
In general, you may change the Owner, Annuitant and Beneficiary designations
by sending us a request in Good Order, which will be effective upon receipt at
our Service Office. However, if the Annuity is held as a Beneficiary Annuity,
the Owner may not be changed and you may not designate another Key Life upon
which distributions are based. As of the Valuation Day we receive an ownership
change, including an assignment, any automated investment or withdrawal
programs will be canceled. The new Owner must submit the applicable program
enrollment if they wish to participate in such a program. Where allowed by
law, such changes will be subject to our acceptance. Any change we accept is
subject to any transactions processed by us before we receive the notice of
change at our Service Office. Some of the changes we will not accept include,
but are not limited to:
.. a new Owner subsequent to the death of the Owner or the first of any
co-Owners to die, except where a spouse-Beneficiary has become the Owner as
a result of an Owner's death;
.. a new Annuitant subsequent to the Annuity Date if the annuity option
includes a life contingency;
.. a new Annuitant prior to the Annuity Date if the Owner is an entity;
.. a new Owner such that the new Owner is older than the age for which we
would then issue the Annuity as of the effective date of such change,
unless the change of Owner is the result of spousal continuation;
.. any permissible designation change if the change request is received at our
Service Office after the Annuity Date;
.. a new Owner or Annuitant that is a certain ownership type, including but
not limited to corporations, partnerships, endowments, and grantor trusts
with multiple grantors; and
.. a new Annuitant for a contract issued to a grantor trust where the new
Annuitant is not the grantor of the trust.
In general, you may change the Owner, Annuitant, and Beneficiary designations
as indicated above, and also may assign the Annuity. WE WILL ALLOW CHANGES OF
OWNERSHIP AND/OR ASSIGNMENTS ONLY IF THE ANNUITY IS HELD EXCLUSIVELY FOR THE
BENEFIT OF THE ANNUITANT OR CONTINGENT ANNUITANT. WE RESERVE THE RIGHT TO
REJECT ANY PROPOSED CHANGE OF OWNER, ANNUITANT, OR BENEFICIARY, AS WELL AS ANY
PROPOSED ASSIGNMENT OF THE ANNUITY. WE WILL IMPLEMENT THIS RIGHT ON A
NON-DISCRIMINATORY BASIS AND TO THE EXTENT ALLOWED BY STATE LAW, BUT ARE NOT
OBLIGATED TO PROCESS YOUR REQUEST WITHIN ANY PARTICULAR TIME FRAME. There are
restrictions on designation changes when you have elected certain optional
benefits.
DEATH BENEFIT SUSPENSION UPON CHANGE OF OWNER OR ANNUITANT. If there is a
change of Owner or Annuitant, the change may affect the amount of the Death
Benefit. See the Death Benefits section of this prospectus for additional
details.
SPOUSAL DESIGNATIONS
If an Annuity is co-owned by spouses, we will assume that the sole primary
Beneficiary is the surviving spouse that was named as the co-Owner unless you
elect an alternative Beneficiary designation.
Certain spousal rights under the contract, and our administration of such
spousal rights and related tax reporting comport with our understanding of the
Defense of Marriage Act (which defines a "marriage" as a legal union between a
man and a woman and a "spouse" as a person of the opposite sex). Depending on
the state in which your annuity is issued, we may offer certain spousal
benefits to civil union couples, domestic partners or same-sex marriages. You
should be aware, however, that federal tax law does not recognize civil union
couples, domestic partners or marriage spouses of the same sex. Therefore, we
cannot permit a same-sex civil union partner, domestic partner or spouse to
continue the annuity within the meaning of the tax law upon the death of the
first partner under the annuity's "spousal continuance" provision. Please note
there may be federal tax consequences at the death of the first same-sex civil
union partner, domestic partner or spouse. Civil union couples, domestic
partners and spouses of the same sex should consider that limitation before
selecting a spousal benefit under the annuity.
CONTINGENT ANNUITANT
Generally, if an Annuity is owned by an entity and the entity has named a
Contingent Annuitant, the Contingent Annuitant will become the Annuitant upon
the death of the Annuitant, and no Death Benefit is payable. Unless we agree
otherwise, the Annuity is only eligible to have a Contingent Annuitant
designation if the entity which owns the Annuity is (1) a plan described in
Internal Revenue Code Section 72(s)(5)(A)(i) (or any successor Code section
thereto); (2) an entity described in Code Section 72(u)(1) (or any successor
Code section thereto); or (3) a Custodial Account established to hold
retirement assets for the benefit of the natural person Annuitant pursuant to
the provisions of Section 408(a) of the Internal Revenue Code (or any
successor Code section thereto) ("Custodial Account").
Where the Annuity is held by a Custodial Account, the Contingent Annuitant
will not automatically become the Annuitant upon the death of the Annuitant.
Upon the death of the Annuitant, the Custodial Account will have the choice,
subject to our rules, to either elect to receive the Death Benefit or elect to
continue the Annuity. If the Custodial Account elects to continue the Annuity,
the Death Benefit payable will equal the Death Benefit described in spousal
continuation section of the Death Benefits section of this prospectus.
See the section above entitled "Spousal Designations" for more information
about how the Annuity can be continued by a Custodial Account.
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MANAGING YOUR ACCOUNT VALUE
There are several programs we administer to help you manage your Account
Value, as described in this section.
DOLLAR COST AVERAGING PROGRAMS
We offer Dollar Cost Averaging Programs during the Accumulation Period. In
general, Dollar Cost Averaging allows you to systematically transfer an amount
periodically from one Sub-account to one or more other Sub-accounts. You can
choose to transfer earnings only, principal plus earnings or a flat dollar
amount. You may elect a Dollar Cost Averaging program that transfers amounts
monthly, quarterly, semi-annually, or annually from Sub-accounts (if you make
no selection, we will effect transfers on a monthly basis). In addition, you
may elect the 6 or 12 Month DCA Program described below.
There is no guarantee that Dollar Cost Averaging will result in a profit or
protect against a loss in a declining market.
6 OR 12 MONTH DOLLAR COST AVERAGING PROGRAM (THE "6 OR 12 MONTH DCA PROGRAM")
The 6 or 12 Month DCA Program is subject to our rules at the time of election
and may not be available in conjunction with other programs and benefits we
make available. We may discontinue, modify or amend this program from time to
time. The 6 or 12 Month DCA Program may not be available in all states or with
certain benefits or programs. Currently, the DCA MVA Options are not available
in the States of Iowa and Oregon.
CRITERIA FOR PARTICIPATING IN THE PROGRAM
.. If you have elected to participate in the 6 or 12 Month DCA Program, your
initial Purchase Payment will be applied to your chosen program. Each time
you make an additional Purchase Payment, you will need to elect a new 6 or
12 Month DCA Program for that additional Purchase Payment. If you do not
provide such instructions, we will allocate that additional Purchase
Payment on a pro rata basis to the Sub-accounts in which your Account Value
is then allocated, excluding Sub-accounts to which you may not electively
allocate Account Value. Additionally, if your initial Purchase Payment is
funded from multiple sources (e.g., a transfer of assets/1035 exchange)
then the total amount that you have designated to fund your annuity will be
treated as the initial Purchase Payment for purposes of your participation
in the 6 or 12 Month DCA Program.
.. You may only allocate Purchase Payments to the DCA MVA Options. You may not
transfer Account Value into this program. To institute a program, you must
allocate at least $2,000 to the DCA MVA Options.
.. As part of your election to participate in the 6 or 12 Month DCA Program,
you specify whether you want 6 or 12 monthly transfers under the program.
We then set the monthly transfer amount, by dividing the Purchase Payment
you have allocated to the DCA MVA Options by the number of months. For
example, if you allocated $6,000, and selected a 6 month DCA Program, we
would transfer $1,000 each month (with the interest earned added to the
last payment). We will adjust the monthly transfer amount if, during the
transfer period, the amount allocated to the DCA MVA Options is reduced. In
that event, we will re-calculate the amount of each remaining transfer by
dividing the amount in the DCA MVA Option (including any interest) by the
number of remaining transfers. If the recalculated transfer amount is below
the minimum transfer required by the program, we will transfer the
remaining amount from the DCA MVA Option on the next scheduled transfer and
terminate the program.
.. We impose no fee for your participation in the 6 or 12 Month DCA Program.
.. You may cancel the DCA Program at any time. If you do, we will transfer any
remaining amount held within the DCA MVA Options according to your
instructions, subject to any applicable MVA. If you do not provide any such
instructions, we will transfer any remaining amount held in the DCA MVA
Options on a pro rata basis to the Sub-accounts in which you are invested
currently, excluding any Sub-accounts to which you are not permitted to
electively allocate or transfer Account Value. If any such Sub-account is
no longer available, we may allocate the amount that would have been
applied to that Sub-account to the AST Money Market Sub-account.
.. We credit interest to amounts held within the DCA MVA Options at the
applicable declared rates. We credit such interest until the earliest of
the following (a) the date the entire amount in the DCA MVA Option has been
transferred out; (b) the date the entire amount in the DCA MVA Option is
withdrawn; (c) the date as of which any Death Benefit payable is
determined, unless the Annuity is continued by a spouse Beneficiary (in
which case we continue to credit interest under the program); or (d) the
Annuity Date.
.. The interest rate earned in a DCA MVA Option will be no less than the
minimum guaranteed interest rate. We may, from time to time, declare new
interest rates for new Purchase Payments that are higher than the minimum
guaranteed interest rate. Please note that the interest rate that we apply
under the 6 or 12 Month DCA Program is applied to a declining balance.
Therefore, the dollar amount of interest you receive will decrease as
amounts are systematically transferred from the DCA MVA Option to the
Sub-accounts, and the effective interest rate earned will therefore be less
than the declared interest rate.
DETAILS REGARDING PROGRAM TRANSFERS
.. Transfers made under this program are not subject to any MVA.
.. Any partial withdrawals, transfers, or fees deducted from the DCA MVA
Options will reduce the amount in the DCA MVA Options. If you have only one
6 or 12 Month DCA Program in operation, withdrawals, transfers, or fees may
be deducted from the DCA MVA Options associated with that program. You may,
however, have more than one 6 or 12 Month DCA Program
42
operating at the same time (so long as any such additional 6 or 12 Month
DCA Program is of the same duration). For example, you may have more than
one 6 month DCA Program running, but may not have a 6 month Program running
simultaneously with a 12 month Program.
.. 6 or 12 Month DCA transfers will begin on the date the DCA MVA Option is
established (unless modified to comply with state law) and on each month
following until the entire principal amount plus earnings is transferred.
We do not count transfers under the 6 or 12 Month DCA Program against the
number of free transfers allowed under your Annuity.
.. The minimum transfer amount is $100, although we will not impose that
requirement with respect to the final amount to be transferred under the
program.
.. If you are not participating in an optional benefit, we will make transfers
under the 6 or 12 month DCA Program to the Sub-accounts that you specified
upon your election of the Program. If you are participating in any optional
benefit, we will allocate amounts transferred out of the DCA MVA Options in
the following manner: (a) if you are participating in the Custom Portfolios
Program, we will allocate to the Sub-accounts in accordance with the rules
of that program (b) if you are not participating in the Custom Portfolios
Program, we will make transfers under the 6 or 12 Month DCA Program to the
Sub-accounts that you specified upon your election of the 6 or 12 Month DCA
Program, provided those instructions comply with the allocation
requirements for the optional benefit and (c) whether or not you
participate in the Custom Portfolios Program, no portion of our monthly
transfer under the 6 or 12 Month DCA Program will be directed initially to
the AST Investment Grade Bond Portfolio Sub-account used with the optional
benefit (although the DCA MVA Option is treated as a "Permitted
Sub-account" for purposes of transfers made by any predetermined
mathematical formula associated with the optional benefit).
.. If you are participating in an optional benefit and also are participating
in the 6 or 12 Month DCA Program, and the predetermined mathematical
formula under the benefit dictates a transfer from the Permitted
Sub-accounts to the applicable AST Investment Grade Bond Portfolio
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
transferred from the DCA MVA Options associated with the 6 or 12 Month DCA
Program. Amounts transferred from the DCA MVA Options under the formula
will be taken on a last-in, first-out basis, without the imposition of a
market value adjustment.
.. If you are participating in one of our automated withdrawal programs (e.g.,
Systematic Withdrawals), we may include within that withdrawal program
amounts held within the DCA MVA Options. If you have elected any optional
living benefit, any withdrawals will be taken on a pro rata basis from your
Sub-accounts and the DCA MVA Options. Such withdrawals will be assessed any
applicable MVA.
AUTOMATIC REBALANCING PROGRAMS
During the Accumulation Period, we offer Automatic Rebalancing among the
Sub-accounts you choose. The "Accumulation Period" refers to the period of
time from the Issue Date through the last Valuation Day immediately preceding
the Annuity Date. You can choose to have your Account Value rebalanced
monthly, quarterly, semi-annually, or annually. On the appropriate date, the
Sub-accounts you choose are rebalanced to the allocation percentages you
requested. With Automatic Rebalancing, we transfer the appropriate amount from
the "overweighted" Sub-accounts to the "underweighted" Sub-accounts to return
your allocations to the percentages you request. For example, over time the
performance of the Sub-accounts will differ, causing your percentage
allocations to shift. You may make additional transfers; however, the
Automatic Rebalancing program will not reflect such transfers unless we
receive instructions from you indicating that you would like to adjust the
program. There is no minimum Account Value required to enroll in Automatic
Rebalancing. All rebalancing transfers as part of an Automatic Rebalancing
program are not included when counting the number of transfers each year
toward the maximum number of free transfers. We do not deduct a charge for
participating in an Automatic Rebalancing program. Participation in the
Automatic Rebalancing program may be restricted if you are enrolled in certain
other optional programs. Sub-accounts that are part of a Systematic Withdrawal
program or Dollar Cost Averaging program will be excluded from an Automatic
Rebalancing program.
If you are participating in an optional living benefit (such as Highest Daily
Lifetime Income 2.0) that makes transfers under a predetermined mathematical
formula, and you have opted for automatic rebalancing, you should be aware
that: (a) the AST bond portfolio used as part of the predetermined
mathematical formula will not be included as part of automatic rebalancing and
(b) the operation of the formula may result in the rebalancing not conforming
to the percentage allocations that you specified originally as part of your
Automatic Rebalancing Program.
FINANCIAL PROFESSIONAL PERMISSION TO FORWARD TRANSACTION INSTRUCTIONS
Unless you direct otherwise, your Financial Professional may forward
instructions regarding the allocation of your Account Value, and request
financial transactions involving Investment Options. IF YOUR FINANCIAL
PROFESSIONAL HAS THIS AUTHORITY, WE DEEM THAT ALL SUCH TRANSACTIONS THAT ARE
DIRECTED BY YOUR FINANCIAL PROFESSIONAL WITH RESPECT TO YOUR ANNUITY HAVE BEEN
AUTHORIZED BY YOU. You will receive a confirmation of any financial
transaction involving the purchase or sale of Units of your Annuity. You must
contact us immediately if and when you revoke such authority. We will not be
responsible for acting on instructions from your Financial Professional until
we receive notification of the revocation of such person's authority. We may
also suspend, cancel or limit these authorizations at any time. In addition,
we may restrict the Investment Options available for transfers or allocation
of Purchase Payments by such Financial Professional. We will notify you and
your Financial Professional if we implement any such restrictions or
prohibitions.
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PLEASE NOTE: Contracts managed by your Financial Professional also are subject
to the restrictions on transfers between Investment Options that are discussed
in the section below entitled "RESTRICTIONS ON TRANSFERS BETWEEN INVESTMENT
OPTIONS." We may also require that your Financial Professional transmit all
financial transactions using the electronic trading functionality available
through our Internet website (www.prudentialannuities.com). Limitations that
we may impose on your Financial Professional under the terms of an
administrative agreement (e.g., a custodial agreement) do not apply to
financial transactions requested by an Owner on their own behalf, except as
otherwise described in this prospectus.
RESTRICTIONS ON TRANSFERS BETWEEN INVESTMENT OPTIONS
During the Accumulation Period you may transfer Account Value between
Investment Options subject to the restrictions outlined below. Transfers are
not subject to taxation on any gain. We do not currently require a minimum
amount in each Sub-account you allocate Account Value to at the time of any
allocation or transfer. Although we do not currently impose a minimum transfer
amount, we reserve the right to require that any transfer be at least $50.
Transfers under this Annuity consist of those you initiate or those made under
a systematic program, such as the 6 or 12 Month DCA Program, another dollar
cost averaging program, an asset rebalancing program, or pursuant to a
mathematical formula required as part of an optional benefit (e.g., Highest
Daily Lifetime Income). The transfer restrictions discussed in this section
apply only to the former type of transfer (i.e., a transfer that you initiate).
Once you have made 20 transfers among the Sub-accounts during an Annuity Year,
we will accept any additional transfer request during that year only if the
request is submitted to us in writing with an original signature and otherwise
is in Good Order. For purposes of this 20 transfer limit, we (i) do not view a
facsimile transmission as a "writing", (ii) will treat multiple transfer
requests submitted on the same Valuation Day as a single transfer, and
(iii) do not count any transfer that solely involves the Sub-account
corresponding to the AST Money Market Portfolio or an MVA Option, or any
transfer that involves one of our systematic programs, such as automated
withdrawals.
Frequent transfers among Sub-accounts in response to short-term fluctuations
in markets, sometimes called "market timing," can make it very difficult for a
portfolio manager to manage a portfolio's investments. Frequent transfers may
cause the portfolio to hold more cash than otherwise necessary, disrupt
management strategies, increase transaction costs, or affect performance. In
light of the risks posed to Owners and other investors by frequent transfers,
we reserve the right to limit the number of transfers in any Annuity Year for
all existing or new Owners and to take the other actions discussed below. We
also reserve the right to limit the number of transfers in any Annuity Year or
to refuse any transfer request for an Owner or certain Owners if: (a) we
believe that excessive transfer activity (as we define it) or a specific
transfer request or group of transfer requests may have a detrimental effect
on Unit Values or the share prices of the portfolios; or (b) we are informed
by a portfolio (e.g., by the portfolio's portfolio manager) that the purchase
or redemption of shares in the portfolio must be restricted because the
portfolio believes the transfer activity to which such purchase and redemption
relates would have a detrimental effect on the share prices of the affected
portfolio. Without limiting the above, the most likely scenario where either
of the above could occur would be if the aggregate amount of a trade or trades
represented a relatively large proportion of the total assets of a particular
portfolio. In furtherance of our general authority to restrict transfers as
described above, and without limiting other actions we may take in the future,
we have adopted the following specific restrictions:
.. With respect to each Sub-account (other than the AST Money Market
Sub-account), we track amounts exceeding a certain dollar threshold that
were transferred into the Sub-account. If you transfer such amount into a
particular Sub-account, and within 30 calendar days thereafter transfer
(the "Transfer Out") all or a portion of that amount into another
Sub-account, then upon the Transfer Out, the former Sub-account becomes
restricted (the "Restricted Sub-account"). Specifically, we will not permit
subsequent transfers into the Restricted Sub-account for 90 calendar days
after the Transfer Out if the Restricted Sub-account invests in a
non-international portfolio, or 180 calendar days after the Transfer Out if
the Restricted Sub-account invests in an international portfolio. For
purposes of this rule, we (i) do not count transfers made in connection
with one of our systematic programs, such as auto-rebalancing or under a
predetermined mathematical formula used with an optional living benefit;
(ii) do not count any transfer that solely involves the AST Money Market
Portfolio or an MVA Option; and (iii) do not categorize as a transfer the
first transfer that you make after the Issue Date, if you make that
transfer within 30 calendar days after the Issue Date. Even if an amount
becomes restricted under the foregoing rules, you are still free to redeem
the amount from your Annuity at any time.
.. We reserve the right to effect transfers on a delayed basis for all
Annuities. That is, we may price a transfer involving the Sub-accounts on
the Valuation Day subsequent to the Valuation Day on which the transfer
request was received. Before implementing such a practice, we would issue a
separate written notice to Owners that explains the practice in detail.
If we deny one or more transfer requests under the foregoing rules, we will
inform you or your Financial Professional promptly of the circumstances
concerning the denial.
There are contract Owners of different variable annuity contracts that are
funded through the same Separate Account that may not be subject to the
above-referenced transfer restrictions and, therefore, might make more
numerous and frequent transfers than contract Owners who are subject to such
limitations. Finally, there are contract Owners of other variable annuity
contracts or
44
variable life contracts that are issued by Pruco Life as well as other
insurance companies that have the same underlying mutual fund portfolios
available to them. Since some contract Owners are not subject to the same
transfer restrictions, unfavorable consequences associated with such frequent
trading within the underlying mutual fund (e.g., greater portfolio turnover,
higher transaction costs, or performance or tax issues) may affect all
contract Owners. Similarly, while contracts managed by a Financial
Professional are subject to the restrictions on transfers between Investment
Options that are discussed above, if the Financial Professional manages a
number of contracts in the same fashion unfavorable consequences may be
associated with management activity since it may involve the movement of a
substantial portion of an underlying mutual fund's assets which may affect all
contract Owners invested in the affected options. Apart from
jurisdiction-specific and contract differences in transfer restrictions, we
will apply these rules uniformly (including contracts managed by a Financial
Professional) and will not waive a transfer restriction for any Owner.
ALTHOUGH OUR TRANSFER RESTRICTIONS ARE DESIGNED TO PREVENT EXCESSIVE
TRANSFERS, THEY ARE NOT CAPABLE OF PREVENTING EVERY POTENTIAL OCCURRENCE OF
EXCESSIVE TRANSFER ACTIVITY. The portfolios have adopted their own policies
and procedures with respect to excessive trading of their respective shares,
and we reserve the right to enforce any such current or future policies and
procedures. The prospectuses for the portfolios describe any such policies and
procedures, which may be more or less restrictive than the policies and
procedures we have adopted. Under SEC rules, we are required to: (1) enter
into a written agreement with each portfolio or its principal underwriter or
its transfer agent that obligates us to provide to the portfolio promptly upon
request certain information about the trading activity of individual contract
Owners (including an Annuity Owner's TIN number), and (2) execute instructions
from the portfolio to restrict or prohibit further purchases or transfers by
specific contract Owners who violate the excessive trading policies
established by the portfolio. In addition, you should be aware that some
portfolios may receive "omnibus" purchase and redemption orders from other
insurance companies or intermediaries such as retirement plans. The omnibus
orders reflect the aggregation and netting of multiple orders from individual
Owners of variable insurance contracts and/or individual retirement plan
participants. The omnibus nature of these orders may limit the portfolios in
their ability to apply their excessive trading policies and procedures. In
addition, the other insurance companies and/or retirement plans may have
different policies and procedures or may not have any such policies and
procedures because of contractual limitations. For these reasons, we cannot
guarantee that the portfolios (and thus contract Owners) will not be harmed by
transfer activity relating to other insurance companies and/or retirement
plans that may invest in the portfolios.
A portfolio also may assess a short-term trading fee (redemption fee) in
connection with a transfer out of the Sub-account investing in that portfolio
that occurs within a certain number of days following the date of allocation
to the Sub-account. Each portfolio determines the amount of the short-term
trading fee and when the fee is imposed. The fee is retained by or paid to the
portfolio and is not retained by us. The fee will be deducted from your
Account Value, to the extent allowed by law. At present, no portfolio has
adopted a short-term trading fee.
45
ACCESS TO ACCOUNT VALUE
TYPES OF DISTRIBUTIONS AVAILABLE TO YOU
During the Accumulation Period you can access your Account Value through
partial withdrawals, systematic withdrawals, and where required for tax
purposes, Required Minimum Distributions. You can also surrender your Annuity
at any time. Depending on your instructions, we may deduct a portion of the
Account Value being withdrawn or surrendered as a CDSC. If you surrender your
Annuity, in addition to any CDSC, we may deduct the Annual Maintenance Fee,
any Tax Charge that applies and the charge for any optional benefits and may
impose an MVA. Certain amounts may be available to you each Annuity Year that
are not subject to a CDSC. These are called "Free Withdrawals." Unless you
notify us differently as permitted, partial withdrawals are taken pro rata
(i.e. "pro rata" meaning that the percentage of each Investment Option
withdrawn is the same percentage that the Investment Option bears to the total
Account Value). Each of these types of distributions is described more fully
below.
If you participate in any Lifetime Guaranteed Minimum Withdrawal Benefit, and
you take a withdrawal deemed to be Excess Income that brings your Unadjusted
Account Value to zero, both the benefit and the Annuity itself will terminate.
TAX IMPLICATIONS FOR DISTRIBUTIONS FROM NON-QUALIFIED ANNUITIES
PRIOR TO ANNUITIZATION
A distribution prior to Annuitization is deemed to come first from any "gain"
in your Annuity and second as a return of your "cost basis", if any.
Distributions from your Annuity are generally subject to ordinary income
taxation on the amount of any investment gain unless the distribution
qualifies as a non-taxable exchange or transfer. If you take a distribution
prior to the taxpayer's age 59 1/2, you may be subject to a 10% penalty in
addition to ordinary income taxes on any gain. You may wish to consult a
professional tax advisor for advice before requesting a distribution.
DURING THE ANNUITIZATION PERIOD
During the Annuitization period, a portion of each annuity payment is taxed as
ordinary income at the tax rate you are subject to at the time of the payment.
The Code and regulations have "exclusionary rules" that we use to determine
what portion of each annuity payment should be treated as a return of any cost
basis you have in your Annuity. Once the cost basis in your Annuity has been
distributed, the remaining annuity payments are taxable as ordinary income.
The cost basis in your Annuity may be based on the cost basis from a prior
contract in the case of a 1035 exchange or other qualifying transfer.
There may also be tax implications on distributions from qualified Annuities.
See "Tax Considerations" for information about qualified Annuities and for
additional information about non-qualified Annuities.
FREE WITHDRAWAL AMOUNTS
You can make a full or partial withdrawal from any of the Annuities during the
Accumulation Period, although a CDSC, MVA, and tax consequences may apply.
There is no CDSC with respect to the C Series. A CDSC may apply to the X
Series, B Series, and L Series, but each Annuity offers a "Free Withdrawal"
amount that applies only to partial withdrawals. The Free Withdrawal amount is
the amount that can be withdrawn from your Annuity each Annuity Year without
the application of any CDSC. The Free Withdrawal amount during each Annuity
Year is equal to 10% of all Purchase Payments (excluding Purchase Credits)
that are currently subject to a CDSC. Withdrawals made within an Annuity Year
reduce the Free Withdrawal amount available for the remainder of the Annuity
Year. If you do not make a withdrawal during an Annuity Year, you are not
allowed to carry over the Free Withdrawal amount to the next Annuity Year.
With respect to the C Series, because any withdrawal is free of a CDSC, the
concept of "free withdrawal" is not applicable.
. The Free Withdrawal amount is not available if you choose to surrender
your Annuity. Amounts withdrawn as a Free Withdrawal do not reduce the
amount of CDSC that may apply upon a subsequent withdrawal or surrender
of your Annuity.
. You can also make partial withdrawals in excess of the Free Withdrawal
amount. The minimum partial withdrawal you may request is $100.
EXAMPLE. This example assumes that no withdrawals have previously been taken.
On January 3, 2012, to purchase your B Series Annuity, you make an initial
Purchase Payment of $20,000.
On January 3, 2013, you make a subsequent Purchase Payment to your B Series
Annuity of $10,000.
. Because in Annuity Year 1 your initial Purchase Payment of $20,000 is
still within the CDSC schedule (see "Annuity Owner Transaction
Expenses"), your Free Withdrawal amount in Annuity Year 1 equals $20,000
X 10%, or $2,000.
. Because in Annuity Year 2 both your initial Purchase Payment of $20,000
and your subsequent Purchase Payment of $10,000 are still within the
CDSC schedule (see "Annuity Owner Transaction Expenses"), your Free
Withdrawal amount in Annuity Year 2 equals $20,000 X 10%, plus $10,000 X
10%, or $2,000 + $1,000 for a total of $3,000.
46
To determine if a CDSC applies to partial withdrawals, we:
1. First determine what, if any, amounts qualify as a Free Withdrawal. These
amounts are not subject to the CDSC.
2. Next determine what, if any, remaining amounts are withdrawals of Purchase
Payments. Amounts in excess of the Free Withdrawal amount will be treated
as withdrawals of Purchase Payments unless all Purchase Payments have been
previously withdrawn. These amounts may be subject to the CDSC. Purchase
Payments are withdrawn on a first-in, first-out basis. We withdraw your
oldest Purchase Payments first so that the lowest CDSC will apply to the
amount withdrawn.
3. Withdraw any remaining amounts from any other Account Value. These amounts
are not subject to the CDSC.
You may request a "gross" withdrawal, in which you ask for a specific
withdrawal amount, with the understanding that the amount you actually receive
is reduced by each applicable amount. If you request a gross withdrawal, you
may receive less than the specified dollar amount, as any applicable CDSC and
tax withholding would be deducted from the amount you requested (although any
MVA will not be applied to the amount you receive, but instead will be applied
to your Unadjusted Account Value). In a "net" withdrawal, you request a
withdrawal for an exact dollar amount, with the understanding that any amount
deducted (e.g., for a CDSC) is taken from your remaining Unadjusted Account
Value. If you do not provide instruction on how you want the withdrawal
processed, we will process the withdrawal as a gross withdrawal. We will
deduct the partial withdrawal from your Unadjusted Account Value in accordance
with your instructions, although if you are participating in an optional
living benefit, your withdrawal must be taken pro rata from each of your
Investment Options. For purposes of calculating the applicable portion to
deduct from the MVA Options, the Unadjusted Account Value in all your MVA
Options is deemed to be in one Investment Option. If you provide no
instructions, then (a) we will take the withdrawal from your Sub-accounts and
MVA Options in the same proportion that each such Investment Option represents
to your total Unadjusted Account Value; (b) with respect to MVA Options with
different amounts of time remaining until maturity, we take the withdrawal
from the MVA Option with the shortest remaining duration, followed by the MVA
Option with the next-shortest remaining duration (if needed to satisfy the
withdrawal request) and so forth; (c) with respect to multiple MVA Options
that have the same duration remaining until maturity, we take the withdrawal
first from the MVA Option with the shortest overall Guarantee Period and
(d) with respect to multiple MVA Options that have both the same Guarantee
Period length and duration remaining until the end of the Guarantee Period, we
take the withdrawal pro rata from each such MVA Option.
PLEASE BE AWARE THAT ALTHOUGH A GIVEN PARTIAL WITHDRAWAL MAY QUALIFY AS A FREE
WITHDRAWAL FOR PURPOSES OF NOT INCURRING A CDSC, THE AMOUNT OF THE WITHDRAWAL
COULD EXCEED THE ANNUAL INCOME AMOUNT UNDER ONE OF THE HIGHEST DAILY LIFETIME
INCOME 2.0, HIGHEST DAILY LIFETIME INCOME OR HIGHEST DAILY LIFETIME 6 PLUS
BENEFITS (OR THE LIA AMOUNT, UNDER HIGHEST DAILY LIFETIME INCOME 2.0 WITH LIA,
HIGHEST DAILY LIFETIME INCOME WITH LIA OR HIGHEST DAILY LIFETIME 6 PLUS WITH
LIA). IN THAT SCENARIO, THE PARTIAL WITHDRAWAL WOULD BE DEEMED "EXCESS INCOME"
- THEREBY REDUCING YOUR ANNUAL INCOME AMOUNT (OR LIA AMOUNT) FOR FUTURE YEARS.
FOR EXAMPLE, IF THE ANNUAL INCOME AMOUNT UNDER HIGHEST DAILY LIFETIME INCOME
2.0 WERE $2000 AND A $2500 WITHDRAWAL THAT QUALIFIED AS A FREE WITHDRAWAL WERE
MADE, THE WITHDRAWAL WOULD BE DEEMED EXCESS INCOME, IN THE AMOUNT OF $500.
SYSTEMATIC WITHDRAWALS FROM MY ANNUITY DURING THE ACCUMULATION PERIOD
You can receive systematic withdrawals of earnings only, or a flat dollar
amount. Systematic withdrawals may be subject to any applicable CDSC and/or an
MVA. We will determine whether a CDSC applies and the amount in the same way
as we would for a partial withdrawal.
Systematic withdrawals can be made from Account Value allocated to the
Sub-accounts or certain MVA Options. There is no minimum Surrender Value we
require to allow you to begin a program of Systematic Withdrawals. The minimum
amount for each systematic withdrawal is $100. If any scheduled systematic
withdrawal is for less than $100 (which may occur under a program that
provides payment of an amount equal to the earnings in your Annuity for the
period requested), we may postpone the withdrawal and add the expected amount
to the amount that is to be withdrawn on the next scheduled systematic
withdrawal.
We will withdraw systematic withdrawals from the Investment Options you have
designated (your "designated Investment Options"). If you do not designate
Investment Options for systematic withdrawals, we will withdraw systematic
withdrawals pro rata based on the Account Value in the Investment Options at
the time we pay out your withdrawal (i.e. "pro rata" meaning that the
percentage of each Investment Option withdrawn is the same percentage that the
Investment Option bears to the total Account Value). For any scheduled
systematic withdrawal for which you have elected a specific dollar amount and
have specified percentages to be withdrawn from your designated Investment
Options, if the amounts in your designated Investment Options cannot satisfy
such instructions, we will withdraw systematic withdrawals pro rata, as just
described, based on the Account Value across all your Investment Options.
Please note that if you are participating in certain optional living benefits
(e.g., Highest Daily Lifetime Income 2.0), systematic withdrawals must be
taken pro rata. Ownership changes to and assignment of your Annuity will
terminate any systematic withdrawals that had been in effect on the date of
the change.
SYSTEMATIC WITHDRAWALS UNDER SECTIONS 72(T)/72(Q) OF THE INTERNAL REVENUE CODE
If your Annuity is used as a funding vehicle for certain retirement plans that
receive special tax treatment under Sections 401, 403(b), 408 or 408A of the
Code, Section 72(t) of the Code may provide an exception to the 10% penalty
tax on distributions made
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prior to age 59 1/2 if you elect to receive distributions as a series of
"substantially equal periodic payments." For Annuities issued as non-qualified
annuities, the Code may provide a similar exemption from penalty under
Section 72(q) of the Code. Systematic withdrawals under Sections 72(t)/72(q)
may be subject to a CDSC (except that no CDSC applies to the C Series) and/or
an MVA. To request a program that complies with Sections 72(t)/72(q), you must
provide us with certain required information in writing on a form acceptable
to us. We may require advance notice to allow us to calculate the amount of
72(t)/72(q) withdrawals. There is no minimum Surrender Value we require to
allow you to begin a program for withdrawals under Sections 72(t)/72(q). The
minimum amount for any such withdrawal is $100 and payments may be made
monthly, quarterly, semi-annually or annually.
You may also annuitize your Annuity and begin receiving payments for the
remainder of your life (or life expectancy) as a means of receiving income
payments before age 59 1/2 that are not subject to the 10% penalty.
Please note that if a withdrawal under Sections 72(t) or 72(q) was scheduled
to be effected between December 25/th/ and December 31/st/ of a given year,
then we will implement the withdrawal on December 28 or on the last Valuation
Day prior to December 28/th/ of that year.
REQUIRED MINIMUM DISTRIBUTIONS
Required Minimum Distributions are a type of systematic withdrawal we allow to
meet distribution requirements under Sections 401, 403(b) or 408 of the Code.
Required Minimum Distribution rules do not apply to Roth IRAs during the
Owner's lifetime. Under the Code, you may be required to begin receiving
periodic amounts from your Annuity. In such case, we will allow you to make
systematic withdrawals in amounts that satisfy the minimum distribution rules
under the Code. We do not assess a CDSC (if applicable) or an MVA on Required
Minimum Distributions from your Annuity if you are required by law to take
such Required Minimum Distributions from your Annuity at the time it is taken,
provided the amount withdrawn is the amount we calculate as the Required
Minimum Distribution and is paid out through a program of systematic
withdrawals that we make available. However, a CDSC (if applicable) or an MVA
may be assessed on that portion of a systematic withdrawal that is taken to
satisfy the Required Minimum Distribution rules in relation to other savings
or investment plans under other qualified retirement plans.
The amount of the Required Minimum Distribution for your particular situation
may depend on other annuities, savings or investments. We will only calculate
the amount of your Required Minimum Distribution based on the value of your
Annuity. We require three (3) days advance written notice to calculate and
process the amount of your payments. You may elect to have Required Minimum
Distributions paid out monthly, quarterly, semi-annually or annually. The $100
minimum amount that applies to systematic withdrawals applies to monthly
Required Minimum Distributions but does not apply to Required Minimum
Distributions taken out on a quarterly, semi-annual or annual basis.
You may also annuitize your Annuity and begin receiving payments for the
remainder of your life (or life expectancy) as a means of receiving income
payments and satisfying the Required Minimum Distribution rules under the
Code. Please see "Living Benefits" for further information relating to
Required Minimum Distributions if you own a living benefit.
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.
Please note that if a Required Minimum Distribution was scheduled to be
effected between December 25/th/ and December 31/st/ of a given year, then we
will implement the Required Minimum Distribution on December 28 or on the last
Valuation Day prior to December 28/th/ of that year.
No withdrawal taken as a Required Minimum Distribution for your Annuity under
a program that we administer is subject to an MVA.
See "Tax Considerations" for a further discussion of Required Minimum
Distributions.
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SURRENDERS
SURRENDER VALUE
During the Accumulation Period you can surrender your Annuity at any time, and
will receive the Surrender Value. Upon surrender of your Annuity, you will no
longer have any rights under the surrendered Annuity. Your Surrender Value is
equal to the Account Value (which includes the effect of any MVA) less any
applicable CDSC, any applicable tax charges, any charges assessable as a
deduction from the Account Value for any optional benefits provided by rider
or endorsement, and any Annual Maintenance Fee.
We apply as a threshold, in certain circumstances, a minimum Surrender Value
of $2,000. If you purchase an Annuity without a lifetime guaranteed minimum
withdrawal benefit, we will not allow you to take any withdrawals that would
cause your Annuity's Account Value, after taking the withdrawal, to fall below
the minimum Surrender Value. Likewise, if you purchase an Annuity with a
lifetime guaranteed minimum withdrawal benefit, we will not allow you to take
a Non-Lifetime Withdrawal (see "Living Benefits - Non-Lifetime Withdrawal
Feature") that would cause your Annuity's Account Value, after taking the
withdrawal, to fall below the minimum Surrender Value. See "Annuity Options"
for information on the impact of the minimum Surrender Value at annuitization.
MEDICALLY-RELATED SURRENDERS
Where permitted by law, you may request to surrender all or part of your X
Series, B Series, or L Series Annuity prior to the Annuity Date without
application of any otherwise applicable CDSC upon occurrence of a
medically-related "Contingency Event" as described below. The CDSC and this
waiver are not applicable to the C Series.
If you request a full surrender, the amount payable will be your Account Value
minus the amount of any Purchase Credits applied within 12 months prior to
your request in Good Order to surrender your Annuity under this provision.
With respect to partial surrenders, we similarly reserve the right to
recapture Purchase Credits. Any applicable MVA will apply to a
medically-related surrender. Although a CDSC will not apply to qualifying
medically-related surrenders, please be aware that a withdrawal from the
Annuity before you have reached age 59 1/2 may be subject to a 10% tax penalty
and other tax consequences - see the Tax Considerations section of this
prospectus.
This waiver of any applicable CDSC is subject to our rules in place at the
time of your request, which currently include but are not limited to the
following:
. If the Owner is an entity, the Annuitant must have been named or any
change of Annuitant must have been accepted by us, prior to the
"Contingency Event" described below in order to qualify for a
medically-related surrender;
. If the Owner is an entity, the Annuitant must be alive as of the date we
pay the proceeds of such surrender request;
. If the Owner is one or more natural persons, all such Owners must also
be alive at such time;
. We must receive satisfactory proof of the Owner's (or the Annuitant's if
entity-owned) confinement in a Medical Care Facility or Fatal Illness in
writing on a form satisfactory to us; and
. no additional Purchase Payments can be made to the Annuity.
We reserve the right to impose a maximum amount of a medically-related
surrender (equal to $500,000), but we do not currently impose that maximum.
That is, if the amount of a partial medically-related withdrawal request, when
added to the aggregate amount of medically-related surrenders you have taken
previously under this Annuity and any other annuities we and/or our affiliates
have issued to you exceeds that maximum amount, we reserve the right to treat
the amount exceeding that maximum as not an eligible medically-related
surrender. A "Contingency Event" occurs if the Owner (or Annuitant if
entity-owned) is:
. first confined in a "Medical Care Facility" after the Issue Date and
while the Annuity is in force, remains confined for at least 90
consecutive days, and remains confined on the date we receive the
Medically Related surrender request at our Service Office; or
. first diagnosed as having a "Fatal Illness" after the Issue Date and
while the Annuity is in force. We may require a second or third opinion
by a physician chosen by us regarding a diagnosis of Fatal Illness. We
will pay for any such second or third opinion.
"Fatal Illness" means a condition (a) diagnosed by a licensed physician; and
(b) that is expected to result in death within 24 months after the diagnosis
in 80% of the cases diagnosed with the condition. "Medical Care Facility"
means a facility operated and licensed pursuant to the laws of any United
States jurisdiction providing medically-necessary in-patient care, which is
(a) prescribed by a licensed physician in writing; (b) recognized as a general
hospital or long-term care facility by the proper authority of the United
States jurisdiction in which it is located; (c) recognized as a general
hospital by the Joint Commission on the Accreditation of Hospitals; and
(d) certified as a hospital or long-term care facility; OR (e) a nursing home
licensed by the United States jurisdiction in which it is located and offers
the services of a Registered Nurse (RN) or Licensed Practical Nurse (LPN) 24
hours a day that maintains control of all prescribed medications dispensed and
daily medical records. This benefit is not currently available in California
and Massachusetts.
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ANNUITY OPTIONS
Annuitization involves converting your Unadjusted Account Value to an annuity
payment stream, the length of which depends on the terms of the applicable
annuity option. Thus, once annuity payments begin, your death benefit, if any,
is determined solely under the terms of the applicable annuity payment option,
and you no longer participate in any optional living benefit (unless you have
annuitized under that benefit). We currently make annuity options available
that provide fixed annuity payments. Fixed annuity payments provide the same
amount with each payment. Please refer to the "Living Benefits" section in
this prospectus for a description of annuity options that are available when
you elect one of the living benefits. You must annuitize your entire Account
Value; partial annuitizations are not allowed.
You have a right to choose your annuity start date, provided that it is no
later than the first day of the calendar month next following the 95/th/
birthday of the oldest of any Owner and Annuitant whichever occurs first
("Latest Annuity Date") and no earlier than the earliest permissible Annuity
Date. You may choose one of the Annuity Options described below, and the
frequency of annuity payments. You may change your choices before the Annuity
Date. If you have not provided us with your Annuity Date or annuity payment
option in writing, then your Annuity Date will be the Latest Annuity Date.
Certain annuity options and/or periods certain may not be available, depending
on the age of the Annuitant. If a CDSC is still remaining on your Annuity, any
period certain must be at least 10 years (or the maximum period certain
available, if life expectancy is less than 10 years).
If needed, we will require proof in Good Order of the Annuitant's age before
commencing annuity payments. Likewise, we may require proof in Good Order that
an Annuitant is still alive, as a condition of our making additional annuity
payments while the Annuitant lives. We will seek to recover any life income
annuity payments that we made after the death of the Annuitant.
If the initial annuity payment would be less than $100, we will not allow you
to annuitize (except as otherwise specified by applicable law). Instead, we
will pay you your current Unadjusted Account Value in a lump sum and terminate
your Annuity. Similarly, we reserve the right to pay your Unadjusted Account
Value in a lump sum, rather than allow you to annuitize, if the Surrender
Value of your Annuity is less than $2000 on the Annuity Date.
Once annuity payments begin, you no longer receive benefits under any optional
living benefit (unless you have annuitized under that benefit) or the Death
Benefits described below.
Certain of these annuity options may be available as "settlement options" to
Beneficiaries who choose to receive the Death Benefit proceeds as a series of
payments instead of a lump sum payment.
Please note that you may not annuitize within the first three Annuity Years
(except as otherwise specified by applicable law).
For Beneficiary Annuities, no annuity payments are available and all
references to Annuity Date are not applicable.
OPTION 1
ANNUITY PAYMENTS FOR A PERIOD CERTAIN: Under this option, we will make equal
payments for the period chosen, up to 25 years (but not to exceed the life
expectancy of the Annuitant at the time the Annuity Option becomes effective,
as computed under applicable IRS tables). The annuity payments may be made
monthly, quarterly, semiannually, or annually, as you choose, for the fixed
period. If the Owner dies during the income phase, payments will continue to
any surviving Owner, or if there is no surviving Owner, the named Beneficiary
or your estate if no Beneficiary is named for the remainder of the period
certain.
OPTION 2
LIFE INCOME ANNUITY OPTION WITH A PERIOD CERTAIN: Under this option, income is
payable monthly, quarterly, semiannually, or annually for the number of years
selected (the "period certain"), subject to our then current rules, and
thereafter until the death of the Annuitant. Should the Owner or Annuitant die
before the end of the period certain, the remaining period certain payments
are paid to any surviving Owner, or if there is no surviving Owner, the named
Beneficiary, or your estate if no Beneficiary is named, until the end of the
period certain. If an annuity option is not selected by the Annuity Date, this
is the option we will automatically select for you. We will use a period
certain of 10 years, or a shorter duration if the Annuitant's life expectancy
at the time the Annuity Option becomes effective, as computed under applicable
IRS tables, is less than 10 years. If in this instance the duration of the
period certain is prohibited by applicable law, then we will pay you a lump
sum in lieu of this option.
OTHER ANNUITY OPTIONS WE MAY MAKE AVAILABLE
At the Annuity Date, we may make available other annuity options not described
above. The additional options we currently offer are:
.. Life Annuity Option. We currently make available an annuity option that
makes payments for the life of the Annuitant. Under that option, income is
payable monthly, quarterly, semiannually, or annually, as you choose, until
the death of the Annuitant. No additional annuity payments are made after
the death of the Annuitant. No minimum number of payments is guaranteed. It
is possible that only one payment will be payable if the death of the
Annuitant occurs before the date the second payment was due, and no other
payments nor death benefits would be payable.
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.. Joint Life Annuity Option. Under the joint lives option, income is payable
monthly, quarterly, semiannually, or annually, as you choose, during the
joint lifetime of two Annuitants, ceasing with the last payment prior to
the death of the second to die of the two Annuitants. No minimum number of
payments is guaranteed under this option. It is possible that only one
payment will be payable if the death of all the Annuitants occurs before
the date the second payment was due, and no other payments or death
benefits would be payable.
.. Joint Life Annuity Option With a Period Certain. Under this option, income
is payable monthly, quarterly, semiannually, or annually for the number of
years selected (the "period certain"), subject to our current rules, and
thereafter during the joint lifetime of two Annuitants, ceasing with the
last payment prior to the death of the second to die of the two Annuitants.
If the Annuitants' joint life expectancy is less than the period certain,
we will institute a shorter period certain, determined according to
applicable IRS tables. Should the two Annuitants die before the end of the
period certain, the remaining period certain payments are paid to any
surviving Owner, or if there is no surviving Owner, the named Beneficiary,
or to your estate if no Beneficiary is named, until the end of the period
certain.
We reserve the right to cease offering any of these Other Annuity Options. If
we do so, we will amend this prospectus to reflect the change. We reserve the
right to make available other annuity or settlement options.
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LIVING BENEFITS
Pruco Life offers different optional living benefits, for an additional
charge, that can provide investment protection for Owners while they are
alive. No optional living benefit may be elected if your Annuity is held as a
Beneficiary Annuity. Notwithstanding the additional protection provided under
the optional living benefits, the additional cost has the impact of reducing
net performance of the Investment Options. Each optional benefit offers a
distinct type of guarantee, regardless of the performance of the Sub-accounts,
that may be appropriate for you depending on the manner in which you intend to
make use of your Annuity while you are alive. We reserve the right to cease
offering any of these optional living benefits. Depending on which optional
living benefit you choose, you can have substantial flexibility to invest in
the Sub-accounts while:
.. protecting a principal amount from decreases in value due to investment
performance;
.. guaranteeing a minimum amount of growth to be used as the basis for
lifetime withdrawals; or
.. providing spousal continuation of certain benefits.
We currently offer the following "living benefits": The following "living benefits" are available only for
Highest Daily Lifetime Income 2.0 Annuities issued with an application signed prior to
Highest Daily Lifetime Income 2.0 with Lifetime Income January 24, 2011, subject to availability which may vary
Accelerator by firm:
Spousal Highest Daily Lifetime Income 2.0 Highest Daily Guaranteed Return Option II
Highest Daily Lifetime Income 2.0 (HD GRO II)
With Highest Daily Death Benefit Guaranteed Return Option Plus II (GRO PLUS II)
Spousal Highest Daily Lifetime Income 2.0 with
Highest Daily Death Benefit
We previously offered the following optional living benefits during the
periods indicated.
Offered from January 24, 2011 to August 20, 2012: Offered from March 15, 2010 to January 23, 2011:
Highest Daily Lifetime Income Highest Daily Lifetime 6 Plus Income
Highest Daily Lifetime Income with Lifetime Income Highest Daily Lifetime 6 Plus Income with Lifetime
Accelerator Income Accelerator
Spousal Highest Daily Lifetime Income Spousal Highest Daily Lifetime 6 Plus Income
Please see Appendix D for information pertaining to the Highest Daily Lifetime
Income suite of benefits, and Appendix C for information pertaining to the
Highest Daily Lifetime 6 Plus suite of benefits.
Each living benefit requires your participation in a predetermined
mathematical formula that may transfer your account value between the
Sub-accounts you have chosen from among those we permit with the benefit
(i.e., the "permitted Sub-accounts") and certain bond portfolio Sub-accounts
of AST. Highest Daily Lifetime Income 2.0, Highest Daily Lifetime Income 2.0
with LIA, Spousal Highest Daily Lifetime Income 2.0, Highest Daily Lifetime
Income 2.0 with Highest Daily Death Benefit, Spousal Highest Daily Lifetime
Income 2.0 with Highest Daily Death Benefit, Highest Daily Lifetime Income,
Highest Daily Lifetime Income with LIA, Spousal Highest Daily Lifetime Income,
Highest Daily Lifetime 6 Plus, Highest Daily Lifetime 6 Plus with LIA, and
Spousal Highest Daily Lifetime 6 Plus use one predetermined mathematical
formula. GRO Plus II and HD GRO II each uses a separate and different
predetermined mathematical formula. Under the predetermined mathematical
formula used with the Highest Daily Lifetime Income 2.0, Highest Daily
Lifetime Income and Highest Daily Lifetime 6 Plus Income benefits, your
Account Value may be transferred between certain "permitted Sub-accounts" and
the AST Investment Grade Bond Sub-account. Under each predetermined
mathematical formula used with GRO Plus II and HD GRO II, your Account Value
may be transferred between certain "permitted Sub-accounts" and a Sub-account
within a group of bond portfolio Sub-accounts differing with respect to their
target maturity date. The formulas differ because of the nature of the
underlying guarantees, and thus could result in different transfers of account
value over time. Although not guaranteed, the optional living benefit
investment requirements and the applicable formula are designed to reduce the
difference between your Account Value and our liability under the benefit.
Minimizing such difference generally benefits us by decreasing the risk that
we will use our own assets to make benefit payments to you. Though the
investment requirements and formulas are designed to reduce risk, they do not
guarantee any appreciation of your Account Value. In fact, they could mean
that you miss appreciation opportunities in other investment options. We are
not providing you with investment advice through the use of any of the
formulas. In addition, the formulas do not constitute an investment strategy
that we are recommending to you.
Here is a general description of each kind of living benefit that exists under
this Annuity:
LIFETIME GUARANTEED MINIMUM WITHDRAWAL BENEFITS. These benefits are designed
for someone who wants a guaranteed lifetime income stream through withdrawals
over time, rather than by annuitizing. Highest Daily Lifetime Income 2.0 is
one example of this type of benefit. Please note that there is a Latest
Annuity Date under your Annuity, by which date annuity payments must commence.
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Under any of the Guaranteed Lifetime Withdrawal Benefits (e.g., Highest Daily
Lifetime Income 2.0, Highest Daily Lifetime Income 2.0 with Lifetime Income
Accelerator, Spousal Highest Daily Lifetime Income 2.0, Highest Daily Lifetime
Income 2.0, Highest Daily Death Benefit, and Spousal Highest Daily Lifetime
Income 2.0 with Highest Daily Death Benefit, WITHDRAWALS IN EXCESS OF THE
ANNUAL INCOME AMOUNT, CALLED "EXCESS INCOME," WILL RESULT IN A PERMANENT
REDUCTION IN FUTURE GUARANTEED AMOUNTS.
GUARANTEED MINIMUM ACCUMULATION BENEFITS. The common characteristic of these
benefits is that your Account Value is guaranteed to be at least a specified
amount at some point in the future. Thus, these benefits may be appropriate
for an annuity Owner who wants a guaranteed minimum Account Value after a
specified number of years. Because the guarantee inherent in the benefit does
not take effect until a specified number of years into the future, you should
elect such a benefit only if your investment time horizon is of at least that
duration. HD GRO II is one example of this type of benefit.
PLEASE REFER TO THE BENEFIT DESCRIPTION THAT FOLLOWS FOR A COMPLETE
DESCRIPTION OF THE TERMS, CONDITIONS AND LIMITATIONS OF EACH OPTIONAL BENEFIT.
SEE THE CHART IN THE "INVESTMENT OPTIONS" SECTION OF THE PROSPECTUS FOR A LIST
OF INVESTMENT OPTIONS AVAILABLE AND PERMITTED WITH EACH BENEFIT. WE RESERVE
THE RIGHT TO TERMINATE A BENEFIT IF YOU ALLOCATE FUNDS INTO NON-PERMITTED
INVESTMENT OPTIONS. You should consult with your Financial Professional to
determine if any of these optional benefits may be appropriate for you based
on your financial needs. As is the case with optional living benefits in
general, the fulfillment of our guarantee under these benefits is dependent on
our claims-paying ability.
TERMINATION OF EXISTING BENEFITS AND ELECTION OF NEW BENEFITS
If you elect an optional living benefit, you may subsequently terminate the
benefit and elect one of the then currently available benefits, subject to
availability of the benefit at that time and our then current rules. There is
currently no waiting period for such an election (you may elect a new benefit
beginning on the next Valuation Day), provided that upon such an election,
your Account Value must be allocated to the Investment Options permitted for
the optional benefit. We reserve the right to waive, change and/or further
limit availability and election frequencies in the future. Check with your
Financial Professional regarding the availability of re-electing or electing a
benefit and any waiting period. The benefit you re-elect or elect may not
provide the same guarantees and/or may be more expensive than the benefit you
are terminating. NOTE THAT ONCE YOU TERMINATE AN EXISTING 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
UNADJUSTED ACCOUNT VALUE AS OF THE DATE THE NEW BENEFIT BECOMES EFFECTIVE. You
should carefully consider whether terminating your existing benefit and
electing a new benefit is appropriate for you.
No Long-Term MVA Option is permitted if you elect any Optional Living Benefit.
The DCA MVA Options are not available with GRO Plus II and HD GRO II.
Certain spousal rights under the contract, and our administration of such
spousal rights and related tax reporting comport with our understanding of the
Defense of Marriage Act (which defines a "marriage" as a legal union between a
man and a woman and a "spouse" as a person of the opposite sex). Depending on
the state in which your annuity is issued, we may offer certain spousal
benefits to civil union couples, domestic partners or same-sex marriages. You
should be aware, however, that federal tax law does not recognize civil union
couples, domestic partners or marriage spouses of the same sex. Therefore, we
cannot permit a same-sex civil union partner, domestic partner or spouse to
continue the annuity within the meaning of the tax law upon the death of the
first partner under the annuity's "spousal continuance" provision. Please note
there may be federal tax consequences at the death of the first same-sex civil
union partner, domestic partner or spouse. Civil union couples, domestic
partners and spouses of the same sex should consider that limitation before
selecting a spousal benefit under the annuity.
HIGHEST DAILY LIFETIME INCOME BENEFIT 2.0
Highest Daily Lifetime Income 2.0 is a lifetime guaranteed minimum withdrawal
benefit, under which, subject to the terms of the benefit, we guarantee your
ability to take a certain annual withdrawal amount for life. We reserve the
right, in our sole discretion, to cease offering this benefit for new
elections, at any time.
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
Unadjusted 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 provided that you do not take withdrawals of
Excess Income that result in your Unadjusted Account Value being reduced to
zero. We also permit you to designate the first withdrawal from your Annuity
as a one-time "Non-Lifetime Withdrawal". All other partial withdrawals from
your Annuity are considered a "Lifetime Withdrawal" under the benefit.
Withdrawals are taken first from your own Account Value. We are only required
to begin making lifetime income payments to you under our guarantee when and
if your Unadjusted Account Value is reduced to zero (for any reason other than
due to partial withdrawals of Excess Income). Highest Daily Lifetime Income
2.0 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
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benefit. An integral component of Highest Daily Lifetime Income 2.0 is the
predetermined mathematical formula we employ that may periodically transfer
your Unadjusted Account Value to and from the AST Investment Grade Bond
Sub-account. See the section below entitled "How Highest Daily Lifetime Income
2.0 Transfers Unadjusted Account Value Between Your Permitted Sub-accounts and
the AST Investment Grade Bond Sub-account."
The income benefit under Highest Daily Lifetime Income 2.0 currently is based
on a single "designated life" who is at least 50 years old on the date that
the benefit is acquired. Highest Daily Lifetime Income 2.0 is not available if
you elect any other optional living benefit. As long as your Highest Daily
Lifetime Income 2.0 is in effect, you must allocate your Unadjusted Account
Value in accordance with the 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.
ALTHOUGH YOU ARE GUARANTEED THE ABILITY TO WITHDRAW YOUR ANNUAL INCOME AMOUNT
FOR LIFE EVEN IF YOUR UNADJUSTED ACCOUNT VALUE FALLS TO ZERO, IF THAT
WITHDRAWAL OF EXCESS INCOME (DESCRIBED BELOW) BRINGS YOUR UNADJUSTED ACCOUNT
VALUE TO ZERO, YOUR ANNUAL INCOME AMOUNT ALSO WOULD FALL TO ZERO, AND THE
BENEFIT AND THE ANNUITY THEN WOULD TERMINATE. IN THAT SCENARIO, NO FURTHER
AMOUNT WOULD BE PAYABLE UNDER HIGHEST DAILY LIFETIME INCOME 2.0. AS TO THE
IMPACT OF SUCH A SCENARIO ON ANY OTHER OPTIONAL BENEFIT YOU MAY HAVE, PLEASE
SEE THE APPLICABLE SECTION IN THIS PROSPECTUS.
You may also participate in the 6 or 12 Month DCA Program if you elect Highest
Daily Lifetime Income 2.0, subject to the 6 or 12 Month DCA Program's rules.
See the section of this prospectus entitled "6 or 12 Month Dollar Cost
Averaging Program" for details.
KEY FEATURE - PROTECTED WITHDRAWAL VALUE
The Protected Withdrawal Value is only used to calculate the initial Annual
Income Amount and the benefit fee. The Protected Withdrawal Value is separate
from your Unadjusted Account Value and not available as cash or a lump sum
withdrawal. On the effective date of the benefit, the Protected Withdrawal
Value is equal to your Unadjusted 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 Unadjusted 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 5% 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 Unadjusted Account Value on the current Valuation Day.
If you have not made a Lifetime Withdrawal on or before the 12/th/ Anniversary
of the effective date of the benefit, your Periodic Value on the 12/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% of the Unadjusted Account Value on the effective date of the
benefit including any Purchase Payments (including any associated
Purchase Credits) made on that day;
(b)200% 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.
Upon locking in the double (200%), your Protected Withdrawal Value will
continue to lock in your Annuity's highest daily value and immediately
compound it at 5% annually until your first Lifetime Withdrawal. This means
that your Protected Withdrawal Value will be at least double (200%) your
cumulative Purchase Payments made within the first benefit year if you have
owned the benefit at least 12 years, assuming you have not taken any
withdrawals. This is a minimum guarantee. If, due to positive Account Value
performance, your Protected Withdrawal Value is greater than the double
(200%), your Protected Withdrawal Value will continue to lock in your highest
daily value and immediately increase it at 5% compounded growth until your
first Lifetime Withdrawal.
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
54
associated Purchase Credits) and reduced for subsequent Lifetime Withdrawals,
and (ii) the highest daily Unadjusted Account Value upon any step-up,
increased for subsequent Purchase Payments (including any associated Purchase
Credits) and reduced for subsequent Lifetime Withdrawals (see the examples
that begin immediately prior to the sub-heading below entitled "Example of
dollar-for-dollar reductions").
PLEASE NOTE THAT IF YOU ELECT HIGHEST DAILY LIFETIME INCOME 2.0, YOUR ACCOUNT
VALUE IS NOT GUARANTEED, CAN FLUCTUATE AND MAY LOSE VALUE.
KEY FEATURE - ANNUAL INCOME AMOUNT UNDER HIGHEST DAILY LIFETIME INCOME 2.0.
The Annual Income Amount is equal to a specified percentage of the Protected
Withdrawal Value at the first Lifetime Withdrawal and does not reduce in
subsequent Annuity Years, as described below. The percentage initially depends
on the age of the Annuitant on the date of the first Lifetime Withdrawal. The
percentages are: 3% for ages 50-54; 4% for ages 55 to 64; 5% for ages 65 to
84, and 6% for ages 85 or older. Under Highest Daily Lifetime Income 2.0, 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 and also will
reduce the Protected Withdrawal Value on a dollar-for-dollar basis. 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). Excess Income also will reduce the Protected
Withdrawal Value by the same ratio.
AS DISCUSSED IN THIS PARAGRAPH, WHEN YOU MAKE A PARTIAL WITHDRAWAL THAT IS
SUBJECT TO A CDSC AND/OR TAX WITHHOLDING, WE WILL IDENTIFY THE AMOUNT THAT
INCLUDES NOT ONLY THE AMOUNT YOU ACTUALLY RECEIVE, BUT ALSO THE AMOUNT OF THE
CDSC AND/OR TAX WITHHOLDING, TO DETERMINE WHETHER YOUR WITHDRAWAL HAS EXCEEDED
THE ANNUAL INCOME AMOUNT. WHEN YOU TAKE A PARTIAL WITHDRAWAL, YOU MAY REQUEST
A "GROSS" WITHDRAWAL AMOUNT (E.G., $2000) BUT THEN HAVE ANY CDSC AND/OR TAX
WITHHOLDING DEDUCTED FROM THE AMOUNT YOU ACTUALLY RECEIVE (ALTHOUGH AN MVA MAY
ALSO BE APPLIED TO YOUR REMAINING UNADJUSTED ACCOUNT VALUE, IT IS NOT
CONSIDERED FOR PURPOSES OF DETERMINING EXCESS INCOME). THE PORTION OF A
WITHDRAWAL THAT EXCEEDED YOUR ANNUAL INCOME AMOUNT (IF ANY) WOULD BE TREATED
AS EXCESS INCOME AND THUS WOULD REDUCE YOUR ANNUAL INCOME AMOUNT IN SUBSEQUENT
YEARS. ALTERNATIVELY, YOU MAY REQUEST THAT A "NET" WITHDRAWAL AMOUNT ACTUALLY
BE PAID TO YOU (E.G., $2000), WITH THE UNDERSTANDING THAT ANY CDSC AND/OR TAX
WITHHOLDING (E.G., $240) BE APPLIED TO YOUR REMAINING UNADJUSTED ACCOUNT VALUE
(ALTHOUGH AN MVA MAY ALSO BE APPLIED TO YOUR REMAINING UNADJUSTED ACCOUNT
VALUE, IT IS NOT CONSIDERED FOR PURPOSES OF DETERMINING EXCESS INCOME). IN THE
LATTER SCENARIO, WE DETERMINE WHETHER ANY PORTION OF THE WITHDRAWAL IS TO BE
TREATED AS EXCESS INCOME BY LOOKING TO THE SUM OF THE NET AMOUNT YOU ACTUALLY
RECEIVE (E.G., $2000) AND THE AMOUNT OF ANY CDSC AND/OR TAX WITHHOLDING (IN
THIS EXAMPLE, A TOTAL OF $2240). THE AMOUNT OF THAT SUM (E.G., THE $2000 YOU
RECEIVED PLUS THE $240 FOR THE CDSC AND/OR TAX WITHHOLDING) THAT EXCEEDS YOUR
ANNUAL INCOME AMOUNT WILL BE TREATED AS EXCESS INCOME - THEREBY REDUCING YOUR
ANNUAL INCOME AMOUNT IN SUBSEQUENT YEARS.
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 Income 2.0 and subsequent to the first Lifetime Withdrawal will
(i) immediately 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: 3% for ages 50-54; 4% for ages 55 to
64; 5% for ages 65 to 84, and 6% for ages 85 or 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). Subject to state law, 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 Income 2.0. 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
Unadjusted 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
55
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: 3% for
ages 50-54; 4% for ages 55 to 64; 5% for ages 65-84, and 6% for ages 85 or
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. We will not automatically increase your Annual
Income Amount solely as a result of your attaining a new age that is
associated with a new age-based percentage. The Unadjusted 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 Unadjusted 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 Unadjusted 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 Income 2.0
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 Income 2.0 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 consult with your
Financial Professional and carefully evaluate whether the amount of the
step-up justifies the increased fee to which you will be subject. Any such
increased charge will not be greater than the maximum charge set forth in the
table entitled "Your Optional Benefit Fees and Charges."
If you are enrolled in a Systematic Withdrawal program, we will not
automatically increase the withdrawal amount when there is an increase to the
Annual Income Amount. You must notify us in order to increase the withdrawal
amount of any Systematic Withdrawal program.
Highest Daily Lifetime Income 2.0 does not affect your ability to take partial
withdrawals under your Annuity, or limit your ability to take partial
withdrawals that exceed the Annual Income Amount. Under Highest Daily Lifetime
Income 2.0, 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 any Annuity Year are
less than the Annual Income Amount, you cannot carry over the unused portion
of the Annual Income Amount to subsequent Annuity Years. If your cumulative
Lifetime Withdrawals in an Annuity Year exceed the Annual Income Amount, 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).
Because each of the Protected Withdrawal Value and Annual Income Amount is
determined in a way that is not solely related to Unadjusted Account Value, it
is possible for the Unadjusted 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
Income 2.0 or any other fees and charges under the Annuity. Assume the
following for all three examples:
. The Issue Date is November 1, 2012
. Highest Daily Lifetime Income 2.0 is elected on August 1, 2013
. The Annuitant was 70 years old when he/she elected Highest Daily
Lifetime Income 2.0
. The first withdrawal is a Lifetime Withdrawal
EXAMPLE OF DOLLAR-FOR-DOLLAR REDUCTIONS
On October 24, 2013, 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 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
October 31, 2013) 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 October 29, 2013 and the Unadjusted 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
Income to the Unadjusted Account Value immediately prior to the Excess Income.
(Note that if there are other future withdrawals in that Annuity Year, each
would result in another proportional reduction to the Annual Income Amount).
56
HERE IS THE CALCULATION:
Unadjusted Account Value before Lifetime withdrawal $118,000.00
Less amount of "non" Excess Income $ 3,500.00
Unadjusted Account Value immediately before Excess Income of $1,500 $114,500.00
Excess Income amount $ 1,500.00
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 after the first Lifetime Withdrawal, the
Annual Income Amount is stepped-up if the appropriate percentage (based on the
Annuitant's age on that 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 (including
any associated Purchase Credits), is greater than the Annual Income Amount,
adjusted for Excess Income 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 Income on October 29 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 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 greater than $5,921.40. Here are the
calculations for determining the daily values. Only the October 25 value is
being adjusted for Excess Income as the October 30, October 31, and November 1
Valuation Days occur after the Excess Income on October 29.
HIGHEST DAILY VALUE ADJUSTED ANNUAL
UNADJUSTED (ADJUSTED FOR WITHDRAWAL INCOME AMOUNT (5% OF THE
DATE* ACCOUNT VALUE AND PURCHASE PAYMENTS)** HIGHEST DAILY VALUE)
----- ------------- ------------------------ ------------------------
October 25, 2013 $119,000.00 $119,000.00 $5,950.00
October 29, 2013 $113,000.00 $113,986.95 $5,699.35
October 30, 2013 $113,000.00 $113,986.95 $5,699.35
October 31, 2013 $119,000.00 $119,000.00 $5,950.00
November 1, 2013 $118,473.00 $119,000.00 $5,950.00
* In this example, the Annuity Anniversary date is November 1. The Valuation
Dates are every day following the first Lifetime Withdrawal. In subsequent
Annuity Years Valuation Dates will be the Annuity Anniversary and every day
following the Annuity Anniversary. The Annuity Anniversary Date of
November 1 is considered the first Valuation Date in the Annuity Year.
** In this example, the first daily value after the first Lifetime Withdrawal
is $119,000 on October 25, resulting in an adjusted Annual Income Amount of
$5,950.00. This amount is adjusted on October 29 to reflect the $5,000
withdrawal. The calculations for the adjustments are:
. The Unadjusted Account Value of $119,000 on October 25 is first reduced
dollar-for-dollar by $3,500 ($3,500 is the remaining Annual Income
Amount for the Annuity Year), resulting in Unadjusted Account Value of
$115,500 before the Excess Income.
. This amount ($115,500) is further reduced by 1.31% (this is the ratio in
the above example which is the Excess Income divided by the Unadjusted
Account Value immediately preceding the Excess Income) resulting in a
Highest Daily Value of $113,986.95.
. The adjusted October 29 Highest Daily Value, $113,986.95, is carried
forward to the next Valuation Date of October 30. At this time, we
compare this amount to the Unadjusted Account Value on October 30,
$113,000. Since the October 29 adjusted Highest Daily Value of
$113,986.95 is greater than the October 30 value, we will continue to
carry $113,986.95 forward to the next Valuation Day of October 31. The
Unadjusted Account Value on October 31, $119,000.00, becomes the final
Highest Daily Value since it exceeds the $113,986.95 carried forward.
. The October 31 adjusted Highest Daily Value of $119,000.00 is also
greater than the November 1 value, so we will continue to carry
$119,000.00 forward to the final Valuation Day of November 1.
In this example, the final Highest Daily Value of $119,000.00 is converted to
an Annual Income Amount based on the applicable percentage of 5%, generating
an Annual Income Amount of $5,950.00. Since this amount is greater than the
current year's Annual Income Amount of $5,921.40 (adjusted for Excess Income),
the Annual Income Amount for the next Annuity Year, starting on November 1,
2013 and continuing through October 31, 2014, 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 Income 2.0. It is an optional feature of the
benefit that you can only elect at the time of your first withdrawal. You
cannot take a Non-Lifetime Withdrawal in an amount that would cause your
Annuity's Account Value, after taking the withdrawal, to fall below the
minimum Surrender Value (see "Surrenders - Surrender Value"). 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 Highest Daily Lifetime Income 2.0. You must tell us
at the time you take the withdrawal if your withdrawal is intended to be the
Non-Lifetime Withdrawal and not the first Lifetime Withdrawal under Highest
Daily Lifetime Income 2.0. If you don't elect the Non-Lifetime Withdrawal, the
first withdrawal you
57
make will be the first Lifetime Withdrawal that establishes your Annual Income
Amount, which is based on your Protected Withdrawal Value. Once you elect to
take the Non-Lifetime Withdrawal or Lifetime Withdrawals, no additional
Non-Lifetime Withdrawals may be taken. If you do not take a Non-Lifetime
Withdrawal before beginning Lifetime Withdrawals, you lose the ability to take
it.
The Non-Lifetime Withdrawal will proportionally reduce the Protected
Withdrawal Value. It will also proportionally reduce the Periodic Value
guarantee on the twelfth anniversary of the benefit effective date (see
description in "Key Feature - Protected Withdrawal Value," above). It will
reduce both by the percentage the total withdrawal amount (including any
applicable CDSC) represents of the then current Unadjusted 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. Thus, the first withdrawal will be a 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 3, 2012
. Highest Daily Lifetime Income 2.0 is elected on September 4, 2013
. The Unadjusted Account Value at benefit election was $105,000
. The Annuitant was 70 years old when he/she elected Highest Daily
Lifetime Income 2.0
. No previous withdrawals have been taken under Highest Daily Lifetime
Income 2.0
. On October 3, 2013, the Protected Withdrawal Value is $125,000, the 12th
benefit year minimum Periodic Value guarantee is $210,000, and the
Unadjusted Account Value is $120,000. Assuming $15,000 is withdrawn from
the Annuity on October 3, 2013 and is designated as a Non-Lifetime
Withdrawal, all guarantees associated with Highest Daily Lifetime Income
2.0 will be reduced by the ratio the total withdrawal amount represents
of the Unadjusted Account Value just prior to the withdrawal being taken.
HERE IS THE CALCULATION:
Withdrawal amount $ 15,000
Divided by Unadjusted 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
12/th/ benefit year Minimum Periodic Value $183,750
REQUIRED MINIMUM DISTRIBUTIONS
Required Minimum Distributions ("RMD") for this Annuity must be taken by
April 1st in the year following the date you turn age 70 1/2 and by
December 31/st/ for subsequent calendar years. If the annual RMD amount is
greater than the Annual Income Amount, a withdrawal of the RMD amount will not
be treated as a withdrawal of Excess Income, as long as the RMD amount is
calculated by us for this Annuity and administered under a program we support
each calendar year. If you are not participating in an RMD withdrawal program
each calendar year, you can alternatively satisfy the RMD amount without it
being treated as a withdrawal of Excess Income as long as you abide by the
following:
The total amount within an Annuity Year that can be withdrawn is equal to:
1. the Annual Income Amount remaining in the current Annuity Year, plus,
2. The difference between:
a. The RMD amount (assuming the RMD amount is greater than the Annual
Income Amount) less any withdrawals already taken in the calendar year,
less
b. The Annual Income Amount.
Please see hypothetical examples below for details.
If you do not comply with the rules described above, any withdrawal that
exceeds the Annual Income Amount will be treated as a withdrawal of Excess
Income, which will reduce your Annual Income Amount in future Annuity Years.
This may include situations where you comply with the rules outlined above and
then decide to take additional withdrawals after satisfying your RMD
requirement from the Annuity.
58
We will assume your first withdrawal under the benefit is a Lifetime
Withdrawal unless you designated the withdrawal as a Non-Lifetime Withdrawal.
Example
The following example is purely hypothetical and intended to illustrate a
scenario as described above. Note that withdrawals must comply with all IRS
guidelines in order to satisfy the Required Minimum Distribution for the
current calendar year.
Assumptions:
RMD Calendar Year
01/01/2012 to 12/31/2012
Annuity Year
06/01/2011 to 05/31/2012
Annual Income Amount and RMD Amount
Annual Income Amount = $5,000
Remaining Annual Income Amount as of 1/3/2012 = $3,000 (a $2,000 withdrawal
was taken on 7/1/2011)
RMD Amount for Calendar Year 2012 = $6,000
The amount you may withdraw in the current Annuity Year (between 1/3/2012 and
5/31/2012) without it being treated as Excess Income is $4,000. Here is the
calculation: $3,000 + ($6,000 - $5,000) = $4,000.
If the $4,000 withdrawal is taken in the current Annuity Year (prior to
6/1/2012), the remaining Annual Income Amount will be zero and the remaining
RMD amount of $2,000 may be taken in the subsequent Annuity Year beginning on
6/1/2012 (when your Annual Income Amount is reset to $5,000).
If you had chosen to not take any additional withdrawals until on or after
6/1/2012, then you would be eligible to withdraw $6,000 without it being
treated as a withdrawal of Excess Income.
BENEFITS UNDER HIGHEST DAILY LIFETIME INCOME 2.0
.. To the extent that your Unadjusted 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 Income 2.0, 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 Unadjusted 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. After the
Unadjusted Account Value is reduced to zero, you will not be permitted to
make additional Purchase Payments to your Annuity. TO THE EXTENT THAT
CUMULATIVE PARTIAL WITHDRAWALS IN THE ANNUITY YEAR THAT REDUCED YOUR
UNADJUSTED ACCOUNT VALUE TO ZERO ARE MORE THAN THE ANNUAL INCOME AMOUNT,
HIGHEST DAILY LIFETIME INCOME 2.0 TERMINATES, AND NO ADDITIONAL PAYMENTS
ARE MADE. HOWEVER, IF A PARTIAL 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
DESIGNATED LIFE.
.. Please note that if your Unadjusted 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 Latest Annuity Date 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 Unadjusted Account Value, less any applicable tax charges,
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 Service Office. If applying your Unadjusted
Account Value, less any applicable tax charges, to the life-only
annuity payment rates results in a higher annual payment, we will
give you the higher annual payment.
.. In the absence of an election when mandatory annuity payments are to begin
we currently make annual annuity payments in the form of a single life
fixed annuity with eight payments certain, by applying the greater of the
annuity rates then currently available or the annuity rates guaranteed in
your Annuity. We reserve the right at any time to increase or decrease the
period
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certain in order to comply with the Code (e.g., to shorten the period
certain to match life expectancy under applicable Internal Revenue Service
tables). 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 Unadjusted 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.
OTHER IMPORTANT CONSIDERATIONS
.. Withdrawals under Highest Daily Lifetime Income 2.0 are subject to all of
the terms and conditions of the Annuity, including any applicable CDSC for
the Non-Lifetime Withdrawal as well as partial withdrawals that exceed the
Annual Income Amount. If you have an active Systematic Withdrawal program
running at the time you elect this benefit, the first systematic withdrawal
that processes after your election of the benefit will be deemed a Lifetime
Withdrawal. Withdrawals made while Highest Daily Lifetime Income 2.0 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 MVA Options. If you have an active Systematic
Withdrawal program running at the time you elect this benefit, the program
must withdraw funds pro rata.
.. Any Lifetime Withdrawal that you take that is not a withdrawal of Excess
Income is not subject to a CDSC, even if the total amount of such
withdrawals in any Annuity Year exceeds the maximum Free Withdrawal amount.
Any Lifetime Withdrawal that is treated as Excess Income is subject to any
applicable CDSC, if the withdrawal is greater than the Free Withdrawal
amount.
.. You should carefully consider when to begin taking Lifetime Withdrawals. If
you begin taking withdrawals early, you may maximize the time during which
you may take Lifetime Withdrawals due to longer life expectancy, and you
will be using an optional benefit for which you are paying a charge. On the
other hand, you could limit the value of the benefit if you begin taking
withdrawals too soon. For example, withdrawals reduce your Unadjusted
Account Value and may limit the potential for increasing your Protected
Withdrawal Value. You should discuss with your Financial Professional when
it may be appropriate for you to begin taking Lifetime Withdrawals.
.. You cannot allocate Purchase Payments or transfer Unadjusted 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 section
entitled "Investment Options." You can find a copy of the AST Investment
Grade Bond Portfolio prospectus by going to www.prudentialannuities.com.
.. Transfers to and from the Permitted Sub-accounts, the DCA MVA Options, and
the AST Investment Grade Bond Sub-account triggered by the predetermined
mathematical formula will not count toward the maximum number of free
transfers allowable under an Annuity.
.. Upon inception of the benefit, 100% of your Unadjusted Account Value must
be allocated to the Permitted Sub-accounts (as defined below). We may amend
the Permitted Sub-accounts from time to time. Changes to the Permitted
Sub-accounts, or to the requirements as to how you may allocate your
Account Value with this benefit, will apply to new elections of the benefit
and may apply to current participants in the benefit. To the extent that
changes apply to current participants in the benefit, they will only apply
upon re-allocation of Account Value, or upon addition of subsequent
Purchase Payments. That is, we will not require such current participants
to re-allocate Account Value to comply with any new requirements.
.. 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 Sub-accounts and (ii) invest the proceeds of those sales in
the Sub-accounts that you have designated. During this reallocation
process, your Unadjusted 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 begin until the close of business on the following
Valuation Day.
.. Any Death Benefit will terminate if withdrawals taken under Highest Daily
Lifetime Income 2.0 reduce your Unadjusted Account Value to zero (see
"Death Benefits").
.. The current charge for Highest Daily Lifetime Income 2.0 is 1.00% annually
of the greater of the Unadjusted Account Value and Protected Withdrawal
Value. The maximum charge for Highest Daily Lifetime Income 2.0 is 2.00%
annually of the greater of the Unadjusted Account Value and Protected
Withdrawal Value. As discussed in "Highest Daily Auto Step-Up" above, we
may increase the fee upon a step-up under this benefit. We deduct this
charge on quarterly anniversaries of the benefit effective date, based on
the values on the last Valuation Day prior to the quarterly anniversary.
Thus, we deduct, on a quarterly basis, 0.25% of the greater of the prior
Valuation Day's Unadjusted 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. You will
begin paying this charge as of the effective date of the benefit even if
you do not begin taking withdrawals for many years, or ever. We will not
refund the charges you have paid if you choose never to take any
withdrawals and/or if you never receive any lifetime income payments.
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If the deduction of the charge would result in the Unadjusted Account Value
falling below the lesser of $500 or 5% of the sum of the Unadjusted 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 Unadjusted Account Value to fall below the Account
Value Floor. If the Unadjusted Account Value on the date we would deduct a
charge for the benefit is less than the Account Value Floor, then no charge
will be assessed for that benefit quarter. Charges deducted upon termination
of the benefit may cause the Unadjusted Account Value to fall below the
Account Value Floor. If a charge for Highest Daily Lifetime Income 2.0 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 Unadjusted Account Value to fall below the Account Value Floor.
While the deduction of the charge (other than the final charge) may not reduce
the Unadjusted Account Value to zero, partial withdrawals may reduce the
Unadjusted Account Value to zero. If this happens and the Annual Income Amount
is greater than zero, we will make payments under the benefit.
ELECTION OF AND DESIGNATIONS UNDER THE BENEFIT
For Highest Daily Lifetime Income 2.0, 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 50 years old. Any change of the Annuitant under the Annuity will result
in cancellation of Highest Daily Lifetime Income 2.0. Similarly, any change of
Owner will result in cancellation of Highest Daily Lifetime Income 2.0, except
if (a) the new Owner has the same taxpayer identification number as the
previous Owner, (b) ownership is transferred from a custodian or other entity
to the Annuitant, or vice versa or (c) ownership is transferred from one
entity to another entity that satisfies our ownership guidelines.
Highest Daily Lifetime Income 2.0 can be elected at the time that you purchase
your Annuity or after the Issue Date, subject to its availability, and our
eligibility rules and restrictions. If you elect Highest Daily Lifetime Income
2.0 and terminate it, you can re-elect it, subject to our current rules and
availability. See "Termination of Existing Benefits and Election of New
Benefits" for information pertaining to elections, termination and re-election
of benefits. PLEASE NOTE THAT IF YOU TERMINATE A LIVING BENEFIT AND ELECT
HIGHEST DAILY LIFETIME INCOME 2.0, YOU LOSE THE GUARANTEES THAT YOU HAD
ACCUMULATED UNDER YOUR EXISTING BENEFIT AND YOUR GUARANTEES UNDER HIGHEST
DAILY LIFETIME INCOME 2.0 WILL BE BASED ON YOUR UNADJUSTED ACCOUNT VALUE ON
THE EFFECTIVE DATE OF HIGHEST DAILY LIFETIME INCOME 2.0. You and your
Financial Professional should carefully consider whether terminating your
existing benefit and electing Highest Daily Lifetime Income 2.0 is appropriate
for you. We reserve the right to waive, change and/or further limit the
election frequency in the future for new elections of this benefit.
If you wish to elect this benefit and you are currently participating in a
Systematic Withdrawal program, amounts withdrawn under the program must be
taken on a pro rata basis from your Annuity's Sub-accounts (i.e., in direct
proportion to the proportion that each such Sub-account bears to your total
Account Value) in order for you to be eligible for the benefit. Thus, you may
not elect Highest Daily Lifetime Income 2.0 so long as you participate in a
Systematic Withdrawal program in which withdrawals are not taken pro rata.
TERMINATION OF THE BENEFIT
You may terminate Highest Daily Lifetime Income 2.0 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 UPON THE FIRST TO OCCUR OF THE FOLLOWING:
(I)YOUR TERMINATION OF THE BENEFIT,
(II)YOUR SURRENDER OF THE ANNUITY,
(III)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)OUR RECEIPT OF DUE PROOF OF DEATH OF THE OWNER OR ANNUITANT (FOR
ENTITY-OWNED ANNUITIES)
(V)BOTH THE UNADJUSTED ACCOUNT VALUE AND ANNUAL INCOME AMOUNT EQUAL ZERO, OR
(VI)YOU CEASE TO MEET OUR REQUIREMENTS AS DESCRIBED IN "ELECTION OF AND
DESIGNATIONS UNDER THE BENEFIT" ABOVE.
"Due Proof of Death" is satisfied when we receive all of the following in Good
Order: (a) a death certificate or similar documentation acceptable to us;
(b) all representations we require or which are mandated by applicable law or
regulation in relation to the death claim and the payment of death proceeds
(all representations may also include trust or estate paperwork (if needed) in
addition to consent forms (if applicable), requirements other than the death
certificate and claim forms from at least one beneficiary); and (c) any
applicable election of the method of payment of the death benefit, if not
previously elected by the Owner, by at least one Beneficiary.
Upon termination of Highest Daily Lifetime Income 2.0, 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.
However, if the amount in the Sub-accounts is not enough to pay the charge, we
will reduce the fee to no more than the amount in the Sub-accounts. With
regard to your investment allocations, upon termination we will: (i) leave
intact amounts that are held in the Permitted Sub-accounts, and (ii) unless
you are participating in an asset allocation program (i.e., Static
Re-balancing Program, or 6 or 12 Month DCA Program for which we are providing
administrative support),
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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 Unadjusted
Account Value in the variable Investment Options is zero, we will transfer
such amounts to the AST Money Market Sub-account.
If a surviving spouse elects to continue the Annuity, Highest Daily Lifetime
Income 2.0 terminates upon Due Proof of Death. The spouse may newly elect the
benefit subject to the restrictions discussed above.
HOW HIGHEST DAILY LIFETIME INCOME 2.0 TRANSFERS UNADJUSTED ACCOUNT VALUE
BETWEEN YOUR PERMITTED SUB-ACCOUNTS AND THE AST INVESTMENT GRADE BOND
SUB-ACCOUNT
OVERVIEW OF THE PREDETERMINED MATHEMATICAL FORMULA
Our goal is to seek a careful balance between providing value-added products,
such as the Highest Daily Lifetime Income 2.0 suite of benefits, while
managing the risk associated with offering these products. One of the key
features that helps us accomplish that balance and an integral part of the
Highest Daily Lifetime Income 2.0 suite is the predetermined mathematical
formula used to transfer Unadjusted Account Value between the Permitted
Subaccounts and the AST Investment Grade Bond Sub-account, referred to in this
section as the "Bond Sub-account". The formula is designed primarily to
mitigate some of the financial risks that we incur in providing the guarantee
under the Highest Daily Lifetime Income 2.0 suite of benefits.
The formula is set forth in Appendix I (and is described below).
The predetermined mathematical formula ("formula") monitors each individual
contract each Valuation Day that the benefit is in effect on your Annuity, in
order to help us manage guarantees through all market cycles. It helps manage
the risk associated with these benefits, which is generally represented by the
gap between your Unadjusted Account Value and the Protected Withdrawal Value.
As the gap between these two values increases, the formula will determine if
and how much money should be transferred into the Bond Sub-account. This
movement is intended to reduce the equity risk we will bear in funding our
obligation associated with these benefits. As the gap decreases (due to
favorable performance of the Unadjusted Account Value), the formula then
determines if and how much money should transfer back into the Permitted
Sub-accounts. The use of the formula, combined with restrictions on the
Sub-accounts you are allowed to invest in, lessens the risk that your
Unadjusted Account Value will be reduced to zero while you are still alive,
thus reducing the likelihood that we will make any lifetime income payments
under this benefit. It may also limit the potential for your Account Value to
grow.
The formula is not forward looking and contains no predictive or projective
component with respect to the markets, the Unadjusted Account Value or the
Protected Withdrawal Value. We are not providing you with investment advice
through the use of the formula nor does the formula constitute an investment
strategy that we are recommending to you.
In addition to providing lifetime income when your Account Value is reduced to
zero, Highest Daily Lifetime Income 2.0 can potentially dampen the impact of
volatility on your Account Value during extreme market downturns by
transferring assets from your chosen investments into a Bond-Subaccount as
described above. This occurs pursuant to the predetermined mathematical
formula, which can limit the possibility or reduce the amount of a significant
loss of Account Value, and potentially provide a higher income stream in
retirement.
TRANSFER ACTIVITY UNDER THE FORMULA
Prior to the first Lifetime Withdrawal, the primary driver of transfers to the
Bond Sub-account is the difference between your Unadjusted Account Value and
your Protected Withdrawal Value. If none of your Unadjusted Account Value is
allocated to the Bond Sub-account, then over time the formula permits an
increasing difference between the Unadjusted Account Value and the Protected
Withdrawal Value before a transfer to the Bond Sub-account occurs. Therefore,
over time, assuming none of the Unadjusted Account Value is allocated to the
Bond Sub-account, the formula will allow for a greater decrease in the
Unadjusted Account Value before a transfer to the Bond Sub-account is made.
It is important to understand that transfers within your Annuity are specific
to the performance of your chosen investment options, the performance of the
Bond Sub-account while money is invested in it, as well as how long the
benefit has been owned. For example, two contracts purchased on the same day,
but invested differently, will likely have different results, as would two
contracts purchased on different days with the same investment options.
Each market cycle is unique, therefore the performance of your Sub-accounts,
and its impact on your Unadjusted Account Value, will differ from market cycle
to market cycle, therefore producing different transfer activity under the
formula. The amount and timing of transfers to and from the Bond Sub-account
depend on various factors unique to your Annuity and are not necessarily
directly correlated with the securities markets, bond markets, interest rates
or any other market or index. Some of the factors that determine the amount
and timing of transfers (as applicable to your Annuity), include:
.. The difference between your Unadjusted Account Value and your Protected
Withdrawal Value;
.. The amount of time the benefit has been in effect on your Annuity;
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.. The amount allocated to and the performance of the Permitted Sub-accounts
and the Bond Sub-account;
.. Any additional Purchase Payments you make to your Annuity (while the
benefit is in effect); and
.. Any withdrawals you take from your Annuity (while the benefit is in effect).
Under the formula, investment performance of your Unadjusted Account Value
that is negative, flat, or even moderately positive may result in a transfer
of a portion of your Unadjusted Account Value in the Permitted Sub-accounts to
the Bond Sub-account.
At any given time, some, most or none of your Unadjusted Account Value will be
allocated to the Bond Sub-account, as dictated by the formula.
The amount allocated to the Bond Sub-account and the amount allocated to the
Permitted Sub-accounts each is a variable in the formula. Therefore, the
investment performance of each affects whether a transfer occurs for your
Annuity. As the amounts allocated to either the Bond Sub-account or the
Permitted Sub-accounts increase, the performance of those sub-accounts will
have a greater impact on your Unadjusted Account Value and hence a greater
impact on if (and how much of) your Unadjusted Account Value is transferred to
or from the Bond Sub-account. It is possible that if a significant portion of
your Unadjusted Account Value is allocated to the Bond Sub-account and that
Sub-account has positive performance, the formula might transfer a portion of
your Unadjusted Account Value to the Permitted Sub-accounts, even if the
performance of your Permitted Sub-accounts is negative. Conversely, if a
significant portion of your Unadjusted Account Value is allocated to the Bond
Sub-account and that Sub-account has negative performance, the formula may
transfer additional amounts from your Permitted Sub-accounts to the Bond
Sub-account even if the performance of your Permitted Sub-accounts is positive.
HOW THE FORMULA OPERATES
Generally, the formula, which is applied each Valuation Day, takes four steps
in determining any applicable transfers within your Annuity.
(1)First, the formula starts by identifying the value of future income
payments we expect to pay. We refer to that value as the "Target Value" or
"L".
(2)Second, we subtract any amounts invested in the Bond Sub-account ("B") from
the Target Value and divide that number by the amount invested in the
Permitted Sub-Accounts ("V"). We refer to this resulting value as the
"Target Ratio" or "R".
(3)Third, we compare the Target Ratio to designated thresholds and other rules
described in greater detail below to determine if a transfer needs to occur.
(4)If a transfer needs to occur, we use another calculation to determine the
amount of the transfer.
The Formula is:
R = L - B/ V
More specifically, the formula operates as follows:
(1)We calculate the Target Value (L) by multiplying the income basis for that
day by 5% and by the applicable Annuity Factor found in Appendix I. If you
have already made a Lifetime Withdrawal, your Target Value would take into
account any automatic step-up, any subsequent Purchase Payments (including
any associated Purchase Credits with respect to the X Series), and any
withdrawals of Excess Income.
Example (assume the income basis is $200,000, and the contract is 11 1/2
months old, resulting in an annuity factor of 14.95)
Target Value (L) = $200,000 x 5% x 14.95 = $149,500
(2)Next, to calculate the Target Ratio (R), the Target Value is reduced by any
amount held within the Bond Sub-account (B) on that day. The remaining
amount is divided by the amount held within the Permitted Sub-accounts (V).
Example (assume the amount in the Bond Sub-account is zero, and the amount
held within the Permitted Sub-accounts is $179,500)
Target Ratio (R) = ($149,500 - 0)/$179,500 = 83.3%
(3)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 the
third Valuation Day, make a transfer from your Permitted Sub-accounts to
the Bond Sub-account (subject to the 90% cap discussed below). If, however,
on any Valuation Day, the Target Ratio is above 84.5%, the formula will
make a transfer from the Permitted Sub-accounts to the Bond Sub-account
(subject to the 90% cap). Once a transfer is made, the Target Ratio must
again be greater than 83% but less than or equal to 84.5% for three
consecutive Valuation Days before a subsequent transfer to the Bond
Sub-account will occur. If the Target Ratio falls below 78% on any
Valuation Day, then a transfer from the Bond Sub-account to the Permitted
Sub-accounts (excluding the DCA MVA Options) will occur.
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Example: Assuming the Target Ratio is above 83% for a 3/rd/ consecutive
Valuation Day, but less than or equal to 84.5% for three consecutive
Valuation Days, a transfer into the Bond Portfolio occurred.
(4)In deciding how much to transfer, we perform a calculation that essentially
seeks to reallocate amounts held in the Permitted Sub-accounts and the Bond
Sub-account so that the Target Ratio meets a target, which currently is
equal to 80% (subject to the 90% Cap discussion below). The further the
Target Ratio is from 80% when a transfer is occurring under the formula,
the greater the transfer amount will be.
THE 90% CAP
The formula will not execute a transfer to the Bond Sub-account that results
in more than 90% of your Unadjusted Account Value being allocated to the Bond
Sub-account ("90% cap") on that Valuation Day. Thus, on any Valuation Day, if
the formula would require a transfer to the Bond Sub-account that would result
in more than 90% of the Unadjusted Account Value being allocated to the Bond
Sub-account, only the amount that results in exactly 90% of the Unadjusted
Account Value being allocated to the Bond Sub-account will be transferred.
Additionally, future transfers into the Bond Sub-account will not be made
(regardless of the performance of the Bond Sub-account and the Permitted
Sub-accounts) at least until there is first a transfer out of the Bond
Sub-account. Once this transfer occurs out of the Bond Sub-account, future
amounts may be transferred to or from the Bond Sub-account (subject to the 90%
cap).
Under the operation of the formula, the 90% cap may come into and out of
effect multiple times while you participate in the benefit. At no time will
the formula make a transfer to the Bond Sub-account that results in greater
than 90% of your Unadjusted Account Value being allocated to the Bond
Sub-account. However, it is possible that, due to the investment performance
of your allocations in the Bond Sub-account and your allocations in the
Permitted Sub-accounts you have selected, your Unadjusted Account Value could
be more than 90% invested in the Bond Sub-account.
MONTHLY TRANSFERS
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, if there is
money allocated to the Bond Sub-account, the formula will perform an
additional calculation to determine whether or not a transfer will be made
from the Bond Sub-account to the Permitted Sub-accounts. This transfer will
automatically occur provided that the Target Ratio, as described above, would
be less than 83% after this 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 Unadjusted Account Value in the Bond
Sub-account, or
b) An amount equal to 5% of your total Unadjusted Account Value.
OTHER IMPORTANT INFORMATION
.. The Bond sub-account is not a Permitted Sub-account. As such, only the
formula can transfer Unadjusted Account Value to or from the Bond
Sub-account. You may not allocate Purchase Payments or transfer any of your
Unadjusted Account Value to or from the Bond Sub-account.
.. While you are not notified before a transfer occurs to or from the Bond
Sub-account, you will receive a confirmation statement indicating the
transfer of a portion of your Unadjusted Account Value either to or from
the Bond Sub-account. Your confirmation statements will be detailed to
include the effective date of the transfer, the dollar amount of the
transfer and the Permitted Sub-accounts the funds are being transferred
to/from. 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 Bond
Sub-account; or
. If a portion of your Unadjusted Account Value was previously allocated
to the 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 Unadjusted Account Value in the Permitted
Sub-accounts and the DCA MVA Options to the Bond Sub-account.
.. If you make additional Purchase Payments to your Annuity, they will be
allocated to the Permitted Sub-accounts and will be subject to the formula.
. Additional Purchase Payments to your Annuity do not increase "B" within
the formula, and may result in an additional Account Value being
transferred to the Permitted Sub-accounts, or a transfer to the Bond
Sub-account due to the change in the ratio.
. 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 Bond Sub-account at least until there is first
a transfer out of the Bond Sub-account, regardless of how much of your
Unadjusted 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 Unadjusted
Account Value is allocated to the Bond Sub-account, and the formula will
still not transfer any of your Unadjusted Account Value to the Bond
Sub-account (at least until there is first a transfer out of the Bond
Sub-account).
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.. If you are participating in Highest Daily Lifetime Income 2.0 and you are
also participating in the 6 or 12 Month DCA Program, the following rules
apply:
. DCA MVA Options are considered "Permitted Sub-accounts" for purpose of
the Target Ratio calculation ("L") described above.
. The formula may transfer amounts out of the DCA MVA Options to the Bond
Sub-account if the amount allocated to the other Permitted Sub-accounts
is insufficient to cover the amount of the transfer.
. The transfer formula will not allocate amounts to the DCA MVA Options
when there is a transfer out of the Bond Sub-account . Such transfers
will be allocated pro-rata to the variable Sub-accounts, excluding the
Bond Sub-account.
. A Market Value Adjustment is not assessed when amounts are transferred
out of the DCA MVA Options under the transfer formula.
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
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, as discussed above. In addition, the amount and
duration of payments under the annuity payment provision may be adjusted so
that the payments do not trigger any penalty or excise taxes due to tax
considerations such as Required Minimum Distribution rules 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 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 Income 2.0 or Spousal
Highest Daily Lifetime Income 2.0 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.
HIGHEST DAILY LIFETIME INCOME 2.0 BENEFIT WITH LIFETIME INCOME ACCELERATOR
We offer another version of Highest Daily Lifetime Income 2.0 that we call
Highest Daily Lifetime Income 2.0 with Lifetime Income Accelerator. Highest
Daily Lifetime Income 2.0 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. We reserve the right, in our sole discretion, to cease
offering this benefit at any time.
You may choose Highest Daily Lifetime Income 2.0 with or without also electing
LIA, however you may not elect LIA without Highest Daily Lifetime Income 2.0
and you must elect the LIA benefit at the time you elect Highest Daily
Lifetime Income 2.0. If you elect Highest Daily Lifetime Income 2.0 without
LIA and would like to add the feature later, you must first terminate Highest
Daily Lifetime Income 2.0 and elect Highest Daily Lifetime Income 2.0 with LIA
(subject to availability and benefit re-election provisions). Please note that
if you terminate Highest Daily Lifetime Income 2.0 and elect Highest Daily
Lifetime Income 2.0 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 Unadjusted Account Value as of the date the
new benefit becomes active. Highest Daily Lifetime Income 2.0 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
death benefit. As long as your Highest Daily Lifetime Income 2.0 with LIA
benefit is in effect, you must allocate your Unadjusted Account Value in
accordance with the Permitted Sub-account(s) with this benefit. The income
benefit under Highest Daily Lifetime Income 2.0 with LIA currently is based on
a single "designated life" who is between the ages of 50 and 75 on the date
that the benefit is elected and received in Good Order. All terms and
conditions of Highest Daily Lifetime Income 2.0 apply to this version of the
benefit, except as described herein. As is the case with Highest Daily
Lifetime Income 2.0, Highest Daily Lifetime Income 2.0 with LIA involves your
participation in a predetermined mathematical formula that transfers Account
Value between your Sub-accounts and the AST Investment Grade Bond Portfolio
Sub-account. Please see Highest Daily Lifetime Income 2.0 above for a
description of the predetermined mathematical formula.
Highest Daily Lifetime Income 2.0 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 or other medical or retirement expenses. You should seek
professional advice to determine your financial needs for long-term care.
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.
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If you elect Highest Daily Lifetime Income 2.0 with LIA, the current charge is
1.50% annually of the greater of Unadjusted Account Value and Protected
Withdrawal Value. The maximum charge is 2.00% annually of the greater of the
Unadjusted 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, 0.375% of the greater of the prior Valuation Day's
Unadjusted 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.
If the deduction of the charge would result in the Unadjusted Account Value
falling below the lesser of $500 or 5% of the sum of the Unadjusted 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 Unadjusted Account Value to fall below the Account
Value Floor. If the Unadjusted Account Value on the date we would deduct a
charge for the benefit is less than the Account Value Floor, then no charge
will be assessed for that benefit quarter. Charges deducted upon termination
of the benefit may cause the Unadjusted Account Value to fall below the
Account Value Floor. If a charge for Highest Daily Lifetime Income 2.0 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 Unadjusted Account Value to fall below the Account
Value Floor. While the deduction of the charge (other than the final charge)
may not reduce the Unadjusted Account Value to zero, withdrawals may reduce
the Unadjusted Account Value to zero.
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.
(1)The designated life is confined to a qualified nursing facility. A
qualified nursing facility is a facility operated pursuant to laws of any
United States jurisdiction 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, and you will have to notify us again in writing in order to become
eligible. 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. Please note that you must be available in the U.S. for
the assessment. Once eligibility is determined, the LIA Amount is equal to
double the Annual Income Amount as described above under Highest Daily
Lifetime Income 2.0.
Additionally, once eligibility is determined, we will reassess your
eligibility on an annual basis although your LIA benefit for the Annuity Year
that immediately precedes or runs concurrent with 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. However, if you were receiving income based on the LIA Amount and do
not take action to change your withdrawal amount to your Annual Income Amount,
any cumulative Lifetime Withdrawals in an Annuity Year that are in excess of
the Annual Income Amount will impact your Annual Income Amount in subsequent
years (except with regard to Required Minimum Distributions for this Annuity
that comply with our rules). Please note that we will not change your current
withdrawal amount
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unless you instruct us to do so. If you wish to establish or make changes to
your existing withdrawal program to ensure that you are not taking Excess
Income, please contact our Annuity Service Office. 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 Income 2.0 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.
For new issuances of this benefit, we may institute a "cut-off" date that
would stop the appreciation of the Protected Withdrawal Value, even if no
Lifetime Withdrawal had been taken prior to the cut-off date (thus affecting
the determination of the LIA Amount). We will not apply any cut-off date to
those who elected this benefit prior to our institution of a cut-off date.
WITHDRAWALS IN EXCESS OF THE LIA AMOUNT. Withdrawals (other than the
Non-Lifetime Withdrawal) of any amount in a given Annuity Year up to the LIA
Amount will reduce the Protected Withdrawal Value by the amount of the
withdrawal. However, if your cumulative Lifetime Withdrawals in an Annuity
Year are in excess of the LIA Amount ("Excess Income"), 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 Income. Excess
Income also 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.
AS DISCUSSED IN THIS PARAGRAPH, WHEN YOU MAKE A WITHDRAWAL THAT IS SUBJECT TO
A CDSC AND/OR TAX WITHHOLDING, WE WILL IDENTIFY THE AMOUNT THAT INCLUDES NOT
ONLY THE AMOUNT YOU ACTUALLY RECEIVE, BUT ALSO THE AMOUNT OF THE CDSC AND/OR
TAX WITHHOLDING, TO DETERMINE WHETHER YOUR WITHDRAWAL HAS EXCEEDED THE LIA
AMOUNT. WHEN YOU TAKE A WITHDRAWAL, YOU MAY REQUEST A "GROSS" WITHDRAWAL
AMOUNT (E.G., $2000) BUT THEN HAVE ANY CDSC AND/OR TAX WITHHOLDING DEDUCTED
FROM THE AMOUNT YOU ACTUALLY RECEIVE (ALTHOUGH AN MVA MAY ALSO BE APPLIED TO
YOUR REMAINING UNADJUSTED ACCOUNT VALUE, IT IS NOT CONSIDERED FOR PURPOSES OF
DETERMINING EXCESS INCOME). THE PORTION OF A WITHDRAWAL THAT EXCEEDED YOUR LIA
AMOUNT (IF ANY) WOULD BE TREATED AS AN EXCESS INCOME AND THUS WOULD REDUCE
YOUR LIA AMOUNT IN SUBSEQUENT YEARS. ALTERNATIVELY, YOU MAY REQUEST THAT A
"NET" WITHDRAWAL AMOUNT ACTUALLY BE PAID TO YOU (E.G., $2000), WITH THE
UNDERSTANDING THAT ANY CDSC AND/OR TAX WITHHOLDING (E.G., $240) BE APPLIED TO
YOUR REMAINING UNADJUSTED ACCOUNT VALUE (ALTHOUGH AN MVA MAY ALSO BE APPLIED
TO YOUR REMAINING UNADJUSTED ACCOUNT VALUE, IT IS NOT CONSIDERED FOR PURPOSES
OF DETERMINING EXCESS INCOME). IN THE LATTER SCENARIO, WE DETERMINE WHETHER
ANY PORTION OF THE WITHDRAWAL IS TO BE TREATED AS EXCESS INCOME BY LOOKING TO
THE SUM OF THE NET AMOUNT YOU ACTUALLY RECEIVE (E.G., $2000) AND THE AMOUNT OF
ANY CDSC AND/OR TAX WITHHOLDING (IN THIS EXAMPLE, A TOTAL OF $2240). THE
AMOUNT OF THAT SUM (E.G., THE $2000 YOU RECEIVED PLUS THE $240 FOR THE CDSC
AND/OR TAX WITHHOLDING) THAT EXCEEDS YOUR LIA AMOUNT WILL BE TREATED AS EXCESS
INCOME - THEREBY REDUCING YOUR LIA AMOUNT IN SUBSEQUENT YEARS.
No CDSC is applicable to any Lifetime Withdrawal that is less than or equal to
the LIA Amount, even if the total amount of such withdrawals in any Annuity
Year exceeds any maximum free withdrawal amount described in the Annuity. Such
Lifetime Withdrawals are not treated as withdrawals of Purchase Payments. Each
withdrawal that is Excess Income is subject to any applicable CDSC if the
withdrawal is greater than the Free Withdrawal amount under the Annuity.
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 that we accept, the Annual Income Amount is increased by an amount
obtained by applying the applicable percentage (3% for ages 50-54; 4% for ages
55 to 64; 5% for ages 65-84; and 6% for ages 85 or 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 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).
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If the Annuity permits additional Purchase Payments, we will monitor
additional Purchase Payments and may limit or refuse all or any portion of 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 and timing of additional Purchase Payment(s). Currently, our
administrative practice is to monitor each contract and, beginning in the
second benefit year, cumulative additional Purchase Payments within any
benefit year will be limited to the Account Value at benefit election plus any
additional Purchase Payments made within that first benefit year. Subject to
state law, we also 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 Unadjusted 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 Unadjusted 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 UNADJUSTED ACCOUNT
VALUE TO ZERO ARE MORE THAN THE LIA AMOUNT (EXCEPT IN THE CASE OF REQUIRED
MINIMUM DISTRIBUTIONS), HIGHEST DAILY LIFETIME INCOME 2.0 WITH LIA TERMINATES,
AND NO ADDITIONAL PAYMENTS ARE 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 LIA AMOUNT IN SUBSEQUENT ANNUITY YEARS UNTIL THE DEATH OF
THE DESIGNATED LIFE.
ANNUITY OPTIONS. In addition to the Highest Daily Lifetime Income 2.0 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 Unadjusted 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.
If you elect Highest Daily Lifetime Income 2.0 with LIA, and never meet the
eligibility requirements, you will not receive any additional payments based
on the LIA Amount.
PLEASE NOTE THAT IF YOU ELECT HIGHEST DAILY LIFETIME INCOME 2.0 WITH LIA, YOUR
ACCOUNT VALUE IS NOT GUARANTEED, CAN FLUCTUATE AND MAY LOSE VALUE.
TERMINATION OF HIGHEST DAILY LIFETIME INCOME 2.0 WITH LIA. THE LIA BENEFIT
TERMINATES UPON THE FIRST TO OCCUR OF THE FOLLOWING:
.. YOUR TERMINATION OF THE BENEFIT;
.. YOUR SURRENDER OF THE ANNUITY;
.. OUR RECEIPT OF DUE PROOF OF DEATH OF THE DESIGNATED LIFE;
.. THE ANNUITY DATE, IF UNADJUSTED ACCOUNT VALUE REMAINS ON THE ANNUITY DATE
AND AN ELECTION IS MADE TO COMMENCE ANNUITY PAYMENTS PRIOR TO THE TENTH
ANNUITY ANNIVERSARY;
.. THE VALUATION DAY ON WHICH EACH OF THE UNADJUSTED ACCOUNT VALUE AND THE
ANNUAL INCOME AMOUNT IS ZERO; OR
.. IF YOU CEASE TO MEET OUR REQUIREMENTS FOR ELECTIONS OF THIS BENEFIT.
Highest Daily Lifetime Income 2.0 with LIA uses the same predetermined
mathematical formula used with Highest Daily Lifetime Income 2.0 and Spousal
Highest Daily Lifetime Income 2.0. See the pertinent discussion in Highest
Daily Lifetime Income 2.0 above.
SPOUSAL HIGHEST DAILY LIFETIME INCOME 2.0 BENEFIT
Spousal Highest Daily Lifetime Income 2.0 is a lifetime guaranteed minimum
withdrawal benefit, under which, subject to the terms of the benefit, we
guarantee your ability to take a certain annual withdrawal amount for the
lives of two individuals who are spouses. We reserve the right, in our sole
discretion, to cease offering this benefit for new elections at any time.
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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 Unadjusted 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,
provided you have not made withdrawals of Excess Income that result in your
Unadjusted Account Value being reduced to zero. We also permit you to
designate the first withdrawal from your Annuity as a one-time "Non-Lifetime
Withdrawal." All other withdrawals from your Annuity are considered a
"Lifetime Withdrawal" under the benefit. Withdrawals are taken first from your
own Account Value. We are only required to begin making lifetime income
payments to you under our guarantee when and if your Unadjusted Account Value
is reduced to zero (for any reason other than due to partial withdrawals of
Excess Income). 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 Spousal Highest Daily Lifetime Income 2.0 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 Income 2.0 is the
predetermined mathematical formula we employ that may periodically transfer
your Unadjusted Account Value to and from the AST Investment Grade Bond
Sub-account. See the section above entitled "How Highest Daily Lifetime Income
2.0 Transfers Unadjusted Account Value Between Your Permitted Sub-accounts and
the AST Investment Grade Bond Sub-account."
Spousal Highest Daily Lifetime Income 2.0 is the spousal version of Highest
Daily Lifetime Income 2.0. 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
Income 2.0 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" for details. Please note that if you terminate
Spousal Highest Daily Lifetime Income 2.0 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
Unadjusted Account Value as of the date the new benefit becomes active.
Spousal Highest Daily Lifetime Income 2.0 must be elected based on two
designated lives, as described below. Each designated life must be at least 50
years old when the benefit is elected. Spousal Highest Daily Lifetime Income
2.0 is not available if you elect any other optional living benefit. As long
as your Spousal Highest Daily Lifetime Income 2.0 is in effect, you must
allocate your Unadjusted Account Value in accordance with the 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.
ALTHOUGH YOU ARE GUARANTEED THE ABILITY TO WITHDRAW YOUR ANNUAL INCOME AMOUNT
FOR LIFE EVEN IF YOUR UNADJUSTED ACCOUNT VALUE FALLS TO ZERO, IF THAT
WITHDRAWAL OF EXCESS INCOME (DESCRIBED BELOW) BRINGS YOUR UNADJUSTED ACCOUNT
VALUE TO ZERO, YOUR ANNUAL INCOME AMOUNT ALSO WOULD FALL TO ZERO, AND THE
BENEFIT AND THE ANNUITY THEN WOULD TERMINATE. IN THAT SCENARIO, NO FURTHER
AMOUNT WOULD BE PAYABLE UNDER SPOUSAL HIGHEST DAILY LIFETIME INCOME 2.0. AS TO
THE IMPACT OF SUCH A SCENARIO ON ANY OTHER OPTIONAL BENEFIT YOU MAY HAVE,
PLEASE SEE THE APPLICABLE SECTION IN THIS PROSPECTUS.
You may also participate in the 6 or 12 Month Dollar Cost Averaging Program if
you elect Spousal Highest Daily Lifetime Income, subject to the 6 or 12 Month
DCA Program's rules. See the section of this prospectus entitled "6 or 12
Month Dollar Cost Averaging Program" for details.
KEY FEATURE - PROTECTED WITHDRAWAL VALUE
The Protected Withdrawal Value is only used to calculate the initial Annual
Income Amount and the benefit fee. The Protected Withdrawal Value is separate
from your Unadjusted Account Value and not available as cash or a lump sum
withdrawal. On the effective date of the benefit, the Protected Withdrawal
Value is equal to your Unadjusted 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 Unadjusted 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 5% 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 Unadjusted Account Value on the current Valuation Day.
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If you have not made a Lifetime Withdrawal on or before the 12/th/ Anniversary
of the effective date of the benefit, your Periodic Value on the 12/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% of the Unadjusted Account Value on the effective date of the
benefit including any Purchase Payments (including any associated
Purchase Credits) made on that day;
(b)200% 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.
Upon locking in the double (200%), your Protected Withdrawal Value will
continue to lock in your Annuity's highest daily value and immediately
compound it at 5% annually until your first Lifetime Withdrawal. This means
that your Protected Withdrawal Value will be at least double (200%) your
cumulative Purchase Payments made within the first benefit year if you have
owned the benefit at least 12 years, assuming you have not taken any
withdrawals. This is a minimum guarantee. If, due to positive Account Value
performance, your Protected Withdrawal Value is greater than the double
(200%), your Protected Withdrawal Value will continue to lock in your highest
daily value and immediately increase it at 5% compounded growth until your
first Lifetime Withdrawal.
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 Unadjusted Account
Value upon any step-up, increased for subsequent Purchase Payments (including
any associated Purchase Credits) and reduced for subsequent Lifetime
Withdrawals (see the examples that begin immediately prior to the sub-heading
below entitled "Example of dollar-for-dollar reductions").
PLEASE NOTE THAT IF YOU ELECT SPOUSAL HIGHEST DAILY LIFETIME INCOME 2.0, YOUR
ACCOUNT VALUE IS NOT GUARANTEED, CAN FLUCTUATE AND MAY LOSE VALUE.
KEY FEATURE - ANNUAL INCOME AMOUNT UNDER SPOUSAL HIGHEST DAILY LIFETIME INCOME
2.0
The Annual Income Amount is equal to a specified percentage of the Protected
Withdrawal Value at the first Lifetime Withdrawal and does not reduce in
subsequent Annuity Years, as described below. The percentage initially depends
on the age of the younger designated life on the date of the first Lifetime
Withdrawal after election of the benefit. The percentages are: 2.5% for ages
50-54, 3.5% for ages 55 to 64; 4.5% for ages 65 to 84, and 5.5% for ages 85
and older. We use the age of the younger designated life even if that
designated life is no longer a participant under the Annuity due to death or
divorce. Under Spousal Highest Daily Lifetime Income 2.0, 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 and also will reduce the
Protected Withdrawal Value on a dollar-for-dollar basis. 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 Unadjusted Account Value immediately
prior to such withdrawal (see examples of this calculation below). Excess
Income also will reduce the Protected Withdrawal Value by the same ratio.
AS DISCUSSED IN THIS PARAGRAPH, WHEN YOU MAKE A PARTIAL WITHDRAWAL THAT IS
SUBJECT TO A CDSC AND/OR TAX WITHHOLDING, WE WILL IDENTIFY THE AMOUNT THAT
INCLUDES NOT ONLY THE AMOUNT YOU ACTUALLY RECEIVE, BUT ALSO THE AMOUNT OF THE
CDSC AND/OR TAX WITHHOLDING, TO DETERMINE WHETHER YOUR WITHDRAWAL HAS EXCEEDED
THE ANNUAL INCOME AMOUNT. WHEN YOU TAKE A PARTIAL WITHDRAWAL, YOU MAY REQUEST
A "GROSS" WITHDRAWAL AMOUNT (E.G., $2000) BUT THEN HAVE ANY CDSC AND/OR TAX
WITHHOLDING DEDUCTED FROM THE AMOUNT YOU ACTUALLY RECEIVE (ALTHOUGH AN MVA MAY
ALSO BE APPLIED TO YOUR REMAINING UNADJUSTED ACCOUNT VALUE, IT IS NOT
CONSIDERED FOR PURPOSES OF DETERMINING EXCESS INCOME). THE PORTION OF A
WITHDRAWAL THAT EXCEEDED YOUR ANNUAL INCOME AMOUNT (IF ANY) WOULD BE TREATED
AS EXCESS INCOME AND THUS WOULD REDUCE YOUR ANNUAL INCOME AMOUNT IN SUBSEQUENT
YEARS. ALTERNATIVELY, YOU MAY REQUEST THAT A "NET" WITHDRAWAL AMOUNT ACTUALLY
BE PAID TO YOU (E.G., $2000), WITH THE UNDERSTANDING THAT ANY CDSC AND/OR TAX
WITHHOLDING (E.G., $240) BE APPLIED TO YOUR REMAINING UNADJUSTED ACCOUNT VALUE
(ALTHOUGH AN MVA MAY ALSO BE APPLIED TO YOUR REMAINING UNADJUSTED ACCOUNT
VALUE, IT IS NOT CONSIDERED FOR PURPOSES OF DETERMINING EXCESS INCOME). IN THE
LATTER SCENARIO, WE DETERMINE WHETHER ANY PORTION OF THE WITHDRAWAL IS TO BE
TREATED AS EXCESS INCOME BY LOOKING TO THE SUM OF THE NET AMOUNT YOU ACTUALLY
RECEIVE (E.G., $2000) AND THE AMOUNT OF ANY CDSC AND/OR TAX WITHHOLDING (IN
THIS EXAMPLE, A TOTAL OF $2240). THE AMOUNT OF THAT SUM (E.G., THE $2000 YOU
RECEIVED PLUS THE $240 FOR THE CDSC AND/OR TAX WITHHOLDING) THAT EXCEEDS YOUR
ANNUAL INCOME AMOUNT WILL BE TREATED AS EXCESS INCOME - THEREBY REDUCING YOUR
ANNUAL INCOME AMOUNT IN SUBSEQUENT YEARS.
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.
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Any Purchase Payment that you make subsequent to the election of Spousal
Highest Daily Lifetime Income 2.0 and subsequent to the first Lifetime
Withdrawal will (i) immediately 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: 2.5%
for ages 50-54, 3.5% for ages 55 to 64, 4.5% for ages 65 to 84, and 5.5% 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). Subject to state law, 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 Unadjusted 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 younger designated life on the Annuity Anniversary as of which
the step-up would occur. The percentages are 2.5% for ages 50-54, 3.5% for
ages 55 to 64, 4.5% for ages 65 to 84, and 5.5% 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. We will not automatically increase your Annual Income
Amount solely as a result of your attaining a new age that is associated with
a new age-based percentage. The Unadjusted 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
Unadjusted 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 Unadjusted 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 Income 2.0 has
changed for new purchasers, you may be subject to the new charge at the time
of such step-up. Prior to increasing your charge for Spousal Highest Daily
Lifetime Income 2.0 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. Any such increased charge will not be greater than
the maximum charge set forth in the table entitled "Your Optional Benefit Fees
and Charges".
If you are enrolled in a Systematic Withdrawal program, we will not
automatically increase the withdrawal amount when there is an increase to the
Annual Income Amount. You must notify us in order to increase the withdrawal
amount of any Systematic Withdrawal program.
Spousal Highest Daily Lifetime Income 2.0 does not affect your ability to take
withdrawals under your Annuity, or limit your ability to take partial
withdrawals that exceed the Annual Income Amount. Under Spousal Highest Daily
Lifetime Income 2.0, 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. If your
cumulative Lifetime Withdrawals in an Annuity Year exceed the Annual Income
Amount, 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).
Because each of the Protected Withdrawal Value and Annual Income Amount is
determined in a way that is not solely related to Unadjusted Account Value, it
is possible for the Unadjusted 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 Income 2.0 or any other fees and charges under the Annuity. Assume
the following for all three examples:
. The Issue Date is November 1, 2012
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. Spousal Highest Daily Lifetime Income 2.0 is elected on August 1, 2013
. Both designated lives were 70 years old when they elected Spousal
Highest Daily Lifetime Income 2.0
. The first withdrawal is a Lifetime Withdrawal
EXAMPLE OF DOLLAR-FOR-DOLLAR REDUCTIONS
On October 24, 2013, the Protected Withdrawal Value is $120,000, resulting in
an Annual Income Amount of $5,400 (since the younger designated life is
between the ages of 65 and 84 at the time of the first Lifetime Withdrawal,
the Annual Income Amount is 4.5% of the Protected Withdrawal Value, in this
case 4.5% 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 October 31, 2013) is $2,900. This is the result of a
dollar-for-dollar reduction of the Annual Income Amount ($5,400 less $2,500 =
$2,900).
EXAMPLE OF PROPORTIONAL REDUCTIONS
Continuing the previous example, assume an additional withdrawal of $5,000
occurs on October 29, 2013 and the Account Value at the time and immediately
prior to this withdrawal is $118,000. The first $2,900 of this withdrawal
reduces the Annual Income Amount for that Annuity Year to $0. The remaining
withdrawal amount of $2,100 reduces the Annual Income Amount in future Annuity
Years on a proportional basis based on the ratio of the Excess Income to the
Unadjusted Account Value immediately prior to the Excess Income. (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:
Unadjusted Account Value before Lifetime Withdrawal $118,000.00
Less amount of "non" Excess Income $ 2,900.00
Unadjusted Account Value immediately before Excess Income of $2,100 $115,100.00
Excess Income amount $ 2,100.00
Ratio 1.82%
Annual Income Amount $ 5,400.00
Less ratio of 1.82% $ 98.28
Annual Income Amount for future Annuity Years $ 5,301.72
EXAMPLE OF HIGHEST DAILY AUTO STEP-UP
On each Annuity Anniversary date after the first Lifetime Withdrawal, the
Annual Income Amount is stepped-up if the appropriate percentage (based on the
younger designated life's age on that 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 (including any associated Purchase Credits), is greater than the
Annual Income Amount, adjusted for Excess Income and additional Purchase
Payments (including any associated Purchase Credits).
Continuing the same example as above, the Annual Income Amount for this
Annuity Year is $5,400. However, the Excess Income on October 29 reduces the
amount to $5,301.72 for future years (see above). For the next Annuity Year,
the Annual Income Amount will be stepped up if 4.5% (since the younger
designated life is between 59 1/2 and 84 on the date of the potential step-up)
of the highest daily Unadjusted Account Value adjusted for withdrawals and
Purchase Payments (including any associated Purchase Credits), is greater than
$5,301.72. Here are the calculations for determining the daily values. Only
the October 26 value is being adjusted for Excess Income as the October 30,
October 31 and November 1 Valuation Days occur after the Excess Income on
October 29.
HIGHEST DAILY VALUE
(ADJUSTED FOR ADJUSTED ANNUAL
WITHDRAWAL AND PURCHASE INCOME AMOUNT (4.5% OF THE
DATE* ACCOUNT VALUE PAYMENTS)** HIGHEST DAILY VALUE)
----- ------------- ----------------------- --------------------------
October 25, 2013 $119,000.00 $119,000.00 $5,355.00
October 29, 2013 $113,000.00 $113,986.98 $5,129.41
October 30, 2013 $113,000.00 $113,986.98 $5,129.41
October 31, 2013 $119,000.00 $119,000.00 $5,355.00
November 1, 2013 $118,473.00 $119,000.00 $5,355.00
* In this example, the Annuity Anniversary date is November 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 November 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 October 25, resulting in an adjusted Annual Income Amount of
$5,355.00. This amount is adjusted on October 29 to reflect the $5,000
withdrawal. The calculations for the adjustments are:
. The Unadjusted Account Value of $119,000 on October 25 is first reduced
dollar-for-dollar by $2,900 ($2,900 is the remaining Annual Income
Amount for the Annuity Year), resulting in an Unadjusted Account Value
of $116,100 before the Excess Income.
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. This amount ($116,100) is further reduced by 1.82% (this is the ratio in
the above example which is the Excess Income divided by the Unadjusted
Account Value immediately preceding the Excess Income) resulting in a
Highest Daily Value of $113,986.98.
. The adjusted October 29 Highest Daily Value, $113,986.98, is carried
forward to the next Valuation Date of October 30. At this time, we
compare this amount to the Unadjusted Account Value on October 30,
$113,000. Since the October 29 adjusted Highest Daily Value of
$113,986.98 is greater than the October 30 value, we will continue to
carry $113,986.98 forward to the next Valuation Day of October 31. The
Unadjusted Account Value on October 31, $119,000.00, becomes the final
Highest Daily Value since it exceeds the $113,986.98 carried forward.
. The October 31 adjusted Highest Daily Value of $119,000.00 is also
greater than the November 1 value, so we will continue to carry
$119,000.00 forward to the final Valuation Day of November 1.
In this example, the final Highest Daily Value of $119,000.00 is converted to
an Annual Income Amount based on the applicable percentage of 4.5%, generating
an Annual Income Amount of $5,355.00. Since this amount is greater than the
current year's Annual Income Amount of $5,301.72 (adjusted for Excess Income),
the Annual Income Amount for the next Annuity Year, starting on November 1,
2013 and continuing through October 31, 2014, will be stepped-up to $5,355.00.
NON-LIFETIME WITHDRAWAL FEATURE
You may take a one-time non-lifetime withdrawal ("Non-Lifetime Withdrawal")
under Spousal Highest Daily Lifetime Income 2.0. It is an optional feature of
the benefit that you can only elect at the time of your first withdrawal. You
cannot take a Non-Lifetime Withdrawal in an amount that would cause your
Annuity's Account Value, after taking the withdrawal, to fall below the
minimum Surrender Value (see "Surrenders - Surrender Value"). This
Non-Lifetime Withdrawal will not establish your 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 Spousal Highest Daily Lifetime Income 2.0. You must tell us at
the time you take the partial withdrawal if your withdrawal is intended to be
the Non-Lifetime Withdrawal and not the first Lifetime Withdrawal under
Spousal Highest Daily Lifetime Income 2.0. If you don't elect the Non-Lifetime
Withdrawal, the first withdrawal you make will be the first Lifetime
Withdrawal that establishes your Annual Income Amount, which is based on your
Protected Withdrawal Value. Once you elect the Non-Lifetime Withdrawal or
Lifetime Withdrawals, no additional Non-Lifetime Withdrawals may be taken. If
you do not take a Non-Lifetime Withdrawal before beginning Lifetime
Withdrawals, you lose the ability to take it.
The Non-Lifetime Withdrawal will proportionally reduce the Protected
Withdrawal Value. It will also proportionally reduce the Periodic Value
guarantee on the twelfth anniversary of the benefit effective date (see
description in "Key Feature - Protected Withdrawal Value," above). It will
reduce both by the percentage the total withdrawal amount (including any
applicable CDSC) represents of the then current Unadjusted 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. Thus, the first withdrawal will be a 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 3, 2012
.. Spousal Highest Daily Lifetime Income 2.0 is elected on September 4, 2013
.. The Unadjusted Account Value at benefit election was $105,000
.. Each designated life was 70 years old when he/she elected Spousal Highest
Daily Lifetime Income 2.0
.. No previous withdrawals have been taken under Spousal Highest Daily
Lifetime Income 2.0
On October 3, 2013, the Protected Withdrawal Value is $125,000, the 12/th/
benefit year minimum Periodic Value guarantee is $210,000, and the Unadjusted
Account Value is $120,000. Assuming $15,000 is withdrawn from the Annuity on
October 3, 2013 and is designated as a Non-Lifetime Withdrawal, all guarantees
associated with Spousal Highest Daily Lifetime Income 2.0 will be reduced by
the ratio the total withdrawal amount represents of the Unadjusted Account
Value just prior to the withdrawal being taken.
HERE IS THE CALCULATION:
Withdrawal amount $ 15,000
Divided by Unadjusted 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
12th benefit year Minimum Periodic Value $183,750
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REQUIRED MINIMUM DISTRIBUTIONS
See the sub-section entitled "Required Minimum Distributions" in the
prospectus section above concerning Highest Daily Lifetime Income for a
discussion of the relationship between the RMD amount and the Annual Income
Amount.
BENEFITS UNDER SPOUSAL HIGHEST DAILY LIFETIME INCOME 2.0
.. To the extent that your Unadjusted 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 Income 2.0, 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 Unadjusted 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. After the Unadjusted Account Value is reduced to zero, 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
UNADJUSTED ACCOUNT VALUE TO ZERO ARE MORE THAN THE ANNUAL INCOME AMOUNT,
SPOUSAL HIGHEST DAILY LIFETIME INCOME 2.0 TERMINATES, AND NO ADDITIONAL
PAYMENTS WILL BE MADE. HOWEVER, IF A PARTIAL 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 Unadjusted 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 Latest Annuity Date 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 Unadjusted Account Value, less any applicable state
required premium tax, 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. If applying your Unadjusted
Account Value, less any applicable tax charges, to our current life
only (or joint life, depending on the number of designated lives
remaining) annuity payment rates results in a higher annual payment,
we will give you the higher annual payment.
.. In the absence of an election when mandatory annuity payments are to begin,
we currently make annual annuity payments as a joint and survivor or single
(as applicable) life fixed annuity with eight payments certain, by applying
the greater of the annuity rates then currently available or the annuity
rates guaranteed in your Annuity. We reserve the right at any time to
increase or decrease the certain period in order to comply with the Code
(e.g., to shorten the period certain to match life expectancy under
applicable Internal Revenue Service tables). 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 Unadjusted 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.
OTHER IMPORTANT CONSIDERATIONS
.. Withdrawals under the Spousal Highest Daily Lifetime Income 2.0 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 partial
withdrawals that exceed the Annual Income Amount. If you have an active
Systematic Withdrawal program running at the time you elect this benefit,
the first systematic withdrawal that processes after your election of the
benefit will be deemed a Lifetime Withdrawal. Withdrawals made while
Spousal Highest Daily Lifetime Income 2.0 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 MVA Options. If you have an active Systematic Withdrawal program
running at the time you elect this benefit, the program must withdraw funds
pro rata.
.. Any Lifetime Withdrawal that you take that is not a withdrawal of Excess
Income is not subject to a CDSC, even if the total amount of such
withdrawals in any Annuity Year exceeds the maximum Free Withdrawal amount.
Any Lifetime Withdrawal
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that is treated as Excess Income is subject to any applicable CDSC, if the
withdrawal is greater than the Free Withdrawal amount.
.. You should carefully consider when to begin taking Lifetime Withdrawals. If
you begin taking withdrawals early, you may maximize the time during which
you may take Lifetime Withdrawals due to longer life expectancy, and you
will be using an optional benefit for which you are paying a charge. On the
other hand, you could limit the value of the benefit if you begin taking
withdrawals too soon. For example, withdrawals reduce your Unadjusted
Account Value and may limit the potential for increasing your Protected
Withdrawal Value. You should discuss with your Financial Professional when
it may be appropriate for you to begin taking Lifetime Withdrawals.
.. You cannot allocate Purchase Payments or transfer Unadjusted Account Value
to or from the AST Investment Grade Bond Sub-account. A summary description
of the AST Investment Grade Bond Portfolios appears in the prospectus
section entitled "Investment Options." 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 Permitted Sub-accounts, the DCA MVA Options, and
the AST Investment Grade Bond Sub-account triggered by the predetermined
mathematical formula will not count toward the maximum number of free
transfers allowable under an Annuity.
.. Upon inception of the benefit, 100% of your Unadjusted Account Value must
be allocated to the Permitted Sub-accounts. We may amend the Permitted
Sub-accounts from time to time. Changes to Permitted Sub-accounts, or to
the requirements as to how you may allocate your Unadjusted Account Value
with this benefit, will apply to new elections of the benefit and may apply
to current participants in the benefit. To the extent that changes apply to
current participants in the benefit, they will apply only upon
re-allocation of Unadjusted Account Value, or upon addition of additional
Purchase Payments. That is, we will not require such current participants
to re-allocate Unadjusted Account Value to comply with any new requirements.
.. 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 Sub-accounts and (ii) invest the proceeds of those sales in
the Sub-accounts that you have designated. During this reallocation
process, your Unadjusted 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 begin until the close of business on the following
Valuation Day.
.. Any Death Benefit will terminate if withdrawals taken under Spousal Highest
Daily Lifetime Income 2.0 reduce your Unadjusted Account Value to zero (see
"Death Benefits").
.. The current charge for Spousal Highest Daily Lifetime Income 2.0 is 1.10%
annually of the greater of Unadjusted Account Value and Protected
Withdrawal Value. The maximum charge for Spousal Highest Daily Lifetime
Income 2.0 is 2.00% annually of the greater of the Unadjusted Account Value
and Protected Withdrawal Value. As discussed in "Highest Daily Auto
Step-Up" above, we may increase the fee upon a step-up under this benefit.
We deduct this charge on quarterly anniversaries of the benefit effective
date, based on the values on the last Valuation Day prior to the quarterly
anniversary. Thus, we deduct, on a quarterly basis, 0.275% of the greater
of the prior Valuation Day's Unadjusted 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. You will begin paying this charge as of the effective date of
the benefit even if you do not begin taking withdrawals for many years, or
ever. We will not refund the charges you have paid if you choose never to
take any withdrawals and/or if you never receive any lifetime income
payments.
If the deduction of the charge would result in the Unadjusted Account Value
falling below the lesser of $500 or 5% of the sum of the Unadjusted 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 Unadjusted Account Value to fall below the Account
Value Floor. If the Unadjusted Account Value on the date we would deduct a
charge for the benefit is less than the Account Value Floor, then no charge
will be assessed for that benefit quarter. Charges deducted upon termination
of the benefit may cause the Unadjusted Account Value to fall below the
Account Value Floor. If a charge for Spousal Highest Daily Lifetime Income 2.0
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 Unadjusted Account Value to fall below the Account Value
Floor. While the deduction of the charge (other than the final charge) may not
reduce the Unadjusted Account Value to zero, withdrawals may reduce the
Unadjusted Account Value to zero. If this happens and the Annual Income Amount
is greater than zero, we will make payments under the benefit.
ELECTION OF AND DESIGNATIONS UNDER THE BENEFIT
Spousal Highest Daily Lifetime Income 2.0 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 Income 2.0 only may be elected if the Owner, Annuitant, and
Beneficiary designations are as follows:
.. One Annuity Owner, where the Annuitant and the Owner are the same person
and the sole Beneficiary is the Owner's spouse. Each Owner/Annuitant and
the Beneficiary must be at least 50 years old at the time of election; or
.. Co-Annuity Owners, where the Owners are each other's spouses. The
Beneficiary designation must be the surviving spouse, or the spouses named
equally. One of the Owners must be the Annuitant. Each Owner must be at
least 50 years old at the time of election; or
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.. 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. Each of the Annuitant and the Contingent Annuitant must be at
least 50 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
designations under this benefit. However, if the Beneficiary is changed, the
benefit may not be eligible to be continued upon the death of the first
designated life. If the designated lives divorce, Spousal Highest Daily
Lifetime Income 2.0 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 Income 2.0 can be elected at the time that you
purchase your Annuity or after the Issue Date, subject to its availability,
and our eligibility rules and restrictions. If you elect Spousal Highest Daily
Lifetime Income 2.0 and terminate it, you can re-elect it, subject to our
current rules and availability. See "Termination of Existing Benefits and
Election of New Benefits" for information pertaining to elections, termination
and re-election of benefits. PLEASE NOTE THAT IF YOU TERMINATE A LIVING
BENEFIT AND ELECT SPOUSAL HIGHEST DAILY LIFETIME INCOME 2.0, YOU LOSE THE
GUARANTEES THAT YOU HAD ACCUMULATED UNDER YOUR EXISTING BENEFIT, AND YOUR
GUARANTEES UNDER SPOUSAL HIGHEST DAILY LIFETIME INCOME 2.0 WILL BE BASED ON
YOUR UNADJUSTED ACCOUNT VALUE ON THE EFFECTIVE DATE OF SPOUSAL HIGHEST DAILY
LIFETIME INCOME 2.0. You and your Financial Professional should carefully
consider whether terminating your existing benefit and electing Spousal
Highest Daily Lifetime Income 2.0 is appropriate for you. We reserve the right
to waive, change and/or further limit the election frequency in the future for
new elections of this benefit.
If you wish to elect this benefit and you are currently participating in a
Systematic Withdrawal program, amounts withdrawn under the program must be
taken on a pro rata basis from your Annuity's Sub-accounts (i.e., in direct
proportion to the proportion that each such Sub-account bears to your total
Account Value) in order for you to be eligible for the benefit. Thus, you may
not elect Spousal Highest Daily Lifetime Income 2.0 so long as you participate
in a Systematic Withdrawal program in which withdrawals are not taken pro rata.
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 UPON THE FIRST TO OCCUR OF THE FOLLOWING:
.. UPON OUR RECEIPT OF DUE PROOF OF DEATH OF THE FIRST DESIGNATED LIFE, IF THE
SURVIVING SPOUSE OPTS TO TAKE THE DEATH BENEFIT UNDER THE ANNUITY (RATHER
THAN CONTINUE THE ANNUITY) OR IF THE SURVIVING SPOUSE IS NOT AN ELIGIBLE
DESIGNATED LIFE;
.. UPON THE DEATH OF THE SECOND DESIGNATED LIFE;
.. YOUR TERMINATION OF THE BENEFIT;
.. YOUR SURRENDER OF THE ANNUITY;
.. 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);
.. BOTH THE UNADJUSTED ACCOUNT VALUE AND ANNUAL INCOME AMOUNT EQUAL ZERO; OR
.. YOU CEASE TO MEET OUR REQUIREMENTS AS DESCRIBED IN "ELECTION OF AND
DESIGNATIONS UNDER THE BENEFIT".
"Due Proof of Death" is satisfied when we receive all of the following in Good
Order: (a) a death certificate or similar documentation acceptable to us;
(b) all representations we require or which are mandated by applicable law or
regulation in relation to the death claim and the payment of death proceeds
(all representations may also include trust or estate paperwork (if needed) in
addition to consent forms (if applicable), requirements other than the death
certificate and claim forms from at least one beneficiary); and (c) any
applicable election of the method of payment of the death benefit, if not
previously elected by the Owner, by at least one Beneficiary.
Upon termination of Spousal Highest Daily Lifetime Income 2.0 other than upon
the death of the second 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 Unadjusted Account Value falling below the Account Value Floor.
However, if the amount in the Sub-accounts is not enough to pay the charge, we
will reduce the fee to no more than the amount in the Sub-accounts. With
regard to your investment allocations, upon termination we will: (i) leave
intact amounts that are held in the Permitted Sub-accounts, and (ii) unless
you are participating in an asset allocation program (i.e., Static
Re-balancing 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
Unadjusted Account Value in the variable Investment Options is zero, we will
transfer such amounts to the AST Money Market Sub-account.
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HOW SPOUSAL HIGHEST DAILY LIFETIME INCOME 2.0 TRANSFERS UNADJUSTED ACCOUNT
VALUE BETWEEN YOUR PERMITTED SUB-ACCOUNTS AND THE AST INVESTMENT GRADE BOND
SUB-ACCOUNT. See "How Highest Daily Lifetime Income 2.0 Transfers Unadjusted
Account Value Between Your Permitted Sub-accounts and the AST Investment Grade
Bond Sub-account" in the discussion of Highest Daily Lifetime Income 2.0
Benefit above for information regarding this component of the benefit.
ADDITIONAL TAX CONSIDERATIONS
Please see the Additional Tax Considerations section under Highest Daily
Lifetime Income 2.0 above.
HIGHEST DAILY LIFETIME INCOME 2.0 WITH HIGHEST DAILY DEATH BENEFIT
Highest Daily Lifetime Income 2.0 with Highest Daily Death Benefit ("HD DB")
is a lifetime guaranteed minimum withdrawal benefit, under which, subject to
the terms of the benefit, we guarantee your ability to take a certain annual
withdrawal amount for life. This benefit also provides for a highest daily
death benefit, subject to the terms of the benefit. 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. We reserve the right, in our sole discretion,
to cease offering this benefit for new elections, at any time.
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
Unadjusted 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 provided that you do not take withdrawals of
Excess Income that result in your Unadjusted Account Value being reduced to
zero. We also permit you to designate the first withdrawal from your Annuity
as a one-time "Non-Lifetime Withdrawal". All other partial withdrawals from
your Annuity are considered a "Lifetime Withdrawal" under the benefit.
Withdrawals are taken first from your own Account Value. We are only required
to begin making lifetime income payments to you under our guarantee when and
if your Unadjusted Account Value is reduced to zero (for any reason other than
due to partial withdrawals of Excess Income) ("Guarantee Payments"). Highest
Daily Lifetime Income 2.0 with HD DB 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, and also
wish to provide a death benefit to your beneficiaries. 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 Income 2.0 with
HD DB is the predetermined mathematical formula we employ that may
periodically transfer your Unadjusted Account Value to and from the AST
Investment Grade Bond Sub-account. See the section above entitled "How Highest
Daily Lifetime Income 2.0 Transfers Unadjusted Account Value Between Your
Permitted Sub-accounts and the AST Investment Grade Bond Sub-account."
You may choose Highest Daily Lifetime Income 2.0 with or without also electing
HD DB, however you may not elect HD DB without Highest Daily Lifetime Income
2.0 and you must elect the HD DB benefit at the time you elect Highest Daily
Lifetime Income 2.0. If you elect Highest Daily Lifetime Income 2.0 without HD
DB and would like to add the feature later, you must first terminate Highest
Daily Lifetime Income 2.0 and elect Highest Daily Lifetime Income 2.0 with HD
DB (subject to availability and benefit re-election provisions). Please note
that if you terminate Highest Daily Lifetime Income 2.0 and elect Highest
Daily Lifetime Income 2.0 with HD DB 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 Unadjusted Account Value as of
the date the new benefit becomes active. Highest Daily Lifetime Income 2.0
with HD DB 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 or death benefit.
The income benefit under Highest Daily Lifetime Income 2.0 with HD DB
currently is based on a single "designated life" who is between the ages of 50
and 79 on the date that the benefit is elected and received in Good Order. As
long as your Highest Daily Lifetime Income 2.0 with HD DB is in effect, you
must allocate your Unadjusted Account Value in accordance with the 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.
ALTHOUGH YOU ARE GUARANTEED THE ABILITY TO WITHDRAW YOUR ANNUAL INCOME AMOUNT
FOR LIFE EVEN IF YOUR UNADJUSTED ACCOUNT VALUE FALLS TO ZERO, IF THAT
WITHDRAWAL OF EXCESS INCOME (DESCRIBED BELOW) BRINGS YOUR UNADJUSTED ACCOUNT
VALUE TO ZERO, YOUR ANNUAL INCOME AMOUNT ALSO WOULD FALL TO ZERO, AND THE
BENEFIT AND THE ANNUITY THEN WOULD TERMINATE. IN THAT SCENARIO, NO FURTHER
AMOUNT WOULD BE PAYABLE UNDER HIGHEST DAILY LIFETIME INCOME 2.0 WITH HD DB
(INCLUDING NO PAYMENT OF THE HIGHEST DAILY DEATH BENEFIT AMOUNT). You may also
participate in the 6 or 12 Month DCA Program if you elect Highest Daily
Lifetime Income 2.0 with HD DB, subject to the 6 or 12 Month DCA Program's
rules. See the section of this prospectus entitled "6 or 12 Month Dollar Cost
Averaging Program" for details.
KEY FEATURE - PROTECTED WITHDRAWAL VALUE
The Protected Withdrawal Value is only used to calculate the initial Annual
Income Amount and the benefit fee. The Protected Withdrawal Value is separate
from your Unadjusted Account Value and not available as cash or a lump sum
withdrawal. On the
77
effective date of the benefit, the Protected Withdrawal Value is equal to your
Unadjusted 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 Unadjusted 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 5% 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 Unadjusted Account Value on the current Valuation Day.
If you have not made a Lifetime Withdrawal on or before the 12/th/ Anniversary
of the effective date of the benefit, your Periodic Value on the 12/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% of the Unadjusted Account Value on the effective date of the
benefit including any Purchase Payments (including any associated
Purchase Credits) made on that day;
(b)200% 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.
Upon locking in the double (200%), your Protected Withdrawal Value will
continue to lock in your Annuity's highest daily value and immediately
compound it at 5% annually until your first Lifetime Withdrawal. This means
that your Protected Withdrawal Value will be at least double (200%) your
cumulative Purchase Payments made within the first benefit year if you have
owned the benefit at least 12 years, assuming you have not taken any
withdrawals. This is a minimum guarantee. If, due to positive Account Value
performance, your Protected Withdrawal Value is greater than the double
(200%), your Protected Withdrawal Value will continue to lock in your highest
daily value and immediately increase it at 5% compounded growth until your
first Lifetime Withdrawal.
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 Unadjusted Account
Value upon any step-up, increased for subsequent Purchase Payments (including
any associated Purchase Credits) and reduced for subsequent Lifetime
Withdrawals (see the examples that begin immediately prior to the sub-heading
below entitled "Example of dollar-for-dollar reductions").
PLEASE NOTE THAT IF YOU ELECT HIGHEST DAILY LIFETIME INCOME 2.0 WITH HD DB,
YOUR ACCOUNT VALUE IS NOT GUARANTEED, CAN FLUCTUATE AND MAY LOSE VALUE.
KEY FEATURE - ANNUAL INCOME AMOUNT UNDER HIGHEST DAILY LIFETIME INCOME 2.0
WITH HD DB.
The Annual Income Amount is equal to a specified percentage of the Protected
Withdrawal Value at the first Lifetime Withdrawal and does not reduce in
subsequent Annuity Years, as described below. The percentage initially depends
on the age of the Annuitant on the date of the first Lifetime Withdrawal. The
percentages are: 3% for ages 50-54; 4% for ages 55 to 64; 5% for ages 65 to
84, and 6% for ages 85 or older. Under Highest Daily Lifetime Income 2.0 with
HD DB, 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 and also will reduce the Protected Withdrawal Value on a
dollar-for-dollar basis. 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). Excess
Income also will reduce the Protected Withdrawal Value by the same ratio.
AS DISCUSSED IN THIS PARAGRAPH, WHEN YOU MAKE A PARTIAL WITHDRAWAL THAT IS
SUBJECT TO A CDSC AND/OR TAX WITHHOLDING, WE WILL IDENTIFY THE AMOUNT THAT
INCLUDES NOT ONLY THE AMOUNT YOU ACTUALLY RECEIVE, BUT ALSO THE AMOUNT OF THE
CDSC AND/OR TAX WITHHOLDING, TO DETERMINE WHETHER YOUR WITHDRAWAL HAS EXCEEDED
THE ANNUAL INCOME AMOUNT. WHEN YOU TAKE A PARTIAL
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WITHDRAWAL, YOU MAY REQUEST A "GROSS" WITHDRAWAL AMOUNT (E.G., $2000) BUT THEN
HAVE ANY CDSC AND/OR TAX WITHHOLDING DEDUCTED FROM THE AMOUNT YOU ACTUALLY
RECEIVE (ALTHOUGH AN MVA MAY ALSO BE APPLIED TO YOUR REMAINING UNADJUSTED
ACCOUNT VALUE, IT IS NOT CONSIDERED FOR PURPOSES OF DETERMINING EXCESS
INCOME). THE PORTION OF A WITHDRAWAL THAT EXCEEDED YOUR ANNUAL INCOME AMOUNT
(IF ANY) WOULD BE TREATED AS EXCESS INCOME AND THUS WOULD REDUCE YOUR ANNUAL
INCOME AMOUNT IN SUBSEQUENT YEARS. ALTERNATIVELY, YOU MAY REQUEST THAT A "NET"
WITHDRAWAL AMOUNT ACTUALLY BE PAID TO YOU (E.G., $2000), WITH THE
UNDERSTANDING THAT ANY CDSC AND/OR TAX WITHHOLDING (E.G., $240) BE APPLIED TO
YOUR REMAINING UNADJUSTED ACCOUNT VALUE (ALTHOUGH AN MVA MAY ALSO BE APPLIED
TO YOUR REMAINING UNADJUSTED ACCOUNT VALUE, IT IS NOT CONSIDERED FOR PURPOSES
OF DETERMINING EXCESS INCOME). IN THE LATTER SCENARIO, WE DETERMINE WHETHER
ANY PORTION OF THE WITHDRAWAL IS TO BE TREATED AS EXCESS INCOME BY LOOKING TO
THE SUM OF THE NET AMOUNT YOU ACTUALLY RECEIVE (E.G., $2000) AND THE AMOUNT OF
ANY CDSC AND/OR TAX WITHHOLDING (IN THIS EXAMPLE, A TOTAL OF $2240). THE
AMOUNT OF THAT SUM (E.G., THE $2000 YOU RECEIVED PLUS THE $240 FOR THE CDSC
AND/OR TAX WITHHOLDING) THAT EXCEEDS YOUR ANNUAL INCOME AMOUNT WILL BE TREATED
AS EXCESS INCOME - THEREBY REDUCING YOUR ANNUAL INCOME AMOUNT IN SUBSEQUENT
YEARS.
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 Income 2.0 with HD DB and subsequent to the first Lifetime Withdrawal
will (i) immediately 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: 3% for ages 50-54 ; 4% for ages 55
to 64; 5% for ages 65 to 84, and 6% for ages 85 or older) and (ii) increase
the Protected Withdrawal Value by the amount of the Purchase Payment
(including any associated Purchase Credits).
After your first Lifetime Withdrawal and before your Unadjusted Account Value
is reduced to zero, you may make additional Purchase Payments, subject to the
limits in the next paragraph. We reserve the right not to accept additional
Purchase Payments if the Unadjusted Account Value becomes zero.
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). Subject to state law, 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 Income 2.0 with HD DB. 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 Unadjusted 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: 3% for
ages 50-54; 4% for ages 55 to 64; 5% for ages 65-84, and 6% for ages 85 or
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. We will not automatically increase your Annual
Income Amount solely as a result of your attaining a new age that is
associated with a new age-based percentage. The Unadjusted 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 Unadjusted 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 Unadjusted 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 Income 2.0
with HD DB 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 Income 2.0 with HD DB 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 consult with your Financial Professional and carefully evaluate whether
the amount of the step-up justifies the increased fee to which you will be
subject. Any such increased charge will not be greater than the maximum charge
set forth in the table entitled "Your Optional Benefit Fees and Charges."
79
If you are enrolled in a Systematic Withdrawal program, we will not
automatically increase the withdrawal amount when there is an increase to the
Annual Income Amount. You must notify us in order to increase the withdrawal
amount of any Systematic Withdrawal program.
Highest Daily Lifetime Income 2.0 with HD DB does not affect your ability to
take partial withdrawals under your Annuity, or limit your ability to take
partial withdrawals that exceed the Annual Income Amount. Under Highest Daily
Lifetime Income 2.0 with HD DB, 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 any Annuity
Year are less than the Annual Income Amount, you cannot carry over the unused
portion of the Annual Income Amount to subsequent Annuity Years. If your
cumulative Lifetime Withdrawals in an Annuity Year exceed the Annual Income
Amount, 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).
Because each of the Protected Withdrawal Value and Annual Income Amount is
determined in a way that is not solely related to Unadjusted Account Value, it
is possible for the Unadjusted 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
Income 2.0 with HD DB or any other fees and charges under the Annuity. Assume
the following for all three examples:
.. The Issue Date is November 1, 2012
.. Highest Daily Lifetime Income 2.0 with HD DB is elected on August 1, 2013
.. The Annuitant was 70 years old when he/she elected Highest Daily Lifetime
Income 2.0 with HD DB
.. The first withdrawal is a Lifetime Withdrawal
EXAMPLE OF DOLLAR-FOR-DOLLAR REDUCTIONS
On October 24, 2013, 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 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). The Highest Daily Death Benefit Amount is $115,420. Assuming $2,500
is withdrawn from the Annuity on this date, the remaining Annual Income Amount
for that Annuity Year (up to and including October 31, 2013) 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) and the Highest Daily Death Benefit Amount
($115,420 less $2,500 = $112,920).
EXAMPLE OF PROPORTIONAL REDUCTIONS
Continuing the previous example, assume an additional withdrawal of $5,000
occurs on October 29, 2013 and the Unadjusted 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
Income to the Unadjusted Account Value immediately prior to the Excess Income.
(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:
Unadjusted Account Value before Lifetime withdrawal $118,000.00
Less amount of "non" Excess Income $ 3,500.00
Unadjusted Account Value immediately before Excess Income of $1,500 $114,500.00
Excess Income amount $ 1,500.00
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 after the first Lifetime Withdrawal, the
Annual Income Amount is stepped-up if the appropriate percentage (based on the
Annuitant's age on that 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 (including
any associated Purchase Credits), is greater than the Annual Income Amount,
adjusted for Excess Income 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 Income on October 29 reduces the
amount to $5,921.40 for future years (see above). For the next Annuity Year,
the Annual Income
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Amount will be stepped up if 5% (since the 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 greater than $5,921.40. Here are the calculations for
determining the daily values. Only the October 25 value is being adjusted for
Excess Income as the October 30, October 31, and November 1 Valuation Days
occur after the Excess Income on October 29.
HIGHEST DAILY VALUE ADJUSTED ANNUAL
UNADJUSTED (ADJUSTED FOR WITHDRAWAL INCOME AMOUNT (5% OF THE
DATE* ACCOUNT VALUE AND PURCHASE PAYMENTS)** HIGHEST DAILY VALUE)
----- ------------- ------------------------ ------------------------
October 25, 2013 $119,000.00 $119,000.00 $5,950.00
October 29, 2013 $113,000.00 $113,986.95 $5,699.35
October 30, 2013 $113,000.00 $113,986.95 $5,699.35
October 31, 2013 $119,000.00 $119,000.00 $5,950.00
November 1, 2013 $118,473.00 $119,000.00 $5,950.00
* In this example, the Annuity Anniversary date is November 1. The Valuation
Dates are every day following the first Lifetime Withdrawal. In subsequent
Annuity Years Valuation Dates will be the Annuity Anniversary and every day
following the Annuity Anniversary. The Annuity Anniversary Date of
November 1 is considered the first Valuation Date in the Annuity Year.
** In this example, the first daily value after the first Lifetime Withdrawal
is $119,000 on October 25, resulting in an adjusted Annual Income Amount of
$5,950.00. This amount is adjusted on October 29 to reflect the $5,000
withdrawal. The calculations for the adjustments are:
. The Unadjusted Account Value of $119,000 on October 25 is first reduced
dollar-for-dollar by $3,500 ($3,500 is the remaining Annual Income
Amount for the Annuity Year), resulting in Unadjusted Account Value of
$115,500 before the Excess Income.
. This amount ($115,500) is further reduced by 1.31% (this is the ratio in
the above example which is the Excess Income divided by the Unadjusted
Account Value immediately preceding the Excess Income) resulting in a
Highest Daily Value of $113,986.95.
. The adjusted October 29 Highest Daily Value, $113,986.95, is carried
forward to the next Valuation Date of October 30. At this time, we
compare this amount to the Unadjusted Account Value on October 30,
$113,000. Since the October 29 adjusted Highest Daily Value of
$113,986.95 is greater than the October 30 value, we will continue to
carry $113,986.95 forward to the next Valuation Day of October 31. The
Unadjusted Account Value on October 31, $119,000.00, becomes the final
Highest Daily Value since it exceeds the $113,986.95 carried forward.
. The October 31 adjusted Highest Daily Value of $119,000.00 is also
greater than the November 1 value, so we will continue to carry
$119,000.00 forward to the final Valuation Day of November 1.
In this example, the final Highest Daily Value of $119,000.00 is converted to
an Annual Income Amount based on the applicable percentage of 5%, generating
an Annual Income Amount of $5,950.00. Since this amount is greater than the
current year's Annual Income Amount of $5,921.40 (adjusted for Excess Income),
the Annual Income Amount for the next Annuity Year, starting on November 1,
2013 and continuing through October 31, 2014, 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 Income 2.0 with HD DB. It is an optional feature
of the benefit that you can only elect at the time of your first withdrawal.
You cannot take a Non-Lifetime Withdrawal in an amount that would cause your
Annuity's Account Value, after taking the withdrawal, to fall below the
minimum Surrender Value (see "Surrenders - Surrender Value"). 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 Highest Daily Lifetime Income 2.0 with HD DB. You
must tell us at the time you take the withdrawal if your withdrawal is
intended to be the Non-Lifetime Withdrawal and not the first Lifetime
Withdrawal under Highest Daily Lifetime Income 2.0 with HD DB. If you don't
elect the Non-Lifetime Withdrawal, the first withdrawal you make will be the
first Lifetime Withdrawal that establishes your Annual Income Amount, which is
based on your Protected Withdrawal Value. Once you elect to take the
Non-Lifetime Withdrawal or Lifetime Withdrawals, no additional Non-Lifetime
Withdrawals may be taken. If you do not take a Non-Lifetime Withdrawal before
beginning Lifetime Withdrawals, you lose the ability to take it.
The Non-Lifetime Withdrawal will proportionally reduce the Protected
Withdrawal Value. It will also proportionally reduce the Periodic Value
guarantee on the twelfth anniversary of the benefit effective date (see
description in "Key Feature - Protected Withdrawal Value," above) and the
Highest Daily Death Benefit Amount. It will reduce each value by the
percentage the total withdrawal amount (including any applicable CDSC)
represents of the then current Unadjusted 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. Thus, the first withdrawal will be a 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 3, 2012
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.. Highest Daily Lifetime Income 2.0 with HD DB is elected on September 4, 2013
.. The Unadjusted Account Value at benefit election was $105,000
.. The Annuitant was 70 years old when he/she elected Highest Daily Lifetime
Income 2.0 with HD DB
.. No previous withdrawals have been taken under Highest Daily Lifetime Income
2.0 with HD DB
On October 3, 2013, the Protected Withdrawal Value is $125,000, the 12th
benefit year minimum Periodic Value guarantee is $210,000, the Highest Daily
Death Benefit Amount is $115,420, and the Unadjusted Account Value is
$120,000. Assuming $15,000 is withdrawn from the Annuity on October 3, 2013
and is designated as a Non-Lifetime Withdrawal, all guarantees associated with
Highest Daily Lifetime Income 2.0 with HD DB will be reduced by the ratio the
total withdrawal amount represents of the Unadjusted Account Value just prior
to the withdrawal being taken.
HERE IS THE CALCULATION:
Withdrawal amount $ 15,000.00
Divided by Unadjusted Account Value before withdrawal $120,000.00
Equals ratio 12.5%
All guarantees will be reduced by the above ratio (12.5%)
Protected Withdrawal Value $109,375.00
12th benefit year Minimum Periodic Value $183,750.00
Highest Daily Death Benefit Amount $100,992.50
REQUIRED MINIMUM DISTRIBUTIONS
Required Minimum Distributions ("RMD") for this Annuity must be taken by
April 1st in the year following the date you turn age 70 1/2 and by
December 31st for subsequent calendar years. If the annual RMD amount is
greater than the Annual Income Amount, a withdrawal of the RMD amount will not
be treated as a withdrawal of Excess Income, as long as the RMD amount is
calculated by us for this Annuity and administered under a program we support
each calendar year. If you are not participating in an RMD withdrawal program
each calendar year, you can alternatively satisfy the RMD amount without it
being treated as a withdrawal of Excess Income as long as you abide by the
following:
The total amount within an Annuity Year that can be withdrawn is equal to:
1. the Annual Income Amount remaining in the current Annuity Year, plus,
2. The difference between:
a. The RMD amount (assuming the RMD amount is greater than the Annual
Income Amount) less any withdrawals already taken in the calendar year,
less
b. The Annual Income Amount.
Please see hypothetical examples below for details.
If you do not comply with the rules described above, any withdrawal that
exceeds the Annual Income Amount will be treated as a withdrawal of Excess
Income, which will reduce your Annual Income Amount in future Annuity Years.
This may include situations where you comply with the rules outlined above and
then decide to take additional withdrawals after satisfying your RMD
requirement from the Annuity.
We will assume your first withdrawal under the benefit is a Lifetime
Withdrawal unless you designated the withdrawal as a Non-Lifetime Withdrawal.
Example
The following example is purely hypothetical and intended to illustrate a
scenario as described above. Note that withdrawals must comply with all IRS
guidelines in order to satisfy the Required Minimum Distribution for the
current calendar year.
Assumptions:
RMD Calendar Year
01/01/2012 to 12/31/2012
Annuity Year
06/01/2011 to 05/31/2012
Annual Income Amount and RMD Amount
Annual Income Amount = $5,000
Remaining Annual Income Amount as of 1/3/2012 = $3,000 (a $2,000 withdrawal
was taken on 7/1/2011)
RMD Amount for Calendar Year 2012 = $6,000
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The amount you may withdraw in the current Annuity Year (between 1/3/2012 and
5/31/2012) without it being treated as Excess Income is $4,000. Here is the
calculation: $3,000 + ($6,000 - $5,000) = $4,000.
If the $4,000 withdrawal is taken in the current Annuity Year (prior to
6/1/2012), the remaining Annual Income Amount will be zero and the remaining
RMD amount of $2,000 may be taken in the subsequent Annuity Year beginning on
6/1/2012 (when your Annual Income Amount is reset to $5,000).
If you had chosen to not take any additional withdrawals until on or after
6/1/2012, then you would be eligible to withdraw $6,000 without it being
treated as a withdrawal of Excess Income.
HIGHEST DAILY DEATH BENEFIT
A Death Benefit is payable under Highest Daily Lifetime Income 2.0 with HD DB
(until we begin making Guarantee Payments under the benefit or annuity
payments have begun) upon the death of the Owner (Annuitant if entity owned),
also referred to as the "Single Designated Life", when we receive Due Proof of
Death. The Death Benefit is the greatest of: the Minimum Death Benefit
(described later in this prospectus) or the Highest Daily Death Benefit Amount
described below.
Highest Daily Death Benefit Amount:
On the date you elect Highest Daily Lifetime Income 2.0 with HD DB, the
Highest Daily Death Benefit Amount is equal to your Unadjusted Account Value.
On each subsequent Valuation Day, until the date of death of the decedent, the
Highest Daily Death Benefit Amount will be the greater of:
(1)The Unadjusted Account Value on the current Valuation Day; and
(2)The Highest Daily Death Benefit Amount of the immediately preceding
Valuation Day,
. increased by any Purchase Payments made on the current Valuation Day and,
. reduced by the effect of withdrawals made on the current Valuation Day,
as described below.
Please note that the Highest Daily Death Benefit Amount does not have any
guaranteed growth rate associated with it and therefore can be a different
amount than any of the guaranteed values associated with the living benefit
features of Highest Daily Lifetime Income 2.0 with HD DB.
A Non-Lifetime Withdrawal will proportionately reduce the Highest Daily Death
Benefit Amount by the ratio of the Non-Lifetime Withdrawal to the Account
Value immediately prior to the Non-Lifetime Withdrawal. A Lifetime Withdrawal
that is not considered Excess Income will reduce the Highest Daily Death
Benefit Amount (dollar-for-dollar) by the amount of the withdrawal. All or a
portion of a Lifetime Withdrawal that is considered Excess Income will
proportionately reduce the Highest Daily Death Benefit Amount by the ratio of
the Excess Income to the Account Value immediately prior to the withdrawal of
the Excess Income.
The Highest Daily Death Benefit will be calculated on the date of death of the
decedent and will be:
.. increased by the amount of any additional Adjusted Purchase Payments, and
.. reduced by the effect of any withdrawals (as described in the preceding
paragraph), made during the period between the decedent's date of death and
the date we receive Due Proof of Death.
We will reduce the Highest Daily Death Benefit Amount payable under this
benefit by Purchase Credits applied during the period beginning 12 months
prior to the decedent's date of death and ending on the date we receive Due
Proof of Death. We may waive, on a non-discriminatory basis, our right to
deduct such Purchase Credits.
PLEASE NOTE THAT THE HIGHEST DAILY DEATH BENEFIT AMOUNT IS AVAILABLE ONLY
UNTIL WE MAKE GUARANTEE PAYMENTS UNDER HIGHEST DAILY LIFETIME INCOME 2.0 WITH
HD DB OR ANNUITY PAYMENTS BEGIN.
ALL OTHER PROVISIONS APPLICABLE TO DEATH BENEFITS UNDER YOUR ANNUITY WILL
CONTINUE TO APPLY. SEE THE "DEATH BENEFITS" SECTION OF THIS PROSPECTUS FOR
MORE INFORMATION PERTAINING TO DEATH BENEFITS.
BENEFITS UNDER HIGHEST DAILY LIFETIME INCOME 2.0 WITH HD DB
.. To the extent that your Unadjusted 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 Guarantee Payments amounts
are still payable under Highest Daily Lifetime Income 2.0 with HD DB, 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 Unadjusted 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. After the Unadjusted Account Value is reduced to zero, you
will not be permitted to make additional Purchase Payments to your Annuity.
TO THE EXTENT THAT CUMULATIVE PARTIAL WITHDRAWALS IN THE ANNUITY YEAR THAT
REDUCED YOUR UNADJUSTED ACCOUNT VALUE TO ZERO ARE MORE THAN THE ANNUAL
INCOME AMOUNT, HIGHEST DAILY LIFETIME INCOME 2.0 WITH HD DB TERMINATES, AND
NO ADDITIONAL PAYMENTS ARE MADE.
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.. Please note that if your Unadjusted 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 Latest Annuity Date will be
treated as annuity payments. Please note that if your Unadjusted Account
Value is reduced to zero due to withdrawals or annuitization, any Death
Benefit value, including that of the HD DB feature, will terminate and no
Death Benefit Amount is payable.
.. 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 Unadjusted Account Value, less any applicable tax charges,
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 Service Office. If applying your Unadjusted
Account Value, less any applicable tax charges, to the life-only
annuity payment rates results in a higher annual payment, we will
give you the higher annual payment.
.. In the absence of an election when mandatory annuity payments are to begin
we currently make annual annuity payments in the form of a single life
fixed annuity with eight payments certain, by applying the greater of the
annuity rates then currently available or the annuity rates guaranteed in
your Annuity. We reserve the right at any time to increase or decrease the
period certain in order to comply with the Code (e.g., to shorten the
period certain to match life expectancy under applicable Internal Revenue
Service tables). 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 Unadjusted Account Value.
.. If no Lifetime Withdrawal has been taken, the Annual Income Amount applied
for the purpose of calculating annuity payments will be treated as if your
first Lifetime Withdrawal was taken on the date the annuity payments are to
begin. Therefore, the Annual Income Amount will potentially increase by no
less than the 5% compounded growth rate up until the time your annuity
payments commence.
OTHER IMPORTANT CONSIDERATIONS
.. Withdrawals under Highest Daily Lifetime Income 2.0 with HD DB are subject
to all of the terms and conditions of the Annuity, including any applicable
CDSC for the Non-Lifetime Withdrawal as well as partial withdrawals that
exceed the Annual Income Amount. If you have an active Systematic
Withdrawal program running at the time you elect this benefit, the first
systematic withdrawal that processes after your election of the benefit
will be deemed a Lifetime Withdrawal. Withdrawals made while Highest Daily
Lifetime Income 2.0 with HD DB 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 MVA Options. If you have an active Systematic Withdrawal program
running at the time you elect this benefit, the program must withdraw funds
pro rata.
.. Any Lifetime Withdrawal that you take that is not a withdrawal of Excess
Income is not subject to a CDSC, even if the total amount of such
withdrawals in any Annuity Year exceeds the maximum Free Withdrawal amount.
Any Lifetime Withdrawal that is treated as Excess Income is subject to any
applicable CDSC, if the withdrawal is greater than the Free Withdrawal
amount.
.. You should carefully consider when to begin taking Lifetime Withdrawals. If
you begin taking withdrawals early, you may maximize the time during which
you may take Lifetime Withdrawals due to longer life expectancy, and you
will be using an optional benefit for which you are paying a charge. On the
other hand, you could limit the value of the benefit if you begin taking
withdrawals too soon. For example, withdrawals reduce your Unadjusted
Account Value and may limit the potential for increasing your Protected
Withdrawal Value. You should discuss with your Financial Professional when
it may be appropriate for you to begin taking Lifetime Withdrawals.
.. You cannot allocate Purchase Payments or transfer Unadjusted 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 section
entitled "Investment Options." You can find a copy of the AST Investment
Grade Bond Portfolio prospectus by going to www.prudentialannuities.com.
.. Transfers to and from the Permitted Sub-accounts, the DCA MVA Options, and
the AST Investment Grade Bond Sub-account triggered by the predetermined
mathematical formula will not count toward the maximum number of free
transfers allowable under an Annuity.
.. Upon inception of the benefit, 100% of your Unadjusted Account Value must
be allocated to the Permitted Sub-accounts (as defined below). We may amend
the Permitted Sub-accounts from time to time. Changes to the Permitted
Sub-accounts, or to the requirements as to how you may allocate your
Account Value with this benefit, will apply to new elections of the benefit
and may apply to current participants in the benefit. To the extent that
changes apply to current participants in the benefit, they will only apply
upon re-allocation of Account Value, or upon addition of subsequent
Purchase Payments. That is, we will not require such current participants
to re-allocate Account Value to comply with any new requirements.
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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 Sub-accounts and (ii) invest the proceeds of those sales in
the Sub-accounts that you have designated. During this reallocation
process, your Unadjusted 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 begin until the close of business on the following
Valuation Day.
.. Any Death Benefit, including the HD DB, will be zero if any withdrawals
taken under Highest Daily Lifetime Income 2.0 with HD DB reduce your
Unadjusted Account Value to zero (see "Death Benefits").
.. The current charge for Highest Daily Lifetime Income 2.0 with HD DB is
1.50% annually of the greater of the Unadjusted Account Value and Protected
Withdrawal Value. The maximum charge for Highest Daily Lifetime Income 2.0
with HD DB is 2.00% annually of the greater of the Unadjusted Account Value
and Protected Withdrawal Value. As discussed in "Highest Daily Auto
Step-Up" above, we may increase the fee upon a step-up under this benefit.
We deduct this charge on quarterly anniversaries of the benefit effective
date, based on the values on the last Valuation Day prior to the quarterly
anniversary. Thus, we deduct, on a quarterly basis, 0.375% of the greater
of the prior Valuation Day's Unadjusted 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. You will begin paying this charge as of the effective date of
the benefit even if you do not begin taking withdrawals for many years, or
ever. We will not refund the charges you have paid if you choose never to
take any withdrawals and/or if you never receive any lifetime income
payments.
If the deduction of the charge would result in the Unadjusted Account Value
falling below the lesser of $500 or 5% of the sum of the Unadjusted 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 Unadjusted Account Value to fall below the Account
Value Floor. If the Unadjusted Account Value on the date we would deduct a
charge for the benefit is less than the Account Value Floor, then no charge
will be assessed for that benefit quarter. Charges deducted upon termination
of the benefit may cause the Unadjusted Account Value to fall below the
Account Value Floor. If a charge for Highest Daily Lifetime Income 2.0 with HD
DB 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 Unadjusted Account Value to fall below the Account
Value Floor. While the deduction of the charge (other than the final charge)
may not reduce the Unadjusted Account Value to zero, partial withdrawals may
reduce the Unadjusted Account Value to zero. If this happens and the Annual
Income Amount is greater than zero, we will make payments under the benefit.
ELECTION OF AND DESIGNATIONS UNDER THE BENEFIT
For Highest Daily Lifetime Income 2.0 with HD DB, 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 between 50 and 79 years old. Any change of the Annuitant
under the Annuity will result in cancellation of Highest Daily Lifetime Income
2.0 with HD DB. Similarly, any change of Owner will result in cancellation of
Highest Daily Lifetime Income 2.0 with HD DB, except if (a) the new Owner has
the same taxpayer identification number as the previous Owner, (b) ownership
is transferred from a custodian or other entity to the Annuitant, or vice
versa or (c) ownership is transferred from one entity to another entity that
satisfies our ownership guidelines.
Highest Daily Lifetime Income 2.0 with HD DB can be elected at the time that
you purchase your Annuity or after the Issue Date, subject to its
availability, and our eligibility rules and restrictions. If you elect Highest
Daily Lifetime Income 2.0 with HD DB and terminate it, you can re-elect it,
subject to our current rules and availability. See "Termination of Existing
Benefits and Election of New Benefits" for information pertaining to
elections, termination and re-election of benefits. PLEASE NOTE THAT IF YOU
TERMINATE A LIVING BENEFIT AND ELECT HIGHEST DAILY LIFETIME INCOME 2.0 WITH HD
DB, YOU LOSE THE GUARANTEES THAT YOU HAD ACCUMULATED UNDER YOUR EXISTING
BENEFIT AND YOUR GUARANTEES UNDER HIGHEST DAILY LIFETIME INCOME 2.0 WITH HD DB
WILL BE BASED ON YOUR UNADJUSTED ACCOUNT VALUE ON THE EFFECTIVE DATE OF
HIGHEST DAILY LIFETIME INCOME 2.0 WITH HD DB. You and your Financial
Professional should carefully consider whether terminating your existing
benefit and electing Highest Daily Lifetime Income 2.0 with HD DB is
appropriate for you. We reserve the right to waive, change and/or further
limit the election frequency in the future for new elections of this benefit.
If you wish to elect this benefit and you are currently participating in a
Systematic Withdrawal program, amounts withdrawn under the program must be
taken on a pro rata basis from your Annuity's Sub-accounts (i.e., in direct
proportion to the proportion that each such Sub-account bears to your total
Account Value) in order for you to be eligible for the benefit. Thus, you may
not elect Highest Daily Lifetime Income 2.0 with HD DB so long as you
participate in a Systematic Withdrawal program in which withdrawals are not
taken pro rata.
TERMINATION OF THE BENEFIT
You may terminate Highest Daily Lifetime Income 2.0 with HD DB at any time by
notifying us. If you terminate the benefit, any guarantee provided by the
benefit, including the HD DB, will terminate as of the date the termination is
effective, and certain restrictions on re-election may apply.
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THE BENEFIT AUTOMATICALLY TERMINATES UPON THE FIRST TO OCCUR OF THE FOLLOWING:
(I)YOUR TERMINATION OF THE BENEFIT,
(II)YOUR SURRENDER OF THE ANNUITY,
(III)WHEN ANNUITY PAYMENTS BEGIN (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)OUR RECEIPT OF DUE PROOF OF DEATH OF THE OWNER (OR ANNUITANT IF ENTITY
OWNED)
(V)BOTH THE UNADJUSTED ACCOUNT VALUE AND ANNUAL INCOME AMOUNT EQUAL ZERO, OR
(VI)YOU CEASE TO MEET OUR REQUIREMENTS AS DESCRIBED IN "ELECTION OF AND
DESIGNATIONS UNDER THE BENEFIT" ABOVE.
"Due Proof of Death" is satisfied when we receive all of the following in Good
Order: (a) a death certificate or similar documentation acceptable to us;
(b) all representations we require or which are mandated by applicable law or
regulation in relation to the death claim and the payment of death proceeds
(all representations may also include trust or estate paperwork (if needed) in
addition to consent forms (if applicable), requirements other than the death
certificate and claim forms from at least one beneficiary); and (c) any
applicable election of the method of payment of the death benefit, if not
previously elected by the Owner, by at least one Beneficiary.
Upon termination of Highest Daily Lifetime Income 2.0 with HD DB, other than
upon the death of the Owner 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. However, if the amount in the Sub-accounts is not enough to pay the
charge, we will reduce the fee to no more than the amount in the Sub-accounts.
With regard to your investment allocations, upon termination we will:
(i) leave intact amounts that are held in the Permitted Sub-accounts, and
(ii) unless you are participating in an asset allocation program (i.e., Static
Re-balancing 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
Unadjusted Account Value in the variable Investment Options is zero, we will
transfer such amounts to the AST Money Market Sub-account.
If a surviving spouse elects to continue the Annuity, Highest Daily Lifetime
Income 2.0 with HD DB terminates upon Due Proof of Death. The spouse may newly
elect the benefit subject to the restrictions discussed above.
HOW HIGHEST DAILY LIFETIME INCOME 2.0 WITH HD DB TRANSFERS UNADJUSTED ACCOUNT
VALUE BETWEEN YOUR PERMITTED SUB-ACCOUNTS AND THE AST INVESTMENT GRADE BOND
SUB-ACCOUNT
See "How Highest Daily Lifetime Income 2.0 Transfers Unadjusted Account Value
Between Your Permitted Sub-accounts and the AST Investment Grade Bond
Sub-account" in the discussion of Highest Daily Lifetime Income 2.0 Benefit
above for information regarding this component of the benefit.
ADDITIONAL TAX CONSIDERATIONS
Please see the Additional Tax Considerations section under Highest Daily
Lifetime Income 2.0 above.
SPOUSAL HIGHEST DAILY LIFETIME INCOME 2.0 WITH HIGHEST DAILY DEATH BENEFIT
Spousal Highest Daily Lifetime Income 2.0 with Highest Daily Death Benefit
("HD DB") is a lifetime guaranteed minimum withdrawal benefit, under which,
subject to the terms of the benefit, we guarantee your ability to take a
certain annual withdrawal amount for the lives of two individuals who are
spouses. This benefit also provides for a highest daily death benefit, subject
to the terms of the benefit. 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. We reserve the right, in our sole discretion, to cease
offering this benefit for new elections at any time.
We offer a benefit that guarantees, until the death of the Remaining
Designated Life (as described below) (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 Unadjusted 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,
provided you have not made withdrawals of Excess Income that result in your
Unadjusted Account Value being reduced to zero. We also permit you to
designate the first withdrawal from your Annuity as a one-time "Non-Lifetime
Withdrawal." All other withdrawals from your Annuity are considered a
"Lifetime Withdrawal" under the benefit. Withdrawals are taken first from your
own Account Value. We are only required to begin making lifetime income
payments to you under our guarantee when and if your Unadjusted Account Value
is reduced to zero (for any reason other than due to partial withdrawals of
Excess Income) ("Guarantee Payments"). 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 Spousal Highest Daily
Lifetime Income 2.0 with HD DB after the death of the first spouse (subject to
the provisions below regarding a Remaining Designated Life), and also want to
provide a death benefit. 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.
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An integral component of Spousal Highest Daily Lifetime Income 2.0 with HD DB
is the predetermined mathematical formula we employ that may periodically
transfer your Unadjusted Account Value to and from the AST Investment Grade
Bond Sub-account. See the section above entitled "How Highest Daily Lifetime
Income 2.0 Transfers Unadjusted Account Value Between Your Permitted
Sub-accounts and the AST Investment Grade Bond Sub-account."
Spousal Highest Daily Lifetime Income 2.0 with HD DB is the spousal version of
Highest Daily Lifetime Income 2.0 with HD DB. You may choose Spousal Highest
Daily Lifetime Income 2.0 with or without also electing HD DB, however you may
not elect HD DB without Spousal Highest Daily Lifetime Income 2.0 and you must
elect the HD DB benefit at the time you elect Spousal Highest Daily Lifetime
Income 2.0. If you elect Spousal Highest Daily Lifetime Income 2.0 without HD
DB and would like to add the feature later, you must first terminate Spousal
Highest Daily Lifetime Income 2.0 and elect Spousal Highest Daily Lifetime
Income 2.0 with HD DB (subject to availability and benefit re-election
provisions). Please note that if you terminate Spousal Highest Daily Lifetime
Income 2.0 and elect Spousal Highest Daily Lifetime Income 2.0 with HD DB 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
Unadjusted Account Value as of the date the new benefit becomes active.
Spousal Highest Daily Lifetime Income 2.0 with HD DB is offered as an
alternative to other lifetime withdrawal options. Currently, if you elect
Spousal Highest Daily Lifetime Income 2.0 with HD DB 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" for details.
Spousal Highest Daily Lifetime Income 2.0 with HD DB must be elected based on
two designated lives, as described below. Each designated life must be between
the ages of 50 and 79 years old when the benefit is elected. Spousal Highest
Daily Lifetime Income 2.0 with HD DB is not available if you elect any other
optional living or death benefit.
As long as your Spousal Highest Daily Lifetime Income 2.0 with HD DB is in
effect, you must allocate your Unadjusted Account Value in accordance with the
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.
ALTHOUGH YOU ARE GUARANTEED THE ABILITY TO WITHDRAW YOUR ANNUAL INCOME AMOUNT
FOR LIFE EVEN IF YOUR UNADJUSTED ACCOUNT VALUE FALLS TO ZERO, IF THAT
WITHDRAWAL OF EXCESS INCOME (DESCRIBED BELOW) BRINGS YOUR UNADJUSTED ACCOUNT
VALUE TO ZERO, YOUR ANNUAL INCOME AMOUNT ALSO WOULD FALL TO ZERO, AND THE
BENEFIT AND THE ANNUITY THEN WOULD TERMINATE. IN THAT SCENARIO, NO FURTHER
AMOUNT WOULD BE PAYABLE UNDER SPOUSAL HIGHEST DAILY LIFETIME INCOME 2.0 WITH
HD DB.
You may also participate in the 6 or 12 Month Dollar Cost Averaging Program if
you elect Spousal Highest Daily Lifetime Income 2.0 with HD DB, subject to the
6 or 12 Month DCA Program's rules. See the section of this prospectus entitled
"6 or 12 Month Dollar Cost Averaging Program" for details.
KEY FEATURE - PROTECTED WITHDRAWAL VALUE
The Protected Withdrawal Value is only used to calculate the initial Annual
Income Amount and the benefit fee. The Protected Withdrawal Value is separate
from your Unadjusted Account Value and not available as cash or a lump sum
withdrawal. On the effective date of the benefit, the Protected Withdrawal
Value is equal to your Unadjusted 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 Unadjusted 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 5% 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 Unadjusted Account Value on the current Valuation Day.
If you have not made a Lifetime Withdrawal on or before the 12/th/ Anniversary
of the effective date of the benefit, your Periodic Value on the 12/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% of the Unadjusted Account Value on the effective date of the
benefit including any Purchase Payments (including any associated
Purchase Credits) made on that day;
(b)200% of all Purchase Payments (including any associated Purchase
Credits) made within one year following the effective date of the
benefit; and
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(c)all Purchase Payments (including any associated Purchase Credits) made
after one year following the effective date of the benefit.
Upon locking in the double (200%), your Protected Withdrawal Value will
continue to lock in your Annuity's highest daily value and immediately
compound it at 5% annually until your first Lifetime Withdrawal. This means
that your Protected Withdrawal Value will be at least double (200%) your
cumulative Purchase Payments made within the first benefit year if you have
owned the benefit at least 12 years, assuming you have not taken any
withdrawals. This is a minimum guarantee. If, due to positive Account Value
performance, your Protected Withdrawal Value is greater than the double
(200%), your Protected Withdrawal Value will continue to lock in your highest
daily value and immediately increase it at 5% compounded growth until your
first Lifetime Withdrawal.
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 Unadjusted Account
Value upon any step-up, increased for subsequent Purchase Payments (including
any associated Purchase Credits) and reduced for subsequent Lifetime
Withdrawals (see the examples that begin immediately prior to the sub-heading
below entitled "Example of dollar-for-dollar reductions").
PLEASE NOTE THAT IF YOU ELECT SPOUSAL HIGHEST DAILY LIFETIME INCOME 2.0 WITH
HD DB, YOUR ACCOUNT VALUE IS NOT GUARANTEED, CAN FLUCTUATE AND MAY LOSE VALUE.
KEY FEATURE - ANNUAL INCOME AMOUNT UNDER SPOUSAL HIGHEST DAILY LIFETIME INCOME
2.0 WITH HD DB
The Annual Income Amount is equal to a specified percentage of the Protected
Withdrawal Value at the first Lifetime Withdrawal and does not reduce in
subsequent Annuity Years, as described below. The percentage initially depends
on the age of the younger spousal designated life on the date of the first
Lifetime Withdrawal after election of the benefit. The percentages are: 2.5%
for ages 50-54, 3.5% for ages 55 to 64; 4.5% for ages 65 to 84, and 5.5% for
ages 85 and older. We use the age of the younger designated life. If you
elected this benefit and one of the Spousal Designated Lives becomes the
Remaining Designated Life, we will continue to use the age of the younger of
both the original Spousal Designated Lives for purposes of calculating the
applicable Annual Income percentage. Under Spousal Highest Daily Lifetime
Income 2.0 with HD DB, 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 and also will reduce the Protected Withdrawal Value on a
dollar-for-dollar basis. 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
Unadjusted Account Value immediately prior to such withdrawal (see examples of
this calculation below). Excess Income also will reduce the Protected
Withdrawal Value by the same ratio.
AS DISCUSSED IN THIS PARAGRAPH, WHEN YOU MAKE A PARTIAL WITHDRAWAL THAT IS
SUBJECT TO A CDSC AND/OR TAX WITHHOLDING, WE WILL IDENTIFY THE AMOUNT THAT
INCLUDES NOT ONLY THE AMOUNT YOU ACTUALLY RECEIVE, BUT ALSO THE AMOUNT OF THE
CDSC AND/OR TAX WITHHOLDING, TO DETERMINE WHETHER YOUR WITHDRAWAL HAS EXCEEDED
THE ANNUAL INCOME AMOUNT. WHEN YOU TAKE A PARTIAL WITHDRAWAL, YOU MAY REQUEST
A "GROSS" WITHDRAWAL AMOUNT (E.G., $2000) BUT THEN HAVE ANY CDSC AND/OR TAX
WITHHOLDING DEDUCTED FROM THE AMOUNT YOU ACTUALLY RECEIVE (ALTHOUGH AN MVA MAY
ALSO BE APPLIED TO YOUR REMAINING UNADJUSTED ACCOUNT VALUE, IT IS NOT
CONSIDERED FOR PURPOSES OF DETERMINING EXCESS INCOME). THE PORTION OF A
WITHDRAWAL THAT EXCEEDED YOUR ANNUAL INCOME AMOUNT (IF ANY) WOULD BE TREATED
AS EXCESS INCOME AND THUS WOULD REDUCE YOUR ANNUAL INCOME AMOUNT IN SUBSEQUENT
YEARS. ALTERNATIVELY, YOU MAY REQUEST THAT A "NET" WITHDRAWAL AMOUNT ACTUALLY
BE PAID TO YOU (E.G., $2000), WITH THE UNDERSTANDING THAT ANY CDSC AND/OR TAX
WITHHOLDING (E.G., $240) BE APPLIED TO YOUR REMAINING UNADJUSTED ACCOUNT VALUE
(ALTHOUGH AN MVA MAY ALSO BE APPLIED TO YOUR REMAINING UNADJUSTED ACCOUNT
VALUE, IT IS NOT CONSIDERED FOR PURPOSES OF DETERMINING EXCESS INCOME). IN THE
LATTER SCENARIO, WE DETERMINE WHETHER ANY PORTION OF THE WITHDRAWAL IS TO BE
TREATED AS EXCESS INCOME BY LOOKING TO THE SUM OF THE NET AMOUNT YOU ACTUALLY
RECEIVE (E.G., $2000) AND THE AMOUNT OF ANY CDSC AND/OR TAX WITHHOLDING (IN
THIS EXAMPLE, A TOTAL OF $2240). THE AMOUNT OF THAT SUM (E.G., THE $2000 YOU
RECEIVED PLUS THE $240 FOR THE CDSC AND/OR TAX WITHHOLDING) THAT EXCEEDS YOUR
ANNUAL INCOME AMOUNT WILL BE TREATED AS EXCESS INCOME - THEREBY REDUCING YOUR
ANNUAL INCOME AMOUNT IN SUBSEQUENT YEARS.
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 Income 2.0 with HD DB and subsequent to the first
Lifetime Withdrawal will (i) immediately 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: 2.5% for ages 50-54, 3.5% for ages 55 to 64, 4.5% for ages 65 to 84, and
5.5% for ages 85 and older), and (ii) increase the Protected Withdrawal Value
by the amount of the Purchase Payment (including any associated Purchase
Credits).
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After your first Lifetime Withdrawal and before your Unadjusted Account Value
is reduced to zero, you may make additional Purchase Payments, subject to the
limits in the next paragraph. We reserve the right not to accept additional
Purchase Payments if the Unadjusted Account Value becomes zero.
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). Subject to state law, 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 Unadjusted 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 younger spousal designated life on the Annuity Anniversary as
of which the step-up would occur. The percentages are 2.5% for ages 50-54,
3.5% for ages 55 to 64, 4.5% for ages 65 to 84, and 5.5% 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. We will not automatically increase your Annual
Income Amount solely as a result of your attaining a new age that is
associated with a new age-based percentage. The Unadjusted 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 Unadjusted 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 Unadjusted 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
Income 2.0 with HD DB has changed for new purchasers, you may be subject to
the new charge at the time of such step-up. Prior to increasing your charge
for Spousal Highest Daily Lifetime Income 2.0 with HD DB 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. Any such increased
charge will not be greater than the maximum charge set forth in the table
entitled "Your Optional Benefit Fees and Charges".
If you are enrolled in a Systematic Withdrawal program, we will not
automatically increase the withdrawal amount when there is an increase to the
Annual Income Amount. You must notify us in order to increase the withdrawal
amount of any Systematic Withdrawal program.
Spousal Highest Daily Lifetime Income 2.0 with HD DB does not affect your
ability to take withdrawals under your Annuity, or limit your ability to take
partial withdrawals that exceed the Annual Income Amount. Under Spousal
Highest Daily Lifetime Income 2.0 with HD DB, 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. If your cumulative Lifetime Withdrawals in an Annuity Year
exceed the Annual Income Amount, 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).
Because each of the Protected Withdrawal Value and Annual Income Amount is
determined in a way that is not solely related to Unadjusted Account Value, it
is possible for the Unadjusted 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 Income 2.0 with HD DB or any other fees and charges under the
Annuity. Assume the following for all three examples:
. The Issue Date is November 1, 2012
. Spousal Highest Daily Lifetime Income 2.0 with HD DB is elected on
August 1, 2013
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. Both designated lives were 70 years old when they elected Spousal
Highest Daily Lifetime Income 2.0 with HD DB
. The first withdrawal is a Lifetime Withdrawal
EXAMPLE OF DOLLAR-FOR-DOLLAR REDUCTIONS
On October 24, 2013, the Protected Withdrawal Value is $120,000, resulting in
an Annual Income Amount of $5,400 (since the younger designated life is
between the ages of 65 and 84 at the time of the first Lifetime Withdrawal,
the Annual Income Amount is 4.5% of the Protected Withdrawal Value, in this
case 4.5% of $120,000). The Highest Daily Death Benefit Amount is $115,420.
Assuming $2,500 is withdrawn from the Annuity on this date, the remaining
Annual Income Amount for that Annuity Year (up to and including October 31,
2013) is $2,900. This is the result of a dollar-for-dollar reduction of the
Annual Income Amount ($5,400 less $2,500 = $2,900) and the Highest Daily Death
Benefit Amount ($115,420 less $2,500 = $112,920.).
EXAMPLE OF PROPORTIONAL REDUCTIONS
Continuing the previous example, assume an additional withdrawal of $5,000
occurs on October 29, 2013 and the Account Value at the time and immediately
prior to this withdrawal is $118,000. The first $2,900 of this withdrawal
reduces the Annual Income Amount for that Annuity Year to $0. The remaining
withdrawal amount of $2,100 reduces the Annual Income Amount in future Annuity
Years on a proportional basis based on the ratio of the Excess Income to the
Unadjusted Account Value immediately prior to the Excess Income. (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:
Unadjusted Account Value before Lifetime Withdrawal $118,000.00
Less amount of "non" Excess Income $ 2,900.00
Unadjusted Account Value immediately before Excess Income of $2,100 $115,100.00
Excess Income amount $ 2,100.00
Ratio 1.82%
Annual Income Amount $ 5,400.00
Less ratio of 1.82% $ 98.28
Annual Income Amount for future Annuity Years $ 5,301.72
EXAMPLE OF HIGHEST DAILY AUTO STEP-UP
On each Annuity Anniversary date after the first Lifetime Withdrawal, the
Annual Income Amount is stepped-up if the appropriate percentage (based on the
younger designated life's age on that 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 (including any associated Purchase Credits), is greater than the
Annual Income Amount, adjusted for Excess Income and additional Purchase
Payments (including any associated Purchase Credits).
Continuing the same example as above, the Annual Income Amount for this
Annuity Year is $5,400. However, the Excess Income on October 29 reduces the
amount to $5,301.72 for future years (see above). For the next Annuity Year,
the Annual Income Amount will be stepped up if 4.5% (since the younger
designated life is between 65 and 84 on the date of the potential step-up) of
the highest daily Unadjusted Account Value adjusted for withdrawals and
Purchase Payments (including any associated Purchase Credits), is greater than
$5,301.72. Here are the calculations for determining the daily values. Only
the October 25 value is being adjusted for Excess Income as the
October 30, October 31 and November 1 Valuation Days occur after the Excess
Income on October 29.
HIGHEST DAILY VALUE ADJUSTED ANNUAL
(ADJUSTED FOR WITHDRAWAL INCOME AMOUNT (4.5% OF THE
DATE* ACCOUNT VALUE AND PURCHASE PAYMENTS)** HIGHEST DAILY VALUE)
----- ------------- ------------------------ --------------------------
October 25, 2013 $119,000.00 $119,000.00 $5,355.00
October 29, 2013 $113,000.00 $113,986.98 $5,129.41
October 30, 2013 $113,000.00 $113,986.98 $5,129.41
October 31, 2013 $119,000.00 $119,000.00 $5,355.00
November 1, 2013 $118,473.00 $119,000.00 $5,355.00
* In this example, the Annuity Anniversary date is November 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 November 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 October 25, resulting in an adjusted Annual Income Amount of
$5,355.00. This amount is adjusted on October 29 to reflect the $5,000
withdrawal. The calculations for the adjustments are:
. The Unadjusted Account Value of $119,000 on October 25 is first reduced
dollar-for-dollar by $2,900 ($2,900 is the remaining Annual Income
Amount for the Annuity Year), resulting in an Unadjusted Account Value
of $116,100 before the Excess Income.
. This amount ($116,100) is further reduced by 1.82% (this is the ratio in
the above example which is the Excess Income divided by the Unadjusted
Account Value immediately preceding the Excess Income) resulting in a
Highest Daily Value of $113,986.98.
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. The adjusted October 29 Highest Daily Value, $113,986.98, is carried
forward to the next Valuation Date of October 30. At this time, we
compare this amount to the Unadjusted Account Value on October 30,
$113,000. Since the October 29 adjusted Highest Daily Value of
$113,986.98 is greater than the October 30 value, we will continue to
carry $113,986.98 forward to the next Valuation Day of October 31. The
Unadjusted Account Value on October 31, $119,000.00, becomes the final
Highest Daily Value since it exceeds the $113,986.98 carried forward.
. The October 31 adjusted Highest Daily Value of $119,000.00 is also
greater than the November 1 value, so we will continue to carry
$119,000.00 forward to the final Valuation Day of November 1.
In this example, the final Highest Daily Value of $119,000.00 is converted to
an Annual Income Amount based on the applicable percentage of 4.5%, generating
an Annual Income Amount of $5,355.00. Since this amount is greater than the
current year's Annual Income Amount of $5,301.72 (adjusted for Excess Income),
the Annual Income Amount for the next Annuity Year, starting on November 1,
2013 and continuing through October 31, 2014, will be stepped-up to $5,355.00.
NON-LIFETIME WITHDRAWAL FEATURE
You may take a one-time non-lifetime withdrawal ("Non-Lifetime Withdrawal")
under Spousal Highest Daily Lifetime Income 2.0 with HD DB. It is an optional
feature of the benefit that you can only elect at the time of your first
withdrawal. You cannot take a Non-Lifetime Withdrawal in an amount that would
cause your Annuity's Account Value, after taking the withdrawal, to fall below
the minimum Surrender Value (see "Surrenders - Surrender Value"). This
Non-Lifetime Withdrawal will not establish your 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 Spousal Highest Daily Lifetime Income 2.0 with HD DB. You must
tell us at the time you take the partial withdrawal if your withdrawal is
intended to be the Non-Lifetime Withdrawal and not the first Lifetime
Withdrawal under Spousal Highest Daily Lifetime Income 2.0 with HD DB. If you
don't elect the Non-Lifetime Withdrawal, the first withdrawal you make will be
the first Lifetime Withdrawal that establishes your Annual Income Amount,
which is based on your Protected Withdrawal Value. Once you elect the
Non-Lifetime Withdrawal or Lifetime Withdrawals, no additional Non-Lifetime
withdrawals may be taken. If you do not take a Non-Lifetime Withdrawal before
beginning Lifetime Withdrawals, you lose the ability to take it.
The Non-Lifetime Withdrawal will proportionally reduce the Protected
Withdrawal Value. It will also proportionally reduce the Periodic Value
guarantee on the twelfth anniversary of the benefit effective date (see
description in "Key Feature - Protected Withdrawal Value," above) and the
Highest Daily Death Benefit Amount. It will reduce each value by the
percentage the total withdrawal amount (including any applicable CDSC)
represents of the then current Unadjusted 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. Thus, the first withdrawal will be a 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 3, 2012
.. Spousal Highest Daily Lifetime Income 2.0 with HD DB is elected on
September 4, 2013
.. The Unadjusted Account Value at benefit election was $105,000
.. Each designated life was 70 years old when he/she elected Spousal Highest
Daily Lifetime Income 2.0 with HD DB
.. No previous withdrawals have been taken under Spousal Highest Daily
Lifetime Income 2.0 with HD DB
On October 3, 2013, the Protected Withdrawal Value is $125,000, the 12th
benefit year minimum Periodic Value guarantee is $210,000, the Highest Daily
Death Benefit Amount is $115,420, and the Unadjusted Account Value is
$120,000. Assuming $15,000 is withdrawn from the Annuity on October 3, 2013
and is designated as a Non-Lifetime Withdrawal, all guarantees associated with
Spousal Highest Daily Lifetime Income 2.0 with HD DB will be reduced by the
ratio the total withdrawal amount represents of the Unadjusted Account Value
just prior to the withdrawal being taken.
HERE IS THE CALCULATION:
Withdrawal amount $ 15,000.00
Divided by Unadjusted Account Value before withdrawal $120,000.00
Equals ratio 12.5%
All guarantees will be reduced by the above ratio (12.5%)
Protected Withdrawal Value $109,375.00
12th benefit year Minimum Periodic Value $183,750.00
Highest Daily Death Benefit Amount $100,992.50
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REQUIRED MINIMUM DISTRIBUTIONS
See the sub-section entitled "Required Minimum Distributions" in the
prospectus section above concerning Highest Daily Lifetime Income 2.0 for a
discussion of the relationship between the RMD amount and the Annual Income
Amount.
HIGHEST DAILY DEATH BENEFIT
A Death Benefit is payable under Spousal Highest Daily Lifetime Income 2.0
with HD DB (until we begin making Guarantee Payments under the benefit or
annuity payments have begun) upon the death of the Remaining Designated Life
when we receive Due Proof of Death. The Death Benefit is the greatest of: the
Minimum Death Benefit (described later in this prospectus) or the Highest
Daily Death Benefit Amount described below.
Highest Daily Death Benefit Amount:
On the date you elect Spousal Highest Daily Lifetime Income 2.0 with HD DB,
the Highest Daily Death Benefit Amount is equal to your Unadjusted Account
Value. On each subsequent Valuation Day, until the date of death of the
decedent, the Highest Daily Death Benefit Amount will be the greater of:
(1)The Unadjusted Account Value on the current Valuation Day; and
(2)The Highest Daily Death Benefit Amount of the immediately preceding
Valuation Day,
. increased by any Purchase Payments made on the current Valuation Day and,
. reduced by the effect of withdrawals made on the current Valuation Day,
as described below.
Please note that the Highest Daily Death Benefit Amount does not have any
guaranteed growth rate associated with it and therefore can be a different
amount than any of the guaranteed values associated with the living benefit
features of Spousal Highest Daily Lifetime Income 2.0 with HD DB.
A Non-Lifetime Withdrawal will proportionately reduce the Highest Daily Death
Benefit Amount by the ratio of the Non-Lifetime Withdrawal to the Account
Value immediately prior to the Non-Lifetime Withdrawal. A Lifetime Withdrawal
that is not considered Excess Income will reduce the Highest Daily Death
Benefit Amount (dollar-for-dollar) by the amount of the withdrawal. All or a
portion of a Lifetime Withdrawal that is considered Excess Income will
proportionately reduce the Highest Daily Death Benefit Amount by the ratio of
the Excess Income to the Account Value immediately prior to the withdrawal of
the Excess Income.
The Highest Daily Death Benefit will be calculated on the date of death of the
Remaining Designated Life and will be:
. increased by the amount of any additional Adjusted Purchase Payments, and
. reduced by the effect of any withdrawals (as described in the preceding
paragraph),
made during the period between the decedent's date of death and the date we
receive Due Proof of Death.
We will reduce the Highest Daily Death Benefit Amount payable under this
benefit by Purchase Credits applied during the period beginning 12 months
prior to the decedent's date of death and ending on the date we receive Due
Proof of Death. We may waive, on a non-discriminatory basis, our right to
deduct such Purchase Credits.
PLEASE NOTE THAT HIGHEST DAILY DEATH BENEFIT AMOUNT IS AVAILABLE ONLY UNTIL WE
MAKE GUARANTEE PAYMENTS UNDER SPOUSAL HIGHEST DAILY DEATH BENEFIT 2.0 WITH HD
DB OR ANNUITY PAYMENTS BEGIN.
ALL OTHER PROVISIONS APPLICABLE TO DEATH BENEFITS UNDER YOUR ANNUITY CONTINUE
TO APPLY. SEE THE "DEATH BENEFITS" SECTION OF THIS PROSPECTUS FOR MORE
INFORMATION PERTAINING TO DEATH BENEFITS.
BENEFITS UNDER SPOUSAL HIGHEST DAILY LIFETIME INCOME 2.0 WITH HD DB
.. To the extent that your Unadjusted 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 Guarantee Payments amounts
are still payable under Spousal Highest Daily Lifetime Income 2.0 with HD
DB, 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 Unadjusted 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 continue to make payments until the simultaneous
deaths of both spousal designated lives, or the death of the Remaining
Designated Life. After the Unadjusted Account Value is reduced to zero, 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 UNADJUSTED ACCOUNT VALUE TO ZERO ARE MORE THAN THE ANNUAL INCOME
AMOUNT, SPOUSAL HIGHEST DAILY LIFETIME INCOME 2.0 WITH HD DB TERMINATES,
AND NO ADDITIONAL PAYMENTS WILL BE MADE.
.. Please note that if your Unadjusted 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 Latest Annuity Date will be
treated as annuity payments.
.. Please note that if your Unadjusted Account Value is reduced to zero due to
withdrawals or annuitization, any Death Benefit value, including that of
the HD DB feature, will terminate and no Death Benefit Amount is payable.
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.. 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 Unadjusted Account Value, less any applicable state
required premium tax, to any annuity option available; or
(2)request that, as of the date annuity payments are to begin, we make
annuity payments each year equal to the Annual Income Amount. We will
make payments until the death of the Remaining Designated Life. We
must receive your request in a form acceptable to us at our office.
If applying your Unadjusted Account Value, less any applicable tax
charges, to our current life only (or joint life, depending on the
number of designated lives remaining) annuity payment rates results
in a higher annual payment, we will give you the higher annual
payment.
.. In the absence of an election when mandatory annuity payments are to begin,
we currently make annual annuity payments as a joint and survivor or single
(as applicable) life fixed annuity with eight payments certain, by applying
the greater of the annuity rates then currently available or the annuity
rates guaranteed in your Annuity. We reserve the right at any time to
increase or decrease the certain period in order to comply with the Code
(e.g., to shorten the period certain to match life expectancy under
applicable Internal Revenue Service tables). 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 Unadjusted Account Value.
.. If no Lifetime Withdrawal has been taken, the Annual Income Amount applied
for the purpose of calculating annuity payments will be treated as if your
first Lifetime Withdrawal was taken on the date the annuity payments are to
begin. Therefore, the Annual Income Amount will potentially increase by no
less than the 5% compounded growth rate up until the time your annuity
payments commence.
OTHER IMPORTANT CONSIDERATIONS
.. Withdrawals under the Spousal Highest Daily Lifetime Income 2.0 with HD DB
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
partial withdrawals that exceed the Annual Income Amount. If you have an
active Systematic Withdrawal program running at the time you elect this
benefit, the first systematic withdrawal that processes after your election
of the benefit will be deemed a Lifetime Withdrawal. Withdrawals made while
Spousal Highest Daily Lifetime Income 2.0 with HD DB 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 MVA Options. If you have an active Systematic Withdrawal
program running at the time you elect this benefit, the program must
withdraw funds pro rata.
.. Any Lifetime Withdrawal that you take that is not a withdrawal of Excess
Income is not subject to a CDSC, even if the total amount of such
withdrawals in any Annuity Year exceeds the maximum Free Withdrawal amount.
Any Lifetime Withdrawal that is treated as Excess Income is subject to any
applicable CDSC, if the withdrawal is greater than the Free Withdrawal
amount.
.. You should carefully consider when to begin taking Lifetime Withdrawals. If
you begin taking withdrawals early, you may maximize the time during which
you may take Lifetime Withdrawals due to longer life expectancy, and you
will be using an optional benefit for which you are paying a charge. On the
other hand, you could limit the value of the benefit if you begin taking
withdrawals too soon. For example, withdrawals reduce your Unadjusted
Account Value and may limit the potential for increasing your Protected
Withdrawal Value. You should discuss with your Financial Professional when
it may be appropriate for you to begin taking Lifetime Withdrawals.
.. You cannot allocate Purchase Payments or transfer Unadjusted Account Value
to or from the AST Investment Grade Bond Sub-account. A summary description
of the AST Investment Grade Bond Portfolios appears in the prospectus
section entitled "Investment Options." 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 Permitted Sub-accounts, the DCA MVA Options, and
the AST Investment Grade Bond Sub-account triggered by the predetermined
mathematical formula will not count toward the maximum number of free
transfers allowable under an Annuity.
.. Upon inception of the benefit, 100% of your Unadjusted Account Value must
be allocated to the Permitted Sub-accounts. We may amend the Permitted
Sub-accounts from time to time. Changes to Permitted Sub-accounts, or to
the requirements as to how you may allocate your Unadjusted Account Value
with this benefit, will apply to new elections of the benefit and may apply
to current participants in the benefit. To the extent that changes apply to
current participants in the benefit, they will apply only upon
re-allocation of Unadjusted Account Value, or upon addition of additional
Purchase Payments. That is, we will not require such current participants
to re-allocate Unadjusted Account Value to comply with any new requirements.
.. 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 Sub-accounts and (ii) invest the proceeds of those sales in
the Sub-accounts that you have designated. During this reallocation
process, your Unadjusted Account Value allocated to the Sub-accounts will
remain exposed to investment risk, as is the case generally. The
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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 begin until the close of business on the following
Valuation Day.
.. Any Death Benefit will be zero if any withdrawals taken under Spousal
Highest Daily Lifetime Income 2.0 with HD DB reduce your Unadjusted Account
Value to zero (see "Death Benefits").
.. Spousal Continuation: If a Death Benefit is not payable on the death of a
spousal designated life (e.g., if the first of the spousal designated lives
to die is the Beneficiary but not an Owner), Spousal Highest Daily Lifetime
Income 2.0 with HD DB will remain in force unless we are instructed
otherwise.
.. The current charge for Spousal Highest Daily Lifetime Income 2.0 with HD DB
is 1.60% annually of the greater of Unadjusted Account Value and Protected
Withdrawal Value. The maximum charge for Spousal Highest Daily Lifetime
Income 2.0 with HD DB is 2.00% annually of the greater of the Unadjusted
Account Value and Protected Withdrawal Value. As discussed in "Highest
Daily Auto Step-Up" above, we may increase the fee upon a step-up under
this benefit. We deduct this charge on quarterly anniversaries of the
benefit effective date, based on the values on the last Valuation Day prior
to the quarterly anniversary. Thus, we deduct, on a quarterly basis, 0.40%
of the greater of the prior Valuation Day's Unadjusted 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. You will begin paying this charge as of the effective
date of the benefit even if you do not begin taking withdrawals for many
years, or ever. We will not refund the charges you have paid if you choose
never to take any withdrawals and/or if you never receive any lifetime
income payments.
If the deduction of the charge would result in the Unadjusted Account Value
falling below the lesser of $500 or 5% of the sum of the Unadjusted 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 Unadjusted Account Value to fall below the Account
Value Floor. If the Unadjusted Account Value on the date we would deduct a
charge for the benefit is less than the Account Value Floor, then no charge
will be assessed for that benefit quarter. Charges deducted upon termination
of the benefit may cause the Unadjusted Account Value to fall below the
Account Value Floor. If a charge for Spousal Highest Daily Lifetime Income 2.0
with HD DB 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 Unadjusted Account Value to fall below the Account
Value Floor. While the deduction of the charge (other than the final charge)
may not reduce the Unadjusted Account Value to zero, withdrawals may reduce
the Unadjusted Account Value to zero. If this happens and the Annual Income
Amount is greater than zero, we will make payments under the benefit.
ELECTION OF AND DESIGNATIONS UNDER THE BENEFIT
Spousal Highest Daily Lifetime Income 2.0 with HD DB 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. Currently, Spousal
Highest Daily Lifetime Income 2.0 with HD DB only may be elected if the Owner,
Annuitant, and Beneficiary designations are as follows:
.. One Annuity Owner, where the Annuitant and the Owner are the same person
and the sole Beneficiary is the Owner's spouse. Each Owner/Annuitant and
the Beneficiary must be between 50-79 years old at the time of election; or
.. Co-Annuity Owners, where the Owners are each other's spouses. The
Beneficiary designation must be the surviving spouse, or the spouses named
equally. One of the Owners must be the Annuitant. Each Owner must be
between 50 and 79 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. Each of the Annuitant and the Contingent Annuitant must be
between 50 and 79 years old at the time of election.
Remaining Designated Life: A Remaining Designated Life must be a natural
person and must have been listed as one of the spousal designated lives when
the benefit was elected. A spousal designated life will become the Remaining
Designated Life on the earlier of the death of the first of the spousal
designated lives to die, provided that they are each other's spouses at that
time, or divorce from the other spousal designated life while the benefit is
in effect. That said, if a spousal designated life is removed as Owner,
Beneficiary, or Annuitant due to divorce, the other spousal designated life
becomes the Remaining Designated Life when we receive notice of the divorce,
and any other documentation we require, in Good Order. Any new
Beneficiary(ies) named by the Remaining Designated Life will not be a spousal
designated life.
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
designations under this benefit, however if the Beneficiary is changed, the
benefit may not be eligible to be continued upon the death of the first
designated life. If the designated lives divorce, Spousal Highest Daily
Lifetime Income 2.0 with HD DB 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 Income 2.0 with HD DB can be elected at the
time that you purchase your Annuity or after the Issue Date, subject to its
availability, and our eligibility rules and restrictions. If you elect Spousal
Highest Daily Lifetime Income
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2.0 with HD DB and terminate it, you can re-elect it, subject to our current
rules and availability. See "Termination of Existing Benefits and Election of
New Benefits" for information pertaining to elections, termination and
re-election of benefits. PLEASE NOTE THAT IF YOU TERMINATE A LIVING BENEFIT
AND ELECT SPOUSAL HIGHEST DAILY LIFETIME INCOME 2.0 WITH HD DB, YOU LOSE THE
GUARANTEES THAT YOU HAD ACCUMULATED UNDER YOUR EXISTING BENEFIT, AND YOUR
GUARANTEES UNDER SPOUSAL HIGHEST DAILY LIFETIME INCOME 2.0 WITH HD DB WILL BE
BASED ON YOUR UNADJUSTED ACCOUNT VALUE ON THE EFFECTIVE DATE OF SPOUSAL
HIGHEST DAILY LIFETIME INCOME 2.0 WITH HD DB. You and your Financial
Professional should carefully consider whether terminating your existing
benefit and electing Spousal Highest Daily Lifetime Income 2.0 with HD DB is
appropriate for you. We reserve the right to waive, change and/or further
limit the election frequency in the future for new elections of this benefit.
If you wish to elect this benefit and you are currently participating in a
Systematic Withdrawal program, amounts withdrawn under the program must be
taken on a pro rata basis from your Annuity's Sub-accounts (i.e., in direct
proportion to the proportion that each such Sub-account bears to your total
Account Value) in order for you to be eligible for the benefit. Thus, you may
not elect Spousal Highest Daily Lifetime Income 2.0 so long as you participate
in a Systematic Withdrawal program in which withdrawals are not taken pro rata.
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 UPON THE FIRST TO OCCUR OF THE FOLLOWING:
.. UPON OUR RECEIPT OF DUE PROOF OF DEATH OF THE FIRST DESIGNATED LIFE WHO IS
AN OWNER (OR WHO IS THE ANNUITANT IF ENTITY OWNED), IF THE REMAINING
DESIGNATED LIFE ELECTS NOT TO CONTINUE THE ANNUITY;
.. UPON OUR RECEIPT OF DUE PROOF OF DEATH OF AN OWNER (OR ANNUITANT IF ENTITY
OWNED) IF THE SURVIVING SPOUSE IS NOT ELIGIBLE TO CONTINUE THE BENEFIT
BECAUSE SUCH SPOUSE IS NOT A SPOUSAL DESIGNATED LIFE AND THERE IS ANY
UNADJUSTED ACCOUNT VALUE ON THE DATE OF DEATH;
.. UPON OUR RECEIPT OF DUE PROOF OF DEATH OF THE REMAINING DESIGNATED LIFE IF
A DEATH BENEFIT IS PAYABLE UNDER THIS BENEFIT;
.. YOUR TERMINATION OF THE BENEFIT;
.. YOUR SURRENDER OF THE ANNUITY;
.. WHEN ANNUITY PAYMENTS BEGIN (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);
.. BOTH THE UNADJUSTED ACCOUNT VALUE AND ANNUAL INCOME AMOUNT EQUAL ZERO; OR
.. YOU CEASE TO MEET OUR REQUIREMENTS AS DESCRIBED IN "ELECTION OF AND
DESIGNATIONS UNDER THE BENEFIT".
"Due Proof of Death" is satisfied when we receive all of the following in Good
Order: (a) a death certificate or similar documentation acceptable to us;
(b) all representations we require or which are mandated by applicable law or
regulation in relation to the death claim and the payment of death proceeds
(all representations may also include trust or estate paperwork (if needed) in
addition to consent forms (if applicable), requirements other than the death
certificate and claim forms from at least one beneficiary); and (c) any
applicable election of the method of payment of the death benefit, if not
previously elected by the Owner, by at least one Beneficiary.
Upon termination of Spousal Highest Daily Lifetime Income 2.0 with HD DB other
than upon the death of the Remaining 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 Unadjusted Account Value falling below the Account Value
Floor. However, if the amount in the Sub-accounts is not enough to pay the
charge, we will reduce the fee to no more than the amount in the Sub-accounts.
With regard to your investment allocations, upon termination we will:
(i) leave intact amounts that are held in the Permitted Sub-accounts, and
(ii) unless you are participating in an asset allocation program (i.e., Static
Re-balancing 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
Unadjusted Account Value in the variable Investment Options is zero, we will
transfer such amounts to the AST Money Market Sub-account.
HOW SPOUSAL HIGHEST DAILY LIFETIME INCOME 2.0 WITH HD DB TRANSFERS UNADJUSTED
ACCOUNT VALUE BETWEEN YOUR PERMITTED SUB-ACCOUNTS AND THE AST INVESTMENT GRADE
BOND SUB-ACCOUNT
See "How Highest Daily Lifetime Income 2.0 Transfers Unadjusted Account Value
Between Your Permitted Sub-accounts and the AST Investment Grade Bond
Sub-account" in the discussion of Highest Daily Lifetime Income 2.0 Benefit
above for information regarding this component of the benefit.
ADDITIONAL TAX CONSIDERATIONS
Please see the Additional Tax Considerations section under Highest Daily
Lifetime Income 2.0 above.
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GUARANTEED RETURN OPTION PLUS II (GRO PLUS II)
Guaranteed Return Option/SM/ Plus II (GRO Plus II/SM/) is a form of
"guaranteed minimum accumulation benefit" that guarantees a specified
Unadjusted Account Value at one or more dates in the future. If you
participate in this benefit, you are subject to the predetermined mathematical
formula described below that transfers Account Value between your Sub-accounts
and an AST bond portfolio Sub-account. GRO Plus II is available only for
Annuities issued with an application signed prior to January 24, 2011, subject
to availability which may vary by firm.
Under GRO Plus II, we guarantee that on the seventh anniversary of benefit
election, and each anniversary thereafter, the Unadjusted Account Value will
be not less than the Unadjusted Account Value on the date that the benefit is
added to your Annuity (adjusted for subsequent Purchase Payments and
withdrawals as detailed below). We refer to this initial guarantee as the
"base guarantee." In addition to the base guarantee, GRO Plus II offers the
possibility of an enhanced guarantee. You may "manually" lock in an enhanced
guarantee once per "benefit year" (i.e., a year beginning on the date you
acquired the benefit and each anniversary thereafter) if your Unadjusted
Account Value on that Valuation Day exceeds the amount of any outstanding base
guarantee or enhanced guarantee. If you elect to manually lock-in an enhanced
guarantee on an anniversary of the effective date of the benefit, that lock-in
will not count towards the one elective manual lock-in you may make each
benefit year. We guarantee that the Unadjusted Account Value locked-in by that
enhanced guarantee will not be any less seven years later, and each
anniversary of that date thereafter. In addition, you may elect an automatic
enhanced guarantee feature under which, if your Unadjusted Account Value on a
benefit anniversary exceeds the highest existing guarantee by 7% or more, we
guarantee that such Unadjusted Account Value will not be any less seven
benefit anniversaries later and each benefit anniversary thereafter. You may
maintain only one enhanced guarantee in addition to your base guarantee. Thus,
when a new enhanced guarantee is created, it cancels any existing enhanced
guarantee. However, the fact that an enhanced guarantee was effected
automatically on a benefit anniversary does not prevent you from "manually"
locking-in an enhanced guarantee during the ensuing benefit year. In addition,
the fact that you "manually" locked in an enhanced guarantee does not preclude
the possibility of an automatic enhanced guarantee on the subsequent benefit
anniversary. Please note that upon creation of a new enhanced guarantee, an
immediate transfer to an AST bond portfolio Sub-account (which is used as part
of this benefit) may occur depending on the discount rate (as described below)
used to determine the present value of each of your guarantees. You may elect
to terminate an enhanced guarantee without also terminating the base
guarantee. If you do, any amounts held in the AST bond portfolio Sub-account
(which is used as part of this benefit) with respect to that enhanced
guarantee will be transferred to your other Sub-accounts in accordance with
your most recent allocation instructions, and if none exist, then pro rata to
your variable Sub-accounts (see below "Key Feature - Allocation of Unadjusted
Account Value"). Amounts held in an AST bond portfolio Sub-account with
respect to the base guarantee will not be transferred as a result of the
termination of an enhanced guarantee. You may not lock in an enhanced
guarantee, either manually or through our optional automatic program, within
seven years prior to the Latest Annuity Date (please see "Annuity Options" for
further information). This also applies to a new Owner who has acquired the
Annuity from the original Owner.
In this section, we refer to a date on which the Unadjusted Account Value is
guaranteed to be present as the "Maturity Date". If the Account Value on the
Maturity Date is less than the guaranteed amount, we will contribute funds
from our general account to bring your Unadjusted Account Value up to the
guaranteed amount. If the Maturity Date is not a Valuation Day, then we would
contribute such an amount on the next Valuation Day. We will allocate any such
amount to each Sub-account (other than the AST bond portfolio Sub-account used
with this benefit and described below) in accordance with your most recent
allocation instructions, which means: a) the Custom Portfolio Program or, b)
if you are not participating in this program, then such amounts will be
allocated to your Sub-accounts on a pro rata basis. Regardless of whether we
need to contribute funds at the end of a Guarantee Period, we will at that
time transfer all amounts held within the AST bond portfolio Sub-account
associated with the maturing guarantee in accordance with your most recent
allocation instructions, which means: a) the Custom Portfolio Program or, b)
if you are not participating in this program, then such amounts will be
allocated to your Sub-accounts on a pro rata basis. If the former (i.e., an
asset allocation program), your Unadjusted Account Value will be transferred
according to the program.
Any addition or transferred amount may be subsequently re-allocated based on
the predetermined mathematical formula described below.
The guarantees provided by the benefit exist only on the applicable Maturity
Date(s). However, due to the ongoing monitoring of your Unadjusted Account
Value, and the transfer of Unadjusted Account Value to support your future
guarantees, the benefit may provide some protection from significant
Sub-account losses. For this same reason, the benefit may limit your ability
to benefit from Sub-account increases while it is in effect.
We increase both the base guarantee and any enhanced guarantee by the amount
of each Purchase Payment (including any associated Purchase Credits) made
subsequent to the date that the guarantee was established. For example, if the
effective date of the benefit was January 3, 2011 and the Account Value was
$100,000 on that date, then a $30,000 Purchase Payment made on March 30, 2012
would increase the base guarantee amount to $130,000.
If you make a withdrawal (including any CDSC), we effect a proportional
reduction to each existing guarantee amount. We calculate a proportional
reduction by reducing each existing guarantee amount by the percentage
represented by the ratio of the withdrawal amount (including any CDSC) to your
Unadjusted Account Value immediately prior to the withdrawal.
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If you make a withdrawal, we will deduct the withdrawal amount pro rata from
each of your Sub-accounts (including the AST bond portfolio Sub-account used
with this benefit).
EXAMPLE
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 a withdrawal on each guarantee amount
under this benefit.
Assume the following:
. The Issue Date is December 1, 2010
. The benefit is elected on December 1, 2010
. The Unadjusted Account Value on December 1, 2010 is $200,000, which
results in a base guarantee of $200,000
. An enhanced guarantee amount of $350,000 is locked in on December 1, 2011
. The Unadjusted Account Value immediately prior to the withdrawal is
equal to $380,000
. for purposes of simplifying these assumptions, we assume hypothetically
that no CDSC is applicable (in general, a CDSC could be inapplicable
based on the Free Withdrawal provision if the withdrawal was within the
CDSC period, and would be inapplicable to the C Series)
If a withdrawal of $50,000 is taken on December 15, 2011, all guarantee
amounts will be reduced by the ratio of the total withdrawal amount to the
Unadjusted Account Value just prior to the withdrawal being taken.
HERE IS THE CALCULATION (FIGURES ARE ROUNDED):
Withdrawal Amount $ 50,000
Divided by Unadjusted Account Value before withdrawal $380,000
Equals ratio 13.16%
All guarantees will be reduced by the above ratio (13.16%).
Base guarantee amount $173,680
Enhanced guarantee amount $303,940
KEY FEATURE - ALLOCATION OF UNADJUSTED ACCOUNT VALUE FOR GRO PLUS II (AND
HIGHEST DAILY GRO II, IF ELECTED PRIOR TO JULY 16, 2010)
We limit the Sub-accounts to which you may allocate Unadjusted Account Value
if you elect GRO Plus II or Highest Daily GRO II (HD GRO II) (see below for
information pertaining to HD GRO II). For purposes of these benefits, we refer
to those permitted Investment Options (other than the required bond portfolio
Sub-accounts discussed below) as the "Permitted Sub-accounts."
GRO Plus II and HD GRO II use a predetermined mathematical formula to help us
manage your guarantees through all market cycles. The formula applicable to
you may not be altered once you elect the benefit. However, subject to
regulatory approval, we do reserve the right to amend the formula for
newly-issued Annuities that elect or re-elect GRO Plus II and HD GRO II and
for existing Annuities that elect the benefit post-issue. This required
formula helps us manage our financial exposure under GRO Plus II and HD GRO
II, by moving assets out of certain Sub-accounts if dictated by the formula
(see below). In essence, we seek to preserve Unadjusted Account Value, by
transferring them to a more stable option (i.e., one or more specified bond
Portfolios of Advanced Series Trust). We refer to the Sub-accounts
corresponding to these bond Portfolios collectively as the "AST bond portfolio
Sub-accounts". The formula also contemplates the transfer of Unadjusted
Account Value from an AST bond portfolio Sub-account to the other
Sub-accounts. Because these restrictions and the use of the formula lessen the
likelihood that your Unadjusted Account Value will be reduced below the base
and/or enhanced guarantee(s), they also reduce the likelihood that we will
make any payments under this benefit. They may also limit your upside
potential for growth. The formula is set forth in Appendix D of this
prospectus. A summary description of each AST bond portfolio Sub-account
appears within the prospectus section entitled "Investment Options." In
addition, you can find a copy of the AST bond portfolio prospectus by going to
www.prudentialannuities.com.
For purposes of operating the GRO Plus II formula, we have included within
each Annuity several AST bond portfolio Sub-accounts. Each AST bond portfolio
is unique, in that its underlying investments generally mature at different
times. For example, there would be an AST bond portfolio whose underlying
investments generally mature in 2020, an AST bond portfolio whose underlying
investments generally mature in 2021, and so forth. As discussed below, the
formula determines the appropriate AST bond portfolio Sub-account to which
Account Value is transferred. We will introduce new AST bond portfolio
Sub-accounts in subsequent years, to correspond generally to the length of new
Guarantee Periods that are created under this benefit (and the Highest Daily
GRO II benefit). If you have elected GRO Plus II or HD GRO II, you may have
Unadjusted Account Value allocated to an AST bond portfolio Sub-account only
by operation of the formula, and thus you may not allocate Purchase Payments
to or make transfers to or from an AST bond portfolio Sub-account.
Although we employ several AST bond portfolio Sub-accounts for purposes of the
benefit, the formula described in the next paragraph operates so that your
Unadjusted Account Value may be allocated to only one AST bond portfolio
Sub-account at one
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time. The formula determines the appropriate AST Bond Portfolio Sub-account to
which Unadjusted Account Value is transferred. On any day a transfer into or
out of the AST bond portfolio Sub-account is made the formula may dictate that
a transfer out of one AST bond portfolio Sub-account be made into another AST
bond portfolio Sub-account. Any transfer into an AST bond portfolio
Sub-account will be directed to the AST bond portfolio Sub-account associated
with the "current liability", as described below. As indicated, the formula
and AST bond portfolio Sub-accounts are employed with this benefit to help us
mitigate the financial risks under our guarantee. Thus, the formula applicable
to you under the benefit determines which AST bond portfolio Sub-account your
Account Value is transferred to, and under what circumstances a transfer is
made. Please note that upon creation of a new enhanced guarantee, an immediate
transfer to the AST Bond Portfolio Sub-account associated with the "current
liability" may occur, depending on the discount rate (as described in the next
paragraph) used to determine the present value of each of your guarantees. AS
SUCH, A LOW DISCOUNT RATE COULD CAUSE A TRANSFER OF UNADJUSTED ACCOUNT VALUE
INTO AN AST BOND PORTFOLIO SUB-ACCOUNT, DESPITE THE FACT THAT YOUR UNADJUSTED
ACCOUNT VALUE HAD INCREASED.
In general, the formula works as follows. On each Valuation Day, the formula
automatically performs an analysis with respect to each guarantee that is
outstanding. For each outstanding guarantee, the formula begins by determining
the present value on that Valuation Day that, if appreciated at the applicable
"discount rate", would equal the applicable guarantee amount on the Maturity
Date. As detailed in the formula, the discount rate is an interest rate
determined by taking a benchmark index used within the financial services
industry and then reducing that interest rate by a prescribed adjustment. Once
selected, we do not change the applicable benchmark index (although we do
reserve the right to use a new benchmark index if the original benchmark is
discontinued). The greatest of each such present value is referred to as the
"current liability" in the formula. The formula compares the current liability
to the amount of your Unadjusted Account Value held within the AST bond
portfolio Sub-account and to your Unadjusted Account Value held within the
Permitted Sub-accounts. If the current liability, reduced by the amount held
within the AST bond portfolio Sub-account, and divided by the amount held
within the Permitted Sub-accounts, exceeds an upper target value (currently,
85%), then the formula will make a transfer into the AST bond portfolio
Sub-account, in the amount dictated by the formula (subject to the 90% cap
discussed below). If the current liability, reduced by the amount held within
the AST bond portfolio Sub-account, and divided by the amount within the
Permitted Sub-accounts, is less than a lower target value (currently, 79%),
then the formula will transfer Unadjusted Account Value from the AST bond
portfolio Sub-account into the Permitted Sub-accounts, in the amount dictated
by the formula.
The formula will not execute a transfer to the AST bond portfolio Sub-account
that results in more than 90% of your Unadjusted Account Value being allocated
to the AST bond portfolio Sub-account ("90% cap"). Thus, on any Valuation Day,
if the formula would require a transfer to the AST bond portfolio Sub-account
that would result in more than 90% of the Unadjusted Account Value being
allocated to the AST bond portfolio Sub-account, only the amount that results
in exactly 90% of the Unadjusted Account Value being allocated to the AST bond
portfolio Sub-account will be transferred. Additionally, future transfers into
the AST bond portfolio Sub-account will not be made (regardless of the
performance of the AST bond portfolio Sub-account and the Permitted
Sub-accounts) at least until there is first a transfer out of the AST bond
portfolio Sub-account. Once this transfer occurs out of the AST bond portfolio
Sub-account, future amounts may be transferred to or from the AST bond
portfolio Sub-account if dictated by the formula (subject to the 90% cap). At
no time will the formula make a transfer to the AST bond portfolio Sub-account
that results in greater than 90% of your Unadjusted Account Value being
allocated to the AST bond portfolio Sub-account. However, it is possible that,
due to the investment performance of your allocations in the AST bond
portfolio Sub-account and your allocations in the Permitted Sub-accounts you
have selected, your Unadjusted Account Value could be more than 90% invested
in the AST bond portfolio 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 bond portfolio
Sub-account at least until there is first a transfer out of the AST bond
portfolio Sub-account, regardless of how much of your Unadjusted 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 Unadjusted Account Value is allocated to the AST bond
portfolio Sub-account, and the formula will still not transfer any of your
Unadjusted Account Value to the AST bond portfolio Sub-account (at least until
there is first a transfer out of the AST bond portfolio Sub-account).
For example,
. March 17, 2011 - a transfer is made to the AST bond portfolio
Sub-account that results in the 90% cap being met and now $90,000 is
allocated to the AST bond portfolio Sub-account and $10,000 is allocated
to the Permitted Sub-accounts.
. March 18, 2011 - you make an additional Purchase Payment of $10,000. No
transfers have been made from the AST bond portfolio Sub-account to the
Permitted Sub-accounts since the cap went into effect on March 17, 2011.
. On March 18, 2011 (and at least until first a transfer is made out of
the AST bond portfolio 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 bond portfolio 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 bond portfolio Sub-account).
. Once there is a transfer out of the AST bond portfolio Sub-account (of
any amount), the formula will operate as described above, meaning that
the formula could transfer amounts to or from the AST bond portfolio
Sub-account if dictated by the formula (subject to the 90% cap).
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Under the operation of the formula, the 90% cap may come into and out of
effect 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 bond portfolio Sub-account as dictated by the formula.
As discussed above, each Valuation Day, the formula analyzes the difference
between your Unadjusted Account Value and your guarantees, as well as how long
you have owned the benefit, and determines if any portion of your Unadjusted
Account Value needs to be transferred into or out of the AST bond portfolio
Sub-accounts. Therefore, at any given time, some, none, or most of your
Unadjusted Account Value may be allocated to the AST bond portfolio
Sub-accounts.
Each market cycle is unique, therefore the performance of your Sub-accounts,
and its impact on your Unadjusted Account Value, will differ from market cycle
to market cycle producing different transfer activity under the formula. The
amount and timing of transfers to and from the AST bond portfolio Sub-accounts
pursuant to the formula depend on various factors unique to your Annuity and
are not necessarily directly correlated with the securities markets, bond
markets, interest rates or any other market or index. Some of the factors that
determine the amount and timing of transfers (as applicable to your Annuity),
include:
. The difference between your Unadjusted Account Value and your guarantee
amount(s);
. The amount of time until the maturity of your guarantee(s);
. The amount invested in, and the performance of, the Permitted
Sub-accounts;
. The amount invested in, and the performance of, the AST bond portfolio
Sub-accounts;
. The discount rate used to determine the present value of your
guarantee(s);
. Additional Purchase Payments, if any, that you make to the Annuity; and
. Withdrawals, if any, taken from the Annuity.
Any amounts invested in the AST bond portfolio Sub-accounts will affect your
ability to participate in a subsequent market recovery within the Permitted
Sub-accounts. Conversely, the Unadjusted Account Value may be higher at the
beginning of the market recovery, e.g. more of the Unadjusted Account Value
may have been protected from decline and volatility than it otherwise would
have been had the benefit not been elected. The AST bond portfolio
Sub-accounts are available only with certain optional living benefits, and you
may not allocate Purchase Payments to or transfer Account Value to or from the
AST bond portfolio Sub-accounts.
Transfers under the formula do not impact any guarantees under the benefit
that have already been locked-in.
ELECTION/CANCELLATION OF THE BENEFIT
GRO Plus II is available only for Annuities issued with an application signed
prior to January 24, 2011, subject to availability which may vary by firm. GRO
Plus II can be elected on any Valuation Day as long as the benefit is
available, provided that your Unadjusted Account Value is allocated in a
manner permitted with the benefit and that you otherwise meet our eligibility
rules. You may elect GRO Plus II only if the oldest of the Owner and Annuitant
is 84 or younger on the date of election. GRO Plus II is not available if you
participate in any other optional living benefit. However, GRO Plus II may be
elected together with any optional death benefit.
GRO PLUS II WILL TERMINATE AUTOMATICALLY UPON: (A) THE DEATH OF THE OWNER OR
THE ANNUITANT (IN AN ENTITY OWNED CONTRACT), UNLESS THE ANNUITY IS CONTINUED
BY THE SURVIVING SPOUSE; (B) AS OF THE DATE UNADJUSTED ACCOUNT VALUE IS
APPLIED TO BEGIN ANNUITY PAYMENTS; (C) AS OF THE ANNIVERSARY OF BENEFIT
ELECTION THAT IMMEDIATELY PRECEDES THE CONTRACTUALLY-MANDATED LATEST ANNUITY
DATE, OR (D) UPON FULL SURRENDER OF THE ANNUITY. IF YOU ELECT TO TERMINATE THE
BENEFIT, GRO PLUS II WILL NO LONGER PROVIDE ANY GUARANTEES. THE CHARGE FOR THE
GRO PLUS II BENEFIT WILL NO LONGER BE DEDUCTED FROM YOUR UNADJUSTED ACCOUNT
VALUE UPON TERMINATION OF THE BENEFIT.
If you elect this benefit, and in connection with that election you are
required to reallocate to different Investment Options permitted under this
benefit, then on the Valuation Day on which 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 permitted Investment Options
that you have designated. During this reallocation process, your Unadjusted
Account Value allocated to the Sub-accounts will remain exposed to investment
risk, as is the case generally. The protection afforded by the newly-elected
benefit will not arise until the close of business on the following Valuation
Day.
If you wish, you may cancel the GRO Plus II benefit. You may also cancel an
enhanced guarantee, but leave the base guarantee intact. Upon cancellation,
you may elect any other currently available living benefit on any Valuation
Day after you have cancelled the GRO Plus II benefit, provided that your
Unadjusted Account Value is allocated in a manner permitted with that new
benefit and that you otherwise meet our eligibility rules. Upon cancellation
of the GRO Plus II benefit, any Unadjusted Account Value allocated to the AST
bond portfolio Sub-account used with the formula will be reallocated to the
Permitted Sub-accounts according to your most recent allocation instructions
or, in absence of such instructions, pro rata (i.e., in direct proportion to
your current allocations). Upon your re-election of GRO Plus II, Unadjusted
Account Value may be transferred between the AST bond portfolio Sub-accounts
and the Permitted Sub-accounts according to the predetermined mathematical
formula (see "Key Feature - Allocation of Unadjusted Account
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Value" above for more details). You also should be aware that upon
cancellation of the GRO Plus II benefit, you will lose all guarantees that you
had accumulated under the benefit. Thus, the guarantees under any
newly-elected benefit will be based on your current Unadjusted Account Value
at benefit effectiveness. The benefit you elect or re-elect may be more
expensive than the benefit you cancel. Once the GRO Plus II benefit is
canceled you are not required to re-elect another optional living benefit and
any subsequent benefit election may be made on or after the first Valuation
Day following the cancellation of the GRO Plus II benefit provided that the
benefit you are looking to elect is available at that time and on a post-issue
basis.
SPECIAL CONSIDERATIONS UNDER GRO PLUS II
This benefit is subject to certain rules and restrictions, including, but not
limited to the following:
. Upon inception of the benefit, 100% of your Unadjusted Account Value
must be allocated to the Permitted Sub-accounts. The Permitted
Sub-accounts are those described in the Investment Option section of
this prospectus. No MVA Options may be in effect as of the date that you
elect to participate in the benefit, nor may you add such allocations
after you have acquired the benefit.
. Transfers as dictated by the formula will not count toward the maximum
number of free transfers allowable under the Annuity.
. Any amounts applied to your Unadjusted Account Value by us on a Maturity
Date will not be treated as "investment in the contract" for income tax
purposes.
. Only systematic withdrawal programs in which amounts withdrawn are being
taken on a pro rata basis from your Annuity's Sub-accounts (i.e., in
direct proportion to the proportion that each such Sub-account bears to
your total Unadjusted Account Value) will be permitted if you
participate in GRO Plus II. Thus, you may not elect GRO Plus II so long
as you participate in a systematic withdrawal program in which
withdrawals are not taken pro rata. Similarly, if you currently
participate in GRO Plus II, we will allow you to add a systematic
withdrawal program only if withdrawals under the program are to be taken
pro rata.
. As the time remaining until the applicable Maturity Date(s) gradually
decreases, the benefit may become increasingly sensitive to moves to an
AST bond portfolio Sub-account.
CHARGES UNDER THE BENEFIT
We deduct an annualized charge equal to 0.60% of the average daily net assets
of the Sub-accounts (including any AST bond portfolio Sub-account) for
participation in the GRO Plus II benefit. The annualized charge is deducted
daily. The charge is deducted to compensate us for: (a) the risk that your
Account Value on a Maturity Date is less than the amount guaranteed and
(b) administration of the benefit. You will begin paying this charge as of the
effective date of the benefit. We will not refund the charges you have paid
even if we never have to make any payments under the benefit.
HIGHEST DAILY GUARANTEED RETURN OPTION II (HD GRO II)
HD GRO II is available only for Annuities issued with an application signed
prior to January 24, 2011, subject to availability which may vary by firm.
Highest Daily/SM/ Guaranteed Return Option/SM/ II (HD GRO II/SM/) is a form of
"guaranteed minimum accumulation benefit" that guarantees a specified Account
Value at one or more dates in the future. If you participate in this benefit,
you are subject to a predetermined mathematical formula that transfers Account
Value between your Sub-accounts and an AST bond portfolio Sub-account.
HD GRO II creates a series of separate guarantees, each of which is based on
the highest Unadjusted Account Value attained on a day during the applicable
time period. As each year of your participation in the benefit passes, we
create a new guarantee. Each guarantee then remains in existence until the
date on which it matures (unless the benefit terminates sooner). We refer to
each date on which the specified Unadjusted Account Value is guaranteed as the
"Maturity Date" for that guarantee. HD GRO II will not create a guarantee if
the Maturity Date of that guarantee would extend beyond the Latest Annuity
Date. This is true even with respect to a new Owner who has acquired the
Annuity from the original Owner.
The guarantees provided by the benefit exist only on the applicable Maturity
Date(s). However, due to the ongoing monitoring of your Unadjusted Account
Value, and the transfer of Unadjusted Account Value to support your future
guarantees, the benefit may provide some protection from significant
Sub-account losses. For this same reason, the benefit may limit your ability
to benefit from Sub-account increases while it is in effect.
The initial guarantee is created on the day that the HD GRO II benefit is
added to your Annuity. We guarantee that your Unadjusted Account Value on the
tenth anniversary of that day (we refer to each such anniversary as a "benefit
anniversary") will not be less than your Unadjusted Account Value on the day
that the HD GRO II benefit was added or re-added to your Annuity. Each benefit
anniversary thereafter, we create a new guarantee. With respect to each such
subsequent guarantee, we identify the highest Unadjusted Account Value that
occurred between the date of that benefit anniversary and the date on which HD
GRO II was added to your Annuity. We guarantee that your Unadjusted Account
Value ten years after that benefit anniversary will be no less than the
highest daily Unadjusted Account Value (adjusted for Purchase Payments and
withdrawals, as described below) that occurred during that time period. The
following example illustrates the time period over which we identify the
highest daily Unadjusted Account Value for purposes of each subsequent
guarantee under the benefit. If the date of benefit election were
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January 6, 2011, we would create a guarantee on January 6 of each subsequent
year. For example, we would create a guarantee on January 6, 2015 based on the
highest Unadjusted Account Value occurring between January 6, 2011 and
January 6, 2015, and that guarantee would mature on January 6, 2025. As
described below, we adjust each of the guarantee amounts for Purchase Payments
(and any associated Purchase Credits) and withdrawals.
If the Unadjusted Account Value on the Maturity Date is less than the
guaranteed amount, we will contribute funds from our general account to bring
your Unadjusted Account Value up to the guaranteed amount. If the Maturity
Date is not a Valuation Day, then we would contribute such an amount on the
next Valuation Day. We will allocate any such amount to each Sub-account
(other than the AST bond portfolio Sub-account used with this benefit and
described below) in accordance with your most recent allocations instructions.
Regardless of whether we need to contribute funds at the end of a Guarantee
Period, we will at that time transfer all amounts held within the AST bond
portfolio Sub-account associated with the maturing guarantee to your other
Sub-accounts on a pro rata basis, unless your Account Value is either
(1) being allocated according to an asset allocation program or (2) at that
time allocated entirely to an AST bond portfolio Sub-account. If the former
(i.e., an asset allocation program), your Unadjusted Account Value will be
transferred according to the program. If the latter (i.e., an AST bond
portfolio Sub-account), then your Unadjusted Account Value will be transferred
to the Sub-accounts permitted with this benefit according to your most recent
allocation instructions. Any addition or transferred amount may subsequently
be re-allocated based on the predetermined mathematical formula described
below.
We increase the amount of each guarantee that has not yet reached its Maturity
Date, as well as the highest daily Unadjusted Account Value that we calculate
to establish a guarantee, by the amount of each subsequent Purchase Payment
(including any associated Purchase Credits) made prior to the applicable
Maturity Date. For example, if the effective date of the benefit was
January 4, 2011, and there was an initial guaranteed amount that was set at
$100,000 maturing January 4, 2021, and a second guaranteed amount that was set
at $120,000 maturing January 4, 2022, then a $30,000 Purchase Payment made on
March 30, 2012 would increase the guaranteed amounts to $130,000 and $150,000,
respectively.
If you make a withdrawal (including any CDSC), we effect a proportional
reduction to each existing guarantee amount. We calculate a proportional
reduction by reducing each existing guarantee amount by the percentage
represented by the ratio of the withdrawal amount (including any CDSC) to your
Unadjusted Account Value immediately prior to the withdrawal.
If you make a withdrawal, we will deduct the withdrawal amount pro rata from
each of your Sub-accounts (including the AST bond portfolio Sub-account used
with this benefit).
EXAMPLE
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 a withdrawal on each guarantee amount
under this benefit.
Assume the following:
. The Issue Date is December 1, 2010
. The benefit is elected on December 1, 2010
. The Unadjusted Account Value on December 1, 2010 is $200,000, which
results in an initial guarantee of $200,000
. An additional guarantee amount of $350,000 is locked in on December 1,
2011
. The Unadjusted Account Value immediately prior to the withdrawal is
equal to $380,000
. for purposes of simplifying these assumptions, we assume hypothetically
that no CDSC is applicable (in general, a CDSC could be inapplicable
based on the Free Withdrawal provision if the withdrawal was within the
CDSC period, and would be inapplicable to the C Series)
If a withdrawal of $50,000 is taken on December 15, 2011, all guarantee
amounts will be reduced by the ratio the total withdrawal amount represents of
the Unadjusted Account Value just prior to the withdrawal being taken.
HERE IS THE CALCULATION (FIGURES ARE ROUNDED):
Withdrawal Amount $ 50,000
Divided by Unadjusted Account Value before withdrawal $380,000
Equals ratio 13.16%
All guarantees will be reduced by the above ratio (13.16%)
Initial guarantee amount $173,680
Additional guarantee amount $303,940
KEY FEATURE - ALLOCATION OF UNADJUSTED ACCOUNT VALUE
We limit the Sub-accounts to which you may allocate Unadjusted Account Value
if you elect HD GRO II. For purposes of this benefit, we refer to those
permitted investment options (other than the AST bond portfolio used with this
benefit) as the "Permitted Sub-accounts".
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HD GRO II uses a predetermined mathematical formula to help manage your
guarantees through all market cycles. The formula applicable to you may not be
altered once you elect the benefit. However, subject to regulatory approval,
we do reserve the right to amend the formula for newly-issued Annuities that
elect or re-elect the benefit and for existing Annuities that elect the
benefit post-issue. This required formula helps us manage our financial
exposure under HD GRO II, by moving assets out of certain Sub-accounts if
dictated by the formula (see below). In essence, we seek to preserve
Unadjusted Account Value, by transferring it to a more stable option (i.e.,
one or more specified bond Portfolios of Advanced Series Trust). We refer to
the Sub-accounts corresponding to these bond Portfolios collectively as the
"AST bond portfolio Sub-accounts". The formula also contemplates the transfer
of Unadjusted Account Value from an AST bond portfolio Sub-account to the
other Sub-accounts. Because these restrictions and the use of the formula
lessen the likelihood that your Unadjusted Account Value will be reduced below
the base and/or enhanced guarantee(s), they also reduce the likelihood that we
will make any payments under this benefit. They may also limit your upside
potential for growth. The formula is set forth in Appendix G of this
prospectus. A summary description of each AST bond portfolio Sub-account
appears within the prospectus section entitled "Investment Options." In
addition, you can find a copy of the AST bond portfolio prospectus by going to
www.prudentialannuities.com.
For purposes of operating the HD GRO II formula, we have included within each
Annuity several AST bond portfolio Sub-accounts. Each AST bond portfolio is
unique, in that its underlying investments generally mature at different
times. For example, there would be an AST bond portfolio whose underlying
investments generally mature in 2020, an AST bond portfolio whose underlying
investments generally mature in 2021, and so forth. As discussed below, the
formula determines the appropriate AST bond portfolio Sub-account to which
Unadjusted Account Value is transferred. We will introduce new AST bond
portfolio Sub-accounts in subsequent years, to correspond generally to the
length of new guarantee periods that are created under this benefit. If you
have elected HD GRO II, you may have Unadjusted Account Value allocated to an
AST bond portfolio Sub-account only by operation of the formula, and thus you
may not allocate Purchase Payments to or make transfers to or from an AST bond
portfolio Sub-account.
Although we employ several AST bond portfolio Sub-accounts for purposes of the
benefit, the formula described in the next paragraph operates so that your
Unadjusted Account Value may be allocated to only one AST bond portfolio
Sub-account at one time. The formula determines the appropriate AST bond
portfolio Sub-account to which Unadjusted Account Value is transferred. On any
day a transfer into or out of the AST bond portfolio Sub-account is made the
formula may dictate that a transfer out of one AST bond portfolio Sub-account
be made into another AST bond portfolio Sub-account. Any transfer into an AST
bond portfolio Sub-account will be directed to the AST bond portfolio
Sub-account associated with the "current liability", as described below. As
indicated, the formula and AST bond portfolio Sub-accounts are employed with
this benefit to help us mitigate the financial risks under our guarantee.
Thus, the applicable formula under the benefit determines which AST bond
portfolio Sub-account your Unadjusted Account Value is transferred to, and
under what circumstances a transfer is made.
In general, the formula works as follows. Under the formula, Unadjusted
Account Value will transfer between the "permitted Sub-accounts" and an AST
bond portfolio Sub-account when dictated by the predetermined mathematical
formula. On each Valuation Day, including the effective date of the benefit,
the predetermined mathematical formula is used to compare your Unadjusted
Account Value to an amount based on the guarantees provided under the benefit.
The formula determines whether a transfer occurs based, among other things, on
an identification of the outstanding guarantee that has the largest present
value. Based on the formula, a determination is made as to whether any portion
of your Unadjusted Account Value is to be transferred to or from the AST bond
portfolio Sub-account. In identifying those guarantees, we consider each
guarantee that already has been set (i.e., on a benefit anniversary), as well
as an amount that we refer to as the "Projected Future Guarantee." The
"Projected Future Guarantee" is an amount equal to the highest Unadjusted
Account Value (adjusted for withdrawals, additional Purchase Payments, and any
associated Credits as described in the section of the prospectus concerning HD
GRO II) within the current benefit year that would result in a new guarantee.
For the Projected Future Guarantee, the assumed guarantee period begins on the
current Valuation Day and ends 10 years from the next anniversary of the
effective date of the benefit. As such, a Projected Future Guarantee could
cause a transfer of Unadjusted Account Value into an AST bond portfolio
Sub-account. We only calculate a Projected Future Guarantee if the assumed
guarantee period associated with that Projected Future Guarantee does not
extend beyond the latest Annuity Date applicable to the Annuity. The amount
that is transferred to and from the AST bond portfolio Sub-accounts pursuant
to the formula depends upon the factors set forth in the seven bullet points
below, some of which relate to the guarantee amount(s), including the
Projected Future Guarantee.
For each outstanding guarantee and the Projected Future Guarantee, the formula
begins by determining the present value on that Valuation Day that, if
appreciated at the applicable "discount rate", would equal the applicable
guarantee amount on the Maturity Date. As detailed in the formula, the
discount rate is an interest rate determined by taking a benchmark index used
within the financial services industry and then reducing that interest rate by
a prescribed adjustment. Once selected, we do not change the applicable
benchmark index (although we do reserve the right to use a new benchmark index
if the original benchmark is discontinued). The greatest of each such present
value is referred to as the "current liability" in the formula. The formula
compares the current liability to the amount of your Unadjusted Account Value
held within the AST bond portfolio Sub-account and to your Unadjusted Account
Value held within the Permitted Sub-accounts. If the current liability,
reduced by the amount held within the AST bond portfolio Sub-account, and
divided by the amount held within the Permitted Sub-accounts, exceeds an upper
target value
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(currently, 85%), then the formula will make a transfer into the AST bond
portfolio Sub-account, in the amount dictated by the formula (subject to the
90% cap feature discussed below). If the current liability, reduced by the
amount held within the AST bond portfolio Sub-account, and divided by the
amount within the Permitted Sub-accounts, is less than a lower target value
(currently, 79%), then the formula will transfer Unadjusted Account Value from
the AST bond portfolio Sub-account into the Permitted Sub-accounts, in the
amount dictated by the formula.
The formula will not execute a transfer to the AST bond portfolio Sub-account
that results in more than 90% of your Unadjusted Account Value being allocated
to the AST bond portfolio Sub-account ("90% cap"). Thus, on any Valuation Day,
if the formula would require a transfer to the AST bond portfolio Sub-account
that would result in more than 90% of the Unadjusted Account Value being
allocated to the AST bond portfolio Sub-account, only the amount that results
in exactly 90% of the Unadjusted Account Value being allocated to the AST bond
portfolio Sub-account will be transferred. Additionally, future transfers into
the AST bond portfolio Sub-account will not be made (regardless of the
performance of the AST bond portfolio Sub-account and the Permitted
Sub-accounts) at least until there is first a transfer out of the AST bond
portfolio Sub-account. Once this transfer occurs out of the AST bond portfolio
Sub-account, future amounts may be transferred to or from the AST bond
portfolio Sub-account if dictated by the formula (subject to the 90% cap
feature). At no time will the formula make a transfer to the AST bond
portfolio Sub-account that results in greater than 90% of your Unadjusted
Account Value being allocated to the AST bond portfolio Sub-account. However,
it is possible that, due to the investment performance of your allocations in
the AST bond portfolio Sub-account and your allocations in the Permitted
Sub-accounts you have selected, your Unadjusted Account Value could be more
than 90% invested in the AST bond portfolio 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 bond portfolio Sub-account at least until there is first a transfer out of
the AST bond portfolio Sub-account, regardless of how much of your Unadjusted
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 Unadjusted Account Value is allocated to the AST
bond portfolio Sub-account, and the formula will still not transfer any of
your Unadjusted Account Value to the AST bond portfolio Sub-account (at least
until there is first a transfer out of the AST bond portfolio Sub-account).
For example,
. March 17, 2011 - a transfer is made to the AST bond portfolio
Sub-account that results in the 90% cap being met and now $90,000 is
allocated to the AST bond portfolio Sub-account and $10,000 is allocated
to the Permitted Sub-accounts.
. March 18, 2011 - you make an additional Purchase Payment of $10,000. No
transfers have been made from the AST bond portfolio Sub-account to the
Permitted Sub-accounts since the cap went into effect on March 17, 2011.
. On March 18, 2011 (and at least until first a transfer is made out of
the AST bond portfolio 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 bond portfolio 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 bond portfolio Sub-account).
. Once there is a transfer out of the AST bond portfolio Sub-account (of
any amount), the formula will operate as described above, meaning that
the formula could transfer amounts to or from the AST bond portfolio
Sub-account if dictated by the formula (subject to the 90% cap feature).
Under the operation of the formula, the 90% cap may come into and out of
effect multiple times while you participate in the benefit. We will continue
to monitor your Unadjusted Account Value daily and, if dictated by the
formula, systematically transfer amounts between the Permitted Sub-accounts
you have chosen and the AST bond portfolio Sub-account as dictated by the
formula.
As discussed above, each Valuation Day, the formula analyzes the difference
between your Unadjusted Account Value and your guarantees as well as how long
you have owned the benefit, and determines if any portion of your Unadjusted
Account Value needs to be transferred into or out of the AST bond portfolio
Sub-accounts. Therefore, at any given time, some, none, or most of your
Unadjusted Account Value may be allocated to the AST bond portfolio
Sub-accounts.
Each market cycle is unique, therefore the performance of your Sub-accounts,
and its impact on your Unadjusted Account Value, will differ from market cycle
to market cycle producing different transfer activity under the formula. The
amount and timing of transfers to and from the AST bond portfolio Sub-accounts
pursuant to the formula depend on various factors unique to your Annuity and
are not necessarily directly correlated with the securities markets, bond
markets, interest rates or any other market or index. Some of the factors that
determine the amount and timing of transfers (as applicable to your Annuity),
include:
. The difference between your Unadjusted Account Value and your guarantee
amount(s);
. The amount of time until the maturity of your guarantee(s);
. The amount invested in, and the performance of, the Permitted
Sub-accounts;
. The amount invested in, and the performance of, the AST bond portfolio
Sub-accounts;
. The discount rate used to determine the present value of your
guarantee(s);
. Additional Purchase Payments, if any, that you make to the Annuity; and
. Withdrawals, if any, taken from the Annuity.
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Any amounts invested in the AST bond portfolio Sub-accounts will affect your
ability to participate in a subsequent market recovery within the Permitted
Sub-accounts. Conversely, the Unadjusted Account Value may be higher at the
beginning of the market recovery, e.g. more of the Unadjusted Account Value
may have been protected from decline and volatility than it otherwise would
have been had the benefit not been elected. The AST bond portfolio
Sub-accounts are available only with certain optional living benefits, and you
may not allocate Purchase Payments to or transfer Unadjusted Account Value to
or from the AST bond portfolio Sub-accounts.
Transfers under the formula do not impact any guarantees under the benefit
that have already been locked-in.
ELECTION/CANCELLATION OF THE BENEFIT
HD GRO II is available only for Annuities issued with an application signed
prior to January 24, 2011, subject to availability which may vary by firm. HD
GRO II can be elected on any Valuation Day as long as the benefit is
available, provided that your Unadjusted Account Value is allocated in a
manner permitted with the benefit and you otherwise meet our eligibility
requirements. You may elect HD GRO II only if the oldest of the Owner and
Annuitant is 84 or younger on the date of election. If you currently
participate in a living benefit that may be cancelled, you may terminate that
benefit at any time and elect HD GRO II. However you will lose all guarantees
that you had accumulated under the previous benefit. The initial guarantee
under HD GRO II will be based on your current Unadjusted Account Value at the
time the new benefit becomes effective on your Annuity. HD GRO II is not
available if you participate in any other living benefit. However, HD GRO II
may be elected together with any optional death benefit.
HD GRO II WILL TERMINATE AUTOMATICALLY UPON: (A) THE DEATH OF THE OWNER OR THE
ANNUITANT (IN AN ENTITY OWNED ANNUITY), UNLESS THE ANNUITY IS CONTINUED BY THE
SURVIVING SPOUSE; (B) AS OF THE DATE UNADJUSTED ACCOUNT VALUE IS APPLIED TO
BEGIN ANNUITY PAYMENTS; (C) AS OF THE ANNIVERSARY OF BENEFIT ELECTION THAT
IMMEDIATELY PRECEDES THE CONTRACTUALLY-MANDATED LATEST ANNUITY DATE, OR
(D) UPON FULL SURRENDER OF THE ANNUITY. IF YOU ELECT TO TERMINATE THE BENEFIT,
HD GRO II WILL NO LONGER PROVIDE ANY GUARANTEES. THE CHARGE FOR THE HD GRO II
BENEFIT WILL NO LONGER BE DEDUCTED FROM YOUR UNADJUSTED ACCOUNT VALUE UPON
TERMINATION OF THE BENEFIT.
If you elect this benefit, and in connection with that election you are
required to reallocate to different Investment Options permitted under this
benefit, then on the Valuation Day on which 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 permitted Investment Options
that you have designated. During this reallocation process, your Unadjusted
Account Value allocated to the Sub-accounts will remain exposed to investment
risk, as is the case generally. The protection afforded by the newly-elected
benefit will not arise until the close of business on the following Valuation
Day.
If you wish, you may cancel the HD GRO II benefit. You may then elect any
other currently available living benefit on any Valuation Day after you have
cancelled the HD GRO II benefit, provided that your Unadjusted Account Value
is allocated in the manner permitted with that new benefit and you otherwise
meet our eligibility requirements. Upon cancellation of the HD GRO II benefit,
any Unadjusted Account Value allocated to the AST bond portfolio Sub-accounts
used with the formula will be reallocated to the Permitted Sub-accounts
according to your most recent allocation instructions or, in absence of such
instructions, pro rata (i.e., in direct proportion to your current
allocations). Upon your re-election of HD GRO II, Unadjusted Account Value may
be transferred between the AST bond portfolio Sub-accounts and the other
Sub-accounts according to the predetermined mathematical formula (see "Key
Feature - Allocation of Unadjusted Account Value" section for more details).
You also should be aware that upon cancellation of the HD GRO II benefit, you
will lose all guarantees that you had accumulated under the benefit. Thus, the
guarantees under your newly-elected benefit will be based on your current
Unadjusted Account Value at the time the new benefit becomes effective. The
benefit you elect or re-elect may be more expensive than the benefit you
cancel.
SPECIAL CONSIDERATIONS UNDER HD GRO II
This benefit is subject to certain rules and restrictions, including, but not
limited to the following:
.. Upon inception of the benefit, 100% of your Unadjusted Account Value must
be allocated to the Permitted Sub-accounts. The Permitted Sub-accounts are
those described in the Investment Option section.
.. Transfers as dictated by the formula will not count toward the maximum
number of free transfers allowable under the Annuity.
.. Any amounts applied to your Unadjusted Account Value by us on a Maturity
Date will not be treated as "investment in the contract" for income tax
purposes.
.. As the time remaining until the applicable Maturity Date gradually
decreases, the benefit may become increasingly sensitive to moves to an AST
bond portfolio Sub-account.
.. Only systematic withdrawal programs in which amounts withdrawn are being
taken on a pro rata basis from your Annuity's Sub-accounts (i.e., in direct
proportion to the proportion that each such Sub-account bears to your total
Unadjusted Account Value) will be permitted if you participate in HD GRO
II. Thus, you may not elect HD GRO II so long as you participate in a
systematic withdrawal program in which withdrawals are not taken pro rata.
Similarly, if you currently participate in HD GRO II, we will allow you to
add a systematic withdrawal program only if withdrawals under the program
are to be taken pro rata.
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CHARGES UNDER THE BENEFIT
We deduct an annualized charge equal to 0.60% of the average daily net assets
of the Sub-accounts (including any AST bond portfolio Sub-account) for
participation in the HD GRO II benefit. The annualized charge is deducted
daily. The charge is deducted to compensate us for: (a) the risk that your
Account Value on the Maturity Date is less than the amount guaranteed and
(b) administration of the benefit. You will begin paying this charge as of the
effective date of the benefit. We will not refund the charges you have paid
even if we never have to make any payments under the benefit.
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DEATH BENEFITS
TRIGGERS FOR PAYMENT OF THE DEATH BENEFIT
Each Annuity provides a Death Benefit prior to Annuitization. If the Annuity
is owned by one or more natural persons, the Death Benefit is payable upon the
death of the Owner (or the first to die, if there are multiple Owners). If an
Annuity is owned by an entity, the Death Benefit is payable upon the
Annuitant's death if there is no Contingent Annuitant. Generally, if a
Contingent Annuitant was designated before the Annuitant's death and the
Annuitant dies, then the Contingent Annuitant becomes the Annuitant and a
Death Benefit will not be paid upon the Annuitant's death. The person upon
whose death the Death Benefit is paid is referred to below as the "decedent".
Where an Annuity is structured so that it is owned by a grantor trust but the
Annuitant is not the grantor, then the Annuity is required to terminate upon
the death of the grantor if the grantor pre-deceases the Annuitant under
Section 72(s) of the Code. Under this circumstance, the Surrender Value will
be paid out to the trust and there is no Death Benefit provided under the
Annuity.
We determine the amount of the Death Benefit as of the date we receive "Due
Proof of Death." Due Proof of Death can be met only if each of the following
is submitted to us in Good Order: (a) a death certificate or similar
documentation acceptable to us (b) all representations we require or which are
mandated by applicable law or regulation in relation to the death claim and
the payment of death proceeds and (c) any applicable election of the method of
payment of the death benefit by at least one Beneficiary (if not previously
elected by the Owner). We must be made aware of the entire universe of
eligible Beneficiaries in order for us to have received Due Proof of Death.
Any given Beneficiary must submit the written information we require in order
to be paid his/her share of the Death Benefit.
Once we have received Due Proof of Death, each eligible Beneficiary may take
his/her portion of the Death Benefit in one of the forms described in this
prospectus (e.g., distribution of the entire interest in the Annuity within 5
years after the date of death, or as periodic payments over a period not
extending beyond the life or life expectancy of the Beneficiary - see "Payment
of Death Benefits" below).
After our receipt of Due Proof of Death, we automatically transfer any
remaining Death Benefit to the AST Money Market Sub-account. However, between
the date of death and the date that we transfer any remaining Death Benefit to
the AST Money Market Sub-account, THE AMOUNT OF THE DEATH BENEFIT IS SUBJECT
TO MARKET FLUCTUATIONS.
No Death Benefit will be payable if the Annuity terminates because your
Unadjusted Account Value reaches zero (which can happen if, for example, you
are taking withdrawals under an optional living benefit).
EXCEPTIONS TO AMOUNT OF DEATH BENEFIT
There are certain exceptions to the amount of the Death Benefit:
SUBMISSION OF DUE PROOF OF DEATH WITHIN ONE YEAR. If we receive Due Proof of
Death more than one year after the date of death, we reserve the right to
limit the Death Benefit to the Unadjusted Account Value on the date we receive
Due Proof of Death (i.e., we would not pay the minimum Death Benefit or any
Optional Death Benefit).
DEATH BENEFIT SUSPENSION PERIOD. You also should be aware that there is a
Death Benefit suspension period. If the decedent was not the Owner or
Annuitant as of the Issue Date (or within 60 days thereafter), any Death
Benefit (including the Minimum Death Benefit, any optional Death Benefit and
Highest Daily Lifetime Income 2.0 with HD DB and Spousal Highest Daily
Lifetime Income 2.0 with HD DB) that applies will be suspended for a two year
period starting from the date that person first became Owner or Annuitant.
This suspension would not apply if the ownership or annuitant change was the
result of Spousal Continuation or death of the prior Owner or Annuitant. While
the two year suspension is in effect, the Death Benefit amount will equal the
Unadjusted Account Value, less any Purchase Credits granted during the period
beginning 12 months prior to decedent's date of death and ending on the date
we receive Due Proof of Death with respect to the X Series. Thus, if you had
elected an Optional Death benefit, Highest Daily Lifetime Income 2.0 with HD
DB or Spousal Highest Daily Lifetime Income 2.0 with HD DB, and the suspension
were in effect, you would be paying the fee for the Optional Death Benefit,
Highest Daily Lifetime Income 2.0 with HD DB or Spousal Highest Daily Lifetime
Income 2.0 with HD DB even though during the suspension period your Death
Benefit would be limited to the Unadjusted Account Value. After the two-year
suspension period is completed the Death Benefit is the same as if the
suspension period had not been in force. See the section of the prospectus
above generally with regard to changes of Owner or Annuitant that are
allowable.
With respect to a Beneficiary Annuity, the Death Benefit is triggered by the
death of the beneficial Owner (or the Key Life, if entity-owned). However, if
the Annuity is held as a Beneficiary Annuity, the Owner is an entity, and the
Key Life is already deceased, then no Death Benefit is payable upon the death
of the beneficial Owner.
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MINIMUM DEATH BENEFIT
Each Annuity provides a minimum Death Benefit at no additional charge. The
amount of the minimum Death Benefit is equal to the greater of:
. The sum of all Purchase Payments you have made since the Issue Date of
the Annuity (excluding any Purchase Credits) until the date of Due Proof
of Death, reduced proportionally by the ratio of the amount of any
withdrawal to the Account Value immediately prior to the withdrawal; AND
. Your Unadjusted Account Value (less the amount of any Purchase Credits
applied during the period beginning 12-months prior to the decedent's
date of death, and ending on the date we receive Due Proof of Death with
respect to the X Series).
OPTIONAL DEATH BENEFITS NO LONGER AVAILABLE FOR ELECTION ONCE HIGHEST DAILY
LIFETIME INCOME 2.0 WITH HIGHEST DAILY DEATH BENEFIT AND SPOUSAL HIGHEST DAILY
LIFETIME INCOME 2.0 WITH HIGHEST DAILY DEATH BENEFIT ARE AVAILABLE IN YOUR
STATE
Two optional Death Benefits are offered for purchase with your Annuity to
provide an enhanced level of protection for your Beneficiaries. No optional
Death Benefit is available if your Annuity is held as a Beneficiary Annuity.
The optional Death Benefits are called the Highest Anniversary Value Death
Benefit and the Combination 5% Roll-up and Highest Anniversary Value Death
Benefit. Currently, these optional Death Benefits are only offered in those
jurisdictions where we have received regulatory approval and must be elected
at the time that you purchase your Annuity. Neither optional Death Benefit is
available with the Highest Daily Lifetime Income 2.0 with HD DB, Spousal
Highest Daily Lifetime Income 2.0 with HD DB, Highest Daily Lifetime Income
2.0 with LIA, Highest Daily Lifetime Income with LIA or Highest Daily Lifetime
6 Plus with LIA. If you purchase either Highest Daily Lifetime Income 2.0 or
Spousal Highest Daily Lifetime Income 2.0 and withdrawals taken under either
reduce your Unadjusted Account Value to zero, your optional Death Benefit will
terminate. You may not elect both optional Death Benefits. Investment
restrictions apply if you elect either optional Death Benefit. See the chart
in the "Investment Options" section of the prospectus for a list of Investment
Options available and permitted with each benefit. If subsequent to your
election of an optional Death Benefit, we change our requirements as to how
your Account Value must be allocated, we will not compel you to re-allocate
your Account Value in accordance with our newly-adopted requirements. We
reserve the right to cease offering any optional Death Benefit.
KEY TERMS USED WITH THE HIGHEST ANNIVERSARY VALUE DEATH BENEFIT AND THE
COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH BENEFIT:
. The DEATH BENEFIT TARGET DATE for both the Highest Anniversary Value
Death Benefit and the Combination 5% Roll-up and HAV Death Benefit
initially is the later of (a) the anniversary of the Issue Date
coinciding with or next following the date the oldest Owner (or
Annuitant, if the Annuity is entity-owned) reaches age 80 and (b) the
fifth anniversary of the Issue Date of the Annuity. If there is a change
of Owner (or Annuitant, if the Annuity is entity-owned) prior to the
Death Benefit Target Date, then we will set the Death Benefit Target
Date with reference to the age of the oldest Owner (or Annuitant).
However, we will not change the Death Benefit Target Date if the change
of Owner (or Annuitant, for an entity-owned Annuity) occurs after the
previous Death Benefit Target Date.
. The HIGHEST ANNIVERSARY VALUE on the Issue Date is equal to your
Unadjusted Account Value (including any Purchase Credits, in the case of
the X Series). Thereafter, we calculate a Highest Anniversary Value on
each anniversary of the Issue Date of the Annuity ("Annuity
Anniversary") up to and including the earlier of the date of death or
attainment of the Death Benefit Target Date. On each such anniversary,
the Anniversary Value is equal to the greater of (a) the previous
Highest Anniversary Value and (b) the Unadjusted Account Value on each
such Anniversary. Between such anniversaries, the Highest Anniversary
Value is increased by the sum of all Purchase Payments (including any
associated Purchase Credits) since the prior anniversary date and
reduced by any Proportional Withdrawals since the prior anniversary date.
. THE ROLL-UP VALUE. The initial Roll-Up Value is equal to the Unadjusted
Account Value on the Issue Date of the Annuity. Each day we increase the
Roll-up Value, plus the amount of any additional Purchase Payments you
make after the effective date of the Death Benefit (including Purchase
Credits with respect to the X Series), at the daily equivalent of a 5%
annual rate. We stop increasing the Roll-Up Value at the 5% annual rate
on the first to occur of the following: (1) the decedent's date of death
and (2) the Death Benefit Target Date. After we stop increasing the
Roll-Up Value at the 5% annual rate, we continue to increase the Roll-Up
Value by the amount of any additional Purchase Payments (including
Purchase Credits with respect to the X Series) made after that date.
. PROPORTIONAL WITHDRAWALS are determined by calculating the ratio of the
amount of the withdrawal (including any applicable CDSC and MVA) to the
Account Value as of the date of the withdrawal but immediately prior to
the withdrawal. Proportional withdrawals result in a reduction to the
Highest Anniversary Value or Roll-Up value by reducing such value in the
same proportion as the Account Value was reduced by the withdrawal as of
the date the withdrawal occurred. For example, if your Highest
Anniversary Value or Roll-up value is $125,000 and you subsequently
withdraw $10,000 at a time when your Account Value is equal to $100,000
(a 10% reduction), then we will reduce your Highest Anniversary Value or
Roll-Up value ($125,000) by 10%, or $12,500.
HIGHEST ANNIVERSARY VALUE DEATH BENEFIT ("HAV")
If an Annuity has one Owner, the Owner must be age 79 or less at the time the
Highest Anniversary Value Optional Death Benefit is elected. If an Annuity has
joint Owners, the oldest Owner must be age 79 or less upon election. If an
Annuity is owned by an entity, the Annuitant must be age 79 or less upon
election.
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CALCULATION OF HIGHEST ANNIVERSARY VALUE DEATH BENEFIT
If the decedent's date of death occurs BEFORE the Death Benefit Target Date,
the Death Benefit equals the greater of:
1. the greater of the minimum Death Benefit described above, and
2. the Highest Anniversary Value as of the date on which we receive Due
Proof of Death, less any Purchase Credits granted during the period
beginning 12 months prior to the date of death and ending on the date we
receive Due Proof of Death. This means that we will recapture any
Purchase Credits granted with respect to Purchase Payments we receive
beginning 12 months prior to the date of death and thereafter.
If the Owner dies ON OR AFTER the Death Benefit Target Date, the Death Benefit
equals the greater of:
1. the minimum Death Benefit described above, and
2. the Highest Anniversary Value on the Death Benefit Target Date, plus any
Purchase Payments (and associated Purchase Credits) since the Death
Benefit Target Date, less the effect of any Proportional Withdrawals
since the Death Benefit Target Date, and less any Purchase Credits
granted during the period beginning 12 months prior to the date of death
and ending on the date we receive Due Proof of Death.
This Death Benefit may not be an appropriate feature where the oldest Owner's
age (Annuitant if entity owned) is near age 80. This is because the benefit
may not have the same potential for growth as it otherwise would, since there
will be fewer Annuity anniversaries before the Death Benefit Target Date is
reached.
COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH BENEFIT
If an Annuity has one Owner, the Owner must be age 79 or less at the time the
Combination 5% Roll-up and HAV Optional Death Benefit is purchased. If an
Annuity has joint Owners, the oldest Owner must be age 79 or less upon
election. If the Annuity is owned by an entity, the Annuitant must be age 79
or less upon election.
CALCULATION OF 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH BENEFIT
The Combination 5% Roll-up and HAV Death Benefit equals the greatest of:
If the decedent's date of death occurs BEFORE the Death Benefit Target Date,
the Death Benefit equals the greater of:
1. the greater of the minimum Death Benefit described above, and
2. the Highest Anniversary Value as of the date on which we receive Due
Proof of Death, less any Purchase Credits granted during the period
beginning 12 months prior to the date of death and ending on the date we
receive Due Proof of Death.
3. the Roll-Up Value as described above.
If the Owner dies ON OR AFTER the Death Benefit Target Date, the Death Benefit
equals the greater of:
1. the greater of the minimum Death Benefit described above, and,
2. the Highest Anniversary Value on the Death Benefit Target Date plus any
Purchase Payments (and associated Purchase Credits) since the Death
Benefit Target Date, less the effect of any Proportional Withdrawals
since the Death Benefit Target Date, and, less any Purchase Credits
granted during the period beginning 12 months prior to the date of death
and ending on the date we receive Due Proof of Death.
3. the Roll-Up Value as described above.
This Death Benefit may not be an appropriate feature where the oldest Owner's
age (Annuitant if entity owned) is near age 80. This is because the benefit
may not have the same potential for growth as it otherwise would, since there
will be fewer Annuity anniversaries, and less time for the Roll-Up Value to
increase, before the Death Benefit Target Date is reached.
EFFECT OF WITHDRAWALS ON THE ROLL-UP VALUE PRIOR TO DEATH BENEFIT TARGET DATE.
Withdrawals prior to the Death Benefit Target Date reduce the Roll-Up Value by
the amount of the withdrawal until an annual "dollar-for-dollar" limit has
been reached, and withdrawals in excess of the dollar-for-dollar limit then
reduce the Roll-Up Value proportionally. Until the first Anniversary of the
Issue Date, the dollar-for-dollar limit is equal to 5% of the initial Roll-Up
Value. On each Annuity Anniversary thereafter, we reset the dollar-for-dollar
limit to equal 5% of the Roll-Up Value on that anniversary. When all or a
portion of a withdrawal exceeds the dollar-for-dollar limit for that Annuity
Year, the excess portion of the withdrawal proportionally reduces the Roll-Up
Value. The proportional reduction decreases the Roll-Up Value by the ratio of
the excess withdrawal (i.e., the amount of the withdrawal that exceeds the
dollar-for-dollar limit in that Annuity Year) to your Account Value (after the
Account Value has been reduced by any portion of the withdrawal that was
within the dollar-for-dollar limit but IS NOT reduced by the excess
withdrawal).
EFFECT OF WITHDRAWALS ON THE ROLL-UP VALUE ON OR AFTER THE DEATH BENEFIT
TARGET DATE. All withdrawals after the Death Benefit Target Date are
Proportional Withdrawals.
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WHAT ARE THE CHARGES FOR THE OPTIONAL DEATH BENEFITS?
For elections of the Highest Anniversary Value Death Benefit and the
Combination 5% Roll-Up and HAV Death Benefit, we impose a charge equal to
0.40% and 0.80%, respectively, per year of the average daily net assets of the
Sub-accounts. We deduct the charge for each of these benefits to compensate
Pruco Life for providing increased insurance protection under the optional
Death Benefits. The additional annualized charge is deducted daily against
your Account Value allocated to the Sub-accounts.
CAN I TERMINATE THE OPTIONAL DEATH BENEFITS?
The Highest Anniversary Value Death Benefit and the Combination 5% Roll-up and
HAV Death Benefit may not be terminated by you once elected. Each optional
Death Benefit will terminate upon the first to occur of the following:
. the date that the Death Benefit is determined, unless the Annuity is
continued by a spouse Beneficiary;
. upon your designation of a new Owner or Annuitant who, as of the
effective date of the change, is older than the age at which we would
then issue the Death Benefit (or if we do not then consent to continue
the Death Benefit);
. upon the Annuity Date;
. upon surrender of the Annuity; or
. if your Account Value reaches zero (which can happen if, for example,
you are taking withdrawals under an optional living benefit).
Where an Annuity is structured so that it is owned by a grantor trust but the
Annuitant is not the grantor, then the Annuity is required to be surrendered
upon the death of the grantor if the grantor pre-deceases the Annuitant under
Section 72(s) of the Code. Under this circumstance, the Account Value will be
paid out to the Beneficiary, and is not eligible for the Death Benefit
provided under the Annuity.
Upon termination, we cease to assess the fee for the optional Death Benefit.
SPOUSAL CONTINUATION OF ANNUITY
Unless you designate a Beneficiary other than your spouse, upon the death of
either spousal Owner, the surviving spouse may elect to continue ownership of
the Annuity instead of taking the Death Benefit payment. The Unadjusted
Account Value as of the date of Due Proof of Death will be equal to the Death
Benefit that would have been payable. Any amount added to the Unadjusted
Account Value will be allocated to the Sub-accounts (if you participate in an
optional living benefit, such amount will not be directly added to any bond
portfolio Sub-account used by the benefit, but may be reallocated by the
predetermined mathematical formula on the same day). No CDSC will apply to
Purchase Payments made prior to the effective date of a spousal continuance.
However, any additional Purchase Payments applied after the date the
continuance is effective will be subject to all provisions of the Annuity,
including the CDSC when applicable.
Subsequent to spousal continuation, the basic Death Benefit will be equal to
the greater of:
. The Unadjusted Account Value on the effective date of the spousal
continuance, plus all Purchase Payments you have made since the spousal
continuance (excluding any Purchase Credits) until the date of Due Proof
of Death, reduced proportionally by the ratio of the amount of any
withdrawal to the Account Value immediately prior to the withdrawal; and
. The Unadjusted Account Value on Due Proof of Death of the surviving
spouse (less the amount of any Purchase Credits applied during the
period beginning 12-months prior to the decedent's date of death, and
ending on the date we receive Due Proof of Death with respect to the X
Series).
With respect to Highest Daily Lifetime Income 2.0 with HD DB and Spousal
Highest Daily Lifetime Income 2.0 with HD DB:
. If the Highest Daily Death Benefit is not payable upon the death of a
Spousal Designated Life, and the Remaining Designated Life chooses to
continue the Annuity, the benefit will remain in force unless we are
instructed otherwise.
. If a Death Benefit is not payable upon the death of a Spousal Designated
Life (e.g., if the first of the Spousal Designated Lives to die is the
Beneficiary but not an Owner), the benefit will remain in force unless
we are instructed otherwise.
Spousal continuation is also permitted, subject to our rules and regulatory
approval, if the Annuity is held by a custodial account established to hold
retirement assets for the benefit of the natural person Annuitant pursuant to
the provisions of Section 408(a) of the Code ("Custodial Account") and, on the
date of the Annuitant's death, the spouse of the Annuitant is (1) the
Contingent Annuitant under the Annuity and (2) the Beneficiary of the
Custodial Account. The ability to continue the Annuity in this manner will
result in the Annuity no longer qualifying for tax deferral under the Code.
However, such tax deferral should result from the ownership of the Annuity by
the Custodial Account. Please consult your tax or legal advisor.
Any Optional Death Benefit in effect at the time the first of the spouses dies
will continue only if spousal assumption occurs prior to the Death Benefit
Target Date and prior to the assuming spouse's 80th birthday. If spousal
assumption occurs after the Death Benefit Target Date (or the 80th birthday of
the assuming spouse), then any Optional Death Benefit will terminate as of the
date of spousal assumption. In that event, the assuming spouse's Death Benefit
will equal the basic Death Benefit.
We allow a spouse to continue the Annuity even though he/she has reached or
surpassed the Latest Annuity Date. However, upon such a spousal continuance,
annuity payments would begin immediately.
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A surviving spouse's ability to continue ownership of the Annuity may be
impacted by the Defense of Marriage Act (see "Managing Your Annuity - Spousal
Designations"). Please consult your tax or legal advisor for more information
about such impact in your state.
PAYMENT OF DEATH BENEFITS
ALTERNATIVE DEATH BENEFIT PAYMENT OPTIONS - ANNUITIES OWNED BY INDIVIDUALS
(NOT ASSOCIATED WITH TAX-FAVORED PLANS)
Except in the case of a spousal continuation as described above, upon your
death, certain distributions must be made under the Annuity. The required
distributions depend on whether you die before you start taking annuity
payments under the Annuity or after you start taking annuity payments under
the Annuity. If you die on or after the Annuity Date, the remaining portion of
the interest in the Annuity must be distributed at least as rapidly as under
the method of distribution being used as of the date of death. In the event of
the decedent's death before the Annuity Date, the Death Benefit must be
distributed:
. within five (5) years of the date of death (the "5 Year Deadline"); or
. as a series of payments not extending beyond the life expectancy of the
Beneficiary or over the life of the Beneficiary. Payments under this
option must begin within one year of the date of death. If the
Beneficiary does not begin installments by such time, then we require
that the Beneficiary take the Death Benefit as a lump sum within the 5
Year Deadline.
If the Annuity is held as a Beneficiary Annuity, the payment of the Death
Benefit must be distributed:
. as a lump sum payment; or
. as a series of required distributions under the Beneficiary Continuation
Option as described below in the section entitled "Beneficiary
Continuation Option", unless you have made an election prior to Death
Benefit proceeds becoming due.
ALTERNATIVE DEATH BENEFIT PAYMENT OPTIONS - ANNUITIES HELD BY TAX-FAVORED PLANS
The Code provides for alternative death benefit payment options when an
Annuity is used as an IRA, 403(b) or other "qualified investment" that
requires minimum distributions. Upon your death under an IRA, 403(b) or other
"qualified investment", the designated Beneficiary may generally elect to
continue the Annuity and receive Required Minimum Distributions under the
Annuity instead of receiving the Death Benefit in a single payment. The
available payment options will depend on whether you die before the date
Required Minimum Distributions under the Code were to begin, whether you have
named a designated Beneficiary and whether the Beneficiary is your surviving
spouse.
. If you die after a designated Beneficiary has been named, the death
benefit must be distributed by December 31st of the year including the
five year anniversary of the date of death (the "Qualified 5 Year
Deadline"), or as periodic payments not extending beyond the life
expectancy of the designated Beneficiary (provided such payments begin
by December 31st of the year following the year of death). If the
Beneficiary does not begin installments by such time, then we require
that the Beneficiary take the Death Benefit as a lump sum within the
Qualified 5 Year Deadline. However, if your surviving spouse is the
Beneficiary, the death benefit can be paid out over the life expectancy
of your spouse with such payments beginning no later than December 31st
of the year following the year of death, or December 31st of the year in
which you would have reached age 70 1/2, whichever is later.
Additionally, if the Death Benefit is solely payable to (or for the
benefit of) your surviving spouse, then the Annuity may be continued
with your spouse as the Owner. If your Beneficiary elects to receive
full distribution by the Qualified 5 Year Deadline, 2009 shall not be
included in the five year requirement period. This effectively extends
this period to December 31st of the year including the six year
anniversary date of death.
. If you die before a designated Beneficiary is named and before the date
Required Minimum Distributions must begin under the Code, the Death
Benefit must be paid out by the Qualified 5 Year Deadline. If the
Beneficiary does not begin installments by December 31st of the year
following the year of death, we will require that the Beneficiary take
the Death Benefit as a lump sum within the Qualified 5 Year Deadline.
For Annuities where multiple Beneficiaries have been named and at least
one of the Beneficiaries does not qualify as a designated Beneficiary
and the account has not been divided into Separate Accounts by
December 31st of the year following the year of death, such Annuity is
deemed to have no designated Beneficiary. For this distribution
requirement also, 2009 shall not be included in the five year
requirement period.
. If you die before a designated Beneficiary is named and after the date
Required Minimum Distributions must begin under the Code, the Death
Benefit must be paid out at least as rapidly as under the method then in
effect. For Annuities where multiple Beneficiaries have been named and
at least one of the Beneficiaries does not qualify as a designated
Beneficiary and the account has not been divided into Separate Accounts
by December 31st of the year following the year of death, such Annuity
is deemed to have no designated Beneficiary.
A Beneficiary has the flexibility to take out more each year than mandated
under the Required Minimum Distribution rules.
Until withdrawn, amounts in an IRA, 403(b) or other "qualified investment"
continue to be tax deferred. Amounts withdrawn each year, including amounts
that are required to be withdrawn under the Required Minimum Distribution
rules, are subject to tax. You may wish to consult a professional tax advisor
for tax advice as to your particular situation.
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For a Roth IRA, if death occurs before the entire interest is distributed, the
Death Benefit must be distributed under the same rules applied to IRAs where
death occurs before the date Required Minimum Distributions must begin under
the Code.
The tax consequences to the Beneficiary may vary among the different Death
Benefit payment options. See the Tax Considerations section of this
prospectus, and consult your tax advisor.
BENEFICIARY CONTINUATION OPTION
Instead of receiving the Death Benefit in a single payment, or under an
Annuity Option, a Beneficiary may take the Death Benefit under an alternative
Death Benefit payment option, as provided by the Code and described above
under the sections entitled "Payment of Death Benefits" and "Alternative Death
Benefit Payment Options - Annuities Held by Tax-Favored Plans". This
"Beneficiary Continuation Option" is described below and is available for both
qualified Annuities (i.e. annuities sold to an IRA, Roth IRA, SEP IRA, or
403(b)), Beneficiary Annuities and non-qualified Annuities. This option is
different from the "Beneficiary Annuity", because the Beneficiary Continuation
Option is a death benefit payout option used explicitly for annuities issued
by a Prudential affiliate.
UNDER THE BENEFICIARY CONTINUATION OPTION:
. The Beneficiary must apply at least $15,000 to the Beneficiary
Continuation Option (thus, the Death Benefit amount payable to each
Beneficiary must be at least $15,000).
. The Annuity will be continued in the Owner's name, for the benefit of
the Beneficiary.
. Beginning on the date we receive an election by the Beneficiary to take
the Death Benefit in a form other than a lump sum, the Beneficiary will
incur a Settlement Service Charge which is an annual charge assessed on
a daily basis against the average assets allocated to the Sub-accounts.
The charge is 1.00% per year.
. Beginning on the date we receive an election by the Beneficiary to take
the Death Benefit in a form other than a lump sum, the Beneficiary will
incur an annual maintenance fee equal to the lesser of $30 or 2% of
Unadjusted Account Value. The fee will only apply if the Unadjusted
Account Value is less than $25,000 at the time the fee is assessed. The
fee will not apply if it is assessed 30 days prior to a surrender
request.
. The initial Account Value will be equal to any Death Benefit (including
any optional Death Benefit) that would have been payable to the
Beneficiary if the Beneficiary had taken a lump sum distribution.
. The available Sub-accounts will be among those available to the Owner at
the time of death, however certain Sub-accounts may not be available.
. The Beneficiary may request transfers among Sub-accounts, subject to the
same limitations and restrictions that applied to the Owner. Transfers
in excess of 20 per year will incur a $10 transfer fee.
. No MVA Options will be offered for Beneficiary Continuation Options.
. No additional Purchase Payments can be applied to the Annuity. Multiple
death benefits cannot be combined in a single Beneficiary Continuation
Option.
. The basic Death Benefit and any optional benefits elected by the Owner
will no longer apply to the Beneficiary.
. The Beneficiary can request a withdrawal of all or a portion of the
Account Value at any time, unless the Beneficiary Continuation Option
was the payout predetermined by the Owner and the Owner restricted the
Beneficiary's withdrawal rights.
. Withdrawals are not subject to CDSC.
. Upon the death of the Beneficiary, any remaining Account Value will be
paid in a lump sum to the person(s) named by the Beneficiary
(successor), unless the successor chooses to continue receiving payments
through a Beneficiary Continuation Option established for the successor.
However, the distributions will continue to be based on the Key Life of
the Beneficiary Continuation Option the successor received the death
benefit proceeds from.
. If the Beneficiary elects to receive the death benefit proceeds under
the Beneficiary Continuation Option, we must receive the election in
Good Order at least 14 days prior to the first required distribution.
If, for any reason, the election impedes our ability to complete the
first distribution by the required date, we will be unable to accept the
election.
We may pay compensation to the broker-dealer of record on the Annuity based on
amounts held in the Beneficiary Continuation Option. Please contact us for
additional information on the availability, restrictions and limitations that
will apply to a Beneficiary under the Beneficiary Continuation Option.
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VALUING YOUR INVESTMENT
VALUING THE SUB-ACCOUNTS
When you allocate Account Value to a Sub-account, you are purchasing Units of
the Sub-account. Each Sub-account invests exclusively in shares of an
underlying Portfolio. The value of the Units fluctuates with the market
fluctuations of the Portfolios. The value of the Units also reflects the daily
accrual for the Insurance Charge, and if you elected one or more optional
benefits whose annualized charge is deducted daily, the additional charge for
such benefits.
Each Valuation Day, we determine the price for a Unit of each Sub-account,
called the "Unit Price". The Unit Price is used for determining the value of
transactions involving Units of the Sub-accounts. We determine the number of
Units involved in any transaction by dividing the dollar value of the
transaction by the Unit Price of the Sub-account as of the Valuation Day.
There may be several different Unit Prices for each Sub-account to reflect the
Insurance Charge and the charges for any optional benefits. The Unit Price for
the Units you purchase will be based on the total charges for the benefits
that apply to your Annuity. See the section below entitled "Termination of
Optional Benefits" for a detailed discussion of how Units are purchased and
redeemed to reflect changes in the daily charges that apply to your Annuity.
EXAMPLE
Assume you allocate $5,000 to a Sub-account. On the Valuation Day you make the
allocation, the Unit Price is $14.83. Your $5,000 buys 337.154 Units of the
Sub-account. Assume that later, you wish to transfer $3,000 of your Account
Value out of that Sub-account and into another Sub-account. On the Valuation
Day you request the transfer, the Unit Price of the original Sub-account has
increased to $16.79 and the Unit Price of the new Sub-account is $17.83. To
transfer $3,000, we redeem 178.677 Units at the current Unit Price, leaving
you 158.477 Units. We then buy $3,000 of Units of the new Sub-account at the
Unit Price of $17.83. You would then have 168.255 Units of the new Sub-account.
PROCESSING AND VALUING TRANSACTIONS
Pruco Life is generally open to process financial transactions on those days
that the New York Stock Exchange (NYSE) is open for trading. There may be
circumstances where the NYSE does not open on a regularly scheduled date or
time or closes at an earlier time than scheduled (normally 4:00 p.m. EST).
Generally, financial transactions requested in Good Order before the close of
regular trading on the NYSE will be processed according to the value next
determined following the close of business. Financial transactions requested
on a non-business day or after the close of regular trading on the NYSE will
be processed based on the value next computed on the next Valuation Day. There
may be circumstances when the opening or closing time of regular trading on
the NYSE is different than other major stock exchanges, such as NASDAQ or the
American Stock Exchange. Under such circumstances, the closing time of regular
trading on the NYSE will be used when valuing and processing transactions.
The NYSE is closed on the following nationally recognized holidays: New Year's
Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving, and Christmas. On those dates, we
will not process any financial transactions involving purchase or redemption
orders. Pruco Life will also not process financial transactions involving
purchase or redemption orders or transfers on any day that:
.. trading on the NYSE is restricted;
.. an emergency, as determined by the SEC, exists making redemption or
valuation of securities held in the Separate Account impractical; or
.. the SEC, by order, permits the suspension or postponement for the
protection of security holders.
If, pursuant to SEC rules, the AST Money Market Portfolio suspends payment of
redemption proceeds in connection with a liquidation of the Portfolio, we will
delay payment of any transfer, full or partial withdrawal, or death
benefit from the AST Money Market Sub-account until the Portfolio is
liquidated.
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 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 at any time or modified in certain circumstances.
INITIAL PURCHASE PAYMENTS: We are required to allocate your initial Purchase
Payment to the Sub-accounts within two (2) Valuation Days after we receive the
Purchase Payment in Good Order at our Service Office. If we do not have all
the required information to allow us to issue your Annuity, we may retain the
Purchase Payment while we try to reach you or your representative to obtain
all of our requirements. If we are unable to obtain all of our required
information within five (5) Valuation
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Days, we are required to return the Purchase Payment to you at that time,
unless you specifically consent to our retaining the Purchase Payment while we
gather the required information. Once we obtain the required information, we
will invest the Purchase Payment (and any associated Purchase Credit with
respect to the X Series) and issue an Annuity within two (2) Valuation Days.
With respect to your initial Purchase Payment that is pending investment in
our separate account, we may hold the amount temporarily in a suspense account
and may earn interest on such amount. You will not be credited with interest
during that period.
As permitted by applicable law, the broker-dealer firm through which you
purchase your Annuity may forward your initial Purchase Payment to us prior to
approval of your purchase by a registered principal of the firm. These
arrangements are subject to a number of regulatory requirements, including
that until such time that the insurer is notified of the firm's principal
approval and is provided with the application, or is notified of the firm
principal's rejection, customer funds will be held by the insurer in a
segregated bank account. In addition, the insurer must promptly return the
customer's funds at the customer's request prior to the firm's principal
approval or upon the firm's rejection of the application. The monies held in
the bank account will be held in a suspense account within our general account
and we may earn interest on amounts held in that suspense account. Contract
owners will not be credited with any interest earned on amounts held in that
suspense account. The monies in such suspense account may be subject to our
general creditors. Moreover, because the FINRA rule authorizing the use of
such accounts is new, there may be uncertainty as to the segregation and
treatment of such insurance company general account assets under applicable
Federal and State laws.
ADDITIONAL PURCHASE PAYMENTS: We will apply any additional Purchase Payments
(and any associated Purchase Credit with respect to the X Series) on the
Valuation Day that we receive the Purchase Payment at our Service Office in
Good Order.
SCHEDULED TRANSACTIONS: Scheduled transactions include transfers under Dollar
Cost Averaging, the Asset Allocation Program, Auto-Rebalancing, Systematic
Withdrawals, Systematic Investments, Required Minimum Distributions,
substantially equal periodic payments under section 72(t)/72(q) of the Code,
and annuity payments. Scheduled transactions are processed and valued as of
the date they are scheduled, unless the scheduled day is not a Valuation Day.
In that case, the transaction will be processed and valued on the next
Valuation Day, unless (with respect to Required Minimum Distributions,
substantially equal periodic payments under Section 72(t)/72(q) of the Code,
and annuity payments only), the next Valuation Day falls in the subsequent
calendar year, in which case the transaction will be processed and valued on
the prior Valuation Day.
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 and
(b) a withdrawal exceeding a certain dollar amount if the payee is someone
other than the Owner. In addition, we will not honor a withdrawal request in
which the requested payee is the Financial Professional or agent of record. We
reserve the right to request a signature guarantee with respect to a written
withdrawal request. If we do perform a signature verification, we will pay the
withdrawal proceeds within 7 days after the withdrawal request was received by
us in Good Order, and will process the transaction in accordance with the
discussion in "Processing And Valuing Transactions"
MEDICALLY-RELATED SURRENDERS & DEATH BENEFITS: Medically-related surrender
requests and Death Benefit claims require our review and evaluation before
processing. We price such transactions as of the date we receive at our
Service Office in Good Order all supporting documentation we require for such
transactions.
We are generally required by law to pay any surrender request or death benefit
claims from the Separate Account within 7 days of our receipt of your request
in Good Order at our Service Office.
TERMINATION OF OPTIONAL BENEFITS: In general, if an optional benefit
terminates, we will no longer deduct the charge we apply to purchase the
optional benefit. However, for the Highest Daily Lifetime Income 2.0, Highest
Daily Lifetime Income or Highest Daily Lifetime 6 Plus benefits, if the
benefit terminates for any reason other than death or annuitization, we will
deduct a final charge upon termination, based on the number of days since the
charge for the benefit was most recently deducted. Certain optional benefits
may be added after you have purchased your Annuity. On the date a charge no
longer applies or a charge for an optional benefit begins to be deducted, your
Annuity will become subject to a different charge.
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TAX CONSIDERATIONS
The tax considerations associated with an Annuity vary depending on whether
the contract is (i) owned by an individual or non-natural person, and not
associated with a tax-favored retirement plan, or (ii) held under a
tax-favored retirement plan. We discuss the tax considerations for these
categories of contracts below. The discussion is general in nature and
describes only federal income tax law (not state or other tax laws). It is
based on current law and interpretations, which may change. The information
provided is not intended as tax advice. You should consult with a qualified
tax advisor for complete information and advice. References to Purchase
Payments below relate to your cost basis in your contract. Generally, your
cost basis in a contract not associated with a tax-favored retirement plan is
the amount you pay into your contract, or into annuities exchanged for your
contract, on an after-tax basis less any withdrawals of such payments. Cost
basis for a tax-favored retirement plan is provided only in limited
circumstances, such as for contributions to a Roth IRA or nondeductible IRA.
The discussion includes a description of certain spousal rights under the
contract, and our administration of such spousal rights and related tax
reporting comport with our understanding of the Defense of Marriage Act (which
defines a "marriage" as a legal union between a man and a woman and a "spouse"
as a person of the opposite sex). Depending on the state in which your annuity
is issued, we may offer certain spousal benefits to civil union couples,
domestic partners or same-sex marriages. You should be aware, however, that
federal tax law does not recognize civil union couples, domestic partners or
marriage spouses of the same sex. Therefore, we cannot permit a same-sex civil
union partner, domestic partner or spouse to continue the annuity within the
meaning of the tax law upon the death of the first partner under the annuity's
"spousal continuance" provision. Please note there may be federal tax
consequences at the death of the first same-sex civil union partner, domestic
partner or spouse. Civil union couples, domestic partners and spouses of the
same sex should consider that limitation before selecting a spousal benefit
under the annuity.
The discussion below generally assumes that the Annuity is issued to the
Annuity Owner. For Annuities issued under the Beneficiary Continuation Option
or as a Beneficiary Annuity, refer to the Taxes Payable by Beneficiaries for
Nonqualified Annuity Contracts and Required Distributions Upon Your Death for
Qualified Annuity Contracts in this Tax Considerations section.
NONQUALIFIED ANNUITY CONTRACTS
IN GENERAL, AS USED IN THIS PROSPECTUS, A NONQUALIFIED ANNUITY IS OWNED BY AN
INDIVIDUAL OR NON-NATURAL PERSON AND IS NOT ASSOCIATED WITH A TAX-FAVORED
RETIREMENT PLAN.
TAXES PAYABLE BY YOU We believe the Annuity is an annuity contract for tax
purposes. Accordingly, as a general rule, you should not pay any tax until you
receive money under the contract. Generally, annuity contracts issued by the
same company (and affiliates) to you during the same calendar year must be
treated as one annuity contract for purposes of determining the amount subject
to tax under the rules described below. Charges for investment advisory fees
that are taken from the contract are treated as a partial withdrawal from the
contract and will be reported as such to the contract Owner.
It is possible that the Internal Revenue Service (IRS) could assert that some
or all of the charges for the optional benefits under the contract should be
treated for federal income tax purposes as a partial withdrawal from the
contract. If this were the case, the charge for this benefit could be deemed a
withdrawal and treated as taxable to the extent there are earnings in the
contract. Additionally, for Owners under age 59 1/2, the taxable income
attributable to the charge for the benefit could be subject to a tax penalty.
If the IRS determines that the charges for one or more benefits under the
contract are taxable withdrawals, then the sole or surviving Owner will be
provided with a notice from us describing available alternatives regarding
these benefits.
You must commence annuity payments or surrender your Annuity no later than the
first day of the calendar month next following the maximum Annuity date for
your Annuity. For some of our contracts, you are able to choose to defer the
Annuity Date beyond the default Annuity date described in your Annuity.
However, the IRS may not then consider your contract to be an annuity under
the tax law.
TAXES ON WITHDRAWALS AND SURRENDER If you make a withdrawal from your contract
or surrender it before annuity payments begin, the amount you receive will be
taxed as ordinary income, rather than as return of Purchase Payments, until
all gain has been withdrawn. Once all gain has been withdrawn, payments will
be treated as a nontaxable return of Purchase Payments until all Purchase
Payments have been returned. After all Purchase Payments are returned, all
subsequent amounts will be taxed as ordinary income. You will generally be
taxed on any withdrawals from the contract while you are alive even if the
withdrawal is paid to someone else. Withdrawals under any of the optional
living benefits or as a systematic payment are taxed under these rules. If you
assign or pledge all or part of your contract as collateral for a loan, the
part assigned generally will be treated as a withdrawal and subject to income
tax to the extent of gain. If you transfer your contract for less than full
consideration, such as by gift, you will also trigger tax on any gain in the
contract. This rule does not apply if you transfer the contract to your spouse
or under most circumstances if you transfer the contract incident to divorce.
If you choose to receive payments under an interest payment option, or a
Beneficiary chooses to receive a death benefit under an interest payment
option, that election will be treated, for tax purposes, as surrendering your
Annuity and will immediately subject any gain in the contract to income tax.
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TAXES ON ANNUITY PAYMENTS A portion of each annuity payment you receive will
be treated as a partial return of your Purchase Payments and will not be
taxed. The remaining portion will be taxed as ordinary income. Generally, the
nontaxable portion is determined by multiplying the annuity payment you
receive by a fraction, the numerator of which is your Purchase Payments (less
any amounts previously received tax-free) and the denominator of which is the
total expected payments under the contract. After the full amount of your
Purchase Payments has been recovered tax-free, the full amount of the annuity
payments will be taxable. If annuity payments stop due to the death of the
Annuitant before the full amount of your Purchase Payments have been
recovered, a tax deduction may be allowed for the unrecovered amount.
If your Account Value is reduced to zero but the Annuity remains in force due
to a benefit provision, further distributions from the Annuity will be
reported as annuity payments, using an exclusion ratio based upon the
undistributed purchase payments in the Annuity and the total value of the
anticipated future payments until such time as all Purchase Payments have been
recovered.
Please refer to your Annuity contract for the maximum Annuity Date, also
described above.
PARTIAL ANNUITIZATION Effective January 1, 2011, an individual may partially
annuitize their non-qualified annuity if the contract so permits. The Small
Business Jobs Act of 2010 included a provision which allows for a portion of a
non-qualified annuity, endowment or life insurance contract to be annuitized
while the balance is not annuitized. The annuitized portion must be paid out
over 10 or more years or over the lives of one or more individuals. The
annuitized portion of the contract is treated as a separate contract for
purposes of determining taxability of the payments under IRC section 72. We do
not currently permit partial annuitization.
MEDICARE TAX ON NET INVESTMENT INCOME The Patient Protection and Affordable
Care Act, also known as the 2010 Health Care Act, included a new Medicare tax
on investment income. This new tax, which is effective in 2013, assesses a
3.8% surtax on the lesser of (1) net investment income or (2) the excess of
"modified adjusted gross income" over a threshold amount. The "threshold
amount" is $250,000 for married taxpayers filing jointly, $125,000 for married
taxpayers filing separately, $200,000 for single taxpayers, and approximately
$12,000 for trusts. The taxable portion of payments received as a withdrawal,
surrender, annuity payment, death benefit payment or any other actual or
deemed distribution under the contract will be considered investment income
for purposes of this surtax.
TAX PENALTY FOR EARLY WITHDRAWAL FROM A NONQUALIFIED ANNUITY CONTRACT You may
owe a 10% tax penalty on the taxable part of distributions received from your
Nonqualified Annuity contract before you attain age 59 1/2. Amounts are not
subject to this tax penalty if:
.. the amount is paid on or after you reach age 59 1/2 or die;
.. the amount received is attributable to your becoming disabled;
.. generally the amount paid or received is in the form of substantially equal
payments (as defined in the Code) not less frequently than annually (please
note that substantially equal payments must continue until the later of
reaching age 59 1/2 or 5 years and modification of payments during that
time period will result in retroactive application of the 10% tax penalty);
or
.. the amount received is paid under an immediate annuity contract (in which
annuity payments begin within one year of purchase).
Other exceptions to this tax may apply. You should consult your tax advisor
for further details.
SPECIAL RULES IN RELATION TO TAX-FREE EXCHANGES UNDER SECTION 1035
Section 1035 of the Code permits certain tax-free exchanges of a life
insurance, annuity or endowment contract for an annuity, including tax-free
exchanges of annuity death benefits for a Beneficiary Annuity. Partial
surrenders may be treated in the same way as tax-free 1035 exchanges of entire
contracts, therefore avoiding current taxation of the partially exchanged
amount as well as the 10% tax penalty on pre-age 59 1/2 withdrawals. In
Revenue Procedure 2011-38, the IRS has indicated that, for exchanges on or
after October 24, 2011, where there is a surrender or distribution from either
the initial annuity contract or receiving annuity contract within 180 days of
the date on which the partial exchange was completed, the IRS will apply
general tax rules to determine the substance and treatment of the original
transfer. For partial exchanges that occurred prior to October 24, 2011, the
provisions of Revenue Procedure 2008-24 will continue to apply if there is a
surrender or distribution within 12 months of the date on which the partial
exchange was completed. Under Revenue Procedure 2008-24, the transfer will
retroactively be treated as a taxable distribution from the initial annuity
contract and a contribution to the receiving annuity contract. Tax-free
exchange treatment will be retained under certain circumstances if you are
eligible for an exception to the 10% federal income tax penalty, other than
the exceptions for substantially equal periodic payments or distributions
under an immediate annuity. We strongly urge you to discuss any transaction of
this type with your tax advisor before proceeding with the transaction.
If an Annuity is purchased through a tax-free exchange of a life insurance,
annuity or endowment contract that was purchased prior to August 14, 1982,
then any Purchase Payments made to the original contract prior to August 14,
1982 will be treated as made to the new contract prior to that date.
Generally, such pre-August 14, 1982 withdrawals are treated as a recovery of
your investment in the contract first until Purchase Payments made before
August 14, 1982 are withdrawn. Moreover, income allocable to Purchase Payments
made before August 14, 1982, is not subject to the 10% tax penalty.
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TAXES PAYABLE BY BENEFICIARIES
The Death Benefit options are subject to ordinary income tax to the extent the
distribution exceeds the cost basis in the contract. The value of the Death
Benefit, as determined under federal law, is also included in the Owner's
estate for federal estate tax purposes. Generally, the same tax rules
described above would also apply to amounts received by your Beneficiary.
Choosing an option other than a lump sum Death Benefit may defer taxes.
Certain minimum distribution requirements apply upon your death, as discussed
further below in the Annuity Qualification section. Tax consequences to the
Beneficiary vary depending upon the Death Benefit payment option selected.
Generally, for payment of the Death Benefit
.. As a lump sum payment: the Beneficiary is taxed in the year of payment on
gain in the contract.
.. Within 5 years of death of Owner: the Beneficiary is taxed as amounts are
withdrawn (in this case gain is treated as being distributed first).
.. Under an annuity or annuity settlement option with distribution beginning
within one year of the date of death of the Owner: the Beneficiary is taxed
on each payment (part will be treated as gain and part as return of
Purchase Payments).
CONSIDERATIONS FOR CONTINGENT ANNUITANTS: We may allow the naming of a
contingent Annuitant when a Nonqualified Annuity contract is held by a pension
plan or a tax favored retirement plan, or held by a Custodial Account (as
defined earlier in this prospectus). In such a situation, the Annuity may no
longer qualify for tax deferral where the Annuity contract continues after the
death of the Annuitant. However, tax deferral should be provided instead by
the pension plan, tax favored retirement plan, or Custodial Account. We may
also allow the naming of a contingent annuitant when a Nonqualified Annuity
contract is held by an entity owner when such contracts do not qualify for tax
deferral under the current tax law. This does not supersede any benefit
language which may restrict the use of the contingent annuitant.
REPORTING AND WITHHOLDING ON DISTRIBUTIONS Taxable amounts distributed from an
Annuity are subject to federal and state income tax reporting and withholding.
In general, we will withhold federal income tax from the taxable portion of
such distribution based on the type of distribution. In the case of an annuity
or similar periodic payment, we will withhold as if you are a married
individual with three (3) exemptions unless you designate a different
withholding status. If no U.S. taxpayer identification number is provided, we
will automatically withhold using single with zero exemptions as the default.
In the case of all other distributions, we will withhold at a 10% rate. You
may generally elect not to have tax withheld from your payments. An election
out of withholding must be made on forms that we provide. If you are a U.S.
person (including resident alien), and your address of record is a non-U.S.
address, we are required to withhold income tax unless you provide us with a
U.S. residential address.
State income tax withholding rules vary and we will withhold based on the
rules of your State of residence. Special tax rules apply to withholding for
nonresident aliens, and we generally withhold income tax for nonresident
aliens at a 30% rate. A different withholding rate may be applicable to a
nonresident alien based on the terms of an existing income tax treaty between
the United States and the nonresident alien's country. Please refer to the
discussion below regarding withholding rules for a Qualified Annuity.
Regardless of the amount withheld by us, you are liable for payment of federal
and state income tax on the taxable portion of annuity distributions. You
should consult with your tax advisor regarding the payment of the correct
amount of these income taxes and potential liability if you fail to pay such
taxes.
ENTITY OWNERS
Where a contract is held by a non-natural person (e.g. a corporation), other
than as an agent or nominee for a natural person (or in other limited
circumstances), the contract will not be taxed as an annuity and increases in
the value of the contract over its cost basis will be subject to tax annually.
Where a contract is issued to a Charitable Remainder Trust (CRT), the contract
will not be taxed as an annuity and increases in the value of the contract
over its cost basis will be subject to tax annually. As there are charges for
the living benefits described elsewhere in this prospectus, and such charges
reduce the contract value of the Annuity, trustees of the CRT should discuss
with their legal advisors whether election of such living benefits violates
their fiduciary duty to the remainder beneficiary.
Where a contract is issued to a trust, and such trust is characterized as a
grantor trust under the Code, such contract shall not be considered to be held
by a non-natural person and will be subject to the tax reporting and
withholding requirements generally applicable to a Nonqualified Annuity. At
this time, we will not issue an Annuity to grantor trusts with multiple
grantors.
At this time, we will not issue an Annuity to a grantor trust where the
Grantor is not also the Annuitant. Where a previously issued contract was
structured so that it is owned by a grantor trust but the Annuitant is not the
grantor, then the contract is required to terminate upon the death of the
grantor of the trust if the grantor pre-deceases the Annuitant under
Section 72(s) of the Code. Under this circumstance, the contract value will be
paid out to the Beneficiary and it is not eligible for the death benefit
provided under the contract.
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ANNUITY QUALIFICATION
Diversification And Investor Control. In order to qualify for the tax rules
applicable to annuity contracts described above, the assets underlying the
Sub-accounts of an Annuity must be diversified, according to certain rules
under the Internal Revenue Code. Each portfolio is required to diversify its
investments each quarter so that no more than 55% of the value of its assets
is represented by any one investment, no more than 70% is represented by any
two investments, no more than 80% is represented by any three investments, and
no more than 90% is represented by any four investments. Generally, securities
of a single issuer are treated as one investment and obligations of each U.S.
Government agency and instrumentality (such as the Government National
Mortgage Association) are treated as issued by separate issuers. In addition,
any security issued, guaranteed or insured (to the extent so guaranteed or
insured) by the United States or an instrumentality of the U.S. will be
treated as a security issued by the U.S. Government or its instrumentality,
where applicable. We believe the Portfolios underlying the variable Investment
Options of the Annuity meet these diversification requirements.
An additional requirement for qualification for the tax treatment described
above is that we, and not you as the contract Owner, must have sufficient
control over the underlying assets to be treated as the Owner of the
underlying assets for tax purposes. While we also believe these investor
control rules will be met, the Treasury Department may promulgate guidelines
under which a variable annuity will not be treated as an annuity for tax
purposes if persons with ownership rights have excessive control over the
investments underlying such variable annuity. It is unclear whether such
guidelines, if in fact promulgated, would have retroactive effect. It is also
unclear what effect, if any, such guidelines might have on transfers between
the Investment Options offered pursuant to this prospectus. We reserve the
right to take any action, including modifications to your Annuity or the
Investment Options, required to comply with such guidelines if promulgated.
Any such changes will apply uniformly to affected Owners and will be made with
such notice to affected Owners as is feasible under the circumstances.
Required Distributions Upon Your Death for Nonqualified Annuity Contracts.
Upon your death, certain distributions must be made under the contract. The
required distributions depend on whether you die before you start taking
annuity payments under the contract or after you start taking annuity payments
under the contract. If you die on or after the Annuity Date, the remaining
portion of the interest in the contract must be distributed at least as
rapidly as under the method of distribution being used as of the date of
death. If you die before the Annuity Date, the entire interest in the contract
must be distributed within 5 years after the date of death, or as periodic
payments over a period not extending beyond the life or life expectancy of the
designated Beneficiary (provided such payments begin within one year of your
death). Your designated Beneficiary is the person to whom benefit rights under
the contract pass by reason of death, and must be a natural person in order to
elect a periodic payment option based on life expectancy or a period exceeding
five years. Additionally, if the Annuity is payable to (or for the benefit of)
your surviving spouse, that portion of the contract may be continued with your
spouse as the Owner. For Nonqualified annuity contracts owned by a non-natural
person, the required distribution rules apply upon the death of the Annuitant.
This means that for a contract held by a non-natural person (such as a trust)
for which there is named a co-annuitant, then such required distributions will
be triggered by the death of the first co-annuitants to die.
Changes In Your Annuity. We reserve the right to make any changes we deem
necessary to assure that your Annuity qualifies as an annuity contract for tax
purposes. Any such changes will apply to all contract Owners and you will be
given notice to the extent feasible under the circumstances.
QUALIFIED ANNUITY CONTRACTS
IN GENERAL, AS USED IN THIS PROSPECTUS, A QUALIFIED ANNUITY IS AN ANNUITY
CONTRACT WITH APPLICABLE ENDORSEMENTS FOR A TAX-FAVORED PLAN OR A NONQUALIFIED
ANNUITY CONTRACT HELD BY A TAX-FAVORED RETIREMENT PLAN.
The following is a general discussion of the tax considerations for Qualified
Annuity contracts. This Annuity may or may not be available for all types of
the tax-favored retirement plans discussed below. This discussion assumes that
you have satisfied the eligibility requirements for any tax-favored retirement
plan. Please consult your Financial Professional prior to purchase to confirm
if this contract is available for a particular type of tax-favored retirement
plan or whether we will accept the type of contribution you intend for this
contract.
A Qualified annuity may typically be purchased for use in connection with:
. Individual retirement accounts and annuities (IRAs), including inherited
IRAs (which we refer to as a Beneficiary IRA), which are subject to
Sections 408(a) and 408(b) of the Code;
. Roth IRAs, including inherited Roth IRAs (which we refer to as a
Beneficiary Roth IRA) under Section 408A of the Code;
. A corporate Pension or Profit-sharing plan (subject to 401(a) of the
Code);
. H.R. 10 plans (also known as Keogh Plans, subject to 401(a) of the Code)
. Tax Sheltered Annuities (subject to 403(b) of the Code, also known as
Tax Deferred Annuities or TDAs);
. Section 457 plans (subject to 457 of the Code).
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A Nonqualified annuity may also be purchased by a 401(a) trust or custodial
IRA or Roth IRA account, or a Section 457 plan, which can hold other
permissible assets. The terms and administration of the trust or custodial
account or plan in accordance with the laws and regulations for 401(a) plans,
IRAs or Roth IRAs, or a Section 457 plan, as applicable, are the
responsibility of the applicable trustee or custodian.
You should be aware that tax favored plans such as IRAs generally provide
income tax deferral regardless of whether they invest in annuity contracts.
This means that when a tax favored plan invests in an annuity contract, it
generally does not result in any additional tax benefits (such as income tax
deferral and income tax free transfers).
TYPES OF TAX-FAVORED PLANS
IRAS. If you buy an Annuity for use as an IRA, we will provide you a copy of
the prospectus and contract. The "IRA Disclosure Statement" and "Roth IRA
Disclosure Statement" which accompany the prospectus contain information about
eligibility, contribution limits, tax particulars, and other IRA information.
In addition to this information (some of which is summarized below), the IRS
requires that you have a "Free Look" after making an initial contribution to
the contract. During this time, you can cancel the Annuity by notifying us in
writing, and we will refund all of the Purchase Payments under the Annuity
(or, if provided by applicable state law, the amount credited under the
Annuity, if greater), less any applicable federal and state income
tax withholding.
CONTRIBUTIONS LIMITS/ROLLOVERS. Subject to the minimum Purchase Payment
requirements of an Annuity, you may purchase an Annuity for an IRA in
connection with a "rollover" of amounts from a qualified retirement plan, as a
transfer from another IRA, by making a contribution consisting of your IRA
contributions and catch-up contributions, if applicable, attributable to the
prior year during the period from January 1 to April 15 (or the applicable due
date of your federal income tax return, without extension), or as a current
year contribution. In 2012 the contribution limit is $5,000. The contribution
amount is indexed for inflation. The tax law also provides for a catch-up
provision for individuals who are age 50 and above, allowing these individuals
an additional $1,000 contribution each year. The catch-up amount is not
indexed for inflation.
The "rollover" rules under the Code are fairly technical; however, an
individual (or his or her surviving spouse) may generally "roll over" certain
distributions from tax favored retirement plans (either directly or within 60
days from the date of these distributions) if he or she meets the requirements
for distribution. Once you buy an Annuity, you can make regular IRA
contributions under the Annuity (to the extent permitted by law). However, if
you make such regular IRA contributions, you should note that you will not be
able to treat the contract as a "conduit IRA", which means that you will not
retain possible favorable tax treatment if you subsequently "roll over" the
contract funds originally derived from a qualified retirement plan or TDA into
another Section 401(a) plan or TDA.
In some circumstances, non-spouse Beneficiaries may roll over to an IRA
amounts due from qualified plans, 403(b) plans, and governmental 457(b) plans.
However, the rollover rules applicable to non-spouse Beneficiaries under the
Code are more restrictive than the rollover rules applicable to
Owner/participants and spouse Beneficiaries. Generally, non-spouse
Beneficiaries may roll over distributions from tax favored retirement plans
only as a direct rollover, and if permitted by the plan. Under the Worker,
Retiree and Employer Recovery Act of 2008, employer retirement plans are
required to permit non-spouse Beneficiaries to roll over funds to an inherited
IRA for plan years beginning after December 31, 2009. An inherited IRA must be
directly rolled over from the employer plan or transferred from an IRA and
must be titled in the name of the deceased (i.e., John Doe deceased for the
benefit of Jane Doe). No additional contributions can be made to an inherited
IRA. In this prospectus, an inherited IRA is also referred to as a Beneficiary
Annuity.
Required Provisions. Contracts that are IRAs (or endorsements that are part of
the contract) must contain certain provisions:
. You, as Owner of the contract, must be the "Annuitant" under the
contract (except in certain cases involving the division of property
under a decree of divorce);
. Your rights as Owner are non-forfeitable;
. You cannot sell, assign or pledge the contract;
. The annual contribution you pay cannot be greater than the maximum
amount allowed by law, including catch-up contributions if applicable
(which does not include any rollover amounts);
. The date on which required minimum distributions must begin cannot be
later than April 1st of the calendar year after the calendar year you
turn age 70 1/2; and
. Death and annuity payments must meet "required minimum distribution"
rules described below.
Usually, the full amount of any distribution from an IRA (including a
distribution from this contract) which is not a rollover is taxable. As
taxable income, these distributions are subject to the general tax withholding
rules described earlier regarding a Nonqualified Annuity. In addition to this
normal tax liability, you may also be liable for the following, depending on
your actions:
. A 10% early withdrawal penalty described below;
. Liability for "prohibited transactions" if you, for example, borrow
against the value of an IRA; or
. Failure to take a required minimum distribution, also described below.
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SEPs. SEPs are a variation on a standard IRA, and contracts issued to a SEP
must satisfy the same general requirements described under IRAs (above). There
are, however, some differences:
.. If you participate in a SEP, you generally do not include in income any
employer contributions made to the SEP on your behalf up to the lesser of
(a) $50,000 in 2012 ($49,000 in 2011) or (b) 25% of your taxable
compensation paid by the contributing employer (not including the
employer's SEP contribution as compensation for these purposes). However,
for these purposes, compensation in excess of certain limits established by
the IRS will not be considered. In 2012, this limit is $250,000 ($245,000
for 2011);
.. SEPs must satisfy certain participation and nondiscrimination requirements
not generally applicable to IRAs; and
.. SEPs that contain a salary reduction or "SARSEP" provision prior to 1997
may permit salary deferrals up to $17,000 in 2012 with the employer making
these contributions to the SEP. However, no new "salary reduction" or
"SARSEPs" can be established after 1996. Individuals participating in a
SARSEP who are age 50 or above by the end of the year will be permitted to
contribute an additional $5,500 in 2012. These amounts are indexed for
inflation. Not all Annuities issued by us are available for SARSEPs. You
will also be provided the same information, and have the same "Free Look"
period, as you would have if you purchased the contract for a standard IRA.
ROTH IRAs. The "Roth IRA Disclosure Statement" contains information about
eligibility, contribution limits, tax particulars and other Roth IRA
information. Like standard IRAs, income within a Roth IRA accumulates
tax-free, and contributions are subject to specific limits. Roth IRAs have,
however, the following differences:
.. Contributions to a Roth IRA cannot be deducted from your gross income;
.. "Qualified distributions" from a Roth IRA are excludable from gross income.
A "qualified distribution" is a distribution that satisfies two
requirements: (1) the distribution must be made (a) after the Owner of the
IRA attains age 59 1/2; (b) after the Owner's death; (c) due to the Owner's
disability; or (d) for a qualified first time homebuyer distribution within
the meaning of Section 72(t)(2)(F) of the Code; and (2) the distribution
must be made in the year that is at least five tax years after the first
year for which a contribution was made to any Roth IRA established for the
Owner or five years after a rollover, transfer, or conversion was made from
a traditional IRA to a Roth IRA. Distributions from a Roth IRA that are not
qualified distributions will be treated as made first from contributions
and then from earnings and earnings will be taxed generally in the same
manner as distributions from a traditional IRA.
.. If eligible (including meeting income limitations and earnings
requirements), you may make contributions to a Roth IRA after attaining age
70 1/2, and distributions are not required to begin upon attaining such age
or at any time thereafter.
Subject to the minimum Purchase Payment requirements of an Annuity, you may
purchase an Annuity for a Roth IRA in connection with a "rollover" of amounts
of another traditional IRA, SEP, SIMPLE-IRA, employer sponsored retirement
plan (under sections 401(a) or 403(b) of the Code) or Roth IRA; or, if you
meet certain income limitations, by making a contribution consisting of your
Roth IRA contributions and catch-up contributions, if applicable, attributable
to the prior year during the period from January 1 to April 15 (or the
applicable due date of your federal income tax return, without extension), or
as a current year contribution. The Code permits persons who receive certain
qualifying distributions from such non-Roth IRAs, to directly rollover or
make, within 60 days, a "rollover" of all or any part of the amount of such
distribution to a Roth IRA which they establish. The conversion of non-Roth
accounts triggers current taxation (but is not subject to a 10% early
distribution penalty). Once an Annuity has been purchased, regular Roth IRA
contributions will be accepted to the extent permitted by law. In addition, an
individual receiving an eligible rollover distribution from a designated Roth
account under an employer plan may roll over the distribution to a Roth IRA
even if the individual is not eligible to make regular contributions to a Roth
IRA. Non-spouse Beneficiaries receiving a distribution from an employer
sponsored retirement plan under sections 401(a) or 403(b) of the Code can also
directly roll over contributions to a Roth IRA. However, it is our
understanding of the Code that non-spouse Beneficiaries cannot "rollover"
benefits from a traditional IRA to a Roth IRA.
TDAs. In general, you may own a Tax Deferred Annuity (also known as a TDA, Tax
Sheltered Annuity (TSA), 403(b) plan or 403(b) annuity) if you are an employee
of a tax-exempt organization (as defined under Code Section 501(c)(3)) or a
public educational organization, and you may make contributions to a TDA so
long as your employer maintains such a plan and your rights to the annuity are
non-forfeitable. Contributions to a TDA, and any earnings, are not taxable
until distribution. You may also make contributions to a TDA under a salary
reduction agreement, generally up to a maximum of $17,000 in 2012. Individuals
participating in a TDA who are age 50 or above by the end of the year will be
permitted to contribute an additional $5,500 in 2012. This amount is indexed
for inflation. Further, you may roll over TDA amounts to another TDA or an
IRA. You may also roll over TDA amounts to a qualified retirement plan, a SEP
and a 457 government plan. A contract may generally only qualify as a TDA if
distributions of salary deferrals (other than "grandfathered" amounts held as
of December 31, 1988) may be made only on account of:
.. Your attainment of age 59 1/2;
.. Your severance of employment;
.. Your death;
.. Your total and permanent disability; or
.. Hardship (under limited circumstances, and only related to salary
deferrals, not including earnings attributable to these amounts).
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In any event, you must begin receiving distributions from your TDA by
April 1st of the calendar year after the calendar year you turn age 70 1/2 or
retire, whichever is later. These distribution limits do not apply either to
transfers or exchanges of investments under the contract, or to any "direct
transfer" of your interest in the contract to another employer's TDA plan or
mutual fund "custodial account" described under Code Section 403(b)(7).
Employer contributions to TDAs are subject to the same general contribution,
nondiscrimination, and minimum participation rules applicable to "qualified"
retirement plans.
CAUTION: Under IRS regulations we can accept contributions, transfers and
rollovers only if we have entered into an information-sharing agreement, or
its functional equivalent, with the applicable employer or its agent. In
addition, in order to comply with the regulations, we will only process
certain transactions (e.g., transfers, withdrawals, hardship distributions
and, if applicable, loans) with employer approval. This means that if you
request one of these transactions we will not consider your request to be in
Good Order, and will not therefore process the transaction, until we receive
the employer's approval in written or electronic form.
REQUIRED MINIMUM DISTRIBUTIONS AND PAYMENT OPTIONS If you hold the contract
under an IRA (or other tax-favored plan), required minimum distribution rules
must be satisfied. This means that generally payments must start by April 1 of
the year after the year you reach age 70 1/2 and must be made for each year
thereafter. For a TDA or a 401(a) plan for which the participant is not a
greater than 5% Owner of the employer, this required beginning date can
generally be deferred to retirement, if later. Roth IRAs are not subject to
these rules during the Owner's lifetime. The amount of the payment must at
least equal the minimum required under the IRS rules. Several choices are
available for calculating the minimum amount. More information on the
mechanics of this calculation is available on request. Please contact us at a
reasonable time before the IRS deadline so that a timely distribution is made.
Please note that there is a 50% tax penalty on the amount of any required
minimum distribution not made in a timely manner. Required minimum
distributions are calculated based on the sum of the Account Value and the
actuarial value of any additional living and death benefits from optional
riders that you have purchased under the contract. As a result, the required
minimum distributions may be larger than if the calculation were based on the
Account Value only, which may in turn result in an earlier (but not before the
required beginning date) distribution of amounts under the Annuity and an
increased amount of taxable income distributed to the Annuity Owner, and a
reduction of payments under the living and death benefit optional riders.
You can use the Minimum Distribution option to satisfy the required minimum
distribution rules for an Annuity without either beginning annuity payments or
surrendering the Annuity. We will distribute to you the required minimum
distribution amount, less any other partial withdrawals that you made during
the year. Such amount will be based on the value of the contract as of
December 31 of the prior year, but is determined without regard to other
contracts you may own.
Although the IRS rules determine the required amount to be distributed from
your IRA each year, certain payment alternatives are still available to you.
If you own more than one IRA, you can choose to satisfy your minimum
distribution requirement for each of your IRAs by withdrawing that amount from
any of your IRAs. If you inherit more than one IRA or more than one Roth IRA
from the same Owner, similar rules apply.
CHARITABLE IRA DISTRIBUTIONS.
The Pension Protection Act of 2006 included a charitable giving incentive
permitting tax-free IRA distributions for charitable purposes. The Tax Relief,
Unemployment Insurance Reauthorization, and Job Creation Act of 2010 extended
this provision until the end of 2011. As of 2012, this provision expired and
has not been extended. It is possible Congress will extend this provision
retroactively to include some or all of 2012.
For distributions in tax years beginning after 2005 and before 2012, the Act
provides an exclusion from gross income, up to $100,000 for otherwise taxable
IRA distributions from a traditional or Roth IRA that are qualified charitable
distributions. To constitute a qualified charitable distribution, the
distribution must be made (1) directly by the IRA trustee to certain qualified
charitable organizations and (2) on or after the date the IRA owner attains
age 70 1/2. Distributions that are excluded from income under this provision
are not taken into account in determining the individual's deductions, if any,
for charitable contributions.
The IRS has indicated that an IRA trustee is not responsible for determining
whether a distribution to a charity is one that satisfies the requirements for
the new income tax exclusion added by the Pension Protection Act. As a result
the general rules for reporting IRA distributions apply.
REQUIRED DISTRIBUTIONS UPON YOUR DEATH FOR QUALIFIED ANNUITY CONTRACTS Upon
your death under an IRA, Roth IRA, 403(b) or other employer sponsored plan,
the designated Beneficiary may generally elect to continue the contract and
receive required minimum distributions under the contract instead of receiving
the death benefit in a single payment. The available payment options will
depend on whether you die before the date required minimum distributions under
the Code were to begin, whether you have named a designated Beneficiary and
whether that Beneficiary is your surviving spouse.
.. If you die after a designated Beneficiary has been named, the death benefit
must be distributed by December 31st of the year including the five year
anniversary of the date of death, or as periodic payments not extending
beyond the life or life expectancy of the designated Beneficiary (as long
as payments begin by December 31st of the year following the year of
death). However, if your surviving spouse is the Beneficiary, the death
benefit can be paid out over the life or life expectancy
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of your spouse with such payments beginning no later than December 31st of
the year following the year of death or December 31st of the year in which
you would have reached age 70 1/2, whichever is later. Additionally, if the
contract is payable to (or for the benefit of) your surviving spouse as
sole primary beneficiary, the contract may be continued with your spouse as
the Owner.
.. If you die before a designated Beneficiary is named and before the date
required minimum distributions must begin under the Code, the death benefit
must be paid out by December 31st of the year including the five year
anniversary of the date of death. For contracts where multiple
Beneficiaries have been named and at least one of the Beneficiaries does
not qualify as a designated Beneficiary and the account has not been
divided into separate accounts by December 31st of the year following the
year of death, such contract is deemed to have no designated Beneficiary. A
designated Beneficiary may elect to apply the rules for no designated
Beneficiary if those would provide a smaller payment requirement. For this
distribution requirement also, 2009 shall not be included in the five year
requirement period.
.. If you die before a designated Beneficiary is named and after the date
required minimum distributions must begin under the Code, the death benefit
must be paid out at least as rapidly as under the method then in effect.
For contracts where multiple Beneficiaries have been named and at least one
of the Beneficiaries does not qualify as a designated Beneficiary and the
account has not been divided into separate accounts by December 31st of the
year following the year of death, such contract is deemed to have no
designated Beneficiary. A designated Beneficiary may elect to apply the
rules for no designated Beneficiary if those would provide a smaller
payment requirement.
A Beneficiary has the flexibility to take out more each year than mandated
under the required minimum distribution rules.
Until withdrawn, amounts in a Qualified Annuity contract continue to be tax
deferred. Amounts withdrawn each year, including amounts that are required to
be withdrawn under the required minimum distribution rules, are subject to
tax. You may wish to consult a professional tax advisor for tax advice as to
your particular situation.
For a Roth IRA, if death occurs before the entire interest is distributed, the
death benefit must be distributed under the same rules applied to IRAs where
death occurs before the date required minimum distributions must begin under
the Code.
TAX PENALTY FOR EARLY WITHDRAWALS FROM QUALIFIED ANNUITY CONTRACTS You may owe
a 10% tax penalty on the taxable part of distributions received from an IRA,
SEP, Roth IRA, TDA or qualified retirement plan before you attain age 59 1/2.
Amounts are not subject to this tax penalty if:
.. the amount is paid on or after you reach age 59 1/2 or die;
.. the amount received is attributable to your becoming disabled; or
.. generally the amount paid or received is in the form of substantially equal
payments (as defined in the Code) not less frequently than annually.
(Please note that substantially equal payments must continue until the
later of reaching age 59 1/2 or 5 years. Modification of payments or
additional contributions to the contract during that time period will
result in retroactive application of the 10% tax penalty.)
Other exceptions to this tax may apply. You should consult your tax advisor
for further details.
WITHHOLDING
We will withhold federal income tax at the rate of 20% for any eligible
rollover distribution paid by us to or for a plan participant, unless such
distribution is "directly" rolled over into another qualified plan, IRA
(including the IRA variations described above), SEP, 457 government plan or
TDA. An eligible rollover distribution is defined under the tax law as a
distribution from an employer plan under 401(a), a TDA or a 457 governmental
plan, excluding any distribution that is part of a series of substantially
equal payments (at least annually) made over the life expectancy of the
employee or the joint life expectancies of the employee and his designated
Beneficiary, any distribution made for a specified period of 10 years or more,
any distribution that is a required minimum distribution and any hardship
distribution. Regulations also specify certain other items which are not
considered eligible rollover distributions. We will not withhold for payments
made from trustee owned contracts or for payments under a 457 plan. For all
other distributions, unless you elect otherwise, we will withhold federal
income tax from the taxable portion of such distribution at an appropriate
percentage. The rate of withholding on annuity payments where no mandatory
withholding is required is determined on the basis of the withholding
certificate that you file with us. If you do not file a certificate, we will
automatically withhold federal taxes on the following basis:
.. For any annuity payments not subject to mandatory withholding, you will
have taxes withheld by us as if you are a married individual, with 3
exemptions
.. If no U.S. taxpayer identification number is provided, we will
automatically withhold using single with zero exemptions as the default; and
.. For all other distributions, we will withhold at a 10% rate.
We will provide you with forms and instructions concerning the right to elect
that no amount be withheld from payments in the ordinary course. However, you
should know that, in any event, you are liable for payment of federal income
taxes on the taxable portion of the distributions, and you should consult with
your tax advisor to find out more information on your potential liability if
you fail to pay such taxes. There may be additional state income tax
withholding requirements.
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ERISA REQUIREMENTS
ERISA (the "Employee Retirement Income Security Act of 1974") and the Code
prevent a fiduciary and other "parties in interest" with respect to a plan
(and, for these purposes, an IRA would also constitute a "plan") from
receiving any benefit from any party dealing with the plan, as a result of the
sale of the contract. Administrative exemptions under ERISA generally permit
the sale of insurance/annuity products to plans, provided that certain
information is disclosed to the person purchasing the contract. This
information has to do primarily with the fees, charges, discounts and other
costs related to the contract, as well as any commissions paid to any agent
selling the contract. Information about any applicable fees, charges,
discounts, penalties or adjustments may be found in the applicable sections of
this prospectus. Information about sales representatives and commissions may
be found in the sections of this prospectus addressing distribution of the
Annuities.
Other relevant information required by the exemptions is contained in the
contract and accompanying documentation.
Please consult with your tax advisor if you have any questions about ERISA and
these disclosure requirements.
SPOUSAL CONSENT RULES FOR RETIREMENT PLANS - QUALIFIED CONTRACTS If you are
married at the time your payments commence, you may be required by federal law
to choose an income option that provides survivor annuity income to your
spouse, unless your spouse waives that right. Similarly, if you are married at
the time of your death, federal law may require all or a portion of the Death
Benefit to be paid to your spouse, even if you designated someone else as your
Beneficiary. A brief explanation of the applicable rules follows. For more
information, consult the terms of your retirement arrangement.
DEFINED BENEFIT PLANS AND MONEY PURCHASE PENSION PLANS.
If you are married at the time your payments commence, federal law requires
that benefits be paid to you in the form of a "qualified joint and survivor
annuity" (QJSA), unless you and your spouse waive that right, in writing.
Generally, this means that you will receive a reduced payment during your life
and, upon your death, your spouse will receive at least one-half of what you
were receiving for life. You may elect to receive another income option if
your spouse consents to the election and waives his or her right to receive
the QJSA. If your spouse consents to the alternative form of payment, your
spouse may not receive any benefits from the plan upon your death. Federal law
also requires that the plan pay a Death Benefit to your spouse if you are
married and die before you begin receiving your benefit. This benefit must be
available in the form of an annuity for your spouse's lifetime and is called a
"qualified pre-retirement survivor annuity" (QPSA). If the plan pays Death
Benefits to other Beneficiaries, you may elect to have a Beneficiary other
than your spouse receive the Death Benefit, but only if your spouse consents
to the election and waives his or her right to receive the QPSA. If your
spouse consents to the alternate Beneficiary, your spouse will receive no
benefits from the plan upon your death. Any QPSA waiver prior to your
attaining age 35 will become null and void on the first day of the calendar
year in which you attain age 35, if still employed.
DEFINED CONTRIBUTION PLANS (INCLUDING 401(K) PLANS AND ERISA 403(B)
ANNUITIES). Spousal consent to a distribution is generally not required. Upon
your death, your spouse will receive the entire Death Benefit, even if you
designated someone else as your Beneficiary, unless your spouse consents in
writing to waive this right. Also, if you are married and elect an annuity as
a periodic income option, federal law requires that you receive a QJSA (as
described above), unless you and your spouse consent to waive this right.
IRAS, NON-ERISA 403(B) ANNUITIES, AND 457 PLANS.
Spousal consent to a distribution usually is not required. Upon your death,
any Death Benefit will be paid to your designated Beneficiary.
GIFTS AND GENERATION-SKIPPING TRANSFERS
If you transfer your contract to another person for less than adequate
consideration, there may be gift tax consequences in addition to income tax
consequences. Also, if you transfer your contract to a person two or more
generations younger than you (such as a grandchild or grandniece) or to a
person that is more than 37 1/2 years younger than you, there may be
generation-skipping transfer tax consequences.
ADDITIONAL INFORMATION
For additional information about federal tax law requirements applicable to
IRAs and Roth IRAs, see the IRA Disclosure Statement or Roth IRA Disclosure
Statement, as applicable.
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OTHER INFORMATION
PRUCO LIFE AND THE SEPARATE ACCOUNT
PRUCO LIFE. Pruco Life Insurance Company (Pruco Life) is a stock life
insurance company organized in 1971 under the laws of the State of Arizona. It
is licensed to sell life insurance and annuities in the District of Columbia,
Guam and in all states except New York. Pruco Life is a wholly-owned
subsidiary of The Prudential Insurance Company of America (Prudential), a New
Jersey stock life insurance company that has been doing business since 1875.
Prudential is an indirect wholly-owned subsidiary of Prudential Financial,
Inc. (Prudential Financial), a New Jersey insurance holding company. No
company other than Pruco Life has any legal responsibility to pay amounts that
it owes under its annuity contracts. Among other things, this means that where
you participate in an optional living benefit or death benefit and the value
of that benefit (e.g., the Protected Withdrawal Value for Highest Daily
Lifetime Income 2.0) exceeds your current Account Value, you would rely solely
on the ability of Pruco Life to make payments under the benefit out of its own
assets. As Pruco Life's ultimate parent, Prudential Financial, however,
exercises significant influence over the operations and capital structure of
Pruco Life.
Pruco Life incorporates by reference into the prospectus its latest annual
report on Form 10-K filed pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (Exchange Act) since the end of the fiscal
year covered by its latest annual report. In addition, all documents
subsequently filed by Pruco Life pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act also are incorporated into the prospectus by
reference. Pruco Life will provide to each person, including any beneficial
Owner, to whom a prospectus is delivered, a copy of any or all of the
information that has been incorporated by reference into the prospectus but
not delivered with the prospectus. Such information will be provided upon
written or oral request at no cost to the requester by writing to Pruco Life
Insurance Company, One Corporate Drive, Shelton, CT 06484 or by calling
800-752-6342. Pruco Life files periodic reports as required under the Exchange
Act. The public may read and copy any materials that Pruco Life files with the
SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C.
20549. The public may obtain information on the operation of the Public
Reference Room by calling the SEC at 202-551-8090. The SEC maintains an
Internet site that contains reports, proxy, and information statements, and
other information regarding issuers that file electronically with the SEC (see
http://www.sec.gov). Our internet address is
http://www.prudentialannuities.com.
Pruco Life conducts the bulk of its operations through staff employed by it or
by affiliated companies within the Prudential Financial family. Certain
discrete functions have been delegated to non-affiliates that could be deemed
"service providers" or "administrators" under the Investment Company Act of
1940. The entities engaged by Pruco Life may change over time. As of
December 31, 2011, non-affiliated entities that could be deemed service
providers to Pruco Life and/or another insurer within the Prudential Annuities
business unit consisted of the following: Alliance-One Services Inc.
(administration of variable life policies) located at 55 Hartland Street, East
Hartford CT 06108, Ascensus (qualified plan administrator) located at 200
Dryden Road, Dresher, PA 19025, Alerus Retirement Solutions (qualified plan
administrator), State Street Financial Center One, Lincoln Street, Boston, MA
02111, Aprimo (fulfillment of marketing materials), 510 East 96/th/ Street,
Suite 300, Indianapolis, IN 46240, Aplifi (order entry systems provider)
located at 555 SW 12th Ave, Suite 202, Pompano Beach, FL 33069, Broadridge
Investor Communication Solutions, Inc. (proxy tabulation services), 51
Mercedes Way, Edgewood, NY 11717, Consona (maintenance and storage of
administrative documents), 333 Allegheny Avenue, Suite 301 North, Oakmont, PA
15139-2066, Depository Trust & Clearing Corporation (clearing and settlement
services), 55 Water Street, 26/th/ Floor, New York, NY 10041, DG3 North
America, Inc. (proxy and prospectus printing and mailing services), 100 Burma
Road, Jersey City, NJ 07305, DST Systems, Inc. (clearing and settlement
services), 4900 Main, 7/th/ Floor, Kansas City, MO 64112, EBIX, Inc.
(order-entry system), 5 Concourse Parkway, Suite 3200, Atlanta, GA 30328,
ExlService Holdings, Inc., (administration of annuity contracts), 350 Park
Avenue, 10th Floor, New York, NY 10022, Diversified Information Technologies
Inc. (records management), 123 Wyoming Avenue, Scranton, PA 18503, Fiserv
(composition, printing and mailing of confirmation and quarterly statements),
881 Main Street, Manchester, CT 06040, Fosdick Fulfillment Corp. (fulfillment
of prospectuses and marketing materials), 26 Barnes Industrial Park Road,
North Wallingford, CT 06492, Insurance Technologies (annuity illustrations),
38120 Amrhein Ave., Livonia, MI 48150, Morningstar Associates LLC (asset
allocation recommendations) , 225 West Wacker Drive Chicago, IL 60606,
National Financial Services (clearing and settlement services), NEPS, LLC
(composition, printing, and mailing of contracts and benefit documents), 12
Manor Parkway, Salem, NJ 03079, Pershing LLC (order-entry systems provider),
One Pershing Plaza, Jersey City, NJ 07399, RR Donnelley Receivables, Inc.
(printing annual reports and prospectuses), 111 South Wacker Drive, Chicago,
IL 60606-4301, Skywire Software (composition, printing, and mailing of
contracts and benefit documents), 150 Post Street, Suite 500, San Francisco,
CA 94108, VG Reed & Sons, Inc. (printing and fulfillment of annual reports),
1002 South 12th Street, Louisville, KY 40210, William B. Meyer (printing and
fulfillment of prospectuses and marketing materials), 255 Long Beach
Boulevard, Stratford, CT 06615, Right Now Technologies (business information
repository), 136 Enterprise Blvd, Bozeman, MT 59718, The Harty Press (print
vendor for client communications) 25 James Street, New Haven, CT 06513.
THE SEPARATE ACCOUNT. We have established a Separate Account, the Pruco Life
Flexible Premium Variable Annuity Account (Separate Account), to hold the
assets that are associated with the variable annuity contracts. The Separate
Account was established under Arizona law on June 16, 1995, and is registered
with the SEC under the Investment Company Act of 1940 as a unit investment
trust, which is a type of investment company. The assets of the Separate
Account are held in the name of Pruco Life and legally belong to us. These
assets are kept separate from all of our other assets and may not be charged
with liabilities arising
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out of any other business we may conduct. Income, gains, and losses, whether
or not realized, for assets allocated to the Separate Account are, in
accordance with the Annuities, credited to or charged against the Separate
Account without regard to other income, gains, or losses of Pruco Life. The
obligations under the Annuities are those of Pruco Life, which is the issuer
of the Annuities and the depositor of the Separate Account. More detailed
information about Pruco Life, including its audited consolidated financial
statements, is provided in the Statement of Additional Information.
We may offer new Sub-accounts, eliminate Sub-accounts, or combine Sub-accounts
at our sole discretion. We may also close Sub-accounts to additional Purchase
Payments on existing Annuities or close Sub-accounts for Annuities purchased
on or after specified dates. We will first notify you and receive any
necessary SEC and/or state approval before making such a change. If an
underlying mutual fund is liquidated, we will ask you to reallocate any amount
in the liquidated fund. If you do not reallocate these amounts, we will
reallocate such amounts only in accordance with guidance provided by the SEC
or its staff (or after obtaining an order from the SEC, if required). We
reserve the right to substitute underlying portfolios, as allowed by
applicable law. If we make a fund substitution or change, we may change the
Annuity contract to reflect the substitution or change. We do not control the
underlying mutual funds, so we cannot guarantee that any of those funds will
always be available.
If you are enrolled in a Dollar Cost Averaging, Automatic Rebalancing, or
comparable programs while an underlying fund merger, substitution or
liquidation takes place, unless otherwise noted in any communication from us,
your Account Value invested in such underlying fund will be transferred
automatically to the designated surviving fund in the case of mergers, the
replacement fund in the case of substitutions, and an available Money Market
Fund in the case of fund liquidations. Your enrollment instructions will be
automatically updated to reflect the surviving fund, the replacement fund or a
Money Market Fund for any continued and future investments.
With the MVA Options, we use a separate account of Pruco Life different from
the Pruco Life Flexible Premium Variable Annuity Account discussed above. This
separate account is not registered under the Investment Company Act of 1940.
Moreover, you do not participate in the appreciation or depreciation of the
assets held by that separate account.
SERVICE FEES PAYABLE TO PRUCO LIFE
Pruco Life and/or our affiliates receive substantial and varying
administrative service payments, Rule 12b-1 fees, and "revenue sharing"
payments from certain underlying Portfolios or related parties. Rule 12b-1
fees compensate our affiliated principal underwriter for distribution,
marketing, and/or servicing functions. Administrative services payments
compensate us for providing administrative services with respect to Annuity
Owners invested indirectly in the Portfolio, which include duties such as
recordkeeping shareholder services, and the mailing of periodic reports. We
receive administrative services fees with respect to both affiliated
underlying Portfolios and unaffiliated underlying Portfolios. The
administrative services fees we receive from affiliates originate from the
assets of the affiliated Portfolio itself and/or the assets of the Portfolio's
investment advisor. In recognition of the administrative services provided by
the relevant affiliated insurance companies, the investment advisors to
certain affiliated Portfolios also make "revenue sharing" payments to such
affiliated insurance companies. In any case, the existence of these payments
tends to increase the overall cost of investing in the Portfolio. In addition,
because these payments are made to us, allocations you make to these
affiliated underlying Portfolios benefit us financially.
We collect these payments and fees under agreements between us and a
Portfolio's principal underwriter, transfer agent, investment advisor and/or
other entities related to the Portfolio.
The 12b-1 fees and administrative services fees that we receive may vary among
the different fund complexes that are part of our investment platform. Thus,
the fees we collect may be greater or smaller, based on the Portfolios that
you select. In addition, we may consider these payments and fees, among a
number of factors, when deciding to add or keep a Portfolio on the "menu" of
Portfolios that we offer through the Annuity. Please see the table entitled
"Underlying Mutual Fund Portfolio Annual Expenses" for a listing of the
Portfolios that pay a 12b-1 fee.
With respect to administrative services fees, the maximum fee (as of December
31, 2011) that we receive is equal to 0.40% of the average assets allocated to
the Portfolio(s) under the Annuity. We expect to make a profit on these fees.
In addition, an investment advisor, sub-advisor or distributor of the
underlying Portfolios may also compensate us by providing reimbursement,
defraying the costs of, or paying directly for, among other things, marketing
and/or administrative services and/or other services they provide in
connection with the Annuity. These services may include, but are not limited
to: sponsoring or co-sponsoring various promotional, educational or marketing
meetings and seminars attended by distributors, wholesalers, and/or broker
dealer firms' registered representatives, and creating marketing material
discussing the contract, available options, and underlying Portfolios. The
amounts paid depend on the nature of the meetings, the number of meetings
attended by the advisor, sub-advisor, or distributor, the number of
participants and attendees at the meetings, the costs expected to be incurred,
and the level of the advisor's, sub-advisor's or distributor's participation.
These payments or reimbursements may not be offered by all advisors,
sub-advisors, or distributors, and the amounts of such payments may vary
between and among each advisor, sub-advisor, and distributor depending on
their respective participation.
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During 2011, with regard to amounts that were paid under these kinds of
arrangements described immediately above, the amounts ranged from
approximately $125 to approximately $789,756. These amounts may have been paid
to one or more Prudential-affiliated insurers issuing individual variable
annuities.
LEGAL STRUCTURE OF THE UNDERLYING FUNDS
Each underlying mutual fund is registered as an open-end management investment
company under the Investment Company Act of 1940. Shares of the underlying
mutual fund Portfolios are sold to Separate Accounts of life insurance
companies offering variable annuity and variable life insurance products. The
shares may also be sold directly to qualified pension and retirement plans.
VOTING RIGHTS
We are the legal owner of the shares of the underlying mutual funds in which
the Sub-accounts invest. However, under current SEC rules, you have voting
rights in relation to Account Value maintained in the Sub-accounts. If an
underlying mutual fund portfolio requests a vote of shareholders, we will vote
our shares based on instructions received from Owners with Account Value
allocated to that Sub-account. Owners have the right to vote an amount equal
to the number of shares attributable to their contracts. If we do not receive
voting instructions in relation to certain shares, we will vote those shares
in the same manner and proportion as the shares for which we have received
instructions. This voting procedure is sometimes referred to as "mirror
voting" because, as indicated in the immediately preceding sentence, we mirror
the votes that are actually cast, rather than decide on our own how to vote.
We will also "mirror vote" shares that are owned directly by us or an
affiliate (excluding shares held in the separate account of an affiliated
insurer). In addition, because all the shares of a given mutual fund held
within our Separate Account are legally owned by us, we intend to vote all of
such shares when that underlying fund seeks a vote of its shareholders. As
such, all such shares will be counted towards whether there is a quorum at the
underlying fund's shareholder meeting and towards the ultimate outcome of the
vote. Thus, under "mirror voting", it is possible that the votes of a small
percentage of contract holders who actually vote will determine the ultimate
outcome. We will furnish those Owners who have Account Value allocated to a
Sub-account whose underlying mutual fund portfolio has requested a "proxy"
vote with proxy materials and the necessary forms to provide us with their
voting instructions. Generally, you will be asked to provide instructions for
us to vote on matters such as changes in a fundamental investment strategy,
adoption of a new investment advisory agreement, or matters relating to the
structure of the underlying mutual fund that require a vote of shareholders.
We reserve the right to change the voting procedures described above if
applicable SEC rules change.
Advanced Series Trust (the "Trust") has obtained an exemption from the
Securities and Exchange Commission that permits its co-investment advisers,
AST Investment Services, Inc. and Prudential Investments LLC, subject to
approval by the Board of Trustees of the Trust, to change sub-advisors for a
Portfolio and to enter into new sub-advisory agreements, without obtaining
shareholder approval of the changes. This exemption (which is similar to
exemptions granted to other investment companies that are organized in a
similar manner as the Trust) is intended to facilitate the efficient
supervision and management of the sub-advisors by AST Investment Services,
Inc., Prudential Investments LLC and the Trustees. The exemption does not
apply to the AST Franklin Templeton Founding Funds Allocation Portfolio;
shareholder approval of new subadvisory agreements for this Portfolio only is
required. The Trust is required, under the terms of the exemption, to provide
certain information to shareholders following these types of changes. We may
add new Sub-accounts that invest in a series of underlying funds other than
the Trust. Such series of funds may have a similar order from the SEC. You
also should review the prospectuses for the other underlying funds in which
various Sub-accounts invest as to whether they have obtained similar orders
from the SEC.
MATERIAL CONFLICTS
It is possible that differences may occur between companies that offer shares
of an underlying mutual fund portfolio to their respective Separate Accounts
issuing variable annuities and/or variable life insurance products.
Differences may also occur surrounding the offering of an underlying mutual
fund portfolio to variable life insurance policies and variable annuity
contracts that we offer. Under certain circumstances, these differences could
be considered "material conflicts", in which case we would take necessary
action to protect persons with voting rights under our variable annuity
contracts and variable life insurance policies against persons with voting
rights under other insurance companies' variable insurance products. If a
"material conflict" were to arise between Owners of variable annuity contracts
and variable life insurance policies issued by us we would take necessary
action to treat such persons equitably in resolving the conflict. "Material
conflicts" could arise due to differences in voting instructions between
Owners of variable life insurance and variable annuity contracts of the same
or different companies. We monitor any potential conflicts that may exist.
CONFIRMATIONS, STATEMENTS, AND REPORTS
We send any statements and reports required by applicable law or regulation to
you at your last known address of record. You should therefore give us prompt
notice of any address change. We reserve the right, to the extent permitted by
law and subject to your prior consent, to provide any prospectus, prospectus
supplements, confirmations, statements and reports required by applicable law
or regulation to you through our Internet Website at
www.prudentialannuities.com or any other electronic means, including diskettes
or CD ROMs. We generally send a confirmation statement to you each time a
financial transaction is made affecting Account Value, such as making
additional Purchase Payments, transfers, exchanges or withdrawals. We also
send quarterly statements detailing the activity affecting your Annuity during
the calendar quarter, if there have been transactions during the quarter. We
may confirm regularly scheduled transactions, including, but not limited to
the Annual Maintenance Fee, systematic withdrawals (including 72(t)/72(q)
payments and Required Minimum Distributions), electronic funds transfer, Dollar
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Cost Averaging, auto rebalancing, and the Custom Portfolios Program in
quarterly statements instead of confirming them immediately. You should review
the information in these statements carefully. You may request additional
reports or copies of reports previously sent. We reserve the right to charge
$50 for each such additional or previously sent report, but may waive that
charge in the future. We will also send an annual report and a semi-annual
report containing applicable financial statements for the portfolios to Owners
or, with your prior consent, make such documents available electronically
through our Internet Website or other electronic means.
DISTRIBUTION OF ANNUITIES OFFERED BY PRUCO LIFE
Prudential Annuities Distributors, Inc. (PAD), a wholly-owned subsidiary of
Prudential Annuities, Inc., is the distributor and principal underwriter of
the annuities offered through this prospectus. PAD acts as the distributor of
a number of annuity and life insurance products. PAD's principal business
address is One Corporate Drive, Shelton, Connecticut 06484. PAD is registered
as a broker-dealer under the Securities Exchange Act of 1934 (Exchange Act),
and is a member of the Financial Industry Regulatory Authority (FINRA). Each
Annuity is offered on a continuous basis. PAD enters into distribution
agreements with broker/dealers who are registered under the Exchange Act and
with entities that may offer the Annuities but are exempt from registration
(firms). Applications for each Annuity are solicited by registered
representatives of those firms. In addition, PAD may offer the Annuity
directly to potential purchasers.
Under the selling agreements, commissions are paid to firms on sales of the
Annuity according to one or more schedules. The registered representative will
receive all or a portion of the compensation, depending on the practice of his
or her firm. Commissions are generally based on a percentage of Purchase
Payments made, up to a maximum of 6.0% for the X Series, 7.0% for the B
Series, 5.50% for the L Series and 2.0% for the C Series. Alternative
compensation schedules are available that generally provide a lower initial
commission plus ongoing quarterly compensation based on all or a portion of
Unadjusted Account Value. We may also provide compensation to the distributing
firm for providing ongoing service to you in relation to the Annuity.
Commissions and other compensation paid in relation to the Annuity do not
result in any additional charge to you or to the Separate Account.
Compensation varies by Annuity product, and such differing compensation could
be a factor in which Annuity a Financial Professional recommends to you.
In addition, in an effort to promote the sale of our products (which may
include the placement of Pruco Life and/or the Annuity on a preferred or
recommended company or product list and/or access to the firm's registered
representatives), we or PAD may enter into compensation arrangements with
certain broker/dealers firms with respect to certain or all registered
representatives of such firms under which such firms may receive separate
compensation or reimbursement for, among other things, training of sales
personnel and/or marketing and/or administrative services and/or other
services they provide to us or our affiliates. These services may include, but
are not limited to: educating customers of the firm on the Annuity's features;
conducting due diligence and analysis; providing office access, operations and
systems support; holding seminars intended to educate registered
representatives and make them more knowledgeable about the Annuities;
providing a dedicated marketing coordinator; providing priority sales desk
support; and providing expedited marketing compliance approval and preferred
programs to PAD. We or PAD also may compensate third-party vendors, for
services that such vendors render to broker-dealer firms. To the extent
permitted by the FINRA rules and other applicable laws and regulations, PAD
may pay or allow other promotional incentives or payments in the forms of cash
or non-cash compensation (e.g., gifts, occasional meals and entertainment,
sponsorship of training and due diligence events). These arrangements may not
be offered to all firms and the terms of such arrangements may differ between
firms. In addition, we or our affiliates may provide such compensation,
payments and/or incentives to firms arising out of the marketing, sale and/or
servicing of variable annuities or life insurance offered by different
Prudential business units.
The list below identifies three general types of payments that PAD pays which
are broadly defined as follows:
. Percentage Payments based upon "Assets under Management" or "AUM": This
type of payment is a percentage payment that is based upon the total
assets, subject to certain criteria in certain Pruco Life products.
. Percentage Payments based upon sales: This type of payment is a
percentage payment that is based upon the total amount of money received
as Purchase Payments under Pruco Life annuity products sold through the
firm (or its affiliated broker-dealers).
. Fixed Payments: These types of payments are made directly to or in
sponsorship of the firm (or its affiliated broker-dealers). Examples of
arrangements under which such payments may be made currently include,
but are not limited to: sponsorships, conferences (national, regional
and top producer), speaker fees, promotional items and reimbursements to
firms for marketing activities or services paid by the firms and/or
their registered representatives. The amount of these payments varies
widely because some payments may encompass only a single event, such as
a conference, and others have a much broader scope. In addition, we may
make payments periodically during the relationship for systems,
operational and other support.
The list below includes the names of the firms (or their affiliated
broker/dealers) that we are aware (as of December 31, 2011) received payment
with respect to our annuity business generally during 2011 (or as to which a
payment amount was accrued during 2011). The firms listed below include those
receiving payments in connection with marketing of products issued by Pruco
Life Insurance Company and Pruco Life Insurance Company of New Jersey. Your
registered representative can provide you with more information about the
compensation arrangements that apply upon request. During 2011, the least
amount paid, and greatest
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amount paid, were $19.35 and $6,443,077.91, respectively. Each of these
Annuities also is distributed by other selling firms that previously were
appointed only with our affiliate Prudential Annuities Life Assurance
Corporation ("PALAC"). Such other selling firms may have received compensation
similar to the types discussed above with respect to their sale of PALAC
annuities. In addition, such other selling firms may, on a going forward
basis, receive substantial compensation that is not reflected in this 2011
retrospective depiction.
NAME OF FIRM:
1/st/ Global Capital Corp. Capital Investment Group, Inc. First Brokerage America, LLC
1934 Group Capital One Investment Services, LLC FIRST CITIZENS INVESTOR
Aaron Industries Capital Securities Management SERVICES INC
Advantage Fire Sprinkler Co. Castner Josephs Retirement Group First Financial Equity Corp.
Aegon Transamerica CBIZ First Heartland Capital, Inc.
A.G. Edwards & Sons, Inc. CCF Investments, Inc. First Merit Investments
Afore ING Centaurus Financial, Inc. First Southeast Investor Services
AIG Financial Advisors Inc CFD Investments, Inc. First State Financial Management
Allen & Company of Florida, Inc. Charter One Bank (Cleveland) First Tennessee Brokerage, Inc
Alliance Bernstein L.P. Chase Investment Services First Trust Portfolios L.P.
Allstate Financial Srvcs, LLC Citigroup Global Markets Inc. First Western Advisors
American Century Citizens Bank and Trust Company Florida Investment Advisers
American Independent Marketing Clairmont Oaks Foothill Securities, Inc.
AMERICAN PORTFOLIO FIN SVCS CLS Investments Forrester Research
INC COMERICA SECURITIES, INC. Fortune Financial Services, Inc.
Ameriprise Financial, Inc. Total Commonwealth Financial Network Franklin Templeton
Ameritas Investment Corp. Compak Securities FROST BROKERAGE SERVICES
ANCHOR BAY SECURITIES, LLC Compass Bank Wealth Management FSC Securities Corp.
ARETE WEALTH MANAGEMENT Group G.A. Repple & Company
Arlington Securities, Inc. Crescent Securities Group GATX Southern Star Agency
Arque Capital, Ltd. Crown Capital Securities, L.P. Garden State Securities, Inc.
ARVEST ASSET MANAGEMENT CUNA Brokerage Svcs, Inc. Gary Goldberg & Co., Inc.
ASKAR CORPORATION CUSO Financial Services, L.P. Geneos Wealth Management, Inc.
AUSDAL FINANCIAL PARTNERS, D.A. Davidson Genworth Financial Securities
INC. David A. Noyes & Company Corporation
AXA Advisors, LLC Delta Equity Girard Securities, Inc.
BancorpSouth Investment Services, Inc. Dempsey Lord Smith, LLC Golden Years Advisors
Banc of America Invest.Svs(SO) Deutsche Bank Goldman Sachs & Co.
BBVA Compass Investment Solutions, DeWaay Financial Network, LLC Great American Advisors, Inc.
Inc. Eaton Vance Great American Investors, Inc.
Ballew Investments EDI Financial GWN Securities, Inc.
Bank of the West Edward Jones & Co. H. Beck, Inc.
Battery Ventures ELLIOTT DAVIS BROKERAGE HBW SECURITIES LLC
BB&T Investment Services, Inc. SERVICES, LLC HD Associates
BCG Companies Equitrust H.D. Vest Investment
BCG Securities, Inc. Equity Services, Inc. Hantz Financial Services,Inc.
Beaconsfield Financial Services ESSEX FINANCIAL SERVICES, HARBOR FINANCIAL SERVICES
Berthel Fisher & Company INC. LLC
BlackRock Financial Management Inc. Evergreen Consulting Harbour Investments, Inc.
Broker Dealer Financial Services Federated Investors Harmon Dennis Bradshaw
Brookstone Financial Services Fidelity Investments Hartford Life Insurance Company
Brown Builders Fifth Third Securities, Inc. Harvest Capital, LLC
Cadaret, Grant & Co., Inc. FINANCIAL ADVISERS OF Hazard & Siegel, Inc.
Calton & Associates, Inc. AMERICA LLC Heim, Young & Associates, Inc.
Cambridge Investment Research, Inc. Financial Network Investment Horizon Investments
Cambridge Legacy Securities, LLC Financial Planning Consultants Hornor, Townsend & Kent, Inc.
Cantella & Co., Inc. Financial Security Management, Inc. HSBC
CAPE SECURITIES, INC. Financial Telesis Inc. Huntleigh Securities
Capital Advisors Financial West Group ICC
Capital Analysts Fintegra, LLC IMS Securities
Capital Financial Services, Inc. First Allied Securities Inc Independent Financial Grp, LLC
CAPITAL GROWTH RESOURCES First American Insurance Underwriters IFS (Industry Fund Services)
Capital Guardian (FAIU) Impact Speakers
127
Infinex Investments, Inc. Neuberger Berman SMH Capital, Inc.
ING Financial Partners, LLC New Alliance Bank Southwest Securities, Inc.
Institutional Securities Corp. New England Securities Corp. SPIRE SECURITIES LLC
INTERCAROLINA FINANCIAL New York Life STERLING MONROE SECURITIES
SERVICES, INC. Newbridge Securities Corp. LLC
Intersecurities, Inc Newport Coast Securities Sterne Agee Financial Services, Inc.
Intervest International Equities Corp. Next Financial Group, Inc. Stifel Nicolaus & Co.
Invest Financial Corporation NFP Securities, Inc. STRATEGIC FIN ALLIANCE INC
Investacorp North Ridge Securities Corp. Summit Brokerage Services, Inc
Investment Centers of America NPB Financial Group, LLC Summit Equities, Inc.
Investment Professionals OneAmerica Securities, Inc. Summit Financial
Investors Capital Corporation One Resource Group Sunset Financial Services, Inc
Investors Security Co, Inc. OPPENHEIMER & CO, INC. SunTrust Investment Services, Inc.
ISG Equity Sales Pacific West Securities, Inc. SWBC Investment Services
JHS Capital Packerland Brokerage Services, Inc. SWS Financial Services, Inc
J.J.B. Hilliard Lyons, Inc. Park Avenue Securities, LLC SYMETRA INVESTMENT
J.P. Morgan Paulson Investment Co., Inc. SERVICES INC
J.P. Turner & Company, LLC PIMCO Syndicated
J.W. Cole Financial, Inc. PlanMember Securities Corp. T. Rowe Price Group, Inc.
Jack Cramer & Associates PNC Investments, LLC TFS Securities, Inc.
Janney Montgomery Scott, LLC. Presidential Brokerage, Inc. The Capital Group Securities, Inc.
Jennison Associates, LLC Prime Capital Services, Inc. The Investment Center
John Hancock PRIMEVEST FINANCIAL The O.N. Equity Sales Co.
Key Bank SERVICES The Prudential Insurance Company of
KEY INVESTMENT SERVICES LLC Principal Financial Group America
Klosterman Baking Princor Financial Services Corp. The Wharton School
KMS Financial Services, Inc. Private Client Services, LLC Tower Square Securities, Inc.
Kovack Securities, Inc. ProEquities TransAmerica Financial Advisors, Inc.
LaSalle St. Securities, LLC Prospera Financial Services, Inc. Triad Advisors, Inc.
Leaders Group Inc. Pruco Securities, LLC Trustmont Financial Group, Inc.
Legend Equities Corporation Purshe Kaplan Sterling Investments UBS Financial Services, Inc.
Legg Mason QA3 Financial Corp. UNIONBANC INVESTMENT SERV,
Leigh Baldwin & Company, LLC Quest Financial Services LLC
Lincoln Financial Advisors Questar Capital Corporation United Planners Fin. Serv.
Lincoln Financial Securities Raymond James & Associates USA Financial Securities Corp.
Corporation Raymond James Financial Svcs US Bank
Lincoln Investment Planning RBC CAPITAL MARKETS UVEST Fin'l Srvcs Group, Inc.
Lord Abbett CORPORATION VALIC Financial Advisors, Inc
LPL Financial Corporation Resource Horizons Group Valmark Securities, Inc.
LSG Financial Services Ridgeway & Conger, Inc. Veritrust Financial LLC
M3 Insurance Solutions, Inc. RNR Securities, LLC VFinance Investments
M Holdings Securities, Inc Robert W. Baird & Co., Inc. VSR Financial Services, Inc.
Main Street Securities, LLC Royal Alliance Associates WADDELL & REED INC.
Mason Wells Royal Bank of Scotland Wall Street Financial Group
Merrill Lynch, P,F,S Sagemark Consulting Walnut Street Securities, Inc.
Merritt Wealth Strategies SAGEPOINT FINANCIAL, INC. WAYNE HUMMER INVESTMENTS
MetLife Sage Rutty & Co., Inc. LLC
MFS Sammons Securities Co., LLC Wedbush Morgan Securities
Michigan Securities, Inc. Sanders Morris Harris Inc. Wells Fargo Advisors LLC
Mid-Atlantic Capital Corp. SAUNDERS RETIREMENT WELLS FARGO ADVISORS LLC -
Milkie Ferguson Investments ADVISORS INC WEALTH
MML Investors Services, Inc. SCF Securities, Inc. WFG Investments, Inc.
Money Concepts Capital Corp. Schroders Investment Management Wilbanks Securities, Inc.
Montgomery Agency Scott & Stringfellow, Inc. Williams Financial Group
Morgan Keegan & Company Seacoast Capital Woodbury Financial Services
Morgan Stanley Smith Barney Securian Financial Svcs, Inc. Woodstock Financial
MTL Equity Products, Inc. Securities America, Inc. Workman Securities Corporation
Multi Financial Securities Crp Securities Service Network World Equity Group, Inc.
National Planning Corporation Sigma Financial Corporation World Group Securities, Inc.
National Securities Corp. Signator Investors, Inc. WRP Investments, Inc
Nationwide Securities, LLC SII Investments, Inc.
Navigator Financial Silver Oaks Securities
128
You should note that firms and individual registered representatives and
branch managers with some firms participating in one of these compensation
arrangements might receive greater compensation for selling the Annuities than
for selling a different annuity that is not eligible for these compensation
arrangements. While compensation is generally taken into account as an expense
in considering the charges applicable to a contract product, any such
compensation will be paid by us or PAD and will not result in any additional
charge to you. Your registered representative can provide you with more
information about the compensation arrangements that apply upon request.
This Annuity is sold through firms that are unaffiliated with us, and also is
sold through an affiliated firm called Pruco Securities, LLC. Pruco
Securities, LLC is an indirect wholly-owned subsidiary of Prudential Financial
that sells variable annuities and variable life insurance (among other
products) through its registered representatives. Pruco Securities, LLC also
serves as principal underwriter of certain variable life insurance contracts
issued by subsidiary insurers of Prudential Financial.
FINANCIAL STATEMENTS
The financial statements of the Separate Account and Pruco Life are included
in the Statement of Additional Information.
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Securities Act") may be permitted to directors, officers or persons
controlling the registrant pursuant to the foregoing provisions, the
registrant has been informed that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable.
LEGAL PROCEEDINGS
We are subject to legal and regulatory actions in the ordinary course of our
business. Our pending legal and regulatory actions may include proceedings
specific to us and proceedings generally applicable to business practices in
the industry in which we operate. We are subject to class action lawsuits and
individual lawsuits involving a variety of issues, including sales practices,
underwriting practices, claims payment and procedures, additional premium
charges for premiums paid on a periodic basis, denial or delay of benefits,
return of premiums or excessive premium charges and breaching fiduciary duties
to customers. We are subject to litigation involving commercial disputes with
counterparties or partners and class action lawsuits and other litigation
alleging, among other things, that we made improper or inadequate disclosures
in connection with the sale of assets and annuity and investment products or
charged excessive or impermissible fees on these products, recommended
unsuitable products to customers, mishandled customer accounts or breached
fiduciary duties to customers. We may be a defendant in, or be contractually
responsible to third parties for, class action lawsuits and individual
litigation arising from our operations, including claims for breach of
contract. We are also subject to litigation arising out of our general
business activities, such as our investments, contracts, leases and labor and
employment relationships, including claims of discrimination and harassment
and could be exposed to claims or litigation concerning certain business or
process patents. Regulatory authorities from time to time make inquiries and
conduct investigations and examinations relating particularly to us and our
products. In addition, we, along with other participants in the businesses in
which we engage, may be subject from time to time to investigations,
examinations and inquiries, in some cases industry-wide, concerning issues or
matters upon which such regulators have determined to focus. In some of our
pending legal and regulatory actions, parties may seek large and/or
indeterminate amounts, including punitive or exemplary damages. The outcome of
a litigation or regulatory matter, and the amount or range of potential loss
at any particular time, is often inherently uncertain.
In December 2010, a purported state-wide class action complaint, Phillips v.
Prudential Financial, Inc., was filed in the Circuit Court of the First
Judicial Circuit, Williamson County, Illinois. The complaint makes claims of
breach of contract, breaches of fiduciary duty, and violation of Illinois law
on behalf of a class of Illinois residents whose death benefits were settled
by retained assets accounts and seeks damages and disgorgement of profits. In
January 2011, the case was removed to the United States District Court for the
Southern District of Illinois. In March 2011, the complaint was amended to
drop Prudential Financial as a defendant and add Pruco Life as a defendant.
The matter is now captioned Phillips v. Prudential Insurance and Pruco Life
Insurance Company. In April 2011, a motion to dismiss the amended complaint
was filed. In November 2011, the complaint was dismissed and the dismissal
appealed in December 2011.
In July 2010, Pruco Life, along with other life insurance industry
participants, received a formal request for information from the State of New
York Attorney General's Office in connection with its investigation into
industry practices relating to the use of retained asset accounts. In August
2010, Pruco Life received a similar request for information from the State of
Connecticut Attorney General's Office. Pruco Life is cooperating with these
investigations. Pruco Life has also been contacted by state insurance
regulators and other governmental entities, including the U.S. Department of
Veterans Affairs and Congressional committees regarding retained asset
accounts. These matters may result in additional investigations, information
requests, claims, hearings, litigation, adverse publicity and potential
changes to business practices.
In January 2012, a qui tam action on behalf of the State of Illinois, Total
Asset Recovery Services v. Met Life Inc, et al., Prudential Financial, Inc.,
The Prudential Insurance Company of America, and Prudential Holdings, LLC,
filed in the Circuit Court of Cook
129
County, Illinois, was served on Pruco Life. The complaint alleges that Pruco
Life failed to escheat life insurance proceeds to the State of Illinois in
violation of the Illinois False Claims Whistleblower Reward and Protection Act
and seeks injunctive relief, compensatory damages, civil penalties, treble
damages, prejudgment interest, attorneys' fees and costs. In March 2012, a qui
tam action on behalf of the State of Minnesota, Total Asset Recovery v.
MetLife Inc., et al., Prudential Financial Inc., The Prudential Insurance
Company of America and Prudential Holdings, Inc., filed in the Fourth Judicial
District, Hennepin County, in the State of Minnesota was served on Pruco Life.
The complaint alleges that Pruco Life failed to escheat life insurance
proceeds to the State of Minnesota in violation of the Minnesota False Claims
Act and seeks injunctive relief, compensatory damages, civil penalties, treble
damages, prejudgment interest, attorneys' fees and costs.
In January 2012, a Global Resolution Agreement entered into by Pruco Life and
a third party auditor became effective upon its acceptance by the unclaimed
property departments of 20 states and jurisdictions. Under the terms of the
Global Resolution Agreement, the third party auditor acting on behalf of the
signatory states will compare expanded matching criteria to the Social
Security Master Death File ("SSMDF") to identify deceased insureds and
contract holders where a valid claim has not been made. In February 2012, a
Regulatory Settlement Agreement entered into by Pruco Life to resolve a
multi-state market conduct examination regarding its adherence to state claim
settlement practices became effective upon its acceptance by the insurance
departments of 20 states and jurisdictions. The Regulatory Settlement
Agreement applies prospectively and requires Pruco Life to adopt and implement
additional procedures comparing its records to the SSMDF to identify unclaimed
death benefits and prescribes procedures for identifying and locating
beneficiaries once deaths are identified. Other jurisdictions that are not
signatories to the Regulatory Settlement Agreement are considering proposals
that would apply prospectively and require life insurance companies to take
additional steps to identify unreported deceased policy and contract holders.
These prospective changes and any escheatable property identified as a result
of the audits and inquiries could result in: (1) additional payments of
previously unclaimed death benefits; (2) the payment of abandoned funds to
U.S. jurisdictions; and (3) changes in Pruco Life's practices and procedures
for the identification of escheatable funds and beneficiaries, which would
impact claim payments and reserves, among other consequences.
Pruco Life is one of several companies subpoenaed by the New York Attorney
General regarding its unclaimed property procedures. Additionally, the New
York Department of Insurance ("NYDOI") has requested that 172 life insurers
(including Pruco Life) provide data to the NYDOI regarding use of the SSMDF.
The New York Office of Unclaimed Funds recently notified Pruco Life that it
intends to conduct an audit of Pruco Life's compliance with New York's
unclaimed property laws. The Minnesota Attorney General has also requested
information regarding Pruco Life's use of the SSMDF and its claim handling
procedures and Pruco Life is one of several companies subpoenaed by the
Minnesota Department of Commerce, Insurance Division. In February 2012, the
Massachusetts Office of the Attorney General requested information regarding
Pruco Life's unclaimed property procedures.
Pruco Life's litigation and regulatory matters are subject to many
uncertainties, and given their complexity and scope, their outcome cannot be
predicted. It is possible that Pruco Life's results of operations or cash flow
in a particular quarterly or annual period could be materially affected by an
ultimate unfavorable resolution of pending litigation and regulatory matters
depending, in part, upon the results of operations or cash flow for such
period. In light of the unpredictability of Pruco Life's litigation and
regulatory matters, it is also possible that in certain cases an ultimate
unfavorable resolution of one or more pending litigation or regulatory matters
could have a material adverse effect on Pruco Life's financial position.
Management believes, however, that, based on information currently known to
it, the ultimate outcome of all pending litigation and regulatory matters,
after consideration of applicable reserves and rights to indemnification, is
not likely to have a material adverse effect on Pruco Life's financial
position.
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
The following are the contents of the Statement of Additional Information:
.. Company
.. Experts
.. Principal Underwriter
.. Payments Made to Promote Sale of Our Products
.. Determination of Accumulation Unit Values
.. Financial Statements
HOW TO CONTACT US
You can contact us by:
. calling our Customer Service Team at 1-888-PRU-2888 during our normal
business hours,
. writing to us via regular mail at Prudential Annuity Service Center,
P.O. Box 7960, Philadelphia, PA 19176. NOTE: Failure to send mail to the
proper address may result in a delay in our receiving and processing
your request.
130
. writing to us via overnight mail, certified, or registered mail delivery
at the Prudential Annuity Service Center, 2101 Welsh Road, Dresher, PA
19025.
. accessing information about your Annuity through our Internet Website at
www.prudentialannuities.com.
You can obtain account information by calling our automated response system
and at www.prudentialannuities.com, our Internet Website. Our Customer Service
representatives are also available during business hours to provide you with
information about your account. You can request certain transactions through
our telephone voice response system, our Internet Website or through a
customer service representative. You can provide authorization for a third
party, including your attorney-in-fact acting pursuant to a power of attorney,
to access your account information and perform certain transactions on your
account. You will need to complete a form provided by us which identifies
those transactions that you wish to authorize via telephonic and electronic
means and whether you wish to authorize a third party to perform any such
transactions. Please note that unless you tell us otherwise, we deem that all
transactions that are directed by your Financial Professional with respect to
your Annuity have been authorized by you. We require that you or your
representative provide proper identification before performing transactions
over the telephone or through our Internet Website. This may include a
Personal Identification Number (PIN) that will be provided to you upon issue
of your Annuity or you may establish or change your PIN by calling our
automated response system and at www.prudentialannuities.com, our Internet
Website. Any third party that you authorize to perform financial transactions
on your account will be assigned a PIN for your account.
Transactions requested via telephone are recorded. To the extent permitted by
law, we will not be responsible for any claims, loss, liability or expense in
connection with a transaction requested by telephone or other electronic means
if we acted on such transaction instructions after following reasonable
procedures to identify those persons authorized to perform transactions on
your Annuity using verification methods which may include a request for your
Social Security number, PIN or other form of electronic identification. We may
be liable for losses due to unauthorized or fraudulent instructions if we did
not follow such procedures.
Pruco Life does not guarantee access to telephonic, facsimile, Internet or any
other electronic information or that we will be able to accept transaction
instructions via such means at all times. Nor, due to circumstances beyond our
control, can we provide any assurances as to the delivery of transaction
instructions submitted to us by regular and/or express mail. Regular and/or
express mail (if operational) will be the only means by which we will accept
transaction instructions when telephonic, facsimile, Internet or any other
electronic means are unavailable or delayed. Pruco Life reserves the right to
limit, restrict or terminate telephonic, facsimile, Internet or any other
electronic transaction privileges at any time.
131
APPENDIX A - ACCUMULATION UNIT VALUES
As we have indicated throughout this prospectus, each Annuity is a contract
that allows you to select or decline any of several features that carries with
it a specific asset-based charge. We maintain a unique Unit value
corresponding to each combination of such contract features.
Here, we set forth the historical Unit values corresponding to the lowest
charge level for each Series and the highest charge level for each Series. In
the Statement of Additional Information, which is available free of charge, we
set forth Unit values corresponding to the remaining charge levels.
PREMIER RETIREMENT X SERIES
PRUCO LIFE INSURANCE COMPANY
PROSPECTUS
ACCUMULATION UNIT VALUES: BASIC DEATH BENEFIT ONLY (1.85%)
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
----------------------------------------------------------------------------------------------------------
AST ACADEMIC STRATEGIES ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.96776 $10.80355 16,115,236
01/01/2011 to 12/31/2011 $10.80355 $10.32201 26,145,020
----------------------------------------------------------------------------------------------------------
AST ADVANCED STRATEGIES PORTFOLIO
03/15/2010 to 12/31/2010 $9.97845 $10.90934 16,520,147
01/01/2011 to 12/31/2011 $10.90934 $10.71983 31,160,927
----------------------------------------------------------------------------------------------------------
AST AMERICAN CENTURY INCOME & GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $10.00698 $10.80426 386,068
01/01/2011 to 12/31/2011 $10.80426 $10.98336 861,212
----------------------------------------------------------------------------------------------------------
AST BALANCED ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98872 $10.76175 19,444,721
01/01/2011 to 12/31/2011 $10.76175 $10.43457 30,884,829
----------------------------------------------------------------------------------------------------------
AST BLACKROCK GLOBAL STRATEGIES PORTFOLIO
05/02/2011* to 12/31/2011 $9.99847 $9.15446 4,206,004
----------------------------------------------------------------------------------------------------------
AST BLACKROCK VALUE PORTFOLIO
FORMERLY, AST VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98607 $10.67822 180,577
01/01/2011 to 12/31/2011 $10.67822 $10.42937 927,305
----------------------------------------------------------------------------------------------------------
AST CAPITAL GROWTH ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.97763 $10.84253 17,802,880
01/01/2011 to 12/31/2011 $10.84253 $10.38402 23,039,463
----------------------------------------------------------------------------------------------------------
AST CLS GROWTH ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.97772 $10.98316 9,422,264
01/01/2011 to 12/31/2011 $10.98316 $10.52277 15,912,582
----------------------------------------------------------------------------------------------------------
AST CLS MODERATE ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98752 $10.79555 9,993,968
01/01/2011 to 12/31/2011 $10.79555 $10.40365 18,489,579
----------------------------------------------------------------------------------------------------------
AST COHEN & STEERS REALTY PORTFOLIO
03/15/2010 to 12/31/2010 $9.95986 $11.79603 629,095
01/01/2011 to 12/31/2011 $11.79603 $12.34114 1,206,134
----------------------------------------------------------------------------------------------------------
AST FEDERATED AGGRESSIVE GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.97180 $12.16884 408,703
01/01/2011 to 12/31/2011 $12.16884 $10.37797 902,020
----------------------------------------------------------------------------------------------------------
AST FI PYRAMIS(R) ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.99847 $10.89088 6,864,689
01/01/2011 to 12/31/2011 $10.89088 $10.42542 12,294,833
A-1
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
------------------------------------------------------------------------------------------------------------------
AST FIRST TRUST BALANCED TARGET PORTFOLIO
03/15/2010 to 12/31/2010 $9.97594 $11.02450 10,460,931
01/01/2011 to 12/31/2011 $11.02450 $10.65807 19,667,799
------------------------------------------------------------------------------------------------------------------
AST FIRST TRUST CAPITAL APPRECIATION TARGET PORTFOLIO
03/15/2010 to 12/31/2010 $9.96346 $11.51915 12,510,633
01/01/2011 to 12/31/2011 $11.51915 $10.60363 20,525,257
------------------------------------------------------------------------------------------------------------------
AST GLOBAL REAL ESTATE PORTFOLIO
03/15/2010 to 12/31/2010 $9.97014 $11.55536 274,439
01/01/2011 to 12/31/2011 $11.55536 $10.77031 415,059
------------------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS CONCENTRATED GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $10.01847 $10.79024 453,210
01/01/2011 to 12/31/2011 $10.79024 $10.17178 638,844
------------------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS LARGE-CAP VALUE PORTFOLIO
FORMERLY, AST ALLIANCEBERNSTEIN GROWTH & INCOME PORTFOLIO
03/15/2010 to 12/31/2010 $9.99171 $10.77467 523,595
01/01/2011 to 12/31/2011 $10.77467 $9.99185 856,280
------------------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS MID-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $10.01979 $11.42605 820,867
01/01/2011 to 12/31/2011 $11.42605 $10.88116 1,298,500
------------------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS SMALL-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.96509 $11.50123 1,034,338
01/01/2011 to 12/31/2011 $11.50123 $11.43580 1,623,604
------------------------------------------------------------------------------------------------------------------
AST HIGH YIELD PORTFOLIO
03/15/2010 to 12/31/2010 $9.98444 $10.77285 781,633
01/01/2011 to 12/31/2011 $10.77285 $10.90929 1,470,127
------------------------------------------------------------------------------------------------------------------
AST HORIZON GROWTH ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.97670 $10.88236 5,496,657
01/01/2011 to 12/31/2011 $10.88236 $10.62051 10,013,676
------------------------------------------------------------------------------------------------------------------
AST HORIZON MODERATE ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98821 $10.71140 7,230,953
01/01/2011 to 12/31/2011 $10.71140 $10.46023 12,879,029
------------------------------------------------------------------------------------------------------------------
AST INTERNATIONAL GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.92930 $11.26762 429,967
01/01/2011 to 12/31/2011 $11.26762 $9.63007 601,698
------------------------------------------------------------------------------------------------------------------
AST INTERNATIONAL VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.92917 $10.80592 418,182
01/01/2011 to 12/31/2011 $10.80592 $9.27520 737,258
------------------------------------------------------------------------------------------------------------------
AST INVESTMENT GRADE BOND PORTFOLIO
03/15/2010 to 12/31/2010 $10.00670 $10.61020 41,027
01/01/2011 to 12/31/2011 $10.61020 $11.71022 110,706,033
------------------------------------------------------------------------------------------------------------------
AST JENNISON LARGE-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.97132 $10.78687 233,153
01/01/2011 to 12/31/2011 $10.78687 $10.65776 635,357
------------------------------------------------------------------------------------------------------------------
AST JENNISON LARGE-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.97163 $10.57122 430,116
01/01/2011 to 12/31/2011 $10.57122 $9.76664 690,215
------------------------------------------------------------------------------------------------------------------
AST JPMORGAN INTERNATIONAL EQUITY PORTFOLIO
03/15/2010 to 12/31/2010 $9.92182 $10.56777 725,442
01/01/2011 to 12/31/2011 $10.56777 $9.42340 1,083,762
------------------------------------------------------------------------------------------------------------------
AST JPMORGAN STRATEGIC OPPORTUNITIES PORTFOLIO
03/15/2010 to 12/31/2010 $9.99847 $10.59781 5,623,269
01/01/2011 to 12/31/2011 $10.59781 $10.42630 11,769,393
A-2
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
-----------------------------------------------------------------------------------------------------------
AST LARGE-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.99045 $10.62894 264,381
01/01/2011 to 12/31/2011 $10.62894 $9.99613 458,796
-----------------------------------------------------------------------------------------------------------
AST LORD ABBETT CORE-FIXED INCOME PORTFOLIO
FORMERLY, AST LORD ABBETT BOND-DEBENTURE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98864 $10.83202 445,793
01/01/2011 to 12/31/2011 $10.83202 $11.71326 3,851,027
-----------------------------------------------------------------------------------------------------------
AST MARSICO CAPITAL GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.99257 $11.31652 599,023
01/01/2011 to 12/31/2011 $11.31652 $11.00602 954,711
-----------------------------------------------------------------------------------------------------------
AST MFS GLOBAL EQUITY PORTFOLIO
03/15/2010 to 12/31/2010 $9.98760 $10.90539 654,025
01/01/2011 to 12/31/2011 $10.90539 $10.36861 1,170,710
-----------------------------------------------------------------------------------------------------------
AST MFS GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.99847 $10.88101 254,897
01/01/2011 to 12/31/2011 $10.88101 $10.61657 334,532
-----------------------------------------------------------------------------------------------------------
AST MID-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98873 $11.51238 387,296
01/01/2011 to 12/31/2011 $11.51238 $10.90968 608,066
-----------------------------------------------------------------------------------------------------------
AST MONEY MARKET PORTFOLIO
03/15/2010 to 12/31/2010 $9.99847 $9.85245 1,640,205
01/01/2011 to 12/31/2011 $9.85245 $9.67264 3,774,781
-----------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN CORE BOND PORTFOLIO
10/31/2011* to 12/31/2011 $10.02838 $10.06723 112,651
-----------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN MID-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.95876 $11.93497 593,887
01/01/2011 to 12/31/2011 $11.93497 $11.91206 1,202,261
-----------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN SMALL-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.97289 $11.43803 286,843
01/01/2011 to 04/29/2011 $11.43803 $12.82105 0
-----------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN / LSV MID-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.99102 $11.24476 814,527
01/01/2011 to 12/31/2011 $11.24476 $10.76281 1,232,918
-----------------------------------------------------------------------------------------------------------
AST PARAMETRIC EMERGING MARKETS EQUITY PORTFOLIO
03/15/2010 to 12/31/2010 $9.93894 $11.68593 1,551,512
01/01/2011 to 12/31/2011 $11.68593 $9.14486 1,985,084
-----------------------------------------------------------------------------------------------------------
AST PIMCO LIMITED MATURITY BOND PORTFOLIO
03/15/2010 to 12/31/2010 $10.00789 $10.09014 894,555
01/01/2011 to 12/31/2011 $10.09014 $10.12632 1,902,630
-----------------------------------------------------------------------------------------------------------
AST PIMCO TOTAL RETURN BOND PORTFOLIO
03/15/2010 to 12/31/2010 $10.00681 $10.36307 12,788,956
01/01/2011 to 12/31/2011 $10.36307 $10.49495 20,127,075
-----------------------------------------------------------------------------------------------------------
AST PRESERVATION ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98943 $10.60667 18,134,321
01/01/2011 to 12/31/2011 $10.60667 $10.51438 39,410,414
-----------------------------------------------------------------------------------------------------------
AST PRUDENTIAL CORE BOND PORTFOLIO
10/31/2011* to 12/31/2011 $10.01839 $10.06713 216,960
-----------------------------------------------------------------------------------------------------------
AST QMA US EQUITY ALPHA PORTFOLIO
03/15/2010 to 12/31/2010 $9.99847 $10.90109 147,522
01/01/2011 to 12/31/2011 $10.90109 $11.06966 279,830
A-3
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
-------------------------------------------------------------------------------------------------------------
AST QUANTITATIVE MODELING PORTFOLIO
05/02/2011* to 12/31/2011 $9.99847 $8.88788 2,470,946
-------------------------------------------------------------------------------------------------------------
AST SCHRODERS MULTI-ASSET WORLD STRATEGIES PORTFOLIO
03/15/2010 to 12/31/2010 $9.98235 $10.77457 12,822,769
01/01/2011 to 12/31/2011 $10.77457 $10.21799 20,814,989
-------------------------------------------------------------------------------------------------------------
AST SMALL-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.96085 $12.62928 506,068
01/01/2011 to 12/31/2011 $12.62928 $12.27464 1,125,305
-------------------------------------------------------------------------------------------------------------
AST SMALL-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.96428 $11.47783 380,118
01/01/2011 to 12/31/2011 $11.47783 $10.59244 622,032
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.99216 $10.70296 19,296,637
01/01/2011 to 12/31/2011 $10.70296 $10.71365 39,420,262
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE EQUITY INCOME PORTFOLIO
FORMERLY, AST ALLIANCEBERNSTEIN CORE VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98581 $10.54809 376,764
01/01/2011 to 12/31/2011 $10.54809 $10.18355 509,407
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE GLOBAL BOND PORTFOLIO
03/15/2010 to 12/31/2010 $9.98015 $10.32114 717,496
01/01/2011 to 12/31/2011 $10.32114 $10.54828 1,403,572
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE LARGE-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.97104 $11.14744 1,309,895
01/01/2011 to 12/31/2011 $11.14744 $10.75602 2,008,486
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE NATURAL RESOURCES PORTFOLIO
03/15/2010 to 12/31/2010 $9.85972 $11.48747 1,912,053
01/01/2011 to 12/31/2011 $11.48747 $9.59315 3,407,102
-------------------------------------------------------------------------------------------------------------
AST WELLINGTON MANAGEMENT HEDGED EQUITY PORTFOLIO
FORMERLY, AST AGGRESSIVE ASSET ALLOCATION PORTFOLIO
05/02/2011* to 12/31/2011 $9.99847 $8.82530 2,711,264
-------------------------------------------------------------------------------------------------------------
AST WESTERN ASSET CORE PLUS BOND PORTFOLIO
03/15/2010 to 12/31/2010 $9.99847 $10.41023 2,255,133
01/01/2011 to 12/31/2011 $10.41023 $10.83354 4,205,372
-------------------------------------------------------------------------------------------------------------
FRANKLIN TEMPLETON VIP FOUNDING FUNDS ALLOCATION FUND
03/15/2010 to 12/31/2010 $9.97099 $10.65063 14,541,761
01/01/2011 to 12/31/2011 $10.65063 $10.27927 21,594,879
* Denotes the start date of these sub-accounts
PREMIER RETIREMENT X SERIES
PRUCO LIFE INSURANCE COMPANY
PROSPECTUS
ACCUMULATION UNIT VALUES: WITH COMBO 5%/HAV AND HD GRO II OR COMBO 5%/HAV AND
GRO PLUS II (3.25%)
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
----------------------------------------------------------------------------------------------------------
AST ACADEMIC STRATEGIES ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.96658 $10.67920 65,586
01/01/2011 to 12/31/2011 $10.67920 $10.05801 32,305
A-4
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
------------------------------------------------------------------------------------------------------
AST ADVANCED STRATEGIES PORTFOLIO
03/15/2010 to 12/31/2010 $9.97726 $10.78391 63,320
01/01/2011 to 12/31/2011 $10.78391 $10.44570 36,268
------------------------------------------------------------------------------------------------------
AST AMERICAN CENTURY INCOME & GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $10.00580 $10.68000 0
01/01/2011 to 12/31/2011 $10.68000 $10.70255 0
------------------------------------------------------------------------------------------------------
AST BALANCED ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98754 $10.63801 52,778
01/01/2011 to 12/31/2011 $10.63801 $10.16773 41,360
------------------------------------------------------------------------------------------------------
AST BLACKROCK GLOBAL STRATEGIES PORTFOLIO
05/02/2011* to 12/31/2011 $9.99728 $9.06646 5,266
------------------------------------------------------------------------------------------------------
AST BLACKROCK VALUE PORTFOLIO
FORMERLY, AST VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98489 $10.55547 6,008
01/01/2011 to 12/31/2011 $10.55547 $10.16268 2,215
------------------------------------------------------------------------------------------------------
AST BOND PORTFOLIO 2017
03/15/2010 to 12/31/2010 $9.99728 $10.47326 1,077
01/01/2011 to 12/31/2011 $10.47326 $11.28966 176,639
------------------------------------------------------------------------------------------------------
AST BOND PORTFOLIO 2018
03/15/2010 to 12/31/2010 $10.00599 $10.51568 0
01/01/2011 to 12/31/2011 $10.51568 $11.55635 171,789
------------------------------------------------------------------------------------------------------
AST BOND PORTFOLIO 2019
03/15/2010 to 12/31/2010 $9.99728 $10.51855 0
01/01/2011 to 12/31/2011 $10.51855 $11.80304 0
------------------------------------------------------------------------------------------------------
AST BOND PORTFOLIO 2020
03/15/2010 to 12/31/2010 $10.00811 $10.54905 0
01/01/2011 to 12/31/2011 $10.54905 $12.11329 0
------------------------------------------------------------------------------------------------------
AST BOND PORTFOLIO 2021
03/15/2010 to 12/31/2010 $10.00704 $10.64953 0
01/01/2011 to 12/31/2011 $10.64953 $12.39610 1,039,227
------------------------------------------------------------------------------------------------------
AST BOND PORTFOLIO 2022
01/03/2011* to 12/31/2011 $9.99728 $11.84372 63,992
------------------------------------------------------------------------------------------------------
AST CAPITAL GROWTH ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.97645 $10.71790 391,948
01/01/2011 to 12/31/2011 $10.71790 $10.11846 164,486
------------------------------------------------------------------------------------------------------
AST CLS GROWTH ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.97654 $10.85687 281,346
01/01/2011 to 12/31/2011 $10.85687 $10.25378 119,373
------------------------------------------------------------------------------------------------------
AST CLS MODERATE ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98634 $10.67150 21,946
01/01/2011 to 12/31/2011 $10.67150 $10.13769 17,203
------------------------------------------------------------------------------------------------------
AST COHEN & STEERS REALTY PORTFOLIO
03/15/2010 to 12/31/2010 $9.95867 $11.66051 2,513
01/01/2011 to 12/31/2011 $11.66051 $12.02580 1,025
------------------------------------------------------------------------------------------------------
AST FEDERATED AGGRESSIVE GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.97062 $12.02896 63,773
01/01/2011 to 12/31/2011 $12.02896 $10.11241 19,152
------------------------------------------------------------------------------------------------------
AST FI PYRAMIS(R) ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.99728 $10.76559 53,525
01/01/2011 to 12/31/2011 $10.76559 $10.15880 27,393
A-5
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
------------------------------------------------------------------------------------------------------------------
AST FIRST TRUST BALANCED TARGET PORTFOLIO
03/15/2010 to 12/31/2010 $9.97476 $10.89777 41,613
01/01/2011 to 12/31/2011 $10.89777 $10.38550 35,895
------------------------------------------------------------------------------------------------------------------
AST FIRST TRUST CAPITAL APPRECIATION TARGET PORTFOLIO
03/15/2010 to 12/31/2010 $9.96228 $11.38660 63,452
01/01/2011 to 12/31/2011 $11.38660 $10.33249 33,759
------------------------------------------------------------------------------------------------------------------
AST GLOBAL REAL ESTATE PORTFOLIO
03/15/2010 to 12/31/2010 $9.96896 $11.42258 7,260
01/01/2011 to 12/31/2011 $11.42258 $10.49505 2,154
------------------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS CONCENTRATED GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $10.01728 $10.66626 6,841
01/01/2011 to 12/31/2011 $10.66626 $9.91176 2,303
------------------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS LARGE-CAP VALUE PORTFOLIO
FORMERLY, AST ALLIANCEBERNSTEIN GROWTH & INCOME PORTFOLIO
03/15/2010 to 12/31/2010 $9.99053 $10.65075 599
01/01/2011 to 12/31/2011 $10.65075 $9.73635 169
------------------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS MID-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $10.01861 $11.29475 9,481
01/01/2011 to 12/31/2011 $11.29475 $10.60285 5,877
------------------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS SMALL-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.96391 $11.36904 37,088
01/01/2011 to 12/31/2011 $11.36904 $11.14341 10,062
------------------------------------------------------------------------------------------------------------------
AST HIGH YIELD PORTFOLIO
03/15/2010 to 12/31/2010 $9.98326 $10.64904 1,088
01/01/2011 to 12/31/2011 $10.64904 $10.63061 391
------------------------------------------------------------------------------------------------------------------
AST HORIZON GROWTH ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.97552 $10.75721 50,255
01/01/2011 to 12/31/2011 $10.75721 $10.34891 24,771
------------------------------------------------------------------------------------------------------------------
AST HORIZON MODERATE ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98703 $10.58812 39,331
01/01/2011 to 12/31/2011 $10.58812 $10.19269 24,837
------------------------------------------------------------------------------------------------------------------
AST INTERNATIONAL GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.92811 $11.13809 5,276
01/01/2011 to 12/31/2011 $11.13809 $9.38377 2,037
------------------------------------------------------------------------------------------------------------------
AST INTERNATIONAL VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.92798 $10.68170 1,162
01/01/2011 to 12/31/2011 $10.68170 $9.03790 1,326
------------------------------------------------------------------------------------------------------------------
AST JENNISON LARGE-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.97014 $10.66273 9,443
01/01/2011 to 12/31/2011 $10.66273 $10.38511 2,812
------------------------------------------------------------------------------------------------------------------
AST JENNISON LARGE-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.97045 $10.44965 2,613
01/01/2011 to 12/31/2011 $10.44965 $9.51676 948
------------------------------------------------------------------------------------------------------------------
AST JPMORGAN INTERNATIONAL EQUITY PORTFOLIO
03/15/2010 to 12/31/2010 $9.92064 $10.44626 237
01/01/2011 to 12/31/2011 $10.44626 $9.18224 371
------------------------------------------------------------------------------------------------------------------
AST JPMORGAN STRATEGIC OPPORTUNITIES PORTFOLIO
03/15/2010 to 12/31/2010 $9.99728 $10.47594 23,043
01/01/2011 to 12/31/2011 $10.47594 $10.15974 12,836
------------------------------------------------------------------------------------------------------------------
AST LARGE-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98927 $10.50667 1,704
01/01/2011 to 12/31/2011 $10.50667 $9.74042 962
A-6
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
-----------------------------------------------------------------------------------------------------------
AST LORD ABBETT CORE-FIXED INCOME PORTFOLIO
FORMERLY, AST LORD ABBETT BOND-DEBENTURE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98746 $10.70748 216
01/01/2011 to 12/31/2011 $10.70748 $11.41401 7,417
-----------------------------------------------------------------------------------------------------------
AST MARSICO CAPITAL GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.99139 $11.18639 3,660
01/01/2011 to 12/31/2011 $11.18639 $10.72467 1,261
-----------------------------------------------------------------------------------------------------------
AST MFS GLOBAL EQUITY PORTFOLIO
03/15/2010 to 12/31/2010 $9.98642 $10.78001 10,730
01/01/2011 to 12/31/2011 $10.78001 $10.10344 5,029
-----------------------------------------------------------------------------------------------------------
AST MFS GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.99728 $10.75587 6,141
01/01/2011 to 12/31/2011 $10.75587 $10.34505 2,234
-----------------------------------------------------------------------------------------------------------
AST MID-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98755 $11.37997 33,871
01/01/2011 to 12/31/2011 $11.37997 $10.63064 11,219
-----------------------------------------------------------------------------------------------------------
AST MONEY MARKET PORTFOLIO
03/15/2010 to 12/31/2010 $9.99729 $9.73891 7,345
01/01/2011 to 12/31/2011 $9.73891 $9.42516 42,315
-----------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN CORE BOND PORTFOLIO
10/31/2011* to 12/31/2011 $10.02720 $10.04231 0
-----------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN MID-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.95758 $11.79780 4,654
01/01/2011 to 12/31/2011 $11.79780 $11.60753 3,614
-----------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN SMALL-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.97171 $11.30656 0
01/01/2011 to 04/29/2011 $11.30656 $12.61446 0
-----------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN / LSV MID-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98984 $11.11549 36,520
01/01/2011 to 12/31/2011 $11.11549 $10.48759 12,178
-----------------------------------------------------------------------------------------------------------
AST PARAMETRIC EMERGING MARKETS EQUITY PORTFOLIO
03/15/2010 to 12/31/2010 $9.93776 $11.55161 13,074
01/01/2011 to 12/31/2011 $11.55161 $8.91087 2,840
-----------------------------------------------------------------------------------------------------------
AST PIMCO LIMITED MATURITY BOND PORTFOLIO
03/15/2010 to 12/31/2010 $10.00671 $9.97411 1,448
01/01/2011 to 12/31/2011 $9.97411 $9.86766 544
-----------------------------------------------------------------------------------------------------------
AST PIMCO TOTAL RETURN BOND PORTFOLIO
03/15/2010 to 12/31/2010 $10.00563 $10.24378 190,185
01/01/2011 to 12/31/2011 $10.24378 $10.22662 107,961
-----------------------------------------------------------------------------------------------------------
AST PRESERVATION ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98825 $10.48476 258,537
01/01/2011 to 12/31/2011 $10.48476 $10.24577 148,696
-----------------------------------------------------------------------------------------------------------
AST PRUDENTIAL CORE BOND PORTFOLIO
10/31/2011* to 12/31/2011 $10.01721 $10.04222 0
-----------------------------------------------------------------------------------------------------------
AST QMA US EQUITY ALPHA PORTFOLIO
03/15/2010 to 12/31/2010 $9.99728 $10.77565 0
01/01/2011 to 12/31/2011 $10.77565 $10.78653 0
-----------------------------------------------------------------------------------------------------------
AST QUANTITATIVE MODELING PORTFOLIO
05/02/2011* to 12/31/2011 $9.99728 $8.80236 0
A-7
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
-------------------------------------------------------------------------------------------------------------
AST SCHRODERS MULTI-ASSET WORLD STRATEGIES PORTFOLIO
03/15/2010 to 12/31/2010 $9.98117 $10.65078 56,983
01/01/2011 to 12/31/2011 $10.65078 $9.95693 55,318
-------------------------------------------------------------------------------------------------------------
AST SMALL-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.95967 $12.48393 57,911
01/01/2011 to 12/31/2011 $12.48393 $11.96054 13,558
-------------------------------------------------------------------------------------------------------------
AST SMALL-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.96310 $11.34575 33,429
01/01/2011 to 12/31/2011 $11.34575 $10.32143 8,067
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.99098 $10.57983 150,188
01/01/2011 to 12/31/2011 $10.57983 $10.43968 82,958
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE EQUITY INCOME PORTFOLIO
FORMERLY, AST ALLIANCEBERNSTEIN CORE VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98463 $10.42678 1,049
01/01/2011 to 12/31/2011 $10.42678 $9.92304 396
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE GLOBAL BOND PORTFOLIO
03/15/2010 to 12/31/2010 $9.97897 $10.20242 946
01/01/2011 to 12/31/2011 $10.20242 $10.27861 8,726
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE LARGE-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.96986 $11.01931 8,318
01/01/2011 to 12/31/2011 $11.01931 $10.48112 2,700
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE NATURAL RESOURCES PORTFOLIO
03/15/2010 to 12/31/2010 $9.85854 $11.35536 14,109
01/01/2011 to 12/31/2011 $11.35536 $9.34768 6,503
-------------------------------------------------------------------------------------------------------------
AST WELLINGTON MANAGEMENT HEDGED EQUITY PORTFOLIO
FORMERLY, AST AGGRESSIVE ASSET ALLOCATION PORTFOLIO
05/02/2011* to 12/31/2011 $9.99728 $8.74046 939
-------------------------------------------------------------------------------------------------------------
AST WESTERN ASSET CORE PLUS BOND PORTFOLIO
03/15/2010 to 12/31/2010 $9.99728 $10.29052 18,664
01/01/2011 to 12/31/2011 $10.29052 $10.55671 18,479
-------------------------------------------------------------------------------------------------------------
FRANKLIN TEMPLETON VIP FOUNDING FUNDS ALLOCATION FUND
03/15/2010 to 12/31/2010 $9.96981 $10.52821 310,853
01/01/2011 to 12/31/2011 $10.52821 $10.01633 139,694
* Denotes the start date of these sub-accounts
PREMIER RETIREMENT B SERIES
PRUCO LIFE INSURANCE COMPANY
PROSPECTUS
ACCUMULATION UNIT VALUES: BASIC DEATH BENEFIT ONLY (1.30%)
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
----------------------------------------------------------------------------------------------------------
AST ACADEMIC STRATEGIES ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.96822 $10.85224 26,061,580
01/01/2011 to 12/31/2011 $10.85224 $10.42656 42,594,262
----------------------------------------------------------------------------------------------------------
AST ADVANCED STRATEGIES PORTFOLIO
03/15/2010 to 12/31/2010 $9.97890 $10.95858 23,763,450
01/01/2011 to 12/31/2011 $10.95858 $10.82832 47,458,243
A-8
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
------------------------------------------------------------------------------------------------------------------
AST AMERICAN CENTURY INCOME & GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $10.00744 $10.85287 814,994
01/01/2011 to 12/31/2011 $10.85287 $11.09452 1,473,637
------------------------------------------------------------------------------------------------------------------
AST BALANCED ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98918 $10.81032 31,826,087
01/01/2011 to 12/31/2011 $10.81032 $10.54027 51,822,696
------------------------------------------------------------------------------------------------------------------
AST BLACKROCK GLOBAL STRATEGIES PORTFOLIO
05/02/2011* to 12/31/2011 $9.99892 $9.18873 9,845,067
------------------------------------------------------------------------------------------------------------------
AST BLACKROCK VALUE PORTFOLIO
FORMERLY, AST VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98653 $10.72651 198,561
01/01/2011 to 12/31/2011 $10.72651 $10.53507 1,075,827
------------------------------------------------------------------------------------------------------------------
AST CAPITAL GROWTH ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.97809 $10.89145 27,069,366
01/01/2011 to 12/31/2011 $10.89145 $10.48915 37,814,832
------------------------------------------------------------------------------------------------------------------
AST CLS GROWTH ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.97818 $11.03265 15,257,174
01/01/2011 to 12/31/2011 $11.03265 $10.62929 26,726,585
------------------------------------------------------------------------------------------------------------------
AST CLS MODERATE ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98798 $10.84421 18,706,448
01/01/2011 to 12/31/2011 $10.84421 $10.50892 34,942,290
------------------------------------------------------------------------------------------------------------------
AST COHEN & STEERS REALTY PORTFOLIO
03/15/2010 to 12/31/2010 $9.96031 $11.84909 846,857
01/01/2011 to 12/31/2011 $11.84909 $12.46608 1,407,302
------------------------------------------------------------------------------------------------------------------
AST FEDERATED AGGRESSIVE GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.97226 $12.22363 439,021
01/01/2011 to 12/31/2011 $12.22363 $10.48304 1,124,729
------------------------------------------------------------------------------------------------------------------
AST FI PYRAMIS(R) ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.99892 $10.93987 8,078,952
01/01/2011 to 12/31/2011 $10.93987 $10.53088 16,343,076
------------------------------------------------------------------------------------------------------------------
AST FIRST TRUST BALANCED TARGET PORTFOLIO
03/15/2010 to 12/31/2010 $9.97640 $11.07430 15,657,160
01/01/2011 to 12/31/2011 $11.07430 $10.76605 30,056,901
------------------------------------------------------------------------------------------------------------------
AST FIRST TRUST CAPITAL APPRECIATION TARGET PORTFOLIO
03/15/2010 to 12/31/2010 $9.96392 $11.57100 16,326,236
01/01/2011 to 12/31/2011 $11.57100 $10.71112 27,779,420
------------------------------------------------------------------------------------------------------------------
AST GLOBAL REAL ESTATE PORTFOLIO
03/15/2010 to 12/31/2010 $9.97060 $11.60747 367,927
01/01/2011 to 12/31/2011 $11.60747 $10.87942 646,128
------------------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS CONCENTRATED GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $10.01892 $10.83890 671,433
01/01/2011 to 12/31/2011 $10.83890 $10.27481 949,802
------------------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS LARGE-CAP VALUE PORTFOLIO
FORMERLY, AST ALLIANCEBERNSTEIN GROWTH & INCOME PORTFOLIO
03/15/2010 to 12/31/2010 $9.99217 $10.82329 770,951
01/01/2011 to 12/31/2011 $10.82329 $10.09318 1,269,237
------------------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS MID-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $10.02025 $11.47753 1,040,702
01/01/2011 to 12/31/2011 $11.47753 $10.99121 1,561,424
------------------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS SMALL-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.96555 $11.55299 1,356,838
01/01/2011 to 12/31/2011 $11.55299 $11.55148 2,116,961
A-9
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
-----------------------------------------------------------------------------------------------------------
AST HIGH YIELD PORTFOLIO
03/15/2010 to 12/31/2010 $9.98490 $10.82146 792,445
01/01/2011 to 12/31/2011 $10.82146 $11.01977 1,710,687
-----------------------------------------------------------------------------------------------------------
AST HORIZON GROWTH ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.97716 $10.93142 10,881,087
01/01/2011 to 12/31/2011 $10.93142 $10.72799 19,401,400
-----------------------------------------------------------------------------------------------------------
AST HORIZON MODERATE ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98867 $10.75964 12,766,919
01/01/2011 to 12/31/2011 $10.75964 $10.56611 22,958,371
-----------------------------------------------------------------------------------------------------------
AST INTERNATIONAL GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.92975 $11.31839 490,015
01/01/2011 to 12/31/2011 $11.31839 $9.72769 771,375
-----------------------------------------------------------------------------------------------------------
AST INTERNATIONAL VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.92962 $10.85463 553,463
01/01/2011 to 12/31/2011 $10.85463 $9.36922 921,394
-----------------------------------------------------------------------------------------------------------
AST INVESTMENT GRADE BOND PORTFOLIO
03/15/2010 to 12/31/2010 $10.00716 $10.65798 10,192
01/01/2011 to 12/31/2011 $10.65798 $11.82865 157,599,837
-----------------------------------------------------------------------------------------------------------
AST JENNISON LARGE-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.97178 $10.83550 346,402
01/01/2011 to 12/31/2011 $10.83550 $10.76565 797,535
-----------------------------------------------------------------------------------------------------------
AST JENNISON LARGE-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.97209 $10.61893 455,800
01/01/2011 to 12/31/2011 $10.61893 $9.86566 872,595
-----------------------------------------------------------------------------------------------------------
AST JPMORGAN INTERNATIONAL EQUITY PORTFOLIO
03/15/2010 to 12/31/2010 $9.92228 $10.61546 1,262,302
01/01/2011 to 12/31/2011 $10.61546 $9.51892 1,916,869
-----------------------------------------------------------------------------------------------------------
AST JPMORGAN STRATEGIC OPPORTUNITIES PORTFOLIO
03/15/2010 to 12/31/2010 $9.99892 $10.64561 8,413,230
01/01/2011 to 12/31/2011 $10.64561 $10.53196 15,572,403
-----------------------------------------------------------------------------------------------------------
AST LARGE-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.99091 $10.67679 376,410
01/01/2011 to 12/31/2011 $10.67679 $10.09724 542,453
-----------------------------------------------------------------------------------------------------------
AST LORD ABBETT CORE-FIXED INCOME PORTFOLIO
FORMERLY, AST LORD ABBETT BOND-DEBENTURE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98910 $10.88074 427,266
01/01/2011 to 12/31/2011 $10.88074 $11.83175 3,033,814
-----------------------------------------------------------------------------------------------------------
AST MARSICO CAPITAL GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.99303 $11.36749 1,061,189
01/01/2011 to 12/31/2011 $11.36749 $11.11743 1,812,224
-----------------------------------------------------------------------------------------------------------
AST MFS GLOBAL EQUITY PORTFOLIO
03/15/2010 to 12/31/2010 $9.98806 $10.95462 1,285,703
01/01/2011 to 12/31/2011 $10.95462 $10.47366 2,094,896
-----------------------------------------------------------------------------------------------------------
AST MFS GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.99892 $10.93006 301,992
01/01/2011 to 12/31/2011 $10.93006 $10.72407 498,962
-----------------------------------------------------------------------------------------------------------
AST MID-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98919 $11.56425 396,950
01/01/2011 to 12/31/2011 $11.56425 $11.02019 757,319
-----------------------------------------------------------------------------------------------------------
AST MONEY MARKET PORTFOLIO
03/15/2010 to 12/31/2010 $9.99893 $9.89691 1,375,388
01/01/2011 to 12/31/2011 $9.89691 $9.77005 4,326,809
A-10
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
-------------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN CORE BOND PORTFOLIO
10/31/2011* to 12/31/2011 $10.02883 $10.07694 93,055
-------------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN MID-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.95922 $11.98881 787,294
01/01/2011 to 12/31/2011 $11.98881 $12.03274 1,707,248
-------------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN SMALL-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.97335 $11.48956 355,836
01/01/2011 to 04/29/2011 $11.48956 $12.90230 0
-------------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN / LSV MID-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.99148 $11.29548 892,994
01/01/2011 to 12/31/2011 $11.29548 $10.87188 1,477,755
-------------------------------------------------------------------------------------------------------------
AST PARAMETRIC EMERGING MARKETS EQUITY PORTFOLIO
03/15/2010 to 12/31/2010 $9.93940 $11.73867 1,846,677
01/01/2011 to 12/31/2011 $11.73867 $9.23763 3,023,669
-------------------------------------------------------------------------------------------------------------
AST PIMCO LIMITED MATURITY BOND PORTFOLIO
03/15/2010 to 12/31/2010 $10.00835 $10.13563 954,564
01/01/2011 to 12/31/2011 $10.13563 $10.22893 2,292,661
-------------------------------------------------------------------------------------------------------------
AST PIMCO TOTAL RETURN BOND PORTFOLIO
03/15/2010 to 12/31/2010 $10.00727 $10.40977 13,733,937
01/01/2011 to 12/31/2011 $10.40977 $10.60112 23,130,649
-------------------------------------------------------------------------------------------------------------
AST PRESERVATION ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98989 $10.65463 19,632,210
01/01/2011 to 12/31/2011 $10.65463 $10.62112 38,352,053
-------------------------------------------------------------------------------------------------------------
AST PRUDENTIAL CORE BOND PORTFOLIO
10/31/2011* to 12/31/2011 $10.01884 $10.07683 225,014
-------------------------------------------------------------------------------------------------------------
AST QMA US EQUITY ALPHA PORTFOLIO
03/15/2010 to 12/31/2010 $9.99892 $10.95026 270,360
01/01/2011 to 12/31/2011 $10.95026 $11.18180 522,206
-------------------------------------------------------------------------------------------------------------
AST QUANTITATIVE MODELING PORTFOLIO
05/02/2011* to 12/31/2011 $9.99892 $8.92125 1,754,314
-------------------------------------------------------------------------------------------------------------
AST SCHRODERS MULTI-ASSET WORLD STRATEGIES PORTFOLIO
03/15/2010 to 12/31/2010 $9.98281 $10.82328 19,393,966
01/01/2011 to 12/31/2011 $10.82328 $10.32161 32,534,496
-------------------------------------------------------------------------------------------------------------
AST SMALL-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.96131 $12.68615 507,467
01/01/2011 to 12/31/2011 $12.68615 $12.39878 1,173,374
-------------------------------------------------------------------------------------------------------------
AST SMALL-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.96474 $11.52948 303,510
01/01/2011 to 12/31/2011 $11.52948 $10.69970 674,683
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.99262 $10.75123 31,800,974
01/01/2011 to 12/31/2011 $10.75123 $10.82213 63,513,321
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE EQUITY INCOME PORTFOLIO
FORMERLY, AST ALLIANCEBERNSTEIN CORE VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98627 $10.59566 611,914
01/01/2011 to 12/31/2011 $10.59566 $10.28660 844,623
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE GLOBAL BOND PORTFOLIO
03/15/2010 to 12/31/2010 $9.98061 $10.36769 967,701
01/01/2011 to 12/31/2011 $10.36769 $10.65495 1,829,798
A-11
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE LARGE-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.97150 $11.19772 1,785,458
01/01/2011 to 12/31/2011 $11.19772 $10.86500 2,911,305
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE NATURAL RESOURCES PORTFOLIO
03/15/2010 to 12/31/2010 $9.86018 $11.53931 1,994,769
01/01/2011 to 12/31/2011 $11.53931 $9.69046 3,623,775
-------------------------------------------------------------------------------------------------------------
AST WELLINGTON MANAGEMENT HEDGED EQUITY PORTFOLIO
FORMERLY, AST AGGRESSIVE ASSET ALLOCATION PORTFOLIO
05/02/2011* to 12/31/2011 $9.99892 $8.85848 4,979,895
-------------------------------------------------------------------------------------------------------------
AST WESTERN ASSET CORE PLUS BOND PORTFOLIO
03/15/2010 to 12/31/2010 $9.99892 $10.45725 2,449,201
01/01/2011 to 12/31/2011 $10.45725 $10.94324 4,779,811
-------------------------------------------------------------------------------------------------------------
FRANKLIN TEMPLETON VIP FOUNDING FUNDS ALLOCATION FUND
03/15/2010 to 12/31/2010 $9.97145 $10.69864 21,975,155
01/01/2011 to 12/31/2011 $10.69864 $10.38336 32,929,829
* Denotes the start date of these sub-accounts
PREMIER RETIREMENT B SERIES
PRUCO LIFE INSURANCE COMPANY
PROSPECTUS
ACCUMULATION UNIT VALUES: WITH COMBO 5%/HAV AND HD GRO II OR COMBO 5%/HAV AND
GRO PLUS II (2.70%)
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
----------------------------------------------------------------------------------------------------------
AST ACADEMIC STRATEGIES ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.96704 $10.72802 170,769
01/01/2011 to 12/31/2011 $10.72802 $10.16130 80,163
----------------------------------------------------------------------------------------------------------
AST ADVANCED STRATEGIES PORTFOLIO
03/15/2010 to 12/31/2010 $9.97773 $10.83318 196,565
01/01/2011 to 12/31/2011 $10.83318 $10.55300 97,519
----------------------------------------------------------------------------------------------------------
AST AMERICAN CENTURY INCOME & GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $10.00626 $10.72883 1,559
01/01/2011 to 12/31/2011 $10.72883 $10.81250 487
----------------------------------------------------------------------------------------------------------
AST BALANCED ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98800 $10.68666 209,022
01/01/2011 to 12/31/2011 $10.68666 $10.27226 133,796
----------------------------------------------------------------------------------------------------------
AST BLACKROCK GLOBAL STRATEGIES PORTFOLIO
05/02/2011* to 12/31/2011 $9.99775 $9.10110 939
----------------------------------------------------------------------------------------------------------
AST BLACKROCK VALUE PORTFOLIO
FORMERLY, AST VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98536 $10.60379 0
01/01/2011 to 12/31/2011 $10.60379 $10.26707 105
----------------------------------------------------------------------------------------------------------
AST BOND PORTFOLIO 2017
03/15/2010 to 12/31/2010 $9.99775 $10.52124 28,782
01/01/2011 to 12/31/2011 $10.52124 $11.40570 637,381
----------------------------------------------------------------------------------------------------------
AST BOND PORTFOLIO 2018
03/15/2010 to 12/31/2010 $10.00645 $10.56381 0
01/01/2011 to 12/31/2011 $10.56381 $11.67506 349,445
A-12
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
------------------------------------------------------------------------------------------------------------------
AST BOND PORTFOLIO 2019
03/15/2010 to 12/31/2010 $9.99775 $10.56667 0
01/01/2011 to 12/31/2011 $10.56667 $11.92426 0
------------------------------------------------------------------------------------------------------------------
AST BOND PORTFOLIO 2020
03/15/2010 to 12/31/2010 $10.00857 $10.59733 0
01/01/2011 to 12/31/2011 $10.59733 $12.23769 59
------------------------------------------------------------------------------------------------------------------
AST BOND PORTFOLIO 2021
03/15/2010 to 12/31/2010 $10.00751 $10.69820 0
01/01/2011 to 12/31/2011 $10.69820 $12.52320 368,195
------------------------------------------------------------------------------------------------------------------
AST BOND PORTFOLIO 2022
01/03/2011* to 12/31/2011 $9.99775 $11.91076 58,451
------------------------------------------------------------------------------------------------------------------
AST CAPITAL GROWTH ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.97692 $10.76684 214,272
01/01/2011 to 12/31/2011 $10.76684 $10.22230 112,785
------------------------------------------------------------------------------------------------------------------
AST CLS GROWTH ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.97700 $10.90649 60,433
01/01/2011 to 12/31/2011 $10.90649 $10.35901 33,097
------------------------------------------------------------------------------------------------------------------
AST CLS MODERATE ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98681 $10.72024 140,238
01/01/2011 to 12/31/2011 $10.72024 $10.24187 51,420
------------------------------------------------------------------------------------------------------------------
AST COHEN & STEERS REALTY PORTFOLIO
03/15/2010 to 12/31/2010 $9.95914 $11.71378 10,696
01/01/2011 to 12/31/2011 $11.71378 $12.14917 3,876
------------------------------------------------------------------------------------------------------------------
AST FEDERATED AGGRESSIVE GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.97108 $12.08395 899
01/01/2011 to 12/31/2011 $12.08395 $10.21630 492
------------------------------------------------------------------------------------------------------------------
AST FI PYRAMIS(R) ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.99775 $10.81480 49,528
01/01/2011 to 12/31/2011 $10.81480 $10.26312 34,198
------------------------------------------------------------------------------------------------------------------
AST FIRST TRUST BALANCED TARGET PORTFOLIO
03/15/2010 to 12/31/2010 $9.97523 $10.94766 125,711
01/01/2011 to 12/31/2011 $10.94766 $10.49225 67,404
------------------------------------------------------------------------------------------------------------------
AST FIRST TRUST CAPITAL APPRECIATION TARGET PORTFOLIO
03/15/2010 to 12/31/2010 $9.96274 $11.43865 118,155
01/01/2011 to 12/31/2011 $11.43865 $10.43861 104,792
------------------------------------------------------------------------------------------------------------------
AST GLOBAL REAL ESTATE PORTFOLIO
03/15/2010 to 12/31/2010 $9.96942 $11.47469 5,561
01/01/2011 to 12/31/2011 $11.47469 $10.60270 1,950
------------------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS CONCENTRATED GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $10.01775 $10.71494 5,368
01/01/2011 to 12/31/2011 $10.71494 $10.01355 1,368
------------------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS LARGE-CAP VALUE PORTFOLIO
FORMERLY, AST ALLIANCEBERNSTEIN GROWTH & INCOME PORTFOLIO
03/15/2010 to 12/31/2010 $9.99100 $10.69949 3,443
01/01/2011 to 12/31/2011 $10.69949 $9.83638 1,782
------------------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS MID-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $10.01907 $11.34646 9,036
01/01/2011 to 12/31/2011 $11.34646 $10.71178 3,866
------------------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS SMALL-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.96438 $11.42102 12,437
01/01/2011 to 12/31/2011 $11.42102 $11.25787 5,011
A-13
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
-----------------------------------------------------------------------------------------------------------
AST HIGH YIELD PORTFOLIO
03/15/2010 to 12/31/2010 $9.98373 $10.69768 7,053
01/01/2011 to 12/31/2011 $10.69768 $10.73964 4,175
-----------------------------------------------------------------------------------------------------------
AST HORIZON GROWTH ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.97599 $10.80651 43,981
01/01/2011 to 12/31/2011 $10.80651 $10.45528 24,067
-----------------------------------------------------------------------------------------------------------
AST HORIZON MODERATE ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98749 $10.63651 72,494
01/01/2011 to 12/31/2011 $10.63651 $10.29738 48,274
-----------------------------------------------------------------------------------------------------------
AST INTERNATIONAL GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.92858 $11.18912 2,179
01/01/2011 to 12/31/2011 $11.18912 $9.48026 1,444
-----------------------------------------------------------------------------------------------------------
AST INTERNATIONAL VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.92845 $10.73053 5,116
01/01/2011 to 12/31/2011 $10.73053 $9.13080 1,473
-----------------------------------------------------------------------------------------------------------
AST JENNISON LARGE-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.97060 $10.71155 978
01/01/2011 to 12/31/2011 $10.71155 $10.49190 691
-----------------------------------------------------------------------------------------------------------
AST JENNISON LARGE-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.97092 $10.49745 1,268
01/01/2011 to 12/31/2011 $10.49745 $9.61464 591
-----------------------------------------------------------------------------------------------------------
AST JPMORGAN INTERNATIONAL EQUITY PORTFOLIO
03/15/2010 to 12/31/2010 $9.92110 $10.49411 7,494
01/01/2011 to 12/31/2011 $10.49411 $9.27676 2,122
-----------------------------------------------------------------------------------------------------------
AST JPMORGAN STRATEGIC OPPORTUNITIES PORTFOLIO
03/15/2010 to 12/31/2010 $9.99775 $10.52387 109,605
01/01/2011 to 12/31/2011 $10.52387 $10.26420 34,237
-----------------------------------------------------------------------------------------------------------
AST LARGE-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98974 $10.55472 0
01/01/2011 to 12/31/2011 $10.55472 $9.84054 5
-----------------------------------------------------------------------------------------------------------
AST LORD ABBETT CORE-FIXED INCOME PORTFOLIO
FORMERLY, AST LORD ABBETT BOND-DEBENTURE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98793 $10.75645 3,124
01/01/2011 to 12/31/2011 $10.75645 $11.53116 2,250
-----------------------------------------------------------------------------------------------------------
AST MARSICO CAPITAL GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.99185 $11.23754 269
01/01/2011 to 12/31/2011 $11.23754 $10.83471 752
-----------------------------------------------------------------------------------------------------------
AST MFS GLOBAL EQUITY PORTFOLIO
03/15/2010 to 12/31/2010 $9.98688 $10.82935 1,534
01/01/2011 to 12/31/2011 $10.82935 $10.20729 1,229
-----------------------------------------------------------------------------------------------------------
AST MFS GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.99775 $10.80508 391
01/01/2011 to 12/31/2011 $10.80508 $10.45133 202
-----------------------------------------------------------------------------------------------------------
AST MID-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98801 $11.43201 2,869
01/01/2011 to 12/31/2011 $11.43201 $10.73996 1,007
-----------------------------------------------------------------------------------------------------------
AST MONEY MARKET PORTFOLIO
03/15/2010 to 12/31/2010 $9.99776 $9.78359 8,153
01/01/2011 to 12/31/2011 $9.78359 $9.52209 3,391
-----------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN CORE BOND PORTFOLIO
10/31/2011* to 12/31/2011 $10.02766 $10.05209 0
A-14
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
-------------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN MID-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.95805 $11.85179 6,638
01/01/2011 to 12/31/2011 $11.85179 $11.72679 2,775
-------------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN SMALL-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.97218 $11.35834 150
01/01/2011 to 04/29/2011 $11.35834 $12.69571 0
-------------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN / LSV MID-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.99030 $11.16638 6,135
01/01/2011 to 12/31/2011 $11.16638 $10.59540 1,821
-------------------------------------------------------------------------------------------------------------
AST PARAMETRIC EMERGING MARKETS EQUITY PORTFOLIO
03/15/2010 to 12/31/2010 $9.93823 $11.60441 10,653
01/01/2011 to 12/31/2011 $11.60441 $9.00244 4,727
-------------------------------------------------------------------------------------------------------------
AST PIMCO LIMITED MATURITY BOND PORTFOLIO
03/15/2010 to 12/31/2010 $10.00718 $10.01971 1,873
01/01/2011 to 12/31/2011 $10.01971 $9.96892 1,154
-------------------------------------------------------------------------------------------------------------
AST PIMCO TOTAL RETURN BOND PORTFOLIO
03/15/2010 to 12/31/2010 $10.00610 $10.29072 186,153
01/01/2011 to 12/31/2011 $10.29072 $10.33172 105,236
-------------------------------------------------------------------------------------------------------------
AST PRESERVATION ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98872 $10.53285 163,174
01/01/2011 to 12/31/2011 $10.53285 $10.35103 97,357
-------------------------------------------------------------------------------------------------------------
AST PRUDENTIAL CORE BOND PORTFOLIO
10/31/2011* to 12/31/2011 $10.01767 $10.05196 0
-------------------------------------------------------------------------------------------------------------
AST QMA US EQUITY ALPHA PORTFOLIO
03/15/2010 to 12/31/2010 $9.99775 $10.82499 1,770
01/01/2011 to 12/31/2011 $10.82499 $10.89734 482
-------------------------------------------------------------------------------------------------------------
AST QUANTITATIVE MODELING PORTFOLIO
05/02/2011* to 12/31/2011 $9.99775 $8.83594 0
-------------------------------------------------------------------------------------------------------------
AST SCHRODERS MULTI-ASSET WORLD STRATEGIES PORTFOLIO
03/15/2010 to 12/31/2010 $9.98163 $10.69944 100,007
01/01/2011 to 12/31/2011 $10.69944 $10.05905 75,435
-------------------------------------------------------------------------------------------------------------
AST SMALL-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.96013 $12.54113 3,649
01/01/2011 to 12/31/2011 $12.54113 $12.08356 1,404
-------------------------------------------------------------------------------------------------------------
AST SMALL-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.96356 $11.39766 2,103
01/01/2011 to 12/31/2011 $11.39766 $10.42757 600
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.99145 $10.62833 209,082
01/01/2011 to 12/31/2011 $10.62833 $10.54700 113,620
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE EQUITY INCOME PORTFOLIO
FORMERLY, AST ALLIANCEBERNSTEIN CORE VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98509 $10.47453 429
01/01/2011 to 12/31/2011 $10.47453 $10.02508 180
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE GLOBAL BOND PORTFOLIO
03/15/2010 to 12/31/2010 $9.97944 $10.24908 3,543
01/01/2011 to 12/31/2011 $10.24908 $10.38419 2,198
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE LARGE-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.97033 $11.06962 1,325
01/01/2011 to 12/31/2011 $11.06962 $10.58857 2,150
A-15
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE NATURAL RESOURCES PORTFOLIO
03/15/2010 to 12/31/2010 $9.85900 $11.40731 27,897
01/01/2011 to 12/31/2011 $11.40731 $9.44376 9,596
-------------------------------------------------------------------------------------------------------------
AST WELLINGTON MANAGEMENT HEDGED EQUITY PORTFOLIO
FORMERLY, AST AGGRESSIVE ASSET ALLOCATION PORTFOLIO
05/02/2011* to 12/31/2011 $9.99775 $8.77381 0
-------------------------------------------------------------------------------------------------------------
AST WESTERN ASSET CORE PLUS BOND PORTFOLIO
03/15/2010 to 12/31/2010 $9.99775 $10.33756 19,082
01/01/2011 to 12/31/2011 $10.33756 $10.66490 8,732
-------------------------------------------------------------------------------------------------------------
FRANKLIN TEMPLETON VIP FOUNDING FUNDS ALLOCATION FUND
03/15/2010 to 12/31/2010 $9.97028 $10.57635 150,872
01/01/2011 to 12/31/2011 $10.57635 $10.11938 78,190
* Denotes the start date of these sub-accounts
PREMIER RETIREMENT L SERIES
PRUCO LIFE INSURANCE COMPANY
PROSPECTUS
ACCUMULATION UNIT VALUES: BASIC DEATH BENEFIT ONLY (1.70%)
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
----------------------------------------------------------------------------------------------------------
AST ACADEMIC STRATEGIES ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.96788 $10.81679 30,764,513
01/01/2011 to 12/31/2011 $10.81679 $10.35039 46,928,622
----------------------------------------------------------------------------------------------------------
AST ADVANCED STRATEGIES PORTFOLIO
03/15/2010 to 12/31/2010 $9.97857 $10.92280 21,103,790
01/01/2011 to 12/31/2011 $10.92280 $10.74947 37,358,515
----------------------------------------------------------------------------------------------------------
AST AMERICAN CENTURY INCOME & GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $10.00710 $10.81739 751,455
01/01/2011 to 12/31/2011 $10.81739 $11.01353 1,598,623
----------------------------------------------------------------------------------------------------------
AST BALANCED ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98884 $10.77509 27,529,956
01/01/2011 to 12/31/2011 $10.77509 $10.46346 41,400,310
----------------------------------------------------------------------------------------------------------
AST BLACKROCK GLOBAL STRATEGIES PORTFOLIO
05/02/2011* to 12/31/2011 $9.99859 $9.16386 8,260,503
----------------------------------------------------------------------------------------------------------
AST BLACKROCK VALUE PORTFOLIO
FORMERLY, AST VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98620 $10.69150 120,198
01/01/2011 to 12/31/2011 $10.69150 $10.45834 772,322
----------------------------------------------------------------------------------------------------------
AST CAPITAL GROWTH ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.97776 $10.85587 30,971,093
01/01/2011 to 12/31/2011 $10.85587 $10.41265 38,111,848
----------------------------------------------------------------------------------------------------------
AST CLS GROWTH ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.97784 $10.99668 15,939,271
01/01/2011 to 12/31/2011 $10.99668 $10.55184 23,481,024
----------------------------------------------------------------------------------------------------------
AST CLS MODERATE ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98765 $10.80894 16,553,746
01/01/2011 to 12/31/2011 $10.80894 $10.43243 26,668,098
A-16
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
------------------------------------------------------------------------------------------------------------------
AST COHEN & STEERS REALTY PORTFOLIO
03/15/2010 to 12/31/2010 $9.95998 $11.81048 770,699
01/01/2011 to 12/31/2011 $11.81048 $12.37513 1,281,208
------------------------------------------------------------------------------------------------------------------
AST FEDERATED AGGRESSIVE GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.97192 $12.18384 426,864
01/01/2011 to 12/31/2011 $12.18384 $10.40658 1,042,929
------------------------------------------------------------------------------------------------------------------
AST FI PYRAMIS(R) ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.99859 $10.90428 7,385,331
01/01/2011 to 12/31/2011 $10.90428 $10.45421 13,531,447
------------------------------------------------------------------------------------------------------------------
AST FIRST TRUST BALANCED TARGET PORTFOLIO
03/15/2010 to 12/31/2010 $9.97607 $11.03811 13,914,602
01/01/2011 to 12/31/2011 $11.03811 $10.68755 23,859,930
------------------------------------------------------------------------------------------------------------------
AST FIRST TRUST CAPITAL APPRECIATION TARGET PORTFOLIO
03/15/2010 to 12/31/2010 $9.96359 $11.53321 18,771,323
01/01/2011 to 12/31/2011 $11.53321 $10.63290 27,741,061
------------------------------------------------------------------------------------------------------------------
AST GLOBAL REAL ESTATE PORTFOLIO
03/15/2010 to 12/31/2010 $9.97026 $11.56952 460,733
01/01/2011 to 12/31/2011 $11.56952 $10.80000 635,517
------------------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS CONCENTRATED GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $10.01859 $10.80359 658,085
01/01/2011 to 12/31/2011 $10.80359 $10.19990 1,034,751
------------------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS LARGE-CAP VALUE PORTFOLIO
FORMERLY, AST ALLIANCEBERNSTEIN GROWTH & INCOME PORTFOLIO
03/15/2010 to 12/31/2010 $9.99184 $10.78790 1,062,982
01/01/2011 to 12/31/2011 $10.78790 $10.01951 1,349,540
------------------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS MID-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $10.01991 $11.44014 1,392,125
01/01/2011 to 12/31/2011 $11.44014 $10.91114 1,843,266
------------------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS SMALL-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.96522 $11.51535 1,228,729
01/01/2011 to 12/31/2011 $11.51535 $11.46720 2,008,504
------------------------------------------------------------------------------------------------------------------
AST HIGH YIELD PORTFOLIO
03/15/2010 to 12/31/2010 $9.98457 $10.78613 1,300,745
01/01/2011 to 12/31/2011 $10.78613 $10.93950 2,241,709
------------------------------------------------------------------------------------------------------------------
AST HORIZON GROWTH ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.97683 $10.89582 11,663,970
01/01/2011 to 12/31/2011 $10.89582 $10.64989 19,028,558
------------------------------------------------------------------------------------------------------------------
AST HORIZON MODERATE ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98833 $10.72450 13,413,172
01/01/2011 to 12/31/2011 $10.72450 $10.48895 22,240,645
------------------------------------------------------------------------------------------------------------------
AST INTERNATIONAL GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.92942 $11.28154 747,119
01/01/2011 to 12/31/2011 $11.28154 $9.65674 913,382
------------------------------------------------------------------------------------------------------------------
AST INTERNATIONAL VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.92929 $10.81917 645,449
01/01/2011 to 12/31/2011 $10.81917 $9.30077 1,102,604
------------------------------------------------------------------------------------------------------------------
AST INVESTMENT GRADE BOND PORTFOLIO
03/15/2010 to 12/31/2010 $10.00682 $10.62325 11,936
01/01/2011 to 12/31/2011 $10.62325 $11.74255 157,644,524
------------------------------------------------------------------------------------------------------------------
AST JENNISON LARGE-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.97144 $10.80010 369,555
01/01/2011 to 12/31/2011 $10.80010 $10.68707 715,742
A-17
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
-----------------------------------------------------------------------------------------------------------
AST JENNISON LARGE-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.97176 $10.58426 647,767
01/01/2011 to 12/31/2011 $10.58426 $9.79363 931,722
-----------------------------------------------------------------------------------------------------------
AST JPMORGAN INTERNATIONAL EQUITY PORTFOLIO
03/15/2010 to 12/31/2010 $9.92194 $10.58075 1,222,927
01/01/2011 to 12/31/2011 $10.58075 $9.44941 1,765,458
-----------------------------------------------------------------------------------------------------------
AST JPMORGAN STRATEGIC OPPORTUNITIES PORTFOLIO
03/15/2010 to 12/31/2010 $9.99859 $10.61090 7,494,738
01/01/2011 to 12/31/2011 $10.61090 $10.45511 12,799,949
-----------------------------------------------------------------------------------------------------------
AST LARGE-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.99058 $10.64194 445,909
01/01/2011 to 12/31/2011 $10.64194 $10.02358 821,379
-----------------------------------------------------------------------------------------------------------
AST LORD ABBETT CORE-FIXED INCOME PORTFOLIO
FORMERLY, AST LORD ABBETT BOND-DEBENTURE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98877 $10.84532 588,204
01/01/2011 to 12/31/2011 $10.84532 $11.74557 3,386,686
-----------------------------------------------------------------------------------------------------------
AST MARSICO CAPITAL GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.99269 $11.33042 1,208,214
01/01/2011 to 12/31/2011 $11.33042 $11.03643 1,826,589
-----------------------------------------------------------------------------------------------------------
AST MFS GLOBAL EQUITY PORTFOLIO
03/15/2010 to 12/31/2010 $9.98772 $10.91885 986,150
01/01/2011 to 12/31/2011 $10.91885 $10.39724 1,850,604
-----------------------------------------------------------------------------------------------------------
AST MFS GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.99859 $10.89440 383,418
01/01/2011 to 12/31/2011 $10.89440 $10.64578 587,566
-----------------------------------------------------------------------------------------------------------
AST MID-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98885 $11.52646 408,851
01/01/2011 to 12/31/2011 $11.52646 $10.93968 738,315
-----------------------------------------------------------------------------------------------------------
AST MONEY MARKET PORTFOLIO
03/15/2010 to 12/31/2010 $9.99860 $9.86455 1,756,415
01/01/2011 to 12/31/2011 $9.86455 $9.69934 4,378,576
-----------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN CORE BOND PORTFOLIO
10/31/2011* to 12/31/2011 $10.02850 $10.06988 90,947
-----------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN MID-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.95889 $11.94964 712,070
01/01/2011 to 12/31/2011 $11.94964 $11.94490 1,362,309
-----------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN SMALL-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.97302 $11.45213 337,443
01/01/2011 to 04/29/2011 $11.45213 $12.84323 0
-----------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN / LSV MID-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.99114 $11.25860 962,132
01/01/2011 to 12/31/2011 $11.25860 $10.79250 1,541,843
-----------------------------------------------------------------------------------------------------------
AST PARAMETRIC EMERGING MARKETS EQUITY PORTFOLIO
03/15/2010 to 12/31/2010 $9.93907 $11.70034 2,484,727
01/01/2011 to 12/31/2011 $11.70034 $9.17013 3,419,207
-----------------------------------------------------------------------------------------------------------
AST PIMCO LIMITED MATURITY BOND PORTFOLIO
03/15/2010 to 12/31/2010 $10.00802 $10.10254 1,452,999
01/01/2011 to 12/31/2011 $10.10254 $10.15429 3,620,347
-----------------------------------------------------------------------------------------------------------
AST PIMCO TOTAL RETURN BOND PORTFOLIO
03/15/2010 to 12/31/2010 $10.00694 $10.37575 16,233,285
01/01/2011 to 12/31/2011 $10.37575 $10.52377 25,947,306
A-18
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
-------------------------------------------------------------------------------------------------------------
AST PRESERVATION ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98956 $10.61981 19,097,676
01/01/2011 to 12/31/2011 $10.61981 $10.54353 35,425,896
-------------------------------------------------------------------------------------------------------------
AST PRUDENTIAL CORE BOND PORTFOLIO
10/31/2011* to 12/31/2011 $10.01851 $10.06978 272,121
-------------------------------------------------------------------------------------------------------------
AST QMA US EQUITY ALPHA PORTFOLIO
03/15/2010 to 12/31/2010 $9.99859 $10.91439 247,126
01/01/2011 to 12/31/2011 $10.91439 $11.10006 545,381
-------------------------------------------------------------------------------------------------------------
AST QUANTITATIVE MODELING PORTFOLIO
05/02/2011* to 12/31/2011 $9.99859 $8.89689 4,804,905
-------------------------------------------------------------------------------------------------------------
AST SCHRODERS MULTI-ASSET WORLD STRATEGIES PORTFOLIO
03/15/2010 to 12/31/2010 $9.98247 $10.78795 23,160,057
01/01/2011 to 12/31/2011 $10.78795 $10.24638 35,666,558
-------------------------------------------------------------------------------------------------------------
AST SMALL-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.96097 $12.64476 546,119
01/01/2011 to 12/31/2011 $12.64476 $12.30830 1,033,660
-------------------------------------------------------------------------------------------------------------
AST SMALL-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.96440 $11.49200 373,436
01/01/2011 to 12/31/2011 $11.49200 $10.62167 635,080
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.99229 $10.71605 24,269,579
01/01/2011 to 12/31/2011 $10.71605 $10.74314 44,365,420
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE EQUITY INCOME PORTFOLIO
FORMERLY, AST ALLIANCEBERNSTEIN CORE VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98593 $10.56101 678,046
01/01/2011 to 12/31/2011 $10.56101 $10.21155 824,490
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE GLOBAL BOND PORTFOLIO
03/15/2010 to 12/31/2010 $9.98028 $10.33385 1,336,731
01/01/2011 to 12/31/2011 $10.33385 $10.57749 2,293,269
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE LARGE-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.97117 $11.16117 1,886,107
01/01/2011 to 12/31/2011 $11.16117 $10.78581 3,234,502
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE NATURAL RESOURCES PORTFOLIO
03/15/2010 to 12/31/2010 $9.85984 $11.50158 2,083,250
01/01/2011 to 12/31/2011 $11.50158 $9.61963 3,652,343
-------------------------------------------------------------------------------------------------------------
AST WELLINGTON MANAGEMENT HEDGED EQUITY PORTFOLIO
FORMERLY, AST AGGRESSIVE ASSET ALLOCATION PORTFOLIO
05/02/2011* to 12/31/2011 $9.99859 $8.83435 4,284,929
-------------------------------------------------------------------------------------------------------------
AST WESTERN ASSET CORE PLUS BOND PORTFOLIO
03/15/2010 to 12/31/2010 $9.99859 $10.42309 2,739,117
01/01/2011 to 12/31/2011 $10.42309 $10.86347 5,381,783
-------------------------------------------------------------------------------------------------------------
FRANKLIN TEMPLETON VIP FOUNDING FUNDS ALLOCATION FUND
03/15/2010 to 12/31/2010 $9.97112 $10.66370 22,435,067
01/01/2011 to 12/31/2011 $10.66370 $10.30757 29,830,471
* Denotes the start date of these sub-accounts
A-19
PREMIER RETIREMENT L SERIES
PRUCO LIFE INSURANCE COMPANY
PROSPECTUS
ACCUMULATION UNIT VALUES: WITH COMBO 5%/HAV AND HD GRO II OR COMBO 5%/HAV AND
GRO PLUS II (3.10%)
Number of
Accumulation Accumulation Accumulation
Unit Value At Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
----------------------------------------------------------------------------------------------------------
AST ACADEMIC STRATEGIES ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.96671 $10.69261 21,185
01/01/2011 to 12/31/2011 $10.69261 $10.08624 17,857
----------------------------------------------------------------------------------------------------------
AST ADVANCED STRATEGIES PORTFOLIO
03/15/2010 to 12/31/2010 $9.97739 $10.79745 29,168
01/01/2011 to 12/31/2011 $10.79745 $10.47512 41,747
----------------------------------------------------------------------------------------------------------
AST AMERICAN CENTURY INCOME & GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $10.00592 $10.69335 2,972
01/01/2011 to 12/31/2011 $10.69335 $10.73257 1,550
----------------------------------------------------------------------------------------------------------
AST BALANCED ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98767 $10.65135 78,854
01/01/2011 to 12/31/2011 $10.65135 $10.19628 34,837
----------------------------------------------------------------------------------------------------------
AST BLACKROCK GLOBAL STRATEGIES PORTFOLIO
05/02/2011* to 12/31/2011 $9.99741 $9.07593 163
----------------------------------------------------------------------------------------------------------
AST BLACKROCK VALUE PORTFOLIO
FORMERLY, AST VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98502 $10.56868 970
01/01/2011 to 12/31/2011 $10.56868 $10.19120 890
----------------------------------------------------------------------------------------------------------
AST BOND PORTFOLIO 2017
03/15/2010 to 12/31/2010 $9.99741 $10.48637 9,886
01/01/2011 to 12/31/2011 $10.48637 $11.32131 280,983
----------------------------------------------------------------------------------------------------------
AST BOND PORTFOLIO 2018
03/15/2010 to 12/31/2010 $10.00612 $10.52885 0
01/01/2011 to 12/31/2011 $10.52885 $11.58868 133,116
----------------------------------------------------------------------------------------------------------
AST BOND PORTFOLIO 2019
03/15/2010 to 12/31/2010 $9.99741 $10.53165 0
01/01/2011 to 12/31/2011 $10.53165 $11.83610 0
----------------------------------------------------------------------------------------------------------
AST BOND PORTFOLIO 2020
03/15/2010 to 12/31/2010 $10.00823 $10.56221 0
01/01/2011 to 12/31/2011 $10.56221 $12.14716 0
----------------------------------------------------------------------------------------------------------
AST BOND PORTFOLIO 2021
03/15/2010 to 12/31/2010 $10.00717 $10.66288 0
01/01/2011 to 12/31/2011 $10.66288 $12.43071 138,180
----------------------------------------------------------------------------------------------------------
AST BOND PORTFOLIO 2022
01/03/2011* to 12/31/2011 $9.99741 $11.86199 14,378
----------------------------------------------------------------------------------------------------------
AST CAPITAL GROWTH ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.97658 $10.73111 136,278
01/01/2011 to 12/31/2011 $10.73111 $10.14668 44,840
----------------------------------------------------------------------------------------------------------
AST CLS GROWTH ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.97667 $10.87045 28,056
01/01/2011 to 12/31/2011 $10.87045 $10.28249 17,039
----------------------------------------------------------------------------------------------------------
AST CLS MODERATE ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98647 $10.68478 15,971
01/01/2011 to 12/31/2011 $10.68478 $10.16604 9,844
A-20
Number of
Accumulation Accumulation Accumulation
Unit Value At Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
-------------------------------------------------------------------------------------------------------------
AST COHEN & STEERS REALTY PORTFOLIO
03/15/2010 to 12/31/2010 $9.95880 $11.67491 402
01/01/2011 to 12/31/2011 $11.67491 $12.05919 237
-------------------------------------------------------------------------------------------------------------
AST FEDERATED AGGRESSIVE GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.97075 $12.04402 43
01/01/2011 to 12/31/2011 $12.04402 $10.14082 113
-------------------------------------------------------------------------------------------------------------
AST FI PYRAMIS(R) ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.99741 $10.77910 28,003
01/01/2011 to 12/31/2011 $10.77910 $10.18727 16,651
-------------------------------------------------------------------------------------------------------------
AST FIRST TRUST BALANCED TARGET PORTFOLIO
03/15/2010 to 12/31/2010 $9.97489 $10.91143 32,740
01/01/2011 to 12/31/2011 $10.91143 $10.41475 25,438
-------------------------------------------------------------------------------------------------------------
AST FIRST TRUST CAPITAL APPRECIATION TARGET PORTFOLIO
03/15/2010 to 12/31/2010 $9.96241 $11.40087 98,922
01/01/2011 to 12/31/2011 $11.40087 $10.36144 33,813
-------------------------------------------------------------------------------------------------------------
AST GLOBAL REAL ESTATE PORTFOLIO
03/15/2010 to 12/31/2010 $9.96908 $11.43692 2,250
01/01/2011 to 12/31/2011 $11.43692 $10.52447 850
-------------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS CONCENTRATED GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $10.01741 $10.67948 670
01/01/2011 to 12/31/2011 $10.67948 $9.93936 224
-------------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS LARGE-CAP VALUE PORTFOLIO
FORMERLY, AST ALLIANCEBERNSTEIN GROWTH &
INCOME PORTFOLIO
03/15/2010 to 12/31/2010 $9.99066 $10.66408 999
01/01/2011 to 12/31/2011 $10.66408 $9.76363 393
-------------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS MID-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $10.01873 $11.30877 8,522
01/01/2011 to 12/31/2011 $11.30877 $10.63239 3,534
-------------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS SMALL-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.96404 $11.38325 6,047
01/01/2011 to 12/31/2011 $11.38325 $11.17453 2,349
-------------------------------------------------------------------------------------------------------------
AST HIGH YIELD PORTFOLIO
03/15/2010 to 12/31/2010 $9.98339 $10.66230 5,117
01/01/2011 to 12/31/2011 $10.66230 $10.66028 2,547
-------------------------------------------------------------------------------------------------------------
AST HORIZON GROWTH ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.97565 $10.77066 9,053
01/01/2011 to 12/31/2011 $10.77066 $10.37784 3,314
-------------------------------------------------------------------------------------------------------------
AST HORIZON MODERATE ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98716 $10.60133 25,834
01/01/2011 to 12/31/2011 $10.60133 $10.22123 13,110
-------------------------------------------------------------------------------------------------------------
AST INTERNATIONAL GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.92824 $11.15207 119
01/01/2011 to 12/31/2011 $11.15207 $9.41014 0
-------------------------------------------------------------------------------------------------------------
AST INTERNATIONAL VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.92811 $10.69498 0
01/01/2011 to 12/31/2011 $10.69498 $9.06313 0
-------------------------------------------------------------------------------------------------------------
AST JENNISON LARGE-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.97026 $10.67604 0
01/01/2011 to 12/31/2011 $10.67604 $10.41409 150
A-21
Number of
Accumulation Accumulation Accumulation
Unit Value At Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
-----------------------------------------------------------------------------------------------------------
AST JENNISON LARGE-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.97058 $10.46272 0
01/01/2011 to 12/31/2011 $10.46272 $9.54353 609
-----------------------------------------------------------------------------------------------------------
AST JPMORGAN INTERNATIONAL EQUITY PORTFOLIO
03/15/2010 to 12/31/2010 $9.92076 $10.45935 2,892
01/01/2011 to 12/31/2011 $10.45935 $9.20807 2,804
-----------------------------------------------------------------------------------------------------------
AST JPMORGAN STRATEGIC OPPORTUNITIES PORTFOLIO
03/15/2010 to 12/31/2010 $9.99741 $10.48911 21,821
01/01/2011 to 12/31/2011 $10.48911 $10.18829 12,596
-----------------------------------------------------------------------------------------------------------
AST LARGE-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98940 $10.51978 381
01/01/2011 to 12/31/2011 $10.51978 $9.76774 0
-----------------------------------------------------------------------------------------------------------
AST LORD ABBETT CORE-FIXED INCOME PORTFOLIO
FORMERLY, AST LORD ABBETT BOND-DEBENTURE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98759 $10.72077 0
01/01/2011 to 12/31/2011 $10.72077 $11.44584 3,372
-----------------------------------------------------------------------------------------------------------
AST MARSICO CAPITAL GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.99152 $11.20032 1,490
01/01/2011 to 12/31/2011 $11.20032 $10.75460 540
-----------------------------------------------------------------------------------------------------------
AST MFS GLOBAL EQUITY PORTFOLIO
03/15/2010 to 12/31/2010 $9.98654 $10.79352 4,063
01/01/2011 to 12/31/2011 $10.79352 $10.13184 2,388
-----------------------------------------------------------------------------------------------------------
AST MFS GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.99741 $10.76921 0
01/01/2011 to 12/31/2011 $10.76921 $10.37396 0
-----------------------------------------------------------------------------------------------------------
AST MID-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98768 $11.39417 0
01/01/2011 to 12/31/2011 $11.39417 $10.66050 75
-----------------------------------------------------------------------------------------------------------
AST MONEY MARKET PORTFOLIO
03/15/2010 to 12/31/2010 $9.99742 $9.75110 46,500
01/01/2011 to 12/31/2011 $9.75110 $9.45154 22,871
-----------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN CORE BOND PORTFOLIO
10/31/2011* to 12/31/2011 $10.02732 $10.04497 0
-----------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN MID-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.95771 $11.81265 0
01/01/2011 to 12/31/2011 $11.81265 $11.64008 67
-----------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN SMALL-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.97184 $11.32074 0
01/01/2011 to 04/29/2011 $11.32074 $12.63664 0
-----------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN / LSV MID-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98997 $11.12942 120
01/01/2011 to 12/31/2011 $11.12942 $10.51702 112
-----------------------------------------------------------------------------------------------------------
AST PARAMETRIC EMERGING MARKETS EQUITY PORTFOLIO
03/15/2010 to 12/31/2010 $9.93789 $11.56611 7,273
01/01/2011 to 12/31/2011 $11.56611 $8.93590 1,727
-----------------------------------------------------------------------------------------------------------
AST PIMCO LIMITED MATURITY BOND PORTFOLIO
03/15/2010 to 12/31/2010 $10.00684 $9.98655 18,130
01/01/2011 to 12/31/2011 $9.98655 $9.89522 10,015
-----------------------------------------------------------------------------------------------------------
AST PIMCO TOTAL RETURN BOND PORTFOLIO
03/15/2010 to 12/31/2010 $10.00576 $10.25672 89,579
01/01/2011 to 12/31/2011 $10.25672 $10.25520 37,788
A-22
Number of
Accumulation Accumulation Accumulation
Unit Value At Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
-------------------------------------------------------------------------------------------------------------
AST PRESERVATION ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98838 $10.49789 53,416
01/01/2011 to 12/31/2011 $10.49789 $10.27441 41,263
-------------------------------------------------------------------------------------------------------------
AST PRUDENTIAL CORE BOND PORTFOLIO
10/31/2011* to 12/31/2011 $10.01733 $10.04487 0
-------------------------------------------------------------------------------------------------------------
AST QMA US EQUITY ALPHA PORTFOLIO
03/15/2010 to 12/31/2010 $9.99741 $10.78915 0
01/01/2011 to 12/31/2011 $10.78915 $10.81676 0
-------------------------------------------------------------------------------------------------------------
AST QUANTITATIVE MODELING PORTFOLIO
05/02/2011* to 12/31/2011 $9.99741 $8.81153 0
-------------------------------------------------------------------------------------------------------------
AST SCHRODERS MULTI-ASSET WORLD STRATEGIES PORTFOLIO
03/15/2010 to 12/31/2010 $9.98130 $10.66410 68,435
01/01/2011 to 12/31/2011 $10.66410 $9.98477 28,608
-------------------------------------------------------------------------------------------------------------
AST SMALL-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.95979 $12.49968 106
01/01/2011 to 12/31/2011 $12.49968 $11.99419 0
-------------------------------------------------------------------------------------------------------------
AST SMALL-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.96322 $11.35991 1,291
01/01/2011 to 12/31/2011 $11.35991 $10.35036 443
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.99111 $10.59310 19,835
01/01/2011 to 12/31/2011 $10.59310 $10.46904 6,894
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE EQUITY INCOME PORTFOLIO
FORMERLY, AST ALLIANCEBERNSTEIN CORE VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98475 $10.43978 0
01/01/2011 to 12/31/2011 $10.43978 $9.95083 154
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE GLOBAL BOND PORTFOLIO
03/15/2010 to 12/31/2010 $9.97910 $10.21510 6,742
01/01/2011 to 12/31/2011 $10.21510 $10.30720 6,593
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE LARGE-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.96999 $11.03301 2,084
01/01/2011 to 12/31/2011 $11.03301 $10.51030 1,018
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE NATURAL RESOURCES PORTFOLIO
03/15/2010 to 12/31/2010 $9.85867 $11.36954 23,386
01/01/2011 to 12/31/2011 $11.36954 $9.37388 8,708
-------------------------------------------------------------------------------------------------------------
AST WELLINGTON MANAGEMENT HEDGED EQUITY PORTFOLIO
FORMERLY, AST AGGRESSIVE ASSET ALLOCATION PORTFOLIO
05/02/2011* to 12/31/2011 $9.99741 $8.74958 513
-------------------------------------------------------------------------------------------------------------
AST WESTERN ASSET CORE PLUS BOND PORTFOLIO
03/15/2010 to 12/31/2010 $9.99741 $10.30343 3,618
01/01/2011 to 12/31/2011 $10.30343 $10.58626 2,172
-------------------------------------------------------------------------------------------------------------
FRANKLIN TEMPLETON VIP FOUNDING FUNDS ALLOCATION FUND
03/15/2010 to 12/31/2010 $9.96994 $10.54128 36,580
01/01/2011 to 12/31/2011 $10.54128 $10.04431 28,670
* Denotes the start date of these sub-accounts
A-23
PREMIER RETIREMENT C SERIES
PRUCO LIFE INSURANCE COMPANY
PROSPECTUS
ACCUMULATION UNIT VALUES: BASIC DEATH BENEFIT ONLY (1.75%)
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
-------------------------------------------------------------------------------------------------------------
AST ACADEMIC STRATEGIES ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.96784 $10.81229 2,034,566
01/01/2011 to 12/31/2011 $10.81229 $10.34079 3,415,308
-------------------------------------------------------------------------------------------------------------
AST ADVANCED STRATEGIES PORTFOLIO
03/15/2010 to 12/31/2010 $9.97853 $10.91830 1,747,701
01/01/2011 to 12/31/2011 $10.91830 $10.73950 2,675,653
-------------------------------------------------------------------------------------------------------------
AST AMERICAN CENTURY INCOME & GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $10.00706 $10.81301 73,873
01/01/2011 to 12/31/2011 $10.81301 $11.00358 98,448
-------------------------------------------------------------------------------------------------------------
AST BALANCED ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98880 $10.77058 2,033,167
01/01/2011 to 12/31/2011 $10.77058 $10.45375 3,325,286
-------------------------------------------------------------------------------------------------------------
AST BLACKROCK GLOBAL STRATEGIES PORTFOLIO
05/02/2011* to 12/31/2011 $9.99855 $9.16071 544,211
-------------------------------------------------------------------------------------------------------------
AST BLACKROCK VALUE PORTFOLIO
FORMERLY, AST VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98616 $10.68707 44,748
01/01/2011 to 12/31/2011 $10.68707 $10.44865 127,344
-------------------------------------------------------------------------------------------------------------
AST CAPITAL GROWTH ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.97772 $10.85132 1,937,824
01/01/2011 to 12/31/2011 $10.85132 $10.40307 2,495,805
-------------------------------------------------------------------------------------------------------------
AST CLS GROWTH ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.97780 $10.99214 734,415
01/01/2011 to 12/31/2011 $10.99214 $10.54213 1,327,653
-------------------------------------------------------------------------------------------------------------
AST CLS MODERATE ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98761 $10.80442 1,168,843
01/01/2011 to 12/31/2011 $10.80442 $10.42280 2,001,044
-------------------------------------------------------------------------------------------------------------
AST COHEN & STEERS REALTY PORTFOLIO
03/15/2010 to 12/31/2010 $9.95994 $11.80558 89,137
01/01/2011 to 12/31/2011 $11.80558 $12.36368 137,541
-------------------------------------------------------------------------------------------------------------
AST FEDERATED AGGRESSIVE GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.97188 $12.17884 50,866
01/01/2011 to 12/31/2011 $12.17884 $10.39703 84,930
-------------------------------------------------------------------------------------------------------------
AST FI PYRAMIS(R) ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.99855 $10.89984 404,169
01/01/2011 to 12/31/2011 $10.89984 $10.44463 784,875
-------------------------------------------------------------------------------------------------------------
AST FIRST TRUST BALANCED TARGET PORTFOLIO
03/15/2010 to 12/31/2010 $9.97603 $11.03356 1,145,809
01/01/2011 to 12/31/2011 $11.03356 $10.67767 1,795,727
-------------------------------------------------------------------------------------------------------------
AST FIRST TRUST CAPITAL APPRECIATION TARGET PORTFOLIO
03/15/2010 to 12/31/2010 $9.96354 $11.52850 1,209,612
01/01/2011 to 12/31/2011 $11.52850 $10.62310 1,717,920
-------------------------------------------------------------------------------------------------------------
AST GLOBAL REAL ESTATE PORTFOLIO
03/15/2010 to 12/31/2010 $9.97022 $11.56479 36,396
01/01/2011 to 12/31/2011 $11.56479 $10.79005 34,529
A-24
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
-----------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS CONCENTRATED GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $10.01855 $10.79913 35,823
01/01/2011 to 12/31/2011 $10.79913 $10.19048 43,964
-----------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS LARGE-CAP VALUE PORTFOLIO
FORMERLY, AST ALLIANCEBERNSTEIN GROWTH &
INCOME PORTFOLIO
03/15/2010 to 12/31/2010 $9.99180 $10.78349 49,020
01/01/2011 to 12/31/2011 $10.78349 $10.01031 53,065
-----------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS MID-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $10.01987 $11.43545 104,734
01/01/2011 to 12/31/2011 $11.43545 $10.90107 140,337
-----------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS SMALL-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.96518 $11.51063 119,251
01/01/2011 to 12/31/2011 $11.51063 $11.45679 146,574
-----------------------------------------------------------------------------------------------------------
AST HIGH YIELD PORTFOLIO
03/15/2010 to 12/31/2010 $9.98452 $10.78171 196,903
01/01/2011 to 12/31/2011 $10.78171 $10.92947 365,275
-----------------------------------------------------------------------------------------------------------
AST HORIZON GROWTH ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.97679 $10.89130 425,193
01/01/2011 to 12/31/2011 $10.89130 $10.64008 1,155,407
-----------------------------------------------------------------------------------------------------------
AST HORIZON MODERATE ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98829 $10.72009 979,508
01/01/2011 to 12/31/2011 $10.72009 $10.47940 1,929,435
-----------------------------------------------------------------------------------------------------------
AST INTERNATIONAL GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.92938 $11.27694 65,902
01/01/2011 to 12/31/2011 $11.27694 $9.64782 66,069
-----------------------------------------------------------------------------------------------------------
AST INTERNATIONAL VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.92925 $10.81483 135,925
01/01/2011 to 12/31/2011 $10.81483 $9.29226 116,371
-----------------------------------------------------------------------------------------------------------
AST INVESTMENT GRADE BOND PORTFOLIO
03/15/2010 to 12/31/2010 $10.00678 $10.61892 2,171
01/01/2011 to 12/31/2011 $10.61892 $11.73180 10,979,505
-----------------------------------------------------------------------------------------------------------
AST JENNISON LARGE-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.97140 $10.79575 57,130
01/01/2011 to 12/31/2011 $10.79575 $10.67737 71,563
-----------------------------------------------------------------------------------------------------------
AST JENNISON LARGE-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.97172 $10.57991 65,272
01/01/2011 to 12/31/2011 $10.57991 $9.78468 71,816
-----------------------------------------------------------------------------------------------------------
AST JPMORGAN INTERNATIONAL EQUITY PORTFOLIO
03/15/2010 to 12/31/2010 $9.92190 $10.57658 198,793
01/01/2011 to 12/31/2011 $10.57658 $9.44081 244,688
-----------------------------------------------------------------------------------------------------------
AST JPMORGAN STRATEGIC OPPORTUNITIES PORTFOLIO
03/15/2010 to 12/31/2010 $9.99855 $10.60650 1,003,418
01/01/2011 to 12/31/2011 $10.60650 $10.44555 1,733,593
-----------------------------------------------------------------------------------------------------------
AST LARGE-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.99054 $10.63757 67,867
01/01/2011 to 12/31/2011 $10.63757 $10.01439 102,771
-----------------------------------------------------------------------------------------------------------
AST LORD ABBETT CORE-FIXED INCOME PORTFOLIO
FORMERLY, AST LORD ABBETT BOND-DEBENTURE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98873 $10.84081 255,361
01/01/2011 to 12/31/2011 $10.84081 $11.73472 573,729
A-25
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
------------------------------------------------------------------------------------------------------------
AST MARSICO CAPITAL GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.99265 $11.32577 121,113
01/01/2011 to 12/31/2011 $11.32577 $11.02625 147,682
------------------------------------------------------------------------------------------------------------
AST MFS GLOBAL EQUITY PORTFOLIO
03/15/2010 to 12/31/2010 $9.98768 $10.91439 101,607
01/01/2011 to 12/31/2011 $10.91439 $10.38774 225,790
------------------------------------------------------------------------------------------------------------
AST MFS GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.99855 $10.88984 53,154
01/01/2011 to 12/31/2011 $10.88984 $10.63594 55,618
------------------------------------------------------------------------------------------------------------
AST MID-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98881 $11.52183 54,932
01/01/2011 to 12/31/2011 $11.52183 $10.92973 53,639
------------------------------------------------------------------------------------------------------------
AST MONEY MARKET PORTFOLIO
03/15/2010 to 12/31/2010 $9.99855 $9.86040 369,181
01/01/2011 to 12/31/2011 $9.86040 $9.69018 918,392
------------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN CORE BOND PORTFOLIO
10/31/2011* to 12/31/2011 $10.02846 $10.06897 18,438
------------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN MID-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.95884 $11.94484 41,457
01/01/2011 to 12/31/2011 $11.94484 $11.93405 76,213
------------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN SMALL-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.97297 $11.44748 45,591
01/01/2011 to 04/29/2011 $11.44748 $12.83593 0
------------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN / LSV MID-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.99110 $11.25415 151,934
01/01/2011 to 12/31/2011 $11.25415 $10.78277 178,543
------------------------------------------------------------------------------------------------------------
AST PARAMETRIC EMERGING MARKETS EQUITY PORTFOLIO
03/15/2010 to 12/31/2010 $9.93903 $11.69549 269,663
01/01/2011 to 12/31/2011 $11.69549 $9.16163 250,430
------------------------------------------------------------------------------------------------------------
AST PIMCO LIMITED MATURITY BOND PORTFOLIO
03/15/2010 to 12/31/2010 $10.00797 $10.09850 364,406
01/01/2011 to 12/31/2011 $10.09850 $10.14512 1,041,349
------------------------------------------------------------------------------------------------------------
AST PIMCO TOTAL RETURN BOND PORTFOLIO
03/15/2010 to 12/31/2010 $10.00690 $10.37151 2,514,210
01/01/2011 to 12/31/2011 $10.37151 $10.51419 3,476,727
------------------------------------------------------------------------------------------------------------
AST PRESERVATION ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98952 $10.61539 3,744,436
01/01/2011 to 12/31/2011 $10.61539 $10.53375 6,646,084
------------------------------------------------------------------------------------------------------------
AST PRUDENTIAL CORE BOND PORTFOLIO
10/31/2011* to 12/31/2011 $10.01847 $10.06887 100,212
------------------------------------------------------------------------------------------------------------
AST QMA US EQUITY ALPHA PORTFOLIO
03/15/2010 to 12/31/2010 $9.99855 $10.90996 60,019
01/01/2011 to 12/31/2011 $10.90996 $11.08995 49,984
------------------------------------------------------------------------------------------------------------
AST QUANTITATIVE MODELING PORTFOLIO
05/02/2011* to 12/31/2011 $9.99855 $8.89388 81,397
------------------------------------------------------------------------------------------------------------
AST SCHRODERS MULTI-ASSET WORLD STRATEGIES PORTFOLIO
03/15/2010 to 12/31/2010 $9.98243 $10.78348 1,562,729
01/01/2011 to 12/31/2011 $10.78348 $10.23692 2,664,320
------------------------------------------------------------------------------------------------------------
AST SMALL-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.96093 $12.63958 70,518
01/01/2011 to 12/31/2011 $12.63958 $12.29711 148,712
A-26
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
-------------------------------------------------------------------------------------------------------------
AST SMALL-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.96436 $11.48713 63,043
01/01/2011 to 12/31/2011 $11.48713 $10.61184 70,466
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.99224 $10.71167 2,123,199
01/01/2011 to 12/31/2011 $10.71167 $10.73326 3,748,039
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE EQUITY INCOME PORTFOLIO
FORMERLY, AST ALLIANCEBERNSTEIN CORE VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98589 $10.55674 81,656
01/01/2011 to 12/31/2011 $10.55674 $10.20221 75,734
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE GLOBAL BOND PORTFOLIO
03/15/2010 to 12/31/2010 $9.98023 $10.32968 130,433
01/01/2011 to 12/31/2011 $10.32968 $10.56776 306,148
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE LARGE-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.97113 $11.15658 153,892
01/01/2011 to 12/31/2011 $11.15658 $10.77586 244,099
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE NATURAL RESOURCES PORTFOLIO
03/15/2010 to 12/31/2010 $9.85980 $11.49684 233,930
01/01/2011 to 12/31/2011 $11.49684 $9.61076 389,530
-------------------------------------------------------------------------------------------------------------
AST WELLINGTON MANAGEMENT HEDGED EQUITY PORTFOLIO
FORMERLY, AST AGGRESSIVE ASSET ALLOCATION PORTFOLIO
05/02/2011* to 12/31/2011 $9.99855 $8.83142 276,533
-------------------------------------------------------------------------------------------------------------
AST WESTERN ASSET CORE PLUS BOND PORTFOLIO
03/15/2010 to 12/31/2010 $9.99855 $10.41878 388,377
01/01/2011 to 12/31/2011 $10.41878 $10.85342 775,193
-------------------------------------------------------------------------------------------------------------
FRANKLIN TEMPLETON VIP FOUNDING FUNDS ALLOCATION FUND
03/15/2010 to 12/31/2010 $9.97108 $10.65939 1,234,022
01/01/2011 to 12/31/2011 $10.65939 $10.29816 1,818,753
* Denotes the start date of these sub-accounts
PREMIER RETIREMENT C SERIES
PRUCO LIFE INSURANCE COMPANY
PROSPECTUS
ACCUMULATION UNIT VALUES: WITH COMBO 5%/HAV AND HD GRO II OR COMBO 5%/HAV AND
GRO PLUS II (3.15%)
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
----------------------------------------------------------------------------------------------------------
AST ACADEMIC STRATEGIES ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.96666 $10.68813 25,772
01/01/2011 to 12/31/2011 $10.68813 $10.07677 12,480
----------------------------------------------------------------------------------------------------------
AST ADVANCED STRATEGIES PORTFOLIO
03/15/2010 to 12/31/2010 $9.97735 $10.79288 4,329
01/01/2011 to 12/31/2011 $10.79288 $10.46517 1,686
----------------------------------------------------------------------------------------------------------
AST AMERICAN CENTURY INCOME & GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $10.00588 $10.68884 509
01/01/2011 to 12/31/2011 $10.68884 $10.72234 283
----------------------------------------------------------------------------------------------------------
AST BALANCED ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98762 $10.64688 0
01/01/2011 to 12/31/2011 $10.64688 $10.18677 0
A-27
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
-------------------------------------------------------------------------------------------------------------
AST BLACKROCK GLOBAL STRATEGIES PORTFOLIO
05/02/2011* to 12/31/2011 $9.99737 $9.07275 0
-------------------------------------------------------------------------------------------------------------
AST BLACKROCK VALUE PORTFOLIO
FORMERLY, AST VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98498 $10.56426 0
01/01/2011 to 12/31/2011 $10.56426 $10.18166 0
-------------------------------------------------------------------------------------------------------------
AST BOND PORTFOLIO 2017
03/15/2010 to 12/31/2010 $9.99737 $10.48198 0
01/01/2011 to 12/31/2011 $10.48198 $11.31079 22,632
-------------------------------------------------------------------------------------------------------------
AST BOND PORTFOLIO 2018
03/15/2010 to 12/31/2010 $10.00607 $10.52439 0
01/01/2011 to 12/31/2011 $10.52439 $11.57785 81,083
-------------------------------------------------------------------------------------------------------------
AST BOND PORTFOLIO 2019
03/15/2010 to 12/31/2010 $9.99737 $10.52727 0
01/01/2011 to 12/31/2011 $10.52727 $11.82506 0
-------------------------------------------------------------------------------------------------------------
AST BOND PORTFOLIO 2020
03/15/2010 to 12/31/2010 $10.00819 $10.55776 0
01/01/2011 to 12/31/2011 $10.55776 $12.13573 0
-------------------------------------------------------------------------------------------------------------
AST BOND PORTFOLIO 2021
03/15/2010 to 12/31/2010 $10.00713 $10.65842 0
01/01/2011 to 12/31/2011 $10.65842 $12.41931 11,924
-------------------------------------------------------------------------------------------------------------
AST BOND PORTFOLIO 2022
01/03/2011* to 12/31/2011 $9.99737 $11.85586 7,595
-------------------------------------------------------------------------------------------------------------
AST CAPITAL GROWTH ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.97654 $10.72680 27,750
01/01/2011 to 12/31/2011 $10.72680 $10.13738 18,154
-------------------------------------------------------------------------------------------------------------
AST CLS GROWTH ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.97662 $10.86594 0
01/01/2011 to 12/31/2011 $10.86594 $10.27282 0
-------------------------------------------------------------------------------------------------------------
AST CLS MODERATE ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98643 $10.68027 1,516
01/01/2011 to 12/31/2011 $10.68027 $10.15662 5,998
-------------------------------------------------------------------------------------------------------------
AST COHEN & STEERS REALTY PORTFOLIO
03/15/2010 to 12/31/2010 $9.95876 $11.67022 0
01/01/2011 to 12/31/2011 $11.67022 $12.04822 0
-------------------------------------------------------------------------------------------------------------
AST FEDERATED AGGRESSIVE GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.97070 $12.03897 0
01/01/2011 to 12/31/2011 $12.03897 $10.13136 0
-------------------------------------------------------------------------------------------------------------
AST FI PYRAMIS(R) ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.99737 $10.77453 0
01/01/2011 to 12/31/2011 $10.77453 $10.17772 0
-------------------------------------------------------------------------------------------------------------
AST FIRST TRUST BALANCED TARGET PORTFOLIO
03/15/2010 to 12/31/2010 $9.97485 $10.90682 24,028
01/01/2011 to 12/31/2011 $10.90682 $10.40498 9,697
-------------------------------------------------------------------------------------------------------------
AST FIRST TRUST CAPITAL APPRECIATION TARGET PORTFOLIO
03/15/2010 to 12/31/2010 $9.96236 $11.39622 16,090
01/01/2011 to 12/31/2011 $11.39622 $10.35183 13,018
-------------------------------------------------------------------------------------------------------------
AST GLOBAL REAL ESTATE PORTFOLIO
03/15/2010 to 12/31/2010 $9.96904 $11.43200 0
01/01/2011 to 12/31/2011 $11.43200 $10.51446 0
A-28
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
------------------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS CONCENTRATED GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $10.01737 $10.67505 0
01/01/2011 to 12/31/2011 $10.67505 $9.93022 0
------------------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS LARGE-CAP VALUE PORTFOLIO
FORMERLY, AST ALLIANCEBERNSTEIN GROWTH & INCOME PORTFOLIO
03/15/2010 to 12/31/2010 $9.99062 $10.65958 0
01/01/2011 to 12/31/2011 $10.65958 $9.75450 0
------------------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS MID-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $10.01869 $11.30416 0
01/01/2011 to 12/31/2011 $11.30416 $10.62257 0
------------------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS SMALL-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.96400 $11.37837 376
01/01/2011 to 12/31/2011 $11.37837 $11.16407 209
------------------------------------------------------------------------------------------------------------------
AST HIGH YIELD PORTFOLIO
03/15/2010 to 12/31/2010 $9.98334 $10.65785 0
01/01/2011 to 12/31/2011 $10.65785 $10.65035 0
------------------------------------------------------------------------------------------------------------------
AST HORIZON GROWTH ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.97561 $10.76623 0
01/01/2011 to 12/31/2011 $10.76623 $10.36828 0
------------------------------------------------------------------------------------------------------------------
AST HORIZON MODERATE ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98711 $10.59691 2,695
01/01/2011 to 12/31/2011 $10.59691 $10.21172 1,268
------------------------------------------------------------------------------------------------------------------
AST INTERNATIONAL GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.92820 $11.14735 0
01/01/2011 to 12/31/2011 $11.14735 $9.40131 0
------------------------------------------------------------------------------------------------------------------
AST INTERNATIONAL VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.92807 $10.69064 0
01/01/2011 to 12/31/2011 $10.69064 $9.05485 0
------------------------------------------------------------------------------------------------------------------
AST JENNISON LARGE-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.97022 $10.67165 0
01/01/2011 to 12/31/2011 $10.67165 $10.40451 0
------------------------------------------------------------------------------------------------------------------
AST JENNISON LARGE-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.97054 $10.45834 0
01/01/2011 to 12/31/2011 $10.45834 $9.53461 0
------------------------------------------------------------------------------------------------------------------
AST JPMORGAN INTERNATIONAL EQUITY PORTFOLIO
03/15/2010 to 12/31/2010 $9.92072 $10.45502 0
01/01/2011 to 12/31/2011 $10.45502 $9.19945 0
------------------------------------------------------------------------------------------------------------------
AST JPMORGAN STRATEGIC OPPORTUNITIES PORTFOLIO
03/15/2010 to 12/31/2010 $9.99737 $10.48468 11,371
01/01/2011 to 12/31/2011 $10.48468 $10.17871 4,894
------------------------------------------------------------------------------------------------------------------
AST LARGE-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98936 $10.51537 0
01/01/2011 to 12/31/2011 $10.51537 $9.75858 0
------------------------------------------------------------------------------------------------------------------
AST LORD ABBETT CORE-FIXED INCOME PORTFOLIO
FORMERLY, AST LORD ABBETT BOND-DEBENTURE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98755 $10.71635 0
01/01/2011 to 12/31/2011 $10.71635 $11.43521 0
------------------------------------------------------------------------------------------------------------------
AST MARSICO CAPITAL GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.99147 $11.19566 0
01/01/2011 to 12/31/2011 $11.19566 $10.74445 353
A-29
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
------------------------------------------------------------------------------------------------------------
AST MFS GLOBAL EQUITY PORTFOLIO
03/15/2010 to 12/31/2010 $9.98650 $10.78896 991
01/01/2011 to 12/31/2011 $10.78896 $10.12224 580
------------------------------------------------------------------------------------------------------------
AST MFS GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.99737 $10.76474 0
01/01/2011 to 12/31/2011 $10.76474 $10.36420 0
------------------------------------------------------------------------------------------------------------
AST MID-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98763 $11.38945 0
01/01/2011 to 12/31/2011 $11.38945 $10.65051 0
------------------------------------------------------------------------------------------------------------
AST MONEY MARKET PORTFOLIO
03/15/2010 to 12/31/2010 $9.99738 $9.74705 131
01/01/2011 to 12/31/2011 $9.74705 $9.44271 80
------------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN CORE BOND PORTFOLIO
10/31/2011* to 12/31/2011 $10.02728 $10.04409 0
------------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN MID-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.95766 $11.80765 0
01/01/2011 to 12/31/2011 $11.80765 $11.62918 0
------------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN SMALL-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.97179 $11.31606 0
01/01/2011 to 04/29/2011 $11.31606 $12.62932 0
------------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN / LSV MID-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98992 $11.12480 500
01/01/2011 to 12/31/2011 $11.12480 $10.50718 288
------------------------------------------------------------------------------------------------------------
AST PARAMETRIC EMERGING MARKETS EQUITY PORTFOLIO
03/15/2010 to 12/31/2010 $9.93785 $11.56130 340
01/01/2011 to 12/31/2011 $11.56130 $8.92749 235
------------------------------------------------------------------------------------------------------------
AST PIMCO LIMITED MATURITY BOND PORTFOLIO
03/15/2010 to 12/31/2010 $10.00679 $9.98227 2,155
01/01/2011 to 12/31/2011 $9.98227 $9.88577 1,471
------------------------------------------------------------------------------------------------------------
AST PIMCO TOTAL RETURN BOND PORTFOLIO
03/15/2010 to 12/31/2010 $10.00572 $10.25235 2,432
01/01/2011 to 12/31/2011 $10.25235 $10.24571 1,698
------------------------------------------------------------------------------------------------------------
AST PRESERVATION ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.98834 $10.49355 13,064
01/01/2011 to 12/31/2011 $10.49355 $10.26483 6,907
------------------------------------------------------------------------------------------------------------
AST PRUDENTIAL CORE BOND PORTFOLIO
10/31/2011* to 12/31/2011 $10.01729 $10.04397 0
------------------------------------------------------------------------------------------------------------
AST QMA US EQUITY ALPHA PORTFOLIO
03/15/2010 to 12/31/2010 $9.99737 $10.78463 0
01/01/2011 to 12/31/2011 $10.78463 $10.80665 0
------------------------------------------------------------------------------------------------------------
AST QUANTITATIVE MODELING PORTFOLIO
05/02/2011* to 12/31/2011 $9.99737 $8.80844 0
------------------------------------------------------------------------------------------------------------
AST SCHRODERS MULTI-ASSET WORLD STRATEGIES PORTFOLIO
03/15/2010 to 12/31/2010 $9.98125 $10.65964 4,647
01/01/2011 to 12/31/2011 $10.65964 $9.97537 4,121
------------------------------------------------------------------------------------------------------------
AST SMALL-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.95975 $12.49444 0
01/01/2011 to 12/31/2011 $12.49444 $11.98301 0
------------------------------------------------------------------------------------------------------------
AST SMALL-CAP VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.96318 $11.35515 0
01/01/2011 to 12/31/2011 $11.35515 $10.34059 0
A-30
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Sub-Accounts Beginning of Period End of Period End of Period
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE ASSET ALLOCATION PORTFOLIO
03/15/2010 to 12/31/2010 $9.99106 $10.58861 7,496
01/01/2011 to 12/31/2011 $10.58861 $10.45913 3,445
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE EQUITY INCOME PORTFOLIO
FORMERLY, AST ALLIANCEBERNSTEIN CORE VALUE PORTFOLIO
03/15/2010 to 12/31/2010 $9.98471 $10.43543 0
01/01/2011 to 12/31/2011 $10.43543 $9.94161 0
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE GLOBAL BOND PORTFOLIO
03/15/2010 to 12/31/2010 $9.97905 $10.21091 974
01/01/2011 to 12/31/2011 $10.21091 $10.29784 580
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE LARGE-CAP GROWTH PORTFOLIO
03/15/2010 to 12/31/2010 $9.96995 $11.02841 491
01/01/2011 to 12/31/2011 $11.02841 $10.50050 279
-------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE NATURAL RESOURCES PORTFOLIO
03/15/2010 to 12/31/2010 $9.85862 $11.36484 255
01/01/2011 to 12/31/2011 $11.36484 $9.36523 153
-------------------------------------------------------------------------------------------------------------
AST WELLINGTON MANAGEMENT HEDGED EQUITY PORTFOLIO
FORMERLY, AST AGGRESSIVE ASSET ALLOCATION PORTFOLIO
05/02/2011* to 12/31/2011 $9.99737 $8.74653 0
-------------------------------------------------------------------------------------------------------------
AST WESTERN ASSET CORE PLUS BOND PORTFOLIO
03/15/2010 to 12/31/2010 $9.99737 $10.29910 1,222
01/01/2011 to 12/31/2011 $10.29910 $10.57630 771
-------------------------------------------------------------------------------------------------------------
FRANKLIN TEMPLETON VIP FOUNDING FUNDS ALLOCATION FUND
03/15/2010 to 12/31/2010 $9.96990 $10.53697 2,458
01/01/2011 to 12/31/2011 $10.53697 $10.03503 3,725
* Denotes the start date of these sub-accounts
A-31
APPENDIX B - SELECTING THE VARIABLE ANNUITY THAT'S RIGHT FOR YOU
Pruco Life Insurance Company offers several deferred variable annuity
products. Each annuity, (X, L, B, C Series), has different features and
benefits that may be appropriate for you based on your individual financial
situation and how you intend to use the annuity. Not all of these annuities
may be available to you, depending on factors such as the broker-dealer
through which your annuity was sold. You can verify which of these annuities
is available to you by speaking to your Financial Professional or calling
1-888-PRU-2888.
Among the factors you should consider when choosing which annuity product and
benefit may be most appropriate for your individual needs are the following:
.. Your age;
.. The amount of your investment and any planned future Purchase Payments into
the annuity,
.. How long you intend to hold the annuity (also referred to as investment
time horizon);
.. Your desire to make withdrawals from the annuity and the timing thereof;
.. Your investment objectives;
.. The guarantees optional benefits may provide
.. Your desire to minimize costs and/or maximize return associated with the
annuity.
You can compare the costs of the X-Series, L-Series, B-Series, and C-Series by
examining the section in this prospectus entitled "Summary of Contract Fees
and Charges". There are trade-offs associated with the costs and benefits
provided by each of the Series. Generally, shorter-term CDSC products such as
the C-Series and L-Series provide higher Surrender Value in short-duration
scenarios, while long-term CDSC classes such as the B-Series and X-Series
provide higher Surrender Values in long-term scenarios. Please note, while the
Insurance Charges differ among the Series, beginning after the 9th Annuity
Year they are all equal.
In choosing which Series to purchase, you should consider the features and the
associated costs that offer the greatest value to you. The different features
may include:
.. Variations on your ability to access funds in your Annuity without the
imposition of a Contingent Deferred Sales Charge (CDSC),
.. Different ongoing fees and charges you pay to stay in the Annuity,
.. Purchase Credits made available.
An Annuity without CDSC or a shorter CDSC may provide flexibility and greater
Surrender Value in earlier years; however, if you intend to hold the Annuity
long term, it may result in a trade off for value in later years. An Annuity
that provides a Purchase Credit has a higher Insurance Charge until after the
9th Annuity Year and a longer CDSC period than other Annuities without a
Purchase Credit. However, the Purchase Credit may add long term value.
The following chart outlines some of the different features for each Annuity
sold through this prospectus. The availability of optional benefits, such as
those noted in the chart, increase the total cost of the Annuity. Certain
living benefits are intended to address longevity risks or market risk. You
should consider whether your need for a living benefit alters your time
horizon and then ultimately your share class decision. You should carefully
consider which features you plan to use when selecting your annuity, and the
impact of such features in relation to your investment objectives and which
share class may be most appropriate for you.
To demonstrate the impact of the various expense structures, the hypothetical
examples on the following pages reflect the Account Value and Surrender Value
of each Annuity over a variety of holding periods. These charts reflect the
impact of different hypothetical rates of return and the comparable value of
each of the Annuities (which reflects the charges associated with each
Annuity) under the assumptions noted.
PRUCO LIFE PRODUCT COMPARISON
Below is a summary of Pruco Life's annuity products sold through this
prospectus. X Series refers to Prudential Premier Retirement Variable Annuity
X Series, B Series refers to Prudential Premier Retirement Variable Annuity B
Series, L Series refers to Prudential Premier Retirement Variable Annuity L
Series, and C Series refers to Prudential Premier Retirement Variable Annuity
C Series. Your registered Financial Professional can provide you with the
prospectus for the underlying portfolios and can guide you through Selecting
the Annuity That's Right For You and help you decide upon the Annuity that
would be most advantageous for you given your individual needs. Please read
the prospectus carefully before investing. Pruco Life Insurance Company does
not make recommendations or provide investment advice. Please note that X
Series Annuities sold in Connecticut have a different CDSC schedule.
B-1
Annuity Comparison X Series B Series L Series C Series
-------------------------------------------------------------------------------------------------------------------
Minimum Investment $10,000 $1,000 $10,000 $10,000
-------------------------------------------------------------------------------------------------------------------
Maximum Issue Age 80 85 85 85
-------------------------------------------------------------------------------------------------------------------
Contingent Deferred Sales 9 Years 7 Years 4 Years N/A
Charge Schedule (9%, 9%, 9%, 9%, 8%, (7%, 7%, 6%, 6%, 5%, (7%, 7%, 6%, 5%)
(Based on date of each 8%, 8%, 5%, 2.5%) 5%, 5%)
purchase payment)
May vary by state
-------------------------------------------------------------------------------------------------------------------
Total Insurance Charge 1.85% 1.30% 1.70% 1.75%
(during first 9 Annuity
Years)
-------------------------------------------------------------------------------------------------------------------
Total Insurance Charge 1.30%
(after 9th Annuity Year)
-------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee Lesser of:
$50, or
2% of Unadjusted
Account Value
Waived for
Premiums =(greater than) $100k
-------------------------------------------------------------------------------------------------------------------
Purchase Credit Yes, based on purchase No No No
payments
Yrs 1-4:
6% (3% age 82+)
Yrs 5+: N/A
Recaptured in certain
circumstances
-------------------------------------------------------------------------------------------------------------------
MVA Options 6 and 12 month
DCA MVA options;
3-, 5-, 7-& 10-yr MVA
Options
-------------------------------------------------------------------------------------------------------------------
Variable Investment Advanced Series Trust
Options (Not all options
available with certain
optional benefits)
-------------------------------------------------------------------------------------------------------------------
Minimum Death Benefit Greater of: Greater of:
Purchase payments Purchase payments
minus proportional minus proportional
withdrawals, and withdrawals, and
Unadjusted Unadjusted
Account Value, Account Value
Less any Purchase Credits
recaptured in certain
circumstances
-------------------------------------------------------------------------------------------------------------------
Optional Living Benefits HDI 2.0
(for an additional cost) HDI 2.0 with LIA
SHDI 2.0
HDI 2.0 with HD DB
SHDI 2.0 with HD DB
HD GRO II;
GRO Plus II
-------------------------------------------------------------------------------------------------------------------
HYPOTHETICAL ILLUSTRATION
The following examples outline the value of each Annuity as well as the amount
that would be available to an investor as a full surrender at the end of each
of the Annuity Years specified. The values shown below are based on the
following assumptions: An initial investment of $100,000 is made into each
Annuity earning a gross rate of return of 0% and 6% and 10%, respectively.
No additional Purchase Payments or withdrawals are made from the Annuity. The
hypothetical gross rates of return are reduced by the arithmetic average of
the fees and expenses of the underlying portfolios and the charges that are
deducted from the Annuity at the Separate Account level (which is 1.07% for
all Series) based on the fees and expenses of the applicable underlying
portfolios as of December 31, 2011. The arithmetic average of all fund
expenses is computed by adding portfolio management fees, 12b-1 fees and other
expenses of all the underlying portfolios and then dividing by the number of
portfolios. For purposes of the illustrations, we do not reflect any expense
reimbursements or expense waivers that might apply and are described in the
prospectus fee table. The Separate Account level charges refer to the
Insurance Charge.
The Account Value and Surrender Value are further reduced by the Annual
Maintenance Fee, if applicable. For X-Series, the Account Value and Surrender
Value also reflect the addition of any applicable Purchase Credits.
B-2
The Account Value assumes no surrender, while the Surrender Value assumes a
100% surrender two days prior to the anniversary of the Issue Date of the
Annuity ("Annuity Anniversary"), therefore reflecting the CDSC applicable to
that Annuity Year. Note that a withdrawal on the Annuity Anniversary, or the
day before the Annuity Anniversary, would be subject to the CDSC applicable to
the next Annuity Year, which may be lower. The CDSC is calculated based on the
date that the Purchase Payment was made and for purposes of these examples, we
assume that a single Purchase Payment of $100,000 was made on the Issue Date.
The values that you actually experience under an Annuity will be different
from what is depicted here if any of the assumptions we make here differ from
your circumstances, however the relative values for each Annuity reflected
below will remain the same. (We will provide your Financial Professional with
a personalized illustration upon request).
If, for an additional fee, you elect an optional living benefit that has a
Protected Withdrawal Value (PWV), the expenses will be higher and the values
will differ from those shown in the charts below. Similar to Account and
Surrender Values, the PWV will differ by share class. Typically, the share
class with the higher Account Value will translate into a relatively higher
PWV, unless the net rate of return is below the roll-up rate, where the PWV of
the C, L and B would all grow equally by the guaranteed amount. The X Series,
because of the impact of the Purchase Credit applied to the Account Value,
will yield the relatively highest PWV in all scenarios. If the minimum
guarantee(s) increases the PWV, the PWV of C, L, and B would all be equal at
that time. The X Series would yield the highest PWV with the minimum
guarantee(s) due to the impact of the Purchase Credit.
0% GROSS RATE OF RETURN
-----------------------------------------------------------------------------------------------
0% Gross Rate of Return 0% Gross Rate of Return 0% Gross Rate of Return 0% Gross Rate of Return
L Share B Share X Share C Share
-----------------------------------------------------------------------------------------------
Net rate of return Net rate of return Net rate of return Net rate of return
Yrs 1-10 -2.75% All years -2.36% Yrs 1-10 -2.90% Yrs 1-10 -2.80%
Yrs 10+ -2.36% Yrs 10+ -2.36% Yrs 10+ -2.36%
-----------------------------------------------------------------------------------------------
Annuity Contract Surrender Contract Surrender Contract Surrender Contract Surrender
Year Value Value Value Value Value Value Value Value
-------------------------------------------------------------------------------------------------------
1 97,256 90,256 97,650 90,650 102,934 93,934 97,206 97,206
-------------------------------------------------------------------------------------------------------
2 94,579 87,579 95,350 88,350 99,949 90,949 94,483 94,483
-------------------------------------------------------------------------------------------------------
3 91,977 85,977 93,103 87,103 97,050 88,050 91,837 91,837
-------------------------------------------------------------------------------------------------------
4 89,446 84,446 90,909 84,909 94,235 85,235 89,264 89,264
-------------------------------------------------------------------------------------------------------
5 86,984 86,984 88,768 83,768 91,502 83,502 86,763 86,763
-------------------------------------------------------------------------------------------------------
6 84,591 84,591 86,676 81,676 88,849 80,849 84,333 84,333
-------------------------------------------------------------------------------------------------------
7 82,263 82,263 84,634 79,634 86,272 78,272 81,971 81,971
-------------------------------------------------------------------------------------------------------
8 79,999 79,999 82,640 82,640 83,770 78,770 79,674 79,674
-------------------------------------------------------------------------------------------------------
9 77,798 77,798 80,693 80,693 81,340 78,840 77,442 77,442
-------------------------------------------------------------------------------------------------------
10 75,657 75,657 78,792 78,792 78,981 78,981 75,273 75,273
-------------------------------------------------------------------------------------------------------
11 73,874 73,874 76,935 76,935 77,119 77,119 73,499 73,499
-------------------------------------------------------------------------------------------------------
12 72,133 72,133 75,123 75,123 75,302 75,302 71,767 71,767
-------------------------------------------------------------------------------------------------------
13 70,433 70,433 73,353 73,353 73,528 73,528 70,076 70,076
-------------------------------------------------------------------------------------------------------
14 68,774 68,774 71,624 71,624 71,796 71,796 68,425 68,425
-------------------------------------------------------------------------------------------------------
15 67,154 67,154 69,937 69,937 70,104 70,104 66,813 66,813
-------------------------------------------------------------------------------------------------------
16 65,571 65,571 68,289 68,289 68,452 68,452 65,239 65,239
-------------------------------------------------------------------------------------------------------
17 64,027 64,027 66,680 66,680 66,840 66,840 63,702 63,702
-------------------------------------------------------------------------------------------------------
18 62,518 62,518 65,109 65,109 65,265 65,265 62,201 62,201
-------------------------------------------------------------------------------------------------------
19 61,045 61,045 63,575 63,575 63,727 63,727 60,735 60,735
-------------------------------------------------------------------------------------------------------
20 59,607 59,607 62,077 62,077 62,226 62,226 59,304 59,304
-------------------------------------------------------------------------------------------------------
21 58,202 58,202 60,615 60,615 60,759 60,759 57,907 57,907
-------------------------------------------------------------------------------------------------------
22 56,831 56,831 59,186 59,186 59,328 59,328 56,543 56,543
-------------------------------------------------------------------------------------------------------
23 55,492 55,492 57,792 57,792 57,930 57,930 55,210 55,210
-------------------------------------------------------------------------------------------------------
24 54,185 54,185 56,430 56,430 56,565 56,565 53,910 53,910
-------------------------------------------------------------------------------------------------------
25 52,908 52,908 55,101 55,101 55,233 55,233 52,639 52,639
-------------------------------------------------------------------------------------------------------
ASSUMPTIONS:
a. $100,000 initial investment
b. Fund Expenses = 1.07%
c. No optional death benefits or living benefits elected
d. Annuity was issued on or after May 1, 2012
e. Surrender value assumes surrender 2 days before Annuity Anniversary
B-3
The shaded values indicate the highest Surrender Values in that year based on
the stated assumptions. Assuming a 0% gross annual return, the C-Series has
the highest Surrender Value in the first four Annuity Years, the L-Series has
the highest Surrender Value in Annuity Years five, six and seven, the B-Series
has the highest Surrender Value in Annuity Years eight and nine, and the
X-Series has the highest Surrender Value from the tenth Annuity Year on.
For X Series Annuities issued in the state of Connecticut:
Due to the state-specific CDSC schedule for X Series Annuities issued in
Connecticut, the Surrender Values shown above may differ. Please refer to
Appendix F for details.
6% GROSS RATE OF RETURN
-----------------------------------------------------------------------------------------------
6% Gross Rate of Return 6% Gross Rate of Return 6% Gross Rate of Return 6% Gross Rate of Return
L Share B Share X Share C Share
-----------------------------------------------------------------------------------------------
Net rate of return Net rate of return Net rate of return Net rate of return
Yrs 1-10 3.07% All years 3.49% Yrs 1-10 2.92% Yrs 1-10 3.02%
Yrs 10+ 3.49% Yrs 10+ 3.49% Yrs 10+ 3.49%
-----------------------------------------------------------------------------------------------
Annuity Contract Surrender Contract Surrender Contract Surrender Contract Surrender
Year Value Value Value Value Value Value Value Value
-------------------------------------------------------------------------------------------------------
1 103,075 96,075 103,493 96,493 109,093 100,093 103,022 103,022
-------------------------------------------------------------------------------------------------------
2 106,252 99,252 107,118 100,118 112,285 103,285 106,144 106,144
-------------------------------------------------------------------------------------------------------
3 109,528 103,528 110,870 104,870 115,570 106,570 109,361 109,361
-------------------------------------------------------------------------------------------------------
4 112,905 107,905 114,753 108,753 118,951 109,951 112,676 112,676
-------------------------------------------------------------------------------------------------------
5 116,386 116,386 118,772 113,772 122,431 114,431 116,090 116,090
-------------------------------------------------------------------------------------------------------
6 119,974 119,974 122,932 117,932 126,013 118,013 119,609 119,609
-------------------------------------------------------------------------------------------------------
7 123,673 123,673 127,238 122,238 129,700 121,700 123,234 123,234
-------------------------------------------------------------------------------------------------------
8 127,486 127,486 131,694 131,694 133,495 128,495 126,968 126,968
-------------------------------------------------------------------------------------------------------
9 131,417 131,417 136,307 136,307 137,401 134,901 130,816 130,816
-------------------------------------------------------------------------------------------------------
10 135,468 135,468 141,081 141,081 141,421 141,421 134,781 134,781
-------------------------------------------------------------------------------------------------------
11 140,212 140,212 146,023 146,023 146,372 146,372 139,500 139,500
-------------------------------------------------------------------------------------------------------
12 145,123 145,123 151,137 151,137 151,499 151,499 144,386 144,386
-------------------------------------------------------------------------------------------------------
13 150,206 150,206 156,431 156,431 156,805 156,805 149,443 149,443
-------------------------------------------------------------------------------------------------------
14 155,467 155,467 161,910 161,910 162,297 162,297 154,678 154,678
-------------------------------------------------------------------------------------------------------
15 160,912 160,912 167,581 167,581 167,982 167,982 160,095 160,095
-------------------------------------------------------------------------------------------------------
16 166,548 166,548 173,450 173,450 173,865 173,865 165,703 165,703
-------------------------------------------------------------------------------------------------------
17 172,381 172,381 179,526 179,526 179,955 179,955 171,506 171,506
-------------------------------------------------------------------------------------------------------
18 178,419 178,419 185,814 185,814 186,258 186,258 177,514 177,514
-------------------------------------------------------------------------------------------------------
19 184,668 184,668 192,322 192,322 192,782 192,782 183,731 183,731
-------------------------------------------------------------------------------------------------------
20 191,136 191,136 199,058 199,058 199,534 199,534 190,166 190,166
-------------------------------------------------------------------------------------------------------
21 197,831 197,831 206,030 206,030 206,523 206,523 196,827 196,827
-------------------------------------------------------------------------------------------------------
22 204,760 204,760 213,246 213,246 213,756 213,756 203,721 203,721
-------------------------------------------------------------------------------------------------------
23 211,932 211,932 220,715 220,715 221,243 221,243 210,856 210,856
-------------------------------------------------------------------------------------------------------
24 219,355 219,355 228,446 228,446 228,992 228,992 218,242 218,242
-------------------------------------------------------------------------------------------------------
25 227,038 227,038 236,447 236,447 237,013 237,013 225,886 225,886
-------------------------------------------------------------------------------------------------------
ASSUMPTIONS:
a. $100,000 initial investment
b. Fund Expenses = 1.07%
c. No optional death benefits or living benefits elected
d. Annuity was issued on or after May 1, 2012
e. Surrender value assumes surrender 2 days before Annuity Anniversary
The shaded values indicate the highest Surrender Values in that year based on
the stated assumptions. Assuming a 6% gross annual return, the C-Series has
the highest Surrender Value in the first four Annuity Years, the L-Series has
the highest Surrender Value in Annuity Years five, six and seven, the B-Series
has the highest Surrender Value in Annuity Years eight and nine, and the
X-Series has the highest Surrender Value from the tenth Annuity Year on.
B-4
For X Series Annuities issued in the state of Connecticut:
Due to the state-specific CDSC schedule for X Series Annuities issued in
Connecticut, the Surrender Values shown above may differ. Please refer to
Appendix F for details. The C-Series has the highest Surrender Value in the
first four Annuity Years, the L-Series has the highest Surrender Value in
Annuity Years five and six, the B-Series has the highest Surrender Value in
Annuity Years eight and nine, and the X-Series has the highest Surrender Value
in year seven and from the tenth Annuity Year on.
10% GROSS RATE OF RETURN
---------------------------------------------------------------------------------------------------
10% Gross Rate of Return 10% Gross Rate of Return 10% Gross Rate of Return 10% Gross Rate of Return
L Share B Share X Share C Share
---------------------------------------------------------------------------------------------------
Net rate of return Net rate of return Net rate of return Net rate of return
Yrs 1-10 6.96% All years 7.40% Yrs 1-10 6.80% Yrs 1-10 6.91%
Yrs 10+ 7.40% Yrs 10+ 7.40% Yrs 10+ 7.40%
---------------------------------------------------------------------------------------------------
Annuity Contract Surrender Contract Surrender Contract Surrender Contract Surrender
Year Value Value Value Value Value Value Value Value
-----------------------------------------------------------------------------------------------------------
1 106,953 99,953 107,387 100,387 113,198 104,198 106,899 106,899
-----------------------------------------------------------------------------------------------------------
2 114,411 107,411 115,343 108,343 120,906 111,906 114,295 114,295
-----------------------------------------------------------------------------------------------------------
3 122,389 116,389 123,888 117,888 129,140 120,140 122,203 122,203
-----------------------------------------------------------------------------------------------------------
4 130,923 125,923 133,066 127,066 137,934 128,934 130,657 130,657
-----------------------------------------------------------------------------------------------------------
5 140,052 140,052 142,924 137,924 147,327 139,327 139,697 139,697
-----------------------------------------------------------------------------------------------------------
6 149,818 149,818 153,512 148,512 157,360 149,360 149,362 149,362
-----------------------------------------------------------------------------------------------------------
7 160,265 160,265 164,885 159,885 168,076 160,076 159,696 159,696
-----------------------------------------------------------------------------------------------------------
8 171,441 171,441 177,100 177,100 179,521 174,521 170,744 170,744
-----------------------------------------------------------------------------------------------------------
9 183,395 183,395 190,220 190,220 191,746 189,246 182,558 182,558
-----------------------------------------------------------------------------------------------------------
10 196,183 196,183 204,312 204,312 204,804 204,804 195,188 195,188
-----------------------------------------------------------------------------------------------------------
11 210,715 210,715 219,448 219,448 219,973 219,973 209,645 209,645
-----------------------------------------------------------------------------------------------------------
12 226,325 226,325 235,705 235,705 236,269 236,269 225,177 225,177
-----------------------------------------------------------------------------------------------------------
13 243,092 243,092 253,167 253,167 253,772 253,772 241,858 241,858
-----------------------------------------------------------------------------------------------------------
14 261,101 261,101 271,922 271,922 272,573 272,573 259,776 259,776
-----------------------------------------------------------------------------------------------------------
15 280,444 280,444 292,067 292,067 292,766 292,766 279,021 279,021
-----------------------------------------------------------------------------------------------------------
16 301,220 301,220 313,704 313,704 314,455 314,455 299,692 299,692
-----------------------------------------------------------------------------------------------------------
17 323,536 323,536 336,944 336,944 337,750 337,750 321,894 321,894
-----------------------------------------------------------------------------------------------------------
18 347,504 347,504 361,906 361,906 362,772 362,772 345,741 345,741
-----------------------------------------------------------------------------------------------------------
19 373,248 373,248 388,717 388,717 389,647 389,647 371,354 371,354
-----------------------------------------------------------------------------------------------------------
20 400,900 400,900 417,515 417,515 418,513 418,513 398,865 398,865
-----------------------------------------------------------------------------------------------------------
21 430,599 430,599 448,446 448,446 449,518 449,518 428,414 428,414
-----------------------------------------------------------------------------------------------------------
22 462,499 462,499 481,668 481,668 482,820 482,820 460,152 460,152
-----------------------------------------------------------------------------------------------------------
23 496,763 496,763 517,351 517,351 518,588 518,588 494,242 494,242
-----------------------------------------------------------------------------------------------------------
24 533,565 533,565 555,678 555,678 557,007 557,007 530,857 530,857
-----------------------------------------------------------------------------------------------------------
25 573,093 573,093 596,844 596,844 598,272 598,272 570,184 570,184
-----------------------------------------------------------------------------------------------------------
ASSUMPTIONS:
a. $100,000 initial investment
b. Fund Expenses = 1.07%
c. No optional death benefits or living benefits elected
d. Annuity was issued on or after May 1, 2012
e. Surrender value assumes surrender 2 days before Annuity Anniversary
The shaded values indicate the highest Surrender Values in that year based on
the stated assumptions. Assuming a 10% gross annual return, the C-Series has
the highest Surrender Value in the first four Annuity Years, the L-Series has
the highest Surrender Value in Annuity Years five, six and seven, the B-Series
has the highest Surrender Value in Annuity Years eight and nine, and the
X-Series has the highest Surrender Value from the tenth Annuity Year on.
For X Series Annuities issued in the state of Connecticut:
Due to the state-specific CDSC schedule for X Series Annuities issued in
Connecticut, the Surrender Values shown above may differ. Please refer to
Appendix F for details. The C-Series has the highest Surrender Value in the
first four Annuity Years, the L-Series has the highest Surrender Value in
Annuity Years five and six, the B-Series has the highest Surrender Value in
Annuity Years eight and nine, and the X-Series has the highest Surrender Value
in year seven and from the tenth Annuity Year on.
B-5
APPENDIX C - HIGHEST DAILY LIFETIME 6 PLUS INCOME BENEFIT, HIGHEST DAILY
LIFETIME 6 PLUS INCOME BENEFIT WITH LIFETIME INCOME ACCELERATOR, AND SPOUSAL
HIGHEST DAILY LIFETIME 6 PLUS INCOME BENEFIT - NO LONGER AVAILABLE FOR NEW
ELECTIONS
These benefits were offered March 15, 2010 to January 23, 2011.
HIGHEST DAILY LIFETIME 6 PLUS INCOME BENEFIT (HD 6 PLUS)
Highest Daily Lifetime/SM/ 6 Plus Income Benefit (HD 6 Plus)/SM/ is a lifetime
guaranteed minimum withdrawal benefit, under which, subject to the terms of
the benefit, we guarantee your ability to take a certain annual withdrawal
amount for life. Highest Daily Lifetime 6 Plus is no longer available.
If you have elected this benefit, the benefit 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 Unadjusted 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 provided that you
do not take withdrawals of Excess Income that result in your Unadjusted
Account Value being reduced to zero. We also permit you to designate the first
withdrawal from your Annuity as a one-time "Non-Lifetime Withdrawal". All
other partial withdrawals from your Annuity are considered a "Lifetime
Withdrawal" under the benefit. Withdrawals are taken first from your own
Account Value. We are only required to begin making lifetime income payments
to you under our guarantee when and if your Unadjusted Account Value is
reduced to zero (for any reason other than due to partial withdrawals of
Excess Income). 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 predetermined mathematical formula we
employ that may periodically transfer your Unadjusted Account Value to and
from the AST Investment Grade Bond Sub-account. See the section below entitled
"How Highest Daily Lifetime 6 Plus Transfers Unadjusted Account Value Between
Your Permitted Sub-accounts and the AST Investment Grade Bond Sub-account."
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, although you may
elect any optional death benefit. As long as your Highest Daily Lifetime 6
Plus Benefit is in effect, you must allocate your Unadjusted Account Value in
accordance with the 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.
ALTHOUGH YOU ARE GUARANTEED THE ABILITY TO WITHDRAW YOUR ANNUAL INCOME AMOUNT
FOR LIFE EVEN IF YOUR UNADJUSTED ACCOUNT VALUE FALLS TO ZERO, IF YOU TAKE A
WITHDRAWAL OF EXCESS INCOME (DESCRIBED BELOW) THAT BRINGS YOUR UNADJUSTED
ACCOUNT VALUE TO ZERO, YOUR ANNUAL INCOME AMOUNT ALSO WOULD FALL TO ZERO, AND
THE BENEFIT AND THE ANNUITY THEN WOULD TERMINATE. IN THAT SCENARIO, NO FURTHER
AMOUNT WOULD BE PAYABLE UNDER THE HIGHEST DAILY LIFETIME 6 PLUS BENEFIT. AS TO
THE IMPACT OF SUCH A SCENARIO ON ANY OTHER OPTIONAL BENEFIT YOU MAY HAVE,
PLEASE SEE THE APPLICABLE SECTION IN THIS PROSPECTUS.
You may also participate in the 6 or 12 Month DCA Program if you elect Highest
Daily Lifetime 6 Plus, subject to the 6 or 12 Month DCA Program's rules.
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 Unadjusted
Account Value and not available as cash or a lump sum withdrawal. On the
effective date of the benefit, the Protected Withdrawal Value is equal to your
Unadjusted 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 Unadjusted 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 Unadjusted Account Value on the current Valuation Day.
C-1
If you have not made a Lifetime Withdrawal on or before the 10/th/ or 20th
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 10th anniversary) or 400% (on the 20/th/ anniversary) of
the Unadjusted 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 10th 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.
In the rider for this benefit, we use slightly different terms for the
calculation described. We use the term "Guaranteed Base Value" to refer to the
Unadjusted Account Value on the effective date of the benefit, plus the amount
of any "adjusted" Purchase Payments made within one year after the effective
date of the benefit. "Adjusted" Purchase Payments means Purchase Payments we
receive, increased by any Purchase Credits applied to your Account Value in
relation to Purchase Payments, and decreased by any fees or tax charges
deducted from such Purchase Payments upon allocation to the Annuity.
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 Unadjusted 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 HIGHEST DAILY LIFETIME 6 PLUS
The Annual Income Amount is equal to a specified percentage of the Protected
Withdrawal Value at the first Lifetime Withdrawal and does not reduce in
subsequent Annuity Years, as described below. The percentage initially depends
on the age of the Annuitant on the date 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 or older. (Note that for purposes of the age tiers used
with this benefit, we deem the Annuitant to have reached age 59 1/2 on the
183rd day after his/her 59/th/ birthday). 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 and also will reduce the Protected Withdrawal Value on a
dollar-for-dollar basis. 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). Excess
Income also will reduce the Protected Withdrawal Value by the same ratio.
AS DISCUSSED IN THIS PARAGRAPH, WHEN YOU MAKE A PARTIAL WITHDRAWAL THAT IS
SUBJECT TO A CDSC AND/OR TAX WITHHOLDING, WE WILL IDENTIFY THE AMOUNT THAT
INCLUDES NOT ONLY THE AMOUNT YOU ACTUALLY RECEIVE, BUT ALSO THE AMOUNT OF THE
CDSC AND/OR TAX WITHHOLDING, TO DETERMINE WHETHER YOUR WITHDRAWAL HAS EXCEEDED
THE ANNUAL INCOME AMOUNT. WHEN YOU TAKE A PARTIAL WITHDRAWAL, YOU MAY REQUEST
A "GROSS" WITHDRAWAL AMOUNT (E.G., $2000) BUT THEN HAVE ANY CDSC AND/OR TAX
WITHHOLDING DEDUCTED FROM THE AMOUNT YOU ACTUALLY RECEIVE (ALTHOUGH AN MVA MAY
ALSO BE APPLIED TO YOUR REMAINING UNADJUSTED ACCOUNT VALUE, IT IS NOT
CONSIDERED FOR PURPOSES OF DETERMINING EXCESS INCOME). THE PORTION OF A
WITHDRAWAL THAT EXCEEDED YOUR ANNUAL INCOME AMOUNT (IF ANY) WOULD BE TREATED
AS EXCESS INCOME AND THUS WOULD REDUCE YOUR ANNUAL INCOME AMOUNT IN SUBSEQUENT
YEARS. ALTERNATIVELY, YOU MAY REQUEST THAT A "NET" WITHDRAWAL AMOUNT ACTUALLY
BE PAID TO YOU (E.G., $2000), WITH THE UNDERSTANDING THAT ANY CDSC AND/OR TAX
WITHHOLDING (E.G., $240) BE APPLIED TO YOUR REMAINING UNADJUSTED ACCOUNT VALUE
(ALTHOUGH AN MVA MAY ALSO BE APPLIED TO YOUR REMAINING UNADJUSTED ACCOUNT
VALUE, IT IS NOT CONSIDERED FOR PURPOSES OF DETERMINING EXCESS INCOME). IN THE
LATTER SCENARIO, WE DETERMINE WHETHER ANY PORTION OF THE WITHDRAWAL IS TO BE
TREATED AS EXCESS INCOME BY LOOKING TO THE SUM OF THE NET AMOUNT YOU ACTUALLY
RECEIVE (E.G., $2000) AND THE AMOUNT OF ANY CDSC AND/OR TAX WITHHOLDING (IN
THIS EXAMPLE, A TOTAL OF $2240). THE AMOUNT OF THAT SUM (E.G., THE $2000 YOU
RECEIVED PLUS THE $240 FOR THE CDSC AND/OR TAX WITHHOLDING) THAT EXCEEDS YOUR
ANNUAL INCOME AMOUNT WILL BE TREATED AS EXCESS INCOME - THEREBY REDUCING YOUR
ANNUAL INCOME AMOUNT IN SUBSEQUENT YEARS.
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) immediately 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).
C-2
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). Subject to state law, 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
Unadjusted 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. We will not automatically increase your Annual
Income Amount solely as a result of your attaining a new age that is
associated with a new age-based percentage. The Unadjusted 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 Unadjusted 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 Unadjusted 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 consult with your Financial
Professional and carefully evaluate whether the amount of the step-up
justifies the increased fee to which you will be subject. Any such increased
charge will not be greater than the maximum charge set forth in the table
entitled "Your Optional Benefit Fees and Charges."
If you are enrolled in a Systematic Withdrawal program, we will not
automatically increase the withdrawal amount when there is an increase to the
Annual Income Amount. You must notify us in order to increase the withdrawal
amount of any Systematic Withdrawal program.
The Highest Daily Lifetime 6 Plus benefit does not affect your ability to take
partial withdrawals under your Annuity, or limit your ability to take partial
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 your cumulative Lifetime Withdrawals in any Annuity Year are less
than the Annual Income Amount, 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 Unadjusted Account Value, it
is possible for the Unadjusted 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 November 1, 2010
. The Highest Daily Lifetime 6 Plus benefit is elected on August 1, 2011
. The Annuitant was 70 years old when he/she elected the Highest Daily
Lifetime 6 Plus benefit
. The first withdrawal is a Lifetime Withdrawal
EXAMPLE OF DOLLAR-FOR-DOLLAR REDUCTIONS
On October 24, 2011, 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%
C-3
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 October 31, 2011) 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 October 27, 2011 and the Unadjusted 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
Income to the Unadjusted Account Value immediately prior to the Excess Income.
(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:
Unadjusted Account Value before Lifetime withdrawal $118,000.00
Less amount of "non" Excess Income $ 3,500.00
Unadjusted Account Value immediately before Excess Income of $1,500 $114,500.00
Excess Income amount $ 1500.00
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 after the first Lifetime Withdrawal, the
Annual Income Amount is stepped-up if the appropriate percentage (based on the
Annuitant's age on that 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 (including
any associated Purchase Credits), is higher than the Annual Income Amount,
adjusted for Excess Income 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 Income on October 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 greater than $5,921.40. Here are the
calculations for determining the daily values. Only the October 26 value is
being adjusted for Excess Income as the October 28 and October 31 Valuation
Days occur after the Excess Income on October 27.
HIGHEST DAILY VALUE ADJUSTED ANNUAL INCOME
UNADJUSTED (ADJUSTED FOR WITHDRAWAL AMOUNT (5% OF THE
DATE* ACCOUNT VALUE AND PURCHASE PAYMENTS)** HIGHEST DAILY VALUE)
----- ------------- ------------------------ ----------------------
October 26, 2011 $119,000.00 $119,000.00 $5,950.00
October 27, 2011 $113,000.00 $113,986.95 $5,699.35
October 28, 2011 $113,000.00 $113,986.95 $5,699.35
October 31, 2011 $119,000.00 $119,000.00 $5,950.00
* In this example, the Annuity Anniversary date is November 1. The Valuation
Dates are every day following the first Lifetime Withdrawal. In subsequent
Annuity Years Valuation Dates will be the Annuity Anniversary and every day
following the Annuity Anniversary. The Annuity Anniversary Date of
November 1 is considered the first Valuation Date in the Annuity Year.
** In this example, the first daily value after the first Lifetime Withdrawal
is $119,000 on October 26, resulting in an adjusted Annual Income Amount of
$5,950.00. This amount is adjusted on October 27 to reflect the $5,000
withdrawal. The calculations for the adjustments are:
. The Unadjusted Account Value of $119,000 on October 26 is first reduced
dollar-for-dollar by $3,500 ($3,500 is the remaining Annual Income
Amount for the Annuity Year), resulting in Unadjusted Account Value of
$115,500 before the Excess Income.
. This amount ($115,500) is further reduced by 1.31% (this is the ratio in
the above example which is the Excess Income divided by the Unadjusted
Account Value immediately preceding the Excess Income) resulting in a
Highest Daily Value of $113,986.95.
. The Unadjusted Annual Income Amount is carried forward to the next
Valuation Date of October 28. At this time, we compare this amount to 5%
of the Unadjusted Account Value on October 28. Since the October 27
adjusted Annual Income Amount of $5,699.35 is greater than $5,650.00 (5%
of $113,000), we continue to carry $5,699.35 forward to the next and
final Valuation Date of October 31. The Unadjusted Account Value on
October 31 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 October 31 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 Income), the Annual Income Amount for
the next Annuity Year, starting on November 1, 2011 and continuing through
October 31, 2012, will be stepped-up to $5,950.00.
C-4
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. You cannot take
a Non-Lifetime Withdrawal in an amount that would cause your Annuity's Account
Value, after taking the withdrawal, to fall below the minimum Surrender Value
(see "Surrenders - Surrender Value" earlier in this prospectus). 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 at the time you take the withdrawal 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 Annual Income Amount, which is based on your
Protected Withdrawal Value. Once you elect to take the Non-Lifetime Withdrawal
or Lifetime Withdrawals, no additional Non-Lifetime Withdrawals may be taken.
If you do not take a Non-Lifetime Withdrawal before beginning Lifetime
Withdrawals, you lose the ability to take it.
The Non-Lifetime Withdrawal will proportionally reduce the Protected
Withdrawal Value. It will also proportionally reduce the Periodic Value
guarantees on the tenth and twentieth anniversaries of the benefit effective
date (see description in "Key Feature - Protected Withdrawal Value," above).
It will reduce both by the percentage the total withdrawal amount (including
any applicable CDSC and any applicable MVA) represents of the then current
Unadjusted 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. Thus, the first withdrawal will be a 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, 2010
. The Highest Daily Lifetime 6 Plus benefit is elected on September 1, 2011
. The Unadjusted 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 3, 2011, 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 Unadjusted
Account Value is $120,000. Assuming $15,000 is withdrawn from the Annuity on
October 3, 2011 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 Unadjusted Account
Value just prior to the withdrawal being taken.
HERE IS THE CALCULATION:
Withdrawal amount $ 15,000
Divided by Unadjusted 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
Required Minimum Distributions ("RMD") for this Annuity must be taken by
April 1st in the year following the date you turn age 70 1/2 and by
December 31st for subsequent calendar years. If the annual RMD amount is
greater than the Annual Income Amount, a withdrawal of the RMD amount will not
be treated as a withdrawal of Excess Income, as long as the RMD amount is
calculated by us for this Annuity and administered under a program we support
each calendar year. If you are not participating in an RMD withdrawal program
each calendar year, you can alternatively satisfy the RMD amount without it
being treated as a withdrawal of Excess Income as long as you abide by the
following:
The total amount within an Annuity Year that can be withdrawn is equal to:
1. the Annual Income Amount remaining in the current Annuity Year, plus,
2. The difference between:
a. The RMD amount (assuming the RMD amount is greater than the Annual Income
Amount) less any withdrawals already taken in the calendar year, less
b. The Annual Income Amount.
C-5
Pleasesee hypothetical examples below for details.
If you do not comply with the rules described above, any withdrawal that
exceeds the Annual Income Amount will be treated as a withdrawal of Excess
Income, which will reduce your Annual Income Amount in future Annuity Years.
This may include situations where you comply with the rules outlined above and
then decide to take additional withdrawals after satisfying your RMD
requirement from the Annuity.
We will assume your first withdrawal under the benefit is a Lifetime
Withdrawal unless you designated the withdrawal as a Non-Lifetime Withdrawal.
Example
The following example is purely hypothetical and intended to illustrate a
scenario as described above. Note that withdrawals must comply with all IRS
guidelines in order to satisfy the Required Minimum Distribution for the
current calendar year.
Assumptions:
RMD Calendar Year
01/01/2011 to 12/31/2011
Annuity Year
06/01/2010 to 05/31/2011
Annual Income Amount and RMD Amount
Annual Income Amount = $5,000
Remaining Annual Income Amount as of 1/3/2011 = $3,000 (a $2,000 withdrawal
was taken on 7/1/2010)
RMD Amount for Calendar Year 2011 = $6,000
The amount you may withdraw in the current Annuity Year (between 1/3/2011 and
5/31/2011) without it being treated as Excess Income is $4,000. Here is the
calculation: $3,000 + ($6,000 - $5,000) = $4,000.
If the $4,000 withdrawal is taken in the current Annuity Year (prior to
6/1/2011), the remaining Annual Income Amount will be zero and the remaining
RMD amount of $2,000 may be taken in the subsequent Annuity Year beginning on
6/1/2011 (when your Annual Income Amount is reset to $5,000).
If you had chosen to not take any additional withdrawals until on or after
6/1/2011, then you would be eligible to withdraw $6,000 without it being
treated as a withdrawal of Excess Income.
BENEFITS UNDER HIGHEST DAILY LIFETIME 6 PLUS
.. To the extent that your Unadjusted 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 Unadjusted 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. After the
Unadjusted Account Value is reduced to zero, you will not be permitted to
make additional Purchase Payments to your Annuity. TO THE EXTENT THAT
CUMULATIVE PARTIAL WITHDRAWALS IN THE ANNUITY YEAR THAT REDUCED YOUR
UNADJUSTED 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 PARTIAL 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 DESIGNATED LIFE.
.. Please note that if your Unadjusted 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 Latest Annuity Date 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 Unadjusted Account Value, less any applicable tax charges,
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 Service Office. If applying your Unadjusted
Account Value, less any applicable tax charges, to the life-only
annuity payment rates results in a higher annual payment, we will
give you the higher annual payment.
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.. In the absence of an election when mandatory annuity payments are to begin
we currently make annual annuity payments in the form of a single life
fixed annuity with eight payments certain, by applying the greater of the
annuity rates then currently available or the annuity rates guaranteed in
your Annuity. We reserve the right at any time to increase or decrease the
period certain in order to comply with the Code (e.g., to shorten the
period certain to match life expectancy under applicable Internal Revenue
Service tables). 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 Unadjusted 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.
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 partial withdrawals that
exceed the Annual Income Amount. If you have an active Systematic
Withdrawal program running at the time you elect this benefit, the first
systematic withdrawal that processes after your election of the benefit
will be deemed a Lifetime Withdrawal. 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 MVA Options. If you have an active Systematic Withdrawal program
running at the time you elect this benefit, the program must withdraw funds
pro rata.
.. Any Lifetime Withdrawal that you take that is less than or equal to the
Annual Income Amount is not subject to a CDSC, even if the total amount of
such withdrawals in any Annuity Year exceeds the maximum Free Withdrawal
amount. For purposes of calculating a CDSC on any future withdrawal,
Lifetime Withdrawals that are less than or equal to the Annual Income
Amount in an Annuity Year are not treated as withdrawals of Purchase
Payments. Moreover, any Lifetime Withdrawal that is treated as Excess
Income is subject to any applicable CDSC if the withdrawal is greater than
the Free Withdrawal amount.
.. You should carefully consider when to begin taking Lifetime Withdrawals. If
you begin taking withdrawals early, you may maximize the time during which
you may take Lifetime Withdrawals due to longer life expectancy, and you
will be using an optional benefit for which you are paying a charge. On the
other hand, you could limit the value of the benefit if you begin taking
withdrawals too soon. For example, withdrawals reduce your Unadjusted
Account Value and may limit the potential for increasing your Protected
Withdrawal Value. You should discuss with your Financial Professional when
it may be appropriate for you to begin taking Lifetime Withdrawals.
.. You cannot allocate Purchase Payments or transfer Unadjusted 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 section
entitled "Investment Options." You can find a copy of the AST Investment
Grade Bond Portfolio prospectus by going to www.prudentialannuities.com.
.. Transfers to and from the Permitted Sub-accounts, the DCA MVA Options, and
the AST Investment Grade Bond Sub-account triggered by the predetermined
mathematical formula will not count toward the maximum number of free
transfers allowable under an Annuity.
.. Upon inception of the benefit, 100% of your Unadjusted Account Value must
be allocated to the Permitted Sub-accounts. We may amend the Permitted
Sub-accounts from time to time. Changes to the Permitted Sub-accounts, or
to the requirements as to how you may allocate your Account Value with this
benefit, may apply to current participants in the benefit. To the extent
that changes apply to current participants in the benefit, they will only
apply upon re-allocation of Account Value, or upon addition of subsequent
Purchase Payments. That is, we will not require such current participants
to re-allocate Account Value to comply with any new requirements.
.. Any Death Benefit, including any optional Death Benefit that you elected,
will terminate if withdrawals taken under Highest Daily Lifetime 6 Plus
reduce your Unadjusted Account Value to zero (see "Death Benefits" earlier
in the prospectus).
.. The current charge for Highest Daily Lifetime 6 Plus is 0.85% annually of
the greater of the Unadjusted Account Value and Protected Withdrawal Value.
The maximum charge for Highest Daily Lifetime 6 Plus is 1.50% annually of
the greater of the Unadjusted Account Value and Protected Withdrawal Value.
As discussed in "Highest Daily Auto Step-Up" above, we may increase the fee
upon a step-up under this benefit. We deduct this charge on quarterly
anniversaries of the benefit effective date, based on the values on the
last Valuation Day prior to the quarterly anniversary. Thus, we deduct, on
a quarterly basis, 0.2125% of the greater of the prior Valuation Day's
Unadjusted 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. You will begin paying this
charge as of the effective date of the benefit even if you do not begin
taking withdrawals for many years, or ever. We will not refund the charges
you have paid if you choose never to take any withdrawals and/or if you
never receive any lifetime income payments.
If the deduction of the charge would result in the Unadjusted Account Value
falling below the lesser of $500 or 5% of the sum of the Unadjusted Account
Value on the effective date of the benefit plus all Purchase Payments made
subsequent thereto (and any
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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
Unadjusted Account Value to fall below the Account Value Floor. If the
Unadjusted Account Value on the date we would deduct a charge for the benefit
is less than the Account Value Floor, then no charge will be assessed for that
benefit quarter. Charges deducted upon termination of the benefit may cause
the Unadjusted Account Value to fall below the Account Value Floor. 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
Unadjusted Account Value to fall below the Account Value Floor. While the
deduction of the charge (other than the final charge) may not reduce the
Unadjusted Account Value to zero, partial withdrawals may reduce the
Unadjusted Account Value to zero. If this happens and the Annual Income Amount
is greater than zero, we will make payments under the benefit.
ELECTION OF AND DESIGNATIONS UNDER THE BENEFIT
We no longer permit elections of Highest Daily Lifetime 6 Plus. Previously,
for elections of Highest Daily Lifetime 6 Plus, there must have been either, a
single Owner who is the same as the Annuitant, or if the Annuity is entity
owned, there must have been a single natural person Annuitant. In either case,
the Annuitant must have been 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 could be elected at the time that you purchase
your Annuity or after the Issue Date, subject to its availability, and our
eligibility rules and restrictions.
If you are currently participating in a Systematic Withdrawal program, amounts
withdrawn under the program must be taken on a pro rata basis from your
Annuity's Sub-accounts (i.e., in direct proportion to the proportion that each
such Sub-account bears to your total Account Value) in order for you to be
eligible for the benefit. Thus, you may not have elected Highest Daily
Lifetime 6 Plus so long as you participate in a Systematic Withdrawal program
in which withdrawals are not taken pro rata.
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 UPON THE FIRST TO OCCUR OF THE FOLLOWING:
(I)YOUR TERMINATION OF THE BENEFIT,
(II)YOUR SURRENDER OF THE ANNUITY,
(III)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)OUR RECEIPT OF DUE PROOF OF DEATH OF THE OWNER OR ANNUITANT (FOR
ENTITY-OWNED ANNUITIES)
(V)BOTH THE UNADJUSTED ACCOUNT VALUE AND ANNUAL INCOME AMOUNT EQUAL ZERO, OR
(VI)YOU CEASE TO MEET OUR REQUIREMENTS AS DESCRIBED IN "ELECTION OF AND
DESIGNATIONS UNDER THE BENEFIT" ABOVE.
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 Unadjusted 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, and (ii) unless you are participating in an
asset allocation program (i.e., Custom Portfolios 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 Unadjusted Account Value in the
variable Investment Options is zero, we will transfer such amounts to the AST
Money Market Sub-account.
If a surviving spouse elects to continue the Annuity, the Highest Daily
Lifetime 6 Plus benefit terminates upon Due Proof of Death.
HOW HIGHEST DAILY LIFETIME 6 PLUS TRANSFERS UNADJUSTED ACCOUNT VALUE BETWEEN
YOUR PERMITTED SUB-ACCOUNTS AND THE AST INVESTMENT GRADE BOND SUB-ACCOUNT
An integral part of Highest Daily Lifetime 6 Plus (including Highest Daily
Lifetime 6 Plus with LIA and Spousal Highest Daily Lifetime 6 Plus) is the
predetermined mathematical formula used to transfer Unadjusted Account Value
between the Permitted Sub-accounts and a specified bond fund within the
Advanced Series Trust (the AST Investment Grade Bond Sub-account, referred to
as the "Bond Sub-account"). This predetermined mathematical formula
("formula") runs each Valuation Day that the benefit is in effect on your
Annuity and, as a result, transfers of Unadjusted Account Value between the
Permitted Sub-accounts and the Bond Sub-account can occur on any Valuation Day
subject to the conditions described below. Only the predetermined
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mathematical formula can transfer Unadjusted Account Value to and from the
Bond Sub-account, and thus you may not allocate Purchase Payments to or make
transfers to or from the Bond Sub-account We are not providing you with
investment advice through the use of the formula nor does the formula
constitute an investment strategy that we are recommending to you. 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. The formula is not forward looking and contains no predictive
or projective component with respect to the markets, the Unadjusted Account
Value or the Protected Withdrawal Value. The formula is described below.
As indicated above, we limit the Sub-accounts to which you may allocate
Unadjusted Account Value if you elect Highest Daily Lifetime 6 Plus. For
purposes of these benefits, we refer to those permitted Investment Options as
the "Permitted Sub-accounts". Because these restrictions and the use of the
formula lessen the risk that your Unadjusted Account Value will be reduced to
zero while you are still alive, they also reduce the likelihood that we will
make any lifetime income payments under this benefit. They may also limit your
upside potential for growth.
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 Bond
Sub-account, then the amount to be transferred will be taken entirely from the
Sub-accounts, provided there is sufficient Unadjusted Account Value in those
Sub-accounts to meet the required transfer amount. Only if there is
insufficient Unadjusted Account Value in those Sub-accounts will an amount be
transferred from the DCA MVA Options. For purposes of the discussion below
concerning transfers from the Permitted Sub-accounts to the Bond Sub-account,
amounts held within the DCA MVA Options are included within the term
"Permitted Sub-accounts". Thus, amounts may be transferred from the DCA MVA
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 Bond Sub-account will only be transferred
to the Permitted Sub-accounts, not the DCA MVA Options. We will not assess any
applicable Market Value Adjustment with respect to transfers under the formula
from the DCA MVA Options.
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. This amount may be different than the actual Annual Income
Amount currently guaranteed under your benefit. Then it produces an estimate
of the total amount targeted in the formula, 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 Lifetime
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), and any withdrawals of Excess
Income. Next, the formula subtracts from the Target Value the amount held
within the Bond Sub-account on that day, and divides that difference by the
amount held within the Permitted Sub-accounts. That ratio, which essentially
isolates the amount of your Target Value that is not offset by amounts held
within the 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 Bond Sub-account. Once a
transfer is made, the Target Ratio must again be greater than 83% but less
than or equal to 84.5% for three consecutive Valuation Days before a
subsequent transfer to the Bond Sub-account will occur. If, however, on any
Valuation Day, the Target Ratio is above 84.5%, the formula will make a
transfer from the Permitted Sub-accounts (subject to the 90% cap) to the Bond
Sub-account (as described above). If the Target Ratio falls below 78% on any
Valuation Day, then a transfer from the Bond Sub-account to the Permitted
Sub-accounts (excluding the DCA MVA Options) will occur.
The formula will not execute a transfer to the Bond Sub-account that results
in more than 90% of your Unadjusted Account Value being allocated to the Bond
Sub-account ("90% cap") on that Valuation Day. Thus, on any Valuation Day, if
the formula would require a transfer to the Bond Sub-account that would result
in more than 90% of the Unadjusted Account Value being allocated to the Bond
Sub-account, only the amount that results in exactly 90% of the Unadjusted
Account Value being allocated to the Bond Sub-account will be transferred.
Additionally, future transfers into the Bond Sub-account will not be made
(regardless of the performance of the Bond Sub-account and the Permitted
Sub-accounts) at least until there is first a transfer out of the Bond
Sub-account. Once this transfer occurs out of the Bond Sub-account, future
amounts may be transferred to or from the Bond Sub-account if dictated by the
formula (subject to the 90% cap). At no time will the formula make a transfer
to the Bond Sub-account that results in greater than 90% of your Unadjusted
Account Value being allocated to the Bond Sub-account. However, it is possible
that, due to the investment performance of your allocations in the Bond
Sub-account and your allocations in the Permitted Sub-accounts you have
selected, your Unadjusted Account Value could be more than 90% invested in the
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 Bond Sub-account at least until there is first a transfer out
of the Bond Sub-account, regardless of how much of your Unadjusted 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 Unadjusted Account Value is allocated to the Bond
Sub-account, and the formula will still not transfer any of your Unadjusted
Account Value to the Bond Sub-account (at least until there is first a
transfer out of the Bond Sub-account). For example,
. September 4, 2012 - a transfer is made to the Bond Sub-account that
results in the 90% cap being met and now $90,000 is allocated to the
Bond Sub-account and $10,000 is allocated to the Permitted Sub-accounts.
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. September 5, 2012 - you make an additional Purchase Payment of $10,000.
No transfers have been made from the Bond Sub-account to the Permitted
Sub-accounts since the cap went into effect on September 4, 2012.
. On September 5, 2012 - (and at least until first a transfer is made out
of the 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 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
Bond Sub-account).
. Once there is a transfer out of the Bond Sub-account (of any amount),
the formula will operate as described above, meaning that the formula
could transfer amounts to or from the 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 and out of
effect multiple times while you participate in the benefit. We will continue
to monitor your Unadjusted Account Value daily and, if dictated by the
formula, systematically transfer amounts between the Permitted Sub-accounts
you have chosen and the Bond Sub-account as dictated by the formula.
Under the formula, investment performance of your Unadjusted Account Value
that is negative, flat, or even moderately positive may result in a transfer
of a portion of your Unadjusted Account Value in the Permitted Sub-accounts to
the Bond Sub-account because such investment performance will tend to increase
the Target Ratio. In deciding how much to transfer, we use another formula,
which essentially seeks to reallocate amounts held in the Permitted
Sub-accounts and the Bond Sub-account so that the Target Ratio meets a target,
which currently is equal to 80%. The further the Target Ratio is from 80% when
a transfer is occurring under the formula, the greater the transfer amount
will be. 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, if there is
money allocated to the Bond Sub-account, we will perform an additional monthly
calculation to determine whether or not a transfer will be made from the Bond
Sub-account to the Permitted Sub-accounts. 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 Unadjusted Account Value in the Bond
Sub-account, or
b) An amount equal to 5% of your total Unadjusted Account Value.
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 Unadjusted Account Value either to or from the Bond
Sub-account. 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 Bond
Sub-account; or
. If a portion of your Unadjusted Account Value was previously allocated
to the 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 Unadjusted Account Value in the Permitted
Sub-accounts and the DCA MVA Options to the Bond Sub-account.
Prior to the first Lifetime Withdrawal, the primary driver of transfers to the
Bond Sub-account is the difference between your Unadjusted Account Value and
your Protected Withdrawal Value. If none of your Unadjusted Account Value is
allocated to the Bond Sub-account, then over time the formula permits an
increasing difference between the Unadjusted Account Value and the Protected
Withdrawal Value before a transfer to the Bond Sub-account occurs. Therefore,
as time goes on, while none of your Unadjusted Account Value is allocated to
the Bond Sub-account, the smaller the difference between the Protected
Withdrawal Value and the Unadjusted Account Value, the more the Unadjusted
Account Value can decrease prior to a transfer to the Bond Sub-account.
Each market cycle is unique, therefore the performance of your Sub-accounts,
and its impact on your Unadjusted Account Value, will differ from market cycle
to market cycle producing different transfer activity under the formula. The
amount and timing of transfers to and from the Bond Sub-account pursuant to
the formula depend on various factors unique to your Annuity and are not
necessarily directly correlated with the securities markets, bond markets,
interest rates or any other market or index. Some of the factors that
determine the amount and timing of transfers (as applicable to your Annuity),
include:
. The difference between your Unadjusted Account Value and your Protected
Withdrawal Value;
. The amount of time Highest Daily Lifetime 6 Plus has been in effect on
your Annuity;
. The amount allocated to and the performance of the Permitted
Sub-accounts and the Bond Sub-account;
. Any additional Purchase Payments you make to your Annuity (while the
benefit is in effect); and
. Any withdrawals you take from your Annuity (while the benefit is in
effect).
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At any given time, some, most or none of your Unadjusted Account Value will be
allocated to the Bond Sub-account, as dictated by the formula.
Because the amount allocated to the 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. The greater the amounts allocated to either the Bond Sub-account or
to the Permitted Sub-accounts, the greater the impact performance of that
Sub-account has on your Unadjusted Account Value and thus the greater the
impact on whether (and how much) your Unadjusted Account Value is transferred
to or from the Bond Sub-account. It is possible, under the formula, that if a
significant portion of your Unadjusted Account Value is allocated to the Bond
Sub-account and that Sub-account has positive performance, the formula might
transfer a portion of your Unadjusted Account Value to the Permitted
Sub-accounts, even if the performance of your Permitted Sub-accounts is
negative. Conversely, if a significant portion of your Unadjusted Account
Value is allocated to the Bond Sub-account and that Sub-account has negative
performance, the formula may transfer additional amounts from your Permitted
Sub-accounts to the Bond Sub-account even if the performance of your Permitted
Sub-accounts is positive.
If you make additional Purchase Payments to your Annuity, they will be
allocated in accordance with your Annuity. Once allocated, they will also be
subject to the formula described above and therefore may be transferred to the
Bond Sub-account, if dictated by the formula and subject to the 90% cap
feature described above.
Any Unadjusted Account Value in the Bond Sub-account will not participate in
the positive or negative investment experience of the Permitted Sub-accounts
until it is transferred out of the 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
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, as discussed above. In addition, the amount and
duration of payments under the annuity payment provision may be adjusted so
that the payments do not trigger any penalty or excise taxes due to tax
considerations such as Required Minimum Distribution rules 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 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 or 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.
HIGHEST DAILY LIFETIME 6 PLUS WITH LIFETIME INCOME ACCELERATOR (HD6 PLUS WITH
LIA)
Highest Daily Lifetime 6 Plus with LIA is no longer available. If you have
elected this benefit, the benefit 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. You could choose Highest Daily Lifetime 6 Plus
with or without also electing LIA, however you could not elect LIA without
Highest Daily Lifetime 6 Plus and you must have elected the LIA benefit at the
time you elected Highest Daily Lifetime 6 Plus. Please note that if you
terminate Highest Daily Lifetime 6 Plus and elected the Highest Daily Lifetime
6 Plus with LIA you would 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 Unadjusted 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. This benefit may not be
combined with any other optional living benefit or death benefit. As long as
your Highest Daily Lifetime 6 Plus with LIA benefit is in effect, you must
allocate your Unadjusted Account Value in accordance with the 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. As is the case with Highest Daily Lifetime 6 Plus, Highest
Daily Lifetime 6 Plus with LIA involves your participation in a predetermined
mathematical formula that transfers Account Value between your Sub-accounts
and the AST Investment Grade Bond Portfolio Sub-account. Please see Highest
Daily Lifetime 6 Plus above for a description of the predetermined
mathematical formula.
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 or other medical or retirement expenses. You should seek
professional advice to determine your financial needs for long-term care.
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If this benefit is 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.
The current charge for this benefit is 1.20% annually of the greater of
Unadjusted Account Value and Protected Withdrawal Value. The maximum charge is
2.00% annually of the greater of the Unadjusted 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 Unadjusted 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.
If the deduction of the charge would result in the Unadjusted Account Value
falling below the lesser of $500 or 5% of the sum of the Unadjusted 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 Unadjusted Account Value to fall below the Account
Value Floor. If the Unadjusted Account Value on the date we would deduct a
charge for the benefit is less than the Account Value Floor, then no charge
will be assessed for that benefit quarter. Charges deducted upon termination
of the benefit may cause the Unadjusted Account Value to fall below the
Account Value Floor. 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 Unadjusted Account Value to fall below the Account
Value Floor. While the deduction of the charge (other than the final charge)
may not reduce the Unadjusted Account Value to zero, withdrawals may reduce
the Unadjusted Account Value to zero.
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 120/TH/
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.
(1)The designated life is confined to a qualified nursing facility. A
qualified nursing facility is a facility operated pursuant to laws of any
United States jurisdiction 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, and you will have to notify us again in writing in order to become
eligible. 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. Please note that you must be available in the U.S. for
the assessment. 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 Annuity Year
that immediately precedes or runs concurrent with 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. However, if you were receiving income based on the LIA Amount and do
not take action to change your withdrawal amount to your Annual Income Amount,
any cumulative Lifetime Withdrawals in an Annuity Year that are in excess of
the Annual Income Amount will impact your Annual Income Amount in subsequent
years (except with regard to Required Minimum
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Distributions for this Annuity that comply with our rules). Please note that
we will not change your current withdrawal amount unless you instruct us to do
so. If you wish to establish or make changes to your existing withdrawal
program to ensure that you are not taking Excess Income, please contact our
Annuity Service Office. 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.
For new issuances of this benefit, we may institute a "cut-off" date that
would stop the appreciation of the Protected Withdrawal Value, even if no
Lifetime Withdrawal had been taken prior to the cut-off date (thus affecting
the determination of the LIA Amount). We will not apply any cut-off date to
those who elected this benefit prior to our institution of a cut-off date.
WITHDRAWALS IN EXCESS OF THE LIA AMOUNT. Withdrawals (other than the
Non-Lifetime Withdrawal) of any amount in a given Annuity Year up to the LIA
Amount will reduce the Protected Withdrawal Value by the amount of the
withdrawal. However, if your cumulative Lifetime Withdrawals in an Annuity
Year are in excess of the LIA Amount ("Excess Income"), 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 Income. Excess
Income also 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.
AS DISCUSSED IN THIS PARAGRAPH, WHEN YOU MAKE A WITHDRAWAL THAT IS SUBJECT TO
A CDSC AND/OR TAX WITHHOLDING, WE WILL IDENTIFY THE AMOUNT THAT INCLUDES NOT
ONLY THE AMOUNT YOU ACTUALLY RECEIVE, BUT ALSO THE AMOUNT OF THE CDSC AND/OR
TAX WITHHOLDING, TO DETERMINE WHETHER YOUR WITHDRAWAL HAS EXCEEDED THE LIA
AMOUNT. WHEN YOU TAKE A WITHDRAWAL, YOU MAY REQUEST A "GROSS" WITHDRAWAL
AMOUNT (E.G., $2000) BUT THEN HAVE ANY CDSC AND/OR TAX WITHHOLDING DEDUCTED
FROM THE AMOUNT YOU ACTUALLY RECEIVE (ALTHOUGH AN MVA MAY ALSO BE APPLIED TO
YOUR REMAINING UNADJUSTED ACCOUNT VALUE, IT IS NOT CONSIDERED FOR PURPOSES OF
DETERMINING EXCESS INCOME). THE PORTION OF A WITHDRAWAL THAT EXCEEDED YOUR LIA
AMOUNT (IF ANY) WOULD BE TREATED AS EXCESS INCOME AND THUS WOULD REDUCE YOUR
LIA AMOUNT IN SUBSEQUENT YEARS. ALTERNATIVELY, YOU MAY REQUEST THAT A "NET"
WITHDRAWAL AMOUNT ACTUALLY BE PAID TO YOU (E.G., $2000), WITH THE
UNDERSTANDING THAT ANY CDSC AND/OR TAX WITHHOLDING (E.G., $240) BE APPLIED TO
YOUR REMAINING UNADJUSTED ACCOUNT VALUE (ALTHOUGH AN MVA MAY ALSO BE APPLIED
TO YOUR REMAINING UNADJUSTED ACCOUNT VALUE, IT IS NOT CONSIDERED FOR PURPOSES
OF DETERMINING EXCESS INCOME). IN THE LATTER SCENARIO, WE DETERMINE WHETHER
ANY PORTION OF THE WITHDRAWAL IS TO BE TREATED AS EXCESS INCOME BY LOOKING TO
THE SUM OF THE NET AMOUNT YOU ACTUALLY RECEIVE (E.G., $2000) AND THE AMOUNT OF
ANY CDSC AND/OR TAX WITHHOLDING (IN THIS EXAMPLE, A TOTAL OF $2240). THE
AMOUNT OF THAT SUM (E.G., THE $2000 YOU RECEIVED PLUS THE $240 FOR THE CDSC
AND/OR TAX WITHHOLDING) THAT EXCEEDS YOUR LIA AMOUNT WILL BE TREATED AS EXCESS
INCOME - THEREBY REDUCING YOUR LIA AMOUNT IN SUBSEQUENT YEARS.
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.
(Note that for purposes of the age tiers used with this benefit, we deem the
Annuitant to have reached age 59 1/2 on the 183/rd/ day after his/her 59/th/
birthday).
The LIA Amount is increased by double the Annual 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).
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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). Subject to state law, 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 Unadjusted 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 Unadjusted 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 UNADJUSTED 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. 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 LIA AMOUNT IN SUBSEQUENT ANNUITY YEARS UNTIL THE DEATH OF
THE DESIGNATED LIFE.
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 Unadjusted 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.
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.
TERMINATION OF HIGHEST DAILY LIFETIME 6 PLUS WITH LIA. THE LIA BENEFIT
TERMINATES UPON THE FIRST TO OCCUR OF THE FOLLOWING:
.. YOUR TERMINATION OF THE BENEFIT;
.. YOUR SURRENDER OF THE ANNUITY;
.. OUR RECEIPT OF DUE PROOF OF DEATH OF THE DESIGNATED LIFE;
.. THE ANNUITY DATE, IF UNADJUSTED ACCOUNT VALUE REMAINS ON THE ANNUITY DATE
AND AN ELECTION IS MADE TO COMMENCE ANNUITY PAYMENTS PRIOR TO THE TENTH
ANNUITY ANNIVERSARY;
.. THE VALUATION DAY ON WHICH EACH OF THE UNADJUSTED ACCOUNT VALUE AND THE
ANNUAL INCOME AMOUNT IS ZERO; OR
.. IF YOU CEASE TO MEET OUR REQUIREMENTS FOR ELECTIONS OF THIS BENEFIT.
Highest Daily Lifetime 6 Plus with LIA uses the same predetermined
mathematical formula used with Highest Daily Lifetime 6 Plus and Spousal
Highest Daily Lifetime 6 Plus. See the pertinent discussion in Highest Daily
Lifetime 6 Plus above.
SPOUSAL HIGHEST DAILY LIFETIME 6 PLUS INCOME BENEFIT (SHD6 PLUS)
Spousal Highest Daily Lifetime 6 Plus Income Benefit (SHD6 Plus) is a lifetime
guaranteed minimum withdrawal benefit, under which, subject to the terms of
the benefit, we guarantee your ability to take a certain annual withdrawal
amount for the lives of two individuals who are spouses. Spousal Highest Daily
Lifetime 6 Plus is no longer available for election
If you have elected this benefit, the benefit 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 Unadjusted 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,
provided you have not made withdrawals of Excess Income that result in your
Unadjusted
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Account Value being reduced to zero. We also permit you to designate the first
withdrawal from your Annuity as a one-time "Non-Lifetime Withdrawal." All
other withdrawals from your Annuity are considered a "Lifetime Withdrawal"
under the benefit. Withdrawals are taken first from your own Account Value. We
are only required to begin making lifetime income payments to you under our
guarantee when and if your Unadjusted Account Value is reduced to zero (for
any reason other than due to partial withdrawals of Excess Income). 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 predetermined
mathematical formula we employ that may periodically transfer your Unadjusted
Account Value to and from the AST Investment Grade Bond Sub-account. See the
section above entitled "How Highest Daily Lifetime 6 Plus Transfers Unadjusted
Account Value Between Your Permitted Sub-accounts and the AST Investment Grade
Bond Sub-account."
Spousal Highest Daily Lifetime 6 Plus is the spousal version of Highest Daily
Lifetime 6 Plus. 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" 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 Unadjusted Account Value as of
the date the new benefit becomes active. Spousal Highest Daily Lifetime 6 Plus
must have been elected based on two designated lives, as described below. The
youngest designated life must have been at least 50 years old and the oldest
designated life must have been 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 living benefit, although you may elect any optional death
benefit. As long as your Spousal Highest Daily Lifetime 6 Plus Benefit is in
effect, you must allocate your Unadjusted Account Value in accordance with the
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.
ALTHOUGH YOU ARE GUARANTEED THE ABILITY TO WITHDRAW YOUR ANNUAL INCOME AMOUNT
FOR LIFE EVEN IF YOUR UNADJUSTED ACCOUNT VALUE FALLS TO ZERO, IF YOU TAKE A
WITHDRAWAL OF EXCESS INCOME (DESCRIBED BELOW) THAT BRINGS YOUR UNADJUSTED
ACCOUNT VALUE TO ZERO, YOUR ANNUAL INCOME AMOUNT ALSO WOULD FALL TO ZERO, AND
THE BENEFIT AND THE ANNUITY THEN WOULD TERMINATE. IN THAT SCENARIO, NO FURTHER
AMOUNT WOULD BE PAYABLE UNDER THE SPOUSAL HIGHEST DAILY LIFETIME 6 PLUS
BENEFIT. AS TO THE IMPACT OF SUCH A SCENARIO ON ANY OTHER OPTIONAL BENEFIT YOU
MAY HAVE, PLEASE SEE THE APPLICABLE SECTION IN THIS PROSPECTUS.
You may also participate in the 6 or 12 Month Dollar Cost Averaging Program if
you elect Spousal Highest Daily Lifetime 6 Plus, subject to the 6 or 12 Month
DCA Program's rules.
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 Unadjusted
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 Unadjusted
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 Unadjusted 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 Unadjusted Account Value on the current Valuation Day.
If you have not made a Lifetime Withdrawal on or before the 10th or 20/th/
Anniversary of the effective date of the benefit, your Periodic Value on the
10th or 20th 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 10th anniversary) or 400% (on the 20th anniversary) of the
Unadjusted Account Value on the effective date of the benefit including
any Purchase Payments (including any associated Purchase Credits) made
on that day;
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(b)200% (on the 10th anniversary) or 400% (on the 20th 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.
In the rider for this benefit, as respects the preceding paragraph, we use the
term "Guaranteed Base Value" to refer to the Unadjusted Account Value on the
effective date of the benefit, plus the amount of any "adjusted" Purchase
Payments made within one year after the effective date of the benefit.
"Adjusted" Purchase Payments means Purchase Payments we receive, increased by
any Purchase Credits applied to your Account Value in relation to Purchase
Payments, and decreased by any fees or tax charges deducted from such Purchase
Payments upon allocation to the Annuity.
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 Unadjusted 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 at the first Lifetime Withdrawal and does not reduce in
subsequent Annuity Years, as described below. The percentage initially depends
on the age of the younger 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
younger 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 and also will reduce the Protected Withdrawal Value
on a dollar-for-dollar basis. 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 Unadjusted Account Value immediately prior to such withdrawal (see
examples of this calculation below). Excess Income also will reduce the
Protected Withdrawal Value by the same ratio.
AS DISCUSSED IN THIS PARAGRAPH, WHEN YOU MAKE A PARTIAL WITHDRAWAL THAT IS
SUBJECT TO A CDSC AND/OR TAX WITHHOLDING, WE WILL IDENTIFY THE AMOUNT THAT
INCLUDES NOT ONLY THE AMOUNT YOU ACTUALLY RECEIVE, BUT ALSO THE AMOUNT OF THE
CDSC AND/OR TAX WITHHOLDING, TO DETERMINE WHETHER YOUR WITHDRAWAL HAS EXCEEDED
THE ANNUAL INCOME AMOUNT. WHEN YOU TAKE A PARTIAL WITHDRAWAL, YOU MAY REQUEST
A "GROSS" WITHDRAWAL AMOUNT (E.G., $2000) BUT THEN HAVE ANY CDSC AND/OR TAX
WITHHOLDING DEDUCTED FROM THE AMOUNT YOU ACTUALLY RECEIVE (ALTHOUGH AN MVA MAY
ALSO BE APPLIED TO YOUR REMAINING UNADJUSTED ACCOUNT VALUE, IT IS NOT
CONSIDERED FOR PURPOSES OF DETERMINING EXCESS INCOME). THE PORTION OF A
WITHDRAWAL THAT EXCEEDED YOUR ANNUAL INCOME AMOUNT (IF ANY) WOULD BE TREATED
AS EXCESS INCOME AND THUS WOULD REDUCE YOUR ANNUAL INCOME AMOUNT IN SUBSEQUENT
YEARS. ALTERNATIVELY, YOU MAY REQUEST THAT A "NET" WITHDRAWAL AMOUNT ACTUALLY
BE PAID TO YOU (E.G., $2000), WITH THE UNDERSTANDING THAT ANY CDSC AND/OR TAX
WITHHOLDING (E.G., $240) BE APPLIED TO YOUR REMAINING UNADJUSTED ACCOUNT VALUE
(ALTHOUGH AN MVA MAY ALSO BE APPLIED TO YOUR REMAINING UNADJUSTED ACCOUNT
VALUE, IT IS NOT CONSIDERED FOR PURPOSES OF DETERMINING EXCESS INCOME). IN THE
LATTER SCENARIO, WE DETERMINE WHETHER ANY PORTION OF THE WITHDRAWAL IS TO BE
TREATED AS EXCESS INCOME BY LOOKING TO THE SUM OF THE NET AMOUNT YOU ACTUALLY
RECEIVE (E.G., $2000) AND THE AMOUNT OF ANY CDSC AND/OR TAX WITHHOLDING (IN
THIS EXAMPLE, A TOTAL OF $2240). THE AMOUNT OF THAT SUM (E.G., THE $2000 YOU
RECEIVED PLUS THE $240 FOR THE CDSC AND/OR TAX WITHHOLDING) THAT EXCEEDS YOUR
ANNUAL INCOME AMOUNT WILL BE TREATED AS EXCESS INCOME - THEREBY REDUCING YOUR
ANNUAL INCOME AMOUNT IN SUBSEQUENT YEARS.
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) immediately 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). Subject to state law, 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.
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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 Unadjusted 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 younger 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. We will not
automatically increase your Annual Income Amount solely as a result of your
attaining a new age that is associated with a new age-based percentage. The
Unadjusted 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 Unadjusted 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 Unadjusted
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 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. Any such increased
charge will not be greater than the maximum charge set forth in the table
entitled "Your Optional Benefit Fees and Charges".
If you are enrolled in a Systematic Withdrawal program, we will not
automatically increase the withdrawal amount when there is an increase to the
Annual Income Amount. You must notify us in order to increase the withdrawal
amount of any Systematic Withdrawal program.
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 partial
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 carryover 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 Unadjusted Account Value, it
is possible for the Unadjusted 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 November 1, 2010
.. The Spousal Highest Daily Lifetime 6 Plus benefit is elected on August 1,
2011
.. The younger designated life was 70 years old when he/she elected the
Spousal Highest Daily Lifetime 6 Plus benefit.
.. The first withdrawal is a Lifetime Withdrawal
EXAMPLE OF DOLLAR-FOR-DOLLAR REDUCTIONS
On October 24, 2011, the Protected Withdrawal Value is $120,000, resulting in
an Annual Income Amount of $6,000 (since the younger 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
October 31, 2011) 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 October 27, 2011 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
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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 Excess Income to the Unadjusted Account Value
immediately prior to the Excess Income. (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:
Unadjusted Account Value before Lifetime Withdrawal $118,000.00
Less amount of "non" Excess Income $ 3,500.00
Unadjusted Account Value immediately before Excess Income of $1,500 $114,500.00
Excess Income amount $ 1,500.00
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 after the first Lifetime Withdrawal, the
Annual Income Amount is stepped-up if the appropriate percentage (based on the
younger designated life's age on that 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 (including any associated Purchase Credits), is greater than the
Annual Income Amount, adjusted for Excess Income 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 Income on October 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 Unadjusted Account Value adjusted for withdrawals and
Purchase Payments (including any associated Purchase Credits), is greater than
$5921.40. Here are the calculations for determining the daily values. Only the
October 26 value is being adjusted for Excess Income as the October 28 and
October 31 Valuation Days occur after the Excess Income on October 27.
HIGHEST DAILY VALUE ADJUSTED ANNUAL INCOME
(ADJUSTED FOR WITHDRAWAL AMOUNT (5% OF THE
DATE* ACCOUNT VALUE AND PURCHASE PAYMENTS)** HIGHEST DAILY VALUE)
----- ------------- ------------------------ ----------------------
October 26, 2011 $119,000.00 $119,000.00 $5,950.00
October 27, 2011 $113,000.00 $113,986.95 $5,699.35
October 28, 2011 $113,000.00 $113,986.95 $5,699.35
October 31, 2011 $119,000.00 $119,000.00 $5,950.00
* In this example, the Annuity Anniversary date is November 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 November 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 October 26, resulting in an adjusted Annual Income Amount of
$5,950.00. This amount is adjusted on October 27 to reflect the $5,000
withdrawal. The calculations for the adjustments are:
. The Unadjusted Account Value of $119,000 on October 26 is first reduced
dollar-for-dollar by $3,500 ($3,500 is the remaining Annual Income
Amount for the Annuity Year), resulting in an Unadjusted Account Value
of $115,500 before the Excess Income.
. This amount ($115,500) is further reduced by 1.31% (this is the ratio in
the above example which is the Excess Income divided by the Unadjusted
Account Value immediately preceding the Excess Income) resulting in a
Highest Daily Value of $113,986.95.
. The adjusted Annual Income Amount is carried forward to the next
Valuation Date of October 28. At this time, we compare this amount to 5%
of the Unadjusted Account Value on October 28. Since the October 27
adjusted Annual Income Amount of $5,699.35 is greater than $5,650.00 (5%
of $113,000), we continue to carry $5,699.35 forward to the next and
final Valuation Day of October 31. The Unadjusted Account Value on
October 31 is $119,000 and 5% of this amount is $5,950. Since this is
greater than $5,699.35, the adjusted Annual Income Amount is reset to
$5,950.00.
In this example, 5% of the October 31 value results in the highest amount of
$5,950.00. Since this amount is greater than the current year's Annual Income
Amount of $5,921.40 (adjusted for Excess Income), the Annual Income Amount for
the next Annuity Year, starting on November 1, 2011 and continuing through
October 31, 2012, 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. You
cannot take a Non-Lifetime Withdrawal in an amount that would cause your
Annuity's Account Value, after taking the withdrawal, to fall below the
minimum Surrender Value (see "Surrenders - Surrender Value" earlier in this
prospectus). This Non-Lifetime Withdrawal will not establish your 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
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tell us at the time you take the partial withdrawal 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 Annual Income Amount,
which is based on your Protected Withdrawal Value. Once you elect the
Non-Lifetime Withdrawal or Lifetime Withdrawals, no additional Non-Lifetime
Withdrawals may be taken. If you do not take a Non-Lifetime Withdrawal before
beginning Lifetime Withdrawals, you lose the ability to take it.
The Non-Lifetime Withdrawal will proportionally reduce the Protected
Withdrawal Value. It will also proportionally reduce the Periodic Value
guarantees on the tenth and twentieth anniversaries of the benefit effective
date (see description in "Key Feature - Protected Withdrawal Value," above).
It will reduce both by the percentage the total withdrawal amount (including
any applicable CDSC and any applicable MVA) represents of the then current
Unadjusted 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. Thus, the first withdrawal will be a 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, 2010
. The Spousal Highest Daily Lifetime 6 Plus benefit is elected on
September 1, 2011
. The Unadjusted 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 3, 2011, the Protected Withdrawal Value is $125,000, the 10th
benefit year minimum Periodic Value guarantee is $210,000 and the 20th benefit
year minimum Periodic Value guarantee is $420,000, and the Unadjusted Account
Value is $120,000. Assuming $15,000 is withdrawn from the Annuity on
October 3, 2011 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 Unadjusted
Account Value just prior to the withdrawal being taken.
HERE IS THE CALCULATION:
Withdrawal amount $ 15,000
Divided by Unadjusted 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
10th benefit year Minimum Periodic Value $183,750
20th benefit year Minimum Periodic Value $367,500
REQUIRED MINIMUM DISTRIBUTIONS
See the sub-section entitled "Required Minimum Distributions" in the section
above concerning Highest Daily Lifetime 6 Plus for a discussion of the
relationship between the RMD amount and the Annual Income Amount.
BENEFITS UNDER SPOUSAL HIGHEST DAILY LIFETIME 6 PLUS
.. To the extent that your Unadjusted 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 Unadjusted 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. After the Unadjusted Account Value is reduced to zero, 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
UNADJUSTED 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 PARTIAL 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.
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.. Please note that if your Unadjusted 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 Latest Annuity Date 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 Unadjusted Account Value, less any applicable state
required premium tax, 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. If applying your Unadjusted
Account Value, less any applicable tax charges, to our current life
only (or joint life, depending on the number of designated lives
remaining) annuity payment rates results in a higher annual payment,
we will give you the higher annual payment.
.. In the absence of an election when mandatory annuity payments are to begin,
we currently make annual annuity payments as a joint and survivor or single
(as applicable) life fixed annuity with eight payments certain, by applying
the greater of the annuity rates then currently available or the annuity
rates guaranteed in your Annuity. We reserve the right at any time to
increase or decrease the certain period in order to comply with the Code
(e.g., to shorten the period certain to match life expectancy under
applicable Internal Revenue Service tables). 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 Unadjusted 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.
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 partial
withdrawals that exceed the Annual Income Amount. If you have an active
Systematic Withdrawal program running at the time you elect this benefit,
the first systematic withdrawal that processes after your election of the
benefit will be deemed a Lifetime Withdrawal. 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 MVA Options. If you have an active Systematic Withdrawal program
running at the time you elect this benefit, the program must withdraw funds
pro rata.
.. Any Lifetime Withdrawal that you take that is less than or equal to the
Annual Income Amount is not subject to a CDSC, even if the total amount of
such withdrawals in any Annuity Year exceeds the maximum Free Withdrawal
amount. For purposes of calculating a CDSC on any future withdrawal,
Lifetime Withdrawals that are less than or equal to the Annual Income
Amount in an Annuity Year are not treated as withdrawals of Purchase
Payments. Moreover, any Lifetime Withdrawal that is treated as Excess
Income is subject to any applicable CDSC if the withdrawal is greater than
the Free Withdrawal amount.
.. You should carefully consider when to begin taking Lifetime Withdrawals. If
you begin taking withdrawals early, you may maximize the time during which
you may take Lifetime Withdrawals due to longer life expectancy, and you
will be using an optional benefit for which you are paying a charge. On the
other hand, you could limit the value of the benefit if you begin taking
withdrawals too soon. For example, withdrawals reduce your Unadjusted
Account Value and may limit the potential for increasing your Protected
Withdrawal Value. You should discuss with your Financial Professional when
it may be appropriate for you to begin taking Lifetime Withdrawals.
.. You cannot allocate Purchase Payments or transfer Unadjusted Account Value
to or from the AST Investment Grade Bond Sub-account. A summary description
of the AST Investment Grade Bond Portfolios appears in the prospectus
section entitled "Investment Options." In addition, you can find a copy of
the AST Investment Grade Bond Portfolio prospectus by going to
www.prudentialannuities.com.
.. Transfers to and from the elected Sub-accounts, the DCA MVA 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, 100% of your Unadjusted Account Value must
be allocated to the Permitted Sub-accounts. We may amend the Permitted
Sub-accounts from time to time. Changes to Permitted Sub-accounts, or to
the requirements as to how you may allocate your Unadjusted Account Value
with this benefit, may apply to current participants in the benefit. To the
extent that changes apply to current participants in the benefit, they will
apply only upon re-allocation of Unadjusted Account Value, or upon addition
of additional Purchase Payments. That is, we will not require such current
participants to re-allocate Unadjusted Account Value to comply with any new
requirements.
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.. Any Death Benefit, including any optional Death Benefit that you elected,
will terminate if withdrawals taken under Spousal Highest Daily Lifetime 6
Plus reduce your Unadjusted Account Value to zero (see "Death Benefits"
earlier in the prospectus).
.. The current charge for Spousal Highest Daily Lifetime 6 Plus is 0.95%
annually of the greater of Unadjusted Account Value and Protected
Withdrawal Value. The maximum charge for Spousal Highest Daily Lifetime 6
Plus is 1.50% annually of the greater of the Unadjusted Account Value and
Protected Withdrawal Value. As discussed in "Highest Daily Auto Step-Up"
above, we may increase the fee upon a step-up under this benefit. We deduct
this charge on quarterly anniversaries of the benefit effective date, based
on the values on the last Valuation Day prior to the quarterly anniversary.
Thus, we deduct, on a quarterly basis, 0.2375% of the greater of the prior
Valuation Day's Unadjusted 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. You will
begin paying this charge as of the effective date of the benefit even if
you do not begin taking withdrawals for many years, or ever. We will not
refund the charges you have paid if you choose never to take any
withdrawals and/or if you never receive any lifetime income payments.
If the deduction of the charge would result in the Unadjusted Account Value
falling below the lesser of $500 or 5% of the sum of the Unadjusted 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 Unadjusted Account Value to fall below the Account
Value Floor. If the Unadjusted Account Value on the date we would deduct a
charge for the benefit is less than the Account Value Floor, then no charge
will be assessed for that benefit quarter. Charges deducted upon termination
of the benefit may cause the Unadjusted Account Value to fall below the
Account Value Floor. 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 Unadjusted Account Value to fall below the Account
Value Floor. While the deduction of the charge (other than the final charge)
may not reduce the Unadjusted Account Value to zero, withdrawals may reduce
the Unadjusted Account Value to zero. If this happens and the Annual Income
Amount is greater than zero, we will make payments under the benefit.
ELECTION OF AND DESIGNATIONS UNDER THE BENEFIT
Spousal Highest Daily Lifetime 6 Plus is no longer available. Spousal Highest
Daily Lifetime 6 Plus could only be elected based on two designated lives.
Designated lives must have been 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. Spousal Highest Daily Lifetime 6 Plus only could be
elected if the Owner, Annuitant, and Beneficiary designations were as follows:
.. One Annuity Owner, where the Annuitant and the Owner are the same person
and the sole Beneficiary is the Owner's spouse. The younger Owner/Annuitant
and the Beneficiary must be at least 50 years old and the older 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 younger Owner must be
at least 50 years old and the older 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 younger of the Annuitant and the Contingent Annuitant must
be at least 50 years old and the older 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
designations under this benefit, however if the Beneficiary is changed, the
benefit may not be eligible to be continued upon the death of the first
designated life. 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.
If you are currently participating in a Systematic Withdrawal program, amounts
withdrawn under the program must be taken on a pro rata basis from your
Annuity's Sub-accounts (i.e., in direct proportion to the proportion that each
such Sub-account bears to your total Account Value) in order for you to be
eligible for the benefit. Thus, you may not elect Spousal Highest Daily
Lifetime 6 Plus so long as you participate in a Systematic Withdrawal program
in which withdrawals are not taken pro rata.
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.
C-21
THE BENEFIT AUTOMATICALLY TERMINATES UPON THE FIRST TO OCCUR OF THE FOLLOWING:
.. UPON OUR RECEIPT OF DUE PROOF OF DEATH OF THE FIRST DESIGNATED LIFE, IF THE
SURVIVING SPOUSE OPTS TO TAKE THE DEATH BENEFIT UNDER THE ANNUITY (RATHER
THAN CONTINUE THE ANNUITY) OR IF THE SURVIVING SPOUSE IS NOT AN ELIGIBLE
DESIGNATED LIFE;
.. UPON THE DEATH OF THE SECOND DESIGNATED LIFE;
.. YOUR TERMINATION OF THE BENEFIT;
.. YOUR SURRENDER OF THE ANNUITY;
.. 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);
.. BOTH THE UNADJUSTED ACCOUNT VALUE AND ANNUAL INCOME AMOUNT EQUAL ZERO; OR
.. 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 the
death of the second 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
Unadjusted 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, and (ii) unless you are
participating in an asset allocation program (i.e., Custom Portfolios 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
Unadjusted Account Value in the variable Investment Options is zero, we will
transfer such amounts to the AST Money Market Sub-account.
HOW SPOUSAL HIGHEST DAILY LIFETIME 6 PLUS TRANSFERS UNADJUSTED ACCOUNT VALUE
BETWEEN YOUR PERMITTED SUB-ACCOUNTS AND THE AST INVESTMENT GRADE BOND
SUB-ACCOUNT. See "How Highest Daily Lifetime 6 Plus Transfers Unadjusted
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
Please see the Additional Tax Considerations section under Highest Daily
Lifetime 6 Plus above.
FORMULA FOR HIGHEST DAILY LIFETIME 6 PLUS INCOME BENEFIT, HIGHEST DAILY
LIFETIME 6 PLUS INCOME BENEFIT WITH LIFETIME INCOME ACCELERATOR, AND SPOUSAL
HIGHEST DAILY LIFETIME 6 PLUS INCOME BENEFIT
Please see Appendix I: "Formula for Highest Daily Lifetime Income 2.0 Suite,
Highest Daily Lifetime Income Suite and Highest Daily Lifetime 6 Plus Suite of
Living Benefits."
C-22
APPENDIX D - HIGHEST DAILY LIFETIME INCOME, HIGHEST DAILY LIFETIME INCOME WITH
LIA AND SPOUSAL HIGHEST DAILY LIFETIME INCOME - NO LONGER AVAILABLE FOR NEW
ELECTIONS
These benefits were offered January 24, 2011 to August 20, 2012.
HIGHEST DAILY LIFETIME INCOME BENEFIT
Highest Daily Lifetime Income is a lifetime guaranteed minimum withdrawal
benefit, under which, subject to the terms of the benefit, we guarantee your
ability to take a certain annual withdrawal amount for life. We reserve the
right, in our sole discretion, to cease offering this benefit for new
elections, at any time.
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
Unadjusted 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 provided that you do not take withdrawals of
Excess Income that result in your Unadjusted Account Value being reduced to
zero. We also permit you to designate the first withdrawal from your Annuity
as a one-time "Non-Lifetime Withdrawal". All other partial withdrawals from
your Annuity are considered a "Lifetime Withdrawal" under the benefit.
Withdrawals are taken first from your own Account Value. We are only required
to begin making lifetime income payments to you under our guarantee when and
if your Unadjusted Account Value is reduced to zero (for any reason other than
due to partial withdrawals of Excess Income). Highest Daily Lifetime Income
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 Income is the predetermined
mathematical formula we employ that may periodically transfer your Unadjusted
Account Value to and from the AST Investment Grade Bond Sub-account. See the
section below entitled "How Highest Daily Lifetime Income Transfers Unadjusted
Account Value Between Your Permitted Sub-accounts and the AST Investment Grade
Bond Sub-account."
The income benefit under Highest Daily Lifetime Income currently is based on a
single "designated life" who is at least 45 years old on the date that the
benefit is acquired. Highest Daily Lifetime Income is not available if you
elect any other optional living benefit, although you may elect any optional
death benefit. As long as your Highest Daily Lifetime Income is in effect, you
must allocate your Unadjusted Account Value in accordance with the 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.
Although you are guaranteed the ability to withdraw your Annual Income Amount
for life even if your Unadjusted Account Value falls to zero, if you take a
withdrawal of Excess Income (described below) that brings your Unadjusted
Account Value to zero, your Annual Income Amount also would fall to zero, and
the benefit and the Annuity then would terminate. In that scenario, no further
amount would be payable under Highest Daily Lifetime Income. As to the impact
of such a scenario on any other optional benefit you may have, please see the
applicable section in this prospectus. For example, if the Annuity terminates
in this scenario, you would no longer have any optional death benefit that you
may have elected (see the optional death benefits section of this prospectus).
You may also participate in the 6 or 12 Month DCA Program if you elect Highest
Daily Lifetime Income, subject to the 6 or 12 Month DCA Program's rules. See
the section of this prospectus entitled "6 or 12 Month Dollar Cost Averaging
Program" for details.
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 Unadjusted
Account Value and not available as cash or a lump sum withdrawal. On the
effective date of the benefit, the Protected Withdrawal Value is equal to your
Unadjusted 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 Unadjusted 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 5% 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 Unadjusted Account Value on the current Valuation Day.
D-1
If you have not made a Lifetime Withdrawal on or before the 12/th/ Anniversary
of the effective date of the benefit, your Periodic Value on the 12/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% of the Unadjusted Account Value on the effective date of the
benefit including any Purchase Payments (including any associated
Purchase Credits) made on that day;
(b)200% 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 Unadjusted Account
Value upon any step-up, increased for subsequent Purchase Payments (including
any associated Purchase Credits) and reduced for subsequent Lifetime
Withdrawals (see the examples that begin immediately prior to the sub-heading
below entitled "Example of dollar-for-dollar reductions").
KEY FEATURE - ANNUAL INCOME AMOUNT UNDER HIGHEST DAILY LIFETIME INCOME
The Annual Income Amount is equal to a specified percentage of the Protected
Withdrawal Value at the first Lifetime Withdrawal and does not reduce in
subsequent Annuity Years, as described below. The percentage initially depends
on the age of the Annuitant on the date of the first Lifetime Withdrawal. The
percentages are: 3% for ages 45-54; 4% for ages 55 to less than 59 1/2; 5% for
ages 59 1/2 to 84, and 6% for ages 85 or older. Under Highest Daily Lifetime
Income, 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 and also will reduce the Protected Withdrawal Value on a
dollar-for-dollar basis. 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). Excess
Income also will reduce the Protected Withdrawal Value by the same ratio.
AS DISCUSSED IN THIS PARAGRAPH, WHEN YOU MAKE A PARTIAL WITHDRAWAL THAT IS
SUBJECT TO A CDSC AND/OR TAX WITHHOLDING, WE WILL IDENTIFY THE AMOUNT THAT
INCLUDES NOT ONLY THE AMOUNT YOU ACTUALLY RECEIVE, BUT ALSO THE AMOUNT OF THE
CDSC AND/OR TAX WITHHOLDING, TO DETERMINE WHETHER YOUR WITHDRAWAL HAS EXCEEDED
THE ANNUAL INCOME AMOUNT. WHEN YOU TAKE A PARTIAL WITHDRAWAL, YOU MAY REQUEST
A "GROSS" WITHDRAWAL AMOUNT (E.G., $2000) BUT THEN HAVE ANY CDSC AND/OR TAX
WITHHOLDING DEDUCTED FROM THE AMOUNT YOU ACTUALLY RECEIVE (ALTHOUGH AN MVA MAY
ALSO BE APPLIED TO YOUR REMAINING UNADJUSTED ACCOUNT VALUE, IT IS NOT
CONSIDERED FOR PURPOSES OF DETERMINING EXCESS INCOME). THE PORTION OF A
WITHDRAWAL THAT EXCEEDED YOUR ANNUAL INCOME AMOUNT (IF ANY) WOULD BE TREATED
AS EXCESS INCOME AND THUS WOULD REDUCE YOUR ANNUAL INCOME AMOUNT IN SUBSEQUENT
YEARS. ALTERNATIVELY, YOU MAY REQUEST THAT A "NET" WITHDRAWAL AMOUNT ACTUALLY
BE PAID TO YOU (E.G., $2000), WITH THE UNDERSTANDING THAT ANY CDSC AND/OR TAX
WITHHOLDING (E.G., $240) BE APPLIED TO YOUR REMAINING UNADJUSTED ACCOUNT VALUE
(ALTHOUGH AN MVA MAY ALSO BE APPLIED TO YOUR REMAINING UNADJUSTED ACCOUNT
VALUE, IT IS NOT CONSIDERED FOR PURPOSES OF DETERMINING EXCESS INCOME). IN THE
LATTER SCENARIO, WE DETERMINE WHETHER ANY PORTION OF THE WITHDRAWAL IS TO BE
TREATED AS EXCESS INCOME BY LOOKING TO THE SUM OF THE NET AMOUNT YOU ACTUALLY
RECEIVE (E.G., $2000) AND THE AMOUNT OF ANY CDSC AND/OR TAX WITHHOLDING (IN
THIS EXAMPLE, A TOTAL OF $2240). THE AMOUNT OF THAT SUM (E.G., THE $2000 YOU
RECEIVED PLUS THE $240 FOR THE CDSC AND/OR TAX WITHHOLDING) THAT EXCEEDS YOUR
ANNUAL INCOME AMOUNT WILL BE TREATED AS EXCESS INCOME - THEREBY REDUCING YOUR
ANNUAL INCOME AMOUNT IN SUBSEQUENT YEARS.
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 Income and subsequent to the first Lifetime Withdrawal will
(i) immediately 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: 3% for ages 45 -54 ; 4% for ages 55
to less than 59 1/2; 5% for ages 59 1/2 to 84, and 6% for ages 85 or 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). Subject to
D-2
state law, 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 Income. 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
Unadjusted 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: 3% for
ages 45-54; 4% for ages 55 to less than 59 1/2; 5% for ages 59 1/2-84, and 6%
for ages 85 or 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. We will not automatically
increase your Annual Income Amount solely as a result of your attaining a new
age that is associated with a new age-based percentage. The Unadjusted 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 Unadjusted 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 Unadjusted 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 Income 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 Income 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 consult
with your Financial Professional and carefully evaluate whether the amount of
the step-up justifies the increased fee to which you will be subject. Any such
increased charge will not be greater than the maximum charge set forth in the
table entitled "Your Optional Benefit Fees and Charges."
If you are enrolled in a Systematic Withdrawal program, we will not
automatically increase the withdrawal amount when there is an increase to the
Annual Income Amount. You must notify us in order to increase the withdrawal
amount of any Systematic Withdrawal program.
Highest Daily Lifetime Income does not affect your ability to take partial
withdrawals under your Annuity, or limit your ability to take partial
withdrawals that exceed the Annual Income Amount. Under Highest Daily Lifetime
Income, 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 any Annuity Year are less
than the Annual Income Amount, you cannot carry over the unused portion of the
Annual Income Amount to subsequent Annuity Years. If your cumulative Lifetime
Withdrawals in an Annuity Year exceed the Annual Income Amount, 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).
Because each of the Protected Withdrawal Value and Annual Income Amount is
determined in a way that is not solely related to Unadjusted Account Value, it
is possible for the Unadjusted 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
Income or any other fees and charges under the Annuity. Assume the following
for all three examples:
.. The Issue Date is November 1, 2011
.. Highest Daily Lifetime Income is elected on August 1, 2012
.. The Annuitant was 70 years old when he/she elected Highest Daily Lifetime
Income
.. The first withdrawal is a Lifetime Withdrawal
EXAMPLE OF DOLLAR-FOR-DOLLAR REDUCTIONS
On October 24, 2012, 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 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
October 31, 2012) 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).
D-3
EXAMPLE OF PROPORTIONAL REDUCTIONS
Continuing the previous example, assume an additional withdrawal of $5,000
occurs on October 29, 2012 and the Unadjusted 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
Income to the Unadjusted Account Value immediately prior to the Excess Income.
(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:
Unadjusted Account Value before Lifetime withdrawal $118,000.00
Less amount of "non" Excess Income $ 3,500.00
Unadjusted Account Value immediately before Excess Income of $1,500 $114,500.00
Excess Income amount $ 1,500.00
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 after the first Lifetime Withdrawal, the
Annual Income Amount is stepped-up if the appropriate percentage (based on the
Annuitant's age on that 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 (including
any associated Purchase Credits), is greater than the Annual Income Amount,
adjusted for Excess Income 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 Income on October 29 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 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 greater than $5,921.40. Here are the
calculations for determining the daily values. Only the October 26 value is
being adjusted for Excess Income as the October 30, October 31, and November 1
Valuation Days occur after the Excess Income on October 29.
HIGHEST DAILY VALUE ADJUSTED ANNUAL INCOME
UNADJUSTED (ADJUSTED FOR WITHDRAWAL AMOUNT (5% OF THE
DATE* ACCOUNT VALUE AND PURCHASE PAYMENTS)** HIGHEST DAILY VALUE)
----- ------------- ------------------------ ----------------------
October 26, 2012 $119,000.00 $119,000.00 $5,950.00
October 29, 2012 $113,000.00 $113,986.95 $5,699.35
October 30, 2012 $113,000.00 $113,986.95 $5,699.35
October 31, 2012 $119,000.00 $119,000.00 $5,950.00
November 1, 2012 $118,473.00 $119,000.00 $5,950.00
* In this example, the Annuity Anniversary date is November 1. The Valuation
Dates are every day following the first Lifetime Withdrawal. In subsequent
Annuity Years Valuation Dates will be the Annuity Anniversary and every day
following the Annuity Anniversary. The Annuity Anniversary Date of
November 1 is considered the first Valuation Date in the Annuity Year.
** In this example, the first daily value after the first Lifetime Withdrawal
is $119,000 on October 26, resulting in an adjusted Annual Income Amount of
$5,950.00. This amount is adjusted on October 29 to reflect the $5,000
withdrawal. The calculations for the adjustments are:
. The Unadjusted Account Value of $119,000 on October 26 is first reduced
dollar-for-dollar by $3,500 ($3,500 is the remaining Annual Income
Amount for the Annuity Year), resulting in Unadjusted Account Value of
$115,500 before the Excess Income.
. This amount ($115,500) is further reduced by 1.31% (this is the ratio in
the above example which is the Excess Income divided by the Unadjusted
Account Value immediately preceding the Excess Income) resulting in a
Highest Daily Value of $113,986.95.
. The adjusted October 29 Highest Daily Value, $113,986.95, is carried
forward to the next Valuation Date of October 30. At this time, we
compare this amount to the Unadjusted Account Value on October 30,
$113,000. Since the October 29 adjusted Highest Daily Value of
$113,986.95 is greater than the October 30 value, we will continue to
carry $113,986.95 forward to the next Valuation Day of October 31. The
Unadjusted Account Value on October 31, $119,000.00, becomes the final
Highest Daily Value since it exceeds the $113,986.95 carried forward.
. The October 31 adjusted Highest Daily Value of $119,000.00 is also
greater than the November 1 value, so we will continue to carry
$119,000.00 forward to the final Valuation Day of November 1.
In this example, the final Highest Daily Value of $119,000.00 is converted to
an Annual Income Amount based on the applicable percentage of 5%, generating
an Annual Income Amount of $5,950.00. Since this amount is greater than the
current year's Annual Income Amount of $5,921.40 (adjusted for Excess Income),
the Annual Income Amount for the next Annuity Year, starting on November 1,
2012 and continuing through October 31, 2013, will be stepped-up to $5,950.00.
D-4
NON-LIFETIME WITHDRAWAL FEATURE
You may take a one-time non-lifetime withdrawal ("Non-Lifetime Withdrawal")
under Highest Daily Lifetime Income. It is an optional feature of the benefit
that you can only elect at the time of your first withdrawal. You cannot take
a Non-Lifetime Withdrawal in an amount that would cause your Annuity's Account
Value, after taking the withdrawal, to fall below the minimum Surrender Value
(see "Surrenders - Surrender Value"). 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 Highest
Daily Lifetime Income. You must tell us at the time you take the withdrawal if
your withdrawal is intended to be the Non-Lifetime Withdrawal and not the
first Lifetime Withdrawal under Highest Daily Lifetime Income. If you don't
elect the Non-Lifetime Withdrawal, the first withdrawal you make will be the
first Lifetime Withdrawal that establishes your Annual Income Amount, which is
based on your Protected Withdrawal Value. Once you elect to take the
Non-Lifetime Withdrawal or Lifetime Withdrawals, no additional Non-Lifetime
Withdrawals may be taken. If you do not take a Non-Lifetime Withdrawal before
beginning Lifetime Withdrawals, you lose the ability to take it.
The Non-Lifetime Withdrawal will proportionally reduce the Protected
Withdrawal Value. It will also proportionally reduce the Periodic Value
guarantee on the twelfth anniversary of the benefit effective date (see
description in "Key Feature - Protected Withdrawal Value," above). It will
reduce both by the percentage the total withdrawal amount (including any
applicable CDSC) represents of the then current Unadjusted 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. Thus, the first withdrawal will be a 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, 2011
.. Highest Daily Lifetime Income is elected on September 4, 2012
.. The Unadjusted Account Value at benefit election was $105,000
.. The Annuitant was 70 years old when he/she elected Highest Daily Lifetime
Income
.. No previous withdrawals have been taken under Highest Daily Lifetime Income
On October 3, 2012, the Protected Withdrawal Value is $125,000, the 12th
benefit year minimum Periodic Value guarantee is $210,000, and the Unadjusted
Account Value is $120,000. Assuming $15,000 is withdrawn from the Annuity on
October 3, 2012 and is designated as a Non-Lifetime Withdrawal, all guarantees
associated with Highest Daily Lifetime Income will be reduced by the ratio the
total withdrawal amount represents of the Unadjusted Account Value just prior
to the withdrawal being taken.
HERE IS THE CALCULATION:
Withdrawal amount $ 15,000
Divided by Unadjusted 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
12/th/ benefit year Minimum Periodic Value $183,750
REQUIRED MINIMUM DISTRIBUTIONS
Required Minimum Distributions ("RMD") for this Annuity must be taken by
April 1st in the year following the date you turn age 70 1/2 and by
December 31st for subsequent calendar years. If the annual RMD amount is
greater than the Annual Income Amount, a withdrawal of the RMD amount will not
be treated as a withdrawal of Excess Income, as long as the RMD amount is
calculated by us for this Annuity and administered under a program we support
each calendar year. If you are not participating in an RMD withdrawal program
each calendar year, you can alternatively satisfy the RMD amount without it
being treated as a withdrawal of Excess Income as long as you abide by the
following:
The total amount within an Annuity Year that can be withdrawn is equal to:
1. the Annual Income Amount remaining in the current Annuity Year, plus,
2. The difference between:
a. The RMD amount (assuming the RMD amount is greater than the Annual
Income Amount) less any withdrawals already taken in the calendar
year, less
b. The Annual Income Amount.
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Please see hypothetical examples below for details.
If you do not comply with the rules described above, any withdrawal that
exceeds the Annual Income Amount will be treated as a withdrawal of Excess
Income, which will reduce your Annual Income Amount in future Annuity Years.
This may include situations where you comply with the rules outlined above and
then decide to take additional withdrawals after satisfying your RMD
requirement from the Annuity.
We will assume your first withdrawal under the benefit is a Lifetime
Withdrawal unless you designated the withdrawal as a Non-Lifetime Withdrawal.
Example
The following example is purely hypothetical and intended to illustrate a
scenario as described above. Note that withdrawals must comply with all IRS
guidelines in order to satisfy the Required Minimum Distribution for the
current calendar year.
Assumptions:
RMD Calendar Year
01/01/2011 to 12/31/2011
Annuity Year
06/01/2010 to 05/31/2011
Annual Income Amount and RMD Amount
Annual Income Amount = $5,000
Remaining Annual Income Amount as of 1/3/2011 = $3,000 (a $2,000 withdrawal
was taken on 7/1/2010)
RMD Amount for Calendar Year 2011 = $6,000
The amount you may withdraw in the current Annuity Year (between 1/3/2011 and
5/31/2011) without it being treated as Excess Income is $4,000. Here is the
calculation: $3,000 + ($6,000 - $5,000) = $4,000.
If the $4,000 withdrawal is taken in the current Annuity Year (prior to
6/1/2011), the remaining Annual Income Amount will be zero and the remaining
RMD amount of $2,000 may be taken in the subsequent Annuity Year beginning on
6/1/2011 (when your Annual Income Amount is reset to $5,000).
If you had chosen to not take any additional withdrawals until on or after
6/1/2011, then you would be eligible to withdraw $6,000 without it being
treated as a withdrawal of Excess Income.
BENEFITS UNDER HIGHEST DAILY LIFETIME INCOME
.. To the extent that your Unadjusted 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 Income, 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 Unadjusted 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. After the
Unadjusted Account Value is reduced to zero, you will not be permitted to
make additional Purchase Payments to your Annuity. TO THE EXTENT THAT
CUMULATIVE PARTIAL WITHDRAWALS IN THE ANNUITY YEAR THAT REDUCED YOUR
UNADJUSTED ACCOUNT VALUE TO ZERO ARE MORE THAN THE ANNUAL INCOME AMOUNT,
HIGHEST DAILY LIFETIME INCOME TERMINATES, AND NO ADDITIONAL PAYMENTS ARE
MADE. HOWEVER, IF A PARTIAL 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
DESIGNATED LIFE.
.. Please note that if your Unadjusted 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 Latest Annuity Date 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 Unadjusted Account Value, less any applicable tax charges,
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 Service Office. If applying your Unadjusted
Account Value, less any applicable tax charges, to the life-only
annuity payment rates results in a higher annual payment, we will
give you the higher annual payment.
.. In the absence of an election when mandatory annuity payments are to begin
we currently make annual annuity payments in the form of a single life
fixed annuity with eight payments certain, by applying the greater of the
annuity rates then currently available or the annuity rates guaranteed in
your Annuity. We reserve the right at any time to increase or decrease the
period
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certain in order to comply with the Code (e.g., to shorten the period
certain to match life expectancy under applicable Internal Revenue Service
tables). 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 Unadjusted 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.
OTHER IMPORTANT CONSIDERATIONS
.. Withdrawals under Highest Daily Lifetime Income are subject to all of the
terms and conditions of the Annuity, including any applicable CDSC for the
Non-Lifetime Withdrawal as well as partial withdrawals that exceed the
Annual Income Amount. If you have an active Systematic Withdrawal program
running at the time you elect this benefit, the first systematic withdrawal
that processes after your election of the benefit will be deemed a Lifetime
Withdrawal. Withdrawals made while Highest Daily Lifetime Income 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 MVA Options. If you have an active Systematic
Withdrawal program running at the time you elect this benefit, the program
must withdraw funds pro rata.
.. Any Lifetime Withdrawal that you take that is less than or equal to the
Annual Income Amount is not subject to a CDSC, even if the total amount of
such withdrawals in any Annuity Year exceeds the maximum Free Withdrawal
amount. For purposes of calculating a CDSC on any future withdrawal,
Lifetime Withdrawals that are less than or equal to the Annual Income
Amount in an Annuity Year are not treated as withdrawals of Purchase
Payments. Moreover, any Lifetime Withdrawal that is treated as Excess
Income is subject to any applicable CDSC if the withdrawal is greater than
the Free Withdrawal amount.
.. You should carefully consider when to begin taking Lifetime Withdrawals. If
you begin taking withdrawals early, you may maximize the time during which
you may take Lifetime Withdrawals due to longer life expectancy, and you
will be using an optional benefit for which you are paying a charge. On the
other hand, you could limit the value of the benefit if you begin taking
withdrawals too soon. For example, withdrawals reduce your Unadjusted
Account Value and may limit the potential for increasing your Protected
Withdrawal Value. You should discuss with your Financial Professional when
it may be appropriate for you to begin taking Lifetime Withdrawals.
.. You cannot allocate Purchase Payments or transfer Unadjusted 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 section
entitled "Investment Options." You can find a copy of the AST Investment
Grade Bond Portfolio prospectus by going to www.prudentialannuities.com.
.. Transfers to and from the Permitted Sub-accounts, the DCA MVA Options, and
the AST Investment Grade Bond Sub-account triggered by the predetermined
mathematical formula will not count toward the maximum number of free
transfers allowable under an Annuity.
.. Upon inception of the benefit, 100% of your Unadjusted Account Value must
be allocated to the Permitted Sub-accounts (as defined below). We may amend
the Permitted Sub-accounts from time to time. Changes to the Permitted
Sub-accounts, or to the requirements as to how you may allocate your
Account Value with this benefit, will apply to new elections of the benefit
and may apply to current participants in the benefit. To the extent that
changes apply to current participants in the benefit, they will only apply
upon re-allocation of Account Value, or upon addition of subsequent
Purchase Payments. That is, we will not require such current participants
to re-allocate Account Value to comply with any new requirements.
.. 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 Sub-accounts and (ii) invest the proceeds of those sales in
the Sub-accounts that you have designated. During this reallocation
process, your Unadjusted 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 begin until the close of business on the following
Valuation Day.
.. Any Death Benefit, including any optional Death Benefit that you elect,
will terminate if withdrawals taken under Highest Daily Lifetime Income
reduce your Unadjusted Account Value to zero (see "Death Benefits" earlier
in the prospectus).
.. The current charge for Highest Daily Lifetime Income is 0.95% annually of
the greater of the Unadjusted Account Value and Protected Withdrawal Value.
The maximum charge for Highest Daily Lifetime Income is 1.50% annually of
the greater of the Unadjusted Account Value and Protected Withdrawal Value.
As discussed in "Highest Daily Auto Step-Up" above, we may increase the fee
upon a step-up under this benefit. We deduct this charge on quarterly
anniversaries of the benefit effective date, based on the values on the
last Valuation Day prior to the quarterly anniversary. Thus, we deduct, on
a quarterly basis, 0.2375% of the greater of the prior Valuation Day's
Unadjusted 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. You will begin paying this
charge as of the effective date of the benefit even if you do not begin
taking withdrawals for many years, or ever. We will not refund the charges
you have paid if you choose never to take any withdrawals and/or if you
never receive any lifetime income payments.
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If the deduction of the charge would result in the Unadjusted Account Value
falling below the lesser of $500 or 5% of the sum of the Unadjusted 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 Unadjusted Account Value to fall below the Account
Value Floor. If the Unadjusted Account Value on the date we would deduct a
charge for the benefit is less than the Account Value Floor, then no charge
will be assessed for that benefit quarter. Charges deducted upon termination
of the benefit may cause the Unadjusted Account Value to fall below the
Account Value Floor. If a charge for Highest Daily Lifetime Income 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 Unadjusted Account Value to fall below the Account Value Floor.
While the deduction of the charge (other than the final charge) may not reduce
the Unadjusted Account Value to zero, partial withdrawals may reduce the
Unadjusted Account Value to zero. If this happens and the Annual Income Amount
is greater than zero, we will make payments under the benefit.
ELECTION OF AND DESIGNATIONS UNDER THE BENEFIT
For Highest Daily Lifetime Income, 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 Income. Similarly, any change of
Owner will result in cancellation of Highest Daily Lifetime Income, except if
(a) the new Owner has the same taxpayer identification number as the previous
Owner, (b) ownership is transferred from a custodian or other entity 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 Income can be elected at the time that you purchase
your Annuity or after the Issue Date, subject to its availability, and our
eligibility rules and restrictions. If you elect Highest Daily Lifetime Income
and terminate it, you can re-elect it, subject to our current rules and
availability. See "Termination of Existing Benefits and Election of New
Benefits" for information pertaining to elections, termination and re-election
of benefits. PLEASE NOTE THAT IF YOU TERMINATE A LIVING BENEFIT AND ELECT
HIGHEST DAILY LIFETIME INCOME, YOU LOSE THE GUARANTEES THAT YOU HAD
ACCUMULATED UNDER YOUR EXISTING BENEFIT AND YOUR GUARANTEES UNDER HIGHEST
DAILY LIFETIME INCOME WILL BE BASED ON YOUR UNADJUSTED ACCOUNT VALUE ON THE
EFFECTIVE DATE OF HIGHEST DAILY LIFETIME INCOME. You and your Financial
Professional should carefully consider whether terminating your existing
benefit and electing Highest Daily Lifetime Income is appropriate for you. We
reserve the right to waive, change and/or further limit the election frequency
in the future.
If you wish to elect this benefit and you are currently participating in a
Systematic Withdrawal program, amounts withdrawn under the program must be
taken on a pro rata basis from your Annuity's Sub-accounts (i.e., in direct
proportion to the proportion that each such Sub-account bears to your total
Account Value) in order for you to be eligible for the benefit. Thus, you may
not elect Highest Daily Lifetime Income so long as you participate in a
Systematic Withdrawal program in which withdrawals are not taken pro rata.
TERMINATION OF THE BENEFIT
You may terminate Highest Daily Lifetime Income 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 UPON THE FIRST TO OCCUR OF THE FOLLOWING:
(I)YOUR TERMINATION OF THE BENEFIT,
(II)YOUR SURRENDER OF THE ANNUITY,
(III)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)OUR RECEIPT OF DUE PROOF OF DEATH OF THE OWNER OR ANNUITANT (FOR
ENTITY-OWNED ANNUITIES)
(V)BOTH THE UNADJUSTED ACCOUNT VALUE AND ANNUAL INCOME AMOUNT EQUAL ZERO, OR
(VI)YOU CEASE TO MEET OUR REQUIREMENTS AS DESCRIBED IN "ELECTION OF AND
DESIGNATIONS UNDER THE BENEFIT" ABOVE.
"Due Proof of Death" is satisfied when we receive all of the following in Good
Order: (a) a death certificate or similar documentation acceptable to us;
(b) all representations we require or which are mandated by applicable law or
regulation in relation to the death claim and the payment of death proceeds;
and (c) any applicable election of the method of payment of the death benefit,
if not previously elected by the Owner, by at least one Beneficiary.
Upon termination of Highest Daily Lifetime Income 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.
However, if the amount in the Sub-accounts is not enough to pay the charge, we
will reduce the fee to no more than the amount in the Sub-accounts. With
regard to your investment allocations, upon termination we will: (i) leave
intact amounts that are held in the Permitted Sub-accounts, and (ii) unless
you are participating in an asset allocation program (i.e., Static
Re-balancing 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
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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
Unadjusted Account Value in the variable Investment Options is zero, we will
transfer such amounts to the AST Money Market Sub-account.
If a surviving spouse elects to continue the Annuity, Highest Daily Lifetime
Income terminates upon Due Proof of Death. The spouse may newly elect the
benefit subject to the restrictions discussed above.
HOW HIGHEST DAILY LIFETIME INCOME TRANSFERS UNADJUSTED ACCOUNT VALUE BETWEEN
YOUR PERMITTED SUB-ACCOUNTS AND THE AST INVESTMENT GRADE BOND SUB-ACCOUNT
An integral part of Highest Daily Lifetime Income (including Highest Daily
Lifetime Income with LIA and Spousal Highest Daily Lifetime Income) is the
predetermined mathematical formula used to transfer Unadjusted Account Value
between the Permitted Sub-accounts and a specified bond fund within the
Advanced Series Trust (the AST Investment Grade Bond Sub-account, referred to
in this section as the "Bond Sub-account"). This predetermined mathematical
formula ("formula") runs each Valuation Day that the benefit is in effect on
your Annuity and, as a result, transfers of Unadjusted Account Value between
the Permitted Sub-accounts and the Bond Sub-account can occur on any Valuation
Day subject to the conditions described below. Only the predetermined
mathematical formula can transfer Unadjusted Account Value to and from the
Bond Sub-account, and thus you may not allocate Purchase Payments to or make
transfers to or from the Bond Sub-account. We are not providing you with
investment advice through the use of the formula nor does the formula
constitute an investment strategy that we are recommending to you. 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 Income. The formula is not forward looking and contains no predictive
or projective component with respect to the markets, the Unadjusted Account
Value or the Protected Withdrawal Value. The formula is set forth in Appendix
I (and is described below).
As indicated above, we limit the Sub-accounts to which you may allocate
Unadjusted Account Value if you elect Highest Daily Lifetime Income. For
purposes of these benefits, we refer to those permitted Investment Options as
the "Permitted Sub-accounts". Because these restrictions and the use of the
formula lessen the risk that your Unadjusted Account Value will be reduced to
zero while you are still alive, they also reduce the likelihood that we will
make any lifetime income payments under this benefit. They may also limit your
upside potential for growth.
If you are participating in Highest Daily Lifetime Income 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 Bond
Sub-account, then the amount to be transferred will be taken entirely from the
Sub-accounts, provided there is sufficient Unadjusted Account Value in those
Sub-accounts to meet the required transfer amount. Only if there is
insufficient Unadjusted Account Value in those Sub-accounts will an amount be
transferred from the DCA MVA Options. For purposes of the discussion below
concerning transfers from the Permitted Sub-accounts to the Bond Sub-account,
amounts held within the DCA MVA Options are included within the term
"Permitted Sub-accounts". Thus, amounts may be transferred from the DCA MVA
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 Bond Sub-account will only be transferred
to the Permitted Sub-accounts, not the DCA MVA Options. We will not assess any
Market Value Adjustment with respect to transfers under the formula from the
DCA MVA Options.
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. This amount may be different than the actual Annual Income
Amount currently guaranteed under your benefit. Then it produces an estimate
of the total amount targeted in the formula, 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 Lifetime
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 the X Series), and
any withdrawals of Excess Income. Next, the formula subtracts from the Target
Value the amount held within the Bond Sub-account on that day, and divides
that difference by the amount held within the Permitted Sub-accounts. That
ratio, which essentially isolates the amount of your Target Value that is not
offset by amounts held within the 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 Bond
Sub-account. Once a transfer is made, the Target Ratio must again be greater
than 83% but less than or equal to 84.5% for three consecutive Valuation Days
before a subsequent transfer to the Bond Sub-account will occur. If, however,
on any Valuation Day, the Target Ratio is above 84.5%, the formula will make a
transfer from the Permitted Sub-accounts (subject to the 90% cap) to the Bond
Sub-account (as described above). If the Target Ratio falls below 78% on any
Valuation Day, then a transfer from the Bond Sub-account to the Permitted
Sub-accounts (excluding the DCA MVA Options) will occur.
The formula will not execute a transfer to the Bond Sub-account that results
in more than 90% of your Unadjusted Account Value being allocated to the Bond
Sub-account ("90% cap") on that Valuation Day. Thus, on any Valuation Day, if
the formula would require a transfer to the Bond Sub-account that would result
in more than 90% of the Unadjusted Account Value being allocated to
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the Bond Sub-account, only the amount that results in exactly 90% of the
Unadjusted Account Value being allocated to the Bond Sub-account will be
transferred. Additionally, future transfers into the Bond Sub-account will not
be made (regardless of the performance of the Bond Sub-account and the
Permitted Sub-accounts) at least until there is first a transfer out of the
Bond Sub-account. Once this transfer occurs out of the Bond Sub-account,
future amounts may be transferred to or from the Bond Sub-account if dictated
by the formula (subject to the 90% cap). At no time will the formula make a
transfer to the Bond Sub-account that results in greater than 90% of your
Unadjusted Account Value being allocated to the Bond Sub-account. However, it
is possible that, due to the investment performance of your allocations in the
Bond Sub-account and your allocations in the Permitted Sub-accounts you have
selected, your Unadjusted Account Value could be more than 90% invested in the
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 Bond Sub-account at least until there is first a transfer out
of the Bond Sub-account, regardless of how much of your Unadjusted 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 Unadjusted Account Value is allocated to the Bond
Sub-account, and the formula will still not transfer any of your Unadjusted
Account Value to the Bond Sub-account (at least until there is first a
transfer out of the Bond Sub-account). For example,
.. September 4, 2012 - a transfer is made to the Bond Sub-account that results
in the 90% cap being met and now $90,000 is allocated to the Bond
Sub-account and $10,000 is allocated to the Permitted Sub-accounts.
.. September 5, 2012 - you make an additional Purchase Payment of $10,000. No
transfers have been made from the Bond Sub-account to the Permitted
Sub-accounts since the cap went into effect on September 4, 2012.
.. On September 5, 2012 - (and at least until first a transfer is made out of
the 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 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 Bond
Sub-account).
.. Once there is a transfer out of the Bond Sub-account (of any amount), the
formula will operate as described above, meaning that the formula could
transfer amounts to or from the 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 and out of
effect multiple times while you participate in the benefit. We will continue
to monitor your Unadjusted Account Value daily and, if dictated by the
formula, systematically transfer amounts between the Permitted Sub-accounts
you have chosen and the Bond Sub-account as dictated by the formula.
Under the formula, investment performance of your Unadjusted Account Value
that is negative, flat, or even moderately positive may result in a transfer
of a portion of your Unadjusted Account Value in the Permitted Sub-accounts to
the Bond Sub-account because such investment performance will tend to increase
the Target Ratio. In deciding how much to transfer, we use another formula,
which essentially seeks to reallocate amounts held in the Permitted
Sub-accounts and the Bond Sub-account so that the Target Ratio meets a target,
which currently is equal to 80%. The further the Target Ratio is from 80% when
a transfer is occurring under the formula, the greater the transfer amount
will be. Once you elect Highest Daily Lifetime Income, the values we use to
compare to the Target Ratio will be fixed. For newly-issued Annuities that
elect Highest Daily Lifetime Income and existing Annuities that elect Highest
Daily Lifetime Income 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, if there is
money allocated to the Bond Sub-account, we will perform an additional monthly
calculation to determine whether or not a transfer will be made from the Bond
Sub-account to the Permitted Sub-accounts. 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 Unadjusted Account Value in the Bond
Sub-account, or
b) An amount equal to 5% of your total Unadjusted Account Value.
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 Unadjusted Account Value either to or from the Bond
Sub-account. 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 Bond
Sub-account; or
.. If a portion of your Unadjusted Account Value was previously allocated to
the 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 Unadjusted Account Value in the Permitted
Sub-accounts and the DCA MVA Options to the Bond Sub-account.
D-10
Prior to the first Lifetime Withdrawal, the primary driver of transfers to the
Bond Sub-account is the difference between your Unadjusted Account Value and
your Protected Withdrawal Value. If none of your Unadjusted Account Value is
allocated to the Bond Sub-account, then over time the formula permits an
increasing difference between the Unadjusted Account Value and the Protected
Withdrawal Value before a transfer to the Bond Sub-account occurs. Therefore,
as time goes on, while none of your Unadjusted Account Value is allocated to
the Bond Sub-account, the smaller the difference between the Protected
Withdrawal Value and the Unadjusted Account Value, the more the Unadjusted
Account Value can decrease prior to a transfer to the Bond Sub-account.
Each market cycle is unique, therefore the performance of your Sub-accounts,
and its impact on your Unadjusted Account Value, will differ from market cycle
to market cycle producing different transfer activity under the formula. The
amount and timing of transfers to and from the Bond Sub-account pursuant to
the formula depend on various factors unique to your Annuity and are not
necessarily directly correlated with the securities markets, bond markets,
interest rates or any other market or index. Some of the factors that
determine the amount and timing of transfers (as applicable to your Annuity),
include:
.. The difference between your Unadjusted Account Value and your Protected
Withdrawal Value;
.. The amount of time Highest Daily Lifetime Income has been in effect on your
Annuity;
.. The amount allocated to and the performance of the Permitted Sub-accounts
and the Bond Sub-account;
.. Any additional Purchase Payments you make to your Annuity (while the
benefit is in effect); and
.. Any withdrawals you take from your Annuity (while the benefit is in effect).
At any given time, some, most or none of your Unadjusted Account Value will be
allocated to the Bond Sub-account, as dictated by the formula.
Because the amount allocated to the 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. The greater the amounts allocated to either the Bond Sub-account or
to the Permitted Sub-accounts, the greater the impact performance of that
Sub-account has on your Unadjusted Account Value and thus the greater the
impact on whether (and how much) your Unadjusted Account Value is transferred
to or from the Bond Sub-account. It is possible, under the formula, that if a
significant portion of your Unadjusted Account Value is allocated to the Bond
Sub-account and that Sub-account has positive performance, the formula might
transfer a portion of your Unadjusted Account Value to the Permitted
Sub-accounts, even if the performance of your Permitted Sub-accounts is
negative. Conversely, if a significant portion of your Unadjusted Account
Value is allocated to the Bond Sub-account and that Sub-account has negative
performance, the formula may transfer additional amounts from your Permitted
Sub-accounts to the Bond Sub-account even if the performance of your Permitted
Sub-accounts is positive.
If you make additional Purchase Payments to your Annuity, they will be
allocated in accordance with your Annuity. Once allocated, they will also be
subject to the formula described above and therefore may be transferred to the
Bond Sub-account, if dictated by the formula and subject to the 90% cap
feature described above.
Any Unadjusted Account Value in the Bond Sub-account will not participate in
the positive or negative investment experience of the Permitted Sub-accounts
until it is transferred out of the 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
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, as discussed above. In addition, the amount and
duration of payments under the annuity payment provision may be adjusted so
that the payments do not trigger any penalty or excise taxes due to tax
considerations such as Required Minimum Distribution rules 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 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 Income or Spousal
Highest Daily Lifetime Income 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.
HIGHEST DAILY LIFETIME INCOME BENEFIT WITH LIFETIME INCOME ACCELERATOR
We offer another version of Highest Daily Lifetime Income that we call Highest
Daily Lifetime Income with Lifetime Income Accelerator. Highest Daily Lifetime
Income with LIA guarantees, until the death of the single designated life, the
ability to
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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. We reserve the right, in
our sole discretion, to cease offering this benefit at any time.
You may choose Highest Daily Lifetime Income with or without also electing
LIA, however you may not elect LIA without Highest Daily Lifetime Income and
you must elect the LIA benefit at the time you elect Highest Daily Lifetime
Income. If you elect Highest Daily Lifetime Income without LIA and would like
to add the feature later, you must first terminate Highest Daily Lifetime
Income and elect Highest Daily Lifetime Income with LIA (subject to
availability and benefit re-election provisions). Please note that if you
terminate Highest Daily Lifetime Income and elect Highest Daily Lifetime
Income 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 Unadjusted Account Value as of the date the new benefit
becomes active. Highest Daily Lifetime Income 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 death
benefit. As long as your Highest Daily Lifetime Income with LIA benefit is in
effect, you must allocate your Unadjusted Account Value in accordance with the
Permitted Sub-account(s) with this benefit. The income benefit under Highest
Daily Lifetime Income 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 Income apply to this version of the benefit, except as described
herein. As is the case with Highest Daily Lifetime Income, Highest Daily
Lifetime Income with LIA involves your participation in a predetermined
mathematical formula that transfers Account Value between your Sub-accounts
and the AST Investment Grade Bond Portfolio Sub-account. Please see Highest
Daily Lifetime Income above for a description of the predetermined
mathematical formula.
Highest Daily Lifetime Income 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 or other medical or retirement expenses. You should seek
professional advice to determine your financial needs for long-term care.
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.
If you elect Highest Daily Lifetime Income with LIA, the current charge is
1.30% annually of the greater of Unadjusted Account Value and Protected
Withdrawal Value. The maximum charge is 2.00% annually of the greater of the
Unadjusted 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, 0.325% of the greater of the prior Valuation Day's
Unadjusted 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.
If the deduction of the charge would result in the Unadjusted Account Value
falling below the lesser of $500 or 5% of the sum of the Unadjusted 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 Unadjusted Account Value to fall below the Account
Value Floor. If the Unadjusted Account Value on the date we would deduct a
charge for the benefit is less than the Account Value Floor, then no charge
will be assessed for that benefit quarter. Charges deducted upon termination
of the benefit may cause the Unadjusted Account Value to fall below the
Account Value Floor. If a charge for Highest Daily Lifetime Income 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 Unadjusted Account Value to fall below the Account
Value Floor. While the deduction of the charge (other than the final charge)
may not reduce the Unadjusted Account Value to zero, withdrawals may reduce
the Unadjusted Account Value to zero.
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.
(1)The designated life is confined to a qualified nursing facility. A
qualified nursing facility is a facility operated pursuant to laws of any
United States jurisdiction 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.
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(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, and you will have to notify us again in writing in order to become
eligible. 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. Please note that you must be available in the U.S. for
the assessment. Once eligibility is determined, the LIA Amount is equal to
double the Annual Income Amount as described above under Highest Daily
Lifetime Income.
Additionally, once eligibility is determined, we will reassess your
eligibility on an annual basis although your LIA benefit for the Annuity Year
that immediately precedes or runs concurrent with 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. However, if you were receiving income based on the LIA Amount and do
not take action to change your withdrawal amount to your Annual Income Amount,
any cumulative Lifetime Withdrawals in an Annuity Year that are in excess of
the Annual Income Amount will impact your Annual Income Amount in subsequent
years (except with regard to Required Minimum Distributions for this Annuity
that comply with our rules). Please note that we will not change your current
withdrawal amount unless you instruct us to do so. If you wish to establish or
make changes to your existing withdrawal program to ensure that you are not
taking Excess Income, please contact our Annuity Service Office. 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 Income 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.
For new issuances of this benefit, we may institute a "cut-off" date that
would stop the appreciation of the Protected Withdrawal Value, even if no
Lifetime Withdrawal had been taken prior to the cut-off date (thus affecting
the determination of the LIA Amount). We will not apply any cut-off date to
those who elected this benefit prior to our institution of a cut-off date.
WITHDRAWALS IN EXCESS OF THE LIA AMOUNT. Withdrawals (other than the
Non-Lifetime Withdrawal) of any amount in a given Annuity Year up to the LIA
Amount will reduce the Protected Withdrawal Value by the amount of the
withdrawal. However, if your cumulative Lifetime Withdrawals in an Annuity
Year are in excess of the LIA Amount ("Excess Income"), 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 Income. Excess
Income also 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.
AS DISCUSSED IN THIS PARAGRAPH, WHEN YOU MAKE A WITHDRAWAL THAT IS SUBJECT TO
A CDSC AND/OR TAX WITHHOLDING, WE WILL IDENTIFY THE AMOUNT THAT INCLUDES NOT
ONLY THE AMOUNT YOU ACTUALLY RECEIVE, BUT ALSO THE AMOUNT OF THE CDSC AND/OR
TAX
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WITHHOLDING, TO DETERMINE WHETHER YOUR WITHDRAWAL HAS EXCEEDED THE LIA AMOUNT.
WHEN YOU TAKE A WITHDRAWAL, YOU MAY REQUEST A "GROSS" WITHDRAWAL AMOUNT (E.G.,
$2000) BUT THEN HAVE ANY CDSC AND/OR TAX WITHHOLDING DEDUCTED FROM THE AMOUNT
YOU ACTUALLY RECEIVE (ALTHOUGH AN MVA MAY ALSO BE APPLIED TO YOUR REMAINING
UNADJUSTED ACCOUNT VALUE, IT IS NOT CONSIDERED FOR PURPOSES OF DETERMINING
EXCESS INCOME). THE PORTION OF A WITHDRAWAL THAT EXCEEDED YOUR LIA AMOUNT (IF
ANY) WOULD BE TREATED AS AN EXCESS INCOME AND THUS WOULD REDUCE YOUR LIA
AMOUNT IN SUBSEQUENT YEARS. ALTERNATIVELY, YOU MAY REQUEST THAT A "NET"
WITHDRAWAL AMOUNT ACTUALLY BE PAID TO YOU (E.G., $2000), WITH THE
UNDERSTANDING THAT ANY CDSC AND/OR TAX WITHHOLDING (E.G., $240) BE APPLIED TO
YOUR REMAINING UNADJUSTED ACCOUNT VALUE (ALTHOUGH AN MVA MAY ALSO BE APPLIED
TO YOUR REMAINING UNADJUSTED ACCOUNT VALUE, IT IS NOT CONSIDERED FOR PURPOSES
OF DETERMINING EXCESS INCOME). IN THE LATTER SCENARIO, WE DETERMINE WHETHER
ANY PORTION OF THE WITHDRAWAL IS TO BE TREATED AS EXCESS INCOME BY LOOKING TO
THE SUM OF THE NET AMOUNT YOU ACTUALLY RECEIVE (E.G., $2000) AND THE AMOUNT OF
ANY CDSC AND/OR TAX WITHHOLDING (IN THIS EXAMPLE, A TOTAL OF $2240). THE
AMOUNT OF THAT SUM (E.G., THE $2000 YOU RECEIVED PLUS THE $240 FOR THE CDSC
AND/OR TAX WITHHOLDING) THAT EXCEEDS YOUR LIA AMOUNT WILL BE TREATED AS EXCESS
INCOME - THEREBY REDUCING YOUR LIA AMOUNT IN SUBSEQUENT YEARS.
No CDSC is applicable to any Lifetime Withdrawal that is less than or equal to
the LIA Amount, even if the total amount of such withdrawals in any Annuity
Year exceeds any maximum free withdrawal amount described in the Annuity. Such
Lifetime Withdrawals are not treated as withdrawals of Purchase Payments. Each
withdrawal that is Excess Income is subject to any applicable CDSC if the
withdrawal is greater than the Free Withdrawal amount under the Annuity.
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 (3% for ages 45-54; 4% for ages 55 to less
than 59 1/2; 5% for ages 59 1/2-84; and 6% for ages 85 or 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 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). Subject to state law, 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 Unadjusted 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 Unadjusted 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 UNADJUSTED ACCOUNT
VALUE TO ZERO ARE MORE THAN THE LIA AMOUNT (EXCEPT IN THE CASE OF REQUIRED
MINIMUM DISTRIBUTIONS), HIGHEST DAILY LIFETIME INCOME WITH LIA TERMINATES, AND
NO ADDITIONAL PAYMENTS ARE 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 LIA AMOUNT IN SUBSEQUENT ANNUITY YEARS UNTIL THE DEATH OF
THE DESIGNATED LIFE.
ANNUITY OPTIONS. In addition to the Highest Daily Lifetime Income 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
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Amount. If you would receive a greater payment by applying your Unadjusted
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.
If you elect Highest Daily Lifetime Income with LIA, and never meet the
eligibility requirements, you will not receive any additional payments based
on the LIA Amount.
TERMINATION OF HIGHEST DAILY LIFETIME INCOME WITH LIA. THE LIA BENEFIT
TERMINATES UPON THE FIRST TO OCCUR OF THE FOLLOWING:
.. YOUR TERMINATION OF THE BENEFIT;
.. YOUR SURRENDER OF THE ANNUITY;
.. OUR RECEIPT OF DUE PROOF OF DEATH OF THE DESIGNATED LIFE;
.. THE ANNUITY DATE, IF UNADJUSTED ACCOUNT VALUE REMAINS ON THE ANNUITY DATE
AND AN ELECTION IS MADE TO COMMENCE ANNUITY PAYMENTS PRIOR TO THE TENTH
ANNUITY ANNIVERSARY;
.. THE VALUATION DAY ON WHICH EACH OF THE UNADJUSTED ACCOUNT VALUE AND THE
ANNUAL INCOME AMOUNT IS ZERO; OR
.. IF YOU CEASE TO MEET OUR REQUIREMENTS FOR ELECTIONS OF THIS BENEFIT.
Highest Daily Lifetime Income with LIA uses the same predetermined
mathematical formula used with Highest Daily Lifetime Income and Spousal
Highest Daily Lifetime Income. See the pertinent discussion in Highest Daily
Lifetime Income above.
SPOUSAL HIGHEST DAILY LIFETIME INCOME BENEFIT
Spousal Highest Daily Lifetime Income is a lifetime guaranteed minimum
withdrawal benefit, under which, subject to the terms of the benefit, we
guarantee your ability to take a certain annual withdrawal amount for the
lives of two individuals who are spouses. We reserve the right, in our sole
discretion, to cease offering this benefit for new elections at any time.
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 Unadjusted 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,
provided you have not made withdrawals of Excess Income that result in your
Unadjusted Account Value being reduced to zero. We also permit you to
designate the first withdrawal from your Annuity as a one-time "Non-Lifetime
Withdrawal." All other withdrawals from your Annuity are considered a
"Lifetime Withdrawal" under the benefit. Withdrawals are taken first from your
own Account Value. We are only required to begin making lifetime income
payments to you under our guarantee when and if your Unadjusted Account Value
is reduced to zero (for any reason other than due to partial withdrawals of
Excess Income). 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 Spousal Highest Daily Lifetime Income 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 Income is the predetermined
mathematical formula we employ that may periodically transfer your Unadjusted
Account Value to and from the AST Investment Grade Bond Sub-account. See the
section above entitled "How Highest Daily Lifetime Income Transfers Unadjusted
Account Value Between Your Permitted Sub-accounts and the AST Investment Grade
Bond Sub-account."
Spousal Highest Daily Lifetime Income is the spousal version of Highest Daily
Lifetime Income. 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 Income
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" for details. Please note that if you terminate Spousal Highest Daily
Lifetime Income 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 Unadjusted Account Value as of
the date the new benefit becomes active. Spousal Highest Daily Lifetime Income
must be elected based on two designated lives, as described below. Each
designated life must be at least 45 years old when the benefit is elected.
Spousal Highest Daily Lifetime Income is not available if you elect any other
optional living benefit, although you may elect any optional death benefit. As
long as your Spousal Highest Daily Lifetime Income is in effect, you must
allocate your Unadjusted Account Value in accordance with the 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.
ALTHOUGH YOU ARE GUARANTEED THE ABILITY TO WITHDRAW YOUR ANNUAL INCOME AMOUNT
FOR LIFE EVEN IF YOUR UNADJUSTED ACCOUNT VALUE FALLS TO ZERO, IF YOU TAKE A
WITHDRAWAL OF EXCESS INCOME THAT BRINGS YOUR UNADJUSTED ACCOUNT VALUE TO ZERO,
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YOUR ANNUAL INCOME AMOUNT ALSO WOULD FALL TO ZERO, AND THE BENEFIT AND THE
ANNUITY THEN WOULD TERMINATE. IN THAT SCENARIO, NO FURTHER AMOUNT WOULD BE
PAYABLE UNDER SPOUSAL HIGHEST DAILY LIFETIME INCOME. AS TO THE IMPACT OF SUCH
A SCENARIO ON ANY OTHER OPTIONAL BENEFIT YOU MAY HAVE, PLEASE SEE THE
APPLICABLE SECTION IN THIS PROSPECTUS. FOR EXAMPLE, IF THE ANNUITY TERMINATES
IN THIS SCENARIO, YOU WOULD NO LONGER HAVE ANY OPTIONAL DEATH BENEFIT THAT YOU
MAY HAVE ELECTED (SEE THE OPTIONAL DEATH BENEFITS SECTION OF THIS PROSPECTUS).
You may also participate in the 6 or 12 Month Dollar Cost Averaging Program if
you elect Spousal Highest Daily Lifetime Income, subject to the 6 or 12 Month
DCA Program's rules. See the section of this prospectus entitled "6 or 12
Month Dollar Cost Averaging Program" for details.
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 Unadjusted
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 Unadjusted
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 Unadjusted 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 5% 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 Unadjusted Account Value on the current Valuation Day.
If you have not made a Lifetime Withdrawal on or before the 12/th/ Anniversary
of the effective date of the benefit, your Periodic Value on the 12/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% of the Unadjusted Account Value on the effective date of the
benefit including any Purchase Payments (including any associated
Purchase Credits) made on that day;
(b)200% 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 Unadjusted Account
Value upon any step-up, increased for subsequent Purchase Payments (including
any associated Purchase Credits) and reduced for subsequent Lifetime
Withdrawals (see the examples that begin immediately prior to the sub-heading
below entitled "Example of dollar-for-dollar reductions").
KEY FEATURE - ANNUAL INCOME AMOUNT UNDER SPOUSAL HIGHEST DAILY LIFETIME INCOME
The Annual Income Amount is equal to a specified percentage of the Protected
Withdrawal Value at the first Lifetime Withdrawal and does not reduce in
subsequent Annuity Years, as described below. The percentage initially depends
on the age of the younger designated life on the date of the first Lifetime
Withdrawal after election of the benefit. The percentages are: 2.5% for ages
45-54, 3.5% for ages 55 to less than 59 1/2; 4.5% for ages 59 1/2 to 84, and
5.5% for ages 85 and older. We use the age of the younger designated life even
if that designated life is no longer a participant under the Annuity due to
death or divorce. Under Spousal Highest Daily Lifetime Income, 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 and also will
reduce the Protected Withdrawal Value on a dollar-for-dollar basis. 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 Unadjusted Account Value
immediately prior to such withdrawal (see examples of this calculation below).
Excess Income also will reduce the Protected Withdrawal Value by the same
ratio.
D-16
AS DISCUSSED IN THIS PARAGRAPH, WHEN YOU MAKE A PARTIAL WITHDRAWAL THAT IS
SUBJECT TO A CDSC AND/OR TAX WITHHOLDING, WE WILL IDENTIFY THE AMOUNT THAT
INCLUDES NOT ONLY THE AMOUNT YOU ACTUALLY RECEIVE, BUT ALSO THE AMOUNT OF THE
CDSC AND/OR TAX WITHHOLDING, TO DETERMINE WHETHER YOUR WITHDRAWAL HAS EXCEEDED
THE ANNUAL INCOME AMOUNT. WHEN YOU TAKE A PARTIAL WITHDRAWAL, YOU MAY REQUEST
A "GROSS" WITHDRAWAL AMOUNT (E.G., $2000) BUT THEN HAVE ANY CDSC AND/OR TAX
WITHHOLDING DEDUCTED FROM THE AMOUNT YOU ACTUALLY RECEIVE (ALTHOUGH AN MVA MAY
ALSO BE APPLIED TO YOUR REMAINING UNADJUSTED ACCOUNT VALUE, IT IS NOT
CONSIDERED FOR PURPOSES OF DETERMINING EXCESS INCOME). THE PORTION OF A
WITHDRAWAL THAT EXCEEDED YOUR ANNUAL INCOME AMOUNT (IF ANY) WOULD BE TREATED
AS EXCESS INCOME AND THUS WOULD REDUCE YOUR ANNUAL INCOME AMOUNT IN SUBSEQUENT
YEARS. ALTERNATIVELY, YOU MAY REQUEST THAT A "NET" WITHDRAWAL AMOUNT ACTUALLY
BE PAID TO YOU (E.G., $2000), WITH THE UNDERSTANDING THAT ANY CDSC AND/OR TAX
WITHHOLDING (E.G., $240) BE APPLIED TO YOUR REMAINING UNADJUSTED ACCOUNT VALUE
(ALTHOUGH AN MVA MAY ALSO BE APPLIED TO YOUR REMAINING UNADJUSTED ACCOUNT
VALUE, IT IS NOT CONSIDERED FOR PURPOSES OF DETERMINING EXCESS INCOME). IN THE
LATTER SCENARIO, WE DETERMINE WHETHER ANY PORTION OF THE WITHDRAWAL IS TO BE
TREATED AS EXCESS INCOME BY LOOKING TO THE SUM OF THE NET AMOUNT YOU ACTUALLY
RECEIVE (E.G., $2000) AND THE AMOUNT OF ANY CDSC AND/OR TAX WITHHOLDING (IN
THIS EXAMPLE, A TOTAL OF $2240). THE AMOUNT OF THAT SUM (E.G., THE $2000 YOU
RECEIVED PLUS THE $240 FOR THE CDSC AND/OR TAX WITHHOLDING) THAT EXCEEDS YOUR
ANNUAL INCOME AMOUNT WILL BE TREATED AS EXCESS INCOME - THEREBY REDUCING YOUR
ANNUAL INCOME AMOUNT IN SUBSEQUENT YEARS.
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 Income and subsequent to the first Lifetime Withdrawal
will (i) immediately 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: 2.5% for ages 45-54,
3.5% for ages 55 to less than 59 1/2, 4.5% for ages 59 1/2 to 84, and 5.5% 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). Subject to state law, 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 Unadjusted 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 younger designated life on the Annuity Anniversary as of which
the step-up would occur. The percentages are 2.5% for ages 45-54, 3.5% for
ages 55 to less than 59 1/2, 4.5% for ages 59 1/2 to 84, and 5.5% 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. We will not automatically increase your
Annual Income Amount solely as a result of your attaining a new age that is
associated with a new age-based percentage. The Unadjusted 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 Unadjusted 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 Unadjusted 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
Income has changed for new purchasers, you may be subject to the new charge at
the time of such step-up. Prior to increasing your charge for Spousal Highest
Daily Lifetime Income 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. Any such increased charge will not be greater than
the maximum charge set forth in the table entitled "Your Optional Benefit Fees
and Charges".
D-17
If you are enrolled in a Systematic Withdrawal program, we will not
automatically increase the withdrawal amount when there is an increase to the
Annual Income Amount. You must notify us in order to increase the withdrawal
amount of any Systematic Withdrawal program.
Spousal Highest Daily Lifetime Income does not affect your ability to take
withdrawals under your Annuity, or limit your ability to take partial
withdrawals that exceed the Annual Income Amount. Under Spousal Highest Daily
Lifetime Income, 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. If your cumulative
Lifetime Withdrawals in an Annuity Year exceed the Annual Income Amount, 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).
Because each of the Protected Withdrawal Value and Annual Income Amount is
determined in a way that is not solely related to Unadjusted Account Value, it
is possible for the Unadjusted 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 Income or any other fees and charges under the Annuity. Assume the
following for all three examples:
.. The Issue Date is November 1, 2011
.. Spousal Highest Daily Lifetime Income is elected on August 1, 2012
.. Both designated lives were 70 years old when they elected Spousal Highest
Daily Lifetime Income
.. The first withdrawal is a Lifetime Withdrawal
EXAMPLE OF DOLLAR-FOR-DOLLAR REDUCTIONS
On October 24, 2012, the Protected Withdrawal Value is $120,000, resulting in
an Annual Income Amount of $5,400 (since the younger designated life is
between the ages of 59 1/2 and 84 at the time of the first Lifetime
Withdrawal, the Annual Income Amount is 4.5% of the Protected Withdrawal
Value, in this case 4.5% 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 October 31, 2012) is $2,900. This is the result of a
dollar-for-dollar reduction of the Annual Income Amount ($5,400 less $2,500 =
$2,900).
EXAMPLE OF PROPORTIONAL REDUCTIONS
Continuing the previous example, assume an additional withdrawal of $5,000
occurs on October 29, 2012 and the Account Value at the time and immediately
prior to this withdrawal is $118,000. The first $2,900 of this withdrawal
reduces the Annual Income Amount for that Annuity Year to $0. The remaining
withdrawal amount of $2,100 reduces the Annual Income Amount in future Annuity
Years on a proportional basis based on the ratio of the Excess Income to the
Unadjusted Account Value immediately prior to the Excess Income. (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:
Unadjusted Account Value before Lifetime Withdrawal $118,000.00
Less amount of "non" Excess Income $ 2,900.00
Unadjusted Account Value immediately before Excess Income of $2,100 $115,100.00
Excess Income amount $ 2,100.00
Ratio 1.82%
Annual Income Amount $ 5,400.00
Less ratio of 1.82% $ 98.28
Annual Income Amount for future Annuity Years $ 5,301.72
EXAMPLE OF HIGHEST DAILY AUTO STEP-UP
On each Annuity Anniversary date after the first Lifetime Withdrawal, the
Annual Income Amount is stepped-up if the appropriate percentage (based on the
younger designated life's age on that 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 (including any associated Purchase Credits), is greater than the
Annual Income Amount, adjusted for Excess Income and additional Purchase
Payments (including any associated Purchase Credits).
Continuing the same example as above, the Annual Income Amount for this
Annuity Year is $5,400. However, the Excess Income on October 29 reduces the
amount to $5,301.72 for future years (see above). For the next Annuity Year,
the Annual Income
D-18
Amount will be stepped up if 4.5% (since the younger designated life is
between 59 1/2 and 84 on the date of the potential step-up) of the highest
daily Unadjusted Account Value adjusted for withdrawals and Purchase Payments
(including any associated Purchase Credits), is greater than $5,301.72. Here
are the calculations for determining the daily values. Only the October 26
value is being adjusted for Excess Income as the October 30, October 31 and
November 1 Valuation Days occur after the Excess Income on October 29.
HIGHEST DAILY VALUE ADJUSTED ANNUAL INCOME
(ADJUSTED FOR WITHDRAWAL AMOUNT (4.5% OF THE
DATE* ACCOUNT VALUE AND PURCHASE PAYMENTS)** HIGHEST DAILY VALUE)
----- ------------- ------------------------ ----------------------
October 26, 2012 $119,000.00 $119,000.00 $5,355.00
October 29, 2012 $113,000.00 $113,986.98 $5,129.41
October 30, 2012 $113,000.00 $113,986.98 $5,129.41
October 31, 2012 $119,000.00 $119,000.00 $5,355.00
November 1, 2012 $118,473.00 $119,000.00 $5,355.00
* In this example, the Annuity Anniversary date is November 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 November 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 October 26, resulting in an adjusted Annual Income Amount of
$5,355.00. This amount is adjusted on October 29 to reflect the $5,000
withdrawal. The calculations for the adjustments are:
. The Unadjusted Account Value of $119,000 on October 26 is first reduced
dollar-for-dollar by $2,900 ($2,900 is the remaining Annual Income
Amount for the Annuity Year), resulting in an Unadjusted Account Value
of $116,100 before the Excess Income.
. This amount ($116,100) is further reduced by 1.82% (this is the ratio in
the above example which is the Excess Income divided by the Unadjusted
Account Value immediately preceding the Excess Income) resulting in a
Highest Daily Value of $113,986.98.
. The adjusted October 29 Highest Daily Value, $113,986.98, is carried
forward to the next Valuation Date of October 30. At this time, we
compare this amount to the Unadjusted Account Value on October 30,
$113,000. Since the October 29 adjusted Highest Daily Value of
$113,986.98 is greater than the October 30 value, we will continue to
carry $113,986.98 forward to the next Valuation Day of October 31. The
Unadjusted Account Value on October 31, $119,000.00, becomes the final
Highest Daily Value since it exceeds the $113,986.98 carried forward.
. The October 31 adjusted Highest Daily Value of $119,000.00 is also
greater than the November 1 value, so we will continue to carry
$119,000.00 forward to the final Valuation Day of November 1.
In this example, the final Highest Daily Value of $119,000.00 is converted to
an Annual Income Amount based on the applicable percentage of 4.5%, generating
an Annual Income Amount of $5,355.00. Since this amount is greater than the
current year's Annual Income Amount of $5,301.72 (adjusted for Excess Income),
the Annual Income Amount for the next Annuity Year, starting on November 1,
2012 and continuing through October 31, 2013, will be stepped-up to $5,355.00.
NON-LIFETIME WITHDRAWAL FEATURE
You may take a one-time non-lifetime withdrawal ("Non-Lifetime Withdrawal")
under Spousal Highest Daily Lifetime Income. It is an optional feature of the
benefit that you can only elect at the time of your first withdrawal. You
cannot take a Non-Lifetime Withdrawal in an amount that would cause your
Annuity's Account Value, after taking the withdrawal, to fall below the
minimum Surrender Value (see "Surrenders - Surrender Value"). 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 Spousal Highest Daily Lifetime Income. You must tell us at the
time you take the partial withdrawal if your withdrawal is intended to be the
Non-Lifetime Withdrawal and not the first Lifetime Withdrawal under Spousal
Highest Daily Lifetime Income. If you don't elect the Non-Lifetime Withdrawal,
the first withdrawal you make will be the first Lifetime Withdrawal that
establishes your Annual Income Amount, which is based on your Protected
Withdrawal Value. Once you elect the Non-Lifetime Withdrawal or Lifetime
Withdrawals, no additional Non-Lifetime withdrawals may be taken. If you do
not take a Non-Lifetime Withdrawal before beginning Lifetime Withdrawals, you
lose the ability to take it.
The Non-Lifetime Withdrawal will proportionally reduce the Protected
Withdrawal Value. It will also proportionally reduce the Periodic Value
guarantee on the twelfth anniversary of the benefit effective date (see
description in "Key Feature - Protected Withdrawal Value," above). It will
reduce both by the percentage the total withdrawal amount (including any
applicable CDSC) represents of the then current Unadjusted 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. Thus, the first withdrawal will be a 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, 2011
.. Spousal Highest Daily Lifetime Income is elected on September 4, 2012
.. The Unadjusted Account Value at benefit election was $105,000
D-19
.. Each designated life was 70 years old when he/she elected Spousal Highest
Daily Lifetime Income
.. No previous withdrawals have been taken under Spousal Highest Daily
Lifetime Income
On October 3, 2012, the Protected Withdrawal Value is $125,000, the 12th
benefit year minimum Periodic Value guarantee is $210,000, and the Unadjusted
Account Value is $120,000. Assuming $15,000 is withdrawn from the Annuity on
October 3, 2012 and is designated as a Non-Lifetime Withdrawal, all guarantees
associated with Spousal Highest Daily Lifetime Income will be reduced by the
ratio the total withdrawal amount represents of the Unadjusted Account Value
just prior to the withdrawal being taken.
HERE IS THE CALCULATION:
Withdrawal amount $ 15,000
Divided by Unadjusted 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
12/th/ benefit year Minimum Periodic Value $183,750
REQUIRED MINIMUM DISTRIBUTIONS
See the sub-section entitled "Required Minimum Distributions" in the
prospectus section above concerning Highest Daily Lifetime Income for a
discussion of the relationship between the RMD amount and the Annual Income
Amount.
BENEFITS UNDER SPOUSAL HIGHEST DAILY LIFETIME INCOME
.. To the extent that your Unadjusted 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 Income, 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 Unadjusted 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. After the Unadjusted Account Value is reduced to zero, 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
UNADJUSTED ACCOUNT VALUE TO ZERO ARE MORE THAN THE ANNUAL INCOME AMOUNT,
SPOUSAL HIGHEST DAILY LIFETIME INCOME TERMINATES, AND NO ADDITIONAL
PAYMENTS WILL BE MADE. HOWEVER, IF A PARTIAL 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 Unadjusted 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 Latest Annuity Date 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 Unadjusted Account Value, less any applicable state
required premium tax, 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. If applying your Unadjusted
Account Value, less any applicable tax charges, to our current life
only (or joint life, depending on the number of designated lives
remaining) annuity payment rates results in a higher annual payment,
we will give you the higher annual payment.
.. In the absence of an election when mandatory annuity payments are to begin,
we currently make annual annuity payments as a joint and survivor or single
(as applicable) life fixed annuity with eight payments certain, by applying
the greater of the annuity rates then currently available or the annuity
rates guaranteed in your Annuity. We reserve the right at any time to
increase or decrease the certain period in order to comply with the Code
(e.g., to shorten the period certain to match life expectancy under
applicable Internal Revenue Service tables). 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 Unadjusted Account Value.
D-20
.. 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.
OTHER IMPORTANT CONSIDERATIONS
.. Withdrawals under the Spousal Highest Daily Lifetime Income 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 partial
withdrawals that exceed the Annual Income Amount. If you have an active
Systematic Withdrawal program running at the time you elect this benefit,
the first systematic withdrawal that processes after your election of the
benefit will be deemed a Lifetime Withdrawal. Withdrawals made while
Spousal Highest Daily Lifetime Income 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 MVA Options. If you have an active Systematic Withdrawal program
running at the time you elect this benefit, the program must withdraw funds
pro rata.
.. Any Lifetime Withdrawal that you take that is less than or equal to the
Annual Income Amount is not subject to a CDSC, even if the total amount of
such withdrawals in any Annuity Year exceeds the maximum Free Withdrawal
amount. For purposes of calculating a CDSC on any future withdrawal,
Lifetime Withdrawals that are less than or equal to the Annual Income
Amount in an Annuity Year are not treated as withdrawals of Purchase
Payments. Moreover, any Lifetime Withdrawal that is treated as Excess
Income is subject to any applicable CDSC if the withdrawal is greater than
the Free Withdrawal amount.
.. You should carefully consider when to begin taking Lifetime Withdrawals. If
you begin taking withdrawals early, you may maximize the time during which
you may take Lifetime Withdrawals due to longer life expectancy, and you
will be using an optional benefit for which you are paying a charge. On the
other hand, you could limit the value of the benefit if you begin taking
withdrawals too soon. For example, withdrawals reduce your Unadjusted
Account Value and may limit the potential for increasing your Protected
Withdrawal Value. You should discuss with your Financial Professional when
it may be appropriate for you to begin taking Lifetime Withdrawals.
.. You cannot allocate Purchase Payments or transfer Unadjusted Account Value
to or from the AST Investment Grade Bond Sub-account. A summary description
of the AST Investment Grade Bond Portfolios appears in the prospectus
section entitled "Investment Options." 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 Permitted Sub-accounts, the DCA MVA Options, and
the AST Investment Grade Bond Sub-account triggered by the predetermined
mathematical formula will not count toward the maximum number of free
transfers allowable under an Annuity.
.. Upon inception of the benefit, 100% of your Unadjusted Account Value must
be allocated to the Permitted Sub-accounts. We may amend the Permitted
Sub-accounts from time to time. Changes to Permitted Sub-accounts, or to
the requirements as to how you may allocate your Unadjusted Account Value
with this benefit, will apply to new elections of the benefit and may apply
to current participants in the benefit. To the extent that changes apply to
current participants in the benefit, they will apply only upon
re-allocation of Unadjusted Account Value, or upon addition of additional
Purchase Payments. That is, we will not require such current participants
to re-allocate Unadjusted Account Value to comply with any new requirements.
.. 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 Sub-accounts and (ii) invest the proceeds of those sales in
the Sub-accounts that you have designated. During this reallocation
process, your Unadjusted 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 begin until the close of business on the following
Valuation Day.
.. Any Death Benefit, including any optional Death Benefit that you elect,
will terminate if withdrawals taken under Spousal Highest Daily Lifetime
Income reduce your Unadjusted Account Value to zero (see "Death Benefits"
earlier in the prospectus).
.. The current charge for Spousal Highest Daily Lifetime Income is 0.95%
annually of the greater of Unadjusted Account Value and Protected
Withdrawal Value. The maximum charge for Spousal Highest Daily Lifetime
Income is 1.50% annually of the greater of the Unadjusted Account Value and
Protected Withdrawal Value. As discussed in "Highest Daily Auto Step-Up"
above, we may increase the fee upon a step-up under this benefit. We deduct
this charge on quarterly anniversaries of the benefit effective date, based
on the values on the last Valuation Day prior to the quarterly anniversary.
Thus, we deduct, on a quarterly basis, 0.2375% of the greater of the prior
Valuation Day's Unadjusted 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. You will
begin paying this charge as of the effective date of the benefit even if
you do not begin taking withdrawals for many years, or ever. We will not
refund the charges you have paid if you choose never to take any
withdrawals and/or if you never receive any lifetime income payments.
If the deduction of the charge would result in the Unadjusted Account Value
falling below the lesser of $500 or 5% of the sum of the Unadjusted 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 Unadjusted Account Value to fall below the Account
Value Floor. If the Unadjusted Account Value on the date we would deduct a
charge for the benefit is less than the Account Value Floor, then no charge
will be assessed for that benefit quarter. Charges deducted upon termination
of the benefit may cause the Unadjusted Account Value to fall below the
Account Value Floor. If a charge for Spousal Highest Daily Lifetime Income
would be deducted on the same day we process a withdrawal
D-21
request, the charge will be deducted first, then the withdrawal will be
processed. The withdrawal could cause the Unadjusted Account Value to fall
below the Account Value Floor. While the deduction of the charge (other than
the final charge) may not reduce the Unadjusted Account Value to zero,
withdrawals may reduce the Unadjusted Account Value to zero. If this happens
and the Annual Income Amount is greater than zero, we will make payments under
the benefit.
ELECTION OF AND DESIGNATIONS UNDER THE BENEFIT
Spousal Highest Daily Lifetime Income 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 Income only may be elected if the Owner, Annuitant, and Beneficiary
designations are as follows:
.. One Annuity Owner, where the Annuitant and the Owner are the same person
and the sole Beneficiary is the Owner's spouse. Each Owner/Annuitant and
the Beneficiary must be at least 45 years old at the time of election; or
.. Co-Annuity Owners, where the Owners are each other's spouses. The
Beneficiary designation must be the surviving spouse, or the spouses named
equally. One of the Owners must be the Annuitant. Each Owner must be at
least 45 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. Each of the Annuitant and the Contingent Annuitant must be at
least 45 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
designations under this benefit, however if the Beneficiary is changed, the
benefit may not be eligible to be continued upon the death of the first
designated life. If the designated lives divorce, Spousal Highest Daily
Lifetime Income 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 Income can be elected at the time that you
purchase your Annuity or after the Issue Date, subject to its availability,
and our eligibility rules and restrictions. If you elect Spousal Highest Daily
Lifetime Income and terminate it, you can re-elect it, subject to our current
rules and availability. See "Termination of Existing Benefits and Election of
New Benefits" for information pertaining to elections, termination and
re-election of benefits. PLEASE NOTE THAT IF YOU TERMINATE A LIVING BENEFIT
AND ELECT SPOUSAL HIGHEST DAILY LIFETIME INCOME, YOU LOSE THE GUARANTEES THAT
YOU HAD ACCUMULATED UNDER YOUR EXISTING BENEFIT, AND YOUR GUARANTEES UNDER
SPOUSAL HIGHEST DAILY LIFETIME INCOME WILL BE BASED ON YOUR UNADJUSTED ACCOUNT
VALUE ON THE EFFECTIVE DATE OF SPOUSAL HIGHEST DAILY LIFETIME INCOME. You and
your Financial Professional should carefully consider whether terminating your
existing benefit and electing Spousal Highest Daily Lifetime Income is
appropriate for you. We reserve the right to waive, change and/or further
limit the election frequency in the future.
If you wish to elect this benefit and you are currently participating in a
Systematic Withdrawal program, amounts withdrawn under the program must be
taken on a pro rata basis from your Annuity's Sub-accounts (i.e., in direct
proportion to the proportion that each such Sub-account bears to your total
Account Value) in order for you to be eligible for the benefit. Thus, you may
not elect Spousal Highest Daily Lifetime Income so long as you participate in
a Systematic Withdrawal program in which withdrawals are not taken pro rata.
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 UPON THE FIRST TO OCCUR OF THE FOLLOWING:
.. UPON OUR RECEIPT OF DUE PROOF OF DEATH OF THE FIRST DESIGNATED LIFE, IF THE
SURVIVING SPOUSE OPTS TO TAKE THE DEATH BENEFIT UNDER THE ANNUITY (RATHER
THAN CONTINUE THE ANNUITY) OR IF THE SURVIVING SPOUSE IS NOT AN ELIGIBLE
DESIGNATED LIFE;
.. UPON THE DEATH OF THE SECOND DESIGNATED LIFE;
.. YOUR TERMINATION OF THE BENEFIT;
.. YOUR SURRENDER OF THE ANNUITY;
.. 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);
.. BOTH THE UNADJUSTED ACCOUNT VALUE AND ANNUAL INCOME AMOUNT EQUAL ZERO; OR
.. YOU CEASE TO MEET OUR REQUIREMENTS AS DESCRIBED IN "ELECTION OF AND
DESIGNATIONS UNDER THE BENEFIT".
Upon termination of Spousal Highest Daily Lifetime Income other than upon the
death of the second 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
D-22
Unadjusted Account Value falling below the Account Value Floor. However, if
the amount in the Sub-accounts is not enough to pay the charge, we will reduce
the fee to no more than the amount in the Sub-accounts. With regard to your
investment allocations, upon termination we will: (i) leave intact amounts
that are held in the Permitted Sub-accounts, and (ii) unless you are
participating in an asset allocation program (i.e., Static Re-balancing
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
Unadjusted Account Value in the variable Investment Options is zero, we will
transfer such amounts to the AST Money Market Sub-account.
HOW SPOUSAL HIGHEST DAILY LIFETIME INCOME TRANSFERS UNADJUSTED ACCOUNT VALUE
BETWEEN YOUR PERMITTED SUB-ACCOUNTS AND THE AST INVESTMENT GRADE BOND
SUB-ACCOUNT
See "How Highest Daily Lifetime Income Transfers Unadjusted Account Value
Between Your Permitted Sub-accounts and the AST Investment Grade Bond
Sub-account" in the discussion of Highest Daily Lifetime Income Benefit above
for information regarding this component of the benefit.
ADDITIONAL TAX CONSIDERATIONS
Please see the Additional Tax Considerations section under Highest Daily
Lifetime Income above.
D-23
APPENDIX E: FORMULA FOR GRO PLUS II
THE FOLLOWING ARE THE TERMS AND DEFINITIONS REFERENCED IN THE TRANSFER
CALCULATION FORMULA:
. AV is the current Account Value of the Annuity
. V\\V\\ is the current Account Value of the elected Sub-accounts of the
Annuity
. V\\F\\ is the current Account Value of amounts held in the MVA Options
. B is the total current value of the AST bond portfolio Sub-account
. C\\l\\ is the lower target value. Currently, it is 79%.
. C\\t\\ is the middle target value. Currently, it is 82%.
. C\\u\\ is the upper target value. Currently, it is 85%.
. T is the amount of a transfer into or out of the AST bond portfolio
Sub-account.
For each guarantee provided under the benefit,
. G\\i\\ is the guarantee amount
. N\\i \\is the number of days until the Maturity Date
. d\\i\\ is the discount rate applicable to the number of days until the
Maturity Date. It is determined with reference a benchmark index,
reduced by the Discount Rate Adjustment and subject to the discount rate
minimum. The discount rate minimum, beginning on the effective date of
the benefit, is three percent, and will decline monthly over the first
twenty-four months following the effective date of the benefit to one
percent in the twenty-fifth month, and will remain at one percent for
every month thereafter. Once selected, we will not change the applicable
benchmark index. However, if the benchmark index is discontinued, we
will substitute a successor benchmark index, if there is one. Otherwise
we will substitute a comparable benchmark index. We will obtain any
required regulatory approvals prior to substitution of the benchmark
index.
The formula, which is set on the effective date and is not changed while the
benefit is in effect, determines, on each Valuation Day, when a transfer is
required.
The formula begins by determining the value on that Valuation Day that, if
appreciated at the applicable discount rate, would equal the guarantee amount
at the end of each applicable Guarantee Period. We call the greatest of these
values the "current liability (L)."
L = MAX (L\\i\\), where L\\i\\ = G\\i\\ / (1 + d\\i\\) /(Ni/365)/
Next the formula calculates the following formula ratio:
r = (L - B) / (V\\V\\ + V\\F\\)
If the formula ratio exceeds an upper target value, then all or a portion of
the Account Value will be transferred to the AST bond portfolio Sub-account
associated with the current liability subject to the rule that prevents a
transfer into that AST bond portfolio Sub-account if 90% or more of Account
Value is in that Sub-account (90% cap). If at the time we make a transfer to
the AST bond portfolio Sub-account associated with the current liability there
is Account Value allocated to an AST bond portfolio Sub-account not associated
with the current liability, we will transfer all assets from that AST bond
portfolio Sub-account to the AST bond portfolio Sub-account associated with
the current liability.
The formula will transfer assets into the AST bond portfolio Sub-account if r
(greater than) C\\u\\, subject to the 90% cap.
The transfer amount is calculated by the following formula:
T = {Min (MAX(0, (.90 * (V\\V\\ + V\\F\\ + B)) - B), [L - B - (V\\V\\ + V\\F\\) * C\\t\\] / (1 - C\\t\\))}
E-1
If the formula ratio is less than a lower target value and there are assets in
the AST bond portfolio Sub-account, then the formula will transfer assets out
of the AST bond portfolio Sub-account into the elected Sub-accounts.
The formula will transfer assets out of the AST bond portfolio Sub-account if
r (less than) C\\l\\ and B (greater than) 0. The transfer amount is calculated
by the following formula:
T = {Min (B, - [L - B - (V\\V\\ + V\\F\\) * C\\t\\]/(1 - C\\t\\))}
If following a transfer to the elected Sub-accounts, there are assets
remaining in a AST bond portfolio Sub-account not associated with the current
liability, we will transfer all assets from that AST bond portfolio
Sub-account to the AST bond portfolio Sub-account associated with the current
liability.
90% CAP RULE: If, on any Valuation Day the Rider remains in effect, a transfer
into the AST bond portfolio Sub-account occurs which results in 90% of the
Account Value being allocated to the AST bond portfolio Sub-account, any
transfers into the AST bond portfolio Sub-account will be suspended even if
the formula would otherwise dictate that a transfer into the AST bond
portfolio Sub-account should occur. Transfers out of the AST bond portfolio
Sub-account and into the elected Sub-accounts will still be allowed. The
suspension will be lifted once a transfer out of the AST bond portfolio
Sub-account occurs. Due to the performance of the AST bond portfolio
Sub-account and the elected Sub-accounts, the Account Value could be more than
90% invested in the AST bond portfolio Sub-account.
E-2
APPENDIX F - SPECIAL CONTRACT PROVISIONS FOR ANNUITIES ISSUED IN CERTAIN STATES
Certain features of your Annuity may be different than the features described
earlier in this prospectus, if your Annuity is issued in certain states
described below. Further variations may arise in connection with additional
state reviews.
Jurisdiction Special Provisions
------------ ----------------------------------------------------------------
California Highest Daily Lifetime 6 Plus with Lifetime Income Accelerator
is not available. Highest Daily Lifetime Income with Lifetime
Income Accelerator is not available. Highest Daily Lifetime
Income 2.0 with Lifetime Income Accelerator is not available.
Medically-Related Surrender is not available. For the California
annuity forms, "contingent deferred sales charges" are referred
to as "surrender charges".
Connecticut Highest Daily Lifetime 6 Plus with Lifetime Income Accelerator
is not available. Highest Daily Lifetime Income with Lifetime
Income Accelerator is not available. Highest Daily Lifetime
Income 2.0 with Lifetime Income Accelerator is not available.
Different CDSC schedule for X Series. No recapture of Purchase
Credits upon death.
The CDSC Schedule for X Series Annuities in Connecticut is as
follows:
PERCENTAGE APPLIED
AGAINST PURCHASE
PAYMENT BEING
AGE OF PURCHASE PAYMENT BEING WITHDRAWN WITHDRAWN
--------------------------------------- ------------------
Less than one year old 9.0%
1 year old or older, but not yet 2 years old 8.50%
2 years old or older, but not yet 3 years old 8.0%
3 years old or older, but not yet 4 years old 8.0%
4 years old or older, but not yet 5 years old 7.75%
5 years old or older, but not yet 6 years old 7.75%
6 years old or older, but not yet 7 years old 5.0%
7 years old or older, but not yet 8 years old 4.0%
8 years old or older, but not yet 9 years old 2.5%
9 or more years old 0.0%
Florida One year waiting period for annuitization. With respect to
those who are 65 years or older on the date of purchase, in no
event will the Contingent Deferred Sales Charge exceed 10% in
accordance with Florida law.
Hawaii Highest Daily Lifetime Income 2.0 with Lifetime Income
Accelerator is not available.
Iowa 6 and 12 Month DCA Options are not available. Market Value
Adjustment Options are not available.
Massachusetts The annuity rates we use to calculate annuity payments are
available only on a gender-neutral basis under any Annuity
Option or any lifetime withdrawal option benefit. Medically
Related Surrenders are not available.
Montana The annuity rates we use to calculate annuity payments are
available only on a gender-neutral basis under any Annuity
Option or any lifetime withdrawal option benefit.
Oregon 6 and 12 Month DCA Options are not available. Market Value
Adjustment Options are not available.
South Dakota Highest Daily Lifetime Income 2.0 with Lifetime Income
Accelerator is not available.
Texas No MVA Options are available under the X Series Annuity. The
Beneficiary Annuity is not available.
Virginia Highest Daily Lifetime Income 2.0 with Lifetime Income
Accelerator is not available.
Washington Combination 5% Roll-up and Highest Anniversary Value Death
Benefit is not available. Highest Daily Lifetime 6 Plus with
Lifetime Income Accelerator is not available. Highest Daily
Lifetime Income with Lifetime Income Accelerator is not
available. Highest Daily Lifetime Income 2.0 with Lifetime
Income Accelerator is not available.
F-1
APPENDIX G - MVA FORMULAS
MVA FORMULA FOR LONG-TERM MVA OPTIONS
The MVA formula is applied separately to each MVA Option to determine the
Account Value of the MVA Option on a particular date.
The MVA factor is equal to:
[(l+I)/(l+J+K)]/^/N/12//
where:
I = the Crediting Rate for the MVA Option;
J = the Rate for the remaining Guarantee Period, determined as
described below;
K = the Liquidity Factor, currently equal to 0.0025; and
N = the number of months remaining in the Guarantee Period duration,
rounded up to the nearest whole month
For the purposes of determining "j",
Y = /N/12/
GP\\1\\ = the smallest whole number of years greater than or equal to Y.
r\\1\\ = the rate for Guarantee Periods of duration GP\\1\\, which will equal
the crediting rate if such Guarantee Period duration is currently available.
GP\\2\\ = the greatest whole number of years less than or equal to Y, but not
less than 1.
r\\2\\ = the rate for Guarantee Periods of duration GP\\2\\, which will equal
the crediting rate if such Guarantee Period duration is currently available.
If we do not currently offer a Guarantee Period of duration GP\\1\\ or
duration GP\\2\\, we will determine r\\1\\ and / or r\\2\\ by linearly
interpolating between the current rates of Guarantee Periods closest in
duration. If we cannot interpolate because a Guarantee Period of lesser
duration is not available, then r\\1\\ and / or r\\2\\ will be equal to [(1) +
(2) - (3)], where (1), (2), and (3) are defined as:
(1)= the current Treasury spot rate for GP\\1\\ or GP\\2\\, respectively, and
(2)= the current crediting rate for the next longer Guaranteed Period duration
currently available, and
(3)= the current Treasury spot rate for the next longer Guaranteed Period
duration currently available.
The term "current Treasury spot rate" refers to the rates that existed at the
time the crediting rates were last determined.
To determine "j":
If Y is an integer, and if Y is equal to a Guarantee Period duration that we
currently offer, "j" is equal to the crediting rate associated with a
Guarantee Period duration of Y years.
If Y is less than 1, then "j" = r\\2\\.
Otherwise, we determine "j" by linearly interpolating between r\\1\\ and
r\\2\\, using the following formula:
J = (R\\1\\ * (Y - GP\\2\\) + r\\2\\ * (GP\\1\\ - Y))/(GP\\1\\ - GP\\2\\)
The current rate ("j") in the MVA formula is subject to the same Guaranteed
Minimum Interest Rate as the Crediting Rate.
G-1
We reserve the right to waive the liquidity factor set forth above.
MVA EXAMPLES FOR LONG-TERM MVA OPTIONS
The following hypothetical examples show the effect of the MVA in determining
Account Value. Assume the following:
. You allocate $50,000 into an MVA Option (we refer to this as the
"Allocation Date" in these examples) with a Guarantee Period of 5 years
(we refer to this as the "Maturity Date" in these examples).
. The crediting rate associated with the MVA Option beginning on
Allocation Date and maturing on Maturity Date is 5.50% (I = 5.50%).
. You make no withdrawals or transfers until you decide to withdraw the
entire MVA Option after exactly three (3) years, at which point 24
months remain before the Maturity Date (N = 24).
EXAMPLE OF POSITIVE MVA
Assume that at the time you request the withdrawal, the crediting rate
associated with the fixed allocation maturing on the Maturity Date is 4.00% (J
= 4.00%). Based on these assumptions, the MVA would be calculated as follows:
MVA Factor = [(1+I)/(1+J+0.0025)]/^/N/12// = [1.055/1.0425]/^/2// = 1.024125
Unadjusted Value = $58,712.07
Adjusted Account Value after MVA = Unadjusted Value X MVA Factor = $60,128.47
EXAMPLE OF NEGATIVE MVA
Assume that at the time you request the withdrawal, the crediting rate
associated with the fixed allocation maturing on the Maturity Date is 7.00% (J
= 7.00%). Based on these assumptions, the MVA would be calculated as follows:
MVA Factor = [(1+I)/(1+J+0.0025)]/^/N/12// = [1.055/1.0725]/^/2// = 0.967632
Unadjusted Value = $58,712.07
Adjusted Account Value after MVA = Unadjusted Value X MVA Factor = $56,811.69
MVA FORMULA FOR 6 OR 12 MONTH DCA MVA OPTIONS
The MVA formula is applied separately to each DCA MVA Option to determine the
Account Value of the DCA MVA Option on a particular date.
The Market Value Adjustment Factor applicable to the MVA Options we make
available under the 6 or 12 Month Dollar Cost Averaging Program is as follows:
The MVA factor is equal to:
[(l+I)/(l+J+K/)]^N/12/
where:
I = the Index Rate established at inception of a DCA MVA Option. This
Index Rate will be based on a Constant Maturity Treasury (CMT) rate for
a maturity (in months) equal to the initial duration of the DCA MVA
Option. This CMT rate will be determined based on the weekly average of
the CMT Index of appropriate maturity as of two weeks prior to
initiation of the DCA MVA Option. The CMT Index will be based on
"Treasury constant maturities nominal 12" rates as published in Federal
Reserve Statistical Release H.15. If a CMT index for the number of
months needed is not available, the applicable CMT index will be
determined based on a linear interpolation of the published CMT indices;
J = the Index Rate determined at the time the MVA calculation is
needed, based on a CMT rate for the amount of time remaining in the DCA
MVA Option. The amount of time will be based on the number of complete
months remaining in the DCA MVA Option, rounded up to the nearest whole
month. This CMT rate will be determined based on the weekly average of
the CMT Index of appropriate maturity as of two weeks prior to the date
for which the MVA calculation is needed. The CMT Index will be based on
"Treasury constant maturities nominal 12" rates as published in Federal
Reserve Statistical Release H.15. If a CMT index for the number of
months needed is not available, the applicable CMT index will be
determined based on a linear interpolation of the published CMT indices;
K = the Liquidity Factor, currently equal to 0.0025; and
N = the number of complete months remaining in the DCA MVA Option,
rounded up to the nearest whole month.
G-2
If the "Treasury constant maturities nominal 12" rates available through
Federal Reserve Statistical Release H. 15 should become unavailable at any
time, or if the rate for a 1-month maturity should become unavailable through
this source, we will substitute rates which, in our opinion, are comparable.
We reserve the right to waive the Liquidity Factor.
G-3
APPENDIX H - FORMULA FOR HIGHEST DAILY GRO II
FORMULA FOR ELECTIONS OF HIGHEST DAILY GRO II MADE PRIOR TO JULY 16, 2010
THE FOLLOWING ARE THE TERMS AND DEFINITIONS REFERENCED IN THE TRANSFER
CALCULATION FORMULA:
. AV is the current Account Value of the Annuity
. V\\V\\ is the current Account Value of the elected Sub-accounts of the
Annuity
. V\\F\\ is the current Account Value of amounts held in the MVA Options
. B is the total current value of the AST bond portfolio Sub-account
. C\\l\\ is the lower target value. Currently, it is 79%.
. C\\t\\ is the middle target value. Currently, it is 82%.
. C\\u \\is the upper target value. Currently, it is 85%.
. T is the amount of a transfer into or out of the AST bond portfolio
Sub-account.
For each guarantee provided under the benefit,
. G\\i \\is the guarantee amount
. N\\i\\ is the number of days until the Maturity Date
. d\\i \\is the discount rate applicable to the number of days until the
Maturity Date. It is determined with reference a benchmark index,
reduced by the Discount Rate Adjustment and subject to the discount rate
minimum. The discount rate minimum, beginning on the effective date of
the benefit, is three percent, and will decline monthly over the first
twenty-four months following the effective date of the benefit to one
percent in the twenty-fifth month, and will remain at one percent for
every month thereafter. Once selected, we will not change the applicable
benchmark index. However, if the benchmark index is discontinued, we
will substitute a successor benchmark index, if there is one. Otherwise
we will substitute a comparable benchmark index. We will obtain any
required regulatory approvals prior to substitution of the benchmark
index.
The formula, which is set on the effective date and is not changed while the
benefit is in effect, determines, on each Valuation Day, when a transfer is
required.
The formula begins by determining the value on that Valuation Day that, if
appreciated at the applicable discount rate, would equal the guarantee amount
at the end of each applicable Guarantee Period. We call the greatest of these
values the "current liability (L)."
L = MAX (L\\i\\), where L\\i\\ = G\\i\\ / (1 + d\\i\\) //(Ni/365)//
Next the formula calculates the following formula ratio:
r = (L - B) / (V\\V\\ + V\\F\\)
If the formula ratio exceeds an upper target value, then all or a portion of
the Account Value will be transferred to the AST bond portfolio Sub-account
associated with the current liability subject to the rule that prevents a
transfer into that AST bond portfolio Sub-account if 90% or more of Account
Value is in that Sub-account (90% cap). If at the time we make a transfer to
the AST bond portfolio Sub-account associated with the current liability there
is Account Value allocated to an AST bond portfolio Sub-account not associated
with the current liability, we will transfer all assets from that AST bond
portfolio Sub-account to the AST bond portfolio Sub-account associated with
the current liability.
The formula will transfer assets into the AST bond portfolio Sub-account if r
(greater than) C\\u\\, subject to the 90% cap.
The transfer amount is calculated by the following formula:
T = {Min (MAX(0, (.90 * (V\\V\\ + V\\F\\ + B)) - B), [L - B - (V\\V\\ + V\\F\\) * C\\t\\] / (1 - C\\t\\))}
H-1
If the formula ratio is less than a lower target value and there are assets in
the AST bond portfolio Sub-account, then the formula will transfer assets out
of the AST bond portfolio Sub-account into the elected Sub-accounts.
The formula will transfer assets out of the AST bond portfolio Sub-account if
r (less than) C\\l\\ and B (greater than) 0. The transfer amount is calculated
by the following formula:
T = {Min (B, - [L - B - (V\\V\\ + V\\F\\) * C\\t\\] / (1 - C\\t\\))}
If following a transfer to the elected Sub-accounts, there are assets
remaining in a AST bond portfolio Sub-account not associated with the current
liability, we will transfer all assets from that AST bond portfolio
Sub-account to the AST bond portfolio Sub-account associated with the current
liability.
90% CAP RULE: If, on any Valuation Day the Rider remains in effect, a transfer
into the AST bond portfolio Sub-account occurs which results in 90% of the
Account Value being allocated to the AST bond portfolio Sub-account, any
transfers into the AST bond portfolio Sub-account will be suspended even if
the formula would otherwise dictate that a transfer into the AST bond
portfolio Sub-account should occur. Transfers out of the AST bond portfolio
Sub-account and into the elected Sub-accounts will still be allowed. The
suspension will be lifted once a transfer out of the AST bond portfolio
Sub-account occurs. Due to the performance of the AST bond portfolio
Sub-account and the elected Sub-accounts, the Account Value could be more than
90% invested in the AST bond portfolio Sub-account.
FORMULA FOR ELECTIONS OF HD GRO II MADE ON OR AFTER JULY 16, 2010, SUBJECT TO
STATE APPROVAL.
The operation of the formula is the same as for elections of HD GRO II prior
to July 16, 2010. The formula below provides additional information regarding
the concept of the Projected Future Guarantee throughout the Transfer
Calculation.
THE FOLLOWING ARE THE TERMS AND DEFINITIONS REFERENCED IN THE TRANSFER
CALCULATION FORMULA:
. AV is the current Account Value of the Annuity
. V\\V\\ is the current Account Value of the elected Sub-accounts of the
Annuity
. V\\F\\ is the current Account Value of the elected Fixed Rate Options of
the Annuity
. B is the total current value of the Transfer Account
. C\\l\\ is the lower target value; it is established on the Effective
Date and is not changed for the life of the guarantee
. C\\t\\ is the middle target value; it is established on the Effective
Date and is not changed for the life of the guarantee
. C\\u\\ is the upper target value; it is established on the Effective
Date and is not changed for the life of the guarantee
. T is the amount of a transfer into or out of the Transfer Account
. "Projected Future Guarantee" is an amount equal to the highest Account
Value (adjusted for Withdrawals and additional Net Purchase Payments)
within the current Benefit Year that would result in a new Guarantee
Amount. For the Projected Future Guarantee, the assumed Guarantee Period
begins on the current Valuation Day and ends 10 years from the next
anniversary of the Effective Date. We only calculate a Projected Future
Guarantee if the assumed Guarantee Period associated with that Projected
Future Guarantee does not extend beyond the latest Annuity Date
applicable to the Annuity.
The formula, which is set on the Effective Date and is not changed while the
Rider is in effect, determines, on each Valuation Day, when a transfer is
required.
The formula begins by determining for each Guarantee Amount and for the
Projected Future Guarantee, the value on that Valuation Day that, if
appreciated at the applicable discount rate, would equal the Guarantee Amount
at the end of the Guarantee Period. We call the greatest of these values the
"current liability (L)".
L = MAX (L\\i\\), where L\\i\\ = G\\i\\ / (1 + d\\i\\ ) //(Ni /365)//
Where:
. G\\i\\ is the value of the Guarantee Amount or the Projected Future
Guarantee
. N\\i\\ is the number of days until the end of the Guarantee Period
H-2
. d\\i\\ is the discount rate associated with the number of days until the
end of a Guarantee Period (or the assumed Guarantee Period, for the
Projected Future Guarantee). The discount rate is determined by taking
the greater of the Benchmark Index Interest Rate less the Discount Rate
Adjustment, and the Discount Rate Minimum. The applicable term of the
Benchmark Index Interest Rate is the same as the number of days
remaining until the end of the Guarantee Period (or the assumed
Guarantee Period, for the Projected Future Guarantee). If no Benchmark
Index Interest Rate is available for such term, the nearest available
term will be used. The Discount Rate Minimum is determined based on the
number of months since the Effective Date.
Next the formula calculates the following formula ratio (r):
r = (L - B) / (V\\V\\ + V\\F\\)
If the formula ratio exceeds an upper target value, then Unadjusted Account
Value will be transferred to the bond portfolio Sub-account associated with
the current liability subject to the 90% Cap Feature. If, at the time we make
a transfer to the bond portfolio Sub-account associated with the current
liability, there is Unadjusted Account Value allocated to a bond portfolio
Sub-account not associated with the current liability, we will transfer all
assets from that bond portfolio Sub-account to the bond portfolio Sub-account
associated with the current liability.
The formula will transfer assets into the Transfer Account if r (greater than)
C\\u\\ and if transfers have not been suspended due to the 90% Cap Feature.
Assets in the elected Sub-accounts and Fixed Rate Options, if applicable, are
transferred to the Transfer Account in accordance with the Transfer provisions
of the Rider.
The transfer amount is calculated by the following formula:
T = {Min(MAX(0,(.90 * (V\\V\\ + V\\F\\ + B)) - B), [L - B - (V\\V\\ + V\\F\\ ) * C\\t\\ ] / (1 - C\\t\\))}
If the formula ratio is less than a lower target value, and there are assets
in the Transfer Account, then the formula will transfer assets out of the
Transfer Account and into the elected Sub-accounts.
The formula will transfer assets out of the Transfer Account if r (less than)
C\\l\\ and B (greater than) 0.
The transfer amount is calculated by the following formula:
T = {Min (B, - [L - B - (V\\V\\ + V\\F\\) * C\\t\\ ]/(1 - C\\t\\))}
If, following a transfer to the elected Sub-accounts, there are assets
remaining in a bond portfolio Sub-account not associated with the current
liability, we will transfer all assets from that bond portfolio Sub-account to
the bond portfolio Sub-account associated with the current liability.
90% CAP FEATURE: If, on any Valuation Day the Rider remains in effect, a
transfer into the Transfer Account occurs which results in 90% of the
Unadjusted Account Value being allocated to the Transfer Account, any
transfers into the Transfer Account will be suspended even if the formula
would otherwise dictate that a transfer into the Transfer Account should
occur. Transfers out of the Transfer Account and into the elected Sub-accounts
will still be allowed. The suspension will be lifted once a transfer out of
the Transfer Account occurs. Due to the performance of the Transfer Account
and the elected Sub-Accounts, the Unadjusted Account Value could be more than
90% invested in the Transfer Account.
H-3
APPENDIX I - FORMULA FOR HIGHEST DAILY LIFETIME INCOME 2.0 SUITE, HIGHEST DAILY
LIFETIME INCOME SUITE AND HIGHEST DAILY LIFETIME 6 PLUS SUITE OF LIVING BENEFITS
This Appendix describes the formula used with the following living benefits:
The Highest Daily Lifetime Income 2.0 Suite:
.. Highest Daily Lifetime Income 2.0;
.. Highest Daily Lifetime Income 2.0 with Lifetime Income Accelerator;
.. Spousal Highest Daily Lifetime Income 2.0;
.. Highest Daily Lifetime Income 2.0 with Highest Daily Death Benefit;
.. Spousal Highest Daily Lifetime Income 2.0 with Highest Daily Death Benefit.
The Highest Daily Lifetime Income Suite (offered from January 24, 2011 to
August 20, 2012):
.. Highest Daily Lifetime Income;
.. Highest Daily Lifetime Income with Lifetime Income Accelerator, and
.. Spousal Highest Daily Lifetime Income.
The Highest Daily Lifetime 6 Plus Suite (offered from March 15, 2010 to
January 23, 2011):
.. Highest Daily Lifetime 6 Plus Income Benefit;
.. Highest Daily Lifetime 6 Plus Income Benefit with Lifetime Income
Accelerator; and
.. Spousal Highest Daily Lifetime 6 Plus Income Benefit.
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 Income 2.0 Suite, Highest Daily Lifetime Income
Suite and Highest Daily Lifetime 6 Plus Suite of benefits (the
"Effective Date") and is not changed for the life of the guarantee.
Currently, it is 83%.
. C\\us\\ - The secondary upper target is established on the Effective
Date of the Highest Daily Lifetime Income 2.0 Suite, Highest Daily
Lifetime Income Suite and Highest Daily Lifetime 6 Plus Suite of
benefits 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 Unadjusted Account Value of all elected DCA MVA 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, increased for additional Purchase Payments, including the
amount of any associated Purchase Credits, and adjusted proportionally
for Excess Income*, 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 Unadjusted 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.
I-1
. 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 TARGET VALUE CALCULATION:
On each Valuation Day, a target value (L) is calculated, according to the
following formula. If (V\\V\\ + V\\F\\) is equal to zero, no calculation is
necessary. Target Values are subject to change for new elections of this
benefit on a going-forward basis.
L = 0.05 * P * a
DAILY 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 =) C\\us\\ or if on any day r (greater than) C\\us\\, and
transfers have not been suspended due to the 90% cap rule, assets in the
Permitted Sub-accounts and the DCA MVA Options, if applicable, 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.
90% CAP RULE: If, on any Valuation Day this benefit remains in effect, a
transfer into the AST Investment Grade Bond Portfolio Sub-account occurs that
results in 90% of the Unadjusted Account Value being allocated to the AST
Investment Grade Bond Portfolio Sub-account, any transfers into the AST
Investment Grade Bond Portfolio Sub-account will be suspended, even if the
formula would otherwise dictate that a transfer into the AST Investment Grade
Bond Portfolio Sub-account should occur. Transfers out of the AST Investment
Grade Bond Portfolio Sub-account and into the elected Sub-accounts will still
be allowed. The suspension will be lifted once a transfer out of the AST
Investment Grade Bond Portfolio Sub-account occurs either due to a Daily or
Monthly Transfer Calculation. Due to the performance of the AST Investment
Grade Bond Portfolio Sub-account and the elected Sub-accounts, the Unadjusted
Account value could be more than 90% invested in the AST Investment Grade Bond
Portfolio Sub-account.
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 the DCA MVA Options to the
AST Investment Grade Bond Sub-account
T = {Min (B, - [L - B - (V\\V\\ + V\\F\\) * C\\t\\] / Money is transferred from the AST Investment
(1 - C\\t\\))} Grade Bond Sub-account to the Permitted Sub-
accounts
MONTHLY TRANSFER 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.
I-2
"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 6.7 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-3
PLEASE SEND ME A STATEMENT OF ADDITIONAL INFORMATION THAT CONTAINS
FURTHER DETAILS ABOUT THE PRUCO LIFE PRUDENTIAL PREMIER(R) RETIREMENT
VARIABLE ANNUITY X SERIES, B SERIES, L SERIES AND C SERIES/SM/ ANNUITY
DESCRIBED IN PROSPECTUS (2012)
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entitled "How To Contact Us" for
where to send your request for
a Statement of Additional Information
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