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Reed Smith LLP
W. THOMAS CONNER 1301 K Street, N.W.
Direct Phone: +1 202 414 9208 Suite 1100 - East Tower
Email: tconner@reedsmith.com Washington, D.C. 20005-3373
+1 202 414 9200
Fax +1 202 414 9299
reedsmith.com
March 25, 2013
Sonny Oh
Division of Investment Management
Office of Insurance Products
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
RE: METLIFE POST-EFFECTIVE AMENDMENTS FILED JANUARY 14 AND 15, 2013
Dear Mr. Oh:
On January 14 and 15, 2013, Metlife Investors USA Insurance Company ("MLI
USA") and First Metlife Investors Insurance Company ("FMLI," and together with
MLI USA, the "Companies") and their corresponding separate accounts filed
post-effective amendments (the "Amendments") relating to certain registration
statements for variable annuity contracts (the "Contracts") as noted in
Appendix A. On behalf of MLI USA and FMLI and their respective separate
accounts, MetLife Investors USA Separate Account A and First MetLife Investors
Variable Annuity Account One (each, a "Registrant," and collectively, the
"Registrants"), we are responding to the comments that you provided to us
orally on February 27, 2013 in connection with the Amendments.
For ease of reference, each of the Staff's comments is set forth below,
followed by the Companies' response. We understand that the comments provided
by the Staff relate primarily to the Amendments corresponding to the "national"
version of the Contract that will be issued through MetLife Investors USA
Separate Account A (referred to herein as the "National Version" of the
Contract), but may also apply in certain cases to the Amendments corresponding
to the New York version of the Contract that will be issued through First
MetLife Investors Variable Annuity Account One (referred to herein as the "New
York Version" of the Contract). For ease of reference, our summary of each of
the comments denotes whether the comment applies to the National Version, the
New York Version, or both, as the case may be.
Page references are to the marked versions of the prospectuses provided to
the Staff. To the extent that the Companies' responses herein refer to proposed
revisions to disclosure in the Amendments, changed pages reflecting such
revisions are being filed herewith; final disclosure revisions (which may
include additional editorial and stylistic changes) and required exhibits will
be filed in amendments filed pursuant to paragraph (b) of Rule 485.
NEW YORK . LONDON . HONG KONG . CHICAGO . WASHINGTON, D.C. . BEIJING . PARIS .
LOS ANGELES . SAN FRANCISCO . PHILADELPHIA . SHANGHAI . PITTSBURGH MUNICH . ABU
DHABI . PRINCETON . NORTHERN VIRGINIA . WILMINGTON . SILICON VALLEY . DUBAI .
CENTURY CITY . RICHMOND . GREECE
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Page 2
1. GENERAL COMMENT -- NATIONAL AND NEW YORK VERSIONS
Please confirm that each prospectus will bear a date on or about the date of
effectiveness of the filing.
RESPONSE: Each prospectus will bear a date on or about the date of
effectiveness of the filing.
2. FEE TABLES/EXAMPLES -- NATIONAL AND NEW YORK VERSIONS
In footnote 5, please revise the following disclosure to change the phrase
"may increase with additional Purchase Payments" to read "may be adjusted
for subsequent Purchase Payments and withdrawals," similar to the disclosure
in footnote 3 of the Fee Tables/Examples:
The Total Guaranteed Withdrawal Amount is initially set at an amount
equal to your initial Purchase Payment. The Total Guaranteed
Withdrawal Amount may increase with additional Purchase Payments. See
"Living Benefits -- Guaranteed Withdrawal Benefit" for a definition of
the term Total Guaranteed Withdrawal Amount. The GWB rider charge may
increase upon an Automatic Annual Step-Up, but it will not exceed the
maximum charge listed in this table. (See "Expenses").
RESPONSE: Footnote 5 will be revised as requested.
3. PURCHASE -- NATIONAL AND NEW YORK VERSIONS (EXCEPT WHERE NOTED)
(a) Under the main heading "Purchase," sub-heading "Purchase Payments,"
please either clarify the applicability of the final paragraph in
light of the last bullet point or, if it is not necessary, delete it.
RESPONSE: Certain disclosures in this section of the prospectus following
the sub-heading "Purchase Payments" referred to in the Staff's comment have
been revised to clarify the applicability of the disclosure in the final
paragraph.
(b) The term "GWB" is defined, but is not used consistently as a defined
term in the prospectus (see for instance, page 23 where reference is
made to the GWB vl rider). Please revise the prospectus to make
consistent use of this defined term.
RESPONSE: Registrants have used the different terminology purposefully: the
term "GWB" is used to describe the features offered by the guaranteed
withdrawal benefit generally, whereas the term "GWB vl" is used to refer
specifically to features or limitations that are applicable to that specific
version of the rider. Nevertheless, upon further review of the relevant
disclosure, Registrants have determined that certain additional changes on
pages 23 and 24 are appropriate in order to more fully implement this
general principle.
(c) NEW YORK VERSION -- In the National Version of the prospectus, there
is a paragraph describing the import of rider termination on
investment allocation restrictions that is
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March 25, 2013
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captioned "Restrictions on Investment Allocations after Rider
--------------------------------------------------
Terminates." The staff believes that the New York Version would
----------
benefit from the addition of a similar caption.
RESPONSE: As noted in the Registrants' responses to a similar Staff comment
in the past, the Fixed Account investment option and the optional EDB Max
death benefit are not available in New York. For the New York version, there
are no surviving investment allocation restrictions after the GMIB Max rider
terminates. Because of this fact and the reduced level of disclosure in this
paragraph, Registrants do not believe that the referenced caption, or any
other caption, is necessary.
(d) NATIONAL VERSION -- On page 24, left hand column under the heading
"Potential Restrictions on Subsequent Purchase Payments -- Oregon
Only," please specify under what circumstances this may happen. For
example, in the prior paragraph "Potential Restrictions on Subsequent
Purchase Payments," the disclosure provides:
In the future, we may choose not to permit Owners of existing
contracts with GMIB Max V, GMIB Max IV, GMIB Max III, or GMIB Max
II rider to make subsequent Purchase Payments if: (a) that GMIB
Max rider is no longer available to new customers, or (b) we make
certain changes to the terms of that GMIB Max rider offered to
new customers (for example, if we change the rider charge; see
your contract schedule for a list of the other changes).
Similarly, in the future, we may choose not to permit Owners of
existing contracts with an EDB Max V, EDB Max IV, EDB Max III, or
EDB Max II rider to make subsequent Purchase Payments if:
(a) that EDB Max rider is no longer available to new customers,
or (b) we make certain changes to the terms of that EDB Max rider
offered to new customers (see your contract schedule for a list
of the changes).
If these circumstances, or similar circumstances, are applicable to
Oregon, please add disclosure describing such circumstances to the
section on "Potential Restrictions on Subsequent Purchase Payments --
Oregon Only."
RESPONSE: Neither these circumstances, nor similar circumstances, are
applicable to restrictions on subsequent purchase payments in Oregon.
Therefore, Registrants believe that the disclosure is correct and that
revisions are not necessary or appropriate.
(e) NATIONAL VERSION -- On page 24, right hand column under the heading
"California Free Look Requirements for Purchasers Age 60 and Over,"
there is a cross reference to the broader "Free Look" section on page
27. Please provide, in that broader "Free Look" section on page 27, a
similar brief cross reference back to the "California Free Look
Requirements for Purchasers Age 60 and Over" section on page 24.
RESPONSE: The disclosure will be revised to provide the requested
cross-reference.
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(f) NATIONAL VERSION AND NEW YORK VERSION -- With respect to the second
paragraph of the disclosure under each of the following sub-headings,
"Current Restrictions on Subsequent Purchase Payments" (page 19 of New
York Version) and "Current Restrictions on Subsequent Purchase
Payments -- Oregon Only" (page 24 of National Version), please clarify
whether that paragraph applies only to the GMIB Max riders or also
applies to the EDB Max riders.
RESPONSE: Registrants note that the New York Version has never offered, and
does not now offer, the EDB Max riders. As such, the referenced disclosure
in the New York Version applies only to the GMIB Max riders. With respect to
the National Version, the Registrants note that the EDB Max rider was not
offered in Oregon at the time that the restriction was put in place. As
such, the referenced disclosure in the National Version applies only to the
GMIB Max riders.
4. ANNUITY PAYMENTS (THE INCOME PHASE) -- NATIONAL VERSION AND NEW YORK VERSION
-- Under the sub-heading "Maturity Date" (page 43 of the National Version,
and page 36 of the NY Version), the disclosure appears to be new. Please
clarify whether this applies to prospective and/or current owners and if
current, kindly explain the basis for retroactive application.
RESPONSE: The disclosures were added to provide additional procedural detail
relating to the Annuity Date and extension of the Annuity Date, in
accordance with applicable provisions of the contract. Accordingly, there
are no new limitations placed on current Contract owners. Upon further
consideration, Registrants have determined to make the added disclosure more
focused.
5. NATIONAL VERSION AND NEW YORK VERSIONS
(a) Under the heading "Optional Step-Up," in the paragraph that begins
"Each Optional Step-Up:" (page 53 of National Version and page 46 of
New York Version), the National Version lists 3 results and the New
York Version lists 4 results of the step-up. Please confirm that the
disclosure is accurate or conform the disclosure.
RESPONSE: Registrants have reviewed the Staff's comments and the relevant
disclosure and confirm that the disclosure is accurate as drafted.
(b) With respect to the decision to remove examples, please note that the
National Version and the New York Version have each retained
Appendices C and D to provide examples. The staff strongly recommends
that the registrants provide at least some rudimentary examples as to
the operation of these riders (GMIB in particular), which are more
complex than the riders to which Appendices C and D relate. The staff
encourages the registrant to at least provide a simple example in the
prospectus narrative (not necessarily adding back in the Appendices).
RESPONSE: We appreciate the Staff's comments in this regard, have carefully
considered the relevant disclosure, and agree that it may be useful to
investors to include examples illustrating the conceptual operation of
certain basic rider features. Registrants anticipate including such
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March 25, 2013
Page 5
examples in appendices to the prospectus. Registrants' legal staff is
conferring internally with representatives of the actuarial, product design,
marketing, sales and other units within the Companies to determine which
features of which riders, and in what level of detail, the examples should
reflect.
6. GUARANTEED WITHDRAWAL BENEFIT -- NATIONAL VERSION AND NEW YORK VERSION.
(a) Under the sub-heading, "Summary of the Guaranteed Withdrawal Benefit
Rider" (page 60 of the National Version and page 53 of the New York
Version), please highlight the last sentence of the second paragraph
of the disclosure.
RESPONSE: Registrants will highlight the last sentence in response to the
staff's comment.
(b) Under the sub-headings, "Total Guaranteed Withdrawal Amount" and
"Remaining Guaranteed Withdrawal Amount," please expand the disclosure
in bold (page 61 of the National Version and page 54 of the New York
Version) to more fully explain the impact (see, e.g., the disclosure
for GMIB on page 52 of the National Version).
RESPONSE: We have reviewed the staff's comments and the relevant disclosure
and will incorporate disclosure similar to what is found in the referenced
sections of the National Version.
(c) Under the sub-heading "Annual Benefit Payment" (page 61 of the
National Version and page 54 of the New York Version), within the
bullets under the sub-heading "It is important to note," the staff
believes that it would be helpful to explain why the longer a contract
owner waits to take the first withdrawal, the higher the withdrawal
rate. Additionally, please also clarify the last sentence by
explaining that delaying the first payment results in a benefit that
you are not receiving.
RESPONSE: We have reviewed the staff's comments and the relevant disclosure
and will revise the disclosure in a fashion that Registrants believe is
responsive to the comments.
(d) Under the sub-heading "Required Minimum Distributions," in the first
sentence of the second paragraph (page 62 of the National Version and
page 55 of the New York Version), please confirm the accuracy of the
use of "and/or." For example, please see the disclosure on page 66 of
the National Version and consider whether the disclosure should be
conjunctive as it is on page 66 of the National Version under the
sub-heading "Use of Automated Required Minimum Distribution Program
and Systematic Withdrawal Program With GWB." Additionally, toward end
of that sentence, please clarify the statement that presently reads
"by the amount of the withdrawal" to make clear that it is "the
difference between the Annual Benefit Payment and the Required Minimum
Distribution."
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March 25, 2013
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RESPONSE: We have revised the relevant disclosure to clarify the references
to the Automated Required Minimum Distribution Program and the Systematic
Withdrawal Program and to clarify the "by the amount of the withdrawal"
language.
(e) Under the sub-heading "Withdrawal Enhancement Feature" (page 63 of the
National Version and page 56 of the New York Version), please be more
specific regarding the 90 day prerequisite (i.e., consecutive or total
within a set period of time).
RESPONSE: We have revised the disclosure to clarify that the 90 day
requirement is consecutive.
(f) Under the same sub-heading "Withdrawal Enhancement Feature," in the
4th to last paragraph (page 63 of the National Version and page 56 of
the New York Version), within the section that begins "If you meet the
requirements . . . ", please explain to the staff under what
circumstances the recalculated benefit would equal item (b).
RESPONSE: The recalculated benefit would equal item (b) if the Contract
owner's Required Minimum Distribution Amount (item (b)) were larger than the
GWB Withdrawal Rate (5%, 6%, or 7%) multiplied by the Withdrawal Enhancement
Rate (150%), multiplied by the Total Guaranteed Withdrawal Amount (item
(a)). Accordingly, the disclosure is accurate as drafted. Registrants note
in this regard that since the disclosure applies only to a relatively modest
group of Contract holders, Registrants believe that the benefits of any
expansion of the disclosure are outweighed by the possibility of confusion.
(g) Throughout the Section regarding the "Guaranteed Withdrawal Benefit,"
which begins on page 60 of the National Version and page 53 of the New
York Version, please confirm whether references to 120 days from the
date of the contract issuance are coincidentally equal to Purchase
Payment Period, or are one and the same; if one and the same, please
make that clear.
RESPONSE: Registrants have reviewed the Staff's question and the relevant
disclosure and can confirm that it is happenstance that the references to
120 days from the date of contract issuance are coincident with the Purchase
Payment Period under the GWB vl version of the rider.
(h) Please revise the second sentence in the paragraph immediately
preceding "Investment Allocation Restrictions" in the left hand column
of page 64 (of the National Version) and the last paragraph of the
left hand column of page 57 (of the New York Version) to clarify why
making Purchase Payments after 120 days may impact whether or not a
benefit is due.
RESPONSE: Registrants reviewed the relevant disclosure and will include
clarifying disclosure in response to the Staff's comment, explaining that
because such Purchase Payments increase the Account Value, it may be less
likely that at the time a calculation is made to determine whether there
will be a Guaranteed Principal Adjustment, the Account Value will be less
than the amount of Purchase Payments credited during the first 120 days.
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(i) The section of the prospectus describing the Guaranteed Withdrawal
Benefit includes a section captioned "Taxes" (on page 64 of the
National Version and on page 57 of the New York Version). If
appropriate, please provide corresponding disclosure in the section of
the prospectus describing the GMIB.
RESPONSE: Upon further review, it was unclear to which section the comment
was directed; the "Taxes" section or the "Tax Treatment" section. If the
comment was directed to the "Taxes" section, Registrants will add
corresponding disclosure in the section of the prospectus describing the
GMIB. If the comment was directed to the "Tax Treatment" section, Registrant
notes that the disclosure found in the "Tax Treatment" section is not
applicable to the GMIB.
7. (a) Death Benefit -- National Version only (beginning on page 69). Under
the sub-heading "Withdrawal Adjustments" on page 74, the Staff notes
that there is disclosure set forth in sub-section (a)(2) thereof,
which reads "Withdrawal adjustments in a Contract Year are determined
according to . . . (a) proportional reduction: . . . (2) if the
withdrawals occur on or after the contract anniversary immediately
prior to your 91st birthday . . ." This appears to represent new
disclosure. Please clarify whether this applies to prospective and/or
current owners and if current, kindly explain the basis for
retroactive application.
RESPONSE: The disclosure in item (a), which is applicable to both new and
current owners (i.e. when a proportional reduction occurs), is the mirror
image of disclosure contained in item (b) (i.e. when a dollar-for-dollar
reduction occurs). The disclosure in item (b) (i.e. that in order to receive
dollar-for-dollar treatment for a withdrawal, the contract owner must take a
withdrawal before the contract anniversary immediately prior to his or her
91st birthday) has always been in the National Version, and the referenced
disclosure was added to item (a) in order to make even more clear that the
operation is the same for both proportional and dollar-for-dollar reductions.
(b) Death Benefit -- National Version only. Under the sub-heading "The EDB
Rider and Annuitization" (page 76), this appears to represent new
disclosure. Please clarify whether this applies to prospective and/or
current owners and if current, kindly explain the basis for
retroactive application.
RESPONSE: A new feature has been added relating to extension of the Annuity
Date that, while applicable to current as well as future Contract owners,
will be beneficial in all situations.
8. NY Version only -- Under the sub-heading "Additional Compensation for
selected Selling Firms" (beginning on page 73), please update the year on
page 74 (see Page 90 of National Version for equivalent disclosure with an
updated year reference).
RESPONSE: Registrants will change the date and update the relevant
disclosure to reflect current information.
9. National Version and New York Version -- In Appendix A, in both Charts 1 and
2, the Staff believes that Registrants should reflect the AUV with the
highest fees and expenses first.
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RESPONSE: As noted in response to a similar Staff comment in the past, the
Registrants respectfully decline to make this revision for the following
reasons. First, while Item 4.A of Form N-4 and the instructions thereto
require AUVs to be presented for all classes of accumulation units, there
is no required order in which they must be presented. Registrants do not
believe that the format of the AUV table generally lends itself to
assessing performance and, accordingly, the current presentation is not
confusing or misleading. Second, the printing, formatting, and auditor
review costs involved in changing the presentation in this manner would
greatly outweigh whatever negligible benefit may be associated with such
revision.
10. National Version and New York Version -- Please include a Statement of
Additional Information with condensed financial information and preamble
to the SAI that all other possible combinations of Separate Account
product charges and death benefit rider charges are listed in Appendix A
to the Prospectus.
RESPONSE: Registrants will include a Statement of Additional Information
and condensed financial information as part of the filing to be made
pursuant to Rule 485(b). Registrants respectfully note that rider charges
do not impact the AUV; finally, Registrants note that the SAI already
includes a statement that the SAI charts are in addition to the charts
contained in the prospectus.
11. Opinions of Counsel -- Please explain the basis for not providing an
updated opinion given that there are new versions of riders offered under
the contract.
RESPONSE: The referenced opinions of counsel are required under applicable
Commission form requirements to confirm that the securities being
registered on the registration statement will be legally issued and will
represent binding obligations of the Companies. We believe that under the
present circumstances, where the functional operation of the riders has
not been changed, the legal analysis set forth in the opinions currently
being relied upon is not impacted. As the Staff is aware, the opinions
required in the context of variable annuity registration is largely within
the ambit of the Companies' insurance attorneys, and we believe it is
appropriate under the present circumstances to rely on their determination
as to whether their current opinion can continue to be relied upon. This
has been the practice to date, as the Companies have not viewed it
necessary in similar circumstances to include a new opinion. Moreover,
while we have not conducted in depth research in this regard, we are not
aware that is general industry practice to do so.
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12. Kindly include TANDY representations.
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RESPONSE: Registrants will include TANDY representations.
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Please call the undersigned at 202.414.9208 or Tim Johnson at 412.288.1484
with comments or questions.
Very truly yours,
/s/ W. Thomas Conner
W. Thomas Conner
Attachments
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POST-EFFECTIVE AMENDMENTS COVERED BY THE STAFF'S COMMENTS
---------------------------------------------------------
MetLife Investors USA Insurance Company and MetLife Investors USA Separate
--------------------------------------------------------------------------
Account A
---------
PEA No. 9 (File No. 333-176374) for Series VA (offered on and after October 7,
2011)
PEA No. 8 (File No. 333-176698) for Series S (offered on and after October 7,
2011) and Series S -- L Share Option (offered on and after October 7, 2011)
PEA No. 8 (File No. 333-176676) for Series VA -- 4 (offered on and after
October 7, 2011)
PEA No. 4 (File No. 333-178514) for Series O
First MetLife Investors Insurance Company and First MetLife Investors Variable
------------------------------------------------------------------------------
Annuity Account One
-------------------
PEA No. 8 (File No. 333-176680) for Class VA -- 4 (offered on and after
October 7, 2011)
PEA No. 7 (File No. 333-176691) for Class VA (offered on and after October 7,
2011)
PEA No. 7 (File No. 333-176679) for Class S (offered on and after October 7,
2011) and Class S -- L Share Option (offered on and after October 7, 2011)
PEA No. 4 (File No. 333-178515) for Class O
THE VARIABLE ANNUITY CONTRACT
ISSUED BY
METLIFE INVESTORS USA INSURANCE COMPANY
AND
METLIFE INVESTORS USA SEPARATE ACCOUNT A
SERIES VA
(OFFERED ON AND AFTER OCTOBER 7, 2011)
APRIL 29, 2013
This prospectus describes the flexible premium deferred variable annuity
contract offered by MetLife Investors USA Insurance Company (MetLife Investors
USA or we or us). The contract is offered for individuals and some tax qualified
and non-tax qualified retirement plans.
The annuity contract has 64 investment choices - a Fixed Account that offers an
interest rate guaranteed by us, and 63 Investment Portfolios listed below.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THE CONTRACTS AS DESCRIBED IN THIS PROSPECTUS UNTIL THE POST-EFFECTIVE
AMENDMENT TO THE REGISTRATION STATEMENT RELATING TO THE CONTRACTS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THE PROSPECTUS IS NOT AN
OFFER TO SELL THESE CONTRACTS AND IS NOT SOLICITING AN OFFER TO BUY THESE
CONTRACTS IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
MET INVESTORS SERIES TRUST - GMIB MAX, EDB MAX, AND GWB PORTFOLIOS* (CLASS B):
AllianceBernstein Global Dynamic Allocation Portfolio
AQR Global Risk Balanced Portfolio
BlackRock Global Tactical Strategies Portfolio
Invesco Balanced-Risk Allocation Portfolio
JPMorgan Global Active Allocation Portfolio
MetLife Balanced Plus Portfolio
MetLife Multi-Index Targeted Risk Portfolio
Pyramis (Reg. TM) Government Income Portfolio
Schroders Global Multi-Asset Portfolio
* If you elect the GWB rider, a GMIB Max rider, or a GMIB Max and an EDB Max
rider, you must allocate your Purchase Payments and Account Value among these
Investment Portfolios. (See "Purchase - Investment Allocation Restrictions for
Certain Riders.") These Investment Portfolios are also available for investment
if you do not elect the GWB rider, a GMIB Max rider or an EDB Max rider.
1
GUARANTEED WITHDRAWAL BENEFIT (GWB) RIDER CHARGES(Note 4)
(as a percentage of the Total Guaranteed Withdrawal Amount (Note 5))
GWB v1 - maximum charge 1.80%
GWB v1 - current charge 0.90%
--------------------------------------------------------------------------------
Note 4. The GWB v1 rider is currently available for purchase in all states
except __________.
Note 5. The Total Guaranteed Withdrawal Amount is initially set at an amount
equal to your initial Purchase Payment. The Total Guaranteed Withdrawal Amount
may be adjusted for subsequent Purchase Payments and withdrawals. See "Living
Benefits - Guaranteed Withdrawal Benefit" for a definition of the term Total
Guaranteed Withdrawal Amount. The GWB rider charge may increase upon an
Automatic Annual Step-Up, but it will not exceed the maximum charge listed in
this table. (See "Expenses.")
13
identified by the Investment Portfolios on a case-by-case basis. We may revise
these policies and procedures in our sole discretion at any time without prior
notice.
Our market timing policies and procedures are discussed in more detail in
"Investment Options - Transfers - Market Timing."
2. PURCHASE
The contract may not be available for purchase through your broker dealer
("selling firm") during certain periods. There are a number of reasons why the
contract periodically may not be available, including that the insurance
company wants to limit the volume of sales of the contract. You may wish to
speak to your registered representative about how this may affect your
purchase. For example, you may be required to submit your purchase application
in Good Order prior to or on a stipulated date in order to purchase a contract,
and a delay in such process could result in your not being able to purchase a
contract. In addition, certain optional riders described in this prospectus may
not be available through your selling firm, which you may also wish to discuss
with your registered representative. Your selling firm may offer the contract
with a lower maximum issue age for the contract and certain riders than other
selling firms.
We reserve the right to reject any application.
PURCHASE PAYMENTS
A PURCHASE PAYMENT is the money you give us to invest in the contract. The
initial Purchase Payment is due on the date the contract is issued. You may
also be permitted to make subsequent Purchase Payments. Initial and subsequent
Purchase payments are subject to certain requirements. These requirements are
explained below. We may restrict your ability to make subsequent Purchase
Payments. The manner in which subsequent Purchase Payments may be restricted is
discussed below.
GENERAL REQUIREMENTS FOR PURCHASE PAYMENTS. The following requirements apply to
initial and subsequent Purchase Payments:
o The minimum initial Purchase Payment we will accept is $5,000 when the
contract is purchased as a Non-Qualified Contract.
o If you are purchasing the contract as part of an IRA (Individual Retirement
Annuity) or other qualified plan, the minimum initial Purchase Payment we
will accept is $2,000.
o If you want to make an initial Purchase Payment of $1 million or more, or a
subsequent Purchase Payment that would cause your total Purchase Payments
to exceed $1 million, you will need our prior approval.
o The minimum subsequent Purchase Payment is $500 unless you have elected an
electronic funds transfer program approved by us, in which case the
minimum subsequent Purchase Payment is $100 per month.
o We will accept a different amount if required by federal tax law.
o We reserve the right to refuse Purchase Payments made via a personal check
in excess of $100,000. Purchase Payments over $100,000 may be accepted in
other forms, including, but not limited to, EFT/wire transfers, certified
checks, corporate checks, and checks written on financial institutions. The
form in which we receive a Purchase Payment may determine how soon subsequent
disbursement requests may be fulfilled. (See "Access to Your Money.")
o We will not accept Purchase Payments made with cash, money orders, or
travelers checks.
RESTRICTIONS ON SUBSEQUENT PURCHASE PAYMENTS. We may restrict your ability to
make subsequent Purchase Payments. We will notify you in advance if we impose
restrictions on subsequent Purchase Payments. You and your financial
representative should carefully consider whether our ability to restrict
subsequent Purchase Payments is consistent with your investment objectives.
o We reserve the right to reject any Purchase Payment and to limit future
Purchase Payments. This means that we may restrict your ability to make
subsequent Purchase Payments for any reason, subject to applicable
requirements in your state. We may make certain exceptions to restrictions
on subsequent Purchase Payments in accordance with our established
administrative procedures.
o Certain riders have current and potential restrictions on subsequent
Purchase Payments that are described in more detail below. For more
information, see these subsections below: "Investment Allocation
Restrictions for Certain Riders - Investment Allocation Restrictions for
the GMIB Max, EDB Max, and GWB
21
v1 Riders" and "Investment Allocation Restrictions for Certain Riders -
Investment Allocation Restrictions for GMIB Plus IV, EDB III, GMIB Plus III,
and EDB II."
We reserve the right to reject any application or Purchase Payment and to limit
future Purchase Payments.
TERMINATION FOR LOW ACCOUNT VALUE
We may terminate your contract by paying you the Account Value in one sum if,
prior to the Annuity Date, you do not make Purchase Payments for two
consecutive Contract Years, the total amount of Purchase Payments made, less
any partial withdrawals, is less than $2,000 or any lower amount required by
federal tax laws, and the Account Value on or after the end of such two year
period is less than $2,000. (A CONTRACT YEAR is defined as a one-year period
starting on the date the contract is issued and on each contract anniversary
thereafter.) Accordingly, no contract will be terminated due solely to negative
investment performance. Federal tax law may impose additional restrictions on
our right to cancel your Traditional IRA, Roth IRA, SEP, SIMPLE IRA or other
Qualified Contract. We will not terminate any contract that includes a
Guaranteed Minimum Income Benefit or Guaranteed Withdrawal Benefit rider or a
guaranteed death benefit if at the time the termination would otherwise occur
the Income Base of the Guaranteed Minimum Income Benefit rider, the Remaining
Guaranteed Withdrawal Amount of the Guaranteed Withdrawal Benefit rider, or the
guaranteed amount under any death benefit, is greater than the Account Value.
For all other contracts, we reserve the right to exercise this termination
provision, subject to obtaining any required regulatory approvals.
ALLOCATION OF PURCHASE PAYMENTS
When you purchase a contract, we will allocate your Purchase Payment to the
Fixed Account and/or any of the Investment Portfolios you have selected. You
may not choose more than 18 Investment Portfolios (including the Fixed Account)
at the time your initial Purchase Payment is allocated. Each allocation must be
at least $500 and must be in whole numbers.
We have reserved the right to restrict payments to the Fixed Account if any of
the following conditions exist:
o the credited interest rate on the Fixed Account is equal to the guaranteed
minimum rate; or
o your Account Value in the Fixed Account equals or exceeds our published
maximum for Fixed Account allocation (currently, there is no limit); or
o a transfer was made out of the Fixed Account within the previous 180 days.
Once we receive your Purchase Payment and the necessary information (or a
designee receives a payment and the necessary information in accordance with
the designee's administrative procedures), we will issue your contract and
allocate your first Purchase Payment within 2 Business Days. A BUSINESS DAY is
each day that the New York Stock Exchange is open for business. A Business Day
closes at the close of normal trading on the New York Stock Exchange, usually
4:00 p.m. Eastern Time. If you do not give us all of the information we need,
we will contact you to get it before we make any allocation. If for some reason
we are unable to complete this process within 5 Business Days, we will either
send back your money or get your permission to keep it until we get all of the
necessary information. (See "Other Information - Requests and Elections.")
We may restrict the investment options available to you if you select certain
optional riders. These restrictions are intended to reduce the risk of
investment losses that could require us to use our own assets to pay amounts
due under the selected optional rider.
In the future, we may change the investment options that are available to you
if you select certain optional riders. If you elect an optional rider and we
later remove an investment option from the group of investment options
available under that rider, you will not be required to reallocate Purchase
Payments or Account Value that you had previously allocated to that investment
option. However, you may not be able to allocate new Purchase Payments or
transfer Account Value to that investment option.
If you choose the GMIB Max V, GMIB Max IV, GMIB Max III, GMIB Max II, EDB Max
V, EDB Max IV, EDB Max III, EDB Max II, or GWB v1 riders, we require you to
allocate your Purchase Payments and Account Value as described below under
"Investment Allocation Restrictions for the GMIB Max, EDB Max, and GWB Riders"
until the rider terminates.
If you choose the Guaranteed Minimum Income Benefit Plus IV (GMIB Plus IV),
Enhanced Death Benefit III (EDB
22
III), Guaranteed Minimum Income Benefit Plus III (GMIB Plus III), or Enhanced
Death Benefit II (EDB II) riders, we require you to allocate your Purchase
Payments and Account Value as described below under "Investment Allocation
Restrictions for GMIB Plus IV, EDB III, GMIB Plus III, and EDB II" until the
rider terminates.
If you make additional Purchase Payments, we will allocate them in the same way
as your first Purchase Payment unless you tell us otherwise. However, if you
make an additional Purchase Payment while an EDCA or Dollar Cost Averaging
(DCA) program is in effect, we will not allocate the additional Purchase
Payment to the EDCA or DCA program, unless you tell us to do so. Instead,
unless you give us other instructions, we will allocate the additional Purchase
Payment directly to the same destination Investment Portfolios you selected
under the EDCA or DCA program. (See "Investment Options -
Dollar Cost Averaging Programs.") You may change your allocation instructions
at any time by notifying us in writing, by calling us or by Internet. You may
not choose more than 18 Investment Portfolios (including the Fixed Account) at
the time you submit a subsequent Purchase Payment. If you wish to allocate the
payment to more than 18 Investment Portfolios (including the Fixed Account), we
must have your request to allocate future Purchase Payments to more than 18
Investment Portfolios on record before we can apply your subsequent Purchase
Payment to your chosen allocation. If there are Joint Owners, unless we are
instructed to the contrary, we will accept allocation instructions from either
Joint Owner.
INVESTMENT ALLOCATION RESTRICTIONS FOR CERTAIN RIDERS
INVESTMENT ALLOCATION RESTRICTIONS FOR THE GMIB MAX, EDB MAX, AND GWB V1 RIDERS
If you elect the GMIB Max V, GMIB Max IV, EDB Max V or EDB Max IV riders, or if
you elected the GMIB Max III, GMIB Max II, EDB Max III or EDB Max II riders
(all eight riders are referred to collectively as the "GMIB Max and EDB Max
riders"), or if you elect the GWB v1 rider, you may allocate your Purchase
Payments and Account Value among the following Investment Portfolios:
(a) AllianceBernstein Global Dynamic Allocation Portfolio
(b) AQR Global Risk Balanced Portfolio
(c) BlackRock Global Tactical Strategies Portfolio
(d) Invesco Balanced-Risk Allocation Portfolio
(e) JPMorgan Global Active Allocation Portfolio
(f) MetLife Balanced Plus Portfolio
(g) MetLife Multi-Index Targeted Risk Portfolio
(h) Schroders Global Multi-Asset Portfolio
In addition, you may allocate Purchase Payments and Account Value to the
Pyramis (Reg. TM) Government Income Portfolio. No other Investment Portfolios
are available with the GMIB Max, EDB Max, or GWB v1 riders.
The Investment Portfolios listed above (other than the Pyramis (Reg. TM)
Government Income Portfolio) have investment strategies intended in part to
reduce the risk of investment losses that could require us to use our own
assets to make payments in connection with the guarantees under the GMIB Max,
EDB Max, and GWB v1 riders. For example, certain of the Investment Portfolios
are managed in a way that is intended to minimize volatility of returns and
hedge against the effects of interest rate changes. Other investment options
that are available if the GMIB Max, EDB Max, or GWB v1 riders are not selected
may offer the potential for higher returns. Before you select a GMIB Max, EDB
Max, or GWB v1 rider, you and your financial representative should carefully
consider whether the investment options available with the GMIB Max, EDB Max,
and GWB v1 riders meet your investment objectives and risk tolerance.
You may also allocate Purchase Payments to the Enhanced Dollar Cost Averaging
(EDCA) program, provided that your destination portfolios are one or more of
the Investment Portfolios listed above. If you elect the GMIB Max, EDB Max, or
GWB v1 riders, you may not participate in the Dollar Cost Averaging (DCA)
program.
RESTRICTIONS ON INVESTMENT ALLOCATIONS AFTER RIDER TERMINATES. If you elected a
GMIB Max rider and it terminates, or if you elected both a GMIB Max rider and
the corresponding EDB Max rider and both riders terminate, or if you elected
the GWB v1 rider and it terminates, the investment allocation restrictions
described above will no longer apply and you will be permitted to allocate
subsequent Purchase Payments or transfer Account Value to any of the available
Investment Portfolios, but not to the Fixed Account. However, if you elected
both a GMIB Max rider and the corresponding EDB Max rider, and only the GMIB
Max rider has terminated, the investment allocation restrictions described
above under "Investment Allocation Restrictions for the GMIB Max, EDB Max, and
23
GWB v1 Riders" will continue to apply. (For information on the termination of
the GMIB Max, EDB Max, and GWB v1 riders, see the descriptions of the GMIB and
GWB riders in the "Living Benefits" section and the description of the EDB
riders in the "Death Benefit" section.)
RESTRICTIONS ON SUBSEQUENT PURCHASE PAYMENTS - GMIB MAX AND EDB MAX. The
following subsections describe potential and current restrictions on subsequent
Purchase Payments for the GMIB Max and EDB Max riders. As of the date of this
prospectus, only contracts issued with the GMIB Max II rider or the GMIB Max II
and EDB Max II riders during the time period specified in the "Current
Restrictions on Subsequent Purchase Payments" section below are subject to
restrictions on subsequent Purchase Payments.
POTENTIAL RESTRICTIONS ON SUBSEQUENT PURCHASE PAYMENTS. (The following does not
apply to contracts issued in Oregon. For information on Oregon, see the next
paragraph.) In the future, we may choose not to permit Owners of existing
contracts with a GMIB Max V, GMIB Max IV, GMIB Max III, or GMIB Max II rider to
make subsequent Purchase Payments if: (a) that GMIB Max rider is no longer
available to new customers, or (b) we make certain changes to the terms of that
GMIB Max rider offered to new customers (for example, if we change the rider
charge; see your contract schedule for a list of the other changes). Similarly,
in the future, we may choose not to permit Owners of existing contracts with an
EDB Max V, EDB Max IV, EDB Max III, or EDB Max II rider to make subsequent
Purchase Payments if: (a) that EDB Max rider is no longer available to new
customers, or (b) we make certain changes to the terms of that EDB Max rider
offered to new customers (see your contract schedule for a list of the
changes). We will notify Owners of contracts with a GMIB Max or EDB Max rider
in advance if we impose restrictions on subsequent Purchase Payments. If we
impose restrictions on subsequent Purchase Payments, contract Owners will still
be permitted to transfer Account Value among the Investment Portfolios listed
above.
POTENTIAL RESTRICTIONS ON SUBSEQUENT PURCHASE PAYMENTS - OREGON ONLY. In
Oregon, we may choose not to permit Owners of existing contracts with a GMIB
Max or EDB Max rider to make subsequent Purchase Payments. We will not impose
restrictions on subsequent Purchase Payments until at least 90 days after the
contract has been issued. We will notify Owners of contracts with the affected
GMIB Max and/or EDB Max riders in advance if we impose restrictions on
subsequent Purchase Payments. If we impose restrictions on subsequent Purchase
Payments, contract Owners will still be permitted to transfer Account Value
among the Investment Portfolios listed above.
For contracts issued in all states, if we have imposed restrictions on
----------------------------------
subsequent Purchase Payments on your contract, we will permit you to make a
subsequent Purchase Payment when either of the following conditions apply to
your contract: (a) your Account Value is below the minimum described in
"Purchase - Termination for Low Account Value"; or (b) the rider charge is
greater than your Account Value.
CURRENT RESTRICTIONS ON SUBSEQUENT PURCHASE PAYMENTS. (The following does not
apply to contracts issued in Oregon. For information on Oregon, see the next
paragraph.) If we received your application and necessary information, in Good
Order, at our MetLife Annuity Service Center after the close of the New York
Stock Exchange on December 2, 2011, and you elected the GMIB Max II rider or
the GMIB Max II and EDB Max II riders, we will not accept subsequent Purchase
Payments from you after the close of the New York Stock Exchange on April 27,
2012. However, we will accept a subsequent Purchase Payment received after
April 27, 2012 if the Purchase Payment was initiated by paperwork for a direct
transfer or an exchange under Section 1035 of the Internal Revenue Code that we
accepted, and which was received by our MetLife Annuity Service Center in Good
Order, before the close of the New York Stock Exchange on March 30, 2012.
CURRENT RESTRICTIONS ON SUBSEQUENT PURCHASE PAYMENTS - OREGON ONLY. For
contracts issued in Oregon only, if we received your application and necessary
information, in Good Order, at our MetLife Annuity Service Center after the
close of the New York Stock Exchange on December 2,2011 and you elected the GMIB
Max II rider, we will not accept subsequent Purchase Payments from you after
the later of: (1) the close of the New York Stock Exchange on April 27, 2012; or
(2) 90 days after the contract was issued. However, we will accept a subsequent
Purchase Payment received after the later of (1) or (2) above if the Purchase
Payment was initiated by paperwork for a direct transfer or an exchange under
Section 1035 of the Internal Revenue Code that we accepted, and which was
received by our MetLife Annuity Service Center in Good Order, before the later
of (1) or (2) above.
RESTRICTION ON SUBSEQUENT PURCHASE PAYMENTS - GWB V1. While the GWB v1 rider is
in effect, you are limited to making Purchase Payments within the GWB
24
Purchase Payment Period (see "Living Benefits - GWB Rate Table"). However, we
will permit you to make a subsequent Purchase Payment after the GWB Purchase
Payment Period when either of the following conditions apply to your contract:
(a) your Account Value is below the minimum described in "Purchase -
Termination for Low Account Value"; or (b) the GWB v1 rider charge is greater
than your Account Value. If the GWB v1 rider is cancelled (see "Living Benefits
- Operation of the Guaranteed Withdrawal Benefit - Cancellation and
Guaranteed Principal Adjustment") or terminated (see "Living Benefits -
Operation of the Guaranteed Withdrawal Benefit - Termination of the GWB Rider"),
the restriction on subsequent Purchase Payments no longer applies.
CALIFORNIA FREE LOOK REQUIREMENTS FOR PURCHASERS AGE 60 AND OVER. If you elect
a GMIB Max, EDB Max, or GWB v1 rider and you are a California purchaser aged 60
or older, you may allocate your Purchase Payments to the BlackRock Money Market
Portfolio during the free look period. (See the "Free Look" section below.)
After the free look period expires, your Account Value will automatically be
transferred to one or more of the Investment Portfolios listed above, according
to the allocation instructions you have given us. If you allocate your Purchase
Payments to the BlackRock Money Market Portfolio and the contract is cancelled
during the free look period, we will give you back your Purchase Payments. If
you do not allocate your Purchase Payments to the BlackRock Money Market
Portfolio and the contract is cancelled during the free look period, you will
only be entitled to a refund of the contract's Account Value, which may be less
than the Purchase Payments made to the contract.
INVESTMENT ALLOCATION RESTRICTIONS FOR GMIB PLUS IV, EDB III, GMIB PLUS III,
AND EDB II ALLOCATION. If you elect the GMIB Plus IV rider, the Enhanced Death
Benefit III rider, the GMIB Plus III rider, or the Enhanced Death Benefit II
rider, you must comply with certain investment allocation restrictions.
SPECIFICALLY, YOU MUST ALLOCATE ACCORDING TO EITHER (A) OR (B) BELOW:
------
(A) You must allocate:
o 100% of your Purchase Payments or Account Value among the AllianceBernstein
Global Dynamic Allocation Portfolio, American Funds (Reg. TM) Balanced
Allocation Portfolio, American Funds (Reg. TM) Moderate Allocation
Portfolio, AQR Global Risk Balanced Portfolio, BlackRock Global Tactical
Strategies Portfolio, Invesco Balanced-Risk Allocation Portfolio, JPMorgan
Global Active Allocation Portfolio, MetLife Balanced Plus Portfolio,
MetLife Balanced Strategy Portfolio, MetLife Defensive Strategy Portfolio,
MetLife Moderate Strategy Portfolio, Schroders Global Multi-Asset
Portfolio, SSgA Growth and Income ETF Portfolio, BlackRock Money Market
Portfolio, and/or the Fixed Account (you may also allocate Purchase
Payments to the EDCA program, provided that your destination portfolios
are one or more of the above listed Investment Portfolios; you may not
allocate Purchase Payments to the Dollar Cost Averaging program).
OR
(B) You must allocate:
o AT LEAST 30% of Purchase Payments or Account Value to Platform 1 portfolios
and/or to the Fixed Account;
o UP TO 70% of Purchase Payments or Account Value to Platform 2 portfolios;
o UP TO 15% of Purchase Payments or Account Value to Platform 3 portfolios;
and
o UP TO 15% of Purchase Payments or Account Value to Platform 4 portfolios.
(See the "EDCA" section below for information on allocating Purchase Payments
to the EDCA account under option (B). You may not allocate Purchase Payments to
the Dollar Cost Averaging program under option (B).)
The investment options in each Platform are:
Platform 1
----------
Fixed Account
American Funds (Reg. TM) Bond Portfolio
Barclays Capital Aggregate Bond Index Portfolio
BlackRock Money Market Portfolio
Met/Franklin Low Duration Total Return Portfolio
PIMCO Inflation Protected Bond Portfolio
PIMCO Total Return Portfolio
Pyramis (Reg. TM) Government Income Portfolio
Western Asset Management U.S. Government Portfolio
Platform 2
----------
AllianceBernstein Global Dynamic Allocation Portfolio
American Funds (Reg. TM) Balanced Allocation Portfolio
American Funds (Reg. TM) Growth Allocation Portfolio
American Funds (Reg. TM) Growth Portfolio
American Funds (Reg. TM) International Portfolio
25
new allocation instructions for Purchase Payments and if these instructions
conform to the allocation limits described under (B) above, then we will
rebalance in accordance with the revised allocation instructions. Any future
Purchase Payment, EDCA account transfer and quarterly rebalancing allocations
will be automatically updated in accordance with these new instructions.
TRANSFERS. Please note that any transfer request must result in an Account
Value that meets the allocation limits described above. Any transfer request
will not cause your allocation instructions to change unless you provide us
with a separate instruction at the time of transfer.
FREE LOOK
If you change your mind about owning this contract, you can cancel it within 10
days after receiving it (or the period required in your state). We ask that you
submit your request to cancel in writing, signed by you, to our Annuity Service
Center. When you cancel the contract within this "free look" period, we will
not assess a withdrawal charge. Unless otherwise required by state law, you
will receive back whatever your contract is worth on the day we receive your
request. This may be more or less than your Purchase Payment depending upon the
performance of the Investment Portfolios you allocated your Purchase Payment to
during the free look period. This means that you bear the risk of any decline
in the value of your contract during the free look period. We do not refund any
charges or deductions assessed during the free look period. In certain states,
we are required to give you back your Purchase Payment if you decide to cancel
your contract during the free look period. (For additional information
applicable to California purchasers aged 60 and older who elect a GMIB Max, EDB
Max, or GWB v1 rider, see "Investment Allocation Restrictions for the GMIB Max,
EDB Max, and GWB v1 Riders - California Free Look Requirements for Purchasers
Age 60 and Over.")
ACCUMULATION UNITS
The portion of your Account Value allocated to the Separate Account will go up
or down depending upon the investment performance of the Investment
Portfolio(s) you choose. In order to keep track of this portion of your Account
Value, we use a unit of measure we call an ACCUMULATION UNIT. (An Accumulation
Unit works like a share of a mutual fund.)
Every Business Day as of the close of the New York Stock Exchange (generally
4:00 p.m. Eastern Time), we determine the value of an Accumulation Unit for
each of the Investment Portfolios by multiplying the Accumulation Unit value
for the immediately preceding Business Day by a factor for the current Business
Day. The factor is determined by:
1) dividing the net asset value per share of the Investment Portfolio at the
end of the current Business Day, plus any dividend or capital gains per
share declared on behalf of the Investment Portfolio as of that day, by
the net asset value per share of the Investment Portfolio for the previous
Business Day, and
2) multiplying it by one minus the Separate Account product charges
(including any rider charge for the Annual Step-Up Death Benefit, the
Compounded-Plus Death Benefit, and/or the Additional Death Benefit-Earnings
Preservation Benefit) for each day since the last Business Day and any
charges for taxes.
The value of an Accumulation Unit may go up or down from day to day.
When you make a Purchase Payment, we credit your contract with Accumulation
Units. The number of Accumulation Units credited is determined by dividing the
amount of the Purchase Payment allocated to an Investment Portfolio by the
value of the Accumulation Unit for that Investment Portfolio.
Purchase Payments and transfer requests are credited to a contract on the basis
of the Accumulation Unit value next determined after receipt of a Purchase
Payment or transfer request. Purchase Payments or transfer requests received
before the close of the New York Stock Exchange will be credited to your
------
contract that day, after the New York Stock Exchange closes. Purchase Payments
or transfer requests received after the close of the New York Stock Exchange,
-----
or on a day when the New York Stock Exchange is not open, will be treated as
received on the next day the New York Stock Exchange is open (the next Business
Day).
EXAMPLE:
On Monday we receive an additional Purchase Payment of $5,000 from you
before 4:00 p.m. Eastern Time. You have told us you want this to go to the
Lord Abbett Mid Cap Value Portfolio. When the New York Stock Exchange
closes on that Monday, we determine that the value of an Accumulation Unit
for the Lord Abbett Mid Cap Value Portfolio is $13.90. We then divide
$5,000 by $13.90 and credit your contract on Monday night with 359.71
Accumulation Units for the Lord Abbett Mid Cap Value Portfolio.
28
your Joint Owner are terminally ill and not expected to live more than 12
months; a physician certifies to your illness and life expectancy; you were not
diagnosed with the terminal illness as of the date we issued your contract; and
you have been the Owner continuously since the contract was issued (or have
become the Owner as the spousal Beneficiary who continues the contract). This
waiver terminates on the Annuity Date. We will not accept additional payments
once this waiver is used. There is no charge for this rider. This rider is not
available in Massachusetts.
The Nursing Home or Hospital Confinement rider and the Terminal Illness rider
are not available for Owners who are age 81 or older (on the contract issue
date). Additional conditions and requirements apply to the Nursing Home or
Hospital Confinement rider and the Terminal Illness rider. They are specified
in the rider(s) that are part of your contract.
PREMIUM AND OTHER TAXES
We reserve the right to deduct from Purchase Payments, account balances,
withdrawals, death benefits or income payments any taxes relating to the
contracts (including, but not limited to, premium taxes) paid by us to any
government entity. Examples of these taxes include, but are not limited to,
premium tax, generation-skipping transfer tax or a similar excise tax under
federal or state tax law which is imposed on payments we make to certain
persons and income tax withholdings on withdrawals and income payments to the
extent required by law. Premium taxes generally range from 0 to 3.5%, depending
on the state. We will, at our sole discretion, determine when taxes relate to
the contracts. We may, at our sole discretion, pay taxes when due and deduct
that amount from the account balance at a later date. Payment at an earlier
date does not waive any right we may have to deduct amounts at a later date. It
is our current practice not to charge premium taxes until Annuity Payments
begin.
TRANSFER FEE
We currently allow unlimited transfers without charge during the Accumulation
Phase. However, we have reserved the right to limit the number of transfers to
a maximum of 12 per year without charge and to charge a transfer fee of $25 for
each transfer greater than 12 in any year. We are currently waiving the
transfer fee, but reserve the right to charge it in the future. The transfer
fee is deducted from the Investment Portfolio or Fixed Account from which the
transfer is made. However, if the entire interest in an account is being
transferred, the transfer fee will be deducted from the amount which is
transferred.
If the transfer is part of a pre-scheduled transfer program, it will not count
in determining the transfer fee.
INCOME TAXES
We reserve the right to deduct from the contract for any income taxes which we
incur because of the contract. In general, we believe under current federal
income tax law, we are entitled to hold reserves with respect to the contract
that offset Separate Account income. If this should change, it is possible we
could incur income tax with respect to the contract, and in that event we may
deduct such tax from the contract. At the present time, however, we are not
incurring any such income tax or making any such deductions.
INVESTMENT PORTFOLIO EXPENSES
There are deductions from and expenses paid out of the assets of each
Investment Portfolio, which are described in the fee table in this prospectus
and the Investment Portfolio prospectuses. These deductions and expenses are
not charges under the terms of the contract, but are represented in the share
values of each Investment Portfolio.
5. ANNUITY PAYMENTS
(THE INCOME PHASE)
ANNUITY DATE
Under the contract you can receive regular income payments (referred to as
ANNUITY PAYMENTS). You can choose the month and year in which those payments
begin. We call that date the ANNUITY DATE. Your Annuity Date must be the first
day of a calendar month and must be at least 30 days after we issue the
contract.
When you purchase the contract, the Annuity Date will be the later of the first
day of the calendar month after the Annuitant's 90th birthday or 10 years from
the date your contract was issued. You can change or extend the Annuity Date at
any time before the Annuity Date with 30 days prior notice to us (subject to
restrictions that may apply in your state, restrictions imposed by your selling
firm, and our current established administrative procedures).
PLEASE BE AWARE THAT ONCE YOUR CONTRACT IS ANNUITIZED, YOU ARE INELIGIBLE TO
RECEIVE THE DEATH BENEFIT YOU HAVE SELECTED. ADDITIONALLY, IF YOU HAVE SELECTED
A LIVING BENEFIT RIDER SUCH AS A
42
GUARANTEED MINIMUM INCOME BENEFIT OR GUARANTEED WITHDRAWAL BENEFIT, ANNUITIZING
YOUR CONTRACT TERMINATES THE RIDER, INCLUDING ANY DEATH BENEFIT OR GUARANTEED
PRINCIPAL ADJUSTMENT THAT MAY BE PROVIDED BY THE RIDER.
ANNUITY PAYMENTS
You (unless another payee is named) will receive the Annuity Payments during
the Income Phase. The Annuitant is the natural person(s) whose life we look to
in the determination of Annuity Payments.
During the Income Phase, you have the same investment choices you had just
before the start of the Income Phase. At the Annuity Date, you can choose
whether payments will be:
o fixed Annuity Payments, or
o variable Annuity Payments, or
o a combination of both.
If you don't tell us otherwise, your Annuity Payments will be based on the
investment allocations that were in place just before the start of the Income
Phase.
If you choose to have any portion of your Annuity Payments based on the
Investment Portfolio(s), the dollar amount of your initial payment will vary
and will depend upon three things:
1) the value of your contract in the Investment Portfolio(s) just before the
start of the Income Phase,
2) the assumed investment return (AIR) (you select) used in the annuity
table for the contract, and
3) the Annuity Option elected.
Subsequent variable Annuity Payments will vary with the performance of the
Investment Portfolios you selected. (For more information, see "Variable
Annuity Payments" below.)
At the time you choose an Annuity Option, you select the AIR, which must be
acceptable to us. Currently, you can select an AIR of 3% or 4%. You can change
the AIR with 30 days notice to us prior to the Annuity Date. If you do not
select an AIR, we will use 3%. If the actual performance exceeds the AIR, your
variable Annuity Payments will increase. Similarly, if the actual investment
performance is less than the AIR, your variable Annuity Payments will decrease.
Your variable Annuity Payment is based on ANNUITY UNITS. An Annuity Unit is an
accounting device used to calculate the dollar amount of Annuity Payments. (For
more information, see "Variable Annuity Payments" below.)
When selecting an AIR, you should keep in mind that a lower AIR will result in
a lower initial variable Annuity Payment, but subsequent variable Annuity
Payments will increase more rapidly or decline more slowly as changes occur in
the investment experience of the Investment Portfolios. On the other hand, a
higher AIR will result in a higher initial variable Annuity Payment than a
lower AIR, but later variable Annuity Payments will rise more slowly or fall
more rapidly.
A transfer during the Income Phase from a variable Annuity Payment option to a
fixed Annuity Payment option may result in a reduction in the amount of Annuity
Payments.
If you choose to have any portion of your Annuity Payments be a fixed Annuity
Payment, the dollar amount of each fixed Annuity Payment will not change,
unless you make a transfer from a variable Annuity Payment option to the fixed
Annuity Payment that causes the fixed Annuity Payment to increase. Please refer
to the "Annuity Provisions" section of the Statement of Additional Information
for more information.
Annuity Payments are made monthly (or at any frequency permitted under the
contract) unless you have less than $5,000 to apply toward an Annuity Option.
In that case, we may provide your Annuity Payment in a single lump sum instead
of Annuity Payments. Likewise, if your Annuity Payments would be or become less
than $100 a month, we have the right to change the frequency of payments so
that your Annuity Payments are at least $100.
ANNUITY OPTIONS
You can choose among income plans. We call those ANNUITY OPTIONS. We ask you to
choose an Annuity Option when you purchase the contract. You can change it at
any time before the Annuity Date with 30 days notice to us.
If you do not choose an Annuity Option at the time you purchase the contract,
Option 2, which provides a life
43
elect to continue the contract and the GMIB rider. If the spouse elects to
continue the contract and the Owner had begun to take withdrawals prior to his
or her death, and the Owner was older than the spouse, the spouse's eligibility
for the Enhanced Payout Rates described above is based on the Owner's age when
the withdrawals began. For example, if an Owner had begun to take withdrawals
at the applicable Minimum Enhanced Payout Withdrawal Age and subsequently died,
if that Owner's spouse continued the contract and the GMIB rider, the spouse
would be eligible for the Enhanced Payout Rate as described above, even if the
spouse were younger than the Enhanced Rate Withdrawal Age at the time the
contract was continued. If the spouse elects to continue the contract and the
Owner had not taken any withdrawals prior to his or her death, the spouse's
eligibility for the Enhanced Payout Rates is based on the spouse's age when the
spouse begins to take withdrawals.
INVESTMENT ALLOCATION RESTRICTIONS. For a detailed description of the GMIB
investment allocation restrictions, see the applicable subsection of "Purchase
- Investment Allocation Restrictions for Certain Riders."
POTENTIAL RESTRICTIONS ON SUBSEQUENT PURCHASE PAYMENTS. For a detailed
description of the restrictions or potential restrictions on subsequent
Purchase Payments that may apply for your version of the GMIB, see the
applicable subsection of "Purchase - Investment Allocation Restrictions for
Certain Riders."
TAXES. Withdrawals of taxable amounts will be subject to ordinary income tax
and, if made prior to age 59 1/2, a 10% federal tax penalty may apply.
OWNERSHIP. If you, the Owner, are a natural person, you must also be the
Annuitant. If a non-natural person owns the contract, then the Annuitant will
be considered the Owner in determining the Income Base and GMIB Annuity
Payments. If Joint Owners are named, the age of the older Joint Owner will be
used to determine the Income Base and GMIB Annuity Payments. For the purposes
of the Guaranteed Minimum Income Benefit section of the prospectus, "you"
always means the Owner, oldest Joint Owner or the Annuitant, if the Owner is a
non-natural person.
GMIB AND DECEDENT CONTRACTS. If you are purchasing this contract with a
nontaxable transfer of the death benefit proceeds of any annuity contract or
IRA (or any other tax-qualified arrangement) of which you were the Beneficiary
and you are "stretching" the distributions under the IRS required distribution
rules, you may not purchase a GMIB rider.
TERMINATING THE GMIB RIDER. Except as otherwise provided in the GMIB rider, the
rider will terminate upon the earliest of:
a) The 30th day following the contract anniversary prior to your 91st
birthday;
b) The date you make a complete withdrawal of your Account Value (if
there is an Income Base remaining you will receive payments based on
the remaining Income Base) (a pro rata portion of the rider charge
will be assessed);
c) The date you elect to receive Annuity Payments under the contract
and you do not elect to receive payments under the GMIB (a pro rata
portion of the rider charge will be assessed);
d) Death of the Owner or Joint Owner (unless the spouse (age 89 or
younger) is the Beneficiary and elects to continue the contract), or
death of the Annuitant if a non-natural person owns the contract;
e) A change for any reason of the Owner or Joint Owner or the
Annuitant, if a non-natural person owns the contract, subject to our
administrative procedures (a pro rata portion of the rider charge
will be assessed);
f) The effective date of the Guaranteed Principal Option; or
g) The date you assign your contract (a pro rata portion of the rider
charge will be assessed).
Under our current administrative procedures, we will waive the termination of
the GMIB rider if you assign a portion of the contract under the following
limited circumstances: if the assignment is solely for your benefit on account
of your direct transfer of Account Value under Section 1035 of the Internal
Revenue Code to fund premiums for a long term care insurance policy or Purchase
Payments for an annuity contract issued by an insurance company which is not
our affiliate and which is licensed to conduct business in any state. All such
direct transfers are subject to any applicable withdrawal charges.
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GUARANTEED WITHDRAWAL BENEFIT
If you want to invest your Account Value in the Investment Portfolio(s) during
the Accumulation Phase, but also want to assure that your entire Purchase
Payment will be guaranteed to be returned to you, we offer an optional rider
for an additional charge, called the Guaranteed Withdrawal Benefit (GWB). The
purpose of the GWB rider is to provide protection against market risk (the risk
that the Account Value allocated to the Investment Portfolio(s) may decline in
value or underperform your expectations).
The GWB rider is designed to allow you to invest your Account Value in the
Investment Portfolios, while guaranteeing that at least the entire amount of
Purchase Payments you make will be returned to you through a series of
withdrawals, provided withdrawals in any Contract Year do not exceed the
maximum amount allowed under the rider. You may begin taking withdrawals under
the GWB rider immediately or at a later time. This means that, regardless of
negative investment performance, you can take specified annual withdrawals
until the entire amount of the Purchase Payments you made during the time
period specified in your rider has been returned to you.
In states where approved, you may purchase the GWB rider if you are age 80 or
younger on the effective date of your contract. You may not have this benefit
and another living benefit (GMIB) or an Enhanced Death Benefit rider in effect
at the same time. Once elected, the GWB rider may not be terminated except as
stated below.
SUMMARY OF THE GUARANTEED WITHDRAWAL BENEFIT RIDER
THE FOLLOWING SECTION PROVIDES A SUMMARY OF HOW THE GUARANTEED WITHDRAWAL
BENEFIT (GWB) RIDER WORKS. A MORE DETAILED EXPLANATION OF THE OPERATION OF THE
GWB IS PROVIDED IN THE SECTION BELOW CALLED "OPERATION OF THE GUARANTEED
WITHDRAWAL BENEFIT."
The GWB guarantees that the entire amount of Purchase Payments you make will be
returned to you through a series of withdrawals over time. THE GWB DOES NOT
GUARANTEE WITHDRAWALS FOR YOUR LIFETIME.
Under the GWB, we calculate a "Total Guaranteed Withdrawal Amount" (TGWA) that
determines, in part, the maximum amount you may receive as withdrawals each
year ("Annual Benefit Payment") without reducing your guarantee. The TGWA is
multiplied by the applicable withdrawal rate to determine your Annual Benefit
Payment. The rider guarantee may be reduced if your annual withdrawals are
greater than the Annual Benefit Payment.
IT IS IMPORTANT TO RECOGNIZE THAT THE TGWA IS NOT AVAILABLE TO BE TAKEN AS A
LUMP SUM AND DOES NOT ESTABLISH OR GUARANTEE YOUR ACCOUNT VALUE OR A MINIMUM
RETURN FOR ANY INVESTMENT PORTFOLIO. However, if you cancel the Guaranteed
Withdrawal Benefit rider after a waiting period of at least 15 years, the
Guaranteed Principal Adjustment will increase your Account Value to the
Purchase Payments credited within the first 120 days of the date that we issue
the contract, reduced proportionately for any withdrawals. (See "Operation of
the Guaranteed Withdrawal Benefit - Cancellation and Guaranteed Principal
Adjustment" below.)
While the GWB rider is in effect, you may only make subsequent Purchase
Payments during the GWB Purchase Payment Period. (See "Restrictions on
Subsequent Purchase Payments" below.)
DIFFERENT VERSIONS OF THE GWB. From time to time, we may introduce new versions
of the GWB. Each version of the GWB we have offered with this contract, and the
versions we may currently be offering (if any), will be listed in the "GWB Rate
Table" immediately following the "Operation of the Guaranteed Withdrawal
Benefit" section below. The principal differences between the different
versions of the GWB described in this prospectus are the items listed in the
GWB Rate Table.
OPERATION OF THE GUARANTEED WITHDRAWAL BENEFIT
The following section describes how the Guaranteed Withdrawal Benefit (GWB)
operates. When reading the following descriptions of the operation of the GWB
(for example, the "Total Guaranteed Withdrawal Amount," "Annual Benefit
Payment," and "Withdrawal Enhancement Feature" sections), refer to the GWB Rate
Table below for the specific rates and other terms applicable to your version
of the GWB.
TOTAL GUARANTEED WITHDRAWAL AMOUNT. While the Guaranteed Withdrawal Benefit
rider is in effect, we guarantee that you will receive a minimum amount over
time. We refer to this minimum amount as the TOTAL GUARANTEED WITHDRAWAL
AMOUNT. The initial Total Guaranteed Withdrawal Amount is equal to your initial
Purchase Payment. We increase the Total Guaranteed Withdrawal Amount (up to a
maximum of $5,000,000) by
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each additional Purchase Payment received during the GWB Purchase Payment
Period (see "Restriction on Subsequent Purchase Payments" below). If you take a
withdrawal that does not exceed the Annual Benefit Payment (see "Annual Benefit
Payment" below), then we will not reduce the Total Guaranteed Withdrawal
Amount. We refer to this type of withdrawal as a Non-Excess Withdrawal. If,
however, you take a withdrawal that results in cumulative withdrawals for the
current Contract Year that exceed the Annual Benefit Payment, then we will
reduce the Total Guaranteed Withdrawal Amount in the same proportion that the
entire withdrawal (including any applicable withdrawal charges) reduced the
Account Value. We refer to this type of withdrawal as an Excess Withdrawal.
DEPENDING ON THE RELATIVE AMOUNTS OF THE TOTAL GUARANTEED WITHDRAWAL AMOUNT AND
THE ACCOUNT VALUE, SUCH A PROPORTIONAL REDUCTION MAY RESULT IN A SIGNIFICANT
REDUCTION IN THE TOTAL GUARANTEED WITHDRAWAL AMOUNT (PARTICULARLY WHEN THE
ACCOUNT VALUE IS LOWER THAN THE TOTAL GUARANTEED WITHDRAWAL AMOUNT), AND COULD
HAVE THE EFFECT OF REDUCING THE AMOUNT YOU ARE GUARANTEED TO RECEIVE OVER TIME
UNDER THE GWB RIDER (SEE "MANAGING YOUR WITHDRAWALS" BELOW). Limiting your
cumulative withdrawals during a Contract Year to not more than the Annual
Benefit Payment will result in dollar-for-dollar treatment of the withdrawals.
REMAINING GUARANTEED WITHDRAWAL AMOUNT. The REMAINING GUARANTEED WITHDRAWAL
AMOUNT is the remaining amount you are guaranteed to receive over time. The
initial Remaining Guaranteed Withdrawal Amount is equal to the initial Total
Guaranteed Withdrawal Amount. We increase the Remaining Guaranteed Withdrawal
Amount (up to a maximum of $5,000,000) by additional Purchase Payments received
during the GWB Purchase Payment Period (see "Restrictions on Subsequent
Purchase Payments" below), and we decrease the Remaining Guaranteed Withdrawal
Amount by withdrawals. If you take a Non-Excess Withdrawal, we will decrease
the Remaining Guaranteed Withdrawal Amount, dollar-for-dollar, by the amount of
the Non-Excess Withdrawal (including any applicable withdrawal charges). If,
however, you take an Excess Withdrawal, then we will reduce the Remaining
Guaranteed Withdrawal Amount in the same proportion that the withdrawal
(including any applicable withdrawal charges) reduces the Account Value.
DEPENDING ON THE RELATIVE AMOUNTS OF THE REMAINING GUARANTEED WITHDRAWAL AMOUNT
AND THE ACCOUNT VALUE, SUCH A PROPORTIONAL REDUCTION MAY RESULT IN A
SIGNIFICANT REDUCTION IN THE REMAINING GUARANTEED WITHDRAWAL AMOUNT
(PARTICULARLY WHEN THE ACCOUNT VALUE IS LOWER THAN THE REMAINING GUARANTEED
WITHDRAWAL AMOUNT), AND COULD HAVE THE EFFECT OF REDUCING THE REMAINING AMOUNT
YOU ARE GUARANTEED TO RECEIVE OVER TIME UNDER THE GWB RIDER (SEE "MANAGING YOUR
WITHDRAWALS" BELOW). Limiting your cumulative withdrawals during a Contract
Year to not more than the Annual Benefit Payment will result in dollar-for-
dollar treatment of the withdrawals. The Remaining Guaranteed Withdrawal Amount
is also used to calculate an alternate death benefit available under the
GWB rider (see "Additional Information" below).
ANNUAL BENEFIT PAYMENT. The initial ANNUAL BENEFIT PAYMENT is equal to the
initial Total Guaranteed Withdrawal Amount multiplied by the GWB WITHDRAWAL
RATE. If the Total Guaranteed Withdrawal Amount is later recalculated (for
example, because of the Automatic Annual Step-Up or Excess Withdrawals), the
Annual Benefit Payment is reset equal to the new Total Guaranteed Withdrawal
Amount multiplied by the GWB Withdrawal Rate. (See "Withdrawal Enhancement
Feature" below for a feature which may allow you to increase your Annual
Benefit Payment during a Contract Year if you are confined to a nursing home.)
You may choose to receive your Annual Benefit Payment through the optional
Systematic Withdrawal Program (see "Access To Your Money - Systematic
Withdrawal Program"). While the GWB rider is in effect, your withdrawals
through the Systematic Withdrawal Program may not exceed your Annual Benefit
Payment. There is no charge for the Systematic Withdrawal Program and you may
terminate your participation at any time.
IT IS IMPORTANT TO NOTE:
o We will continue to pay the Annual Benefit Payment each year until the
Remaining Guaranteed Withdrawal Amount is depleted, even if your Account
Value declines to zero. This means if your Account Value is depleted due
to a Non-Excess Withdrawal or the deduction of the rider charge, and your
Remaining Guaranteed Withdrawal Amount is greater than zero, we will pay
you the remaining Annual Benefit Payment, if any, not yet withdrawn during
the Contract Year that the Account Value was depleted, and beginning in
the following Contract Year, we will continue paying the
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Annual Benefit Payment to you each year until your Remaining Guaranteed
Withdrawal Amount is depleted. This guarantees that you will receive your
Purchase Payments even if your Account Value declines to zero due to
market performance, so long as you do not take Excess Withdrawals.
o IF YOU HAVE ELECTED THE GWB, YOU SHOULD CAREFULLY CONSIDER WHEN TO BEGIN
TAKING WITHDRAWALS. IF YOU BEGIN TAKING WITHDRAWALS TOO SOON, YOU MAY
LIMIT THE VALUE OF THE GWB, BECAUSE THE GWB WITHDRAWAL RATE IS DETERMINED
BY WHEN YOU TAKE YOUR FIRST WITHDRAWAL (SEE THE GWB RATE TABLE). AS SHOWN
IN THE GWB RATE TABLE, WAITING TO TAKE YOUR FIRST WITHDRAWAL WILL RESULT
IN A HIGHER GWB WITHDRAWAL RATE. The GWB Withdrawal Rate is used to
determine the amount of your Annual Benefit Payment, as described above.
Once your GWB Withdrawal Rate has been determined, it will never increase
or decrease.
MANAGING YOUR WITHDRAWALS. It is important that you carefully manage your
annual withdrawals. To retain the full guarantees of this rider, your annual
withdrawals cannot exceed the Annual Benefit Payment each Contract Year. In
other words, you should not take Excess Withdrawals. We do not include
withdrawal charges for the purpose of calculating whether you have taken an
Excess Withdrawal. IF YOU DO TAKE AN EXCESS WITHDRAWAL, WE WILL RECALCULATE THE
TOTAL GUARANTEED WITHDRAWAL AMOUNT AND REDUCE THE ANNUAL BENEFIT PAYMENT TO THE
NEW TOTAL GUARANTEED WITHDRAWAL AMOUNT MULTIPLIED BY THE GWB WITHDRAWAL RATE.
IN ADDITION, AS NOTED ABOVE, IF YOU TAKE AN EXCESS WITHDRAWAL, WE WILL REDUCE
THE REMAINING GUARANTEED WITHDRAWAL AMOUNT IN THE SAME PROPORTION THAT THE
WITHDRAWAL REDUCES THE ACCOUNT VALUE. THESE REDUCTIONS IN THE TOTAL GUARANTEED
WITHDRAWAL AMOUNT, ANNUAL BENEFIT PAYMENT, AND REMAINING GUARANTEED WITHDRAWAL
AMOUNT MAY BE SIGNIFICANT. You are still eligible to receive the remainder of
the Remaining Guaranteed Withdrawal Amount so long as the withdrawal that
exceeded the Annual Benefit Payment did not cause your Account Value to decline
to zero. AN EXCESS WITHDRAWAL THAT REDUCES THE ACCOUNT VALUE TO ZERO WILL
TERMINATE THE CONTRACT.
You can always take Non-Excess Withdrawals. However, if you choose to receive
only a part of your Annual Benefit Payment in any given Contract Year, your
Annual Benefit Payment is not cumulative and your Remaining Guaranteed
Withdrawal Amount and Annual Benefit Payment will not increase. For example, if
your Annual Benefit Payment is 4% of your Total Guaranteed Withdrawal Amount,
you cannot withdraw 2% of the Total Guaranteed Withdrawal Amount in one year
and then withdraw 6% of the Total Guaranteed Withdrawal Amount the next year
without making an Excess Withdrawal in the second year.
Income taxes and penalties may apply to your withdrawals, and withdrawal
charges may apply to withdrawals during the first Contract Year unless you take
the necessary steps to elect to take such withdrawals under a Systematic
Withdrawal Program. Withdrawal charges will also apply to withdrawals of
Purchase Payments that exceed the free withdrawal amount. (See
"Expenses-Withdrawal Charge.")
REQUIRED MINIMUM DISTRIBUTIONS. For IRAs and other contracts subject to Section
401(a)(9) of the Internal Revenue Code, you may be required to take withdrawals
to fulfill minimum distribution requirements generally beginning at age 70 1/2.
If your contract is an IRA or other contract subject to Section 401(a)(9) of
the Internal Revenue Code, and the required distributions are larger than the
Total Guaranteed Withdrawal Amount multiplied by the GWB Withdrawal Rate, we
will increase your Annual Benefit Payment to the required minimum distribution
amount for the previous calendar year or for this calendar year (whichever is
greater).
If:
(1) you are enrolled in the Automated Required Minimum Distribution Program,
or in both the Automated Required Minimum Distribution Program and the
Systematic Withdrawal Program;
(2) you do not take additional withdrawals outside of these two programs;
and
(3) your remaining Annual Benefit Payment for the Contract Year is equal to
zero;
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we will increase your Annual Benefit Payment by the amount of the withdrawals
that remain to be taken in that Contract Year under the program or programs in
which you are enrolled. This will prevent the withdrawal from exceeding the
Annual Benefit Payment.
See "Use of Automated Required Minimum Distribution Program and Systematic
Withdrawal Program With GWB" below for more information on the Automated
Required Minimum Distribution Program and the Systematic Withdrawal Program.
AUTOMATIC ANNUAL STEP-UP. On each contract anniversary prior to the Owner's
86th birthday, an Automatic Annual Step-Up will occur, provided that the
Account Value exceeds the Total Guaranteed Withdrawal Amount immediately before
the step-up (and provided that you have not chosen to decline the step-up as
described below).
The Automatic Annual Step-Up:
o resets the Total Guaranteed Withdrawal Amount and the Remaining Guaranteed
Withdrawal Amount to the Account Value on the date of the step-up, up to a
maximum of $5,000,000, regardless of whether or not you have taken any
withdrawals;
o resets the Annual Benefit Payment equal to the GWB Withdrawal Rate
multiplied by the Total Guaranteed Withdrawal Amount after the step-up;
and
o may reset the GWB rider charge to a rate that does not exceed the lower of:
(a) the GWB Maximum Fee Rate (1.80%) or (b) the current rate that we would
charge for the same rider available for new contract purchases at the time
of the Automatic Annual Step-Up.
In the event that the charge applicable to contract purchases at the time of
the step-up is higher than your current GWB rider charge, we will notify you in
writing a minimum of 30 days in advance of the applicable contract anniversary
and inform you that you may choose to decline the Automatic Annual Step-Up. If
you choose to decline the Automatic Annual Step-Up, you must notify us in
accordance with our Administrative Procedures (currently we require you to
submit your request in writing to our Annuity Service Center no less than seven
calendar days prior to the applicable contract anniversary). Once you notify us
of your decision to decline the Automatic Annual Step-Up, you will no longer be
eligible for future Automatic Annual Step-Ups until you notify us in writing to
our Annuity Service Center that you wish to reinstate the step-ups. This
reinstatement will take effect at the next contract anniversary after we
receive your request for reinstatement. Please note that the Automatic Annual
Step-Up may be of limited benefit if you intend to make Purchase Payments that
would cause your Account Value to approach $5,000,000, because the Total
Guaranteed Withdrawal Amount and Remaining Guaranteed Withdrawal Amount cannot
exceed $5,000,000.
WITHDRAWAL ENHANCEMENT FEATURE. The Withdrawal Enhancement Feature may allow
you to increase your Annual Benefit Payment for a Contract Year if you are
confined to a nursing home. Beginning in the fourth Contract Year, you may
request that your GWB Withdrawal Rate be multiplied by the Withdrawal
Enhancement Rate once each Contract Year, if:
(1) you are confined to a nursing home for at least 90 consecutive days;
(2) your request is received by the contract anniversary immediately prior
to the oldest Owner's 81st birthday;
(3) you have not taken withdrawals in that Contract Year in excess of the
Annual Benefit Payment at the time the request is approved;
(4) the request and proof satisfactory to us of confinement are received by
us at our Annuity Service Office while you are confined;
(5) your Account Value is greater than zero at the time the request is
approved; and
(6) you have been the Owner continuously since the date the contract was
issued, or you are a spousal Beneficiary who continues the contract under
the spousal continuation option.
In the case of Joint Owners, the Withdrawal Enhancement Feature applies to
either Joint Owner. If the Owner is not a natural person, the Withdrawal
Enhancement Feature applies to the Annuitant.
If you meet the requirements, your Annual Benefit Payment for that Contract
Year is recalculated to the greater of:
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(a) the GWB Withdrawal Rate multiplied by the Withdrawal Enhancement Rate,
and then multiplied by the Total Guaranteed Withdrawal Amount; or;
(b) your Annual Benefit Payment before the acceptance of your request.
Your remaining Annual Benefit Payment in that year is the new Annual Benefit
Payment less any withdrawals already taken in that Contract Year.
At the end of the Contract Year, your GWB Withdrawal Rate will be reset to what
it was prior to the acceptance of your request. In subsequent Contract Years,
you may request that your GWB Withdrawal Rate be increased by the Withdrawal
Enhancement Rate if you meet the conditions above.
The Withdrawal Enhancement Feature is only available if the oldest Owner is age
75 or younger at the contract issue date. The Withdrawal Enhancement Feature is
not available in the following states: __________ .
CANCELLATION AND GUARANTEED PRINCIPAL ADJUSTMENT. You may elect to cancel the
GWB rider on the contract anniversary every five Contract Years for the first
15 Contract Years and annually thereafter. We must receive your cancellation
request within 30 days following the applicable contract anniversary in
accordance with our Administrative Procedures (currently we require you to
submit your request in writing to our Annuity Service Center). The cancellation
will take effect upon our receipt of your request. If cancelled, the GWB rider
will terminate, we will no longer deduct the GWB rider charge, and the
investment allocation restrictions and subsequent Purchase Payment restrictions
described in "Purchase - Investment Allocation Restrictions Certain Riders -
Investment Allocation Restrictions for the GMIB Max, EDB Max, and GWB Riders"
will no longer apply. The variable annuity contract, however, will continue.
If you cancel the GWB rider on the 15th contract anniversary or any contract
anniversary thereafter, we will add a Guaranteed Principal Adjustment to your
Account Value. The Guaranteed Principal Adjustment is intended to restore your
initial investment in the contract in the case of poor investment performance.
The Guaranteed Principal Adjustment is equal to (a) - (b) where:
(a) is Purchase Payments credited within 120 days of the date that we issued
the contract, reduced proportionately by the percentage reduction in
Account Value attributable to any partial withdrawals taken (including any
applicable withdrawal charges) and
(b) is the Account Value on the date of cancellation.
The Guaranteed Principal Adjustment will be added to each applicable Investment
Portfolio in the ratio the portion of the Account Value in such Investment
Portfolio bears to the total Account Value in all Investment Portfolios. The
Guaranteed Principal Adjustment will never be less than zero.
IT IS IMPORTANT TO NOTE THAT ONLY PURCHASE PAYMENTS MADE DURING THE FIRST 120
DAYS THAT YOU HOLD THE CONTRACT ARE TAKEN INTO CONSIDERATION IN DETERMINING THE
GUARANTEED PRINCIPAL ADJUSTMENT. CONTRACT OWNERS WHO ANTICIPATE MAKING PURCHASE
PAYMENTS AFTER 120 DAYS (IF PERMITTED UNDER THE GWB RIDER; SEE "RESTRICTIONS ON
SUBSEQUENT PURCHASE PAYMENTS" BELOW) SHOULD UNDERSTAND THAT SUCH PAYMENTS WILL
NOT INCREASE THE GUARANTEED PRINCIPAL ADJUSTMENT. HOWEVER, BECAUSE PURCHASE
PAYMENTS MADE AFTER 120 DAYS WILL INCREASE YOUR ACCOUNT VALUE, SUCH PURCHASE
PAYMENTS MAY HAVE A SIGNIFICANT IMPACT ON WHETHER OR NOT A GUARANTEED PRINCIPAL
ADJUSTMENT IS DUE. THEREFORE, THE GWB MAY NOT BE APPROPRIATE FOR YOU IF YOU
INTEND TO MAKE ADDITIONAL PURCHASE PAYMENTS AFTER THE 120-DAY PERIOD AND ARE
PURCHASING THE GWB FOR ITS GUARANTEED PRINCIPAL ADJUSTMENT FEATURE.
INVESTMENT ALLOCATION RESTRICTIONS. For a detailed description of the GWB
investment allocation restrictions, see "Purchase - Investment Allocation
Restrictions for Certain Riders - Investment Allocation Restrictions for the
GMIB Max, EDB Max, and GWB Riders."
RESTRICTIONS ON SUBSEQUENT PURCHASE PAYMENTS. While the GWB rider is in effect,
you are limited to making Purchase Payments within the GWB Purchase Payment
Period (see the GWB Rate Table). If the GWB rider is cancelled (see
"Cancellation and Guaranteed Principal Adjustment" above) or terminated (see
"Termination of the GWB Rider" below), this restriction on subsequent Purchase
Payments no longer applies.
WITHDRAWAL CHARGE. We will apply a withdrawal charge to withdrawals from
Purchase Payments as described in "Expenses - Withdrawal Charge" (also see
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