[REEDSMITH LETTERHEAD]
Reed Smith LLP
1301 K Street, N.W.
Suite 1100 - East Tower
Washington, D.C. 20005-3373
W. THOMAS CONNER +1 202 414 9200
Direct Phone: +1 202 414 9208 Fax +1 202 414 9299
Email: tconner@reedsmith.com reedsmith.com
April 5, 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 INVESTORS USA INSURANCE COMPANY:
----------------------------------------
METLIFE INVESTORS USA SEPARATE ACCOUNT A
SERIES L-4 YEAR
INITIAL REGISTRATION STATEMENT FILED ON FORM N-4
FILE NOS. 811-03365 AND 333-186204
FIRST METLIFE INVESTORS INSURANCE COMPANY:
------------------------------------------
FIRST METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE
CLASS L-4 YEAR
INITIAL REGISTRATION STATEMENT FILED ON FORM N-4
FILE NOS. 811-08306 AND 333-186216
Dear Mr. Oh:
On January 25, 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 registration
statements on Form N-4 for the Series L-4 Year (the "L-4") and Class L-4 Year
(the "NY L-4") variable annuity contracts (the "Contracts".) 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 by letter dated March 26, 2013 in
connection with the registration statements.
For ease of reference, each of the Staff's comments is set forth below,
followed by the Companies' response. 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 prospectuses,
changed pages reflecting such revisions will be provided supplementally to the
Staff in the near future; final disclosure revisions (which may include
additional editorial and stylistic changes) and required exhibits will be filed
in pre-effective amendments.
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
US_ACTIVE-112518890.5-WTCONNER
Mr. Sonny Oh
April 5, 2013
Page 2 [REEDSMITH LOGO APPEARS HERE]
GENERAL
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1. Please disclose to the staff whether there are any types of guarantees
(E.G., as to any of the insurance company's obligations under the contract)
or will the company be solely responsible for paying out on any such
obligations).
RESPONSE: MLI USA does not have any type of guarantee or support agreement
with a third party to support any of the guarantees under the contract or any
of its related riders. MLI USA will be responsible for paying out guarantees
associated with the contract.
First MetLife entered into a net worth maintenance agreement with its parent
company, MetLife, Inc. The agreement is described in the Statement of
Additional Information ("SAI"). First MetLife intends to incorporate by
reference the MetLife, Inc. financial statements in the SAI that will be
filed with the pre-effective amendment.
2. Please confirm that once the contract name is revised to include the
appropriate date, the Class identifier will be revised accordingly.
RESPONSE: The Registrants confirm that once the contract name is revised to
include the appropriate date, the Class identifier will be revised accordingly.
PROSPECTUS
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3. FRONT COVER PAGE
A. Please confirm that the prospectus date on the front cover page will be
approximately the same as the date of effectiveness.
RESPONSE: Each prospectus will bear a date approximately the same as the
date of effectiveness.
B. Please reconcile the second paragraph of the NY L-4 with the
corresponding paragraph of the L-4 where the NY L-4 specifically
identifies the guaranteed account option offered in connection with the
EDCA, but the L-4 does not. If the disparity is intentional, please
explain.
RESPONSE: The EDCA program is a feature that allows Contract owners to
dollar cost average their purchase payments into the investment portfolios over
a fixed period of months. Purchase payments remain in the EDCA program for no
more than 12 months (with the majority of the purchase payment being
transferred out before the last month). In addition, Contract owners can only
allocate new purchase payments to the EDCA program; they cannot transfer
account value from the investment portfolios to the EDCA program. For these
reasons, Registrant believes that the EDCA program should not be presented on
the front cover of the prospectus along with the investment portfolios as one
of the available investment choices. Therefore, for consistency, Registrant
will remove the reference to the EDCA program from the cover page of the NY L-4
prospectus so that the cover pages of both the NY L-4 and the L-4 prospectuses
refer only to
Mr. Sonny Oh
April 5, 2013
Page 3 [REEDSMITH LOGO APPEARS HERE]
investment options under the Contracts in which account value can be invested
over the long term.
4. Throughout the prospectus for the NY L-4, please be consistent when using
special terms. For example, "Accumulation Phase" is upper and lower cased in
the second paragraph under "Highlights" on page 6.
RESPONSE: FMLI has reviewed the prospectus and made revisions as necessary
to be consistent when using special terms.
5. FEE TABLES AND EXAMPLES (PAGE 8)
Please revise the second sentence in footnote 3 to the GWB rider fee table
on page 10 to state that Total Guaranteed Withdrawal Amount is adjusted for
subsequent Purchase Payments and withdrawals as explained in "Total
Guaranteed Withdrawal Amount" on page 39.
RESPONSE: Footnote 3 will be revised as requested.
6. PURCHASE (PAGE 17)
A. Please expand the last paragraph under "Purchase Payments" on page 17 to
better explain the exact circumstances under which the company may
"reject any application or Purchase Payment and to limit future Purchase
Payments" and the extent to which it may do so.
RESPONSE: Certain disclosures in this section of the prospectus following
the sub-heading "Purchase Payments" have been revised to clarify the
applicability of the disclosure in the last paragraph.
B. The term "GWB" is defined in the first paragraph under "Highlights" on
page 6. Please use this term consistently throughout the prospectus. For
example, please refer to the second to last paragraph under "Purchase
Payments" appearing on page 18 and compare the first sentence under
"Investment Allocation Restrictions for the GWB Rider" on page 18 with
the remainder of that section.
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 v1" 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 are
appropriate in order to more fully implement this general principle.
C. For the NY L-4, please clarify the meaning of the term "default funding
options" as described in the last paragraph under "2. Enhanced Dollar
Cost Averaging (EDCA) Program"
Mr. Sonny Oh
April 5, 2013
Page 4 [REEDSMITH LOGO APPEARS HERE]
on page 28. In doing so, please reconcile the description of the
consequences of termination or death in that paragraph with the
corresponding paragraph in the L-4 prospectus on page 29.
RESPONSE: The disclosure in the NY L-4 prospectus has been revised to be
consistent with that in the L-4 prospectus.
7. GUARANTEED WITHDRAWAL BENEFIT (PAGE 38)
A. Please note that the L-4 and NY L-4 prospectus both include Appendices B
and C to provide examples, respectively, of the EDCA and optional death
benefits associated with each contract. Therefore, given the more
complex nature of the GWB rider, the staff strongly recommends providing
at least some rudimentary examples in the prospectus to better
illustrate the basic operations of the GWB rider.
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 GWB rider features. Registrants have included such examples in an
appendix to the prospectus.
B. Please highlight the last sentence of the second paragraph under
"Summary of the Guaranteed Withdrawal Benefit Rider" on page 39.
RESPONSE: Registrants have highlighted the last sentence in response to the
staff's comment.
C. Please note that the prospectus included in this filing offers only one
version of the GWB rider. In light of this, the subsection "Different
Versions of the GWB" and the use of the GWB Rate Table are confusing.
Please delete the applicable subsection and other references to other
"versions" of the GWB rider and include the information provided by the
rate table directly into the applicable narrative.
RESPONSE: Registrants have made certain changes to the GWB section of the
prospectus that we believe will eliminate any potential confusion on the part
of the reader. As the Staff is aware, Registrants worked closely with the Staff
to develop and implement the general disclosure format that is now being used
to describe the GWB rider; this format is intended to permit the introduction
of new versions of the GWB rider by use of a supplement that can be easily
understood by investors and that will dovetail with the current prospectus. The
GWB Rate Table is an essential building block of this approach. We also believe
that using the Rate Table to present certain information about the existing
rider is helpful to the reader. Registrants have retained references to "GWB
v.1," as this is the actual name of the rider used in the contract form and in
marketing materials.
In summary, we respectfully submit that the GWB section of the prospectus as
revised is not misleading and does not contain any material omissions.
Mr. Sonny Oh
April 5, 2013
Page 5 [REEDSMITH LOGO APPEARS HERE]
D. Please revise the bolded risk disclosure in the paragraph preceding and
the paragraph under "Remaining Guaranteed Withdrawal Amount" to more
fully explain the impact that taking an Excess Withdrawal may have on
the Annual Benefit Payment by significantly reducing the Total and
Remaining Guaranteed Withdrawal Amounts.
RESPONSE: Revisions have been made in response to the Staff's comment.
E. In the second bullet point under "Annual Benefit Payment--It is
important to note:" beginning on page 40, please clarify the second
sentence by further explaining that the longer one waits to begin taking
withdrawals, the higher the Withdrawal Rate will be.
Please also clarify the last sentence of the same bullet point by further
explaining how delaying the first withdrawal results in the Owner paying for a
benefit he/she is not using, I.E., would the age of the Owner be a factor as
well?
RESPONSE: We have reviewed the staff's comments and the relevant disclosure
and have revised the disclosure in a fashion that Registrants believe is
responsive to the comments.
F. In the first sentence of the second paragraph under "Required Minimum
Distributions" on page 41, please confirm the accuracy of the use of
"and/or." Based on disclosure under "Use of Automated Required Minimum
Distribution Program ." on page 45, it does not appear that election
solely of the Systematic Withdrawal Program allows for the Annual
Benefit Amount to equal the applicable required minimum distributions of
a particular Owner.
Toward the end of the same first sentence, please clarify the latter
"withdrawal" appearing in the phrase "at the time of each withdrawal by the
amount of the withdrawal.
RESPONSE: The referenced disclosure has been revised 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.
G. In item (1) under "Withdrawal Enhancement Feature" on page 42, please be
more specific as to the "90 days" prerequisite, I.E., is it referring to
consecutive days or a total within a limited period of time?
RESPONSE: We have revised the disclosure to clarify that the 90 day
requirement is consecutive.
H. The fourth to last paragraph under the "Withdrawal Enhancement Feature"
on page 42 explains how the value of the Annual Benefit Payment is
recalculated to equal the greater of item (a) or (b).
Please explain supplementally to the staff under what circumstances item
(b) would be greater than item (a).
Mr. Sonny Oh
April 5, 2013
Page 6 [REEDSMITH LOGO APPEARS HERE]
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 they expect that the disclosure will apply only to a relatively
modest group of Contract holders, and Registrants therefore believe that the
benefits of any expansion of the disclosure are outweighed by the possibility
of confusion.
I. The GWB section makes repeated references to the time period of 120 days
from the issue date. For example, please refer to the penultimate
paragraph of the summary on page 39 and to the latter paragraphs under
"Cancellation and Guaranteed Principal Adjustment" on page 43.
It also explains that, while the rider is in effect, Purchase Payments
are limited to the GWB Purchase Payment Period which, according to the GWB
Rate Table on page 47, is also 120 days from the issue date.
Therefore, please advise supplementally to the staff whether the
references to the "120 days" are all references to the GWB Purchase Payment
Period or are they references to other 120-day periods. If the former,
please make that fact clear where "120 days appears.
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 rider.
J. In light of the "Restrictions on Subsequent Purchase Payments"
disclosure on page 43, please revise the penultimate sentence in the
paragraph preceding "Investment Allocation Restrictions" on page 43. The
current disclosure is unclear as to whether Purchase Payments made after
120 days affect whether a benefit is due.
RESPONSE: Registrants reviewed the relevant disclosure and have included
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.
8. DEATH BENEFIT (PAGE 48)
Please refrain from references to "versions" of each death benefit rider in
the second paragraph and include disclosure in the registration statement
that identifies those states where the riders are not currently available.
RESPONSE: We respectfully note that we have worked closely with members of
the Staff repeatedly in the past to ensure that this level of disclosure is not
misleading and contains no
Mr. Sonny Oh
April 5, 2013
Page 7 [REEDSMITH LOGO APPEARS HERE]
material omissions. In this regard, the following paragraph is representative
of this type of disclosure approach, and we note that the second to last
sentence was added at the specific behest of the Staff.
"STATE VARIATIONS. Contracts issued in your state may provide different
features and benefits from, and impose different costs than, those
described in this prospectus because of state law variations. These
differences include, among other things, free look rights, age issuance
limitations, transfer rights and limitations, the right to reject Purchase
Payments, the right to assess transfer fees, requirements for unisex
annuity rates, the general availability of certain riders, and the
availability of certain features of riders. However, please note that the
maximum fees and charges for all features and benefits are set forth in the
fee table in this prospectus. This prospectus describes all the material
features of the contract. If you would like to review a copy of the
contract and any endorsements, contact our Annuity Service Center."
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
------------------------------------------
9. In the second paragraph after the sales compensation table under
"Distribution" on page 4, the last sentence refers to First MetLife
Investors Insurance Company and MetLife Investors Insurance Company as
affiliates.
Please reconcile this with the corresponding sentence in the NY L-4 SAI
where it refers to MetLife investors Insurance Company, MetLife Investors
USA Insurance Company and MetLife Insurance Company of Connecticut as
affiliates, I.E., the L-4 leaves out the Connecticut affiliate, but the NY
L-4 includes it.
RESPONSE: The referenced disclosure has been revised as requested.
PART C
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10. Please explain supplementally to the staff why the Index to Exhibits for
the NY L-4 includes the following exhibits with the initial registration
statement but the L-4 incorporates them by reference to a prior filing.
4(xix) Form of Guaranteed Withdrawal Benefit Rider
4(xx) Form of Guaranteed Withdrawal Benefit Rider - Withdrawal Rate
Enhancement
4(xxi) Form of Contract Schedule for Guaranteed Withdrawal Benefit - Rider
Specifications
4(xxii) Form of Contract Schedule for Guaranteed Withdrawal Benefit
Mr. Sonny Oh
April 5, 2013
Page 8 [REEDSMITH LOGO APPEARS HERE]
RESPONSE: Registrants simply followed two different approaches to
fulfilling the requirements of the form to include applicable contract forms;
either approach is legally sufficient.
11. FINANCIAL STATEMENTS, EXHIBITS, AND CERTAIN OTHER INFORMATION
Any financial statements, exhibits, and any other disclosure not included
in this registration statement must be filed by pre-effective amendment to
the registration statement.
RESPONSE: All required financial statements, exhibits, and other required
disclosure not included in the initial registration statement will be included
in the pre-effective amendment.
12. REPRESENTATIONS
We urge all persons who are responsible for the accuracy and adequacy of
the disclosure in the filings reviewed by the staff to be certain that they
have provided all information investors require for an informed decision.
Since the registrant is in possession of all facts relating to the
registrant's disclosure, it is responsible for the accuracy and adequacy of
the disclosures it has made.
Notwithstanding our comments, in the event the registrant requests
acceleration of the effective date of the pending registration statement,
it should furnish a letter, at the time of such request, acknowledging that:
. Should the Commission or the staff, acting pursuant to the delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
. The action of the Commission or the staff, acting pursuant to delegated
authority, in declaring the filing effective, does not relieve the
registrant from its full responsibility for the adequacy and accuracy of
the disclosure in the filing; and
. The registrant may not assert this action as a defense in any proceeding
initiated by the Commission or any person under the federal securities
laws of the United States.
Mr. Sonny Oh
April 5, 2013
Page 9 [REEDSMITH LOGO APPEARS HERE]
RESPONSE: The referenced representations will be provided by the
Registrants in the letter requesting acceleration.
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
THE VARIABLE ANNUITY CONTRACT
ISSUED BY
METLIFE INVESTORS USA INSURANCE COMPANY
AND
METLIFE INVESTORS USA SEPARATE ACCOUNT A
SERIES L - 4 YEAR
(OFFERED ON AND AFTER APRIL 29, 2013)
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 61 investment choices -
a Fixed Account that offers an interest rate guaranteed by us, and 60
Investment Portfolios listed below.
MET INVESTORS SERIES TRUST - 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
Pyramis (Reg. TM) Managed Risk Portfolio
Schroders Global Multi-Asset Portfolio
METROPOLITAN SERIES FUND - GWB PORTFOLIO* (CLASS G):
Barclays Aggregate Bond Index Portfolio
* If you elect the GWB v1 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 v1 rider.
MET INVESTORS SERIES TRUST (CLASS B OR, AS NOTED, CLASS C OR CLASS E):
American Funds (Reg. TM) Growth Portfolio (Class C)
BlackRock High Yield Portfolio
Clarion Global Real Estate Portfolio
ClearBridge Aggressive Growth Portfolio
Goldman Sachs Mid Cap Value Portfolio
Harris Oakmark International Portfolio
Invesco Comstock Portfolio
Invesco Small Cap Growth Portfolio
Janus Forty Portfolio
JPMorgan Core Bond Portfolio
Loomis Sayles Global Markets Portfolio
Lord Abbett Bond Debenture Portfolio
Lord Abbett Mid Cap Value Portfolio
Met/Eaton Vance Floating Rate Portfolio
Met/Franklin Low Duration Total Return Portfolio
MFS (Reg. TM) Emerging Markets Equity Portfolio
MFS (Reg. TM) Research International Portfolio
PIMCO Inflation Protected Bond Portfolio
PIMCO Total Return Portfolio
Pioneer Fund Portfolio
Pioneer Strategic Income Portfolio (Class E)
T. Rowe Price Large Cap Value Portfolio
T. Rowe Price Mid Cap Growth Portfolio
Third Avenue Small Cap Value Portfolio
1
ADDITIONAL OPTIONAL RIDER CHARGES (Note 1)
GUARANTEED WITHDRAWAL BENEFIT (GWB) RIDER CHARGES
(Note 2)
(as a percentage of the Total
Guaranteed Withdrawal Amount (Note 3))
GWB v1 - maximum charge 1.80%
GWB v1 - current charge 0.90%
--------------------------------------------------------------------------------
Note 1. Certain charges and expenses may not apply during the Income Phase of
the contract. (See "Expenses.")
Note 2. The GWB v1 rider is currently available for purchase in all states
except __________.
Note 3. 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
Benefit - 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.")
10
present the potential for pricing inefficiencies. Our policies and procedures
may result in transfer restrictions being applied to deter frequent transfers.
Large transfers may increase brokerage and administrative costs of the
Investment Portfolios and may disrupt portfolio management strategy. We do not
monitor for large transfers except where a portfolio manager of a particular
Investment Portfolio has brought large transfer activity to our attention,
including "block transfers" where transfer requests have been submitted on
behalf of multiple contract Owners by a third party, such as an investment
adviser. When we detect such large trades, we may impose restrictions similar
to those described above.
Our policies and procedures on frequent or large transfers are discussed in
more detail in "Investment Options - Transfers - Restrictions on Frequent
Transfers" and "Investment Options - Transfers - Restrictions on Large
Transfers." We may revise these policies and procedures in our sole discretion
at any time without prior notice.
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 $10,000.
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
16
certain exceptions to restrictions on subsequent Purchase Payments in
accordance with our established administrative procedures.
o The GWB v1 rider has potential restrictions on subsequent Purchase Payments
that are described in more detail below. For more information, see
"Investment Allocation Restrictions for Certain Riders - Investment
Allocation and Other Purchase Payment Restrictions for the GWB v1 Rider."
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 Withdrawal Benefit rider or a guaranteed death benefit if at the
time the termination would otherwise occur, 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 GWB v1 rider, we will require you to allocate your Purchase
Payments and Account Value as described below under "Investment Allocation and
Other Purchase Payment Restrictions for the GWB v1 Rider" 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
17
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 AND OTHER PURCHASE PAYMENT RESTRICTIONS FOR THE GWB V1
RIDER
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) Pyramis (Reg. TM) Managed Risk Portfolio
(i) Schroders Global Multi-Asset Portfolio
In addition, you may allocate Purchase Payments and Account Value to the
Barclays Aggregate Bond Index Portfolio and the Pyramis (Reg. TM) Government
Income Portfolio. No other Investment Portfolios are available with the GWB v1
rider.
The Investment Portfolios listed above (other than the Barclays Aggregate Bond
Index Portfolio and 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 GWB v1 rider. 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 GWB v1 rider is not selected may
offer the potential for higher returns. Before you select the GWB v1 rider, you
and your financial representative should carefully consider whether the
investment options available with the GWB v1 rider 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 GWB v1 rider, you may
not participate in the Dollar Cost Averaging (DCA) program.
RESTRICTIONS ON INVESTMENT ALLOCATIONS AFTER RIDER TERMINATES. 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. (For information on the
termination of the GWB v1 rider, see the description of the rider in the
"Living Benefit" section.)
RESTRICTION ON SUBSEQUENT PURCHASE PAYMENTS. While the GWB v1 rider is in
effect, you are limited to making Purchase Payments within the GWB Purchase
Payment Period (see "Living Benefit - 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 Benefit - Operation of
the Guaranteed Withdrawal Benefit - Cancellation and Guaranteed Principal
Adjustment") or terminated (see "Living Benefit - 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
the GWB v1 rider and you are a California purchaser aged 60 or
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Business Day. While the Systematic Withdrawal Program is in effect you can make
additional withdrawals. However, such withdrawals plus the systematic
withdrawals will be considered when determining the applicability of any
withdrawal charge. (For a discussion of the withdrawal charge, see "Expenses"
above.)
We will terminate your participation in the Systematic Withdrawal Program when
we receive notification of your death.
INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS MAY APPLY TO SYSTEMATIC
WITHDRAWALS.
SUSPENSION OF PAYMENTS OR TRANSFERS
We may be required to suspend or postpone payments for withdrawals or transfers
for any period when:
o the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
o trading on the New York Stock Exchange is restricted;
o an emergency exists, as determined by the Securities and Exchange
Commission, as a result of which disposal of shares of the Investment
Portfolios is not reasonably practicable or we cannot reasonably value the
shares of the Investment Portfolios; or
o during any other period when the Securities and Exchange Commission, by
order, so permits for the protection of Owners.
We have reserved the right to defer payment for a withdrawal or transfer from
the Fixed Account for the period permitted by law, but not for more than six
months.
Federal laws designed to counter terrorism and prevent money laundering might,
in certain circumstances, require us to block an Owner's ability to make
certain transactions and thereby refuse to accept any requests for transfers,
withdrawals, surrenders, or death benefits until instructions are received from
the appropriate regulator. We may also be required to provide additional
information about you and your contract to government regulators.
7. LIVING BENEFIT
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. 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.
37
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.)
(See Appendix C for examples illustrating the operation of the GWB.)
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 at the end of this section of the prospectus for the specific rates and
other terms applicable to your GWB rider.
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 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
38
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 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
39
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;
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
40
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:
(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 GWB Rider" 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
41
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
GWB Rider."
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
"Expenses - Withdrawal Charge - Free Withdrawal Amount" and "Access to Your
Money - Systematic Withdrawal Program").
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.
TAX TREATMENT. THE TAX TREATMENT OF WITHDRAWALS UNDER THE GWB RIDER IS
UNCERTAIN. IT IS CONCEIVABLE THAT THE AMOUNT OF POTENTIAL GAIN COULD BE
DETERMINED BASED ON THE REMAINING GUARANTEED WITHDRAWAL AMOUNT UNDER THE GWB
RIDER AT THE TIME OF THE WITHDRAWAL, IF THE REMAINING GUARANTEED WITHDRAWAL
AMOUNT IS GREATER THAN THE ACCOUNT VALUE (PRIOR TO WITHDRAWAL CHARGES, IF
APPLICABLE). THIS COULD RESULT IN A GREATER AMOUNT OF TAXABLE INCOME REPORTED
UNDER A WITHDRAWAL AND CONCEIVABLY A LIMITED ABILITY TO RECOVER ANY REMAINING
BASIS IF THERE IS A LOSS ON SURRENDER OF THE CONTRACT. CONSULT YOUR TAX ADVISER
PRIOR TO PURCHASE.
GWB 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 purchase the GWB rider.
If you are purchasing this contract with a nontaxable transfer of the death
benefit proceeds of any Non-Qualified annuity contract of which you were the
Beneficiary and you are "stretching" the distributions under the IRS required
distribution rules, you may not purchase the GWB rider.
TERMINATION OF THE GWB RIDER. The GWB rider will terminate upon the earliest
of:
(1) the date of a full withdrawal of the Account Value (you are still
eligible to receive the Remaining Guaranteed Withdrawal Amount, provided
the withdrawal did not exceed the Annual Benefit Payment and the
provisions and conditions of the rider have been met) (a pro rata portion
of the rider charge will be assessed);
(2) the date all of the Account Value is applied to an Annuity Option (a pro
rata portion of the rider charge will be assessed);
(3) the date there are insufficient funds to deduct the GWB rider charge
from the Account Value and your contract is thereby terminated (whatever
Account Value is available will be applied to pay the rider charge and you
are still eligible to receive the Remaining Guaranteed Withdrawal Amount,
provided the provisions and conditions of the rider have been met;
however, you will have no other benefits under the contract);
(4) the death of the Owner or Joint Owner (or the Annuitant if the Owner is
a non-natural person), except where the primary Beneficiary is the spouse,
the spouse is age 80 or younger, and the spouse elects to continue the
contract under the spousal continuation provisions of the contract;
(5) a change of the Owner or Joint Owner for any reason, subject to our
administrative procedures (a pro rata portion of the rider charge will be
assessed);
(6) the effective date of the cancellation of the rider;
(7) the termination of the contract to which the rider is
42
attached, other than due to death (a pro rata portion of the rider charge
will be assessed); or
(8) 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 GWB 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.
Once the rider is terminated, the GWB rider charge will no longer be deducted,
the GWB investment allocation restrictions will no longer apply, and the GWB
restrictions on subsequent Purchase Payments will no longer apply.
ADDITIONAL INFORMATION. The GWB rider may affect the death benefit available
under your contract. If the Owner or Joint Owner should die while the GWB rider
is in effect, the Beneficiary may elect to receive the Remaining Guaranteed
Withdrawal Amount as a death benefit, in which case we will pay the Remaining
Guaranteed Withdrawal Amount on a monthly basis (or any mutually agreed upon
frequency, but no less frequently than annually) until the Remaining Guaranteed
Withdrawal Amount is exhausted. The Beneficiary's withdrawal rights then come
to an end. Currently, there is no minimum dollar amount for the payments;
however, we reserve the right to accelerate any payment, in a lump sum, that is
less than $500 (see below). This death benefit will be paid instead of the
applicable contractual death benefit. Otherwise, the provisions of that
contractual death benefit will determine the amount of the death benefit.
Except as may be required by the Internal Revenue Code, an annual payment will
not exceed the Annual Benefit Payment. If your Beneficiary dies while such
payments are made, we will continue making the payments to the Beneficiary's
estate unless we have agreed to another payee in writing. If the contract is a
Non-Qualified Contract, any death benefit must be paid out over a time period
and in a manner that satisfies Section 72(s) of the Internal Revenue Code. If
the Owner (or the Annuitant, if the Owner is not a natural person) dies prior
to the "annuity starting date" (as defined under the Internal Revenue Code and
regulations thereunder), the period over which the Remaining Guaranteed
Withdrawal Amount is paid as a death benefit cannot exceed the remaining life
expectancy of the payee under the appropriate IRS tables. For purposes of the
preceding sentence, if the payee is a non-natural person, the Remaining
Guaranteed Withdrawal Amount must be paid out within 5 years from the date of
death. Payments under this death benefit must begin within 12 months following
the date of death.
We reserve the right to accelerate any payment, in a lump sum, that is less
than $500 or to comply with requirements under the Internal Revenue Code
(including minimum distribution requirements for IRAs and other contracts
subject to Section 401(a)(9) of the Internal Revenue Code and Non-Qualified
Contracts subject to Section 72(s)). If you terminate the GWB rider because (1)
you make a total withdrawal of your Account Value; (2) your Account Value is
insufficient to pay the GWB rider charge; or (3) the contract Owner dies,
except where the Beneficiary or Joint Owner is the spouse of the Owner and the
spouse elects to continue the contract, you may not make additional Purchase
Payments under the contract.
GUARANTEED WITHDRAWAL BENEFIT AND ANNUITIZATION. Since the Annuity Date at the
time you purchase the contract is the later of age 90 of the Annuitant or 10
years from contract issue, you must make an election if you would like to
extend your Annuity Date to the latest date permitted (subject to restrictions
that may apply in your state, restrictions imposed by your selling firm, and
our current established administrative procedures). If you elect to extend your
Annuity Date to the latest date permitted, and that date is reached, your
contract must be annuitized (see "Annuity Payments (The Income Phase)"), or you
must make a complete withdrawal of your Account Value.
If you annuitize at the latest date permitted, you must elect one of the
following options:
1) Annuitize the Account Value under the contract's annuity provisions.
43
2) Elect to receive the Annual Benefit Payment under the GWB rider paid each
year until the RGWA is depleted. These payments will be equal in amount,
except for the last payment that will be in an amount necessary to reduce
the RGWA to zero.
If you do not select an Annuity Option or elect to receive payments under the
GWB rider, we will annuitize your contract under the Life Annuity with 10 Years
of Annuity Payments Guaranteed Annuity Option. However, if we do, we will
adjust your Annuity Payment or the Annuity Option, if necessary, so your
aggregate Annuity Payments will not be less than what you would have received
under the GWB rider.
USE OF AUTOMATED REQUIRED MINIMUM DISTRIBUTION PROGRAM AND SYSTEMATIC
WITHDRAWAL PROGRAM WITH GWB
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.
Used with the GWB rider, our Automated Required Minimum Distribution Program
can help you fulfill minimum distribution requirements with respect to your
contract without reducing the Total Guaranteed Withdrawal Amount (TGWA) and
Remaining Guaranteed Withdrawal Amount (RGWA) on a proportionate basis.
(Reducing the TGWA and RGWA on a proportionate basis could have the effect of
reducing or eliminating the guarantees of the GWB rider.) The Automated
Required Minimum Distribution Program calculates minimum distribution
requirements with respect to your contract and makes payments to you on a
monthly, quarterly, semi-annual, or annual basis.
Alternatively, you may choose to enroll in both the Automated Required Minimum
Distribution Program and the Systematic Withdrawal Program (see "Access to Your
Money - Systematic Withdrawal Program"). In order to avoid taking withdrawals
that could reduce the TGWA and RGWA on a proportionate basis, withdrawals under
the Systematic Withdrawal Program should not exceed the GWB Withdrawal Rate
each Contract Year. Any amounts above the GWB Withdrawal Rate that need to be
withdrawn to fulfill minimum distribution requirements can be paid out at the
end of the calendar year by the Automated Required Minimum Distribution
Program. For example, if you elect the GWB, enroll in the Systematic Withdrawal
Program, and elect to receive monthly payments equal to the GWB Withdrawal Rate
multiplied by the TGWA, you should also enroll in the Automated Required
Minimum Distribution Program and elect to receive your Automated Required
Minimum Distribution Program payment on an annual basis, after the Systematic
Withdrawal Program monthly payment in December.
If you enroll in either the Automated Required Minimum Distribution Program or
both the Automated Required Minimum Distribution Program and the Systematic
Withdrawal Program, you should not make additional withdrawals outside the
programs. Additional withdrawals may result in the TGWA, RGWA, and Annual
Benefit Payment being reduced.
To enroll in the Automated Required Minimum Distribution Program and/or the
Systematic Withdrawal Program, please contact our Annuity Service Center.
GWB RATE TABLE
The GWB Rate Table lists the following for the GWB:
o the GWB Withdrawal Rate: if you take withdrawals that do not exceed the GWB
-------------------
Withdrawal Rate multiplied by the Total Guaranteed Withdrawal Amount,
those withdrawals will not reduce the Total Guaranteed Withdrawal Amount
and Annual Benefit Payment. (Taking withdrawals that do exceed the GWB
Withdrawal Rate multiplied by the Total Guaranteed Withdrawal Amount will
reduce the Total Guaranteed Withdrawal Amount and Annual Benefit Payment,
and may have a significant negative impact on the value of the benefits
available under the GWB - see "Operation of the Guaranteed Withdrawal
Benefit-Managing Your Withdrawals.") For IRAs and other Qualified
Contracts, also see "Operation of the Guaranteed Withdrawal
Benefit-Required Minimum Distributions.";
o the GWB Purchase Payment Period, which is the period of time following the
---------------------------
contract issue date during which you may make subsequent Purchase Payments
(see "Operation of the Guaranteed Withdrawal Benefit - Restrictions on
Subsequent Purchase Payments"); and
o the Withdrawal Enhancement Rate, which is the percentage by which the GWB
---------------------------
Withdrawal Rate will be increased if you request and meet the requirements
of
44
the Withdrawal Enhancement Feature under the GWB rider (see "Operation of
the Guaranteed Withdrawal Benefit-Withdrawal Enhancement Feature").
DIFFERENT VERSIONS OF THE GWB. From time to time, we may introduce new versions
of the GWB. If we introduce a new version of the rider, we generally will do so
by updating the GWB Rate Table to show the new version, together with any prior
versions, the dates each rider version was offered, and the specific rates and
other terms applicable to each version. Changes to the GWB Rate Table after the
date of this prospectus, reflecting a new version of the rider, will be made in
a supplement to the prospectus.
45
GWB RATE TABLE
GWB
DATE DATE GWB PURCHASE WITHDRAWAL
GWB FIRST LAST WITHDRAWAL PAYMENT ENHANCEMENT
RIDER AVAILABLE AVAILABLE RATE PERIOD RATE
if first
withdrawal
taken before 5th 5.0%
contract
anniversary
if first
withdrawal 120 days
taken on or after from
5th contract contract
GWB v1/1/ 04/29/13 - anniversary but 6.0% issue date 150%
before 10th
contract
anniversary
if first
withdrawal
taken on or after 7.0%
10th contract
anniversary
--------
(1) The GWB v1 rider is currently available for purchase in all states except
__________.
46
APPENDIX C
GUARANTEED WITHDRAWAL BENEFIT EXAMPLES
The purpose of these examples is to illustrate the operation of the Guaranteed
Withdrawal Benefit. The investment results shown are hypothetical and are not
representative of past or future performance. Actual investment results may be
more or less than those shown and will depend upon a number of factors,
including investment allocations and the investment experience of the
Investment Portfolios chosen. THE EXAMPLES DO NOT REFLECT THE DEDUCTION OF FEES
AND CHARGES, WITHDRAWAL CHARGES OR INCOME TAXES AND TAX PENALTIES. The
Guaranteed Withdrawal Benefit does not establish or guarantee an Account Value
or minimum return for any Investment Portfolio. The Total Guaranteed Withdrawal
Amount and the Remaining Guaranteed Withdrawal Amount cannot be taken as a lump
sum.
A. GWB - Annual Benefit Payment Continuing When Account Value Reaches Zero
-----------------------------------------------------------------------
When you purchase a contract and elect the optional GWB rider:
o your initial Account Value is equal to your initial Purchase Payment;
o your initial Total Guaranteed Withdrawal Amount (the minimum amount you are
guaranteed to receive over time) is equal to your initial Purchase Payment;
o your initial Remaining Guaranteed Withdrawal Amount (the remaining minimum
amount you are guaranteed to receive over time) is equal to the initial
Total Guaranteed Withdrawal Amount; and
o your initial Annual Benefit Payment (the amount you may withdraw each
Contract Year without taking an Excess Withdrawal) is equal to the initial
Total Guaranteed Withdrawal Amount multiplied by the applicable GWB
Withdrawal Rate (see "Living Benefit - Guaranteed Withdrawal Benefit (GWB) -
GWB Rate Table").
The graphic example below shows how withdrawing the Annual Benefit Payment each
Contract Year reduces the Remaining Guaranteed Withdrawal Amount and Account
Value. Assume that over time the Account Value is reduced to zero by the
effects of withdrawing the Annual Benefit Payment and poor market performance.
If the Account Value reaches zero while a Remaining Guaranteed Withdrawal
Amount still remains, we will begin making payments to you (equal, on an annual
basis, to the Annual Benefit Payment) until the Remaining Guaranteed Withdrawal
Amount is exhausted. The total amount withdrawn over the life of the contract
will be equal to the initial Total Guaranteed Withdrawal Amount.
[GRAPHIC APPEARS HERE]
C-1
B. GWB - Effect of an Excess Withdrawal
------------------------------------
A withdrawal that causes your total withdrawals in a Contract Year to exceed
the Annual Benefit Payment is called an "Excess Withdrawal."
As described in Example A above, if you do not take Excess Withdrawals, the GWB
------
rider guarantees that the entire amount of Purchase Payments you make will be
returned to you through a series of withdrawals over time, even if your Account
Value is reduced to zero. Non-Excess Withdrawals do not decrease the Total
Guaranteed Withdrawal Amount or Annual Benefit Payment, and decrease the
Remaining Guaranteed Withdrawal Amount by the dollar amount of the withdrawal.
If you do take an Excess Withdrawal, you will reduce the amount guaranteed be
--
returned to you under the GWB rider. If you take an Excess Withdrawal, we will:
o reduce the Total Guaranteed Withdrawal Amount in the same proportion that the
Excess Withdrawal reduced the Account Value;
o reduce the Remaining Guaranteed Withdrawal Amount in the same proportion that
the Excess Withdrawal reduces the Account Value; and
o reduce the Annual Benefit Payment to the new Total Guaranteed Withdrawal
Amount multiplied by the GWB Withdrawal Rate.
For example, if an Excess Withdrawal is equal to 10% of the Account Value, that
Excess Withdrawal will reduce both the Total Guaranteed Withdrawal Amount and
the Remaining Guaranteed Withdrawal Amount by 10%, and the new Annual Benefit
Payment will be calculated based on the reduced Total Guaranteed Withdrawal
Amount.
These reductions in the Total Guaranteed Withdrawal Amount, Remaining
Guaranteed Withdrawal Amount, and Annual Benefit Payment may be significant,
particularly when the Account Value at the time of the Excess Withdrawal is
lower than the Total Guaranteed Withdrawal Amount. An Excess Withdrawal that
reduces the Account Value to zero will terminate the contract.
C. GWB - How the Automatic Annual Step-Up Works
--------------------------------------------
As described in Example A above, when you purchase a contract and elect the
optional GWB rider, the initial Account Value and Total Guaranteed Withdrawal
Amount are equal to the initial Purchase Payment. The initial Annual Benefit
Payment is equal to the initial Total Guaranteed Withdrawal Amount multiplied
by your GWB Withdrawal Rate.
Assume that on the first contract anniversary the Account Value is greater than
the Total Guaranteed Withdrawal Amount. As shown in the graphic example below,
the Automatic Annual Step-Up will increase the Total Guaranteed Withdrawal
Amount to equal the Account Value. The Remaining Guaranteed Withdrawal Amount
will also be increased to equal the Account Value. The Annual Benefit Payment
will be set equal to the newly recalculated Total Guaranteed Withdrawal Amount
multiplied by the GWB Withdrawal Rate.
Assume that on the second contract anniversary the Account Value is once again
greater than the Total Guaranteed Withdrawal Amount. As shown in the graphic
example below, the Automatic Annual Step-Up will again increase the Total
Guaranteed Withdrawal Amount to equal the Account Value. The Remaining
Guaranteed Withdrawal Amount will also be increased to equal the Account Value.
The Annual Benefit Payment will be set equal to the newly recalculated Total
Guaranteed Withdrawal Amount multiplied by the GWB Withdrawal Rate.
Even if the Account Value decreases after the second contract anniversary, the
Total Guaranteed Withdrawal Amount and Annual Benefit Payment will not decrease
as long as you do not take Excess Withdrawals.
The graphic example below shows how the Automatic Annual Step-Ups on the first
and second contract anniversaries increase the Total Guaranteed Withdrawal
Amount. It also shows the contract Owner choosing to begin withdrawals of the
Annual Benefit Payment on the fifth contract anniversary.
Automatic Annual Step-Ups may only occur on contract anniversaries prior to the
Owner's 86th birthday. If an Automatic Annual Step-Up occurs, we may reset the
GWB rider charge to a rate that does not exceed the lower of: (a) the GWB
C-2
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. If an Automatic Annual Step-Up would result in an increase in
your 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.
[GRAPHIC APPEARS HERE]
C-3
THE VARIABLE ANNUITY CONTRACT
ISSUED BY
FIRST METLIFE INVESTORS INSURANCE COMPANY
AND
FIRST METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE
CLASS L - 4 YEAR
(OFFERED ON AND AFTER APRIL 29, 2013)
APRIL 29, 2013
This prospectus describes the flexible premium deferred variable annuity
contract offered by First MetLife Investors Insurance Company (First
MetLife Investors or we or us). The contract is offered for individuals
and some tax qualified and non-tax qualified retirement plans.
The annuity contract has 60 investment choices listed below.
MET INVESTORS SERIES TRUST - 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
Pyramis (Reg. TM) Managed Risk Portfolio
Schroders Global Multi-Asset Portfolio
METROPOLITAN SERIES FUND - GWB PORTFOLIO* (CLASS G):
Barclays Aggregate Bond Index Portfolio
* If you elect the GWB v1 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 v1 rider.
MET INVESTORS SERIES TRUST (CLASS B OR, AS NOTED, CLASS C OR CLASS E):
American Funds (Reg. TM) Growth Portfolio (Class C)
BlackRock High Yield Portfolio
Clarion Global Real Estate Portfolio
ClearBridge Aggressive Growth Portfolio
Goldman Sachs Mid Cap Value Portfolio
Harris Oakmark International Portfolio
Invesco Comstock Portfolio
Invesco Small Cap Growth Portfolio
Janus Forty Portfolio
JPMorgan Core Bond Portfolio
Loomis Sayles Global Markets Portfolio
Lord Abbett Bond Debenture Portfolio
Lord Abbett Mid Cap Value Portfolio
Met/Eaton Vance Floating Rate Portfolio
Met/Franklin Low Duration Total Return Portfolio
MFS (Reg. TM) Emerging Markets Equity Portfolio
MFS (Reg. TM) Research International Portfolio
PIMCO Inflation Protected Bond Portfolio
PIMCO Total Return Portfolio
Pioneer Fund Portfolio
Pioneer Strategic Income Portfolio (Class E)
T. Rowe Price Large Cap Value Portfolio
T. Rowe Price Mid Cap Growth Portfolio
Third Avenue Small Cap Value Portfolio
1
imposition of this restriction for a six-month period; a second occurrence will
result in the permanent imposition of the restriction.
DOLLAR COST AVERAGING PROGRAMS
We offer two dollar cost averaging programs as described below. By allocating
amounts on a regular schedule as opposed to allocating the total amount at one
particular time, you may be less susceptible to the impact of market
fluctuations. You can elect only one dollar cost averaging program at a time.
The dollar cost averaging programs are available only during the Accumulation
Phase.
If you make an additional Purchase Payment while a Dollar Cost Averaging (DCA)
or Enhanced Dollar Cost Averaging (EDCA) program is in effect, we will not
allocate the additional payment to the DCA or EDCA program unless you tell us
to do so. Instead, unless you previously provided different allocation
instructions for future Purchase Payments or provide new allocation
instructions with the payment, we will allocate the additional Purchase Payment
directly to the same destination Investment Portfolios you selected under the
DCA or EDCA program. Any Purchase Payments received after the DCA or EDCA
program has ended will be allocated as described in "Purchase -
Allocation of Purchase Payments."
We reserve the right to modify, terminate or suspend any of the dollar cost
averaging programs. There is no additional charge for participating in any of
the dollar cost averaging programs. If you participate in any of the dollar
cost averaging programs, the transfers made under the program are not taken
into account in determining any transfer fee. We may, from time to time, offer
other dollar cost averaging programs which have terms different from those
described in this prospectus. We will terminate your participation in a dollar
cost averaging program when we receive notification of your death.
The two dollar cost averaging programs are:
1. STANDARD DOLLAR COST AVERAGING (DCA)
This program allows you to systematically transfer a set amount each month from
a money market Investment Portfolio to any of the other available Investment
Portfolio(s) you select. These transfers are made on a date you select or, if
you do not select a date, on the date that a Purchase Payment or Account Value
is allocated to the dollar cost averaging program. However, transfers will be
made on the 1st day of the following month for Purchase Payments or Account
Value allocated to the dollar cost averaging program on the 29th, 30th, or 31st
day of a month.
If you allocate an additional Purchase Payment to your existing DCA program,
the DCA transfer amount will not be increased; however, the number of months
over which transfers are made is increased, unless otherwise elected in
writing. You can terminate the program at any time, at which point transfers
under the program will stop. This program is not available if you have selected
the GWB rider.
2. ENHANCED DOLLAR COST AVERAGING (EDCA) PROGRAM
The Enhanced Dollar Cost Averaging (EDCA) program allows you to systematically
transfer amounts from a guaranteed account option, the EDCA account in the
general account, to any available Investment Portfolio(s) you select. Except as
discussed below, only new Purchase Payments or portions thereof can be
allocated to an EDCA account. The transfer amount will be equal to the amount
allocated to the EDCA account divided by a specified number of months
(currently 6 or 12 months). For example, a $12,000 allocation to a 6-month
program will consist of six $2,000 transfers, and a final transfer of the
interest processed separately as a seventh transfer.
When a subsequent Purchase Payment is allocated by you to your existing EDCA
account, we create "buckets" within your EDCA account.
o The EDCA transfer amount will be increased by the subsequent Purchase
Payment divided by the number of EDCA months (6 or 12 months as you
selected) and thereby accelerates the time period over which transfers are
made.
o Each allocation (bucket) resulting from a subsequent Purchase Payment will
earn interest at the then current interest rate applied to new allocations
to an EDCA account of the same monthly term.
o Allocations (buckets) resulting from each Purchase Payment, along with the
interest credited, will be transferred on a first-in, first-out basis.
Using the example above, a subsequent $6,000 allocation to a 6 month EDCA
will increase the EDCA transfer amount from $2,000 to $3,000 ($2,000 plus
$6,000/6). This increase will have the effect of accelerating the rate at
which the 1st payment bucket is exhausted.
26
(See Appendix B for further examples of EDCA with multiple Purchase Payments.)
The interest rate earned in an EDCA account will be the minimum guaranteed
rate, plus any additional interest which we may declare from time to time. The
minimum interest rate depends on the date your contract is issued, but will not
be less than 1%. The interest rate earned in an EDCA account is paid over time
on declining amounts in the EDCA account. Therefore, the amount of interest
payments you receive will decrease as amounts are systematically transferred
from the EDCA account to any Investment Portfolio, and the effective interest
rate earned will therefore be less than the declared interest rate.
The first transfer we make under the EDCA program is the date your Purchase
Payment is allocated to your EDCA account. Subsequent transfers will be made
each month thereafter on the same day. However, transfers will be made on the
1st day of the following month for Purchase Payments allocated on the 29th,
30th, or 31st day of a month. If the selected day is not a Business Day, the
transfer will be deducted from the EDCA account on the selected day but will be
applied to the Investment Portfolios on the next Business Day. EDCA interest
will not be credited on the transfer amount between the selected day and the
next Business Day. Transfers will continue on a monthly basis until all amounts
are transferred from your EDCA account. Your EDCA account will be terminated as
of the last transfer.
If you decide you no longer want to participate in the EDCA program, or if we
receive notification of your death, your participation in the EDCA program will
be terminated and all money remaining in your EDCA account will be transferred
to the Investment Portfolio(s) in accordance with the percentages you have
chosen for the EDCA program, unless you specify otherwise.
THREE MONTH MARKET ENTRY PROGRAM
Alternatively, you can participate in the Three Month Market Entry Program
which operates in the same manner as the Enhanced Dollar Cost Averaging
Program, except it is of 3 months duration.
AUTOMATIC REBALANCING PROGRAM
Once your money has been allocated to the Investment Portfolios, the
performance of each portfolio may cause your allocation to shift. You can
direct us to automatically rebalance your contract to return to your original
percentage allocations by selecting our Automatic Rebalancing Program. You can
tell us whether to rebalance monthly, quarterly, semi-annually or annually.
An automatic rebalancing program is intended to transfer Account Value from
those portfolios that have increased in value to those that have declined or
not increased as much in value. Over time, this method of investing may help
you "buy low and sell high," although there can be no assurance that this
objective will be achieved. Automatic rebalancing does not guarantee profits,
nor does it assure that you will not have losses.
We will measure the rebalancing periods from the anniversary of the date we
issued your contract. If a dollar cost averaging (either DCA or EDCA) program
is in effect, rebalancing allocations will be based on your current DCA or EDCA
allocations. If you are not participating in a dollar cost averaging program,
we will make allocations based upon your current Purchase Payment allocations,
unless you tell us otherwise.
The Automatic Rebalancing Program is available only during the Accumulation
Phase. There is no additional charge for participating in the Automatic
Rebalancing Program. If you participate in the Automatic Rebalancing Program,
the transfers made under the program are not taken into account in determining
any transfer fee. We will terminate your participation in the Automatic
Rebalancing Program when we receive notification of your death.
EXAMPLE:
Assume that you want your initial Purchase Payment split between two
Investment Portfolios. You want 40% to be in the Lord Abbett Bond Debenture
Portfolio and 60% to be in the ClearBridge Aggressive Growth Portfolio.
Over the next 2 1/2 months the bond market does very well while the stock
market performs poorly. At the end of the first quarter, the Lord Abbett
Bond Debenture Portfolio now represents 50% of your holdings because of its
increase in value. If you have chosen to have your holdings rebalanced
quarterly, on the first day of the next quarter, we will sell some of your
units in the Lord Abbett Bond Debenture Portfolio to bring its value back
to 40% and use the money to buy more units in the ClearBridge Aggressive
Growth Portfolio to increase those holdings to 60%.
27