Prospectus
April 29, 2024
Flexible Premium Deferred Variable Annuity Contract
issued by Depositor
American General Life Insurance Company
in all states except in New York where it is issued by
The United States Life Insurance Company in the City of New York
in connection with
VARIABLE SEPARATE ACCOUNT
and
FS VARIABLE SEPARATE ACCOUNT
This variable annuity has several investment choices - Variable Portfolios (which are subaccounts of the separate account) and available Fixed Account options. Each Variable Portfolio invests exclusively in shares of one of the Underlying Funds listed in Appendix A to this prospectus.
Please read this prospectus carefully before investing and keep it for future reference. It contains important information about the variable annuity, including a description of all material features of the contract.
If you are a new investor in the contract, you may cancel your contract within 10 days of receiving it without paying fees or penalties. In some states, this cancellation period may be longer. Upon cancellation, you will receive either a full refund of the amount you paid with your application or your total contract value. You should review this prospectus, or consult with your financial representative, for additional information about the specific cancellation terms that apply.
If you are considering funding a tax-qualified retirement plan (e.g., IRAs, 401k or 403b plans) with an annuity, you should know that an annuity does not provide any additional tax deferral treatment of earnings beyond the treatment provided by the tax-qualified plan itself. You should fully discuss this decision with your financial representative.
If you are considering funding a tax-qualified retirement plan (e.g., IRAs, 401k or 403b plans) with an annuity, you should know that an annuity does not provide any additional tax deferral treatment of earnings beyond the treatment provided by the tax-qualified plan itself. You should fully discuss this decision with your financial representative.
The Company offers several different variable annuity contracts to meet the diverse needs of our investors. Our contracts may provide different features, benefits, programs, and investment options offered at different fees and expenses. You should carefully consider among other things, whether the features of this contract and the related fees provide the most appropriate solution to help you meet your retirement savings goals.
These securities have not been approved or disapproved by the SEC, nor any state securities commission, nor has the SEC passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
Additional information about certain investment products, including variable annuities, has been prepared by the SEC’s staff and is available at www.Investor.gov.
Inquiries: If you have questions about your contract, call your financial representative or contact us at Annuity Service Center, P.O. Box 15570, Amarillo, Texas 79105-5570. Telephone Number: (800) 445-7862 and website (www.corebridgefinancial.com/annuities).
Please see ALLOCATION OF PURCHASE PAYMENTS in this prospectus for the address to which you must send Purchase Payments.
TABLE OF CONTENTS
| 3 | |
| 4 | |
| 6 | |
| 6 | |
| 6 | |
| 7 | |
| 8 | |
| 8 | |
| 8 | |
| 8 | |
| 10 | |
| 10 | |
| 10 | |
| 11 | |
| 13 | |
| 15 | |
| 16 | |
| 17 | |
| 18 | |
| 19 | |
| 19 | |
| 19 | |
| 19 | |
| 20 | |
| 21 | |
| 21 | |
| 21 | |
| 22 | |
| 22 | |
| 23 | |
| 24 | |
| 24 | |
| 25 | |
| 27 | |
| 27 | |
| 27 | |
| 27 | |
| 29 | |
| 29 | |
| 30 | |
| 30 | |
| 31 | |
| 32 | |
| 34 | |
| 36 | |
| 45 | |
| 49 | |
| 50 | |
| 51 | |
| 52 | |
| 52 | |
| 52 | |
| 52 | |
| 53 | |
| 54 | |
| 54 | |
| 54 | |
| 55 | |
| 55 | |
| 55 | |
| 55 | |
| 56 | |
| 56 | |
| 56 | |
| 56 | |
| 56 |
| 56 | |
| 57 | |
| 58 | |
| 58 | |
| 59 | |
| 60 | |
| 60 | |
| 61 | |
| 61 | |
| 61 | |
| 62 | |
| 62 | |
| 64 | |
| 65 | |
| 65 | |
| 65 | |
| 65 | |
| 66 | |
| 66 | |
| 67 | |
| 67 | |
| 67 | |
| 67 | |
| 68 | |
| 68 | |
| 68 | |
| 68 | |
| 69 | |
| 69 | |
| A-1 | |
| B-1 | |
| C-1 | |
| D-1 | |
| E-1 | |
| F-1 | |
| G-1 | |
| H-1 | |
| I-1 | |
| J-1 | |
| K-1 |
2
Glossary
We have capitalized some of the technical terms used in this prospectus. To help you understand these terms, we have defined them in this glossary.
Accumulation Phase - The period during which you invest money in your contract.
Accumulation Units - A measurement we use to calculate the value of the variable portion of your contract during the Accumulation Phase.
Annuitant - The person on whose life we base annuity income payments after you begin the Income Phase.
Annuity Date - The date you select on which annuity income payments begin.
Annuity Units - A measurement we use to calculate the amount of annuity income payments you receive from the variable portion of your contract during the Income Phase.
Beneficiary - The person you designate to receive any benefits under the contract if you or, in the case of a non-natural Owner, the Annuitant dies. If your contract is jointly owned, you and the joint Owner are each other’s primary Beneficiary.
Company - Refers to American General Life Insurance Company (“AGL”) or The United States Life Insurance Company in the City of New York (“US Life”) for contracts issued in New York only, the insurer that issues this contract. The term “we,” “us” and “our” are also used to identify the issuing Company.
Continuation Contribution - An amount by which the death benefit that would have been paid to the spousal Beneficiary upon the death of the original Owner exceeds the contract value as of the Good Order date. We will contribute this amount, if any, to the contract value upon spousal continuation.
Continuing Spouse - Spouse of original contract Owner at the time of death who elects to continue the contract after the death of the original contract Owner.
Feeder Funds - Each of the following Feeder Funds invests exclusively in shares of a corresponding Master Fund: SA American Funds Global Growth, SA American Funds Growth, SA American Funds Growth-Income, SA American Funds Asset Allocation, and SA American Funds VCP Managed Allocation Variable Portfolios.
Fixed Account - An account, if available, in which you may invest money and earn a fixed rate of return. Fixed Accounts are obligations of the General Account.
Fund-of-Funds - An Underlying Fund that pursues its investment goal by investing its assets in a combination of other Underlying Funds.
General Account - The Company’s account, which includes any amounts you have allocated to available Fixed Accounts and the Secure Value Account, including any interest credited thereon, and amounts owed under your contract for death benefits and/or Living Benefits which are in excess of portions of contract value allocated to the Variable Portfolios.
Good Order - Fully and accurately completed form(s) and/or instructions, including any necessary documentation, applicable to any given transaction or request received by us.
Income Phase - The period upon annuitization during which we make annuity income payments to you.
Insurable Interest - Evidence that the Owner(s), Annuitant(s) or Beneficiary(ies) will suffer a financial loss at the death of the life that triggers the death benefit. Generally, we consider an interest insurable if a familial relationship and/or an economic interest exists. A familial relationship generally includes those persons related by blood or by law. An economic interest exists when the Owner has a lawful and substantial economic interest in having the life, health or bodily safety of the insured life preserved.
Latest Annuity Date - The first NYSE business day of the month following your 95th birthday.
Market Close - The close of the New York Stock Exchange on business days, excluding holidays, usually at 1:00 p.m. Pacific Time.
Master Funds - Funds of the American Funds Insurance Series in which the Feeder Funds invest.
Non-Qualified (contract) - A contract purchased with after-tax dollars. In general, these contracts are not under any pension plan, specially sponsored program or individual retirement account (“IRA”).
NYSE - New York Stock Exchange.
Owner - The person or entity (if a non-natural Owner) with an interest or title to this contract. The term “you” or “your” are also used to identify the Owner.
Purchase Payments - The money you give us to buy and invest in the contract.
Purchase Payments Limit - $2,000,000 for contracts issued on or after September 5, 2023, $1,000,000 for contracts issued prior to September 5, 2023.
Qualified (contract) - A contract purchased with pretax dollars. These contracts are generally purchased under a pension plan, specially sponsored program or IRA.
Secure Value Account - A Fixed Account, available only with election of certain Living Benefits, to which we allocate a percentage of every Purchase Payment and Continuation Contribution.
Separate Account - A segregated asset account maintained by the Company separately from the Company’s General Account. The Separate Account consists of Variable Portfolios or subaccounts, each investing in shares of the Underlying Funds.
Trusts - Collectively refers to the AIM Variable Insurance Funds (Invesco Variable Insurance Funds), Franklin Templeton Variable Insurance Products Trust, Goldman Sachs Variable Insurance Trust, Lord Abbett Series Fund, Inc., PIMCO Variable Insurance Trust, Seasons Series Trust and SunAmerica Series Trust.
Underlying Funds - The underlying investment portfolios of the Trusts in which the Variable Portfolios invest.
Variable Portfolio(s) - The variable investment options available under the contract. Each Variable Portfolio, which is a subaccount of the Separate Account, invests in shares of one of the Underlying Funds. Each Underlying Fund has its own investment objective.
3
Important Information You Should Consider About the Contract
| |
FEES AND EXPENSES |
Location in Prospectus | ||
| Charges for Early Withdrawals |
You may be subject to charges for early withdrawals. Withdrawal charges do not apply to certain withdrawals including the withdrawal up to the annual penalty-free withdrawal amount which equals 10% of your Purchase Payments not yet withdrawn. •Contracts without Early Access Feature. If you withdraw money from your contract within charge of up to •Contracts with Early Access Feature. If you withdraw money from your contract within 4 years following your purchase of the contract or your last Purchase Payment, you may be assessed a withdrawal charge of up to 8%, as a percentage of each Purchase Payment withdrawn. For example, if you were to withdraw $100,000 during a withdrawal charge period, you could be assessed a withdrawal charge of up to $ charge is 8%. |
Expenses – Withdrawal Charges | ||
| Transaction Charges |
In addition to withdrawal charges, you may be charged for other transactions. You will be charged for each transfer after 15 transfers in any contract year during the Accumulation Phase. There may also be taxes on Purchase Payments. |
Expenses | ||
| Ongoing Fees and Expenses (annual charges) |
The table below describes the current fees and expenses of the contract that you may pay each year, depending on the options you choose. Please refer to your contract data page for information about the specific fees you will pay each year based on the options you have elected. |
Expenses | ||
| Annual Fee |
Minimum |
Maximum | ||
| Base Contract1 |
|
| ||
| Investment Options2 (Underlying Fund fees and expenses) |
|
| ||
| Optional Benefits Available for an Additional Charge (For a single optional benefit, if elected) |
|
| ||
| 1 2 3 Because your contract is customizable, the choices you make affect how much you will pay. To help you understand the cost of owning your contract, the following table shows the lowest and highest cost you could pay each year, based on current charges. This estimate assumes that you do not take withdrawals from the contract, which could add withdrawal charges that substantially increase costs. | ||||
| Lowest Annual Cost: $ |
Highest Annual Cost: $ | |||
| Assumes: •Investment of $100,000 •5% annual appreciation •Least expensive Underlying Fund fees and expenses •No optional benefits •No withdrawal charges •No additional Purchase Payments, transfers, or withdrawals |
Assumes: •Investment of $100,000 •5% annual appreciation •Most expensive combination of optional benefits and Underlying Fund fees and expenses •No withdrawal charges •No additional Purchase Payments, transfers, or withdrawals | |||
4
| |
RISKS |
Location in Prospectus | ||
| Risk of Loss |
|
Principal Risks of Investing in the Contract | ||
| Not a Short-Term Investment |
• | |||
| Risks Associated with Investment Options |
• | |||
| Insurance Company Risks |
| |||
| |
RESTRICTIONS |
| ||
| Investments |
• |
Investment Options | ||
| Optional Benefits |
• |
Optional Living Benefits Death Benefits | ||
| |
TAXES |
| ||
| Tax Implications |
• |
Taxes | ||
5
| |
CONFLICTS OF INTEREST |
Location in Prospectus | ||
| Investment Professional Compensation |
|
Payments in Connection with Distribution of the Contract | ||
| Exchanges |
| |||
OVERVIEW OF THE CONTRACT
Purpose of the Contract
The contract is designed to help you invest on a tax-deferred basis, meet long-term financial goals, and plan for your retirement. You can accumulate assets by investing in the contract’s investment options and then later convert those accumulated assets into a stream of guaranteed income payments from us. The contract includes certain death benefit options that may help financially protect your beneficiaries in the event of your death. Optional Living Benefits may also be available under the contract, which are designed to help you achieve your financial goals and protect against certain financial risks.
This contract may be appropriate for you if you have a long investment time horizon and the contract’s terms and conditions are consistent with your financial goals. It is not intended for people whose liquidity needs require early or frequent withdrawals or for people who intend to frequently trade in the contract’s Variable Portfolios.
Phases of the Contract
Like all deferred annuities, the contract has two phases: (1) the Accumulation Phase (for savings) and (2) the Income Phase (for income).
Accumulation Phase. During the Accumulation Phase, you invest the money under your contract in one or more available investment options to help you build assets on a tax-deferred basis. The available investment options may include:
•
Variable Portfolios. When you invest in a Variable Portfolio, you are indirectly investing in the Variable Portfolio’s Underlying Fund. The Underlying Funds have different investment objectives, strategies, and risks. You can gain or lose money if you invest in a Variable Portfolio.
Additional information about each Underlying
Additional information about each Underlying
Fund is provided in an appendix to this prospectus. Please see APPENDIX A – UNDERLYING FUNDS AVAILABLE UNDER THE CONTRACT.
•
Fixed Accounts. When you invest in a Fixed Account option, your principal is guaranteed and earns interest based on a rate set and guaranteed by the Company.
The amount of money you accumulate under your contract depends (in part) on the performance of the investment options you choose. You may transfer money between investment options during the Accumulation Phase, subject to certain restrictions and possible fees. Your accumulated assets impact the value of your contract’s benefits during the Accumulation Phase, including the death benefit and any optional Living Benefits, as well as the amount available for withdrawal.
Income Phase. When you are ready to receive guaranteed income under the contract, you can switch to the Income Phase, at which time you will start to receive annuity income payments from us. This is also referred to as “annuitizing” your contract. You generally decide when to annuitize your contract, although there are restrictions on the earliest and latest times that your contract may be annuitized. If you do not annuitize or surrender your contract before the latest annuitization date, your contract will be automatically annuitized.
You can choose from the available annuity income options, which may provide income for life, for an available period of time, or a combination of both. You can also choose to receive payments on a variable or fixed basis, or some combination of both. If the payments are fixed, the dollar amount of each payment will not change. If the payments are variable, the dollar amounts for the payments will fluctuate.
There is no death benefit during the Income Phase. Annuity payments may be payable after death depending on the annuity income option that you selected. You cannot take
6
withdrawals of contract value or surrender the contract during the Income Phase. If you own an optional Living Benefit at the time that you annuitize the contract, you may choose to take annuity income payments in accordance with that Living Benefit. Otherwise, your optional Living Benefit terminates at the beginning of the Income Phase.
Contract Features
Accessing Your Money. You may withdraw money from your contract at any time during the Accumulation Phase. If you make a withdrawal, you may have to pay a withdrawal charge and/or income taxes, including a tax penalty if you are younger than age 59½. Withdrawals may negatively impact the value of your contract’s benefits, and may cause an optional Living Benefit to terminate.
Tax Treatment. You can transfer money between investment options without tax implications, and earnings (if any) on your investments are generally tax-deferred. Earnings are not taxed until they are distributed, which may occur when making a withdrawal, upon receiving an annuity payment, or upon payment of the death benefit.
Optional Living Benefits. You may be able to elect (or may have elected) one of the optional Living Benefits under the contract for an additional fee. Certain Living Benefits are no longer available for election, and any Living Benefit that is available must be elected at the time that the contract is purchased. Each Living Benefit is designed to provide limited protection from unfavorable investment performance during the Accumulation Phase, and can also provide a guaranteed income stream that may last as long as you live.
Death Benefits. If you die during the Accumulation Phase, the Company pays a death benefit to your beneficiary or beneficiaries. The contract includes a Contract Value death benefit equal to the value of the contract at no additional charge. If you elect an optional death benefit (either the Return of Purchase Payment or Maximum Anniversary Value Death Benefit) for an additional fee, a greater amount may be payable upon death.
Additional Features and Services. Additional features and services under the contract are summarized below. There are no additional charges associated with these features and services unless otherwise noted. Not all features and services may be available under your contract.
•
Early Access Feature. Contracts issued prior to May 1, 2019 may have the Early Access feature, which could have been elected for an additional charge. This feature reduces the length of the withdrawal charge period associated with each Purchase Payment under the contract.
•
Secure Value Account. Under certain optional Living Benefits, which include an additional charge, a certain percentage of your investment must be allocated to the Secure Value Account. As a Fixed
Account option, amounts allocated to the Secure Value Account are guaranteed with respect to principal and a guaranteed rate of interest.
•
Dollar Cost Averaging (DCA) Fixed Accounts. If you invest in a DCA Fixed Account, interest is credited to amounts allocated to that DCA Fixed Account and your money is systematically transferred from the DCA Fixed Account to one or more investment options over a specified period of time. Automatic transfers do not count towards the number of free transfers per contract year.
•
Dollar Cost Averaging (DCA) Program. The DCA program allows you to systematically transfer a specified dollar amount or percentage of contract value from an investment option to one or more eligible investment options. Automatic transfers do not count towards the number of free transfers per contract year.
•
Automatic Asset Rebalancing Program. This program allows you to have your investments periodically rebalanced so that the resulting allocations are consistent with your current investment instructions. Automatic rebalances do not count towards the number of free transfers per contract year.
•
Systematic Withdrawal Program. This program allows you to receive periodic withdrawals from your contract on a monthly, quarterly, semi-annual, or annual basis.
•
Automatic Payment Plan. This program allows you to make automatic subsequent Purchase Payments, once you have contributed at least the minimum initial Purchase Payment.
7
Fee Table FOR CONTRACTS ISSUED ON OR AFTER OCTOBER 13, 2020
| Maximum Withdrawal Charges (as a percentage of each Purchase Payment withdrawn) |
|
| Transfer Fee1 (Per transfer after 15 transfers in any contract year) |
$ |
| Years Since Receipt of Purchase Payments |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8+ |
| |
8% |
7% |
6% |
5% |
4% |
3% |
2% |
0% |
| Contract Maintenance Fee (assessed annually and may be waived if contract value is $75,000 or more) |
$ |
| Base Contract Expenses2 (deducted from the average daily ending net asset value allocated to the Variable Portfolios) |
|
| Return of Purchase Payment |
|
| Maximum Anniversary Value |
|
Polaris Income Plus Daily Flex
| |
Maximum Fee4 |
| One Covered Person |
|
| Two Covered Persons |
|
| Lifetime Income Option Change Fee5 |
|
| |
Minimum |
Maximum |
| |
|
|
8
| Number of Covered Persons |
Minimum Annual Fee Rate |
Maximum Annualized Fee Rate Decrease or Increase Each Benefit Quarter* |
| One Covered Person |
0.60% |
±0.40% |
| Two Covered Persons |
0.60% |
±0.40% |
9
Fee Table FOR CONTRACTS ISSUED PRIOR TO OCTOBER 13, 2020
The following tables describe the fees and expenses that you will pay when owning, and surrendering or making withdrawals from the contract. Please refer to your contract data page for information about the specific fees you will pay each year based on the options you have elected.
The first table describes the fees and expenses that you pay at the time you surrender the contract, make withdrawals from the contract, or make transfers between investment options. State premium taxes may also be deducted.
Contract Owner Transaction Expenses
| Maximum Withdrawal Charges (as a percentage of each Purchase Payment withdrawn) |
8% |
| Transfer Fee1 (Per transfer after 15 transfers in any contract year) |
$25 |
Withdrawal Charge Schedule (as a percentage of each Purchase Payment withdrawn) declines over 7 or 4 years as follows:
| Years Since Receipt of Purchase Payments |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8+ |
| Without Early Access feature |
8% |
7% |
6% |
5% |
4% |
3% |
2% |
0% |
| With Early Access feature |
8% |
7% |
6% |
5% |
0% |
0% |
0% |
0% |
Your contract provides for a penalty-free withdrawal amount each year. Please see PENALTY-FREE WITHDRAWAL AMOUNT below.
The following tables describe the fees and expenses you will pay each year during the time that you own the contract, not including Underlying Fund fees and expenses. If you chose to purchase an optional benefit, you will pay additional charges, as shown below.
Contract Owner Annual Expenses
| Contract Maintenance Fee (assessed annually and may be waived if contract value is $75,000 or more) |
$50 |
| Base Contract Expenses2 (Contracts issued on or after May 1, 2017) (deducted from the average daily ending net asset value allocated to the Variable Portfolios) |
1.00% |
| Base Contract Expenses2 (Contracts issued prior to May 1, 2017) (deducted from the average daily ending net asset value allocated to the Variable Portfolios) |
|
Optional Death Benefits
(deducted from the average daily ending net asset value allocated to the Variable Portfolios)
| Return of Purchase Payment |
0.15% |
| Maximum Anniversary Value (Contracts issued on or after May 1, 2017) |
0.40% |
| Maximum Anniversary Value (Contracts issued prior to |
|
Other Optional Feature
(deducted from the average daily ending net asset value allocated to the Variable Portfolios)
| Early Access Fee3 (Contracts issued prior to May 1, 2019) |
0.40% |
Optional Living Benefits4
(calculated as percentage of the Income Base and deducted from the contract value)
Polaris Income Plus Flex
Polaris Income Plus Daily Flex
Polaris Income Plus Daily Flex
(Contracts issued prior to October 13, 2020 )
| |
Initial Fee5 |
Maximum Fee5 |
| One Covered Person |
|
|
| Two Covered Persons |
|
|
| Lifetime Income Option Change Fee6 |
0.25% |
10
Polaris Income Plus
Polaris Income Builder
Polaris Income Builder
(Polaris Income Plus is not available for election after September 8, 2019. Polaris Income Builder is not available for election after May 1, 2018)
(Contracts issued on or after October 9, 2017)
| |
Initial Fee5 |
Maximum Fee5 |
| One Covered Person |
1.00% |
2.50% |
| Two Covered Persons |
1.25% |
2.50% |
(Contracts issued prior to October 9, 2017)
| |
Initial Fee5 |
Maximum Fee5 |
| One Covered Person |
1.10% |
2.20% |
| Two Covered Persons |
1.35% |
2.70% |
Polaris Income Plus Daily
(Polaris Income Plus Daily is not available for election on or after September 8, 2019)
(Contracts issued on or after October 9, 2017)
| |
Initial Fee5 |
Maximum Fee5 |
| One Covered Person |
1.15% |
2.50% |
| Two Covered Persons |
1.35% |
2.50% |
(Contracts issued between May 1, 2017 and October 8, 2017)
| |
Initial Fee5 |
Maximum Fee5 |
| One Covered Person |
1.25% |
2.20% |
| Two Covered Persons |
1.45% |
2.70% |
(Contracts issued prior to May 1, 2017)
| |
Initial Fee5 |
Maximum Fee5 |
| One Covered Person |
1.10% |
2.20% |
| Two Covered Persons |
1.35% |
2.70% |
Annual Underlying Fund Expenses
The following shows the minimum and maximum total operating expenses charged by the Underlying Funds of the Trusts, before any waivers or reimbursements, that you may pay periodically during the time that you own the contract. A complete list of Underlying Funds available under the contract, including their annual expenses, may be found in Appendix A.
| |
Minimum |
Maximum |
| Expenses deducted from Underlying Fund assets, including management fees, distribution and/or service (12b-1) fees, if applicable, and other expenses. |
0.46% |
1.89% |
11
Footnotes to the Fee Table:
1 In Pennsylvania and Texas, any transfer over the limit of 15 will incur a $10 transfer fee.
2 Base Contract Expenses: If you do not elect any optional features, your total Base Contract Expense would be 1.00% annually for contracts issued on or after May 1, 2017 and 1.15% for contracts issued prior to May 1, 2017.
3 The Early Access feature fee was available on contracts issued prior to May 1, 2019. The fee depends on the number of years since you purchased your contract and terminates on the fifth contract anniversary as follows:
| Contract Year |
|
| 1-4 |
0.40% |
| 5+ |
none |
4 The fee is calculated as a percentage of the Income Base which determines the basis of the guaranteed benefit. The annual fee is deducted from your contract value at the end of the first quarter following election and quarterly thereafter. For a complete description of how the Income Base is calculated, please see OPTIONAL LIVING BENEFITS below. If you purchased your contract prior to May 1, 2023, please see APPENDIX E — LIVING BENEFITS FOR CONTRACTS ISSUED PRIOR TO May 1, 2023, for a description of the Living Benefit you may have elected.
5 The Initial Annual Fee Rate is guaranteed not to change for the first Benefit Year. Subsequently, the fee rate may change quarterly subject to the parameters identified in the table below. Any fee adjustment is based on a non-discretionary formula tied to the change in the Volatility Index (“VIX ® ”), an index of market volatility reported by the Chicago Board Options Exchange. In general, as the average value of the VIX decreases or increases, your fee rate will decrease or increase accordingly, subject to the maximums identified in the Fee Table and the minimums described below. If you purchased your contract prior to October 9, 2017, please see APPENDIX E — LIVING BENEFITS FOR CONTRACTS ISSUED PRIOR TO MAY 1, 2023 for applicable formula.
| |
Minimum Annual Fee Rate |
Maximum Annualized Fee Rate Decrease or Increase Each Benefit Quarter* |
| One Covered Person |
0.60% |
±0.40% |
| Two Covered Persons |
0.60% |
±0.40% |
| |
Minimum Annual Fee Rate |
Maximum Annualized Fee Rate Decrease or Increase Each Benefit Quarter* |
| One Covered Person |
0.60% |
±0.25% |
| Two Covered Persons |
0.60% |
±0.25% |
12
Examples
These examples are intended to help you compare the cost of investing in the contract with the cost of investing in other variable annuity contracts. These costs include transaction expenses, annual contract expenses, and annual Underlying Fund expenses.
The expense examples below assume that you invest $100,000 in the contract for the time periods indicated; your investment has a 5% return each year; and you incur the maximum or minimum fees and expenses of the Underlying Funds as indicated in the examples.
The first Maximum Expense Example reflects the most expensive possible combination of charges (including additional charges for optional benefits) for any version of the contract since inception. The second Maximum Expense Example reflects the most expensive possible combination of charges (including additional charges for optional benefits) for current offerings of the contract. Although your actual costs may be higher or lower, based on these assumptions, your costs at the end of the stated period would be the amounts set forth in the tables below.
Maximum Expense Examples
(assuming base contract annual expenses of 1.80% (including the optional Maximum Anniversary Value death benefit and the Early Access feature), the optional Polaris Income Plus Daily feature (for the first year calculated at the initial annual fee rate of 1.45% and at the maximum annual fee rate of 2.70% for remaining years) and investment in an Underlying Fund with total expenses of 1.89%*)
(1)
If you surrender your contract at the end of the applicable time period:
| 1 year |
3 years |
5 years |
10 years |
| $ |
$ |
$ |
$ |
(2)
If you do not surrender or if you annuitize your contract at the end of the applicable time period:
| 1 year |
3 years |
5 years |
10 years |
| $ |
$ |
$ |
$ |
Minimum Expense Examples
(assuming base contract annual expenses of 1.00%, no election of optional features and investment in an Underlying Fund with total expenses of 0.46%**)
(1)
If you surrender your contract at the end of the applicable time period:
| 1 year |
3 years |
5 years |
10 years |
| $ |
$ |
$ |
$ |
(2)
If you do not surrender or if you annuitize your contract at the end of the applicable time period:
| 1 year |
3 years |
5 years |
10 years |
| $ |
$ |
$ |
$ |
Maximum Expense Examples
(assuming contract annual expenses of 1.40% (including the optional Maximum Anniversary Value death benefit feature), the optional Polaris Income Plus Daily Flex feature (for the first year calculated at the assumed initial annual fee rate of 1.45% and at the maximum annual fee rate of 2.50% for remaining years) and investment in an Underlying Fund with total expenses of 1.89%*)
(1)
If you surrender your contract at the end of the applicable time period:
| 1 year |
3 years |
5 years |
10 years |
| $ |
$ |
$ |
$ |
(2)
If you do not surrender or if you annuitize your contract at the end of the applicable time period:
| 1 year |
3 years |
5 years |
10 years |
| $ |
$ |
$ |
$ |
Minimum Expense Examples
(assuming contract annual expenses of 1.00%, no election of optional features and investment in an Underlying Fund with total expenses of 0.46%**)
(1)
If you surrender your contract at the end of the applicable time period:
| 1 year |
3 years |
5 years |
10 years |
| $ |
$ |
$ |
$ |
(2)
If you do not surrender or if you annuitize your contract at the end of the applicable time period:
| 1 year |
3 years |
5 years |
10 years |
| $ |
$ |
$ |
$ |
13
Additional Expense Example Information
1.
In addition to the stated assumptions, the Expense Examples also assume that no transfer fees were imposed. Although premium taxes may apply in certain states, they are not reflected in the Expense Examples.
2.
If you elected other optional features, your expenses would be lower than those shown in the Maximum Expense Examples. The first Maximum Expense Example assumes that the Income Base which is used to calculate the Polaris Income Plus Daily fee equals contract value, that no withdrawals are taken during the stated period, there are two Covered Persons and that the annual maximum fee rate of 2.70% has been reached after the first year. The second Maximum Expense Example assumes that the Income Base which is used to calculate the Polaris Income Plus Daily Flex fee equals contract value, that no withdrawals are taken during the stated period, there are two Covered Persons and that the annual maximum fee rate of 2.50% has been reached after the first year. The current initial annual fee rate may be higher or lower. Please see the Rate Sheet Supplement.
3.
The first Maximum Expense Example with election of the Early Access feature reflects the Early Access withdrawal charge schedule and the applicable feature fee. The Early Access feature is not available for election after April 30, 2019.
4.
If you elected optional features, you do not pay fees for optional features once you begin the Income Phase (annuitize your contract); therefore, your expenses will be lower than those shown here. Please see ANNUITY INCOME OPTIONS below.
*
The 1 year Maximum Expense Example reflect the SunAmerica Series Trust 0.75% fee waiver.
**
The 1 year Minimum Expense Example reflects the Goldman Sachs Variable Insurance Trust 0.03% fee waiver.
These examples should not be considered a representation of past or future expenses. Actual expenses may be greater or less than those shown.
14
Principal Risks Of Investing In The Contract
15
Purchasing a Polaris Preferred Solution
Variable Annuity
When you purchase a variable annuity, a contract exists between you and the Company. You are the Owner of the contract.
Maximum Issue Age
We will not issue a contract to anyone age 86 or older on the contract issue date. The age requirements may vary depending on your election of an optional death benefit or other available optional feature:
| Without Optional Benefits |
With Optional Living Benefit |
With Optional Maximum Anniversary Death Benefit |
| 85 |
80* |
80 |
*
The age requirements may vary depending on the number of Covered Persons you elect. Please see OPTIONAL LIVING BENEFITS.
Note: In general, we will not issue a Qualified contract to anyone who is age 72 or older, unless it is shown that the minimum distribution required by the IRS is being made. Please see TAXES.
Joint Ownership
A Non-Qualified contract may be jointly owned by a spouse or non-spouse. Joint owners possess an equal and undivided interest in the contract. The age of the older Owner is used to determine the availability of most age driven benefits.
The addition of a joint Owner after the contract has been issued is contingent upon prior review and approval by the Company.
We will not issue a Qualified contract with joint owners, in accordance with tax law.
Spouse
Your spouse (as determined for federal tax law purposes) may jointly own the contract. In certain states, domestic or civil union partners (“Domestic Partners”) qualify for treatment as, or are equal to, spouses under state law.
Non-Spouse
In certain states, we may issue the contract to non-spousal joint owners. Non-spousal joint Owners and Domestic Partners should consult with their tax adviser and/or financial representative as, they may not be able to fully benefit from certain benefits and features of the contract such as the optional Living Benefit, if applicable, and Spousal Continuation of the death benefit.
16
Please see APPENDIX B — STATE CONTRACT AVAILABILITY AND/OR VARIABILITY for a list of states that require that benefits and features be made to domestic or civil union partners.
Non-Natural Ownership
A trust, corporation or other non-natural entity may only own this contract if such entity has sufficiently demonstrated an Insurable Interest in the Annuitant selected.
At its sole discretion, the Company reserves the right to decline to issue this contract to certain entities. We apply various considerations including but not limited to:
•
Estate planning,
•
Tax consequences, and
•
The propriety of this contract as an investment consistent with a non-natural Owner’s organizational documentation.
For more information on non-natural ownership, please see TAXES. You should consult with your tax and/or legal advisor in connection with non-natural ownership of this contract.
Assignment of the Contract/Change of Ownership
You may assign this contract before beginning the Income Phase. We will not be bound by any assignment until we receive and process your written request at our Annuity Service Center and you have received confirmation.
•
Your rights and those of any other person with rights under this contract will be subject to the assignment.
•
We are not responsible for the validity, tax or other legal consequences of any assignment.
•
An assignment will not affect any payments we may make or actions we may take before we receive notice of the assignment.
We reserve the right not to recognize any assignment, as determined in our sole discretion, if it changes the risk profile of the contract owner, if no Insurable Interest exists, or if not permitted by the Internal Revenue Code.
Please see the Statement of Additional Information for details on the tax consequences of an assignment. You should consult a qualified tax adviser before assigning the contract.
Termination of the Contract for Misstatement and/or Fraud
The Company reserves the right to terminate the contract at any time if it discovers a misstatement or fraudulent representation of any information provided in connection with the issuance or ongoing administration of the contract.
If we learn of a misstatement of age, we reserve the right to fully pursue our remedies including revocation of any
age-driven benefits and/or termination of the contract. Please see APPENDIX B — STATE CONTRACT AVAILABILITY AND/OR VARIABILITY for specific information.
Allocation of Purchase Payments
In order to issue your contract, we must receive your initial Purchase Payment and all required paperwork in Good Order, including Purchase Payment allocation instructions.
An initial Purchase Payment is the money you give us to purchase a contract. Any additional money you give us to invest in the contract after purchase is a subsequent Purchase Payment.
Minimum Initial and Subsequent Purchase Payments
| |
Minimum Initial Purchase Payment(1) |
Minimum Subsequent Purchase Payment |
Minimum Automatic Subsequent Purchase Payment |
| Qualified(2) |
$4,000 |
$500 |
$100 |
| Non-Qualified(2) |
$10,000 |
$500 |
$100 |
(1)
If you purchased your contract through certain broker-dealers, the minimum initial Purchase Payment may be higher than the amounts shown in this table.
(2)
These amounts depend upon whether a contract is Qualified or Non-Qualified for tax purposes. For further explanation, please see TAXES.
Purchase Payment Restrictions
We will not allow anyone age 86 or older to add subsequent Purchase Payments after the contract issue date. The attained age restrictions to add subsequent Purchase Payments may vary depending on your election of an optional Living Benefit or optional death benefit as follows:
| Without Optional Benefits |
With Optional Living Benefit |
With Optional Maximum Anniversary Death Benefit |
| 86 |
81 |
81 |
We reserve the right to refuse any Purchase Payment(s), limit the amount of subsequent Purchase Payment(s) with advance notice and restrict allowance of Purchase Payment(s) based on age as shown above and election of optional benefit(s).
We reserve the right to require Company approval prior to accepting Purchase Payments greater than the Purchase Payments Limit as defined in the Glossary.
•
For contracts owned by a non-natural Owner, we reserve the right to require prior Company approval to accept any Purchase Payment.
•
Purchase Payments that would cause total Purchase Payments in all contracts issued by AGL and/or US Life to the same Owner and/or Annuitant to exceed the Purchase Payments Limit may also be subject to Company pre-approval.
17
Submission of Purchase Payments
Purchase Payments will be priced when received at the Annuity Service Center. Delivery of Purchase Payments to any other address may result in a delay in crediting your contract until the Purchase Payment is received at the Annuity Service Center.
Regular Mail:
Purchase Payments sent by regular mail must be sent to the Premium Processing Center at the following address:
| American General Life Insurance Company Premium Processing Center P.O. Box 100330 Pasadena, CA 91189-0330 |
| |
| US Life (New York contracts only) Premium Processing Center P.O. Box 100357 Pasadena, CA 91189-0357 |
Express Delivery:
Purchase Payments sent by overnight or express delivery must be sent to the Premium Processing Center at the following address:
| For American General Life Insurance Company: JPM Chase-AGL 100330 Premium Processing Center 2710 Media Center Drive Building #6, Suite 120 Los Angeles, CA 90065-1750 |
| |
| For US Life (New York contracts only): JPM Chase-USL 100357 Premium Processing Center 2710 Media Center Drive Building #6, Suite 120 Los Angeles, CA 90065-1750 |
Receipt of Purchase Payments:
Purchase Payments will be picked up at the mailing addresses noted above and forwarded to our Annuity Service Center. Purchase Payments, however, are not considered received by us until received at our Annuity Service Center in Good Order.
We allocate your Purchase Payment to your contract as of the date such Purchase Payment is priced. Initial Purchase Payments received at the Annuity Service Center in Good Order before Market Close will be priced within two NYSE business days after it is received. Initial Purchase Payments received at the Annuity Service Center in Good Order after
Market Close will be priced within two NYSE business days after the next NYSE business day.
If we do not have complete information necessary to issue your contract, we will contact you. If we do not receive the necessary information within five NYSE business days, we will obtain your permission to keep your money until we get the information necessary to issue the contract, or we will send your money back to whomever we received the funds.
Any subsequent Purchase Payment will be priced as of the day it is received by the Annuity Service Center in Good Order before Market Close. If the subsequent Purchase Payment is received at the Annuity Service Center in Good Order after Market Close, it will be priced as of the next NYSE business day.
We invest your subsequent Purchase Payments in the Variable Portfolios and available Fixed Accounts according to any allocation instructions that accompany the subsequent Purchase Payment. If we receive a Purchase Payment without allocation instructions, we will invest the Purchase Payment according to your allocation instructions on file.
Electronic Transmission:
We will accept initial and subsequent Purchase Payments by electronic transmission from certain broker-dealer firms.
Agent of Company:
We may have an agreement in place whereby your broker-dealer may be deemed our agent for receipt of your Purchase Payments. If a broker-dealer is deemed to be our agent, Purchase Payments will be priced as of the time they are received by the broker-dealer.
You assume any risk in market fluctuations if you submit your Purchase Payment directly to a broker-dealer that does not have such an agreement, should there be a delay in that broker-dealer delivering your Purchase Payment to us. Please check with your financial representative to determine if his/her broker-dealer has an agreement with the Company that deems the broker-dealer an agent of the Company.
Automatic Payment Plan:
Once you have contributed at least the minimum initial Purchase Payment, you can establish an Automatic Payment Plan that allows you to make subsequent Purchase Payments, if you have not elected a Living Benefit feature.
Early Access Feature
Effective May 1, 2019, the Early Access feature is no longer available for election.
For an additional annualized fee of 0.40% of the average daily ending net asset value allocated to the Variable Portfolios, you may elect the optional Early Access feature when you purchase the contract. This feature reduces the length of the withdrawal charge schedule associated with each Purchase Payment from 7 years to 4 years. In addition, the withdrawal charge will not exceed 8% of each Purchase
18
Payment withdrawn. The fee for this feature terminates on your fifth contract anniversary. Please see EXPENSES below.
Accumulation Units
We credit your contract with Accumulation Units when you allocate a Purchase Payment to the Variable Portfolios. We determine the value of each Accumulation Unit at the close of every NYSE business day. The value of an Accumulation Unit goes up and down based on the performance of the Variable Portfolios and the fees and expenses under your contract.
The number of Accumulation Units you are credited is calculated the day we process your Purchase Payment. Please see ALLOCATION OF PURCHASE PAYMENTS.
The Accumulation Unit value is determined by multiplying the Accumulation Unit value for the preceding NYSE business day by a factor for the current NYSE business day.
The factor is determined by:
1.
dividing the net asset value per share of the Underlying Fund at the end of the current NYSE business day, plus any dividend or capital gains per share declared on behalf of the Underlying Fund as of that day, by the net asset value per share of the Underlying Fund for the previous NYSE business day; and
2.
multiplying it by one minus all applicable daily asset based charges.
We determine the number of Accumulation Units credited to your contract by dividing the Purchase Payment by the Accumulation Unit value for the specific Variable Portfolio.
Example:
We receive a $25,000 Purchase Payment from you on Wednesday. You allocate the money to Variable Portfolio A. We determine that the value of an Accumulation Unit for Variable Portfolio A is $11.10 at Market Close on Wednesday. We then divide $25,000 by $11.10 and credit your contract on Wednesday night with 2,252.2523 Accumulation Units for Variable Portfolio A.
Performance of the Variable Portfolios and the insurance charges under your contract affect Accumulation Unit values. These factors cause the value of your contract to go up and down.
Free Look
You may cancel your contract within ten days after receiving it. We call this a “free look.” Your state may require a longer free look period. Please check your contract or with your financial representative.
To cancel, mail the contract along with your written free look request to:
| Annuity Service Center P.O. Box 15570 Amarillo, Texas 79105-5570. |
If you decide to cancel your contract during the free look period we will refund the following:
•
The value of your contract on the day we receive your request in Good Order if received before Market Close.
•
The value of your contract on the next NYSE business day, if the free look request is received after Market Close.
IRA and State Free Look Restrictions
Certain states require us to return your Purchase Payments upon a free look request. Contracts issued as an IRA require the full return of Purchase Payments upon a free look.
If your contract was issued either in a state requiring return of Purchase Payments or as an IRA, and you cancel your contract during the free look period, we return the greater of:
(1)
Purchase Payments; or
(2)
the value of your contract on the day we receive your request in Good Order.
With respect to these contracts, we reserve the right to invest your money in a money market portfolio during the free look period. We will allocate your money according to your instructions at the end of the applicable free look period.
Please see your contract and APPENDIX B – STATE CONTRACT AVAILABILITY AND/OR VARIABILITY for information about the free look period in your state.
Exchange Offers
From time to time, we allow you to exchange an older variable annuity issued by the Company or one of its affiliates, for a newer product with different features and benefits issued by the Company or one of its affiliates. Such an exchange offer will be made in accordance with applicable federal securities laws and state insurance rules and regulations. We will provide the specific terms and conditions of any such exchange offer at the time the offer is made.
Investment Options
You may allocate purchase payments using one or a combination of the investment options and Fixed Accounts, as may be available under your contract:
•
Variable Portfolios
•
Fixed Accounts
19
•
Dollar Cost Averaging Fixed Account
•
Secure Value Account (optional Living Benefit only)
If you elect an optional Living Benefit, not all investment options may be available and you must allocate your Purchase Payments in accordance with the applicable investment requirements. Please see Investment Requirements For Optional Living Benefits in APPENDIX A – UNDERLYING FUNDS AVAILABLE UNDER THE CONTRACT for the specific investment requirements applicable to your Living Benefit.
Variable Portfolios
The Variable Portfolios available under the contract invest in the Underlying Funds of the Trusts. Additional Variable Portfolios may be available in the future.
Information regarding each Underlying Fund, including (i) its name, (ii) its type, (iii) its investment advisor and any sub-investment advisor, (iv) current expenses, and (v) performance is available in an appendix to this prospectus. See APPENDIX A – UNDERLYING FUNDS AVAILABLE UNDER THE CONTRACT.
Each Underlying Fund has issued a prospectus that contains more detailed information about the Underlying Fund. Read these prospectuses carefully before investing. Paper or electronic copies of the Underlying Fund prospectuses may be obtained by calling (855) 421-2692 or visiting our website at www.corebridgefinancial.com/ProductProspectuses.
You may also obtain information about the Underlying Funds by accessing the U.S. Securities and Exchange Commission’s website at www.sec.gov.
All Variable Portfolios may not be available through the broker-dealer with which your financial representative is affiliated. Such portfolios are identified in APPENDIX A - UNDERLYING FUNDS AVAILABLE UNDER THE CONTRACT. Please check with your financial representative for availability.
From time to time, certain Variable Portfolio names are changed. When we are notified of a name change, we will make changes so that the new name is properly shown. However, until we complete the changes, we may provide you with various forms, reports and confirmations that reflect a Variable Portfolio’s prior name.
Certain Underlying Funds offered under this contract have similar investment objectives to other Underlying Funds managed by the same advisor or subadvisor. The investment results of the Underlying Funds, however, may be higher or lower than such other Underlying Funds. We do not guarantee or make any representation that the investment results of any of the Underlying Funds will be comparable to the investment results of any other Underlying Fund managed by the same advisor or subadvisor.
| You can gain or lose money if you invest in these Variable Portfolios. You are responsible for allocating Purchase Payments to the Variable Portfolios as appropriate for your own individual circumstances, investment goals, financial situation and risk tolerance. You should periodically review your allocations and values to ensure they continue to suit your needs. You bear the risk of any decline in contract value resulting from the performance of the Variable Portfolio you have selected. In making your investment selections, you should investigate all information available to you including the Underlying Fund’s prospectus, statement of additional information and annual and semi-annual reports. |
| We do not provide investment advice, nor do we recommend or endorse any particular Underlying Fund. |
Please consult your financial representative regarding which of these Variable Portfolios are appropriate for your risk tolerance.
You should read the prospectuses for the Trusts carefully for detailed information about the Underlying Funds, including each Underlying Fund’s investment objective and risk factors.
Selection of Underlying Funds
The Underlying Funds offered through this contract are selected by us and we may consider various factors in the selection process, including but not limited to: asset class coverage, the strength of the investment advisor’s or subadvisor’s reputation and tenure, brand recognition, the alignment of the investment objectives of an Underlying Fund with our hedging strategy, performance and the capability and qualification of each investment firm.
Another factor we may consider is whether the Underlying Fund or its service providers (i.e. the investment advisor and/or subadvisor(s)) or their affiliates will make payments to us or our affiliates in connection with certain administrative, marketing and support services, or whether the Underlying Fund’s service providers have affiliates that can provide marketing and distribution support for sales of the contract. Please see PAYMENTS IN CONNECTION WITH DISTRIBUTION OF THE CONTRACT below.
We review the Underlying Funds periodically and may make changes if we determine that an Underlying Fund no longer satisfies one or more of the selection criteria and/or if the Underlying Fund has not attracted significant allocations from contract Owners.
Fund-of-Funds
Certain Underlying Funds invest substantially all their assets in other Underlying Funds. These arrangements are referred to as Fund-of-Funds or Master-Feeder Funds, as described below. Expenses for a Fund-of-Funds may be higher than that for other funds because a Fund-of-Funds bears its own expenses and indirectly bears its proportionate share of expenses of the Underlying Funds. As a result, you
20
will pay higher fees and expenses under the Fund-of-Funds structure than if you invested directly in each of the Underlying Funds held in the Fund-of-Funds structure. This will reduce your investment return.
Master-Feeder Funds
Under the Master-Feeder Funds structure, the Feeder Funds do not buy individual securities directly. Rather, each Feeder Fund invests all of its investment assets in a corresponding Master Fund, which invests directly in individual securities.
Under the Master-Feeder structure, you will pay higher fees and expenses than if you invested in an Underlying Fund that invests directly in the same individual securities as the Master Fund. We offer other variable annuity contracts which include Variable Portfolios that invest directly in the Master Funds without investing through a Feeder Fund and they currently assess lower fees and expenses than the Master-Feeder Funds.
Each Feeder Fund may withdraw all its assets from a Master Fund if the Board of Directors (“Board”) of the Feeder Fund determines that it is in the best interest of the Feeder Fund and its shareholders to do so.
Volatility Control Funds
Certain Underlying Funds advised by our affiliate employ risk management strategies that are intended to control the Underlying Funds’ overall volatility and to reduce the downside exposure of the Underlying Funds during significant market downturns. Conversely, these Variable Portfolios could limit the upside participation of these Underlying Funds in rising equity markets relative to other Underlying Funds.
These risk management techniques help us to manage our financial risks associated with guarantees, like the living and death benefits because this managed volatility strategy reduces the incidence of extreme outcomes including the probability of large gains or losses.
Trusts
We offer Underlying Funds of affiliated and unaffiliated Trusts. The Trusts serve as the underlying investment vehicles for other variable annuity contracts issued by the Company as well as by other insurance companies.
Neither the Company nor the Trusts believe that offering shares of the Trusts in this manner disadvantages you. The Trusts are monitored for potential conflicts. The Trusts may have other Underlying Funds, in addition to those listed here, that are not available for investment under this contract.
Unaffiliated Trusts
We offer Underlying Funds of the following unaffiliated Trusts:
•
AIM Variable Insurance Funds (Invesco Variable Insurance Funds) – Series II Shares
•
Franklin Templeton Variable Insurance Products Trust – Class 2 Shares
•
Goldman Sachs Variable Insurance Trust – Class Service Shares
•
Lord Abbett Series Fund, Inc. – Class VC Shares
•
PIMCO Variable Insurance Trust – Class Advisor Shares
Affiliated Trusts
We offer Underlying Funds of the following affiliated Trusts at least in part because they are managed by SunAmerica Asset Management, LLC (“SAAMCo”), an affiliate of the Company. SAAMCo engages subadvisors to provide investment advice for certain Underlying Funds. The Company and/or its affiliates may be subject to certain conflicts of interest as the Company may derive greater revenues from Variable Portfolios offered by a Trust managed by an affiliate than certain other available Variable Portfolios.
•
Seasons Series Trust – Class 3 Shares
•
SunAmerica Series Trust – Class 3 Shares
Substitution, Addition or Deletion of Variable Portfolios
We may, subject to any applicable law, make certain changes to the Variable Portfolios offered in your contract. We may offer new Variable Portfolios or stop offering existing Variable Portfolios. New Variable Portfolios may be made available to existing contract Owners, and Variable Portfolios may be closed to new or subsequent Purchase Payments, transfers or allocations. In addition, we may also liquidate the shares of any Variable Portfolio, substitute the shares of one Underlying Fund held by a Variable Portfolio for another and/or merge Variable Portfolios or cooperate in a merger of Underlying Funds. To the extent required by the Investment Company Act of 1940, as amended, we may be required to obtain SEC approval or your approval.
Fixed Accounts
Your contract may offer a Fixed Account for a guaranteed period. Your Fixed Account interest crediting rates are guaranteed for amounts allocated to each Fixed Account for up to 1 year. Thereafter, for Fixed Accounts other than Dollar Cost Averaging Fixed Account options (as described below), we will declare annual Fixed Account crediting rates each contract year, and this rate will never be lower than the minimum guarantee rate as referenced in your contract. Factors that influence the declared Fixed Account renewal rate include, but are not limited to, the level of US treasury rates, credit spreads on corporate bonds and other fixed income instruments, company asset-liability matching strategies, the length of the contract withdrawal charge period and the number of years since your annuity contract
21
was issued. You may obtain current interest rates by calling the Annuity Service Center or by speaking with your financial representative.
Please check with your financial representative regarding the availability of a Fixed Account. Allocations to the Fixed Account are obligations of the General Account. In reliance on certain exemptions and exclusions, interests in the General Account are not registered as securities under the Securities Act of 1933 and not registered as an investment company under the Investment Company Act of 1940. However, the disclosures in the prospectus about the Fixed Accounts are subject to certain provisions of the federal securities laws regarding the accuracy and completeness of disclosures. Please see GENERAL ACCOUNT below.
Minimum Guaranteed Interest Rate
We guarantee that the interest rate credited to amounts allocated to any Fixed Account guarantee periods will never be less than the guaranteed minimum interest rate specified in your contract. Once the rate is established, it will not change for the duration of the guarantee period. The minimum guaranteed interest rate can vary but is never lower than 1%. We determine which, if any, guarantee periods will be offered at any time in our sole discretion, unless state law requires us to do otherwise.
Interest Rate Categories
There are three categories of interest rates for money allocated to the Fixed Accounts. The applicable rate is guaranteed until the corresponding guarantee period expires. With each category of interest rate, your money may be credited a different rate as follows:
•
Initial Rate: The rate credited to any portion of the initial Purchase Payment allocated to a Fixed Account.
•
Current Rate: The rate credited to any portion of a subsequent Purchase Payment allocated to a Fixed Account.
•
Renewal Rate: The rate credited to money transferred from a Fixed Account or a Variable Portfolio into a Fixed Account and to money remaining in a Fixed Account after expiration of a guarantee period.
Transfers/Withdrawals from Fixed Accounts
There are no restrictions with respect to transferring out of or taking a withdrawal from a Fixed Account. If you make a transfer out of or a withdrawal from a Fixed Account prior to the end of a guarantee period, you will be credited the interest earned up to the time of transfer or withdrawal. When a guarantee period ends, you may leave your money in the same Fixed Account or you may reallocate your money to another Fixed Account, if available, or to the Variable Portfolios. If you do not want to leave your money in the same Fixed Account, you must contact us within 30 days after the end of the guarantee period and provide
us with new allocation instructions. We do not contact you. If you do not contact us, your money will remain in the same Fixed Account where it will earn interest at the renewal rate then in effect for that Fixed Account.
We reserve the right to defer payments for a withdrawal from a Fixed Account for up to six months.
If available through our Dollar Cost Averaging Program, you may systematically transfer interest earned in available Fixed Accounts into any of the Variable Portfolios on a monthly basis. Systematic transfers may be started, changed or terminated at any time by contacting our Annuity Service Center.
Check with your financial representative about the current availability of this service.
Fixed Account Restrictions
At any time we are crediting the minimum guaranteed interest rate specified in your contract, we reserve the right to restrict your ability to invest into the Fixed Accounts. All Fixed Accounts may not be available in your state. Please check with your financial representative regarding the availability of Fixed Accounts.
Secure Value Account
If you elect a Living Benefit, a certain percentage of your investment is automatically allocated to the Secure Value Account. The Secure Value Account is only available with the election of a Living Benefit and you may not reallocate your money from the Secure Value Account to another Fixed Account, if available, or to the Variable Portfolios when the guarantee period ends. Please see Investment Requirements for Optional Living Benefits in APPENDIX A – UNDERLYING FUNDS AVAILABLE UNDER THE CONTRACT. Allocations to the Secure Value Account are obligations of the General Account. Please see GENERAL ACCOUNT below.
Dollar Cost Averaging Fixed Accounts
You may invest initial and/or subsequent Purchase Payments in the dollar cost averaging (“DCA”) Fixed Accounts, if available. The minimum Purchase Payment amounts are as follows:
| DCA Fixed Account |
Minimum Purchase Payment |
| 6-Month |
$600 |
| 12-Month |
$1,200 |
•
The DCA Fixed Accounts only accept initial and subsequent Purchase Payments because they are offered as “source” accounts exclusively to facilitate the DCA Program for a specified time period.
•
You may not make a transfer from a Variable Portfolio or available Fixed Account into a DCA Fixed Account. Please see DOLLAR COST AVERAGING PROGRAM below for more information.
22
•
Unless otherwise directed by you, any Purchase Payment less than the above minimum amounts will automatically be allocated to available investment options according to your current allocation instructions on file.
DCA Interest Rate Crediting
DCA Fixed Accounts credit a fixed rate of interest and can only be elected to facilitate a DCA Program. Interest is credited to amounts allocated to the DCA Fixed Accounts while your money is transferred to available investment options over certain specified time frames. The interest rates applicable to the DCA Fixed Accounts may differ from those applicable to any other Fixed Account but will never be less than the minimum guaranteed interest rate specified in your contract. The minimum guaranteed interest rate can vary but is never lower than 1%. However, when using a DCA Fixed Account, the annual interest rate is paid on a declining balance as you systematically transfer your money to available investment options. Therefore, the actual effective yield will be less than the stated annual crediting rate. We reserve the right to change the availability of DCA Fixed Accounts offered, unless state law requires us to do otherwise.
If you elected the Early Access feature in some states, you may not invest initial and/or subsequent Purchase Payments in the available DCA Fixed Accounts.
Dollar Cost Averaging Program
Under the DCA Program, you systematically transfer a specified dollar amount or percentage of contract value from a Variable Portfolio, available Fixed Account or DCA Fixed Account (“source account”) to any available investment options (“target account”).
The DCA Program allows you to invest gradually in available investment options at no additional cost. The DCA Program is designed to lessen the impact of market fluctuations on your investment. However, the DCA Program can neither guarantee a profit nor protect your investment against a loss. When you elect the DCA Program, you are continuously investing in securities fluctuating at different price levels. You should consider your tolerance for investing through periods of fluctuating price levels.
Example of DCA Program
Assume that you want to move $750 each month from one Variable Portfolio to another Variable Portfolio over six
months. You set up a DCA Program and purchase Accumulation Units at the following values:
| Month |
Accumulation Unit Value |
Units Purchased |
| 1 |
$7.50 |
100 |
| 2 |
$5.00 |
150 |
| 3 |
$10.00 |
75 |
| 4 |
$7.50 |
100 |
| 5 |
$5.00 |
150 |
| 6 |
$7.50 |
100 |
You paid an average price of only $6.67 per Accumulation Unit over six months, while the average market price actually was $7.08. By investing an equal amount of money each month, you automatically buy more Accumulation Units when the market price is low and fewer Accumulation Units when the market price is high. This example is for illustrative purposes only.
DCA Program Guidelines
•
Fixed Accounts are not available as target accounts for the DCA Program.
•
Transfers occur on a monthly periodic schedule.
•
The minimum transfer amount under the DCA Program is $100 per transaction, regardless of the source account.
•
Transfers resulting from your participation in the DCA Program are not counted towards the number of free transfers per contract year.
Allocation of Subsequent Purchase Payments to DCA Program
If you have not elected an optional Living Benefit and you choose to allocate subsequent Purchase Payments to an active DCA Program with an available Fixed Account serving as the source account, the rate applicable to that Fixed Account at the time we receive the subsequent Purchase Payment will apply. Further, we will begin transferring subsequent Purchase Payments into your target account allocations on the same day of the month as the initial active DCA Program. Therefore, you may not receive a full 30 days of interest prior to the first transfer to the target account(s). Please see DOLLAR COST AVERAGING FIXED ACCOUNTS above for more information.
Termination of DCA Program
You may terminate the DCA Program at any time. If you terminate the DCA Program and money remains in the DCA Fixed Account(s), we transfer the remaining money according to your current allocation instructions on file.
Upon notification of your death, we will terminate the DCA Program and transfer the remaining money according to the current allocation instructions on file.
23
Automatic Asset Rebalancing Program
Market fluctuations may cause the percentage of your investment in the Variable Portfolios to differ from your original allocations. Automatic Asset Rebalancing typically involves shifting portions of your money into and out of investment options so that the resulting allocations are consistent with your current investment instructions.
Under the Automatic Asset Rebalancing Program:
•
You may elect to have your investments in the Variable Portfolios and/or Fixed Accounts, if available, periodically rebalanced to return your allocations to preselected percentages for no additional charge.
•
At your request, rebalancing occurs on a quarterly, semiannual or annual basis.
•
Transfers resulting from your participation in this program are not counted against the number of free transfers per contract year.
Changes to Rebalancing Instructions
If you make a transfer, you must provide updated rebalancing instructions. If you do not provide new rebalancing instructions at the time you make such transfer, we will change your ongoing rebalancing instructions to reflect the percentage allocations among the new Variable Portfolios and/or Fixed Accounts, if available, resulting from your transfer which will replace any previous rebalancing instructions you may have provided (“Default Rebalancing Instructions”). You may change any applicable Default Rebalancing Instructions at any time by contacting the Annuity Service Center. If we cannot complete automatic rebalancing according to your current instructions due to Variable Portfolio changes, we reserve the right to allocate the applicable amounts that would have been transferred to the impacted Variable Portfolio(s) to a money market option available under the contract.
Upon notification of your death, we will terminate the Automatic Asset Rebalancing Program.
Mandatory Rebalancing with Election of a Living Benefit
If you elect an optional Living Benefit, we will automatically enroll you in the Automatic Asset Rebalancing Program with quarterly rebalancing. If at any point, for any reason, your rebalancing instructions would result in allocations inconsistent with the investment requirements, we will revert to the last compliant instructions on file and we will notify you of such reversion. If we cannot complete automatic rebalancing according to your current instructions due to Variable Portfolio changes (including closures, substitutions, or mergers), we reserve the right to allocate the applicable amounts that would have been transferred to the impacted Variable Portfolio(s) to a money market option available under the contract. In addition, any amount of your
investment allocated to the Secure Value Account cannot be rebalanced. Please see OPTIONAL LIVING BENEFITs below.
Automatic asset rebalancing will continue if it is a requirement of an optional Living Benefit that remains in effect pursuant to your Spousal Beneficiary’s election of Spousal Continuation.
We reserve the right to modify, suspend or terminate the Automatic Asset Rebalancing Program at any time and we will notify you 30 days prior to exercising that right. In the event of modification, we will administer the program according to the parameters of the modification. In the event of suspension or termination of the program, we will no longer administer the program and your investments will no longer be rebalanced.
Transfers During the Accumulation Phase
Subject to the Company’s rules, restrictions and policies (including short term trading policies) described below, you may transfer funds between the Variable Portfolios and/or any available Fixed Accounts.
•
Funds already in your contract cannot be transferred into the DCA Fixed Accounts, if available.
•
You must transfer at least $100 per transfer.
•
If less than $100 remains in any Variable Portfolio or Fixed Account after a transfer, that amount must be transferred as well.
Submitting Transfer Instructions
Your transfer instructions must be received via one of the methods and locations referenced below; otherwise they will not be considered received by us. Please see SHORT-TERM TRADING POLICIES below for more information.
| Telephone: (800) 445-7862 |
| Internet: www.corebridgefinancial.com/annuities |
| United States Postal Service (first-class mail): Annuity Service Center P.O. Box 15570 Amarillo, Texas 79105-5570 |
| Facsimile: (818) 615-1543 |
Telephone/Internet Authorization
We may accept transfers by telephone or the internet unless you tell us not to on your contract application. When receiving instructions over the telephone or the internet, we have procedures to provide reasonable assurance that the transactions executed are genuine. Thus, we are not
24
responsible for any claim, loss or expense from any error resulting from instructions received over the telephone or the internet. If we fail to follow our procedures, we may be liable for any losses due to unauthorized or fraudulent instructions.
If your contract was issued in the state of New York, we may accept transfers by telephone if you complete and send the Telephone Transfer Agreement form to our Annuity Service Center at the above address.
Transfer Fees
There is no charge for your first 15 transfers in any contract year. We charge for transfers in excess of 15 in any contract year. The fee is $25 for each transfer exceeding this limit. Transfers resulting from your participation in the DCA or Automatic Asset Rebalancing Programs are not counted towards the number of free transfers per contract year.
Please see APPENDIX B - STATE CONTRACT AVAILABILITY AND/OR VARIABILITY for state-specific fees.
Accepting Transfer Requests
We cannot guarantee that we will be able to accept telephone, fax and/or internet transfer instructions at all times. Any telephone, fax or computer system, whether it is yours, your broker-dealer’s, or ours, can experience outages or delays for a variety of reasons and may prevent our processing of your transfer request. If telephone, fax and/or internet access is unavailable, you must make your transfer request in writing by U.S. Mail to our Annuity Service Center at the address above.
We reserve the right to modify, suspend or terminate telephone, fax and/or internet transfer privileges at any time and we will notify you prior to exercising the right of suspension.
Pricing Transfer Requests
Any transfer request will be priced as of the day it is received by us in Good Order if the request is received before Market Close. If the transfer request is received after Market Close, the request will be priced as of the next NYSE business day.
Short-Term Trading Policies
This variable annuity contract is not designed to support frequent trading or trading strategies that seek to benefit from short-term price fluctuations or price inefficiencies in the Variable Portfolios of this product (“Short-Term Trading”) and we discourage Short-Term Trading as more fully described below.
Risks of Short-Term Trading
Short-Term Trading may create risks that may result in adverse effects on the investment return of the Underlying Fund in which a Variable Portfolio invests. Such risks may include, but are not limited to: (1) interference with the
management and planned investment strategies of an Underlying Fund; (2) dilution of the interests in the Underlying Fund due to practices such as “arbitrage”; and/or (3) increased brokerage and administrative costs due to forced and unplanned fund turnover. These circumstances may reduce the value of the Variable Portfolio. In addition to negatively impacting the Owner, a reduction in contract value may also be harmful to Annuitants and/or Beneficiaries.
We have adopted the following administrative procedures to discourage Short-Term Trading which are summarized below.
Standard U.S. Mail Policy
Under the Standard U.S. Mail Policy, all transfers must be submitted by U.S. Mail for 12-months. The 15th transfer in a 12-month look-back period (“12-Month Rolling Period”) triggers the Standard U.S. Mail Policy.
Transfer Requests under the U.S. Mail Policy
•
While the U.S. Mail Policy is in effect, we will not accept transfer requests sent by any other method except U.S. Mail.
•
Transfer requests required to be submitted by U.S. Mail can only be cancelled by a written request sent by U.S. Mail with the appropriate paperwork received prior to the execution of the transfer.
•
All transfers made on the same day prior to Market Close are considered one transfer request for purposes of applying the Short-Term Trading policy and calculating the number of free transfers.
•
Transfers resulting from your participation in the DCA or Automatic Asset Rebalancing Programs are not included for the purposes of determining the number of transfers before applying the Standard U.S. Mail Policy.
•
We apply the Standard U.S. Mail Policy uniformly and consistently to all contract Owners except for omnibus group contracts. See Omnibus Group Contracts below for more information.
Example
For example, if you made a transfer on August 21, 2024 and within the previous twelve months (from August 22, 2023 forward) you made 15 transfers including the August 21st transfer, then all transfers made for twelve months after August 21, 2024 must be submitted by U.S. Mail (from August 22, 2024 through August 21, 2025).
Accelerated U.S. Mail Policy
We may become aware of transfer patterns among the Variable Portfolios and/or Fixed Accounts which appear to be Short-Term Trading or otherwise detrimental to the Variable Portfolios but have not yet triggered the Standard
25
U.S. Mail Policy described above. If such transfer activity comes to our attention, we may require you to adhere to our Standard U.S. Mail Policy prior to reaching the specified number of transfers.
Additional Short-Term Trading Restrictions
To the extent we become aware of Short-Term Trading activities which cannot be reasonably controlled solely by the Standard U.S. Mail Policy or the Accelerated U.S. Mail Policy, we reserve the right to evaluate, in our sole discretion, whether to:
1.
impose further limits on the size, manner, number and/or frequency of transfers you can make;
2.
impose minimum holding periods;
3.
reject any Purchase Payment or transfer request;
4.
terminate your transfer privileges; and/or
5.
request that you surrender your contract.
We will notify you in writing if your transfer privileges are modified, suspended or terminated. In addition, we reserve the right not to accept or otherwise restrict transfers from a third party acting for you and not to accept pre-authorized transfer forms.
Enforcement Determination Factors
Some of the factors we may consider when determining whether to accelerate the Standard U.S. Mail Policy, reject transfers or impose other conditions on transfer privileges include:
•
the number of transfers made in a defined period;
•
the dollar amount of the transfer;
•
the total assets of the Variable Portfolio involved in the transfer and/or transfer requests that represent a significant portion of the total assets of the Variable Portfolio;
•
the investment objectives and/or asset classes of the particular Variable Portfolio involved in your transfers;
•
whether the transfer appears to be part of a pattern of transfers to take advantage of short-term market fluctuations or market inefficiencies;
•
the history of transfer activity in the contract or in other contracts we may offer; and/or
•
other activity, as determined by us, that creates an appearance, real or perceived, of Short-Term Trading or the possibility of Short-Term Trading.
Applicability to Third Party Trading Services
The Standard and Accelerated U.S. Mail Policies are applied uniformly and consistently to contract Owners utilizing third party trading services/strategies performing asset allocation services for a number of contract Owners at the same time. You should be aware that such third party trading services may engage in transfer activities that can also be
detrimental to the Variable Portfolios, including trading relatively large groups of contracts simultaneously. These transfer activities may not be intended to take advantage of short-term price fluctuations or price inefficiencies. However, such activities can create the same or similar risks as Short-Term Trading and negatively impact the Variable Portfolios as described above.
Deterrence Limitations
Notwithstanding the administrative procedures above, there are limitations on the effectiveness of these procedures. Our ability to detect and/or deter Short-Term Trading is limited by operational systems and technological limitations, as well as our ability to predict strategies employed by contract Owners (or those acting on their behalf) to avoid detection. We cannot guarantee that we will detect and/or deter all Short-Term Trading and it is likely that some level of Short-Term Trading will occur before it is detected and steps are taken to deter it. To the extent that we are unable to detect and/or deter Short-Term Trading, the Variable Portfolios may be negatively impacted as described above.
Additionally, the Variable Portfolios may be harmed by transfer activity related to other insurance companies and/or retirement plans or other investors that invest in shares of the Underlying Fund. Moreover, our ability to deter Short-Term Trading may be limited by decisions by state regulatory bodies and court orders which we cannot predict.
You should be aware that the design of our administrative procedures involves inherently subjective decisions which we attempt to make in a fair and reasonable manner consistent with the interests of all Owners of this contract. We do not enter into agreements with contract Owners whereby we permit or intentionally disregard Short-Term Trading.
Omnibus Group Contracts
Omnibus group contracts may invest in the same Underlying Funds available in your contract but on an aggregate, not individual basis. Thus, we have limited ability to detect Short-Term Trading in omnibus group contracts and the Standard U.S. Mail Policy does not apply to these contracts. Our inability to detect Short-Term Trading may negatively impact the Variable Portfolios as described above.
We reserve the right to modify the policies and procedures described in the TRANSFERS DURING THE ACCUMULATION PHASE section at any time. To the extent that we exercise this reservation of rights, we will do so uniformly and consistently unless we disclose otherwise.
Underlying Funds’ Short-Term Trading Policies
Please note that the Underlying Funds have their own policies and procedures (outlined in their respective prospectus) with respect to frequent purchases and redemptions of their respective shares which may be more or less restrictive than ours.
26
•
We reserve the right to enforce these Underlying Fund policies and procedures, including, but not limited to, the right to collect a redemption fee on shares of the Underlying Fund if imposed by such Underlying Fund’s Board of Trustees/Directors. As of the date of this prospectus, none of the Underlying Funds impose a redemption fee.
•
We also reserve the right to reject, with or without prior notice, any purchase, transfer or allocation into a Variable Portfolio if the corresponding Underlying Fund will not accept such purchase, transfer or allocation for any reason.
We are obligated to execute instructions from the Underlying Funds to restrict or prohibit further purchases or transfers in an Underlying Fund under certain circumstances.
Processing Omnibus Orders
Many investments in the Underlying Funds outside of these contracts are omnibus orders from intermediaries such as other separate accounts or retirement plans. If an Underlying Fund’s policies and procedures fail to successfully detect and discourage Short-Term Trading, there may be a negative impact to the Owners of the Underlying Fund. If an Underlying Fund believes that an omnibus order we submit may reflect transfer requests from Owners engaged in Short-Term Trading, the Underlying Fund may reject the entire omnibus order and delay or prevent us from implementing your transfer request.
Required Information Sharing
Under rules adopted by the SEC, we also have written agreements with the Underlying Funds that obligate us to, among other things, provide the Underlying Funds promptly upon request certain information about you (e.g., your social security number) and your trading activity.
Transfers During the Income Phase
During the Income Phase, only one transfer per month is permitted between the Variable Portfolios. No other transfers are allowed during the Income Phase. Transfers will be effected for the last NYSE business day of the month in which we receive your request for the transfer.
You may not use the DCA Program or the Automatic Asset Rebalancing Program during the Income Phase.
Voting Rights
The Company is the legal owner of the Trusts’ shares. However, when an Underlying Fund solicits proxies in conjunction with a shareholder vote, we must obtain your instructions on how to vote those shares. We vote all of the shares we own in proportion to your instructions. This includes any shares we own on our own behalf. As a result of this proportionate voting, the vote of a small number of contract Owners can determine the outcome of a vote.
Should we determine that we are no longer required to vote in the manner described above, we will vote the shares in our own right.
Access to your Money
You can access money in your contract in one of the following ways:
•
Partial Withdrawal;
•
Systematic Withdrawal;
•
Total Withdrawal (also known as surrender); or
•
Annuity Income Payment (during Income Phase).
Withdrawals made prior to age 59½ may result in a 10% IRS penalty tax. Certain Qualified plans restrict and/or prohibit your ability to withdraw money from your contract. Please see TAXES.
Minimum Withdrawal Amount and Minimum Contract Value
| |
Minimum Withdrawal Amount |
Minimum Contract Value(1) |
| Partial Withdrawal |
$1,000 |
$2,500(2) |
| Systematic Withdrawal |
$100 |
$2,500(2) |
(1)
The value left in any Variable Portfolio or available Fixed Account must be at least $100 after a withdrawal.
(2)
The total contract value must be at least $2,500 after a withdrawal.
Where permitted by state law, we may terminate your contract if your contract value is less than $2,500 as a result of withdrawals and/or fees and charges. We will provide you with 60 days written notice that your contract is being terminated. At the end of the notice period, we will distribute the contract’s remaining value to you.
If you elected an optional Living Benefit, withdrawals taken under the parameters of the feature that reduce contract value below the minimum contract value will not terminate your contract. Please see OPTIONAL LIVING BENEFITs below.
Penalty-Free Withdrawal Amount
Your contract provides for a penalty-free withdrawal amount each contract year during the applicable withdrawal period. The penalty-free withdrawal amount is the portion of your contract that we allow you to take out without being charged a withdrawal charge. The penalty-free withdrawal amount does not reduce the basis used to calculate future annual penalty-free withdrawals and withdrawal charges.
27
| Your maximum annual penalty-free withdrawal amount equals 10% of remaining Purchase Payments not yet withdrawn each contract year, and still subject to withdrawal charges. |
| If you elect an optional Living Benefit, please see Penalty-Free Withdrawal Amount under "What are the effects of withdrawals on Polaris Income Max?" and "What are the effects of withdrawals on Polaris Income Plus Daily Flex?" under OPTIONAL LIVING BENEFITS below. |
Purchase Payments that are no longer subject to a withdrawal charge and not previously withdrawn may also be withdrawn penalty-free.
If, in any contract year, you choose to take less than the full penalty-free withdrawal amount, then you may not carry over the unused amount as an additional penalty-free withdrawal in subsequent years.
Assessment of Withdrawal Charges
We deduct a withdrawal charge applicable to any amount of a partial or total withdrawal in excess of your penalty-free withdrawal amount made before the end of the withdrawal charge period. Before purchasing this contract, you should consider the effect of withdrawal charges on your investment if you need to withdraw more than the annual penalty-free amount during the withdrawal charge period. You should fully discuss this decision with your financial representative.
The withdrawal charge percentage is determined by the number of years the Purchase Payment has been in the contract at the time of the withdrawal. Please see WITHDRAWAL CHARGES and EXPENSES.
When you make a partial withdrawal, we deduct it from any remaining annual penalty-free withdrawal amount first, next from remaining Purchase Payments on a first-in, first-out basis, and then from any remaining contract value. This means that you will access your Purchase Payments that are lower or no longer subject to withdrawal charges before those Purchase Payments that are still subject to withdrawal charges or higher withdrawal charges.
If you request a total withdrawal (surrender) of your contract, we may also deduct any premium taxes, if applicable. If you fully surrender your contract, withdrawal charges will be assessed against the amount of Purchase Payments subject to withdrawal charges. This means that, if you surrender your contract while withdrawal charges still apply, any prior penalty-free withdrawal amounts taken in the current contract year are not subtracted from the total Purchase Payments still subject to withdrawal charges. Please see EXPENSES.
Calculating Withdrawal Charges
For the purpose of calculating the withdrawal charge if you request a total withdrawal of your contract, any prior penalty-free withdrawal amount, including a required minimum distribution, in the current contract year is not subtracted from the total Purchase Payments still subject to withdrawal charges.
Example:
For example, you make an initial Purchase Payment of $100,000. For purposes of this example we will assume a 0% growth rate over the life of the contract, no subsequent Purchase Payments and no election of optional features. In contract year 2, you take out your maximum penalty-free withdrawal of $10,000. After that penalty-free withdrawal your contract value is $90,000. In the 3rd contract year, you request a total withdrawal of your contract. We will apply the following calculation:
A–(B x C)=D, where:
A=
Your contract value at the time of your request for withdrawal ($90,000)
B=
The amount of your Purchase Payments still subject to withdrawal charge ($100,000)
C=
The withdrawal charge percentage applicable to the age of each Purchase Payment (assuming 6% is the applicable percentage) [B x C=$6,000]
D=
Your full contract value ($84,000) available for total withdrawal
Required Minimum Distributions
If you are taking required minimum distributions applicable to this contract only, we waive any withdrawal charges applicable to those withdrawals. Please see TAXES for details regarding required minimum distributions.
Annuity Income Payments
Any time after your second contract anniversary, you may receive annuity income payments for a specified period of time and at a frequency as elected by you. We will waive any applicable withdrawal charges upon processing of your request to annuitize the contract. Please see ANNUITY INCOME OPTIONS.
Processing Withdrawal Requests
A request to access money from your contract, as outlined above, must be submitted in writing and in Good Order to the Annuity Service Center at the following address. Withdrawals are processed effective the date they are deemed in Good Order and payments are made within 7 days. If you take a partial withdrawal, you can choose whether any applicable withdrawal charges are deducted from the amount withdrawn or from the contract value remaining after the amount withdrawn. If you fully surrender your contract value, we deduct any applicable withdrawal charges from the amount surrendered.
28
For withdrawals of $500,000 and more, you are required to include a signature guarantee issued by your broker-dealer which verifies the validity of your signature.
| Annuity Service Center P.O. Box 15570 Amarillo, TX 79105-5570 |
Any request for withdrawal will be priced as of the day it is received by us in Good Order at the Annuity Service Center, if the request is received before Market Close. If the request for withdrawal is received after Market Close, the request will be priced as of the next NYSE business day. Withdrawals are processed effective the date they are deemed in Good Order and payments are made within 7 days.
We may be required to suspend or postpone the payment of a withdrawal for any period of time when: (1) the NYSE is closed (other than a customary weekend and holiday closings); (2) trading with the NYSE is restricted; (3) an emergency exists such that disposal of or determination of the value of shares of the Variable Portfolios is not reasonably practicable; (4) the SEC, by order, so permits for the protection of contract Owners.
Additionally, we reserve the right to defer payments for a withdrawal from a Fixed Account for up to six months.
Partial, Systematic, and Required Minimum Distributions
Partial withdrawals, systematic withdrawals and required minimum distributions will be made proportionately from each Variable Portfolio and the Fixed Account in which you are invested, unless you provide different instructions.
If you surrender your contract, we may deduct any premium taxes, if applicable. Please see EXPENSES.
Optional Living Benefit Withdrawals
Partial Withdrawals under an optional Living Benefit must be deducted proportionately from each Variable Portfolio and Secure Value Account in which you are invested. You cannot request withdrawals from one or more specific funds in which you are invested.
Total Withdrawals
We calculate withdrawal charges upon total withdrawal of the contract on the day after we receive your request in Good Order. Any prior penalty-free withdrawal amount in the current contract year is not subtracted from the total Purchase Payments still subject to withdrawal charges. We will return your contract value less any applicable fees and charges within 7 calendar days of the request.
Systematic Withdrawal Program
During the Accumulation Phase, you may elect to receive periodic withdrawals under the Systematic Withdrawal Program for no additional charge. Under the program, you may choose to take monthly, quarterly, semi-annual or
annual payments from your contract. Electronic transfer of these periodic withdrawals to your bank account is available.
Please contact our Annuity Service Center which can provide the necessary enrollment forms. A withdrawal charge may apply if the amount of the periodic withdrawals in any year exceeds the penalty-free withdrawal amount permitted each year.
If you elect a Living Benefit and choose to receive periodic withdrawals under the Systematic Withdrawal Program on or after the Activation Date, you must request withdrawals on the appropriate Living Benefit enrollment form. The Systematic Withdrawal Program may not be established before the Activation Date. If we receive your request on another form, your request will not be processed. The Systematic Withdrawal Program for contracts with a Living Benefit is designed to provide withdrawal amounts within the Maximum Annual Withdrawal Amount. Any amounts taken above your Maximum Annual Withdrawal Amount while enrolled in the Systematic Withdrawal Program will eliminate the remaining systematic withdrawals within the same contract year and may permanently reduce future guaranteed withdrawal amounts. The Systematic Withdrawal Program will be re-established in the following contract year after such withdrawals, and the annualized systematic withdrawals will be adjusted to account for the new Maximum Annual Withdrawal Amount. If you must take Required Minimum Distributions (RMDs) from this contract and want to ensure that these withdrawals will not permanently reduce future guaranteed withdrawal amounts on or after the Activation Date, your total distribution(s) during the current contract year must not exceed the greater of the Maximum Annual Withdrawal Amount under the Living Benefit or the RMD amount as calculated by our Annuity Service Center. You may establish a Systematic Withdrawal Program to take your RMD, which will ensure the amount taken does not exceed either the Maximum Annual Withdrawal Amount under the Living Benefit or RMD amount as calculated by our Annuity Service Center.
Upon notification of your death, we will terminate the Systematic Withdrawal Program.
We reserve the right to modify, suspend or terminate the Systematic Withdrawal Program at any time and we will notify you prior to exercising that right.
Nursing Home Waiver
If you are confined to a nursing home for 60 days or longer, we may waive the withdrawal charge on partial or total withdrawals made while you are in a nursing home or within 90 days after you leave the nursing home.
•
You cannot use this waiver during the first 90 days after your contract is issued.
•
The confinement period for which you seek the waiver must begin after you purchase your contract.
29
•
We will only waive withdrawal charges on withdrawals paid directly to the contract owner, and not to a third party or other financial services company.
In order to use this waiver, you must submit the following documents to the Annuity Service Center:
1)
a doctor’s note recommending admittance to a nursing home;
2)
an admittance form which shows the type of facility you entered; and
3)
the bill from the nursing home which shows that you met the 60 day confinement requirement.
Please see APPENDIX B — STATE CONTRACT AVAILABILITY AND/OR VARIABILITY for state specific information regarding the availability of the Nursing Home Waiver.
Benefits Available Under the Contract
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
30
| |
|
Maximum Fee |
|
| |
|
(as a percentage of Income Base) |
|
| |
|
(as a percentage of Income Base) |
|
| |
|
(as a percentage of average daily net asset value allocated to the Variable Portfolios) |
|
31
| |
|
|
|
| |
|
(as a percentage of average daily net asset value allocated to the Variable Portfolios) |
|
Optional Benefits No Longer Available For Election
| Name of Benefit |
Purpose |
Maximum Fee |
Brief Description of Restrictions/Limitations |
| Early Access Feature |
Reduces the length of the withdrawal charge schedule under the contract |
0.40% (as a percentage of average daily ending net asset value allocated to the Variable Portfolios) |
•DCA Fixed Accounts may not be available in same states if this benefit was elected |
| Polaris Income Plus Flex Living Benefit |
A guaranteed minimum withdrawal benefit with Income Credits and step-up opportunities |
2.50% (as a percentage of Income Base) |
•All withdrawals before guaranteed withdrawals are activated may significantly reduce or terminate the benefit •Excess withdrawals after guaranteed withdrawals are activated may significantly reduce or terminate the benefit •Income Credits not available after the 12th benefit anniversary •Minimum Income Base not available on 12th benefit anniversary if guaranteed withdrawals have been activated •Investment requirements limit available investment options •Purchase Payments subject to additional restrictions •May not be cancelled by you prior to the 5th benefit anniversary •Certain events will automatically terminate the benefit •May not be re-elected or reinstated after termination •Fee may be deducted pro rata from variable portfolios only in certain states. Please see APPENDIX B – STATE CONTRACT AVAILABILITY AND/OR VARIABILITY for specific states |
| Polaris Income Plus Daily Flex Living Benefit (For contracts issued before October 13, 2020) |
A guaranteed minimum withdrawal benefit with frequent step-up opportunities |
2.50% (as a percentage of Income Base) |
•All withdrawals before guaranteed withdrawals are activated may significantly reduce or terminate the benefit •Excess withdrawals after guaranteed withdrawals are activated may significantly reduce or terminate the benefit •Minimum Income Base not available after the earlier of 15th benefit anniversary or activating guaranteed withdrawals •Investment requirements limit available investment options •Purchase Payments subject to additional restrictions •May not be cancelled by you prior to the 5th benefit anniversary •Certain events will automatically terminate the benefit •May not be re-elected or reinstated after termination •Fee may be deducted pro rata from variable portfolios only in certain states. Please see APPENDIX B – STATE CONTRACT AVAILABILITY AND/OR VARIABILITY for specific states |
32
Optional Benefits No Longer Available For Election (continued)
| Name of Benefit |
Purpose |
Maximum Fee |
Brief Description of Restrictions/Limitations |
| Polaris Income Plus Daily Living Benefit |
A guaranteed minimum withdrawal benefit with frequent step-up opportunities |
Purchased between Oct. 9, 2017 and Sept. 8, 2019 2.50% (as a percentage of Income Base) Purchased before Oct. 9, 2017 2.20% One Covered Person / 2.70% Two Covered Persons (as a percentage of Income Base) |
•Excess withdrawals may significantly reduce or terminate the benefit •Step-up opportunities change from daily to annually after first withdrawal •Investment requirements limit available investment options •For contracts with Minimum Income Base (contracts issued between May 1, 2017 and September 8, 2019), Minimum Income Base not available after the earlier of 15th benefit anniversary or first withdrawal •Purchase Payments subject to additional restrictions •May not be cancelled by you prior to the 5th benefit anniversary •Certain events will automatically terminate the benefit •May not be re-elected or reinstated after termination •Fee may be deducted pro rata from variable portfolios only in certain states. Please see APPENDIX B – STATE CONTRACT AVAILABILITY AND/OR VARIABILITY for specific states |
| Polaris Income Plus Living Benefit (Formerly SunAmerica Income Plus) |
A guaranteed minimum withdrawal benefit with Income Credits and step-up opportunities |
Purchased between Oct. 9, 2017 and Sept. 8, 2019 2.50% (as a percentage of Income Base) Purchased before Oct. 9, 2017 2.20% One Covered Person / 2.70% Two Covered Persons (as a percentage of Income Base) |
•Excess withdrawals may significantly reduce or terminate the benefit •Income Credits unavailable after the 12th benefit anniversary •Investment requirements limit available investment options •Minimum Income Base not available on 12th benefit anniversary if withdrawal has been taken •Purchase Payments subject to additional restrictions •May not be cancelled by you prior to the 5th benefit anniversary •Certain events will automatically terminate the benefit •May not be re-elected or reinstated after termination •Fee may be deducted pro rata from variable portfolios only in certain states. Please see APPENDIX B – STATE CONTRACT AVAILABILITY AND/OR VARIABILITY for specific states |
| Polaris Income Builder Living Benefit (Formerly SunAmerica Income Builder) |
A guaranteed minimum withdrawal benefit with Income Credits and step-up opportunities |
Purchased on or after Oct. 9, 2017 2.50% (as a percentage of Income Base) Purchased before Oct. 9, 2017 2.20% One Covered Person / 2.70% Two Covered Persons (as a percentage of Income Base) |
•Excess withdrawals may significantly reduce or terminate the benefit •Income Credits not available in any benefit year withdrawals are taken and not available after 12th benefit anniversary •Investment requirements limit available investment options •Minimum Income Base not available if withdrawal taken before the 12th benefit anniversary •Purchase Payments subject to additional restrictions •May not be cancelled by you prior to the 5th benefit anniversary •Certain events will automatically terminate the benefit •May not be re-elected or reinstated after termination •Fee may be deducted pro rata from variable portfolios only in certain states. Please see APPENDIX B – STATE CONTRACT AVAILABILITY AND/OR VARIABILITY for specific states |
| Maximum Anniversary Death Benefit (For contracts issued before May 1, 2017) |
Provides a death benefit based on the greatest of contract value, net purchase payments, or highest contract value on an eligible contract anniversary |
0.25% (as a percentage of average daily net asset value allocated to the Variable Portfolios) |
•Death benefit calculated differently depending on whether an optional Living Benefit has been elected •Death benefit election cannot be changed •Withdrawals may significantly reduce the benefit |
33
Optional Living Benefits
34
| Optional Living Benefit |
Income Credit (as a percentage of the Income Credit Base) |
Income Credit Availability Prior to the Activation Date |
| Polaris Income Max |
The applicable Income Credit Percentage is provided in the Rate Sheet Supplement |
The Income Credit Base and Income Base are reduced proportionately for any withdrawals taken prior to the Activation Date |
| Polaris Income Plus Daily Flex |
Not available | |
35
36
| Living Benefit Parameter |
Polaris Income Max |
Polaris Income Plus Daily Flex |
| This Living Benefit is suitable for the type of investor |
Who wants the guarantee of Income Credits prior to the Activation Date |
Who wants the greater flexibility of investment options and wants a Living Benefit that provides the ability for the Income Base to step up more frequently to Step-up Values. |
| Minimum Income Base |
N/A |
Minimum Income Base: a Minimum Income Base Percentage is applied annually to Purchase Payments received prior to the Activation Date. Any withdrawals taken prior to the Activation Date will proportionately reduce all Purchase Payments used in the calculation of the Minimum Income Base. No further adjustments are made on or after the Activation Date. |
| Income Credit – Prior to the Activation Date |
Income Credit available – the Income Credit Base and Income Base are reduced proportionately for any withdrawals taken prior to the Activation Date |
N/A |
| Income Credit – On or After the Activation Date |
N/A |
N/A |
| Frequency of Step-up Values |
Annually |
Daily |
| Investment Requirements |
20% in Secure Value Account 80% in Variable Portfolios (total of 18 investment options) |
10% in Secure Value Account 90% in Variable Portfolios Asset Allocation Portfolios (37 investment options) or 90% in Build Your Own Allocation (76 investment options that cross 12 asset classes) |
37
38
39
40
41
42
43
Polaris Income Plus Daily Flex Fee
| Number of Covered Persons |
Maximum Annual Fee Rate |
Minimum Annual Fee Rate |
Maximum Annualized Fee Rate Decrease or Increase Each Benefit Quarter* |
| One Covered Person |
2.50% |
0.60% |
±0.40% |
| Two Covered Persons |
2.50% |
0.60% |
±0.40% |
| Lifetime Income Option Change Fee* |
0.25% |
If the contract value is reduced to zero as a result of any withdrawal, but the Income Base is greater than zero, the contract will be terminated including any optional benefits and features.
If the contract value is reduced to zero, but the Income Base is greater than zero, we will pay the remaining Maximum Annual Withdrawal Amount for that Benefit Year. Thereafter we will pay the Protected Income Payment over the remaining lifetime of the Covered Person(s).
44
Additional important information
applicable to all optional living benefits
When and how may I elect a Living Benefit?
A Living Benefit must be elected at the time of contract issue (the “Benefit Effective Date”). You may elect to have the Living Benefit cover only your life or the lives of both you and your spouse, the “Covered Person(s).” If the contract is not owned by a natural person, references to Owner(s) apply to the Annuitant(s). To elect the Living Benefit, Covered Person(s) must meet the minimum and maximum age requirements. The age requirements vary depending on the type of contract and the number of Covered Persons. The age requirements for optional death benefits and other optional features may be different than those listed here. You must meet the age requirements for those features in order to elect them.
Polaris Income Max:
| Number of Owners |
Covered Person | |
| Minimum Age(1) |
Maximum Age(2) | |
| One Owner |
50 |
80 |
| Joint Owners(3) |
50 |
80 |
(1)
Minimum Age must be met by any Covered Person(s) as of the Contract Issue Date.
(2)
Maximum Age cannot be exceeded by any Covered Person(s) as of the date added.
(3)
Joint Owners may choose which of the two Owners will be the Covered Person. The Beneficiary’s age is not considered in determining the maximum issue age of the second Covered Person.
Polaris Income Plus Daily Flex:
| Number of Owners |
Covered Person | |
| Minimum Age(1) |
Maximum Age(2) | |
| One Owner |
45 |
80 |
| Joint Owners(3) |
45 |
80 |
(1)
Minimum Age must be met by any Covered Person(s) as of the Contract Issue Date.
(2)
Maximum Age cannot be exceeded by any Covered Person(s) as of the date added.
(3)
Joint Owners may choose which of the two Owners will be the Covered Person. The Beneficiary’s age is not considered in determining the maximum issue age of the second Covered Person.
What are the allowable changes to Covered Person(s) prior to the Activation Date?
You may make changes to your Covered Person(s) prior to the Activation Date for specific Life Change Events as defined below by submitting the appropriate Covered Person(s) Change form. Note: Any Covered Person being added must meet the above minimum and maximum age requirements.
•
Marriage – If there is one Covered Person, you may add your spouse as the second Covered Person;
•
Divorce – If there are two Covered Persons, you may remove one of the Covered Persons as a result of divorce;
•
Death – Upon the death of one of the Covered Persons, you may remove the deceased Covered Person.
What are the allowable changes to Covered Person(s) on the Activation Date?
| Number of Owners and Covered Persons |
Allowed Changes to Covered Person(s) on the Activation Date |
| Single Owned Contract & One Covered Person |
Add Spouse as the second Covered Person |
| Single Owned Contract & Two Covered Persons(1) |
Remove or Change the second Covered Person who is not the Single Owner |
| Jointly Owned Contract & One Covered Person |
Add Joint Owner as the second Covered Person |
| Jointly Owned Contract & Two Covered Persons(1) |
Remove or Change either Covered Person |
(1)
You must keep at least one of the original Covered Person(s) if requesting to remove or change either Covered Person. Note: If a second Covered Person or if one of the original Covered Person(s) is changed, Covered Person(s) must meet the above minimum and maximum age requirements.
Your Lifetime Income will change as a result of removing or adding a Covered Person(s).
If I own a Qualified contract, how do Required Minimum Distributions impact my Living Benefit?
Prior to the Activation Date, Required Minimum Distributions (“RMD”) will proportionately reduce the Income Base, Income Credit Base, if applicable, and the Purchase Payments used to calculate the Minimum Income Base, if applicable.
45
On or after the Activation Date, as the original Owner, or Continuing Spouse (two Covered Persons elected) electing to treat the annuity contract as their own, if you are taking required minimum distributions (“RMD”) from this contract, and the amount of the RMD (based only on the contract to which the feature is elected and using the Uniform Lifetime Table or Joint Life Expectancy Table from the regulations under the Internal Revenue Code) is greater than the Maximum Annual Withdrawal Amount in any given Benefit Year, no portion of the RMD will be treated as an Excess Withdrawal. Please see “What are the effects of withdrawals on Polaris Income Max?”and“What are the effects of withdrawals on Polaris Income Plus Daily Flex?”above.
Any withdrawal taken before you activate Lifetime Income (including RMDs) will result in a reduction of the amount of future withdrawals of the Maximum Annual Withdrawal Amount (MAWA).
We will provide RMD favorable treatment, in each Benefit Year, to the greater of the Maximum Annual Withdrawal Amount or the RMD amount. Any portion of a withdrawal in a Benefit Year which exceeds the greater of the Maximum Annual Withdrawal Amount or RMD amount will be considered an Excess Withdrawal. If you must take RMD from this contract and want to ensure that these withdrawals are not considered Excess Withdrawals, your total distribution(s) during the current contract year must not exceed the greater of the Maximum Annual Withdrawal Amount or the RMD amount as calculated by our Annuity Service Center. Therefore, if you plan to take an Excess Withdrawal, then this feature may not be appropriate for you.
The age at which you must begin taking RMDs is 73 (if you were born January 1, 1951 or later), 72 (if you were born on or after July 1, 1949, and before January 1, 1951), or 70 ½ (if you were born before July 1, 1949).
If you are transferring from another company and have already reached the age you must begin taking RMDs, you should take the current tax year’s RMD prior to the transfer, as we cannot systematically calculate the RMD as we do not possess the valuation for the previous year end. Further, if you are turning the age you must begin taking RMDs, you should know that although tax code allows for deferral of the first withdrawal to April of the tax year following your attainment of the age you must begin taking RMDs, doing so may result in subsequent withdrawals being treated as Excess Withdrawals for that Benefit Year.
What happens to my Living Benefit upon a spousal continuation if I elected one Covered Person and if the contract value is greater than zero?
Prior to the Activation Date, if the single Covered Person dies, the surviving Spousal Joint Owner or Spousal Beneficiary may elect to:
1.
Make a death claim, which terminates the Living Benefit and the contract; or
2.
Continue the contract and the Living Benefit as a new single Covered Person. The Continuing Spouse will receive the Maximum Annual Withdrawal Amount upon Lifetime Income Activation and the Protected Income Payment after the contract value goes to zero. The Continuing Spouse cannot add a new Covered Person. Upon the death of the Continuing Spouse, the Beneficiary must make a death claim, which terminates the Living Benefit and the contract.
If an Owner that is not the single Covered Person dies, the surviving Spousal Joint Owner who is the Covered Person may elect to:
1.
Make a death claim, which terminates the Living Benefit and the contract; or
2.
Continue the contract and the Living Benefit as the current single Covered Person. The Continuing Spouse will receive the Maximum Annual Withdrawal Amount upon Lifetime Income Activation and the Protected Income Payment after the contract value goes to zero. The Continuing Spouse cannot add a new Covered Person. Upon the death of the Continuing Spouse, the Beneficiary must make a death claim, which terminates the Living Benefit and the contract.
On or after the Activation Date, if the single Covered Person dies, the surviving Spousal Joint Owner or Spousal Beneficiary may elect to:
1.
Make a death claim, which terminates the Living Benefit and the contract; or
2.
Continue the contract, without the Living Benefit.
If an Owner that is not the single Covered Person dies, the surviving Spousal Joint Owner who is the Covered Person may elect to:
1.
Make a death claim, which terminates the Living Benefit and the contract; or
2.
Continue the contract with the current Maximum Annual Withdrawal Amount and Protected Income Payment.
Note: At any time, if, the contract value goes to zero due to a withdrawal, the Spousal Beneficiary cannot continue the contract.
What happens to my Living Benefit upon a spousal continuation if I elected two Covered Persons and if the contract value is greater than zero?
Prior to the Activation Date, upon death of the first of the two Covered Persons, the surviving Covered Person (Spousal Joint Owner or Spousal Beneficiary) may elect to:
1.
Make a death claim, which terminates the Living Benefit and the contract; or
2.
Continue the contract as a single Covered Person. The Continuing Spouse will receive the Maximum
46
Annual Withdrawal Amount upon Lifetime Income Activation and the Protected Income Payment after the contract value goes to zero. The Continuing Spouse cannot add a new Covered Person. Upon the death of the Continuing Spouse, the Beneficiary must make a death claim, which terminates the Living Benefit and the contract.
Note: Prior to the Activation Date, if the contract value goes to zero due to a withdrawal, the Living Benefit and the contract terminate, and the Spousal Beneficiary cannot continue the contract.
On or after the Activation Date, upon the first of the two Covered Person’s death, the surviving Covered Person (Spousal Joint Owner or Spousal Beneficiary) may elect to:
1.
Make a death claim, which terminates the Living Benefit and the contract; or
2.
Continue the contract, with the current Maximum Annual Withdrawal Amount and Protected Income Payment.
Note: On or after the Activation Date, if the contract value goes to zero due to: a) a withdrawal taken within the parameters of the Living Benefit, the Spousal Beneficiary can continue the Living Benefit as the surviving Covered Person with the current Protected Income Payment for their lifetime or b) an Excess Withdrawal, the Living Benefit and contract will terminate, and the Spousal Beneficiary cannot continue the contract.
The components of the Living Benefit in effect at the time of Spousal Continuation will not change. The surviving Covered Person can elect to receive withdrawals in accordance with the provisions of the Living Benefit elected based on the age of the younger Covered Person on the Activation Date. If Lifetime Income was not activated prior to the Spousal Continuation, the Maximum Annual Withdrawal Percentage and the Protected Income Payment Percentage will be based on the age of the surviving Covered Person on the Activation Date. Please see “How does Polaris Income Max work?” and “How does Polaris Income Plus Daily Flex work?” above.
For Polaris Income Max only
If Spousal Continuation occurs, the Continuing Spouse will continue to receive any increase to the Income Base for Higher Anniversary Values or if applicable, any Income Credit prior to the Activation Date, while the contract value is greater than zero.
For Polaris Income Plus Daily Flex only
If Spousal Continuation occurs, the Continuing Spouse will continue to receive any increase to the Income Base for Step-up Values and the Continuing Spouse will also be eligible to receive the Minimum Income Base on Benefit Year Anniversaries prior to the Activation Date. On or after the Activation Date, the Continuing Spouse is no longer eligible for any further adjustments to the Minimum Income Base.
Can a non-spousal Beneficiary elect to receive any remaining benefits under my Living Benefit upon the death of the second spouse?
No. Upon the death of the Covered Person(s), if the contract value is greater than zero, a non-spousal Beneficiary must make an election under the death benefit provisions of the contract, which terminates the Living Benefit. Please see DEATH BENEFITS below.
What happens to my Living Benefit upon the Latest Annuity Date?
On the Latest Annuity Date, if the contract value is greater than zero, You must select one of the following options:
1.
Annuitize by selecting from choices a. or b. below:
a.
elect to begin one of the Annuity Income Payment Options set forth in Your Contract. If you choose this option, We will apply the contract value to provide annuity income payments under the contract’s annuity provisions as described under ANNUITY INCOME OPTIONS; or
b.
elect to receive Lifetime Income under Your Living Benefit option by means of an Annuitization while any of the last named Covered Person(s) is living. If You have already activated Lifetime Income under the Living Benefit, You will continue to receive Lifetime Income by means of an Annuitization as described below. If you have not yet activated Lifetime Income, you may activate Lifetime Income by means of an Annuitization as described under ANNUITY INCOME OPTIONS; or
2.
Fully surrender your Contract
Note: Under 1b) upon annuitization you will receive the applicable Maximum Annual Withdrawal Amount for a fixed period while you are alive. The fixed period is determined by dividing the contract value as of the Latest Annuity Date by the Maximum Annual Withdrawal Amount. After that fixed period ends, you will receive the Protected Income Payment, which is calculated by multiplying the Income Base as of the Latest Annuity Date by then applicable Protected Income Payment Percentage, paid until the death(s) of all Covered Person(s). The amount of each such payment will equal the Protected Income Payment amount divided according to the payment frequency you selected.
An election under option 1 above converts Your contract value or Lifetime Income amount to an Annuitization payable through a series of payments as described above. Once the selected Annuitization begins, all other benefits under Your Contract, will be terminated, transfers may no longer be made, a death benefit is no longer payable, and the Living Benefit Fee will no longer be deducted. If You do not select an option listed above by the Latest Annuity Date, We will automatically begin making Lifetime Income
47
payments, which would equal to the Maximum Annual Withdrawal Amount as long as the contract value is greater than zero, or the Protected Income Payment if the contract value goes to zero, in accordance with option 1b) above, divided equally and paid on a monthly frequency until the death(s) of all of the last named Covered Person(s).
Can I elect to cancel my Living Benefit?
The Living Benefit may not be cancelled by you prior to the 5th Benefit Year Anniversary unless you surrender your contract. The Living Benefit may be cancelled by you on or after the 5th Benefit Year Anniversary and the cancellation will be effective as outlined in the table below.
| Cancellation Request Received |
Cancellation Effective Date |
| Years 1-5 |
5th Benefit Year Anniversary |
| Years 5+ |
Benefit Quarter Anniversary following the receipt of the cancellation request |
Once cancellation is effective, the guarantees under the Living Benefits are terminated. In addition, the investment requirements for the Living Benefits will no longer apply to your contract. You may not re-elect or reinstate the Living Benefit after cancellation.
If there are two Covered Persons, upon the death of the first Covered Person, the surviving Covered Person (generally, the Continuing Spouse) may cancel the Living Benefit on or after the 5th Benefit Year Anniversary and the cancellation will be effective as outlined in the table above. Upon the cancellation effective date of the Living Benefit, there will be one final fee applicable to the Benefit Quarter in which the cancellation occurs, on the same Benefit Quarter Anniversary. Thereafter, the fee will no longer be charged.
What happens to the Secure Value Account and Automatic Asset Rebalancing Program instructions if I elect to cancel Polaris Income Max or Polaris Income Plus Daily Flex?
Amounts allocated to the Secure Value Account will be automatically transferred to the 1-Year Fixed Account, if available. If the 1-Year Fixed Account is not available in the state in which your contract was issued, amounts will be transferred to a money market or similar portfolio. From the day following the automated transfer from the Secure Value Account, you may transfer this amount to another available investment option under the contract for a period of 90 days during which the transfer will not count against the annual number of free transfers or U.S. Mail transfers, or incur a transfer fee. You may move your funds out of the 1-Year Fixed Account or a money market or similar portfolio, as applicable, at any time.
The Automatic Asset Rebalancing Program and your instructions on file will not be terminated or changed upon cancellation of the Living Benefit. Amounts transferred from the Secure Value Account into the 1-Year Fixed Account or a money market or similar portfolio, as applicable, will not impact the Automatic Asset Rebalancing Program
instructions on file and that transfer will not result in new Default Rebalancing Instructions. On or after cancellation of these features, you may provide new rebalancing instructions or you may choose to terminate the Automatic Asset Rebalancing Program by contacting the Annuity Service Center. Please see APPENDIX B – STATE CONTRACT AVAILABILITY AND/OR VARIABILITY for state specific information regarding amounts allocated to the Secure Value Account and Automatic Asset Allocation Rebalancing Program upon cancellation of any Living Benefit.
Are there circumstances under which my Living Benefit will be automatically cancelled?
The Living Benefit and Lifetime Income will automatically be cancelled upon the occurrence of one of the following:
(i)
Annuitization of the contract; or
(ii)
Termination or surrender of the contract; or
(iii)
A death benefit is paid resulting in the contract being terminated; or
(iv)
Any withdrawal prior to the Activation Date that reduces the Contract Value to zero; or
(v)
On or after the Activation Date, any Excess Withdrawal that reduces the contract value and Income Base to zero; or
(vi)
Death of the Covered Person, if only one is elected after Lifetime Income has been activated; or, if two Covered Persons are elected, death of the surviving Covered Person; or
(vii)
A change that removes all of the original Covered Persons from the contract; or
(viii)
A Change of the Owner or Assignment; or
(ix)
You elect to cancel Your Living Benefit.
If a change of ownership occurs from a natural person to a non-natural entity, the original natural Owner(s) must also be the Annuitant(s) after the ownership change to prevent termination of the Living Benefit. A change of ownership from a non-natural entity to a natural person can only occur if the new natural Owner(s) was the original natural Annuitant(s) in order to prevent termination of the Living Benefit. Any ownership change is contingent upon prior review and approval by the Company.
Any amounts that we may pay under the feature in excess of your contract value are subject to the Company’s financial strength and claims-paying ability.
48
Death Benefits
| Owner |
Payable Upon Death of |
| Natural persons |
Owner (or first to die, if jointly owned) |
| Non-natural person (e.g. Trust) |
Annuitant |
| Satisfactory proof of death includes, but may not be limited to: |
| (1)A certified copy of the death certificate; or |
| (2)A certified copy of a decree of a court of competent jurisdiction as to the finding of death; or |
| (3)A written statement by a medical doctor who attended the deceased at the time of death. |
49
| We will process an Extended Legacy election as of the date we receive the following in Good Order at the Annuity Service Center: |
| •Death Claim form electing Extended Legacy Program; and |
| •Satisfactory proof of death of the original Owner. |
50
| We will process an Inherited Account election as of the date we receive the following at the Annuity Service Center: |
| •Inherited Account and Required Minimum Distribution Election Form; and |
| •New contract application |
| Withdrawal taken: |
Withdrawal Amount | |
| Up to MAWA |
In Excess of MAWA | |
| Before your 81st birthday |
By the dollar amount which equals each withdrawal taken |
Proportionately by the percentage by which Excess Withdrawal reduced the contract value |
| On or after your 81st birthday |
Proportionately by the percentage that withdrawals reduced the contract value | |
51
Death Benefit Options
52
| We will process a spousal continuation as of the date we receive the following at the Annuity Service Center: |
| •Death Claim form; and |
| •Satisfactory proof of death of the original Owner. |
53
Expenses
We may deduct the following fees and expenses if applicable from your contract, as described later in this section.
•
Base Contract Expenses
•
Withdrawal Charges
•
Underlying Fund Expenses
•
Contract Maintenance Fee
•
Transfer Fee
•
Optional Living Benefit Fee
•
Optional Death Benefit Fee
•
Optional Early Access Feature Fee
Fees and expenses associated with your contract reduce your investment return. Before purchasing this contract, you should consider the effect of fees and expenses on your investment. You should fully discuss this decision with your financial representative. We will not increase certain contract fees, such as the Base Contract Expense or withdrawal charges for the life of your contract. Underlying Fund investment management fees may increase or decrease. Some states may require that we charge less than the amounts described below. Please see APPENDIX B — STATE CONTRACT AVAILABILITY AND/OR VARIABILITY for state-specific expenses.
We intend to profit from the sale of the contracts. Our profit may be derived as a result of a variety of pricing factors including but not limited to the fees and charges assessed under the contract and/or amounts we may receive from an Underlying Fund, its investment advisor and/or subadvisors (or affiliates thereof). Please see PAYMENTS IN CONNECTION WITH DISTRIBUTION OF THE CONTRACT below. The fees, charges, amounts received from the Underlying Funds (or affiliates thereof) and any resulting profit may be used for any corporate purpose including supporting marketing, distribution and/or administration of the contract and, in its role as an intermediary, the Underlying Funds.
| Base Contract Expenses |
1.00% |
(annualized charge as a percentage of the average daily ending net asset value allocated to Variable Portfolios)
The Base Contract Expense (also referred to as Separate Account Charge) compensates the Company for the mortality and expense risk and the costs of contract distribution assumed by the Company.
Generally, the mortality risks assumed by the Company arise from its contractual obligations to make annuity income payments after the Annuity Date and to provide a death benefit. The expense risk assumed by the Company is that the costs of administering the contracts and the Separate Account will exceed the amount received from the fees and charges assessed under the contract. There may not necessarily be a relationship between the administrative
charge imposed under the contract and the amount of expenses that may be attributable to the contract.
If these charges do not cover all of our expenses, we will pay the difference. Likewise, if these charges exceed our expenses, we will keep the difference. The mortality and expense risk charge is expected to result in a profit. Profit may be used for any cost or expense including supporting distribution. Please see PAYMENTS IN CONNECTION WITH DISTRIBUTION OF THE CONTRACT below.
If your Beneficiary elects to take the death benefit amount under the Extended Legacy Program, we will deduct an annual Base Contract Expense of 1.15% of the average daily ending net asset value allocated to the Variable Portfolios. Please see Extended Legacy Program under DEATH BENEFITS.
Withdrawal Charges
The contract provides a penalty-free withdrawal amount every contract year. Please see ACCESS TO YOUR MONEY above. You may incur a withdrawal charge if you take a withdrawal in excess of the penalty-free withdrawal amount and/or if you fully surrender your contract. Withdrawal Charges reimburse us for the cost of contract sales, expenses associated with issuing your contract and other acquisition expenses.
We apply a withdrawal charge schedule to each Purchase Payment you contribute to the contract. A withdrawal charge does not apply to each Purchase Payment after it has been in the contract for four complete years if Early Access is elected, or seven complete years if the Early Access feature is not elected. The withdrawal charge percentage declines over time for each Purchase Payment in the contract.
Withdrawal Charge with election of the Early Access feature:
| Years Since Purchase Payment Receipt |
1 |
2 |
3 |
4 |
5+ |
| Withdrawal Charge |
8% |
7% |
6% |
5% |
0% |
Withdrawal Charge without the election of Early Access:
| Years Since Purchase Payment Receipt |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8+ |
| Withdrawal Charge |
8% |
7% |
6% |
5% |
4% |
3% |
2% |
0% |
When calculating the withdrawal charge, we treat withdrawals as coming first from the Purchase Payments that have been in your contract the longest, which means the Purchase Payments that have the lowest Withdrawal Charge percentages. However, for tax purposes, per IRS requirements, your withdrawals are considered as coming first from taxable earnings, then from Purchase Payments, which are not taxable if your contract is Non-Qualified. Please see ACCESS TO YOUR MONEY above.
If you take a partial withdrawal, you can choose whether any applicable withdrawal charges are deducted from the amount withdrawn or from the contract value remaining
54
after the amount withdrawn. If you fully surrender your contract value, we deduct any applicable withdrawal charges from the amount surrendered.
We will not assess a withdrawal charge when we pay a death benefit or when you annuitize your contract.
Withdrawals made prior to age 59½ may result in tax penalties. Please see TAXES below.
Underlying Fund Expenses
There are deductions from and expenses paid out of the assets of each Underlying Fund. Detailed information about these deductions and expenses can be found in the prospectuses for the Underlying Funds.
Investment Management Fees
Investment management fees are set by the Underlying Funds’ own board of directors, and may vary. These fees are not fixed or specified in your annuity contract.
Each Variable Portfolio purchases shares of a corresponding Underlying Fund. The Accumulation Unit value for each purchased Variable Portfolio share reflects the investment management fees and other expenses of the corresponding Underlying Funds. If you invest in a Master Fund, the Accumulation Unit value will also reflect the investment management fee and other expenses of the corresponding Master Fund.
12b-1 Fees
Certain Underlying Funds available in this product, including the Feeder Funds, assess a 12b-1 fee of 0.25% of the average daily net assets allocated to those Underlying Funds. Over time these fees will increase the cost of your investment.
There is an annualized 0.25% fee applicable to Class 3 shares of Seasons Series Trust, and SunAmerica Series Trust, Class Advisor shares of PIMCO Variable Insurance Trust, Class 2 shares of Franklin Templeton Variable Insurance Products Trust, Class Service shares of Goldman Sachs Variable Insurance Trust, and Series II shares of AIM Variable Insurance Funds (Invesco Variable Insurance Funds). This amount is generally used to pay financial intermediaries for services provided over the life of your contract.
The 12b-1 fees compensate us for costs associated with the servicing of these shares, including, but not limited to, reimbursing us for expenditures we make to registered representatives in selling firms for providing services to contract Owners who are indirect beneficial Owners of these shares and for maintaining contract Owner accounts.
There are deductions from and expenses paid out of the assets of each Underlying Fund. Detailed information about these deductions and expenses can be found in the prospectuses for the Underlying Funds.
Contract Maintenance Fee
During the Accumulation Phase, we deduct a contract maintenance fee of $50 from your contract once per year on your contract anniversary. This charge compensates us for the cost of administering your contract. The fee is deducted proportionately from your contract value on your contract anniversary by redeeming the number of Accumulation Units invested in the Variable Portfolios and the dollar amount invested in available Fixed Accounts which in total equal the amount of the fee. If you withdraw your entire contract value, we will deduct the contract maintenance fee from that withdrawal.
If your contract value is $75,000 or more on your contract anniversary date, we currently waive this fee. This waiver is subject to change without notice.
Please see APPENDIX B — STATE CONTRACT AVAILABILITY AND/OR VARIABILITY for the state-specific Contract Maintenance Fee.
Transfer Fee
| After 15 Transfers |
$25 |
We permit 15 free transfers between investment options each contract year. We charge you $25 for each additional transfer that contract year. The transfer fee compensates us for the cost of processing your transfer.
In Pennsylvania and Texas, any transfer over the limit of 15 will incur a $10 transfer fee.
In Pennsylvania and Texas, any transfer over the limit of 15 will incur a $10 transfer fee.
Optional Living Benefit Fees
The Living Benefit fees will be calculated as a percentage of the Income Base for all years in which the Living Benefits are in effect. The Living Benefit fee is charged and received by the Company in consideration of the Living Benefit guarantees provided to you.
The fee is deducted proportionately from your contract value by redeeming the number of Accumulation Units invested in the Variable Portfolios and the value in the Secure Value Account, which in total equals the amount of the fee. If your contract value is reduced to zero before the Living Benefit has been cancelled, the fee will no longer be assessed.
We will not assess a quarterly fee if you annuitize your contract or if a death benefit is paid before the end of the Benefit Quarter. If the Living Benefit is still in effect while your contract value is greater than zero, and you surrender your contract, we will assess a pro-rata charge for the fee applicable to the Benefit Quarter in which the surrender occurs if you surrender your contract before the end of a Benefit Quarter. The pro-rata fee is calculated by multiplying the fee by the number of days between the date the fee was last assessed and the date of surrender, divided by the number of days between the prior and the next Benefit Quarter Anniversaries.
55
Polaris Income Max Fee
Polaris Income Plus Daily Flex Fee
Polaris Income Plus Daily Flex Fee
| Number of Covered Persons |
Maximum Annual Fee Rate |
Minimum Annual Fee Rate |
Maximum Annualized Fee Rate Decrease or Increase Each Benefit Quarter* |
| One Covered Person |
2.50% |
0.60% |
±0.40% |
| Two Covered Persons |
2.50% |
0.60% |
±0.40% |
*
The fee rate can decrease or increase no more than 0.10% each quarter (0.40%/ 4). If you change your Income Option election on the Activation Date, the quarterly fee rate can increase no more than 0.1625% [(0.40% + 0.25%)/ 4] for the first Benefit Quarter immediately following the Activation Date.
Please see the Rate Sheet Supplement that must accompany this prospectus for the applicable initial annual fee rate.
If you change your Income Option election on the Activation Date, an annualized fee applies. The fee is calculated as a percentage of the Income Base and deducted from the contract value on a quarterly basis beginning on the first Benefit Quarter Anniversary following the Activation Date:
| Lifetime Income Option Change Fee* |
0.25% |
*
The fee is deducted quarterly, and the quarterly fee rate is 0.0625% (0.25%/4). The sum of the Living Benefit feature fee rate and Lifetime Income Option Change fee rate cannot exceed the Maximum Annual Fee Rate stated in the table above.
The initial annual fee rate is guaranteed not to change for the first Benefit Year. Subsequently, the fee rate may change quarterly subject to the parameters identified in the table above. After the first Benefit Year, on each Benefit Quarter Anniversary, we will (1) deduct the fee in effect for the previous Benefit Quarter; and (2) determine the fee rate applicable to the next Benefit Quarter. Any fee adjustment is based on a non-discretionary formula tied to the change in VIX. In general, as the average value of the VIX decreases or increases, your fee rate will decrease or increase accordingly, subject to the minimums and maximum identified in the table above.
Any fee adjustment is based on a non-discretionary formula tied to the VIX. In general, as the average value of the VIX decreases or increases, your fee rate will decrease or increase accordingly, subject to the minimums and maximum identified in the table above.
Please see APPENDIX B — STATE CONTRACT AVAILABILITY AND/OR VARIABILITY for state specific information regarding the assessment of the fee.
Please see APPENDIX C — FORMULA AND EXAMPLES OF CALCULATIONS OF THE POLARIS INCOME MAX AND POLARIS INCOME PLUS DAILY FLEX FEE.
If your contract was issued prior to May 1, 2023, please see APPENDIX E — LIVING BENEFITS FOR CONTRACTS ISSUED PRIOR TO MAY 1, 2023, for
applicable fees. If you purchased your contract on or after May 1, 2023, please see APPENDIX J - LIVING BENEFIT RATES FOR CONTRACTS ISSUED ON OR AFTER MAY 1, 2023 (EXCEPT IN NEW YORK) and APPENDIX K - LIVING BENEFIT RATES CONTRACTS ISSUED ON OR AFTER MAY 1, 2023 (IN NEW YORK).
Return of Purchase Payment Death Benefit Fee
If you elect the Return of Purchase Payment death benefit, the annualized fee is 0.15% of the average daily ending net asset value allocated to the Variable Portfolio(s).
Maximum Anniversary Value Death Benefit Fee
If you elect the Maximum Anniversary Value death benefit, the fee is 0.40% of the average daily ending net asset value allocated to the Variable Portfolio(s).
Optional Early Access Feature Fee
The annualized fee for the optional Early Access feature is 0.40% of the average daily ending net asset value allocated to the Variable Portfolios. This fee is no longer assessed after four contract years.
| Contract Year |
1-4 |
5+ |
| Optional Early Access Feature Fee |
0.40% |
none |
The Early Access feature was available on contracts issued prior to May 1, 2019.
Premium Tax
Certain states charge the Company a tax on Purchase Payments that ranges from 0% to 3.5%. Some states assess this premium tax when the contract is issued while other states only assess the tax upon annuitization. The Company may advance any tax amount due, but we will deduct such amount from your contract value only when and if you begin the Income Phase (annuitization).
Income Taxes
We do not currently deduct income taxes from your contract. We reserve the right to do so in the future.
Reduction or Elimination of Fees, Expenses and Additional Amounts Credited
Sometimes sales of contracts to groups of similarly situated individuals may lower our fees and expenses. We determine which groups are eligible for this treatment. Some of the criteria we evaluate to make a determination are size of the group; amount of expected Purchase Payments; relationship existing between us and the prospective purchaser; length of time a group of contracts is expected to remain active; purpose of the purchase and whether that purpose increases the likelihood that our expenses will be reduced; and/or any other factors that we believe indicate that fees and expenses may be reduced.
56
The Company may make such a determination regarding sales to its employees, its affiliates’ employees and employees of currently contracted broker-dealers; its registered representatives; and immediate family members of all of those described. Currently, the Company credits an additional amount to contracts sold to the following groups: (1) employees of the Company and its affiliates, and their immediate family members; (2) appointed agents and registered representatives of broker-dealers that sell the Company’s and its affiliates’ variable contracts, and the agents’ and registered representatives’ immediate family members; (3) trustees of mutual funds offered in the Company’s and its affiliates’ variable contracts. The additional amount credited to a contract sold to one of the above individuals will generally equal the commission payable on the initial purchase payment for the contract. This means that the additional amount will generally be 6.00% (5.00% if you elected Early Access) of the initial Purchase Payment.
Certain broker-dealers may limit crediting this additional amount to employees only.
Payments in connection with distribution of the contract
Payments We Make
We make payments in connection with the distribution of the contracts that generally fall into the three categories below.
As a result of the payments that financial representatives may receive from us or other companies, some financial representatives may have a financial incentive to offer you a new contract in place of the one you already own. You should consider exchanging a contract you already own only if you determine, after comparing the features, fees, and risks of both contracts, that it is better for you to purchase the new contract rather than continue to own your existing contract.
Commissions. Registered representatives of affiliated and unaffiliated broker-dealers (“selling firms”) licensed under federal securities laws and state insurance laws sell the contract to the public. The selling firms have entered into written selling agreements with the Company and Corebridge Capital Services, Inc., the distributor of the contracts. We pay commissions to the selling firms for the sale of your contract. The selling firms are paid commissions for the promotion and sale of the contracts according to one or more schedules. The amount and timing of commissions will vary depending on the selling firm and its selling agreement with us. For example, as one option, we may pay upfront commission only, up to a maximum 6.00% of each Purchase Payment you invest (which may include promotional amounts we may pay periodically as commission specials). Another option may be a lower upfront commission on each Purchase Payment, with a trail
commission of up to a maximum 1.00% of contract value annually for the life of the contract.
The registered representative who sells you the contract typically receives a portion of the compensation we pay to his/her selling firm, depending on the agreement between the selling firms and its registered representative and their internal compensation program. We are not involved in determining your registered representatives’ compensation.
Additional Cash Compensation. We may enter into agreements to pay selling firms support fees in the form of additional cash compensation (“revenue sharing”). These revenue sharing payments may be intended to reimburse the selling firms for specific expenses incurred or may be based on sales, certain assets under management, longevity of assets invested with us and/or a flat fee. Asset-based payments primarily create incentives to service and maintain previously sold contracts. Sales-based payments primarily create incentives to make new sales of contracts.
These revenue sharing payments may be consideration for, among other things, product placement/preference and visibility, greater access to train and educate the selling firm’s registered representatives about our contracts, our participation in sales conferences and educational seminars and for selling firms to perform due diligence on our contracts. The amount of these fees may be tied to the anticipated level of our access in that selling firm.
We enter into such revenue sharing arrangements in our discretion and we may negotiate customized arrangements with selling firms, including affiliated and non-affiliated selling firms based on various factors. These special compensation arrangements are not offered to all selling firms and the terms of such arrangements may vary between selling firms depending on, among other things, the level and type of marketing and distribution support provided, assets under management and the volume and size of the sales of our contracts.
If allowed by his or her selling firm, a registered representative or other eligible person may purchase a contract on a basis in which an additional amount is credited to the contract. Please see REDUCTION OR ELIMINATION OF FEES, EXPENSES AND ADDITIONAL AMOUNTS CREDITED above.
We provide a list of firms to whom we paid annual amounts greater than $15,000 under these revenue sharing arrangements in 2023 in the Statement of Additional Information which is available upon request.
Non-Cash Compensation. Some registered representatives and their supervisors may receive various types of non-cash compensation such as gifts, promotional items and entertainment in connection with our marketing efforts. We may also pay for registered representatives to attend educational and/or business seminars. Any such compensation is paid in accordance with SEC and FINRA rules.
57
We do not assess a specific charge directly to you or your Separate Account assets in order to cover commissions and other sales expenses and incentives we pay. However, we anticipate recovering these amounts from our profits which are derived from the fees and charges collected under the contract. We hope to benefit from these revenue sharing arrangements through increased sales of our contracts and greater customer service support.
Revenue sharing arrangements may provide selling firms and/or their registered representatives with an incentive to favor sales of our contracts over other variable annuity contracts (or other investments) with respect to which a selling firm does not receive the same level of additional compensation. You should discuss with your selling firm and/or registered representative how they are compensated for sales of a contract and/or any resulting real or perceived conflicts of interest. You may wish to take such revenue sharing arrangements into account when considering or evaluating any recommendation relating to this contract.
Payments We Receive
We and our affiliates may directly or indirectly receive revenue sharing payments from the Trusts, their investment advisors, subadvisors and/or distributors (or affiliates thereof), in connection with certain administrative, marketing and other services we provide and related expenses we incur. The availability of these revenue sharing arrangements creates an incentive for us to seek and offer Underlying Funds (and classes of shares of such Underlying Funds) that pay us higher amounts. Other Underlying Funds (or available classes of shares) may have lower fees and better overall investment performance. Not all Trusts pay the same amount of revenue sharing. Therefore, the amount of fees we collect may be greater or smaller based on the Underlying Funds you select.
We and our affiliates generally receive three kinds of payments described below.
Rule 12b-1 or Service Fees. We receive 12b-1 fees of up to 0.25% or service fees of up to 0.50% of the average daily net assets in certain Underlying Funds, including the Feeder Funds that are attributable to the contract and to certain other variable insurance products that we and our affiliates issue. Rule 12b-1 fees and service fees paid out of Underlying Fund assets will reduce the amount of assets that otherwise would be available for investment, and reduce the Underlying Fund’s investment return. The dollar amount of asset-based payments we receive from the Underlying Funds is not set and will fluctuate over time depending on the Underlying Funds’ net asset value and the amount of assets invested.
Administrative, Marketing and Support Service Fees. We receive compensation of up to 0.70% annually based on assets under management from certain Trusts’ investment advisors, subadvisors and/or distributors (or affiliates
thereof). These payments may be derived, in whole or in part, from the profits the investment advisor realizes on the investment management fees deducted from assets of the Underlying Funds or wholly from the assets of the Underlying Funds. Contract Owners, through their indirect investment in the Trusts, bear the costs of these investment management fees, which in turn will reduce the return on your investment. The payments we receive are generally based on assets under management from certain Trusts’ investment advisors or their affiliates and vary by Trust. Some investment advisors, subadvisors and/or distributors (or affiliates thereof) pay us more than others. The amount may be significant. Such amounts received from SAAMCo, a wholly-owned subsidiary of AGL, are not expected to exceed 0.70% annually based on assets under management.
Other Payments. Certain investment advisors, subadvisors and/or distributors (or affiliates thereof) may help offset the costs we incur for marketing activities and training to support sales of the Underlying Funds in the contract. These amounts are paid voluntarily and may provide such advisors, subadvisors and/or distributors access to national and regional sales conferences attended by our employees and registered representatives. The amounts paid depend on the nature of the meetings, the number of meetings attended, the costs expected to be incurred and the level of the advisor’s, subadvisor’s or distributor’s participation.
In addition, we (and our affiliates) may receive occasional gifts, entertainment or other compensation as an incentive to market the Underlying Funds and to cooperate with their marketing efforts. As a result of these payments, the investment advisors, subadvisors and/or distributors (or affiliates thereof) may benefit from increased access to our wholesalers and to our affiliates involved in the distribution of the contract.
Annuity Income Options
The Income Phase
What is the Income Phase?
During the Income Phase, we use the money accumulated in your contract to make regular payments to you. This is known as “annuitizing” your contract. At this point, the Accumulation Phase ends. You will no longer be able to take withdrawals of contract value and all other features and benefits of your contract will terminate, including your ability to surrender your contract.
Beginning the Income Phase is an important event. You have different options available to you. You should discuss your options with your financial representative and/or tax adviser so that together you may make the best decision for your particular circumstances.
58
When does the Income Phase begin?
Generally, you can annuitize your contract any time after your second contract anniversary (“Annuity Date”) and on or before the Latest Annuity Date, defined below, by completing and mailing the Annuity Option Selection Form to our Annuity Service Center.
If you do not request to annuitize your contract on the Annuity Date of your choice, your contract will be annuitized on the Latest Annuity Date, except as specified below for certain contracts issued in New York. If your contract is jointly owned, the Latest Annuity Date is based on the older Owner’s date of birth. Your Latest Annuity Date is defined as the first NYSE business day of the month following your 95th birthday. For example, if your 95th birthday is July 8, 2022, the first NYSE business day of the following month would be Monday, August 1, 2022. In accordance with the Company’s final settlement of a multi-state audit and market conduct examination, and other related state regulatory inquiries regarding unclaimed property, if your contract was issued in New York with a Latest Annuity Date of age 90, you must notify us that you want to extend the Latest Annuity Date to your 95th birthday. At your request to extend the Latest Annuity Date, the Accumulation Phase will also extend to the first NYSE business day of the month following your 95th birthday for contracts issued in New York.
How do I elect to begin the Income Phase?
You must select one of the annuity income payment options, listed below, that best meets your needs by mailing a completed Annuity Option Selection Form to our Annuity Service Center. If you do not select an annuity income payment option, your contract will be annuitized in accordance with the default annuity income payment option specified under Annuity Income Options below.
What is the impact on the living and death benefits if I annuitize?
If you annuitize, you may choose to take annuity income payments or withdrawals under your Living Benefit. Prior to annuitizing, you should seek advice on whether taking annuity income payments under the contract or guaranteed withdrawals under a Living Benefit are more advantageous to you. Upon annuitizing the contract, the death benefit will terminate. If your contract value is reduced to zero prior to annuitization as a result of receiving guaranteed withdrawals under the Living Benefit, you will receive your Protected Income Payment under the Living Benefit. Please see OPTIONAL LIVING BENEFITs and DEATH BENEFITS above.
Annuity Income Options
You must send a written request to our Annuity Service Center to select an annuity income option. Once you begin receiving annuity income payments, you cannot change your annuity income option. If you elect to receive annuity income
payments but do not select an annuity income option, your annuity income payments shall be in accordance with Option 4 for a period of 10 years; for annuity income payments based on joint lives, the default is Option 3 for a period of 10 years. Generally, the amount of each annuity income payment will be less with greater frequency of payments or if you chose a longer period certain guarantee.
We base our calculation of annuity income payments on the life expectancy of the Annuitant and the annuity rates set forth in your contract. In most contracts, the Owner and Annuitant are the same person. The Owner may change the Annuitant if different from the Owner at any time prior to the Annuity Date. The Owner must notify us if the Annuitant dies before the Annuity Date and designate a new Annuitant. If we do not receive a new Annuitant election, the Owner may not select an annuity income option based on the life of the Annuitant.
If the contract is owned by a non-natural Owner, the Annuitant cannot be changed after the contract has been issued and the death of the Annuitant will trigger the payment of the death benefit.
If you elect a lifetime based annuity income option without a guaranteed period, your annuity income payments depend on longevity only. That means that you may potentially not live long enough to receive an annuity income payment. If you die before the first annuity income payment, no annuity income payments will be made.
Annuity Income Option 1 – Life Income Annuity
This option provides annuity income payments for the life of the Annuitant. Annuity income payments end when the Annuitant dies.
Annuity Income Option 2 – Joint and Survivor Life Income Annuity
This option provides annuity income payments for the life of the Annuitant and for the life of another designated person. Upon the death of either person, we will continue to make annuity income payments during the lifetime of the survivor. Annuity income payments end when the survivor dies. For Qualified contracts, under certain circumstances, the survivor’s annuity income payments may be limited based on the Internal Revenue Code.
Annuity Income Option 3 – Joint and Survivor Life Income Annuity with 10 or 20 Years Guaranteed
This option is similar to Option 2 above, with an additional guarantee of payments for at least 10 or 20 years, depending on the period chosen. If the Annuitant and the survivor die before all of the guaranteed annuity income payments have been made, the remaining annuity income payments are made to the Beneficiary under your contract. A guarantee of payments greater than 10 years may not be available to all Beneficiaries. For Qualified contracts, under
59
certain circumstances the survivor's annuity income payments may be limited based on the Internal Revenue Code.
Annuity Income Option 4 – Life Income Annuity with 10 or 20 Years Guaranteed
This option is similar to income Option 1 above with an additional guarantee of payments for at least 10 or 20 years, depending on the period chosen. If the Annuitant dies before all guaranteed annuity income payments are made, the remaining annuity income payments are made to the Beneficiary under your contract. A guarantee of payments greater than 10 years may not be available to all Beneficiaries. For Qualified contracts, under certain circumstances the Beneficiary’s annuity income payments may be limited based on the Internal Revenue Code.
Annuity Income Option 5 – Income for a Specified Period
This option provides annuity income payments for a guaranteed period ranging from 5 to 30 years, depending on the period chosen. If the Annuitant dies before all the guaranteed annuity income payments are made, the remaining annuity income payments are made to the Beneficiary under your contract. A guarantee of payments for more than 10 years may not be available to all Beneficiaries. For Qualified contracts, under certain circumstances the Beneficiary’s annuity income payments may be limited based on the Internal Revenue Code. Additionally, if variable annuity income payments are elected under this option, you (or the Beneficiary under the contract if the Annuitant dies prior to all guaranteed annuity income payments being made) may redeem any remaining guaranteed variable annuity income payments after the Annuity Date. Upon your request, the contract may be commuted if a period certain annuitization income option has been elected. The amount available upon such redemption would be the discounted present value of any remaining guaranteed annuity income payments that would reflect the fluctuating trading costs for liquidating the securities in place to pay for these contractual obligations. The detrimental impact depends on the nature of the securities (and which may include short-term, medium term, and/or long-term investments) resulting in varying losses to the Company.
The value of an Annuity Unit, regardless of the option chosen, takes into account Base Contract Expense which includes a mortality and expense risk charge. Since Option 5 does not contain an element of mortality risk, no benefit is derived from this charge.
Please see the Statement of Additional Information for a more detailed discussion of the annuity income options.
Please see OPTIONAL LIVING BENEFITS above for annuity income options available under the Living Benefits.
Fixed or Variable Annuity Income Payments
You can choose annuity income payments that are fixed, variable or both. Unless otherwise elected, if at the date when annuity income payments begin you are invested in the Variable Portfolios only, your annuity income payments will be variable and if your money is only in Fixed Accounts at that time, your annuity income payments will be fixed in amount. Further, if you are invested in both Fixed Accounts and Variable Portfolios when annuity income payments begin, your payments will be fixed and variable, unless otherwise elected. If annuity income payments are fixed, the Company guarantees the amount of each payment. If the annuity income payments are variable, the amount is not guaranteed and may fluctuate as described under ANNUITY INCOME PAYMENTS below.
Annuity Income Payments
We make annuity income payments on a monthly, quarterly, semi-annual or annual basis as elected by you. You instruct us to send you a check or to have the payments directly deposited into your bank account. If state law allows, we distribute annuities with a contract value of $5,000 or less in a lump sum. Also, if state law allows and the selected annuity income option results in annuity income payments of less than $50 per payment, we may decrease the frequency of payments.
If you are invested in the Variable Portfolios after the Annuity Date, your annuity income payments vary depending on the following:
•
for life income options, your age when annuity income payments begin; and
•
the contract value attributable to the Variable Portfolios on the Annuity Date; and
•
the 3.5% assumed investment rate used in the annuity table for the contract; and
•
the performance of the Variable Portfolios in which you are invested during the time you receive annuity income payments.
If you are invested in both the Fixed Accounts and the Variable Portfolios after the Annuity Date, the allocation of funds between the Fixed Accounts and Variable Portfolios also impacts the amount of your annuity income payments.
The value of fixed annuity income payments, if elected, will not be less than 1%. The value of variable annuity income payments, if elected, is based on an assumed interest rate (“AIR”) of 3.5% compounded annually. Variable annuity income payments generally increase or decrease from one annuity income payment date to the next based upon the performance of the applicable Variable Portfolios. If the performance of the Variable Portfolios selected is equal to the AIR, the annuity income payments will remain constant. If performance of Variable Portfolios is greater than the AIR, the annuity income payments will increase and if it is less than the AIR, the annuity income payments will decline.
60
Deferment of Payments
We may defer making fixed payments for up to six months, or less if required by law. Interest is credited to you during the deferral period. Please see ACCESS TO YOUR MONEY above for a discussion of when payments from a Variable Portfolio may be suspended or postponed.
Taxes
The Federal income tax treatment of annuity contracts or retirement plans/programs is complex and sometimes uncertain. The discussion below is intended for general informational purposes only and does not include all the Federal income tax rules that may affect you and your contract. This discussion also does not address other Federal tax consequences (including consequences of sales to foreign individuals or entities), state or local tax consequences, estate or gift tax consequences, or the impact of foreign tax laws, associated with your contract.
Tax laws are subject to legislative modification, and while many such modifications will have only a prospective application, it is important to recognize that a change could have a retroactive effect as well. As a result, you should always consult a tax adviser about the application of tax rules found in the Internal Revenue Code (“IRC”), Treasury Regulations and applicable Internal Revenue Service (“IRS”) guidance to your individual situation.
Refer to the Statement of Additional Information for further details.
Annuity Contracts in General
The IRC provides for special rules regarding the tax treatment of annuity contracts.
•
Generally, taxes on the earnings in your annuity contract are deferred until you take the money out.
•
Qualified contracts that satisfy specific IRC requirements automatically provide tax deferral regardless of whether the underlying contract is an annuity, a trust, or a custodial account.
•
Different rules and tax treatment apply depending on how you take the money out and whether your contract is Qualified or Non-Qualified.
Non-Qualified Contract
If you do not purchase your contract under an employer-sponsored retirement plan/arrangement, or an Individual Retirement Account or Individual Retirement Annuity (“IRA”), including a Roth IRA, your contract is referred to as a Non-Qualified contract.
Qualified Contract
If you purchase your contract under an employer-sponsored retirement plan/arrangement or an Individual Retirement
Account or Individual Retirement Annuity (“IRA”), including Roth IRA, your contract is referred to as a Qualified contract.
Employer-sponsored plans/arrangements include:
•
Tax-Sheltered Annuities (also referred to as 403(b) annuities)
•
Plans of self-employed individuals (often referred to as H.R. 10 Plans or Keogh Plans)
•
Pension and profit sharing plans including 401(k) plans, and governmental 457(b) plans
If you are purchasing the contract as an investment vehicle for a trust under a Qualified contract, you should consider that the contract does not provide any additional tax-deferral benefits beyond the treatment provided by the trust itself.
In addition, if the contract itself is a qualifying arrangement (as with a 403(b) annuity or IRA), the contract generally does not provide tax deferral benefits beyond the treatment provided to alternative qualifying arrangements such as trusts or custodial accounts. However, in both cases the contract offers features and benefits that other investments may not offer. You and your financial representative should carefully consider whether the features and benefits, including the investment options, lifetime annuity income options, and protection through Living Benefits, death benefits and other benefits provided under an annuity contract issued in connection with a Qualified contract are suitable for your needs and objectives and are appropriate in light of the expense.
On December 20, 2019, the Setting Every Community Up for Retirement Enhancement (“SECURE”) Act was signed into law as part of larger appropriations legislation. Additionally, The SECURE 2.0 Act OF 2022 (“SECURE 2.0”) was passed on December 29, 2022. SECURE and SECURE 2.0 include many provisions affecting Qualified Contracts including:
•
an increase in the age at which required minimum distributions (RMDs) generally must commence. The updated RMD ages are:
○
Age 73 if you were born January 1, 1951, or later.
○
Age 72 if you were born on or after July 1, 1949, and before January 1, 1951.
○
Age 70 ½ if you were born before July 1, 1949.
○
the RMD eligible age is due to increase to age 75 after December 31, 2032.
•
new limitations on the period for beneficiary distributions following the death of the plan participant or IRA owner (when the death occurs on or after January 1, 2020;
•
elimination of the age 70 ½ restriction on traditional IRA contributions for tax years
61
beginning 2020 (combined with an offset to the amount of eligible qualified charitable distributions (QCDs) by the amount of post-70 ½ IRA contributions);
•
new exceptions to the 10% additional tax on early distributions, for the qualified birth or adoption of a child, which also became an allowable plan distribution event for terminal illnesses, and for eligible distributions for domestic abuse victims;
•
expansion of distribution and loan (including loan repayment) rules for qualified disaster recovery distributions from certain employer-sponsored retirement plans and IRAs; and
•
reduction of the earliest permissible age for in-service distributions from pension plans and certain Section 457 plans to 59 ½.
The foregoing is not an exhaustive list. The SECURE Act and SECURE 2.0 included many additional provisions affecting Qualified Contracts. Additionally, SECURE 2.0 introduced numerous provisions into law that take effect after 2023, including, that effective for taxable years beginning after December 31, 2023, the minimum distribution requirements no longer apply to Roth Accounts for participants in qualified plans during their lifetime.
Some provisions in the Act are subject to the terms of an employer’s retirement plan and IRA and may not be available with your annuity. You should consult with your financial professional or personal tax advisor if you are impacted by these changes.
Tax Treatment of Purchase Payments
Non-Qualified Contract
In general, your cost basis in a Non-Qualified contract is equal to the Purchase Payments you put into the contract. You have already been taxed on the Purchase Payments you contributed in your Non-Qualified contract.
Qualified Contract
Typically, for employer sponsored plans/arrangements and tax-deductible IRA contributions, you have not paid any tax on the Purchase Payments contributed to your contract and therefore, you have no cost basis in your contract. However, you normally will have cost basis in a Roth IRA, a designated Roth account in a 403(b), 401(k), or governmental 457(b) plan, and you may have cost basis in a traditional IRA or in another Qualified contract.
Qualified Contract—Tax-Sheltered Annuity (403(b))
On July 26, 2007, the Treasury Department published final 403(b) regulations that were largely effective on January 1, 2009. These comprehensive regulations include several new rules and requirements, such as a requirement that employers maintain their 403(b) plans pursuant to a written plan. Subsequent IRS guidance and/or the terms of the written plan may impose new restrictions on both new
and existing contracts, including restrictions on the availability of loans, distributions, transfers and exchanges, regardless of when a contract was purchased. Effective January 1, 2009, the Company no longer accepts new Purchase Payments (including contributions, transfers and exchanges) into new or existing 403(b) annuities. You may wish to discuss the regulations and/or the general information above with your tax adviser.
Tax Treatment of Distributions
Distributions from Non-Qualified Contracts
Federal tax rules generally require that all Non-Qualified contracts issued by the same company to the same policyholder during the same calendar year will be treated as one annuity contract for purposes of determining the taxable amount upon distribution.
The taxable portion of any withdrawals, whether annuity income payment or other withdrawal, generally is subject to applicable state and/or local income taxes, and may be subject to an additional 10% penalty tax unless withdrawn in conjunction with the following circumstances:
•
after attaining age 59½;
•
when paid to your Beneficiary after you die;
•
after you become disabled (as defined in the IRC);
•
when paid as a part of a series of substantially equal periodic payments (not less frequently than annually) made for your life (or life expectancy) or the joint lives (or joint life expectancies) of you and your designated Beneficiary for a period of 5 years or attainment of age 59½, whichever is later;
•
under an immediate annuity contract;
•
when attributable to Purchase Payments made prior to August 14, 1982.
Partial or Total Withdrawals
If you make partial or total withdrawals from a Non-Qualified contract, the IRC generally treats such withdrawals as coming first from taxable earnings and then coming from your Purchase Payments. Purchase Payments made prior to August 14, 1982, however, are an important exception to this general rule, and for tax purposes generally are treated as being distributed first, before either the earnings on those contributions, or other Purchase Payments and earnings in the contract.
Annuitization
If you annuitize your contract, a portion of each annuity income payment will be considered, for tax purposes, to be a return of a portion of your Purchase Payment, generally until you have received all of your Purchase Payment. The portion of each annuity income payment that is considered a return of your Purchase Payment will not be taxed.
62
Annuity to Annuity Transfer
A transfer of contract value to another annuity contract generally will be tax reported as a distribution unless we have sufficient information, on a form satisfying us, to confirm that the transfer qualifies as an exchange under IRC Section 1035 (a “1035 exchange”).
Additional Tax on Net Investment Income
Information in this section generally does not apply to Qualified contracts, however taxable distributions from such contracts may be taken into account in determining the applicability of the Modified Adjusted Gross Income (“MAGI”) threshold.
Under Federal Tax law, there is a tax on net investment income, at the rate of 3.8% of applicable thresholds for MAGI based on type of filer. Further information may be found on www.irs.gov. An individual with MAGI in excess of the threshold will be required to pay this 3.8% tax on net investment income in excess of the applicable MAGI threshold. For this purpose, net investment income generally will include taxable withdrawals from a Non-Qualified contract, as well as other taxable amounts including amounts taxed annually to an Owner that is not a natural person (see Contracts Owned by a Trust or Corporation below).
Distributions from Qualified Contracts
Generally, you have not paid any taxes on the Purchase Payments used to buy a Qualified contract. As a result, most amounts withdrawn from the contract or received as annuity income payments will be taxable income. Exceptions to this general rule include withdrawals attributable to after-tax amounts permitted under the employer’s plan or contributed to a Roth IRA or non-deductible traditional IRA.
Withdrawals from other Qualified contracts are often limited by the IRC and by the employer-sponsored plan/arrangement.
The taxable portion of any withdrawal or annuity income payment from a Qualified contract (except for Tax-Sheltered Annuities) will be subject to an additional 10% penalty tax, under the IRC, except in the following circumstances:
•
after attainment of age 59½;
•
when paid to your Beneficiary after you die;
•
after you become disabled (as defined in the IRC);
•
after you become terminally ill;
•
as a part of a series of substantially equal periodic payments (not less frequently than annually) made for your life (or life expectancy) or the joint lives (or joint expectancies) of you and your designated Beneficiary for a period of 5 years or attainment of age 59½, whichever is later;
•
dividends paid with respect to stock of a corporation described in IRC Section 404(k);
•
payments up to the amount of your deductible medical expenses (without regard to whether you itemize deductions for the taxable year);
•
for payment of health insurance if you are unemployed and meet certain requirements;
•
distributions from IRAs for qualifying higher education expenses or first home purchases, with certain limitations;
•
payments to certain individuals called up for active duty after September 11, 2001;
•
payments up to $3,000 per year for health, life and accident insurance by certain retired public safety officers, which are federal income tax-free;
•
amounts distributed from a Code Section 457(b) plan other than to the extent such amounts in a governmental Code Section 457(b) plan represent rollovers from an IRA or employer-sponsored plan to which the 10% penalty would otherwise apply and which are treated as distributed from a Qualified plan for purposes of the premature distribution penalty;
•
distributions for parents after the “qualified birth or adoption” of a new child (subject to limitations);
•
certain amounts to a domestic abuse victim;
•
certain amounts for emergency personal expenses;
•
withdrawals of net income on excess IRA contributions returned by the due date of your tax return.
Non-IRA contracts:
•
payments to employees after separation from service after attainment of age 55 (does not apply to IRAs);
•
payments from a tax-qualified plan or section 403(b) plan made after you separate from service if you provided firefighting services and you (1) will be at least age 50 in the year of the separation or (2) have at least 25 years of service under the Plan (does not apply to IRAs); and
•
transfers to alternate payees pursuant to a qualified domestic relations order (does not apply to IRAs).
Annuitization
Unlike a Non-Qualified contract, if you annuitize your Qualified annuity contract the entire annuity income payment will be considered income, for tax purposes.
Direct and Indirect Rollovers
Under certain circumstances, you may be able to transfer amounts distributed from your employer sponsored plan/arrangement to another eligible plan or IRA. Generally,
63
a distribution may be eligible for rollover but certain types of distributions cannot be rolled over, such as distributions received on account of:
(a)
a required minimum distribution,
(b)
a hardship withdrawal, or
(c)
a series of substantially equal payments (at least annually) made over your life expectancy or the joint life expectancies of you and your designated Beneficiary or a distribution made for a specified period of 10 years or more.
The IRS issued Announcement 2014-32 confirming its intent to apply the one-rollover-per-year limitation of 408(d)(3)(B) on an aggregate basis to all IRAs that an individual owns. This means that an individual cannot make a tax-free IRA-to-IRA rollover if he or she has made such a rollover involving any of the individual’s IRAs in the current tax year. If an intended rollover does not qualify for tax-free rollover treatment, contributions to your IRA may constitute excess contributions that may exceed contribution limits. This one-rollover-per-year limitation does not apply to direct trustee-to-trustee transfers. You should always consult your tax adviser before you move or attempt to move any funds.
The IRC limits the withdrawal of an employee’s elective deferral Purchase Payments from a Tax-Sheltered Annuity (TSA) contract under IRC 403(b). Generally, withdrawals can only be made when an Owner:
•
reaches age 59½;
•
severs employment with the employer;
•
dies;
•
birth or adoption of child (subject to limitations);
•
becomes disabled (as defined in the IRC); or
•
experiences a financial hardship (as defined in the IRC).*
*
In the case of hardship, the Owner can only withdraw Purchase Payments.
Additional plan limitations may also apply.Amounts held in a TSA contract as of December 31, 1988 are not subject to these restrictions except as otherwise imposed by the plan.
Annuity to Annuity Transfer (Tax-Sheltered Annuities)
Qualifying transfers (including intra-plan exchanges) of amounts from one TSA contract or account to another TSA contract or account, and qualifying transfers to a state defined benefit plan to purchase service credits, where permitted under the employer’s plan, generally are not considered distributions, and thus are not subject to the above IRC withdrawal limitations. If amounts are transferred to a contract with less restrictive IRC withdrawal limitations than the account from which it is transferred, the more restrictive withdrawal limitations will continue to apply.
Transfers among 403(b) annuities and/or 403(b)(7) custodial accounts generally are subject to rules
set out in the plan, the IRC, treasury regulations, IRS pronouncements, and other applicable legal authorities.
Required Minimum Distributions
Information in this section generally does not apply to Non-Qualified contracts.
Failure to satisfy the minimum distribution requirements may result in a tax penalty. You should consult your tax adviser for more information.
Commencement Date
Generally, the IRC requires that you begin taking annual distributions from Qualified annuity contracts by April 1 of the calendar year following the later of (1) the calendar year in which you attain age:
•
Age 73 if you were born January 1, 1951 or later.
•
Age 72 if you were born on or after July 1, 1949, and before January 1, 1951.
•
Age 70 ½ if you were born before July 1, 1949.
or (2) the calendar year in which you sever employment from the employer sponsoring the plan. If you own a traditional IRA, you must begin receiving minimum distributions by April 1 of the calendar year following the calendar year in which you reach age:
•
Age 73 if you were born January 1, 1951 or later.
•
Age 72 if you were born on or after July 1, 1949, and before January 1, 1951.
•
Age 70 ½ if you were born before July 1, 1949.
If you choose to delay your first distribution until the year after the year in which you reach the applicable RMD age or sever employment, as applicable, then you will be required to withdraw your second required minimum distribution on or before December 31 in that same year. For each year thereafter, you must withdraw your required minimum distribution by December 31.
Combining Distributions from Multiple Contracts
If you own more than one IRA, you may be permitted to take your annual distributions in any combination from your IRAs. A similar rule applies if you own more than one TSA. However, you cannot satisfy this distribution requirement for your IRA contract by taking a distribution from a TSA, and you cannot satisfy the requirement for your TSA by taking a distribution from an IRA.
Automatic Withdrawal Option
You may elect to have the required minimum distribution amount on your contract calculated and withdrawn each year under the automatic withdrawal option. You may select monthly, quarterly, semiannual, or annual withdrawals for this purpose. This service is provided as a courtesy and we do not guarantee the accuracy of our calculations.
64
Accordingly, we recommend you consult your tax adviser concerning your required minimum distribution.
Impact of Optional Benefits
IRS regulations require that the annuity contract value used to determine required minimum distributions include the actuarial present value of other benefits under the contract, such as enhanced death benefits and/or Living Benefits. As a result, if you request a minimum distribution calculation, or if one is otherwise required to be provided, in those specific circumstances where this requirement applies, the calculation may be based upon a value that is greater than your contract value, resulting in a larger required minimum distribution. This regulation does not apply to required minimum distributions made under an irrevocable annuity income option. You should discuss the effect of these regulations with your tax adviser.
Tax Treatment of Death Benefits
The taxable amount of any death benefits paid under the contract are taxable to the Beneficiary. The rules governing the taxation of payments from an annuity contract, as discussed above, generally apply whether the death benefit is paid as lump sum or annuity income payments. Estate taxes may also apply.
Enhanced death benefits are used as investment protection and are not expected to give rise to any adverse tax effects. However, the IRS could take the position that some or all of the charges for these death benefits should be treated as a partial withdrawal from the contract. In that case, the amount of the partial withdrawal may be includible in taxable income and subject to the 10% penalty if the Owner is under 59½, unless another exception applies. You should consult your tax adviser for more information.
If you own a Qualified contract and purchase an enhanced death benefit, the IRS may consider these benefits “incidental death benefits” or “life insurance.” The IRC imposes limits on the amount of the incidental benefits and/or life insurance allowable for Qualified contracts and the employer-sponsored plans under which they are purchased. If the death benefit(s) selected by you are considered to exceed these limits, the benefit(s) could result in taxable income to the Owner of the Qualified contract, and in some cases could adversely impact the qualified status of the Qualified contract or the plan. You should consult your tax adviser regarding these features and benefits prior to purchasing a contract.
Tax Treatment of Optional Living Benefits
Generally, we will treat amounts credited to the contract value under the optional Living Benefit guarantees, for income tax purposes, as earnings in the contract. Thus, payments of Living Benefits are treated as taxable withdrawals to the extent there are taxable gains in the contract value. Payments in accordance with such guarantees after the contract value has been reduced to zero
may be treated for tax purposes as amounts received as an annuity, if the other requirements for such treatment are satisfied. All payments or withdrawals after cost basis has been reduced to zero, whether or not under such a guarantee, will be treated as taxable amounts. If available and you elect an optional Living Benefit, the application of certain tax rules, including those rules relating to distributions from your contract, are not entirely clear. Such benefits are not intended to adversely affect the tax treatment of distributions or of the contract. However, you should be aware that little guidance is available. You should consult a tax adviser before electing an optional Living Benefit.
Contracts Owned by a Trust or Corporation
A Trust or Corporation or other Owner that is not a natural person (“Non-Natural Owner”) that is considering purchasing this contract should consult a tax adviser.
Generally, the IRC does not confer tax-deferred status upon a Non-Qualified contract owned by a Non-Natural Owner for federal income tax purposes. Instead in such cases, the Non-Natural Owner pays tax each year on the contract’s value in excess of the Owner’s cost basis, and the contract’s cost basis is then increased by a like amount. However, this treatment is not applied to a contract held by a trust or other entity as an agent for a natural person nor to contracts held by Qualified Plans. Please see the Statement of Additional Information for a more detailed discussion of the potential adverse tax consequences associated with non-natural ownership of a Non-Qualified annuity contract.
Withholding
Taxable amounts distributed from annuity contracts are subject to federal and state income tax reporting and withholding. In general, we will withhold federal income tax from the taxable portion of such distribution based on the type of distribution and, in certain cases, the amount of your distribution. An election out of withholding must be made in accordance with the IRS guidance as directed on forms that we provide. If you are a U.S. person (which includes a resident alien), and your address of record is a non-U.S. address, we are required to withhold income tax unless payments are directed to your U.S. residential address.
State income tax withholding rules vary and we will withhold based on the rules of your state of residence.
Special tax rules apply to withholding for nonresident aliens, and we generally withhold income tax for nonresident aliens at a 30% rate. A different withholding rate may be applicable to a nonresident alien based on the terms of an existing income tax treaty between the United States and the nonresident alien’s country. You should consult your tax adviser as to the availability of an exemption from, or reduction of, such tax under an applicable income tax treaty, if any.
65
Any income tax withheld is a credit against your income tax liability. Regardless of the amount withheld by us, you are liable for payment of federal and state income tax on the taxable portion of annuity distributions. You should consult with your tax adviser regarding the payment of the correct amount of these income taxes and potential liability if you fail to pay such taxes.
20% Withholding on Eligible Rollover Distributions
For certain qualified employer sponsored plans, we are required to withhold 20% of the taxable portion of your withdrawal that constitutes an “eligible rollover distribution” for Federal income taxes. The amount we withhold is determined by the Code.
You may avoid withholding if you directly transfer a withdrawal from this Contract to another qualified plan or IRA. Similarly, you may be able to avoid withholding on a transfer into the Contract from an existing qualified plan you may have with another provider by arranging to have the transfer made directly to us.
Foreign Account Tax Compliance Act (“FATCA”)
A Contract Owner who is not a “United States person” which is defined to mean:
•
a citizen or resident of the United States
•
a partnership or corporation created or organized in the United States or under the law of the United States or of any state, or the District of Columbia
•
any estate or trust other than a foreign estate or foreign trust (see Internal Revenue Code section 7701(a)(31) for the definition of a foreign estate and a foreign trust)
should be aware that FATCA provides that a 30% withholding tax will be imposed on certain gross payments (which could include distributions from cash value life insurance or annuity products) made to a foreign entity if such entity fails to provide applicable certifications under a Form W-9, Form W-8 BEN-E, Form W-8IMY, or other applicable form. Certain withholding certifications will remain effective until a change in circumstances makes any information on the form incorrect. Notwithstanding the preceding sentence, any Form W-8 (including the Form W-8 BEN-E and Form W-8IMY), is only effective for three years from date of signature unless a change in circumstances makes any information on the form incorrect. An entity, for this purpose, will be considered a foreign entity unless it provides an applicable withholding certification to the contrary. The Contract Owner must inform the Company within 30 days of any change in circumstances that makes any information on the form incorrect by furnishing a new IRS Form W-9, Form W-8 BEN-E, Form W-8IMY, or other applicable form.
Gifts, Pledges and/or Assignments of a Contract
Non-Qualified Contracts
If you transfer ownership of your Non-Qualified contract to a person other than your spouse (or former spouse incident to divorce) as a gift you will pay federal income tax on the contract’s cash value to the extent it exceeds your cost basis. The recipient’s cost basis will be increased by the amount on which you will pay federal taxes. In addition, the IRC treats any assignment or pledge (or agreement to assign or pledge) of any portion of a Non-Qualified contract as a withdrawal. Please see the Statement of Additional Information for a more detailed discussion regarding potential tax consequences of gifting, assigning, or pledging a Non-Qualified contract.
Qualified Contracts
The IRC prohibits Qualified annuity contracts including IRAs from being transferred, assigned or pledged as security for a loan.
This prohibition, however, generally does not apply to loans under an employer-sponsored plan (including loans from the annuity contract) that satisfy certain requirements, provided that:
•
the plan is not an unfunded deferred compensation plan; and
•
the plan funding vehicle is not an IRA.
You should consult a tax advisor as to the availability of this exception.
Diversification and Investor Control
Diversification
For a contract to be treated as a variable annuity for Federal income tax purposes, the underlying investments under the variable annuity must be “adequately diversified”. Treasury Regulations provide standards that must be met to comply with the rules. If the variable annuity fails to comply with these diversification standards, you could be required to pay tax currently on the excess of the Contract Value over the contract Purchase Payments. We expect that the manager of the Underlying Funds monitors the Funds so as to comply with these Treasury Regulations.
Investor Control
These investor control limitations generally do not apply to Qualified contracts, which are referred to as “Pension Plan Contracts” for purposes of this rule, although the limitations could be applied to Qualified contracts in the future.
Under certain circumstances, you, and not the Company, could be treated as the owner of the Underlying Funds under your Non-Qualified contract, based on the degree of control you exercise over the underlying investments. If this occurs, you may be currently taxed on income and gains attributable to the assets under the contract.
66
There is little guidance in this area, and the determination of whether you possess sufficient incidents of ownership over Variable Portfolio assets to be deemed the owner of the Underlying Funds depends on all of the relevant facts and circumstances. However, IRS Revenue Ruling 2003-91 provides that an annuity owner’s ability to choose among general investment strategies either at the time of the initial purchase or thereafter, does not constitute control sufficient to cause the contract holder to be treated as the owner of the Variable Portfolios. The Revenue Ruling provides that if, based on all the facts and circumstances, you do not have direct or indirect control over the Separate Account or any Variable Portfolio asset, then you do not possess sufficient incidents of ownership over the assets supporting the annuity to be deemed the owner of the assets for federal income tax purposes. We do not know what limits may be set by the IRS in any future guidance that it may issue and whether such limits will apply to existing contracts.
While we believe the contract does not give you investment control over the Underlying Funds, we reserve the right to modify the contract as necessary in an attempt to prevent you from being considered as the owner of the assets of the contract for purposes of the Code.
Our Taxes
The Company is taxed as a life insurance company under the Code. We are entitled to certain tax benefits related to the investment of company assets, including assets of the Separate Account, which may include the foreign tax credit and the corporate dividends received deduction. These potential benefits are not passed back to you, since we are the owner of the assets from which tax benefits may be derived.
Other Information
The Distributor
Corebridge Capital Services, Inc., 30 Hudson Street, 16th Floor, Jersey City, NJ 07302, distributes the contracts. Corebridge Capital Services, Inc., an indirect, wholly-owned subsidiary of AGL, is a registered broker-dealer under the Securities Exchange Act of 1934, as amended, and is a member of the Financial Industry Regulatory Authority (“FINRA”). No underwriting fees are retained by Corebridge Capital Services, Inc. in connection with the distribution of the contracts.
The Company
American General Life Insurance Company
American General Life Insurance Company (“AGL”) is a stock life insurance company organized under the laws of the state of Texas. Its home office is 2727-A Allen Parkway, Houston, Texas 77019-2191.
Contracts are issued by AGL in all states, except New York, where they are issued by US Life.
AGL is obligated to pay all amounts promised to investors under a contract issued by AGL.
The United States Life Insurance Company in the City of New York
The United States Life Insurance Company in the City of New York (“US Life”) is a stock life insurance company organized under the laws of the state of New York. Its home office is 28 Liberty Street, Floor 45th, New York, NY 10005-1400. US Life conducts life insurance and annuity business primarily in the state of New York.
US Life is obligated to pay all amounts promised to investors under a contract issued by US Life.
Operation of the Company
The operations of the Company are influenced by many factors, including general economic conditions, monetary and fiscal policies of the federal government, and policies of state and other regulatory authorities. The level of sales of the Company’s financial and insurance products is influenced by many factors, including general market rates of interest, the strength, weakness and volatility of equity markets, terms and conditions of competing financial and insurance products and the relative value of such brands.
The Company is exposed to market risk, interest rate risk, contract Owner behavior risk and mortality/longevity risk. Market volatility may result in increased risks related to guaranteed death and Living Benefits on the Company’s financial and insurance products, as well as reduced fee income in the case of assets held in separate accounts, where applicable. These guaranteed benefits are sensitive to equity market and other conditions. The Company primarily uses capital market hedging strategies to help cover the risk of paying guaranteed Living Benefits in excess of account values as a result of significant downturns in equity markets or as a result of other factors. The Company has treaties to reinsure a portion of the guaranteed minimum income benefits and guaranteed death benefits for equity and mortality risk on some of its older contracts. Such risk mitigation may or may not reduce the volatility of net income and capital and surplus resulting from equity market volatility.
The Company is regulated for the benefit of contract Owners by the insurance regulator in its state of domicile; and also by all state insurance departments where it is licensed to conduct business. The Company is required by its regulators to hold a specified amount of reserves in order to meet its contractual obligations to contract Owners. Insurance regulations also require the Company to maintain additional surplus to protect against a financial impairment the amount of which is based on the risks inherent in the Company’s operations.
67
The Separate Account
Variable Separate Account is a separate account of AGL under Texas law. It may be used to support the contract and other variable annuity contracts, and used for other permitted purposes.
FS Variable Separate Account is a separate account of US Life under New York law.
These Separate Accounts are registered with the SEC as a unit investment trust under the Investment Company Act of 1940, as amended.
Purchase Payments you make that are allocated to the Variable Portfolios are invested in the Separate Account. The Company owns the assets in the Separate Account and invests them on your behalf, according to your instructions. Purchase Payments invested in the Separate Account are not guaranteed and will fluctuate with the value of the Variable Portfolios you select. Therefore, you assume all of the investment risk for contract value allocated to the Variable Portfolios. These assets are kept separate from our General Account and may not be charged with liabilities arising from any other business we may conduct. Additionally, income gains and losses (realized and unrealized) resulting from assets in the Separate Account are credited to or charged against the Separate Account without regard to other income gains or losses of the Company.
You benefit from dividends received by the Separate Account through an increase in your unit value. The Company expects to benefit from these dividends through tax credits and corporate dividends received deductions; however, these corporate deductions are not passed back to the Separate Account or to contract Owners.
The General Account
Obligations that are paid out of the Company’s general account (“General Account”) include any amounts you have allocated to available Fixed Accounts and the Secure Value Account, including any interest credited thereon, and amounts owed under your contract for death and/or Living Benefits which are in excess of portions of contract value allocated to the Variable Portfolios. The obligations and guarantees under the contract are the sole responsibility of the Company. Therefore, payments of these obligations are subject to our financial strength and claims paying ability, and our long term ability to make such payments.
The General Account assets are invested in accordance with applicable state regulation. These assets are exposed to the typical risks normally associated with a portfolio of fixed income securities, namely interest rate, option, liquidity and credit risk. The Company manages its exposure to these risks by, among other things, closely monitoring and matching the duration and cash flows of its assets and liabilities, monitoring or limiting prepayment and extension risk in its portfolio, maintaining a large percentage of its portfolio in highly liquid securities and engaging in a
disciplined process of underwriting, reviewing and monitoring credit risk. With respect to the Living Benefits available in your contract, we also manage interest rate and certain market risk through a hedging strategy in the portfolio and we may require that those who elect a Living Benefit allocate their Purchase Payments in accordance with specified investment parameters.
Financial Statements
The financial statements described below are important for you to consider. Information about how to obtain these financial statements is also provided below.
The Company and the Separate Account
The financial statements of the Company and the Separate Account are required to be provided because you must look to those entities directly to satisfy our obligations to you under the Contract.
Instructions to Obtain Financial Statements
The financial statements of the Company and Separate Account are included in the Statement of Additional Information and available on the Company’s website at www.corebridgefinancial.com/ProductProspectuses and on SEC’s website at www.sec.gov. You may also request a free copy of the Statement of Additional Information by following the instructions on the back page or by contacting our Annuity Service Center at:
Mailing Address:
Annuity Service Center
P.O. Box 15570, Amarillo, Texas 79105-5570
Telephone Number: (800) 445-7862
Annuity Service Center
P.O. Box 15570, Amarillo, Texas 79105-5570
Telephone Number: (800) 445-7862
We encourage both existing and prospective contract Owners to read and understand the financial statements.
Administration
We are responsible for the administrative servicing of your contract. Please contact our Annuity Service Center at (800) 445-7862, if you have any comments, questions or service requests.
We send out transaction confirmations and quarterly statements. During the Accumulation Phase, you will receive confirmation of transactions for your contract. Transactions made pursuant to contractual or systematic agreements, such as dollar cost averaging, if available, may be confirmed quarterly. Purchase Payments received through the automatic payment plan may also be confirmed quarterly. For all other transactions, we send confirmations. It is your responsibility to review these documents carefully and notify our Annuity Service Center of any inaccuracies immediately. We investigate all inquiries. Depending on the facts and circumstances, we may retroactively adjust your contract, provided you notify us of your concern within 30 days of receiving the transaction confirmation or quarterly
68
statement. Any other adjustments we deem warranted are made as of the time we receive notice of the error.
Legal Proceedings
There are no pending legal proceedings affecting the Separate Account. Various federal, state or other regulatory agencies may from time to time review, examine or inquire into the operations, practices and procedures of the Company, such as through financial examinations, subpoenas, investigations, market conduct exams or other regulatory inquiries. Based on the current status of pending regulatory examinations, investigations and inquiries involving the Company, the Company believes that none of these matters will have a material adverse effect on the ability of the principal underwriter to perform its contract with the Registrant or of the depositor to meet its obligations under the variable annuity contracts.
Various lawsuits against the Company have arisen in the ordinary course of business. As of the date of this prospectus, the Company believes that none of these matters will have a material adverse effect on the ability of the principal underwriter to perform its contract with the Registrant or of the depositor to meet its obligations under the variable annuity contracts.
Registration Statements
Registration statements under the Securities Act of 1933, as amended, related to the contracts offered by this prospectus are on file with the SEC. This prospectus does not contain all of the information contained in the registration statements and exhibits. For further information regarding the Separate Account, the Company and its General Account, the Variable Portfolios and the contract, please refer to the registration statements and exhibits.
69
Appendix A – Underlying Funds Available Under the Contract
| |
Underlying Fund – Share Class Advisor Subadvisor (if applicable) |
Current Expenses |
Average Annual Total Returns (as of 12/31/2023) | ||
| 1 Year |
5 Year |
10 Year | |||
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
N/A |
N/A |
| |
|
|
|
|
N/A |
| |
|
|
|
|
N/A |
| |
|
|
|
|
N/A |
| |
|
|
|
|
N/A |
| |
|
|
|
|
N/A |
| |
|
|
|
|
N/A |
| |
|
|
|
|
N/A |
| |
|
|
|
|
N/A |
| |
|
|
|
|
|
| |
|
|
|
|
|
A-1
| Type |
Underlying Fund – Share Class Advisor Subadvisor (if applicable) |
Current Expenses |
Average Annual Total Returns (as of 12/31/2023) | ||
| 1 Year |
5 Year |
10 Year | |||
| Asset Allocation (continued) |
|
|
|
|
|
| |
|
|
|
|
N/A |
| |
|
|
|
|
N/A |
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
N/A |
| |
|
|
|
|
N/A |
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
- |
- |
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
Shares |
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
A-2
| Type |
Underlying Fund – Share Class Advisor Subadvisor (if applicable) |
Current Expenses |
Average Annual Total Returns (as of 12/31/2023) | ||
| 1 Year |
5 Year |
10 Year | |||
| Stock (continued) |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
N/A |
| |
– Class 3 |
|
|
N/A |
N/A |
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
N/A |
N/A |
| |
|
|
|
|
|
| |
|
|
|
|
N/A |
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
N/A |
A-3
| Type |
Underlying Fund – Share Class Advisor Subadvisor (if applicable) |
Current Expenses |
Average Annual Total Returns (as of 12/31/2023) | ||
| 1 Year |
5 Year |
10 Year | |||
| Stock (continued) |
|
|
|
|
N/A |
| |
|
|
|
|
N/A |
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
N/A |
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
N/A |
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
N/A |
| |
|
|
|
|
|
| |
|
|
|
|
N/A |
| |
|
|
|
|
N/A |
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
N/A |
A-4
| 20% Secure Value Account |
80% in one or more of the following Variable Portfolios, except as otherwise noted: Goldman Sachs VIT Government Money Market Fund PIMCO Total Return SA American Century Inflation Protection SA American Funds VCP Managed Allocation* SA BlackRock VCP Global Multi Asset* SA Federated Hermes Corporate Bond SA Fixed Income Index SA Fixed Income Intermediate Index SA JPMorgan MFS Core Bond SA JPMorgan Ultra-Short Bond SA PIMCO Global Bond Opportunities SA PIMCO VCP Tactical Balanced* SA Schroders VCP Global Allocation* SA T. Rowe Price VCP Balanced* SA VCP Dynamic Allocation SA VCP Dynamic Strategy SA VCP Index Allocation SA Wellington Government and Quality Bond DCA Fixed Accounts** 6-Month DCA 1-Year DCA *You may invest up to a maximum of 50% in each of these Variable Portfolios. **You may use a DCA Fixed Account to invest your target allocation in accordance with the investment requirements. |
A-5
| 10% Secure Value Account |
Asset Allocation Portfolios 90% in one or more of the following Variable Portfolios: Individually Managed Asset Allocation Portfolios: SA American Funds Asset Allocation SA BlackRock Multi-Factor 70/30 SA Franklin Tactical Opportunities SA Goldman Sachs Multi-Asset Insights SA JPMorgan Diversified Balanced SA MFS Total Return SA Putnam Asset Allocation Diversified Growth SA T. Rowe Price Asset Allocation Growth SA Wellington Strategic Multi-Asset Actively Managed Fund-of-Funds: SA Allocation Balanced SA Allocation Growth SA Allocation Moderate SA Allocation Moderate Growth Index Fund-of-Funds Portfolios: SA Global Index Allocation 90/10 SA Global Index Allocation 75/25 SA Global Index Allocation 60/40 SA Index Allocation 90/10 SA Index Allocation 80/20 SA Index Allocation 60/40 Volatility Control Portfolios: SA American Funds VCP Managed Allocation SA BlackRock VCP Global Multi Asset SA PIMCO VCP Tactical Balanced SA Schroders VCP Global Allocation SA T. Rowe Price VCP Balanced SA VCP Dynamic Allocation SA VCP Dynamic Strategy SA VCP Index Allocation Fixed Income Portfolios Goldman Sachs VIT Government Money Market Fund PIMCO Total Return SA American Century Inflation Protection SA Federated Hermes Corporate Bond SA Fixed Income Immediate Index SA Fixed Income Index SA JPMorgan MFS Core Bond SA JPMorgan Ultra-Short Bond SA PIMCO Global Bond Opportunities SA Wellington Government & Quality Bond DCA Fixed Accounts* 6-Month DCA 1-Year DCA *You may use a DCA Fixed Account to invest your target allocation in accordance with the investment requirements. |
| FIXED INCOME PORTFOLIOS Investment Requirement Minimum 18% Maximum 90% | |
| Money Market Portfolio: |
|
| Goldman Sachs VIT Government Money Market Fund |
|
| Core Fixed Income Portfolios: |
|
| PIMCO Total Return |
|
| SA American Century Inflation Protection |
|
| SA Federated Hermes Corporate Bond |
|
| SA Fixed Income Index |
|
| SA Fixed Income Intermediate Index |
|
| SA JPMorgan MFS Core Bond |
|
| SA JPMorgan Ultra-Short Bond |
|
| SA PIMCO Global Bond Opportunities |
|
| SA Wellington Government & Quality Bond |
|
| DCA Fixed Accounts* |
|
| 6-Month DCA |
|
| 1-Year DCA |
|
| Fixed Accounts |
|
| 1-Year Fixed (if available) |
|
| | |
| PRIMARY EQUITY AND ASSET ALLOCATION PORTFOLIOS Investment Requirement Minimum 0% Maximum 72%** | |
| Global & International Portfolios: |
|
| SA Emerging Markets Equity Index |
|
| SA International Index |
|
| SA JPMorgan Global Equities |
|
| SA Morgan Stanley International Equities |
|
| Large Core Portfolios: |
|
| SA American Funds Growth-Income |
|
| SA Franklin Systematic U.S. Large Cap Core |
|
| SA JPMorgan Large Cap Core |
|
| SA Large Cap Index |
|
| SA MFS Massachusetts Investors Trust |
|
| Large Value Portfolios: |
|
| Invesco V.I. Comstock |
|
| Invesco V.I. Growth and Income |
|
| Lord Abbett Growth and Income |
|
| SA Franklin BW U.S. Large Cap Value |
|
| SA Franklin Systematic U.S. Large Cap Value |
|
| SA JPMorgan Equity-Income |
|
| SA Large Cap Value Index |
|
| Large Growth Portfolios: |
|
| Invesco V.I. American Franchise |
|
| SA AB Growth |
|
| SA American Funds Growth |
|
| SA Janus Focused Growth |
|
| SA Large Cap Growth Index |
|
| SA MFS Blue Chip Growth |
|
| SA Wellington Capital Appreciation |
|
| Small & Mid Cap Portfolios: |
|
| SA Mid Cap Index |
|
| SA Small Cap Index |
|
| Asset Allocation Portfolios: |
|
| Franklin Allocation VIP Fund |
|
| Franklin Income VIP Fund |
|
| SA Allocation Balanced |
|
| SA Allocation Growth |
|
| SA Allocation Moderate |
|
| SA Allocation Moderate Growth |
|
A-6
| PRIMARY EQUITY AND ASSET ALLOCATION PORTFOLIOS - CONTINUED Investment Requirement Minimum 0% Maximum 72%** | |
| SA American Funds Asset Allocation |
|
| SA BlackRock Multi-Factor 70/30 |
|
| SA Franklin Tactical Opportunities |
|
| SA Global Index Allocation 60/40 |
|
| SA Global Index Allocation 75/25 |
|
| SA Global Index Allocation 90/10 |
|
| SA Goldman Sachs Multi-Asset Insights |
|
| SA Index Allocation 60/40 |
|
| SA Index Allocation 80/20 |
|
| SA Index Allocation 90/10 |
|
| SA JPMorgan Diversified Balanced |
|
| SA MFS Total Return |
|
| SA Putnam Asset Allocation Diversified Growth |
|
| SA T. Rowe Price Asset Allocation Growth |
|
| SA Wellington Strategic Multi-Asset |
|
| Asset Allocation (Volatility Control Portfolios): |
|
| SA American Funds VCP Managed Allocation |
|
| SA BlackRock VCP Global Multi Asset |
|
| SA PIMCO VCP Tactical Balanced |
|
| SA Schroders VCP Global Allocation |
|
| SA T. Rowe Price VCP Balanced |
|
| SA VCP Dynamic Allocation |
|
| SA VCP Dynamic Strategy |
|
| SA VCP Index Allocation |
|
| | |
| OTHER EQUITY AND SPECIALTY PORTFOLIOS Investment Requirement Minimum 0% Maximum 27%*** | |
| Small & Mid Cap Portfolios: |
|
| SA AB Small & Mid Cap Value |
|
| SA Franklin Small Company Value |
|
| SA Invesco Growth Opportunities |
|
| SA JPMorgan Mid-Cap Growth |
|
| Global & International Portfolios: |
|
| SA American Funds Global Growth |
|
| SA Fidelity Institutional AM® International Growth |
|
| SA JPMorgan Emerging Markets |
|
| SA PIMCO RAE International Value |
|
| SA Putnam International Growth and Income |
|
| Specialty Portfolios: |
|
| PIMCO Emerging Markets Bond |
|
| SA Fidelity Institutional AM® Real Estate |
|
| SA PineBridge High-Yield Bond |
|
| |
|
OPTIONAL BENEFITS NO LONGER AVAILABLE FOR ELECTION
This section contains the investment requirements for the following optional Living Benefits that we are no longer offering to investors:
•
Polaris Income Plus Daily Flex (For contracts issued prior to November 8, 2021)
•
Polaris Income Plus Flex
•
Polaris Income Plus Daily
•
Polaris Income Plus
•
Polaris Income Builder
A-7
| 10% Secure Value Account |
Asset Allocation Portfolios 90% in one or more of the following Variable Portfolios: Individually Managed Asset Allocation Portfolios: SA American Funds Asset Allocation SA BlackRock Multi-Factor 70/30 SA Franklin Tactical Opportunities SA Goldman Sachs Multi-Asset Insights SA JPMorgan Diversified Balanced SA MFS Total Return SA Putnam Asset Allocation Diversified Growth SA T. Rowe Price Asset Allocation Growth SA Wellington Strategic Multi-Asset Actively Managed Fund-of-Funds: SA Allocation Balanced SA Allocation Growth SA Allocation Moderate SA Allocation Moderate Growth Index Fund-of-Funds Portfolios: SA Global Index Allocation 90/10 SA Global Index Allocation 75/25 SA Global Index Allocation 60/40 SA Index Allocation 90/10 SA Index Allocation 80/20 SA Index Allocation 60/40 Volatility Control Portfolios: SA American Funds VCP Managed Allocation SA BlackRock VCP Global Multi Asset SA PIMCO VCP Tactical Balanced SA Schroders VCP Global Allocation SA T. Rowe Price VCP Balanced SA VCP Dynamic Allocation SA VCP Dynamic Strategy SA VCP Index Allocation Fixed Income Portfolios Goldman Sachs VIT Government Money Market Fund PIMCO Total Return SA American Century Inflation Protection SA Federated Hermes Corporate Bond SA Fixed Income Immediate Index SA Fixed Income Index SA JPMorgan MFS Core Bond SA JPMorgan Ultra-Short Bond SA PIMCO Global Bond Opportunities SA Wellington Government & Quality Bond DCA Fixed Accounts* 6-Month DCA 1-Year DCA *You may use a DCA Fixed Account to invest your target allocation in accordance with the investment requirements. |
| FIXED INCOME PORTFOLIOS Investment Requirement Minimum 18% Maximum 90% | |
| Money Market Portfolio: |
|
| Goldman Sachs VIT Government Money Market Fund |
|
| Core Fixed Income Portfolios: |
|
| PIMCO Total Return |
|
| SA American Century Inflation Protection |
|
| SA Federated Hermes Corporate Bond |
|
| SA Fixed Income Index |
|
| SA Fixed Income Intermediate Index |
|
| SA JPMorgan MFS Core Bond |
|
| SA JPMorgan Ultra-Short Bond |
|
| SA PIMCO Global Bond Opportunities |
|
| SA Wellington Government & Quality Bond |
|
| DCA Fixed Accounts* |
|
| 6-Month DCA |
|
| 1-Year DCA |
|
| Fixed Accounts |
|
| 1-Year Fixed (if available) |
|
| | |
| PRIMARY EQUITY AND ASSET ALLOCATION PORTFOLIOS Investment Requirement Minimum 0% Maximum 72%** | |
| Global & International Portfolios: |
|
| SA Emerging Markets Equity Index |
|
| SA International Index |
|
| SA JPMorgan Global Equities |
|
| SA Morgan Stanley International Equities |
|
| Large Core Portfolios: |
|
| SA American Funds Growth-Income |
|
| SA Franklin Systematic U.S. Large Cap Core |
|
| SA JPMorgan Large Cap Core |
|
| SA Large Cap Index |
|
| SA MFS Massachusetts Investors Trust |
|
| Large Value Portfolios: |
|
| Invesco V.I. Comstock |
|
| Invesco V.I. Growth and Income |
|
| Lord Abbett Growth and Income |
|
| SA Franklin BW U.S. Large Cap Value |
|
| SA Franklin Systematic U.S. Large Cap Value |
|
| SA JPMorgan Equity-Income |
|
| SA Large Cap Value Index |
|
| Large Growth Portfolios: |
|
| Invesco V.I. American Franchise |
|
| SA AB Growth |
|
| SA American Funds Growth |
|
| SA Janus Focused Growth |
|
| SA Large Cap Growth Index |
|
| SA MFS Blue Chip Growth |
|
| SA Wellington Capital Appreciation1 |
|
| Small & Mid Cap Portfolios: |
|
| SA Mid Cap Index |
|
| SA Small Cap Index |
|
| Asset Allocation Portfolios: |
|
| Franklin Allocation VIP Fund |
|
| Franklin Income VIP Fund |
|
| SA Allocation Balanced |
|
| SA Allocation Growth |
|
| SA Allocation Moderate |
|
| SA Allocation Moderate Growth |
|
A-8
| PRIMARY EQUITY AND ASSET ALLOCATION PORTFOLIOS - CONTINUED Investment Requirement Minimum 0% Maximum 72%** | |
| SA American Funds Asset Allocation |
|
| SA BlackRock Multi-Factor 70/30 |
|
| SA Franklin Tactical Opportunities |
|
| SA Global Index Allocation 60/40 |
|
| SA Global Index Allocation 75/25 |
|
| SA Global Index Allocation 90/10 |
|
| SA Goldman Sachs Multi-Asset Insights |
|
| SA Index Allocation 60/40 |
|
| SA Index Allocation 80/20 |
|
| SA Index Allocation 90/10 |
|
| SA JPMorgan Diversified Balanced |
|
| SA MFS Total Return |
|
| SA Putnam Asset Allocation Diversified Growth |
|
| SA T. Rowe Price Asset Allocation Growth |
|
| SA Wellington Strategic Multi-Asset |
|
| Asset Allocation (Volatility Control Portfolios): |
|
| SA American Funds VCP Managed Allocation |
|
| SA BlackRock VCP Global Multi Asset |
|
| SA PIMCO VCP Tactical Balanced |
|
| SA Schroders VCP Global Allocation |
|
| SA T. Rowe Price VCP Balanced |
|
| SA VCP Dynamic Allocation |
|
| SA VCP Dynamic Strategy |
|
| SA VCP Index Allocation |
|
| | |
| OTHER EQUITY AND SPECIALTY PORTFOLIOS Investment Requirement Minimum 0% Maximum 27%*** | |
| Small & Mid Cap Portfolios: |
|
| SA AB Small & Mid Cap Value |
|
| SA Franklin Small Company Value |
|
| SA Invesco Growth Opportunities |
|
| SA JPMorgan Mid-Cap Growth2 |
|
| Global & International Portfolios: |
|
| SA American Funds Global Growth |
|
| SA Fidelity Institutional AM® International Growth |
|
| SA JPMorgan Emerging Markets |
|
| SA PIMCO RAE International Value |
|
| SA Putnam International Growth and Income |
|
| Specialty Portfolios: |
|
| PIMCO Emerging Markets Bond |
|
| SA Fidelity Institutional AM® Real Estate |
|
| SA PineBridge High-Yield Bond |
|
| |
|
| 10% Secure Value Account |
90% in one or more of the following Variable Portfolios, except as otherwise noted: Goldman Sachs VIT Government Money Market Fund PIMCO Total Return SA American Century Inflation Protection SA American Funds VCP Managed Allocation* SA BlackRock VCP Global Multi Asset* SA Federated Hermes Corporate Bond SA Fixed Income Index SA Fixed Income Intermediate Index SA JPMorgan MFS Core Bond SA JPMorgan Ultra-Short Bond SA PIMCO Global Bond Opportunities SA PIMCO VCP Tactical Balanced* SA Schroders VCP Global Allocation* SA T. Rowe Price VCP Balanced* SA VCP Dynamic Allocation SA VCP Dynamic Strategy SA VCP Index Allocation SA Wellington Government and Quality Bond DCA Fixed Accounts** 6-Month DCA 1-Year DCA *You may invest up to a maximum of 50% in each of these Variable Portfolios. **You may use a DCA Fixed Account to invest your target allocation in accordance with the investment requirements. |
A-9
| 10% Secure Value Account |
90% in one or more of the following Variable Portfolios: Individually Managed Asset Allocation Portfolios: SA American Funds Asset Allocation SA Franklin Tactical Opportunities SA Goldman Sachs Multi-Asset Insights SA JPMorgan Diversified Balanced SA MFS Total Return SA Putnam Asset Allocation Diversified Growth SA T. Rowe Price Asset Allocation Growth SA Wellington Strategic Multi-Asset Income Actively Managed Fund-of-Funds: SA Allocation Balanced SA Allocation Growth SA Allocation Moderate SA Allocation Moderate Growth Fixed Income and Money Market Portfolios: Goldman Sachs VIT Government Money Market Fund SA American Century Inflation Protection SA Federated Hermes Corporate Bond SA Fixed Income Index SA Fixed Income Intermediate Index SA JPMorgan MFS Core Bond SA JPMorgan Ultra-Short Bond SA PIMCO Global Bond Opportunities SA Wellington Government and Quality Bond Index Fund-of-Funds Portfolios SA Global Index Allocation 90/10 SA Global Index Allocation 75/25 SA Global Index Allocation 60/40 SA Index Allocation 90/10 SA Index Allocation 80/20 SA Index Allocation 60/40 Volatility Control Portfolios: SA American Funds VCP Managed Allocation SA BlackRock VCP Global Multi Asset SA PIMCO VCP Tactical Balanced SA Schroders VCP Global Allocation SA T. Rowe Price VCP Balanced SA VCP Dynamic Allocation SA VCP Dynamic Strategy SA VCP Index Allocation DCA Fixed Accounts* 6-Month DCA 1-Year DCA *You may use a DCA Fixed Account to invest your target allocation in accordance with the investment requirements. |
| A |
10% Secure Value Account and 90% in Allocation* 1, 2, 3 or 4 * Please see POLARIS PORTFOLIO ALLOCATOR PROGRAM and 50%-50% COMBINATION MODEL PROGRAM FOR CONTRACTS ISSUED PRIOR TO FEBRUARY 6, 2017 later in this Appendix for the allocations for the formerly available Polaris Portfolio Allocator Models. |
| B |
10% Secure Value Account and select up to 90% in one or more of the following Variable Portfolios: Individually Managed Asset Allocation Portfolios: SA American Funds Asset Allocation SA Franklin Tactical Opportunities SA Goldman Sachs Multi-Asset Insights SA JPMorgan Diversified Balanced SA MFS Total Return SA Putnam Asset Allocation Diversified Growth SA T. Rowe Price Asset Allocation Growth SA Wellington Strategic Multi-Asset Income Volatility Control Portfolios: SA American Funds VCP Managed Allocation SA BlackRock VCP Global Multi Asset SA PIMCO VCP Tactical Balanced SA Schroders VCP Global Allocation SA T. Rowe Price VCP Balanced SA VCP Dynamic Allocation SA VCP Dynamic Strategy SA VCP Index Allocation Fixed Income and Money Market Portfolios: Goldman Sachs VIT Government Money Market Fund SA American Century Inflation Protection SA Federated Hermes Corporate Bond SA Fixed Income Index SA Fixed Income Intermediate Index SA JPMorgan MFS Core Bond SA JPMorgan Ultra-Short Bond SA PIMCO Global Bond Opportunities SA Wellington Government and Quality Bond Index Fund-of-Funds Portfolios SA Global Index Allocation 90/10 SA Global Index Allocation 75/25 SA Global Index Allocation 60/40 SA Index Allocation 90/10 SA Index Allocation 80/20 SA Index Allocation 60/40 Actively Managed Fund-of-Funds: SA Allocation Balanced SA Allocation Growth SA Allocation Moderate SA Allocation Moderate Growth DCA Fixed Accounts* 6-Month DCA 1-Year DCA *You may use a DCA Fixed Account to invest your target allocation in accordance with the investment requirements. |
A-10
| 10% Secure Value Account |
90% in one or more of the following Variable Portfolios, except as otherwise noted: Goldman Sachs VIT Government Money Market Fund SA American Century Inflation Protection SA American Funds VCP Managed Allocation* SA BlackRock VCP Global Multi Asset* SA Federated Hermes Corporate Bond SA Fixed Income Index SA Fixed Income Intermediate Index SA JPMorgan MFS Core Bond SA JPMorgan Ultra-Short Bond SA PIMCO Global Bond Opportunities SA PIMCO VCP Tactical Balanced* SA Schroders VCP Global Allocation* SA T. Rowe Price VCP Balanced* SA VCP Dynamic Allocation SA VCP Dynamic Strategy SA VCP Index Allocation SA Wellington Government and Quality Bond * You may invest up to a maximum of 50% in each of these Variable Portfolios. |
If your contract was purchased between October 1, 2013 and April 30, 2015, and you elected the optional Polaris Income Plus Income (formerly called Sunamerica Income Plus) Living Benefit, the following Investment Requirements are applicable:
| 20% Secure Value Account |
80% in one or more of the following Variable Portfolios, except as otherwise noted: Goldman Sachs VIT Government Money Market Fund SA American Century Inflation Protection SA American Funds VCP Managed Allocation* SA BlackRock VCP Global Multi Asset* SA Federated Hermes Corporate Bond SA Fixed Income Index SA Fixed Income Intermediate Index SA JPMorgan MFS Core Bond SA JPMorgan Ultra-Short Bond SA PIMCO Global Bond Opportunities SA PIMCO VCP Tactical Balanced* SA Schroders VCP Global Allocation* SA T. Rowe Price VCP Balanced* SA VCP Dynamic Allocation SA VCP Dynamic Strategy SA VCP Index Allocation SA Wellington Government and Quality Bond * You may invest up to a maximum of 50% in each of these Variable Portfolios. Previously, you could only invest up to 10%. This change is designed to give you greater flexibility in choosing your allocation. |
POLARIS INCOME BUILDER
If your contract was purchased between May 1, 2015 and April 30, 2018, and you elected the optional Polaris Income Builder Living Benefit, you must allocate your assets in accordance with the following:
| 10% Secure Value Account |
90% in one or more of the following Variable Portfolios, except as otherwise noted: Goldman Sachs VIT Government Money Market Fund SA American Century Inflation Protection SA American Funds VCP Managed Allocation* SA BlackRock VCP Global Multi Asset* SA Federated Hermes Corporate Bond SA Fixed Income Index SA Fixed Income Intermediate Index SA JPMorgan MFS Core Bond SA JPMorgan Ultra-Short Bond SA PIMCO Global Bond Opportunities SA PIMCO VCP Tactical Balanced* SA Schroders VCP Global Allocation* SA T. Rowe Price VCP Balanced* SA VCP Dynamic Allocation SA VCP Dynamic Strategy SA VCP Index Allocation SA Wellington Government and Quality Bond *You may invest up to a maximum of 50% in each of these Variable Portfolios. |
A-11
If your contract was purchased between October 1, 2013 and April 30, 2015, and you elected the optional Polaris Income Builder (formerly called Sunamerica Income Builder) Living Benefit, you must allocate your assets in accordance with the following:
| 20% Secure Value Account |
80% in one or more of the following Variable Portfolios, except as otherwise noted: Goldman Sachs VIT Government Money Market Fund SA American Century Inflation Protection SA American Funds VCP Managed Allocation* SA BlackRock VCP Global Multi Asset* SA Federated Hermes Corporate Bond SA Fixed Income Index SA Fixed Income Intermediate Index SA JPMorgan MFS Core Bond SA JPMorgan Ultra-Short Bond SA PIMCO Global Bond Opportunities SA PIMCO VCP Tactical Balanced* SA Schroders VCP Global Allocation* SA T. Rowe Price VCP Balanced* SA VCP Dynamic Allocation SA VCP Dynamic Strategy SA VCP Index Allocation SA Wellington Government and Quality Bond *You may invest up to a maximum of 50% in each of these Variable Portfolios. Previously, you could only invest up to 10%. This change is designed to give you greater flexibility in choosing your allocation. |
| Variable Portfolios |
Allocation 1 |
Allocation 2 |
Allocation 3 |
Allocation 4* |
| Invesco V.I. Comstock Fund |
5.00% |
5.00% |
6.00% |
8.00% |
| Invesco V.I. Growth and Income Fund |
6.00% |
7.00% |
8.00% |
8.00% |
| SA AB Growth |
3.00% |
4.00% |
4.00% |
6.00% |
| SA AB Small & Mid Cap Value |
1.00% |
1.00% |
1.00% |
2.00% |
| SA American Century Inflation Protection |
5.00% |
3.00% |
2.00% |
0.00% |
| SA American Funds Global Growth |
2.00% |
3.00% |
4.00% |
6.00% |
| SA American Funds Growth-Income |
0.00% |
0.00% |
1.00% |
4.00% |
| SA Federated Hermes Corporate Bond |
10.00% |
8.00% |
7.00% |
1.00% |
| SA Fidelity Institutional AM® Real Estate |
0.00% |
0.00% |
0.00% |
1.00% |
| SA Franklin BW U.S. Large Cap Value |
4.00% |
4.00% |
4.00% |
5.00% |
| SA Franklin Small Company Value |
0.00% |
2.00% |
2.00% |
1.00% |
| SA Franklin Systematic U.S. Large Cap Value |
3.00% |
3.00% |
3.00% |
5.00% |
| SA Janus Focused Growth |
0.00% |
1.00% |
1.00% |
2.00% |
| SA JPMorgan Emerging Markets |
0.00% |
1.00% |
2.00% |
2.00% |
| SA JPMorgan Equity-Income |
6.00% |
7.00% |
8.00% |
8.00% |
| SA JPMorgan Large Cap Core |
3.00% |
4.00% |
4.00% |
6.00% |
| SA JPMorgan MFS Core Bond |
17.00% |
13.00% |
10.00% |
5.00% |
| SA JPMorgan Ultra-Short Bond |
2.00% |
1.00% |
0.00% |
0.00% |
| SA MFS Blue Chip Growth |
2.00% |
3.00% |
4.00% |
4.00% |
| SA MFS Massachusetts Investors Trust |
6.00% |
6.00% |
7.00% |
8.00% |
| SA Morgan Stanley International Equities |
3.00% |
3.00% |
4.00% |
5.00% |
| SA PIMCO Global Bond Opportunities |
4.00% |
4.00% |
2.00% |
2.00% |
| SA PIMCO RAE International Value |
3.00% |
3.00% |
3.00% |
4.00% |
| SA PineBridge High-Yield Bond |
4.00% |
3.00% |
2.00% |
0.00% |
| SA Wellington Capital Appreciation |
3.00% |
3.00% |
4.00% |
5.00% |
| SA Wellington Government and Quality Bond |
8.00% |
8.00% |
7.00% |
2.00% |
| Total |
100% |
100% |
100% |
100% |
A-12
A-13
Appendix B – State Contract Availability and/or Variability
| PROSPECTUS PROVISION |
AVAILABILITY OR VARIATION |
ISSUE STATE |
| Administration Charge |
Contract Maintenance Fee is $30. |
New Mexico |
| Administration Charge |
Charge will be deducted pro-rata from Variable Portfolios only. |
New York Oregon Texas Washington |
| Annuity Date |
You may switch to the Income Phase any time after your first contract anniversary. |
Florida |
| Annuity Date |
You may begin the Income Phase any time 13 or more months after contract issue. |
New York |
| Early Access |
The Early Access Feature is not available for contracts purchase on or after September 2, 2016 |
Maryland |
| Free Look |
If you are age 65 or older on the contract issue date, the Free Look period is 30 days. |
Arizona |
| Free Look |
If you are age 60 or older on the contract issue date: The Free Look period is 30 days; and If you invest in the Money Market Portfolio, the Free Look amount is calculated as the Purchase Payments paid; or If you invest in Variable Portfolio(s), the Free Look amount is calculated as the greater of (1) Purchase Payments or (2) the value of your contract plus any fees paid on the day we received your request in Good Order at the Annuity Service Center. If you are younger than age 60 on the contract issue date, the Free Look amount is calculated as the value of your contract plus fees and charges on the day we received your request in Good Order at the Annuity Service Center. |
California |
| Free Look |
The Free Look period is 21 days and the amount is calculated as the value of your contract plus fees and charges on the day we receive your request in Good Order at the Annuity Service Center. |
Florida |
| Free Look |
The Free Look period is 20 days. |
Idaho North Dakota Rhode Island Texas |
| Free Look |
The Free Look amount is calculated as the greater of (1) Purchase Payments including fees and charges or (2) the value of your contract on the day we receive your request in Good Order at the Annuity Service Center. |
Arkansas New York |
| Free Look |
The Free Look amount is calculated as the value of your contract plus fees and charges on the day we received your request in Good Order at the Annuity Service Center. |
Michigan Minnesota Missouri Texas |
| Joint Ownership |
Benefits and Features to be made available to Domestic Partners. |
California District of Columbia Maine Nevada Oregon Washington Wisconsin |
| Joint Ownership |
Benefits and Features to be made available to Civil Union Partners. |
California Colorado Hawaii Illinois New Jersey Rhode Island |
| Minimum Contract Value |
The minimum remaining contract value after a partial withdrawal must be $2,000. |
New York Texas |
| Nursing Home Waiver |
The Nursing Home Waiver is not available for contracts purchased on or after May 1, 2014. |
California |
| Nursing Home Waiver |
The Nursing Home Waiver is not available for contracts purchased on or after February 6, 2017. |
Connecticut Massachusetts Pennsylvania |
| Nursing Home Waiver |
The Nursing Home Waiver is not available for contracts issued on or after May 1, 2017. |
Missouri |
B-1
| PROSPECTUS PROVISION |
AVAILABILITY OR VARIATION |
ISSUE STATE |
| Polaris Income Max Polaris Income Plus Flex Polaris Income Plus Daily Flex |
Charge will be deducted pro-rata from Variable Portfolios only. |
Connecticut Hawaii Missouri New York Oregon Texas Vermont Virginia Washington |
| Polaris Income Builder Polaris Income Plus |
Charge will be deducted pro-rata from Variable Portfolios only. * For contracts issued on or after January 23, 2017. |
Missouri* New York Oregon Texas Washington |
| Polaris Income Plus Daily |
Charge will be deducted pro-rata from Variable Portfolios only. |
Hawaii Missouri New York Oregon Texas Washington |
| Purchase Payment Age Limit |
The Purchase Payment Age Limit is the later of three years after contract issue or the Owner’s 63rd birthday for contracts issued prior to August 3, 2015. If you elected the Early Access feature, the Purchase Payment Age Limit is the later of six years after contract issue or the Owner’s 66th birthday for contracts issued prior to August 3, 2015. The Purchase Payment Age limit is not applicable to contracts issued on or after August 3, 2015. |
Kentucky Minnesota Oklahoma Texas |
| Purchase Payment Age Limit |
The Purchase Payment Age Limit is the later of two years after contract issue or the Owner’s 62nd birthday for contracts issued prior to August 3, 2015. If you elected the Early Access feature, the Purchase Payment Age Limit is the later of two years after contract issue or the Owner’s 62nd birthday for contracts issued prior to August 3, 2015. The Purchase Payment Age limit is not applicable to contracts issued on or after August 3, 2015. |
Washington |
| Transfer Privilege |
Any transfer over the limit of 15 will incur a $10 transfer fee. |
Pennsylvania Texas |
B-2
Appendix C – Formula and Examples of Calculations of the Polaris Income MAX
and Polaris Income Plus DAILY Flex Fee
The fee for Polaris Income Max and Polaris Income Plus Daily Flex is assessed against the Income Base and deducted from the contract value at the end of each Benefit Quarter.
Polaris Income Max and Polaris Income Plus Daily Flex Fee
| Number of Covered Persons |
Maximum Annual Fee Rate |
Minimum Annual Fee Rate |
Maximum Annualized Fee Rate Decrease or Increase Each Benefit Quarter* |
| One Covered Person |
2.50% |
0.60% |
±0.40% |
| Two Covered Persons |
2.50% |
0.60% |
±0.40% |
*
The fee rate can decrease or increase no more than 0.10% each quarter (0.40%/4). If you change your Income Option election on the Activation Date, the quarterly fee can increase no more than 0.1625% [(.40% + 0.25%)/4] on the first Benefit Quarter Anniversary following the Activation Date.
Please see the Rate Sheet Supplement that must accompany this prospectus for the applicable initial annual fee rate.
| Lifetime Income Option Change Fee* |
0.25% |
*
The sum of the Living Benefit fee and Lifetime Income Option Change fee cannot be more than 0.625% (2.50%/4) for each Benefit Quarter. The sum of the Living Benefit feature fee rate and Lifetime Income Option Change fee rate cannot exceed the Maximum Annual Fee Rate stated in the table above.
The initial annual fee rate is guaranteed for the first Benefit Year. Subsequently, the fee rate may change quarterly subject to the parameters identified in the table above. Any fee rate adjustment is based on the non-discretionary formula stated below which is tied to the change in the Volatility Index (“VIX”), an index of market volatility reported by the Chicago Board Options Exchange. The fee rate is based on the quarterly average of the daily VIX squared values (VIX multiplied by VIX on the same day) as of Market Close on each day during the Benefit Quarter for which the fee is being calculated (the “Quarterly Average (Daily VIX2)”). In general, as the Quarterly Average (Daily VIX2) decreases or increases, your fee rate will decrease or increase accordingly, subject to the maximums and minimums identified in the table above.
If you change your Lifetime Income Option on the Activation Date, the Lifetime Income Option Change fee will be assessed and deducted from your contract value starting on the first Benefit Quarter Anniversary following the Activation Date and quarterly thereafter. The fee is calculated as a percentage of the Income Base. The sum of the Living Benefit fee and Lifetime Income Option Change fee cannot exceed the Maximum Annual Fee Rate shown in the table above.
The non-discretionary formula used in the calculation of the annual fee rate applicable after the first Benefit Year is:
Initial Annual Fee Rate + {0.05% x [Quarterly Average (Daily VIX2)/33 – 10]}
You may find the value of the VIX for any given day by going to the Chicago Board Options Exchange website, www.cboe.com.
Please see APPENDIX E — LIVING BENEFIT FOR CONTRACTS ISSUED PRIOR TO MAY 1, 2023 for applicable fee rates if your contract was issued prior to May 1, 2023. If you purchased your contract on or after May 1, 2023, please see APPENDIX J - LIVING BENEFIT RATES FOR CONTRACTS ISSUED ON OR AFTER MAY 1, 2023 (EXCEPT IN NEW YORK) and APPENDIX K - LIVING BENEFIT RATES CONTRACTS ISSUED ON OR AFTER MAY 1, 2023 (IN NEW YORK).
Example
Assumptions:
•
Polaris Income Max Lifetime Income Option 1 for one Covered Person was elected at issue.
•
The initial annual fee rate is 1.45%
•
The assumed Quarterly Averages (Daily VIX2) are as displayed from the table below:
| Benefit Quarter |
Quarterly Average (Daily VIX2) |
Calculated Formula Value* |
Annual Fee Rate |
Quarterly Fee Rate** |
| 1st |
525.71 |
N/A |
1.45% |
0.3625% |
| 2nd |
412.12 |
N/A |
1.45% |
0. 3625% |
| 3rd |
770.25 |
N/A |
1.45% |
0.3625% |
| 4th |
573.97 |
N/A |
1.45% |
0.3625% |
| 5th |
204.42 |
1.26% |
1.26% |
0.3150% |
*
The Calculated Formula Value equals the number resulting from the application of the formula stated above. This amount is compared to the minimum and maximum fee and the maximum quarterly fee increase or decrease to determine the annual fee rate each quarter.
**
The Quarterly Fee Rate is the Annual Fee Rate divided by 4.
The Annual Fee Rates and Quarter Fee Rates are calculated as follows:
In the 5th Benefit Quarter, the Quarterly Average (Daily VIX2) is 204.42. We calculate the Annual Fee Rate in the 5th Benefit Quarter as follows:
Step 1:
Calculation of the Annual Fee Rate
Initial Annual Fee Rate + {0.05% x [Quarterly Average (Daily VIX2)/33 – 10]}
1.45% + {0.05% x [204.42/33 – 10]}
1.45% + [0.05% x (–3.81)]
C-1
1.45% + (–0.19%) = 1.26% (Annual Fee Rate)
Step 2:
Determine whether the Annual Fee Rate calculated in Step 1 is within the Maximum or Minimum Annual Fee Rate and within the Maximum Quarterly Annualized Fee Rate Increase or Decrease
1.45% – 1.26% = 0.19% which is within 0.40% of the previous Annual Fee Rate (1.45%).
1.26% is higher than the Minimum Annual Fee Rate (0.60%) and is lower than Maximum Annual Fee Rate (2.50%)
Therefore, the Annual Fee Rate for the 5th Benefit Quarter is 1.26%
The Quarterly Fee Rate is 0.3150% (or 1.26% divided by 4).
After the 5th Benefit Quarter, until the 12th Benefit Quarter, the assumed Quarterly Averages (Daily VIX2) are as displayed from the table below:
| Benefit Quarter |
Quarterly Average (Daily VIX2) |
Calculated Formula Value |
Annual Fee Rate |
Quarterly Fee Rate |
| 6th |
351.93 |
1.48% |
1.48% |
0.3700% |
| 7th |
307.03 |
1.42% |
1.42% |
0.3550% |
| 8th |
602.30 |
1.86% |
1.82% |
0.4550% |
| 9th |
698.25 |
2.01% |
2.01% |
0.5025% |
| 10th |
323.74 |
1.44% |
1.61% |
0.4025% |
| 11th |
525.72 |
1.75% |
1.75% |
0.4375% |
| 12th |
765.45 |
2.11% |
2.11% |
0.5275% |
The Annual Fee Rates and Quarterly Fee Rates are calculated as follows:
In the 8th Benefit Quarter, the Quarterly Average (Daily VIX2) increases to 602.30. We calculate the Annual Fee Rate on the 8th Benefit Quarter Anniversary as follows:
Step 1:
Calculation of the Annual Fee Rate
Initial Annual Fee Rate + {0.05% x [Quarterly Average (Daily VIX2)/33 – 10]}
1.45% + {0.05% x [602.30/33 – 10]}
1.45% + [0.05% x (8.25)]
1.% + 0.41% = 1.86% (Annual Fee Rate)
Step 2:
Determine whether the Annual Fee Rate calculated in Step 1 is within the Maximum or Minimum Annual Fee Rate and within the Maximum Quarterly Annualized Fee Rate Increase or Decrease
1.86% – 1.42% = 0.44% which is more than 0.40% higher of the previous Annual Fee Rate of 1.42%.
The Annual Fee Rate is adjusted to be exactly 0.40% higher than the previous Annual Fee Rate, which is 1.82% (1.42% + 0.40%). This is within the Minimum and Maximum Annual Fee Rates.
Therefore, the Quarterly Fee Rate is 0.4550% (or 1.82% divided by 4).
In the 10th Benefit Quarter, the Quarterly Average (Daily VIX2) decreases to 323.74. We calculate the Annual Fee Rate on the 10th Benefit Quarter Anniversary as follows:
Step 1:
Calculation of the Annual Fee Rate
Initial Annual Fee Rate + {0.05% x [Quarterly Average (Daily VIX2)/33 – 10]}
1.45% + {0.05% x [323.74/33 – 10]}
1.45% + [0.05% x (–0.19)]
1.45% + (–0.01%) = 1.44% (Annual Fee Rate)
Step 2:
Determine whether the Annual Fee Rate calculated in Step 1 is within the Maximum or Minimum Annual Fee Rate and within the Maximum Quarterly Annualized Fee Rate Increase or Decrease
2.01% – 1.44% = 0.57% which is more than 0.40% Quarterly Annualized Fee Rate Decrease from the previous Annual Fee Rate of 2.01%.
The Annual Fee Rate is adjusted to be exactly 0.40% lower than the previous Annual Fee Rate, which is 1.61% (2.01% – 0.40%).
Therefore, the Quarterly Fee Rate is 0.4025% (or 1.61% divided by 4).
Assume that Lifetime Income is activated and Lifetime Income Option 1 was changed to Lifetime Income Option 2 during the 13th Benefit Quarter.
The assumed Quarterly Averages (Daily VIX2) are as follows:
| Benefit Quarter |
Quarterly Average (Daily VIX2) |
Calculated Formula Value |
Annual Fee Rate |
Quarterly Fee Rate |
Annual Lifetime Income Option Change Fee |
Quarterly Lifetime Income Option Change Fee |
| 12th |
765.45 |
2.11% |
2.11% |
0.5275% |
N/A |
N/A |
| 13th |
957.12 |
2.40% |
2.50% |
0.6250% |
0.10% |
0.0250% |
| 14th |
1,025.43 |
2.50% |
2.50% |
0.6250% |
0.00% |
0.0000% |
| 15th |
721.89 |
2.04% |
2.35% |
0.5875% |
0.25% |
0.0625% |
| 16th |
207.38 |
1.26% |
1.95% |
0.4875% |
0.25% |
0.0625% |
On every Benefit Quarter after the 14th, the combined Annual Fee Rate, which includes the Income Option Change Fee, will continue to increase or decrease depending on the movement of the Quarterly Average (Daily VIX2), subject to the Minimum and Maximum Annual Fee Rates shown above.
C-2
In the 13th Benefit Quarter, the Quarterly Average (Daily VIX2) increases to 957.12. We calculate the Annual Fee Rate on the 13th Benefit Quarter Anniversary as follows:
Step 1:
Calculation of the Annual Fee Rate
Initial Annual Fee Rate + {0.05% x [Quarterly Average (Daily VIX2)/33 – 10]}
1.45% + {0.05% x [957.12/33 – 10]}
1.45% + (0.05% x 19)
1.45% + 0.95% = 2.40% (Annual Fee Rate without Lifetime Income Option Change Fee)
Step 2:Determine whether the Annual Fee Rate calculated in Step 1 is within the Maximum or Minimum Annual Fee Rate and within the Maximum Quarterly Annualized Fee Rate Increase of Decrease
2.40% - 2.11% = 0.29% which is within 0.40% of the previous Annual Fee Rate (2.11%). This is within the Minimum and Maximum Annual Fee Rates.
Step 3:
Combine the Annual Fee Rate calculated in Step 2 with the Lifetime Income Option Change Fee Rate of 0.25% to determine that it is within the Maximum Annual Fee Rate.
2.40% + 0.25% = 2.65% which is within the Maximum Annual fee Rate (2.50%).
The sum of the Living Benefit fee and the Lifetime Income Option Change fee is adjusted to be 2.50%. Therefore, the Lifetime Income Option Change fee charged is 0.10% (2.50% - 2.40%), and the Quarterly Fee Rate is 0.6250% (or 2.50% divided by 4).
In the 14th Benefit Quarter, the Quarterly Average (Daily VIX2) increases to 1,025.43. We calculate the Annual Fee Rate on the 14th Benefit Quarter Anniversary as follows:
Step 1:
Calculation of the Annual Fee Rate
Initial Annual Fee Rate + {0.05% x [Quarterly Average (Daily VIX2)/33 – 10]}
1.45% + {0.05% x [1,025.43/33 – 10]}
1.45% + (0.05% x 21.07)
1.45% + 1.05% = 2.50% (Annual Fee Rate without Lifetime Income Option Change Fee)
Step 2:Determine whether the Annual Fee Rate calculated in Step 1 is within the Maximum or Minimum Annual Fee Rate and within the Maximum Quarterly Annualized Fee Rate Increase of Decrease
2.50% - 2.50% = 0.00% which is within 0.40% of the previous Annual Fee Rate (2.50%).
Step 3:
Combine the Annual Fee Rate calculated in Step 2 with the Lifetime Income Option Change Fee Rate of 0.25% to determine that it is within the Maximum Annual Fee Rate.
2.50% + 0.25% = 2.75% which is higher than the Maximum Annual fee Rate (2.50%). The sum of the Living Benefit fee and the Lifetime Income Option Change fee is adjusted to be 2.50%.
Therefore, the Lifetime Income Option Change fee charged is 0.00% (2.50% - 2.50%), and the Quarterly Fee Rate is 0.6250% (or 2.50% divided by 4).
After the 14th Benefit Quarter, the combined Annual Fee Rate will continue to increase or decrease depending on the movement of the Quarterly Average (Daily VIX2). If your contract value falls to zero, the fee will no longer be deducted.
C-3
Appendix D – Optional Living Benefits Examples
The following examples demonstrate how increases to the Income Base and withdrawals taken from the contract affect the values of the currently offered Living Benefits – Polaris Income Max and Polaris Income Plus Daily Flex. The examples are based on a hypothetical contract over an extended period of time and do not assume any specific rate of return nor do they represent how your contract will actually perform.
Examples 1-7 below assume election of Polaris Income Max Living Benefit for one Covered Person based on the assumptions shown below. Your percentages may differ based on the Income Option you elected and the Covered Person's age on the Activation Date. These examples are intended to demonstrate how the living benefits are calculated. Please see the Rate Sheet Supplement that must accompany this prospectus for the Income Credit Percentage, Maximum Annual Withdrawal Percentage and Protected Income Payment Percentage applicable to your contract.
Example 1: Initial Values
The values shown below are based on the following assumptions:
•
Benefit Effective Date = contract issue date
•
Covered Person = Owner age 65 on the Benefit Effective Date
•
Initial Purchase Payment = $100,000
•
Income Credit Percentage = 5.25%
•
Maximum Annual Withdrawal Percentage = 6.25%
| Values as of |
Purchase Payments Invested |
Contract Value |
Income Base |
Income Credit Base |
Maximum Annual Withdrawal Amount upon Activation |
| Benefit Effective Date |
$100,000 |
$100,000 |
$100,000 |
$100,000 |
$6,250 |
•
Income Base = Initial Purchase Payment = $100,000
•
Income Credit Base = Initial Purchase Payment = $100,000
•
Maximum Annual Withdrawal Amount = Income Base x Maximum Annual Withdrawal Percentage
= $100,000 x 6.25% = $6,250, if Lifetime Income is activated
Example 2: Impact of Adding Subsequent Purchase Payments and Attaining Higher Anniversary Values
The values shown below are based on the assumptions stated in Example 1 above, in addition to the following:
•
Subsequent Purchase Payment invested in the first Benefit Year = $60,000.
•
Subsequent Purchase Payment invested in the second Benefit Year = $90,000.
•
No withdrawals taken in the first 2 Benefit Years.
| Values as of |
Purchase Payment Invested |
Assumed Contract Value |
Anniversary Value |
Income Base |
Income Credit Base |
Income Credit |
Maximum Annual Withdrawal Amount upon Activation |
| Benefit Effective Date |
$100,000 |
$100,000 |
— |
$100,000 |
$100,000 |
— |
$6,250 |
| Year 1 |
$60,000 |
$165,000 |
— |
$160,000 |
$160,000 |
— |
$10,000 |
| 1st Anniversary |
— |
$170,000 |
$170,000 |
$170,000 |
$170,000 |
$8,400 |
$10,625 |
| Year 2 |
$90,000 |
$255,000 |
— |
$260,000 |
$260,000 |
— |
$16,250 |
| 2nd Anniversary |
— |
$287,000 |
$287,000 |
$287,000 |
$287,000 |
$13,650 |
$17,938 |
The values of the feature are impacted by adding subsequent Purchase Payments and attaining Higher Anniversary Values as follows:
•
The Income Base, Income Credit Base and the Maximum Annual Withdrawal Amount (“MAWA”) are recalculated at the time each subsequent Purchase Payment is received.
D-1
•
The Income Base and Income Credit Base are increased to a Higher Anniversary Value on each Benefit Year Anniversary if the Anniversary Value is greater than the current Income Base plus the Income Credit; and the Maximum Annual Withdrawal Amount (“MAWA”) is recalculated based on the value of the new Income Base, available only if Lifetime Income is activated.
○
In year 1, a subsequent Purchase Payment of $60,000 was added. The Income Base and Income Credit Base were increased to $160,000 ($100,000 + $60,000); and the MAWA was increased to $10,000 ($160,000 x 6.25%).
○
On the 1st Benefit Year Anniversary, the Income Base and Income Credit Base were increased to $170,000 ($170,000 is greater than $160,000 + $8,400 Income Credit); and the MAWA was increased to $10,625 ($170,000 x 6.25%).
○
In year 2, a subsequent Purchase Payment of $90,000 was added. The Income Base and Income Credit Base were increased to $260,000 ($170,000 + $90,000); and the MAWA was increased to $16,250 ($260,000 x 6.25%).
○
On the 2nd Benefit Year Anniversary, the Income Base and Income Credit Base were increased to $287,000 ($287,000 is greater than $260,000 + $13,650 Income Credit); and the MAWA was increased to $17,938 ($287,000 x 6.25%).
Example 3: Impact of Income Credit on Income Base and Income Credit Base
The values shown below are based on the assumptions stated in Examples 1 and 2 above, in addition to the following:
•
An Income Credit was added to the Income Base on the third Benefit Year Anniversary, prior to the Activation Date.
| As of |
Assumed Contract Value |
Withdrawal Taken |
Anniversary Value |
Income Base |
Income Credit Base |
Income Credit |
Maximum Annual Withdrawal Amount upon Activation |
| 2nd Anniversary |
$287,000 |
— |
$287,000 |
$287,000 |
$287,000 |
$13,650 |
$17,938 |
| 3rd Anniversary |
$300,000 |
— |
$300,000 |
$302,068 |
$287,000 |
$15,068 |
$18,879 |
•
When the Income Base is increased due to the addition of the Income Credit, the Income Credit Base is not increased.
Note: The Income Credit Base is increased by the addition of the subsequent Purchase Payments and when the Income Base is increased to a Higher Anniversary Value (as shown in Example 2 above).
Example 4: Impact of Taking Withdrawals prior to the Activation Date
The values shown below are based on the assumptions stated in Examples 1, 2, and 3 above, in addition to the following:
•
A withdrawal of $5,000 was taken in the fourth Benefit Year, prior to the Activation Date.
•
Assumed Contract Value is prior to the Withdrawal Taken.
| As of |
Assumed Contract Value |
Withdrawal Taken |
Anniversary Value |
Income Base |
Income Credit Base |
Income Credit |
Maximum Annual Withdrawal Amount upon Activation |
| 3rd Anniversary |
$300,000 |
— |
$300,000 |
$302,068 |
$287,000 |
$15,068 |
$18,879 |
| Year 4 |
$305,000 |
$5,000 |
— |
$279,116 |
$282,295 |
— |
$18,570 |
| 4th Anniversary |
$312,000 |
— |
$312,000 |
$312,000 |
$14,820 |
$14,820 |
$19,500 |
•
The Income Base and Income Credit Base are reduced in the same proportion by which the contract value is reduced by the pre-Income Activation withdrawal amount.
○
In year 4, the reduction proportion was 1.6393% ($5,000/$305,000); the reduced Income Base was $297,116 ($302,068 x [1 – 1.6393%] and Income Credit Base was $282,295 ($287,000 x [1 – 1.6393%]).
○
On the 4th Benefit Year Anniversary, the Income Base and Income Credit Base were increased to $312,000 (Anniversary Value $312,000 is greater than $297,116 + $14,820 Income Credit) and the MAWA was increased to $19,500 ($312,000 x 6.25%).
D-2
Example 5: Impact of Taking Withdrawals up to the Maximum Annual Withdrawal Amount after the Activation Date
The values shown below are based on the assumptions stated in Examples 1, 2, 3 and 4 above, in addition to the following:
•
A withdrawal of 100% of MAWA was taken in the fifth Benefit Year, after the Activation Date.
| As of |
Assumed Contract Value |
Withdrawal Taken |
Anniversary Value |
Income Base |
Income Credit Base |
Income Credit |
Maximum Annual Withdrawal Amount |
| 4th Anniversary |
$312,000 |
— |
$312,000 |
$312,000 |
$312,000 |
$14,820 |
$19,500 |
| Year 5 |
$302,000 |
$19,500 |
— |
$312,000 |
— |
— |
$19,500 |
| 5th Anniversary |
$305,000 |
— |
$305,000 |
$312,000 |
— |
— |
$19,500 |
•
In year 5, a Lifetime Income amount of $19,500 was withdrawn.
The values of the feature are impacted by the Lifetime Income withdrawal taken as follows:
•
The Income Base is not reduced because the amount of the Lifetime Income withdrawal taken was less than or equal to the Maximum Annual Withdrawal Amount (“MAWA”).
•
No Income Credit is available after the Activation Date.
Example 6: Impact of Taking Excess Withdrawals (in excess of the Maximum Annual Withdrawal Amount) after the Activation Date
The values shown below are based on the assumptions stated in Examples 1, 2, 3, 4 and 5 above, in addition to the following:
•
Withdrawals of 8% of Income Base taken in the sixth and seventh Benefit Years.
| As of |
Assumed Contract Value |
Withdrawal Taken |
Anniversary Value |
Income Base |
Maximum Annual Withdrawal Amount |
| 5th Anniversary |
$305,000 |
— |
$305,000 |
$312,000 |
$19,500 |
| Year 6 |
$305,000 |
$24,960 |
— |
$306,033 |
$19,127 |
| 6th Anniversary |
$280,000 |
— |
$290,000 |
$306,033 |
$19,127 |
| Year 7 |
$290,000 |
$24,483 |
— |
$299,982 |
$18,749 |
| 7th Anniversary |
$260,000 |
— |
$230,000 |
$299,982 |
$18,749 |
The values of the feature are impacted by taking withdrawals in excess of the Maximum Annual Withdrawal Amount (“MAWA”) after the Activation Date as follows:
•
The Income Base is reduced by the same proportion by which the contract value is reduced by the amount in excess of the MAWA.
○
In year 6, the reduction proportion was 1.9124% ([$24,960 - $19,500] / [$305,000 - $19,500]); the Income Base was reduced to $306,033 ($312,000 x [1 – 1.9124%]); and the MAWA was reduced to $19,127 ($306,033 x 6.25%).
○
In year 7, the reduction proportion was 1.9772% ([$24,483 – $19,127] / [$290,000 - $19,127]); the Income Base was reduced to $299,982 ($306,033 x [1 – 1.9772%]); and the MAWA was reduced to $18,749 ($299,982 x 6.25%).
•
The MAWA is recalculated based on the reduced Income Base.
D-3
Example 7: Protected Income Payment
The values shown below are based on the assumptions stated in Examples 1, 2, 3, 4, 5 and 6 above, in addition to the following:
•
Contract values as shown below and reduced to $0 in Year 11 due to fees charged and market conditions.
•
Protected Income Payment Percentage = 4.0%
•
No withdrawals taken after the seventh Benefit Year.
| Values as of |
Assumed Contract Value |
Anniversary Value |
Income Base |
Maximum Annual Withdrawal Amount |
Protected Income Payment |
| 7th Anniversary |
$230,000 |
$260,000 |
$299,982 |
$18,749 |
— |
| 8th Anniversary |
$150,000 |
$150,000 |
$299,982 |
$18,749 |
— |
| 9th Anniversary |
$100,000 |
$100,000 |
$299,982 |
$18,749 |
— |
| 10th Anniversary |
$50,000 |
$50,000 |
$299,982 |
$18,749 |
— |
| Year 11 |
$0 |
$0 |
$299,982 |
$18,749 |
— |
| 11th Anniversary |
$0 |
$0 |
$299,982 |
— |
$11,999 |
•
The Protected Income Payment of $11,999 ($299,982 x 4%) will be paid annually for the lifetime of the Covered Person.
Examples 8-13 below assume election of Polaris Income Daily Flex Living Benefit for one Covered Person based on the assumptions shown below. Your percentages may differ based on the Income Option you elected and the Covered Person's age on the Activation Date. These examples are intended to demonstrate how the living benefits are calculated. Please see the Rate Sheet Supplement that must accompany this prospectus for the Minimum Income Base Percentage, Maximum Annual Withdrawal Percentage and the Protected Income Payment Percentage applicable to your contract.
Example 8: Initial Values
The values shown below are based on the following assumptions:
•
Benefit Effective Date = contract issue date
•
Covered Person = Owner age 65 on the Benefit Effective Date
•
Initial Purchase Payment = $100,000
•
Maximum Annual Withdrawal Percentage = 6.00%
| Value as of |
Purchase Payments Invested |
Contract Value |
Minimum Income Base |
Income Base |
Maximum Annual Withdrawal Amount upon Activation |
| Benefit Effective Date |
$100,000 |
$100,000 |
$100,000 |
$100,000 |
$6,000 |
•
Minimum Income Base = Income Base = Initial Purchase Payment = $100,000
•
Maximum Annual Withdrawal Amount = Income Base x Maximum Annual Withdrawal Percentage
= $100,000 x 6.00% = $6,000, if Lifetime Income is activated
Example 9: Impact of Increase in Income Base due to Daily Step-up Values, Adding Subsequent Purchase Payments, and Minimum Income Base at Benefit Year Anniversaries prior to the Activation Date
The values shown below are based on the assumptions stated in Example 8 above, in addition to the following:
•
Subsequent Purchase Payment invested in the 1st Benefit Year = $60,000
•
Subsequent Purchase Payment invested in the 2nd Benefit Year = $90,000
•
No withdrawals taken in the first 2 Benefit Years
•
Annual Minimum Income Base Percentage = 5.00%
D-4
•
The Maximum Annual Withdrawal Amounts in this example are only available if Lifetime Income is activated
| Values as of |
Purchase Payment Invested |
Assumed Contract Value |
Step-up Value |
Minimum Income Base |
Income Base |
Maximum Annual Withdrawal Amount upon Activation |
| Benefit Effective Date |
$100,000 |
$100,000 |
— |
$100,000 |
$100,000 |
$6,000 |
| Year 1 – Day 25 |
— |
$102,000 |
$102,000 |
$100,000 |
$102,000 |
$6,120 |
| Year 1 – Day 105 |
— |
$105,000 |
$105,000 |
$100,000 |
$105,000 |
$6,300 |
| Year 1 – Day 200 |
$60,000 |
$162,000 |
— |
$160,000 |
$165,000 |
$9,900 |
| Year 1 – Day 300 |
— |
$166,000 |
$166,000 |
$160,000 |
$166,000 |
$9,960 |
| 1st Anniversary |
— |
$167,000 |
$167,000 |
$168,000 |
$168,000 |
$10,080 |
| Year 2 – Day 180 |
$90,000 |
$250,000 |
— |
$258,000 |
$258,000 |
$15,480 |
| Year 2 – Day 250 |
— |
$280,000 |
$280,000 |
$258,000 |
$280,000 |
$16,800 |
| 2nd Anniversary |
— |
$279,000 |
— |
$270,500 |
$280,000 |
$16,800 |
The values of the feature are impacted by attaining the daily Step-up Values, adding subsequent Purchase Payments, and comparing to the Minimum Income Base at Benefit Year Anniversaries when no Lifetime Income withdrawals have been taken as follows:
•
If no withdrawals have been taken, the Income Base is increased to the Step-up Values on a daily basis and the Maximum Annual Withdrawal Amount (“MAWA”) is recalculated based on the new Income Base, only available after Lifetime Income is activated.
•
The Income Base and the Maximum Annual Withdrawal Amount (“MAWA”) are recalculated at the time each subsequent Purchase Payment is received.
○
In year 1 – day 25, the Income Base was increased to the Step-up Value of $102,000 (Contract Value $102,000 is greater than the current Income Base $100,000) and the MAWA was increased to $6,120 ($102,000 x 6.00%).
○
In year 1 – day 105, the Income Base was increased to the Step-up Value of $105,000 (Contract Value $105,000 is greater than the current Income Base $102,000) and the MAWA was increased to $6,300 ($105,000 x 6.00%)
○
In year 1 – day 200, the Minimum Income Base was increased to $160,000 ($100,000 + $60,000 subsequent Purchase Payment), the Income Base was increased to $165,000 ($105,000 + $60,000 subsequent Purchase Payment) and the MAWA was increased to $9,900 ($165,000 x 6.00%).
•
While no Lifetime Income withdrawals have been taken, the Income Base continues to be increased to the Step-up Values on a daily basis and the Maximum Annual Withdrawal Amount (“MAWA”) is recalculated based on the new Income Base. At Benefit Year Anniversaries, the Income Base can also step up to the Minimum Income Base if the Minimum Income Base is greater than the current Income Base.
○
In year 1 – day 300, the Income Base was increased to the Step-up Value of $166,000 (Contract Value $166,000 is greater than the current Income Base $165,000) and the MAWA was increased to $9,960 ($166,000 x 6.00%).
○
On the 1st Benefit Year Anniversary, the Income Base was increased to the Minimum Income Base of $168,000 ($160,000 x 105%, Minimum Income Base $168,000 is greater than both Step-Up Value $167,000 and current Income Base $166,000) and the MAWA was increased to $10,080 ($168,000 x 6.00%).
○
In year 2 – day 180, the Income Base was increased to $258,000 ($168,000 + $90,000 subsequent Purchase Payment), and the MAWA was increased to $15,480 ($258,000 x 6.00%).
○
In year 2 – day 250, the Income Base was increased to the Step-up Value of $280,000 (Contract Value $280,000 is greater than the current Income Base $258,000) and the MAWA was increased to $16,800 ($280,000 x 6.00%).
○
On the 2nd Benefit Year Anniversary, the Income Base remained unchanged at $280,000 (current Income Base $280,000 is greater than Minimum Income Base $270,500 ($160,000 1st year Purchase Payments x 110% + $90,000 2nd year Purchase Payment x 105%)) and the MAWA also remained unchanged at $16,800.
D-5
Example 10: Impact of Taking Withdrawals prior to the Activation Date
The values shown below are based on the assumptions stated in the Examples 8 and 9 above, in addition to the following:
•
Withdrawals of $5,000 was taken in Benefit Year 3, prior to the Activation Date.
•
Assumed Contract Value is the amount prior to the Withdrawal Taken.
| Value as of |
Assumed Contract Value |
Withdrawal Taken |
Step-up Value |
Minimum Income Base |
Income Base |
Maximum Annual Withdrawal Amount upon Activation |
| 2nd Anniversary |
$279,000 |
— |
— |
$270,500 |
$280,000 |
$16,800 |
| Year 3 – Day 45 |
$290,000 |
— |
$290,000 |
$270,500 |
$290,000 |
$17,400 |
| Year 3 – Day 155 |
$285,000 |
$5,000 |
— |
$265,754 |
$284,912 |
$17,095 |
| Year 3 – Day 275 |
$300,000 |
— |
$300,000 |
$265,754 |
$300,000 |
$18,000 |
| 3rd Anniversary |
$310,000 |
— |
$310,000 |
$278,035 |
$310,000 |
$18,600 |
○
In year 3 – day 45, the Income Base was increased to the Step-up Value of $290,000 (Contract Value $290,000 is greater than the current Income Base $280,000) and the MAWA was increased to $17,400 ($290,000 x 6.00%).
○
In year 3 – day 155, the reduction proportion was 1.7544% ($5,000 Withdrawal/$285,000 Contract Value). The reduced Income Base was $284,912 ($290,000 x [1 – 1.7544%]) and the reduced MAWA was $17,095 ($284,912 x 6.00%). The reduced Minimum Income Base was $265,754 (110% x 1st year reduced Purchase Payments $157,193 [$160,000 x {1 – 1.7544%}] plus 105% x 2nd year reduced Purchase Payment $88,421 [$90,000 x {1 – 1.7544%}])
○
In year 3 – day 275, the Income Base was increased to the Step-up Value of $300,000 (Contract Value $300,000 Contract Value was greater than current Income Base $284,912) and the MAWA was increased to $18,000 ($300,000 x 6.00%).
○
On the third Benefit Year Anniversary, the Income Base was increased to the Step-up Value of $310,000 ($310,000 Contract Value was greater than both current Income Base $300,000 and Minimum Income Base $278,035 (115% x $157,193 + 110% x $88,421)) and the MAWA was increased to $18,600 ($310,000 x 6.00%).
Example 11: Impact of Taking Withdrawals up to the Maximum Annual Withdrawal Amount after the Activation Date
The values shown below are based on the assumptions stated in the Examples 8, 9, and 10 above, in addition to the following:
•
Withdrawals less than or equal MAWA are taken in the fourth and fifth Benefit Years, after the Activation Date.
| Value as of |
Assumed Contract Value |
Withdrawal Taken |
Step-up Value |
Minimum Income Base |
Income Base |
Maximum Annual Withdrawal Amount upon Activation |
| 3rd Anniversary |
$310,000 |
— |
$310,000 |
$278,035 |
$310,000 |
$18,600 |
| Year 4 – Day 65 |
$315,000 |
— |
$315,000 |
$278,035 |
$315,000 |
$18,900 |
| Year 4 – Day 92 |
$312,000 |
$10,000 |
— |
— |
$315,000 |
$18,900 |
| Year 4 – Day 350 |
$320,000 |
— |
$320,000 |
— |
$315,000 |
$18,900 |
| 4th Anniversary |
$311,000 |
— |
— |
— |
$320,000 |
$19,200 |
| Year 5 – Day 75 |
$325,000 |
— |
$325,000 |
— |
$320,000 |
$19,200 |
| Year 5 – Day 80 |
$322,000 |
$19,200 |
— |
— |
$320,000 |
$19,200 |
| 5th Anniversary |
$317,000 |
— |
— |
— |
$325,000 |
$19,500 |
| Year 6 – Day 155 |
$330,000 |
— |
$330,000 |
— |
$325,000 |
$19,500 |
| 6th Anniversary |
$329,000 |
— |
— |
— |
$330,000 |
$19,800 |
•
In year 4, a Lifetime Income amount of $10,000, less than MAWA was withdrawn.
•
In year 5, a Lifetime Income amount of $19,200, equal to MAWA was withdrawn.
D-6
The values of the feature are impacted prior to and after the withdrawals are taken as follows:
•
Prior to the Activation Date, the Income Base is increased to the Step-up Values on a daily basis and the Maximum Annual Withdrawal Amount (MAWA) is recalculated based on the new Income Base.
○
In year 4 – day 65, the Income Base was increased to the Step-up Value of $315,000 (Contract Value $315,000 is greater than the current Income Base $310,000) and the MAWA was increased to $18,900 ($315,000 x 6.00%).
○
In year 4 – day 92, after the Activation Date, a Lifetime Income amount of $10,000 was withdrawn, and was less than the MAWA of $18,900. The Income Base ($315,000) and the MAWA ($18,900) remained unchanged.
•
After the first Lifetime Income withdrawal has been taken, The Minimum Income Base is no longer available, and the Income Base is not increased until the next Benefit Year Anniversary date, looking back at the Step-up Values following the first Lifetime Income withdrawal.
○
In year 4 – day 350, there was a Step-up Value of $320,000, but the Income Base ($315,000) and the MAWA ($18,900) remained unchanged.
○
On the 4th Benefit Year Anniversary date, the Income Base was increased to the Step-up Value $320,000 that had occurred between the date of the Lifetime Income withdrawal and the 4th Benefit Year Anniversary date, and the MAWA was increased to $19,200 ($320,000 x 6.00%).
•
Past the first Benefit Year Anniversary date after the first Lifetime Income withdrawal has been taken, the Income Base is not increased until the next Benefit Year Anniversary date, looking back at the Step-up Values in the immediately preceding Benefit Year.
○
In year 5 – day 75, there was a Step-up Value of $325,000, but the Income Base ($320,000) and the MAWA ($19,200) remained unchanged.
○
In year 5 – day 80, a Lifetime Income amount $19,200 was withdrawn and was equal to the MAWA of $19,200. The Income Base ($320,000) and the MAWA ($19,200) remained unchanged.
○
On the 5th Benefit Year Anniversary date, the Income Base was increased to the Step-up Value $325,000 that had occurred during the immediately preceding Benefit Year, and the MAWA was increased to $19,500 ($325,000 x 6.00%).
○
In year 6 – day 155, there was a Step-up Value of $330,000, but the Income Base ($325,000) and the MAWA ($19,500) remained unchanged.
○
On the 6th Benefit Year Anniversary date, the Income Base was increased to the Step-up Value $330,000 that had occurred during the immediately preceding Benefit Year, and the MAWA was increased to $19,800 ($330,000 x 6.00%).
Example 12: Impact of Taking Excess Withdrawals (in excess of the Maximum Annual Withdrawal Amount) after the Activation Date
The values shown below are based on the assumptions stated in the Examples 8, 9, 10 and 11 above, in addition to the following:
•
Withdrawal of 8% of Income Base taken in the seventh and eighth contract years.
| Value as of |
Assumed Contract Value |
Withdrawal Taken |
Step-up Value |
Income Base |
Maximum Annual Withdrawal Amount |
| 6th Anniversary |
$329,000 |
— |
— |
$330,000 |
$19,800 |
| Year 7 – Day 37 |
$321,000 |
$26,400 |
— |
$322,769 |
$19,366 |
| Year 7 – Day 362 |
$325,000 |
— |
$325,000 |
$322,769 |
$19,366 |
| 7th Anniversary |
$317,000 |
— |
— |
$325,000 |
$19,500 |
| Year 8 – Day 46 |
$307,000 |
$26,000 |
— |
$317,652 |
$19,059 |
| 8th Anniversary |
$270,000 |
— |
— |
$317,652 |
$19,059 |
The values of the feature are impacted by taking withdrawals in excess of the Maximum Annual Withdrawal Amount (“MAWA”) as follows:
•
The Income Base is reduced by the same proportion by which the contract value is reduced by the amount in excess of the MAWA.
D-7
○
In year 7 – day 37, the reduction proportion is 2.1912% ([$26,400 - $19,800] / [$321,000 - $19,800]); the reduced Income Base was $322,769 ($330,000 x [1 – 2.1912%]) and the reduced MAWA was $19,366 ($322,769 x 6.00%).
○
In year 7 – day 362, there was a Step-up Value of $325,000, but the Income Base ($322,769) and the MAWA ($19,366) remained unchanged.
○
On the 7th Benefit Year Anniversary date, the Income Base was increased to the Step-up Value $325,000 that had occurred after the Excess Withdrawal, and the MAWA was increased to $19,500 ($325,000 x 6.00%).
○
In year 8 – day 46, the reduction proportion was 2.2609% ([$26,000 – $19,500] / [$307,000 - $19,500]); the reduced Income Base was $317,652 ($325,000 x [1 – 2.2609%]); and the reduced MAWA was $19,059 ($317,652 x 6.00%).
Example 13: Protected Income Payment
The values shown below are based on the assumptions stated in Examples 8, 9, 10, 11 and 12 above, in addition to the following:
•
Contract value as shown and reduced to $0 in Year 12 due to Lifetime Income withdrawals, fees charged and market conditions.
•
MAWA withdrawals were taken every year.
•
Protected Income Payment Percentage = 4.0%
•
There were no Step-up Values after the 8th Benefit Year Anniversary date.
| Value as of |
Assumed Contract Value |
Withdrawal Taken |
Step-up Value |
Income Base |
Maximum Annual Withdrawal Amount |
Protected Income Payment |
| 8th Anniversary |
$270,000 |
— |
— |
$317,652 |
$19,059 |
— |
| 9th Anniversary |
$150,000 |
$19,059 |
— |
$317,652 |
$19,059 |
— |
| 10th Anniversary |
$100,000 |
$19,059 |
— |
$317,652 |
$19,059 |
— |
| 11th Anniversary |
$50,000 |
$19,059 |
— |
$317,652 |
$19,059 |
— |
| Year 12 – Day 81 |
$0 |
$19,059 |
— |
$317,652 |
$19,059 |
— |
| 12th Anniversary |
$0 |
$0 |
— |
$317,652 |
— |
$12,706 |
•
The Protected Income Payment of $12,706 ($317,652 x 4%) will be paid annually for the lifetime of the Covered Person.
D-8
Appendix E – LIVING BENEFITS FOR CONTRACTS ISSUED PRIOR TO May 1, 2023
None of the Living Benefits described below are currently being offered.
Effective January 15, 2016, if you have elected a Living Benefit feature, except for either the Polaris Income Plus Flex or Polaris Income Plus Daily Flex Living Benefit feature, we will not accept subsequent Purchase Payments on or after the 1st contract anniversary from your contract issue date. You may not establish a future automatic subsequent purchase payment plan and any current payment plan has been terminated.
Table of Contents
| Polaris Income Max & Polaris Income Plus Daily Flex (October 13, 2020 to April 30, 2023) |
E-1 |
| Polaris Income Max & Polaris Income Plus Daily Flex Fee |
E-14 |
| Additional Important Information Applicable To Polaris Income Max And Polaris Income Plus Daily Flex |
E-15 |
| Polaris Income Plus Flex & Polaris Income Plus Daily Flex (May 1, 2019 to October 12, 2020) |
E-19 |
| Polaris Income Plus Flex & Polaris Income Plus Daily Flex Fee |
E-31 |
| Additional Important Information Applicable To Polaris Income Plus Flex And Polaris Income Plus Daily Flex |
E-32 |
| Polaris Income Plus Daily |
E-36 |
| Polaris Income Plus Daily Fee |
E-43 |
| Additional Important Information Applicable To Polaris Income Plus Daily |
E-44 |
| Polaris Income Plus |
E-47 |
| Polaris Income Plus Fee |
E-54 |
| Additional Important Information Applicable To Polaris Income Plus |
E-54 |
| Polaris Income Builder |
E-57 |
| Polaris Income Builder Fee |
E-62 |
| Additional Important Information Applicable To Polaris Income Builder |
E-63 |
| |
|
Polaris Income Max and POLARIS INCOME PLUS DAILY FLEX
If your contract was issued between October 13, 2020 and April 30, 2023 and you elected the Polaris Income Max or Polaris Income Plus Daily Flex Living Benefit, the following provisions are applicable to the feature you elected.
Below is a glossary of Living Benefit Terms and a summary of the key features of the optional Living Benefits offered in your contract.
Glossary of Living Benefit Terms
Activation Date
The date on which your Lifetime Income is activated. Upon activation of Lifetime Income, changes cannot be made to the Covered Person(s) or Income Options.
Anniversary Value
The contract value on any Benefit Year Anniversary. The Continuation Contribution, if applicable, is included in the calculation of Anniversary Values.
Benefit Effective Date
The date the Living Benefit is elected. The Benefit Effective Date is the same as the Contract Issue Date.
Benefit Quarter
Each consecutive 3-month period starting on the Benefit Effective Date.
Benefit Quarter Anniversary
The date following each consecutive 3 month period starting on the Benefit Effective Date. If the next Benefit Quarter Anniversary has no corresponding date, then the Benefit Quarter Anniversary will be deemed to be the following day. For example, if a Benefit Quarter Anniversary is November 29, the next Benefit Quarter Anniversary would be February 29 of the following year; however, in a non-Leap Year, there is no corresponding date. Therefore, the next Benefit Quarter Anniversary would be March 1.
Benefit Year
Each consecutive one year period starting on the Benefit Effective Date.
Benefit Year Anniversary
The date on which each Benefit Year begins.
Contract Year
Each consecutive one year period starting on the Contract Issue Date.
Covered Person(s)
The person, or persons, whose lifetime withdrawals are guaranteed under the Living Benefit.
Covered Person Changes
The Covered Person(s) may be changed in the event of Life Change Event prior to or on the Activation Date. No further changes may be made to the Covered Person(s) after the Activation Date.
Excess Withdrawal
Any withdrawal, or portion of a withdrawal, that is taken in a Benefit Year after the Activation Date and exceeds the greater of the Maximum Annual Withdrawal Amount or the Required Minimum Distribution amount as calculated by the Annuity Service Center. An Excess Withdrawal will cause the Income Base and the Maximum Annual Withdrawal Amount to be recalculated.
E-1
Higher Anniversary Value
For Polaris Income Max, the current Anniversary Value that is greater than the current Income Base.
Income Base
The Income Base is a value used to determine the Living Benefit fee and the maximum amount that may be withdrawn each Benefit Year after the Activation Date without reducing the Income Base. The Income Base is also used to determine the amount paid each year over the lifetime of the Covered Person(s), if and when the contract value is reduced to zero, but the Income Base is still greater than zero, or upon the Latest Annuity Date.
Income Credit
Applicable to Polaris Income Max only, the Income Credit is an amount that may be added to the Income Base prior to the Activation Date as shown in the following table:
| Optional Living Benefit |
Income Credit (as a percentage of the Income Credit Base) |
Income Credit Availability Prior to the Activation Date |
| Polaris Income Max |
7.00% (For contracts issued on or after July 25, 2022) 5.25% (For contracts issued prior to July 25, 2022) |
The Income Credit base and Income Base are reduced proportionately for any withdrawals taken prior to the Activation Date |
| Polaris Income Plus Daily Flex |
Not available | |
Income Credit Base
Applicable to Polaris Income Max only, the Income Credit Base is used solely as a basis for calculating the Income Credit prior to the Activation Date.
Income Credit Percentage
Applicable to Polaris Income Max only, a percentage of the Income Credit Base used to determine the Income Credit amount prior to the Activation Date. Please refer to Income Credit above for the Income Credit Percentage applicable to your contract.
Income Option
The Income Option is elected by You at contract issue. The Maximum Annual Withdrawal Amounts and Protected Income Payments offered in each Income Option vary by age and whether you elect one or two Covered Persons.
Income Option Change
A one-time opportunity to change the Income Option of your initial Living Benefit election on the Activation Date.
Investment Requirements
In order to elect the Living Benefit, you must invest your money in accordance with certain requirements outlined under Investment Requirements for Optional Living Benefits in APPENDIX A - UNDERLYING FUNDS AVAILABLE UNDER THE CONTRACT.
Life Change Event
A change to the Covered Person(s) upon marriage, divorce or death if prior to the Activation Date.
Lifetime Income
Any withdrawal taken on or after the Activation Date that is all or part of the Maximum Annual Withdrawal Amount or Protected Income Payment.
Maximum Annual Withdrawal Amount
The maximum amount that may be withdrawn each Benefit Year on or after activating Lifetime Income and while the contract value is greater than zero without reducing the Income Base.
Maximum Annual Withdrawal Percentage
The percentage used to determine the Maximum Annual Withdrawal Amount available for withdrawal each Benefit Year after activating Lifetime Income and while the contract value is greater than zero.
Minimum Income Base
Applicable to Polaris Income Plus Daily Flex only, the Minimum Income Base is a guaranteed minimum amount of the Income Base calculated on each Benefit Year Anniversary prior to the Activation Date. An annual Minimum Income Base Percentage of 6% (for contracts issued on or after July 25, 2022) or 5% (for contracts issued prior to July 25, 2022) will be applied to Purchase Payments received prior to the Activation Date. Prior to the Activation Date, any withdrawals taken will proportionately reduce all Purchase Payments used in the calculation of the Minimum Income Base.
Protected Income Payment
The amount to be paid each year over the lifetime of the Covered Person(s) after the Activation Date, if and when the contract value is reduced to zero, but the Income Base is still greater than zero or if the Latest Annuity Date has been reached.
Protected Income Payment Percentage
The percentage used to determine the Protected Income Payment.
Step-up Value
If you elect Polaris Income Plus Daily Flex, the Step-Up Value is used to determine the Income Base on a daily basis. The Step-Up Value is equal to the current contract value on any day where the current contract value is greater than the current Income Base due to favorable market performance.
How does Polaris Income Max work?
Polaris Income MaxSM locks in the greater of two values to determine the Income Base. The Income Base is initially equal to the first Purchase Payment. The Income Base is automatically locked in on each Benefit Year Anniversary, as the greater of (1) the Higher Anniversary Value, or (2) the Income Base increased by any available Income Credit.
E-2
Polaris Income Max offers guaranteed lifetime income plus the opportunity to increase income by locking in the greater of either the contract’s Higher Anniversary Value, or an Income Base with an annual Income Credit, if any. If you elect Polaris Income Max, you may choose from Income Options 1, 2 or 3, but must elect the date on which your Lifetime Income is activated (the “Activation Date”).
Polaris Income Max allows you flexibility to make a one-time change to your initial elections of: 1) Covered Person(s) (the “Covered Person Change”) and 2) Income Options (the “Income Option Change”) on the Activation Date. The Covered Person Change is also permitted where there is a marriage, divorce, or death prior to the Activation Date (the “Life Change Event”) of one of the original Covered Person(s). You may take withdrawals prior to the Activation Date and those withdrawals will not lock in the Maximum Annual Withdrawal Percentage and Protected Income Payment Percentage. However, withdrawals taken prior to the Activation Date will reduce the Income Base, Income Credit Base, and Purchase Payments in the same proportion by which the contract value is reduced by the withdrawal.
The annual Income Credit is an amount we may add to the Income Base each year prior to Income Activation. The Income Credit is determined by multiplying the applicable Income Credit Percentage by the Income Credit Base.
Prior to Activation Date, if withdrawals are taken, the Income Credit amount is reduced because it will be based on the proportionately reduced Income Credit Base.
On or after the Activation Date, the Income Credit will no longer be available.
Please see “How do increases to the Income Base and Income Credit Base work under Polaris Income Max?” below.
How does Polaris Income Plus Daily Flex work?
Polaris Income Plus Daily Flex® offers guaranteed lifetime income plus the opportunity to increase income by locking in Step-up Values. If you elect Polaris Income Plus Daily Flex, you may choose from Income Options 1, 2, or 3, but must elect the date on which your Lifetime Income is activated (the “Activation Date”).
Polaris Income Plus Daily Flex allows you flexibility to make a one-time change to your initial elections of: 1) Covered Person(s) (the “Covered Person Change”) and 2) Income Option (the “Income Option Change”) on the Activation Date. The Covered Person(s) Change is permitted where there is a marriage, divorce, or death prior to the Activation Date (the “Life Change Event”) of the original Covered Person(s). At least one of the original named Covered Person(s) must remain on the contract. You may take withdrawals prior to the Activation Date and those withdrawals will not lock in the Maximum Annual Withdrawal Percentage and Protected Income Payment Percentage. However, withdrawals taken prior to the
Activation Date will reduce the Income Base and Purchase Payments in the same proportion by which the contract value is reduced by the withdrawal.
Prior to the Activation Date, the Income Base step-ups, if any, occur on a daily basis. The Income Base is the basis for the Covered Person(s)’ Lifetime Income. The Income Base is initially equal to the first Purchase Payment, increased by any subsequent Purchase Payments, if any, and reduced proportionately for any withdrawals made. In addition, you will be eligible for the Minimum Income Base on every Benefit Year Anniversary prior to the Activation Date. The Minimum Income Base is a specified percentage of the Purchase Payment(s). The Purchase Payment(s) used to calculate the Minimum Income Base are reduced for any withdrawals taken prior to the Activation Date.
On or after the Activation Date, the Minimum Income Base will no longer increase on future Benefit Anniversaries. Please see “How do increases in the Income Base work under Polaris Income Plus Daily Flex?” below.
E-3
What are the differences between Polaris Income Max and Polaris Income Plus Daily Flex?
| Living Benefit Parameter |
Polaris Income Max |
Polaris Income Plus Daily Flex |
| This Living Benefit is suitable for the type of investor |
Who wants the guarantee of Income Credits prior to the Activation Date |
Who wants the greater flexibility of investment options and wants a Living Benefit that provides the ability for the Income Base to step up more frequently to Step-Up Values. |
| Minimum Income Base |
N/A |
Minimum Income Base: a Minimum Income Base Percentage is applied annually to Purchase Payments received prior to the Activation Date. Any withdrawals taken prior to the Activation Date will proportionately reduce all Purchase Payments used in the calculation of the Minimum Income Base. No further adjustments are made on or after the Activation Date. |
| Income Credit – Prior to the Activation Date |
Income Credit available – the Income Credit Base and Income Base are reduced proportionately for any withdrawals taken prior to the Activation Date |
N/A |
| Income Credit – On or After the Activation Date |
N/A |
N/A |
| Frequency of Step-up Values |
Annually |
Daily |
| Investment Requirements |
20% in Secure Value Account 80% in Variable Portfolios (total of 18 investment options) |
Allocation Structure: 10% in Secure Value Account 90% in Variable Portfolios Asset Allocation Portfolios (37 investment options) or Build Your Own Allocation (76 investment options that cross 12 asset classes) |
Please see Investment Requirements for Optional Living Benefits in APPENDIX A – UNDERLYING FUNDS AVAILABLE UNDER THE CONTRACT for the investment requirements associated with these optional Living Benefits.
What determines the amount I can receive each year?
The amount that you receive depends on whether there are one or two Covered Person(s), the age of the Covered Person(s) and whether your contract value is greater than or equal to zero on the Activation Date.
While the contract value is greater than zero and on or after the Activation Date, the Maximum Annual Withdrawal Percentage represents the percentage of your Income Base used to calculate the Maximum Annual Withdrawal Amount that you may withdraw each Benefit Year without decreasing your Income Base. The Maximum Annual Withdrawal Percentage differs depending on whether there are one or two Covered Person(s) and the age of the Covered Person(s) on the Activation Date.
If your contract value has been reduced to zero or the Latest Annuity Date is reached, the Protected Income Payment Percentage represents the percentage of your Income Base used to calculate the Protected Income Payment that you will receive each year over the remaining lifetime of the Covered Person(s). The Protected Income Payment Percentage differs depending on whether there are one or two Covered Person(s) and the age of the Covered Person(s) on the Activation Date. Please see “What happens if the contract value is reduced to zero while the Income Base is greater than zero?”and “What happens to my living benefit upon the Latest Annuity Date?”below.
E-4
Maximum Annual Withdrawal Percentage and Protected Income Payment Percentage Table
POLARIS INCOME MAX
If your contract was purchased between July 25, 2022 and April 30, 2023, and you elected the optional Polaris Income Max Living Benefit, the following Maximum Annual Withdrawal and Protected Income Payment Percentage rates are applicable:
| Number of Covered Persons and Age of Covered Person(s) on the Activation Date(1) |
Polaris Income Max Income Option 1 |
Polaris Income Max Income Option 2 |
Polaris Income Max Income Option 3 | |||
| Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage |
Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage |
Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage | |
| One Covered Person (Age 50 - 59) |
4.25% |
3.25%(2) |
4.25% |
3.25%(2) |
3.50% |
3.50% |
| One Covered Person (Age 60 - 64) |
5.25% |
3.25%(2) |
5.25% |
3.25%(2) |
4.20% |
4.20% |
| One Covered Person (Age 65 - 74) |
7.00% |
4.25% |
8.00% |
3.25% |
5.60% |
5.60% |
| One Covered Person (Age 75 and Older) |
7.50% |
4.25% |
8.50% |
3.25% |
5.90% |
5.90% |
| Two Covered Persons (Age 50 - 59) |
4.00% |
3.00%(3) |
4.00% |
3.00%(3) |
3.10% |
3.10% |
| Two Covered Persons (Age 60 - 64) |
5.00% |
3.00%(3) |
5.00% |
3.00%(3) |
3.80% |
3.80% |
| Two Covered Persons (Age 65 - 74) |
6.75% |
4.00% |
7.75% |
3.00% |
5.20% |
5.20% |
| Two Covered Persons (Age 75 and Older) |
7.25% |
4.00% |
8.25% |
3.00% |
5.50% |
5.50% |
(1) If there are Two Covered Persons, the age on the Activation Date is based on the age of the younger of the Two Covered Persons.
(2) If One Covered Person is elected, and income is activated prior to the Covered Person’s 65th birthday, the Protected Income Payment Percentage is 4.25% if the Income Base is increased to a new Higher Anniversary Value on or after the Covered Person’s 65th birthday.
(3) If Two Covered Persons are elected, and income is activated prior to the younger Covered Person’s 65th birthday, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a new Higher Anniversary Value on or after the younger Covered Person’s 65th birthday.
If your contract was purchased between May 2, 2022 and July 24, 2022, and you elected the optional Polaris Income Max Living Benefit, the following Maximum Annual Withdrawal and Protected Income Payment Percentage rates are applicable:
| Number of Covered Persons and Age of Covered Person(s) on the Activation Date(1) |
Polaris Income Max Income Option 1 |
Polaris Income Max Income Option 2 |
Polaris Income Max Income Option 3 | |||
| Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage |
Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage |
Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage | |
| One Covered Person (Age 50 - 59) |
4.25% |
3.25%(2) |
4.25% |
3.25%(2) |
3.30% |
3.30% |
| One Covered Person (Age 60 - 64) |
5.25% |
3.25%(2) |
5.25% |
3.25%(2) |
3.80% |
3.80% |
| One Covered Person (Age 65 - 74) |
6.50% |
4.25% |
7.75% |
3.25% |
5.30% |
5.30% |
| One Covered Person (Age 75 and Older) |
7.00% |
4.25% |
8.25% |
3.25% |
5.55% |
5.55% |
| Two Covered Persons (Age 50 - 59) |
3.85% |
2.85%(3) |
3.85% |
2.85%(3) |
2.90% |
2.90% |
| Two Covered Persons (Age 60 - 64) |
4.85% |
2.85%(3) |
4.85% |
2.85%(3) |
3.40% |
3.40% |
| Two Covered Persons (Age 65 - 74) |
6.10% |
3.85% |
7.35% |
2.85% |
4.90% |
4.90% |
| Two Covered Persons (Age 75 and Older) |
6.60% |
3.85% |
7.85% |
2.85% |
5.15% |
5.15% |
(1) If there are Two Covered Persons, the age on the Activation Date is based on the age of the younger of the Two Covered Persons.
(2) If One Covered Person is elected, and income is activated prior to the Covered Person’s 65th birthday, the Protected Income Payment Percentage is 4.25% if the Income Base is increased to a new Higher Anniversary Value on or after the Covered Person’s 65th birthday.
(3) If Two Covered Persons are elected, and income is activated prior to the younger Covered Person’s 65th birthday, the Protected Income Payment Percentage is 3.85% if the Income Base is increased to a new Higher Anniversary Value on or after the younger Covered Person’s 65th birthday.
E-5
If your contract was purchased between May 3, 2021 and May 1, 2022, and you elected the optional Polaris Income Max Living Benefit, the following Maximum Annual Withdrawal and Protected Income Payment Percentage rates are applicable:
| Number of Covered Persons and Age of Covered Person(s) on the Activation Date(1) |
Polaris Income Max Income Option 1 |
Polaris Income Max Income Option 2 |
Polaris Income Max Income Option 3 | |||
| Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage |
Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage |
Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage | |
| One Covered Person (Age 50 - 59) |
4.00% |
3.00%(2) |
4.00% |
3.00%(2) |
3.00% |
3.00% |
| One Covered Person (Age 60 - 64) |
5.00% |
3.00%(2) |
5.00% |
3.00%(2) |
3.50% |
3.50% |
| One Covered Person (Age 65 - 71) |
6.25% |
4.00% |
7.50% |
3.00% |
5.00% |
5.00% |
| One Covered Person (Age 72 and Older) |
6.75% |
4.00% |
8.00% |
3.00% |
5.25% |
5.25% |
| Two Covered Persons (Age 50 - 59) |
3.60% |
2.60%(3) |
3.60% |
2.60%(3) |
2.60% |
2.60% |
| Two Covered Persons (Age 60 - 64) |
4.60% |
2.60%(3) |
4.60% |
2.60%(3) |
3.10% |
3.10% |
| Two Covered Persons (Age 65 - 74) |
5.85% |
3.60% |
7.10% |
2.60% |
4.60% |
4.60% |
| Two Covered Persons (Age 75 and Older) |
6.35% |
3.60% |
7.60% |
2.60% |
4.85% |
4.85% |
(1) If there are Two Covered Persons, the age on the Activation Date is based on the age of the younger of the Two Covered Persons.
(2) If One Covered Person is elected, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a new Higher Anniversary Value on or after the Covered Person’s 65th birthday.
(3) If Two Covered Persons are elected, the Protected Income Payment Percentage is 3.60% if the Income Base is increased to a new Higher Anniversary Value on or after the younger Covered Person’s 65th birthday.
If your contract was purchased between October 13, 2020 and May 2, 2021, and you elected the optional Polaris Income Max Living Benefit, the following rates are applicable. The first percentage represents the Maximum Annual Withdrawal Percentage and the second percentage represents the Protected Income Payment Percentage for each of the options shown:
| Number of Covered Persons and Age of Covered Person(s) on the Activation Date(1) |
Polaris Income Max Income Option 1 |
Polaris Income Max Income Option 2 |
Polaris Income Max Income Option 3 |
| One Covered Person (Age 50 - 59) |
4.00% / 3.00%(2) |
4.00% / 3.00%(2) |
3.00% / 3.00% |
| One Covered Person (Age 60 - 64) |
5.00% / 3.00%(2) |
5.00% / 3.00%(2) |
3.50% / 3.50% |
| One Covered Person (Age 65 - 71) |
6.25% / 4.00% |
7.50% / 3.00% |
5.00% / 5.00% |
| One Covered Person (Age 72 and Older) |
6.75% / 4.00% |
8.00% / 3.00% |
5.25% / 5.25% |
| Two Covered Persons (Age 50 - 59) |
3.50% / 3.00%(3) |
3.50% / 3.00%(3) |
2.75% / 2.75% |
| Two Covered Persons (Age 60 - 64) |
4.50% / 3.00%(3) |
4.50% / 3.00%(3) |
3.25% / 3.25% |
| Two Covered Persons (Age 65 - 71) |
5.75% / 4.00% |
7.00% / 3.00% |
4.50% / 4.50% |
| Two Covered Persons (Age 72 and Older) |
6.25% / 4.00% |
7.50% / 3.00% |
4.75% / 4.75% |
(1)
If there are two Covered Persons, the age on the Activation Date is based on the age of the younger of the two Covered Persons.
(2)
If One Covered Person is elected, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a new Higher Anniversary Value on or after the Covered Person’s 65th birthday.
(3)
If Two Covered Persons are elected, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a new Higher Anniversary Value on or after the younger Covered Person’s 65th birthday.
E-6
POLARIS INCOME PLUS DAILY FLEX
If your contract was purchased between July 25, 2022 and April 30, 2023, and you elected the optional Polaris Income Plus Daily Flex Living Benefit, the following Maximum Annual Withdrawal and Protected Income Payment Percentage rates are applicable:
| |
Polaris Income Plus Daily Flex Income Option 1 |
Polaris Income Plus Daily Flex Income Option 2 |
Polaris Income Plus Daily Flex Income Option 3 | |||
| Number of Covered Persons and Age of Covered Person(s) on the Activation Date(1) |
Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage |
Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage |
Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage |
| One Covered Person (Age 45 - 59) |
4.00% |
3.00%(2) |
4.00% |
3.00%(2) |
3.30% |
3.30% |
| One Covered Person (Age 60 - 64) |
5.00% |
3.00%(2) |
5.00% |
3.00%(2) |
4.00% |
4.00% |
| One Covered Person (Age 65 - 74) |
6.75% |
4.25% |
7.75% |
3.25% |
5.40% |
5.40% |
| One Covered Person (Age 75 and Older) |
7.25% |
4.25% |
8.25% |
3.25% |
5.70% |
5.70% |
| Two Covered Persons (Age 45 - 59) |
3.75% |
2.75%(3) |
3.75% |
2.75%(3) |
2.90% |
2.90% |
| Two Covered Persons (Age 60 - 64) |
4.75% |
2.75%(3) |
4.75% |
2.75%(3) |
3.60% |
3.60% |
| Two Covered Persons (Age 65 - 74) |
6.50% |
4.00% |
7.50% |
3.00% |
5.00% |
5.00% |
| Two Covered Persons (Age 75 and Older) |
7.00% |
4.00% |
8.00% |
3.00% |
5.30% |
5.30% |
(1) If there are Two Covered Persons, the age on the Activation Date is based on the age of the younger of the Two Covered Persons.
(2) If One Covered Person is elected, and income is activated prior to the Covered Person’s 65th birthday, the Protected Income Payment Percentage is 4.25% if the Income Base is increased to a Step-Up Value on or after the Covered Person’s 65th birthday.
(3) If Two Covered Persons are elected, and income is activated prior to the younger Covered Person’s 65th birthday, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a Step-Up Value on or after the younger Covered Person’s 65th birthday.
If your contract was purchased between May 2, 2022 and July 24, 2022, and you elected the optional Polaris Income Plus Daily Flex Living Benefit, the following Maximum Annual Withdrawal and Protected Income Payment Percentage rates are applicable:
| |
Polaris Income Plus Daily Flex Income Option 1 |
Polaris Income Plus Daily Flex Income Option 2 |
Polaris Income Plus Daily Flex Income Option 3 | |||
| Number of Covered Persons and Age of Covered Person(s) on the Activation Date(1) |
Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage |
Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage |
Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage |
| One Covered Person (Age 45 - 59) |
3.50% |
3.00%(2) |
3.50% |
3.00%(2) |
2.90% |
2.90% |
| One Covered Person (Age 60 - 64) |
4.50% |
3.00%(2) |
4.50% |
3.00%(2) |
3.40% |
3.40% |
| One Covered Person (Age 65 - 74) |
6.25% |
4.25% |
7.25% |
3.25% |
5.15% |
5.15% |
| One Covered Person (Age 75 and Older) |
6.75% |
4.25% |
7.75% |
3.25% |
5.40% |
5.40% |
| Two Covered Persons (Age 45 - 59) |
3.10% |
2.60%(3) |
3.10% |
2.60%(3) |
2.50% |
2.50% |
| Two Covered Persons (Age 60 - 64) |
4.10% |
2.60%(3) |
4.10% |
2.60%(3) |
3.00% |
3.00% |
| Two Covered Persons (Age 65 - 74) |
5.85% |
3.85% |
6.85% |
2.85% |
4.75% |
4.75% |
| Two Covered Persons (Age 75 and Older) |
6.35% |
3.85% |
7.35% |
2.85% |
5.00% |
5.00% |
(1) If there are Two Covered Persons, the age on the Activation Date is based on the age of the younger of the Two Covered Persons.
(2) If One Covered Person is elected, and income is activated prior to the Covered Person’s 65th birthday, the Protected Income Payment Percentage is 4.25% if the Income Base is increased to a Step-Up Value on or after the Covered Person’s 65th birthday.
(3) If Two Covered Persons are elected, and income is activated prior to the younger Covered Person’s 65th birthday, the Protected Income Payment Percentage is 3.85% if the Income Base is increased to a Step-Up Value on or after the younger Covered Person’s 65th birthday.
E-7
If your contract was purchased between May 3, 2021 and May 1, 2022, and you elected elected the optional Polaris Income Plus Daily Flex Living Benefit, the following Maximum Annual Withdrawal and Protected Income Payment Percentage rates are applicable:
| Number of Covered Persons and Age of Covered Person(s) on the Activation Date(1) |
Polaris Income Plus Daily Flex Income Option 1 |
Polaris Income Plus Daily Flex Income Option 2 |
Polaris Income Plus Daily Flex Income Option 3 | |||
| Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage |
Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage |
Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage | |
| One Covered Person (Age 45 - 59) |
3.25% |
2.75%(2) |
3.25% |
2.75%(2) |
2.50% |
2.50% |
| One Covered Person (Age 60 - 64) |
4.25% |
2.75%(2) |
4.25% |
2.75%(2) |
3.00% |
3.00% |
| One Covered Person (Age 65 - 74) |
6.00% |
4.00% |
7.00% |
3.00% |
4.75% |
4.75% |
| One Covered Person (Age 75 and Older) |
6.50% |
4.00% |
7.50% |
3.00% |
5.00% |
5.00% |
| Two Covered Persons (Age 45 - 59) |
2.85% |
2.35%(3) |
2.85% |
2.35%(3) |
2.10% |
2.10% |
| Two Covered Persons (Age 60 - 64) |
3.85% |
2.35%(3) |
3.85% |
2.35%(3) |
2.60% |
2.60% |
| Two Covered Persons (Age 65 - 74) |
5.60% |
3.60% |
6.60% |
2.60% |
4.35% |
4.35% |
| Two Covered Persons (Age 75 and Older) |
6.10% |
3.60% |
7.10% |
2.60% |
4.60% |
4.60% |
(1) If there are Two Covered Persons, the age on the Activation Date is based on the age of the younger of the Two Covered Persons.
(2) If One Covered Person is elected, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a Step-Up Value on or after the Covered Person’s 65th birthday.
(3) If Two Covered Persons are elected, the Protected Income Payment Percentage is 3.60% if the Income Base is increased to a Step-Up Value on or after the younger Covered Person’s 65th birthday.
If your contract was purchased between October 13, 2020 and May 2, 2021, and you elected the optional Polaris Income Plus Daily Flex Living Benefit, the following rates are applicable. The first percentage represents the Maximum Annual Withdrawal Percentage and the second percentage represents the Protected Income Payment Percentage for each of the options shown:
| Number of Covered Persons and Age of Covered Person(s) on the Activation Date(1) |
Polaris Income Plus Daily Flex Income Option 1 |
Polaris Income Plus Daily Flex Income Option 2 |
Polaris Income Plus Daily Flex Income Option 3 |
| One Covered Person (Age 45 - 59) |
3.25% / 2.75%(2) |
3.25% / 2.75%(2) |
2.50% / 2.50% |
| One Covered Person (Age 60 - 64) |
4.25% / 2.75%(2) |
4.25% / 2.75%(2) |
3.00% / 3.00% |
| One Covered Person (Age 65 - 71) |
6.00% / 4.00% |
7.00% / 3.00% |
4.75% / 4.75% |
| One Covered Person (Age 72 and Older) |
6.50% / 4.00% |
7.50% / 3.00% |
5.00% / 5.00% |
| Two Covered Persons (Age 45 - 59) |
2.75% / 2.75%(3) |
2.75% / 2.75%(3) |
2.25% / 2.25% |
| Two Covered Persons (Age 60 - 64) |
3.75% / 2.75%(3) |
3.75% / 2.75%(3) |
2.75% / 2.75% |
| Two Covered Persons (Age 65 - 71) |
5.50% / 4.00% |
6.50% / 3.00% |
4.25% / 4.25% |
| Two Covered Persons (Age 72 and Older) |
6.00% / 4.00% |
7.00% / 3.00% |
4.50% / 4.50% |
(1)
If there are two Covered Persons, the age on the Activation Date is based on the age of the younger of the two Covered Persons.
(2)
If One Covered Person is elected, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a Step-Up Value on or after the Covered Person’s 65th birthday.
(3)
If Two Covered Persons are elected, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a Step-Up Value on or after the younger Covered Person’s 65th birthday.
Are there investment requirements if I elect a Living Benefit?
Yes, you must allocate your assets, including Purchase Payments and the Continuation Contribution, if any, to a combination of the Secure Value Account and Variable Portfolios in accordance with the investment requirements. Please see Investment Requirements for Optional Living Benefits in APPENDIX A – UNDERLYING FUNDS AVAILABLE UNDER THE CONTRACT for the investment requirements associated with this optional Living Benefit.
With respect to amounts allocated to the Secure Value Account, the crediting interest rate will never be less than the guaranteed minimum interest rate specified in your contract. The crediting interest rate, once established, will not change for each allocation to the Secure Value Account for the duration of the guarantee period. The guarantee period for the Secure Value Account is a one year period that automatically renews every year from the date of each allocation to the Secure Value Account, unless the Living Benefit has been cancelled. Each allocation to the Secure Value Account may have different crediting interest rates. You may not reallocate your money in the Secure Value
E-8
Account to a DCA Fixed Account or Fixed Account, if available, or to the Variable Portfolios at any time unless the Living Benefit is cancelled.
You may use available DCA Fixed Accounts to invest your target allocations in accordance with the investment requirements.
How do my investment requirements impact my feature and contract?
Before you elect a Living Benefit, you should carefully consider whether the investment requirements associated with the Living Benefits meet your investment objectives and risk tolerance.
The investment requirements may reduce the need to rely on the guarantees provided by these Living Benefits because they allocate your investment across asset classes and potentially limit exposure to market volatility. As a result, you may have better, or worse, investment returns by allocating your investments more aggressively. Therefore, the investment restrictions reduce the Company’s risk that the contract value will be reduced to zero before the Covered Person(s)’ death. Withdrawals taken while the contract value is greater than zero are withdrawals of the contract owner’s own money. Thus, these investment restrictions would reduce the likelihood that the Company would use its own assets to make payments in connection with the Living Benefit guarantee. You may never need to rely on this protection as the benefit’s value is dependent on your contract’s performance, your withdrawal activity and your longevity. Though the optional Living Benefits offer additional protections, the additional fee associated with the benefits has the impact of reducing the net investment return. Please consult your financial representative regarding which Variable Portfolios are appropriate for the Living Benefit you elected.
To be considered in Good Order, your allocation instructions for any Purchase Payment as well as your target allocations if you invest in a DCA Fixed Account must comply with the investment requirements, provided under Investment Requirements for Optional Living Benefits in APPENDIX A – UNDERLYING FUNDS AVAILABLE UNDER THE CONTRACT, for the amount not invested in the Secure Value Account. You may not transfer any amounts between the Secure Value Account and the Variable Portfolios or DCA Fixed Accounts. The Secure Value Account may not be used as a target account if you are using the DCA Program to comply with investment requirements. You may not request any specific amount of any withdrawal to be deducted solely from the Secure Value Account. Rather, any withdrawal reduces the amount invested in the Secure Value Account in the same proportion that the withdrawal reduces the contract value.
We may revise the investment requirements for any existing contract to the extent that Variable Portfolios are added, deleted, substituted, merged or otherwise reorganized. We will promptly notify you in writing of any changes to the
investment requirements due to additions, deletions, substitutions, mergers or reorganizations of the investment options. The required allocation percentage to the Secure Value Account will not change for the life of your contract.
Rebalancing and Investment Requirements
We will automatically enroll you in the Automatic Asset Rebalancing Program with quarterly rebalancing. If rebalancing instructions are not provided, we will align your rebalancing allocations with your Purchase Payment allocation instructions, or if using a DCA Fixed Account, your target DCA instructions. We require quarterly rebalancing because market performance, transfers, and withdrawal activity may result in your contract’s allocations going outside these requirements. Quarterly rebalancing will ensure that your allocation will continue to comply with the investment requirements for this feature.
Automatic transfers and/or systematic withdrawals will not result in rebalancing before the next automatic quarterly rebalancing occurs. The day following any transfer or withdrawal you initiate, we will rebalance in accordance with your most current and compliant Automatic Asset Rebalancing instructions on file. If you do not provide new rebalancing instructions at the time you initiate a transfer, we will update your ongoing rebalancing instructions to reflect the percentage allocations resulting from that transfer (“Default Rebalancing Instructions”) which will replace any previous rebalancing instructions you may have provided.
If at any point, for any reason, your rebalancing instructions would result in allocations inconsistent with the investment requirements, we will revert to the last compliant instructions on file. You can modify your rebalancing instructions, as long as they are consistent with the investment requirements, at any time by calling the Annuity Service Center.
We will not rebalance amounts in the Secure Value Account or DCA Fixed Accounts under the Automatic Asset Rebalancing Program.
What are the factors used to calculate Polaris Income Max?
The Lifetime Income offered by Polaris Income Max is calculated by considering the factors described below.
First,we determine if the Anniversary Value is the Higher Anniversary Value. The Anniversary Value equals your contract value on any Benefit Year Anniversary.
Second,we determine the Income Base which initially is equal to the first Purchase Payment. The Income Base is increased by each Purchase Payment received and is reduced proportionately for any withdrawals taken prior to the Activation Date and Excess Withdrawals taken on or after the Activation Date.
Third,we determine the Income Credit Base which is used solely as a basis for calculating the Income Credit prior to
E-9
the Activation Date. The initial Income Credit Base is equal to the first Purchase Payment. The Income Credit Base is increased by each Purchase Payment received and is reduced proportionately for any withdrawals taken prior to the Activation Date.
Fourth, we determine the Income Credit. The Income Credit is equal to the Income Credit Percentage of 5.25% multiplied by the Income Credit Base on each Benefit Year Anniversary prior to the Activation Date. On or after the Activation Date, the Income Credit will no longer be available.
Fifth, we determine the Maximum Annual Withdrawal Percentage, which represents the maximum percentage of the Income Base that can be withdrawn each Benefit Year on or after the Activation Date and while the contract value is greater than zero, without reducing the Income Base. If your contract value is reduced to zero after the Activation Date but your Income Base is greater than zero, the Protected Income Payment Percentage represents the percentage of the Income Base you will receive each Benefit Year thereafter until the death of the Covered Person(s).
The Maximum Annual Withdrawal Percentage and Protected Income Payment Percentage are determined by three factors upon the Activation Date: 1) whether there is one or two Covered Person(s); 2) the age of the Covered Person(s); and 3) the Income Option elected. Additionally, if applicable to the Income Option you elect, the Protected Income Payment Percentage may differ depending on whether withdrawals are taken before age 65 and if a new Higher Anniversary Value is achieved on or after the Covered Person(s) 65th birthday. Please see the tables under “What determines the amount I can receive each year?” above for the applicable Maximum Annual Withdrawal Percentage and Protected Income Payment Percentage.
Sixth, we determine the Maximum Annual Withdrawal Amount, which represents the maximum amount that may be withdrawn each Benefit Year on or after the Activation Date, while the contract value is greater than zero, without reducing the Income Base. The Maximum Annual Withdrawal Amount is calculated by multiplying the Income Base by the applicable Maximum Annual Withdrawal Percentage. If your contract value is reduced to zero after activating Lifetime Income, but your Income Base is greater than zero, the Protected Income Payment is determined by multiplying the Income Base when contract value is reduced to zero by the applicable Protected Income Payment Percentage.
Finally, we determine the Excess Withdrawals, if any. Excess Withdrawals are withdrawals taken after the Activation Date that exceed the Maximum Annual Withdrawal Amount in any Benefit Year. An Excess Withdrawal reduces your Income Base on the date the Excess Withdrawal occurs. Any Excess Withdrawal reduces the Income Base in the same proportion by which the
contract value is reduced by the Excess Withdrawal. Please see “What are the effects of withdrawals on Polaris Income Max?” below.
What are the factors used to calculate Polaris Income Plus Daily Flex?
The Lifetime Income offered by Polaris Income Plus Daily Flex is calculated by considering the factors described below.
First, we determine the Step-up Values which are values used to determine the Income Base. The initial Step-up Value is equal to the contract value. Then, on any day that the contract value is greater than the Income Base on that day, the Income Base is stepped up to that value. The Step-up Value is determined daily prior to the Activation Date.
Second, we determine the Income Base, which initially is equal to the first Purchase Payment. The Income Base is increased by each subsequent Purchase Payment received, and is reduced proportionately for any withdrawals taken prior to the Activation Date and Excess Withdrawals taken on or after the Activation Date.
Third, if you do not activate Lifetime Income before each Benefit Year Anniversary up to the Activation Date, an annual Minimum Income Base Percentage of 5% will be applied to Purchase Payments received. Further, any withdrawals taken prior to activating Lifetime Income will proportionately reduce the Purchase Payments used in the calculation of the Minimum Income Base.
Fourth, we determine the Maximum Annual Withdrawal Percentage, which represents the maximum percentage of the Income Base that can be withdrawn each Benefit Year on or after the Activation Date and while the contract value is greater than zero, without reducing the Income Base. If your contract value is reduced to zero after the Activation Date but your Income Base is greater than zero, the Protected Income Payment Percentage represents the percentage of the Income Base you will receive each Benefit Year thereafter until the death of the Covered Person(s).
The Maximum Annual Withdrawal Percentage and Protected Income Payment Percentage are determined by three factors upon the Activation Date: 1) whether there is one or two Covered Person(s); 2) the age of the Covered Person(s); and 3) the Income Option elected. Additionally, if applicable to the Income Option you elect, the Protected Income Payment Percentage may differ depending on whether withdrawals are taken before age 65 and if a new Higher Anniversary Value is achieved on or after the Covered Person(s) 65th birthday. Please see the tables under “What determines the amount I can receive each year?” above for the applicable Maximum Annual Withdrawal Percentage and Protected Income Payment Percentage.
Fifth, we determine the Maximum Annual Withdrawal Amount, which represents the maximum amount that may be withdrawn each Benefit Year on or after the Activation Date, while the contract value is greater than zero, without
E-10
reducing the Income Base. The Maximum Annual Withdrawal Amount is calculated by multiplying the Income Base by the applicable Maximum Annual Withdrawal Percentage. If your contract value is reduced to zero after activating Lifetime Income, but your Income Base is greater than zero, the Protected Income Payment is determined by multiplying the Income Base when contract value is reduced to zero by the applicable Protected Income Payment Percentage.
Finally, we determine the Excess Withdrawals, if any. Excess Withdrawals are withdrawals taken after the Activation Date that exceed the Maximum Annual Withdrawal Amount in any Benefit Year. An Excess Withdrawal reduces your Income Base on the date the Excess Withdrawal occurs. Any Excess Withdrawal reduces the Income Base in the same proportion by which the contract value is reduced by the Excess Withdrawal. Please see “What are the effects of withdrawals on Polaris Income Plus Daily Flex?” below.
How do increases to the Income Base and Income Credit Base work under Polaris Income Max?
On each Benefit Year Anniversary, prior to the Activation Date, the Income Base is automatically increased to the greater of (1) the Higher Anniversary Value; or (2) the current Income Base plus the Income Credit, if any.
On each Benefit Year Anniversary prior to the Activation Date, if the Income Base is increased to a Higher Anniversary Value, the Income Credit Base is also automatically increased to that Higher Anniversary Value. The Income Credit Base is not increased if an Income Credit is added to the Income Base.
Increases to your Income Base occur on Benefit Year Anniversaries while the contract value is greater than zero. However, Purchase Payments increase your Income Base and Income Credit Base at the time they are received. Since Higher Anniversary Values are determined only on the Benefit Year Anniversaries, your Income Base and Income Credit Base will not increase if your contract value is higher on days other than the Benefit Year Anniversaries.
On or After Activation Date, the Maximum Annual Withdrawal Amount is recalculated each time there is an increase in the Income Base. Accordingly, if the sum of withdrawals in any Benefit Year does not exceed the Maximum Annual Withdrawal Amount for that year, the Maximum Annual Withdrawal Amount will not change for the next year unless your Income Base is increased.
How do increases to the Income Base work under Polaris Income Plus Daily Flex?
Prior to the Activation Date, the Income Base is increased daily to the Step-up Value and by subsequent Purchase Payments, if any.
Additionally, prior to the Benefit Year Anniversary, the Income Base will be increased to at least the Minimum
Income Base on the Benefit Year Anniversary as a specified percentage of the Purchase Payments.
On or after the Activation Date, the Income Base is increased only on the Benefit Year Anniversary by looking back to the Higher Step-up Value since the Activation Date (“first look-back”) or, if one or more Excess Withdrawals have been taken in that Benefit Year, to the Higher Step-up Value since the last Excess Withdrawal. The Income Base will no longer be increased to the Minimum Income Base on the Benefit Year Anniversary on or after the Activation Date.
After the first look-back, the Income Base is increased only on the Benefit Year Anniversary by looking back to the Higher Step-up Value since the last Benefit Year Anniversary. If one or more Excess Withdrawals have been taken in that Benefit Year, the Income Base is increased on the Benefit Year Anniversary by looking back to the Higher Step-up Value since the last Excess Withdrawal.
What are the effects of withdrawals on Polaris Income Max?
The Maximum Annual Withdrawal Amount, the Income Base and the Income Credit Base may change over time as a result of the timing and amount of any withdrawals.
Prior to the Activation Date
Any withdrawal, including penalty-free withdrawals, in a Benefit Year reduces the Income Base and Income Credit Base on the date the withdrawal occurs and in the same proportion by which the contract value is reduced by the withdrawal. This may result in a lower amount of Lifetime Income when Lifetime Income withdrawals are activated.
Additionally, any withdrawal taken will reduce the Income Credit. The reduction to the Income Credit Base will result in a lowered Income Credit amount being applied to the Income Base. In addition, these withdrawals will not lock-in your Maximum Annual Withdrawal Percentage or Protected Income Payment Percentage, if applicable because your Lifetime Income withdrawals have not been activated.
On or after the Activation Date
Lifetime Income withdrawals during a Benefit Year that in total are less than or equal to the Maximum Annual Withdrawal Amount will not reduce the Income Base. However, if you choose to take less than the Maximum Annual Withdrawal Amount in any Benefit Year, you may not carry over the unused amount for withdrawal in subsequent years. Your Maximum Annual Withdrawal Amount in any year will not be recalculated solely as a result of taking less than the entire Maximum Annual Withdrawal Amount in the prior year. Please note that if you delay taking withdrawals for too long, you may limit the number of remaining years (due to your life expectancy) in which you may take withdrawals.
Penalty-Free Withdrawal Amount: Your Lifetime Income is free of withdrawal charges. However, if you take a withdrawal after the Activation Date which is greater than
E-11
your Lifetime Income, that amount is treated as an Excess Withdrawal. Such withdrawal may be subject to charges and could result in your contract value being reduced to zero which would significantly reduce or eliminate the value of electing a Living Benefit.
For example, if you elected a Living Benefit and your Maximum Annual Withdrawal Amount (MAWA) on or after the Activation Date is $6,000 (assuming Maximum Annual Withdrawal Percentage of 6%, $100,000 Income Base and $100,000 Contract Value), your penalty-free withdrawal amount would be $10,000. That means that the $6,000 MAWA for that contract year would not be assessed a withdrawal charge because it is within the penalty-free withdrawal amount and was taken on or after the Activation Date. You may also take up to an additional $4,000 that contract year on or after the Activation Date as a penalty-free withdrawal amount; however, this $4,000 would be considered an Excess Withdrawal under the Living Benefit which proportionally reduces the Income Base and future Maximum Annual Withdrawal Amounts. In the event you take Excess Withdrawals on or after the Activation Date that are greater than your Maximum Annual Withdrawal Amount, your contract value could be reduced to zero.
Excess Withdrawals may significantly reduce the value of or terminate the Living Benefit.
For example, assume that your contract value is $106,000, your Income Base is $120,000, and your Maximum Annual Withdrawal Amount is $6,000 and your Maximum Annual Withdrawal Percentage is 5%. Withdrawals greater than $6,000 would be an Excess Withdrawal. You request a withdrawal of $11,000, of which $5,000 is in excess of the Maximum Annual Withdrawal Amount. Your Income Base will be reduced proportionately to $114,000 as follows: $120,000 x {1 – [($11,000 - $6,000)/($106,000 - $6,000)]} = $114,000. The new Maximum Annual Withdrawal Amount will now be 5% of the Income Base: 5% x $114,000 which is $5,700.
Excess Withdrawals reduce your Income Base on the date the Excess Withdrawal occurs. Any Excess Withdrawal in a Benefit Year reduces the Income Base in the same proportion by which the contract value is reduced by the amount in excess of the Maximum Annual Withdrawal Amount (“Excess Withdrawal”). As a result of a reduction of the Income Base, the new Maximum Annual Withdrawal Amount will be equal to the reduced Income Base multiplied by the applicable Maximum Annual Withdrawal Percentage. The last recalculated Maximum Annual Withdrawal Amount in a given Benefit Year is available for withdrawal at the beginning of the next Benefit Year and may be lower than the previous Benefit Year’s Maximum Annual Withdrawal Amount.
When the contract value is less than the Income Base, Excess Withdrawals will reduce the Income Base by an
amount which is greater than the amount of the Excess Withdrawal. The impact of withdrawals on specific factors is further explained below:
Maximum Annual Withdrawal Amount: If the sum of withdrawals in any Benefit Year does not exceed the Maximum Annual Withdrawal Amount for that year, the Maximum Annual Withdrawal Amount will not change for the next year unless your Income Base is increased. If you take an Excess Withdrawal, the Maximum Annual Withdrawal Amount will be recalculated by multiplying the reduced Income Base by the existing Maximum Annual Withdrawal Percentage. This recalculated Maximum Annual Withdrawal Amount is available for withdrawal at the beginning of the next Benefit Year and may be lower than your previous Maximum Annual Withdrawal Amount.
Protected Income Payment: If the Income Base is greater than zero, but the contract value has been reduced to zero due to unfavorable investment performance, deduction of fees, or withdrawals within the Maximum Annual Withdrawal Amount, we will pay any remaining Maximum Annual Withdrawal Amount for the current Benefit Year. Thereafter, you will receive the Protected Income Payment each year over the remaining lifetime of the Covered Person(s) which is calculated by multiplying the Income Base when contract value is reduced to zero by the applicable Protected Income Payment Percentage. The Income Base is no longer increased on Benefit Year Anniversaries after the contract value has been reduced to zero. As a result, the Protected Income Payment is calculated once and will not change. Please see “What happens if the contract value is reduced to zero while the Income Base is greater than zero?” below.
All withdrawals from the contract, including Lifetime Income withdrawals, will reduce your contract value and your death benefit and may impact other provisions of your contract. Unfavorable investment experience and/or fees will also reduce your contract value. Lifetime Income withdrawals are deducted proportionately from each Variable Portfolio and Secure Value Account in which you are invested.
What are the effects of withdrawals on Polaris Income Plus Daily Flex?
The Maximum Annual Withdrawal Amount, the Income Base and the Purchase Payment(s) used in the calculation of the Minimum Income Base may change over time as a result of the timing and amount of any withdrawals.
Prior to the Activation Date
Any withdrawal, including penalty-free withdrawals, in a Benefit Year reduces the Income Base on the date the withdrawal occurs and in the same proportion by which the contract value is reduced by the withdrawal. This may result in a lower amount of Lifetime Income when Lifetime Income withdrawals are activated.
E-12
Additionally, any withdrawal taken will reduce each Purchase Payment included in the calculation of the Minimum Income Base. The reduction to the Purchase Payment(s) will result in a lowered amount being applied to the Income Base.
On or after the Activation Date
Lifetime Income withdrawals during a Benefit Year that in total are less than or equal to the Maximum Annual Withdrawal Amount will not reduce the Income Base. However, if you choose to take less than the Maximum Annual Withdrawal Amount in any Benefit Year, you may not carry over the unused amount for withdrawal in subsequent years. Your Maximum Annual Withdrawal Amount in any year will not be recalculated solely as a result of taking less than the entire Maximum Annual Withdrawal Amount in the prior year. Please note that if you delay taking withdrawals for too long, you may limit the number of remaining years (due to your life expectancy) in which you may take withdrawals.
Penalty-Free Withdrawal Amount: Your Lifetime Income is free of withdrawal charges. However, if you take a withdrawal after the Activation Date which is greater than your Lifetime Income, that amount is treated as an Excess Withdrawal. Such withdrawal may be subject to charges and could result in your contract value being reduced to zero which would significantly reduce or eliminate the value of electing a Living Benefit.
For example, if you elected a Living Benefit and your Maximum Annual Withdrawal Amount (MAWA) on or after the Activation Date is $6,000 (assuming Maximum Annual Withdrawal Percentage of 6%, $100,000 Income Base and $100,000 Contract Value), your penalty-free withdrawal amount would be $10,000. That means that the $6,000 MAWA for that contract year would not be assessed a withdrawal charge because it is within the penalty-free withdrawal amount and was taken on or after the Activation Date. You may also take up to an additional $4,000 that contract year on or after the Activation Date as a penalty-free withdrawal amount; however, this $4,000 would be considered an Excess Withdrawal under the Living Benefit which proportionally reduces the Income Base and future Maximum Annual Withdrawal Amounts. In the event you take Excess Withdrawals on or after the Activation Date that are greater than your Maximum Annual Withdrawal Amount, your contract value could be reduced to zero.
Excess Withdrawals may significantly reduce the value of or terminate the Living Benefit.
For example, assume that your contract value is $106,000, your Income Base is $120,000, your Maximum Annual Withdrawal Amount is $6,000 and your Maximum Annual Withdrawal Percentage is 5%. Withdrawals greater than $6,000 would be an Excess Withdrawal. You request a withdrawal of $11,000, of which $5,000 is in excess of your Maximum Annual Withdrawal Amount. Your Income Base
will be reduced proportionately to $114,000 as follows: $120,000 x {1 – [($11,000 - $6,000)/($106,000 - $6,000)]} = $114,000. The new Maximum Annual Withdrawal Amount will now be 5% of the Income Base: 5% x $114,000 which is $5,700.
Excess Withdrawals reduce your Income Base on the date the Excess Withdrawal occurs. Any Excess Withdrawal in a Benefit Year reduces the Income Base in the same proportion by which the contract value is reduced by the amount in excess of the Maximum Annual Withdrawal Amount (“Excess Withdrawal”). As a result of a reduction of the Income Base, the new Maximum Annual Withdrawal Amount will be equal to the reduced Income Base multiplied by the applicable Maximum Annual Withdrawal Percentage. The last recalculated Maximum Annual Withdrawal Amount in a given Benefit Year is available for withdrawal at the beginning of the next Benefit Year and may be lower than the previous Benefit Year’s Maximum Annual Withdrawal Amount.
When the contract value is less than the Income Base, Excess Withdrawals will reduce the Income Base by an amount which is greater than the amount of the Excess Withdrawal. The impact of withdrawals on specific factors is further explained below:
Maximum Annual Withdrawal Amount: If the sum of withdrawals in any Benefit Year does not exceed the Maximum Annual Withdrawal Amount for that year, the Maximum Annual Withdrawal Amount will not change for the next year unless your Income Base is increased. If you take an Excess Withdrawal, the Maximum Annual Withdrawal Amount will be recalculated by multiplying the reduced Income Base by the existing Maximum Annual Withdrawal Percentage. This recalculated Maximum Annual Withdrawal Amount is available for withdrawal at the beginning of the next Benefit Year and may be lower than your previous Maximum Annual Withdrawal Amount.
Protected Income Payment: If the Income Base is greater than zero, but the contract value has been reduced to zero due to unfavorable investment performance, deduction of fees, or withdrawals within the Maximum Annual Withdrawal Amount, we will pay any remaining Maximum Annual Withdrawal Amount for the current Benefit Year. Thereafter, you will receive the Protected Income Payment each year over the remaining lifetime of the Covered Person(s) which is calculated by multiplying the Income Base when contract value is reduced to zero by the applicable Protected Income Payment Percentage. The Income Base is no longer increased on Benefit Year Anniversaries after the contract value has been reduced to zero. As a result, the Protected Income Payment is calculated once and will not change. Please see “What happens if the contract value is reduced to zero while the Income Base is greater than zero?” below.
E-13
Minimum Income Base: If you activate Lifetime Income, the Minimum Income Base will no longer increase on future Benefit Anniversaries.
Look-back Periods: If you take one or more Excess Withdrawals in a Benefit Year, the Income Base may be increased on the Benefit Year Anniversary by looking back only to the Higher Step-up Value since the last Excess Withdrawal. This means that if you take an Excess Withdrawal, you lose the opportunity to lock in a potentially higher Step-up Value that may have occurred prior to that Excess Withdrawal during that Benefit Year.
All withdrawals from the contract, including Lifetime Income withdrawals, will reduce your contract value and your death benefit and may impact other provisions of your contract. Unfavorable investment experience and/or fees will also reduce your contract value. Lifetime Income withdrawals are deducted proportionately from each Variable Portfolio and Secure Value Account in which you are invested.
How can I change my Income Option Election?
You may change your Income Option election on the Activation Date. If you change your Income Option election on the Activation Date, an annualized fee applies. Once Lifetime Income begins, you may not change your Income Option election.
What is the fee for Polaris Income Max and Polaris Income Plus Daily Flex?
The fee for Polaris Income Max and Polaris Income Plus Daily Flex is calculated as a percentage of the Income Base and deducted from the contract value on a quarterly basis beginning on the first Benefit Quarter Anniversary following the Benefit Effective Date. In Connecticut, Hawaii, Missouri, Oregon, Texas, Vermont, Virginia and Washington, the charge will be deducted pro-rata from Variable Portfolios only. After the first Benefit Year, on each Benefit Quarter Anniversary, we will (1) deduct the fee in effect for the previous Benefit Quarter; and (2) determine the fee rate applicable to the next Benefit Quarter. In addition, if you change your Income Option on the Activation Date, your
annual fee will increase on the next Benefit Quarter Anniversary. Please see fee table below:
Polaris Income Max Fee
Polaris Income Plus Daily Flex Fee
Polaris Income Plus Daily Flex Fee
For contracts issued between May 3, 2021 and April 30, 2023
| Number of Covered Persons |
Initial Annual Fee Rate |
Maximum Annual Fee Rate |
Minimum Annual Fee Rate |
Maximum Annualized Fee Rate Decrease or Increase Each Benefit Quarter* |
| One Covered Person |
1.45% |
2.50% |
0.60% |
±0.40% |
| Two Covered Persons |
1.45% |
2.50% |
0.60% |
±0.40% |
*
The quarterly fee rate can increase or decrease no more than 0.10% each quarter (0.40%/ 4). If you change your Income Option election on the Activation Date, the quarterly fee rate can increase no more than 0.1625% [(0.40% + 0.25%)/ 4] for the first Benefit Quarter immediately following the Activation Date.
For contracts issued prior to May 3, 2021
| Number of Covered Persons |
Initial Annual Fee Rate |
Maximum Annual Fee Rate |
Minimum Annual Fee Rate |
Maximum Annualized Fee Rate Decrease or Increase Each Benefit Quarter* |
| One Covered Person |
1.25% |
2.50% |
0.60% |
±0.40% |
| Two Covered Persons |
1.25% |
2.50% |
0.60% |
±0.40% |
*
The quarterly fee rate can increase or decrease no more than 0.10% each quarter (0.40%/ 4). If you change your Income Option election on the Activation Date, the quarterly fee rate can increase no more than 0.1625% [(0.40% + 0.25%)/ 4] for the first Benefit Quarter immediately following the Activation Date.
If you change your Income Option election on the Activation Date, an annualized fee applies. The fee is calculated as a percentage of the Income Base and deducted from the contract value on a quarterly basis beginning on the first Benefit Quarter Anniversary following the Activation Date:
| Lifetime Income Option Change Fee* |
0.25% |
*
The fee is deducted quarterly, and the quarterly fee rate is 0.0625% (0.25%/4). The sum of the Living Benefit feature fee rate and Lifetime Income Option Change fee rate cannot exceed the Maximum Annual Fee Rate stated in the table above.
The initial Annual Fee Rate is guaranteed not to change for the first Benefit Year. Subsequently, the fee rate may change quarterly subject to the parameters identified in the table above. Any fee adjustment is based on a non-discretionary formula tied to the change in the Volatility Index (“VIX®”), an index of market volatility reported by the Chicago Board Options Exchange. In general, as the average value of the VIX decreases or increases, your fee rate will decrease or increase accordingly, subject to the minimums and maximums identified in the table above.
E-14
Should the VIX no longer be appropriate or available, we would substitute the VIX with another measure of market volatility for determining the fee. If we substitute the VIX, we will notify you; however, the maximum and minimum annual fee rates described in this prospectus are guaranteed for the life of your contract.
For Polaris Income Max, an increase in the Income Base due to an addition of an Income Credit, attaining a new Higher Anniversary Value or an addition of subsequent Purchase Payments will result in an increase to the amount of the fee you pay since the fee rate is assessed against the Income Base, assuming that the annual fee rate has not decreased as described above. Please note that this means the addition of an Income Credit prior to the Activation Date will lead to paying a higher fee in any given period than without the addition of the Income Credit because the Income Credit may increase the Income Base. You will be assessed a non-refundable fee each quarter regardless of whether you activate Lifetime Income.
For Polaris Income Plus Daily Flex, an increase in the Income Base due to attaining a new Step-up Value or an addition of subsequent Purchase Payment(s) will result in an increase to the amount of the fee you pay since the fee rate is assessed against the Income Base, assuming that the annual fee rate has not decreased as described above.
If your contract value falls to zero, the fee will no longer be deducted. We will not assess the quarterly fee if you annuitize your contract or if a death benefit is paid before the end of a Benefit Quarter. If the Living Benefit is still in effect while your contract value is greater than zero, and you surrender your contract, we will assess a pro-rata charge for the fee applicable to the Benefit Quarter in which the surrender occurs if you surrender your contract before the end of a Benefit Quarter. The pro-rata fee is calculated by multiplying the fee by the number of days between the date when the prior fee was last assessed and the date of surrender, divided by the number of days between the prior and the next Benefit Quarter Anniversaries.
What happens if the contract value is reduced to zero while the Income Base is greater than zero?
Prior to the Activation Date,
If the contract value is reduced to zero due to a withdrawal, but the Income Base is greater than zero, the contract will be terminated including any optional benefits and features.
If the contract value is reduced to zero due to a withdrawal, but the Income Base is greater than zero, the contract will be terminated including any optional benefits and features.
On or after the Activation Date,
If the contract value is reduced to zero, but the Income Base is greater than zero, we will pay the remaining Maximum Annual Withdrawal Amount for that Benefit Year. Thereafter we will pay the Protected Income Payment over the remaining lifetime of the Covered Person(s).
If the contract value is reduced to zero, but the Income Base is greater than zero, we will pay the remaining Maximum Annual Withdrawal Amount for that Benefit Year. Thereafter we will pay the Protected Income Payment over the remaining lifetime of the Covered Person(s).
If an Excess Withdrawal reduces your contract value to zero, no further benefits are payable under the contract and your contract along with the Living Benefit will terminate.
If your contract value is reduced to zero, you may no longer make transfers, and no death benefit is payable. Therefore, you should be aware that, particularly during times of unfavorable investment performance, Excess Withdrawals taken under the Living Benefit may reduce the contract value to zero, thereby terminating any other benefits of the contract.
When the contract value equals zero but the Income Base is greater than zero, to receive any remaining Living Benefit, you must select one of the following:
1.
The Protected Income Payment divided equally and paid on a monthly, quarterly, semi-annual or annual frequency as selected by you until the date of death of the Covered Person(s); or
2.
Any option mutually agreeable between you and us.
Once you elect an option above, it cannot be changed. If you do not select an option above, the remaining benefit will be paid as option 1 above. This amount will be divided equally and paid on a quarterly basis until the date of death of the Covered Person(s). No amount is payable thereafter.
Additional important information
applicable to POLARIS INCOME Max and POLARIS INCOME Plus DAILY FLEX
When and how may I elect a Living Benefit?
You may elect a Living Benefit at the time of contract issue (the “Benefit Effective Date”). You may elect to have the Living Benefit cover only your life or the lives of both you and your spouse, the “Covered Person(s).” If the contract is not owned by a natural person, references to Owner(s) apply to the Annuitant(s). To elect the Living Benefit, Covered Person(s) must meet the minimum and maximum age requirements. The age requirements vary depending on the type of contract and the number of Covered Persons. The age requirements for optional death benefits and other optional features may be different than those listed here. You must meet the age requirements for those features in order to elect them.
Polaris Income Max:
| Number of Owners |
Covered Person | |
| Minimum Age(1) |
Maximum Age(2) | |
| One Owner |
50 |
80 |
| Joint Owners(3) |
50 |
80 |
(1)
Minimum Age must be met by any Covered Person(s) as of the Contract Issue Date.
(2)
Maximum Age cannot be exceeded by any Covered Person(s) as of the date added.
(3)
Joint Owners may choose which of the two Owners will be the Covered Person. The Beneficiary’s age is not considered in determining the maximum issue age of the second Covered Person.
E-15
Polaris Income Plus Daily Flex:
| Number of Owners |
Covered Person | |
| Minimum Age(1) |
Maximum Age(2) | |
| One Owner |
45 |
80 |
| Joint Owners(3) |
45 |
80 |
(1)
Minimum Age must be met by any Covered Person(s) as of the Contract Issue Date.
(2)
Maximum Age cannot be exceeded by any Covered Person(s) as of the date added.
(3)
Joint Owners may choose which of the two Owners will be the Covered Person. The Beneficiary’s age is not considered in determining the maximum issue age of the second Covered Person.
What are the allowable changes to Covered Person(s) prior to the Activation Date?
You may make changes to your Covered Person(s) prior to the Activation Date for specific Life Change Events as defined below by submitting the appropriate Covered Person(s) Change form. Note: Any Covered Person being added must meet the above minimum and maximum age requirements.
•
Marriage – If there is one Covered Person, you may add your spouse as the second Covered Person;
•
Divorce – If there are two Covered Persons, you may remove one of the Covered Persons as a result of divorce;
•
Death – Upon the death of one of the Covered Persons, you may remove the deceased Covered Person.
What are the allowable changes to Covered Person(s) on the Activation Date?
| Number of Owners and Covered Persons |
Allowed Changes to Covered Person(s) on the Activation Date |
| Single Owned Contract & One Covered Person |
Add Spouse as the second Covered Person |
| Single Owned Contract & Two Covered Persons(1) |
Remove or Change the second Covered Person who is not the Single Owner |
| Jointly Owned Contract & One Covered Person |
Add Joint Owner as the second Covered Person |
| Jointly Owned Contract & Two Covered Persons(1) |
Remove or Change either Covered Person |
(1)
You must keep at least one of the original Covered Person(s) if requesting to remove or change either Covered Person. Note: If a second Covered Person or if one of the original Covered Person(s) is changed, Covered Person(s) must meet the above minimum and maximum age requirements.
Your Lifetime Income will change as a result of removing or adding a Covered Person(s).
If I own a Qualified contract, how do Required Minimum Distributions impact my Living Benefit?
Prior to the Activation Date, Required Minimum Distributions (“RMD”) will proportionately reduce the Income Base, Income Credit Base, if applicable, and the Purchase Payments used to calculate the Minimum Income Base, if applicable.
On or after the Activation Date, as the original Owner, or Continuing Spouse (two Covered Persons elected) electing to treat the annuity contract as their own, if you are taking required minimum distributions (“RMD”) from this contract, and the amount of the RMD (based only on the contract to which the feature is elected and using the Uniform Lifetime Table or Joint Life Expectancy Table from the regulations under the Internal Revenue Code) is greater than the Maximum Annual Withdrawal Amount in any given Benefit Year, no portion of the RMD will be treated as an Excess Withdrawal. Please see “What are the effects of withdrawals on Polaris Income Max?”and“What are the effects of withdrawals on Polaris Income Plus Daily Flex?”above.
Any withdrawal taken before you activate Lifetime Income (including RMDs) will result in a reduction of the amount of future withdrawals of the Maximum Annual Withdrawal Amount (MAWA).
We will provide RMD favorable treatment, in each Benefit Year, to the greater of the Maximum Annual Withdrawal Amount or the RMD amount. Any portion of a withdrawal in a Benefit Year which exceeds the greater of the Maximum Annual Withdrawal Amount or RMD amount will be considered an Excess Withdrawal. If you must take RMD from this contract and want to ensure that these withdrawals are not considered Excess Withdrawals, your total distribution(s) during the current contract year must not exceed the greater of the Maximum Annual Withdrawal Amount or the RMD amount as calculated by our Annuity Service Center. Therefore, if you plan to take an Excess Withdrawal, then this feature may not be appropriate for you.
The age at which you must begin taking RMDs is 73 (if you were born January 1, 1951 or later), 72 (if you were born on or after July 1, 1949, and before January 1, 1951), or 70 ½ (if you were born before July 1, 1949).
If you are transferring from another company and have already reached the age you must begin taking RMDs, you should take the current tax year’s RMD prior to the transfer, as we cannot systematically calculate the RMD as we do not possess the valuation for the previous year end. Further, if you are turning the age you must begin taking RMDs, you should know that although tax code allows for deferral of the first withdrawal to April of the tax year following your attainment of the age you must begin taking RMDs, doing so may result in subsequent withdrawals being treated as Excess Withdrawals for that Benefit Year.
What happens to my Living Benefit upon a spousal continuation if I elected one Covered Person and if the contract value is greater than zero?
Prior to the Activation Date, if the single Covered Person dies, the surviving Spousal Joint Owner or Spousal Beneficiary may elect to:
1.
Make a death claim, which terminates the Living Benefit and the contract; or
E-16
2.
Continue the contract and the Living Benefit as a new single Covered Person. The Continuing Spouse will receive the Maximum Annual Withdrawal Amount upon Lifetime Income Activation and the Protected Income Payment after the contract value goes to zero. The Continuing Spouse cannot add a new Covered Person. Upon the death of the Continuing Spouse, the Beneficiary must make a death claim, which terminates the Living Benefit and the contract.
If an Owner that is not the single Covered Person dies, the surviving Spousal Joint Owner who is the Covered Person may elect to:
1.
Make a death claim, which terminates the Living Benefit and the contract; or
2.
Continue the contract and the Living Benefit as the current single Covered Person. The Continuing Spouse will receive the Maximum Annual Withdrawal Amount upon Lifetime Income Activation and the Protected Income Payment after the contract value goes to zero. The Continuing Spouse cannot add a new Covered Person. Upon the death of the Continuing Spouse, the Beneficiary must make a death claim, which terminates the Living Benefit and the contract.
On or after the Activation Date, if the single Covered Person dies, the surviving Spousal Joint Owner or Spousal Beneficiary may elect to:
1.
Make a death claim, which terminates the Living Benefit and the contract; or
2.
Continue the contract, without the Living Benefit.
If an Owner that is not the single Covered Person dies, the surviving Spousal Joint Owner who is the Covered Person may elect to:
1.
Make a death claim, which terminates the Living Benefit and the contract; or
2.
Continue the contract with the current Maximum Annual Withdrawal Amount and Protected Income Payment.
Note: At any time, if, the contract value goes to zero due to a withdrawal, the Spousal Beneficiary cannot continue the contract.
What happens to my Living Benefit upon a spousal continuation if I elected two Covered Persons and if the contract value is greater than zero?
Prior to the Activation Date, upon death of the first of the two Covered Persons, the surviving Covered Person (Spousal Joint Owner or Spousal Beneficiary) may elect to:
1.
Make a death claim, which terminates the Living Benefit and the contract; or
2.
Continue the contract as a single Covered Person. The Continuing Spouse will receive the Maximum
Annual Withdrawal Amount upon Lifetime Income Activation and the Protected Income Payment after the contract value goes to zero. The Continuing Spouse cannot add a new Covered Person. Upon the death of the Continuing Spouse, the Beneficiary must make a death claim, which terminates the Living Benefit and the contract.
Note: Prior to the Activation Date, if the contract value goes to zero due to a withdrawal, the Living Benefit and the contract terminate, and the Spousal Beneficiary cannot continue the contract.
On or after the Activation Date, upon the first of the two Covered Person’s death, the surviving Covered Person (Spousal Joint Owner or Spousal Beneficiary) may elect to:
1.
Make a death claim, which terminates the Living Benefit and the contract; or
2.
Continue the contract, with the current Maximum Annual Withdrawal Amount and Protected Income Payment.
Note: On or after the Activation Date, if the contract value goes to zero due to: a) a withdrawal taken within the parameters of the Living Benefit, the Spousal Beneficiary can continue the Living Benefit as the surviving Covered Person with the current Protected Income Payment for their lifetime or b) an Excess Withdrawal, the Living Benefit and contract will terminate, and the Spousal Beneficiary cannot continue the contract.
The components of the Living Benefit in effect at the time of Spousal Continuation will not change. The surviving Covered Person can elect to receive withdrawals in accordance with the provisions of the Living Benefit elected based on the age of the younger Covered Person on the Activation Date. If Lifetime Income was not activated prior to the Spousal Continuation, the Maximum Annual Withdrawal Percentage and the Protected Income Payment Percentage will be based on the age of the surviving Covered Person on the Activation Date. Please see “How does Polaris Income Max work?” and “How does Polaris Income Plus Daily Flex work?” above.
For Polaris Income Max only
If Spousal Continuation occurs, the Continuing Spouse will continue to receive any increase to the Income Base for Higher Anniversary Values or if applicable, any Income Credit prior to the Activation Date, while the contract value is greater than zero.
For Polaris Income Plus Daily Flex only
If Spousal Continuation occurs, the Continuing Spouse will continue to receive any increase to the Income Base for Step-up Values and the Continuing Spouse will also be eligible to receive the Minimum Income Base on Benefit Year Anniversaries prior to the Activation Date. On or after the Activation Date, the Continuing Spouse is no longer eligible for any further adjustments to the Minimum Income Base.
E-17
Can a non-spousal Beneficiary elect to receive any remaining benefits under my Living Benefit upon the death of the second spouse?
No. Upon the death of the Covered Person(s), if the contract value is greater than zero, a non-spousal Beneficiary must make an election under the death benefit provisions of the contract, which terminates the Living Benefit.
What happens to my Living Benefit upon the Latest Annuity Date?
On the Latest Annuity Date, if the contract value is greater than zero, You must select one of the following options:
1.
Annuitize by selecting from choices a. or b. below:
a.
elect to begin one of the Annuity Income Payment Options set forth in Your Contract. If you choose this option, We will apply the contract value to provide annuity income payments under the contract’s annuity provisions as described under ANNUITY INCOME OPTIONS; or
b.
elect to receive Lifetime Income under Your Living Benefit option by means of an Annuitization while any of the last named Covered Person(s) is living. If You have already activated Lifetime Income under the Living Benefit, You will continue to receive Lifetime Income by means of an Annuitization as described below. If you have not yet activated Lifetime Income, you may activate Lifetime Income by means of an Annuitization as described under ANNUITY INCOME OPTIONS; or
2.
Fully surrender your Contract
Note: Under 1b) upon annuitization you will receive the applicable Maximum Annual Withdrawal Amount for a fixed period while you are alive. The fixed period is determined by dividing the contract value as of the Latest Annuity Date by the Maximum Annual Withdrawal Amount. After that fixed period ends, you will receive the Protected Income Payment, which is calculated by multiplying the Income Base as of the Latest Annuity Date by then applicable Protected Income Payment Percentage, paid until the death(s) of all Covered Person(s). The amount of each such payment will equal the Protected Income Payment amount divided according to the payment frequency you selected.
An election under option 1 above converts Your contract value or Lifetime Income amount to an Annuitization payable through a series of payments as described above. Once the selected Annuitization begins, all other benefits under Your Contract, will be terminated, transfers may no longer be made, a death benefit is no longer payable, and the Living Benefit Fee will no longer be deducted. If You do not select an option listed above by the Latest Annuity Date, We will automatically begin making Lifetime Income
payments, which would equal to the Maximum Annual Withdrawal Amount as long as the contract value is greater than zero, or the Protected Income Payment if the contract value goes to zero, in accordance with option 1b) above, divided equally and paid on a monthly frequency until the death(s) of all of the last named Covered Person(s).
Can I elect to cancel my Living Benefit?
The Living Benefit may not be cancelled by you prior to the 5th Benefit Year Anniversary unless you surrender your contract. The Living Benefit may be cancelled by you on or after the 5th Benefit Year Anniversary and the cancellation will be effective as outlined in the table below.
| Cancellation Request Received |
Cancellation Effective Date |
| Years 1-5 |
5th Benefit Year Anniversary |
| Years 5+ |
Benefit Quarter Anniversary following the receipt of the cancellation request |
Once cancellation is effective, the guarantees under the Living Benefits are terminated. In addition, the investment requirements for the Living Benefits will no longer apply to your contract. You may not re-elect or reinstate the Living Benefit after cancellation.
If there are two Covered Persons, upon the death of the first Covered Person, the surviving Covered Person (generally, the Continuing Spouse) may cancel the Living Benefit on or after the 5th Benefit Year Anniversary and the cancellation will be effective as outlined in the table above. Upon the cancellation effective date of the Living Benefit, there will be one final fee applicable to the Benefit Quarter in which the cancellation occurs, on the same Benefit Quarter Anniversary. Thereafter, the fee will no longer be charged.
What happens to the Secure Value Account and Automatic Asset Rebalancing Program instructions if I elect to cancel Polaris Income Max or Polaris Income Plus Daily Flex?
Amounts allocated to the Secure Value Account will be automatically transferred to the 1-Year Fixed Account, if available. If the 1-Year Fixed Account is not available in the state in which your contract was issued, amounts will be transferred to a money market or similar portfolio. From the day following the automated transfer from the Secure Value Account, you may transfer this amount to another available investment option under the contract for a period of 90 days during which the transfer will not count against the annual number of free transfers or U.S. Mail transfers, or incur a transfer fee. You may move your funds out of the 1-Year Fixed Account or a money market or similar portfolio, as applicable, at any time.
The Automatic Asset Rebalancing Program and your instructions on file will not be terminated or changed upon cancellation of the Living Benefit. Amounts transferred from the Secure Value Account into the 1-Year Fixed Account or a money market or similar portfolio, as applicable, will not impact the Automatic Asset Rebalancing Program
E-18
instructions on file and that transfer will not result in new Default Rebalancing Instructions. On or after cancellation of these features, you may provide new rebalancing instructions or you may choose to terminate the Automatic Asset Rebalancing Program by contacting the Annuity Service Center.
Are there circumstances under which my Living Benefit will be automatically cancelled?
The Living Benefit and Lifetime Income will automatically be cancelled upon the occurrence of one of the following:
(i)
Annuitization of the contract; or
(ii)
Termination or surrender of the contract; or
(iii)
A death benefit is paid resulting in the contract being terminated; or
(iv)
Any withdrawal prior to the Activation Date that reduces the Contract Value to zero; or
(v)
On or after the Activation Date, any Excess Withdrawal that reduces the contract value and Income Base to zero; or
(vi)
Death of the Covered Person, if only one is elected after Lifetime Income has been activated; or, if two Covered Persons are elected, death of the surviving Covered Person; or
(vii)
A change that removes all of the original Covered Persons from the contract; or
(viii)
A Change of the Owner or Assignment; or
(ix)
You elect to cancel Your Living Benefit.
If a change of ownership occurs from a natural person to a non-natural entity, the original natural Owner(s) must also be the Annuitant(s) after the ownership change to prevent termination of the Living Benefit. A change of ownership from a non-natural entity to a natural person can only occur if the new natural Owner(s) was the original natural Annuitant(s) in order to prevent termination of the Living Benefit. Any ownership change is contingent upon prior review and approval by the Company.
Any amounts that we may pay under the feature in excess of your contract value are subject to the Company’s financial strength and claims-paying ability.
Polaris Income PLUS FLEX and POLARIS INCOME PLUS DAILY FLEX
If your contract was issued between May 1, 2019 and October 12, 2020 and you elected the Polaris Income Plus Flex or Polaris Income Plus Daily Flex living benefit, the following provisions are applicable to the feature you elected.
Below is a glossary of Living Benefit Terms and a summary of the key features of the optional Living Benefits offered in your contract.
Glossary of Living Benefit Terms
Activation Date
The date on which your Lifetime Income is activated. Upon activation of Lifetime Income, changes cannot be made to the Covered Person(s) or Income Options.
Anniversary Value
The contract value on any Benefit Year Anniversary. The Continuation Contribution, if applicable, is included in the calculation of Anniversary Values.
Benefit Effective Date
The date the Living Benefit is elected. The Benefit Effective Date is the same as the Contract Issue Date.
Benefit Quarter
Each consecutive 3-month period starting on the Benefit Effective Date.
Benefit Quarter Anniversary
The date following each consecutive 3 month period starting on the Benefit Effective Date. If the next Benefit Quarter Anniversary has no corresponding date, then the Benefit Quarter Anniversary will be deemed to be the following day. For example, if a Benefit Quarter Anniversary is November 29, the next Benefit Quarter Anniversary would be February 29 of the following year; however, in a non-Leap Year, there is no corresponding date. Therefore, the next Benefit Quarter Anniversary would be March 1.
Benefit Year
Each consecutive one year period starting on the Benefit Effective Date.
Benefit Year Anniversary
The date on which each Benefit Year begins.
Contract Year
Each consecutive one year period starting on the Contract Issue Date.
Covered Person(s)
The person, or persons, whose lifetime withdrawals are guaranteed under the Living Benefit.
Covered Person Changes
The Covered Person(s) may be changed in the event of Life Change Event prior to or on the Activation Date. No further changes may be made to the Covered Person(s) after the Activation Date.
Excess Withdrawal
Any withdrawal, or portion of a withdrawal, that is taken in a Benefit Year after the Activation Date and exceeds the greater of the Maximum Annual Withdrawal Amount or the Required Minimum Distribution amount as calculated by the Annuity Service Center. An Excess Withdrawal will cause the Income Base, Income Credit Base, if applicable, and the Maximum Annual Withdrawal Amount to be recalculated.
E-19
Higher Anniversary Value
For Polaris Income Plus Flex, the current Anniversary Value that is greater than the current Income Base.
Income Base
The Income Base is a value used to determine the Living Benefit fee and the maximum amount that may be withdrawn each Benefit Year after the Activation Date without reducing the Income Base and Income Credit Base, if applicable. The Income Base is also used to determine the amount paid each year over the lifetime of the Covered Person(s), if and when the contract value is reduced to zero, but the Income Base is still greater than zero, or upon the Latest Annuity Date.
Income Credit
An amount that may be added to the Income Base during the Income Credit Period as shown in the following table:
| Optional Living Benefit |
Income Credit (as a percentage of the Income Credit Base) |
Income Credit Availability Prior to the Activation Date |
Income Credit Availability On or After Activation Date |
| Polaris Income Plus Flex |
5.25% (For contracts purchased on or after March 30, 2020) 6% (For contracts purchased prior to March 30, 2020) |
Available during the first 12 Benefit Years – the Income Credit Base and Income Base are reduced proportionately for any withdrawals taken prior to the Activation Date |
Available during the first 12 Benefit Years – the Income Credit is reduced, but not eliminated in any Benefit Year in which cumulative withdrawals are less than the applicable Income Credit Percentage |
| Polaris Income Plus Daily Flex |
Not available | ||
Income Credit Base
Applicable to Polaris Income Plus Flex only, the Income Credit Base is used solely as a basis for calculating the Income Credit during the Income Credit Period.
Income Credit Percentage
Applicable to Polaris Income Plus Flex only, a percentage of the Income Credit Base used to determine the Income Credit amount during the Income Credit Period. Please refer to Income Credit above for the Income Credit Percentage applicable to your contract.
Income Credit Period
Applicable to Polaris Income Plus Flex only, the period of time over which we calculate the Income Credit, which is the first 12 Benefit Years.
Income Option
The Income Option is elected by You at contract issue. The Maximum Annual Withdrawal Amounts and Protected Income Payments offered in each Income Option vary by age and whether you elect one or two Covered Persons.
Income Option Change
A one-time opportunity to change the Income Option of your initial Living Benefit election on the Activation Date.
Investment Requirements
In order to elect the Living Benefit, you must invest your money in accordance with certain requirements outlined under Investment Requirements for Optional Living Benefits in APPENDIX A - UNDERLYING FUNDS AVAILABLE UNDER THE CONTRACT.
Life Change Event
A change to the Covered Person(s) upon marriage, divorce or death if prior to the Activation Date.
Lifetime Income
Any withdrawal taken on or after the Activation Date that is all or part of the Maximum Annual Withdrawal Amount or Protected Income Payment.
Maximum Annual Withdrawal Amount
The maximum amount that may be withdrawn each Benefit Year on or after activating Lifetime Income and while the contract value is greater than zero without reducing the Income Base and the Income Credit Base, if applicable.
Maximum Annual Withdrawal Percentage
The percentage used to determine the Maximum Annual Withdrawal Amount available for withdrawal each Benefit Year after activating Lifetime Income and while the contract value is greater than zero.
Minimum Income Base for Polaris Income Plus Flex
The Minimum Income Base is a guaranteed minimum amount of the Income Base which is calculated on the 12th Benefit Anniversary if you have not activated Lifetime Income. Any withdrawals taken prior to activating Lifetime Income will proportionately reduce the Purchase Payments used to calculate the Minimum Income Base. If you activate Lifetime Income before the 12th Benefit Anniversary, you will not be eligible to receive the increase to the Income Base on the 12th Benefit Anniversary. The Minimum Income Base amount is calculated as a percentage of Purchase Payments as follows:
| Minimum Income Base Period |
Minimum Income Base Percentage (as a Percentage of the Purchase Payments*) |
| Activation Date on or after the 12th Benefit Year Anniversary |
200% of Purchase Payments* received in the 1st Benefit Year, plus 100% of Purchase Payments* received after the 1st Benefit Year |
*
Purchase Payments reduced proportionately for withdrawals taken prior to the Activation Date.
E-20
Minimum Income Base for Polaris Income Plus Daily Flex
The Minimum Income Base is a guaranteed minimum amount of the Income Base calculated on each Benefit Year Anniversary prior to the Activation Date and up to the 15th Benefit Year Anniversary. An annual Minimum Income Base Percentage of 5% will be applied to Purchase Payments received prior to that Benefit Year Anniversary during the Minimum Income Base period, as long as the Activation Date is after each Benefit Year Anniversary indicated as follows:
| Minimum Income Base Period (Lifetime Income is not activated prior to the Benefit Year Anniversary) |
Minimum Income Base Percentage (as a Percentage of the Purchase Payments) |
| 1st Benefit Year Anniversary |
105% |
| 2nd Benefit Year Anniversary |
110% |
| 3rd Benefit Year Anniversary |
115% |
| 4th Benefit Year Anniversary |
120% |
| 5th Benefit Year Anniversary |
125% |
| 6th Benefit Year Anniversary |
130% |
| 7th Benefit Year Anniversary |
135% |
| 8th Benefit Year Anniversary |
140% |
| 9th Benefit Year Anniversary |
145% |
| 10th Benefit Year Anniversary |
150% |
| 11th Benefit Year Anniversary |
155% |
| 12th Benefit Year Anniversary |
160% |
| 13th Benefit Year Anniversary |
165% |
| 14th Benefit Year Anniversary |
170% |
| 15th Benefit Year Anniversary |
175% |
Prior to the Activation Date, any withdrawals taken will proportionately reduce all Purchase Payments used in the calculation of the Minimum Income Base. The Minimum Income Base is only available in the first 15 Benefit Years, or upon the Activation Date, if earlier.
Protected Income Payment
The amount to be paid each year over the lifetime of the Covered Person(s) after the Activation Date, if and when the contract value is reduced to zero, but the Income Base is still greater than zero or if the Latest Annuity Date has been reached.
Protected Income Payment Percentage
The percentage used to determine the Protected Income Payment.
Step-up Value
If you elect Polaris Income Plus Daily Flex, the Step-Up Value is used to determine the Income Base on a daily basis. The Step-Up Value is equal to the current contract value on any day where the current contract value is greater than the current Income Base due to favorable market performance.
How does Polaris Income Plus Flex work?
Polaris Income Plus Flex® locks in the greater of two values to determine the Income Base. The Income Base is initially equal to the first Purchase Payment. The Income Base is automatically locked in on each Benefit Year Anniversary, as the greater of (1) the Higher Anniversary Value, or (2) the Income Base increased by any available Income Credit.
Polaris Income Plus Flex offers guaranteed lifetime income plus the opportunity to increase income by locking in the greater of either the contract’s Higher Anniversary Value, or an Income Base with an annual Income Credit, if any. If you elect Polaris Income Plus Flex, you may choose from Income Options 1, 2 or 3, but must elect the date on which your Lifetime Income is activated (the “Activation Date”).
Polaris Income Plus Flex allows you flexibility to make a one-time change to your initial elections of: 1) Covered Person(s) (the “Covered Person Change”) and 2) Income Options (the “Income Option Change”) on the Activation Date. The Covered Person Change is also permitted where there is a marriage, divorce, or death prior to the Activation Date (the “Life Change Event”) of one of the original Covered Person(s). You may take withdrawals prior to the Activation Date that will not lock in the Maximum Annual Withdrawal Percentage and Protected Income Payment Percentage, but any such withdrawals will proportionately reduce the Income Base, Income Credit Base (if applicable), and Purchase Payments used in the calculation of the Minimum Income Base. Note: If the Activation Date is prior to the specified Benefit Year Anniversary, you will no longer be eligible for the Minimum Income Base on the Benefit Year Anniversary.
The annual Income Credit is an amount we may add to the Income Base each year for the first 12 Benefit Years. The Income Credit is determined by multiplying the applicable Income Credit Percentage by the Income Credit Base. The Income Credit may be reduced if withdrawals are taken, as described below.
Prior to Activation Date, if withdrawals are taken, the Income Credit Percentage is not reduced, but any applicable Income Credit is reduced because it will be based on the proportionately reduced Income Credit Base.
On or after the Activation Date, the Income Credit is reduced but not eliminated in any Benefit Year in which cumulative withdrawals are less than the applicable Income Credit Percentage, thereby providing a guarantee that income can continue to increase during the first 12 years even after starting withdrawals. After the first 12 years, the Income Base may only increase to the Higher Anniversary Value.
If the Activation Date is after the 12th contract anniversary, and you do not take any withdrawals during the first 12 years, you will be eligible for the Minimum Income Base on the 12th Benefit Year Anniversary. Please see “How do
E-21
increases to the Income Base and Income Credit Base work under Polaris Income Plus Flex?” below.
How does Polaris Income Plus Daily Flex work?
Polaris Income Plus Daily Flex® offers guaranteed lifetime income plus the opportunity to increase income by locking in Step-up Values. If you elect Polaris Income Plus Daily Flex, you may choose from Income Options 1, 2, or 3, but must elect the date on which your Lifetime Income is activated (the “Activation Date”).
Polaris Income Plus Daily Flex allows you flexibility to make a one-time change to your initial elections of: 1) Covered Person(s) (the “Covered Person Change”) and 2) Income Option (the “Income Option Change”) on the Activation Date. The Covered Person(s) Change is permitted where there is a marriage, divorce, or death prior to the Activation Date (the “Life Change Event”) of the original Covered Person(s). At least one of the original named Covered Person(s) must remain on the contract. You may take withdrawals prior to the Activation Date that will not lock in the Maximum Annual Withdrawal Percentage and Protected Income Payment Percentage, but any such withdrawals will proportionately reduce the Income Base, Income Credit (if applicable), and Purchase Payments used in the calculation of the Minimum Income Base.
Prior to the Activation Date, the Income Base step-ups, if any, occur on a daily basis. The Income Base is the basis for the Covered Person(s)’ Lifetime Income. The Income Base is initially equal to the first Purchase Payment, increased by any subsequent Purchase Payments, if any, and reduced proportionately for any withdrawals made. In addition, if the Activation Date is not prior to the specified Benefit Year Anniversary, you will be eligible for the Minimum Income Base on the Benefit Year Anniversary. The Minimum Income Base is a specified percentage of the Purchase Payment(s). The Purchase Payment(s) used to calculate the Minimum Income Base are reduced for any withdrawals taken prior to the Activation Date.
On or after the Activation Date, while both the Income Base and the contract values are greater than zero, the Income Base may only be increased on the Benefit Year Anniversary dates, looking back at the prior Benefit Year’s Step-up Values and subsequent Purchase Payments, if any. Please see “How do increases in the Income Base work under Polaris Income Plus Daily Flex?” below.
What are the differences between Polaris Income Plus Flex and Polaris Income Plus Daily Flex?
| Living Benefit Parameter |
Polaris Income Plus Flex |
Polaris Income Plus Daily Flex |
| Initial Annual Fee |
1.25% One Covered Person 1.25% Two Covered Persons | |
| Minimum Income Base |
Minimum Income Base Percentage: 200% of Purchase Payments received in 1st Benefit Year 100% of Purchase Payments received after 1st Benefit Year Minimum Income Base Period: 12 years if Lifetime Income is NOT activated |
Range of Minimum Income Base Percentage: 105% - 175% Minimum Income Base Period: Years 1-15; upon the Activation Date, no further adjustments are made to the Minimum Income Base |
| Income Credit – Prior to the Activation Date |
Income Credit available in first 12 Benefit Years – the Income Credit Base and Income Base are reduced proportionately for any withdrawals taken prior to the Activation Date |
N/A |
| Income Credit – On or After the Activation Date |
Income Credit available in first 12 Benefit Years – the Income Credit is reduced, but not eliminated in any Benefit Year on or after the Activation date in which cumulative withdrawals are less than the applicable Income Credit Percentage |
N/A |
| Frequency of Step-up Values |
Annual |
Daily |
| Investment Requirements |
10% in Secure Value Account 90% in Variable Portfolios (total of 18 investment options) |
Allocation Structure: 10% in Secure Value Account 90% in Variable Portfolios Asset Allocation Portfolios (37 investment options) or Build Your Own Allocation (76 investment options that cross 12 asset classes) |
Please consult with your financial representative regarding which Living Benefit is appropriate for you.
E-22
What determines the amount I can receive each year?
The amount that you receive depends on whether there are one or two Covered Person(s), the age of the Covered Person(s) and whether your contract value is greater than or equal to zero on the Activation Date.
While the contract value is greater than zero and on or after the Activation Date, the Maximum Annual Withdrawal Percentage represents the percentage of your Income Base used to calculate the Maximum Annual Withdrawal Amount that you may withdraw each Benefit Year without decreasing your Income Base. The Maximum Annual Withdrawal Percentage differs depending on whether there are one or two Covered Person(s) and the age of the Covered Person(s) on the Activation Date.
If your contract value has been reduced to zero or the Latest Annuity Date is reached, the Protected Income Payment Percentage represents the percentage of your Income Base used to calculate the Protected Income Payment that you will receive each year over the remaining lifetime of the Covered Person(s). The Protected Income Payment Percentage differs depending on whether there are one or two Covered Person(s) and the age of the Covered Person(s) on the Activation Date. Please see “What happens if the contract value is reduced to zero while the Income Base is greater than zero?”and “What happens to my living benefit upon the Latest Annuity Date?”below.
Maximum Annual Withdrawal Percentage and Protected Income Payment Percentage Table
The first percentage represents the Maximum Annual Withdrawal Percentage and the second percentage represents the Protected Income Payment Percentage for each of the options shown.
POLARIS INCOME PLUS FLEX
If your contract was purchased between March 30, 2020 and October 12, 2020, and you elected the optional Polaris Income Plus Flex living benefit, the following Maximum Annual Withdrawal and Protected Income Payment Percentage rates are applicable:
| Number of Covered Persons and Age of Covered Person(s) on the Activation Date(1) |
Polaris Income Plus Flex Income Option 1 |
Polaris Income Plus Flex Income Option 2 |
Polaris Income Plus Flex Income Option 3 |
| One Covered Person (Age 45 - 59) |
3.50% / 3.00%(2) |
3.50% / 3.00%(2) |
2.75% / 2.75% |
| One Covered Person (Age 60 - 64) |
4.50% / 3.00%(2) |
4.50% / 3.00%(2) |
3.25% / 3.25% |
| One Covered Person (Age 65 - 71) |
6.00% / 4.00% |
7.00% / 3.00% |
4.75% / 4.75% |
| One Covered Person (Age 72 and Older) |
6.50% / 4.00% |
7.50% / 3.00% |
5.00% / 5.00% |
| Two Covered Persons (Age 45 - 59) |
3.00% / 3.00%(3) |
3.00% / 3.00%(3) |
2.50% / 2.50% |
| Two Covered Persons (Age 60 - 64) |
4.00% / 3.00%(3) |
4.00% / 3.00%(3) |
3.00% / 3.00% |
| Two Covered Persons (Age 65 - 71) |
5.50% / 4.00% |
6.50% / 3.00% |
4.25% / 4.25% |
| Two Covered Persons (Age 72 and Older) |
6.00% / 4.00% |
7.00% / 3.00% |
4.50% / 4.50% |
(1)
If there are two Covered Persons, the age on the Activation Date is based on the age of the younger of the two Covered Persons.
(2)
If One Covered Person is elected, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a new Higher Anniversary Value on or after the Covered Person’s 65th birthday.
(3)
If Two Covered Persons are elected, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a new Higher Anniversary Value on or after the younger Covered Person’s 65th birthday.
E-23
If your contract was purchased between October 7, 2019 and March 29, 2020, and you elected the optional Polaris Income Plus Flex living benefit, the following Maximum Annual Withdrawal and Protected Income Payment Percentage rates are applicable:
| Number of Covered Persons and Age of Covered Person(s) on the Activation Date(1) |
Polaris Income Plus Flex Income Option 1 |
Polaris Income Plus Flex Income Option 2 |
Polaris Income Plus Flex Income Option 3 |
| One Covered Person (Age 45 - 59) |
4.00% / 3.00%(2) |
4.00% / 3.00%(2) |
3.25% / 3.25% |
| One Covered Person (Age 60 - 64) |
5.00% / 3.00%(2) |
5.00% / 3.00%(2) |
3.75% / 3.75% |
| One Covered Person (Age 65 - 71) |
6.50% / 4.00% |
7.50% / 3.00% |
5.25% / 5.25% |
| One Covered Person (Age 72 and Older) |
7.00% / 4.00% |
8.00% / 3.00% |
5.50% / 5.50% |
| Two Covered Persons (Age 45 - 59) |
3.50% / 3.00%(3) |
3.50% / 3.00%(3) |
3.00% / 3.00% |
| Two Covered Persons (Age 60 - 64) |
4.50% / 3.00%(3) |
4.50% / 3.00%(3) |
3.50% / 3.50% |
| Two Covered Persons (Age 65 - 71) |
6.00% / 4.00% |
7.00% / 3.00% |
4.75% / 4.75% |
| Two Covered Persons (Age 72 and Older) |
6.50% / 4.00% |
7.50% / 3.00% |
5.00% / 5.00% |
(1)
If there are two Covered Persons, the age on the Activation Date is based on the age of the younger of the two Covered Persons.
(2)
If One Covered Person is elected, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a new Higher Anniversary Value on or after the Covered Person’s 65th birthday.
(3)
If Two Covered Persons are elected, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a new Higher Anniversary Value on or after the younger Covered Person’s 65th birthday.
If your contract was purchased between May 1, 2019 and October 6, 2019, and you elected the optional Polaris Income Plus Flex living benefit, the following Maximum Annual Withdrawal and Protected Income Payment Percentage rates are applicable:
| Number of Covered Persons and Age of Covered Person(s) on the Activation Date(1) |
Polaris Income Plus Flex Income Option 1 |
Polaris Income Plus Flex Income Option 2 |
Polaris Income Plus Flex Income Option 3 |
| One Covered Person (Age 45 - 59) |
4.50% / 3.00%(2) |
4.50% / 3.00%(2) |
3.75% / 3.75% |
| One Covered Person (Age 60 - 64) |
5.50% / 3.00%(2) |
5.50% / 3.00%(2) |
4.25% / 4.25% |
| One Covered Person (Age 65 - 71) |
6.50% / 4.50% |
7.50% / 3.50% |
5.50% / 5.50% |
| One Covered Person (Age 72 and Older) |
7.00% / 4.50% |
8.00% / 3.50% |
5.75% / 5.75% |
| Two Covered Persons (Age 45 - 59) |
3.50% / 3.00%(3) |
3.50% / 3.00%(3) |
3.25% / 3.25% |
| Two Covered Persons (Age 60 - 64) |
4.50% / 3.00%(3) |
4.50% / 3.00%(3) |
3.75% / 3.75% |
| Two Covered Persons (Age 65 - 71) |
6.00% / 4.50% |
7.00% / 3.50% |
5.00% / 5.00% |
| Two Covered Persons (Age 72 and Older) |
6.50% / 4.50% |
7.50% / 3.50% |
5.25% / 5.25% |
(1)
If there are two Covered Persons, the age on the Activation Date is based on the age of the younger of the two Covered Persons.
(2)
If One Covered Person is elected, the Protected Income Payment Percentage is 4.50% if the Income Base is increased to a new Higher Anniversary Value on or after the Covered Person’s 65th birthday.
(3)
If Two Covered Persons are elected, the Protected Income Payment Percentage is 4.50% if the Income Base is increased to a new Higher Anniversary Value on or after the younger Covered Person’s 65th birthday.
E-24
POLARIS INCOME PLUS DAILY FLEX
If your contract was purchased between March 30, 2019 and October 12, 2020, and you elected the optional Polaris Income Plus Daily Flex living benefit, the following Maximum Annual Withdrawal and Protected Income Payment Percentage rates are applicable:
| Number of Covered Persons and Age of Covered Person(s) on the Activation Date(1) |
Polaris Income Plus Daily Flex Income Option 1 |
Polaris Income Plus Daily Flex Income Option 2 |
Polaris Income Plus Daily Flex Income Option 3 |
| One Covered Person (Age 45 - 59) |
3.25% / 2.75%(2) |
3.25% / 2.75%(2) |
2.50% / 2.50% |
| One Covered Person (Age 60 - 64) |
4.25% / 2.75%(2) |
4.25% / 2.75%(2) |
3.00% / 3.00% |
| One Covered Person (Age 65 - 71) |
6.00% / 4.00% |
7.00% / 3.00% |
4.75% / 4.75% |
| One Covered Person (Age 72 and Older) |
6.50% / 4.00% |
7.50% / 3.00% |
5.00% / 5.00% |
| Two Covered Persons (Age 45 - 59) |
2.75% / 2.75%(3) |
2.75% / 2.75%(3) |
2.25% / 2.25% |
| Two Covered Persons (Age 60 - 64) |
3.75% / 2.75%(3) |
3.75% / 2.75%(3) |
2.75% / 2.75% |
| Two Covered Persons (Age 65 - 71) |
5.50% / 4.00% |
6.50% / 3.00% |
4.25% / 4.25% |
| Two Covered Persons (Age 72 and Older) |
6.00% / 4.00% |
7.00% / 3.00% |
4.50% / 4.50% |
(1)
If there are two Covered Persons, the age on the Activation Date is based on the age of the younger of the two Covered Persons.
(2)
If One Covered Person is elected, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a Step-Up Value on or after the Covered Person’s 65th birthday.
(3)
If Two Covered Persons are elected, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a Step-Up Value on or after the younger Covered Person’s 65th birthday.
If your contract was purchased between October 7, 2019 and March 29, 2020, and you elected the optional Polaris Income Plus Daily Flex living benefit, the following Maximum Annual Withdrawal and Protected Income Payment Percentage rates are applicable:
| Number of Covered Persons and Age of Covered Person(s) on the Activation Date(1) |
Polaris Income Plus Daily Flex Income Option 1 |
Polaris Income Plus Daily Flex Income Option 2 |
Polaris Income Plus Daily Flex Income Option 3 |
| One Covered Person (Age 45 - 59) |
3.75% / 2.75%(2) |
3.75% / 2.75%(2) |
3.00% / 3.00% |
| One Covered Person (Age 60 - 64) |
4.75% / 2.75%(2) |
4.75% / 2.75%(2) |
3.50% / 3.50% |
| One Covered Person (Age 65 - 71) |
6.50% / 4.00% |
7.50% / 3.00% |
5.25% / 5.25% |
| One Covered Person (Age 72 and Older) |
7.00% / 4.00% |
8.00% / 3.00% |
5.50% / 5.50% |
| Two Covered Persons (Age 45 - 59) |
3.25% / 2.75%(3) |
3.25% / 2.75%(3) |
2.75% / 2.75% |
| Two Covered Persons (Age 60 - 64) |
4.25% / 2.75%(3) |
4.25% / 2.75%(3) |
3.25% / 3.25% |
| Two Covered Persons (Age 65 - 71) |
6.00% / 4.00% |
7.00% / 3.00% |
4.75% / 4.75% |
| Two Covered Persons (Age 72 and Older) |
6.50% / 4.00% |
7.50% / 3.00% |
5.00% / 5.00% |
(1)
If there are two Covered Persons, the age on the Activation Date is based on the age of the younger of the two Covered Persons.
(2)
If One Covered Person is elected, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a Step-Up Value on or after the Covered Person’s 65th birthday.
(3)
If Two Covered Persons are elected, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a Step-Up Value on or after the younger Covered Person’s 65th birthday.
E-25
If your contract was purchased between May 1, 2019 and October 6, 2019, and you elected the optional Polaris Income Plus Daily Flex living benefit, the following Maximum Annual Withdrawal and Protected Income Payment Percentage rates are applicable:
| Number of Covered Persons and Age of Covered Person(s) on the Activation Date(1) |
Polaris Income Plus Daily Flex Income Option 1 |
Polaris Income Plus Daily Flex Income Option 2 |
Polaris Income Plus Daily Flex Income Option 3 |
| One Covered Person (Age 45 - 59) |
4.25% / 2.75%(2) |
4.25% / 2.75%(2) |
3.50% / 3.50% |
| One Covered Person (Age 60 - 64) |
5.25% / 3.00%(2) |
5.25% / 3.00%(2) |
4.00% / 4.00% |
| One Covered Person (Age 65 - 71) |
6.50% / 4.50% |
7.50% / 3.50% |
5.50% / 5.50% |
| One Covered Person (Age 72 and Older) |
7.00% / 4.50% |
8.00% / 3.50% |
5.75% / 5.75% |
| Two Covered Persons (Age 45 - 59) |
3.25% / 2.75%(3) |
3.25% / 2.75%(3) |
3.00% / 3.00% |
| Two Covered Persons (Age 60 - 64) |
4.25% / 3.00%(3) |
4.25% / 3.00%(3) |
3.50% / 3.50% |
| Two Covered Persons (Age 65 - 71) |
6.00% / 4.50% |
7.00% / 3.50% |
5.00% / 5.00% |
| Two Covered Persons (Age 72 and Older) |
6.50% / 4.50% |
7.50% / 3.50% |
5.25% / 5.25% |
(1)
If there are two Covered Persons, the age on the Activation Date is based on the age of the younger of the two Covered Persons.
(2)
If One Covered Person is elected, the Protected Income Payment Percentage is 4.50% if the Income Base is increased to a Step-Up Value on or after the Covered Person’s 65th birthday.
(3)
If Two Covered Persons are elected, the Protected Income Payment Percentage is 4.50% if the Income Base is increased to a Step-Up Value on or after the younger Covered Person’s 65th birthday.
Are there investment requirements if I elect a Living Benefit?
Yes, you must allocate your assets, including Purchase Payments and the Continuation Contribution, if any, to a combination of the Secure Value Account and Variable Portfolios in accordance with the investment requirements. Please see Investment Requirements for Optional Living Benefits in APPENDIX A – UNDERLYING FUNDS AVAILABLE UNDER THE CONTRACT for the investment requirements associated with this optional Living Benefit.
With respect to amounts allocated to the Secure Value Account, the crediting interest rate will never be less than the guaranteed minimum interest rate specified in your contract. The crediting interest rate, once established, will not change for each allocation to the Secure Value Account for the duration of the guarantee period. The guarantee period for the Secure Value Account is a one year period that automatically renews every year from the date of each allocation to the Secure Value Account, unless the Living Benefit has been cancelled. Each allocation to the Secure Value Account may have different crediting interest rates. You may not reallocate your money in the Secure Value Account to a DCA Fixed Account or Fixed Account, if available, or to the Variable Portfolios at any time unless the Living Benefit is cancelled.
You may use available DCA Fixed Accounts to invest your target allocations in accordance with the investment requirements.
How do my investment requirements impact my feature and contract?
Before you elect a Living Benefit, you should carefully consider whether the investment requirements associated with the Living Benefits meet your investment objectives and risk tolerance.
The investment requirements may reduce the need to rely on the guarantees provided by these Living Benefits because they allocate your investment across asset classes and potentially limit exposure to market volatility. As a result, you may have better, or worse, investment returns by allocating your investments more aggressively. Therefore, the investment restrictions reduce the Company’s risk that the contract value will be reduced to zero before the Covered Person(s)’ death. Withdrawals taken while the contract value is greater than zero are withdrawals of the contract owner’s own money. Thus, these investment restrictions would reduce the likelihood that the Company would use its own assets to make payments in connection with the Living Benefit guarantee. Please consult your financial representative regarding which Variable Portfolios are appropriate for the Living Benefit you elected.
To be considered in Good Order, your allocation instructions for any Purchase Payment as well as your target allocations if you invest in a DCA Fixed Account must comply with the investment requirements, provided under Investment Requirements for Optional Living Benefits in APPENDIX A - UNDERLYING FUNDS AVAILABLE UNDER THE CONTRACT, for the amount not invested in the Secure Value Account. You may not transfer any amounts between the Secure Value Account and the Variable Portfolios or DCA Fixed Accounts. The Secure Value Account may not be used as a target account if you are using the DCA Program to comply with investment
E-26
requirements. You may not request any specific amount of any withdrawal to be deducted solely from the Secure Value Account. Rather, any withdrawal reduces the amount invested in the Secure Value Account in the same proportion that the withdrawal reduces the contract value.
We may revise the investment requirements for any existing contract to the extent that Variable Portfolios are added, deleted, substituted, merged or otherwise reorganized. We will promptly notify you in writing of any changes to the investment requirements due to additions, deletions, substitutions, mergers or reorganizations of the investment options. The required allocation percentage to the Secure Value Account will not change for the life of your contract.
Rebalancing and Investment Requirements
We will automatically enroll you in the Automatic Asset Rebalancing Program with quarterly rebalancing. If rebalancing instructions are not provided, we will align your rebalancing allocations with your Purchase Payment allocation instructions, or if using a DCA Fixed Account, your target DCA instructions. We require quarterly rebalancing because market performance, transfers, and withdrawal activity may result in your contract’s allocations going outside these requirements. Quarterly rebalancing will ensure that your allocation will continue to comply with the investment requirements for this feature.
Automatic transfers and/or systematic withdrawals will not result in rebalancing before the next automatic quarterly rebalancing occurs. The day following any transfer or withdrawal you initiate, we will rebalance in accordance with your most current and compliant Automatic Asset Rebalancing instructions on file. If you do not provide new rebalancing instructions at the time you initiate a transfer, we will update your ongoing rebalancing instructions to reflect the percentage allocations resulting from that transfer (“Default Rebalancing Instructions”) which will replace any previous rebalancing instructions you may have provided.
If at any point, for any reason, your rebalancing instructions would result in allocations inconsistent with the investment requirements, we will revert to the last compliant instructions on file. You can modify your rebalancing instructions, as long as they are consistent with the investment requirements, at any time by calling the Annuity Service Center.
We will not rebalance amounts in the Secure Value Account or DCA Fixed Accounts under the Automatic Asset Rebalancing Program.
What are the factors used to calculate Polaris Income Plus Flex?
The Lifetime Income offered by Polaris Income Plus Flex is calculated by considering the factors described below.
First,we consider the Income Credit Period. The Income Credit Period is the period of time over which we calculate
the Income Credit. The Income Credit Period begins on the Benefit Effective Date and ends 12 years later.
Second,we determine if the Anniversary Value is the Higher Anniversary Value. The Anniversary Value equals your contract value on any Benefit Year Anniversary.
Third,we determine the Income Base which initially is equal to the first Purchase Payment. The Income Base is increased by each Purchase Payment received and is reduced proportionately for any withdrawals taken prior to the Activation Date and Excess Withdrawals taken on or after the Activation Date.
Fourth,if you do not activate Lifetime Income before the 12th Benefit Anniversary, the guaranteed Minimum Income Base amount will be available in the Income Base calculation on the 12th Benefit Anniversary. Any withdrawals taken prior to activating Lifetime Income on or after the 12th Benefit Year Anniversary will proportionately reduce the Purchase Payments used to determine the Minimum Income Base. The Minimum Income Base amount is calculated as a percentage of Purchase Payments received during the first Benefit Year and a percentage of Purchase Payments received after the first Benefit Year. These percentages are provided above in the Glossary of Living Benefit Defined Terms. If you activate Lifetime Income before the 12th Benefit Year Anniversary, you will not be eligible to receive the increase to the Income Base.
Fifth,we determine the Income Credit Base which is used solely as a basis for calculating the Income Credit during the Income Credit Period. The initial Income Credit Base is equal to the first Purchase Payment. The Income Credit Base is increased by each Purchase Payment received and is reduced proportionately for any withdrawals taken prior to the Activation Date and Excess Withdrawals taken on or after the Activation Date.
Sixth, we determine the Income Credit.
The Income Credit amount is equal to the applicable Income Credit Percentage multiplied by the Income Credit Base on each Benefit Year Anniversary during the Income Credit Period. Prior to the Activation Date, if no withdrawals are taken during the Benefit Year, the Income Credit applied to the Income Base is not reduced.
On or after the Activation Date, the Income Credit Percentage is reduced but not eliminated in any Benefit Year in which cumulative withdrawals during the preceding Benefit Year are less than the applicable Income Credit Percentage.
Seventh, we determine the Maximum Annual Withdrawal Percentage, which represents the maximum percentage of the Income Base that can be withdrawn each Benefit Year on or after the Activation Date and while the contract value is greater than zero, without reducing the Income Base and the Income Credit Base. If your contract value is reduced to zero after the Activation Date but your Income Base is greater than zero, the Protected Income Payment
E-27
Percentage represents the percentage of the Income Base you will receive each Benefit Year thereafter until the death of the Covered Person(s).
The Maximum Annual Withdrawal Percentage and Protected Income Payment Percentage are determined by three factors upon the Activation Date: 1) whether there is one or two Covered Person(s); 2) the age of the Covered Person(s); and 3) the Income Option elected. Additionally, if applicable to the Income Option you elect, the Protected Income Payment Percentage may differ depending on whether withdrawals are taken before age 65 and if a new Higher Anniversary Value is achieved on or after the Covered Person(s) 65th birthday. Please see the tables under “What determines the amount I can receive each year?” above for the applicable Maximum Annual Withdrawal Percentage and Protected Income Payment Percentage.
Eighth, we determine the Maximum Annual Withdrawal Amount, which represents the maximum amount that may be withdrawn each Benefit Year on or after the Activation Date, while the contract value is greater than zero, without reducing the Income Base, and if applicable, the Income Credit Base. The Maximum Annual Withdrawal Amount is calculated by multiplying the Income Base by the applicable Maximum Annual Withdrawal Percentage. If your contract value is reduced to zero after activating Lifetime Income, but your Income Base is greater than zero, the Protected Income Payment is determined by multiplying the Income Base when contract value is reduced to zero by the applicable Protected Income Payment Percentage.
Finally, we determine the Excess Withdrawals, if any. Excess Withdrawals are withdrawals taken after the Activation Date that exceed the Maximum Annual Withdrawal Amount in any Benefit Year. An Excess Withdrawal reduces your Income Base on the date the Excess Withdrawal occurs. Any Excess Withdrawal reduces the Income Base in the same proportion by which the contract value is reduced by the Excess Withdrawal. In addition, you will not be eligible for an Income Credit in that Benefit Year. Please see “What are the effects of withdrawals on Polaris Income Plus Flex?” below.
What are the factors used to calculate Polaris Income Plus Daily Flex?
The Lifetime Income offered by Polaris Income Plus Daily Flex is calculated by considering the factors described below.
First, we determine the Step-up Values which are values used to determine the Income Base. The initial Step-up Value is equal to the contract value. Then, on any day that the contract value is greater than the Income Base on that day, the Income Base is stepped up to that value. The Step-up Value is determined daily prior to the Activation Date.
Second, we determine the Income Base, which initially is equal to the first Purchase Payment. The Income Base is increased by each subsequent Purchase Payment received, and is reduced proportionately for any withdrawals taken
prior to the Activation Date and Excess Withdrawals taken on or after the Activation Date.
Third, if you do not activate Lifetime Income before each Benefit Year Anniversary up to the 15th Benefit Year Anniversary, an annual Minimum Income Base Percentage of 5% will be applied to Purchase Payments received prior to that Benefit Year Anniversary. These percentages are provided above in the Glossary of Living Benefit Defined Terms. Further, any withdrawals taken prior to activating Lifetime Income will proportionately reduce the Purchase Payments used in the calculation of the Minimum Income Base.
Fourth, we determine the Maximum Annual Withdrawal Percentage, which represents the maximum percentage of the Income Base that can be withdrawn each Benefit Year on or after the Activation Date and while the contract value is greater than zero, without reducing the Income Base. If your contract value is reduced to zero after the Activation Date but your Income Base is greater than zero, the Protected Income Payment Percentage represents the percentage of the Income Base you will receive each Benefit Year thereafter until the death of the Covered Person(s).
The Maximum Annual Withdrawal Percentage and Protected Income Payment Percentage are determined by three factors upon the Activation Date: 1) whether there is one or two Covered Person(s); 2) the age of the Covered Person(s); and 3) the Income Option elected. Additionally, if applicable to the Income Option you elect, the Protected Income Payment Percentage may differ depending on whether withdrawals are taken before age 65 and if a new Higher Anniversary Value is achieved on or after the Covered Person(s) 65th birthday. Please see the tables under “What determines the amount I can receive each year?” above for the applicable Maximum Annual Withdrawal Percentage and Protected Income Payment Percentage.
Fifth, we determine the Maximum Annual Withdrawal Amount, which represents the maximum amount that may be withdrawn each Benefit Year on or after the Activation Date, while the contract value is greater than zero, without reducing the Income Base. The Maximum Annual Withdrawal Amount is calculated by multiplying the Income Base by the applicable Maximum Annual Withdrawal Percentage. If your contract value is reduced to zero after activating Lifetime Income, but your Income Base is greater than zero, the Protected Income Payment is determined by multiplying the Income Base when contract value is reduced to zero by the applicable Protected Income Payment Percentage.
Finally, we determine the Excess Withdrawals, if any. Excess Withdrawals are withdrawals taken after the Activation Date that exceed the Maximum Annual Withdrawal Amount in any Benefit Year. An Excess Withdrawal reduces your Income Base on the date the Excess Withdrawal occurs. Any Excess Withdrawal reduces the Income Base in the same proportion by which the
E-28
contract value is reduced by the Excess Withdrawal. Please see “What are the effects of withdrawals on Polaris Income Plus Daily Flex?” below.
How do increases to the Income Base and Income Credit Base work under Polaris Income Plus Flex?
On each Benefit Year Anniversary, the Income Base is automatically increased to the greater of (1) the Higher Anniversary Value; or (2) the current Income Base plus the Income Credit, if any. In addition, the Income Base will be at least the Minimum Income Base on the 12th Benefit Year Anniversary provided that Lifetime Income withdrawals have not begun before that anniversary.
On each Benefit Year Anniversary during the Income Credit Period, if the Income Base is increased to a Higher Anniversary Value, the Income Credit Base is also automatically increased to that Higher Anniversary Value. The Income Credit Base is not increased if an Income Credit is added to the Income Base.
Increases to your Income Base and Income Credit Base occur on Benefit Year Anniversaries while the contract value is greater than zero. However, Purchase Payments increase your Income Base and Income Credit Base at the time they are received. Since Higher Anniversary Values are determined only on the Benefit Year Anniversaries, your Income Base and Income Credit Base will not increase if your contract value is higher on days other than the Benefit Year Anniversaries.
On or After Activation Date, the Maximum Annual Withdrawal Amount is recalculated each time there is an increase in the Income Base. Accordingly, if the sum of withdrawals in any Benefit Year does not exceed the Maximum Annual Withdrawal Amount for that year, the Maximum Annual Withdrawal Amount will not change for the next year unless your Income Base is increased.
How do increases to the Income Base work under Polaris Income Plus Daily Flex?
Prior to the Activation Date, the Income Base is increased daily to the Step-up Value and by subsequent Purchase Payments, if any.
Additionally, prior to the Benefit Year Anniversary, but during the Minimum Income Base period, the Income Base will be increased to at least the Minimum Income Base on the Benefit Year Anniversary as a specified percentage of the Purchase Payments.
On or after the Activation Date, the Income Base is increased only on the Benefit Year Anniversary by looking back to the Higher Step-up Value since the Activation Date (“first look-back”) or, if one or more Excess Withdrawals have been taken in that Benefit Year, to the Higher Step-up Value since the last Excess Withdrawal.
After the first look-back, the Income Base is increased only on the Benefit Year Anniversary by looking back to the Higher Step-up Value since the last Benefit Year
Anniversary. If one or more Excess Withdrawals have been taken in that Benefit Year, the Income Base is increased on the Benefit Year Anniversary by looking back to the Higher Step-up Value since the last Excess Withdrawal.
What are the effects of withdrawals on Polaris Income Plus Flex?
The Maximum Annual Withdrawal Amount, the Income Base and the Income Credit Base may change over time as a result of the timing and amount of any withdrawals. If you activate Lifetime Income before the 12th Benefit Year Anniversary, your Income Base is not eligible to be at least the Minimum Income Base.
Prior to the Activation Date
Any withdrawal in a Benefit Year reduces the Income Base and Income Credit Base on the date the withdrawal occurs and in the same proportion by which the contract value is reduced by the withdrawal. This may result in a lower amount of Lifetime Income when Lifetime Income withdrawals are activated.
Additionally, any withdrawal taken will reduce the Income Credit (if applicable), and Purchase Payments used to calculate the Minimum Income Base. The reduction to the Income Credit Base will result in a lowered Income Credit amount being applied to the Income Base during the Income Credit Period. In addition, these withdrawals will not lock-in your Maximum Annual Withdrawal Percentage or Protected Income Payment Percentage, if applicable because your Lifetime Income withdrawals have not been activated.
On or after the Activation Date
Lifetime Income withdrawals during a Benefit Year that in total are less than or equal to the Maximum Annual Withdrawal Amount will not reduce the Income Base or Income Credit Base. However, if you choose to take less than the Maximum Annual Withdrawal Amount in any Benefit Year, you may not carry over the unused amount for withdrawal in subsequent years. Your Maximum Annual Withdrawal Amount in any year will not be recalculated solely as a result of taking less than the entire Maximum Annual Withdrawal Amount in the prior year. Please note that if you delay taking withdrawals for too long, you may limit the number of remaining years (due to your life expectancy) in which you may take withdrawals.
Excess Withdrawals may significantly reduce the value of or terminate the Living Benefit.
For example, assume that your contract value is $106,000, your Income Base and Income Credit Base are $120,000, and your Maximum Annual Withdrawal Amount is $6,000. You request a withdrawal of $11,000. Your Income Base and Income Credit Base will be reduced to $114,000 as follows: $120,000 x {1 – [($11,000 - $6,000)/($106,000 - $6,000)]} = $114,000.
Excess Withdrawals reduce your Income Base and Income Credit Base on the date the Excess Withdrawal occurs. Any Excess Withdrawal in a Benefit Year reduces the Income
E-29
Base and Income Credit Base in the same proportion by which the contract value is reduced by the amount in excess of the Maximum Annual Withdrawal Amount (“Excess Withdrawal”). As a result of a reduction of the Income Base, the new Maximum Annual Withdrawal Amount will be equal to the reduced Income Base multiplied by the applicable Maximum Annual Withdrawal Percentage. The last recalculated Maximum Annual Withdrawal Amount in a given Benefit Year is available for withdrawal at the beginning of the next Benefit Year and may be lower than the previous Benefit Year’s Maximum Annual Withdrawal Amount. In addition, you will not be eligible for an Income Credit, if applicable, in that Benefit Year.
When the contract value is less than the Income Base, Excess Withdrawals will reduce the Income Base by an amount which is greater than the amount of the Excess Withdrawal. In addition, you will not be eligible for an Income Credit in that Benefit Year. The impact of withdrawals on specific factors is further explained below:
Maximum Annual Withdrawal Amount: If the sum of withdrawals in any Benefit Year does not exceed the Maximum Annual Withdrawal Amount for that year, the Maximum Annual Withdrawal Amount will not change for the next year unless your Income Base is increased. If you take an Excess Withdrawal, the Maximum Annual Withdrawal Amount will be recalculated by multiplying the reduced Income Base by the existing Maximum Annual Withdrawal Percentage. This recalculated Maximum Annual Withdrawal Amount is available for withdrawal at the beginning of the next Benefit Year and may be lower than your previous Maximum Annual Withdrawal Amount.
Protected Income Payment: If the Income Base is greater than zero, but the contract value has been reduced to zero due to unfavorable investment performance, deduction of fees, or withdrawals within the Maximum Annual Withdrawal Amount, we will pay any remaining Maximum Annual Withdrawal Amount for the current Benefit Year. Thereafter, you will receive the Protected Income Payment each year over the remaining lifetime of the Covered Person(s) which is calculated by multiplying the Income Base when contract value is reduced to zero by the applicable Protected Income Payment Percentage. The Income Base is no longer increased on Benefit Year Anniversaries after the contract value has been reduced to zero. As a result, the Protected Income Payment is calculated once and will not change. Please see “What happens if the contract value is reduced to zero while the Income Base is greater than zero?” below.
All withdrawals from the contract, including Lifetime Income withdrawals, will reduce your contract value and your death benefit and may impact other provisions of your contract. Unfavorable investment experience and/or fees will also reduce your contract value. Lifetime Income
withdrawals are deducted proportionately from each Variable Portfolio and Secure Value Account in which you are invested.
What are the effects of withdrawals on Polaris Income Plus Daily Flex?
The Maximum Annual Withdrawal Amount, the Income Base and the Purchase Payment(s) used in the calculation of the Minimum Income Base may change over time as a result of the timing and amount of any withdrawals.
Prior to the Activation Date
Any withdrawal in a Benefit Year reduces the Income Base on the date the withdrawal occurs and in the same proportion by which the contract value is reduced by the withdrawal. This may result in a lower amount of Lifetime Income when Lifetime Income withdrawals are activated.
Additionally, any withdrawal taken will reduce each Purchase Payment included in the calculation of the Minimum Income Base. The reduction to the Purchase Payment(s) will result in a lowered amount being applied to the Income Base during the Minimum Income Base Period. However, the Minimum Income Base will continue to increase during the Minimum Income Base Period prior to the Activation Date. Lastly, any withdrawals will not lock-in your Maximum Annual Withdrawal Percentage or Protected Income Payment Percentage, if applicable because your Lifetime Income withdrawals have not been activated.
On or after the Activation Date
Lifetime Income withdrawals during a Benefit Year that in total are less than or equal to the Maximum Annual Withdrawal Amount will not reduce the Income Base. However, if you choose to take less than the Maximum Annual Withdrawal Amount in any Benefit Year, you may not carry over the unused amount for withdrawal in subsequent years. Your Maximum Annual Withdrawal Amount in any year will not be recalculated solely as a result of taking less than the entire Maximum Annual Withdrawal Amount in the prior year. Please note that if you delay taking withdrawals for too long, you may limit the number of remaining years (due to your life expectancy) in which you may take withdrawals.
Excess Withdrawals may significantly reduce the value of or terminate the Living Benefit.
For example, assume that your contract value is $106,000, your Income Base is $120,000, and your Maximum Annual Withdrawal Amount is $6,000. You request a withdrawal of $11,000. Your Income Base will be reduced to $114,000 as follows: $120,000 x {1 – [($11,000 - $6,000)/($106,000 - $6,000)]} = $114,000.
Excess Withdrawals reduce your Income Base on the date the Excess Withdrawal occurs. Any Excess Withdrawal in a Benefit Year reduces the Income Base in the same proportion by which the contract value is reduced by the amount in excess of the Maximum Annual Withdrawal Amount (“Excess Withdrawal”). As a result of a reduction
E-30
of the Income Base, the new Maximum Annual Withdrawal Amount will be equal to the reduced Income Base multiplied by the applicable Maximum Annual Withdrawal Percentage. The last recalculated Maximum Annual Withdrawal Amount in a given Benefit Year is available for withdrawal at the beginning of the next Benefit Year and may be lower than the previous Benefit Year’s Maximum Annual Withdrawal Amount.
When the contract value is less than the Income Base, Excess Withdrawals will reduce the Income Base by an amount which is greater than the amount of the Excess Withdrawal. The impact of withdrawals on specific factors is further explained below:
Maximum Annual Withdrawal Amount: If the sum of withdrawals in any Benefit Year does not exceed the Maximum Annual Withdrawal Amount for that year, the Maximum Annual Withdrawal Amount will not change for the next year unless your Income Base is increased. If you take an Excess Withdrawal, the Maximum Annual Withdrawal Amount will be recalculated by multiplying the reduced Income Base by the existing Maximum Annual Withdrawal Percentage. This recalculated Maximum Annual Withdrawal Amount is available for withdrawal at the beginning of the next Benefit Year and may be lower than your previous Maximum Annual Withdrawal Amount.
Protected Income Payment: If the Income Base is greater than zero, but the contract value has been reduced to zero due to unfavorable investment performance, deduction of fees, or withdrawals within the Maximum Annual Withdrawal Amount, we will pay any remaining Maximum Annual Withdrawal Amount for the current Benefit Year. Thereafter, you will receive the Protected Income Payment each year over the remaining lifetime of the Covered Person(s) which is calculated by multiplying the Income Base when contract value is reduced to zero by the applicable Protected Income Payment Percentage. The Income Base is no longer increased on Benefit Year Anniversaries after the contract value has been reduced to zero. As a result, the Protected Income Payment is calculated once and will not change. Please see “What happens if the contract value is reduced to zero while the Income Base is greater than zero?” below.
Minimum Income Base: If you activate Lifetime Income during the Minimum Income Base Period, the Minimum Income Base will no longer increase on the next Benefit Anniversary.
Look-back Periods: If you take one or more Excess Withdrawals in a Benefit Year, the Income Base may be increased on the Benefit Year Anniversary by looking back only to the Higher Step-up Value since the last Excess Withdrawal. This means that if you take an
Excess Withdrawal, you lose the opportunity to lock in a potentially higher Step-up Value that may have occurred prior to that Excess Withdrawal during that Benefit Year.
All withdrawals from the contract, including Lifetime Income withdrawals, will reduce your contract value and your death benefit and may impact other provisions of your contract. Unfavorable investment experience and/or fees will also reduce your contract value. Lifetime Income withdrawals are deducted proportionately from each Variable Portfolio and Secure Value Account in which you are invested.
How can I change my Income Option Election?
You may change your Income Option election on the Activation Date. If you change your Income Option election on the Activation Date, an annualized fee applies. Once Lifetime Income begins, you may not change your Income Option election.
What is the fee for Polaris Income Plus Flex and Polaris Income Plus Daily Flex?
The fee for Polaris Income Plus Flex and Polaris Income Plus Daily Flex is calculated as a percentage of the Income Base and deducted from the contract value on a quarterly basis beginning on the first Benefit Quarter Anniversary following the Benefit Effective Date. In Connecticut, Hawaii, Missouri, New York, Oregon, Texas, Vermont, Virginia and Washington, the charge will be deducted pro-rata from Variable Portfolios only. After the first Benefit Year, on each Benefit Quarter Anniversary, we will (1) deduct the fee in effect for the previous Benefit Quarter; and (2) determine the fee rate applicable to the next Benefit Quarter. In addition, if you change your Income Option on the Activation Date, your annual fee will increase on the next Benefit Quarter Anniversary. Please see fee table below:
Polaris Income Plus Flex Fee
Polaris Income Plus Daily Flex Fee
Polaris Income Plus Daily Flex Fee
| Number of Covered Persons |
Initial Annual Fee Rate |
Maximum Annual Fee Rate |
Minimum Annual Fee Rate |
Maximum Annualized Fee Rate Decrease or Increase Each Benefit Quarter* |
| One Covered Person |
1.25% |
2.50% |
0.60% |
±0.40% |
| Two Covered Persons |
1.25% |
2.50% |
0.60% |
±0.40% |
*
The quarterly fee rate can increase or decrease no more than 0.10% each quarter (0.40%/ 4). If you change your Income Option election on the Activation Date, the quarterly fee rate can increase no more than 0.1625% [(0.40% + 0.25%)/ 4] for the first Benefit Quarter immediately following the Activation Date.
If you change your Income Option election on the Activation Date, an annualized fee applies. The fee is calculated as a percentage of the Income Base and deducted from the
E-31
contract value on a quarterly basis beginning on the first Benefit Quarter Anniversary following the Activation Date:
| Lifetime Income Option Change Fee* |
0.25% |
*
The fee is deducted quarterly, and the quarterly fee rate is 0.0625% (0.25%/4). The sum of the Living Benefit feature fee rate and Lifetime Income Option Change fee rate cannot exceed the Maximum Annual Fee Rate stated in the table above.
The initial Annual Fee Rate is guaranteed not to change for the first Benefit Year. Subsequently, the fee rate may change quarterly subject to the parameters identified in the table above. Any fee adjustment is based on a non-discretionary formula tied to the change in the Volatility Index (“VIX®”), an index of market volatility reported by the Chicago Board Options Exchange. In general, as the average value of the VIX decreases or increases, your fee rate will decrease or increase accordingly, subject to the minimums and maximums identified in the table above.
Should the VIX no longer be appropriate or available, we would substitute the VIX with another measure of market volatility for determining the fee. If we substitute the VIX, we will notify you; however, the maximum and minimum annual fee rates described in this prospectus are guaranteed for the life of your contract.
For Polaris Income Plus Flex, an increase in the Income Base due to an addition of an Income Credit, attaining a new Higher Anniversary Value or an addition of subsequent Purchase Payments will result in an increase to the amount of the fee you pay since the fee rate is assessed against the Income Base, assuming that the annual fee rate has not decreased as described above. Please note that this means the addition of an Income Credit will lead to paying a higher fee in any given period than without the addition of the Income Credit because the Income Credit may increase the Income Base. When taking Lifetime Income, the Income Credit will be reduced by the Maximum Annual Withdrawal Amount and may be more than offset by the amount of the fee. You will be assessed a non-refundable fee each quarter regardless of whether you activate Lifetime Income.
For Polaris Income Plus Daily Flex, an increase in the Income Base due to attaining a new Step-up Value or an addition of subsequent Purchase Payment(s) will result in an increase to the amount of the fee you pay since the fee rate is assessed against the Income Base, assuming that the annual fee rate has not decreased as described above.
If your contract value falls to zero, the fee will no longer be deducted. We will not assess the quarterly fee if you annuitize your contract or if a death benefit is paid before the end of a Benefit Quarter. If the Living Benefit is still in effect while your contract value is greater than zero, and you surrender your contract, we will assess a pro-rata charge for the fee applicable to the Benefit Quarter in which the surrender occurs if you surrender your contract before the end of a Benefit Quarter. The pro-rata fee is calculated by multiplying the fee by the number of days between the
date when the prior fee was last assessed and the date of surrender, divided by the number of days between the prior and the next Benefit Quarter Anniversaries.
What happens if the contract value is reduced to zero while the Income Base is greater than zero?
Prior to the Activation Date,
If the contract value is reduced to zero due to a withdrawal, but the Income Base is greater than zero, the contract will be terminated including any optional benefits and features.
If the contract value is reduced to zero due to a withdrawal, but the Income Base is greater than zero, the contract will be terminated including any optional benefits and features.
On or after the Activation Date,
if the contract value is reduced to zero, but the Income Base is greater than zero, we will pay the remaining Maximum Annual Withdrawal Amount for that Benefit Year. Thereafter we will pay the Protected Income Payment over the remaining lifetime of the Covered Person(s).
if the contract value is reduced to zero, but the Income Base is greater than zero, we will pay the remaining Maximum Annual Withdrawal Amount for that Benefit Year. Thereafter we will pay the Protected Income Payment over the remaining lifetime of the Covered Person(s).
If an Excess Withdrawal reduces your contract value to zero, no further benefits are payable under the contract and your contract along with the Living Benefit will terminate.
If your contract value is reduced to zero, you may no longer make transfers, and no death benefit is payable. Therefore, you should be aware that, particularly during times of unfavorable investment performance, Excess Withdrawals taken under the Living Benefit may reduce the contract value to zero, thereby terminating any other benefits of the contract.
In addition, for Polaris Income Plus Flex, an Income Credit is not available if the contract value is reduced to zero, even if a benefit remains payable.
When the contract value equals zero but the Income Base is greater than zero, to receive any remaining Living Benefit, you must select one of the following:
1.
The Protected Income Payment divided equally and paid on a monthly, quarterly, semi-annual or annual frequency as selected by you until the date of death of the Covered Person(s); or
2.
Any option mutually agreeable between you and us.
Once you elect an option above, it cannot be changed. If you do not select an option above, the remaining benefit will be paid as option 1 above. This amount will be divided equally and paid on a quarterly basis until the date of death of the Covered Person(s). No amount is payable thereafter.
Additional important information
applicable to POLARIS INCOME PLUS FLEX and POLARIS INCOME Plus DAILY FLEX
When and how may I elect a Living Benefit?
You may elect a Living Benefit at the time of contract issue (the “Benefit Effective Date”). You may elect to have the Living Benefit cover only your life or the lives of both you and your spouse, the “Covered Person(s).” If the contract is not owned by a natural person, references to Owner(s) apply to the Annuitant(s). To elect the Living Benefit,
E-32
Covered Person(s) must meet the minimum and maximum age requirements. The age requirements vary depending on the type of contract and the number of Covered Persons. The age requirements for optional death benefits and other optional features may be different than those listed here. You must meet the age requirements for those features in order to elect them.
Polaris Income Plus Flex and Polaris Income Plus Daily Flex:
| Number of Owners |
Covered Person | |
| Minimum Age(1) |
Maximum Age(2) | |
| One Owner |
45 |
80 |
| Joint Owners(3) |
45 |
80 |
(1)
Minimum Age must be met by any Covered Person(s) as of the Contract Issue Date.
(2)
Maximum Age cannot be exceeded by any Covered Person(s) as of the date added.
(3)
Joint Owners may choose which of the two Owners will be the Covered Person. The Beneficiary’s age is not considered in determining the maximum issue age of the second Covered Person.
What are the allowable changes to Covered Person(s) prior to the Activation Date?
You may make changes to your Covered Person(s) prior to the Activation Date for specific Life Change Events as defined below by submitting the appropriate Covered Person(s) Change form. Note: Any Covered Person being added must meet the above minimum and maximum age requirements.
•
Marriage – If there is one Covered Person, you may add your spouse as the second Covered Person;
•
Divorce – If there are two Covered Persons, you may remove one of the Covered Persons as a result of divorce;
•
Death – Upon the death of one of the Covered Persons, you may remove the deceased Covered Person.
What are the allowable changes to Covered Person(s) on the Activation Date?
| Number of Owners and Covered Persons |
Allowed Changes to Covered Person(s) on the Activation Date |
| Single Owned Contract & One Covered Person |
Add Spouse as the second Covered Person |
| Single Owned Contract & Two Covered Persons(1) |
Remove or Change the second Covered Person who is not the Single Owner |
| Jointly Owned Contract & One Covered Person |
Add Joint Owner as the second Covered Person |
| Jointly Owned Contract & Two Covered Persons(1) |
Remove or Change either Covered Person |
(1)
You must keep at least one of the original Covered Person(s) if requesting to remove or change either Covered Person. Note: If a second Covered Person or if one of the original Covered Person(s) is changed, Covered Person(s) must meet the above minimum and maximum age requirements.
Your Lifetime Income will change as a result of removing or adding a Covered Person(s).
If I own a Qualified contract, how do Required Minimum Distributions impact my Living Benefit?
Prior to the Activation Date, Required Minimum Distributions (“RMD”) will proportionately reduce the Income Base, Income Credit Base, if applicable, and the Purchase Payments used to calculate the Minimum Income Base.
On or after the Activation Date, as the original Owner, or Continuing Spouse (two Covered Persons elected) electing to treat the annuity contract as their own, if you are taking required minimum distributions (“RMD”) from this contract, and the amount of the RMD (based only on the contract to which the feature is elected and using the Uniform Lifetime Table or Joint Life Expectancy Table from the regulations under the Internal Revenue Code) is greater than the Maximum Annual Withdrawal Amount in any given Benefit Year, no portion of the RMD will be treated as an Excess Withdrawal. Please see “What are the effects of withdrawals on Polaris Income Plus Flex?”and“What are the effects of withdrawals on Polaris Income Plus Daily Flex?”above.
Any withdrawal taken before you activate Lifetime Income (including RMDs) will result in a reduction of the amount of future withdrawals of the Maximum Annual Withdrawal Amount (MAWA).
We will provide RMD favorable treatment, in each Benefit Year, to the greater of the Maximum Annual Withdrawal Amount or the RMD amount. Any portion of a withdrawal in a Benefit Year which exceeds the greater of the Maximum Annual Withdrawal Amount or RMD amount will be considered an Excess Withdrawal. If you must take RMD from this contract and want to ensure that these withdrawals are not considered Excess Withdrawals, your total distribution(s) during the current contract year must not exceed the greater of the Maximum Annual Withdrawal Amount or the RMD amount as calculated by our Annuity Service Center. Therefore, if you plan to take an Excess Withdrawal, then this feature may not be appropriate for you.
The age at which you must begin taking RMDs is 73 (if you were born January 1, 1951 or later), 72 (if you were born on or after July 1, 1949, and before January 1, 1951), or 70 ½ (if you were born before July 1, 1949).
If you are transferring from another company and have already reached the age you must begin taking RMDs, you should take the current tax year’s RMD prior to the transfer, as we cannot systematically calculate the RMD as we do not possess the valuation for the previous year end. Further, if you are turning the age you must begin taking RMDs, you should know that although tax code allows for deferral of the first withdrawal to April of the tax year following your attainment of the age you must begin taking RMDs, doing so may result in subsequent withdrawals being treated as Excess Withdrawals for that Benefit Year.
E-33
If you have elected Polaris Income Plus Flex and the RMD amount is greater than the Maximum Annual Withdrawal Amount, but less than the applicable Income Credit Percentage, an Income Credit equal to the difference between the RMD and the applicable Income Credit Percentage will be included in determining any Income Base increase in that Benefit Year. If the RMD amount is greater than the applicable Income Credit Percentage, no Income Credit will be included in the calculation of the Income Base.
What happens to my Living Benefit upon a spousal continuation if I elected one Covered Person and if the contract value is greater than zero?
Prior to the Activation Date, if the single Covered Person dies, the surviving Spousal Joint Owner or Spousal Beneficiary may elect to:
1.
Make a death claim, which terminates the Living Benefit and the contract; or
2.
Continue the contract and the Living Benefit as a new single Covered Person. The Continuing Spouse will receive the Maximum Annual Withdrawal Amount upon Lifetime Income Activation and the Protected Income Payment after the contract value goes to zero. The Continuing Spouse cannot add a new Covered Person. Upon the death of the Continuing Spouse, the Beneficiary must make a death claim, which terminates the Living Benefit and the contract.
If an Owner that is not the single Covered Person dies, the surviving Spousal Joint Owner who is the Covered Person may elect to:
1.
Make a death claim, which terminates the Living Benefit and the contract; or
2.
Continue the contract and the Living Benefit as the current single Covered Person. The Continuing Spouse will receive the Maximum Annual Withdrawal Amount upon Lifetime Income Activation and the Protected Income Payment after the contract value goes to zero. The Continuing Spouse cannot add a new Covered Person. Upon the death of the Continuing Spouse, the Beneficiary must make a death claim, which terminates the Living Benefit and the contract.
On or after the Activation Date, if the single Covered Person dies, the surviving Spousal Joint Owner or Spousal Beneficiary may elect to:
1.
Make a death claim, which terminates the Living Benefit and the contract; or
2.
Continue the contract, without the Living Benefit.
If an Owner that is not the single Covered Person dies, the surviving Spousal Joint Owner who is the Covered Person may elect to:
1.
Make a death claim, which terminates the Living Benefit and the contract; or
2.
Continue the contract with the current Maximum Annual Withdrawal Amount and Protected Income Payment.
Note: At any time, if, the contract value goes to zero due to a withdrawal, the Spousal Beneficiary cannot continue the contract.
What happens to my Living Benefit upon a spousal continuation if I elected two Covered Persons and if the contract value is greater than zero?
Prior to the Activation Date, upon death of the first of the two Covered Persons, the surviving Covered Person (Spousal Joint Owner or Spousal Beneficiary) may elect to:
1.
Make a death claim, which terminates the Living Benefit and the contract; or
2.
Continue the contract as a single Covered Person. The Continuing Spouse will receive the Maximum Annual Withdrawal Amount upon Lifetime Income Activation and the Protected Income Payment after the contract value goes to zero. The Continuing Spouse cannot add a new Covered Person. Upon the death of the Continuing Spouse, the Beneficiary must make a death claim, which terminates the Living Benefit and the contract.
Note: Prior to the Activation Date, if the contract value goes to zero due to a withdrawal, the Living Benefit and the contract terminate, and the Spousal Beneficiary cannot continue the contract.
On or after the Activation Date, upon the first of the two Covered Person’s death, the surviving Covered Person (Spousal Joint Owner or Spousal Beneficiary) may elect to:
1.
Make a death claim, which terminates the Living Benefit and the contract; or
2.
Continue the contract, with the current Maximum Annual Withdrawal Amount and Protected Income Payment.
Note: On or after the Activation Date, if the contract value goes to zero due to: a) a withdrawal taken within the parameters of the Living Benefit, the Spousal Beneficiary can continue the Living Benefit as the surviving Covered Person with the current Protected Income Payment for their lifetime or b) an Excess Withdrawal, the Living Benefit and contract will terminate, and the Spousal Beneficiary cannot continue the contract.
The components of the Living Benefit in effect at the time of Spousal Continuation will not change. The surviving Covered Person can elect to receive withdrawals in accordance with the provisions of the Living Benefit elected based on the age of the younger Covered Person on the Activation Date. If Lifetime Income was not activated prior to the Spousal Continuation, the Maximum Annual Withdrawal Percentage and the Protected Income Payment Percentage will be based on the age of the surviving Covered Person on the Activation Date. Please see “How
E-34
does Polaris Income Plus Flex work?” and “How does Polaris Income Plus Daily Flex work?” above.
For Polaris Income Plus Flex only
If Spousal Continuation occurs, the Continuing Spouse will continue to receive any increase to the Income Base for Higher Anniversary Values or if applicable, any Income Credit during the Income Credit Period, while the contract value is greater than zero. The Continuing Spouse is also eligible to receive the Minimum Income Base on the 12th Benefit Year Anniversary if Lifetime Income was not activated during the first 12 Benefit Years following the Benefit Effective Date.
For Polaris Income Plus Daily Flex only
If Spousal Continuation occurs, the Continuing Spouse will continue to receive any increase to the Income Base for Step-up Values and the Continuing Spouse will also be eligible to receive the Minimum Income Base on Benefit Year Anniversaries during the Minimum Income Base period if Lifetime Income was not activated during the Minimum Income Base period. On or after the Activation Date, the Continuing Spouse is no longer eligible for any further adjustments to the Minimum Income Base.
Can a non-spousal Beneficiary elect to receive any remaining benefits under my Living Benefit upon the death of the second spouse?
No. Upon the death of the Covered Person(s), if the contract value is greater than zero, a non-spousal Beneficiary must make an election under the death benefit provisions of the contract, which terminates the Living Benefit.
What happens to my Living Benefit upon the Latest Annuity Date?
On the Latest Annuity Date, if the contract value is greater than zero, You must select one of the following options:
1.
Annuitize by selecting from choices a. or b. below:
a.
elect to begin one of the Annuity Income Payment Options set forth in Your Contract. If you choose this option, We will apply the contract value to provide annuity income payments under the contract’s annuity provisions as described under ANNUITY INCOME OPTIONS; or
b.
elect to receive Lifetime Income under Your Living Benefit option by means of an Annuitization while any of the last named Covered Person(s) is living. If You have already activated Lifetime Income under the Living Benefit, You will continue to receive Lifetime Income by means of an Annuitization as described below. If you have not yet activated
Lifetime Income, you may activate Lifetime Income by means of an Annuitization as described under ANNUITY INCOME OPTIONS; or
2.
Fully surrender your Contract
Note: Under 1b) upon annuitization you will receive the applicable Maximum Annual Withdrawal Amount for a fixed period while you are alive. The fixed period is determined by dividing the contract value as of the Latest Annuity Date by the Maximum Annual Withdrawal Amount. After that fixed period ends, you will receive the Protected Income Payment, which is calculated by multiplying the Income Base as of the Latest Annuity Date by then applicable Protected Income Payment Percentage, paid until the death(s) of all Covered Person(s). The amount of each such payment will equal the Protected Income Payment amount divided according to the payment frequency you selected.
An election under option 1 above converts Your contract value or Lifetime Income amount to an Annuitization payable through a series of payments as described above. Once the selected Annuitization begins, all other benefits under Your Contract, will be terminated, transfers may no longer be made, a death benefit is no longer payable, and the Living Benefit Fee will no longer be deducted. If You do not select an option listed above by the Latest Annuity Date, We will automatically begin making Lifetime Income payments, which would equal to the Maximum Annual Withdrawal Amount as long as the contract value is greater than zero, or the Protected Income Payment if the contract value goes to zero, in accordance with option 1b) above, divided equally and paid on a monthly frequency until the death(s) of all of the last named Covered Person(s).
Can I elect to cancel my Living Benefit?
The Living Benefit may not be cancelled by you prior to the 5th Benefit Year Anniversary unless you surrender your contract. The Living Benefit may be cancelled by you on or after the 5th Benefit Year Anniversary and the cancellation will be effective as outlined in the table below.
| Cancellation Request Received |
Cancellation Effective Date |
| Years 1-5 |
5th Benefit Year Anniversary |
| Years 5+ |
Benefit Quarter Anniversary following the receipt of the cancellation request |
Once cancellation is effective, the guarantees under the Living Benefits are terminated. In addition, the investment requirements for the Living Benefits will no longer apply to your contract. You may not re-elect or reinstate the Living Benefit after cancellation.
If there are two Covered Persons, upon the death of the first Covered Person, the surviving Covered Person (generally, the Continuing Spouse) may cancel the Living Benefit on or after the 5th Benefit Year Anniversary and the cancellation will be effective as outlined in the table above. Upon the cancellation effective date of the Living
E-35
Benefit, there will be one final fee applicable to the Benefit Quarter in which the cancellation occurs, on the same Benefit Quarter Anniversary. Thereafter, the fee will no longer be charged.
What happens to the Secure Value Account and Automatic Asset Rebalancing Program instructions if I elect to cancel Polaris Income Plus Flex or Polaris Income Plus Daily Flex?
Amounts allocated to the Secure Value Account will be automatically transferred to a money market portfolio. From the day following the automated transfer from the Secure Value Account, you may transfer this amount to another available investment option under the contract for a period of 90 days during which the transfer will not count against the annual number of free transfers or U.S. Mail transfers, or incur a transfer fee. You may move your funds out of the money market portfolio at any time.
The Automatic Asset Rebalancing Program and your instructions on file will not be terminated or changed upon cancellation of the Living Benefit. Amounts transferred from the Secure Value Account into a money market portfolio will not impact the Automatic Asset Rebalancing Program instructions on file and that transfer will not result in new Default Rebalancing Instructions. On or after cancellation of these features, you may provide new rebalancing instructions or you may choose to terminate the Automatic Asset Rebalancing Program by contacting the Annuity Service Center.
Are there circumstances under which my Living Benefit will be automatically cancelled?
The Living Benefit and Lifetime Income will automatically be cancelled upon the occurrence of one of the following:
(i)
Annuitization of the contract; or
(ii)
Termination or surrender of the contract; or
(iii)
A death benefit is paid resulting in the contract being terminated; or
(iv)
Any withdrawal prior to the Activation Date that reduces the Contract Value to zero; or
(v)
On or after the Activation Date, any Excess Withdrawal that reduces the contract value and Income Base to zero; or
(vi)
Death of the Covered Person, if only one is elected after Lifetime Income has been activated; or, if two Covered Persons are elected, death of the surviving Covered Person; or
(vii)
A change that removes all of the original Covered Persons from the contract; or
(viii)
A Change of the Owner or Assignment; or
(ix)
You elect to cancel Your Living Benefit.
If a change of ownership occurs from a natural person to a non-natural entity, the original natural Owner(s) must also be the Annuitant(s) after the ownership change to prevent termination of the Living Benefit. A change of ownership
from a non-natural entity to a natural person can only occur if the new natural Owner(s) was the original natural Annuitant(s) in order to prevent termination of the Living Benefit. Any ownership change is contingent upon prior review and approval by the Company.
Any amounts that we may pay under the feature in excess of your contract value are subject to the Company’s financial strength and claims-paying ability.
POLARIS INCOME PLUS DAILY
Polaris Income Plus Daily was available from May 1, 2016 through September 8, 2019. Effective September 9, 2019, Polaris Income Plus Daily is no longer available for election.
Below is a glossary of Living Benefit Terms and a summary of the key features of the optional Living Benefit offered in your contract.
Glossary of Living Benefit Terms
Anniversary Value
The contract value on any Benefit Year Anniversary. The Continuation Contribution, if applicable, is included in the calculation of Anniversary Values.
Benefit Effective Date
The date the Living Benefit is elected. The Benefit Effective Date is the same as the contract issue date.
Benefit Quarter
Each consecutive 3-month period starting on the Benefit Effective Date.
Benefit Quarter Anniversary
The date following each consecutive 3-month period starting on the Benefit Effective Date. If the next Benefit Quarter Anniversary has no corresponding date, then the Benefit Quarter Anniversary will be deemed to be the following day.
For example, if a Benefit Quarter Anniversary is November 29, the next Benefit Quarter Anniversary would be February 29 of the following year; however, in a non-Leap Year, there is no corresponding date. Therefore, the next Benefit Quarter Anniversary would be March 1.
Benefit Year
Each consecutive one-year period starting on the Benefit Effective Date.
Benefit Year Anniversary
The date on which each Benefit Year begins.
Contract Year
Each consecutive one-year period starting on the contract issue date.
Covered Person(s)
The person, or persons, whose lifetime withdrawals are guaranteed under the Living Benefit.
Excess Withdrawal
Any withdrawal, or portion of a withdrawal, that is taken in a Benefit Year and exceeds the greater of the Maximum Annual Withdrawal Amount or the Required Minimum
E-36
Distribution amount as calculated by the Annuity Service Center. An Excess Withdrawal will cause the Income Base and the Maximum Annual Withdrawal Amount to be recalculated.
Income Base
The Income Base is a value used to determine the Living Benefit fee and the maximum amount that may be withdrawn each Benefit Year without reducing the Income Base. The Income Base is also used to determine the amount paid each year over the lifetime of the Covered Person(s) if and when the contract value is reduced to zero, but the Income Base is still greater than zero, or upon the Latest Annuity Date.
Investment Requirements
We will allocate a certain percentage of every Purchase Payment and Continuation Contribution, if any, to the “Secure Value Account.” The remaining amount of every Purchase Payment and Continuation Contribution, if any, must be allocated by you in accordance with the investment options under Investment Requirements for Optional Living Benefits in APPENDIX A - UNDERLYING FUNDS AVAILABLE UNDER THE CONTRACT.
Maximum Annual Withdrawal Amount
The maximum amount that may be withdrawn each Benefit Year while the contract value is greater than zero without reducing the Income Base.
Maximum Annual Withdrawal Percentage
The percentage used to determine the Maximum Annual Withdrawal Amount available for withdrawal each Benefit Year while the contract value is greater than zero.
Minimum Income Base (for contracts issued between May 1, 2017 and September 8, 2019 only)
The Minimum Income Base is a guaranteed minimum amount of the Income Base calculated on each Benefit Year Anniversary and up to the 15th Benefit Year Anniversary. An annual Minimum Income Base Percentage of 5% will be applied to the Purchase Payment(s) received prior to the first Benefit Year Anniversary during the Minimum Income
Base period of 15 years, provided no withdrawals are taken prior to each Benefit Year Anniversary as follows:
| Minimum Income Base Period (if no withdrawals are taken prior to the Benefit Year Anniversary) |
Minimum Income Base Percentage (as a Percentage of the 1st Benefit Year’s Purchase Payment) |
| 1st Benefit Year Anniversary |
105% |
| 2nd Benefit Year Anniversary |
110% |
| 3rd Benefit Year Anniversary |
115% |
| 4th Benefit Year Anniversary |
120% |
| 5th Benefit Year Anniversary |
125% |
| 6th Benefit Year Anniversary |
130% |
| 7th Benefit Year Anniversary |
135% |
| 8th Benefit Year Anniversary |
140% |
| 9th Benefit Year Anniversary |
145% |
| 10th Benefit Year Anniversary |
150% |
| 11th Benefit Year Anniversary |
155% |
| 12th Benefit Year Anniversary |
160% |
| 13th Benefit Year Anniversary |
165% |
| 14th Benefit Year Anniversary |
170% |
| 15th Benefit Year Anniversary |
175% |
The Minimum Income Base is only available in the first 15 Benefit Years, provided no withdrawals are taken. The Minimum Income Base is not applicable if your contract was purchased prior to May 1, 2017.
Protected Income Payment
The amount to be paid each year over the remaining lifetime of the Covered Person(s) after the contract value is reduced to zero but the Income Base is still greater than zero or if the Latest Annuity Date has been reached.
Protected Income Payment Percentage
The percentage used to determine the Protected Income Payment.
Step-up Value
The Step-Up Value is used to determine the Income Base on a daily basis. The Step-Up Value is equal to the current contract value on any day where the current contract value is greater than the current Income Base due to favorable market performance.
How does Polaris Income Plus Daily work?
Polaris Income Plus Daily’s Income Base is increased by locking in Step-up Values. Until a withdrawal has been taken, the Income Base is increased to the Step-up Value immediately. After the first withdrawal, while both the Income Base and the contract values are greater than zero, the Income Base may only be increased on the Benefit Year Anniversary dates, looking back at the prior Benefit Year’s Step-up Values.
The Income Base is the basis for the Covered Person(s)’ guaranteed lifetime benefit which must be taken in a series
E-37
of withdrawals. The Income Base is initially equal to the first Purchase Payment. The Income Base is increased by subsequent Purchase Payments. We will not accept subsequent Purchase Payments after the first contract anniversary.
In addition, if your contract was purchased between May 1, 2017 and September 8, 2019, the following also applies to the Polaris Income Plus Daily Living Benefit you elected.
If you do not take any withdrawals prior to the specified Benefit Year Anniversary during the Minimum Income Base period, you will be eligible for the Minimum Income Base on the Benefit Year Anniversary. The Minimum Income Base is a specified percentage of the first Benefit Year’s Purchase Payments according to the table shown in the Glossary of Living Benefit above. However, if you take a withdrawal during the Minimum Income Base Period, you are no longer eligible for any further adjustments to your Minimum Income Base.
What determines the amount I can receive each year?
If your contract was purchased between December 19, 2016 and September 8, 2019, the amount that you receive depends on the income option you have elected, whether there are one or two Covered Person(s), the age of the Covered Person(s) at the time of the first withdrawal and whether your contract value is greater than or equal to zero. You elected an income option at the time you purchased your contract and your election may not be changed thereafter. Please see the table below for the income options that were available to you. If you purchased your contract through certain broker-dealers, all income options may not have been available to you.
While the contract value is greater than zero, the Maximum Annual Withdrawal Percentage represents the percentage of your Income Base used to calculate the Maximum Annual Withdrawal Amount that you may withdraw each Benefit Year without decreasing your Income Base and Income Credit Base, if applicable. The Maximum Annual Withdrawal Percentage differs depending on whether there are one or two Covered Person(s), the age of the Covered Person(s) at the time of first withdrawal and the income option elected.
If your contract value has been reduced to zero or the Latest Annuity Date is reached, the Protected Income Payment Percentage represents the percentage of your Income Base used to calculate the Protected Income Payment that you will receive each year over the remaining lifetime of the Covered Person(s). The Protected Income Payment Percentage differs depending on (1) the income option you elected, (2) whether there are one or two Covered Person(s), (3) the age of the Covered Person(s) at the time of the first withdrawal and (4) for those taking withdrawals before age 65, if applicable under the income option elected, whether the Income Base steps up due to favorable market conditions after the Covered Person(s)’ 65th birthday. Please see “What happens if the contract
value is reduced to zero while the Income Base is greater than zero?” and “What happens to my living benefit upon the Latest Annuity Date?” below.
If your contract was purchased between May 1, 2016 and December 18, 2016, the amount that you receive depends on the income option you have elected, whether there are one or two Covered Person(s), the age of the Covered Person(s) at the time of the first withdrawal, when you take your first withdrawal and whether your contract value is greater than or equal to zero. You elected an income option at the time you purchased your contract and your election may not be changed thereafter. Please see the table below for the income options that were available to you. If you purchased your contract through certain broker-dealers, all income options may not have been available to you.
While the contract value is greater than zero, the Maximum Annual Withdrawal Percentage represents the percentage of your Income Base used to calculate the Maximum Annual Withdrawal Amount that you may withdraw each Benefit Year without decreasing your Income Base. The Maximum Annual Withdrawal Percentage differs depending on when you take your first withdrawal, whether there are one or two Covered Person(s), the age of the Covered Person(s) at the time of first withdrawal and the income option elected.
If your contract value has been reduced to zero or the Latest Annuity Date is reached, the Protected Income Payment Percentage represents the percentage of your Income Base used to calculate the Protected Income Payment that you will receive each year over the remaining lifetime of the Covered Person(s). The Protected Income Payment Percentage differs depending on (1) the income option you elected, (2) whether there are one or two Covered Person(s), (3) the age of the Covered Person(s) at the time of the first withdrawal and (4) when you take your first withdrawal. Please see “What happens if the contract value is reduced to zero while the Income Base is greater than zero?”and “What happens to my Living Benefit upon the Latest Annuity Date?”below.
E-38
Polaris Income Plus Daily for contracts issued prior to September 9, 2019
Maximum Annual Withdrawal Percentage and Protected Income Payment Percentage Table
Maximum Annual Withdrawal Percentage and Protected Income Payment Percentage Table
The first percentage represents the Maximum Annual Withdrawal Percentage and the second percentage represents the Protected Income Payment Percentage for each of the options shown.
For contracts purchased between May 1, 2018 and September 8, 2019:
| Number of Covered Person and Age of Covered Person at First Withdrawal(1) |
Polaris Income Plus Daily Income Option 1 |
Polaris Income Plus Daily Income Option 2 |
Polaris Income Plus Daily Income Option 3 |
| One Covered Person (Age 45 - 59) |
3.75% / 2.75%(2) |
3.75% / 2.75%(2) |
3.00% / 3.00% |
| One Covered Person (Age 60 - 64) |
4.75% / 2.75%(2) |
4.75% / 2.75%.(2) |
3.50% / 3.50% |
| One Covered Person (Age 65 - 71) |
6.50% / 4.00% |
7.50% / 3.00% |
5.25% / 5.25% |
| One Covered Person (Age 72 and Older) |
7.00% / 4.00% |
8.00% / 3.00% |
5.50% / 5.50% |
| Two Covered Persons (Age 45 - 59) |
3.25% / 2.75%(3) |
3.25% / 2.75%(3) |
2.75% / 2.75% |
| Two Covered Persons (Age 60 - 64) |
4.25% / 2.75%(3) |
4.25% / 2.75%(3) |
3.25% / 3.25% |
| Two Covered Persons (Age 65 - 71) |
6.00% / 4.00% |
7.00% / 3.00% |
4.75% / 4.75% |
| Two Covered Persons (Age 72 and Older) |
6.50% / 4.00% |
7.50% / 3.00% |
5.00% / 5.00% |
(1)
If there is One Covered Person but there are joint Owners, the Covered Person is the older Owner. If there are Two Covered Persons, the age at first withdrawal is based on the age of the younger of the Two Covered Persons.
(2)
If One Covered Person is elected, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a Step-Up Value on or after the Covered Person’s 65th birthday.
(3)
If Two Covered Persons are elected, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a Step-Up Value on or after the younger Covered Person’s 65th birthday.
For contracts purchased between December 19, 2016 and April 30, 2018:
| Number of Covered Persons and Age of Covered Person at First Withdrawal(1) |
Polaris Income Plus Daily Income Option 1 |
Polaris Income Plus Daily Income Option 2 |
Polaris Income Plus Daily Income Option 3 |
| One Covered Person (Age 45 - 59) |
3.75% / 2.75%(2) |
3.75% / 2.75%(2) |
3.00% / 3.00% |
| One Covered Person (Age 60 - 64) |
4.75% / 2.75%(2) |
4.75% / 2.75%(2) |
3.50% / 3.50% |
| One Covered Person (Age 65 - 71) |
6.00% / 4.00% |
7.00% / 3.00% |
5.00% / 5.00% |
| One Covered Person (Age 72 and Older) |
6.50% / 4.00% |
7.50% / 3.00% |
5.25% / 5.25% |
| Two Covered Persons (Age 45 - 59) |
3.25% / 2.75%(3) |
3.25% / 2.75%(3) |
2.75% / 2.75% |
| Two Covered Persons (Age 60 - 64) |
4.25% / 2.75%(3) |
4.25% / 2.75%(3) |
3.25% / 3.25% |
| Two Covered Persons (Age 65 - 71) |
5.50% / 4.00% |
6.50% / 3.00% |
4.50% / 4.50% |
| Two Covered Persons (Age 72 and Older) |
6.00% / 4.00% |
7.00% / 3.00% |
4.75% / 4.75% |
(1) If there is One Covered Person but there are joint Owners, the Covered Person is the older Owner. If there are Two Covered Persons, the age at first withdrawal is based on the age of the younger of the Two Covered Persons.
(2) If One Covered Person is elected, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a Step-up Value on or after the Covered Person’s 65th birthday.
(3) If Two Covered Persons are elected, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a Step-up Value on or after the younger Covered Person’s 65th birthday.
E-39
For contracts purchased between August 22, 2016 and December 18, 2016:
If no withdrawals are taken prior to the 5th contract anniversary or if the first withdrawal is taken when the Covered Person is age 68 or older:
| Number of Covered Persons and Age of Covered Person at First Withdrawal(1) |
Polaris Income Plus Daily Income Option 1 |
Polaris Income Plus Daily Income Option 2 |
Polaris Income Plus Daily Income Option 3 |
| One Covered Person (Age 45 - 59) |
4.00% / 3.00%(2) |
4.00% / 3.00%(2) |
3.25% / 3.25% |
| One Covered Person (Age 60 - 64) |
5.00% / 3.00%(2) |
5.00% / 3.00%(2) |
3.75% / 3.75% |
| One Covered Person (Age 65 - 71) |
6.00% / 4.00% |
7.00% / 3.00% |
5.00% / 5.00% |
| One Covered Person (Age 72 and Older) |
6.50% / 4.00% |
7.50% / 3.00% |
5.25% / 5.25% |
| Two Covered Persons (Age 45 - 59) |
3.50% / 3.00%(3) |
3.50% / 3.00%(3) |
3.00% / 3.0% |
| Two Covered Persons (Age 60 - 64) |
4.50% / 3.00%(3) |
4.50% / 3.00%(3) |
3.50% / 3.50% |
| Two Covered Persons (Age 65 - 71) |
5.50% / 4.00% |
6.50% / 3.00% |
4.50% / 4.50% |
| Two Covered Persons (Age 72 and Older) |
6.00% / 4.00% |
7.00% / 3.00% |
4.75% / 4.75% |
If the withdrawal is taken prior to the 5th contract anniversary and the Covered Person is younger than age 68:
| Number of Covered Persons and Age of Covered Person at First Withdrawal(1) |
Polaris Income Plus Daily Income Option 1 |
Polaris Income Plus Daily Income Option 2 |
Polaris Income Plus Daily Income Option 3 |
| One Covered Person (Age 45 - 59) |
3.5% / 2.5%(4) |
3.5% / 2.5%(4) |
2.75% / 2.75% |
| One Covered Person (Age 60 - 64) |
4.5% / 2.5%(4) |
4.5% / 2.5%(4) |
3.25% / 3.25% |
| One Covered Person (Age 65 - 67) |
5.5% / 3.5% |
6.5% / 2.5% |
4.50% / 4.50% |
| One Covered Person (Age 68 - 71) |
6.0% / 4.0% |
7.0% / 3.0% |
5.00% / 5.00% |
| One Covered Person (Age 72 and Older) |
6.5% / 4.0% |
7.5% / 3.0% |
5.25% / 5.25% |
| Two Covered Persons (Age 45 - 59) |
3.0% / 2.5%(5) |
3.0% / 2.5%(5) |
2.50% / 2.50% |
| Two Covered Persons (Age 60 - 64) |
4.0% / 2.5%(5) |
4.0% / 2.5%(5) |
3.00% / 3.00% |
| Two Covered Persons (Age 65 - 67) |
5.0% / 3.5% |
6.0% / 2.5% |
4.00% / 4.00% |
| Two Covered Persons (Age 68 - 71) |
5.5% / 4.0% |
6.5% / 3.0% |
4.50% / 4.50% |
| Two Covered Persons (Age 72 and Older) |
6.0% / 4.0% |
7.0% / 3.0% |
4.75% / 4.75% |
(1) If there is One Covered Person but there are joint Owners, the Covered Person is the older Owner. If there are Two Covered Persons, the age at first withdrawal is based on the age of the younger of the Two Covered Persons.
(2) If One Covered Person is elected, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a new Highest Anniversary Value on or after the Covered Person’s 65th birthday.
(3) If Two Covered Persons are elected, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a new Highest Anniversary Value on or after the younger Covered Person’s 65th birthday.
(4) If One Covered Person is elected, the Protected Income Payment Percentage is 3.50% if the Income Base is increased to a Step-up Value on or after the Covered Person’s 65th birthday.
(5) If Two Covered Persons are elected, the Protected Income Payment Percentage is 3.50% if the Income Base is increased to a Step-up Value on or after the younger Covered Person’s 65th birthday.
For contracts purchased between May 1, 2016 and August 21, 2016:
If no withdrawals are taken prior to the 5th contract anniversary or if the first withdrawal is taken when the Covered Person is age 68 or older:
| Number of Covered Persons and Age of Covered Person at First Withdrawal(1) |
Polaris Income Plus Daily Income Option 1 |
Polaris Income Plus Daily Income Option 2 |
Polaris Income Plus Daily Income Option 3 |
| One Covered Person (Age 45 - 64) |
5.50% / 3.00%(2) |
5.50% / 3.00%(2) |
4.00% / 4.0% |
| One Covered Person (Age 65 and Older) |
6.00% / 4.00% |
7.00% / 3.00% |
5.00% / 5.00% |
| Two Covered Persons (Age 45 - 64) |
5.00% / 3.00%(3) |
5.00% / 3.00%(3) |
3.50% / 3.50% |
| Two Covered Persons (Age 65 and Older) |
5.50% / 4.00% |
6.50% / 3.00% |
4.50% / 4.50% |
E-40
If the withdrawal is taken prior to the 5th contract anniversary and the Covered Person is younger than age 68:
| Number of Covered Persons and Age of Covered Person at First Withdrawal(1) |
Polaris Income Plus Daily Income Option 1 |
Polaris Income Plus Daily Income Option 2 |
Polaris Income Plus Daily Income Option 3 |
| One Covered Person (Age 45 - 64) |
5.00% / 2.50%(4) |
5.00% / 2.50%(4) |
3.50% / 3.50% |
| One Covered Person (Age 65 and Older) |
5.50% / 3.50% |
6.50% / 2.50% |
4.50% / 4.50% |
| Two Covered Persons (Age 45 - 64) |
4.50% / 2.50%(5) |
4.50% / 2.50%(5) |
3.00% / 3.00% |
| Two Covered Persons (Age 65 and Older) |
5.00% / 3.50% |
6.00% / 2.50% |
4.00% / 4.00% |
(1) If there is One Covered Person but there are joint Owners, the Covered Person is the older Owner. If there are Two Covered Persons, the age at first withdrawal is based on the age of the younger of Two Covered Persons.
(2) If One Covered Person is elected, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a new Highest Anniversary Value on or after the Covered Person’s 65th birthday.
(3) If Two Covered Persons are elected, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a new Highest Anniversary Value on or after the younger Covered Person’s 65th birthday.
(4) If One Covered Person is elected, the Protected Income Payment Percentage is 3.50% if the Income Base is increased to a Step-up Value on or after the Covered Person’s 65th birthday.
(5) If Two Covered Persons are elected, the Protected Income Payment Percentage is 3.50% if the Income Base is increased to a Step-up Value on or after the younger Covered Person’s 65th birthday.
Are there investment requirements if I elect Polaris Income Plus Daily?
Yes, you must allocate your assets, including Purchase Payments and the Continuation Contribution, if any, to a combination of the Secure Value Account and Variable Portfolios in accordance with the investment options. Please see Investment Requirements for Optional Living Benefits in APPENDIX A – UNDERLYING FUNDS AVAILABLE UNDER THE CONTRACT for the investment requirements associated with this optional Living Benefit.
With respect to amounts allocated to the Secure Value Account, the crediting interest rate will never be less than the guaranteed minimum interest rate specified in your contract. The crediting interest rate, once established, will not change for each allocation to the Secure Value Account for the duration of the guarantee period. The guarantee period for the Secure Value Account is a one-year period that automatically renews every year from the date of each allocation to the Secure Value Account, unless the living benefit has been cancelled. Each allocation to the Secure Value Account may have different crediting interest rates. You may not reallocate your money in the Secure Value Account to a DCA or Fixed Account, if available, or to the Variable Portfolios at any time unless the Living Benefit is cancelled. You may use available DCA Fixed Accounts to invest your target allocations in accordance with the investment requirements.
How do my investment requirements impact my feature and contract?
The investment requirements may reduce the need to rely on the guarantees provided by this living benefit because it allocates your investment across asset classes and potentially limit exposure to market volatility. As a result, you may have better, or worse, investment returns by allocating your investments more aggressively.
To be considered in Good Order, your allocation instructions for any Purchase Payment as well as your target allocations
if you invest in a DCA Fixed Account must comply with the investment requirements, provided under Investment Requirements for Optional Living Benefits in APPENDIX A – UNDERLYING FUNDS AVAILABLE UNDER THE CONTRACT, for the amount not invested in the Secure Value Account. You may not transfer any amounts between the Secure Value Account and the Variable Portfolios or DCA Fixed Accounts. The Secure Value Account may not be used as a target account if you are using the DCA Program to comply with investment requirements. You may not request any specific amount of any withdrawal to be deducted solely from the Secure Value Account. Rather, any withdrawal reduces the amount invested in the Secure Value Account in the same proportion that the withdrawal reduces the contract value.
We may revise the investment requirements for any existing contract to the extent that Variable Portfolios are added, deleted, substituted, merged or otherwise reorganized. We will promptly notify you in writing of any changes to the investment requirements due to additions, deletions, substitutions, mergers or reorganizations of the investment options. The required allocation percentage to the Secure Value Account will not change for the life of your contract.
Rebalancing and Investment Requirements
We will automatically enroll you in the Automatic Asset Rebalancing Program with quarterly rebalancing. If rebalancing instructions are not provided, we will align your rebalancing allocations with your Purchase Payment allocation instructions, or if using a DCA Fixed Account, your target DCA instructions. We require quarterly rebalancing because market performance and transfer and withdrawal activity may result in your contract’s allocations going outside these requirements. Quarterly rebalancing will ensure that your allocation will continue to comply with the investment requirements for this feature.
Automatic transfers and/or systematic withdrawals will not result in rebalancing before the next automatic quarterly
E-41
rebalancing occurs. The day following any transfer or withdrawal you initiate, we will rebalance in accordance with your most current and compliant Automatic Asset Rebalancing instructions on file. If you do not provide new rebalancing instructions at the time you initiate a transfer, we will update your ongoing rebalancing instructions to reflect the percentage allocations resulting from that transfer (“Default Rebalancing Instructions”) which will replace any previous rebalancing instructions you may have provided.
If at any point, for any reason, your rebalancing instructions would result in allocations inconsistent with the investment requirements, we will revert to the last compliant instructions on file. You can modify your rebalancing instructions, as long as they are consistent with the investment requirements, at any time by calling the Annuity Service Center. Please see AUTOMATIC ASSET REBALANCING PROGRAM above.
We will not rebalance amounts in the Secure Value Account or DCA Fixed Accounts under the Automatic Asset Rebalancing Program.
What are the factors used to calculate Polaris Income Plus Daily?
The benefit offered by Polaris Income Plus Daily is calculated by considering the factors described below.
First, we determine the Step-up Values.
Second, we determine the Income Base, which initially is equal to the first Purchase Payment. The Income Base is increased by each subsequent Purchase Payment received prior to the first contract anniversary and is reduced proportionately for Excess Withdrawals. Additionally, if your contract was purchased between May 2, 2017 and September 8, 2019, and if you do not take any withdrawals prior to the 15th Benefit Year Anniversary, an annual Minimum Income Base Percentage of 5% will be applied to Purchase Payments received prior to the first Benefit year Anniversary. Further, if you take a withdrawal during the Minimum Income Base period of 15 years, you are no longer eligible for adjustments to your Income Base based on the percentages provided above in the Glossary of Living Benefit Terms.
Third, we determine the Maximum Annual Withdrawal Percentage, which represents the maximum percentage of the Income Base that can be withdrawn each Benefit Year while the contract value is greater than zero, without reducing the Income Base. If your contract value is reduced to zero but your Income Base is greater than zero, the Protected Income Payment Percentage represents the percentage of the Income Base you will receive each Benefit Year thereafter until the death of the Covered Person(s).
The Maximum Annual Withdrawal Percentage and Protected Income Payment Percentage are determined by three factors: 1) whether there is one or two Covered Person(s); 2) the age of the Covered Person(s) at the time of first
withdrawal; 3) the income option elected; and if applicable, (4) when you take your first withdrawal.
Please see the table under “What determines the amount I can receive each year?” above for the Maximum Annual Withdrawal Percentage and Protected Income Payment Percentage applicable at the time you purchased the contract.
Fourth, we determine the Maximum Annual Withdrawal Amount, which represents the maximum amount that may be withdrawn each Benefit Year while the contract value is greater than zero, without reducing the Income Base. The Maximum Annual Withdrawal Amount is calculated by multiplying the Income Base by the applicable Maximum Annual Withdrawal Percentage. If your contract value is reduced to zero but your Income Base is greater than zero, the Protected Income Payment is determined by multiplying the Income Base when contract value is reduced to zero by the applicable Protected Income Payment Percentage.
Finally, we determine the Excess Withdrawals. Please see “What are the effects of withdrawals on Polaris Income Plus Daily?” below.
How do increases to the Income Base work under Polaris Income Plus Daily?
If no withdrawals have been taken, the Income Base is increased daily to the Step-up Value.
Additionally, if your contract was purchased between May 1, 2017 and September 8, 2019 and if no withdrawals are taken prior to the Benefit Year Anniversary during the Minimum Income Base period, the Income Base will be increased to at least the Minimum Income Base on the Benefit Year Anniversary as a specified percentage of the first Benefit Year’s Purchase Payments.
After the first withdrawal has been taken, the Income Base is increased only on the Benefit Year Anniversary by looking back to the highest Step-up Value since the first withdrawal (“first look-back”) or, if one or more Excess Withdrawals have been taken in that Benefit Year, to the highest Step-up Value since the last Excess Withdrawal.
After the first look-back, the Income Base is increased only on the Benefit Year Anniversary by looking back to the highest Step-up Value since the last Benefit Year Anniversary or, if one or more Excess Withdrawals have been taken in that Benefit Year, to the highest Step-up Value since the last Excess Withdrawal.
If the contract value has been reduced to zero, the Income Base will no longer be recalculated. Please see “What are the effects of withdrawals on Polaris Income Plus Daily?” below.
What are the effects of withdrawals on Polaris Income Plus Daily?
The Maximum Annual Withdrawal Amount and the Income Bae may change over time as a result of the timing and
E-42
amount of withdrawals. However, if your contract was purchased between May 1, 2017 and September 8, 2019 and if you take a withdrawal during the Minimum Income Base Period, you are no longer eligible for any further adjustments to your Minimum Income Base.
Withdrawals during a Benefit Year that in total are less than or equal to the Maximum Annual Withdrawal Amount will not reduce the Income Base. However, if you choose to take less than the Maximum Annual Withdrawal Amount in any Benefit Year, you may not carry over the unused amount for withdrawal in subsequent years. Your Maximum Annual Withdrawal Amount in any year will not be recalculated solely as a result of taking less than the entire Maximum Annual Withdrawal Amount in the prior year. Please note that if you delay taking withdrawals for too long, you may limit the number of remaining years (due to your life expectancy) in which you may take withdrawals.
You should not elect a living benefit if you plan to take Excess Withdrawals since those withdrawals may significantly reduce the value of or terminate the Living Benefit.
The impact of withdrawals on specific factors is further explained below:
Income Base: If the sum of withdrawals in any Benefit Year exceeds the Maximum Annual Withdrawal Amount, the Income Base will be reduced for those withdrawals. For each Excess Withdrawal taken, the Income Base is reduced in the same proportion by which the contract value is reduced by the amount in excess of the Maximum Annual Withdrawal Amount. This means that the reduction in the Income Base could be more or less than a dollar-for-dollar reduction.
Maximum Annual Withdrawal Amount: The Maximum Annual Withdrawal Amount is recalculated each time there is a change in the Income Base. Accordingly, if the sum of withdrawals in any Benefit Year does not exceed the Maximum Annual Withdrawal Amount for that year, the Maximum Annual Withdrawal Amount will not change for the next year unless your Income Base is increased. If you take an Excess Withdrawal, the Maximum Annual Withdrawal Amount will be recalculated by multiplying the reduced Income Base by the existing Maximum Annual Withdrawal Percentage. This recalculated Maximum Annual Withdrawal Amount is available for withdrawal at the beginning of the next Benefit Year and may be lower than your previous Maximum Annual Withdrawal Amount.
Protected Income Payment: If the Income Base is greater than zero, but the contract value has been reduced to zero due to unfavorable investment performance, deduction of fees, or withdrawals within the Maximum Annual Withdrawal Amount, we will pay any remaining Maximum Annual Withdrawal Amount for the current Benefit Year. Thereafter, you will receive the Protected Income Payment each year over the remaining lifetime of the Covered Person(s) which is calculated by multiplying the Income
Base when contract value is reduced to zero by the applicable Protected Income Payment Percentage. The Income Base is no longer increased on Benefit Year Anniversaries after the contract value has been reduced to zero. As a result, the Protected Income Payment is calculated once and will not change. Please see “What happens if the contract value is reduced to zero while the Income Base is greater than zero?” below.
Look-back Periods: If you take one or more Excess Withdrawals in a Benefit Year, the Income Base may be increased on the Benefit Year Anniversary by looking back only to the highest Step-up Value since the last Excess Withdrawal. This means that if you take an Excess Withdrawal, you lose the opportunity to lock in a potentially higher Step-up Value that may have occurred prior to that Excess Withdrawal during that Benefit Year.
All withdrawals from the contract, including withdrawals taken under this Living Benefit, will reduce your contract value and your death benefit and may impact other provisions of your contract. Unfavorable investment experience and/or fees will also reduce your contract value. In addition, withdrawals under this Living Benefit will reduce the penalty-free withdrawal amount and may be subject to applicable withdrawal charges if in excess of the penalty-free withdrawal amount. The sum of withdrawals in any Benefit Year up to the Maximum Annual Withdrawal Amount will not be assessed a withdrawal charge. Partial withdrawals under this Living Benefit must be deducted proportionately from each Variable Portfolio and Secure Value Account in which you are invested. Please see ACCESS TO YOUR MONEY and EXPENSES in the prospectus above
What is the fee for Polaris Income Plus Daily?
The fee for Polaris Income Plus Daily is calculated as a percentage of the Income Base and deducted from the contract value on a quarterly basis beginning on the first Benefit Quarter Anniversary following the Benefit Effective Date. In Hawaii, Missouri, Oregon, Texas, and Washington, the charge will be deducted pro-rata from Variable Portfolios only. After the first Benefit Year, on each Benefit Quarter Anniversary, we will (1) deduct the fee in effect for the previous Benefit Quarter; and (2) determine the fee rate applicable to the next Benefit Quarter. Please see fee table below:
For contracts purchased between October 9, 2017 and September 8, 2019:
| Number of Covered Persons |
Initial Annual Fee Rate |
Maximum Annual Fee Rate |
Minimum Annual Fee Rate |
Maximum Annualized Fee Rate Decrease or Increase Each Benefit Quarter* |
| One Covered Person |
1.15% |
2.50% |
0.60% |
±0.40% |
| Two Covered Persons |
1.35% |
2.50% |
0.60% |
±0.40% |
E-43
*
The quarterly fee rate will not decrease or increase by more than 0.10% each quarter (0.40% / 4).
For contracts purchased between May 1, 2017 and October 8, 2017:
| Number of Covered Persons |
Initial Annual Fee Rate |
Maximum Annual Fee Rate |
Minimum Annual Fee Rate |
Maximum Annualized Fee Rate Decrease or Increase Each Benefit Quarter* |
| One Covered Person |
1.25% |
2.20% |
0.60% |
±0.25% |
| Two Covered Persons |
1.45% |
2.70% |
0.60% |
±0.25% |
*
The quarterly fee rate will not decrease or increase by more than 0.0625% each quarter (0.25%/ 4).
For contracts purchased between May 1, 2016 and April 30, 2017:
| Number of Covered Persons |
Initial Annual Fee Rate |
Maximum Annual Fee Rate |
Minimum Annual Fee Rate |
Maximum Annualized Fee Rate Decrease or Increase Each Benefit Quarter* |
| One Covered Person |
1.10% |
2.20% |
0.60% |
±0.25% |
| Two Covered Persons |
1.35% |
2.70% |
0.60% |
±0.25% |
*
The quarterly fee rate will not decrease or increase by more than 0.0625% each quarter (0.25% / 4).
The Initial Annual Fee Rate is guaranteed not to change for the first Benefit Year. Subsequently, the fee rate may change quarterly subject to the parameters identified in the table above. Any fee rate adjustment is based on the non-discretionary formula stated below which is tied to the change in the Volatility Index (“VIX®”), an index of market volatility reported by the Chicago Board Options Exchange. The fee rate is based on the average of all VIX values as of Market Close on each day during the Benefit Quarter for which the fee is being calculated (the “Average Value of the VIX”). In general, as the average value of the VIX decreases or increases, your fee rate will decrease or increase accordingly, subject to the minimums and maximums identified in the table above.
If your contract was purchased between October 9, 2017 and April 30, 2019, the non-discretionary formula used in the calculation of the Annual Fee Rate applicable after the first Benefit Year is:
Initial Annual Fee Rate + {0.05% x [Quarterly Average (Daily VIX2)/33 – 10]}
If your contract was purchased between May 1, 2015 and October 8, 2017, the non-discretionary formula used in the calculation of the Annual Fee Rate applicable after the first Benefit Year is:
Initial Annual Fee Rate + [0.05% x (Average Value of the VIX – 20)]
You may find the value of the VIX for any given day by going to the Chicago Board Options Exchange website, www.cboe.com.
Should the VIX no longer be appropriate or available, we would substitute the VIX with another measure of market volatility for determining the fee. If we substitute the VIX, we will notify you; however, the maximum and minimum annual fee rates described in your prospectus are guaranteed for the life of your contract.
For Polaris Income Plus Daily, an increase in the Income Base due to attaining a new Step-up Value or an addition of subsequent Purchase Payment prior to the first contract anniversary will result in an increase to the amount of the fee you pay since the fee rate is assessed against the Income Base, assuming that the annual fee rate has not decreased as described above.
If your contract value falls to zero, the fee will no longer be deducted. We will not assess the quarterly fee if you annuitize your contract or if a death benefit is paid before the end of a Benefit Quarter. If the Living Benefit is still in effect while your contract value is greater than zero, and you surrender your contract, we will assess a pro-rata charge for the fee applicable to the Benefit Quarter in which the surrender occurs if you surrender your contract before the end of a Benefit Quarter. The pro-rata fee is calculated by multiplying the fee by the number of days between the date when the prior fee was last assessed and the date of surrender, divided by the number of days between the prior and the next Benefit Quarter Anniversaries.
ADDITIONAL IMPORTANT INFORMATION APPLICABLE TO POLARIS INCOME PLUS DAILY
What happens if the contract value is reduced to zero while the Income Base is greater than zero?
If the contract value is reduced to zero but the Income Base is greater than zero, we will pay the remaining Maximum Annual Withdrawal Amount for that Benefit Year. Thereafter we will pay the Protected Income Payment over the remaining lifetime of the Covered Person(s).
If an Excess Withdrawal reduces your contract value to zero, no further benefits are payable under the contract and your contract along with the Living Benefit will terminate.
If your contract value is reduced to zero, you may no longer make transfers, and no death benefit is payable. Therefore, you should be aware that, particularly during times of unfavorable investment performance, withdrawals taken under the Living Benefit may reduce the contract value to zero, thereby terminating any other benefits of the contract.
E-44
When the contract value equals zero but the Income Base is greater than zero, to receive any remaining Living Benefit, you must select one of the following:
1.
The Protected Income Payment divided equally and paid on a monthly, quarterly, semi-annual or annual frequency as selected by you until the date of death of the Covered Person(s); or
2.
Any option mutually agreeable between you and us.
Once you elect an option above, it cannot be changed. If you do not select an option above, the remaining benefit will be paid as option 1 above. This amount will be divided equally and paid on a quarterly basis until the date of death of the Covered Person(s). No amount is payable thereafter.
If I own a Qualified contract, how do Required Minimum Distributions impact my Living Benefit?
As the original Owner, or Continuing Spouse (two Covered Persons elected) electing to treat the annuity contract as their own, if you are taking required minimum distributions (“RMD”) from this contract, and the amount of the RMD (based only on the contract to which the feature is elected and using the Uniform Lifetime Table or Joint Life Expectancy Table from the regulations under the Internal Revenue Code) is greater than the Maximum Annual Withdrawal Amount in any given Benefit Year, no portion of the RMD will be treated as an Excess Withdrawal.
We will provide RMD favorable treatment, in each Benefit Year, to the greater of the Maximum Annual Withdrawal Amount or the RMD amount. Any portion of a withdrawal in a Benefit Year that is more than the greater of both the Maximum Annual Withdrawal Amount and the RMD amount will be considered an Excess Withdrawal. If you must take RMD from this contract and want to ensure that these withdrawals are not considered Excess Withdrawals, your total distribution(s) during the current contract year must not exceed the greater of the Maximum Annual Withdrawal Amount or the RMD amount as calculated by our Annuity Service Center.
The age at which you must begin taking RMDs is 73 (if you were born January 1, 1951 or later), 72 (if you were born on or after July 1, 1949, and before January 1, 1951), or 70 ½ (if you were born before July 1, 1949).
If you are transferring from another company and have already reached the age you must begin taking RMDs, you should take the current tax year’s RMD prior to the transfer, as we cannot systematically calculate the RMD as we do not possess the valuation for the previous year end. Further, if you are turning the age you must begin taking RMDs, you should know that although tax code allows for deferral of the first withdrawal to April of the tax year following your attainment of the age you must begin taking RMDs, doing so may result in subsequent withdrawals being treated as Excess Withdrawals for that Benefit Year.
What happens to my Living Benefit upon a spousal continuation if I elected one Covered Person?
If there is one Covered Person and that person dies, the surviving spousal joint Owner or Spousal Beneficiary may elect to:
1.
Make a death claim if the contract value is greater than zero, which terminates the Living Benefit and the contract; or
2.
Continue the contract if the contract value is greater than zero, without the Living Benefit and its corresponding fee.
What happens to my living benefit upon a spousal continuation if I elected two Covered Persons?
If there are two Covered Persons, upon the death of one Covered Person, the surviving Covered Person may elect to:
1.
Make a death claim if the contract value is greater than zero, which terminates the living benefit and the contract; or
2.
Continue the contract with the living benefit and its corresponding fee for two Covered Persons.
The components of the living benefit in effect at the time of spousal continuation will not change. The surviving Covered Person can elect to receive withdrawals in accordance with the provisions of the living benefit elected based on the age of the younger Covered Person at the time the first withdrawal was taken. If no withdrawals were taken prior to the spousal continuation, the Maximum Annual Withdrawal Percentage and the Protected Income Payment Percentage will be based on the age of the surviving Covered Person at the time the first withdrawal is taken.
If spousal continuation occurs, the Continuing Spouse will continue to receive any increase to the Income Base for Step-up Values.
If your contract was purchased between May 1, 2017 and September 8, 2019, the Continuing Spouse will also be eligible to receive the Minimum Income Base on Benefit Year Anniversaries during the Minimum Base period if no withdrawal is taken during the Minimum Income Base period. If a withdrawal is taken, the Continuing Spouse is no longer eligible for any further adjustment to the Minimum Income Base. The Minimum Income Base is equal to the Minimum Income Base percentage multiplied by the first Benefit Year’s Purchase Payments as described under “How can the Income Base be increased for Polaris Income Plus Daily?”
Can a non-spousal Beneficiary elect to receive any remaining benefits under my living benefit upon the death of the second spouse?
No. Upon the death of the Covered Person(s), if the contract value is greater than zero, a non-spousal Beneficiary must make an election under the death benefit provisions of the contract, which terminates the living benefit.
E-45
What happens to my living benefit upon the Latest Annuity Date?
If the contract value and the Income Base are greater than zero on the Latest Annuity Date, you begin the Income Phase and therefore, you must select one of the following annuity income options:
1.
Annuitize the contract value under the contract’s annuity provisions (please see ANNUITY INCOME OPTIONS in the prospectus); or
2.
Annuitize the contract and elect to receive the current Maximum Annual Withdrawal Amount as of the Latest Annuity Date for a fixed period while you are alive. The fixed period is determined by dividing the contract value on the Latest Annuity Date by the Maximum Annual Withdrawal Amount. Any applicable Premium Taxes will be deducted from the contract value prior to determining the fixed period. After that fixed period ends, you will receive the Protected Income Payment, which is calculated by multiplying the Income Base as of the Latest Annuity Date by the applicable Protected Income Payment Percentage, paid until the death(s) of the Covered Person(s). The Maximum Annual Withdrawal Amount fixed period payments and the subsequent Protected Income Payments will be divided equally on a monthly, quarterly, semi-annual or annual frequency, as selected by you.
3.
Any annuity income option mutually agreeable between you and us.
Once you begin the Income Phase by electing one of the annuity income payment options above, the Income Base will no longer be adjusted for Step-up Values and, if your contract was purchased between May 1, 2017 and September 8, 2019, no longer eligible for adjustments to the Minimum Income Base.
If you do not elect an option listed above, on the Latest Annuity Date, we will annuitize the contract value in accordance with Option 2 above.
Can I elect to cancel my living benefit?
The Living Benefit may not be cancelled by you prior to the 5th Benefit Year Anniversary unless you surrender your contract. The living benefit may be cancelled by you on or after the 5th Benefit Year Anniversary and the cancellation will be effective as outlined in the table below:
| Cancellation Request Received |
Cancellation Effective Date |
| Years 1-5 |
5th Benefit Year Anniversary |
| Years 5+ |
Benefit Quarter Anniversary following the receipt of the cancellation request |
Once cancellation is effective, the guarantees under Polaris Income Plus Daily are terminated. In addition, the investment requirement for the living benefit will no longer
apply to your contract. You may not re-elect or reinstate the living benefit after cancellation.
If there are two Covered Persons, upon the death of the first Covered Person, the surviving Covered Person (generally, the Continuing Spouse) may cancel the living benefit on or after the 5th Benefit Year Anniversary and the cancellation will be effective as outlined in the table above. Upon the cancellation effective date of the living benefit, there will be one final fee applicable to the Benefit Quarter in which the cancellation occurs, on the same Benefit Quarter Anniversary. Thereafter, the fee will no longer be charged.
What happens to the Secure Value Account and Automatic Asset Rebalancing Program instructions if I elect to cancel Polaris Income Plus Daily?
Amounts allocated to the Secure Value Account will be automatically transferred to the 1-Year Fixed Account, if available. If the 1-Year Fixed Account is not available in the state in which your contract was issued, amounts will be transferred to a money market portfolio. From the day following the automated transfer from the Secure Value Account, you may transfer this amount to another available investment option under the contract for a period of 90 days during which the transfer will not count against the annual number of free transfers or U.S. Mail transfers, or incur a transfer fee.
The Automatic Asset Rebalancing Program and your instructions on file will not be terminated or changed upon cancellation of the Living Benefit. Amounts transferred from the Secure Value Account into the 1-Year Fixed Account or a money market or similar portfolio, as applicable, will not impact the Automatic Asset Rebalancing Program instructions on file and that transfer will not result in new Default Rebalancing Instructions. On or after cancellation of these features, you may provide new rebalancing instructions, or you may choose to terminate the Automatic Asset Rebalancing Program by contacting the Annuity Service Center. Please see APPENDIX B – STATE CONTRACT AVAILABILITY AND/OR VARIABILITY for state specific information regarding amounts allocated to the Secure Value Account and Automatic Asset Allocation Rebalancing Program upon cancellation of the Living Benefit.
Are there circumstances under which my Living Benefit will be automatically cancelled?
The Living Benefit will automatically be cancelled upon the occurrence of one of the following:
1.
Annuitization of the contract; or
2.
Termination or surrender of the contract; or
3.
A death benefit is paid resulting in the contract being terminated; or
4.
An Excess Withdrawal that reduces the contract value and Income Base to zero; or
E-46
5.
Death of the Covered Person, if only one is elected; or, if two are elected, death of the surviving Covered Person; or
6.
A change that removes all Covered Persons from the contract except as noted below and under “Are there circumstances under which guaranteed withdrawals for two Covered Persons, if elected, terminate for one of the Covered Persons?”
If a change of ownership occurs from a natural person to a non-natural entity, the original natural Owner(s) must also be the Annuitant(s) after the ownership change to prevent termination of the Living Benefit. A change of ownership from a non-natural entity to a natural person can only occur if the new natural Owner(s) was the original natural Annuitant(s) in order to prevent termination of the Living Benefit. Any ownership change is contingent upon prior review and approval by the Company.
Are there circumstances under which guaranteed withdrawals for two Covered Persons, if elected, terminate for one of the Covered Persons?
Under any of the following circumstances, the Living Benefit will provide a guarantee for one Covered Person and not the lifetime of the other Covered Person:
1.
One of the two Covered Persons is removed from the contract, due to reasons other than death; or
2.
The original spousal joint Owners or Spousal Beneficiary, who are the Covered Persons, are no longer married at the time of death of the first spouse.
Under these circumstances, the fee for the Living Benefit based on two Covered Persons will continue to be charged and the guaranteed withdrawals based on two Covered Persons are payable for one Covered Person only. However, the remaining Covered Person may choose to terminate the Living Benefit as described under “Can I elect to cancel my Living Benefit?” above.
Any amounts that we may pay under the feature in excess of your contract value are subject to the Company’s financial strength and claims-paying ability.
POLARIS INCOME PLUS
Polaris Income Plus was available from October 1, 2013 through April 29, 2020. Effective April 30, 2019, Polaris Income Plus is no longer available for election.
Glossary of Living Benefit Terms
Anniversary Value
The contract value on any Benefit Year Anniversary. The Continuation Contribution, if applicable, is included in the calculation of Anniversary Values.
Benefit Effective Date
The date the Living Benefit is elected. The Benefit Effective Date is the same as the contract issue date.
Benefit Quarter
Each consecutive 3-month period starting on the Benefit Effective Date.
Benefit Quarter Anniversary
The date following each consecutive 3-month period starting on the Benefit Effective Date. If the next Benefit Quarter Anniversary has no corresponding date, then the Benefit Quarter Anniversary will be deemed to be the following day.
For example, if a Benefit Quarter Anniversary is November 29, the next Benefit Quarter Anniversary would be February 29 of the following year; however, in a non-Leap Year, there is no corresponding date. Therefore, the next Benefit Quarter Anniversary would be March 1.
Benefit Year
Each consecutive one-year period starting on the Benefit Effective Date.
Benefit Year Anniversary
The date on which each Benefit Year begins.
Contract Year
Each consecutive one-year period starting on the contract issue date.
Covered Person(s)
The person, or persons, whose lifetime withdrawals are guaranteed under the Living Benefit.
Eligible Purchase Payments
Eligible Purchase Payments are Purchase Payments, or portions thereof, made on or after the Benefit Effective Date as shown in the table below and are included in the calculation of the Income Base (defined below) and Income Credit Base (defined below). The calculation of Eligible Purchase Payments does not include Income Credits (defined below) or the Continuation Contribution, if applicable. However, the Continuation Contribution, if any, is included in the calculation of Anniversary Values.
For contracts issued on or after May 1, 2014, Total Purchase Payments are limited to $1,000,000 without prior Company approval. For contracts issued prior to May 1, 2014, Total Purchase Payments are limited to $1,500,000 without prior Company approval.
For contracts purchased on or after October 1, 2013:
| First Contract Year |
Subsequent Contract Years |
| 100% of Purchase Payments received |
Only Purchase Payments received in First Contract Year are considered Eligible Purchase Payments |
Excess Withdrawal
Any withdrawal, or portion of a withdrawal, that is taken in a Benefit Year and exceeds the greater of the Maximum Annual Withdrawal Amount or the Required Minimum Distribution amount as calculated by the Annuity Service Center. An Excess Withdrawal will cause the Income Base, Income Credit Base, if applicable, and the Maximum Annual Withdrawal Amount to be recalculated.
E-47
Highest Anniversary Value
The current Anniversary Value that is greater than (1) all previous Anniversary Values; and (2) any Eligible Purchase Payments received.
Income Base
The Income Base is a value used to determine the Living Benefit fee and the maximum amount that may be withdrawn each Benefit Year without reducing the Income Base. The Income Base is also used to determine the amount paid each year over the lifetime of the Covered Person(s) if and when the contract value is reduced to zero, but the Income Base is still greater than zero, or upon the Latest Annuity Date.
Income Credit
An amount that may be added to the Income Base during the Income Credit Period as shown in the following table:
For contracts purchased between December 19, 2016 and September 8, 2019:
| Income Credit Percentage (as a percentage of the Income Credit Base) |
Income Credit Availability |
| 6% |
Available during the first 12 Benefit Years — the Income Credit is reduced in years withdrawals are taken |
For contracts purchased between August 22, 2016 and December 18, 2016:
| Income Credit Percentage (as a percentage of the Income Credit Base) |
Income Credit Availability |
| 5.5% |
Available during the first 12 Benefit Years — the Income Credit is reduced in years withdrawals are taken |
For contracts purchased between October 1, 2013 and August 21, 2016:
| Income Credit Percentage (as a percentage of the Income Credit Base) |
Income Credit Availability |
| 6% |
Available during the first 12 Benefit Years — the Income Credit is reduced in years withdrawals are taken |
Income Credit Base
The Income Credit Base is used solely as a basis for calculating the Income Credit during the Income Credit Period.
Income Credit Period
The period of time over which we calculate the Income Credit, which is the first 12 Benefit Years.
Ineligible Purchase Payments
Purchase Payments received after the specified contract year discussed in the table under “Eligible Purchase Payments” above.
Investment Requirements
We will allocate a certain percentage of every Purchase Payment and Continuation Contribution, if any, to a fixed interest rate account (the “Secure Value Account”). The remaining amount of every Purchase Payment and Continuation Contribution, if any, must be allocated by you in accordance with the investment options outlined under Investment Requirements for Optional Living Benefits in APPENDIX A - UNDERLYING FUNDS AVAILABLE UNDER THE CONTRACT.
Maximum Annual Withdrawal Amount
The maximum amount that may be withdrawn each Benefit Year while the contract value is greater than zero without reducing the Income Base, and the Income Credit Base, if applicable.
Maximum Annual Withdrawal Percentage
The percentage used to determine the Maximum Annual Withdrawal Amount available for withdrawal each Benefit Year while the contract value is greater than zero.
Minimum Income Base
The Minimum Income Base is a guaranteed minimum amount of the Income Base which is calculated on the 12th Benefit Anniversary during the Minimum Income Base period of 12 years, provided no withdrawals are taken prior to the 12th Benefit Year Anniversary. If you take withdrawals prior to the 12th Benefit Anniversary, you will not be eligible to receive the increase to the Income Base on the 12th Benefit Anniversary. The Minimum Income Base amount is calculated as a percentage of first Benefit Year’s Purchase Payments as follows:
| Minimum Income Base Period (if no withdrawal are taken prior to the Benefit Year Anniversary) |
Minimum Income Base Percentage (as a Percentage of the 1st Benefit Year’s Purchase Payments) |
| 12th Benefit Year Anniversary |
200% |
Protected Income Payment
The amount to be paid each year over the remaining lifetime of the Covered Person(s) after the contract value is reduced to zero but the Income Base is still greater than zero or if the Latest Annuity Date has been reached.
Protected Income Payment Percentage
The percentage used to determine the Protected Income Payment.
How does Polaris Income Plus work?
Polaris Income Plus locks in the greater of two values to determine the Income Base. The Income Base is the basis for the Covered Person(s)’ guaranteed lifetime benefit which must be taken in a series of withdrawals. The Income Base is initially equal to the first Purchase Payment. We will not accept subsequent Purchase Payments on or after the first contract anniversary. While the Income Base is greater than zero, the Income Base is automatically locked in on
E-48
each Benefit Year Anniversary, to the greater of (1) the Highest Anniversary Value, or (2) the current Income Base increased by any available Income Credit.
There is an additional guarantee if you do not take any withdrawals before the 12th Benefit Year Anniversary; the Income Base will be at least 200% of your first Benefit Year’s Purchase Payments (“Minimum Income Base”). Please see “How can the Income Base and Income Credit Base be increased?” below.
What determines the amount I can receive each year?
The amount that you receive depends on the income option you have elected, whether there are one or two Covered Person(s), the age of the Covered Person(s) at the time of the first withdrawal and whether your contract value is greater than or equal to zero. You must choose an income option, if applicable, at the time you purchase your contract and your election may not be changed thereafter. Please see the “Maximum Annual Withdrawal Percentage and Protected Income Payment Percentage Table” below for the income options available to you. If you purchased your contract through certain broker-dealers, all income options may not be available to you.
While the contract value is greater than zero, the Maximum Annual Withdrawal Percentage represents the percentage of your Income Base used to calculate the Maximum Annual Withdrawal Amount that you may withdraw each Benefit Year without decreasing your Income Base and Income Credit Base. The Maximum Annual Withdrawal Percentage differs depending on whether there are one or two Covered Person(s), the age of the Covered Person(s) at the time of first withdrawal and the income option elected.
If your contract value has been reduced to zero or the Latest Annuity Date is reached, the Protected Income Payment Percentage represents the percentage of your Income Base used to calculate the Protected Income Payment that you will receive each year over the remaining lifetime of the Covered Person(s). The Protected Income Payment Percentage differs depending on (1) the income option you elected, (2) whether there are one or two Covered Person(s), (3) the age of the covered Person(s) at the time of the first withdrawal and (4) for those taking withdrawals before age 65, if applicable under the income option elected, whether the Income Base steps up due to favorable market conditions after the Covered Person(s)’65th birthday. Please see “What happens if the contract value is reduced to zero while the Income Base is greater than zero?” and “What happens to my Living Benefit upon the Latest Annuity Date?” below.
E-49
For contracts purchased between May 2, 2018 and September 8, 2019:
| Number of Covered Persons and Age of Covered Person at First Withdrawal(1) |
Polaris Income Plus Income Option 1 |
Polaris Income Plus Income Option 2 |
Polaris Income Plus Income Option 3 |
| One Covered Person (Age 45 - 59) |
4.00% / 3.00%(2) |
4.00% / 3.00%(2) |
3.25% / 3.25% |
| One Covered Person (Age 60 - 64) |
5.00% / 3.00%(2) |
5.00% / 3.00%(2) |
3.75% / 3.75% |
| One Covered Person (Age 65 - 71) |
6.50% / 4.00% |
7.50% / 3.00% |
5.25% / 5.25% |
| One Covered Person (Age 72 and Older) |
7.00% / 4.00% |
8.00% / 3.00% |
5.50% / 5.50% |
| Two Covered Persons (Age 45 - 59) |
3.50% / 3.00%(3) |
3.50% / 3.00%(3) |
3.00% / 3.00% |
| Two Covered Persons (Age 60 - 64) |
4.50% / 3.00%(3) |
4.50% / 3.00%(3) |
3.50% / 3.50% |
| Two Covered Persons (Age 65 - 71) |
6.00% / 4.00% |
7.00% / 3.00% |
4.75% / 4.75% |
| Two Covered Persons (Age 72 and Older) |
6.50% / 4.00% |
7.50% / 3.00% |
5.00% / 5.00% |
(1) If there is One Covered Person but there are joint Owners, the Covered Person is the older Owner. If there are Two Covered Persons, the age at first withdrawal is based on the age of the younger of the Two Covered Persons.
(2) If One Covered Person is elected, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a new Highest Anniversary Value on or after the Covered Person’s 65th birthday.
(3) If Two Covered Persons are elected, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a new Highest Anniversary Value on or after the younger Covered Person’s 65th birthday.
For contracts purchased between August 22, 2016 and May 1, 2018:
| Number of Covered Persons and Age of Covered Person at First Withdrawal(1) |
Polaris Income Plus Income Option 1 |
Polaris Income Plus Income Option 2 |
Polaris Income Plus Income Option 3 |
| One Covered Person (Age 45 - 59) |
4.00% / 3.00%(2) |
4.00% / 3.00%(2) |
3.25% / 3.25% |
| One Covered Person (Age 60 - 64) |
5.00% / 3.00%(2) |
5.00% / 3.00%(2) |
3.75% / 3.75% |
| One Covered Person (Age 65 - 71) |
6.00% / 4.00% |
7.00% / 3.00% |
5.00% / 5.00% |
| One Covered Person (Age 72 and Older) |
6.50% / 4.00% |
7.50% / 3.00% |
5.25% / 5.25% |
| Two Covered Persons (Age 45 - 59) |
3.50% / 3.00%(3) |
3.50% / 3.00%(3) |
3.00% / 3.00% |
| Two Covered Persons (Age 60 - 64) |
4.50% / 3.00%(3) |
4.50% / 3.00%(3) |
3.50% / 3.50% |
| Two Covered Persons (Age 65 - 71) |
5.50% / 4.00% |
6.50% / 3.00% |
4.50% / 4.50% |
| Two Covered Persons (Age 72 and Older) |
6.00% / 4.00% |
7.00% / 3.00% |
4.75% / 4.75% |
(1) If there is One Covered Person but there are joint Owners, the Covered Person is the older Owner. If there are Two Covered Persons, the age at first withdrawal is based on the age of the younger of the Two Covered Persons.
(2) If One Covered Person is elected, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a new Highest Anniversary Value on or after the Covered Person’s 65th birthday.
(3) If Two Covered Persons are elected, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a new Highest Anniversary Value on or after the younger Covered Person’s 65th birthday.
For contracts purchasedbetween May 12, 2014 and August 21, 2016:
| Number of Covered Persons and Age of Covered Person at First Withdrawal(1) |
Polaris Income Plus Income Option 1 |
Polaris Income Plus Income Option 2 |
Polaris Income Plus Income Option 3 |
| One Covered Person (Age 64 and Younger) |
5.50% / 3.00%(2) |
5.50% / 3.00%(2) |
4.00% / 4.00% |
| One Covered Person (Age 65 and Older) |
6.00% / 4.00% |
7.00% / 3.00% |
5.00% / 5.00% |
| Two Covered Persons (Age 64 and Younger) |
5.00% / 3.00%(3) |
5.00% / 3.00%(3) |
3.50% /3.50% |
| Two Covered Persons (Age 65 and Older) |
5.50% / 4.00% |
6.50% / 3.00% |
4.50% / 4.50% |
(1) If there is One Covered Person but there are joint Owners, the Covered Person is the older Owner. If there are Two Covered Persons, the age at first withdrawal is based on the age of the younger of the Two Covered Persons.
(2) If One Covered Person is elected, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a new Highest Anniversary Value on or after the Covered Person’s 65th birthday.
(3) If Two Covered Persons are elected, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a new Highest Anniversary Value on or after the younger Covered Person’s 65th birthday.
E-50
For contracts purchasedbetween October 1, 2013 and May 11, 2014:
| Number of Covered Persons and Age of Covered Person at First Withdrawal(1) |
Polaris Income Plus Income Option 1 |
Polaris Income Plus Income Option 2 |
Polaris Income Plus Income Option 3 |
| One Covered Person (Age 64 and Younger) |
5.00% / 3.00%(2) |
5.00% / 3.00%(2) |
3.75% / 3.75% |
| One Covered Person (Age 65 and Older) |
5.50% / 4.00% |
6.50% / 3.00% |
5.00% / 5.00% |
| Two Covered Persons (Age 64 and Younger) |
4.50% / 3.00%(3) |
4.50% / 3.00%(3) |
3.25% /3.25% |
| Two Covered Persons (Age 65 and Older) |
5.50% / 4.00% |
6.00% / 3.00% |
4.50% / 4.50% |
(1) If there is One Covered Person but there are joint Owners, the Covered Person is the older Owner. If there are Two Covered Persons, the age at first withdrawal is based on the age of the younger of the Two Covered Persons.
(2) If One Covered Person is elected, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a new Highest Anniversary Value on or after the Covered Person’s 65th birthday.
(3) If Two Covered Persons are elected, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a new Highest Anniversary Value on or after the younger Covered Person’s 65th birthday.
Are there investment requirements if I elect Polaris Income Plus?
Yes, you must allocate your assets, including Purchase Payments and the Continuation Contribution, if any, to a combination of the Secure Value Account and Variable Portfolios in accordance with the investment options. Please see Investment Requirements for Optional Living Benefits in APPENDIX A – UNDERLYING FUNDS AVAILABLE UNDER THE CONTRACT for the investment requirements associated with this optional Living Benefit.
With respect to amounts allocated to the Secure Value Account, the crediting interest rate will never be less than the guaranteed minimum interest rate specified in your contract. The crediting interest rate, once established, will not change for each allocation to the Secure Value Account for the duration of the guarantee period. The guarantee period for the Secure Value Account is a one year period that automatically renews every year from the date of each allocation to the Secure Value Account, unless the living benefit has been cancelled. Each allocation to the Secure Value Account may have different crediting interest rates.
You may not reallocate your money in the Secure Value Account to a DCA Fixed Account or 1-Year Fixed Account, if available, or to the Variable Portfolios at any time unless the Living Benefit is cancelled.
You may use available DCA Fixed Accounts to invest your target allocations in accordance with the investment requirements.
How do my investment requirements impact my feature and contract?
The investment requirements may reduce the need to rely on the guarantees provided by this Living Benefit because they allocate your investment across asset classes and potentially limit exposure to market volatility. As a result, you may have better, or worse, investment returns by allocating your investments more aggressively. Therefore, the investment restrictions reduce the Company’s risk that the Contract Value will be reduced to zero before the Covered Person(s)’
death. Thus, these investment restrictions would reduce the likelihood that the Company would use its own assets to make payments in connection with the Living Benefit guarantee. Please consult your financial representative regarding which Variable Portfolios are appropriate for the Living Benefit you elected.
To be considered in Good Order, your allocation instructions for any Purchase Payment as well as your target allocations if you invest in a DCA Fixed Account must comply with the investment requirements, provided under Investment Requirements for Optional Living Benefits in APPENDIX A - UNDERLYING FUNDS AVAILABLE UNDER THE CONTRACT, for the amount not invested in the Secure Value Account. You may not transfer any amounts between the Secure Value Account and the Variable Portfolios, DCA Fixed Accounts or 1-Year Fixed Account, if available. The Secure Value Account may not be used as a target account if you are using the DCA Program to comply with investment requirements. You may not request any specific amount of any withdrawal to be deducted solely from the Secure Value Account. Rather, any withdrawal reduces the amount invested in the Secure Value Account in the same proportion that the withdrawal reduces the contract value.
We may revise the investment requirements for any existing contract to the extent that Variable Portfolios are added, deleted, substituted, merged or otherwise reorganized. We will promptly notify you in writing of any changes to the investment requirements due to additions, deletions, substitutions, mergers or reorganizations of the investment options. The required allocation percentage to the Secured Value Account will not change for the life of your contract.
Rebalancing and Investment Requirements
We will automatically enroll you in the Automatic Asset Rebalancing Program with quarterly rebalancing. If rebalancing instructions are not provided, we will align your rebalancing allocations with your Purchase Payment allocation instructions, or if using a DCA Fixed Account, your target DCA instructions. We require quarterly
E-51
rebalancing because market performance and transfer and withdrawal activity may result in your contract’s allocations going outside these requirements. Quarterly rebalancing will ensure that your allocation will continue to comply with the investment requirements for this feature.
Automatic transfers and/or systematic withdrawals will not result in rebalancing before the next automatic quarterly rebalancing occurs. The day following any transfer or withdrawal you initiate, we will rebalance in accordance with your most current and compliant Automatic Asset Rebalancing instructions on file. If you do not provide new rebalancing instructions at the time you initiate a transfer, we will update your ongoing rebalancing instructions to reflect the percentage allocations resulting from that transfer (“Default Rebalancing Instructions”) which will replace any previous rebalancing instructions you may have provided.
If at any point, for any reason, your rebalancing instructions would result in allocations inconsistent with the investment requirements, we will revert to the last compliant instructions on file. You can modify your rebalancing instructions, as long as they are consistent with the investment requirements, at any time by calling the Annuity Service Center.
We will not rebalance amounts in the Secure Value Account or DCA Fixed Accounts under the Automatic Asset Rebalancing Program.
What are the factors used to calculate Polaris Income Plus?
The benefit offered by Polaris Income Plus is calculated by considering the factors described below.
First, we consider the Income Credit Period. The Income Credit Period is the period of time over which we calculate the Income Credit. The Income Credit Period begins on the Benefit Effective Date and ends 12 years later.
Second, we determine if the Anniversary Value is the Highest Anniversary Value. The Anniversary Value equals your contract value on any Benefit Year Anniversary.
Third, we determine the Income Base which initially is equal to the first Purchase Payment. The Income Base is increased by each subsequent Purchase Payment received prior to the first contract anniversary, and is reduced proportionately for Excess Withdrawals. If you do not take any withdrawals before the 12th Benefit Year Anniversary, the Income Base will be increased to at least the Minimum Income Base on the 12th Benefit Year Anniversary. The Minimum Income Base is equal to 200% of your first Benefit Year’s Purchase Payments.
Fourth, we determine the Income Credit Base which is used solely as a basis for calculating the Income Credit during the Income Credit Period. The initial Income Credit Base is equal to the first Purchase Payment. The Income Credit Base is increased by each subsequent Purchase
Payment received prior to the first contract anniversary, and is reduced proportionately for Excess Withdrawals.
Fifth, we determine the Income Credit. The Income Credit is equal to a percentage (“Income Credit Percentage”) of the Income Credit Base on each Benefit Year Anniversary during the Income Credit Period. Please see the Income Credit table under the “Glossary of Living Benefit Terms” above for the Income Credit Percentage applicable to your contract. The Income Credit Percentage is reduced but not eliminated in any Benefit Year in which cumulative withdrawals during the preceding Benefit Year are less than the Income Credit Percentage and not greater than the Maximum Annual Withdrawal Amount applicable to the income option you elected.
Sixth, we determine the Maximum Annual Withdrawal Percentage, which represents the maximum percentage of the Income Base that can be withdrawn each Benefit Year while the contract value is greater than zero, without reducing the Income Base and the Income Credit base, if applicable. If your contract value is reduced to zero but your Income Base is greater than zero, the Protected Income Payment Percentage represents the percentage of the Income Base you will receive each Benefit Year thereafter until the death of the Covered Person(s).
The Maximum Annual Withdrawal Percentage and Protected Income Payment Percentage are determined by three factors: 1) whether there is one or two Covered Persons(s); 2) the age of the Covered Person(s) at the time of first withdrawal; and 3) the income option elected. Additionally, if applicable to the income option you elected, the Protected Income Payment Percentage may differ depending on whether withdrawals are taken before age 65 and if a new Highest Anniversary Value is achieved on or after the Covered Person(s) 65th birthday.
Please see the table under “What determines the amount I can receive each year?” above for the applicable Maximum Annual Withdrawal Percentage and Protected Income Payment Percentage.
Seventh, we determine the Maximum Annual Withdrawal Amount, which represents the maximum amount that may be withdrawn each Benefit Year while the contract value is greater than zero, without reducing the Income Base, and if applicable, the Income Credit Base. The Maximum Annual Withdrawal Amount is calculated by multiplying the Income Base by the applicable Maximum Annual Withdrawal Percentage. If your contract value is reduced to zero but your Income Base is greater than zero, the Protected Income Payment is determined by multiplying the Income Base when contract value is reduced to zero by the applicable Protected Income Payment Percentage.
Finally, we determine the Excess Withdrawals. Excess Withdrawals are withdrawals that exceed the Maximum Annual Withdrawal Amount in any Benefit Year. An Excess Withdrawal reduces your Income Base on the date the Excess Withdrawal occurs. Any Excess Withdrawal reduced
E-52
the Income Base in the same proportion by which the contract value is reduced by the Excess Withdrawal. In addition, you will not be eligible for an Income Credit in that Benefit Year. Please see “What are the effect of withdrawals on Polaris Income Plus” below.
How can the Income Base and Income Credit Base be increased for Polaris Income Plus?
On each Benefit Year Anniversary, the Income Base is automatically increased to the greater of (1) the Highest Anniversary Value; or (2) the current Income Base plus the Income Credit, if any. In addition, the Income Base will be at least the Minimum Income Base on the 12th Benefit Year Anniversary provided no withdrawals have been taken before that anniversary.
On each Benefit Year Anniversary during the Income Credit Period, the Income Credit Base is automatically increased to the Highest Anniversary Value, if the Income Base is increased to the Highest Anniversary Value. The Income Credit Base is not increased if an Income Credit is added to the Income Base.
Increases to your Income Base and Income Credit Base occur on Benefit Year Anniversaries while the contract value is greater than zero. However, Purchase Payments increase your Income Base and Income Credit Base at the time they are received. Since Highest Anniversary Values are determined only on the Benefit Year Anniversaries, your Income Base and Income Credit Base will not increase if your contract value is higher on days other than the Benefit Year Anniversaries.
What are the effects of withdrawals on Polaris Income Plus?
The Maximum Annual Withdrawal Amount, the Income Base and the Income Credit Base may change over time as a result of the timing and amount of withdrawals. If you take a withdrawal before the 12th Benefit Year Anniversary, your Income Base is not eligible to be at least the Minimum Income Base.
Withdrawals during a Benefit Year that in total are less than or equal to the Maximum Annual Withdrawal Amount will not reduce the Income Base or Income Credit Base. However, if you choose to take less than the Maximum Annual Withdrawal Amount in any Benefit Year, you may not carry over the unused amount for withdrawal in subsequent years. Your Maximum Annual Withdrawal Amount in any year will not be recalculated solely as a result of taking less than the entire Maximum Annual Withdrawal Amount in the prior year. Please note that if you delay taking withdrawals for too long, you may limit the number of remaining years (due to your life expectancy) in which you may take withdrawals.
You should not elect a Living Benefit if you plan to take Excess Withdrawals since those withdrawals may significantly reduce the value of or terminate the Living Benefit.
The impact of withdrawals on specific factors is further explained below:
Income Base and Income Credit Base: If the sum of withdrawals in any Benefit Year exceeds the Maximum Annual Withdrawal Amount, the Income Base and Income Credit Base will be reduced for those withdrawals. For each Excess Withdrawal taken, the Income Base and Income Credit Base are reduced in the same proportion by which the contract value is reduced by the amount in excess of the Maximum Annual Withdrawal Amount. This means that the reduction in the Income Base and Income Credit Base could be more or less than a dollar-for-dollar reduction.
Maximum Annual Withdrawal Amount: The Maximum Annual Withdrawal Amount is recalculated each time there is a change in the Income Base. Accordingly, if the sum of withdrawals in any Benefit Year does not exceed the Maximum Annual Withdrawal Amount for that year, the Maximum Annual Withdrawal Amount will not change for the next year unless your Income Base is increased. If you take an Excess Withdrawal, the Maximum Annual Withdrawal Amount will be recalculated by multiplying the reduced Income Base by the existing Maximum Annual Withdrawal Percentage. This recalculated Maximum Annual Withdrawal Amount is available for withdrawal at the beginning of the next Benefit Year and may be lower than your previous Maximum Annual Withdrawal Amount.
Protected Income Payment: If the Income Base is greater than zero, but the contract value has been reduced to zero due to unfavorable investment performance, deduction of fees, or withdrawals within the Maximum Annual Withdrawal Amount, we will pay any remaining Maximum Annual Withdrawal Amount for the current Benefit Year. Thereafter, you will receive the Protected Income Payment each year over the remaining lifetime of the Covered Person(s) which is calculated by multiplying the Income Base when the contract value is reduced to zero by the applicable Protected Income Payment Percentage. The Income Base is no longer increased on Benefit Year Anniversaries after the contract value has been reduced to zero. As a result, the Protected Income Payment is calculated once and will not change. Please see “What happens if the contract value is reduced to zero while the Income Base is greater than zero?” below.
All withdrawals from the contract, including withdrawals taken under this Living Benefit, will reduce your contract value and your death benefit and may impact other provisions of your contract. Unfavorable investment experience and/or fees will also reduce your contract value. In addition, withdrawals under this Living Benefit will reduce the penalty-free withdrawal amount and may be subject to applicable withdrawal charges if in excess of the penalty-free withdrawal amount. The sum of withdrawals in
E-53
any Benefit Year up to the Maximum Annual Withdrawal Amount will not be assessed a withdrawal charge. Partial withdrawals under this Living Benefit must be deducted proportionately from each Variable Portfolio and Secure Value Account in which you are invested.
What is the fee for Polaris Income Plus?
The fee for Polaris Income Plus is calculated as a percentage of the Income Base and deducted from the contract value on a quarterly basis beginning on the first Benefit Quarter Anniversary following the Benefit Effective Date. In Missouri (for contracts issued on or after January 23, 2017), Oregon, Texas, and Washington, the charge will be deducted pro-rata from Variable Portfolios only. After the first Benefit Year, on each Benefit Quarter Anniversary, we will (1) deduct the fee in effect for the previous Benefit Quarter; and (2) determine the fee rate applicable to the next Benefit Quarter. Please see fee table below:
For contracts purchased between October 9, 2017 and September 8, 2019:
| Number of Covered Persons |
Initial Annual Fee Rate |
Maximum Annual Fee Rate |
Minimum Annual Fee Rate |
Maximum Annualized Fee Rate Decrease or Increase Each Benefit Quarter* |
| One Covered Person |
1.00% |
2.50% |
0.60% |
±0.40% |
| Two Covered Persons |
1.25% |
2.50% |
0.60% |
±0.40% |
*
The quarterly fee rate will not decrease or increase by more than 0.10% each quarter (0.40%/ 4).
If your contract was purchased between October 1, 2013 and October 8, 2017 and you elected the optional Polaris Income Plus, the following fees are applicable:
| Number of Covered Persons |
Initial Annual Fee Rate |
Maximum Annual Fee Rate |
Minimum Annual Fee Rate |
Maximum Annualized Fee Rate Decrease or Increase Each Benefit Quarter* |
| One Covered Person |
1.10% |
2.20% |
0.60% |
±0.25% |
| Two Covered Persons |
1.35% |
2.70% |
0.60% |
±0.25% |
*
The quarterly fee rate will not decrease or increase by more than 0.0625% each quarter (0.25%/ 4).
The initial Annual Fee Rate is guaranteed not to change for the first Benefit Year. Subsequently, the fee rate may change quarterly subject to the parameters identified in the table above. Any fee rate adjustment is based on the non-discretionary formula stated below which is tied to the change in the Volatility Index (“VIX®”), an index of market volatility reported by the Chicago Board Options Exchange. In general, as the average value of the VIX decreases or increases, your fee rate will decrease or
increase accordingly, subject to the minimums and maximums identified in the table above.
If your contract was purchased between October 9, 2017 and September 8, 2019, the non-discretionary formula used in the calculation of the Annual Fee Rate applicable after the first Benefit Year is:
Initial Annual Fee Rate + {0.05% x [Quarterly Average (Daily VIX2)/33 – 10]}
If your contract was purchased between October 1, 2013 and October 8, 2017, the non-discretionary formula used in the calculation of the Annual Fee Rate applicable after the first Benefit Year is:
Initial Annual Fee Rate + [0.05% x (Average Value of the VIX – 20)]
You may find the value of the VIX for any given day by going to the Chicago Board Options Exchange website, www.cboe.com.
Should the VIX no longer be appropriate or available, we would substitute the VIX with another measure of market volatility for determining the fee. If we substitute the VIX, we will notify you; however, the maximum and minimum annual fee rates described in this prospectus are guaranteed for the life of your contract.
An increase in the Income Base due to an addition of an Income Credit, attaining a new Highest Anniversary Value or an addition of subsequent Purchase Payments prior to the first contract anniversary will result in an increase to the amount of the fee you pay since the fee rate is assessed against the Income Base, assuming that the annual fee rate has not decreased as described above.
If your contract value falls to zero, the fee will no longer be deducted. We will not assess the quarterly fee if you annuitize your contract or if a death benefit is paid before the end of a Benefit Quarter. If the Living Benefit is still in effect while your contract value is greater than zero, and you surrender your contract before the end of a Benefit Quarter, we will assess a pro-rata charge for the fee applicable to the Benefit Quarter in which the surrender occurs. The pro-rata fee is calculated by multiplying the fee by the number of days between the date when the prior fee was last assessed and the date of surrender, divided by the number of days between the prior and the next Benefit Quarter Anniversaries.
ADDITIONAL IMPORTANT INFORMATION APPLICABLE TO POLARIS INCOME PLUS
What happens if the contract value is reduced to zero while the Income Base is greater than zero?
If the contract value is reduced to zero but the Income Base is greater than zero, we will pay the remaining Maximum Annual Withdrawal Amount for that Benefit Year. Thereafter we will pay the Protected Income Payment over the remaining lifetime of the Covered Person(s).
E-54
If an Excess Withdrawal reduces your contract value to zero, no further benefits are payable under the contract and your contract along with the Living Benefit will terminate.
If your contract value is reduced to zero, you may no longer make transfers, and no death benefit is payable. Therefore, you should be aware that, particularly during times of unfavorable investment performance, withdrawals taken under this Living Benefit may reduce the contract value to zero, thereby terminating any other benefits of the contract.
In addition, an Income Credit is not available if the contract value is reduced to zero, even if a benefit remains payable.
When the contract value equals zero but the Income Base is greater than zero, to receive any remaining Living Benefit, you must select one of the following:
1.
The Protected Income Payment divided equally and paid on a monthly, quarterly, semi-annual or annual frequency as selected by you until the date of death of the Covered Person(s); or
2.
Any option mutually agreeable between you and us.
Once you elect an option above, it cannot be changed. If you do not select an option above, the remaining benefit will be paid as option 1 above. This amount will be divided equally and paid on a quarterly basis until the date of death of the Covered Person(s). No amount is payable thereafter.
If I own a Qualified contract, how do Required Minimum Distributions impact my Living Benefit?
As the original owner, or Continuing Spouse (two Covered Persons elected) electing to treat the annuity contract as their own, if you are taking required minimum distributions (“RMD”) from this contract, and the amount of the RMD (based only on the contract to which the feature is elected and using the Uniform Lifetime Table or Joint Life Expectancy Table from the regulations under the Internal Revenue Code) is greater than the Maximum Annual Withdrawal Amount in any given Benefit Year, no portion of the RMD will be treated as an Excess Withdrawal. Any portion of a withdrawal in a Benefit Year that is more than the greater of both the Maximum Annual Withdrawal Amount and the RMD amount will be considered an Excess Withdrawal. If you must take RMD from this contract and want to ensure that these withdrawals are not considered Excess Withdrawals, your withdrawals must be set up on the Systematic Withdrawal Program for RMDs administered by our Annuity Service Center.
We will provide RMD favorable treatment, once each Benefit Year, to the greater of the Maximum Annual Withdrawal Amount or the RMD amount as calculated by us. Any portion of a withdrawal in a Benefit Year that is more than the greater of both Maximum Annual Withdrawal Amount and the RMD amount will be considered an Excess Withdrawal.
The age at which you must begin taking RMDs is 73 (if you were born January 1, 1951 or later), 72 (if you were
born on or after July 1, 1949, and before January 1, 1951), or 70 ½ (if you were born before July 1, 1949).
If you are transferring from another company and are already 70½, you should take the current tax year’s RMD prior to the transfer, as we cannot systematically calculate the RMD as we do not possess the valuation for the previous year end. Further, if you are turning 70½, you should know that although tax code allows for deferral of the first withdrawal to April of the tax year following your attainment of age 70½, doing so may result in subsequent withdrawals being treated as Excess Withdrawals for that Benefit Year.
If the RMD amount is greater than the Maximum Annual Withdrawal Amount, but less than the Income Credit Percentage (applicable to you), an Income Credit equal to the difference between the RMD and Income Credit Percentage will be included in determining any Income Base increase in that Benefit Year. If the RMD amount is greater than the Income Credit Percentage, no Income Credit will be included in the calculation of the Income Base.
What happens to my Living Benefit upon a spousal continuation if I elected one Covered Person?
If there is one Covered Person and that person dies, the surviving spousal joint Owner or Spousal Beneficiary may elect to:
1.
Make a death claim if the contract value is greater than zero, which terminates the Living Benefit and the contract; or
2.
Continue the contract if the contract value is greater than zero, without the Living Benefit and its corresponding fee.
What happens to my Living Benefit upon a spousal continuation if I elected two Covered Persons?
If there are two Covered Persons, upon the death of one Covered Person, the surviving Covered Person may elect to:
1.
Make a death claim if the contract value is greater than zero, which terminates the Living Benefit and the contract; or
2.
Continue the contract with the Living Benefit and its corresponding fee for two Covered Persons.
The components of the Living Benefit in effect at the time of spousal continuation will not change. The surviving Covered Person can elect to receive withdrawals in accordance with the provisions of the Living Benefit elected based on the age of the younger Covered Person at the time the first withdrawal was taken. If no withdrawals were taken prior to the spousal continuation, the Maximum Annual Withdrawal Percentage and the Protected Income Payment Percentage will be based on the age of the surviving Covered Person at the time the first withdrawal is taken.
If spousal continuation occurs, the Continuing Spouse will continue to receive any increase to the Income Base for
E-55
Highest Anniversary Value or if applicable, any Income Credit during the Income Credit Period, while the contract value is greater than zero. The Continuing Spouse is also eligible to receive the Minimum Income Base on the 12th Benefit Year Anniversary if no withdrawals have been taken during the first 12 Benefit Years following the Benefit Effective Date.
Can a non-spousal Beneficiary elect to receive any remaining benefits under my Living Benefit upon the death of the second spouse?
No. Upon the death of the Covered Person(s), if the contract value is greater than zero, a non-spousal Beneficiary must make an election under the death benefit provisions of the contract, which terminates the Living Benefit.
What happens to my Living Benefit upon the Latest Annuity Date?
If the contract value and the Income Base are greater than zero on the Latest Annuity Date, you begin the Income Phase and therefore, you must select one of the following annuity income options:
1.
Annuitize the contract value under the contract’s annuity provisions (please see ANNUITY INCOME OPTIONS in the prospectus); or
2.
Annuitize the contract and elect to receive the current Maximum Annual Withdrawal Amount as of the Latest Annuity Date for a fixed period while you are alive. The fixed period is determined by dividing the contract value on the Latest Annuity Date by the Maximum Annual Withdrawal Amount. Any applicable Premium Taxes will be deducted from the contract value prior to determining the fixed period. After that fixed period ends, you will receive the Protected Income Payment, which is calculated by multiplying the Income Base as of the Latest Annuity Date by the applicable Protected Income Payment Percentage, paid until the death(s) of the Covered Person(s). The Maximum Annual Withdrawal Amount fixed period payments and the subsequent Protected Income Payments will be divided equally on a monthly, quarterly, semi-annual or annual frequency, as selected by you.
3.
Any annuity income option mutually agreeable between you and us.
Once you begin the Income Phase by electing one of the annuity income payment options above, the Income Base will no longer be adjusted either for Highest Anniversary Values or additional Income Credits.
If you do not elect an option listed above, on the Latest Annuity Date, we will annuitize the contract value in accordance with Option 2 above.
Can I elect to cancel my Living Benefit?
The Living Benefit may not be cancelled by you prior to the 5th Benefit Year Anniversary unless you surrender your contract. The Living Benefit may be cancelled by you on or after the 5th Benefit Year Anniversary and the cancellation will be effective as outlined in the table below:
| Cancellation Request Received |
Cancellation Effective Date |
| Years 1-5 |
5th Benefit Year Anniversary |
| Years 5+ |
Benefit Quarter Anniversary following the receipt of the cancellation request |
Once cancellation is effective, the guarantees under Polaris Income Plus are terminated. In addition, the investment requirements for the Living Benefit will no longer apply to your contract. You may not re-elect or reinstate the Living Benefit after cancellation.
If there are two Covered Persons, upon the death of the first Covered Person, the surviving Covered Person (generally, the Continuing Spouse) may cancel the Living Benefit on or after the 5th Benefit Year Anniversary and the cancellation will be effective as outlined in the table above. Upon the cancellation effective date of the Living Benefit, there will be one final fee applicable to the Benefit Quarter in which the cancellation occurs, on the same Benefit Quarter Anniversary. Thereafter, the fee will no longer be charged.
What happens to the Secure Value Account and Automatic Asset Rebalancing Program instructions if I elect to cancel Polaris Income Plus?
Amounts allocated to the Secure Value Account will be automatically transferred to the 1-Year Fixed Account, if available. If the 1-Year Fixed Account is not available in the state in which your contract was issued, amounts will be transferred to a money market portfolio. From the day following the automated transfer from the Secure Value Account, you may transfer this amount to another available investment option under the contract for a period of 90 days during which the transfer will not count against the annual number of free transfers or U.S. Mail transfers or incur a transfer fee.
The Automatic Asset Rebalancing Program and your instructions on file will not be terminated or changed upon cancellation of the Living Benefit. Amounts transferred from the Secure Value Account into the 1-Year Fixed Account or a money market or similar portfolio, as applicable, will not impact the Automatic Asset Rebalancing Program instructions on file and that transfer will not result in new Default Rebalancing Instructions. On or after cancellation of these features, you may provide new rebalancing instructions, or you may choose to terminate the Automatic Asset Rebalancing Program by contacting the Annuity Service Center. Please see APPENDIX B - STATE CONTRACT AVAILABILITY AND/OR VARIABILITY for state specific information regarding amounts allocated to the Secure Value Account and Automatic
E-56
Asset Allocation Rebalancing Program upon cancellation of the Living Benefit.
Are there circumstances under which my Living Benefit will be automatically cancelled?
The Living Benefit will automatically be cancelled upon the occurrence of one of the following:
1.
Annuitization of the contract; or
2.
Termination or surrender of the contract; or
3.
A death benefit is paid resulting in the contract being terminated; or
4.
An Excess Withdrawal that reduces the contract value and Income Base to zero; or
5.
Death of the Covered Person, if only one is elected; or, if two are elected, death of the surviving Covered Person; or
6.
A change that removes all Covered Persons from the contract except as noted below and under “Are there circumstances under which guaranteed withdrawals for two Covered Persons, if elected, terminate for one of the Covered Persons?”
If a change of ownership occurs from a natural person to a non-natural entity, the original natural Owner(s) must also be the Annuitant(s) after the ownership change to prevent termination of the Living Benefit. A change of ownership from a non-natural entity to a natural person can only occur if the new natural Owner(s) was the original natural Annuitant(s) in order to prevent termination of the Living Benefit. Any ownership change is contingent upon prior review and approval by the Company.
Are there circumstances under which guaranteed withdrawals for two Covered Persons, if elected, terminate for one of the Covered Persons?
Under any of the following circumstances, the Living Benefit will provide a guarantee for one Covered Person and not the lifetime of the other Covered Person:
1.
One of the two Covered Persons is removed from the contract, due to reasons other than death; or
2.
The original spousal joint Owners or Spousal Beneficiary, who are the Covered Persons, are no longer married at the time of death of the first spouse.
Under these circumstances, the fee for the Living Benefit based on two Covered Persons will continue to be charged and the guaranteed withdrawals based on two Covered Persons are payable for one Covered Person only. However, the remaining Covered Person may choose to terminate the Living Benefit as described under “Can I elect to cancel my Living Benefit?” above.
Any amounts that we may pay under the feature in excess of your contract value are subject to the Company’s financial strength and claims-paying ability.
POLARIS INCOME BUILDER
Polaris Income Builder was available from October 1, 2013 through April 30, 2018. Effective May 1, 2018, Polaris Income Builder is no longer available for election.
Below is a glossary of Living Benefit Terms and a summary of the key features of the optional Living Benefit offered in your contract.
Glossary of Living Benefit Terms
Anniversary Value
The contract value on any Benefit Year Anniversary. The Continuation Contribution, if applicable, is included in the calculation of Anniversary Values.
Benefit Effective Date
The date the living benefit was elected. The Benefit Effective Date is the same as the contract issue date.
Benefit Quarter
Each consecutive 3 month period starting on the Benefit Effective Date.
Benefit Quarter Anniversary
The date following each consecutive 3 month period starting on the Benefit Effective Date. If the next Benefit Quarter Anniversary has no corresponding date, then the Benefit Quarter Anniversary will be deemed to be the following day.
For example, if a Benefit Quarter Anniversary is November 29, the next Benefit Quarter Anniversary would be February 29 of the following year; however, in a non-Leap Year, there is no corresponding date. Therefore, the next Benefit Quarter Anniversary would be March 1.
Benefit Year
Each consecutive one year period starting on the Benefit Effective Date.
Benefit Year Anniversary
The date on which each Benefit Year begins.
Contract Year
Each consecutive one year period starting on the contract issue date.
Covered Person(s)
The person, or persons, whose lifetime withdrawals are guaranteed under the living benefit.
Excess Withdrawal
Any withdrawal, or portion of a withdrawal, that is taken in a Benefit Year and exceeds the greater of the Maximum Annual Withdrawal Amount or the Required Minimum Distribution amount as calculated by the Annuity Service Center. An Excess Withdrawal will cause the Income Base, Income Credit Base, if applicable, and the Maximum Annual Withdrawal Amount to be recalculated.
E-57
Highest Anniversary Value
The current Anniversary Value that is greater than (1) all previous Anniversary Values; and (2) Purchase Payments received prior to the first contract anniversary.
Income Base
The Income Base is used to determine the fee and the maximum amount that may be withdrawn each Benefit Year without reducing the Income Base and Income Credit Base, if applicable. The Income Base is also used to determine the amount paid each year over the remaining lifetime of the Covered Person(s) after the contract value is reduced to zero.
Income Credit
An amount that may be added to the Income Base during the Income Credit Period as shown in the following table:
For contracts purchased between August 22, 2016 and April 30, 2018:
| Income Credit Percentage (as a percentage of the Income Credit Base) |
Income Credit Availability |
| 5% |
Available during the first 12 Benefit Years — the Income Credit is reduced in years withdrawals are taken |
For contracts purchased between October 1, 2013 and August 21, 2016:
| Income Credit Percentage (as a percentage of the Income Credit Base) |
Income Credit Availability |
| 6% |
Available during the first 12 Benefit Years — the Income Credit is reduced in years withdrawals are taken |
Income Credit Base
The Income Credit Base is used solely as a basis for calculating the Income Credit during the Income Credit Period.
Income Credit Period
The period of time over which we calculate the Income Credit, which is the first 12 Benefit Years.
Investment Requirements
We will allocate a certain percentage of every Purchase Payment and Continuation Contribution, if any, to the Secure Value Account. The remaining amount of every Purchase Payment and Continuation Contribution, if any, must be allocated by you in accordance with the investment options outlined under Investment Requirements for Optional Living Benefits in APPENDIX A - UNDERLYING FUNDS AVAILABLE UNDER THE CONTRACT.
Maximum Annual Withdrawal Amount
The maximum amount that may be withdrawn each Benefit Year while the contract value is greater than zero without reducing the Income Base and the Income Credit Base, if applicable.
Maximum Annual Withdrawal Percentage
The percentage used to determine the Maximum Annual Withdrawal Amount available for withdrawal each Benefit Year while the contract value is greater than zero.
Minimum Income Base
The guaranteed minimum amount equal to 200% of the first Benefit Year’s Purchase Payments to which the Income Base will be increased on the 12th Benefit year Anniversary provided no withdrawals are taken before the 12th Benefit Year Anniversary.
| Minimum Income Base Period (if no withdrawal are taken prior to the Benefit Year Anniversary) |
Minimum Income Base Percentage (as a Percentage of the 1st Benefit Year’s Purchase Payments) |
| 12th Benefit Year Anniversary |
200% |
Protected Income Payment
The amount to be paid each year over the remaining lifetime of the Covered Person(s) after the contract value is reduced to zero but the Income Base is still greater than zero or if the Latest Annuity Date has been reached.
Protected Income Payment Percentage
The percentage used to determine the Protected Income Payment.
How does Polaris Income Builder work?
Polaris Income Builder locks in the greater of two values to determine the Income Base. The Income Base is the basis for the Covered Person(s)’ guaranteed lifetime benefit which must be taken in a series of withdrawals. The Income Base is initially equal to the first Purchase Payment. We will not accept subsequent Purchase Payments on or after the first contract anniversary. While the Income Base is greater than zero, the Income Base is automatically locked in on each Benefit Year Anniversary, to the greater of (1) the Highest Anniversary Value, or (2) the current Income Base increased by any available Income Credit.
There is an additional guarantee if you do not take any withdrawals before the 12th Benefit Year Anniversary; the Income Base will be at least 200% of your first Benefit Year’s Purchase Payments (“Minimum Income Base”). Please see “How can the Income Base and Income Credit Base be increased?” below.
What determines the amount I can receive each year?
The amount that you receive depends on the income option you have elected, whether there are one or two Covered
E-58
Person(s), the age of the Covered Person(s) at the time of the first withdrawal and whether your contract value is greater than or equal to zero. You must choose an income option, if applicable, at the time you purchase your contract and your election may not be changed thereafter. Please see the table below for the income options available to you. If you purchased your contract through certain broker-dealers, all income options may not have been available to you.
While the contract value is greater than zero, the Maximum Annual Withdrawal Percentage represents the percentage of your Income Base used to calculate the Maximum Annual Withdrawal Amount that you may withdraw each Benefit Year without decreasing your Income Base and Income Credit Base, if applicable. The Maximum Annual Withdrawal Percentage differs depending on the feature elected and whether there are one or two Covered Person(s), the age of the Covered Person(s) at the time of first withdrawal and the income option elected.
If your contract value has been reduced to zero or the Latest Annuity Date is reached, the Protected Income Payment Percentage represents the percentage of your Income Base used to calculate the Protected Income Payment that you will receive each year over the remaining lifetime of the Covered Person(s). The Protected Income Payment Percentage differs depending on (1) the income option you elected, (2) whether there are one or two Covered Person(s), (3) the age of the covered Person(s) at the time of the first withdrawal and (4) for those taking withdrawals before age 65, if applicable under the income option elected, whether the Income Base steps up due to favorable market conditions after the Covered Person(s)’65th birthday. Please see“What happens if the contract value is reduced to zero while the Income Base is greater than zero?” and “What happens to my living benefit upon the Latest Annuity Date?” below.
Maximum Annual Withdrawal Percentage and Protected Income Payment Percentage Tables
The first percentage represents the Maximum Annual Withdrawal Percentage and the second percentage represents the Protected Income Payment Percentage for each of the options shown.
For contracts purchased between February 29, 2016 and April 30, 2018:
| Number of Covered Persons and Age of Covered Person at First Withdrawal(1) |
MAWP/PIPP |
| One Covered Person (Age 65 and Older) |
5.40% / 5.40% |
| Two Covered Persons (Age 65 and Older) |
4.90% / 4.90% |
(1) If there is One Covered Person but there are joint Owners, the Covered Person is the older Owner. If there are Two Covered Persons, the age at first withdrawal is based on the age of the younger of the Two Covered Persons.
For contracts purchased between May 1, 2015 and February 28, 2016:
| Number of Covered Persons and Age of Covered Person at First Withdrawal(1) |
MAWP/PIPP |
| One Covered Person (Age 65 and Older) |
5.50% / 5.25% |
| Two Covered Persons (Age 65 and Older) |
5.0% / 4.75% |
(1) If there is One Covered Person but there are joint Owners, the Covered Person is the older Owner. If there are Two Covered Persons, the age at first withdrawal is based on the age of the younger of the Two Covered Persons.
Are there investment requirements if I elect a Living Benefit?
Yes, you must allocate your assets, including Purchase Payments and the Continuation Contribution, if any, to a combination of the Secure Value Account and Variable Portfolios in accordance with the investment options. Please see Investment Requirements for Optional Living Benefits in APPENDIX A – UNDERLYING FUNDS AVAILABLE UNDER THE CONTRACT for the investment requirements associated with this optional Living Benefit.
With respect to amounts allocated to the Secure Value Account, the crediting interest rate will never be less than the guaranteed minimum interest rate specified in your contract. The crediting interest rate, once established, will not change for each allocation to the Secure Value Account for the duration of the guarantee period. The guarantee period for the Secure Value Account is a one year period that automatically renews every year from the date of each allocation to the Secure Value Account, unless the living benefit has been cancelled. Each allocation to the Secure Value Account may have different crediting interest rates.
You may not reallocate your money in the Secure Value Account to a DCA or Fixed Account, if available, or to the Variable Portfolios at any time unless the Living Benefit is cancelled.
You may use available DCA Fixed Accounts to invest your target allocations in accordance with the investment requirements.
How do my investment requirements impact my feature and contract?
The investment requirements may reduce the need to rely on the guarantees provided by this Living Benefit because they allocate your investment across asset classes and potentially limit exposure to market volatility. As a result, you may have better, or worse, investment returns by allocating your investments more aggressively.
To be considered in Good Order, your allocation instructions for any Purchase Payment as well as your target allocations if you invest in a DCA Fixed Account must comply with the investment requirements, provided under Investment Requirements for Optional Living Benefits in APPENDIX A - UNDERLYING FUNDS AVAILABLE UNDER THE CONTRACT, for the amount not invested in the Secure Value Account. You may not transfer any
E-59
amounts between the Secure Value Account and the Variable Portfolios, DCA Fixed Accounts or 1-Year Fixed Account, if available. The Secure Value Account may not be used as a target account if you are using the DCA Program to comply with investment requirements. You may not request any specific amount of any withdrawal to be deducted solely from the Secure Value Account. Rather, any withdrawal reduces the amount invested in the Secure Value Account in the same proportion that the withdrawal reduces the contract value.
We may revise the investment requirements for any existing contract to the extent that Variable Portfolios are added, deleted, substituted, merged, or otherwise reorganized. We will promptly notify you in writing of any changes to the investment requirements due to additions, deletions, substitutions, mergers or reorganizations of the investment options. The required allocation percentage to the Secured Value Account will not change for the life of your contract.
Rebalancing and Investment Requirements
We will automatically enroll you in the Automatic Asset Rebalancing Program with quarterly rebalancing. If rebalancing instructions are not provided, we will align your rebalancing allocations with your Purchase Payment allocation instructions, or if using a DCA Fixed Account, your target DCA instructions. We require quarterly rebalancing because market performance and transfer and withdrawal activity may result in your contract’s allocations going outside these requirements. Quarterly rebalancing will ensure that your allocation will continue to comply with the investment requirements for this feature.
Automatic transfers and/or systematic withdrawals will not result in rebalancing before the next automatic quarterly rebalancing occurs. The day following any transfer or withdrawal you initiate, we will rebalance in accordance with your most current and compliant Automatic Asset Rebalancing instructions on file. If you do not provide new rebalancing instructions at the time you initiate a transfer, we will update your ongoing rebalancing instructions to reflect the percentage allocations resulting from that transfer (“Default Rebalancing Instructions”) which will replace any previous rebalancing instructions you may have provided.
If at any point, for any reason, your rebalancing instructions would result in allocations inconsistent with the investment requirements, we will revert to the last compliant instructions on file. You can modify your rebalancing instructions, as long as they are consistent with the investment requirements, at any time by calling the Annuity Service Center.
You may not rebalance amounts in the Secure Value Account or DCA Fixed Accounts under the Automatic Asset Rebalancing Program.
What are the factors used to calculate Polaris Income Builder?
The benefit offered by Polaris Income Builder is calculated by considering the factors described below.
First, we consider the Income Credit Period. The Income Credit Period is the period of time over which we calculate the Income Credit. The Income Credit Period begins on the Benefit Effective Date and ends 12 years later.
Second, we determine if the Anniversary Value is the Highest Anniversary Value. The Anniversary Value equals your contract value on any Benefit Year Anniversary
Third, we determine the Income Base which initially is equal to the first Purchase Payment. The Income Base is increased by each subsequent Purchase Payment received prior to the first contract anniversary, and is reduced proportionately for Excess Withdrawals. If you do not take any withdrawals before the 12th Benefit Year Anniversary, the Income Base will be increased to at least the Minimum Income Base on the 12th Benefit Year Anniversary. The Minimum Income Base is equal to 200% of your first Benefit Year’s Purchase Payments.
Fourth, we determine the Income Credit Base which is used solely as a basis for calculating the Income Credit during the Income Credit Period. The initial Income Credit Base is equal to the first Purchase Payment. The Income Credit Base is increased by each subsequent Purchase Payment received prior to the first contract anniversary, and is reduced proportionately for Excess Withdrawals.
Fifth, we determine the Income Credit. Please see the Income Credit tables above to determine the Income Credit applicable to you.
The Income Credit may only be added to the Income Base if no withdrawals are taken in a Benefit Year. For example, if you take a withdrawal in Benefit Year 2, you will not be eligible for an Income Credit to be added to your Income Base on your second Benefit Year Anniversary; however, if you do not take a withdrawal in Benefit Year 3, you will be eligible for an Income Credit to be added to your Income Base on your third Benefit Year Anniversary.
Sixth, we determine the Maximum Annual Withdrawal Percentage, which represents the maximum percentage of the Income Base that can be withdrawn each Benefit Year while the contract value is greater than zero, without reducing the Income Base and the Income Credit Base, if applicable. If your contract value is reduced to zero but your Income Base is greater than zero, the Protected Income Payment Percentage represents the percentage of the Income Base you will receive each Benefit Year thereafter until the death of the Covered Person(s).
The Maximum Annual Withdrawal Percentage and Protected Income Payment Percentage are determined by three factors: 1) whether there is one or two Covered Person(s); 2) the age of the Covered Person(s) at the time of first withdrawal; and 3) the income option elected. Additionally,
E-60
if applicable to the income option you elect, the Protected Income Payment Percentage may differ depending on whether withdrawals are taken before age 65 and if a new Highest Anniversary Value is achieved on or after the Covered Person(s) 65th birthday.
Please see the table under “What determines the amount I can receive each year?” above for the applicable Maximum Annual Withdrawal Percentage and Protected Income Payment Percentage.
Seventh, we determine the Maximum Annual Withdrawal Amount, which represents the maximum amount that may be withdrawn each Benefit Year while the contract value is greater than zero, without reducing the Income Base, and if applicable, the Income Credit Base. The Maximum Annual Withdrawal Amount is calculated by multiplying the Income Base by the applicable Maximum Annual Withdrawal Percentage. If your contract value is reduced to zero but your Income Base is greater than zero, the Protected Income Payment is determined by multiplying the Income Base when contract value is reduced to zero by the applicable Protected Income Payment Percentage.
Finally, we determine the Excess Withdrawals. Please see “What are the effects of withdrawals on Polaris Income Builder?” below.
How can the Income Base and Income Credit Base be increased for Polaris Income Builder?
On each Benefit Year Anniversary, the Income Base is automatically increased to the greater of (1) the Highest Anniversary Value; or (2) the current Income Base plus the Income Credit, if any. In addition, the Income Base will be at least the Minimum Income Base on the 12th Benefit Year Anniversary provided no withdrawals have been taken before that anniversary.
On each Benefit Year Anniversary during the Income Credit Period, the Income Credit Base is automatically increased to the Highest Anniversary Value, if the Income Base is increased to the Highest Anniversary Value. The Income Credit Base is not increased if an Income Credit is added to the Income Base.
Increases to your Income Base and Income Credit Base occur on Benefit Year Anniversaries while the contract value is greater than zero. However, Purchase Payments increase your Income Base and Income Credit Base at the time they are received. Since Highest Anniversary Values are determined only on the Benefit Year Anniversaries, your Income Base and Income Credit Base will not increase if your contract value is higher on days other than the Benefit Year Anniversaries.
What are the effects of withdrawals on Polaris Income Builder?
The Maximum Annual Withdrawal Amount, the Income Base and the Income Credit Base may change over time as a result of the timing and amount of withdrawals. If you
take a withdrawal before the 12th Benefit Year Anniversary, your Income Base is not eligible to be at least the Minimum Income Base.
Withdrawals during a Benefit Year that in total are less than or equal to the Maximum Annual Withdrawal Amount will not reduce the Income Base or Income Credit Base. However, if you choose to take less than the Maximum Annual Withdrawal Amount in any Benefit Year, you may not carry over the unused amount for withdrawal in subsequent years. Your Maximum Annual Withdrawal Amount in any year will not be recalculated solely as a result of taking less than the entire Maximum Annual Withdrawal Amount in the prior year. Please note that if you delay taking withdrawals for too long, you may limit the number of remaining years (due to your life expectancy) in which you may take withdrawals.
You should not elect a Living Benefit if you plan to take Excess Withdrawals since those withdrawals may significantly reduce the value of or terminate the Living Benefit.
The impact of withdrawals on specific factors is further explained below:
Income Base and Income Credit Base: If the sum of withdrawals in any Benefit Year exceeds the Maximum Annual Withdrawal Amount, the Income Base and Income Credit Base will be reduced for those withdrawals. For each Excess Withdrawal taken, the Income Base and Income Credit Base are reduced in the same proportion by which the contract value is reduced by the amount in excess of the Maximum Annual Withdrawal Amount. This means that the reduction in the Income Base and Income Credit Base could be more or less than a dollar-for-dollar reduction.
Maximum Annual Withdrawal Amount: The Maximum Annual Withdrawal Amount is recalculated each time there is a change in the Income Base. Accordingly, if the sum of withdrawals in any Benefit Year does not exceed the Maximum Annual Withdrawal Amount for that year, the Maximum Annual Withdrawal Amount will not change for the next year unless your Income Base is increased. If you take an Excess Withdrawal, the Maximum Annual Withdrawal Amount will be recalculated by multiplying the reduced Income Base by the existing Maximum Annual Withdrawal Percentage. This recalculated Maximum Annual Withdrawal Amount is available for withdrawal at the beginning of the next Benefit Year and may be lower than your previous Maximum Annual Withdrawal Amount.
Protected Income Payment: If the Income Base is greater than zero, but the contract value has been reduced to zero due to unfavorable investment performance, deduction of fees, or withdrawals within the Maximum Annual Withdrawal Amount, we will pay any remaining Maximum Annual Withdrawal Amount
E-61
for the current Benefit Year. Thereafter, you will receive the Protected Income Payment each year over the remaining lifetime of the Covered Person(s) which is calculated by multiplying the Income Base when contract value is reduced to zero by the applicable Protected Income Payment Percentage. The Income Base is no longer increased on Benefit Year Anniversaries after the contract value has been reduced to zero. As a result, the Protected Income Payment is calculated once and will not change. Please see “What happens if the contract value is reduced to zero while the Income Base is greater than zero?” below.
All withdrawals from the contract, including withdrawals taken under this Living Benefit, will reduce your contract value and your death benefit and may impact other provisions of your contract. Unfavorable investment experience and/or fees will also reduce your contract value. In addition, withdrawals under this Living Benefit will reduce the penalty-free withdrawal amount and may be subject to applicable withdrawal charges if in excess of the penalty-free withdrawal amount. The sum of withdrawals in any Benefit Year up to the Maximum Annual Withdrawal Amount will not be assessed a withdrawal charge. Partial withdrawals under this Living Benefit must be deducted proportionately from each Variable Portfolio and Secure Value Account in which you are invested.
What is the fee for Polaris Income Builder?
The fee for Polaris Income Builder is calculated as a percentage of the Income Base and deducted from the contract value on a quarterly basis beginning on the first Benefit Quarter Anniversary following the Benefit Effective Date. In Missouri, Oregon, Texas, and Washington, the charge will be deducted pro-rata from Variable Portfolios only. After the first Benefit Year, on each Benefit Quarter Anniversary, we will (1) deduct the fee in effect for the previous Benefit Quarter; and (2) determine the fee rate applicable to the next Benefit Quarter. Please see fee table below:
For contracts purchased between October 9, 2017 and April 30, 2018:
| Number of Covered Persons |
Initial Annual Fee Rate |
Maximum Annual Fee Rate |
Minimum Annual Fee Rate |
Maximum Annualized Fee Rate Decrease or Increase Each Benefit Quarter* |
| One Covered Person |
1.00% |
2.50% |
0.60% |
±0.40% |
| Two Covered Persons |
1.25% |
2.50% |
0.60% |
±0.40% |
*
The quarterly fee rate will not decrease or increase by more than 0.10% each quarter (0.40%/ 4).
For contracts purchased between October 1, 2013 and October 8, 2017:
| Number of Covered Persons |
Initial Annual Fee Rate |
Maximum Annual Fee Rate |
Minimum Annual Fee Rate |
Maximum Annualized Fee Rate Decrease or Increase Each Benefit Quarter* |
| One Covered Person |
1.10% |
2.20% |
0.60% |
±0.25% |
| Two Covered Persons |
1.35% |
2.70% |
0.60% |
±0.25% |
*
The quarterly fee rate will not decrease or increase by more than 0.0625% each quarter (0.25%/ 4).
The initial Annual Fee Rate is guaranteed not to change for the first Benefit Year. Subsequently, the fee rate may change quarterly subject to the parameters identified in the table above. Any fee rate adjustment is based on the non-discretionary formula stated below which is tied to the change in the Volatility Index (“VIX®”), an index of market volatility reported by the Chicago Board Options Exchange. In general, as the average value of the VIX decreases or increases, your fee rate will decrease or increase accordingly, subject to the minimums and maximums identified in the table above.
If your contract was purchased between October 9, 2017 and April 30, 2018, the non-discretionary formula used in the calculation of the Annual Fee Rate applicable after the first Benefit Year is:
Initial Annual Fee Rate + {0.05% x [Quarterly Average (Daily VIX2)/33 – 10]}
If your contract was purchased prior to October 8, 2017, the non-discretionary formula used in the calculation of the Annual Fee Rate applicable after the first Benefit Year is:
Initial Annual Fee Rate + [0.05% x (Average Value of the VIX – 20)]
You may find the value of the VIX for any given day by going to the Chicago Board Options Exchange website, www.cboe.com.
Should the VIX no longer be appropriate or available, we would substitute the VIX with another measure of market volatility for determining the fee. If we substitute the VIX, we will notify you; however, the maximum and minimum annual fee rates described in this prospectus are guaranteed for the life of your contract.
If your contract value falls to zero, the fee will no longer be deducted. We will not assess the quarterly fee if you annuitize your contract or if a death benefit is paid before the end of a Benefit Quarter. If the Living Benefit is still in effect while your contract value is greater than zero, and you surrender your contract, we will assess a pro-rata charge for the fee applicable to the Benefit Quarter in which the surrender occurs if you surrender your contract before the end of a Benefit Quarter. The pro-rata fee is calculated
E-62
by multiplying the fee by the number of days between the date when the prior fee was last assessed and the date of surrender, divided by the number of days between the prior and the next Benefit Quarter Anniversaries.
ADDITIONAL IMPORTANT INFORMATION APPLICABLE TO POLARIS INCOME BUILDER
What happens if the contract value is reduced to zero while the Income Base is greater than zero?
If the contract value is reduced to zero but the Income Base is greater than zero, we will pay the remaining Maximum Annual Withdrawal Amount for that Benefit Year. Thereafter we will pay the Protected Income Payment over the remaining lifetime of the Covered Person(s).
If an Excess Withdrawal reduces your contract value to zero, no further benefits are payable under the contract and your contract along with the Living Benefit will terminate.
If your contract value is reduced to zero, you may no longer make transfers, and no death benefit is payable. Therefore, you should be aware that, particularly during times of unfavorable investment performance, withdrawals taken under the Living Benefit may reduce the contract value to zero, thereby terminating any other benefits of the contract.
In addition, an Income Credit is not available if the contract value is reduced to zero, even if a benefit remains payable.
When the contract value equals zero but the Income Base is greater than zero, to receive any remaining Living Benefit, you must select one of the following:
1.
The Protected Income Payment divided equally and paid on a monthly, quarterly, semi-annual or annual frequency as selected by you until the date of death of the Covered Person(s); or
2.
Any option mutually agreeable between you and us.
Once you elect an option above, it cannot be changed. If you do not select an option above, the remaining benefit will be paid as option 1 above. This amount will be divided equally and paid on a quarterly basis until the date of death of the Covered Person(s). No amount is payable thereafter.
If I own a Qualified contract, how do Required Minimum Distributions impact my Living Benefit?
As the original owner, or Continuing Spouse (two Covered Persons elected) electing to treat the annuity contract as their own, if you are taking required minimum distributions (“RMD”) from this contract, and the amount of the RMD (based only on the contract to which the feature is elected and using the Uniform Lifetime Table or Joint Life Expectancy Table from the regulations under the Internal Revenue Code) is greater than the Maximum Annual Withdrawal Amount in any given Benefit Year, no portion of the RMD will be treated as an Excess Withdrawal. If you must take RMD from this contract and want to ensure that these withdrawals are not considered Excess
Withdrawals, your total distribution(s) during the current contract year must not exceed the greater of the Maximum Annual Withdrawal Amount or the RMD amount as calculated by our Annuity Service Center.
Therefore, if you plan to take an Excess Withdrawal, then this feature may not be appropriate for you. The age at which you must begin taking RMDs is 73 (if you were born January 1, 1951 or later), 72 (if you were born on or after July 1, 1949, and before January 1, 1951), or 70 ½ (if you were born before July 1, 1949).
We will provide RMD favorable treatment, once each Benefit Year, to the greater of the Maximum Annual Withdrawal Amount or the RMD amount as calculated by us. Therefore, if you are transferring from another company and have already reached the age you must begin taking RMDs, you should take the current tax year’s RMD prior to the transfer, as we cannot systematically calculate the RMD as we do not possess the valuation for the previous year end. Further, if you are turning the age you must begin taking RMDs, you should know that although tax code allows for deferral of the first withdrawal to April of the tax year following your attainment of the age you must begin taking RMDs, doing so may result in subsequent withdrawals being treated as Excess Withdrawals for that Benefit Year.
No Income Credit will be included in the calculation of the Income Base when an RMD is taken.
What happens to my Living Benefit upon a spousal continuation if I elected one Covered Person?
If there is one Covered Person and that person dies, the surviving spousal joint Owner or Spousal Beneficiary may elect to:
1.
Make a death claim if the contract value is greater than zero, which terminates the Living Benefit and the contract; or
2.
Continue the contract if the contract value is greater than zero, without the Living Benefit and its corresponding fee.
What happens to my Living Benefit upon a spousal continuation if I elected two Covered Persons?
If there are two Covered Persons, upon the death of one Covered Person, the surviving Covered Person may elect to:
1.
Make a death claim if the contract value is greater than zero, which terminates the Living Benefit and the contract; or
2.
Continue the contract with the Living Benefit and its corresponding fee for two Covered Persons.
The components of the Living Benefit in effect at the time of spousal continuation will not change. The surviving Covered Person can elect to receive withdrawals in accordance with the provisions of the Living Benefit elected based on the age of the younger Covered Person at the time the first withdrawal was taken. If no withdrawals were taken prior to the spousal continuation, the Maximum
E-63
Annual Withdrawal Percentage and the Protected Income Payment Percentage will be based on the age of the surviving Covered Person at the time the first withdrawal is taken.
If spousal continuation occurs, the Continuing Spouse will continue to receive any increase to the Income Base for Highest Anniversary Value or if applicable, any Income Credit during the Income Credit Period, while the contract value is greater than zero. The Continuing Spouse is also eligible to receive the Minimum Income Base on the 12th Benefit Year Anniversary if no withdrawals have been taken during the first 12 Benefit Years following the Benefit Effective Date.
Can a non-spousal Beneficiary elect to receive any remaining benefits under my Living Benefit upon the death of the second spouse?
No. Upon the death of the Covered Person(s), if the contract value is greater than zero, a non-spousal Beneficiary must make an election under the death benefit provisions of the contract, which terminates the Living Benefit.
What happens to my Living Benefit upon the Latest Annuity Date?
If the contract value and the Income Base are greater than zero on the Latest Annuity Date, you begin the Income Phase and therefore, you must select one of the following annuity income options:
1.
Annuitize the contract value under the contract’s annuity provisions; or
2.
Annuitize the contract and elect to receive the current Maximum Annual Withdrawal Amount as of the Latest Annuity Date for a fixed period while you are alive. The fixed period is determined by dividing the contract value on the Latest Annuity Date by the Maximum Annual Withdrawal Amount. Any applicable Premium Taxes will be deducted from the contract value prior to determining the fixed period. After that fixed period ends, you will receive the Protected Income Payment, which is calculated by multiplying the Income Base as of the Latest Annuity Date by the applicable Protected Income Payment Percentage, paid until the death(s) of the Covered Person(s). The Maximum Annual Withdrawal Amount fixed period payments and the subsequent Protected Income Payments will be divided equally on a monthly, quarterly, semi-annual or annual frequency, as selected by you.
3.
Any annuity income option mutually agreeable between you and us.
Once you begin the Income Phase by electing one of the annuity income payment options above, the Income Base will no longer be adjusted either for Highest Anniversary Values or additional Income Credits if you elected Polaris Income Builder. If you do not elect an option listed above, on the
Latest Annuity Date, we will annuitize the contract value in accordance with Option 2 above.
Can I elect to cancel my Living Benefit?
The Living Benefit may not be cancelled by you prior to the 5th Benefit Year Anniversary unless you surrender your contract. The Living Benefit may be cancelled by you on or after the 5th Benefit Year Anniversary and the cancellation will be effective as outlined in the table below:
| Cancellation Request Received |
Cancellation Effective Date |
| Years 1-5 |
5th Benefit Year Anniversary |
| Years 5+ |
Benefit Quarter Anniversary following the receipt of the cancellation request |
Once cancellation is effective, the guarantees under Polaris Income Builder are terminated. In addition, the investment requirements for the Living Benefit will no longer apply to your contract. You may not re-elect or reinstate the Living Benefit after cancellation.
If there are two Covered Persons, upon the death of the first Covered Person, the surviving Covered Person (generally, the Continuing Spouse) may cancel the Living Benefit on or after the 5th Benefit Year Anniversary and the cancellation will be effective as outlined in the table above. Upon the cancellation effective date of the Living Benefit, there will be one final fee applicable to the Benefit Quarter in which the cancellation occurs, on the same Benefit Quarter Anniversary. Thereafter, the fee will no longer be charged.
What happens to the Secure Value Account and Automatic Asset Rebalancing Program instructions if I elect to cancel Polaris Income Builder?
Amounts allocated to the Secure Value Account will be automatically transferred to the 1-Year Fixed Account, if available. If the 1-Year Fixed Account is not available in the state in which your contract was issued, amounts will be transferred to a money market portfolio. From the day following the automated transfer from the Secure Value Account, you may transfer this amount to another available investment option under the contract for a period of 90 days during which the transfer will not count against the annual number of free transfers or U.S. Mail transfers, or incur a transfer fee.
The Automatic Asset Rebalancing Program and your instructions on file will not be terminated or changed upon cancellation of the Living Benefit. Amounts transferred from the Secure Value Account into the 1-Year Fixed Account or a money market or similar portfolio, as applicable, will not impact the Automatic Asset Rebalancing Program instructions on file and that transfer will not result in new Default Rebalancing Instructions. On or after cancellation of these features, you may provide new rebalancing instructions or you may choose to terminate the Automatic Asset Rebalancing Program by contacting the Annuity Service Center. Please see APPENDIX B – STATE
E-64
CONTRACT AVAILABILITY AND/OR VARIABILITY for state specific information regarding amounts allocated to the Secure Value Account and Automatic Asset Allocation Rebalancing Program upon cancellation of the Living Benefit.
Are there circumstances under which my Living Benefit will be automatically cancelled?
The Living Benefit will automatically be cancelled upon the occurrence of one of the following:
1.
Annuitization of the contract; or
2.
Termination or surrender of the contract; or
3.
A death benefit is paid resulting in the contract being terminated; or
4.
An Excess Withdrawal that reduces the contract value and Income Base to zero; or
5.
Death of the Covered Person, if only one is elected; or, if two are elected, death of the surviving Covered Person; or
6.
A change that removes all Covered Persons from the contract except as noted below and under “Are there circumstances under which guaranteed withdrawals for two Covered Persons, if elected, terminate for one of the Covered Persons?”
If a change of ownership occurs from a natural person to a non-natural entity, the original natural Owner(s) must also be the Annuitant(s) after the ownership change to prevent termination of the Living Benefit. A change of ownership from a non-natural entity to a natural person can only occur if the new natural Owner(s) was the original natural Annuitant(s) in order to prevent termination of the Living Benefit. Any ownership change is contingent upon prior review and approval by the Company.
Are there circumstances under which guaranteed withdrawals for two Covered Persons, if elected, terminate for one of the Covered Persons?
Under any of the following circumstances, the Living Benefit will provide a guarantee for one Covered Person and not the lifetime of the other Covered Person:
1.
One of the two Covered Persons is removed from the contract, due to reasons other than death; or
2.
The original spousal joint Owners or Spousal Beneficiary, who are the Covered Persons, are no longer married at the time of death of the first spouse.
Under these circumstances, the fee for the Living Benefit based on two Covered Persons will continue to be charged and the guaranteed withdrawals based on two Covered Persons are payable for one Covered Person only. However, the remaining Covered Person may choose to terminate the Living Benefit as described under “Can I elect to cancel my Living Benefit?” above.
Any amounts that we may pay under the feature in excess of your contract value are subject to the Company’s financial strength and claims-paying ability.
We reserve the right to modify, suspend or terminate the optional Living Benefits at any time for prospectively issued contracts.
E-65
Appendix F – Death Benefits Following spousal continuation
If your contract was issued between May 1, 2017 and September 8, 2019 and you did not elect the Polaris Income Plus Flex or Polaris Income Plus Daily Flex Living Benefit, please see APPENDIX I - DEATH BENEFITS FOLLOWING SPOUSAL CONTINUATION FOR CONTRACTS ISSUED BETWEEN MAY 1, 2017 AND SEPTEMBER 8, 2019. If your contract was issued prior to May 1, 2017, please see APPENDIX G - DEATH BENEFITS AND SPOUSAL CONTINUATION DEATH BENEFITS FOR CONTRACTS ISSUED PRIOR TO MAY 1, 2017.
Please see this Appendix for the death benefits following spousal continuation applicable to your contract if:
•
your contract was issued on or after September 9, 2019; or
•
your contract was issued between May 1, 2019 and September 8, 2019 and you elected either the Polaris Income Plus Flex or Polaris Income Plus Daily Flex Living Benefit.
The following details the Contract Value, Return of Purchase Payment and Maximum Anniversary Value death benefits payable upon the Continuing Spouse’s death. The death benefit we will pay to the new Beneficiary chosen by the Continuing Spouse varies depending on the death benefit option elected by the original Owner of the contract, whether a Living Benefit was elected, the age of the Continuing Spouse as of the Continuation Date and the Continuing Spouse’s date of death.
Capitalized terms used in this Appendix have the same meaning as they have in the prospectus.
We define “Continuation Net Purchase Payments” as Net Purchase Payments made on or after the Continuation Date. For the purpose of calculating Continuation Net Purchase Payments, the amount that equals the contract value on the Continuation Date, including the Continuation Contribution, is considered the initial Continuation Purchase Payment. We define “Continuation Purchase Payments” as Purchase Payments made on or after the Continuation Date.
The term “withdrawals” as used in describing the death benefits is defined as withdrawals and the fees and charges applicable to those withdrawals.
The term “Withdrawal Adjustment” is used, if a living benefit had been elected, to describe the way in which the amount of the death benefit will be adjusted for withdrawals depending on when the Continuing Spouse takes a withdrawal and the amount of the withdrawal. Any withdrawal taken prior to the Activation Date reduces the death benefit proportionately by the percentage by which
each withdrawal reduced the contract value. Any withdrawal taken on or after the Activation Date reduces the death benefit as follows:
•
If cumulative withdrawals for the current contract year are taken prior to the Continuing Spouse’s 81st birthday and are less than or equal to the Maximum Annual Withdrawal Amount, the amount of adjustment will equal the amount of each withdrawal.
•
If cumulative withdrawals for the current contract year are taken prior to the Continuing Spouse’s 81st birthday and are in excess of the Maximum Annual Withdrawal Amount, the contract value and the death benefit are first reduced by the Maximum Annual Withdrawal Amount. The resulting death benefit is further adjusted by the withdrawal amount in excess of the Maximum Annual Withdrawal Amount (“Excess Withdrawal”) by the percentage by which the Excess Withdrawal reduced the resulting contract value.
•
If a withdrawal is taken on or after the Continuing Spouse’s 81st birthday, the amount of adjustment is determined by the percentage by which the withdrawal reduced the contract value.
The Company will not accept Purchase Payments from anyone age 86 or older. Therefore, the death benefit calculations described below assume that no Purchase Payments are received on or after the Continuing Spouse’s 86th birthday.
Contract Value Death Benefit Payable Upon Continuing Spouse’s Death
The Contract Value death benefit, included in the contract for no additional fee, will be equal to the contract value on the business day during which we receive all required documentation.
The Return of Purchase Payment death benefit and the Maximum Anniversary Value death benefit, if elected, are calculated differently depending on whether the original Owner had elected a Living Benefit, described above.
Return of Purchase Payment and Maximum Anniversary Value death benefit Payable Upon Continuing Spouse’s Death:
A.
The following describes the Return of Purchase Payment death benefit and the Maximum Anniversary Value death benefit without election of a Living Benefit:
1.
Return of Purchase Payment death benefit
F-1
If the Continuing Spouse is age 85 or younger on the Continuation Date, the death benefit will be the greater of:
a.
Contract value; or
b.
Continuation Net Purchase Payments.
If the Continuing Spouse is age 86 or older on the Continuation Date, the death benefit is equal to the contract value and the Return of Purchase Payment death benefit fee will no longer be deducted as of the Continuation Date.
2.
Maximum Anniversary Value death benefit
If the Continuing Spouse is age 80 or younger on the Continuation Date, the death benefit will be the greatest of:
a.
Contract value; or
b.
Continuation Net Purchase Payments; or
c.
Maximum Anniversary Value on any contract anniversary that occurred after the Continuation Date, but prior to the earlier of the Continuing Spouse’s 83rd birthday or date of death, plus any Continuation Purchase Payments received since that anniversary; and reduced for any withdrawals since that anniversary in the same proportion that the withdrawal reduced the contract value on the date of such withdrawal. The anniversary value for any year is equal to the contract value on the applicable anniversary after the Continuation Date.
If the Continuing Spouse is age 81-85 on the Continuation Date, the death benefit will be the Return of Purchase Payment death benefit, described above and the Maximum Anniversary Value death benefit fee will no longer be deducted as of the Continuation Date. Instead, the Return of Purchase Payment death benefit fee will be deducted as of the Continuation Date.
If the Continuing Spouse is age 86 or older on the Continuation Date, the death benefit is equal to contract value and the Maximum Anniversary Value death benefit fee will no longer be deducted as of the Continuation Date.
B.
The following describes the Return of Purchase Payment death benefit and the Maximum Anniversary Value death benefit with election of a Living Benefit:
1.
Return of Purchase Payment death benefit
If the Continuing Spouse is age 85 or younger on the Continuation Date, the death benefit will be the greater of:
a.
Contract value; or
b.
Continuation Purchase Payments received reduced by:
(i)
any Withdrawal Adjustments after the Continuation Date, if the Living Benefit has not been terminated; or
(ii)
any Withdrawal Adjustments after the Continuation Date, prior to the date the Living Benefit is terminated; and reduced for any withdrawals in the same proportion that the withdrawal reduced the contract value on the date of such withdrawal on or after the date the Living Benefit is terminated.
If the Continuing Spouse is age 86 or older on the Continuation Date, the death benefit is equal to contract value and the Return of Purchase Payment death benefit fee will no longer be deducted as of the Continuation Date.
2.
Maximum Anniversary Value death benefit
If the Continuing Spouse is age 80 or younger on the Continuation Date, the death benefit will be the greatest of:
a.
Contract value; or
b.
Continuation Purchase Payments received reduced by:
(i)
any Withdrawal Adjustments after the Continuation Date, if the Living Benefit has not been terminated; or
(ii)
any Withdrawal Adjustments after the Continuation Date, prior to the date the Living Benefit is terminated; and reduced for any withdrawals in the same proportion that the withdrawal reduced the contract value on the date of such withdrawal on or after the date the Living Benefit is terminated.
c.
Maximum Anniversary Value on any contract anniversary that occurred after the Continuation Date, but prior to the earlier of the Continuing Spouse’s 83rd birthday or date of death and reduced by:
(i)
any Withdrawal Adjustments since that contract anniversary, if the Living Benefit has not been terminated; or
(ii)
any Withdrawal Adjustments since that contract anniversary, prior to the date the Living Benefit is terminated; and reduced for any withdrawals in the same proportion that the withdrawal reduced the contract value on the date of such withdrawal on or after the date the Living Benefit is terminated.
F-2
The anniversary value for any year is equal to the contract value on the applicable anniversary.
If the Continuing Spouse is age 81-85 on the Continuation Date, the death benefit will be the Return of Purchase Payment death benefit, described above and the Maximum Anniversary Value death benefit fee will no longer be deducted as of the Continuation Date. Instead, the Return of Purchase Payment death benefit fee will be deducted as of the Continuation Date.
If the Continuing Spouse is age 86 or older on the Continuation Date, the death benefit is equal to contract value and the Maximum Anniversary Value death benefit fee will no longer be deducted as of the Continuation Date.
We reserve the right to modify, suspend or terminate the Spousal Continuation provision (in its entirety or any component) at any time for prospectively issued contracts.
F-3
Appendix G – Death Benefits and Spousal Continuation Death Benefits for Contracts Issued Prior to May 1, 2017
Certain Death Benefits are no longer offered or have changed since first being offered. None of the death benefits described below are currently being offered. If your contract was issued prior to May 1, 2017 and you elected the standard death benefit option or the optional Maximum Anniversary Value death benefit, the following provisions are applicable to the benefit you elected.
Death Benefit Defined Terms
Capitalized terms used in this Appendix have the same meaning as they have in the prospectus.
Standard Death Benefit
If you elected the standard death benefit, the Separate Account charge for your contract without election of any optional death benefit is 1.15% and includes the return of Purchase Payment Death Benefit fee of 0.15% as follows:
Separate Account Annual Expenses for Contracts issued prior to May 1, 2017
(deducted from the average daily ending net asset value allocated to the Variable Portfolios)
| Separate Account Charge |
1.15% |
| Maximum Anniversary Value Death Benefit Fee, if elected |
0.25% |
| Early Access Fee, if elected |
0.40% |
| Maximum Separate Account Annual Expenses |
1.80% |
STANDARD DEATH BENEFIT
The following describes the standard death benefit without election of a living benefit:
The standard death benefit is the greater of:
1.
Contract value; or
2.
Net Purchase Payments.
The following describes the standard death benefit with election of a living benefit:
The standard death benefit is the greater of:
1.
Contract value; or
2.
Purchase Payments received prior to the first contract anniversary reduced by:
a.
any Withdrawal Adjustments, as defined above, if the living benefit has not been terminated; or
b.
any Withdrawal Adjustments, as defined above, prior to the date the living benefit is terminated; and reduced for any withdrawals in the same proportion that the withdrawal reduced the contract value on the date of such withdrawal on or after the date the living benefit is terminated.
MAXIMUM ANNIVERSARY VALUE DEATH BENEFIT
For an additional fee, you may elect the Maximum Anniversary Value death benefit described below which can provide greater protection for your Beneficiaries. You may only elect the Maximum Anniversary Value death benefit at the time you purchase your contract and you cannot change your election thereafter at any time. The fee for the Maximum Anniversary Value death benefit is 0.25% of the average daily net asset value allocated to the Variable Portfolios. You may pay for the optional death benefit and your Beneficiary may never receive the benefit once you begin the Income Phase. The Maximum Anniversary Value death benefit can only be elected prior to your 81st birthday.
The following describes the Maximum Anniversary Value death benefit without election of a living benefit:
The death benefit is the greatest of:
1.
Contract value; or
2.
Net Purchase Payments; or
3.
Maximum anniversary value on any contract anniversary prior to the earlier of your 83rd birthday or date of death, plus Purchase Payments received since that anniversary; and reduced for any withdrawals since that anniversary in the same proportion that the withdrawal reduced the contract value on the date of such withdrawal. The anniversary value for any year is equal to the contract value on the applicable contract anniversary.
The following describes the Maximum Anniversary Value death benefit with election of a living benefit:
The death benefit is the greatest of:
1.
Contract value; or
2.
Purchase Payments received prior to the first contract anniversary reduced by:
a.
any Withdrawal Adjustments, if the living benefit has not been terminated: or
b.
any Withdrawal Adjustments, prior to the date the living benefit is terminated; and reduced for any withdrawals in the same proportion that the withdrawal reduced the contract value on the date of such withdrawal on or after the date the living benefit is terminated; or
3.
Maximum anniversary value on any contract anniversary prior to the earlier of your 83rd birthday or date of death and reduced by:
a.
any Withdrawal Adjustments since that contract anniversary, if the living benefit has not been terminated; or
G-1
b.
any Withdrawal Adjustments since that contract anniversary, prior to the date the living benefit is terminated; and reduced for any withdrawals in the same proportion that the withdrawal reduced the contract value on the date of such withdrawal on or after the date the living benefit is terminated.
The anniversary value for any year is equal to the contract value on the applicable anniversary.
DEATH BENEFITS FOLLOWING SPOUSAL CONTINUATION
The following provisions apply to the standard death benefit and the Maximum Anniversary Value death benefit payable upon the Continuing Spouse’s death.
The following describes the standard death benefit and the Maximum Anniversary Value death benefit without election of a living benefit:
1.
Standard Death Benefit
If the Continuing Spouse is age 85 or younger on the Continuation Date, the death benefit will be the greater of:
a.
Contract value; or
b.
Continuation Net Purchase Payments.
If the Continuing Spouse is age 86 or older on the Continuation Date, the death benefit is equal to the contract value.
2.
Maximum Anniversary Value Death Benefit
If the Continuing Spouse is age 80 or younger on the Continuation Date, the death benefit will be the greatest of:
a.
Contract value; or
b.
Continuation Net Purchase Payments; or
c.
Maximum anniversary value on any contract anniversary that occurred after the Continuation Date, but prior to the earlier of the Continuing Spouse’s 83rd birthday or date of death, plus any Continuation Purchase Payments received since that anniversary; and reduced for any withdrawals since that anniversary in the same proportion that the withdrawal reduced the contract value on the date of such withdrawal. The anniversary value for any year is equal to the contract value on the applicable anniversary after the Continuation Date.
If the Continuing Spouse is age 81-85 on the Continuation Date, then the death benefit will be the Standard Death Benefit described above and the Maximum Anniversary Value death benefit fee will no longer be deducted as of the Continuation Date.
If the Continuing Spouse is age 86 or older on the Continuation Date, the death benefit is equal to
contract value and the Maximum Anniversary Value death benefit fee will no longer be deducted as of the Continuation Date.
The following describes the standard death benefit and the Maximum Anniversary Value death benefit with election of a living benefit:
1.
Standard Death Benefit
If the Continuing Spouse is age 85 or younger on the Continuation Date, the death benefit will be the greater of:
a.
Contract value; or
b.
Continuation Purchase Payments received prior to the first contract anniversary reduced by:
(i)
any Withdrawal Adjustments after the Continuation Date, if the living benefit has not been terminated; or
(ii)
any Withdrawal Adjustments after the Continuation Date, prior to the date the living benefit is terminated; and reduced for any withdrawals in the same proportion that the withdrawal reduced the contract value on the date of such withdrawal on or after the date the living benefit is terminated.
If the Continuing Spouse is age 86 or older on the Continuation Date, the death benefit is equal to contract value.
2.
Maximum Anniversary Value Death Benefit
If the Continuing Spouse is age 80 or younger on the Continuation Date, the death benefit will be the greatest of:
a.
Contract value; or
b.
Continuation Purchase Payments received prior to the first contract anniversary reduced by:
(i)
any Withdrawal Adjustments after the Continuation Date, if the living benefit has not been terminated; or
(ii)
any Withdrawal Adjustments after the Continuation Date, prior to the date the living benefit is terminated; and reduced for any withdrawals in the same proportion that the withdrawal reduced the contract value on the date of such withdrawal on or after the date the living benefit is terminated.
G-2
c.
Maximum anniversary value on any contract anniversary that occurred after the Continuation Date, but prior to the earlier of the Continuing Spouse’s 83rd birthday or date of death and reduced by:
(i)
any Withdrawal Adjustments since that contract anniversary, if the living benefit has not been terminated; or
(ii)
any Withdrawal Adjustments since that contract anniversary, prior to the date the living benefit is terminated; and reduced for any withdrawals in the same proportion that the withdrawal reduced the contract value on the date of such withdrawal on or after the date the living benefit is terminated.
The anniversary value for any year is equal to the contract value on the applicable anniversary.
If the Continuing Spouse is age 81-85 on the Continuation Date, the death benefit will be the Standard Death Benefit with election of a Living Benefit, described above and the Maximum Anniversary Value death benefit fee will no longer be deducted as of the Continuation Date.
If the Continuing Spouse is age 86 or older on the Continuation Date, the death benefit is equal to contract value and the Maximum Anniversary Value death benefit fee will no longer be deducted as of the Continuation Date.
G-3
Appendix H – Optional Death Benefits Examples
The following examples demonstrate how market performance, subsequent Purchase Payments, and withdrawals impact the death benefit. The examples are based on a hypothetical contract over an extended period of time and do not assume any specific rate of return nor do they represent how your contract will actually perform.
Examples 1 through 3 below assume election of Return of Purchase Payment Death Benefit without a Living Benefit.
Example 1: Initial Values
The values shown below are based on the following assumptions:
•
Initial Purchase Payment = $100,000
•
Owner age 65 on the Issue Date
| Values as of |
Purchase Payment Invested |
Contract Value |
Net Purchase Payments |
Return of Purchase Payment Death Benefit |
| Issue Date |
$100,000 |
$100,000 |
$100,000 |
$100,000 |
Example 2: Impact of Adding Subsequent Purchase Payments
The values shown below are based on the assumptions stated in Example 1 above, in addition to the following:
•
Subsequent Purchase Payment invested in the first Contract Year = $60,000.
•
Subsequent Purchase Payment invested in the second Contract Year = $90,000.
•
No withdrawals taken in the first 2 Contract Years.
| Values as of |
Purchase Payment Invested |
Assumed Contract Value |
Net Purchase Payments |
Return of Purchase Payment Death Benefit |
| Contract Date |
$100,000 |
$100,000 |
$100,000 |
$100,000 |
| Year 1 |
$60,000 |
$165,000 |
$160,000 |
$165,000 |
| 1st Anniversary |
— |
$155,000 |
$160,000 |
$160,000 |
| Year 2 |
$90,000 |
$245,000 |
$250,000 |
$250,000 |
| 2nd Anniversary |
— |
$260,000 |
$250,000 |
$260,000 |
The values of the feature are impacted by adding subsequent Purchase Payments and the Contract Value at the time the death benefit is being calculated.
•
The Net Purchase Payments are recalculated at the time each subsequent Purchase Payment is received.
Example 3: Impact of Taking Withdrawals on Net Purchase Payments
The values shown below are based on the assumptions stated in Examples 1 and 2 above, in addition to the following:
•
A withdrawal of $15,000 was taken in the third Contract Year.
•
A withdrawal of $23,000 was taken in the fourth Contract Year.
| Values as of |
Assumed Contract Value |
Withdrawal Taken |
Contract Value After Withdrawal |
Net Purchase Payments |
Return of Purchase Payment Death Benefit |
| Year 3 |
$300,000 |
$15,000 |
$285,000 |
$237,500 |
$285,000 |
| 3rd Anniversary |
$265,000 |
— |
$265,000 |
$237,500 |
$265,000 |
| Year 4 |
$230,000 |
$23,000 |
$207,000 |
$213,750 |
$213,750 |
| 4th Anniversary |
$220,000 |
— |
$220,000 |
$213,750 |
$220,000 |
•
The Net Purchase Payments are reduced in the same proportion by which the contract value is reduced by the withdrawal amount.
○
In year 3, the reduction proportion was 5.0% ($15,000/$300,000); the reduced Net Purchase Payments were $237,500 ($250,000 x [1 – 5.0%]). The Return of Purchase Payment death benefit was $285,000.
H-1
○
In year 4, the reduction proportion was 10.0% ($23,000/$230,000); the reduced Net Purchased Payments were $213,750 ($237,500 x [1 – 10.0%]). The Return of Purchase Payment death benefit was $213,750.
Note: In year 3, the reduction proportion of 5.0% has less impact to the Net Purchase Payments because Contract Value was greater than Net Purchase Payments: The $15,000 withdrawal reduced Net Purchase Payments by $12,500. Compared to year 4, the reduction proportion of 10.0% has a higher impact because Contract Value was less than the Net Purchase Payments: The $23,000 withdrawal reduced Net Purchase Payments by $23,750.
Examples 4 through 6 below assume election of Maximum Anniversary Value Death Benefit without a Living Benefit.
Example 4: Initial Values
The values shown below are based on the following assumptions:
•
Initial Purchase Payment = $100,000
•
Owner age 65 on the Issue Date
| Values as of |
Purchase Payment Invested |
Contract Value |
Net Purchase Payments |
Maximum Anniversary Value Death Benefit |
| Issue Date |
$100,000 |
$100,000 |
$100,000 |
$100,000 |
Example 5: Impact of Adding Subsequent Purchase Payments
•
The values shown below are based on the assumptions stated in Example 4 above, in addition to the following:
•
Subsequent Purchase Payment invested in the first Contract Year = $60,000.
•
Subsequent Purchase Payment invested in the second Contract Year = $90,000.
•
No withdrawals taken in the first 2 Contract Years.
| Values as of |
Purchase Payment Invested |
Assumed Contract Value |
Anniversary Value |
Net Purchase Payments |
Maximum Anniversary Value Death Benefit |
| Issue Date |
$100,000 |
$100,000 |
— |
$100,000 |
$100,000 |
| Year 1 |
$60,000 |
$165,000 |
— |
$160,000 |
$165,000 |
| 1st Anniversary |
— |
$155,000 |
$155,000 |
$160,000 |
$160,000 |
| Year 2 |
$90,000 |
$245,000 |
— |
$250,000 |
$250,000 |
| 2nd Anniversary |
— |
$260,000 |
$260,000 |
$250,000 |
$260,000 |
The values of the death benefit are impacted by adding subsequent Purchase Payments and locking in the higher Anniversary Values as follows:
•
The Net Purchase Payments and Maximum Anniversary Value death benefit are recalculated at the time each subsequent Purchase Payment is received.
○
In year 1, the $60,000 subsequent Purchase Payment increased Net Purchase Payments and Maximum Anniversary Value, however the contract value was greater; the Maximum Anniversary Value death benefit was $165,000.
○
At 1st anniversary, although anniversary value increased, Net Purchase Payments and Maximum Anniversary Value would both equal $160,000; the Maximum Anniversary Value death benefit was $160,000.
•
The Maximum Anniversary Value is increased to a Higher Anniversary Value on each Benefit Year Anniversary if the Anniversary Value is greater than the current Maximum Anniversary Value.
○
In year 2, the $90,000 subsequent Purchase Payment increased Net Purchase Payments and Maximum Anniversary Value to $250,000 and greater than the contract value; the Maximum Anniversary Value death benefit was $250,000.
○
At 2nd anniversary, contract value was locked in and Maximum Anniversary Value increased to $260,000; Maximum Anniversary Value death benefit was $260,000.
Example 6: Impact of withdrawals on Net Purchase Payments and Maximum Anniversary Value
The values shown below are based on the assumptions stated in Examples 4 and 5 above, in addition to the following:
•
A withdrawal of $15,000 was taken in the third Contract Year.
H-2
•
A withdrawal of $23,000 was taken in the fourth Contract Year.
| Values as of |
Assumed Contract Value |
Withdrawal Taken |
Anniversary Value |
Net Purchase Payments |
Maximum Anniversary Value |
Maximum Anniversary Value Death Benefit |
| Year 3 |
$300,000 |
$15,000 |
— |
$237,500 |
$247,000 |
$285,000 |
| 3rd Anniversary |
$265,000 |
— |
$265,000 |
$237,500 |
$265,000 |
$265,000 |
| Year 4 |
$230,000 |
$23,000 |
— |
$213,750 |
$238,500 |
$238,500 |
| 4th Anniversary |
$220,000 |
— |
$220,000 |
$213,750 |
$238,500 |
$238,500 |
•
The Net Purchase Payments and Maximum Anniversary Value are reduced in the same proportion by which the contract value is reduced by the withdrawal amount.
○
In year 3, the reduction proportion was 5.0% ($15,000/$300,000); the reduced Net Purchase Payments was $237,500 ($250,000 x [1 – 5.0%]); the reduced Maximum Anniversary Value was $247,000 ($260,000 x [1 – 5.0%]); the Maximum Anniversary Value death benefit was $285,000 ($300,000 - $15,000).
○
In year 4, the reduction proportion was 10.0% ($23,000/$230,000); the reduced Net Purchase Payments was $213,750 ($237,500 x [1 – 10.0%]); the reduced Maximum Anniversary Value was $238,500 ($265,000 x [1 – 10.0%]); the Maximum Anniversary Value death benefit was $238,500.
Note: In year 3, the reduction proportion of 5.0% has less impact to the Maximum Anniversary Value because Contract Value was greater than Maximum Anniversary Value: The $15,000 withdrawal reduced Maximum Anniversary Value by $13,000. Compared to year 4, the reduction proportion of 10.0% has a higher impact because Contract Value was less than the Maximum Anniversary Value: The $23,000 withdrawal reduced Maximum Anniversary Value by $26,500.
Examples 7 through 10 below assume election of Return of Purchase Payment Death Benefit and Polaris Income Max Living Benefit. See Appendix D for corresponding values relative to the living benefit used in examples 7-10.
Example 7: Initial Values
The values shown below are based on the following assumptions:
•
Initial Purchase Payment = $100,000
•
Owner age 65 on the Issue Date
| Values as of |
Purchase Payment Invested |
Contract Value |
Net Purchase Payments |
Return of Purchase Payment Death Benefit |
| Issue Date |
$100,000 |
$100,000 |
$100,000 |
$100,000 |
Example 8: Impact of withdrawals prior to Activation Date
The values shown below are based on the assumptions stated in Example 7 above, in addition to the following:
•
A withdrawal of $5,000 was taken in the fourth Contract Year, prior to Activation Date.
| Value as of |
Assumed Contract Value |
Withdrawal Taken |
Anniversary Value |
Net Purchase Payments |
Return of Purchase Payment Death Benefit |
| 3rd Anniversary |
$300,000 |
— |
$300,000 |
$250,000 |
$300,000 |
| Year 4 |
$305,000 |
$5,000 |
— |
$245,902 |
$300,000 |
| 4th Anniversary |
$312,000 |
— |
$312,000 |
$245,902 |
$312,000 |
•
The Net Purchase Payments are reduced in the same proportion by which the contract value is reduced by withdrawal amount.
○
In year 4, the Withdrawal Adjustment is calculated as a reduction proportion of 1.6393% ($5,000/$305,000); the reduced Net Purchase Payments was $245,902 ($250,000 x [1 – 1.6393%]). The Return of Purchase Payment death benefit was $300,000.
H-3
Example 9: Impact of Taking Withdrawals up to the Maximum Annual Withdrawal Amount ("MAWA") after the Activation Date
The values shown below are based on the assumptions stated in Examples 7 and 8 above, in addition to the following:
•
A withdrawal of 100% of MAWA was taken in the fifth Contract Year, after the Activation Date.
| Values as of |
Assumed Contract Value |
Withdrawal Taken |
Anniversary Value |
Assumed Maximum Annual Withdrawal Amount |
Net Purchase Payments |
Return of Purchase Payment Death Benefit |
| 4th Anniversary |
$312,000 |
— |
$312,000 |
$19,500 |
$245,902 |
$312,000 |
| Year 5 |
$302,000 |
$19,500 |
— |
$19,500 |
$226,402 |
$282,500 |
| 5th Anniversary |
$305,000 |
— |
$305,000 |
$19,500 |
$226,402 |
$305,000 |
•
In year 5, a Lifetime Income amount of $19,500 was withdrawn.
The values of the death benefit are impacted by the Lifetime Income withdrawal taken as follows: the Withdrawal Adjustment is a dollar for dollar reduction.
•
In year 5, the Net Purchase Payments was $226,402 ($245,902 – $19,500). The Return of Purchase Payment death benefit was $282,500.
Example 10: Impact of Taking Excess Withdrawals (in excess of the Maximum Annual Withdrawal Amount) after the Activation Date
The values shown below are based on the assumptions stated in Examples 7, 8, and 9 above, in addition to the following:
•
Withdrawals in excess of MAWA were taken in the sixth and seventh Benefit Years.
| Values as of |
Assumed Contract Value |
Withdrawal Taken |
Anniversary Value |
Assumed Maximum Annual Withdrawal Amount |
Net Purchase Payments |
Return of Purchase Payment Death Benefit |
| 5th Anniversary |
$305,000 |
— |
$305,000 |
$19,500 |
$226,402 |
$305,000 |
| Year 6 |
$305,000 |
$24,960 |
— |
$19,127 |
$202,945 |
$280,040 |
| 6th Anniversary |
$280,000 |
— |
$280,000 |
$19,127 |
$202,945 |
$280,000 |
| Year 7 |
$290,000 |
$24,483 |
— |
$18,749 |
$180,183 |
$265,517 |
| 7th Anniversary |
$260,000 |
— |
$260,000 |
$18,749 |
$180,183 |
$260,000 |
The values of the Death Benefit are impacted by taking withdrawals in excess of the Maximum Annual Withdrawal Amount (“MAWA”) after the Activation Date as follows:
•
Withdrawal Adjustment up to the MAWA reduce Net Purchase Payments dollar for dollar first, then the Withdrawal Adjustment of Excess Withdrawal above MAWA reduces Net Purchase Payments proportionately.
○
In year 6, the reduction proportion was 1.9124% ([$24,960 - $19,500] / [$305,000 - $19,500]); the NPP was reduced to $202,945 ([$226,402 – $19,500] x [1 – 1.9124%]); the ROP death benefit was $280,040.
○
In year 7, the reduction proportion was 1.9772% ([$24,483 – $19,127] / [$290,000 - $19,127]); the NPP was reduced to $180,183 ([$202,945 – $19,127] x [1 – 1.9772%]); the ROP death benefit was $265,517.
H-4
Examples 11-14 below assume election of Maximum Anniversary Value Death Benefit and Polaris Income Max Living Benefit. See Appendix D for corresponding values relative to the living benefit used in examples 11-14.
Example 11: Initial Values
The values shown below are based on the following assumptions:
•
Initial Purchase Payment = $100,000
•
Owner age 65 on the Issue Date
| Value as of |
Purchase Payments Invested |
Contract Value |
Net Purchase Payments |
Maximum Anniversary Value Death Benefit |
| Issue Date |
$100,000 |
$100,000 |
$100,000 |
$100,000 |
Example 12: Impact of Increase in Income Base due to Daily Step-up Values, Adding Subsequent Purchase Payments, and Minimum Income Base at Benefit Year Anniversaries prior to the Activation Date
The values shown below are based on the assumptions stated in Example 11 above, in addition to the following:
•
A withdrawal of $5,000 was taken in the fourth Benefit Year, prior to Activation Date.
| Values as of |
Assumed Contract Value |
Withdrawal Taken |
Anniversary Value |
Net Purchase Payments |
Maximum Anniversary Value |
Maximum Anniversary Value Death Benefit |
| 3rd Anniversary |
$300,000 |
— |
$300,000 |
$250,000 |
$300,000 |
$300,000 |
| Year 4 |
$305,000 |
$5,000 |
— |
$245,902 |
$295,082 |
$300,000 |
| 2nd Anniversary |
$312,000 |
— |
$312,000 |
$245,902 |
$312,000 |
$312,000 |
•
The Net Purchase Payments and Maximum Anniversary Value are reduced in the same proportion by which the contract value is reduced by withdrawal amount The Income Base and the Maximum Annual Withdrawal Amount (“MAWA”) are recalculated at the time each subsequent Purchase Payment is received.
○
In year 4, the Withdrawal Adjustment is calculated as a reduction proportion of 1.6393% ($5,000/$305,000); the reduced NPP was $245,902 ($250,000 x [1 – 1.6393%]); the reduced Maximum Anniversary Value was $295,082 ($300,000 x [1 – 1.6393%]); the Maximum Anniversary Value death benefit was $300,000 ($305,000 - $5,000).
Example 13: Impact of Taking Withdrawals up to the Maximum Annual Withdrawal Amount after the Activation Date
The values shown below are based on the assumptions stated in the Examples 11 and 12 above, in addition to the following:
•
A withdrawal of 100% of MAWA was taken in the fifth Contract Year, after the Activation Date.
| Value as of |
Assumed Contract Value |
Withdrawal Taken |
Anniversary Value |
Assume Maximum Annual Withdrawal Amount |
Net Purchase Payments |
Maximum Anniversary Value |
Maximum Anniversary Value Death Benefit |
| 4th Anniversary |
$312,000 |
— |
$312,000 |
$19,500 |
$245,902 |
$312,000 |
$312,000 |
| Year 5 |
$302,000 |
$19,500 |
— |
$19,500 |
$226,402 |
$292,500 |
$292,500 |
| 5th Anniversary |
$305,000 |
— |
$305,000 |
$19,500 |
$226,402 |
$312,000 |
$305,000 |
•
In year 5, a Lifetime Income amount of $19,500 was withdrawn.
The values of the Death Benefit are impacted by the Lifetime Income withdrawal taken as follows: the Withdrawal Adjustment is a dollar for dollar reduction.
•
In year 5, the Net Purchase Payments was $226,402 ($245,902 – $19,500); the Maximum Anniversary Value was $292,500 ($312,000 - $19,500); The Maximum Anniversary Value death benefit was $292,500.
H-5
Example 14: Impact of Taking Excess Withdrawals (in excess of the Maximum Annual Withdrawal Amount) after the Activation Date
The values shown below are based on the assumptions stated in the Examples 11, 12, and 13 above, in addition to the following:
•
Withdrawals in excess of MAWA were taken in the sixth and seventh Benefit Years.
| Value as of |
Assumed Contract Value |
Withdrawal Taken |
Anniversary Value |
Assume Maximum Annual Withdrawal Amount |
Net Purchase Payments |
Maximum Anniversary Value |
Maximum Anniversary Value Death Benefit |
| 5th Anniversary |
$305,000 |
— |
$305,000 |
$19,500 |
$226,402 |
$305,000 |
$305,000 |
| Year 6 |
$305,000 |
$24,960 |
— |
$19,127 |
$202,945 |
$280,040 |
$280,040 |
| 6th Anniversary |
$280,000 |
— |
$280,000 |
$19,127 |
$202,945 |
$280,040 |
$280,040 |
| Year 7 |
$290,000 |
$24,483 |
— |
$18,749 |
$180,183 |
$255,754 |
$255,754 |
| 7th Anniversary |
$260,000 |
— |
$260,000 |
$18,749 |
$180,183 |
$260,000 |
$260,000 |
The values of the Death Benefit are impacted by taking withdrawals in excess of the Maximum Annual Withdrawal Amount (“MAWA”) after the Activation Date as follows:
•
First, the Withdrawal Adjustment up to the MAWA reduce Net Purchase Payments dollar for dollar.
•
Second, the Withdrawal Adjustment of Excess Withdrawal above MAWA reduces Net Purchase Payments proportionately.
•
The same order of operations applies to the Maximum Anniversary Value.
○
In year 6, the reduction proportion was 1.9124% ([$24,960 - $19,500] / [$305,000 - $19,500]); the Net Purchase Payments was reduced to $202,945 ([$226,402 – $19,500] x [1 – 1.9124%]); the Maximum Anniversary Value reduced to $280,040 ([$305,000 – $19,500] x [1 – 1.9124%]); the Maximum Anniversary Value death benefit was $280,040.
○
In year 7, the reduction proportion was 1.9772% ([$24,483 – $19,127] / [$290,000 - $19,127]); the Net Purchase Payments was reduced to $180,183 ([$202,945 – $19,127] x [1 – 1.9772%]); the Maximum Anniversary Value reduced to $255,754 ([$208,040 – $19,500] x [1 – 1.9772%]); the Maximum Anniversary Value death benefit was $255,754.
H-6
Appendix I – Death Benefits Following Spousal Continuation between May 1, 2017 and September 8, 2019
If your contract was issued between May 1, 2019 and September 8, 2019 and you elected either the Polaris Income Plus Flex or Polaris Income Plus Daily Flex Living Benefit, please see APPENDIX F – DEATH BENEFITS FOLLOWING SPOUSAL CONTINUATION.
The following details the Contract Value, Return of Purchase Payment and Maximum Anniversary Value death benefits payable upon the Continuing Spouse’s death. The death benefit we will pay to the new Beneficiary chosen by the Continuing Spouse varies depending on the death benefit option elected by the original Owner of the contract, whether a living benefit was elected, the age of the Continuing Spouse as of the Continuation Date and the Continuing Spouse’s date of death.
Capitalized terms used in this Appendix have the same meaning as they have in the prospectus.
We define “Continuation Net Purchase Payments” as Net Purchase Payments made on or after the Continuation Date. For the purpose of calculating Continuation Net Purchase Payments, the amount that equals the contract value on the Continuation Date, including the Continuation Contribution, is considered the initial Continuation Purchase Payment. We define “Continuation Purchase Payments” as Purchase Payments made on or after the Continuation Date. Continuation Purchase Payments will not be accepted on or after the first contract anniversary if a living benefit was elected.
The term “withdrawals” as used in describing the death benefits is defined as withdrawals and the fees and charges applicable to those withdrawals.
The term “Withdrawal Adjustment” is used, if a living benefit had been elected, to describe the way in which the amount of the death benefit will be adjusted for withdrawals depending on when the Continuing Spouse takes a withdrawal and the amount of the withdrawal. If cumulative withdrawals for the current contract year are taken prior to the Continuing Spouse’s 81st birthday and are less than or equal to the Maximum Annual Withdrawal Amount, the amount of adjustment will equal the amount of each withdrawal. If a withdrawal is taken prior to the Continuing Spouse’s 81st birthday and cumulative withdrawals for the current contract year are in excess of the Maximum Annual Withdrawal Amount, the contract value and the death benefit are first reduced by the Maximum Annual Withdrawal Amount. The resulting death benefit is further adjusted by the withdrawal amount in excess of the Maximum Annual Withdrawal Amount by the percentage by which the excess withdrawal reduced the resulting contract value. If a withdrawal is taken on or after the Continuing
Spouse’s 81st birthday, the amount of adjustment is determined by the percentage by which the withdrawal reduced the contract value.
The Company will not accept Purchase Payments from anyone age 86 or older. Therefore, the death benefit calculations described below assume that no Purchase Payments are received on or after the Continuing Spouse’s 86th birthday. We will not accept Continuation Purchase Payments on or after the first contract anniversary if you have elected a living benefit feature.
Contract Value Death Benefit Payable Upon Continuing Spouse’s Death
The Contract Value death benefit, included in the contract for no additional fee, will be equal to the contract value on the business day during which we receive all required documentation.
The Return of Purchase Payment death benefit and the Maximum Anniversary Value death benefit, if elected, are calculated differently depending on whether the original Owner had elected a Living Benefit, described above.
Return of Purchase Payment and Maximum Anniversary Value death benefit Payable Upon Continuing Spouse’s Death:
A.
The following describes the Return of Purchase Payment death benefit and the Maximum Anniversary Value death benefit without election of a living benefit:
1.
Return of Purchase Payment death benefit
If the Continuing Spouse is age 85 or younger on the Continuation Date, the death benefit will be the greater of:
a.
Contract value; or
b.
Continuation Net Purchase Payments.
If the Continuing Spouse is age 86 or older on the Continuation Date, the death benefit is equal to the contract value and the Return of Purchase Payment death benefit fee will no longer be deducted as of the Continuation Date.
2.
Maximum Anniversary Value death benefit
If the Continuing Spouse is age 80 or younger on the Continuation Date, the death benefit will be the greatest of:
a.
Contract value; or
b.
Continuation Net Purchase Payments; or
c.
Maximum anniversary value on any contract anniversary that occurred after the Continuation Date, but prior to the earlier of the Continuing Spouse’s 83rd birthday or date of death, plus any
I-1
Continuation Purchase Payments received since that anniversary; and reduced for any withdrawals since that anniversary in the same proportion that the withdrawal reduced the contract value on the date of such withdrawal. The anniversary value for any year is equal to the contract value on the applicable anniversary after the Continuation Date.
If the Continuing Spouse is age 81-85 on the Continuation Date, the death benefit will be the Return of Purchase Payment death benefit, described above and the Maximum Anniversary Value death benefit fee will no longer be deducted as of the Continuation Date. Instead, the Return of Purchase Payment death benefit fee will be deducted as of the Continuation Date.
If the Continuing Spouse is age 86 or older on the Continuation Date, the death benefit is equal to contract value and the Maximum Anniversary Value death benefit fee will no longer be deducted as of the Continuation Date.
B.
The following describes the Return of Purchase Payment death benefit and the Maximum Anniversary Value death benefit with election of a living benefit:
1.
Return of Purchase Payment death benefit
If the Continuing Spouse is age 85 or younger on the Continuation Date, the death benefit will be the greater of:
a.
Contract value; or
b.
Continuation Purchase Payments received prior to the first contract anniversary reduced by:
(i)
any Withdrawal Adjustments after the Continuation Date, if the living benefit has not been terminated; or
(ii)
any Withdrawal Adjustments after the Continuation Date, prior to the date the living benefit is terminated; and reduced for any withdrawals in the same proportion that the withdrawal reduced the contract value on the date of such withdrawal on or after the date the living benefit is terminated.
If the Continuing Spouse is age 86 or older on the Continuation Date, the death benefit is equal to contract value and the Return of Purchase Payment death benefit fee will no longer be deducted as of the Continuation Date.
2.
Maximum Anniversary Value death benefit
If the Continuing Spouse is age 80 or younger on the Continuation Date, the death benefit will be the greatest of:
a.
Contract value; or
b.
Continuation Purchase Payments received prior to the first contract anniversary reduced by:
(i)
any Withdrawal Adjustments after the Continuation Date, if the living benefit has not been terminated; or
(ii)
any Withdrawal Adjustments after the Continuation Date, prior to the date the living benefit is terminated; and reduced for any withdrawals in the same proportion that the withdrawal reduced the contract value on the date of such withdrawal on or after the date the living benefit is terminated.
c.
Maximum anniversary value on any contract anniversary that occurred after the Continuation Date, but prior to the earlier of the Continuing Spouse’s 83rd birthday or date of death and reduced by:
(i)
any Withdrawal Adjustments since that contract anniversary, if the living benefit has not been terminated; or
(ii)
any Withdrawal Adjustments since that contract anniversary, prior to the date the living benefit is terminated; and reduced for any withdrawals in the same proportion that the withdrawal reduced the contract value on the date of such withdrawal on or after the date the living benefit is terminated.
The anniversary value for any year is equal to the contract value on the applicable anniversary.
If the Continuing Spouse is age 81-85 on the Continuation Date, the death benefit will be the Return of Purchase Payment death benefit, described above and the Maximum Anniversary Value death benefit fee will no longer be deducted as of the Continuation Date. Instead, the Return of Purchase Payment death benefit fee will be deducted as of the Continuation Date.
If the Continuing Spouse is age 86 or older on the Continuation Date, the death benefit is equal to contract value and the Maximum Anniversary Value death benefit fee will no longer be deducted as of the Continuation Date.
I-2
Appendix J – LIVING bENEFIT Rates for cONTRACTS iSSUED on or after May 1, 2023 (Except in New York)
This Appendix provides historical Living Benefit rates and percentages for contracts purchased prior to the date of this prospectus. For contracts purchased on or after the date of this prospectus, rates and percentages are disclosed in the Rate Sheet Supplement that must accompany this prospectus.
Polaris Income Max
Initial Annual Fee Rate:
For contracts issued between May 1, 2023 and April 28, 2024
| Number of Covered Person(s) |
Initial Annual Fee Rate |
| One Covered Person |
1.45% |
| Two Covered Persons |
1.45% |
Income Credit Percentage:
For contracts issued between May 1, 2023 and April 28, 2024, the Income Credit Percentage is 7.00%
Maximum Annual Withdrawal Percentage and Protected Income Payment Percentage Table
For contracts issued between November 13, 2023 and April 28, 2024
| Number of Covered Persons and Age of Covered Person(s) on the Activation Date(1) |
Polaris Income Max Income Option 1 |
Polaris Income Max Income Option 2 |
Polaris Income Max Income Option 3 | |||
| Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage |
Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage |
Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage | |
| One Covered Person (Age 50 - 59) |
4.50% |
3.50%(2) |
4.50% |
3.50%(2) |
3.70% |
3.70% |
| One Covered Person (Age 60 - 64) |
5.50% |
3.50%(2) |
5.50% |
3.50%(2) |
4.40% |
4.40% |
| One Covered Person (Age 65 - 74) |
7.25% |
4.50% |
8.25% |
3.50% |
5.80% |
5.80% |
| One Covered Person (Age 75 and Older) |
7.75% |
4.50% |
8.75% |
3.50% |
6.25% |
6.25% |
| Two Covered Persons (Age 50 - 59) |
4.25% |
3.25%(3) |
4.25% |
3.25%(3) |
3.30% |
3.30% |
| Two Covered Persons (Age 60 - 64) |
5.25% |
3.25%(3) |
5.25% |
3.25%(3) |
4.00% |
4.00% |
| Two Covered Persons (Age 65 - 74) |
7.00% |
4.25% |
8.00% |
3.25% |
5.40% |
5.40% |
| Two Covered Persons (Age 75 and Older) |
7.50% |
4.25% |
8.50% |
3.25% |
5.85% |
5.85% |
(1) If there are Two Covered Persons, the age on the Activation Date is based on the age of the younger of the Two Covered Persons.
(2) If One Covered Person is elected, and income is activated prior to the Covered Person’s 65th birthday, the Protected Income Payment Percentage is 4.50% if the Income Base is increased to a new Higher Anniversary Value on or after the Covered Person’s 65th birthday.
(3) If Two Covered Persons are elected, and income is activated prior to the younger Covered Person’s 65th birthday, the Protected Income Payment Percentage is 4.25% if the Income Base is increased to a new Higher Anniversary Value on or after the younger Covered Person’s 65th birthday.
J-1
For contracts issued between May 1, 2023 and November 12, 2023
| Number of Covered Persons and Age of Covered Person(s) on the Activation Date(1) |
Polaris Income Max Income Option 1 |
Polaris Income Max Income Option 2 |
Polaris Income Max Income Option 3 | |||
| Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage |
Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage |
Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage | |
| One Covered Person (Age 50 - 59) |
4.25% |
3.25%(2) |
4.25% |
3.25%(2) |
3.50% |
3.50% |
| One Covered Person (Age 60 - 64) |
5.25% |
3.25%(2) |
5.25% |
3.25%(2) |
4.20% |
4.20% |
| One Covered Person (Age 65 - 74) |
7.00% |
4.25% |
8.00% |
3.25% |
5.60% |
5.60% |
| One Covered Person (Age 75 and Older) |
7.50% |
4.25% |
8.50% |
3.25% |
5.90% |
5.90% |
| Two Covered Persons (Age 50 - 59) |
4.00% |
3.00%(3) |
4.00% |
3.00%(3) |
3.10% |
3.10% |
| Two Covered Persons (Age 60 - 64) |
5.00% |
3.00%(3) |
5.00% |
3.00%(3) |
3.80% |
3.80% |
| Two Covered Persons (Age 65 - 74) |
6.75% |
4.00% |
7.75% |
3.00% |
5.20% |
5.20% |
| Two Covered Persons (Age 75 and Older) |
7.25% |
4.00% |
8.25% |
3.00% |
5.50% |
5.50% |
(1) If there are Two Covered Persons, the age on the Activation Date is based on the age of the younger of the Two Covered Persons.
(2) If One Covered Person is elected, and income is activated prior to the Covered Person’s 65th birthday, the Protected Income Payment Percentage is 4.25% if the Income Base is increased to a new Higher Anniversary Value on or after the Covered Person’s 65th birthday.
(3) If Two Covered Persons are elected, and income is activated prior to the younger Covered Person’s 65th birthday, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a new Higher Anniversary Value on or after the younger Covered Person’s 65th birthday.
Polaris Income DAILY FLEX
Initial Annual Fee Rate:
For contracts issued between May 1, 2023 and April 28, 2024
| Number of Covered Person(s) |
Initial Annual Fee Rate |
| One Covered Person |
1.45% |
| Two Covered Persons |
1.45% |
Minimum Income Base Percentage:
For contracts issued between May 1, 2023 and April 28, 2024, the Minimum Income Base Percentage is 6.00%
Maximum Annual Withdrawal Percentage and Protected Income Payment Percentage Table
For contracts issued between November 13, 2023 and April 28, 2024
| |
Polaris Income Plus Daily Flex Income Option 1 |
Polaris Income Plus Daily Flex Income Option 2 |
Polaris Income Plus Daily Flex Income Option 3 | |||
| Number of Covered Persons and Age of Covered Person(s) on the Activation Date(1) |
Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage |
Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage |
Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage |
| One Covered Person (Age 45 - 59) |
4.25% |
3.25%(2) |
4.25% |
3.25%(2) |
3.50% |
3.50% |
| One Covered Person (Age 60 - 64) |
5.25% |
3.25%(2) |
5.25% |
3.25%(2) |
4.20% |
4.20% |
| One Covered Person (Age 65 - 74) |
7.00% |
4.50% |
8.00% |
3.50% |
5.60% |
5.60% |
| One Covered Person (Age 75 and Older) |
7.50% |
4.50% |
8.50% |
3.50% |
6.00% |
6.00% |
| Two Covered Persons (Age 45 - 59) |
4.00% |
3.00%(3) |
4.00% |
3.00%(3) |
3.10% |
3.10% |
| Two Covered Persons (Age 60 - 64) |
5.00% |
3.00%(3) |
5.00% |
3.00%(3) |
3.80% |
3.80% |
| Two Covered Persons (Age 65 - 74) |
6.75% |
4.25% |
7.75% |
3.25% |
5.20% |
5.20% |
| Two Covered Persons (Age 75 and Older) |
7.25% |
4.25% |
8.25% |
3.25% |
5.60% |
5.60% |
(1) If there are Two Covered Persons, the age on the Activation Date is based on the age of the younger of the Two Covered Persons.
(2) If One Covered Person is elected, and income is activated prior to the Covered Person’s 65th birthday, the Protected Income Payment Percentage is 4.50% if the Income Base is increased to a Step-Up Value on or after the Covered Person’s 65th birthday.
J-2
(3) If Two Covered Persons are elected, and income is activated prior to the younger Covered Person’s 65th birthday, the Protected Income Payment Percentage is 4.25% if the Income Base is increased to a Step-Up Value on or after the younger Covered Person’s 65th birthday.
For contracts issued between May 1, 2023 and November 12, 2023
| |
Polaris Income Plus Daily Flex Income Option 1 |
Polaris Income Plus Daily Flex Income Option 2 |
Polaris Income Plus Daily Flex Income Option 3 | |||
| Number of Covered Persons and Age of Covered Person(s) on the Activation Date(1) |
Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage |
Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage |
Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage |
| One Covered Person (Age 45 - 59) |
4.00% |
3.00%(2) |
4.00% |
3.00%(2) |
3.30% |
3.30% |
| One Covered Person (Age 60 - 64) |
5.00% |
3.00%(2) |
5.00% |
3.00%(2) |
4.00% |
4.00% |
| One Covered Person (Age 65 - 74) |
6.75% |
4.25% |
7.75% |
3.25% |
5.40% |
5.40% |
| One Covered Person (Age 75 and Older) |
7.25% |
4.25% |
8.25% |
3.25% |
5.70% |
5.70% |
| Two Covered Persons (Age 45 - 59) |
3.75% |
2.75%(3) |
3.75% |
2.75%(3) |
2.90% |
2.90% |
| Two Covered Persons (Age 60 - 64) |
4.75% |
2.75%(3) |
4.75% |
2.75%(3) |
3.60% |
3.60% |
| Two Covered Persons (Age 65 - 74) |
6.50% |
4.00% |
7.50% |
3.00% |
5.00% |
5.00% |
| Two Covered Persons (Age 75 and Older) |
7.00% |
4.00% |
8.00% |
3.00% |
5.30% |
5.30% |
(1) If there are Two Covered Persons, the age on the Activation Date is based on the age of the younger of the Two Covered Persons.
(2) If One Covered Person is elected, and income is activated prior to the Covered Person’s 65th birthday, the Protected Income Payment Percentage is 4.25% if the Income Base is increased to a Step-Up Value on or after the Covered Person’s 65th birthday.
(3) If Two Covered Persons are elected, and income is activated prior to the younger Covered Person’s 65th birthday, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a Step-Up Value on or after the younger Covered Person’s 65th birthday.
J-3
Appendix K – Living Benefit rates for Contracts Issued on or after May 1, 2023 (in new york)
This Appendix provides historical Living Benefit rates and percentages for contracts purchased prior to the date of this prospectus. For contracts purchased on or after the date of this prospectus, rates and percentages are disclosed in the Rate Sheet Supplement that must accompany this prospectus.
Polaris Income Max
Initial Annual Fee Rate:
For contracts issued between May 1, 2023 and April 28, 2024
| Number of Covered Person(s) |
Initial Annual Fee Rate |
| One Covered Person |
1.45% |
| Two Covered Persons |
1.45% |
Income Credit Percentage:
For contracts issued between November 6, 2023 and April 28, 2024, the Income Credit Percentage is 6.00%
For contracts issued between May 3, 2023 and November 5, 2023, the Income Credit Percentage is 7.00%
Maximum Annual Withdrawal Percentage and Protected Income Payment Percentage Table
For contracts issued between November 6, 2023 and April 28, 2024
| Number of Covered Persons and Age of Covered Person(s) on the Activation Date (1) |
Polaris Income Max | |
| Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage | |
| One Covered Person (Age 50 - 54) |
3.70% |
3.70% |
| One Covered Person (Age 55 - 59) |
4.20% |
4.20% |
| One Covered Person (Age 60 - 64) |
4.40% |
4.40% |
| One Covered Person (Age 65 - 69) |
5.80% |
5.80% |
| One Covered Person (Age 70 - 74) |
6.25% |
6.25% |
| One Covered Person (Age 75 - 79) |
6.75% |
6.75% |
| One Covered Person (Age 80 - 84) |
7.40% |
7.40% |
| One Covered Person (Age 85 - 89) |
8.15% |
8.15% |
| One Covered Person (Age 90 - 94) |
9.15% |
9.15% |
| One Covered Person (Age 95 and Older) |
10.45% |
10.45% |
| Two Covered Persons (Age 50 - 54) |
3.20% |
3.20% |
| Two Covered Persons (Age 55 - 59) |
3.70% |
3.70% |
| Two Covered Persons (Age 60 - 64) |
3.90% |
3.90% |
| Two Covered Persons (Age 65 - 69) |
5.30% |
5.30% |
| Two Covered Persons (Age 70 - 74) |
5.75% |
5.75% |
| Two Covered Persons (Age 75 - 79) |
6.25% |
6.25% |
| Two Covered Persons (Age 80 - 84) |
6.90% |
6.90% |
| Two Covered Persons (Age 85 - 89) |
7.65% |
7.65% |
| Two Covered Persons (Age 90 - 94) |
8.65% |
8.65% |
| Two Covered Persons (Age 95 and Older) |
9.95% |
9.95% |
(1)
If there are Two Covered Persons, the age on the Activation Date is based on the age of the younger of the Two Covered Persons.
K-1
For contracts issued between May 1, 2023 and November 5, 2023
| Number of Covered Persons and Age of Covered Person(s) on the Activation Date(1) |
Polaris Income Max Income Option 1 |
Polaris Income Max Income Option 2 |
Polaris Income Max Income Option 3 | |||
| Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage |
Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage |
Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage | |
| One Covered Person (Age 50 - 59) |
4.25% |
3.25%(2) |
4.25% |
3.25%(2) |
3.50% |
3.50% |
| One Covered Person (Age 60 - 64) |
5.25% |
3.25%(2) |
5.25% |
3.25%(2) |
4.20% |
4.20% |
| One Covered Person (Age 65 - 74) |
7.00% |
4.25% |
8.00% |
3.25% |
5.60% |
5.60% |
| One Covered Person (Age 75 and Older) |
7.50% |
4.25% |
8.50% |
3.25% |
5.90% |
5.90% |
| Two Covered Persons (Age 50 - 59) |
4.00% |
3.00%(3) |
4.00% |
3.00%(3) |
3.10% |
3.10% |
| Two Covered Persons (Age 60 - 64) |
5.00% |
3.00%(3) |
5.00% |
3.00%(3) |
3.80% |
3.80% |
| Two Covered Persons (Age 65 - 74) |
6.75% |
4.00% |
7.75% |
3.00% |
5.20% |
5.20% |
| Two Covered Persons (Age 75 and Older) |
7.25% |
4.00% |
8.25% |
3.00% |
5.50% |
5.50% |
(1) If there are Two Covered Persons, the age on the Activation Date is based on the age of the younger of the Two Covered Persons.
(2) If One Covered Person is elected, and income is activated prior to the Covered Person’s 65th birthday, the Protected Income Payment Percentage is 4.25% if the Income Base is increased to a new Higher Anniversary Value on or after the Covered Person’s 65th birthday.
(3) If Two Covered Persons are elected, and income is activated prior to the younger Covered Person’s 65th birthday, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a new Higher Anniversary Value on or after the younger Covered Person’s 65th birthday.
Polaris Income DAILY FLEX
Initial Annual Fee Rate:
For contracts issued between May 1, 2023 and April 28, 2024
| Number of Covered Person(s) |
Initial Annual Fee Rate |
| One Covered Person |
1.45% |
| Two Covered Persons |
1.45% |
Minimum Income Base Percentage:
For contracts issued between November 6, 2023 and April 28, 2024, the annual Minimum Income Base Percentage is 5.00%
For contracts issued between May 1, 2023 and November 5, 2023, the annual Minimum Income Base Percentage is 6.00%
K-2
Maximum Annual Withdrawal Percentage and Protected Income Payment Percentage Table
For contracts purchased between November 6, 2023 and April 28, 2024
| Number of Covered Persons and Age of Covered Person(s) on the Activation Date (1) |
Polaris Income Plus Daily Flex | |
| Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage | |
| One Covered Person (Age 45 - 49) |
3.30% |
3.30% |
| One Covered Person (Age 50 - 54) |
3.50% |
3.50% |
| One Covered Person (Age 55 - 59) |
4.00% |
4.00% |
| One Covered Person (Age 60 - 64) |
4.20% |
4.20% |
| One Covered Person (Age 65 - 69) |
5.60% |
5.60% |
| One Covered Person (Age 70 - 74) |
6.00% |
6.00% |
| One Covered Person (Age 75 - 79) |
6.50% |
6.50% |
| One Covered Person (Age 80 - 84) |
7.10% |
7.10% |
| One Covered Person (Age 85 - 89) |
7.85% |
7.85% |
| One Covered Person (Age 90 - 94) |
8.80% |
8.80% |
| One Covered Person (Age 95 and Older) |
10.05% |
10.05% |
| Two Covered Persons (Age 45 - 49) |
2.80% |
2.80% |
| Two Covered Persons (Age 50 - 54) |
3.00% |
3.00% |
| Two Covered Persons (Age 55 - 59) |
3.50% |
3.50% |
| Two Covered Persons (Age 60 - 64) |
3.70% |
3.70% |
| Two Covered Persons (Age 65 - 69) |
5.10% |
5.10% |
| Two Covered Persons (Age 70 - 74) |
5.50% |
5.50% |
| Two Covered Persons (Age 75 - 79) |
6.00% |
6.00% |
| Two Covered Persons (Age 80 - 84) |
6.60% |
6.60% |
| Two Covered Persons (Age 85 - 89) |
7.35% |
7.35% |
| Two Covered Persons (Age 90 - 94) |
8.30% |
8.30% |
| Two Covered Persons (Age 95 and Older) |
9.55% |
9.55% |
(1)
If there are Two Covered Persons, the age on the Activation Date is based on the age of the younger of the Two Covered Persons.
For contracts purchased between May 1, 2023 and November 5, 2023
| Number of Covered Persons and Age of Covered Person(s) on the Activation Date(1) |
Polaris Income Plus Daily Flex Income Option 1 |
Polaris Income Plus Daily Flex Income Option 2 |
Polaris Income Plus Daily Flex Income Option 3 | |||
| Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage |
Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage |
Maximum Annual Withdrawal Percentage |
Protected Income Payment Percentage | |
| One Covered Person (Age 45 - 59) |
4.00% |
3.00%(2) |
4.00% |
3.00%(2) |
3.30% |
3.30% |
| One Covered Person (Age 60 - 64) |
5.00% |
3.00%(2) |
5.00% |
3.00%(2) |
4.00% |
4.00% |
| One Covered Person (Age 65 - 74) |
6.75% |
4.25% |
7.75% |
3.25% |
5.40% |
5.40% |
| One Covered Person (Age 75 and Older) |
7.25% |
4.25% |
8.25% |
3.25% |
5.70% |
5.70% |
| Two Covered Persons (Age 45 - 59) |
3.75% |
2.75%(3) |
3.75% |
2.75%(3) |
2.90% |
2.90% |
| Two Covered Persons (Age 60 - 64) |
4.75% |
2.75%(3) |
4.75% |
2.75%(3) |
3.60% |
3.60% |
| Two Covered Persons (Age 65 - 74) |
6.50% |
4.00% |
7.50% |
3.00% |
5.00% |
5.00% |
| Two Covered Persons (Age 75 and Older) |
7.00% |
4.00% |
8.00% |
3.00% |
5.30% |
5.30% |
(1) If there are Two Covered Persons, the age on the Activation Date is based on the age of the younger of the Two Covered Persons.
(2) If One Covered Person is elected, and income is activated prior to the Covered Person’s 65th birthday, the Protected Income Payment Percentage is 4.25% if the Income Base is increased to a Step-Up Value on or after the Covered Person’s 65th birthday.
(3) If Two Covered Persons are elected, and income is activated prior to the younger Covered Person’s 65th birthday, the Protected Income Payment Percentage is 4.00% if the Income Base is increased to a Step-Up Value on or after the younger Covered Person’s 65th birthday.
K-3
The Statement of Additional Information (SAI) contains additional information about the contract, the Company, and the Separate Account, including financial statements. The SAI is dated the same date as this prospectus, and the SAI is incorporated by reference into this prospectus. You may request a free copy of the SAI or submit inquiries by:
•
Mailing: Annuity Service Center, P.O. Box 15570, Amarillo, Texas 79105-5570
•
Calling: (855) 421-2692
•
Visiting: www.corebridgefinancial.com/ProductProspectuses
You may also obtain other information about the Separate Account on the SEC’s website at www.sec.gov, and copies of this information may be obtained, upon payment of a duplicating fee, by electronic request at the following email address: publicinfo@sec.gov.
EDGAR Contract Identifier: C000134222, C000134223
