Separate Account will meet the diversification requirement, and the Company will monitor continued compliance with this requirement.
The Treasury Department has stated in published rulings that a variable life insurance policy owner will be considered the owner of the related separate account assets if the policy owner possesses incidents of ownership in those assets, such as the ability to exercise investment control over the assets. In circumstances where the policy owner is considered the owner of separate account assets, income and gain from the assets would be currently includable in the policy owner’s gross income. The Treasury Department has indicated that in regulations or additional revenue rulings under Section 817(d), (relating to the definition of a variable life insurance policy), it will provide guidance on the extent to which policy owners may direct their investments to particular subaccounts without being treated as owners of the underlying shares. The IRS has issued Revenue Ruling
2003-91
in which it ruled that the ability to choose among as many as 20 subaccounts and make not more than one transfer per
30-day
period without charge did not result in the owner of a policy being treated as the owner of the assets in the subaccount under the investment control doctrine.
The ownership rights under the Policies are similar to, but different in certain respects from, those described by the IRS in Revenue Ruling
2003-91
and other rulings in which it was determined that policy owners were not owners of the subaccount assets. It is possible that these differences could result in Policy owners being treated as the owners of the assets of the subaccounts under the Policies. We, therefore, reserve the right to modify the Policies as necessary to attempt to prevent the owners of the Policies from being considered the owners of a pro rata share of the assets of the subaccounts under the Policies. In addition, it is possible that if regulations or additional rulings are issued, the Policies may need to be modified to comply with them.
Your Policy will be treated as a life insurance contract under federal income tax law if it passes either one or the other of two tests — a cash value accumulation test or a guideline premium/cash value corridor test. Currently, we only offer the cash value accumulation test. Guidance as to how these requirements are to be applied is limited. Nevertheless, we believe that the Policy should satisfy the applicable requirements.
The following discussion assumes that the Policy qualifies as a life insurance contract for federal income tax purposes.
We believe that the proceeds and cash value increases of the Policy should be treated in a manner consistent with a fixed-benefit life insurance policy for federal income tax purposes. Thus, the death benefit under the Policy should be excludable from the gross income of the beneficiary under Section 101(a)(1) of the Code.
Modified Endowment Contracts
The Code establishes a class of life insurance contracts designated as modified endowment contracts, which applies to Policies entered into or materially changed after June 20, 1988.
Due to the Policy’s flexibility, classification as a modified endowment contract will depend on the individual circumstances of the Policy. Guidance as to how these requirements are to be applied, in particular to
policies, is limited. In general, the Policy will be a modified endowment contract if the accumulated premiums paid at any time during the first seven policy years exceeds the sum of the net level premiums which would have been paid on or before such time if the Policy provided for
paid-up
future benefits after the payment of seven level annual premiums. The determination of whether a Policy will be a modified endowment contract after a material change generally depends upon the relationship of the death benefit and Policy Value at the time of such change and the additional premiums paid in the seven years following the material change. We will endeavor to notify you on a
51
timely basis if we believe you have exceeded this limit and the Policy has become a modified endowment contract under the Code.
All Policies that we or our affiliate issue to the same owner during any calendar year, which are treated as modified endowment contracts, are treated as one modified endowment contract for purposes of determining the amount includable in gross income under Section 72(e) of the Code.
If there is a reduction in the benefits under the Policy during the first seven policy years, for example, as a result of a partial withdrawal or surrender, the
seven-pay
test will have to be reapplied as if the Policy had originally been issued at the reduced Specified Amount. If there is a “material change” in the Policy’s benefits or other terms, the Policy may have to be retested as if it were a newly issued Policy. A material change may occur, for example, when there is an increase in the death benefit which is due to the payment of an unnecessary premium. Unnecessary premiums are premiums paid into the Policy which are not needed in order to provide a death benefit equal to the lowest death benefit that was payable in the first seven policy years. To prevent your Policy from becoming a modified endowment contract, it may be necessary to limit premium payments or to limit reductions in benefits. A current or prospective policy owner should consult a tax adviser to determine whether a policy transaction will cause the Policy to be classified as a modified endowment contract.
The rules relating to whether your Policy will be treated as a modified endowment contract are complex and make it impracticable to adequately describe in full in the limited confines of this summary. Therefore, you should consult with a adviser to determine whether the Policy transaction will cause the Policy to be treated as a modified endowment contract.
Distributions from Policies Classified as Modified Endowment Contracts
Policies classified as a modified endowment contract will be subject to the following tax rules. First, all distributions, including distributions upon surrender and partial withdrawals from the Policy are treated as ordinary income subject to tax up to the amount equal to the excess (if any) of the Policy Value immediately before the distribution over the investment in the Policy (described below) at such time. Second, loans taken from or secured by, such a Policy are treated as distributions from such a Policy and taxed accordingly. Past due loan interest that is added to the loan amount will be treated as a loan. Third, a 10 percent additional income tax is imposed on the portion of any distribution from, or loan taken from or secured by such a Policy that is included in income except where the distribution or loan is made on or after the owner attains age 59
1
⁄
2
, is attributable to the owner’s becoming disabled (as determined under the Code), or is part of a series of substantially equal periodic payments for the life (or life expectancy) of the owner or the joint lives (or joint life expectancies) of the owner and the owner’s Beneficiary.
If a Policy becomes a modified endowment contract, distributions that occur during the policy year in which it becomes a modified endowment contract and any subsequent Policy year will be taxed as distributions from a modified endowment contract. In addition, distributions from a Policy within two years before it becomes a modified endowment contract will be taxed in this manner. This means that a distribution made from a Policy that is not a modified endowment contract could later become taxable as a distribution from a modified endowment contract.
Distributions from Policies Not Classified as Modified Endowment Contracts
Distributions from a Policy that is not classified as a modified endowment contract, are generally treated as first recovering the investment in the Policy (described below) and then, only after the return of all such investment in the Policy, as distributions of taxable income. Amounts borrowed under the Policy also are not generally subject to federal income tax at the time of the borrowing. An exception to this general rule occurs in the case of a decrease in the Policy’s death benefit or any other change that reduces benefits under the Policy in the first 15 years after the Policy is issued and that results in a cash distribution to the owner in order for the Policy to continue complying with the Section 7702 definitional limits. The application of these rules may vary depending on whether the change occurs in the first five
52
years after the Policy is issued. Such a cash distribution may be taxed in whole or in part as ordinary income (to the extent of any gain in the Policy) under rules prescribed in Section 7702.
Finally, neither distributions (including distributions upon surrender) nor loans from, or secured by, the Policy that is not classified as a modified endowment contract are subject to the 10 percent additional tax.
Generally, personal interest paid on a loan under a Policy which is owned by an individual is not deductible. In addition, interest on any loan under a Policy owned by a taxpayer and covering the life of any individual will generally not be tax deductible. The deduction of interest on policy loans may also be subject to the restrictions of Section 264 of the Code. An owner should consult a tax adviser before deducting any interest paid in respect of a policy loan.
If a loan from a Policy is outstanding when a Policy is surrendered or lapses, the amount of the outstanding indebtedness will be added to the amount distributed and will be taxed accordingly, if it has not already been taxed as a distribution from a modified endowment contract. The IRS and the courts have not ruled on the question of when a policy is considered to have lapsed for tax purposes where the Policy Value is negative and the
No-Lapse
Guarantee applies. Before taking out a loan from a Policy, you should consult a tax adviser as to the tax consequences.
Investment in your Policy means: (i) the aggregate amount of any premiums or other consideration paid for a Policy, minus (ii) the aggregate amount received under the Policy which is excluded from gross income of the owner, plus (iii) the amount of any loan from, or secured by, a Policy that is a modified endowment contract to the extent that such amount is included in the gross income of the owner.
To the extent that Policy distributions are taxable, they are generally subject to withholding for the recipient
s federal income tax liability. Recipients can generally elect, however, not to have tax withheld from distributions.
Businesses can use the Policies in various arrangements, including non-qualified deferred compensation or salary continuance plans, split dollar insurance plans, executive bonus plans, tax exempt and nonexempt welfare benefit plans, retiree medical benefit plans and others. The tax consequences of such plans may vary depending on the particular facts and circumstances. If you are purchasing the Policy for any arrangement the value of which depends in part on its tax consequences, you should consult a tax adviser. In recent years, moreover, Congress has adopted new rules relating to life insurance owned by businesses. Any business contemplating the purchase of a new Policy or a change in an existing Policy should consult a tax adviser.
Non-Individual
Owners and Business Beneficiaries of Policies
If a Policy is owned or held by a corporation, trust or other entity that is not a natural person, this could jeopardize some or all of such entity’s interest deduction under Section 264 of the Code, even where such entity’s indebtedness is in no way connected to the Policy. In addition, under Section 264(f)(5), if a business (other than a sole proprietorship) is directly or indirectly a beneficiary of a Policy, the Policy could be treated as held by the business for purposes of the Section 264(f) entity-holder rules. A tax adviser should be consulted before any
non-natural
person is made an owner or holder of a Policy, or before a business (other than a sole proprietorship) is made a beneficiary of a Policy.
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Employer-Owned Life Insurance Policies
Pursuant to section 101(j) of the Code, unless certain eligibility, notice and consent requirements are satisfied, the amount excludible as a death benefit payment under an employer-owned life insurance policy will generally be limited to the premiums paid for such policy (although certain exceptions may apply in specific circumstances). An employer-owned life insurance policy is a life insurance policy owned by an employer that insures an employee of the employer and where the employer is a direct or indirect beneficiary under such policy. It is the employer’s responsibility to verify the eligibility of the intended Insured under employer-owned life insurance policies and to provide the notices and obtain the consents required by section 101(j). These requirements generally apply to employer-owned life insurance policies issued or materially modified after August 17, 2006. A tax adviser should be consulted by anyone considering the purchase of an employer-owned life insurance policy.
Split-Dollar Arrangements
The IRS and the Treasury Department have issued guidance that substantially affects split-dollar arrangements. Consult a tax adviser before entering into or paying additional premiums with respect to such arrangements.
Additionally, the Sarbanes-Oxley Act of 2002 prohibits, with limited exceptions, publicly-traded companies, including
non-U.S.
companies that have securities listed on exchanges in the United States, from extending, directly or through a subsidiary, many types of personal loans to their directors or executive officers. It is possible that this prohibition may be interpreted as applying to split-dollar life insurance policies for directors and executive officers of such companies, since such insurance arguably can be viewed as involving a loan from the employer for at least some purposes.
The prohibition on loans is generally effective as of July 30, 2002. Any affected business contemplating the payment of a premium on an existing Policy, or the purchase of a new Policy, in connection with a split-dollar life insurance arrangement should consult legal counsel.
Prospective owners that are corporations should consult a tax adviser about the treatment of the Policy under the Treasury Regulations applicable to corporate tax shelters.
Tax Consequences of the Option to Extend the Maturity Date
The option to extend the Maturity Date that we offer allows the policy owner to extend the original maturity date by 20 years. An extension of maturity could have adverse tax consequences. Before you exercise your rights under this option, you should consult with a tax adviser regarding the possible tax consequences of an extension of maturity.
Disposition of the Policy
The disposition of your Policy will likely have federal income tax consequences. The amount and character of any gain or income recognized in connection with a disposition may vary, depending on the nature of the disposition, your investment in the Policy, premiums paid, and other factors. You should consult a tax adviser prior to any disposition.
Income payments from Net Cash Surrender Value or Death Benefit Proceeds
Your Policy contains provisions that allow for all or a portion of the Net Cash Surrender Value or death benefit to be paid in a series of installments. In addition, certain policies may have optional Riders that provide for installment benefits. These installments may be for a certain period of time, or may be payable based upon the life of one or more individuals.
54
Under the rules of Section 72 of the Code, each payment made will be comprised of two portions: A portion representing a return of the investment in the policy, and the remainder representing interest. The Exclusion Ratio as defined in Section 72(b) is used to determine what amount of each payment is excluded from tax reporting.
The calculation of the Exclusion ratio is based upon these two policy values as of the date the amount of the installment payment is being determined:
| |
• |
|
The portion of the Net Cash Surrender Value or death benefit proceeds being applied to the installment benefit. |
| |
• |
|
The investment in the policy. |
The portion of each payment that is treated as a return of the investment in the policy is equal to the Exclusion Ratio multiplied by the payment amount. For installment payments that are based upon the life of one or more individuals, once the investment in the policy has been depleted any subsequent payment(s) would be treated as a return of interest and thus fully taxable.
Certain Information Reporting
Section 6050Y of the Code requires information reporting for certain life insurance policy transactions. A return must be filed by every person who acquires a life insurance contract or any interest in a life insurance contract in a reportable policy sale. A reportable policy sale is generally the acquisition of an interest in a life insurance contract, directly or indirectly, if the acquirer has no substantial family, business, or financial relationship with the insured apart from the acquirer’s interest in such life insurance contract. The buyer must file the return required under Section 6050Y with the IRS and furnish copies of the return to the insurance company that issued the policy and the seller.
The transfer of your Policy or the designation of a beneficiary may have federal, state, and/or local transfer and inheritance tax consequences, including the imposition of gift, estate and generation-skipping transfer taxes. For example, the transfer of the Policy to, or the designation as beneficiary of, or the payment of proceeds to, a person who is assigned to a generation which is two or more generations below the generation of the owner, may have generation skipping transfer tax considerations under Section 2601 of the Code.
A 3.8% Medicare contribution tax generally applies to all or a portion of the net investment income of a taxpayer who is an individual and not a nonresident alien for federal income tax purposes and who has adjusted gross income (subject to certain adjustments) that exceeds a threshold amount ($250,000 if married filing jointly or if considered a “surviving spouse” for federal income tax purposes, $125,000 if married filing separately, and $200,000 in other cases). For these purposes, amounts received under annuities or life insurance contracts that are includable in gross income are generally considered net investment income.
The individual situation of each owner or beneficiary will determine the extent, if any, to which federal, state and local transfer taxes may be imposed. Consult with a tax adviser for specific information in connection with these taxes.
Life Insurance Purchases by Residents of Puerto Rico
In Rev. Rul.
2004-75,
2004-31
I.R.B. 109, the IRS announced that income received by residents of Puerto Rico under life insurance contracts issued by a Puerto Rico branch of a United States life insurance company is U.S.-source income that is generally subject to United States Federal income tax.
55
Life Insurance Purchases by Nonresident Aliens and Foreign Corporations
Purchasers that are not U.S. citizens or residents will generally be subject to U.S. federal withholding tax on taxable distributions from life insurance policies at a 30% rate, unless a lower treaty rate applies. In addition, purchasers may be subject to state and/or municipal taxes and taxes that may be imposed by the purchaser’s country of citizenship or residence. Prospective purchasers that are not U.S. citizens or residents are advised to consult with a tax adviser regarding U.S. and foreign taxation with respect to a life insurance policy purchase.
The foregoing is a summary of the federal income (and, where noted,
non-income)
tax considerations associated with the Policy and does not purport to cover all possible situations. The summary is based on our understanding of the present federal income tax laws as they are currently interpreted by the IRS. The summary is not intended as tax advice. No representation is made as to the likelihood of continuation of the present federal income tax laws or of the current interpretations by the IRS. Although the likelihood of legislative changes is uncertain, there is always the possibility that the tax treatment of the Policy could change by legislation or otherwise. Consult a tax adviser with respect to legislative developments and their effect on the Policy.
Are There Other Charges That The Company Could Deduct in the Future?
We currently make no charge against Policy Values to pay federal income taxes on investment gains. However, we reserve the right to do so in the event there is a change in the tax laws. We currently do not expect that any such charge will be necessary.
Under current laws, we may incur state and local taxes (in addition to premium taxes) in several states. At present, these taxes are not significant. If there is a material change in applicable state or local tax laws, we reserve the right to make such deductions for such taxes.
How Do I Communicate With The Company?
You may mail all checks for premium payments to The Penn Insurance and Annuity Company, Payment Processing Center, PO Box 7460, Philadelphia, Pennsylvania 19101-7460, or express all checks to The Penn Insurance and Annuity Company, Payment Processing Center, ATTN: L/B 7460, 525 Fellowship Road, Suite 330, Mt. Laurel, New Jersey
08054-3415.
Certain requests pertaining to your Policy must be made in writing and be signed and dated by you. They include the following:
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• |
|
policy loans in excess of $50,000, partial withdrawals in excess of $10,000, and surrenders; |
| |
• |
|
change of rate class; addition/removal of riders; |
| |
• |
|
decreases in Specified Amount of insurance; |
| |
• |
|
election of payment option for policy proceeds; and |
| |
• |
|
tax withholding elections. |
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You should mail these requests to our office, PO Box 178, Philadelphia, Pennsylvania 19105-0178 or express/overnight to The Penn Mutual Life Insurance Company, 1600 Malone Street, Millville, New Jersey 08332. You should also send notice of the insured peoples’ death and related documentation to our office. Communications are not treated as “received” until such time as they have arrived at our office in proper form. Any communication that arrives after the close of our business day, or on a day that is not a business day, will be considered “received” by us on the next following business day. Our business day currently ends at 4:00 p.m. Eastern Time, but special circumstances (such as suspension of trading on a major exchange) may dictate an earlier closing time. In order to receive a day’s closing price, instructions sent by facsimile or Internet transmission must be received by our fax server prior to the close of regular trading on the New York Stock Exchange on that day (generally 4:00 pm Eastern time).
We have special forms that must be used for a number of the requests mentioned above. You can obtain these forms from your financial professional or by calling our office at
800-523-
0650. Each communication to us must include your name, your policy number and the names of the insured people. We cannot process any request that does not include this required information.
You or the financial professional of record (pursuant to your instructions) may request transfers among Variable Investment Options and Fixed Account Options and may change allocations of future premium payments by calling our office at
In addition, if you complete a special authorization form, you may authorize a third person, other than the financial professional of record, to act on your behalf in giving us telephone transfer instructions. We require certain identifying information to process a telephone transfer. We will not be liable for following transfer instructions, including instructions from the finance professional of record, communicated by telephone that we reasonably believe to be genuine. In certain circumstances, such as periods of market volatility, severe weather, and emergencies, you may experience difficulty providing transaction instructions by telephone. We do not guarantee that we will be able to accept transaction instructions via telephone at all times. We also reserve the right to suspend or terminate the privilege altogether at any time.
What Is the Timing of Transactions Under the Policy?
Planned premium payments and unplanned premium payments which do not require evaluation of additional insurance risk will be credited to the Policy and the Net Premium will be allocated to the Variable Investment Options based on values at the end of the valuation period in which we receive the payment in “good order.” A valuation period is the same as the valuation period of the shares of the Portfolios held in the Variable Investment Options. Loan, transfer, partial withdrawal and surrender transactions will be based on values at the end of the valuation period in which we receive all required instructions and necessary documentation in “good order.” In order to receive a day’s closing price, instructions sent by facsimile transmission must be received by our fax server prior to the close of regular trading on the New York Stock Exchange on that day (generally 4:00 pm Eastern Time). Telephone instructions must be received in full, in good order, containing all required information and confirmed back to the caller prior to the close of regular trading in order to receive that day’s closing price. Death benefits will be based on values as of the date of death of the second insured to die.
We will ordinarily pay the death benefit, loan proceeds and partial withdrawal or surrender proceeds, within seven days after receipt at our office of all the documents required for completion of the transaction in good order.
A request or transaction is in Good Order if it complies with our administrative procedures, and the required information is complete and correct. This means the actual receipt by us of your request and any instructions related to the request in writing (or, if permitted, by telephone or electronic means), along with all forms, and any other information or documentation necessary to complete the transaction. We may, in our sole discretion, determine whether any particular request or transaction is in Good Order. We may reject or delay a request or transaction if the information needed
57
is not in Good Order. If you have any questions, you should contact us or your registered representative before submitting a form or request.
Possible Delays and Deferral.
We may defer making a payment from a Variable Investment Option if (1) the disposal or valuation of the Separate Account’s assets is not reasonably practicable because the New York Stock Exchange is closed for other than a regular holiday or weekend, trading is restricted by the Commission, or the Commission declares that an emergency exists; or (2) the Commission by order permits postponement of payment to protect our policy owners.
We may also defer making a payment from a Fixed Account Option for up to six months from the date we receive the written request. However, we will not defer payment of a partial withdrawal or policy loan requested to pay a premium due on a Policy. If a payment from a Fixed Account Option is deferred for 30 days or more, it will bear interest at a rate of 1% per year compounded annually while it is deferred.
We may also delay paying any surrender, withdrawal, loan, or other benefit if your premium or loan repayment check has not cleared your bank.
How Does The Company Communicate With Me?
At least once each year we will send a report to you showing your current Policy Values, premiums paid and deductions made since the last report, any outstanding policy loans, and any additional premiums permitted under your Policy. In addition, when you pay premiums, or if you borrow money under your Policy, transfer amounts among the Variable Investment Options and Fixed Account Options or make partial withdrawals, we will send a written confirmation to you. Information on Dollar Cost Averaging, Automatic Asset Rebalancing, and
pre-authorized
check payments will be confirmed on a quarterly statement.
Once each year, we will also send you an “Updating Summary Prospectus” containing information regarding any material changes we have made, and updating certain information regarding the Portfolios in the Variable Investment Options. You will also receive the annual and semi-annual shareholder reports for each Portfolio underlying a Variable Investment Option to which you have allocated your Policy Value to the extent required by the 1940 Act.
(You can request that paper copies of these reports be sent to you, but otherwise they will be available electronically).
Do I Have the Right to Cancel the Policy?
You have the right to cancel your Policy within 10 days after you receive it (or longer in some states). This is referred to as the free look period. To cancel your Policy, simply deliver or mail the Policy to our office or to the financial professional who delivered the Policy to you.
In most states, you will receive a refund of your Policy Value as of the date of cancellation, plus the premium charge and the Monthly Deductions, and minus any loans and accrued loan interest. The date of cancellation will be the date we receive the Policy.
In some states, you will receive a refund of any premiums you have paid. In these states your Policy Value will be allocated to the Short-Term Fixed Account during the free look period. At the end of the period, the Policy Value will be transferred to the Variable Investment Options and Fixed Account Options you have chosen.
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The Company is a Delaware stock life insurance company, wholly owned by The Penn Mutual Life Insurance Company. We were chartered in 1982 and have been continuously engaged in the life insurance business since that date. We are licensed to sell insurance in 49 states and the District of Columbia. Our corporate headquarters are located at Eight Tower Bridge, 161 Washington Street, Conshohocken, Pennsylvania 19428, a suburb of Philadelphia. Our mailing address is The Penn Insurance and Annuity Company, PO Box 178, Philadelphia, Pennsylvania 19105. We are obligated to pay all benefits provided under the Policies.
Penn Insurance and Annuity Variable Life Account I is a separate investment account under Delaware law. The Separate Account is registered with the Commission as a unit investment trust under the Investment Company Act of 1940 (the “1940 Act”) and qualifies as a “separate account” within the meaning of the federal securities laws.
Net Premiums received under the Policy and under other variable life insurance policies are allocated to the Variable Investment Options for investment in the Portfolios. They are allocated in accordance with instructions from policy owners.
Income, gains and losses, realized or unrealized, in a subaccount (a Variable Investment Option) are credited or charged against that subaccount without regard to any other income, gains or losses of the Company. Assets equal to the reserves and other contract liabilities with respect to the investments held in each subaccount are not chargeable with liabilities arising out of any other business or account of the Company. If the assets exceed the required reserves and other liabilities, we may transfer the excess to our General Account. We are obligated to pay all benefits provided under the Policies.
We reserve the right to add, combine or remove any Variable Investment Options or Portfolios when permitted by law. We retain the right, subject to any applicable law, to make substitutions with respect to the Portfolios of the Variable Investment Options. If investment in shares of a Portfolio should no longer be possible or, if in our judgment, becomes inappropriate to the purposes of the Policies, or, if in our judgment, investment in another portfolio is in the interest of owners, we may substitute another portfolio. No substitution may take place without notice to owners and prior approval of the Commission and insurance regulatory authorities, to the extent required by applicable law.
In the event of a Portfolio merger, any future premium payments will be allocated to the successor or acquiring Portfolio. In the event of the liquidation of a Portfolio, you will be required to provide a new allocation to one of the available Portfolios or accounts for Policy Value in, and any future premium payments allocated to, that Portfolio.
The assets of each Portfolio are separate from the others and each such Portfolio has different investment objectives and policies. As a result, each Portfolio operates as a separate investment fund and the investment performance of one Portfolio has no effect on the investment performance of any other Portfolio. You can make or lose money in any of the Variable Investment Options. The Portfolios described in this prospectus are different from funds that may have similar names but are available directly to the general public. The funds available directly to the general public may have the same adviser, same name, same investment objectives and policies, and substantially similar portfolio securities, but the investment performance may not be the same. The Portfolio’s prospectus should be read carefully before any decision is made concerning the allocation of Net Premium payments and Policy Value to a Variable Investment Option corresponding to a particular Portfolio.
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We offer no assurance that any of the
Portfolios
or Portfolios will attain their respective stated
i
nvestment objectives
.
Specific information regarding each portfolio or Portfolio, including (1) its name, (2) its type (
bond fund, large cap value, small cap growth, specialty, money market fund, etc.); (3) its investment adviser and any
sub-advisor;
(4) current expenses; and (5) investment performance, is available in Appendix A to this prospectus. For more information about each of these Portfolios, please read the Portfolio prospectuses. You should also read a Portfolio’s prospectus carefully before making any decision about allocating premium payments or a portion of your Policy Value to a Variable Investment Option corresponding to a particular Portfolio. Please contact us at
or contact your registered representative, if you would like to obtain any of the Portfolio prospectuses (in either paper or electronic format).
The Portfolios’ shares may be available to certain other separate accounts we use to fund variable annuity contracts offered by the Company. This is called “mixed funding.” The Portfolios’ shares may also be available to separate accounts of insurance companies that are not affiliated with the Company and, in certain instances, to
tax-qualified
policies. This is called “shared funding.” Although we do not anticipate that any difficulties will result from mixed and shared funding, it is possible that differences in tax treatment and other considerations may cause the interests of owners of various contracts participating in the Portfolios to be in conflict. In the event of a material conflict, we could be required to withdraw your Policy Value from a Portfolio. For more information about the risks of mixed and shared funding, please refer to the relevant Portfolio prospectus.
The Portfolios offered through this product are selected by us based on several criteria, including asset class coverage, the strength of the manager’s reputation and tenure, brand recognition, performance, and the capability and qualification of each sponsoring investment firm. We also receive payments or compensation from the Portfolios or their investment advisors, or from other service providers of the Portfolios in connection with administration, distribution and other services that we provide with respect to the Portfolios and their availability through the policies. These payments may be derived, in whole or in part, from the advisory fee charged by the Portfolio and deducted from Portfolio assets and/or from “Rule
12b-1”
fees deducted from Portfolio assets. These payments are also a factor in our selection of Portfolios. We may use these payments for any corporate purpose, including payment of expenses that we incur in promoting, marketing and administering the Policies, and in our role as an intermediary of the Portfolios. Policy owners, through their indirect investment in the Portfolios, bear the costs of these fees. The amounts we receive may be substantial, may vary by Portfolio, and may depend on how much Policy Value is invested in the particular Portfolio. We may profit from these payments. Currently, we receive payments or revenue under various arrangements in amounts up to 0.00% annually of the aggregate net asset value of the shares of some of the Portfolios held by the Variable Investment Options.
We do not provide investment advice and do not recommend or endorse any particular Portfolio. You are responsible for determining that these decisions are appropriate for your own individual circumstances and your investment goals, financial situation, and risk tolerance. Decisions regarding investment allocations should be carefully considered. You bear the risk of any decline in the value of your Policy resulting from the performance of the Portfolios you have chosen. You should consult with your registered representative to determine which combination of Investment Options is most appropriate for you, and periodically review your choices.
Certain Portfolios, generally referred to as “funds of funds” or “master-feeder arrangements,” may invest all or substantially all of their assets in portfolios of other funds. In such cases, you will indirectly pay fees and expenses at both portfolios levels, which would reduce your investment return.
Hedging strategies may be employed by certain Portfolios to attempt to provide downside protection during sharp downward movements in equity markets. The costs of these strategies could limit the upside participation of the Portfolio in rising equity markets relative to other funds.
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So-called
“alternative” investment strategies may also be used by certain funds, which may involve non- traditional asset classes. These alternative investment strategies may be riskier than more traditional investment strategies and may involve leverage or use complex hedging techniques, such as options and derivatives. These may offer potential diversification benefits beyond traditional investment strategies.
Investment selections should be based on a thorough investigation of all of the information regarding the Portfolios that is available to you, including each Portfolio’s prospectus, statement of additional information, and annual and semi-annual reports. Other sources, such as the Portfolio’s website or newspapers and financial and other magazines, provide more current information, including information about any regulatory actions or investigations relating to a Portfolio.
You have the right to tell us how to vote proxies for the Portfolio shares to which your Policy Value is allocated. If the law changes and permits us to vote the Portfolio shares, we may do so.
If you are a policy owner, we determine the number of full and fractional Portfolio shares that you may vote by dividing the portion of the owner’s Policy Value allocated to the Variable Investment Option by the net asset value of one share of the applicable Portfolio. Fractional votes will be counted. We may change these procedures whenever we are required or permitted to do so by law.
The Company will vote the shares held in the Variable Investment Options in accordance with voting instructions received from policy owners and other persons entitled to provide voting instructions. Portfolio shares for which policy owners and other persons entitled to vote have not provided voting instructions and shares owned by the Company in its general and unregistered separate accounts will be voted in proportion to the shares for which voting instructions have been received. Under state insurance law and federal regulations, there are certain circumstances under which the Company may vote other than as instructed by policy owners and other persons entitled to vote. In such cases, the policy owners and such other persons entitled to vote will be advised of that action in the next Portfolio shareholder report. The effect of this proportional voting is that a small number of policy owners may be able to determine the outcome of a vote.
Every state has unclaimed property laws that generally provide for escheatment to the state of unclaimed property (including escheatment of annuity, life, and other insurance policies) under various circumstances. In addition to the state unclaimed property law, we may be required to escheat property pursuant to regulatory demand, finding, agreement or settlement. To help prevent such escheatment it is important that you keep your Policy and other information on file with us up to date, including the names, contact and identifying information for owners, insureds, annuitants, beneficiaries and other payees.
Anti-Money Laundering and Counter-Terrorism
Federal laws designed to counter terrorism and prevent money laundering by criminals might in certain circumstances require us take action, including, but not limited to rejecting a premium payment and/ or “freezing” an owner’s account. If these laws apply in a particular situation, absent instructions from the appropriate regulator, we would not be allowed to pay any request for surrenders (either full or partial) or death benefits, make transfers, or continue making payments. We may also be required to provide information about you and your Policy to government agencies or departments.
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We, like other life insurance companies, are subject to regulatory and legal proceedings, including lawsuits, in the ordinary course of our business. Such legal and regulatory matters include proceedings specific to us and other proceedings generally applicable to business practices in the industry in which we operate. In some lawsuits and regulatory proceedings involving insurers, substantial damages have been sought and/or material settlement payments have been made. Although the outcome of any litigation or regulatory proceeding cannot be predicted with certainty, at the present time, we believe that there are no pending or threatened proceedings or lawsuits that are likely to have a material adverse impact on the Separate Account, on the principal underwriter’s ability to perform under its principal underwriting agreement, or on our ability to meet our obligations under the Policy.
The Company has an administrative services agreement with its parent company, The Penn Mutual Insurance Company (“PML”), that allows the Company to leverage PML’s distribution agreement with Hornor, Townsend & Kent, LLC (“HTK”) to act as principal underwriter for the distribution and sale of the Policies. HTK is affiliated with both the Company and PML, and is located at Eight Tower Bridge, 161 Washington Street, Conshohocken, Pennsylvania 19428. HTK sells the Policies through its financial professionals. HTK has also entered into selling agreements with other broker-dealers who in turn sell the Policies through their sales representatives. HTK is registered as a broker-dealer with the Commission under the Securities Exchange Act of 1934, as well as with the securities commissions in the states in which it operates, and is a member of the Financial Industry Regulatory Authority (“FINRA”).
The Company enters into selling agreements with other broker-dealers whose registered representatives are authorized by state insurance and securities departments to solicit applications for the Policies. Sales and renewal compensation are paid to these broker-dealers for soliciting applications as premium-based commission.
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Registered representatives may be paid commissions on a Policy they sell based on premiums paid in amounts up to 53.50% of first year premiums of sales, 2.50% on premiums paid during the second through fifteenth policy years, and 1.20% on premiums paid after the first fifteen policy years. |
In addition to or partially in lieu of commission, the Company may also make override payments and reimbursements, bonuses, wholesaler fees, and training and marketing allowances. Such payments may offset broker-dealer expenses in connection with activities they are required to perform, such as educating personnel and maintaining records. Registered representatives may also receive
non-cash
compensation such as expense-paid educational or training seminars involving travel within and outside the U.S. or promotional merchandise.
Such additional compensation may give the Company greater access to registered representatives of the broker-dealers that receive such compensation. While this greater access provides the opportunity for training and other educational programs so that your registered representative may serve you better, this additional compensation may provide the Company access to marketing benefits such as website placement, access to registered representative lists, extra marketing assistance, or other heightened visibility and access to the broker- dealer’s sales force that otherwise influences the way that the broker-dealer and the registered representative market the Policies.
Finally, within certain limits imposed by FINRA, registered representatives who are associated with HTK, as a broker-dealer affiliate, may qualify for sales incentive programs and other benefits sponsored by the Company. These HTK registered representatives are also financial professionals of the Company and upon achievement of specified annual sales goals may be eligible for compensation in addition to the amounts stated above, including bonuses, fringe benefits, financing arrangements, conferences, trips, prizes and awards.
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All of the compensation described in this section, and other compensation or benefits provided by the Company or its affiliates, may be more or less than the overall compensation on similar or other products and may influence your registered representative or broker-dealer to present this Policy rather than other investment options.
Individual registered representatives typically receive a portion of the compensation that is paid to the broker-dealer in connection with the Policy, depending on the agreement between the registered representative and their broker-dealer firm. The Company is not involved in determining that compensation arrangement, which may present its own incentives or conflicts. You may ask your registered representative how he/she will be compensated for the transaction.
The financial statements of the Company and the financial statements of the Separate Account appear in the statement of additional information, which may be obtained from The Penn Insurance and Annuity Company, Attn: SAI Request, PO Box 178, Philadelphia, Pennsylvania 19105. Or you can call toll- free at
The financial statements of the Company should be distinguished from any financial statements of the Separate Account and should be considered only as bearing upon the Company’s ability to meet its obligations under the Policies.
Portfolios Available Under the Policy
The following is a list of Portfolios available under the Policy. More information about the Portfolios is available in the prospectuses for the Portfolios, which may be amended from time to time and can be found online at
https://www.pennmutual.com/for-individuals-and-businesses/performance-and-rates.
You can also request this information at no cost by calling
or sending an email request to FundOperations@pennmutual.com. The current expenses and performance information below reflects fees and expenses of the Portfolios, but does not reflect the other fees and expenses that your Policy may charge. Expenses would be higher and performance would be lower if these other charges were included. Each Portfolio’s past performance is not necessarily an indication of future performance.
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PORTFOLIO AND
ADVISER/SUBADVISER |
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AVERAGE ANNUAL TOTAL RETURNS |
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Vanguard Variable Insurance Fund |
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The Vanguard Group, Inc. (Adviser) |
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0.14% |
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26.11% |
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15.52% |
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11.88% |
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Total Stock Market Index Portfolio The Vanguard Group, Inc. (Adviser) |
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0.13% |
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25.95% |
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14.93% |
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11.29% |
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Global Bond Index Portfolio |
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0.13% |
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6.52% |
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0.99% |
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0.88% |
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The Vanguard Group, Inc. (Adviser) |
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0.17% |
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15.83% |
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12.56% |
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9.27% |
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Moderate Allocation Portfolio |
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0.13% |
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15.55% |
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7.78% |
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6.19% |
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Total Bond Market Index Portfolio |
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0.14% |
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5.58% |
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1.04% |
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1.71% |
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International Large Blend |
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Total International Stock Market Index Portfolio |
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0.11% |
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15.54% |
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7.31% |
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4.05% |
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Conservative Allocation Portfolio |
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0.13% |
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12.51% |
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5.60% |
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4.84% |
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Wellington Management Company LLP (Adviser) |
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0.21% |
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14.33% |
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9.59% |
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7.89% |
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PORTFOLIO AND
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AVERAGE ANNUAL TOTAL RETURNS |
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PRIMECAP Management Company (Adviser) |
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0.34% |
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27.98% |
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14.33% |
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12.85% |
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Diversified Value Portfolio Hotchkis and Wiley Capital Management LLC (Adviser) and Lazard Asset Management LLC (Adviser) |
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0.29% |
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20.13% |
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14.28% |
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9.27% |
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Wellington Management Company LLP (Adviser) and The Vanguard Group, Inc. (Adviser) |
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0.29% |
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8.10% |
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11.57% |
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9.53% |
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Wellington Management Company LLP (Adviser) |
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0.33% |
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40.13% |
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16.08% |
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12.88% |
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High Yield Bond Portfolio Wellington Management Company LLP (Adviser) and The Vanguard Group, Inc. (Adviser) |
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0.24% |
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11.66% |
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5.13% |
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4.34% |
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International Large Growth |
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Baillie Gifford Overseas Ltd. (Adviser) Schroder Investment Management North America Inc. (Adviser) |
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0.33% |
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14.65% |
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10.28% |
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6.80% |
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Real Estate Index Portfolio The Vanguard Group, Inc. (Adviser) |
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0.26% |
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11.70% |
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7.18% |
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7.29% |
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Small Company Growth Portfolio ArrowMark Colorado Holdings, LLC (Adviser) The Vanguard Group, Inc. (Adviser) |
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0.29% |
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19.65% |
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9.98% |
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7.85% |
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| 1 |
Since inception (9/7/2017). |
Premium payments allocated and Policy Value transferred to the Fixed Account become part of the Company’s General Account. Interests in the General Account have not been registered under the Securities Act of 1933, nor is the General Account registered as an investment company under the 1940 Act. Accordingly, neither the General Account nor any interests therein are generally subject to the provisions of the 1933 and 1940 Acts. Disclosures regarding the Fixed Accounts, however, are subject generally to applicable provisions of federal securities laws relating to the accuracy and completeness of statements made in the Prospectus.
The Policy allows you to allocate your Policy Value to a Traditional Fixed Account and a Short-Term Fixed Account. As described in the relevant sections of the prospectus, Policy Value allocated to the Fixed Account in most respects is treated in the same manner as Policy Value allocated to the Variable Investment Options. Amounts allocated or transferred to any of these accounts under this Policy become part of Our general account assets. Subject to applicable law and regulation, investment of general account assets is at Our sole discretion.
The Fixed Account Options are both designed to be safe investments that provide fixed returns, where the Company pays a fixed rate of interest (that it declares periodically, subject to a minimum) and where the Company bears the investment risk. However, the Short-Term Fixed Account is intended as a temporary holding place for premiums that are expected ultimately to be invested in the Variable Investment Options; therefore, the Company intends to declare a lower rate of interest for the Short-Term Fixed Account than for the Traditional Fixed Account, and transfers out of the Traditional Fixed Account are subject to restrictions that do not apply to the Short-Term Fixed Account.
Amounts that you allocate to the Traditional Fixed Account will earn interest at a rate we declare from time to time. We guarantee that this rate will be at least 1.0%. We can change the current interest rate we credit for new allocations at any time, in our complete discretion. Restrictions apply to transfers out of the Traditional Fixed Account that do not apply to transfers out of the Short-Term Fixed Account.
Amounts that you allocate to the Short-Term Fixed Account will earn interest at a rate we declare from time to time. We guarantee that this rate will be at least 0.5%. We can change the current interest rate we credit for new allocations at any time, in our complete discretion.
In addition to a Traditional Fixed Account and a Short-Term Fixed Account, premium payments may also be allocated to a Fixed Dollar Cost Averaging Account, which are automatically
re-allocated
each month to one or more of the other Investment Options you select. Amounts that you allocate to the Dollar Cost Averaging Fixed Account will earn interest at a rate we declare from time to time. We guarantee that this rate will be at least 1.0%. We can change the current interest rate we credit for new allocations at any time, in our complete discretion. The Policy does not allow you to allocate your Policy Value to a Fixed Dollar Cost Averaging Account.
These Fixed Accounts are described further below.
Amounts allocated or transferred to the Short-Term Fixed Account will be credited with interest. In no event will the rate of interest credited be less than 0.5%. The declared rate will apply from the date of allocation or transfer through the end of a twelve month period. The twelve month period begins on the first day of the calendar month in which the allocation or transfer is made. Thereafter, interest will be credited on such amount for successive twelve month periods at the then current rate applicable to new
allocations to the account as of the beginning of each successive twelve month period. For each allocation, the rate will not change during the running of a twelve month period.
We will determine the interest rates applicable for the Short-Term Fixed Account in our discretion. Any credited interest above the minimum guaranteed interest is nonforfeitable after crediting except indirectly due to Surrender Charges.
Short-Term Fixed Account Value
On each Monthly Anniversary while the Policy is in force, the Short-Term Fixed Account Value is the sum of:
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the value of the Short-Term Fixed Account on the previous Monthly Anniversary; |
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one month’s interest on (a); |
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any premium allocated to the Short-Term Fixed Account since the preceding Monthly Anniversary reduced by the applicable percent of premium charge; |
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(d) |
any amount transferred into the Short-Term Fixed Account from one or more Variable Investment Options (or subaccounts) or the Traditional Fixed Account since the preceding Monthly Anniversary; |
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(e) |
interest on (c) from the date of receipt in the Home Office to the Monthly Anniversary; |
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interest on (d) from the date of transfer into the Short-Term Fixed Account to the Monthly Anniversary; |
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(g) |
any loan repayments allocated to the Short-Term Fixed Account since the prior Monthly Anniversary; and |
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(h) |
interest on (g) from the date of receipt in the Home Office to the Monthly Anniversary. |
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(a) |
any partial withdrawal from the Short-Term Fixed Account since the preceding Monthly Anniversary; |
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(b) |
any amount transferred out of the Short-Term Fixed Account into one or more Variable Investment Options (or subaccounts) or the Traditional Fixed Account since the preceding Monthly Anniversary; |
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(c) |
interest on (a) from the date of withdrawal to the Monthly Anniversary; |
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(d) |
interest on (b) from the date of transfer out of the Short-Term Fixed Account to the Monthly Anniversary; |
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(e) |
the applicable Monthly Deduction for the following policy month; |
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(f) |
any policy loan or unpaid policy loan interest taken from the Short-Term Fixed Account; |
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(g) |
interest on (f) from the date of the loan or loan interest deduction to the Monthly Anniversary; and |
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any applicable Surrender Charge taken from the Short-Term Fixed Account. |
On dates other than a Monthly Anniversary, the value of the Short-Term Fixed Account will be determined consistently with the above.
Short-Term Fixed Account Transfers
— Subject to and in accordance with the provisions of the Policy, an amount held in the Short-Term Fixed Account may be transferred to one or more Variable Investment Options (or subaccounts) or the Traditional Fixed Account.
We reserve the right, in Our sole discretion to add transfer restrictions on the Short-Term Fixed Account.
Traditional Fixed Account
Amounts allocated or transferred to the Traditional Fixed Account will be credited with interest. In no event will the rate of interest credited be less than 1%. The declared rate will apply from the date of allocation or transfer through the end of a twelve month period. The twelve month period begins on the first day of the calendar month in which the allocation or transfer is made. Thereafter, interest will be credited on such amount for successive twelve month periods at the then current rate applicable to new allocations to the account as of the beginning of each successive twelve month period. For each allocation, the rate will not change during the running of a twelve month period.
We will determine the interest rates applicable for the Traditional Fixed Account in our discretion. Any credited interest above the minimum guaranteed interest is nonforfeitable after crediting except indirectly due to Surrender Charges.
Traditional Fixed Account Value
— On each Monthly Anniversary while this Policy is in force, the Traditional Fixed Account Value is the sum of:
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(a) |
the value of the Traditional Fixed Account on the previous Monthly Anniversary; |
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(b) |
one month’s interest on (a); |
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any premium allocated to the Traditional Fixed Account since the preceding Monthly Anniversary reduced by the applicable percent of premium charge; |
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(d) |
any amount transferred into the Traditional Fixed Account from one or more Variable Investment Options (or subaccounts) or the Short-Term Fixed Account since the preceding Monthly Anniversary; |
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(e) |
interest on (c) from the date of receipt in the Home Office to the Monthly Anniversary; |
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(f) |
interest on (d) from the date of transfer into the Traditional Fixed Account to the Monthly Anniversary; |
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(g) |
any loan repayments allocated to the Traditional Fixed Account since the prior Monthly Anniversary; and |
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(h) |
interest on (g) from the date of receipt in the Home Office to the Monthly Anniversary. |
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(a) |
any partial withdrawal from the Traditional Fixed Account since the preceding Monthly Anniversary; |
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(b) |
any amount transferred out of the Traditional Fixed Account into one or more Variable Investment Options (or subaccounts) or the Short-Term Fixed Account since the preceding Monthly Anniversary; |
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(c) |
interest on (a) from the date of withdrawal to the Monthly Anniversary; |
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(d) |
interest on (b) from the date of transfer out of the Traditional Fixed Account to the Monthly Anniversary; |
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(e) |
the applicable Monthly Deduction for the following policy month; |
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(f) |
any policy loan or unpaid policy loan interest taken from the Traditional Fixed Account; |
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(g) |
interest on (f) from the date of the loan or loan interest deduction to the Monthly Anniversary; and |
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(h) |
any applicable Surrender Charge taken from the Traditional Fixed Account. |
On dates other than a Monthly Anniversary, the value of the Traditional Fixed Account will be determined consistently with the above.
Traditional Fixed Account Transfers
— Subject to and in accordance with the provisions of the Policy, an amount held in the Traditional Fixed Account may be transferred to one or more Variable Investment Options (or subaccounts) or the Short-Term Fixed Accounts subject to the following restrictions:
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(a) |
The sum of all transfers in a policy year cannot exceed the greatest of: |
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(i) |
25% of the Traditional Fixed Account Value at the previous policy anniversary, |
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the total amount transferred from the Traditional Fixed Account in the previous policy year. |
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(b) |
The amount that may be transferred excludes any amount held in the Policy Loan Account. |
We reserve the right, in Our sole discretion to add or waive the transfer restrictions on the Traditional Fixed Account. Please contact Us or Your agent to determine if a waiver is currently in effect.
Fixed Dollar Cost Averaging Account
Premium payments may be allocated to the Fixed Dollar Cost Averaging Account and have a fixed percentage transferred monthly from the account to the Variable Investment Options (or subaccounts) of the Separate Account, as directed by You, to achieve dollar cost averaging.
Amounts held in the Fixed Dollar Cost Averaging Account will be credited with interest. The declared interest rate will apply from the date of the allocation to the account through the end of the dollar cost averaging period. Thereafter, interest will be credited at the then current rate applicable to new allocations to the account as of the beginning of each new dollar cost averaging period.
We will determine the interest rates applicable for the Fixed Dollar Cost Averaging Account in our discretion. In no event will the rate of interest credited be less than 1%. Any credited interest above the minimum guaranteed interest is nonforfeitable after crediting except indirectly due to Surrender Charges.
Premium payments may only be allocated to one of the Fixed Dollar Cost Averaging Options in conjunction with an election of the Dollar Cost Averaging program. Once a Fixed Dollar Cost Averaging Option is selected, an additional Fixed Dollar Cost Averaging Option cannot be selected.
You can request to terminate the account. The remaining balance will be transferred to the Variable Investment Options (or subaccounts) of the Separate Account as directed by You. The minimum amount that can be allocated to the Fixed Dollar Cost Averaging Account is $600 and the amount transferred each month must be at least $25.
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See “Do I Have the Right to Cancel the Policy?” |
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You have the right to cancel your Policy within 30 days after you receive it. |
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See “What Are the Supplemental Riders that are Available? — Chronic Illness Accelerated Benefit Rider” |
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Chronic Illness means that an Insured has been certified by a licensed health care practitioner within the last 12 months as: • Being unable to perform at least two Activities of Daily Living (bathing, continence, dressing, eating, toileting, transferring) without substantial assistance from another person due to a loss of functional capacity for a period of at least 90 days (which need not be consecutive); or • Requiring substantial supervision by another person for a period of at least 90 days (which need not be consecutive) to protect the Insured from threats to health and safety due to severe Cognitive impairment. |
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See “Incontestability” in the Statement of Additional Information |
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For Incontestability, the SAI language has been revised as follows: After a Policy has been in force during the insured’s lifetime for two years from the date of issue, we may not contest the Policy. However, if there has been a Policy change or reinstatement for which we required evidence of insurability, we may contest that Policy change or reinstatement for two years with respect to information provided at that time, during the lifetime of the insured, from the effective date of the Policy change or reinstatement. |
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See “What Is a Policy Loan?” |
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There is no minimum policy loan amount. |
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See “Do I Have the Right to Cancel the Policy?” |
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If your Policy is not replacing an existing policy, you have the right to cancel your Policy within 14 days after you receive it. If your Policy is a replacement, you have the right to cancel your Policy within 30 days after you receive it. |
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See “Incontestability” in the Statement of Additional Information |
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For Incontestability, the SAI language has been revised as follows: After a Policy has been in force during the insured’s lifetime for two years from the date of issue, we may not contest the Policy. However, if there has been a Policy change or reinstatement for which we required evidence of insurability, we may contest that Policy change or reinstatement for two years with respect to information provided at that time, during the lifetime of the insured, from the effective date of the Policy change or reinstatement. |
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See “Do I Have the Right to Cancel the Policy?” |
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If you cancel your Policy during the free look period, you will receive a refund of any premiums you have paid. During the free look period, your Policy Value will be allocated to the Short-Term Fixed Account. At the end of the period, your Policy Value will be transferred to the Variable Investment Options and Fixed Account Options you have chosen. |
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See “Do I Have the Right to Cancel the Policy?” |
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If you cancel your Policy during the free look period, you will receive a refund of any premiums you have paid. During the free look period, your policy value will be allocated to the Short-Term Fixed Account. At the end of the period, your policy value will be transferred to the Variable Investment Options and Fixed Account Options you have chosen. |
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See “Incontestability” in the Statement of Additional Information |
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For Incontestability, the SAI language has been revised as follows: After a Policy has been in force during the insured’s lifetime for two years from the date of issue, we may not contest the Policy. However, if there has been a Policy change or reinstatement for which we required evidence of insurability, we may contest that Policy change or reinstatement for two years with respect to information provided at that time, during the lifetime of the insured, from the effective date of the Policy change or reinstatement. If We initiate a mutual rescission or institute proceedings to vacate the Policy or any rider or supplemental benefits, we must commence such action within the time specified above. |
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See “Suicide” in the Statement of Additional Information |
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The suicide exclusion does not restart upon reinstatement. |
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The Penn Insurance and Annuity Company (PIA) Founded in 1980, The Penn Insurance and Annuity Company (PIA) is a wholly owned life insurance subsidiary of Penn Mutual. Domiciled in Delaware, PIA maintains its operations in Conshohocken, Pennsylvania, and is licensed to do business in 49 states and the District of Columbia. It markets its b usi ness through Penn Mutual’s distribution systems and has its in-force business serviced by the parent |
Survivorship Protection VUL is issued by The Penn Insurance and Annuity Company on Policy Form ICC23-PI-SVFL and state variations thereof.
©
2024 The Penn Insurance and Annuity Company, Philadelphia, PA 19172, www.pennmutual.com
