MEMBERS LIFE INSURANCE COMPANY
I ncome Benefit Supplement Dated September 30, 2025
to
TruStage™ ZoneChoice Income Annuity Statutory Prospectus and Initial Summary Prospectus
dated September 30, 2025
INCOME BENEFIT TERMS
FOR CONTRACT APPLICATIONS SIGNED ON OR AFTER SEPTEMBER 30, 2025
This Income Benefit Supplement (this "Supplement") applies to the TruStage™ ZoneChoice Income
Annuity Contract (the “Contract”). Please read it carefully and keep it with your Prospectus for future
reference. Capitalized terms have the meanings provided in the Prospectus. To confirm that you have the
most current Income Benefit Supplement, please ask your financial professional; contact us at 2000
Heritage Way, Waverly, IA 50677 or 1-800-798-5500; or go to https://www.trustage.com/regulatory-
documents. This Supplement has no specified end date and is effective until superseded by a
subsequent Income Benefit Supplement. We will file a new Income Benefit Supplement at least 10
Business Days before new Income Benefit terms go into effect. Once your Contract is issued, the
Income Benefit terms applicable to you will not change for the life of your Contract. You can find
Income Benefit terms for prior Contract Application Dates in Appendix C to the Prospectus.
This Supplement provides current values for the following Income Benefit terms that you need to
understand when buying the Contract and choosing an Income Benefit rider: Base Withdrawal
Percentage, Annual Increase Percentage, and Income Benefit Fee Rate.
A combination of the Base Withdrawal Percentage and the Annual Increase Percentage is used to
determine the Income Benefit Percentage. The percentages that apply to you depend on whether there is
one Covered Person or two Covered Persons, and the Covered Person(s) Age(s) as of the Contract Issue
Date. If there are two Covered Persons, the joint life option rates apply. The Annual Increase Percentage
is subject to a Maximum Annual Increase Period of 20 years.
For you to receive the Income Benefit terms reflected in this Supplement:
•your Application Signed Date must be on or after the date set forth above and before we establish
new Income Benefit terms through a new Supplement; and
•we must receive your paperwork in Good Order within 14 calendar days of the Application Signed
Date; and
•we must receive the Purchase Payment within 60 calendar days of the Application Signed Date.
Once these conditions are met, if we establish new Income Benefit terms before we issue your Contract
that all change to your advantage or are unchanged, we will apply the new Income Benefit terms on the
Contract Issue Date. However, if any new Income Benefit term changes to your disadvantage, we will
apply all of the Income Benefit terms in this Supplement.
If you do not meet the above conditions and we establish new Income Benefit terms after the Application
Signed Date, the new Income Benefit terms will apply. However, if any new Income Benefit term changes
to your disadvantage, we will consider your application not in Good Order; before we issue your Contract,
we will require you to acknowledge that you wish to proceed based on the changed (less advantageous)
Income Benefit terms.
KEY INFORMATION
Are There Ongoing Fees and Expenses? | Yes. The table below describes the fees and expenses that you may pay each year, depending on the Allocation Options you choose. There is an implicit ongoing fee on the Risk Control Accounts to the extent that the Cap Rate or Dual Step Rate limit your participation in Index gains, which is not reflected in the tables below. This means your returns may be lower than the Index's returns; however, in exchange for accepting limits on Index gains, you receive some protection from Index losses through the Floors, Buffers, and Boosts. Please refer to your Contract Data Page and Rider Data Page for information about the specific fees you will pay each year based on the options you have elected. Once your Contract is issued, your Income Benefit Fee Rate will not change for the life of your Contract. | Location in Prospectus: Fee Table Charges and Adjustments | |||
Annual Fee | Minimum Charge | Maximum Charge | |||
Income Benefit Fee Rate(1) (may vary by Income Benefit rider) | 1.50% | 1.50% | |||
(1) As a percentage of the average daily Income Benefit Base for the prior Contract Year. | |||||
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 result in Surrender Charges, negative Interim Value calculations, and a negative Market Value Adjustment that substantially increase costs. | |||||
Lowest Annual Cost: $1,340 | Highest Annual Cost: $1,340 | ||||
Assumes: •$100,000 investment •5% annual appreciation •Least expensive Income Benefit Rider •No sales charges •No transfers or withdrawals •$0 Interim Value calculation on Income Benefit Fee deduction •No Market Value Adjustment | Assumes: •$100,000 investment •5% annual appreciation •Most expensive Income Benefit Rider •No sales charges •No transfers or withdrawals •$0 Interim Value calculation on Income Benefit Fee deduction •No Market Value Adjustment | ||||
CHARGES AND ADJUSTMENTS - Income Benefit Fee
Income Benefit Fee Rate (as a percentage of the average daily Income Benefit Base for the prior Contract Year) | Current Charge |
IncomeGrowth Protection Rider | 1.50% |
IncomeGrowth Performance Rider | 1.50% |
Percentages for Single Life Income Benefit Payments | ||||
Age on Contract Issue Date | IncomeGrowth Protection | IncomeGrowth Performance | ||
Base Withdrawal Percentage | Annual Increase Percentage | Base Withdrawal Percentage | Annual Increase Percentage | |
21 - 44 | 3.50% | 0.20% | 2.75% | 0.20% |
45 | 4.50% | 0.20% | 3.75% | 0.20% |
46 | 4.65% | 0.20% | 3.90% | 0.20% |
47 | 4.80% | 0.20% | 4.05% | 0.20% |
48 | 4.95% | 0.20% | 4.20% | 0.20% |
49 | 5.10% | 0.20% | 4.35% | 0.20% |
50 | 5.25% | 0.20% | 4.50% | 0.20% |
51 | 5.40% | 0.20% | 4.65% | 0.20% |
52 | 5.55% | 0.20% | 4.80% | 0.20% |
53 | 5.70% | 0.20% | 4.95% | 0.20% |
54 | 5.85% | 0.20% | 5.10% | 0.20% |
55 | 6.00% | 0.25% | 5.25% | 0.25% |
56 | 6.10% | 0.25% | 5.35% | 0.25% |
57 | 6.20% | 0.25% | 5.45% | 0.25% |
58 | 6.30% | 0.25% | 5.55% | 0.25% |
59 | 6.40% | 0.25% | 5.65% | 0.25% |
60 | 6.50% | 0.30% | 5.75% | 0.30% |
61 | 6.60% | 0.30% | 5.85% | 0.30% |
62 | 6.70% | 0.30% | 5.95% | 0.30% |
63 | 6.80% | 0.30% | 6.05% | 0.30% |
64 | 6.90% | 0.30% | 6.15% | 0.30% |
65 | 7.00% | 0.35% | 6.25% | 0.35% |
66 | 7.10% | 0.35% | 6.35% | 0.35% |
67 | 7.20% | 0.35% | 6.45% | 0.35% |
68 | 7.30% | 0.35% | 6.55% | 0.35% |
69 | 7.40% | 0.35% | 6.65% | 0.35% |
70 | 7.50% | 0.40% | 6.75% | 0.40% |
71 | 7.60% | 0.40% | 6.85% | 0.40% |
72 | 7.70% | 0.40% | 6.95% | 0.40% |
73 | 7.80% | 0.40% | 7.05% | 0.40% |
74 | 7.90% | 0.40% | 7.15% | 0.40% |
75 | 8.00% | 0.45% | 7.25% | 0.45% |
76 | 8.00% | 0.45% | 7.25% | 0.45% |
77 | 8.00% | 0.45% | 7.25% | 0.45% |
78 | 8.00% | 0.45% | 7.25% | 0.45% |
79 | 8.00% | 0.45% | 7.25% | 0.45% |
80+ | 8.00% | 0.50% | 7.25% | 0.50% |
Percentages for Joint Life Income Benefit Payments | ||||
Age on Contract Issue Date* | IncomeGrowth Protection | IncomeGrowth Performance | ||
Base Withdrawal Percentage | Annual Increase Percentage | Base Withdrawal Percentage | Annual Increase Percentage | |
21 - 44 | 2.75% | 0.20% | 2.00% | 0.20% |
45 | 3.75% | 0.20% | 3.00% | 0.20% |
46 | 3.90% | 0.20% | 3.15% | 0.20% |
47 | 4.05% | 0.20% | 3.30% | 0.20% |
48 | 4.20% | 0.20% | 3.45% | 0.20% |
49 | 4.35% | 0.20% | 3.60% | 0.20% |
50 | 4.50% | 0.20% | 3.75% | 0.20% |
51 | 4.65% | 0.20% | 3.90% | 0.20% |
52 | 4.80% | 0.20% | 4.05% | 0.20% |
53 | 4.95% | 0.20% | 4.20% | 0.20% |
54 | 5.10% | 0.20% | 4.35% | 0.20% |
55 | 5.25% | 0.25% | 4.50% | 0.25% |
56 | 5.35% | 0.25% | 4.60% | 0.25% |
57 | 5.45% | 0.25% | 4.70% | 0.25% |
58 | 5.55% | 0.25% | 4.80% | 0.25% |
59 | 5.65% | 0.25% | 4.90% | 0.25% |
60 | 5.75% | 0.30% | 5.00% | 0.30% |
61 | 5.85% | 0.30% | 5.10% | 0.30% |
62 | 5.95% | 0.30% | 5.20% | 0.30% |
63 | 6.05% | 0.30% | 5.30% | 0.30% |
64 | 6.15% | 0.30% | 5.40% | 0.30% |
65 | 6.25% | 0.35% | 5.50% | 0.35% |
66 | 6.35% | 0.35% | 5.60% | 0.35% |
67 | 6.45% | 0.35% | 5.70% | 0.35% |
68 | 6.55% | 0.35% | 5.80% | 0.35% |
69 | 6.65% | 0.35% | 5.90% | 0.35% |
70 | 6.75% | 0.40% | 6.00% | 0.40% |
71 | 6.85% | 0.40% | 6.10% | 0.40% |
72 | 6.95% | 0.40% | 6.20% | 0.40% |
73 | 7.05% | 0.40% | 6.30% | 0.40% |
74 | 7.15% | 0.40% | 6.40% | 0.40% |
75 | 7.25% | 0.45% | 6.50% | 0.45% |
76 | 7.25% | 0.45% | 6.50% | 0.45% |
77 | 7.25% | 0.45% | 6.50% | 0.45% |
78 | 7.25% | 0.45% | 6.50% | 0.45% |
79 | 7.25% | 0.45% | 6.50% | 0.45% |
80+ | 7.25% | 0.50% | 6.50% | 0.50% |
*Age of the older Covered Person on the Contract Issue Date if the older Covered Person's Age is
within 5 years of the younger Covered Person's Age; if the age difference is greater than 5 years,
the Age of the younger Covered Person on the Contract Issue Date will be used.
TruStage™ ZoneChoice Income Annuity
Issued by:
MEMBERS Life Insurance Company
2000 Heritage Way
Waverly, Iowa 50677
Telephone number: 800-798-5500
Offered Through: CUNA Brokerage Services, Inc.
DATED SEPTEMBER 30, 2025
This Prospectus describes the TruStage™ ZoneChoice Income Annuity, an individual or joint owned,
single purchase payment deferred index-linked annuity contract issued by MEMBERS Life Insurance
Company. This Prospectus describes all material rights and obligations of Owners, including all state
variations, and provides important information you should know before investing. Please keep this
Prospectus for future reference.
You may purchase the Contract with a single Purchase Payment of at least $10,000. We do not allow
additional Purchase Payments. The Contract is a complex investment and involves risks,
including potential loss of principal. You should speak with a financial professional about the
Contract’s features, benefits, risks, and fees, and whether it is appropriate for you based upon your
financial situation and objectives.
The Contract is designed for you to take lifetime payments under a non-optional Income Benefit. On the
Contract application, you must choose from one of the two Income Benefit riders we offer - IncomeGrowth
Protection, which offers relatively higher guaranteed income by generally providing a higher Base
Withdrawal Percentage; and IncomeGrowth Performance, which offers the potential for higher
performance over time by offering additional Risk Control Account Allocation Options. This election cannot
be changed. We assess an annual Income Benefit Fee for the Income Benefit, which is disclosed in the
current Income Benefit Supplement along with other important Income Benefit terms you need to
understand when deciding which rider to choose. You should not sign an application for the Contract
without first reading the current Income Benefit Supplement.
Subject to certain conditions, the Income Benefit provides guaranteed lifetime Income Benefit Payments
based on a single or joint Income Benefit Percentage of your Income Benefit Base. Income Benefit
Payments are guaranteed regardless of investment performance and will continue even if your Contract
Value is reduced to zero from Income Benefit Payments. Excess Withdrawals, which generally include all
withdrawals other than Income Benefit Payments, reduce the Death Benefit, Income Benefit Base, and
Income Benefit Payment, perhaps significantly, and could terminate the Contract. The Income Benefit
Payment is a withdrawal of your own Contract Value unless the Contract Value is reduced to zero. The
probability of you outliving your Contract Value and receiving Income Benefit Payments from our
General Account may be minimal. Income Benefit Payments reduce the Death Benefit, Surrender
Value, Contract Value and the Annual Free Withdrawal Amount by the amount of the Income Benefit
Payment. Due to the Income Benefit, this Contract may not be appropriate for investors who are only
interested in maximizing long-term accumulation.
You may allocate your Contract Value among index-linked Allocation Options (“Risk Control Accounts”)
and a fixed interest rate Allocation Option (“Fixed Account”) for accumulation and long-term investment
purposes. Additional information about each Allocation Option is provided in Appendix A. The Risk
Control Accounts available to you will vary depending upon which Income Benefit rider you
select, and for the IncomeGrowth Performance rider, whether it is before or after your Income
Benefit Payment Start Date. The Risk Control Accounts are more limited in number and upside
potential with the IncomeGrowth Protection rider, and with the IncomeGrowth Performance rider
for reallocations after the Income Benefit Payment Start Date. See Appendix A. We currently offer
Allocation Options with Interest Terms of one or six years. Allocation Options are available on the Contract
Issue Date and at the end of the applicable Interest Term. Before the end of each Interest Term, we will
notify you of the available Allocation Options to which you may transfer maturing Contract Value. New
Allocation Options may have different Interest Terms and Crediting Strategies than what was previously
available. We reserve the right to add, substitute, or eliminate Indices and Allocation Options as described
in this Prospectus. The Fixed Account and a Risk Control Account with a 0% Floor, a minimum 1%
Cap Rate, and a minimum 100% Participation Rate will always be available. However, we may
change or discontinue some or all of the other Allocation Options; any remaining Allocation
Options may have terms that are unacceptable to you and may not provide any protection from
index losses, which could result in the loss of the entire amount of your Contract Value. Allocation
Options and features may vary by state, and your selling firm may limit the Allocation Options available to
you.
We credit interest daily to the Fixed Account based on a fixed annual interest rate that is guaranteed for
each one-year Interest Term. The Fixed Interest Rate will never be below 0.05%.
We credit interest to the Risk Control Accounts at the end of each Interest Term based in part on the
performance of an external Index by comparing the change in the Index from the first day of the Interest
Term to the last day of the Interest Term (“Index Return”). We currently offer three reference indices: the
S&P 500 Index, the Dimensional US Small Cap Value Systematic Index, and the Barclays Risk Balanced
Index. It is possible that you will not earn any interest in, or that we may credit negative interest to,
the Risk Control Accounts.
We currently offer Risk Control Accounts with the following Crediting Strategies: Floor with Participation
Rate and Cap Rate; Buffer with Participation Rate and Cap Rate; Boost with Participation Rate and Cap
Rate; and Buffer with Dual Step Rate. The Floor, Buffer, and Boost may provide protection by limiting the
amount of negative interest credited to you from negative Index performance, but the Cap Rate and Dual
Step Rate may limit the amount of interest you can earn from positive Index performance. The Floor,
Buffer, and Boost do not limit losses from the Surrender Charge, Market Value Adjustment,
Interim Value calculation, Income Benefit Fee, proportionate calculations, or taxes.
•The Floor is the maximum amount of negative interest that we will credit you at the end of an
Interest Term. Negative Index performance will reduce your Risk Control Account Value by up to
the amount of the Floor you elected. We currently offer eleven Floor options: 0%, -1%, -2%, -3%,
-4%, -5%, -6%, -7%, -8%, -9%, and -10%. During the life of your Contract, a Risk Control Account
with a 0% Floor will always be available. There is a risk of loss of principal and previously
credited interest of up to the Floor (a maximum loss of 10% with a Floor of -10%) each
Interest Term due to negative Index performance.
•The Buffer provides you limited protection each Interest Term against negative Index
performance up to the Buffer, but we will credit you any negative interest that exceeds the Buffer.
We currently offer Risk Control Accounts with a -10% Buffer and a -20% Buffer. We may not
always make available Risk Control Accounts with Buffers, but if we do, a Buffer of -10% or more
will be available. There is a risk of loss of principal and previously credited interest of up to
the amount of any negative Index performance that exceeds the Buffer (a maximum loss of
90% with a Buffer of -10%, if the Index declines by 100%) each Interest Term due to
negative Index performance.
•The Boost provides you limited protection each Interest Term by increasing any negative Index
performance by the amount of the Boost. If the Index Return is zero or positive, the Boost is also
the minimum Adjusted Index Return (subject to the Cap Rate). We currently offer Risk Control
Accounts with a 10% Boost and a 20% Boost. We may not always make available Risk Control
Accounts with Boosts, but if we do, a Boost of 10% or more will be available. There is a risk of
loss of principal and previously credited interest of up to the amount of any negative Index
performance that exceeds the Boost (a maximum loss of 90% with a 10% Boost, if the
Index declines by 100%) each Interest Term due to negative Index performance.
•The Cap Rate is the maximum amount of any positive Index interest that we will credit you at the
end of an Interest Term. Positive Index performance will increase your Risk Control Account Value
by up to the Cap Rate. We reset the Cap Rates at the start of each Interest Term. The Cap Rate
for Risk Control Accounts with one-year Interest Terms will never be less than 1%, and the Cap
Rate for Risk Control Accounts with six-year Interest Terms will never be less than 10%. With the
Cap Rate, you may receive only a portion of any positive Index performance.
•The Participation Rate is the percentage of any positive Index interest that we will credit you at
the end of an Interest Term. For Risk Control Accounts with a Buffer or Floor, the Participation
Rate is applied to any positive Index Return. For Risk Control Accounts with a Boost, the
Participation Rate is applied to any Index Return that is greater than the Boost. We reset the
Participation Rate at the start of each Interest Term. The Participation Rate will never be less than
100%, which means that the Participation Rate alone will not limit the amount of Interest you earn
from positive Index performance.
•The Dual Step Rate is the Adjusted Index Return that we will credit you when the Index Return is
greater than or equal to the applicable Buffer. In other words, if you choose a Buffer of -10%, the
Dual Step Rate will only apply if there is negative Index Return that is -10% or better, or a
positive Index Return. We will not credit you interest from positive Index performance that
exceeds the Dual Step Rate. We reset the Dual Step Rate at the start of each Interest Term. We
may not always make available Risk Control Accounts with a Dual Step Rate, but if we do, the
Dual Step Rate will never be less than 10%. With the Dual Step Rate, you may receive only a
portion of any positive Index performance.
This Contract is not a short-term investment and may not be appropriate if you need ready access
to cash. Surrender Charges, Market Value Adjustments, Interim Value calculations, the Income
Benefit Fee, proportionate calculations, income taxes, and additional taxes may result in the loss
of your principal and previously credited interest. Withdrawals and Flex Transfers could also have
a significant negative impact on your values under the Contract and the amount you receive from
any payments.
•If you take an Excess Withdrawal or surrender your Contract during the first six Contract Years,
you may pay a Surrender Charge of up to 8% of the amount withdrawn that exceeds the Annual
Free Withdrawal Amount.
•If you surrender your Contract or take an Excess Withdrawal from any Allocation Option at
any time other than on or within 30 days after each sixth Contract Anniversary, we will apply a
Market Value Adjustment (which may be positive or negative) to the amount that exceeds the
Annual Free Withdrawal Amount. A negative Market Value Adjustment could significantly
decrease the amount you receive from an Excess Withdrawal or surrender. In extreme
circumstances, losses from the Market Value Adjustment could be as high as 90% of your
Contract Value.
•For Contract Value allocated to a Risk Control Account, if you take a withdrawal (including for
Income Benefit Payments), make a Flex Transfer, surrender your Contract, die, begin Payout
Options, or we deduct the Income Benefit Fee, the amount withdrawn or transferred before the
expiration of an Interest Term is based on the Interim Value and will reduce the Crediting Base
proportionally. The Interim Value calculation may reflect a positive or negative return that
increases or decreases the amount remaining in the Risk Control Account. This could
significantly decrease the values under your Contract by more than the withdrawal or
transfer amount. In extreme circumstances, losses from the Interim Value calculation
could be as high as 100% of your Risk Control Account Value. Only the Crediting Base
remaining in a Risk Control Account after a withdrawal or transfer will be credited interest,
positive or negative, at the end of the Interest Term. You should consult with your financial
professional about whether to elect the Fixed Account Automatic Transfer and Withdrawal
Program, which allows Income Payments to be taken only from the Fixed Account.
•Excess Withdrawals reduce the Income Benefit Base, which is used to determine the Income
Payment, and the Purchase Payment, which is used to determine the Death Benefit, by the ratio
of the withdrawal (including any Surrender Charge and Market Value Adjustment) to the Contract
Value immediately prior to the withdrawal. As a result, reductions due to Excess Withdrawals
may be substantially more than the amount withdrawn, could significantly decrease your
Income Benefit Payment, Death Benefit, and remaining Contract Values, and could
terminate the Income Benefit and the Contract.
•The Floor, Buffer, and Boost do not limit losses from the Surrender Charge, Market Value
Adjustment, Interim Value calculation, Income Benefit Fee, proportionate calculations, or
taxes; however, full surrenders from the Fixed Account are subject to the Fixed Account
nonforfeiture value.
•Withdrawals and surrenders are subject to federal income taxes and may be subject to a 10%
additional tax if taken before age 59½.
•Although the Contract permits systematic withdrawals (including for Required Minimum
Distributions under the Internal Revenue Code), these withdrawals may have an adverse
effect on your values under the Contract. Additionally, we deduct the Income Benefit Fee
on an annual basis, including before the end of the Interest Term for Risk Control
Accounts with six-year Interest Terms. If you intend to make ongoing withdrawals other
than your Income Benefit Payments, you should consult a financial professional to
determine whether the Contract is appropriate for you. You should consult with your
financial professional about whether to elect the Fixed Account Automatic Transfer and
Withdrawal Program, which allows Income Payments to be taken only from the Fixed
Account.
This Contract is a security. It involves investment risk and other risks and may lose value. For
additional information on risks associated with the Contract, see “Principal Risks of Investing in the
Contract" on Page 23. The guarantees in this Contract are subject to the Company’s financial strength
and claims-paying ability.
Additional information about certain investment products, including index-linked annuities, has been
prepared by the Securities and Exchange Commission’s staff and is available at investor.gov/.
The Contract or certain Allocation Options may not be available in all states. This Prospectus
does not constitute an offer to sell any Contract and it is not soliciting an offer to buy any
Contract in any state in which the offer or sale is not permitted. We do not authorize anyone to
provide any information or representations regarding the offering described in this Prospectus
other than the information and representations contained in this Prospectus.
Neither the SEC nor any state securities commission has approved or disapproved of these
securities or determined if this Prospectus is truthful or complete. Any representation to the
contrary is a criminal offense. The Contracts are not insured by the Federal Deposit Insurance
Corporation or any other government agency. They are not deposits or other obligations of any
bank and are not bank guaranteed. They are subject to investment risks and possible loss of
principal and previously credited interest.
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. Upon cancellation, you will receive a full refund of the amount
you paid with your application (less any withdrawals). Some states may permit a longer period for
you to return your Contract, or different calculations and requirements for refunded amounts. You
should review this prospectus, or consult with your investment professional, for additional
information about the specific cancellation terms that apply.
i
TABLE OF CONTENTS
GLOSSARY ............................................................................................................................................... | |
OVERVIEW OF THE CONTRACT ......................................................................................................... | |
Purpose .................................................................................................................................................. | |
Purchase and Contract Periods ......................................................................................................... | |
Income Benefit ..................................................................................................................................... | |
Allocation Options ............................................................................................................................... | |
Withdrawal Options, Transfers, and Adjustments ........................................................................... | |
Other Contract Features ..................................................................................................................... | |
KEY INFORMATION ................................................................................................................................ | |
FEE TABLE ................................................................................................................................................ | |
PRINCIPAL RISKS OF INVESTING IN THE CONTRACT ................................................................ | |
THE INSURANCE COMPANY AND SEPARATE ACCOUNT .......................................................... | |
MEMBERS Life Insurance Company ................................................................................................ | |
The Risk Control Separate Account .................................................................................................. | |
GETTING STARTED - THE ACCUMULATION PERIOD .................................................................. | |
Purchasing a Contract ......................................................................................................................... | |
Tax-Free Section 1035 Exchanges ................................................................................................... | |
Owner and Joint Owners .................................................................................................................... | |
Divorce ................................................................................................................................................... | |
Annuitant and Joint Annuitants .......................................................................................................... | |
Beneficiary and Irrevocable Beneficiaries ........................................................................................ | |
Covered Person .................................................................................................................................... | |
Right to Examine .................................................................................................................................. | |
ALLOCATING YOUR PURCHASE PAYMENT ................................................................................... | |
Purchase Payment ............................................................................................................................... | |
Allocation Options ................................................................................................................................ | |
Reallocating Your Contract Value ...................................................................................................... | |
Flex Transfers ....................................................................................................................................... | |
FIXED ACCOUNT OPTION ..................................................................................................................... | |
Fixed Interest Rate ............................................................................................................................... | |
Fixed Account Nonforfeiture Value .................................................................................................... | |
RISK CONTROL ACCOUNT OPTIONS ............................................................................................... | |
Interest Term and Crediting Interest .................................................................................................. | |
The Indices ............................................................................................................................................ | |
Limits On Index Losses and Gains .................................................................................................... | |
Setting the Crediting Strategies ......................................................................................................... | |
Index Annual Return Examples .......................................................................................................... | |
Restrictions and Changes .................................................................................................................. | |
CONTRACT VALUE ................................................................................................................................. | |
Fixed Account Value ............................................................................................................................ | |
Risk Control Account Value ................................................................................................................ | |
Interim Value ......................................................................................................................................... | |
CHARGES AND ADJUSTMENTS ......................................................................................................... | |
Income Benefit Fee .............................................................................................................................. | |
Surrender Charge ................................................................................................................................ | |
Interim Value ........................................................................................................................................ |
ii
Market Value Adjustment .................................................................................................................... | |
Premium Taxes ..................................................................................................................................... | |
Other Information ................................................................................................................................. | |
ACCESS TO YOUR MONEY .................................................................................................................. | |
Partial Withdrawals .............................................................................................................................. | |
Systematic Withdrawals ...................................................................................................................... | |
Surrenders ............................................................................................................................................. | |
Annual Free Withdrawal Amount ....................................................................................................... | |
Partial Withdrawal and Surrender Restrictions ................................................................................ | |
Right to Defer Payments ..................................................................................................................... | |
INCOME BENEFIT .................................................................................................................................... | |
Income Benefit Fee .............................................................................................................................. | |
Termination of the Income Benefit ..................................................................................................... | |
Covered Person .................................................................................................................................... | |
Spousal Continuation .......................................................................................................................... | |
Income Benefit Payments ................................................................................................................... | |
Treatment of Income Benefit Payment Withdrawals ...................................................................... | |
Fixed Account Automatic Transfer and Withdrawal Program ........................................................ | |
Impact of Excess Withdrawals on the Income Benefit Payment .................................................. | |
Required Minimum Distribution Withdrawals ................................................................................... | |
BENEFITS AVAILABLE UNDER THE CONTRACT .......................................................................... | |
Income Benefit ...................................................................................................................................... | |
Fixed Account Automatic Transfer and Withdrawal Program ........................................................ | |
Death Benefit ........................................................................................................................................ | |
Death Benefit Termination. ................................................................................................................ | |
Systematic Withdrawals ...................................................................................................................... | |
THE PAYOUT PERIOD ............................................................................................................................ | |
Payout Date .......................................................................................................................................... | |
Payout Period Income Payments ...................................................................................................... | |
Terms of Payout Period Income Payments ...................................................................................... | |
Electing a Payout Option ................................................................................................................... | |
Payout Options ..................................................................................................................................... | |
FEDERAL INCOME TAX MATTERS .................................................................................................... | |
OTHER INFORMATION ........................................................................................................................... | |
Important Information about the Indices ........................................................................................... | |
Distribution of the Contract ................................................................................................................ | |
Authority to Change ............................................................................................................................. | |
Incontestability ...................................................................................................................................... | |
Misstatement of Age or Sex at Birth .................................................................................................. | |
Conformity with Applicable Laws ....................................................................................................... | |
Reports to Owners .............................................................................................................................. | |
Householding ........................................................................................................................................ | |
Change of Address .............................................................................................................................. | |
Inquiries ................................................................................................................................................. | |
Legal Proceedings ............................................................................................................................... | |
FINANCIAL STATEMENTS .................................................................................................................... |
iii
APPENDIX A: Allocation Options Available Under the Contract | A-1 | |||
APPENDIX B: State Variations of Certain Features and Benefits | B-1 | |||
APPENDIX C: Terms Disclosed on Previous Income Benefit Supplements | C-1 | |||
1
GLOSSARY
Accumulation Period. The period of time that begins on the Contract Issue Date and ends on the Payout
Date or the date this Contract is terminated if earlier.
Adjusted Index Return. The Index Return for the current Interest Term adjusted for the Crediting
Strategy. This value is only calculated at the end of the Interest Term.
Administrative Office. MEMBERS Life Insurance Company, 2000 Heritage Way, Waverly, Iowa 50677.
Phone: 1-800-798-5500.
Age. Age as of last birthday.
Allocation Options. All available options under the Contract for allocating your Purchase Payment and
Contract Value. Your selling firm may limit the Allocation Options available to you when your Contract is
issued.
Annual Free Withdrawal Amount. The amount that can be withdrawn each Contract Year without
incurring a Surrender Charge or Market Value Adjustment. For the first six Contract Years, it is equal to
10% of the Contract Value determined at the beginning of each Contract Year. Beginning on the sixth
Contract Anniversary, it is equal to 20% of the Contract Value determined at the beginning of each
Contract Year. Income Benefit Payments are considered a withdrawal for purposes of determining the
Annual Free Withdrawal Amount.
Annual Increase Percentage. The percentage that is added to the Income Benefit Percentage for each
whole Contract Year from the Contract Issue Date until the Income Benefit Payment Start Date, subject to
the Maximum Annual Increase Period.
Annuitant (Joint Annuitant). The person(s) whose life (or lives) determines the Payout Period Income
Payment amount payable under the Contract. If the Owner is a non-natural person, the Annuitant(s) is
also the person(s) whose death determines the Death Benefit.
Application Signed Date. The date that you sign your application. For applications transmitted through
electronic order entry, the Application Signed Date is the initial submission date and may be different than
the wet signature date. Please speak with your Financial Professional to determine which date applies to
your application.
Authorized Request. A signed and dated request that is in Good Order. Without limitation, any of the
following requests must be signed by all Owners and any assignee: transfer value, change a party to the
Contract, change the Payout Date, or make a partial withdrawal or full surrender of the Contract. An
Authorized Request may also include a phone, fax, or electronic request for specific transactions.
Base Withdrawal Percentage. The Income Benefit Percentage on the Contract Issue Date.
Beneficiary (Beneficiaries). The person(s) or entity(ies) who will receive the Death Benefit proceeds due
to the Owner’s death, or in the case of a non-natural Owner, upon the death of the Annuitant.
Boost. The percentage added to an Index Return that is less than zero to determine the Adjusted Index
Return. It is also the minimum Adjusted Index Return when the Index Return is greater than or equal to
zero.
Buffer. The maximum amount of negative interest assumed by the Company for an Interest Term, and
any additional negative interest will be credited to the Risk Control Account.
Business Day. Any day that the New York Stock Exchange is open for trading. All requests for
transactions that are received at our Administrative Office in Good Order on any Business Day prior to
market close, generally 4:00 P.M. Eastern Time, will be processed as of the end of that Business Day.
Cap Rate. The maximum amount of interest the Company will credit to the Risk Control Account for an
Interest Term. If the Cap Rate is uncapped, the Cap Rate is not applied to the Crediting Strategy.
2
Company. MEMBERS Life Insurance Company; also referred to as “we”, “our” and “us”.
Contract. The TruStage™ ZoneChoice Income Annuity, an individual or joint owned, single purchase
payment deferred index-linked annuity contract issued by MEMBERS Life Insurance Company.
Contract Anniversary. The same day and month as the Contract Issue Date for each year the Contract
remains in force.
Contract Data Page. Pages attached to your Contract that describe certain terms applicable to your
specific Contract.
Contract Issue Date. The day your Contract is issued. This date will be used to determine Contract
Years and Contract Anniversaries.
Contract Value. The total value of your Contract during the Accumulation Period. All values are
calculated as of the end of a Business Day.
Contract Year. Any twelve-month period beginning on the Contract Issue Date or Contract Anniversary
and ending one day before the next Contract Anniversary.
Covered Person(s). The natural person(s) whose Age and lifetime we base Income Benefit Payments on
under the Income Benefit.
Crediting Base. The amount used to calculate the Risk Control Account Value. It is equal to the amount
allocated to a Risk Control Account at the start of the Interest Term, reduced proportionally for any
withdrawals, Flex Transfers, the Income Benefit Fee, or Contract Value applied to a Payout Option.
Crediting Strategy. The method by which interest is calculated for an Allocation Option during the
Interest Term.
Death Benefit. The amount the Beneficiary is entitled to upon the death of an Owner who is a natural
person or the death of an Annuitant if the Owner is a non-natural person.
Dual Step Rate. The percentage that equals the Adjusted Index Return when the Index Return is greater
than or equal to the applicable Buffer for the Crediting Strategy.
Excess Withdrawal. The portion of a withdrawal that, when added to other withdrawals during the
current Contract Year, is greater than the total Income Benefit Payment for the current Contract Year.
Excess Withdrawals include withdrawals prior to the Income Benefit Payment Start Date and deductions
for any applicable Surrender Charge and Market Value Adjustment.
Fixed Account. An Allocation Option that is part of our General Account to which we credit a fixed annual
rate of interest referred to as the Fixed Interest Rate.
Fixed Account Nonforfeiture Value. The value used to determine the Fixed Account minimum values. It
applies to the Surrender Value, the entire Contract Value applied to a Payout Option, and Death Benefit
proceeds upon the death of an Owner during the Accumulation Period.
Fixed Interest Rate. The effective annual rate of interest credited to the Fixed Account. The Fixed
Interest Rate will never be less than 0.05%.
Flex Transfer. The voluntary transfer of some or all of the value in any Risk Control Account to the Fixed
Account prior to the end of the Interest Term.
Floor. The maximum amount of negative interest for an Interest Term used to determine the Adjusted
Index Return that may be credited to the Risk Control Account for an Interest Term.
General Account. All of the Company’s assets other than the assets in its separate accounts.
Good Order. A request or transaction generally is considered in “Good Order” if we receive it at our
Administrative Office within the time limits, if any, prescribed in this Prospectus for a particular transaction
or instruction, it includes all information and supporting legal documentation necessary for us to execute
the requested instruction or transaction, and is signed by the individual or individuals authorized to
3
provide the instruction or engage in the transaction. A request or transaction may be rejected or delayed if
not in Good Order. This information and documentation necessary for a transaction or instruction
generally includes, to the extent applicable: the completed application or instruction form; your contract
number; the transaction amount (in dollars or percentage terms); the signatures of all Owners (exactly as
indicated on the Contract), if necessary; Social Security Number or Tax I.D.; and any other information or
supporting documentation that we may require, including any consents. With respect to the Purchase
Payment, Good Order also generally includes receipt by us of sufficient funds to affect the purchase. We
may, in our sole discretion, determine whether any particular transaction request is in Good Order, and we
reserve the right to change or waive any Good Order requirement at any time, including without limitation,
the conditions and time periods related to the application of Income Benefit Terms in the Income Benefit
Supplement. If you have any questions, you should contact us or your financial professional before
submitting the form or request.
Income Benefit. A non-optional feature also known as a guaranteed lifetime withdrawal benefit, that,
subject to certain conditions, provides guaranteed lifetime payments (“Income Benefit Payments”) based
on a single or joint percentage (“Income Benefit Percentage”) of your Income Benefit Base.
Income Benefit Base. The amount upon which the Income Benefit Payment is based.
Income Benefit Fee. A fee equal to the Income Benefit Fee Rate multiplied by the average daily Income
Benefit Base for the prior Contract Year. The Income Benefit Fee is assessed as long as the Income
Benefit rider is in effect. The fee compensates us for the expenses, mortality risk, and expense risk
assumed by us for providing the Income Benefit.
Income Benefit Fee Rate. The percentage used to calculate the Income Benefit Fee.
Income Benefit Payment(s). The guaranteed lifetime withdrawal amount.
Income Benefit Percentage. The percentage applied to the Income Benefit Base to determine the
annual Income Benefit Payment. The Income Benefit Payment equals the Income Benefit Percentage (a
combination of the Base Withdrawal Percentage and the Annual Increase Percentage) multiplied by the
Income Benefit Base.
Income Benefit Payment Start Date. The date Income Benefit Payments begin.
Income Benefit Supplement. A periodic supplement to this Prospectus that provides current values for
the following Income Benefit terms: Annual Increase Percentages, Base Withdrawal Percentages, and
Income Benefit Fee Rate.
Index, Indices. The reference index (or indices) that is a benchmark designed to track the performance
of a portfolio of securities and is used to determine the Index Return, Adjusted Index Return, and Interim
Value for a Crediting Strategy.
Index Return. The percentage change in the reference Index from the beginning of the Interest Term to
the end of the Interest Term.
Index Value. The closing value for the reference Index as of the end of a Business Day.
Interest Term. The period for which interest is calculated for an Allocation Option. The Interest Term may
vary by Allocation Option. Interest Terms will start and end on a Contract Anniversary, unless otherwise
specified.
Interim Value. The value for a Risk Control Account on any day other than the first and last Business Day
of an Interest Term.
Internal Revenue Code (IRC). The Internal Revenue Code of 1986, as amended.
Irrevocable Beneficiary. A Beneficiary who must consent to being changed or removed as a Beneficiary.
By designating an Irrevocable Beneficiary, you give up the right to change that Beneficiary unilaterally.
Market Value Adjustment. An adjustment (increase or decrease) that may be applied to a full surrender
or partial withdrawal prior to the end of the six-year rolling period that begins on the Contract Issue Date.
4
The Market Value Adjustment does not apply to transfers (including Flex Transfers) or to the Annual Free
Withdrawal Amount.
Maximum Annual Increase Period. The number of years after which no further Annual Increase
Percentages will be applied.
Non-Qualified Contract. An annuity contract that is independent of any formal retirement or pension
plan.
Owner (Joint Owner). The person(s) or entity who own(s) the Contract and has (have) all rights under
the Contract. Unless owned by a non-natural person, the Owner is also the person(s) whose death
determines the Death Benefit. The Owner is also referred to as “you” or “your”.
Participation Rate. The percentage that may be applied to an Index Return to determine the Adjusted
Index Return. For any Risk Control Account with a Buffer or Floor, the percentage is applied to an Index
Return that is greater than zero. For any Risk Control Account with a Boost, the percentage is applied to
an Index Return that is greater than the Boost.
Payout Date. The date the first Payout Period Income Payment is paid from the Contract to the Owner.
Payout Option. The choices available under the Contract for payout of your Contract Value.
Payout Period. The period of time that begins on the Payout Date and continues until we make the last
payment as provided by the Payout Option chosen or the last Income Benefit Payment.
Payout Period Income Payment. Income payments made during the Payout Period.
Purchase Payment. The amount paid to us, by or on behalf of an Owner, that is used to establish the
annuity on the Contract Issue Date. We do not allow any additional Purchase Payments.
Qualified Contract. An annuity that is part of an individual retirement plan, pension plan or employer-
sponsored retirement program that is qualified for special treatment under the Internal Revenue Code.
Required Minimum Distributions (RMDs). The required minimum distribution defined by section
401(a)(9) of the IRC for the Contract and as determined by us. RMDs only apply to Qualified Contracts.
Rider Data Page. Pages attached to the Income Benefit rider that describe certain terms applicable to
your specific rider.
Risk Control Account. An Allocation Option to which we credit interest based in part on the performance
of an Index, subject to the Crediting Strategy.
Risk Control Account Value. The portion of the Contract Value in a Risk Control Account.
SEC. The U.S. Securities and Exchange Commission.
Spouse. The person to whom you are legally married. The term Spouse includes the person with whom
you have entered into a legally-sanctioned marriage that grants you the rights, responsibilities, and
obligations married couples have in accordance with applicable state laws. Individuals who do not meet
the definition of Spouse may have adverse tax consequences when exercising provisions under this
Contract and any attached endorsements or riders. Additionally, individuals in other arrangements that are
not recognized as marriage under the relevant state law will not be treated as married or as Spouses as
defined in this Contract for federal tax purposes. Consult with a tax advisor for more information on this
subject and before exercising benefits under the contract and any attached endorsements or riders.
Surrender Charge. The charge associated with surrendering either some or all of the Contract Value.
Surrender Value. The amount you are entitled to receive if you elect to surrender this Contract during the
Accumulation Period.
Valuation Period. The period beginning at the close of one Business Day and continuing to the close of
the next succeeding Business Day.
5
OVERVIEW OF THE CONTRACT
The following is a summary of the key features of the Contract. This summary does not include all the
information you should consider before purchasing a Contract. You should carefully read the entire
Prospectus, which contains more detailed information concerning the Contract and the Company, before
making an investment decision.
You should speak with a financial professional about the Contract’s features, benefits, risks, and fees, and
whether it is appropriate for you based upon your financial situation and objectives. The Company is not
an investment adviser and does not provide any investment advice to you in connection with the Contract.
Purpose
The Contract is an individual or joint owned, single purchase payment deferred index-linked annuity
contract. It is designed for you to take lifetime payments under a non-optional Income Benefit, which
subject to certain conditions, provides guaranteed lifetime Income Benefit Payments based on a
percentage of your Income Benefit Base for the life of a Covered Person(s). The Contract can help you
save for retirement by allowing your Contract Value to earn interest from the Risk Control Accounts and/or
Fixed Account on a tax-deferred basis. You generally will not pay taxes on your earnings (your Contract
Value minus the portion of your Purchase Payment not previously withdrawn) until you withdraw them.
The Contract is designed for long-term investors and is not intended for someone who needs ready
access to cash.
Purchase and Contract Periods
You may purchase the Contract with a single Purchase Payment of at least $10,000. You may not make
additional Purchase Payments.
There are two periods to your Contract: an Accumulation Period and a Payout Period.
Accumulation Period. The Accumulation Period begins on the Contract Issue Date and continues until
the Payout Date or the date the Contract is terminated if earlier. During the Accumulation Period, you
allocate your Contract Value to the Risk Control Accounts and the Fixed Account. Additional information
about each Allocation Option is provided in Appendix A.
Payout Period. The Payout Period begins on the Payout Date and continues until we make the last
payment as provided by the Payout Option chosen or the last Income Benefit Payment. On the first day of
the Payout Period, the Contract Value (calculated using the Interim Value calculation if the Payout Date is
before the end of an Interest Term for a Risk Control Account, and subject to the Fixed Account
Nonforfeiture Value, if applicable) will be applied to the Payout Option you select unless the Income
Benefit is in effect and would be higher. When the Payout Period begins, you will no longer be able to
make withdrawals. The Death Benefit terminates when the Contract is applied to a Payout Option. See
"The Payout Period" for more details.
Income Benefit
The Income Benefit (also known as a guaranteed lifetime withdrawal benefit or GLWB) is automatically
included with your Contract. On the Contract application, you must choose from one of the two Income
Benefit riders we offer. This election cannot be changed. The IncomeGrowth Protection rider offers
relatively higher guaranteed income by generally providing a higher Base Withdrawal Percentage; and
the IncomeGrowth Performance offers the potential for higher performance over time by offering
additional Risk Control Account Allocation Options. The Risk Control Accounts are more limited in number
6
and upside potential with the IncomeGrowth Protection rider, and with the IncomeGrowth Performance
rider for reallocations after the Income Benefit Payment Start Date. See Appendix A. We assess an
annual Income Benefit Fee, which is disclosed in the current Income Benefit Supplement along with other
important Income Benefit terms you need to understand when deciding which rider to choose. You should
not sign an application for the Contract without first reading the current Income Benefit Supplement.
Subject to certain conditions, the Income Benefit provides guaranteed lifetime Income Benefit Payments
determined by multiplying the Income Benefit Percentage and the Income Benefit Base.
•The Income Benefit Percentage is a combination of the Base Withdrawal Percentage and the
Annual Increase Percentage.
•The Base Withdrawal Percentage is the Income Benefit Percentage on the Contract Issue Date.
•The Annual Increase Percentage is a percentage added to the Income Benefit Percentage for each
whole Contract Year from the Contract Issue Date until the Income Benefit Payment Start Date,
subject to the Maximum Annual Increase Period.
•The Covered Person(s) is (are) the natural person(s) whose Age and lifetime we base Income
Benefit Payments on. If there is one Covered Person, the Base Withdrawal Percentage and Annual
Increase Percentage are determined based on your election of single life option rates using the Age
of the Covered Person as of the Contract Issue Date. If there are two Covered Persons, the Base
Withdrawal Percentage and Annual Increase Percentage are determined based on your election of
joint life option rates using the older Covered Person's Age as of the Contract Issue Date if the older
Covered Person's Age is within 5 years of the younger Covered Person's Age; if the age difference is
greater than 5 years, the younger Covered Person's Age will be used. There are restrictions on who
can become a Covered Person, and the Owner cannot request to remove, add, or change a Covered
Person except as described in this Prospectus. Also, joint life Income Benefit Payments are not
available for non-natural owners.
•The Maximum Annual Increase Period is the number of years after which no further Annual
Increase Percentages will be applied. For both Income Benefit riders, the Maximum Annual Increase
Period is 20 years.
•The Income Benefit Base is initially equal to the Purchase Payment. The Income Benefit Base (and
therefore the Income Benefit Payment) is recalculated on each Contract Anniversary and on any date
you take an Excess Withdrawal.
•Excess Withdrawals are the portion of a withdrawal that, when added to other withdrawals during
the current Contract Year, is greater than the total Income Benefit Payment for the current Contract
Year. Excess Withdrawals include any withdrawals prior to the Income Benefit Payment Start Date
(including systematic withdrawals and Required Minimum Distributions) and deductions for any
applicable Surrender Charge and Market Value Adjustment.
The Income Benefit Payment is calculated on the Income Benefit Payment Start Date. Income Benefit
Payments can begin as early as the 50th birthday of the younger Covered Person or two Business Days
after the Contract Issue Date. You may take the full or partial Income Benefit Payment amount through
the systematic withdrawal program. If you take less than the Income Benefit Payment, the remaining
Income Benefit Payment will not carry over to future years. Income Benefit Payments can begin as late as
the anticipated Payout Date shown on your Contract Data Page (typically the first Contract Anniversary
after the oldest Annuitant’s 95th birthday). Upon reaching the Payout Date, we will begin Payout Period
Income Payments unless the Contract is surrendered.
The Income Benefit Payments are guaranteed regardless of investment performance and will continue
even if the Contract Value is reduced to zero from Income Benefit Payments. Income Benefit Payments
7
reduce the Death Benefit, Surrender Value, Contract Value, and the Annual Free Withdrawal Amount by
the amount of the Income Benefit Payment. The Income Benefit Payment is a withdrawal of your own
Contract Value unless the Contract Value is reduced to zero. The probability of you outliving your
Contract Value and receiving Income Benefit Payments from our General Account may be
minimal.
Withdrawals taken before the Income Benefit Payment Start Date, including RMDs, and withdrawals
taken after the Income Benefit Payment Start Date that exceed the Income Benefit Payment amount, will
reduce the Income Benefit Base and the Income Benefit Payment, perhaps significantly, and could
terminate the Contract. In other words, the Income Benefit Payment is the maximum amount you can
withdraw in a Contract Year without reducing or eliminating the Income Benefit rider’s benefits. Income
Benefit Payments continue during the life of the Covered Person(s) unless the Income Benefit Rider is
terminated. The Death Benefit is still payable after Income Benefit Payments begin but will be reduced by
the Income Benefit Payments.
Once established, the Income Benefit Base and Income Benefit Payment can only decrease if you take
an Excess Withdrawal. If an Excess Withdrawal causes the Surrender Value to be less than $2,000, your
Contract will terminate and Income Benefit Payments will cease. Before processing the full surrender, we
will attempt to contact you or your financial professional to provide the opportunity for you to take a lesser
withdrawal to maintain a Surrender Value of at least $2,000. If we are unable to contact you within one
Business Day after receiving your request, we will process the full surrender.
Income Benefit Payments are subject to federal income tax and may be subject to a 10% additional tax if
elected prior to age 59½.
Current values for certain terms you need to understand when deciding which Income Benefit rider to
choose are set forth in an Income Benefit Supplement to this Prospectus. You should not sign an application
for the Contract without first reading the current Income Benefit Supplement. Terms disclosed in previous
Income Benefit Supplements are stated in Appendix C.
Allocation Options
You must specify the percentage of your Purchase Payment to be allocated to each Allocation Option on
the Contract Issue Date. Your Purchase Payment and Contract Value will be allocated according to your
allocation instructions on file with us. See "Allocating Your Purchase Payment" for more details. The
current Allocation Options under the Contract are shown in the table below. The Risk Control Accounts
available to you will vary depending upon which Income Benefit rider you select and for the
IncomeGrowth Performance rider, whether it is before or after your Income Benefit Payment Start
Date. See Appendix A. Allocation Options and features may vary by state, and your selling firm may limit
the Allocation Options available to you.
8
ALLOCATION OPTIONS WITH INCOMEGROWTH PROTECTION RIDER | |||
Risk Control Account Crediting Strategy: Floor with Participation Rate and Cap Rate | |||
Index | Interest Term | Crediting Strategy | Minimum Guarantee* |
S&P 500 Index | 1-Year | Floor: 0% to -10% in 1% increments Cap Rate and Participation Rate | Cap Rate: 1% Participation Rate: 100% |
Dimensional US Small Cap Value Systematic Index | 1-Year | Floor: 0% to -10% in 1% increments Cap Rate and Participation Rate | Cap Rate: 1% Participation Rate: 100% |
Barclays Risk Balanced Index | 1-Year | Floor: 0% to -10% in 1% increments Cap Rate and Participation Rate | Cap Rate: 1% Participation Rate: 100% |
Fixed Interest Option | |||
Account | Interest Term | Crediting Strategy | Minimum Guarantee |
Fixed Account | 1-Year | Fixed Interest Rate | Minimum Rate: 0.05% |
ALLOCATION OPTIONS WITH INCOMEGROWTH PERFORMANCE RIDER BEFORE THE INCOME BENEFIT PAYMENT START DATE | |||
Risk Control Account Crediting Strategy: Floor with Participation Rate and Cap Rate | |||
Index | Interest Term | Crediting Strategy | Minimum Guarantee* |
S&P 500 Index | 1-Year | Floor: 0% to -10% in 1% increments Cap Rate and Participation Rate | Cap Rate: 1% Participation Rate: 100% |
Dimensional US Small Cap Value Systematic Index | 1-Year | Floor: 0% to -10% in 1% increments Cap Rate and Participation Rate | Cap Rate: 1% Participation Rate: 100% |
Barclays Risk Balanced Index | 1-Year | Floor: 0% to -10% in 1% increments Cap Rate and Participation Rate | Cap Rate: 1% Participation Rate: 100% |
Risk Control Account Crediting Strategy: Buffer with Participation Rate and Cap Rate | |||
Index | Interest Term | Crediting Strategy | Minimum Guarantee* |
S&P 500 Index | 1-Year | Buffer: -10% and -20% Cap Rate and Participation Rate | Cap Rate: 1% Participation Rate: 100% |
Dimensional US Small Cap Value Systematic Index | 1-Year | Buffer: -10% and -20% Cap Rate and Participation Rate | Cap Rate: 1% Participation Rate: 100% |
S&P 500 Index | 6-Year | Buffer: -10% and -20% Cap Rate and Participation Rate | Cap Rate: 10% Participation Rate: 100% |
Dimensional US Small Cap Value Systematic Index | 6-Year | Buffer: -10% and -20% Cap Rate and Participation Rate | Cap Rate: 10% Participation Rate: 100% |
Barclays Risk Balanced Index | 6-Year | Buffer: -10% and -20% Cap Rate and Participation Rate | Cap Rate: 10% Participation Rate: 100% |
Risk Control Account Crediting Strategy: Boost with Participation Rate and Cap Rate | |||
Index | Interest Term | Crediting Strategy | Minimum Guarantee* |
S&P 500 Index | 6-Year | Boost: 10% and 20% Cap Rate and Participation Rate | Cap Rate: 10% Participation Rate: 100% |
Dimensional US Small Cap Value Systematic Index | 6-Year | Boost: 10% and 20% Cap Rate and Participation Rate | Cap Rate: 10% Participation Rate: 100% |
Barclays Risk Balanced Index | 6-Year | Boost: 10% and 20% Cap Rate and Participation Rate | Cap Rate: 10% Participation Rate: 100% |
9
Risk Control Account Crediting Strategy: Buffer with Dual Step Rate | |||
Index | Interest Term | Crediting Strategy | Minimum Guarantee* |
S&P 500 Index | 6-Year | Buffer: -10% and -20% Dual Step Rate | Dual Step Rate: 10% |
Fixed Interest Option | |||
Account | Interest Term | Crediting Strategy | Minimum Guarantee |
Fixed Account | 1-Year | Fixed Interest Rate | Minimum Rate: 0.05% |
ALLOCATION OPTIONS WITH INCOMEGROWTH PERFORMANCE RIDER AFTER THE INCOME BENEFIT PAYMENT START DATE | |||
Risk Control Account Crediting Strategy: Floor with Participation Rate and Cap Rate | |||
Index | Interest Term | Crediting Strategy | Minimum Guarantee* |
S&P 500 Index | 1-Year | Floor: 0% to -10% in 1% increments Cap Rate and Participation Rate | Cap Rate: 1% Participation Rate: 100% |
Dimensional US Small Cap Value Systematic Index | 1-Year | Floor: 0% to -10% in 1% increments Cap Rate and Participation Rate | Cap Rate: 1% Participation Rate: 100% |
Barclays Risk Balanced Index | 1-Year | Floor: 0% to -10% in 1% increments Cap Rate and Participation Rate | Cap Rate: 1% Participation Rate: 100% |
Risk Control Account Crediting Strategy: Buffer with Participation Rate and Cap Rate | |||
Index | Interest Term | Crediting Strategy | Minimum Guarantee* |
S&P 500 Index | 1-Year | Buffer: -10% and -20% Cap Rate and Participation Rate | Cap Rate: 1% Participation Rate: 100% |
Dimensional US Small Cap Value Systematic Index | 1-Year | Buffer: -10% and -20% Cap Rate and Participation Rate | Cap Rate: 1% Participation Rate: 100% |
Fixed Interest Option | |||
Account | Interest Term | Crediting Strategy | Minimum Guarantee |
Fixed Account | 1-Year | Fixed Interest Rate | Minimum Rate: 0.05% |
* The Floor, Buffer, and Boost for a Risk Control Account will not change unless the Risk Control Account
is discontinued. The Fixed Account and a Risk Control Account with a 0% Floor, a minimum 1%
Cap Rate, and a minimum 100% Participation Rate will always be available. However, we may
change or discontinue some or all of the other Allocation Options; any remaining Allocation
Options may have terms that are unacceptable to you and may not provide any protection from
index losses, which could result in the loss of the entire amount of your Contract Value. We may
not always make available Risk Control Accounts that include the other Crediting Strategies, but if we
do, the minimum guarantees are as follows: Buffer, -10%; Boost, 10%; Dual Step Rate, 10%; Cap
Rate for 6-Year Interest Terms, 10%.
Interest Terms and Reallocations. Subject to the restrictions of the Income Benefit rider you elect and
whether it is before or after your Income Benefit Payment Start Date, each Allocation Option is available
on the Contract Issue Date and at the end of the Interest Term. For example, after the Contract Issue
Date, an Allocation Option with a one-year Interest Term may be available every Contract Anniversary,
whereas an Allocation Option with a six-year Interest Term may be available every sixth Contract
Anniversary. This means that the six-year Interest Term will not be available for you to allocate Contract
Value to on every Contract Anniversary. If we add an Allocation Option, you will not be able to allocate
your Contract Value to the new Allocation Option until the start of the next available Interest Term for that
Allocation Option. Additionally, with respect to the IncomeGrowth Performance rider, the six-year Interest
10
Term is unavailable for reallocation after the Income Benefit Payment Start Date, if the Payout Date is
less than six years from the start of the Interest Term, or if the length of time until a termination date
required by federal regulation is less than six years from the start of the Interest Term. If you have
allocated Contract Value to an Allocation Option that becomes unavailable to you for reallocation, your
Contract Value will be applied to a different Allocation Option at the end of the Interest Term as described
below.
At least two weeks before the end of an Interest Term, we will notify you of the available Allocation
Options to which you may transfer maturing Contract Value. The new Allocation Options may have
different Interest Terms and Crediting Strategies than what was previously available. If we do not receive
transfer instructions by Authorized Request at least one Business Day before the end of the current
Interest Term, we will apply the value of the maturing Contract Value to a new Interest Term of the same
Allocation Option. If the same Risk Control Account is not available, we will apply it to the Fixed Account.
New transfer instructions by Authorized Request will supersede any prior transfer instructions for a given
Allocation Option. Except for Flex Transfers, transfers are not permitted during an Interest Term. For
example, you may not transfer values from the Fixed Account to any Risk Control Account or transfer
values among Risk Control Accounts during an Interest Term.
You should understand the difference between the 6-year Interest Term and the 1-year Interest Term. For
the 6-year Interest Term, interest is not calculated or credited until the end of the Interest Term; therefore,
the Crediting Strategy factors (i.e., Buffer, Boost, Cap Rate, Participation Rate, and Dual Step Rate) only
apply at the end of the Interest Term and not annually. As described below, the application of Interim
Value Calculations on withdrawals, deductions, and transfers from a Risk Control Account before
the end of the Interest Term could significantly reduce the values under the Contract and the
amount you receive from any payments. Moreover, only the Crediting Base remaining in a Risk
Control Account after a withdrawal or transfer will be credited interest, positive or negative, at the
end of the Interest Term.
Fixed Account. The portion of your Contract Value allocated to the Fixed Account is credited interest
daily based on the Fixed Interest Rate. The Fixed Interest Rate will never be less than 0.05%. The initial
Fixed Interest Rate is available in advance of the Contract Issue Date and will be provided by your
financial professional or by calling the Company at 1-800-798-5500. The Fixed Interest Rate for the initial
Interest Term is shown on your Contract Data Page. We will notify you of Fixed Interest Rates for each
subsequent Interest Term at least two weeks before the end of the current Interest Term, or you can
contact your financial professional or the Company at 1-800-798-5500 to obtain current rates.
Risk Control Accounts. The portion of your Contract Value allocated to a Risk Control Account is
credited with interest, if any, based in part on the investment performance of an external Index over the
Interest Term, subject to the Crediting Strategy unique to each Risk Control Account (shown in the table
above). For each Risk Control Account, the Index Return, which can be positive or negative, is calculated
by comparing the change in the Index from the first day of the Interest Term to the last day of the Interest
Term.
The Indices can go up or down based on the prices of the securities that comprise the reference
Index. Except for the Barclays Risk Balanced, each Index associated with the Risk Control
Accounts is a "price return index," which means the Index performance does not include
dividends paid on the securities comprising the Index. This will reduce Index performance and
cause the Index to underperform a direct investment in the underlying securities. The Barclays
Risk Balanced Index reinvests dividends but deducts certain fees. These deductions will reduce Index
performance, and the Index will underperform similar portfolios from which these fees and costs are not
deducted. Because the Index Return is calculated and applied at a single point in time, you may
experience negative or flat performance even though the Index experienced gains through some, or most,
of the Interest Term. It is possible that you will not earn any interest in a Risk Control Account or
11
that we may credit negative interest to the Risk Control Accounts. You could lose a significant
amount of money if the Index declines in value.
Each Risk Control Account has a Crediting Strategy that provides a level of downside protection: Floor,
Buffer, or Boost. The Floor, Buffer, and Boost may provide protection by limiting the amount of negative
interest credited to you from negative Index performance. The Floor, Buffer, and Boost do not limit
losses from the Surrender Charge, Market Value Adjustment, Interim Value calculation, Income
Benefit Fee, proportionate calculations, or taxes.
•The Floor is the maximum amount of negative interest that we will credit you at the end of an
Interest Term. Negative Index performance will reduce your Risk Control Account Value by up to
the amount of the Floor you elected. For example, if you elect a Floor of 0%, a negative Index
Return will not reduce your Risk Control Account Value. If you elect a Floor of -10%, negative
Index performance could reduce your Risk Control Value by up to 10% each Interest Term. We
currently offer eleven Floor options: 0%, -1%, -2%, -3%, -4%, -5%, -6%, -7%, -8%, -9%, and
-10%. During the life of your Contract, a Risk Control Account with a Floor of 0% will always be
available. There is a risk of loss of principal and previously credited interest of up to the
Floor (a maximum loss of 10% with a Floor of -10%) each Interest Term due to negative
Index performance.
•The Buffer provides you limited protection each Interest Term against negative Index
performance up to the Buffer, but we will credit you any negative interest that exceeds the Buffer.
For example, if you choose a -10% Buffer and the Index Return is -5%, your Risk Control Account
value will not increase or decrease, because the negative Index performance does not exceed
the Buffer. However, if you choose a -10% Buffer and the Index Return is -15%, your Risk Control
Account Value will decrease by 5%, which is the amount of negative interest that exceeds the
Buffer. We currently offer Risk Control Accounts with a -10% Buffer and a -20% Buffer. We may
not always make available Risk Control Accounts with Buffers, but if we do, a Buffer of -10% or
more will be available. There is a risk of loss of principal and previously credited interest of
up to the amount of any negative Index performance that exceeds the Buffer (a maximum
loss of 90% with a Buffer of -10%, if the Index declines by 100%) each Interest Term due to
negative Index performance.
•The Boost provides you limited protection each Interest Term by increasing any negative Index
performance by the amount of the Boost. If the Index Return is zero or positive, the Boost is also
the minimum Adjusted Index Return (subject to the Cap Rate). For example, if you choose a 10%
Boost and the Index Return is -5%, your Risk Control Account value will increase by 5% (the -5%
Index Return plus the 10% Boost). If you choose a 10% Boost and the Index Return is -15%, your
Risk Control Account Value will decrease by 5%, (the -15% Index Return plus the 10% Boost).
We currently offer Risk Control Accounts with a 10% Boost and a 20% Boost. We may not always
make available Risk Control Accounts with Boosts, but if we do, a Boost of 10% or more will be
available. There is a risk of loss of principal and previously credited interest of up to the
amount of any negative Index performance that exceeds the Boost (a maximum loss of
90% with a 10% Boost, if the Index declines by 100%) each Interest Term due to negative
Index performance.
Each Risk Control Account also has one or more Crediting Strategies for crediting Index Interest: the Cap
Rate, Participation Rate, and Dual Step Rate. The Cap Rate and Dual Step Rate may limit the amount of
interest you can earn from positive Index performance.
•The Cap Rate is the maximum amount of any positive Index interest that we will credit you at the
end of an Interest Term. Positive Index performance will increase your Risk Control Account Value
by up to the Cap Rate. For example, if the Index Return is 15% and the Cap Rate is 10%, we
would credit you 10%. Generally, the Cap Rate varies according to the level of risk you accept in
12
choosing a Floor, Buffer, or Boost. For example, the Cap Rate would be higher for the -10% Floor
(allowing potentially greater increases and decreases) and lower for the 0% Floor (limiting the
amount of potential increases and decreases). Similarly, the Cap Rate will also be higher for a
-10% Buffer or 10% Boost than for a -20% Buffer or 20% Boost. Generally, the Cap Rate will also
be higher for a six-year Interest Term than a one-year Interest Term. We reset the Cap Rates at
the start of each Interest Term. The Cap Rate for Risk Control Accounts with one-year Interest
Terms will never be less than 1%, and the Cap Rate for Risk Control Accounts with six-year
Interest Terms will never be less than 10%. With the Cap Rate, you may receive only a portion
of any positive Index performance.
•The Participation Rate is the percentage of any positive Index interest that we will credit you at
the end of an Interest Term. For Risk Control Accounts with a Buffer or Floor, the Participation
Rate is applied to any positive Index Return. For example, if the Index Return is 15% and the
Participation Rate is 110%, we would credit you 16.5% (110% of 15%). For Risk Control Accounts
with a Boost, the Participation Rate is applied to any Index Return that is greater than the Boost.
For example, if the Boost is 10%, the Index Return is 15%, and the Participation Rate is 110%,
we would credit you 15.75% (the 10% Boost plus 110% of 5%, the Index Return that is greater
than the Boost). We reset the Participation Rate at the start of each Interest Term. The
Participation Rate will never be less than 100%, which means that the Participation Rate alone
will not limit the amount of Interest you earn from positive Index performance.
•The Dual Step Rate is the Adjusted Index Return that we will credit you when the Index Return is
greater than or equal to the applicable Buffer. In other words, if you choose a Buffer of -10%, the
Dual Step Rate will only apply if there is negative Index Return that is -10% or better, or a
positive Index Return. We will not credit you interest from positive Index performance that
exceeds the Dual Step Rate. For example, if the Buffer is -10% and the Index Return is -5%
(which is greater than the Buffer), and the Dual Step Rate is 50%, we would credit you with the
Dual Step Rate of 50%. Similarly, if the Buffer is -10% and there is a positive Index Return of
60%, and the Dual Step Rate is 50%, we would credit you with the Dual Step Rate of 50%.
However, if the Buffer is -10% and the Index Return is -15% (which is less than the Buffer), the
Dual Step Rate would not apply, and we would credit you with -5% (the -15% Index Return minus
the -5% Buffer).The Dual Step Rate will never be less than 10%. With the Dual Step Rate, you
may receive only a portion of any positive Index performance.
Changes to Rates. We set the Cap Rate, Participation Rate, and Dual Step Rate at the start of each
Interest Term and guarantee them for the duration of the Interest Term. The initial Cap Rate, Participation
Rate, and Dual Step Rate are available at least two weeks in advance of the Contract Issue Date and will
be provided by your financial professional or by calling the Company at 1-800-798-5500. We may declare
a new Cap Rate, Participation Rate, or Dual Step Rate for each subsequent Interest Term and will notify
you of any new rates at least two weeks before the end of the current Interest Term. Information about the
current Cap Rates, Participation Rates, and Dual Step Rates can be located at: https://www.trustage.com/
zonechoice-income-annuity-rates.
Other Changes to Risk Control Account Options. We may offer additional Risk Control Accounts at
our discretion, which includes offering an additional Index, Crediting Strategy, or Interest Term. We may
also discontinue a Risk Control Account or Index at our discretion effective as of the end of an Interest
Term, or under certain circumstances, before the end of an Interest Term. An Index or Risk Control
Account change may negatively affect interest credited and your resulting Contract Value, as well
as how you want to allocate Contract Value between available Allocation Options.
Withdrawal Options, Transfers, and Adjustments
This Contract may not be appropriate for you if you intend to take Excess Withdrawals, which
generally include all withdrawals other than Income Benefit Payments, or surrender the Contract.
13
However, the Contract does offer the following liquidity features during the Accumulation Period. See
"Access to Your Money" for more details.
•Annual Free Withdrawal Amount. Each Contract Year, you may withdraw up to the Annual Free
Withdrawal Amount without incurring a Surrender Charge or Market Value Adjustment. For the
first six Contract Years, the Annual Free Withdrawal Amount is equal to 10% of the Contract Value
determined at the beginning of each Contract Year. Beginning on the sixth Contract Anniversary, it
is equal to 20% of the Contract Value determined at the beginning of each Contract Year. Any
unused Annual Free Withdrawal Amount will not carry over to any subsequent Contract Year.
Income Benefit Payments are considered a withdrawal for purposes of determining the Annual
Free Withdrawal Amount. The Annual Free Withdrawal Amount is subject to Interim Value
calculations and proportionate adjustments.
•Income Benefit Payments. Income Benefit Payments are considered withdrawals. Income Benefit
Payments are not subject to a Surrender Charge or Market Value Adjustment. Each Income
Benefit Payment will reduce the Death Benefit, Surrender Value, Contract Value, and the Annual
Free Withdrawal Amount by the amount of the Income Benefit Payment.
•Partial Withdrawals. You may make partial withdrawals during the Accumulation Period by
Authorized Request. Any applicable Surrender Charge, Market Value Adjustment, Interim Value
calculation, Income Benefit Fee deduction, and proportionate calculations will affect the amount
available for a partial withdrawal. A partial withdrawal may reduce your Income Benefit Base,
Death Benefit and Crediting Base by more than the amount of the partial withdrawal. Additionally,
only the Crediting Base remaining in the Risk Control Account after a withdrawal will be credited
interest, positive or negative, at the end of the Interest Term.
•Systematic Withdrawals. You may elect to receive payments, monthly, quarterly, semi-annually, or
annually, subject to the $100 minimum partial withdrawal amount and minimum Surrender Value.
Surrender Charges, the Interim Value calculation, and a Market Value Adjustment may apply.
Although the Contract permits systematic withdrawals (including for Required Minimum
Distributions under the Internal Revenue Code), these withdrawals may have an adverse
effect on your values under the Contract. Additionally, we deduct the Income Benefit Fee
on an annual basis, including before the end of the Interest Term for Risk Control
Accounts with six-year Interest Terms. If you intend to make ongoing withdrawals other
than your Income Benefit Payments, you should consult a financial professional to
determine whether the Contract is appropriate for you. You should consult with your
financial professional about whether to elect the Fixed Account Automatic Transfer and
Withdrawal Program, which allows Income Payments to be taken only from the Fixed
Account.
•Full Surrender. You may surrender your Contract during the Accumulation Period by Authorized
Request. Upon full surrender, a Surrender Charge and Market Value Adjustment may apply, and
the Interim Value calculation may reflect a negative return.
For Contract Value allocated to a Risk Control Account, if you take a withdrawal (including for Income
Benefit Payments), make a Flex Transfer, surrender your Contract, die, begin Payout Options, or we
deduct the Income Benefit Fee, the amount withdrawn or transferred before the expiration of an Interest
Term is based on the Interim Value and will reduce the Crediting Base proportionally. The Interim Value
calculation may reflect a positive or negative return that increases or decreases the amount remaining in
the Risk Control Account, which could result in the loss of your principal and previously credited interest.
Excess Withdrawals and surrenders at any time other than on or within 30 days after each sixth
Contract Anniversary may be subject to the Market Value Adjustment, and Excess Withdrawals and
surrenders during the first six Contract Years may be subject to a Surrender Charge. The Market Value
Adjustment may be positive or negative and could result in the loss of principal and previously credited
14
interest and may significantly decrease the amount you receive upon surrender or partial withdrawal.
Withdrawals and surrenders are subject to federal income taxes and may be subject to a 10% additional
tax if taken before the Owner is age 59½. It is possible in extreme circumstances to lose up to 100%
of your principal and previously credited interest due to the Surrender Charge, Interim Value
calculation, Market Value Adjustment, Income Benefit Fee, proportionate calculations, and taxes.
The Floor, Buffer, and Boost do not limit such losses; however, full surrenders from the Fixed
Account are subject to the Fixed Account nonforfeiture value.
During an Interest Term, you may make an Authorized Request for a Flex Transfer of some or all of the
Risk Control Account Value from any Risk Control Account to the Fixed Account. The amount transferred
is based on the Interim Value (which may reflect a positive or negative return) and will reduce the
Crediting Base of the Risk Control Account proportionally. If you make a Flex Transfer when the Interim
Value reflects a negative return, you may transfer at a loss, which means your remaining Crediting Base
will be reduced by more than the transferred amount, and that reduction could be substantial. Additionally,
only the Crediting Base remaining in the Risk Control Account after the Flex Transfer will be credited
interest, positive or negative, at the end of the Interest Term. The decision to make a Flex Transfer
could therefore significantly negatively impact your Risk Control Account Value, which impacts
other values under the Contract and the amount you receive from any payments.
Other Contract Features
Fixed Account Automatic Transfer and Withdrawal Program. If you elect to use this program, we will
transfer an amount up to your annual Income Benefit Payment from the Risk Control Accounts to the
Fixed Account on every Contract Anniversary. This program may benefit you because it facilitates
withdrawals for Income Benefit Payments from the Fixed Account, which is not subject to Interim Value
calculations. You should consult with your financial professional when deciding whether to elect this
program. Interim Value calculations apply if program transfers are made to the Fixed Account from
Risk Control Accounts with six-year Interest Terms before the end of the current term.
Death Benefit. The Death Benefit during the Accumulation Period is equal to the greater of Contract
Value (including any applicable Interim Value calculation) or the Purchase Payment adjusted for
withdrawals as of the date the Death Benefit is payable. We calculate Excess Withdrawals on a
proportionate basis when determining the Death Benefit, which could significantly reduce the Death
Benefit, perhaps by substantially more than the amount of the withdrawal. We do not apply a Surrender
Charge or Market Value Adjustment in determining the Death Benefit.
Payout Options. You have several income options to choose from during the Payout Period.
Right to Examine. You may cancel your Contract and return it to your financial professional or to us
within 10 days after you receive the Contract (30 days if it is a replacement contract) to receive a refund
of the Purchase Payment you paid, less any withdrawals. Some states may permit a longer period for you
to return your Contract, or different calculations and requirements for refunded amounts. (See “Getting
Please call your financial professional or the Company at 1-800-798-5500 if you have questions about
how your Contract works.
15
KEY INFORMATION
IMPORTANT INFORMATION YOU SHOULD CONSIDER ABOUT THE TRUSTAGE™ ZONECHOICE INCOME ANNUITY | |||||
FEES, EXPENSES, AND ADJUSTMENTS | Location in Prospectus | ||||
Are There Charges or Adjustments for Early Withdrawals? | Yes. If you surrender your Contract or take an Excess Withdrawal during the first six Contract Years, you may pay a Surrender Charge of up to 8% of the amount withdrawn that exceeds the Annual Free Withdrawal Amount. For example, if you were to surrender your Contract during the first Contract Year, you could pay a surrender charge of up to $7,200 on a $100,000 investment. Your loss will be greater if there is a negative Market Value Adjustment, negative Interim Value adjustment, income taxes, or an additional tax. If you surrender your Contract or take an Excess Withdrawal from any Allocation Option at any time other than on or within 30 days after each sixth Contract Anniversary, we will apply a Market Value Adjustment (which may be positive or negative) to the amount being withdrawn that exceeds the Annual Free Withdrawal Amount. A negative Market Value Adjustment could significantly decrease the amount you receive from an Excess Withdrawal or surrender. In extreme circumstances, losses from the Market Value Adjustment could be as high as 90% of your Contract Value ($90,000 of a $100,000 investment). For Contract Value allocated to a Risk Control Account, if you take a withdrawal (including for Income Benefit Payments), make a Flex Transfer, surrender your Contract, die, begin Payout Options, or we deduct the Income Benefit Fee, the amount withdrawn or transferred before the expiration of an Interest Term is based on the Interim Value and will reduce the Crediting Base proportionally. The Interim Value calculation may reflect a positive or negative return that increases or decreases the amount remaining in the Risk Control Account, which could result in the loss of your principal and previously credited interest. In extreme circumstances, losses from the Interim Value calculation could be as high as 100% of your Risk Control Account Value ($100,000 of a $100,000 investment). The Floor, Buffer, and Boost do not limit losses from the Surrender Charge, Market Value Adjustment, Income Benefit Fee, Interim Value calculation, proportionate calculations, or taxes; however, full surrenders from the Fixed Account are subject to the Fixed Account nonforfeiture value. | ||||
Are There Transaction Charges? | No. | ||||
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Are There Ongoing Fees and Expenses? | Yes. The table below describes the fees and expenses that you may pay each year, depending on the Allocation Options you choose. There is an implicit ongoing fee on the Risk Control Accounts to the extent that the Cap Rate or Dual Step Rate limit your participation in Index gains, which is not reflected in the tables below. This means your returns may be lower than the Index's returns; however, in exchange for accepting limits on Index gains, you receive some protection from Index losses through the Floors, Buffers, and Boosts. Please refer to your Contract Data Page and Rider Data Page for information about the specific fees you will pay each year based on the options you have elected. We assess an annual Income Benefit Fee. The current Income Benefit Fee Rate and table showing the lowest and highest annual cost is provided in the Income Benefit Supplement. Once your Contract is issued, your Income Benefit Fee Rate will not change for the life of your Contract. | ||||
Annual Fee | Minimum | Maximum | |||
Income Benefit Fee Rate(1) | See Income Benefit Supplement. | ||||
(1) As a percentage of the average daily Income Benefit Base for the prior Contract Year. | |||||
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 result in Surrender Charges, negative Interim Value calculations, and a negative Market Value Adjustment that substantially increase costs. | |||||
Lowest Annual Cost: | Highest Annual Cost: | ||||
See Income Benefit Supplement. | |||||
RISKS | Location in Prospectus | ||||
17
Is There a Risk of Loss from Poor Performance? | Yes. You can lose money by investing in the Contract, including loss of principal and previously credited interest, due to negative Index performance. There is a risk of loss of principal and previously credited interest of up to the Floor (a maximum loss of 10% with a Floor of -10%) each Interest Term due to negative Index performance. There is a risk of loss of principal and previously credited interest of up to the amount of any negative Index performance that exceeds the Buffer (a maximum loss of 90% with a Buffer of -10%, if the Index declines by 100%) each Interest Term due to negative Index performance. There is a risk of loss of principal and previously credited interest of up to the amount of any negative Index performance that exceeds the Boost (a maximum loss of 90% with a 10% Boost, if the Index declines by 100%) each Interest Term due to negative Index performance. The Fixed Account and a Risk Control Account with a 0% Floor, a minimum 1% Cap Rate, and a minimum 100% Participation Rate will always be available. However, we may change or discontinue some or all of the other Allocation Options; any remaining Allocation Options may have terms that are unacceptable to you and may not provide any protection from index losses, which could result in the loss of the entire amount of your Contract Value. | ||||
18
Is this a Short- Term Investment? | No. The Contract is not a short-term investment and is not appropriate if you need ready access to cash. The benefits of tax deferral mean that the Contract is more beneficial if you have a long time horizon. Excess Withdrawals and surrenders may be subject to a Surrender Charge and a Market Value Adjustment (which may be positive or negative) to the extent they exceed the Annual Free Withdrawal Amount. All withdrawals and surrenders (including withdrawals for Income Benefit Payments) from a Risk Control Account before the end of an Interest Term are subject to the Interim Value calculation (which may be positive or negative) and proportional adjustment of the Crediting Base. Amounts withdrawn are also subject to federal and state income taxes, and, if taken before age 59½, a 10% additional tax. Excess Withdrawals will also reduce the Death Benefit and Income Benefit Payment, perhaps by significantly more than the amount of the withdrawal. At least two weeks before the end of an Interest Term, you will be notified of the available Allocation Options to which you may transfer maturing Contract Value. The new Allocation Options may have different Interest Terms and Crediting Strategies than what was previously available. If we do not receive transfer instructions by Authorized Request at least one Business Day before the end of the current Interest Term, we will apply the maturing Contract Value to a new Interest Term of the same Allocation Option. If the same Risk Control Account is not available, we will apply the value to the Fixed Account. | ||||
19
What are the Risks Associated with the Allocation Options? | An investment in the Contract is subject to the risk of poor investment performance and can vary depending on the performance of the Allocation Options available under the Contract. Each Allocation Option, including the Risk Control Accounts and the Fixed Account, has its own unique risks. You should review the Allocation Options carefully before making an investment decision. The Cap Rate and Dual Step Rate may limit positive Index returns. For example, if the Index performance is 20%, and the Cap Rate or Dual Step Rate (as applicable) is 10%, we will credit 10% in interest at the end of the Interest Term. You may earn less than the Index performance as a result. The Floor, Buffer, and Boost will limit negative Index performance and thereby provide limited protection in the case of a market decline. For example, if the Index performance is -25% and the Floor is -10%, we will credit -10% at the end of the Interest Term. If the Index performance is -25% and the Buffer is -10%, we will credit -15% at the end of the Interest Term. If the Index performance is -25% and the Boost is 10%, we will credit -15% at the end of the Interest Term. Except for the Barclays Risk Balanced, each Index associated with the Risk Control Accounts is a "price return index," which means the Index performance does not include dividends paid on the securities comprising the Index. This will reduce Index performance and will cause the Index to underperform a direct investment in the underlying securities. The Barclays Risk Balanced Index reinvests dividends but deducts certain fees. These deductions will reduce Index performance, and the Index will underperform similar portfolios from which these fees and costs are not deducted. | ||||
What Are the Risks Related to the Insurance Company? | An investment in the Contract is subject to the risks related to the Company. Any obligations (including under the Fixed Account and the Risk Control Accounts), guarantees (such as the Income Benefit and Death Benefit), or benefits are subject to the Company's claims-paying ability. More information about the Company, including its financial strength ratings, is available upon request by calling 1-800-798-5500. | ||||
RESTRICTIONS | Location in Prospectus | ||||
20
Are There Restrictions on the Allocation Options? | Yes, as described below there are restrictions on certain features of allocations, transfers, withdrawals, and Allocation Option features. | ||||
Risk Control Account Restrictions. The Risk Control Accounts available to you will vary depending upon which Income Benefit rider you select and whether it is before or after your you Income Benefit Payment Start Date. The Risk Control Accounts are more limited in number and upside potential with the IncomeGrowth Protection rider, and with the IncomeGrowth Performance rider for reallocations after the Income Benefit Payment Start Date. With the IncomeGrowth Protection Rider, Risk Control Accounts are limited to the Floor with Participation and Cap Rate Crediting Strategies with one-year Interest Terms, and the Fixed Account. For the IncomeGrowth Performance Rider, after the Income Benefit Payment Start Date, Risk Control Accounts with six-year Interest Terms, including any Boost and Dual Step Rate options, are no longer available as reallocation options. See Appendix A. | |||||
Allocation Timing. Subject to the restrictions of the Income Benefit rider you elect and whether it is before or after your Income Benefit Payment Start Date, each Allocation Option is available on the Contract Issue Date and at the end of the Interest Term. For example, after the Contract Issue Date, an Allocation Option with a one-year Interest Term may be available every Contract Anniversary, whereas an Allocation Option with a six-year Interest Term may be available every sixth Contract Anniversary. If we add an Allocation Option, you will not be able to allocate your Contract Value to the new Allocation Option until the start of the next available Interest Term for that Allocation Option. Additionally, with respect to the IncomeGrowth Performance rider, the six-year Interest Term is unavailable for reallocation after the Income Benefit Payment Start Date, if the Payout Date is less than six years from the start of the Interest Term, or if the length of time until a termination date required by federal regulation is less than six years from the start of the Interest Term. | |||||
Changes to Allocation Options and Features. We may set a new Cap Rate, Participation Rate, Dual Step Rate and/or Fixed Interest Rate for a subsequent Interest Term. We will notify you of any new rates at least two weeks before the end of the current Interest Term. We reserve the right to add, substitute, or eliminate Indices and Allocation Options as described in this Prospectus. If there is a delay between the date we remove the Index and the date we add a substitute Index, your Risk Control Account Value will be based on the value of the Index on the date the Index ceased to be available, which means market changes during the delay will not be used to calculate the index interest. We may change, discontinue, or establish restrictions on Flex Transfers, including limitations on the number, frequency, or amount of Flex Transfers, at any time. | |||||
21
Are There any Restrictions on Contract Benefits? | Yes. The Benefits under the Contract, including Systematic Withdrawals and automatic transfers, are subject to additional limitations on the amounts that you may request and the timing for requesting and terminating such programs. Market Value Adjustments, Interim Value calculations, and Surrender Charges may apply. | ||||
TAXES | Location in Prospectus | ||||
What Are the Contract's Tax Implications? | You should consult with a tax professional to determine the tax implications of the Contract. There is no additional tax benefit if you purchase the Contract through a qualified retirement plan or individual retirement account (IRA). Withdrawals from the Contract are subject to ordinary income tax, and may be subject to a 10% additional tax if taken before age 59½. | ||||
CONFLICTS OF INTEREST | Location in Prospectus | ||||
How Are Investment Professionals Compensated? | Some investment professionals (also referred to as "financial professionals" in this prospectus) may receive compensation for selling the Contract to you in the form of commissions or other compensation. These other forms of compensation may include cash bonuses, insurance benefits and financing arrangements. Non-cash benefits may include conferences, seminars and trips (including travel, lodging and meals in connection therewith), entertainment, merchandise and other similar items. The Company may also pay asset-based commissions (sometimes called trail commissions) in addition to Purchase Payment-based commissions. Investment professionals may also receive other payments from us for services that do not directly involve the sale of the Contracts, including personnel recruitment and training, production of promotional literature and similar services. As a result of these compensation arrangements, investment professionals may have a financial incentive to offer or recommend the Contract over another investment. You should ask your investment professional for additional information about the compensation he or she receives in connection with your purchase of the Contract. | ||||
Should I Exchange My Contract? | You should only exchange your contract if you determine, after comparing the features, fees, and risks of both contracts, and any fees or penalties to terminate your existing contract, that it is better for you to purchase the new contract rather than continue to own your existing contract. Some investment professionals may have a financial incentive to offer you a new contract in place of the one you already own. | ||||
22
FEE TABLE
The following tables describe the fees, expenses, and adjustments that you will pay when buying,
owning, and surrendering or making withdrawals from an Allocation Option or 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 will pay at the time you buy the Contract,
surrender or make withdrawals from an Allocation Option or from the Contract, transfer Contract
Value between Allocation Options, or request special services. State premium taxes may also be
deducted.
Transaction Expenses | Charge |
Maximum Surrender Charge (as a percentage of Contract Value surrendered or withdrawn)(1) | 8% |
(1)During the first six Contact Years, we deduct a Surrender Charge from each Excess Withdrawal or surrender that exceeds the
Annual Free Withdrawal Amount. We do not assess a Surrender Charge on certain withdrawals and surrenders, such as under
the Nursing Home or Hospital Waiver or Terminal Illness Waiver.
The next table describes the adjustments, in addition to any transaction expenses, that apply if all
or a portion of the Contract Value is removed from an Allocation Option or from the Contract prior
to the end of an Interest Term.
Adjustments | Charge |
Interim Value Maximum Potential Loss (as a percentage of Contract Value withdrawn or surrendered)(1) | 100% |
Market Value Adjustment Maximum Potential Loss (as a percentage of Contract Value withdrawn or surrendered)(2) | 90% |
(1)For Contract Value allocated to a Risk Control Account, if you take a withdrawal (including for Income Benefit Payments), make
a Flex Transfer, surrender your Contract, die, begin Payout Options, or we deduct the Income Benefit Fee, the amount
withdrawn or transferred before the expiration of an Interest Term is based on the Interim Value and will reduce the Crediting
Base proportionally. The Interim Value calculation may reflect a positive or negative return that increases or decreases the
amount remaining in the Risk Control Account, which could result in the loss of your principal and previously credited interest.
(2)If you surrender your Contract or take an Excess Withdrawal from any Allocation Option at any time other than on or within 30
days after each sixth Contract Anniversary, we will apply a Market Value Adjustment (which may be positive or negative) to the
amount being withdrawn that exceeds the Annual Free Withdrawal Amount. A negative Market Value Adjustment could
significantly decrease the amount you receive from an Excess Withdrawal or surrender.
The next table describes the fees and expenses that you will pay each year during the time that
you own the Contract.
Annual Contract Expenses | Current Charge | Maximum Charge |
Income Benefit Fee Rate(1) (as a percentage of the average daily Income Benefit Base for the prior Contract Year)(2) | See Income Benefit Supplement. | 3% |
(1)Once your Contract is issued, your Income Benefit Fee Rate will not change for the life of your Contract.
(2)The Income Benefit Fee is deducted proportionally from the Contract Value of each Allocation Option on each Contract
Anniversary.
In addition to the fees described above, the Cap Rates and Dual Step Rates limit the amount you
can earn with respect to each Risk Control Account. This means your returns may be lower than
the Index’s returns. In return for accepting this limit on Index gains, you will receive some
protection from Index losses.
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PRINCIPAL RISKS OF INVESTING IN THE CONTRACT
Your Contract has various risks associated with it. We list these risk factors below, as well as other
important information you should know before purchasing a Contract.
Risk of Loss. An investment in the Contract is subject to the risk of loss. You could lose your investment,
including principal and previously credited interest.
Market Risk. The historical performance of a reference Index should not be taken as an indication of the
future performance of the Index. Index performance will be influenced by complex and interrelated
economic, financial, regulatory, geographic, judicial, political and other factors that can affect the capital
markets generally, and by various circumstances that can influence the performance of securities in a
particular market segment. Generally, each Risk Control Account has broad risks that apply to all indices,
such as market risk, as well as specific risks of investing in particular types of securities. Investing in
certain types of securities, such as foreign (non-U.S.) securities or small or mid-cap securities, subjects
you to greater risk and volatility than the general market.
The extent to which negative Index performance will reduce your Risk Control Account Value depends
upon the Risk Control Account to which you allocate Contract Value, due to the different Crediting
Strategies that apply. The maximum amount your Risk Control Account Value could decline each
Interest Term due to negative Index performance is 90% with the -10% Buffer or the 10% Boost.
These options provide relatively less protection from negative Index performance than other Risk Control
Accounts.
Index-Linked Option Market Risk. You assume the investment risk that no Index interest will be credited
and therefore positive Index performance will not increase your Risk Control Account Value. You also bear
the risk that sustained declines in the relevant Index may cause Index performance to not increase your
Risk Control Account Value for a prolonged period. In addition to the general market risks described
above, the reference Indices are subject to the following specific risks:
•The S&P 500 Index is comprised of equity securities issued by large-capitalization U.S.
companies. In general, large-capitalization companies may be unable to respond quickly to new
competitive challenges and may not be able to attain the high growth rate of successful smaller
companies.
•The Dimensional US Small Cap Value Systematic Index is designed to capture the returns
associated with the US small cap value premium, the tendency for smaller company and value
stocks to outperform larger company and growth stocks over time. Compared to large-
capitalization companies, small-capitalization companies may be less stable (or more volatile),
less liquid, and more susceptible to adverse developments. Value stocks may underperform for
long periods of time and perform differently from the market as a whole. The Index has limited
performance history and may perform in unanticipated ways. Generally, there is less publicly
available information about the Index compared to more established market indices.
•The Barclays Risk Balanced Index allocates between equities and fixed income using the
principles of Modern Portfolio Theory using a 10% volatility (risk) target, which seeks to maximize
the expected return based on a given level of market risk. Although the Index targets a particular
volatility, the actual volatility level may differ from that targeted and may be materially higher or
lower for certain periods than the target level depending on market conditions. Because the Index
is exposed to Treasuries, it may underperform in a rapidly rising interest rate environment.
Because the Index includes a volatility control mechanism, it may underperform in an equity
market rally that occurs immediately after a period of elevated volatility when the Index would
24
have reduced its exposure. The Index may allocate up to 225% of total exposure to its
components; when the portfolio exposure is greater than 100%, negative performance of the
portfolio will be magnified and the level of the Index may decrease significantly. The Index has
limited performance history and may perform in unanticipated ways. Generally, there is less
publicly available information about the Index compared to more established market indices.
If you invest in a Risk Control Account and the relevant Index declines, it may or may not reduce your
Risk Control Account Value, depending on the Risk Control Account to which you allocated your Contract
Value.
•If you allocate to a Risk Control Account that has a Floor, you assume the risk of a negative Index
Return up to the Floor. Your Risk Control Account Value could decline up to a maximum of 10%
each Interest Term with the -10% Floor due to negative Index performance.
•If you allocate to a Risk Control Account with a Buffer, you assume the risk of a negative Index
Return after application of the Buffer. Your Risk Control Account Value could decline up to 90%
each Interest Term with the -10% Buffer, if the Index declines by 100% during the Interest Term.
•If you allocate to a Risk Control Account with a Boost, you assume the risk of a negative Index
Return that exceeds the Boost. Your Risk Control Account Value could decline up to 90% or 80%
with a 10% Boost or a 20% Boost, respectively, if the Index declines by 100% during the Interest
Term.
•If you allocate to a Risk Control Account with a Dual Step Rate, you assume the risk that a
negative Index Return after application of the Buffer will drastically change the amount credited to
you. For example, if the Buffer is -10%, the Dual Step Rate is 40%, and the Index Return is -10%,
we would credit you 40%. However, if the Index Return is -10.01%, we would credit you -0.01%.
Daily changes in your Risk Control Account Value may also be more significant than for other
strategies due to the potential for small negative market movements around the Buffer to have
large impacts on the Interim Value, especially near the end of the Interest Term.
•The Floor, Buffer, and Boost describe the level of investment loss that can be experienced in one
Interest Term, but losses over multiple Interest Terms could result in a loss of previously credited
interest and a loss of principal.
•The Floor, Buffer, and Boost do not limit losses to the Risk Control Accounts from the Surrender
Charge, Interim Value calculation, Income Benefit Fee, Market Value Adjustment, federal income
taxes, additional taxes, and proportionate calculations, which could result in a loss of previously
credited interest or principal even if performance has been positive.
Liquidity, Withdrawal, and Flex Transfer Risk. We designed your Contract to be a long-term
investment that you may use to help save for retirement. Your Contract is not designed to be a short-term
savings vehicle. The Contract may not be appropriate for investors who plan to take Excess
Withdrawals or surrender the Contract in the short-term. Surrender Charges, Market Value
Adjustments, Interim Value calculations, the Income Benefit Fee, proportionate calculations,
income taxes, and additional taxes may result in the loss of your principal and previously credited
interest. Withdrawals and Flex Transfers could also significantly negatively impact your values
under the Contract and the amount you receive from any payments.
•Surrender Charge Risk. If you take an Excess Withdrawal or surrender your Contract during the
first six Contract Years, you may pay a Surrender Charge of up to 8% of the amount withdrawn
that exceeds the Annual Free Withdrawal Amount.
•Market Value Adjustment Risk. If you surrender your Contract or take an Excess Withdrawal from
any Allocation Option at any time other than on or within 30 days after each sixth Contract
25
Anniversary, we will apply a Market Value Adjustment (which may be positive or negative) to the
amount being withdrawn that exceeds the Annual Free Withdrawal Amount. Particularly in an
increasing interest rate environment, a negative Market Value Adjustment could significantly
decrease the amount you receive from an Excess Withdrawal or surrender. In extreme
circumstances, losses from the Market Value Adjustment could be as high as 90% of your
Contract Value.
•Interim Value Risk. For Contract Value allocated to a Risk Control Account, if you take a
withdrawal (including for Income Benefit Payments), make a Flex Transfer, surrender your
Contract, die, begin Payout Options, or we deduct the Income Benefit Fee, the amount withdrawn
or transferred before the expiration of an Interest Term is based on the Interim Value and will
reduce the Crediting Base proportionally. The Interim Value calculation may reflect a positive or
negative return that increases or decreases the amount remaining in the Risk Control Account.
The Interim Value calculated for a Risk Control Account during an Interest Term could be
significantly lower than the performance of the reference Index during most of the Interest Term.
The Interim Value may reflect a negative return even when the value of the applicable Index has
increased. You may have an Interim Value that reflects a negative return regardless of the
Crediting Strategy selected; for example, the Interim Value could reflect negative returns that
exceed the applicable Floor, that apply even if Index losses were within the applicable Buffer, or
that are not offset by the applicable Boost. The Interim Value may change each Business Day,
and it is possible that even relatively small daily market movements may have significant impacts
on the Interim Value. An Interim Value that reflects a negative return could significantly
decrease the values under your Contract by more than the withdrawal or transfer amount.
In extreme circumstances, losses from the Interim Value calculation could be as high as
100% of your Risk Control Account Value. You should consult with your financial professional
about whether to elect the Fixed Account Automatic Transfer and Withdrawal Program, which
allows Income Payments to be taken only from the Fixed Account.
•Future Returns Risk. Only the Crediting Base remaining in a Risk Control Account after a
withdrawal or Flex Transfer will be credited interest, positive or negative, at the end of the Interest
Term.
•Proportionate Calculation Risk. Excess Withdrawals reduce the Income Benefit Base, which is
used to determine the Income Payment, and the Purchase Payment, which is used to determine
the Death Benefit, by the ratio of the withdrawal (including any Surrender Charge and Market
Value Adjustment) to the Contract Value immediately prior to the withdrawal. Additionally, for
Contract Value allocated to a Risk Control Account, if you take a withdrawal (including for
Income Benefit Payments), make a Flex Transfer, surrender your Contract, die, begin Payout
Options, or we deduct the Income Benefit Fee, the amount withdrawn or transferred before the
expiration of an Interest Term is based on the Interim Value and will reduce the Crediting Base
proportionally. Such proportional reductions may be substantially more than the amount
withdrawn or transferred, could significantly decrease your Income Benefit Payment,
Death Benefit, Crediting Base, and remaining Contract Values, and could terminate the
Income Benefit and the Contract.
•Tax Risks. Federal Income taxes apply to any withdrawal or surrender. A 10% additional tax may
also apply if taken before the Owner is age 59½. You should consult your tax advisor before
taking a withdrawal or surrendering the Contract.
•Valuation Risk. The withdrawn, transferred, or surrendered value is calculated at the end of the Business
Day that we receive your request in Good Order. This means that you will not be able to determine your
Risk Control Account Value before requesting a withdrawal, surrender, or Flex Transfer, and the resulting
value may be higher or lower than it was at the time of your request.
26
Reinvestment Risk. You assume the risk that if we do not receive transfer instructions at least one
Business Day prior to the end of the current Interest Term, we will apply the maturing Contract Value to a
new Interest Term of the same Risk Control Account. If the same Risk Control Account is not available, we
will apply the value to the Fixed Account. These default Risk Control Accounts may not align with your
desired allocations.
Other Index-Linked Option Risks. In addition to the risk of loss from negative Index performance, there
are other risks of investing in a Risk Control Account.
You assume the risk that the Cap Rate can be reduced to as little as 1% for Risk Control Accounts with
one-year Interest Terms and 10% for Risk Control Accounts with six-year Interest Terms, and that the
Dual Step Rate can be reduced to as little as 10%. As a result, the Index interest that you receive may be
lower than the return you would have received on an investment in a mutual fund or exchange-traded
fund designed to track the performance of the selected reference Index.
You have no ownership rights in the underlying securities comprising the reference Indices. Purchasing
the Contract is not equivalent to investing in the underlying securities comprising the Indices. As the
Owner of the Contract, you will not have any ownership interest or rights in the underlying securities
comprising the Indices, such as voting rights, dividend payments, or other distributions.
•Except for the Barclays Risk Balanced, each Index associated with the Risk Control Accounts is a
"price return index," which means the Index performance does not include dividends paid on the
securities comprising the Index. This will reduce Index performance and will cause the Index to
underperform a direct investment in the underlying securities.
•The Barclays Risk Balanced Index reinvests dividends but deducts a fee of 0.5% for the equity
exposure, and 0.2% per year for the treasury exposure, and a cost equal to SOFR plus 0.1145%
for the equity component. Therefore, the aggregate fee will depend on the Index’s relative
allocations to the equity and treasury components from time to time, which are determined by the
volatility control mechanism. SOFR refers to the Secured Overnight Financing Rate, which was
4.49% as of December 31, 2024. The New York Fed publishes the SOFR on its website each
Business Day. These deductions will reduce Index performance, and the Index will underperform
similar portfolios from which these fees and costs are not deducted.
Because the Index interest is calculated at a single point in time, you may experience a negative or flat
return even if the Index has experienced gains through some, or most, of the Interest Term.
Risk That We May Eliminate an Allocation Option or Eliminate or Substitute an Index. There is no
guarantee that any Allocation Option or Index will be available during the entire time you own your
Contract. We may discontinue an Allocation Option or Index effective as of the end of an Interest Term, or
in the case of certain Index changes, discontinue an Index and substitute a new Index for a Risk Control
Account before the end of an Interest Term. The Floor, Buffer, and Boost for a Risk Control Account will
not change unless the Risk Control Account is discontinued. You assume the risk that the Risk Control
Accounts are discontinued, including the Buffer and the Boost, and the only options remaining
are the Fixed Account and a Risk Control Account with a 0% Floor, a minimum 1% Cap Rate, and a
minimum 100% Participation Rate. If we change or discontinue some or all of the other Risk
Control Accounts, any remaining Allocation Options may have terms that are unacceptable to you
and may not provide any protection from index losses, which could result in the loss of the entire
amount of your Contract Value.
The performance of the new Index may differ from the original Index. If there is a delay between the date
we remove the Index and the date we add a substitute Index, your Risk Control Account Value will be
based on the value of the Index on the date the Index ceased to be available, which means market
changes during the delay will not be used to calculate the Index Return.
27
If we do not provide a substitute Index, a Risk Control Account may also be discontinued before the end
of an Interest Term, resulting in us transferring your Risk Control Account Value to the Fixed Account for
the remainder of the Interest Term. The amount of interest you earn in the Fixed Account may be less
than the amount you would have earned in the Risk Control Account at the end of the Interest Term. If
there is a delay between the date we remove the Index and the date we transfer value to the Fixed
Account, your Risk Control Account Value prior to the transfer will be based on the value of the Index on
the date the Index ceased to be available, which means market changes during the delay will not be used
to calculate the Index Return.
An Index or Allocation Option change may negatively affect interest credited and your resulting Contract
Value, as well as how you want to allocate Contract Value between available Allocation Options. If we
eliminate an Allocation Option or eliminate or substitute an Index, and you do not wish to allocate your
Contract Value to the remaining Allocation Options available under the Contract, you may surrender your
Contract, but you may be subject to a Surrender Charge, Interim Value calculation, and Market Value
Adjustment, which may result in a loss of principal and credited interest. Surrenders are subject to federal
income taxes, and may be subject to a 10% additional tax if taken before age 59½.
Income Benefit Feature Risk. Purchasers should consult with a financial representative to determine if
the Income Benefit is suitable for them based upon their financial needs and risk tolerance. The Income
Benefit Fee will be assessed whether or not the Owner receives Income Benefit Payments. The Risk
Control Accounts are more limited in number and upside potential with the IncomeGrowth
Protection rider, and with the IncomeGrowth Performance rider for reallocations after the Income
Benefit Payment Start Date. You should also consider any differences between the Base
Withdrawal Percentages, Annual Increase Percentages, Maximum Annual Increase Period, and
Income Benefit Fee Rates applicable to each rider.
You should carefully consider when to begin taking Income Benefit Payments. If Income Benefit
Payments are elected earlier, the Income Benefit Percentage will be lower, resulting in lower Income
Benefit Payments, and the Contract will have less time to accumulate value. However, earlier Income
Benefit Payments could result in receiving payments for a longer period of time. If Income Benefit
Payments are delayed, the Income Benefit Percentage may be higher, resulting in higher Income Benefit
Payments, and the Contract will have more time to accumulate value, which could result in higher
payments and might result in a higher Death Benefit. The Risk Control Accounts available to you for
reallocation with the IncomeGrowth Performance Rider are also more limited after the Income Benefit
Payment Start Date. See Appendix A.
Excess Withdrawals could significantly reduce the Death Benefit, Income Benefit Base, and Income
Benefit Payments and could terminate the Contract. Income Benefit Payments reduce the Death Benefit,
Surrender Value, Contract Value and the Annual Free Withdrawal Amount by the amount of the Income
Benefit Payment.
The Income Benefit Payment is taken out of the Owner’s Contract Value unless the Contract Value is
reduced to zero. The probability of you outliving your Contract Value and receiving Income Benefit
Payments from our General Account may be minimal. The Income Benefit Payments are subject to
federal income tax and may be subject to a 10% additional tax if elected prior to age 59½. Any amounts
paid by the Company in excess of the Contract Value are subject to the Company’s financial strength and
claims paying ability.
Contract Issue Date Risk. The Company only issues the Contract on the 10th and 25th of each month.
Therefore, the Purchase Payment may be held in the Company’s General Account for up to fifteen days
prior to being invested in the Contract and will not earn any interest during that period.
Insurance Company Risk. Our General Account assets support the guarantees under the Contract and
are subject to the claims of our creditors. As such, the guarantees under the Contract are subject to our
28
financial strength and claims-paying ability, and therefore, to the risk that we may default on those
guarantees. You should look solely to our financial strength and claims-paying ability in meeting the
guarantees under the Contract. More information about the Company, including its financial strength
ratings, is available upon request by calling 1-800-798-5500.
Business Disruption and Cyber-Security Risks. We rely heavily on interconnected computer systems
and digital data to conduct our variable and index-linked product business activities. Because our variable
and index-linked product business is highly dependent upon the effective operation of our computer
systems and those of our business partners, our business is vulnerable to disruptions from utility outages,
and susceptible to operational and information security risks resulting from information systems failure
(e.g., hardware and software malfunctions), and cyber-attacks. These risks include, among other things,
the theft, misuse, corruption and destruction of data maintained online or digitally, interference with or
denial of service, attacks on websites and other operational disruption and unauthorized release of
confidential Owner information. Such systems failures and cyber-attacks affecting us, CUNA Brokerage
Services, Inc. ("CBSI"), and intermediaries may adversely affect us and your Contract Value. For
instance, systems failures and cyber-attacks may interfere with our processing of Contract transactions,
including the processing of orders, impact our ability to calculate Contract Value, cause the release and
possible destruction of confidential customer or business information, impede order processing, subject
us and/or CBSI, and intermediaries to regulatory fines and financial losses and/or cause reputational
damage. Cyber-security risks may also impact the issuers of securities that comprise the Index, which
may cause the reference Indices to lose value. The risk of cyber-attacks may be higher during periods of
geopolitical turmoil (such as the Russian invasion of Ukraine and the responses by the United States and
other governments). Due to the increasing sophistication of cyber-attacks, a cybersecurity breach could
occur and persist for an extended period of time without detection.
The preventative actions we take to reduce the frequency and severity of cybersecurity incidents and
protect our computer systems may be insufficient to prevent a cybersecurity breach from impacting our
operations or your Contract Value. There can be no assurance that we, CBSI, or intermediaries will avoid
losses affecting your Contract due to cyber-attacks or information security breaches in the future.
In addition, we are exposed to risks related to natural and man-made disasters and catastrophes, such as
storms, fires, floods, earthquakes, epidemics, pandemics, malicious acts, and terrorist acts, which could
adversely affect our ability to conduct business. A natural or man-made disaster or catastrophe, including
a pandemic (such as the coronavirus COVID-19), could affect the ability, or willingness, of our workforce
and employees of service providers and third-party administrators to perform their job responsibilities.
Even if our workforce and employees of our service providers and third-party administrators were able to
work remotely, those remote work arrangements could result in our business operations being less
efficient than under normal circumstances and lead to delays in our issuing Contracts and processing of
other Contract-related transactions, including orders from Owners. Catastrophic events may negatively
affect the computer and other systems on which we rely and may interfere with our ability to receive,
pickup and process mail, our processing of Contract-related transactions, impact our ability to calculate
Contract Value, or have other possible negative impacts. These events may also impact the issuers of
securities that comprise the Index, which may cause the reference Indices to lose value. There can be no
assurance that we or our service providers will avoid losses affecting your Contract due to a natural
disaster or catastrophe.
29
THE INSURANCE COMPANY AND SEPARATE ACCOUNT
MEMBERS Life Insurance Company
The name of the Company is MEMBERS Life Insurance Company. You may write us at 2000 Heritage
Way, Waverly, Iowa 50677-9202, or call us at 1-800-798-5500. The Company is responsible for all
guarantees provided under the Contract, including our obligations under the Fixed Account and the Risk
Control Accounts, the Death Benefit, and the Payout Options. Our General Account assets support these
guarantees. The assets of our General Account are subject to our general liabilities from business
operations and the claims of our creditors. Accordingly, any obligations, guarantees or benefits are
subject to our financial strength and claims-paying ability. You may obtain information on our financial
condition by reviewing our financial statements. You may also call 1-800-798-5500 for more information
about us, including our financial strength ratings.
We are a wholly-owned direct subsidiary of CMFG Life Insurance Company (“CMFG Life”). We were
formed by CMFG Life on February 27, 1976, as a stock life insurance company under the laws of the
State of Wisconsin. The Company’s name was changed to its current name on January 1, 1993. We re-
domiciled from Wisconsin to Iowa on May 3, 2007. Currently, we have no employees. The Company
issues Index-linked and variable annuity contracts, which account for all the new product sales of the
Company. The Company also services previously existing blocks of annuities and individual and group life
policies.
CMFG Life is a stock insurance company organized on May 20, 1935 and domiciled in Iowa. CMFG Life
is one of the world’s largest direct underwriters of credit life and disability insurance, and is a major
provider of qualified pension products to credit unions. CMFG Life and its affiliates currently offer deferred
and immediate annuities, individual term and permanent life insurance, and accident and health
insurance. In 2012, CMFG Life was reorganized as a wholly-owned subsidiary of TruStage Financial
Group, Inc. (f/k/a CUNA Mutual Financial Group, Inc.), which is a wholly-owned subsidiary of CUNA
Mutual Holding Company (“CM Holding”), a mutual holding company organized under the laws of the
State of Iowa.
CMFG Life provides significant services required to conduct our operations. Under a Cost Sharing,
Procurement, Disbursement, Billing and Collection Agreement, CMFG Life performs certain administrative
functions related to procurement, disbursement, billing and collection and services, agent licensing,
payment of commissions, actuarial services, annuity policy issuance and service, accounting and financial
compliance, market conduct, general and informational services and marketing, and provides certain
resources and personnel to us. We share office space with CMFG Life in Madison, Wisconsin and
Waverly, Iowa. Expenses associated with the facilities are allocated to us through the Amended and
Restated Expense Sharing Agreement that we entered into with CMFG Life on January 1, 2015.
We rely on the exemption from the reporting requirements of Section 15(d) of the Securities Exchange Act
of 1934, as amended (the “1934 Act”), provided by Rule 12h-7 under the 1934 Act with respect to
registered non-variable insurance contracts (such as index-linked investment options) that we issue.
30
The Risk Control Separate Account
The non-registered Separate Account in which we hold reserves for our guarantees attributable to annuity
contracts that offer risk control accounts is referred to as the Risk Control Separate Account. The assets
in the Risk Control Separate Account are equal to the reserves and other liabilities of the contracts
supported by the Risk Control Separate Account and are not chargeable with liabilities arising out of any
other business that we conduct. We have the right to transfer to our General Account any assets of the
Risk Control Separate Account that are in excess of such reserves and other Contract liabilities. Our
General Account assets are also available to meet the guarantees under the Contract, including the
Risk Control Separate Account, as well as our other general obligations. The guarantees in this
Contract are subject to the Company’s financial strength and claims-paying ability.
GETTING STARTED - THE ACCUMULATION PERIOD
The Prospectus describes all material rights, benefits, and obligations under the Contract. All material
state variations in the Contract are described in Appendix B and in your Contract. Please review Appendix
B for any variations from standard Contract provisions that may apply to your Contract based on the state
in which your Contract was issued. Your financial professional can provide you with more information
about those state variations.
Purchasing a Contract
We offer the Contract to individuals and certain non-natural persons (such as certain types of trusts). To
purchase a Contract, you and the Annuitant must be at least Age 21 and no older than Age 85.
We sell the Contract through financial professionals. To start the purchase process, you must submit an
application to your financial professional. The Purchase Payment must either be paid at the Company’s
Administrative Office or delivered to your financial professional. Your financial professional will then
forward your completed application and Purchase Payment (if applicable) to us. The selling firm’s
determination of whether the Contract is suitable for you may delay our receipt of your application. Any
such delays will affect when we issue your Contract.
If the application for a Contract is properly completed and is accompanied by all the information
necessary to process it, including payment of the Purchase Payment, the Purchase Payment will be
allocated to the Allocation Options you choose on the next available Contract Issue Date.
After we receive a completed application, Purchase Payment, and all other information necessary to
process a purchase order in Good Order, we will begin the process of issuing the Contract on the next
Contract Issue Date available. The Purchase Payment will be allocated as described under "Allocating
Your Purchase Payment."
IMPORTANT: You may use the Contract with certain tax qualified retirement plans (“IRA”). The
Contract includes attributes such as tax deferral on accumulated earnings. Qualified retirement
plans provide their own tax deferral benefit; the purchase of this Contract does not provide
additional tax deferral benefits beyond those provided in the qualified retirement plan.
Accordingly, if you are purchasing this Contract through a qualified retirement plan, you should
consider purchasing the Contract for its other features and other non-tax related benefits. Please
consult a tax adviser for information specific to your circumstances to determine whether the
Contract is an appropriate investment for you.
If mandated by applicable law, including federal laws designed to counter terrorism and prevent money
laundering, we may be required to reject your Purchase Payment. We may also be required to provide
additional information about you or your Contract to government regulators. In addition, we may be
31
required to block an Owner’s Contract and thereby refuse to honor any request for transfers, partial
withdrawals, surrender, income payments, and Death Benefit payments, until instructions are received
from the appropriate government regulator.
Tax-Free Section 1035 Exchanges
You can generally exchange one annuity contract for another in a “tax-free exchange” under Section 1035
of the Internal Revenue Code. Before making an exchange, you should compare both contracts carefully.
Remember that if you exchange another contract for the one described in this Prospectus, you might
have to pay a Surrender Charge or negative Market Value Adjustment on the existing contract. If the
exchange does not qualify for Section 1035 tax treatment, you may have to pay federal income tax, and a
possible 10% additional tax on your old contract. There will be a new Contract Issue Date for the purpose
of determining any Surrender Charges for this Contract and other charges may be higher (or lower) and
the benefits may be different. There may be delays in our processing of the exchange. You should not
exchange another contract for this one unless you determine, after knowing all the facts that the
exchange is in your best interest. In general, the person selling you this Contract will earn a commission
from us.
Owner and Joint Owners
The Owner is the person(s) (or non-natural Person) who own(s) the Contract and, in the case of a natural
person(s), whose death determines whether the Death Benefit is payable. While the Owner is living, the
Owner is also the person(s) (or entity) who receives Payout Period Income Payments while the Annuitant
is also living. If there are multiple Owners, each Owner will have equal ownership of the Contract and all
references to Owner will mean Joint Owners. Joint Owners are only allowed if the Owner and Joint Owner
are Spouses. Additionally, Joint Owners are only allowed for non-qualified annuities.
The Owner names the Annuitant or Joint Annuitants. If the Owner is not a natural person, a Joint Owner
and Joint Annuitant cannot be named. All rights under the Contract may be exercised by the Owner,
subject to the rights of any other Owner. If your contract is a non-qualified contract, you may assign all
rights and benefits under this contract by Authorized Request. However, the assignment may terminate
the Income Benefit Rider. Unless otherwise specified by you, the assignment is effective on the date the
Authorized Request is signed by you and any Irrevocable Beneficiary, subject to any payments made or
actions taken by us prior to our receipt of the Authorized Request. We are not responsible for the validity
or effect of any assignment. You should consult with your tax advisor to determine any tax consequences
of an assignment before taking any action.
The Owner may request to change the Owner at any time before the Payout Date. If a Joint Owner is
changed (or is named), the Joint Owner must be the Owner’s Spouse. If an Owner is added or changed,
the amount that will be paid upon the death of the new Owner will be impacted as described in the “Death
Benefit” section. The Income Benefit may also be impacted as described in the "Income Benefit" section.
Any change of Owner must be made by Authorized Request and is subject to our acceptance. We
reserve the right to refuse such change on a non-discriminatory basis. Unless otherwise specified by the
Owner, such change, if accepted by us, will take effect as of the date the Authorized Request was signed.
We are not liable for any payment we make or action we take before we receive the Authorized Request.
If an Owner who is a natural person dies during the Accumulation Period, your Beneficiary is entitled to a
Death Benefit. If you have a Joint Owner, the Death Benefit will be available when the first Joint Owner
dies. If there is a surviving Owner and he or she is the Spouse of the deceased, the surviving Spouse will
be treated as the sole primary Beneficiary, and any other designated Beneficiary will be treated as a
contingent Beneficiary.
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Divorce
In the event of divorce, the former Spouse must provide us divorce distribution instructions using a form
satisfactory to us, and/or a copy of the divorce decree (or a qualified domestic relations order if it is a
qualified plan). The instruction form or terms of the decree/order must identify the Contract and specify
how the Contract Value should be allocated among the former Spouses.
Annuitant and Joint Annuitants
The Annuitant (or Joint Annuitants) is (are) the natural person(s) whose life (or lives) determine(s) the
Payout Period Income Payment amount payable under the Contract. If the Owner is a non-natural person,
the Annuitant(s) is also the person(s) whose death determines the Death Benefit. If the Owner is a natural
person, the Owner may change the Annuitant by Authorized Request at any time provided it is at least 30
days before the Payout Date. Unless otherwise specified by the Owner, such change will take effect as of
the date the Authorized Request was signed. We are not liable for any payment we make or action we
take before we receive the Authorized Request. If you change the Annuitant, the Payout Date will not
change. If the Owner is a non-natural person, the Annuitant cannot be changed. The Annuitant does not
have any rights under the Contract.
Beneficiary and Irrevocable Beneficiaries
The Beneficiary is the person(s) or entity named by the Owner to receive proceeds payable upon the
Owner's death or death the first Annuitant if the Owner is a non-natural person. An Irrevocable Beneficiary
is any Beneficiary who must consent to being changed or removed. Prior to the Payout Date, if no
Beneficiary survives the Owner, the proceeds will be paid to the Owner’s estate. If there are Joint Owners
and we are unable to determine that one of the Joint Owners predeceased the other, it will be assumed
that the Joint Owners died simultaneously. In this instance the Death Benefit will be divided equally
among the Joint Owners’ estates. If there is more than one Beneficiary, each Beneficiary will receive an
equal share unless otherwise specified by the Owner. If Joint Owners have been designated, the
surviving Joint Owner will be treated as the sole primary Beneficiary and any other designated Beneficiary
will be treated as a contingent Beneficiary.
You may change the Beneficiary by an Authorized Request sent to us, or you may name one or more
Beneficiaries. A change of Beneficiary will take effect on the date the Authorized Request was signed. If
there are Joint Owners, each Owner must sign the Authorized Request. In addition, any Irrevocable
Beneficiary or assignee must sign the Authorized Request. We are not liable for any payment we make or
action we take before we receive the Authorized Request.
Use care when naming Beneficiaries. If you have any questions concerning the criteria you should use
when choosing Beneficiaries, consult your financial professional.
Covered Person
The Covered Person(s) is (are) the natural person(s) whose Age and lifetime we base the Income Benefit
Percentage and Income Benefit Payments on for the Income Benefit. You select the Covered Person(s)
on the Contract Issue Date. Covered Persons must meet all eligibility requirements under the Contract.
After the Contract Issue Date, you can only add, remove, or replace a Covered Person if permitted
as described in this Prospectus. See Income Benefit - Covered Person.
Right to Examine
You may cancel your Contract and return it to your financial professional or to us within 10 days after you
receive the Contract (30 days if it is a replacement contract) to receive a refund of the Purchase Payment
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you paid, less any withdrawals. Some states may permit a longer period for you to return your Contract,
or different calculations and requirements for refunded amounts, as described in Appendix B. Refunds will
not be subject to a Surrender Charge or Market Value Adjustment and will be paid within seven days
following the date of cancellation. If you cancel your Contract by exercising your Right to Examine and
attempt to purchase a substantially similar Contract, the Company may refuse to issue the second
Contract.
ALLOCATING YOUR PURCHASE PAYMENT
Purchase Payment
The minimum Purchase Payment for a Non-Qualified or Qualified Contract is $10,000. The Company
does not allow additional Purchase Payments. A Purchase Payment for a Contract, or Purchase
Payments for multiple Contracts owned by the same individual, that equals or exceeds $1 million requires
our prior approval, which may be withheld at our sole discretion.
Contract Issue Dates offered by the Company are currently the 10th and 25th of each month. If we receive
the application for a Contract in Good Order by noon at least two business days prior to the next Contract
Issue Date, which includes our receipt of the Purchase Payment, we will issue the Contract on the next
available Contract Issue Date. If 10th or 25th is a non-Business Day, we issue the Contract on the next
Business Day with an effective Contract Issue Date of the 10th or 25th. Please note that during the period
between the date your Purchase Payment is delivered to us and the next available Contract Issue Date,
we will hold your Purchase Payment in our General Account and not pay interest on it. Thus, during that
period, your Purchase Payment will not be allocated to either the Risk Control Accounts or the Fixed
Account.
Allocation Options
On the Contract Issue Date, your Purchase Payment will be allocated according to your allocation
instructions on file with us. You must specify the percentage of your Purchase Payment to be allocated to
each Allocation Option on the Contract Issue Date. The amount you direct to an Allocation Option must be
in whole percentages from 1% to 100% of the Purchase Payment, and your total allocation must equal
100%. If you do not indicate your allocations on the application, our Administrative Office will attempt to
contact your financial professional and/or you for clarification. We will not issue the Contract without your
allocation instructions.
The current Allocation Options offered under the Contract are shown in the table below. Depending upon
which Income Benefit rider you select and for the IncomeGrowth Performance rider, whether it is
before or after your Income Benefit Payment Start Date, you may not be able to invest in certain
Risk Control Accounts, as noted below. See Appendix A. Allocation Options and features may vary
by state, and your selling firm may limit the Allocation Options available to you.
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ALLOCATION OPTIONS WITH INCOMEGROWTH PROTECTION RIDER | |||
Risk Control Account Crediting Strategy: Floor with Participation Rate and Cap Rate | |||
Index | Interest Term | Crediting Strategy | Minimum Guarantee* |
S&P 500 Index | 1-Year | Floor: 0% to -10% in 1% increments Cap Rate and Participation Rate | Cap Rate: 1% Participation Rate: 100% |
Dimensional US Small Cap Value Systematic Index | 1-Year | Floor: 0% to -10% in 1% increments Cap Rate and Participation Rate | Cap Rate: 1% Participation Rate: 100% |
Barclays Risk Balanced Index | 1-Year | Floor: 0% to -10% in 1% increments Cap Rate and Participation Rate | Cap Rate: 1% Participation Rate: 100% |
Fixed Interest Option | |||
Account | Interest Term | Crediting Strategy | Minimum Guarantee |
Fixed Account | 1-Year | Fixed Interest Rate | Minimum Rate: 0.05% |
ALLOCATION OPTIONS WITH INCOMEGROWTH PERFORMANCE RIDER BEFORE THE INCOME BENEFIT PAYMENT START DATE | |||
Risk Control Account Crediting Strategy: Floor with Participation Rate and Cap Rate | |||
Index | Interest Term | Crediting Strategy | Minimum Guarantee* |
S&P 500 Index | 1-Year | Floor: 0% to -10% in 1% increments Cap Rate and Participation Rate | Cap Rate: 1% Participation Rate: 100% |
Dimensional US Small Cap Value Systematic Index | 1-Year | Floor: 0% to -10% in 1% increments Cap Rate and Participation Rate | Cap Rate: 1% Participation Rate: 100% |
Barclays Risk Balanced Index | 1-Year | Floor: 0% to -10% in 1% increments Cap Rate and Participation Rate | Cap Rate: 1% Participation Rate: 100% |
Risk Control Account Crediting Strategy: Buffer with Participation Rate and Cap Rate | |||
Index | Interest Term | Crediting Strategy | Minimum Guarantee* |
S&P 500 Index | 1-Year | Buffer: -10% and -20% Cap Rate and Participation Rate | Cap Rate: 1% Participation Rate: 100% |
Dimensional US Small Cap Value Systematic Index | 1-Year | Buffer: -10% and -20% Cap Rate and Participation Rate | Cap Rate: 1% Participation Rate: 100% |
S&P 500 Index | 6-Year | Buffer: -10% and -20% Cap Rate and Participation Rate | Cap Rate: 10% Participation Rate: 100% |
Dimensional US Small Cap Value Systematic Index | 6-Year | Buffer: -10% and -20% Cap Rate and Participation Rate | Cap Rate: 10% Participation Rate: 100% |
Barclays Risk Balanced Index | 6-Year | Buffer: -10% and -20% Cap Rate and Participation Rate | Cap Rate: 10% Participation Rate: 100% |
Risk Control Account Crediting Strategy: Boost with Participation Rate and Cap Rate | |||
Index | Interest Term | Crediting Strategy | Minimum Guarantee* |
S&P 500 Index | 6-Year | Boost: 10% and 20% Cap Rate and Participation Rate | Cap Rate: 10% Participation Rate: 100% |
Dimensional US Small Cap Value Systematic Index | 6-Year | Boost: 10% and 20% Cap Rate and Participation Rate | Cap Rate: 10% Participation Rate: 100% |
Barclays Risk Balanced Index | 6-Year | Boost: 10% and 20% Cap Rate and Participation Rate | Cap Rate: 10% Participation Rate: 100% |
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Risk Control Account Crediting Strategy: Buffer with Dual Step Rate | |||
Index | Interest Term | Crediting Strategy | Minimum Guarantee* |
S&P 500 Index | 6-Year | Buffer: -10% and -20% Dual Step Rate | Dual Step Rate: 10% |
Fixed Interest Option | |||
Account | Interest Term | Crediting Strategy | Minimum Guarantee |
Fixed Account | 1-Year | Fixed Interest Rate | Minimum Rate: 0.05% |
ALLOCATION OPTIONS WITH INCOMEGROWTH PERFORMANCE RIDER AFTER THE INCOME BENEFIT PAYMENT START DATE | |||
Risk Control Account Crediting Strategy: Floor with Participation Rate and Cap Rate | |||
Index | Interest Term | Crediting Strategy | Minimum Guarantee* |
S&P 500 Index | 1-Year | Floor: 0% to -10% in 1% increments Cap Rate and Participation Rate | Cap Rate: 1% Participation Rate: 100% |
Dimensional US Small Cap Value Systematic Index | 1-Year | Floor: 0% to -10% in 1% increments Cap Rate and Participation Rate | Cap Rate: 1% Participation Rate: 100% |
Barclays Risk Balanced Index | 1-Year | Floor: 0% to -10% in 1% increments Cap Rate and Participation Rate | Cap Rate: 1% Participation Rate: 100% |
Risk Control Account Crediting Strategy: Buffer with Participation Rate and Cap Rate | |||
Index | Interest Term | Crediting Strategy | Minimum Guarantee* |
S&P 500 Index | 1-Year | Buffer: -10% and -20% Cap Rate and Participation Rate | Cap Rate: 1% Participation Rate: 100% |
Dimensional US Small Cap Value Systematic Index | 1-Year | Buffer: -10% and -20% Cap Rate and Participation Rate | Cap Rate: 1% Participation Rate: 100% |
Fixed Interest Option | |||
Account | Interest Term | Crediting Strategy | Minimum Guarantee |
Fixed Account | 1-Year | Fixed Interest Rate | Minimum Rate: 0.05% |
* The Floor, Buffer, and Boost for a Risk Control Account will not change unless the Risk Control Account
is discontinued. The Fixed Account and a Risk Control Account with a 0% Floor, a minimum 1%
Cap Rate, and a minimum 100% Participation Rate will always be available. However, we may
change or discontinue some or all of the other Allocation Options; any remaining Allocation
Options may have terms that are unacceptable to you and may not provide any protection from
index losses, which could result in the loss of the entire amount of your Contract Value. We may
not always make available Risk Control Accounts that include the other Crediting Strategies, but if we
do, the minimum guarantees are as follows: Buffer, -10%; Boost, 10%; Dual Step Rate, 10%; Cap Rate
for 6-Year Interest Terms, 10%.
Reallocating Your Contract Value
Subject to the restrictions of the Income Benefit rider you elect and whether it is before or after your
Income Benefit Payment Start Date, each Allocation Option is available on the Contract Issue Date and at
the end of the Interest Term. For example, after the Contract Issue Date, an Allocation Option with a one-
year Interest Term may be available every Contract Anniversary, whereas an Allocation Option with a six-
year Interest Term may be available every sixth Contract Anniversary. This means that the six-year
Interest Term will not be available for you to allocate Contract Value to on every Contract Anniversary. If
we add an Allocation Option, you will not be able to allocate your Contract Value to the new Allocation
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Option until the start of the next available Interest Term for that Allocation Option. Additionally, with respect
to the IncomeGrowth Performance rider, the six-year Interest Term is unavailable for reallocation after the
Income Benefit Payment Start Date, if the Payout Date is less than six years from the start of the Interest
Term, or if the length of time until a termination date required by federal regulation is less than six years
from the start of the Interest Term. If you have allocated Contract Value to an Allocation Option that
becomes unavailable to you for reallocation, your Contract Value will be applied to a different Allocation
Option at the end of the Interest Term as described below.
At least two weeks before the end of an Interest Term, we will notify you of the available Allocation
Options to which you may transfer your maturing Contract Value. The new Allocation Options may have
different Interest Terms and Crediting Strategies than what was previously available. If we do not receive
transfer instructions by Authorized Request at least one Business Day prior to the end of the current
Interest Term, we will apply the value of the maturing Contract Value to a new Interest Term of the same
Risk Control Account. If the same Risk Control Account is not available, we will apply the value to the
Fixed Account.
New transfer instructions by Authorized Request will supersede any prior transfer instructions for a given
Allocation Option. Except for Flex Transfers described below, transfers are not permitted during an
Interest Term. For example, you may not transfer values from the Fixed Account to any Risk Control
Account or transfer values among Risk Control Accounts during an Interest Term. Transactions that are
scheduled to occur on a day that the Index Value for a Risk Control Account is not available will be
processed at the end of the next Business Day at the closing Index Value for that day.
Flex Transfers
Prior to the end of the Interest Term, you may transfer some or all of the Risk Control Account Value from
any Risk Control Account to the Fixed Account. Flex Transfer instructions must be provided by Authorized
Request at least one Business Day prior to the end of the Risk Control Account’s Interest Term. Requests
for Flex Transfers that are received at our Administrative Office in Good Order at least one Business Day
prior to the end of the Risk Control Account’s Interest Term will be processed as of the end of that
Business Day. Requests received on the last Business Day of the Interest Term will be considered not in
Good Order and no transfers will be made pursuant to the request. Requests received at any other time
will be processed as of the end of the next Business Day.
The Risk Control Account Value will be calculated at the end of the Business Day the Flex Transfer
request is received in Good Order. This means you will not be able to determine your Risk Control
Account Value in advance of requesting the Flex Transfer, and the transferred value may be higher or
lower than it was at the time of your request. If your requested Flex Transfer is greater than the Risk
Control Account Value at the end of the Business Day the transfer request is received in Good Order, we
will transfer all remaining Risk Control Account Value, which will be less than the Flex Transfer you
requested.
The Flex Transfer is irrevocable once the transfer is requested, and the transferred amount will remain in
the Fixed Account until the next Contract Anniversary, when you can leave values in the Fixed Account or
transfer to any other available Risk Control Account.
The transferred amount will reduce the Crediting Base for the Risk Control Account on a proportional
basis by the ratio of the transfer to the Interim Value immediately prior to the withdrawal. Flex Transfers
are based on the Interim Value, not the performance of the Index over the Interest Term. The Interim
Value may reflect a negative return even when the Index increases, may reflect a positive return even if
the Index decreases, and may be lower than the amount that would have been available at the end of the
Interest Term. See "Contract Value - Interim Value." If you make a Flex Transfer when the Interim
Value reflects a negative return, you may transfer at a loss, which means you essentially "lock in"
such loss; your Crediting Base will be reduced by more than the transferred amount, and that
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reduction could be substantial. Additionally, only the Crediting Base remaining in a Risk Control
Account after the Flex Transfer will be credited index interest, positive or negative, at the end of the
Interest Term. The decision to make a Flex Transfer could therefore significantly negatively impact your
Risk Control Account Value, which impacts other Contract Values. It is possible that you would have
realized less of a loss or no loss if the Flex Transfer occurred later or if values remained until the end of
the Interest Term. You should fully understand the impact of the Flex Transfer and consult your financial
adviser prior to making a Flex Transfer. We will not provide you advice or notify you as to whether you
should or should not make a Flex Transfer or the optimal time for doing so. We are not responsible for
any losses related to your decision whether or not to make a Flex Transfer. It is possible in extreme
circumstances to lose up to 100% of your principal and previously credited interest with respect
to a Risk Control Account if you make a Flex Transfer.
We may change, discontinue, or establish restrictions on Flex Transfers, including limitations on the
number, frequency, or amount of Flex Transfers, at any time.
FIXED ACCOUNT OPTION
You may allocate all or a portion of your Purchase Payment and Contract Value to the Fixed Account.
Contract Value allocated to the Fixed Account becomes part of the Fixed Account Value. We credit
interest at the end of each Business Day to the Fixed Account based on a fixed annual interest rate.
Fixed Interest Rate
The initial Fixed Interest Rate is shown on your Contract Data Page. The Fixed Interest Rate will not
change for the duration of the 1-Year Interest Term. We may declare a new Fixed Interest Rate for
each subsequent 1-year Interest Term and will notify you of the new Fixed Interest Rate at least two
weeks before the end of the current Interest Term. The Fixed Interest Rate will never be less than
0.05%.
Fixed Account Nonforfeiture Value
Full surrenders from the Fixed Account are subject to a minimum nonforfeiture value. The Fixed Account
nonforfeiture value is calculated as of the date of full surrender, application of the entire Contract Value to
a Payout Option, or death of an Owner. If the current Fixed Account Value (calculated as set forth under
"Contract Value"), less any applicable Market Value Adjustment or Surrender Charges, is less than the
minimum nonforfeiture value, your Fixed Account Value account will be set equal to the Fixed Account
Nonforfeiture Value.
The Fixed Account Nonforfeiture Value equals 87.5% x (A + B – C), where
•A = The portion of the Purchase Payment allocated to the Fixed Account.
•B = Any transfers to the Fixed Account.
•C = Any amounts withdrawn or transferred from the Fixed Account.
•A, B, and C are accumulated at the nonforfeiture rate for as long as such amounts were in the
Fixed Account.
The nonforfeiture rate will be calculated each calendar quarter (on each January 1, April 1, July 1, and
October 1) and determined on the Contract Issue Date and every sixth Contract Anniversary based on the
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calendar quarter in which the Issue Date or Contract Anniversary falls. The nonforfeiture rate will apply for
six years and then will be recalculated for the next six-year period.
The nonforfeiture rate will never be less than the lesser of:
a)3%; or
b)The interest rate determined as follows:
1)The average of the three applicable monthly five-year Constant Maturity Treasury (CMT) rates
reported by the Federal Reserve rounded to the nearest 0.05%, as described below;
2)minus 1.25%; and
3)where the resulting interest rate is not less than the greater of the nonforfeiture rate required by
the National Association of Insurance Commissioners (NAIC) Standard Nonforfeiture Law for
Individual Deferred Annuities (currently, 0.15%), or the rate required by applicable law in the
state where the Contract is issued for delivery. See Appendix B for state variations.
The three monthly five-year Constant Maturity Treasury rates used in the calculation above are as follows:
•The prior September, October, and November monthly five-year CMT rates will be used to determine
the first quarter interest rate that is effective each January 1;
•The prior December, January, and February monthly five-year CMT rates will be used to determine
the second quarter interest rate that is effective each April 1;
•The prior March, April, and May monthly five-year CMT rates will be used to determine the third
quarter interest rate that is effective each July 1; and
•The prior June, July, and August monthly five-year CMT rates will be used to determine the fourth
quarter interest rate that is effective each October 1.
Although you may reallocate among Allocation Options with one-year Interest Terms at the end of
each Contract Year, Excess Withdrawals and surrenders from the Fixed Account at any time
other than on or within 30 days after each sixth Contract Anniversary may be subject to a
Market Value Adjustment, and Excess Withdrawals and surrenders during the first six Contract
Years may be subject to a Surrender Charge. Therefore, this Contract may not be appropriate for
you if you plan to take Excess Withdrawals or surrender your Contract before the expiration of
each six-year term.
RISK CONTROL ACCOUNT OPTIONS
You may allocate all or a portion of your Purchase Payment and Contract Value to the Risk Control
Accounts we make available. The portion of the Contract Value allocated to a Risk Control Account
becomes part of the Risk Control Account Value. Information about the features of each currently offered
Risk Control Account, including its name, a brief statement describing the assets that the Index seeks to
track, its crediting period, and its Crediting Strategy, are set forth in Appendix A.
Interest Term and Crediting Interest
The portion of your Contract Value allocated to a Risk Control Account is credited with interest, if any, at
the end of each Interest Term based in part on the investment performance of an external Index over the
Interest Term, subject to the Crediting Strategy unique to each Risk Control Account. For each Risk
Control Account, the Index Return, which can be positive or negative, is calculated by comparing the
change in the Index from the first day of the Interest Term to the last day of the Interest Term. An Interest
Term can be one year or six years. For examples illustrating how we credit interest to the Risk Control
Accounts, see "Contract Value - Risk Control Account Value."
It is possible that you will not earn any interest in a Risk Control Account or that we may credit
negative interest to a Risk Control Account.
39
You should understand the difference between the 6-year Interest Term and the 1-year Interest
Term. For the 6-year Interest Term, interest is not calculated or credited until the end of the
Interest Term; therefore, the Crediting Strategy factors (i.e., the Buffer, Boost, Cap Rate,
Participation Rate, and Dual Step Rate) only apply at the end of the Interest Term and not annually.
The application of Interim Value Calculations on withdrawals, deductions, and transfers from a
Risk Control Account before the end of the Interest Term could significantly reduce the values
under the Contract and the amount you receive from any payments. Only the Crediting Base
remaining in a Risk Control Account after the withdrawal or transfer will be credited interest,
positive or negative, at the end of the Interest Term.
Although you may reallocate among Allocation Options at the end of each Interest Term, Excess
Withdrawals and surrenders at any time other than on or within 30 days after each sixth
Contract Anniversary may be subject to a Market Value Adjustment, and Excess withdrawals and
surrenders during the first six Contract Years may be subject to a Surrender Charge. Therefore,
this Contract may not be appropriate for you if you plan to take Excess Withdrawals or surrender
your Contract before the expiration of each six-year term.
The Indices
Each reference Index can go up or down based on the prices of the underlying securities that comprise
the Index. We currently offer three reference Indices. However, not all Indices may be available for each
Crediting Strategy or Interest Term. See Appendix A.
The S&P 500 Index is a stock market index based on the market capitalizations of 500 leading
companies publicly traded in the U.S. stock market, as determined by Standard & Poor’s.
The Dimensional US Small Cap Value Systematic Index is designed to capture the returns associated
with the US small cap value premium, the tendency for smaller company and value stocks to outperform
larger company and growth stocks over time. The Index includes stocks within the smallest 8% of the US
market down to $100 million in market capitalization with relative prices in the lowest 40% when ranked
by price to book. Within this universe, the index is designed to target higher-expected-return securities by
excluding stocks with lower profitability or high asset growth. The Index uses information in market prices
to systematically pursue higher expected returns in a broadly diversified manner.
The Barclays Risk Balanced Index allocates between equities and fixed income using the principles of
Modern Portfolio Theory using a 10% volatility (risk) target, which seeks to maximize the expected return
based on a given level of market risk. Equities consist of an equally weighed portfolio of 50 US stocks that
have shown low volatility during the past year. To ensure sector diversification, there can be no more than
10 securities per sector. Dividends are reinvested. For fixed income, the Index provides exposure to three
indices tracking the 2, 5, and 10-year US Treasury futures, equally weighted. The Index may allocate up
to 225% of total exposure to its components; when the portfolio exposure is greater than 100%, negative
performance of the portfolio will be magnified and the level of the Index may decrease significantly.
An investment in a Risk Control Account is not an investment in the Index or in any Index fund.
•Except for the Barclays Risk Balanced, each Index is a "price return index," which means the
performance of each Index does not include dividends paid on the securities comprising the
Index, and therefore, the performance of the Index does not reflect the full performance of those
underlying securities. This will reduce Index performance and will cause the Index to
underperform a direct investment in the underlying securities.
•The Barclays Risk Balanced Index reinvests dividends but deducts a fee of 0.5% for the equity
exposure, and 0.2% per year for the treasury exposure, and a cost equal to SOFR plus 0.1145%
for the equity component. Therefore, the aggregate fee will depend on the Index’s relative
40
allocations to the equity and treasury components from time to time, which are determined by the
volatility control mechanism. These deductions will reduce Index performance, and the Index will
underperform similar portfolios from which these fees and costs are not deducted. SOFR refers to
the Secured Overnight Financing Rate, which was 4.49% as of December 31, 2024. The New
York Fed publishes the SOFR on its website each Business Day.
The Index Return is the percentage change in the Index from the beginning of the Interest Term to the
end of the Interest Term. Because interest is calculated on a single point in time, you may experience
negative or flat performance even though the Index experienced gains through some, or most, of the
Interest Term.
Limits On Index Losses and Gains
The Floors, Buffers, and Boosts are used in determining the level of protection provided by the Risk
Control Account. Each Risk Control Account has a Floor, Buffer, or Boost. Once elected, the Floor, Buffer,
and Boost may not be changed until the end of the Interest Term.
The Floor represents the maximum amount of negative interest that may be credited to the Risk Control
Account at the end of an Interest Term. If a Floor of 0% is elected, negative investment performance of
the applicable Index will not reduce your Risk Control Account Value. If any other Floor is chosen,
negative investment performance of the applicable Index will reduce your Risk Control Account Value by
up to the amount of the Floor you elected for any Interest Term. Negative investment performance will not
reduce your Risk Control Account Value by more than the Floor even if the Index performance for that
Interest Term is lower than the Floor. For example, if the Index performance is -15% and you elected a
Floor of -10%, the Company will credit -10% to the Risk Control Account Value. We offer eleven Floor
options for one-year Interest Terms which provide different levels of protection: 0%, -1%, -2%, -3%, -4%,
-5%, -6%, -7%, -8%, -9%, and -10%. If you allocate to a Risk Control Account with a Floor Crediting
Strategy, you must also specify your Floor by choosing one of the eleven available options. There is a risk
of loss of principal and previously credited interest of up to the Floor (a maximum loss of 10% with a Floor
of -10%) each Interest Term due to negative Index performance.
The Buffer represents the maximum amount of negative interest assumed by the Company, and any
additional negative interest will be credited to the Risk Control Account at the end of the Interest Term. For
example, if the -10% Buffer option is elected, negative investment performance of the applicable Index
will not reduce your Risk Control Account Value if the negative investment performance is between zero
and -10% for the Interest Term. If the investment performance is lower than -10% for the Interest Term,
your Risk Control Account Value will be reduced by the amount of negative investment performance in
excess of -10%. We currently offer Risk Control Accounts that have a -10% Buffer and a -20% Buffer.
There is a risk of loss of principal and previously credited interest of up to the amount of any negative
Index performance that exceeds the Buffer (a maximum loss of 90% with a Buffer of -10%, if the Index
declines by 100%) each Interest Term due to negative Index performance.
The Boost increases any negative Index performance by the amount of the Boost. If the Index Return is
zero or positive, the Boost is also the minimum Adjusted Index Return (subject to the Cap Rate). For
example, if you choose a 10% Boost and the Index Return is -5%, your Risk Control Account value will
increase by 5% (the -5% Index Return plus the 10% Boost). If you choose a 10% Boost and the Index
Return is -15%, your Risk Control Account Value will decrease by 5%, (the -15% Index Return plus the
10% Boost). If you choose a 10% Boost and the Index Return is 5%, your Risk Control Account Value will
increase by 10%, (the 10% Boost). We currently offer Risk Control Accounts with six-year Interest Terms
that have a 10% Boost and 20% Boost. There is a risk of loss of principal and previously credited interest
of up to the amount of any negative Index performance that exceeds the Boost (a maximum loss of 90%
with a 10% Boost, if the Index declines by 100%) each Interest Term due to negative Index performance.
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Negative investment performance is limited by the Floor, Buffer, and Boost for a given Interest Term, but
you could lose more due to losses in subsequent Interest Terms. If you make withdrawals, make Flex
Transfers, or surrender your Contract, the Floor, Buffer, and Boost do not limit losses from the Surrender
Charge, Market Value Adjustment, Interim Value calculation, federal income taxes, additional taxes, or
proportionate calculations for withdrawals and Flex Transfers, which could significantly reduce the Death
Benefit and remaining Contract Values.
In deciding between the Floor, Buffer, and Boost options, you should consider the loss potential for each
account. The Floor provides the most protection from large losses. Although the Buffer and Boost provide
limited protection, there is potential to lose substantially more than the Floor if there are large market
losses. Generally, if you elect a Risk Control Account that has relatively more downside protection (for
example, a 0% Floor), you will have relatively less upside potential based on your Cap Rate, Participation
Rate, or Dual Step Rate. The additional gain potential should be weighed against the risk of loss.
Each Risk Control Account has either a Cap Rate and a Participation Rate or a Dual Step Rate. These
features limit the amount of positive interest credited to the Risk Control Account at the end of an Interest
Term. The Cap Rate, Dual Step Rate, and Participation Rate will not change for the duration of the
Interest Term.
The Cap Rate is the maximum amount of any positive Index interest that we will credit you at the end of
an Interest Term. Positive Index performance will increase your Risk Control Account Value by up to the
Cap Rate. For example, if the Index Return is 15% and the Cap Rate is 10%, the Company will credit
10%. Generally, the Cap Rate varies according to the level of risk you accept in choosing a Floor, Buffer,
or Boost. For example, the Cap Rate would be higher for the -10% Floor (allowing potentially greater
increases and decreases) and lower for the 0% Floor (limiting the amount of potential increases and
decreases). Similarly, the Cap Rate will also be higher for a -10% Buffer or 10% Boost than for a -20%
Buffer or 20% Boost. Generally, the Cap Rate will also be higher for a six-year Interest Term than a one-
year Interest Term. With the Cap Rate, you may receive only a portion of any positive Index performance.
The Dual Step Rate is the Adjusted Index Return that we will credit you when the Index Return is greater
than or equal to the applicable Buffer. In other words, if you choose a Buffer of -10%, the Dual Step Rate
will only apply if there is negative Index Return that is -10% or better, or a positive Index Return. We will
not credit you interest from positive Index performance that exceeds the Dual Step Rate. For example, if
the Buffer is -10% and the Index Return is -5% (which is greater than the Buffer), and the Dual Step Rate
is 50%, we would credit you with the Dual Step Rate of 50%. Similarly, if the Buffer is -10% and there is a
positive Index Return of 60%, and the Dual Step Rate is 50%, we would credit you with the Dual Step
Rate of 50%. However, if the Buffer is -10% and the Index Return is -15% (which is less than the Buffer),
the Dual Step Rate would not apply, and we would credit you with -5% (the -15% Index Return minus the
-5% Buffer). With the Dual Step Rate, you may receive only a portion of any positive Index performance. If
you allocate to a Risk Control Account with a Dual Step Rate, you should understand that a negative
Index Return after application of the Buffer may drastically change the amount credited to you. For
example, if the Buffer is -10%, the Dual Step Rate is 40%, and the Index Return is -10%, we would credit
you 40%. However, if the Index Return is -10.01%, we would credit you -0.01%. Daily changes in your
Risk Control Account Value may also be more significant than for other strategies due to the potential for
small negative market movements around the Buffer to have large impacts on the Interim Value,
especially near the end of the Interest Term.
The Participation Rate is the percentage of positive Index interest that we will credit you at the end of an
Interest Term. For Risk Control Accounts with a Buffer or Floor, the Participation Rate is applied to any
positive Index Return. For example, if the Index Return is 15% and the Participation Rate is 110%, we
would credit you 16.5% (110% of 15%). For Risk Control Accounts with a Boost, the Participation Rate is
applied to any Index Return that is greater than the Boost. For example, if the Boost is 10%, the Index
Return is 15%, and the Participation Rate is 110%, we would credit you 15.75% (the 10% Boost plus
110% of 5%, the Index Return that is greater than the Boost). We reset the Participation Rate at the start
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of each Interest Term. The Participation Rate will never be less than 100%, which means that the
Participation Rate alone will not limit the amount of Interest you earn from positive Index performance.
The initial Cap Rate, Participation Rate, Dual Step Rate, and Fixed Interest Rate are available in advance
of the Contract Issue Date and will be provided by your financial professional or by calling the Company
at 1-800-798-5500. We will forward advance written notice to Owners of any change in the Cap Rate,
Participation Rate, and Dual Step Rate for the subsequent Interest Term at least two weeks before the
end of the current Interest Term. This notice will describe the Owner’s right to transfer Contract Value
between available Allocation Options. The current Cap Rates, Participation Rates, and Dual Step Rates
being offered for new Interest Terms of the available Risk Control Accounts can be located at the following
publicly accessible website:https://www.trustage.com/zonechoice-income-annuity-rates. The rates posted
on that website address are incorporated by reference into this prospectus.
Setting the Crediting Strategies
We consider various factors in determining the Crediting Strategies and associated rates, including
investment returns, the costs of our risk management techniques, sales commissions, administrative
expenses, regulatory and tax requirements, general economic trends, and competitive factors. We
determine the rates for the Cap Rate, Dual Step Rate, Participation Rate, Floor, Buffer, and Boost at our
sole discretion.
The Cap Rate, Participation Rate, Dual Step Rate, and Fixed Interest Rate will not change during the
Interest Term. The Cap Rate for Risk Control Accounts with one-year Interest Terms will never be
less than 1%, and the Cap Rate for Risk Control Accounts with six-year Interest Terms will never be
less than 10%. The Participation Rate will never be less than 100%, which means that the
Participation Rate alone will not limit the amount of Interest you earn from positive Index
performance. The Dual Step Rate will never be less than 10%. The Fixed Interest Rate will never be
less than 0.05%.
The Floor, Buffer, and Boost for a Risk Control Account will not change unless the Risk Control Account is
discontinued. The Fixed Account and a Risk Control Account with a 0% Floor, a minimum 1% Cap
Rate, and a minimum 100% Participation Rate will always be available. However, we may change
or discontinue some or all of the other Allocation Options; any remaining Allocation Options may
have terms that are unacceptable to you and may not provide any protection from index losses,
which could result in the loss of the entire amount of your Contract Value. We may not always make
available Risk Control Accounts that include the other Crediting Strategies, but if we do, the minimum
guarantees are as follows: Buffer, -10%; Boost, 10%; Dual Step Rate, 10%; Cap Rate for 6-Year Interest
Terms, 10%.
Index Annual Return Examples
The bar charts shown below provide the annual returns for each Index for the last 10 calendar
years (or for the life of the Index if less than 10 years), as well as the Index returns for each Index
after applying a hypothetical 5% Cap and hypothetical -10% Buffer. The charts illustrate the
variability of the returns from year to year and show how hypothetical limits on Index gains and
losses may affect these returns. Past performance is not necessarily an indication of future
performance.
The performance below is NOT the performance of any Risk Control Account. Your performance
under the Contract will differ, perhaps significantly. The performance below may reflect a different
return calculation, time period, and limit on Index gains and losses than the Risk Control
Accounts, and does not reflect Contract fees and charges, including surrender charges, Interim
Value calculation and the Market Value Adjustment, which reduce performance.
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* Except for the Barclays Risk Balanced Index, each Index is a “price return” index, not a “total return” index, and therefore the
performance of the Index does not reflect dividends declared by any of the companies included in the Index, reducing the Index
return. As a result, the Index will underperform a direct investment in the securities composing the Index.
** The Barclays Risk Balanced Index reinvests dividends but deducts certain fees. These deductions will reduce Index performance,
and the Index will underperform similar portfolios from which these fees and costs are not deducted.
Risk Control Account Restrictions and Changes
The Risk Control Accounts available to you will vary depending upon which Income Benefit rider
you select, and for the IncomeGrowth Performance rider, whether it is before or after your Income
Benefit Payment Start Date. With the IncomeGrowth Protection Rider, Allocation Options are limited to
the Floor with Participation and Cap Rate Crediting Strategies with one-year Interest Terms, and the Fixed
Account. For the IncomeGrowth Performance Rider, after the Income Benefit Payment Start Date, Risk
Control Accounts with six-year Interest Terms, including any Boost and Dual Step Rate options, are no
longer available as reallocation options.
There is no guarantee that any Risk Control Account or Index will be available during the entire time you
own your Contract. We may offer additional Risk Control Accounts at our discretion, which includes
offering an additional Index, Crediting Strategy, or Interest Term. We may also discontinue a Risk Control
Account or Index at our discretion effective as of the end of an Interest Term. In the case of certain Index
changes, we may discontinue an Index and substitute a new Index for a Risk Control Account before the
end of an Interest Term. If an Index is discontinued and we do not provide a substitute Index, a Risk
Control Account may be discontinued before the end of an Interest Term. Such a change will be subject to
any required regulatory approval. Any change we make will be on a non-discriminatory basis.
We reserve the right to add or substitute any Index. Generally, the Index associated with a given Risk
Control Account will remain unchanged for the duration of the Interest Term. However, if the publication of
an Index is discontinued or the calculation of that Index is materially changed, we may substitute a
suitable Index that will be used for the remainder of the Interest Term. Examples of such material changes
to the Index include, without limitation: a contractual dispute between us and the Index provider, changes
that make it impractical or too expensive to purchase derivatives to hedge the Index, or changes that
result in significantly different Index Values or performance. The performance of the new Index may
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differ from the original Index, which may affect the interest credited to the Risk Control Account
and the interest you earn under the Contract. However, a change in the Index will not change the Cap
Rate, Participation Rate, Dual Step Rate, Floor, Buffer, or Boost for your Contract at the time of the
change.
If we remove an Index, we will attempt to add a suitable alternative index that is substantially similar to the
Index being replaced on the same day that we remove the Index. To determine the Index Return, we will
add (1) the percentage change in the Index from the beginning of the Interest Term to the date on which
the Index became unavailable and (2) the percentage change for the substitute Index from the date of
substitution until the end of the Interest Term.
If we are unable to substitute a new Index at the same time an Index ceases to be available, there may be
a brief interval between the date on which we remove the Index and add a substitute Index. In this
situation, your Contract Value will continue to be allocated to the Risk Control Accounts. However, during
the interim period, your Contract Value (including any Interim Value) will be based on the percentage
change in the Index from the beginning of the Interest Term to the date on which the Index became
unavailable under the Contract, which means market changes during the delay will not be used to
determine your Risk Control Account Value.
In the unlikely event that an Index is discontinued, we do not provide a substitute Index, and the Risk
Control Account is discontinued during an Interest Term as a result, we will credit interest from the
beginning of the Interest Term until the date the Risk Control Account is discontinued using the
percentage change in the Index from the beginning of the Interest Term to the date on which the Index
became unavailable. The resulting Risk Control Account Value will be transferred to the Fixed Account for
the remainder of the Interest Term, where it will earn the Fixed Interest Rate starting on the date of
transfer until the next Contract Anniversary. The amount of interest you earn in the Fixed Account may be
less than the amount you would have earned in the Risk Control Account at the end of the Interest Term.
If there is a delay between the date we remove the Index and the date we transfer value to the Fixed
Account, your Risk Control Account Value prior to the transfer will be based on the value of the Index on
the date the Index ceased to be available, which means market changes during the delay will not be used
to calculate the Index Return.
Such a change will be subject to any required regulatory approval, such as any required approval of the
Index by the insurance department in your state.
We will notify you of a Risk Control Account or Index change and its effective date by sending you written
notice at your last known address.
An Index or Risk Control Account change may negatively affect interest credited and your
resulting Contract Value, as well as how you want to allocate Contract Value between available
Allocation Options.
CONTRACT VALUE
On the Contract Issue Date, your Contract Value equals the Purchase Payment. After the Contract Issue
Date, during the Accumulation Period, your Contract Value is equal to the sum of the account value in all
Allocation Options, including the Fixed Account Value and the Risk Control Account Value(s). The
calculation of account value varies by Allocation Option as described below.
Fixed Account Value
The Fixed Account Value is equal to:
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•The amount applied to the Fixed Account at the start of the current Interest Term; plus
•The daily credited interest; minus
•Any applicable Income Benefit Fee; minus
•Any withdrawals (including any Surrender Charge and Market Value Adjustment); plus
•Any Flex Transfers.
The Interim Value does not apply to Contract Value in the Fixed Account.
Risk Control Account Value
Your Contract Value allocated to the Risk Control Accounts for any Valuation Period is equal to the sum of
your Risk Control Account Value in each Risk Control Account. The Risk Control Account Value varies
based on the Business Day it is calculated:
•On the first Business Day of an Interest Term: the Crediting Base.
•On the last Business Day of an Interest Term: the Crediting Base multiplied by the sum of one plus
the Adjusted Index Return.
•On every other Business Day: the Interim Value.
Crediting Base
The Crediting Base is equal to the amount allocated to a Risk Control Account at the start of the Interest
Term, reduced proportionally for any withdrawals during the Interest Term.
For this purpose, "withdrawals" as used in this section include partial withdrawals (including
Income Benefit Payments), Flex Transfers, a full surrender, Death Benefit payments, amounts
withdrawn to be applied to a Payout Option, and the deduction of Income Benefit Fees.
A withdrawal will proportionally reduce the Crediting Base by the ratio of the withdrawal to the Risk
Control Account Value immediately prior to the withdrawal. Withdrawals include any applicable Surrender
Charge and Market Value Adjustment. A proportional reduction to the Crediting Base could be larger than
the amount of the withdrawal.
•If the Risk Control Account Value immediately prior to the withdrawal is greater than the Crediting
Base, the reduction to the Crediting Base will be less than the amount of the withdrawal.
•If the Risk Control Account Value immediately prior to the withdrawal is less than the Crediting
Base, the reduction to the Crediting Base will be greater than the amount of the withdrawal.
The following formulas are used for this calculation:
•Withdrawal as a percentage of Risk Control Account Value = withdrawal / (Risk Control Account
Value immediately prior to withdrawal), where “withdrawal” includes any applicable Surrender
Charge and Market Value Adjustment
•Reduction in Crediting Base = (Crediting Base before withdrawal) x (withdrawal as a percentage
of Risk Control Account Value)
•Crediting Base After Withdrawal = (Crediting Base before withdrawal) – (reduction in Crediting
Base)
The Crediting Base is not used for the Fixed Account.
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Examples of Crediting Base After a Withdrawal or Flex Transfer
Note, “withdrawal,” as used in the examples below, includes partial withdrawals (including Income
Benefit Payments), Flex Transfers, amounts withdrawn to be applied to a Payout Option, and the
deduction of Income Benefit Fees. Withdrawals include any applicable Surrender Charge and Market
Value Adjustment. The Interim Value is reflected in the Risk Control Account Value.
Example 1. Risk Control Account Value immediately prior to the withdrawal is greater than the Crediting
Base.
Assume the following:
•Crediting Base before withdrawal = $100,000
•Withdrawal = $20,000
•Risk Control Account Value at time of withdrawal = $115,000
Step 1: Calculate the withdrawal as a percentage of Risk Control Account Value
•Withdrawal as a percentage of Risk Control Account Value = withdrawal / (Risk Control Account
Value immediately prior to withdrawal)
•Withdrawal as a percentage of Risk Control Account Value = $20,000 / $115,000 = 0.173913
Step 2: Calculate the reduction in the Crediting Base
•Reduction in Crediting Base = (Crediting Base before withdrawal) x (withdrawal as a percentage
of Risk Control Account Value)
•Reduction in Crediting Base = $100,000 x 0.173913 = $17,391.30
Step 3: Calculate the Crediting Base after withdrawal
•Crediting Base after withdrawal = (Crediting Base before withdrawal) – (reduction in Crediting
Base)
•Crediting Base after withdrawal = $100,000 - $17,391.30 = $82,608.70
In this example, because the Risk Control Account Value immediately prior to the withdrawal is greater
than the Crediting Base, the reduction to the Crediting Base ($17,391.30) is less than the amount of the
withdrawal ($20,000).
Example 2. Risk Control Account Value immediately prior to the withdrawal is less than the Crediting
Base.
Assume the following:
•Crediting Base before withdrawal = $100,000
•Withdrawal = $20,000
•Risk Control Account Value at time of withdrawal = $80,000
Step 1: Calculate the withdrawal as a percentage of Risk Control Account Value
•Withdrawal as a percentage of Risk Control Account Value = withdrawal / (Risk Control Account
Value immediately prior to withdrawal)
•Withdrawal as a percentage of Risk Control Account Value = $20,000 / $80,000 = 0.25
Step 2: Calculate the reduction in the Crediting Base
•Reduction in Crediting Base = (Crediting Base before withdrawal) x (withdrawal as a percentage
of Risk Control Account Value)
•Reduction in Crediting Base = $100,000 x 0.25 = $25,000
Step 3: Calculate the Crediting Base after withdrawal
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•Crediting Base after withdrawal = (Crediting Base before withdrawal) – (reduction in Crediting
Base)
•Crediting Base after withdrawal = $100,000 - $25,000 = $75,000
In this example, because the Risk Control Account Value immediately prior to the withdrawal is less than
the Crediting Base, the reduction to the Crediting Base ($25,000) is greater than the amount of the
withdrawal ($20,000). This illustrates that the Crediting Base calculation may result in a reduction in the
Crediting Base that is significantly larger than the withdrawal amount.
Index Return
On the last Business Day of an Interest Term the Risk Control Account Value equals the Crediting Base
multiplied by the sum of one plus the Adjusted Index Return. The Index Return and Adjusted Index Return
are calculated to determine the interest credited to a Risk Control Account. The Index Return and
Adjusted Index Return are calculated separately for each Risk Control Account.
The Index Return is the percentage change in the index from the beginning of the Interest Term to the end
of the Interest Term. The Index Return is calculated using the following formula:
Index Return = A / B – 1 where,
•A = Index Value on the last day of the Interest Term
•B = Index Value on the first day of the Interest Term
If the first or last day of the Interest Term does not fall on a Business Day, the closing Index Value for the
next Business Day will be used.
Adjusted Index Return
The Adjusted Index Return is the Index Return for the current Interest Term adjusted for the Crediting
Strategy. The calculation of the Adjusted Index Return varies based on the Crediting Strategy:
For the Floor with Participation Rate and Cap Rate Crediting Strategy, the Adjusted Index Return is
calculated as follows:
•If the Index Return is greater than or equal to zero: the lesser of the Cap Rate or the Index Return
multiplied by the Participation Rate.
•If the Index Return is less than zero: the greater of the Index Return or the Floor.
Examples: Assume the Floor is -10%, the Cap Rate is 10.00%, and the Participation Rate is 100%.
•If the Index Return is 6.00%, because the Index Return is greater than zero, the Adjusted
Index Return equals the lesser of the Index Return multiplied by the Participation Rate or the
Cap Rate:
oLesser of 6.00%*100% or 10.00% = 6.00%.
•If the Index Return is 16.00%, because the Index Return is greater than zero, the Adjusted
Index Return equals the lesser of the Index Return multiplied by the Participation Rate or the
Cap Rate:
oLesser of 16.00%*100% or 10.00% = 10.00%.
•If the Index Return is -6.00%, because the Index Return is less than zero, the Adjusted Index
Return is the greater of the Index Return or the Floor:
oGreater of -6.00% or -10.00% = -6.00%.
•If the Index Return is -16.00%, because the Index Return is less than zero, the Adjusted
Index Return is the greater of the Index Return or the Floor:
oGreater of -16.00% or -10.00% = -10.00%.
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For the Buffer with Participation Rate and Cap Rate Crediting Strategy, the Adjusted Index Return is
calculated as follows:
•If the Index Return is greater than or equal to zero: the lesser of the Cap Rate or the Index
Return multiplied by the Participation Rate.
•If the Index Return is less than zero and greater than the Buffer: zero.
•If the Index Return is less than the Buffer: the Index Return minus the Buffer.
Examples: Assume the Buffer is -10.00%, the Participation Rate is 100%, and the Cap Rate is 10.00%.
•If the Index Return is 6.00%, because the Index Return is greater than zero, the Adjusted Index
Return equals the lesser of the Index Return or the Cap Rate:
oLesser of 6.00%*100.0% or 10.00% = 6.00%.
•If the Index Return is 16.00%, because the Index Return is positive, the Adjusted Index Return
equals the lesser of the Index Return multiplied by the Participation Rate or the Cap Rate:
oLesser of 16.00%*100.0% or 10.00% = 10.00%.
•If the Index Return is -6.00%, because the Index Return is less than zero and greater than the
-10% Buffer, the Adjusted Index Return is zero:
o0.00%.
•If the Index Return is -16.00%, because the Index Return is less than zero and greater than the
-10% Buffer, the Adjusted Index Return equals the Index Return minus the Buffer:
o-16.00% - (-10%) = -6.00%.
For the Boost with Participation Rate and Cap Rate Crediting Strategy, the Adjusted Index Return is
calculated as follows:
•If the Index Return is greater than or equal to zero: the lesser of the Cap Rate or the Boost plus
the Participation Rate multiplied by any Index Return in excess of the Boost.
•If the Index Return is less than zero: the Index Return plus the Boost.
Examples: Assume the Boost is 10%, the Participation Rate is 100%, and the Cap Rate is 90.00%.
•If the Index Return is 6.00%, because the Index Return is greater than zero, the Adjusted Index
Return equals the lesser of the Cap Rate or the Boost plus the Participation Rate multiplied by
any Index Return in excess of the Boost:
◦Lesser of 10% + 100*0% or 90.00% = 10.00%.
•If the Index Return is 16.00%, because the Index Return is greater than zero, the Adjusted Index
Return equals the lesser of the Cap Rate or the Boost plus the Participation Rate multiplied by
any Index Return in excess of the Boost:
◦Lesser of 10% + 100%*6% or 90.00% = 16.00%.
•If the Index Return is -6.00%, because the Index Return is less than zero, the Adjusted Index
Return is equal to the Index Return plus the Boost:
◦-6.00% + 10% = 4.00%
•If the Index Return is -16.00%, because the Index Return is less than zero, the Adjusted Index
Return is equal to the Index Return plus the Boost:
◦-16.00% + 10% = -6.00%.
The Adjusted Index Return for the Buffer with Dual Step Rate Crediting Strategy is calculated as
follows:
•If the Index Return is greater than or equal to the Buffer: the Dual Step Rate.
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•If the Index Return is less than the Buffer: the Index Return minus the Buffer.
Examples: Assume the Buffer is -10.00% and the Dual Step Rate is 50.00%.
•If the Index Return is 6.00%, because the Index Return is greater than the Buffer, the Adjusted
Index Return equals the Dual Step Rate:
◦50.00%.
•If the Index Return is 16.00%, because the Index Return is greater than the Buffer, the Adjusted
Index Return equals the Dual Step Rate:
◦50.00%.
•If the Index Return is -6.00%, because the Index Return is greater than the Buffer, the Adjusted
Index Return equals the Dual Step Rate:
◦50.00%.
•If the Index Return is -16.00%, because the Index Return is less than the Buffer, the Adjusted
Index Return equals the Index Return minus the Buffer:
◦-16.00% - (-10%) = -6.00%.
Risk Control Account Value Calculation on the Last Business Day of an Interest Term
The following examples illustrate how investment performance of the reference Index is applied in
crediting interest to the Risk Control Accounts. In each case, the following steps are used. Additional
details and examples for each step in these calculations are provided above.
•Step 1 - Calculate the Index Return, which equals the Index Value on the last day of the Interest
Term divided by the Index Value on the first day of the Interest Term minus one.
•Step 2 - Calculate the Adjusted Index Return using the Index Return from Step 1 and the
applicable Crediting Strategy. See above for additional examples of these calculations.
•Step 3 - Calculate the Risk Control Account Value, which equals the Crediting Base multiplied by
the sum of one plus the Adjusted Index Return from Step 2.
No withdrawals, Flex Transfers, or deductions of Income Benefit Fees are assumed to occur under these
examples and all values are determined on the last Business Day of an Interest Term. The examples
illustrate hypothetical circumstances solely for the purpose of demonstrating Risk Control Account
calculations and are not intended as estimates of future performance of the Index.
Example 1: Floor with Cap Rate and Participation Rate Crediting Strategy with a positive Index Return
greater than the Cap Rate.
Assumptions:
•Crediting Base: $100,000
•Floor: -10.00%
•Cap Rate: 15.00%
•Participation Rate: 100%
•Index Value as of the first day of the Interest Term: 1000
•Index Value as of the last day of the Interest Term: 1300
Step 1: Calculate the Index Return: 30.00%
Step 2: Calculate the Adjusted Index Return: 15.00%
Step 3: Calculate the Risk Control Account Value: $115,000
Example 2: Floor with Cap Rate and Participation Rate Crediting Strategy with a negative Index Return.
Assumptions:
•Crediting Base: $100,000
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•Floor: -10.00%
•Cap Rate: Uncapped
•Participation Rate: 100%
•Index Value as of the first day of the Interest Term: 1000
•Index Value as of the last day of the Interest Term: 700
Step 1: Calculate the Index Return: -30.00%
Step 2: Calculate the Adjusted Index Return: -10.00%
Step 3: Calculate the Risk Control Account Value: $90,000
Example 3: Buffer with Cap Rate and Participation Rate Crediting Strategy with a positive Index Return.
Assumptions:
•Crediting Base: $100,000
•Buffer: -10.00%
•Cap Rate: 10.00%
•Participation Rate: 115%
•Index Value as of the first day of the Interest Term: 1000
•Index Value as of the last day of the Interest Term: 1300
Step 1: Calculate the Index Return: 30.00%
Step 2: Calculate the Adjusted Index Return: 34.50%
Step 3: Calculate the Risk Control Account Value: $134,500
Example 4: Buffer with Cap Rate and Participation Rate Crediting Strategy with an Index Return less than
zero and greater than the Buffer.
Assumptions:
•Crediting Base: $100,000
•Buffer: -10.00%
•Cap Rate: Uncapped
•Participation Rate: 115%
•Index Value as of the first day of the Interest Term: 1000
•Index Value as of the last day of the Interest Term: 950
Step 1: Calculate the Index Return: -5.00%
Step 2: Calculate the Adjusted Index Return: 0.00%
Step 3: Calculate the Risk Control Account Value: $100,000
Example 5: Buffer with Cap Rate and Participation Rate Crediting Strategy with an Index Return less than
the Buffer.
Assumptions:
•Crediting Base: $100,000
•Buffer: -10.00%
•Cap Rate: Uncapped
•Participation Rate: 115%
•Index Value as of the first day of the Interest Term: 1000
•Index Value as of the last day of the Interest Term: 700
Step 1: Calculate the Index Return: -30.00%
Step 2: Calculate the Adjusted Index Return: -20.00%
Step 3: Calculate the Risk Control Account Value: $80,000
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Example 6: Boost with Cap Rate and Participation Rate Crediting Strategy with a positive Index Return
Assumptions:
•Crediting Base: $100,000
•Boost: 10.00%
•Cap Rate: 200.00%
•Participation Rate: 110%
•Index Value as of the first day of the Interest Term: 1000
•Index Value as of the last day of the Interest Term: 1300
Step 1: Calculate the Index Return: 30.00%
Step 2: Calculate the Adjusted Index Return: 32.00%
Step 3: Calculate the Risk Control Account Value: $132,000
Example 7: Boost with Cap Rate and Participation Rate Crediting Strategy with a negative Index Return.
Assumptions:
•Crediting Base: $100,000
•Boost: 10.00%
•Cap Rate: Uncapped
•Participation Rate: 110%
•Index Value as of the first day of the Interest Term: 1000
•Index Value as of the last day of the Interest Term: 700
Step 1: Calculate the Index Return: -30.00%
Step 2: Calculate the Adjusted Index Return: -20.00%
Step 3: Calculate the Risk Control Account Value: $80,000
Example 8: Buffer with Dual Step Rate and a positive Index Return
Assumptions:
•Crediting Base: $100,000
•Buffer: -10.00%
•Dual Step Rate: 60.00%
•Index Value as of the first day of the Interest Term: 1000
•Index Value as of the last day of the Interest Term: 1300
Step 1: Calculate the Index Return: 30.00%
Step 2: Calculate the Adjusted Index Return: 60.00%
Step 3: Calculate the Risk Control Account Value: $160,000
Example 9: Buffer with Dual Step Rate and a negative Index Return
Assumptions:
•Crediting Base: $100,000
•Buffer: -10.00%
•Dual Step Rate: 60.00%
•Index Value as of the first day of the Interest Term: 1000
•Index Value as of the last day of the Interest Term: 700
Step 1: Calculate the Index Return: -30.00%
Step 2: Calculate the Adjusted Index Return: -20.00%
Step 3: Calculate the Risk Control Account Value: $80,000
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Interim Value
The Interim Value is the value for a Risk Control Account on any day other than the first and last Business
Day of an Interest Term. The Interim Value may change each Business Day, and the change may be
positive or negative. The Interim Value may reflect a negative return even when the Index increases, may
reflect a positive return even if the Index decreases, and may be lower than the amount that would have
been available at the end of the Interest Term. See "Charges and Adjustments - Interim Value."
The Interim Value reflects the change in value of derivative instruments that hedge market risks
associated with the Risk Control Accounts. Using the Interim Value protects the Company from market
losses relating to changes in the value of the investments that support the Risk Control Accounts when
withdrawals or Flex Transfers are made during the Interest Term. The Interim Value is determined using
an option pricing formula, is calculated separately for each Risk Control Account, and varies based on the
Crediting Strategy.
The Interim Value for a Risk Control Account is calculated using the following formula:
•Crediting Base x [1 + (Hypothetical Option Value – Amortized Option Cost – Trading Costs)]
Hypothetical option value is the hypothetical option value as of the current Business Day, expressed as a
percentage of the Crediting Base. The hypothetical derivatives include calls and puts. The current value of
the hypothetical call options reflects the potential for increases in the reference Index during the Interest
Term. The current value of the hypothetical put options reflects the potential for decreases in the
reference Index during the Interest Term.
Amortized option cost is the hypothetical option value as of the start of the Interest Term, adjusted for the
time elapsed in the Interest Term. To adjust for the time elapsed in the Interest Term, the hypothetical
option value as of the start of the Interest Term is multiplied by the number of days remaining in the
Interest Term divided by the total number of days in the Interest Term. Amortized option cost is expressed
as a percentage of the Crediting Base.
Trading costs represent the reasonably expected additional cost of selling the hypothetical options. The
trading cost may vary by Risk Control Account and time remaining and is expressed as a percentage of
the Crediting Base.
The hypothetical option value used in determining the Interim Value is calculated as follows:
•For the Floor with Participation Rate and Cap Rate Crediting Strategy: Participation Rate x (long
call - short call) - short put + long put.
•For the Buffer with Participation Rate and Cap Rate Crediting Strategy: Participation Rate x (long
call - short call) - short put.
•For the Boost with Participation Rate and Cap Rate Crediting Strategy: Participation Rate x (long
call - short call) - short put + Boost discounted at the risk-free rate.
•For the Buffer with Dual Step Rate Crediting Strategy: Dual Step Rate x long digital call - short
put.
The following inputs are used to calculate the hypothetical call and put option values under a Black-
Scholes pricing model. The implied volatility, divided rate, and risk-free rate are obtained from
independent third parties.
Strike Price of the Option. The strike price varies for each derivative instrument. The strike price for each
derivative instrument is described below.
•Long call:
◦Floor and Buffer Crediting Strategies: Index Value as of the start of the Interest Term
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◦Boost Crediting Strategies: Index Value x (1 + Boost)
•Short put:
◦Floor and Boost Crediting Strategies: Index Value as of the start of the Interest Term
◦Buffer Crediting Strategies: (Index Value at start of the Interest Term) x (1 + Buffer)
•Long put (Floor Crediting Strategies only):
◦(Index Value at start of the Interest Term) x (1 + Floor)
•Short call:
◦Floor and Buffer Crediting Strategies: (Index Value as of the start of the Interest Term) x
(1 + Cap Rate/Participation Rate)
◦Boost Crediting Strategies: (Index Value as of the start of the Interest Term) x (1 + (Cap
Rate – Boost)/Participation Rate + Boost)
•Long digital call (Buffer with Dual Step Rate Crediting Strategies only)
◦(Index Value at start of the Interest Term) x (1 + Buffer)
The value of the call or put option is measured as a percentage of the Crediting Base.
Time Remaining. Represents the portion of the Interest Term remaining. It is measured as the number of
whole and partial years remaining in the Interest Term.
Strike Ratio. The strike price of the option divided by the closing value for the reference Index as of the
current Business Day.
Implied Volatility. The implied volatility is approximated using observed option prices. Linear interpolation
is used between implied volatilities for similar options with the closest available time remaining and strike
ratio.
Dividend Rate of the Index for the Remaining Term of the Option. The dividend rate for the time
remaining using linearly interpolated rates or implied from market data.
Risk-Free Interest Rate for the Remaining Term of the Option. The risk-free rate is a benchmark rate
used for the U.S. financial services industry in valuing financial instruments, with a maturity equal to the
time remaining in the Interest Term. If there is no corresponding length, linear interpolation is used using
rates with the closest remaining term.
For examples of how we calculate the Interim Value, please refer to the Statement of Additional
Information.
CHARGES AND ADJUSTMENTS
Income Benefit Fee
The Income Benefit Fee is equal on an annual basis to the Income Benefit Fee Rate multiplied by the
average daily value of the Income Benefit Base for the prior Contract Year. The Income Benefit Fee will
be deducted proportionally from the Contract Value in all Allocation Options on the Contract Anniversary.
The Income Benefit Fee will be deducted prior to any other transactions on the Contract Anniversary. No
Surrender Charge or Market Value Adjustment will be applied as a result of the deduction of the Income
Benefit Fee. The Income Benefit Fee is assessed even if Income Benefit Payments are never made.
The table shows the current and maximum Income Benefit Fee Rate that we may charge. Once your
Contract is issued, your Income Benefit Fee Rate will not change for the life of your Contract.
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Income Benefit Fee Rate (as a percentage of the average daily Income Benefit Base for the prior Contract Year) | Current Charge | Maximum Charge |
IncomeGrowth Protection Rider | See Income Benefit Supplement. | 3% |
IncomeGrowth Performance Rider | 3% |
The average daily value of the Income Benefit Base will equal the Income Benefit Base as of the start of
the Contract Year unless an Excess Withdrawal is taken. Because Excess Withdrawals reduce the
Income Benefit Base, the reduced Income Benefit Base will be used in the average daily value calculation
in the event of an Excess Withdrawal. In that case, the average daily value of the Income Benefit Base
will be equal to the sum of each Income Benefit Base for the prior Contract Year multiplied by the number
of days it applied and divided by the number of days in the Contract Year.
The Income Benefit Fee will terminate upon the date any of the following occur:
•Contract Value is equal to zero;
•Death or removal of all Covered Persons;
•Payment of a death benefit;
•Full surrender or termination of the Contract;
•Entire Contract Value is applied to a Payout Option;
•The date the Income Benefit terminates.
On the date the Income Benefit terminates, we will deduct any portion of the Income Benefit Fee that is
accrued but not yet deducted, calculated from the last Contract Anniversary to the effective date of the
termination. The final Income Benefit Fee will be deducted as of the termination date proportionally from
the Contract Value in all Allocation Options.
Surrender Charge
During the first six Contract Years, we deduct a Surrender Charge from each Excess Withdrawal or
surrender that exceeds the Annual Free Withdrawal Amount. The Surrender Charge schedule is
expressed as a percentage of the Contract Value withdrawn or surrendered as shown below.
Contract Year | Surrender Charge Percentage |
1 | 8% |
2 | 8% |
3 | 8% |
4 | 7% |
5 | 6% |
6 | 5% |
7+ | 0% |
The Surrender Charge is assessed before application of the Market Value Adjustment. For examples of
how we calculate the Surrender Charge, please refer to the Statement of Additional Information.
We will not assess the Surrender Charge on:
•Withdrawals under the Nursing Home or Hospital waiver or Terminal Illness waiver;
•Refunds under the Right to Examine;
•Required Minimum Distributions that are withdrawn under the automatic withdrawal program
provided by the Company;
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•The Annual Free Withdrawal Amount;
•Death Benefit proceeds;
•Amounts withdrawn after the first six Contract Years;
•Contract Value applied to a Payout Option using the Payout Option tables shown on the Contract
Data Page;
•Income Benefit Payments;
•Income Benefit Fees; and
•Transfers (including Flex Transfers).
We will waive the Surrender Charge and Market Value Adjustment in the case of a partial withdrawal or
surrender where the Owner or Annuitant qualifies for the Nursing Home or Hospital or Terminal Illness
waiver. Before granting the waiver, we may request a second opinion or examination of the Owner or
Annuitant by one of our examiners. We will bear the cost of such second opinion or examination. If there
is a conflicting opinion between physicians, the Company’s physician will rule. Each waiver may be
exercised only one time.
•Nursing Home or Hospital Waiver. We will not deduct a Surrender Charge in the case of a partial
withdrawal or surrender where any Owner or Annuitant is confined to a licensed nursing home or
hospital and has been confined to such nursing home or hospital for at least 90 consecutive days
after the latter of the Contract Issue Date or the date of change of the Owner or Annuitant. A
hospital refers to a facility that is licensed and operated as a hospital according to the law of the
jurisdiction in which it is located. A nursing home refers to a facility that is licensed and operates
as a nursing facility according to the law of the jurisdiction in which it is located. We require
verification of confinement to the nursing home or hospital, and such verification must be signed
by the administrator of the facility.
•Terminal Illness Waiver. We will not deduct a Surrender Charge in the case of a partial withdrawal
or surrender where any Owner or Annuitant has a life expectancy of 12 months or less due to
illness or accident. As proof, we require a determination of the Terminal Illness. Such
determination must be signed by the licensed physician making the determination after the latter
of Contract Issue Date or the date of change of the Owner or Annuitant. The physician may not be
a member of your or the Annuitant’s immediate family.
Any state variations with respect to the availability, terms, and/or benefits of the Surrender Charge
Even if you do not pay a Surrender Charge because of the waivers, you still may be required to pay
taxes, and additional taxes on the amount withdrawn. You should consult a tax adviser to determine the
effect of a partial withdrawal on your taxes. Additionally, any applicable Interim Value will apply to amounts
withdrawn under this Waiver and there may be a proportionate reduction in the Crediting Base and Death
Benefit.
Surrender Charges offset promotion, distribution expenses, and investment risks born by the Company.
To the extent Surrender Charges are insufficient to cover these risks and expenses, the Company will pay
for the costs that it incurs from its General Account.
Interim Value
The Interim Value is the value for a Risk Control Account on any day other than the first and last Business
Day of an Interest Term. See "Contract Value - Interim Value." The Interim Value may change each
Business Day, and the change may be positive or negative. For Contract Value allocated to a Risk Control
Account, if you take a withdrawal (including for Income Benefit Payments), make a Flex Transfer,
surrender your Contract, die, begin Payout Options, or we deduct the Income Benefit Fee, the amount
withdrawn or transferred before the expiration of an Interest Term is based on the Interim Value and will
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reduce the Crediting Base proportionally. You bear the risk that the Interim Value may decrease your Risk
Control Account Value (and consequently, other values under the Contract) if you withdraw or transfer
amounts from a Risk Control Account during the Interest Term. The Interim Value is not applied to
Contract Value in the Fixed Account.
The Interim Value may reflect a negative return even when the Index increases, may reflect a positive
return even if the Index decreases, and may be lower than the amount that would have been available at
the end of the Interest Term. You may have an Interim Value that reflects a negative return regardless of
the Crediting Strategy selected; for example, the Interim Value could reflect negative returns that exceed
the applicable Floor, that apply even if Index losses were within the applicable Buffer, or that are not offset
by the applicable Boost.
An Interim Value that reflects a negative return will reduce the values under the Contract, and it is
possible in extreme circumstances to lose up to 100% of your principal and previously credited
interest allocated to a Risk Control Account due to the Interim Value calculation if you take a
withdrawal (including for Income Benefit Payments), make a Flex Transfer, surrender your
Contract, die, begin Payout Options, or we deduct the Income Benefit Fee, before the expiration of
an Interest Term. Additionally, only the Crediting Base remaining in the Risk Control Account after
the withdrawal or Flex Transfer will be credited interest, positive or negative, at the end of the
Interest Term .
Market Value Adjustment
An Excess Withdrawal or full surrender of the Contract may be adjusted (increased or decreased) for the
Market Value Adjustment. The Market Value Adjustment applies to every Allocation Option, including the
Fixed Account, and will always apply for the six-year rolling period beginning on the Contract Issue Date
even if the Allocation Options elected have an Interest Term of less than six years.
The Market Value Adjustment reflects the change in value of the investments that support the guarantees
under this Contract upon withdrawal during the six-year rolling period beginning on the Contract Issue
Date. Rates used in determining the Market Value Adjustment are reset every sixth Contract Anniversary.
You may obtain information about the Market Value Adjustment by calling us.
A negative Market Value Adjustment could significantly decrease the amount you receive from an
Excess Withdrawal or surrender. In extreme circumstances, losses from the Market Value
Adjustment could be as high as 90% of your Contract Value. You directly bear the investment risk
associated with a Market Value Adjustment. You should carefully consider your income needs
before purchasing the Contract.
Purpose of the Market Value Adjustment. The Market Value Adjustment helps protect us from market
losses relating to changes in the value of the investments that support the guarantees under the Contract
when amounts are withdrawn from an Allocation Option before the end of each six-year period. You bear
the risk that the Market Value Adjustment may decrease the amount of a withdrawal made during the six-
year period.
Application. If the combination of the Constant Maturity Treasury rate and ICE BofA Index has increased
at the time of withdrawal over their levels at the start of the six-year period, the Market Value Adjustment
will be negative and will decrease the Surrender Value or amount you receive from a partial withdrawal by
the amount of the Market Value Adjustment. Similarly, if the combination of the Constant Maturity Treasury
rate and ICE BofA Index has decreased at the time of surrender or partial withdrawal over their levels at
the start of the six-year period, the Market Value Adjustment will be positive and will increase the
Surrender Value or amount you receive from a partial withdrawal by the amount of the Market Value
Adjustment.
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We will not assess the Market Value Adjustment on:
•Withdrawals under the Nursing Home or Hospital Waiver or Terminal illness waiver;
•Refunds under the Right to Examine;
•Required Minimum Distributions that are withdrawn under an automatic withdrawal program
provided by us;
•The Annual Free Withdrawal Amount;
•Death Benefit proceeds;
•Income Benefit Payments;
•Withdrawals on or within 30 days after the end of every six-year rolling period; and
•Contract Value applied to a Payout Option using the Payout Option tables shown on the Contract
Data Page;
•Income Benefit Fee; and
•Transfers (including Flex Transfers).
For more information about the Market Value Adjustment and examples of how we calculate Market Value
Adjustments, please refer to the Statement of Additional Information.
IMPORTANT: You directly bear the investment risk associated with the Interim Value calculation
and the Market Value Adjustment.
Premium Taxes
Charges designed to approximate certain taxes that may be imposed on us, such as premium taxes in
your state, may also apply. However, premium taxes are not currently charged to Contract holders. State
premium taxes currently range from 0% to 3.5%.
Other Information
We assume investment risks and costs in providing the guarantees under the Contract. These investment
risks include the risks we assume in providing the Floors, Buffers, and Boosts for the Risk Control
Accounts, the Fixed Interest Rate for the Fixed Account, the surrender rights available under the Contract,
the Income Benefit, the Death Benefit, and the Payout Period Income Payments. We must provide the
rates and benefits set forth in your Contract regardless of how our General Account investments that
support the guarantees we provide perform. To help manage our investment risks, we engage in certain
risk management techniques. There are costs associated with those risk management techniques. You do
not directly pay the costs associated with our risk management techniques. However, we take those costs
into account when we set rates and guarantees under your Contract.
ACCESS TO YOUR MONEY
Partial Withdrawals
At any time during the Accumulation Period you may make partial withdrawals by Authorized Request in
Good Order. The minimum partial withdrawal amount is $100. Unless you instruct us otherwise,
withdrawals will be processed proportionally from the Contract Value in all Allocation Options. Any
applicable Surrender Charge, Market Value Adjustment, and Interim Value calculation will affect the
amount available for a partial withdrawal. We will pay you the amount you request in connection with a
partial withdrawal by reducing Contract Value in the Fixed Account or the appropriate Risk Control
Accounts.
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Partial withdrawals for less than $25,000 are permitted by telephone and in writing. The written consent of
all Owners must be obtained before we will process the partial withdrawal. If an Authorized Request in
Good Order is received by 4:00 P.M. Eastern Time, it will be processed that day. If an Authorized Request
in Good Order is received after 4:00 P.M. Eastern Time, it will be processed on the next Business Day.
If a partial withdrawal other than an Income Benefit Payment would cause your Surrender Value to be
less than $2,000, we will treat your request for partial withdrawal as a request for full surrender of your
Contract. Before processing the full surrender, we will attempt to contact you or your financial professional
to provide the opportunity for you to take a lower amount to maintain a Surrender Value of at least $2,000.
If we are unable to contact you within one Business Day after receiving your request, we will process the
full surrender.
The Contract may not be appropriate for investors who plan to take Excess Withdrawals
(including systematic withdrawals and Required Minimum Distributions) or surrender the
Contract. Excess Withdrawals may be subject to a Market Value Adjustment and Surrender
Charge. All withdrawals, deductions, and transfers from a Risk Control Account (including for
Income Benefit Payments and Income Benefit Fees) prior to the end of an Interest Term are
subject to the Interim Value calculation and proportional reduction of the Crediting Base. Excess
Withdrawals reduce the Income Benefit Base, which is used to determine the Income Benefit
Payment, and the Purchase Payment, which is used to determine the Death Benefit, by the ratio of
the withdrawal (including any Surrender Charge and Market Value Adjustment) to the Contract
Value immediately prior to the withdrawal. As a result, reductions due to Excess Withdrawals may
be substantially more than the amount withdrawn, could significantly decrease your Income
Benefit Payment, Death Benefit, and remaining Contract Values, and could terminate the Income
Benefit and the Contract.
Systematic Withdrawals
Our systematic withdrawal program is an administrative program designed for you to take recurring
automatic withdrawals. See "Benefits Available Under the Contract - Systematic Withdrawals" for more
information. Although the Contract permits systematic withdrawals (including for Required
Minimum Distributions under the Internal Revenue Code) from the Risk Control Accounts, these
withdrawals may have an adverse effect on your values under the Contract. If you intend to make
ongoing withdrawals other than your Income Benefit Payments, you should consult a financial
professional to determine whether the Contract is appropriate for you.
Surrenders
You may surrender your Contract for the Surrender Value at any time during the Accumulation Period by
Authorized Request. The consent of all Owners must be obtained before the Contract is surrendered. If
an Authorized Request in Good Order is received before 4:00 P.M. Eastern Time on a Business Day, it will
be processed that day. If an Authorized Request in Good Order is received at or after 4:00 P.M. Eastern
Time on a Business Day or on a non-Business Day, it will be processed on the next Business Day.
If you surrender the Contract, you will be paid the Surrender Value, as of the Business Day we received
your Authorized Request in Good Order.
The Surrender Value is calculated separately for the Fixed Account and Risk Control Accounts.
The Surrender Value for the Fixed Account is equal to:
a)Your Fixed Account Value at the end of the Valuation Period in which we receive your Authorized
Request; minus
b)Any applicable Income Benefit Fee and Surrender Charge; adjusted for
c)Any applicable Market Value Adjustment; and
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d)Where the resulting value is not less than the Fixed Account Nonforfeiture Value.
The Surrender Value for the Risk Control Accounts is equal to:
a)Your Risk Control Account Value at the end of the Valuation Period in which we receive your
Authorized Request; minus
b)Any applicable Income Benefit Fee and Surrender Charge; and adjusted for
c)Any applicable Market Value Adjustment.
Instead of crediting interest to amounts that are surrendered prior to the end of the Interest Term,
the amount surrendered is based on the Interim Value (which may reflect a positive or negative
return) and will reduce the Crediting Base proportionally. The Surrender Value could be
significantly lower than your Contract Value due to the Interim Value calculation, Market Value
Adjustment, and Surrender Charge. A surrender is subject to income tax and, if taken before age
59½, a 10% additional tax may apply. You should consult a tax adviser before requesting a
surrender.
Upon payment of the Surrender Value, this contract is terminated, and we have no further obligation
under the Contract or the Income Benefit. We may require that the Contract be returned to our
Administrative Office prior to making payment of the Surrender Value. The Surrender Value will not be
less than the amount required by state law or the Interstate Insurance Product Regulation Commission,
depending on the state in which the contract was delivered for sale. We will pay you the amount you
request in connection with a full surrender by withdrawing Contract Value in the Fixed Account and the
Risk Control Accounts.
Annual Free Withdrawal Amount
Your Annual Free Withdrawal Amount is the amount that can be withdrawn each Contract Year without
incurring a Surrender Charge or Market Value Adjustment. For the first six Contract Years the Annual Free
Withdrawal Amount is equal to 10% of the Contract Value determined at the beginning of each Contract
Year. Beginning on the sixth Contract Anniversary, it is equal to 20% of the Contract Value determined at
the beginning of each Contract Year. Any unused Annual Free Withdrawal Amount will not carry over to
any subsequent Contract Year. Income Benefit Payments are considered a withdrawal for purposes of
determining the Annual Free Withdrawal Amount. The Annual Free Withdrawal Amount is still subject to
Interim Value calculations and proportionate adjustments. Partial annuitization will count toward the
Annual Free Withdrawal Amount.
The Annual Free Withdrawal Amount is subtracted from surrenders for purposes of calculating the
Surrender Charge and Market Value Adjustment.
Partial Withdrawal and Surrender Restrictions
Your right to make partial withdrawals and surrender the Contract is subject to any restrictions imposed by
any applicable law or employee benefit plan.
Right to Defer Payments
We reserve the right to postpone payment for up to six months after we receive your Authorized Request
in Good Order, subject to obtaining prior written approval by the state insurance commissioner if required
by the law of the state in which we issued the Contract. In the event we postpone payment, we will pay
interest on the proceeds if required by state law, calculated at the effective annual rate and for the time
period required under state law.
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INCOME BENEFIT
The Contract includes a non-optional Income Benefit, also known as a guaranteed lifetime withdrawal
benefit or GLWB. On the Contract application, you must choose from one of the two Income Benefit riders
we offer - IncomeGrowth Protection, which offers relatively higher guaranteed income by generally
providing a higher Base Withdrawal Percentage; and IncomeGrowth Performance, which offers the
potential for higher performance over time by offering additional Risk Control Account Allocation Options.
This election cannot be changed. The Risk Control Accounts are more limited in number and upside
potential with the IncomeGrowth Protection rider, and with the IncomeGrowth Performance rider
for reallocations after the Income Benefit Payment Start Date. See Appendix A. You should also
consider any differences between the Base Withdrawal Percentages, Annual Increase
Percentages, Maximum Annual Increase Period, and Income Benefit Fee Rates applicable to each
rider.
Subject to certain conditions, the Income Benefit provides for Income Benefit Payments to be made each
year for the life of the Covered Person(s) in the form of partial withdrawals without reducing the value of
Income Benefit Payments in future years. The Income Benefit Payment is the guaranteed lifetime
withdrawal amount. The Income Benefit Payment is guaranteed regardless of investment performance
and will continue even if the Contract Value is reduced to zero from Income Benefit Payments.
Excess Withdrawals reduce the Income Benefit Base, which is used to determine the Income
Benefit Payment by the ratio of the withdrawal (including any Surrender Charge and Market Value
Adjustment) to the Contract Value immediately prior to the withdrawal. As a result, reductions due
to Excess Withdrawals may be substantially more than the amount withdrawn, could significantly
decrease your Income Benefit Payment, and could terminate the Income Benefit and the Contract.
If you begin Income Benefit Payments before age 59½, the Income Benefit Payments may be
subject to a 10% additional tax.
Income Benefit Fee
We deduct an Income Benefit Fee proportionally from the Contract Value in all Allocation Options on each
Contract Anniversary. Detailed information about the Income Benefit Fee is provided under Charges and
Adjustments - Income Benefit Fee and in the Income Benefit Supplement.
Termination of the Income Benefit
The Income Benefit will terminate and all rights under the Income Benefit will terminate on the date any of
the following occur:
•Death or removal of all Covered Persons;
•Payment of a death benefit;
•Full surrender or termination of the Contract; or
•Entire Contract Value is applied to a Payout Option.
•Upon the Owner(s) voluntary termination of the Income Benefit after the 6th Contract Year by
Authorized Request.
On the date the Income Benefit terminates we will deduct any Income Benefit Fee that was accrued but
not yet deducted as the final Income Benefit Fee.
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Once the Income Benefit is terminated, it cannot be added back to the Contract. You should consult your
financial representative before you voluntarily terminate the Income Benefit.
Covered Person
The Covered Person(s) is the natural person(s) whose Age and lifetime we base the Income Benefit
Percentage and Income Benefit Payments on for the Income Benefit. You select the Covered Person(s)
on the Contract Issue Date. After the Contract Issue Date, you cannot request to add, remove, or
replace a Covered Person, even if you add or change an Owner, Annuitant, or Beneficiary except
as described in this Prospectus.
Eligibility to be a Covered Person
If there is a sole Owner of the Contract:
•You (the Owner) can be a Covered Person.
•Your Spouse can be a Covered Person and the sole primary Beneficiary.
•If you select single life Income Benefit Payments, you (the Owner) must be designated as the
Covered Person.
If there are Joint Owners:
•Both Owners can be Covered Persons.
•The Owners must be Spouses.
•If you select single life Income Benefit Payments, either Owner can be designated as the
Covered Person.
If the Owner is not a natural person:
•The Annuitant must be designated as the Covered Person.
•A joint Annuitant is not permissible.
•Joint life Income Benefit Payments cannot be selected.
If one Covered Person is selected, you have elected single life option rates. If there are two Covered
Persons, the Base Withdrawal Percentage and Annual Increase Percentage are determined based on
your election of joint life option rates using the older Covered Person's Age as of the Contract Issue Date
if the older Covered Person's Age is within 5 years of the younger Covered Person's Age; if the age
difference is greater than 5 years, the younger Covered Person's Age will be used.
Adding a Covered Person
You can add a Covered Person before the Income Benefit Payment Start Date by Authorized Request if
there is only one Covered Person and there has not been a spousal continuation. The added Covered
Person must meet the eligibility requirements described above. Requests to add a Covered Person must
be received at least one Business Day prior to the desired Income Benefit Payment Start Date. If a
Covered Person is added, the Income Benefit Payment will be determined in consideration of the new
Covered Person's Age and could delay the earliest date that Income Benefit Payments can start if the
new Covered Person is younger than 50.
Removing a Covered Person
You can remove a Covered Person before the Income Benefit Payment Start Date by Authorized Request
if there are two Covered Persons and the remaining Covered Person was a Covered Person on the
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Contract Issue Date. Requests to remove a Covered Person must be received at least one Business Day
prior to the desired Income Benefit Payment Start Date.
If a Covered Person is no longer an Owner, Joint Owner, Annuitant, or Beneficiary as required, we will
automatically remove that person from the Income Benefit, and they will no longer be a Covered Person.
Once we remove a Covered Person from the Income Benefit, the Covered Person cannot be reinstated
(except if the person is added as a Covered Person in accordance with the restrictions set forth above).
If at any time two Covered Persons are no longer Spouses, you must send us notice of the divorce by
Authorized Request. Upon receipt of such notice, we will remove one former Spouse from the Contract as
a Covered Person.
If a Covered Person is removed and one Covered Person remains, the following will occur:
•If the Covered Person was removed before the Income Benefit Payment Start Date, single life
option rates will be elected (unless a new Covered Person is added).
•If the Owner is a natural person and joint Income Benefit Payments have already started, we
will continue to pay joint life Income Benefit Payments to the Owner as long as the remaining
Covered Person is living.
If a Covered Person is removed and there is no Covered Person remaining, the Income Benefit will
terminate and Income Benefit Payments will cease.
Spousal Continuation
If the sole primary Beneficiary is the surviving Spouse of the deceased Owner, the surviving Spouse may
elect to continue the Contract as the new Owner. This benefit may only be exercised one time.
If the surviving Spouse is a Covered Person, and elects to continue the Contract as the new Owner, the
Income Benefit will remain in effect, and the following terms apply:
•If the spousal continuation election is before the Income Benefit Payment Start Date, single life
option rates will be used. Joint life option rates and joint life Income Benefit Payments will not be
available, and a Covered Person cannot be added.
•If the spousal continuation election is after the Income Benefit Payment Start Date, we will
continue to pay joint life Income Benefit Payments to the surviving Spouse as long as the
surviving Spouse is living.
If the surviving Spouse is not a Covered Person, the Spouse may elect to continue the Contract as the
new Owner; however, the Income Benefit will terminate, and we will no longer assess the Income Benefit
Fee.
Income Benefit Payments
The Income Benefit Payment is the guaranteed lifetime withdrawal amount. The annual Income Benefit
Payment is equal to the Income Benefit Percentage multiplied by the Income Benefit Base. The Income
Benefit Payment is calculated on the Income Benefit Payment Start Date.
The Income Benefit Base is initially equal to the Purchase Payment. The Income Benefit Base (and
therefore the Income Benefit Payment) is recalculated on each Contract Anniversary and on any date an
Excess Withdrawal is taken. The Income Benefit Payment will only decrease if you take an Excess
Withdrawal.
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The Income Benefit Percentage is a combination of the Base Withdrawal Percentage and the Annual
Increase Percentage, using the following formula: B + A x C, where
B= The Base Withdrawal Percentage.
A= The Annual Increase Percentage.
C = The number of whole Contract Years from the Contract Issue Date until the Income Benefit
Payment Start Date, subject to the Maximum Annual Increase Period of 20 years.
See the Income Benefit Supplement for more details.
Income Benefit Payments can begin on the 50th birthday of the youngest Covered Person or two Business
Days after the Contract Issue Date, whichever is later. You may take the full Income Benefit Payment or
partial Income Benefit Payment amount through the systematic withdrawal program. If you take less than
the Income Benefit Payment, the remaining Income Benefit Payment not taken will not carry over to future
years.
Requests to start receiving the Income Benefit Payment must be received at least one Business Day prior
to the desired Income Benefit Payment Start Date. The Owner elects how to receive the Income Benefit
Payments, either as monthly, quarterly, semi-annual, or annual payments. If the scheduled payment date
does not fall on a Business Day, we will make the payment on the next Business Day.
Income Benefit Payments continue during the life of the Covered Person(s) unless the Income Benefit is
terminated. Under the single life option, Income Benefit Payments will cease on the date of death of the
Covered Person. Under the joint life option, Income Benefit Payments will continue until the date of death
of the second Covered Person if the surviving Spouse continues the Contract upon the death of an
Owner. We may require proof that the Covered Person(s) is living upon the date of any Income Benefit
Payment while the Income Benefit is in effect. If you do not begin Income Benefit Payments before all
Covered Person(s) die or are removed from the Contract, the Income Benefit terminates, and you
will not receive any Income Benefit Payments.
Income Benefit Percentage: Values for the Base Withdrawal Percentages and Annual Increase
Percentages are set forth in an Income Benefit Supplement to this Prospectus. You should not sign an
application for a Contract without first reading the current Income Benefit Supplement. Terms disclosed in
previous Income Benefit Supplements are stated in Appendix C.
Income Benefit Base: The Income Benefit Base is initially equal to the Purchase Payment but will be
reset each Contract Anniversary or on any day an Excess Withdrawal is taken. On each Contract
Anniversary, unless the Income Benefit is terminated, if the current Contract Value is greater than the
current Income Benefit Base, the Income Benefit Base will be reset to equal the current Contract Value.
The Income Benefit Base is used only to determine the Income Benefit Payment and Income Benefit Fee.
The Income Benefit Base is not available for surrender or withdrawal.
The Income Benefit Base will be impacted by Excess Withdrawals as described later in this section.
Example of the Income Benefit Payment Calculation:
Assume the following:
•There is one Covered Person.
•On the Contract Issue Date, the Covered Person is Age 55.
•The Base Withdrawal Percentage is equal to 5.0% for the single life option for a 55-year-old.
•The Annual Increase Percentage is 0.40% for the single life option for a 55-year-old.
•The Income Benefit Payment Start Date is on the 7th Contract Anniversary.
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•The Income Benefit Base is $250,000.
The Income Benefit Percentage equals the Base Withdrawal Percentage of 5.0% plus the Annual
Increase Percentage of 0.40% multiplied by the number of completed Contract Years from the Contract
Issue Date until the Income Benefit Payment Start Date, subject to the maximum of 20 years. The number
of Completed Contract Years is 7, which is less than the maximum of 20, so 7 will be used in the
calculation. Therefore, the Income Benefit Percentage =5.0% + 0.40% x 7 = 7.8%.
The annual Income Benefit Payment is equal to the Income Benefit Percentage of 7.8% multiplied by the
Income Benefit Base of $250,000. Therefore, the annual Income Benefit Payment = 7.8% x $250,000 =
$19,500.
Treatment of Income Benefit Payment Withdrawals
Income Benefit Payments are treated as a withdrawal from the Contract Value. Unless you instruct us
otherwise by Authorized Request, Income Benefit Payments are taken proportionally from the Contract
Value in each Allocation Option at the time of the withdrawal. Income Benefit Payments reduce the Death
Benefit, Surrender Value, Contract Value, and Annual Free Withdrawal Amount by the amount of the
Income Benefit Payment on a dollar-for-dollar basis. Income Benefit Payments do not reduce the Income
Benefit Base. If Income Benefit Payments are withdrawn from a Risk Control Account before the
expiration of an Interest Term, the amount withdrawn from the Risk Control Account is based on the
Interim Value (which may reflect a positive or negative return) and will reduce the Crediting Base
proportionally. For information about having Income Payments taken only from the Fixed Account, see
"Fixed Account Automatic Transfer and Withdrawal Program" below.
While the Income Benefit is in effect, the Contract will not terminate if an Income Benefit Payment causes
the Surrender Value to be less than $2,000.
Income Benefit Payments are not subject to Surrender Charge or Market Value Adjustment. The Income
Benefit Payment will count toward the Annual Free Withdrawal Amount.
If an Income Benefit Payment or investment performance causes the Contract Value to be zero, we will
continue to pay the Income Benefit Payments until the death of all Covered Persons and the frequency of
the Income Benefit Payments will remain the same as what was previously elected. In that event, the
Allocation Options will no longer be available for investment.
If the date of birth of the Covered Person(s) is misstated, the Income Benefit Payment will be adjusted
based on the correct date of birth of the Covered Person(s). Any underpayment will be added to the next
payment. Any overpayment will be subtracted from future payments. No interest will be credited or
charged to any underpayment or overpayment adjustments.
Fixed Account Automatic Transfer and Withdrawal Program
You may elect by Authorized Request to have your Income Benefit Payments taken from the Fixed
Account. You should consult with your financial professional when deciding whether to elect this program.
This program may benefit you because it facilitates withdrawals for Income Benefit Payments from the
Fixed Account, which is not subject to Interim Value calculations. (Note, however, that Interim Value
calculations apply if program transfers are made to the Fixed Account from Risk Control Accounts with
six-year Interest Terms before the end of the current term.)
If you elect to have your Income Benefit Payments taken from the Fixed Account, we will transfer an
amount up to your annual Income Benefit Payment from the Risk Control Accounts to the Fixed Account
on every Contract Anniversary. Unless you instruct us otherwise, the transfer will be taken proportionally
from the Risk Control Account Value in each Risk Control Account. The transfer will be taken after
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assessing the Income Benefit Fee. The Fixed Account automatic transfer and withdrawal program can
only begin on a Contract Anniversary and on or after the Income Benefit Payment Start Date. This
program can be cancelled at any time.
Impact of Excess Withdrawals on the Income Benefit Payment
An Excess Withdrawal is the portion of a withdrawal that, when added to other withdrawals during the
current Contract Year, is greater than the total Income Benefit Payment for the current Contract Year.
Excess Withdrawals generally include all withdrawals (including systematic withdrawals and RMDs) prior
to the Income Benefit Payment Start Date and deductions for any applicable Surrender Charge and
Market Value Adjustment. Excess Withdrawals do not include amounts we withdraw for the Income
Benefit Fee. Excess Withdrawals will proportionally reduce the Income Benefit Base, which is used to
determine the Income Benefit Payment by the ratio of the Excess Withdrawal (including any Surrender
Charge and Market Value Adjustment) to the Contract Value immediately prior to the Excess Withdrawal.
Reductions due to Excess Withdrawals may be substantially more than the amount of the Excess
Withdrawal, and any resulting decreases to the Income Benefit Payment could be significant and could
terminate the Contract.
Any portion of a withdrawal taken after the Income Benefit Payment Start Date that is not an Excess
Withdrawal will be treated as an Income Benefit Payment. If a withdrawal is made after the Income
Benefit Payment Start Date, the remaining Income Benefit Payment for the current Contract Year will be
adjusted to reflect the withdrawal. If the withdrawal when added to the amount of all withdrawals during
the current Contract Year (including Income Benefit Payments) is greater than the Income Benefit
Payment for the current Contract Year, no further Income Benefit Payments will be made during that
Contract Year. Otherwise, the remaining Income Benefit Payment for the current Contract Year is equal to
the Income Benefit Payment reduced by the amount of all withdrawals during the current Contract Year
(including prior Income Benefit Payments).
If an Excess Withdrawal reduces the Surrender Value to less than $2,000, the Income Benefit will
terminate and Income Benefit Payments will cease.
Example of Income Benefit Base Calculation Adjusted for an Excess Withdrawal:
Assume the following information:
•Income Benefit Payment = $5,000.
•Excess Withdrawal (including Surrender Charges and Market Value Adjustments) = $1,000.
•The Contract Value at the time of withdrawal = $100,000.
•Income Benefit Base at the time of the withdrawal = $90,000
Step 1: Deduct the Income Benefit Payment from Contract Value to determine the Contract Value
immediately prior to the Excess Withdrawal:
•$100,000 - $5,000 = $95,000
Step 2: Calculate the ratio of the Excess Withdrawal to the Contract Value immediately prior to the Excess
Withdrawal:
•Ratio = Excess Withdrawal / (Contract Value immediately prior to the Excess Withdrawal)
•$1,000 / $95,000 = 0.010526
Step 3: Calculate the reduction to Income Benefit Base:
•Reduction to Income Benefit Base = Ratio x Income Benefit Base prior to the Excess Withdrawal
•0.010526 x $90,000 = $947.34
Step 4: Calculate the Income Benefit Base adjusted for the Excess Withdrawal:
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•Income Benefit Base adjusted for the Excess Withdrawal = Income Benefit Base prior to the
Excess Withdrawal – reduction to Income Benefit Base
•$90,000 - $947.34 = $89,025.66.
Example 2. This example assumes the Contract Value is less than the Income Benefit Base at the time of
the withdrawal.
Assume the following information:
•Income Benefit Payment = $5,000.
•Excess Withdrawal (including Surrender Charges and Market Value Adjustments) = $1,000.
•The Contract Value at the time of withdrawal = $80,000.
•Income Benefit Base at the time of the withdrawal = $90,000
Step 1: Deduct the Income Benefit Payment from Contract Value to determine the Contract Value
immediately prior to the Excess Withdrawal:
•$80,000 - $5,000 = $75,000
Step 2: Calculate the ratio of the Excess Withdrawal to the Contract Value immediately prior to the Excess
Withdrawal:
•Ratio = Excess Withdrawal / (Contract Value immediately prior to the Excess Withdrawal)
•$1,000 / $75,000 = 0.013333
Step 3: Calculate the reduction to Income Benefit Base:
•Reduction to Income Benefit Base = Ratio x Income Benefit Base prior to the Excess Withdrawal
•0.013333 x $90,000 = $1,199.97
Step 4: Calculate the Income Benefit Base adjusted for the Excess Withdrawal:
•Income Benefit Base adjusted for the Excess Withdrawal = Income Benefit Base prior to the
Excess Withdrawal – reduction to Income Benefit Base
•$90,000 - $1,199.97 = $88,800.03.
As illustrated in Example 2, the Income Benefit Base calculation may result in a reduction in the Income
Benefit Base that is significantly larger than the withdrawal amount.
Required Minimum Distribution Withdrawals
If the Contract is an Individual Retirement Annuity (IRA), Income Benefit Payments may be used to satisfy
your Required Minimum Distribution (RMD) requirements. A withdrawal taken to satisfy RMD
requirements prior to the Income Benefit Payment Start Date will be treated as an Excess
Withdrawal and will reduce the Income Benefit Base and Income Benefit Payment and could
terminate the Contract.
If the RMD associated with the Contract exceeds the Income Benefit Payment, and you increase the
Income Benefit Payment to meet your RMD requirements, the additional funds withdrawn to satisfy RMD
requirements after the Income Benefit Payment Start Date will not be treated as an Excess Withdrawal
and Surrender Charges and Market Value Adjustments will not apply. The additional funds taken to satisfy
an RMD requirement will not reduce the Income Benefit Base or future Income Benefit Payments.
The RMD requirement for the Contract is calculated by the Company based on the calendar year taken.
The portion of the withdrawal that is treated as an RMD may not be greater than the RMD of the current
calendar year less any amount previously withdrawn. For calendar years after the Contract Value is
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reduced to zero, the Income Benefit Payments will be treated as the RMD payments with respect to the
Contract.
BENEFITS AVAILABLE UNDER THE CONTRACT
The following table summarizes information about the benefits available under the Contract.
Benefit | Purpose | Standard or Optional | Maximum Fee | Brief Description of Restrictions and Limitations |
Income Benefit | Provides for Income Benefit Payments to be made each year for the life of the Covered Person(s) | Standard | 3.00% | Excess Withdrawals may reduce the Income Benefit Base by more than the amount of the withdrawal. |
Fixed Account Automatic Transfer and Withdrawal Program | Allows you to have Income Benefit Payments taken from the Fixed Account | Optional | No Charge | Program can only begin on a Contract Anniversary and on or after the Income Benefit Payment Start Date. |
Death Benefit | Provides a Death Benefit if the Owner dies during the Accumulation Period | Standard | No Charge | Excess Withdrawals may reduce the Death Benefit by more than the amount of the withdrawal. |
Systematic Withdrawals | Provide payments on a schedule as set up by you. | Optional | No Charge | Withdrawals may be subject to a Market Value Adjustment or Surrender Charge. |
Income Benefit
See the "Income Benefit" section.
Fixed Account Automatic Transfer and Withdrawal Program
See the "Income Benefit - Fixed Account Automatic Transfer and Withdrawal Program" section.
Death Benefit
Owner or Joint Owner Death during the Accumulation Period. If the Owner (or first Joint Owner) dies
during the Accumulation Period, the Beneficiary is entitled to the Death Benefit. If there are Joint Owners,
the surviving Joint Owner will be treated as the sole primary Beneficiary, and any other designated
Beneficiary will be treated as a contingent Beneficiary.
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If the sole primary Beneficiary is the surviving Spouse of the deceased Owner, the surviving Spouse may
elect to continue the Contract at the current Contract Value. In this event, the surviving Spouse will
assume ownership of the Contract, and the Death Benefit would be paid upon the surviving Spouse's
death.
Annuitant Death during the Accumulation Period. If an Annuitant dies during the Accumulation Period,
and the Owner is a non-natural person, the Annuitant's death will be treated as the death of the Owner,
and Death proceeds will be distributed to the Beneficiary in accordance with Death Benefit Options B or
C. Unless payments under Option B commence within one year of the date of death, the entire interest in
the Contract will be paid in accordance with Death Benefit Option C.
If an Annuitant who is not an Owner dies during the Accumulation Period, and there is a surviving Owner
who is a natural person:
•The surviving Joint Annuitant (If there is one) will become the Annuitant.
•If there is no Joint Annuitant, the Owner(s) will become the Annuitant(s).
Death Benefit Options
Option A: If the sole primary Beneficiary is the surviving Spouse of the deceased Owner, the surviving
Spouse may elect to continue the Contract as the new Owner. See "Income Benefit - Spousal
Continuation." An individual who does not meet the definition of Spouse may not be able to continue the
Contract for that person’s lifetime. That individual must receive the proceeds of the Contract and any
attached endorsements or riders within the time period specified in section 72(s) of the IRC.
Option B: If the Beneficiary is a natural person, the Death Benefit proceeds will be applied in accordance
with section 72(s) of the IRC under one of the Payout Options. The Payout Period Income Payments must
be made for the Beneficiary’s life or a period not extending beyond the Beneficiary’s life expectancy.
Payments must commence within one year of the date of the Owner’s death.
Option C: A Beneficiary may receive the Death Benefit proceeds in a single lump sum at any time within
five years of the Owner’s death.
Unless option A is elected or payments under Option B commence within one year of the date of the
Owner’s Death, the entire interest in the Contract will be paid under Option C.
If there are multiple Beneficiaries, each Beneficiary will be able to elect to receive his or her share of the
benefits under either Option B or Option C. If a Beneficiary does not make such an election, their share of
the Death Benefit proceeds will be paid under Option C. Until payment of the Death Benefit proceeds, the
proceeds remain in the Contract. Death Benefit proceeds will be distributed 5 years from the Owner’s
death or earlier if requested by the Beneficiary. Interest, if any, will be paid on the Death Benefit proceeds
under Option C as required by applicable state law. Other minimum distribution rules apply to Qualified
Contracts.
Proof of Death and Payment of Death Benefit Proceeds. The Death Benefit proceeds are payable
upon receipt at our Administrative Office of proof of death of the Owner while the Contract is in force (or
Annuitant’s death if the Owner is a non-natural person), proof of each Beneficiary’s interest in a form and
manner satisfactory to us, and any other documents we require. Proof of death may consist of a certified
copy of the death record, a certified copy of a court decree reciting a finding of death, or other similar
proof. Proof of each Beneficiary’s interest may include our claim form from each Beneficiary, properly
completed. If we receive such proof before 4:00 P.M. Eastern Time, we will determine the amount of the
Death Benefit as of that day. If we receive it at or after 4:00 P.M. Eastern Time, we will determine the
amount of the Death Benefit as of the next Business Day. Death Benefit proceeds will be paid within 7
days after our receipt of the proof outlined above.
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Death Benefit Proceeds Amount. The amount that will be paid as Death Benefit proceeds during the
Accumulation Period is equal to the greater of:
a)The Risk Control Account Value plus the greater of the Fixed Account Value or the Fixed
Account Nonforfeiture Value on the date Death Benefit proceeds are payable; or
b)The Purchase Payment adjusted for withdrawals.
A Surrender Charge and Market Value Adjustment will not apply to Death Benefit proceeds. So far as
permitted by law, the Death Benefit proceeds will not be subject to any claim of the Beneficiary's creditors.
The Death Benefit amount will not be less than the amount required by state law in which the Contract
was delivered. The Death Benefit proceeds include any interest paid on the Death Benefit proceeds as
required by state law. Interest, if any, will be calculated at the rate and for the time period required by
state law.
Impact of Owner Changes on the Death Benefit. The Death Benefit does not continue if an Owner is
added or changed unless they are changed for a case of spousal continuation. If an Owner is added or
changed, the amount that will be paid upon the death of the new Owner is equal to the Contract Value on
the date such proceeds are payable, calculated using the Interim Value calculation and minimum
nonforfeiture value for the Fixed Account, if applicable. There is no impact on the Death Benefit if an
Owner is removed.
Impact of Withdrawals on the Death Benefit. Excess Withdrawals reduce the Purchase Payment,
which is used to determine the Death Benefit, by the ratio of the withdrawal (including any Surrender
Charge and Market Value Adjustment) to the Contract Value immediately prior to the withdrawal. As a
result, reductions due to Excess Withdrawals may be substantially more than the amount withdrawn,
could significantly decrease your Death Benefit, and remaining Contract Values, and could terminate the
Contract.
Example of Death Benefit proceeds adjusted for withdrawals under a positive economic scenario:
Assumptions:
•Purchase Payment = $80,000
•Assume the following at the time of withdrawal:
◦Income Benefit Payment = $5,000
◦Excess Withdrawal (including surrender charges and adjustments) = $1,000
◦Contract Value at time of withdrawal = $100,000
•Assume the following on the date Death Benefit proceeds are payable:
◦Risk Control Account Value at time of Death Benefit = $77,000
◦Fixed Account Value at time of Death Benefit = $10,000
◦Fixed Account Nonforfeiture Value at time of Death Benefit = $9,000
Step 1: Deduct the Income Benefit Payment from Contract Value to determine the Contract Value
immediately prior to the Excess Withdrawal:
•$100,000 - $5,000 = $95,000
Step 2: Calculate the ratio of the Excess Withdrawal to the Contract Value immediately prior to the Excess
Withdrawal:
•Ratio = Excess Withdrawal / (Contract Value immediately prior to the Excess Withdrawal)
•$1,000 / ($95,000) = 0.010526
Step 3: Deduct the Income Benefit Payment from the Purchase Payment to determine the Purchase
Payment adjusted for withdrawals immediately prior to the Excess Withdrawal:
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•$80,000 - $5,000 = $75,000
Step 4: Calculate the reduction to the Purchase Payment for the Excess Withdrawal:
•Reduction to Return of Purchase Payment Death Benefit = Ratio x Purchase Payment prior to the
Excess Withdrawal
•0.010526 x $75,000 = $789.45
Step 5: Calculate the Purchase Payment adjusted for the Excess Withdrawal:
•Purchase Payment adjusted for the Excess Withdrawal = Purchase Payment prior to the Excess
Withdrawal – reduction to the Purchase Payment
•$75,000 - $842.08 = $74,210.55.
Step 6: Calculate the Contract Value at the time Death Benefit proceeds are payable:
•Contract Value = the Risk Control Account Value plus the greater of the Fixed Account Value or
the Fixed Account Nonforfeiture Value on the date Death Benefit proceeds are payable
•$77,000 + (greater of $10,000 or $9,000) = $87,000
Step 7: Calculate the Death Benefit proceeds:
•Death Benefit Proceeds = the greater of the Contract Value at time Death Benefit proceeds are
payable ($87,000) or the Purchase Payment adjusted for withdrawals ($74,210.55) = $87,000
Example of Death Benefit proceeds adjusted for withdrawals under a negative economic scenario:
Assumptions:
•Purchase Payment = $80,000
•Assume the following at the time of withdrawal:
◦Income Benefit Payment = $5,000
◦Excess Withdrawal (including surrender charges and adjustments) = $1,000
◦Contract Value at time of withdrawal = $100,000
•Assume the following on the date Death Benefit proceeds are payable:
◦Risk Control Account Value at time of Death Benefit = $63,000
◦Fixed Account Value at time of Death Benefit = $10,000
◦Fixed Account Nonforfeiture Value at time of Death Benefit = $9,000
Steps 1 through 5 are the same as the above example.
Step 6: Calculate the Contract Value at the time Death Benefit proceeds are payable:
•Contract Value = the Risk Control Account Value plus the greater of the Fixed Account Value or
the Fixed Account Nonforfeiture Value on the date Death Benefit proceeds are payable
•$63,000 + (greater of $10,000 or $9,000) = $73,000
Step 7: Calculate the Death Benefit proceeds:
•Death Benefit Proceeds = the greater of the Contract Value at time Death Benefit proceeds are
payable ($73,000) or the Purchase Payment adjusted for withdrawals ($74,210.55) = $74,210.55
Death Benefit Termination. The Death Benefit terminates on the earlier of the termination of the
Contract, payment of the Death Benefit proceeds, or when the entire Contract is applied to a Payout
Option.
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Death of Owner or Annuitant After the Payout Date. We must be notified immediately of the death of
an Annuitant or Owner. Proof of death will be required upon the death of an Annuitant or Owner. We are
not responsible for any misdirected payments that result from the failure to notify us of any such death.
If all Annuitants die before all of the guaranteed Payout Period Income Payments have been made,
remaining guaranteed Payout Period Income Payments will be treated as a death benefit distributed in
one of the following two ways:
a)Income payments will be continued during the remainder of the guaranteed period certain to the
Owner; or
b)The present value of the remaining Payout Period Income Payments computed at the interest
rate used to create the Payout Option in effect will be paid to the Owner.
If all Annuitants die and there are no remaining guaranteed Payout Period Income Payments, the contract
is terminated, and we have no further obligation under the contract.
If an Owner dies during the Payout Period, any remaining Payout Period Income Payments will be
distributed to the Beneficiary at least as rapidly as provided by the Payout Option in effect.
Interest on Death Benefit Proceeds. We will pay interest on Death Benefit proceeds from the date we
receive Proof of Death until the date of payment. Interest will be paid at an annual rate equal to the
current interest rate in effect for funds left on deposit with us, or if we have not established a rate for funds
left on deposit, at the 2-year Treasury Constant Maturity Rate as published by the Federal Reserve. In
determining the effective annual rate or rates, we will use the rate in effect on the date Proof of Death is
received.
Payment will be made within 31 calendar days from the latest of the following:
a)The date we receive Proof of Death;
b)The date we receive sufficient information to determine liability, the extent of the liability, and the
appropriate payee legally entitled to the proceeds; or
c)The date that any legal impediments to payment of proceeds that depend on the action of
parties other than us are resolved and sufficient evidence of the same is provided to us. Legal
impediments to payment include but are not limited to 1) The establishment of guardianships
and conservatorships; 2) The appointment and qualification of trustees, executors and
administrators; and 3) The submission of information required to satisfy state and federal
reporting requirements.
In the event payment is postponed for more than 31 calendar days from the latest of items (a), (b) or (c)
above, the annual rate of interest during the period of postponement (beginning on the 32nd day until the
date of payment) will be equal to the interest rate described above, plus 10%.
Abandoned Property Requirements. Every state has unclaimed property laws which generally declare
annuity contracts to be abandoned after a period of inactivity of three to five years from the date the
Death Benefit is due and payable. For example, if the payment of a Death Benefit has been triggered, but,
if after a thorough search, we are still unable to locate the Beneficiary, or the Beneficiary does not come
forward to claim the Death Benefit in a timely manner, the Death Benefit will be paid to the abandoned
property division or unclaimed property office of the state in which the Beneficiary or you last resided, as
shown on our books and records, or to our state of domicile. The “escheatment” is revocable, however,
and the state is obligated to pay the Death Benefit (without interest) if your Beneficiary steps forward to
claim it with the proper documentation. To prevent such escheatment, it is important that you update your
Beneficiary designations, including addresses, if and as they change. To make such changes, please
contact us by writing to us or calling us at our Administrative Office.
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Systematic Withdrawals
Our systematic withdrawal program is an administrative program designed for you to take reoccurring,
automatic withdrawals at the frequency you select. You can receive payments monthly, quarterly, semi-
annually, or annually, subject to the $100 minimum partial withdrawal amount and minimum Surrender
Value described above. The systematic withdrawal program is available to you at any time for no
additional charge. There are federal income tax consequences to partial withdrawals through the
systematic withdrawal plan and you should consult with your tax advisor before electing to participate in
the plan. We may cease offering this program or change the administrative rules related to the program
on a non-discriminatory basis.
Systematic withdrawals may be requested on the following basis before the Income Benefit Payment
Start Date:
•Total systematic withdrawals for the calendar year equal to your annual Required Minimum
Distribution; or
•As Substantially Equal Periodic Payments under Sections 72(t) and 72(q) of the Internal Revenue
Code (IRC), as described below.
Systematic withdrawals may be requested on the following basis on or after the Income Benefit Payment
Start Date:
•Total systematic withdrawals for the calendar year equal to your annual Required Minimum
Distribution;
•Total systematic withdrawals for the Contract Year equal to a specified dollar amount that is less
than your annual Income Benefit Payment; or
•Total systematic withdrawals for the Contract Year equal to your annual Income Benefit Payment;
Unless you instruct us otherwise by Authorized Request, systematic withdrawals will be deducted
proportionally from the Contract Value in each Allocation Option.
The Contract may not be appropriate for investors who plan to take systematic withdrawals. With
the exception of systematic withdrawals for Required Minimum Distributions and Income Benefit
Payments, systematic withdrawals exceeding the Annual Free Withdrawal Amount are subject to
Surrender Charges and the Market Value Adjustment. Excess Withdrawals will also reduce the
Income Benefit Base, which is used to determine the Income Benefit Payment, and Purchase
Payment, which is used to determine the Death Benefit, perhaps by more than the amount of the
withdrawal. Any withdrawals from Risk Control Accounts could also significantly reduce the
Contract Value due to the Interim Value calculation and proportionate withdrawal calculations.
If a partial withdrawal is made after the Income Benefit Payment Start Date and total withdrawals in the
Contract Year do not exceed the Income Benefit Payment, it will be treated as an Income Benefit
Payment and the remaining Income Benefit Payment for the current Contract Year will be adjusted to
reflect the withdrawal. If the partial withdrawal causes the remaining systematic withdrawals to be less
than the $100 minimum partial withdrawal amount, we will attempt to contact you or your financial
professional to discuss your options. Income Benefit Payments are treated as partial withdrawals and will
reduce the remaining Income Benefit Payment available in the Contract Year and the Death Benefit by the
amount of the Income Benefit Payment.
Systematic withdrawals for the Contract Year taken after the Income Benefit Payment Start Date cannot
be more than the annual Income Benefit Payment. If a partial withdrawal causes total withdrawals in a
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Contract Year to exceed the Income Benefit Payment, the portion of the partial withdrawal that
exceeds the Income Benefit Payment will be treated as an Excess Withdrawal and no further
Income Benefit Payments will be made in that Contract Year.
Systematic withdrawals (including Income Benefit Payment systematic withdrawals) can be terminated by
Authorized Request or will terminate when the Income Benefit terminates.
Required Minimum Distributions. If your Required Minimum Distribution is greater than the Income
Benefit Payment, you can elect by Authorized Request to withdraw an amount equal to the Required
Minimum Distribution after the Income Benefit Payment Start Date. Such a withdrawal will not be treated
as an Excess Withdrawal, Surrender Charges and Market Value Adjustments will not apply, and the
additional withdrawal taken to satisfy the Required Minimum Distribution will not reduce the Income
Benefit Base or future Income Benefit Payments. Because Required Minimum Distributions are calculated
based on a calendar year and Income Benefit Payments are based on a Contract Year, if your Required
Minimum Distributions is more than the sum of the Income Benefit Payments and other withdrawals taken
during the calendar year and you elect to take an additional withdrawal that is greater than your Income
Benefit Payment to equal the Required Minimum Distribution, the additional withdrawal will be processed
in December to ensure the calendar year Required Minimum Distribution is satisfied and Income Benefit
Payments for the remainder of the Contract Year will be adjusted. This election will continue each year
unless it is discontinued by Authorized Request.
Substantially Equal Periodic Payments. If your annuity Contract is used as a funding vehicle for certain
retirement plans that receive special tax treatment under Sections 401, 403(b), 408 or 408A of the IRC,
Section 72(t) of the Internal Revenue Code (IRC) may provide an exception to the 10% additional tax on
distributions made prior to age 59½ if you elect to receive distributions as a series of “substantially equal
periodic payments.” For Contracts issued as Non-Qualified Annuities, the IRC may provide a similar
exception from penalty under Section 72(q) of the IRC.
•You cannot take any withdrawals from the annuity other than the substantially equal periodic
payments.
•Changes due to investment experience do not affect the prohibition against taking distributions in
additional to the annual substantially equal periodic payment.
•No more than one substantially equal periodic payment series may be in effect for any year.
Substantially Equal Periodic Payments under Sections 72(t) and 72(q) may be subject to a Surrender
Charge and Market Value Adjustment. To request systematic withdrawals that comply with Sections 72(t)
or 72(q), you must provide us with certain required information in writing on a form acceptable to us.
There is no minimum Surrender Value we require to allow you to begin substantially equal periodic
payments under Sections 72(t) or 72(q). The minimum amount for any such withdrawal is $100 and
payments may be made monthly, quarterly, semi-annually, or annually. However, if treated as Excess
Withdrawals, payments under this program are subject to the minimum Surrender Value described above.
Substantially equal periodic payments must not be modified before the date that is the later of the fifth
anniversary of the date of the first payment and the date the contract owner reaches age 59½. If there are
modifications to the series of payments before that date, an additional recapture tax applies. If you begin
receiving Income Benefit Payments during this time, the withdrawals may be viewed as a modification.
Please consult your personal tax advisor.
If you receive substantially equal periodic payments before the Income Benefit Payment Start
Date, or after the Income Benefit Payment Start Date that exceed your annual Income Benefit
Payment amount, such payments would be considered Excess Withdrawals and will reduce the
Income Benefit Base and Purchase Payment used in determining the Death Benefit, perhaps by
more than the amount of the withdrawal.
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You may also annuitize your Contract and begin receiving payments for the remainder of your life or life
expectancy as a means of receiving income payments before age 59½ that are not subject to the 10%
additional tax.
THE PAYOUT PERIOD
The Payout Period is the period of time that begins on the Payout Date and continues until we make the
last payment as provided by the Payout Option chosen. On the first day of the Payout Period, the
Contract Value (calculated using the Interim Value calculation, if applicable, and subject to the Fixed
Account Nonforfeiture Value, if applicable) will be applied to the Income Payout Option you select, unless
the Income Benefit is in effect and the Income Benefit Payment would be higher. If the Income Benefit is
higher, you may have the ability to continue with the Income Payout Option selected if you so elect. We
will contact you if this alternative is available to you.
Surrender Charges and Market Value Adjustments will not apply to proceeds applied to a Payout Option.
You cannot change the Annuitant or Owner on or after the Payout Date for any reason.
Payout Date
The anticipated Payout Date is the first Contract Anniversary after the oldest Annuitant’s 95th birthday.
Even if the Annuitant is changed, the Payout Date will not change unless you request a different Payout
Date via Authorized Request.
You may change the Payout Date by sending an Authorized Request in Good Order to our Administrative
Office provided: (i) the request is made while an Owner is living; (ii) the request is received at our
Administrative Office at least 30 days before the anticipated Payout Date; (iii) the requested Payout Date
is at least two years after the Contract Issue Date; and (iv) the requested Payout Date is no later than the
anticipated Payout Date as shown on your Contract Data Page (typically the first Contract Anniversary
after the oldest Annuitant’s 95th birthday). Any such change is subject to any maximum maturity Age
restrictions that may be imposed by law.
Payout Period Income Payments
If the Income Benefit has not been terminated, Payout Period Income Payments will be equal to the
greater of the payment under the Payout Option elected as described below or the Income Benefit
Payment. The amount applied to an Income Payout Option is equal to the Contract Value immediately
prior to the commencement of the Payout Period (calculated using the Interim Value calculation, if
applicable, and subject to the Fixed Account Nonforfeiture Value, if applicable) less the amount of any
premium taxes paid. Electing a Payout Option during an Interest Term results in the Interim Value being
used for the Risk Control Account Value, which may be significantly less than the amount that would have
been applied to the Payout Option if you waited until the end of the Interest Term.
If the Payout Period Income Payment is equal to the Income Benefit Payment, the Covered Person(s)
becomes the Annuitant(s). Upon the death of all Annuitants, we will pay the Beneficiary an amount equal
to the Contract Value immediately before the commencement of the Payout Period less the total of the
Payout Period Income Payments paid. If the Payout Period Income Payment is equal to the payment
under the Payout Option elected, upon the death of all Annuitants, we will pay the Beneficiary as
described in “Payout Options” below.
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Terms of Payout Period Income Payments
We use fixed rates of interest to determine the amount of fixed Payout Period Income Payments payable
under the Income Payout Options. Fixed Payout Period Income Payments are periodic payments from us
to the Owner, the amount of which is fixed and guaranteed by us. The amount of each payment depends
on the form and duration of the Income Payout Option chosen, the Age of the Annuitant, the Annuitant's
sex at birth (if applicable), the amount applied to purchase the Payout Period Income Payments and the
applicable income purchase rates in the Contract. The income purchase rates in the Contract are based
on a minimum guaranteed interest rate of 1%. We may, in our discretion and on a non-discriminatory
basis, make Payout Period Income Payments in an amount based on a higher interest rate. Once Payout
Period Income Payments begin, you cannot change the terms or method of those payments. We do not
apply a Surrender Charge, Interim Value calculations, or Market Value Adjustment to Payout Period
Income Payments during the Income Payout Period.
We will make the first Payout Period Income Payment on the Income Payout Date. We may require proof
of age and sex at birth (if the Income Payout Option rate is based on sex at birth) of the Annuitant/Joint
Annuitants before making the first Payout Period Income Payment. To receive Payout Period Income
Payments, the Annuitant/Joint Annuitant must be living on the Income Payout Date and on the date that
each subsequent payment is due as required by the terms of the Income Payout Option. We may require
proof from time to time that this condition has been met.
Electing a Payout Option
You and/or the Beneficiary may elect to receive one of the Income Payout Options described under
“Options” below. The Income Payout Option and distribution, however, must satisfy the applicable
distribution requirements of Section 72(s) or 401(a)(9) of the Internal Revenue Code, as applicable.
The election of an Income Payout Option must be made by Authorized Request. The election is
irrevocable after the payments commence. The Owner may not assign or transfer any future payments
under any option.
We will make Payout Period Income Payments monthly, quarterly, semiannually, or annually for the
Installment Option. Life Income and Joint and Survivor Life Income options allow monthly Payout Period
Income Payments.
You may change your Income Payout Option any time before payments begin on the Income Payout
Date.
Payout Options
We offer the Payout Options described below. The frequency and duration of Payout Period Income
Payments will affect the amount you receive with each payment. In general, if Payout Period Income
Payments are expected to be made over a longer period of time, the amount of each Payout Period
Income Payment will be less than the amount of each Payout Period Income Payment if Payout Period
Income Payments are expected to be made over a shorter period of time. Similarly, more frequent Payout
Period Income Payments will result in the amount of each Payout Period Income Payment being lower
than if Payout Period Income Payments were made less frequently for the same period of time.
Additionally, electing a Payout Option could significantly reduce the amount applied to the Income Option
due to the Interim Value calculation.
•Option 1 – Installment Option. We will pay monthly Payout Period Income Payments for a
chosen number of years between 10 and 30.
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•Option 2 – Life Income Option – Guaranteed Period Certain. We will pay monthly Payout
Period Income Payments for as long as the Annuitant lives and at least for as long as the
Guaranteed Period Certain. The Guaranteed Period Certain choices are: 0 years (life income
only); 5 years; 10 years; 15 years; or 20 years.
•Option 3 – Joint and Survivor Life Income Option – 10-Year Guaranteed Period Certain. We
will pay monthly Payout Period Income Payments for as long as either of the Annuitants is living,
and at least for 10 years.
If the Annuitant (or, in the case of Option 3, the second surviving Annuitant) dies before all of the Payout
Period Income Payments have been made for the period for the applicable Payout Option, remaining
guaranteed Payout Period Income Payments will be treated as the Death Benefit and either (a) will be
continued and paid to the Owner during the remainder of the period; or (b) will be paid to the Owner
based on the present value of the remaining Payout Period Income Payments, computed at the interest
rate used to create the rate for the applicable Payout Option. Under Option 2, if a Guaranteed Period
Certain of 0 years is selected, and the Annuitant dies before the first Payout Period Income Payment is
made, no Payout Period Income Payments will be made and the Death Benefit will be paid.
Income payment(s) will be made to the Beneficiary if there is no surviving Owner. If there is no surviving
Owner or Beneficiary, Payout Period Income Payment(s) will be made to the Owner’s estate.
If you do not select a Payout Option, we will make payments on the following basis, unless the Internal
Revenue Code (“IRC”) requires that we pay in some other manner for the Contract to qualify as an
annuity or to comply with Section 401(a)(9) of the IRC, in which case we will comply with those
requirements):
•Option 2 with a 10-year Guaranteed Period Certain for Contracts with one Annuitant; or
•Option 3 for Contracts with two Annuitants.
The minimum amount which can be applied under all Payout Options is the greater of $2,500 or the
amount required to provide an initial monthly Payout Period Income Payment of $20. We may require due
proof of age and sex at birth of any Annuitant on whose life a Payout Option is based.
We allow partial annuitization. Partial annuitization will count toward the Annual Free Withdrawal Amount.
The Payout Options described above may not be offered in all states. Any state variations are described
in Appendix B. Further, we may offer other Payout Options. More than one option may be elected. If your
Contract is a Qualified Contract, not all options may satisfy required minimum distribution rules. In
addition, note that effective for Qualified Contract Owners who die on or after January 1, 2020, subject to
certain exceptions, most non-spouse designated beneficiaries must now complete death benefit
distributions within ten years of the Owner’s death in order to satisfy required minimum distribution rules.
You should consult a tax advisor before electing a Payout Option.
FEDERAL INCOME TAX MATTERS
The following discussion is general in nature and is not intended as tax advice. Each person concerned
should consult a competent tax advisor. No attempt is made to consider any applicable state or other
income tax laws, any state and local estate or inheritance tax, or other tax consequences of ownership or
receipt of distributions under a Contract.
General Tax Treatment
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When you invest in an annuity contract, you usually do not pay taxes on your investment gains until you
withdraw the money—generally for retirement purposes.
If you invest in an annuity as part of an individual retirement plan, pension plan or employer-sponsored
retirement program, your contract is called a Qualified Contract. The tax rules applicable to Qualified
Contracts vary according to the type of retirement plan and the terms and conditions of the plan.
If your annuity is independent of any formal retirement or pension plan, it is termed a Non-Qualified
Contract.
Tax law imposes several requirements that annuities must satisfy to receive the tax treatment normally
accorded to annuity contracts. We believe that the Contracts will qualify as annuity contracts for Federal
income tax purposes and this discussion is based on that assumption. Non-Qualified Contracts contain
provisions that are intended to comply with these Internal Revenue Code requirements; we intend to
review such provisions and modify them, if necessary, to assure that they comply with the applicable
requirements when such requirements are clarified by regulation or otherwise. Other rules may apply to
Qualified Contracts.
Taxation of Withdrawals
Non-Qualified Contracts. When a partial withdrawal from a Non-Qualified Contract occurs, the amount
received will be treated as ordinary income subject to tax up to an amount equal to the excess (if any) of
the Contract Value, without adjustment for any applicable Surrender Charge, immediately before the
distribution over the Owner’s investment in the Contract (generally, the Purchase Payments or other
consideration paid for the Contract, reduced by any amount previously distributed from the Contract that
was not subject to tax) at that time. In the case of a full surrender under a Non-Qualified Contract, the
amount received generally will be taxable only to the extent it exceeds the Owner’s investment in the
Contract.
Qualified Contracts. In the case of a withdrawal under a Qualified Contract, you are taxed based on the
portion of the withdrawal that exceeds your “investment in the contract” (often referred to as cost basis).
For Qualified Contracts, you typically have not paid tax on the Purchase Payment contributed to your
Contract, and therefore there is generally no cost basis. As a result, most amounts withdrawn from the
Contract will be treated as fully taxable ordinary income. Exceptions to this general rule include
withdrawals from Roth IRAs and IRAs where you have separately tracked and reported any after-tax
contributions that you have made. We generally do not track employee contributions. You should consult
your tax advisor.
Market Value Adjustment
The Contract Value immediately before a withdrawal may be increased or decreased by a Market Value
Adjustment that results from a withdrawal. There is, however, no definitive guidance on the proper tax
treatment of Market Value Adjustments and you should discuss the potential tax consequences of a
Market Value Adjustment with your tax advisor.
Taxation of Income Benefit Payments
See “Additional Tax on Certain Withdrawals” and “Taxation of Income Payments” below.
Additional Tax on Certain Withdrawals
In the case of a distribution, there may be an imposed federal additional tax equal to ten percent of the
amount treated as income. In general, however, there is no additional tax on distributions if:
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•you die;
•you become disabled;
•you receive a series of substantially equal periodic payments made (at least annually) for your life
(or life expectancy) or the joint lives (or life expectancies) for you and your named beneficiary;
•your withdrawal is a qualified reservist distribution;
•the distribution is due to any IRS levy;
•your withdrawal is due to a terminal illness distribution; or
•you withdraw funds up to the cap for domestic violence abuse distribution.
Other exceptions may be applicable under certain circumstances and special rules may be applicable in
connection with the exceptions enumerated above. Additional exceptions may apply to distributions from
a Qualified Contract. You should consult a qualified tax advisor.
Substantially Equal Periodic Payments
Substantially equal periodic payments must continue until the later of reaching age 59½ or five years.
Modification of payments during that time period will result in the retroactive application of the 10%
additional tax. You should consult a qualified tax advisor before making a modification.
Taxation of Income Payments
Although tax consequences may vary depending on the payout option elected under an annuity contract,
a portion of each income payment is generally not taxed, and the remainder is taxed as ordinary income.
The non-taxable portion of an income payment is generally determined in a manner that is designed to
allow you to recover your investment in the Contract ratably on a tax-free basis over the expected stream
of income payments, as determined when income payments start. Once your investment in the Contract
has been fully recovered, however, the full amount of each income payment is subject to tax as ordinary
income.
Taxation of Death Benefit Proceeds
Amounts may be distributed from a Contract because of your death or the death of the Annuitant.
Generally, such amounts are includible in the income of the recipient as follows: (i) if distributed in a lump
sum, they are taxed in the same manner as surrender of the Contract, or (ii) if distributed under a payout
option, they are taxed in the same way as income payments.
To be treated as an annuity contract for Federal income tax purposes, Section 72(s) of the Internal
Revenue Code requires any Non-Qualified Contract to contain certain provisions specifying how your
interest in the Contract will be distributed in the event of the death of an Owner of the Contract.
Specifically, Section 72(s) requires that (i) if any Owner dies on or after the annuity starting date, but prior
to the time the entire interest in the Contract has been distributed, the entire interest in the Contract will
be distributed at least as rapidly as under the method of distribution being used as of the date of such
Owner’s death; and (ii) if any Owner dies prior to the annuity starting date, the entire interest in the
Contract will be distributed within five years after the date of such Owner’s death unless distributions are
made over life or life expectancy, beginning within one year of the death of the Owner. However, if the
designated Beneficiary is the surviving spouse of the deceased Owner, the Contract may be continued
with the surviving spouse as the new Owner.
Transfers, Assignments or Exchanges of the Contract
A transfer or assignment of ownership of the Contract, the designation of an Annuitant other than the
Owner, the selection of certain maturity dates, or the exchange of the Contract may result in certain tax
consequences to you that are not discussed herein. An Owner contemplating any such transfer,
assignment or exchange, should consult a tax advisor as to the tax consequences.
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Withholding
Annuity and pension Distributions are generally subject to federal income tax withholding. They may also
be subject to state income tax withholding, where applicable. Recipients can generally elect, however, not
to have tax withheld from distributions. The withholding rate varies according to the type of distribution
and the Owner’s tax status. The Owner will be provided the opportunity to elect not have tax withheld
from distributions. Certain limitations may apply. Please consult a tax advisor before making any
withholding election.
“Eligible rollover distributions” from section 401(a), 403(b), and governmental 457 plans are subject to a
mandatory federal income tax withholding of 20%. For this purpose, an eligible rollover distribution is any
distribution to an employee (or employee's spouse or former spouse as Beneficiary or alternate Payee)
from such a plan, except certain distributions such as distributions required by the Internal Revenue
Code, distributions in a specified annuity form, or hardship distributions. The 20% withholding does not
apply, however, to nontaxable distributions or if (i) the employee (or employee’s spouse or former spouse
as Beneficiary or alternative Payee) chooses a “direct rollover” from the plan to a tax-qualified plan, IRA or
tax sheltered annuity or to a governmental 457 plan that agrees to separately account for rollover
contributions; or (ii) a non-spouse Beneficiary chooses a “direct rollover” from the plan to an IRA
established by the direct rollover.
Federal Estate Taxes, Gift and Generation-Skipping Transfer Taxes
While no attempt is being made to discuss in detail the Federal estate tax implications of the Contract, a
purchaser should keep in mind that the value of an annuity contract owned by a decedent and payable to
a Beneficiary by virtue of surviving the decedent is included in the decedent’s gross estate. Depending on
the terms of the annuity contract, the value of the annuity included in the gross estate may be the value of
the lump sum payment payable to the contingent Owner or the actuarial value of the payments to be
received by the Beneficiary. Consult an estate planning advisor for more information.
Under certain circumstances, the Internal Revenue Code may impose a generation-skipping transfer tax
(“GST”) when all or part of an annuity contract is transferred to, or a Death Benefit is paid to, an individual
two or more generations younger than the Owner. Regulations issued under the Internal Revenue Code
may require us to deduct the tax from your Contract, or from any applicable payment, and pay it directly to
the IRS. The federal estate tax, gift tax and GST tax exemptions and maximum rates may each be
adjusted.
The potential application of these taxes underscores the importance of seeking guidance from a qualified
advisor to help ensure that your estate plan adequately addresses your needs and those of your
beneficiaries under all possible scenarios.
Same-Sex Spouses
Under the Contract, a surviving spouse may have certain continuation rights that he or she may elect to
exercise upon your death for the Contract’s Death Benefit. All Contract provisions relating to spousal
continuation are available only to a person who meets the definition of “spouse” under federal law. The
U.S. Supreme Court has held that same-sex marriages must be permitted under state law and that
marriages recognized under state law will be recognized for federal law purposes. Domestic partnerships
and civil unions that are not recognized as legal marriages under state law, however, will not be treated as
marriages under federal law. Consult a tax advisor for more information on this subject.
Annuity Purchases By Nonresident Aliens and Foreign Corporations
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The discussion above provides general information regarding U.S. federal income tax consequences to
annuity purchasers that are U.S. citizens or residents. Purchasers that are not U.S. citizens or U.S.
permanent residents will generally be subject to U.S. federal withholding tax on taxable distributions from
annuity contracts at a 30% rate unless a lower treaty rate applies. In addition, such 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. Additional withholding may occur with respect to entity purchasers (including
foreign corporations, partnerships, and trusts) that are not U.S. residents. Prospective purchasers are
advised to consult with a qualified tax advisor regarding U.S., state, and foreign taxation with respect to
an annuity contract purchase.
Additional Information about the Taxation of Non-Qualified Contracts
This discussion generally applies to Contracts owned by natural persons. See “Non-Natural Person”
below for a discussion of Non-Qualified Contracts owned by persons such as corporations and trusts that
are not natural persons.
Medicare Tax. Distributions from a Non-Qualified Contract will be considered “investment income” for
purposes of the Medicare tax on investment income. Thus, in certain circumstances, a 3.8% tax may be
applied to some or all of the taxable portion of distributions (e.g., earnings) to individuals whose income
exceeds certain threshold amounts. Please consult a tax advisor for more information.
Multiple Contracts. All Non-Qualified deferred annuity contracts that are issued by us (or our affiliates) to
the same Owner during any calendar year are treated as one annuity contract for purposes of determining
the amount includible in such Owner’s income when a taxable distribution occurs.
Non-Natural Person. If a non-natural person (e.g., a corporation or a trust) owns a Non-Qualified
Contract, the taxpayer generally must include in income any increase in the excess of the account value
over the investment in the Contract (generally, the Purchase Payment or other consideration paid for the
Contract) during the taxable year. There are some exceptions to this rule and a prospective Owner that is
not a natural person should discuss these with a tax advisor.
Additional Information about the Taxation of Qualified Contracts
Individual Retirement Annuities (IRAs), as defined in Section 408 of the Internal Revenue Code, permit
individuals to make annual contributions of up to the lesser of a specified dollar amount for the year or the
amount of compensation includible in the individual’s gross income for the year. The contributions may be
deductible in whole or in part, depending on the individual’s income. Distributions from certain retirement
plans may be “rolled over” into an IRA on a tax-deferred basis without regard to these limits. Amounts in
the IRA (other than nondeductible contributions) are taxed when distributed from the IRA. A 10%
additional tax generally applies to distributions made before age 59½, unless an exception applies.
Distributions that are rolled over to an IRA within 60 days are not immediately taxable, however only one
such rollover is permitted each year. An individual can make only one rollover from an IRA to another (or
the same) IRA in any 12-month period, regardless of the number of IRAs that are owned. The limit will
apply by aggregating all of an individual’s IRAs, including SEP and SIMPLE IRAs as well as traditional
and Roth IRAs, effectively treating them as one IRA for purposes of the limit. This limit does not apply to
direct trustee-to-trustee transfers or conversion to Roth IRAs.
Roth IRAs, as described in Internal Revenue Code Section 408A, permit certain eligible individuals to
contribute to make non-deductible contributions to a Roth IRA in cash or as a rollover or transfer from
another Roth IRA or other IRA. A rollover from or conversion of an IRA to a Roth IRA is generally subject
to tax and other special rules apply. The Owner may wish to consult a tax advisor before combining any
converted amounts with any other Roth IRA contributions, including any other conversion amounts from
other tax years. Distributions from a Roth IRA generally are not taxed, except that, once aggregate
distributions exceed contributions to the Roth IRA, income tax and a 10% additional tax may apply to
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distributions made (i) before age 59½ (subject to certain exceptions) or (ii) during the five taxable years
starting with the year in which the first contribution is made to any Roth IRA. A 10% additional tax may
apply to amounts attributable to a conversion from an IRA if they are distributed during the five taxable
years beginning with the year in which the conversion was made. Distributions that are rolled over to an
IRA within 60 days are not immediately taxable, however only one such rollover is permitted each year.
An individual can make only one rollover from an IRA to another (or the same) IRA in any 12-month
period, regardless of the number of IRAs that are owned. The limit will apply by aggregating all of an
individual’s IRAs, including SEP and SIMPLE IRAs as well as traditional and Roth IRAs, effectively
treating them as one IRA for purposes of the limit. This limit does not apply to direct trustee-to-trustee
transfers or conversions to Roth IRAs.
Required Minimum Distributions. Qualified Contracts have required minimum distribution (“RMD”) rules
that govern the timing and amount of distributions. You should refer to your Contract or consult a tax
advisor for more information about these rules. The required beginning date for these distributions is
based on your applicable age as defined in the tax law. You should refer to your Contract, retirement plan,
adoption agreement, or consult a tax advisor for more information about these distribution rules.
If distributions from your IRA are made in the form of an annuity, and the annuity payments in a year
exceed the amount that would be required to be distributed for the year under the rules for non-annuitized
contracts (determined by treating the IRA’s account balance as including the value of the annuity), the
excess can be counted towards satisfying the RMD with respect to any non-annuitized account balance in
your IRA(s). You should consult a tax advisor if you want to use this special rule.
Effective for Qualified Contract Owners who die on or after January 1, 2020, subject to certain exceptions,
most non-spouse designated beneficiaries must now complete death benefit distributions within ten years
of the Owner’s death in order to satisfy RMD rules. Consult a tax advisor.
If you fail to take your full RMD for a year, you will be subject to a 25% excise tax on any shortfall. This
excise tax is reduced to 10% if a distribution of the shortfall is made within two years and prior to the date
the excise tax is assessed or imposed by the IRS. If you fail to take your full RMD for a year, you should
consult with a tax advisor for more information.
Possible Tax Law Changes
Although the likelihood of legislative changes is uncertain, there is always the possibility that the tax
treatment of the Contract could change by legislation or otherwise. Consult a tax advisor with respect to
legislative developments and their effect on the Contract.
We have the right to modify the Contract in response to legislative changes that could otherwise diminish
the favorable tax treatment that annuity contract owners currently receive. We make no guarantee
regarding the tax status of any contact and do not intend the above discussion as tax advice.
What Acts may result in Penalties or Additional Taxes?
There are tax advantages to using an annuity for retirement savings. The tax advantages may be offset
by additional taxes and penalties if you are not familiar with and follow the rules.
For example, there may be additions to regular tax for the following activities:
•Taking early distributions
•Allowing excess amounts to accumulate for failing to tax required distributions
•Making excess contributions
There may be penalties for the following, without limitation:
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•Overstating the amount of nondeductible contributions
•Not having enough tax withheld
•Failing to report income
Please consult with your personal advisor to understand when additional tax or penalties may apply.
OTHER INFORMATION
Important Information about the Indices
S&P 500 Index. The Contract is not sponsored, endorsed, sold or promoted by Standard & Poor’s, a
division of the McGraw-Hill companies, Inc. (“S&P”). S&P makes no representation or warranty, express
or implied, to the Owners of the Contract or any member of the public regarding the advisability of
investing in securities generally or in the Contract particularly or the ability of the S&P 500 Index to track
general stock market performance. S&P’s only relationship to the Company is the licensing of certain
trademarks and trade names of S&P and of the S&P 500 Index which is determined, composed and
calculated by S&P without regard to the Company or the Contract. S&P has no obligation to take the
needs of the Company or the Owners of the Contract into consideration in determining, composing or
calculating the S&P 500 Index. S&P is not responsible for and has not participated in the determination of
the prices and amount of the Contract or the timing of the issuance or sale of the Contract or in
determination or calculation of the equation by which the Contract is to be converted into cash. S&P has
no obligation or liability in connection with the administration, marketing or trading of the Contract.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500
INDEX OR ANY DATA INCLUDED THEREIN, AND S&P SHALL HAVE NO LIABILITY FOR ANY
ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE COMPANY, OWNERS OF THE PRODUCT, OR
ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR ANY DATA
INCLUDED THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY
DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
OR USE WITH RESPECT TO THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT
LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY
SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS),
EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
The S&P 500 Index is a stock market index based on the market capitalizations of 500 leading companies
publicly traded in the U.S. stock market, as determined by Standard & Poor’s. The S&P 500 Index can go
up or down based on the stock prices of the 500 companies that comprise the Index. The S&P 500 Index
does not include dividends paid on the securities comprising the Index and therefore does not reflect the
full investment performance of the underlying securities.
The S&P 500 Index is a trademark of Standard & Poor’s or its affiliates and has been licensed for use by
the Company.
Dimensional US Small Cap Value Systematic Index. The Dimensional US Small Cap Value Systematic
Index (the “Index”) is sponsored and published by Dimensional Fund Advisors LP (“Dimensional”).
References to Dimensional include its respective directors, officers, employees, representatives,
delegates or agents. The use of “Dimensional” in the name of the Index and the related stylized mark(s)
are service marks of Dimensional and have been licensed for use by TruStage. TruStage has entered into
a license agreement with Dimensional providing for the right to use the Index and related trademarks in
connection with the TruStage™ ZoneChoice Income Annuity (the “Financial Product”). The Financial
84
Product is not sponsored, endorsed, sold or promoted by Dimensional, and Dimensional makes no
representation regarding the advisability of investing in such Financial Product. Dimensional has no
responsibilities, obligations or duties to investors in the Financial Product, nor does Dimensional make
any express or implied warranties, including, but not limited to, any warranties of merchantability or fitness
for a particular purpose or use with respect to the Index, or as to results to be obtained by a Financial
Product or any other person or entity from the use of the Index, trading based on the Index, the levels of
the Index at any particular time on any particular date, or any data included therein, either in connection
with the Financial Product or for any other use. Dimensional has no obligation or liability in connection
with the administration, marketing or trading of the Financial Product. In certain circumstances,
Dimensional may suspend or terminate the Index. Dimensional has appointed a third-party agent (the
“Index Calculation Agent”) to calculate and maintain the Index. While Dimensional is responsible for the
operation of the Index, certain aspects have thus been outsourced to the Index Calculation Agent.
Dimensional does not guarantee the accuracy, timeliness or completeness of the Index, or any data
included therein or the calculation thereof or any communications with respect thereto. Dimensional has
no liability for any errors, omissions or interruptions of the Index or in connection with its use. In no event
shall Dimensional have any liability of whatever nature for any losses, damages, costs, claims and
expenses (including any special, punitive, direct, indirect or consequential damages (including lost
profits)) arising out of matters relating to the use of the Index, even if notified of the possibility of such
damages. Dimensional has provided TruStage with all material information related to the Index
methodology and the maintenance, operation and calculation of the Index. Dimensional makes no
representation with respect to the completeness of information related to the Index provided by TruStage
in connection with the offer or sale of any Financial Product. Dimensional acts as principal and not as
agent or fiduciary of any other person. Dimensional has not published or approved this document, nor
does Dimensional accept any responsibility for its contents or use.
Barclays Risk Balanced Index. Neither Barclays Bank PLC (“BB PLC”) nor any of its affiliates
(collectively ‘Barclays’) is the issuer or producer of TruStage™ ZoneChoice Income Annuity and Barclays
has no responsibilities, obligations or duties to investors in TruStage™ ZoneChoice Income Annuity. The
Barclays Risk Balanced Index (the “Index”), together with any Barclays indices that are components of the
Index, is a trademark owned by Barclays and, together with any component indices and index data, is
licensed for use by the Company as the issuer or producer of TruStage™ ZoneChoice Income Annuity
(the “Issuer”).
Barclays’ only relationship with the Issuer in respect of the Index is the licensing of the Index, which is
administered, compiled and published by BB PLC in its role as the index sponsor (the “Index Sponsor”)
without regard to the Issuer or the TruStage™ ZoneChoice Income Annuity or investors in the TruStage™
ZoneChoice Income Annuity. Additionally, the Company as issuer or producer TruStage™ ZoneChoice
Income Annuity may for itself execute transaction(s) with Barclays in or relating to the Index in connection
with TruStage™ ZoneChoice Annuity. Investors acquire TruStage™ ZoneChoice Income Annuity from the
Company and investors neither acquire any interest in the Index nor enter into any relationship of any
kind whatsoever with Barclays upon making an investment TruStage™ ZoneChoice Income Annuity. The
TruStage™ ZoneChoice Income Annuity is not sponsored, endorsed, sold or promoted by Barclays and
Barclays makes no representation regarding the advisability of the TruStage™ ZoneChoice Income
Annuity or use of the Index or any data included therein. Barclays shall not be liable in any way to the
Issuer, investors or to other third parties in respect of the use or accuracy of the Index or any data
included therein.
Barclays Index Administration (“BINDA”), a distinct function within BB PLC, is responsible for day-to-day
governance of BB PLC’s activities as Index Sponsor.
To protect the integrity of Barclays’ indices, BB PLC has in place a control framework designed to identify
and remove and/or mitigate (as appropriate) conflicts of interest. Within the control framework, BINDA has
the following specific responsibilities:
85
•oversight of any third party index calculation agent;
•acting as approvals body for index lifecycle events (index launch, change and retirement); and
•resolving unforeseen index calculation issues where discretion or interpretation may be required
(for example: upon the occurrence of market disruption events).
To promote the independence of BINDA, the function is operationally separate from BB PLC’s sales,
trading and structuring desks, investment managers, and other business units that have, or may be
perceived to have, interests that may conflict with the independence or integrity of Barclays’ indices.
Notwithstanding the foregoing, potential conflicts of interest exist as a consequence of BB PLC providing
indices alongside its other businesses. Please note the following in relation to Barclays’ indices:
•BB PLC may act in multiple capacities with respect to a particular index including, but not limited
to, functioning as index sponsor, index administrator, index owner and licensor.
•Sales, trading or structuring desks in BB PLC may launch products linked to the performance of
an index. These products are typically hedged by BB PLC’s trading desks. In hedging an index, a
trading desk may purchase or sell constituents of that index. These purchases or sales may affect
the prices of the index constituents which could in turn affect the level of that index.
•BB PLC may establish investment funds that track an index or otherwise use an index for portfolio
or asset allocation decisions.
The Index Sponsor is under no obligation to continue the administration, compilation and publication of
the Index or the level of the Index. While the Index Sponsor currently employs the methodology ascribed
to the Index (and application of such methodology shall be conclusive and binding), no assurance can be
given that market, regulatory, juridical, financial, fiscal or other circumstances (including, but not limited to,
any changes to or any suspension or termination of or any other events affecting any constituent within
the Index) will not arise that would, in the view of the Index Sponsor, necessitate an adjustment,
modification or change of such methodology. In certain circumstances, the Index Sponsor may suspend
or terminate the Index. The Index Sponsor has appointed a third-party agent (the “Index Calculation
Agent”) to calculate and maintain the Index. While the Index Sponsor is responsible for the operation of
the Index, certain aspects have thus been outsourced to the Index Calculation Agent.
Barclays
1.makes no representation or warranty, express or implied, to the Issuer or any member of the
public regarding the advisability of investing in transactions generally or the ability of the Index to
track the performance of any market or underlying assets or data; and
2.has no obligation to take the needs of the Issuer into consideration in administering, compiling or
publishing the Index.
Barclays has no obligation or liability in connection with administration, marketing or trading of the
TruStage™ ZoneChoice Income Annuity.
The licensing agreement between the Company and BB PLC is solely for the benefit of the Company and
Barclays and not for the benefit of the owners of the TruStage™ ZoneChoice Annuity, investors or other
third parties.
BARCLAYS DOES NOT GUARANTEE, AND SHALL HAVE NO LIABILITY TO THE PURCHASERS AND
TRADERS, AS THE CASE MAY BE, OF THE TRANSACTION OR TO THIRD PARTIES FOR THE
QUALITY, ACCURACY AND/OR COMPLETENESS OF THE INDEX OR ANY DATA INCLUDED
THEREIN OR FOR INTERRUPTIONS IN THE DELIVERY OF THE INDEX. BARCLAYS MAKES NO
EXPRESS OR IMPLIED WARRANTIES, AND HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO
THE INDEX INCLUDING, WITHOUT LIMITATION, THE INDICES, OR ANY DATA INCLUDED THEREIN.
IN NO EVENT SHALL BARCLAYS HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT,
86
OR CONSEQUENTIAL DAMAGES, OR ANY LOST PROFITS, EVEN IF NOTIFIED OF THE
POSSIBILITY OF SUCH DAMAGES SAVE TO THE EXTENT THAT SUCH EXCLUSION OF LIABILITY IS
PROHIBITED BY LAW.
None of the information supplied by Barclays and used in this publication may be reproduced in any
manner without the prior written permission of Barclays Bank PLC. Barclays Bank PLC is registered in
England No. 1026167. Registered office 1 Churchill Place London E14 5HP.
Any reference to ‘Bloomberg Index Services Limited’ (including as abbreviated to ‘Bloomberg’) in
their capacity as the index calculation agent must include the following:
Bloomberg Index Services Limited is the official index calculation and maintenance agent of the Index, an
index owned and administered by Barclays. Bloomberg Index Services Limited does not guarantee the
timeliness, accurateness, or completeness of the Index calculations or any data or information relating to
the Index. Bloomberg Index Services Limited makes no warranty, express or implied, as to the Index or
any data or values relating thereto or results to be obtained therefrom, and expressly disclaims all
warranties of merchantability and fitness for a particular purpose with respect thereto. To the maximum
extent allowed by law, Bloomberg Index Services Limited, its affiliates, and all of their respective partners,
employees, subcontractors, agents, suppliers and vendors (collectively, the “protected parties”) shall have
no liability or responsibility, contingent or otherwise, for any injury or damages, whether caused by the
negligence of a protected party or otherwise, arising in connection with the calculation of the Index or any
data or values included therein or in connection therewith and shall not be liable for any lost profits,
losses, punitive, incidental or consequential damages.
Distribution of the Contract
We have entered into a distribution agreement with our affiliate, CBSI, for the distribution of the Contract.
CBSI is a wholly-owned subsidiary of CUNA Mutual Investment Corporation (“CMIC”). The principal
business address of CBSI is 2000 Heritage Way, Waverly, IA 50677.
We and CBSI enter into selling agreements with other broker-dealer firms (the "Selling Broker-Dealers")
registered under the Securities Exchange Act of 1934, as amended (the “1934 Act”), who are members of
the Financial Industry Regulatory Authority, Inc. (“FINRA”). Contracts are sold by registered
representatives of the Selling Broker-Dealers (the "Selling Agents"). In those states where the Contract
may be lawfully sold, the Selling Agents are licensed as insurance agents by applicable state insurance
authorities and appointed as agents of the Company. CBSI also offered securities to customers through
CBSI registered representatives until May 2022. Through an agreement between LPL Financial (“LPL”)
and CBSI, the majority of these former CBSI registered representatives, which primarily include
employees of CBSI’s affiliates or the credit union where their FINRA registered branch is located,
registered with LPL. LPL is one of the Selling Broker-Dealers. CBSI receives compensation from LPL for
sales by certain LPL registered representatives pursuant to networking agreements with various credit
unions, LPL and CBSI.
We pay CBSI and/or our affiliates pay the Selling Broker-Dealers compensation for the promotion and
sale of the Contract. The Selling Agents who solicit sales of the Contract typically receive a portion of the
compensation paid to the Selling Broker-Dealers in the form of commissions or other compensation,
depending on the agreement between the Selling Broker-Dealer and the Selling Agent. The amount and
timing of commissions we may pay to Selling Broker-Dealers may vary depending on the selling
agreement and the Contract sold but is not expected to be more than 7.25% of the Purchase Payment.
We may also pay asset-based commission (sometimes called trail commissions) in addition to the
Purchase Payment-based commission. We may pay or allow other promotional incentives or payments in
the form of cash or other compensation to the extent permitted by FINRA rules and other applicable laws
and regulations.
87
We also pay compensation to wholesaling broker-dealers or other firms or intermediaries, including
payments to affiliates of ours, in return for wholesaling services such as providing marketing and sales
support, product training and administrative services to the Selling Agents of the Selling Broker-Dealers.
These allowances may be based on a percentage of the Purchase Payment.
In addition to the compensation described above, we may make additional cash payments, in certain
circumstances referred to as "override" compensation or reimbursements to Selling Broker-Dealers in
recognition of their marketing and distribution, transaction processing and/or administrative services
support. These payments are not offered to all Selling Broker-Dealers, and the terms of any particular
agreement governing the payments may vary among Selling Broker-Dealers depending on, among other
things, the level and type of marketing and distribution support provided. Marketing and distribution
support services may include, among other services, placement of the Company’s products on the Selling
Broker-Dealers’ preferred or recommended list, increased access to the Selling Broker-Dealers’
registered representatives for purposes of promoting sales of our products, assistance in training and
education of the Selling Agents, and opportunities for us to participate in sales conferences and
educational seminars. The payments or reimbursements may be calculated as a percentage of the
particular Selling Broker-Dealer’s actual or expected aggregate sales of our annuity contracts (including
the Contract) and/or may be a fixed dollar amount. Broker-dealers receiving these additional payments
may pass on some or all of the payments to the Selling Agent.
You should ask your Selling Agent for further information about what commissions or other compensation
he or she, or the Selling Broker-Dealer for which he or she works, may receive in connection with your
purchase of a Contract.
Commissions and other incentives or payments described above are not charged directly to you. We
intend to recover commissions and other compensation, marketing, administrative and other expenses
and costs of Contract benefits through the fees and charges imposed under the Contract.
Authority to Change
Only the President or Secretary of the Company may change or waive any of the terms of your Contract.
Any change must be in writing and signed by the President or Secretary of the Company. You will be
notified of any such change, as required by law.
Incontestability
We consider all statements in your application (in the absence of fraud) to be representations and not
warranties. We will not contest your Contract.
Misstatement of Age or Sex at Birth
If an Annuitant’s sex at birth has been misstated, and the life income rate type is based on sex at birth, we
will adjust the Payout Period Income Payments to be equal to the payout amount the Contract Value
would have purchased based on the Annuitant’s correct sex at birth. If an Annuitant’s date of birth is
misstated, we will adjust the Payout Period Income Payments to be equal to the payout amount the
Contract Value would have purchased based on the Annuitant's correct date of birth. If a Covered
Person(s) date of birth has been misstated, the Income Benefit Payment will be adjusted based on the
correct date of birth of the Covered Person(s). We will add any underpayments to the next payment. We
will subtract any overpayment from future payments. We will not credit or charge any interest to any
underpayment or overpayment.
88
Conformity with Applicable Laws
The provisions of the Contract conform to the minimum requirements of the state in which the Contract is
delivered (i.e., the “state of issue”). The laws of the state of issue control any conflicting laws of any other
state in which the Owner may live on or after the Contract Issue Date. If any provision of your Contract is
determined not to provide the minimum benefits required by the state in which the Contract is issued,
such provision will be deemed to be amended to conform or comply with such laws or regulations.
Further, the Company will amend the Contract to comply with any changes in law governing the Contract
or the taxation of benefits under the Contract.
Reports to Owners
At least annually, we will mail a report to you at your last known address of record, a report that will state:
•the beginning and end dates for the current report period;
•your Contract Value prior to any Market Value Adjustment at the beginning and end of the current
report period;
•the amounts that have been credited and debited to your Contract Value during the current report
period, identified by the type of activity the amount represents;
•the guaranteed minimum Death Benefit at the end of the current report period;
•the Surrender Value at the end of the current report period;
•the Market Value Adjustment used to determine the Surrender Value;
•information regarding the Income Benefit Base, the Income Benefit Percentage, the Income
Benefit Payment, and the Income Benefit Fee; and
•any other information required by any applicable law or regulation.
You also will receive confirmations of each financial transaction, such as transfers, withdrawals, and
surrenders.
Householding
To reduce service expenses, the Company may send only one copy of certain mailings and reports per
household, regardless of the number of contract owners at the household. However, you may obtain
additional copies upon request to the Company. If you have questions, please call us at 1-800-798-5500,
Monday through Friday, 7:30 A.M. to 6:00 P.M., Central Time.
Change of Address
You may change your address by writing to us at our Administrative Office. If you change your address,
we will send a confirmation of the address change to both your old and new addresses.
Inquiries
You may make inquiries regarding your Contract by writing to us or calling us at our Administrative Office.
Legal Proceedings
Like other insurance companies, we routinely are involved in litigation and other proceedings, including
class actions, reinsurance claims and regulatory proceedings arising in the ordinary course of our
business. In recent years, the life insurance and annuity industry, including us and our affiliated
companies, has been subject to an increase in litigation pursued on behalf of both individual and
purported classes of insurance and annuity purchasers, questioning the conduct of insurance companies
and their agents in the marketing of their products. In addition, state and federal regulatory bodies, such
89
as state insurance departments and attorneys general, periodically make inquiries and conduct
examinations concerning compliance by us and others with applicable insurance and other laws.
In connection with regulatory examinations and proceedings, government authorities may seek various
forms of relief, including penalties, restitution and changes in business practices. The Company has
established procedures and policies to facilitate compliance with laws and regulations and to support
financial reporting. These actions are based on a variety of issues and involve a range of the Company's
practices. We respond to such inquiries and cooperate with regulatory examinations in the ordinary
course of business. In the opinion of management, the ultimate liability, if any, resulting from all such
pending actions will not materially affect the financial statements of the Company, nor the Company’s
ability to meet its obligations under the Contracts.
FINANCIAL STATEMENTS
The Company's statutory basis financial statements are hereby incorporated by reference to the Form N-
VPFS filed with the SEC by the Company on April 1, 2025. You should consider the Company’s financial
statements only as bearing on the Company’s ability to meet its obligations under your Contract.
A-1
APPENDIX A: ALLOCATION OPTIONS AVAILABLE UNDER THE CONTRACT
Note: If you surrender your Contract or take an Excess Withdrawal from any Allocation Option at
any time other than on or within 30 days after each sixth Contract Anniversary, we will apply a
Market Value Adjustment (which may be positive or negative) to the amount being surrendered or
withdrawn that exceeds the Annual Free Withdrawal Amount. A negative Market Value Adjustment
could significantly decrease the amount you receive from an Excess Withdrawal or surrender.
Risk Control Account Options
The following is a list of the Risk Control Accounts currently available under the Contract. Depending
upon which Income Benefit rider you select and for the IncomeGrowth Performance rider, whether
it is before or after your Income Benefit Payment Start Date, you may not be able to invest in
certain Risk Control Accounts, as noted below.
We may change the features of the Risk Control Accounts listed below (including the Index, Floors, Cap
Rates, Participation Rates, Buffers, Boosts, and Dual Step Rates), offer new Risk Control Accounts, and
terminate existing Risk Control Accounts. We will provide you with written notice before making any
changes other than changes to the current Cap Rates, Participation Rates, and Dual Step Rates.
Information about current Cap Rates, Participation Rates and Dual Step Rates is available at https://
www.trustage.com/zonechoice-income-annuity-rates.
Note: For Contract Value allocated to a Risk Control Account, if you take a withdrawal (including
for Income Benefit Payments), make a Flex Transfer, surrender your Contract, die, begin Payout
Options, or we deduct the Income Benefit Fee, the amount withdrawn or transferred before the
expiration of an Interest Term is based on the Interim Value. This may result in a significant
reduction in your Contract Value that could exceed any protection from Index loss that would be
in place if you held the option until the end of the Interest Term.
RISK CONTROL ACCOUNT OPTIONS | ||||
Risk Control Account Crediting Strategy: Floor with Participation Rate and Cap Rate(1) | ||||
Index(2) | Type of Index | Crediting Period(3) | Limit on Index Loss (if held to the end of the Crediting Period) | Minimum Limit on Index Gain (for the Life of the Risk Control Account) |
S&P 500 Index | Stock market index based on market capitalizations of 500 leading companies publicly traded in the U.S. stock market. | 1-Year | Floor: 0% to -10% in 1% increments | •Minimum Cap Rate: 1% •Minimum Participation Rate: 100% |
Dimensional US Small Cap Value Systematic Index | Stock market index that invests within the smallest 8% of the US market down to $100 million in market capitalization with relative prices in the lowest 40% when ranked by price to book. | 1-Year | Floor: 0% to -10% in 1% increments | •Minimum Cap Rate: 1% •Minimum Participation Rate: 100% |
A-2
Barclays Risk Balanced Index | Allocates between equities and fixed income using the principles of Modern Portfolio Theory, which seeks to maximize the expected return based on a given level of market risk. | 1-Year | Floor: 0% to -10% in 1% increments | •Minimum Cap Rate: 1% •Minimum Participation Rate: 100% |
Risk Control Account Crediting Strategy: Buffer with Participation Rate and Cap Rate(1) | ||||
Index(2) | Type of Index | Crediting Period(3) | Limit on Index Loss (if held to the end of the Crediting Period) | Minimum Limit on Index Gain (for the Life of the Risk Control Account) |
S&P 500 Index | Stock market index based on market capitalizations of 500 leading companies publicly traded in the U.S. stock market. | 1-Year | Buffer: -10% and -20% | •Minimum Cap Rate: 1% •Minimum Participation Rate: 100% |
Dimensional US Small Cap Value Systematic Index | Stock market index that invests within the smallest 8% of the US market down to $100 million in market capitalization with relative prices in the lowest 40% when ranked by price to book. | 1-Year | Buffer: -10% and -20% | •Minimum Cap Rate: 1% •Minimum Participation Rate: 100% |
S&P 500 Index | Stock market index based on market capitalizations of 500 leading companies publicly traded in the U.S. stock market. | 6-Year | Buffer: -10% and -20% | •Minimum Cap Rate:10% •Minimum Participation Rate: 100% |
Dimensional US Small Cap Value Systematic Index | Stock market index that invests within the smallest 8% of the US market down to $100 million in market capitalization with relative prices in the lowest 40% when ranked by price to book. | 6-Year | Buffer: -10% and -20% | •Minimum Cap Rate:10% •Minimum Participation Rate: 100% |
Barclays Risk Balanced Index | Allocates between equities and fixed income using the principles of Modern Portfolio Theory, which seeks to maximize the expected return based on a given level of market risk. | 6-Year | Buffer: -10% and -20% | •Minimum Cap Rate:10% •Minimum Participation Rate: 100% |
Risk Control Account Crediting Strategy: Boost with Participation Rate and Cap Rate(1) | ||||
Index(2) | Type of Index | Crediting Period(3) | Limit on Index Loss (if held to the end of the Crediting Period) | Minimum Limit on Index Gain (for the Life of the Risk Control Account) |
A-3
S&P 500 Index | Stock market index based on market capitalizations of 500 leading companies publicly traded in the U.S. stock market. | 6-Year | Boost: 10% and 20% | •Minimum Cap Rate:10% •Minimum Participation Rate: 100% |
Dimensional US Small Cap Value Systematic Index | Stock market index that invests within the smallest 8% of the US market down to $100 million in market capitalization with relative prices in the lowest 40% when ranked by price to book. | 6-Year | Boost: 10% and 20% | •Minimum Cap Rate:10% •Minimum Participation Rate: 100% |
Barclays Risk Balanced Index | Allocates between equities and fixed income using the principles of Modern Portfolio Theory, which seeks to maximize the expected return based on a given level of market risk. | 6-Year | Boost: 10% and 20% | •Minimum Cap Rate:10% •Minimum Participation Rate: 100% |
Risk Control Account Crediting Strategy: Buffer with Dual Step Rate(1) | ||||
Index(2) | Type of Index | Crediting Period(3) | Limit on Index Loss (if held to the end of the Crediting Period) | Minimum Limit on Index Gain (for the Life of the Risk Control Account) |
S&P 500 Index | Stock market index based on market capitalizations of 500 leading companies publicly traded in the U.S. stock market. | 6-Year | Buffer: -10% and -20% | Dual Step Rate: 10% |
(1)During the life of your Contract, the Fixed Account and a Risk Control Account with a 0%
Floor, a minimum 1% Cap Rate, and a minimum 100% Participation Rate will always be
available. However, we may change or discontinue some or all of the other Risk Control
Accounts; any remaining Allocation Options may have terms that are unacceptable to you and
may not provide any protection from index losses, which could result in the loss of the entire
amount of your Contract Value. The Participation Rate will never be less than 100%. We may
not always make available Risk Control Accounts with Buffers, but if we do, a Buffer of -10%
or more will be available. We may not always make available Risk Control Accounts with
Boosts, but if we do, a Boost of 10% or more will be available. The Cap Rate for Risk Control
Accounts with one-year Interest Terms will never be less than 1%, and the Cap Rate for Risk
Control Accounts with six-year Interest Terms will never be less than 10%. We may not always
make available Risk Control Accounts with Dual Step Rates, but if we do, the Dual Step Rate
will never be less than 10%.
(2)Except for the Barclays Risk Balanced, the performance of each Index associated with the Risk
Control Accounts does not include dividends paid on the securities comprising the Index, and
therefore, the performance of the Index does not reflect the full performance of those underlying
securities. This will reduce Index performance and will cause the Index to underperform a direct
investment in the underlying securities. The Barclays Risk Balanced Index reinvests dividends but
deducts a fee of 0.5% for the equity exposure, and 0.2% per year for the treasury exposure, and a
cost equal to SOFR plus 0.1145% for the equity component. Therefore, the aggregate fee will depend
on the Index's relative allocations to the equity and treasury components from time to time, which are
determined by the volatility control mechanism. SOFR refers to the Secured Overnight Financing
Rate, which was 4.49% as of December 31, 2024. The New York Fed publishes the SOFR on its
A-4
website each Business Day. These deductions will reduce Index performance, and the Index will
underperform similar portfolios from which these fees and costs are not deducted.
(3)We credit interest to each Risk Control Account at the end of each Interest Term by comparing the
change in the Index from the first day of the Interest Term to the last day of the Interest Term.
Because Index interest is calculated on a single point in time you may experience negative or flat
performance even though the Index experienced gains through some, or most, of the Interest Term.
RISK CONTROL ACCOUNT OPTIONS AVAILABILITY | ||||
Risk Control Account Crediting Strategy | Index, Crediting Period | IncomeGrowth Protection | IncomeGrowth Performance | |
Before Income Benefit Payment Start Date | After Income Benefit Payment Start Date | |||
Floor with Participation Rate and Cap Rate | S&P 500 1-year | ☑ | ☑ | ☑ |
Dimensional US Small Cap Value Syst., 1-year | ☑ | ☑ | ☑ | |
Barclays Risk Balanced 1-year | ☑ | ☑ | ☑ | |
Buffer with Participation Rate and Cap Rate | S&P 500 1-year | ☑ | ☑ | |
Dimensional US Small Cap Value Syst., 1-year | ☑ | ☑ | ||
S&P 500 6-year | ☑ | |||
Dimensional US Small Cap Value Syst., 6-year | ☑ | |||
Barclays Risk Balanced 6-year | ☑ | |||
Boost with Participation Rate and Cap Rate | S&P 500 6-year | ☑ | ||
Dimensional US Small Cap Value Syst., 6-year | ☑ | |||
Barclays Risk Balanced 6-year | ☑ | |||
Buffer with Dual Step Rate | S&P 500 Index 6-year | ☑ | ||
More information about the Risk Control Accounts, the Market Value Adjustment, and the Interim Value
calculation is available under "Risk Control Account Options" and "Charges and Adjustments."
Fixed Account
The following is a list of Fixed Account Options currently available under the Contract. We may change
the features of the Fixed Account Options listed below, offer new Fixed Account Options, and terminate
existing Fixed Account Options. We will provide you with written notice before doing so.
Name | Term | Minimum Guaranteed Interest Rate |
Fixed Account | 1 year | 0.05%(1) |
(1) Full withdrawals or full surrenders from the Fixed Account are subject to a minimum nonforfeiture
value. See "Fixed Account Option."
B-1
APPENDIX B: STATE VARIATIONS OF CERTAIN FEATURES AND BENEFITS
The following information is a summary of certain features or benefits of the TruStageTM ZoneChoice
Income Annuity Contracts that vary from the features and benefits previously described in this Prospectus
as a result of requirements imposed by states. Please contact your financial professional for more
information about Contract variations and availability in your state.
States where the rate used in section b(3) of the minimum nonforfeiture rate calculation is 1.00%:
Alaska | California | District of Columbia | Idaho | Kentucky |
Louisiana | Maine | Massachusetts | Mississippi | Missouri |
New Jersey | New Mexico | Rhode Island | Tennessee | Washington |
West Virginia | Wisconsin | Wyoming | ||
See "Fixed Account Option." | ||||
States where other certain TruStageTM ZoneChoice Income Annuity features or benefits vary:
State | Feature or Benefit | Variation |
California | Your refund will be the greater of your Contract Value or your Purchase Payment less withdrawals. If you cancel the Contract, the distribution is taxable as ordinary income to the extent it exceeds your investment in the Contract. A Contract cancellation could have an unfavorable tax impact. If your age as of the Contract Issue Date is at least 60 years old, you must return your Contract within 30 days of receipt. For the Nursing Home or Hospital Waiver: “Nursing Home or Hospital” is replaced with “Facility Care, Home Care, or Community- Based Services.” There is no minimum confinement period. This waiver and the Terminal Illness waiver apply only to full surrenders, not partial withdrawals. The Owner or Annuitant must confined for at least 180 consecutive days after the latter of the Contract Issue Date or the date of change of the Owner or Annuitant. | |
Florida | You must return your Contract within 21 days of receipt (30 days if it is a replacement contract). The requested Payout Date must be at least one year after the Contract Issue Date. |
B-2
Massachusetts | Payout Period Income Options are not based on gender. The amount of each payment depends on all the items listed other than gender. Only proof of age is required for misstatement; proof of gender is not. | |
Pennsylvania | You must return your Contract within 10 days of receipt (30 days if it is an external replacement contract and 45 days if it's an internal replacement contract). |
C-1
APPENDIX C: TERMS DISCLOSED ON PREVIOUS INCOME BENEFIT SUPPLEMENTS
Not Applicable
Registration statements relating to this offering have been filed with the Securities and Exchange
Commission (“SEC”). The Statement of Additional Information ("SAI") dated September 30, 2025 is part of
a registration statement filed on Form N-4. The SAI contains additional information about MEMBERS Life
Insurance Company and the Contracts. The SAI is available free of charge. You may request a copy of
the SAI or make inquiries regarding your Contract by writing to our Administrative Office at 2000 Heritage
Way, Waverly, Iowa 50677, or by calling 1-800-798-5500. This Prospectus and the SAI can also be
obtained from the SEC’s website at www.sec.gov. The SAI is incorporated by reference into this
Prospectus.
Reports and other information about MEMBERS Life Insurance Company, including the SAI, may be
obtained from the SEC's Internet site at http://www.sec.gov and copies of this information may also be
obtained, after paying a duplicating fee, by emailing the SEC at publicinfo@sec.gov.
Dealer Prospectus Delivery Obligations
All dealers that effect transactions in these securities are required to deliver a Prospectus.
EDGAR Contract Identifier: C000263436