N-4
Oct. 21, 2025
USD ($)
Contracts
Index
Options. You may allocate your Purchase Payments to any
or all of the Index Options available under your Contract. The
Contract currently offers Index Options with different types of Crediting Methods, including the Index Protection Strategy with Trigger,
Index Precision Strategy, Index Dual Precision Strategy, Index Guard Strategy, and Index Performance Strategy.
We credit positive, zero, or negative
Performance Credits (i.e.,
positive, zero, or negative interest) at the end of a Term for amounts allocated to an Index Option based, in part, on the performance
of the applicable Index (the Index Return).
Other
Index Options include a feature, either a Buffer or Floor, that provides limited protection from negative Index Returns. Under these other
Index Options, you may lose a significant amount of money if an Index declines in value.
Each
Index Option offers a certain level of protection from negative Index Returns.
Each
Index Option offers a certain level of protection from negative Index Returns.
−
The
Index Protection Strategy with Trigger offers complete (or 100%) protection from negative Index Returns. For example, if at the end of
a Term, the Index Return is -25%, we will apply a 0% Performance Credit to your investment (i.e.,
no loss due to the negative Index Return).
−
Other
Index Options include a feature, either a Buffer or Floor, that provides limited protection from negative Index Returns. Under these other
Index Options, you may lose a significant amount of money if an Index declines in value.
○
Buffer
– A Buffer is the maximum amount of negative Index Return that we
absorb before applying a negative Performance Credit. For example, if at the end of a Term, the Index Return is -25% and the Buffer is
10%, we apply a Performance Credit of -15%, meaning your Contract Value allocated to that Index Option will decrease by 15% since the
Term Start Date. This reflects the negative Index Return that exceeds the protection of the 10% Buffer. The Index Precision Strategy,
Index Dual Precision Strategy, and Index Performance Strategy offer Index Options with Buffers.
○
Floor
– A Floor, on the other hand, is the maximum amount of negative Index Return you absorb as a negative Performance Credit. We absorb
any negative Index Return beyond the Floor. For example, if the Index Return is -25% and the Floor is -10%, we apply a Performance Credit
of -10%, meaning your Contract Value allocated to that Index Option will decrease by 10% since the Term Start Date. This reflects the
negative Index Return down to the -10% Floor and no further reduction in Index Option Value occurring as a result. The Index Guard Strategy
offers Index Options with a Floor.
−
The
current limit on Index loss for an Index Option will not change for the life of that Index Option. However, we reserve the right to add
new Index Options, as well as close Index Options to new Purchase Payments and transfers. As such, the limits on Index loss offered under
the Contract may change from one Term to the next if we add an Index Option or discontinue accepting new allocations into an Index Option.
−
If
we offer a new Index Option with a Buffer or Floor in the future, the Buffer or Floor will be no lower than 5% or -25%, respectively.
−
At
least one Index Option with a Buffer no lower than 5% or Floor no lower than -25%,
or an Index Option that provides complete protection from Index losses, will always be available for renewal under the Contract.
At
least one Index Option with a Buffer no lower than 5% or Floor no lower than -25%,
or an Index Option that provides complete protection from Index losses, will always be available for renewal under the Contract.
The
current limit on Index loss for an Index Option will not change for the life of that Index Option. However, we reserve the right to add
new Index Options, as well as close Index Options to new Purchase Payments and transfers. As such, the limits on Index loss offered under
the Contract may change from one Term to the next if we add an Index Option or discontinue accepting new allocations into an Index Option.
Each
Index Option also has an upside feature, either a Trigger Rate, Cap, and/or Participation Rate, used in the calculation of positive Performance
Credits, if any, that may be credited to your investment at the end of a Term. We may limit the amount you can earn on
an Index Option based on the Trigger Rate, Cap or Participation Rate, as applicable.
−
Trigger
Rate – A Trigger Rate represents the positive Performance
Credit, if any, that may apply on the Term End Date. The Index Precision Strategy, Index Dual Precision Strategy, and Index Protection
Strategy with Trigger offer Index Options with a Trigger Rate.
○
For
the Index Precision Strategy and Index Protection Strategy with Trigger, the Trigger Rate will apply if the Index Return is positive or
zero. For example, if at the end of a Term, the Index Return is 6% and the Trigger Rate is 3%, we apply a Performance Credit of 3%, meaning
your Contract Value allocated to that Index Option will increase by 3% since the Term Start Date.
○
For
the Index Dual Precision Strategy, the Trigger Rate will apply if the Index Return is positive, zero, or to a limited extent, negative.
For example, assume a Trigger Rate of 3% and a Buffer of 10%. If at the end of a Term, the Index Return is positive, zero, or negative
but no lower than -10% (i.e., not in excess of the Buffer), we apply a positive Performance Credit of 3%, meaning your Contract Value
allocated to that Index Option will increase by 3% since the Term Start Date. However, if the negative Index Return were lower than -10%
(i.e., in excess of the Buffer), we apply a negative Performance Credit equal to the negative Index Return plus the Buffer, as previously
summarized above.
Cap
– A Cap represents the maximum positive Performance Credit, if any, applied on a Term End Date. For example, if at the end of a
Term, the Index Return is 12% and the Cap is 10%, we apply a Performance Credit of 10%, meaning your Contract Value allocated to that
Index Option will increase by 10% since the Term Start Date. The Index Guard Strategy and Index Performance Strategy offer Index Options
with a Cap. Index Performance Strategy multi-year Term Index Options have both a Cap and a Participation Rate (as described below).
−
Participation
Rate – A Participation Rate is the percentage that
is multiplied by a positive Index Return in calculating a positive Performance Credit, if any, subject to any applicable Cap. For example,
if at the end of a Term, the Participation Rate is 100%, the Cap is 15%, and the Index Return is 12% (which is lower than the Cap), we
apply a Performance Credit of 12% (i.e.,
100% x 12%). However, if the Index Return were instead 20% (which is higher than the Cap), we would apply the Cap and a Performance Credit
of 15% would be applied. Index Performance Strategy multi-year Term Index Options have both a Participation Rate and a Cap.
−
The
Trigger Rate, Cap, and/or Participation Rate for an Index Option will change from Term to Term, subject to a specified guaranteed minimum
that will not change for the life of that Index Option. Guaranteed minimum Trigger Rates, Caps, and/or Participation Rates vary by Index
Option.
−
If
we add a new Index Option to the Contract in the future, the lowest Trigger Rate, Cap, and Participation Rate that we may establish are
0.05%, 0.10%, and 5.00%, respectively. For example, if the Trigger Rate for a new Index Option is 0.05% and the Index Return is 10%, a
0.05% Performance Credit would be applied. Similarly, if the Cap for a new Index Option is 0.10% and the Index Return is 10%, a 0.10%
Performance Credit would be applied. If the Participation Rate for a new Index Option is 5.00%, the Index Option is uncapped, and the
Index Return is 10%, a 0.50% Performance Credit would be applied.
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FEES
AND EXPENSES |
Prospectus
Location
| ||
|
Are
There
Charges
or
Adjustments
for
Early
Withdrawals?
|
Yes,
your Contract is subject to charges for early withdrawals that differ depending on when
you
purchased the Contract.
●If
you purchase the Contract on or after May 1, 2024, and you withdraw money from
the
Contract within six
years of your last Purchase Payment, you will be assessed a
withdrawal
charge of up to 8%
of the Purchase Payment withdrawn, declining to 0%
over
that time period.
●If
you purchased the Contract on or before April 30, 2024, and you withdraw money
from
the Contract within six years of your last Purchase Payment, you will be
assessed
a withdrawal charge of up to 8.5% of the Purchase Payment withdrawn,
declining
to 0% over that time period. |
Fee
Tables
7.
Expenses and
Adjustments
Appendix
C –
Daily
Adjustment
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|
|
For
example, for Contracts issued on or after May
1, 2024, if you invest $100,000 in the
Contract
and make an early withdrawal, you could pay a withdrawal charge of up to $8,000
(or
$8,500
for Contracts issued on or before April
30, 2024). This loss will be greater if there
is
a negative Daily Adjustment, income taxes, or tax penalties.
In
addition, if you take a full or partial withdrawal from an Index Option on a date other than
the
Term End Date, a Daily Adjustment will apply to the Index Option Value available for
withdrawal.
The Daily Adjustment also applies if before the Term End Date you execute a
Performance
Lock, you annuitize the Contract, we pay a death benefit, or we deduct
Contract
fees and expenses. The Daily Adjustment may be negative depending on the
applicable
Crediting Method. You will lose money if the Daily Adjustment is negative.
●Index
Dual Precision Strategy, Index Precision Strategy, Index Guard Strategy,
and
Index Performance Strategy. Daily Adjustments
under these Crediting Methods
may
be positive, negative, or equal to zero. A negative Daily Adjustment will result in a
loss,
and could result in a loss beyond the protection of the 10%, 20%, or 30% Buffer;
or
-10% Floor, as applicable. The maximum potential loss from a negative Daily
Adjustment
is: -99% for the Index Dual Precision Strategy, Index Precision Strategy,
and
Index Performance Strategy; and -35% for the Index Guard Strategy. For
example,
if you allocate $100,000 to a 1-year Term Index Option with 10% Buffer and
later
withdraw the entire amount before the Term has ended, you could lose up to
$99,000
of your investment. This loss will be greater if you also have to pay a
withdrawal
charge, income taxes, and tax penalties.
●Index
Protection Strategy with Trigger. Daily
Adjustments under this Crediting
Method
may be positive or equal to zero, but cannot be negative. |
| ||
|
Are
There
Transaction
Charges?
|
No.
Other than withdrawal charges and Daily Adjustments that may apply to withdrawals
and
other transactions under the Contract, there are no other transaction charges. |
Not
Applicable | ||
|
|
FEES
AND EXPENSES |
Prospectus
Location
| ||
|
Are
There
Ongoing
Fees
and
Expenses?
|
Yes,
there are ongoing fees and expenses. The table below describes the fees and
expenses
that you may pay each
year, depending on the options you choose.
Please refer
to
your Contract specifications page for information about the specific fees you will pay
each
year based on the options you have elected.
There
is an implicit ongoing fee on Index Options to the extent that your participation
in
Index gains is limited by us through a Cap or Trigger Rate.
This means that 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. This implicit ongoing fee is not
reflected
in the tables below. Additionally,
if we add Index Options with a guaranteed
minimum
Participation Rate less than 100%, the Participation Rate would be an
implicit
ongoing fee and limit Index gains.
|
Fee
Tables
7.
Expenses and
Adjustments
Appendix
A –
Investment
Options
Available
Under
the
Contract
| ||
|
Annual
Fee |
Minimum
|
Maximum
| ||
|
Base
Contract(1)
|
0.01%
|
0.01%
| ||
|
Investment
Options(2)
(Fund
fees and expenses) |
0.65%
|
0.65%
| ||
|
Optional
Benefits Available for an Additional
Charge(3)
(for
a single optional benefit, if elected) |
0.20%
|
0.20%
| ||
|
|
(1)
An
amount attributable to the contract maintenance charge. |
| ||
|
|
(2)
As
a percentage of the AZL Government Money Market Fund's average daily net assets. |
| ||
|
|
(3)
As
a percentage of the Charge Base. This is the current charge for the Maximum Anniversary Value Death
Benefit.
|
| ||
|
|
Because
your Contract is customizable, the choices you make affect how much you will
pay.
To help you understand the cost of owning your Contract, the following table shows the
lowest
and highest cost you could pay each
year, based on current charges. This estimate
assumes
that you do not take withdrawals from the Contract, which
could add a
withdrawal
charge and a negative Daily Adjustment that substantially increase costs.
|
| ||
|
|
Lowest
Annual Cost:
$637
|
Highest
Annual Cost:
$825
|
| |
|
|
Assumes:
●Investment
of $100,000 in the Variable
Option
(even though you cannot select
the
Variable Option for investment)
●5%
annual appreciation
●Traditional
Death Benefit
●No
additional Purchase Payments,
transfers,
or withdrawals
●No
Daily Adjustment |
Assumes:
●Investment
of $100,000 in the Variable
Option
(even though you cannot select
the
Variable Option for investment)
●5%
annual appreciation
●Maximum
Anniversary Value Death
Benefit
with a 0.20% rider fee
●No
additional Purchase Payments,
transfers,
or withdrawals
●No
Daily Adjustment |
| |
Are
There
Charges
or
Adjustments
for
Early
Withdrawals?
Yes,
your Contract is subject to charges for early withdrawals that differ depending on when
you
purchased the Contract.
●If
you purchase the Contract on or after May 1, 2024, and you withdraw money from
the
Contract within six
years of your last Purchase Payment, you will be assessed a
withdrawal
charge of up to 8%
of the Purchase Payment withdrawn, declining to 0%
over
that time period.
●If
you purchased the Contract on or before April 30, 2024, and you withdraw money
from
the Contract within six years of your last Purchase Payment, you will be
assessed
a withdrawal charge of up to 8.5% of the Purchase Payment withdrawn,
declining
to 0% over that time period.
Fee
Tables
7.
Expenses and
Adjustments
Appendix
C –
Daily
Adjustment
For
example, for Contracts issued on or after May
1, 2024, if you invest $100,000 in the
Contract
and make an early withdrawal, you could pay a withdrawal charge of up to $8,000
(or
$8,500
for Contracts issued on or before April
30, 2024). This loss will be greater if there
is
a negative Daily Adjustment, income taxes, or tax penalties.
In
addition, if you take a full or partial withdrawal from an Index Option on a date other than
the
Term End Date, a Daily Adjustment will apply to the Index Option Value available for
withdrawal.
The Daily Adjustment also applies if before the Term End Date you execute a
Performance
Lock, you annuitize the Contract, we pay a death benefit, or we deduct
Contract
fees and expenses. The Daily Adjustment may be negative depending on the
applicable
Crediting Method. You will lose money if the Daily Adjustment is negative.
●Index
Dual Precision Strategy, Index Precision Strategy, Index Guard Strategy,
and
Index Performance Strategy. Daily Adjustments
under these Crediting Methods
may
be positive, negative, or equal to zero. A negative Daily Adjustment will result in a
loss,
and could result in a loss beyond the protection of the 10%, 20%, or 30% Buffer;
or
-10% Floor, as applicable. The maximum potential loss from a negative Daily
Adjustment
is: -99% for the Index Dual Precision Strategy, Index Precision Strategy,
and
Index Performance Strategy; and -35% for the Index Guard Strategy. For
example,
if you allocate $100,000 to a 1-year Term Index Option with 10% Buffer and
later
withdraw the entire amount before the Term has ended, you could lose up to
$99,000
of your investment. This loss will be greater if you also have to pay a
withdrawal
charge, income taxes, and tax penalties.
●Index
Protection Strategy with Trigger. Daily
Adjustments under this Crediting
Method
may be positive or equal to zero, but cannot be negative.
Are
There
Transaction
Charges?
No.
Other than withdrawal charges and Daily Adjustments that may apply to withdrawals
and
other transactions under the Contract, there are no other transaction charges.
Not
Applicable
Are
There
Ongoing
Fees
and
Expenses?
Yes,
there are ongoing fees and expenses. The table below describes the fees and
expenses
that you may pay each
year, depending on the options you choose.
Please refer
to
your Contract specifications page for information about the specific fees you will pay
each
year based on the options you have elected.
There
is an implicit ongoing fee on Index Options to the extent that your participation
in
Index gains is limited by us through a Cap or Trigger Rate.
This means that 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. This implicit ongoing fee is not
reflected
in the tables below. Additionally,
if we add Index Options with a guaranteed
minimum
Participation Rate less than 100%, the Participation Rate would be an
implicit
ongoing fee and limit Index gains.
Fee
Tables
7.
Expenses and
Adjustments
Appendix
A –
Investment
Options
Available
Under
the
Contract
Annual
Fee
Minimum
Maximum
Base
Contract(1)
0.01%
0.01%
Investment
Options(2)
(Fund
fees and expenses)
0.65%
0.65%
Optional
Benefits Available for an Additional
Charge(3)
(for
a single optional benefit, if elected)
0.20%
0.20%
(1)
An
amount attributable to the contract maintenance charge.
(2)
As
a percentage of the AZL Government Money Market Fund's average daily net assets.
(3)
As
a percentage of the Charge Base. This is the current charge for the Maximum Anniversary Value Death
Benefit.
Because
your Contract is customizable, the choices you make affect how much you will
pay.
To help you understand the cost of owning your Contract, the following table shows the
lowest
and highest cost you could pay each
year, based on current charges. This estimate
assumes
that you do not take withdrawals from the Contract, which
could add a
withdrawal
charge and a negative Daily Adjustment that substantially increase costs.
Lowest
Annual Cost:
$637
Highest
Annual Cost:
$825
Assumes:
●Investment
of $100,000 in the Variable
Option
(even though you cannot select
the
Variable Option for investment)
●5%
annual appreciation
●Traditional
Death Benefit
●No
additional Purchase Payments,
transfers,
or withdrawals
●No
Daily Adjustment
Assumes:
●Investment
of $100,000 in the Variable
Option
(even though you cannot select
the
Variable Option for investment)
●5%
annual appreciation
●Maximum
Anniversary Value Death
Benefit
with a 0.20% rider fee
●No
additional Purchase Payments,
transfers,
or withdrawals
●No
Daily Adjustment
(1)
An
amount attributable to the contract maintenance charge.
(3)
As
a percentage of the Charge Base. This is the current charge for the Maximum Anniversary Value Death
Benefit.
(2)
As
a percentage of the AZL Government Money Market Fund's average daily net assets.
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RISKS
|
Prospectus
Location
| ||
|
Is
There a Risk
of
Loss from
Poor
Performance?
|
Yes,
you can lose money by investing in the Contract, including loss of principal and
previous
earnings.
The
maximum amount of loss that you could experience from negative Index Return,
after
taking into account the current limits on Index loss provided under the
Contract,
is: -90% with a 10% Buffer; -80% with a 20% Buffer; -70% with a 30% Buffer;
-10%
with the Floor; and 0% with the Index Protection Strategy with Trigger.
The
limits on Index loss offered under the Contract may change from one Term to the
next
if we add an Index Option or discontinue accepting new allocations into an
Index
Option. However, at least one Index Option with a Buffer no lower than 5% or
Floor
no lower than -25%, or an Index Option that provides complete protection from
Index
losses, will always be available for renewal under the Contract.
|
Principal
Risks of
Investing
In the
Contract
4.
Index Options
6.
Valuing Your
Contract
–
Calculating
Performance
Credits
| ||
|
Is
This a
Short-Term
Investment?
|
No,
this Contract is not a short-term investment and is not appropriate if you need ready
access
to cash.
• Considering
the benefits of tax deferral and long-term income, the Contract is generally
more
beneficial to investors with a long investment time horizon.
• Withdrawals
are subject to income taxes, and may also be subject to a 10% additional
federal
tax for amounts withdrawn before age 59 1∕2.
• If,
within six years after we receive a Purchase Payment, you take a full or partial
withdrawal,
withdrawal charges will apply. A withdrawal charge will reduce your Contract
Value
or the amount of money that you actually receive. Withdrawals may reduce or end
Contract
guarantees.
• Amounts
invested in an Index Option must be held in the Index Option for the full Term
before
they can receive a Performance Credit. We apply a Daily Adjustment if, before the
Term
End Date, you take a full or partial withdrawal, you execute a Performance Lock,
you
annuitize the Contract, we pay a death benefit, or we deduct Contract fees and
expenses.
• The
Daily Adjustment may be negative with the Index Dual Precision Strategy, Index
Precision
Strategy, Index Guard Strategy, and Index Performance Strategy. You will lose
money
if the Daily Adjustment is negative.
• Withdrawals
and other deductions from an Index Option prior to a Term End Date will
result
in a proportionate reduction to your Index Option Base. The proportionate reduction
could
be greater than the amount withdrawn or deducted. Reductions to your Index
Option
Base will result in lower Index Option Values for the remainder of the Term and
lower
gains (if any) on the Term End Date.
• On
the Term End Date, you can transfer assets invested in an Index Option by changing
your
allocation instructions. If you do not change your allocation instructions, you will
continue
to be invested in the same Index Option with a new Term Start Date. The new
Term
will be subject to the applicable renewal Trigger Rate, Cap, and/or Participation
Rate.
|
Principal
Risks of
Investing
In the
Contract
4.
Index Options
6.
Valuing Your
Contract
7.
Expenses and
Adjustments
Appendix
C –
Daily
Adjustment | ||
|
|
RISKS
|
Prospectus
Location
| ||
|
What
are the
Risks
Associated
with
the
Investment
Options?
|
• An
investment in the Contract is subject to the risk of poor investment performance and
can
vary depending on the performance of the Variable Option and the Index Options
available
under the Contract.
• The
Variable Option and each Index Option have their own unique risks.
• You
should review the Fund’s prospectus and disclosures, including risk factors, before
making
an investment decision.
• Caps
and Trigger Rates will limit positive Performance Credits (e.g., limited upside). This
may
result in earning less than the Index Return.
– For
example, if at the end of a 1-year Term, the Index Return is 25% and the Cap is
15%,
we apply a Performance Credit of 15%, meaning your Contract Value allocated
to
that Index Option will increase by 15% since the Term Start Date. If at the end of the
Term,
the Index Return is 6% and the Trigger Rate is 3%, we apply a Performance
Credit
of 3%, meaning your Contract Value allocated to that Index Option will increase
by
3% since the Term Start Date.
• The
Buffer or Floor will limit negative Performance Credits (e.g., limited protection in the
case
of Index decline). However,
you bear the risk for all Index losses that exceed
the
Buffer. You also bear the risk for Index losses down to the Floor.
– For
example, if at the end of a Term, the Index Return is -25% and the Buffer is 10%,
we
apply a Performance Credit of -15%, meaning your Contract Value allocated to that
Index
Option will decrease by 15% since the Term Start Date. If the Index Return is
-25%
and the Floor is -10%, we apply a Performance Credit of -10%, meaning your
Contract
Value allocated to that Index Option will decrease by 10% since the Term
Start
Date.
• The
Indexes are price return indexes, not total return indexes. This means that the Index
Options
do not receive any dividends payable on these securities. The Index Options also
do
not directly participate in the returns of the Indexes or the Indexes’ component
securities.
This will reduce the Index Return and may cause the Index to underperform a
direct
investment in the securities composing the Index. |
Principal
Risks of
Investing
In the
Contract
| ||
|
What
are the
Risks
Related
to
the
Insurance
Company?
|
An
investment in the Contract is subject to the risks related to us. All obligations,
guarantees
or benefits of the Contract, including those relating to the Index Options, are the
obligations
of Allianz Life and are subject to our claims-paying ability and financial strength.
More
information about Allianz Life, including our financial strength ratings, is available
upon
request by visiting https://www.allianzlife.com/about/financial-ratings, or contacting us
at
(800) 624-0197. |
Principal
Risks of
Investing
In the
Contract
| ||
• Yes,
there are limits on the Investment Options.
• Certain
Index Options may not be available under your Contract.
• We
can add new Index Options to your Contract in the future.
• You
cannot allocate Purchase Payments to the Variable Option. The sole purpose of the
Variable
Option is to hold Purchase Payments until they are transferred to your selected
Index
Options.
• We
restrict additional Purchase Payments during the Accumulation Phase. Each Index
Year,
you cannot add more than your initial amount (i.e., the total of all Purchase
Payments
received before the first Quarterly Contract Anniversary of the first Contract
Year)
without our prior approval.
• We
do not accept additional Purchase Payments during the Annuity Phase.
• We
typically only allow assets to move into the Index Options on the Index Effective Date
and
on subsequent Index Anniversaries as discussed in section 3, Purchasing the
Contract
– Allocation of Purchase Payments and Contract Value Transfers. However, if
you
execute an Early Reallocation, we will move assets into an Index Option on the
Business
Day we receive your Early Reallocation request in Good Order.
• You
can typically transfer Index Option Value only on Term End Dates. However, you can
transfer
assets out of an Index Option before the Term End Date by first executing a
Performance
Lock and then either requesting an Early Reallocation with new allocation
instructions
or changing your allocation instructions before the next Index Anniversary.
For
more information, see section 6, Valuing Your Contract – Performance Locks and
Early
Reallocations.
• We
do not allow assets to move into an established Index Option until the Term End Date.
If
you request to allocate a Purchase Payment into an established Index Option on an
Index
Anniversary that is not a Term End Date, we will allocate those assets to the same
Index
Option with a new Term Start Date.
• We
reserve the right to substitute the Fund in which the Variable Option invests. We also
reserve
the right to close Index Options to new Purchase Payments and transfers, and to
substitute
Indexes either on a Term Start Date or during a Term.
• We
also reserve the right to decline any or all Purchase Payments at any time on a
nondiscriminatory
basis.
• Caps,
Trigger Rates, and Participation Rates will change from one Term to the next
subject
to their contractual minimum guarantees.
• The
10%, 20%, and 30% Buffers, and -10% Floors for the currently available Index
Options
do not change. However, if we add a new Index Option to your Contract after the
Issue
Date, we establish the Buffer or Floor for it on the date we add the Index Option to
your
Contract. For a new Index Option, the minimum Buffer is 5% and the minimum Floor
is
-25%.
Yes,
there are restrictions on Contract benefits.
• We
do not allow Performance Locks to occur on Term End Dates. We will not execute
your
request for a Performance Lock on Index Protection Strategy with Trigger Index
Options
if the Daily Adjustment is zero. This may limit your ability to take advantage of the
benefits
of the Early Reallocation feature. We do not accept Early Reallocation requests
within
14 calendar days before an Index Anniversary. You are limited to twelve Early
Reallocation
requests each Index Year.
• We
reserve the right to discontinue or modify the Minimum Distribution Program.
• The
death benefits are only available during the Accumulation Phase. Upon annuitization,
these
benefits will end.
• The
Traditional Death Benefit may not be modified, but it will terminate if you take
withdrawals
that reduce both the Contract Value and Guaranteed Death Benefit Value to
zero.
Withdrawals may reduce the Traditional Death Benefit’s Guaranteed Death Benefit
Value
by more than the value withdrawn and could end the Traditional Death Benefit.
• The
optional Maximum Anniversary Value Death Benefit may not be modified.
Withdrawals
may reduce the Maximum Anniversary Value Death Benefit’s Guaranteed
Death
Benefit Value by more than the value withdrawn and will end the Maximum
Anniversary
Value Death Benefit if the withdrawals reduce both the Contract Value and
Guaranteed
Death Benefit Value to zero.
• Consult
with a tax professional to determine the tax implications of an investment in and
withdrawals
from or payments received under the Contract.
• If
you purchased the Contract as an individual retirement annuity or through a custodial
individual
retirement account, you do not get any additional tax benefit under the
Contract.
• Generally,
earnings under a Non-Qualified Contract are taxed at ordinary income rates
when
withdrawn, and may also be subject to a 10% additional federal tax for amounts
withdrawn
before age 59 1∕2.
• Generally,
distributions from Qualified Contracts are taxed at ordinary income tax rates
when
withdrawn, and may also be subject to a 10% additional federal tax for amounts
withdrawn
before age 59 1∕2.
Your
Financial Professional may receive compensation for selling this Contract to you, in
the
form of commissions, additional cash benefits (e.g., cash bonuses), and non-cash
compensation.
We and/or our wholly owned subsidiary distributor may also make marketing
support
payments to certain selling firms for marketing services and costs associated with
Contract
sales. This conflict of interest may influence your Financial Professional to
recommend
this Contract over another investment for which the Financial Professional is
not
compensated or compensated less.
Whether
to exchange your existing Contract for a new contract is a decision that each
investor
should make based on their personal circumstances and financial objectives.
However,
in making this decision you should be aware that some Financial Professionals
may
have a financial incentive to offer you a new contract in place of one you already own.
You
should only exchange your Contract if you determine, after comparing the features,
risks,
and fees of both contracts, including 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.
Fee Tables
The following tables
describe the fees, expenses, and adjustments that you will pay when buying, owning, and surrendering or making withdrawals from an Investment
Option or from the Contract. Please refer to your Contract specifications 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 that you buy the Contract, surrender or make withdrawals from an Investment
Option or from the Contract, or transfer Contract Value between Investment Options. State premium taxes may also be deducted.
Transaction
Expenses
Withdrawal Charge During
Your Contract’s First Phase, the Accumulation Phase(1)
(as a percentage of each Purchase Payment withdrawn)(2)
(as a percentage of each Purchase Payment withdrawn)(2)
|
Number
of Complete
Years
Since
Purchase
Payment |
Withdrawal
Charge Amount | |
|
Contracts
issued
on
or before
April
30, 2024 |
Contracts
issued
on
or after
May
1, 2024 | |
|
0
|
8.5%
|
8%
|
|
1
|
8%
|
8%
|
|
2
|
7%
|
7%
|
|
3
|
6%
|
6%
|
|
4
|
5%
|
5%
|
|
5
|
4%
|
4%
|
|
6
years or more |
0%
|
0%
|
(1)
The
Contract provides a free withdrawal privilege that allows you to withdraw 10% of your total Purchase Payments annually without incurring
a withdrawal charge, as discussed in section 8, Access to Your Money – Free Withdrawal Privilege.
(2)
The Withdrawal Charge Basis is the total amount under
your Contract that is subject to a withdrawal charge, as discussed in section 7, Expenses and Adjustments – Withdrawal Charge.
The next table describes
the Daily Adjustment, in addition to any transaction expenses, that applies if all or a portion of the Contract Value is removed from
an Index Option before the end of a Term.
Adjustments
|
|
Index
Protection Strategy
with
Trigger |
Index
Dual Precision Strategy,
Index
Precision Strategy,
and
Index
Performance Strategy |
Index
Guard
Strategy
|
|
Daily
Adjustment Maximum Potential Loss |
0%
|
99%
|
35%
|
|
(as
a percentage of Index Option Value, applies for
distributions
from an Index Option before any Term
End
Date)(1)
|
|
|
|
(1)
This table shows the maximum potential loss due to
the application of the Daily Adjustment (e.g., maximum loss could occur if there is a total distribution within a Term at a time when
the Index price has declined to zero). The Daily Adjustment could result in a loss beyond the protection of the 10%, 20%, or 30% Buffer;
or -10% Floor. The Daily Adjustment applies if, before the Term End Date, you take a full or partial withdrawal, you execute a Performance
Lock, you annuitize the Contract, we pay a death benefit, or we deduct Contract fees or expenses. The actual Daily Adjustment calculation
is determined by a formula described in Appendix C.
The next table describes
the fees and expenses that you will pay each year during the time that you own the Contract (not including Fund fees and expenses). If
you purchased the optional Maximum Anniversary Value Death Benefit, you pay additional charges, as shown below.
Annual
Contract Expenses
|
Administrative
Expenses (or contract maintenance charge)(1)
(per
year) |
$50
|
|
Optional
Benefit Expenses – Maximum Anniversary Value Death Benefit
(as
a percentage of the Charge Base) |
0.20%
|
(1)
Referred
to as the “contract maintenance charge” in the Contract and elsewhere in this prospectus. Waived if the Contract Value is
at least $100,000. During the Annuity Phase, we deduct the contract maintenance charge proportionately from each Annuity Payment. See
section 7, Expenses and Adjustments – Contract Maintenance Charge (Administrative Expenses).
In addition to the
fees described above, we may limit the amount you can earn on the Index Options. This means your returns may be lower than the Index’s
returns. In return for accepting a limit on Index gains, you will receive some protection from Index losses.
The
next item shows the total operating expenses charged by the Fund that you may pay periodically during the time that you own the Contract.
Expenses shown may change over time and may be higher or lower in the future. More information about the Fund, including its annual expenses,
may be found in Appendix A – Investment Options Available Under the Contract.
Annual
Fund Expenses
|
(expenses
that are deducted from Fund assets, including management fees,
distribution
and/or service (12b-1) fees, and other expenses) |
0.65%
|
Example
This Example is
intended to help you compare the cost of investing in the Variable Option with the cost of investing in other annuity contracts that offer
variable options. These costs include transaction expenses, annual Contract expenses, and annual Fund expenses.
The Example assumes
all Contract Value is allocated to the Variable Option, even though you cannot instruct us to allocate Purchase Payments to the Variable
Option. The Example does not reflect the Daily Adjustment. Your costs could differ from those shown below when you invest in the
Index Options.
The Example assumes
that you invest $100,000 in the Variable Option for the time periods indicated. The Example also assumes that your investment has a 5%
return each year and that you elected the Maximum Anniversary Value Death Benefit for an additional charge. Although your actual
costs may be higher or lower, based on these assumptions, your costs would be:
(1)
If
you surrender your Contract (take a full withdrawal) at the end of the applicable time period:
|
|
1
Year |
3
Years |
5
Years |
10
Years |
|
Contracts
issued on or before April 30, 2024 |
$9,365
|
$9,704
|
$9,699
|
$10,455
|
|
Contracts
issued on or after May 1, 2024 |
$8,865
|
$9,704
|
$9,699
|
$10,455
|
(2)
If
you fully annuitize your Contract at the end of the applicable time period.
|
|
1
Year |
3
Years |
5
Years |
10
Years |
|
Contracts
issued on or before April 30, 2024 |
N/A
|
$2,704
|
$4,699
|
$10,455
|
|
Contracts
issued on or after May 1, 2024 |
N/A*
|
$2,704
|
$4,699
|
$10,455
|
*
The
earliest available Annuity Date is the second Index Anniversary.
(3)
If
you do not surrender your Contract.
|
|
1
Year |
3
Years |
5
Years |
10
Years |
|
Contracts
issued on or before April 30, 2024 |
$865
|
$2,704
|
$4,699
|
$10,455
|
|
Contracts
issued on or after May 1, 2024 |
$865
|
$2,704
|
$4,699
|
$10,455
|
Transaction
Expenses
Withdrawal Charge During
Your Contract’s First Phase, the Accumulation Phase(1)
(as a percentage of each Purchase Payment withdrawn)(2)
(as a percentage of each Purchase Payment withdrawn)(2)
|
Number
of Complete
Years
Since
Purchase
Payment |
Withdrawal
Charge Amount | |
|
Contracts
issued
on
or before
April
30, 2024 |
Contracts
issued
on
or after
May
1, 2024 | |
|
0
|
8.5%
|
8%
|
|
1
|
8%
|
8%
|
|
2
|
7%
|
7%
|
|
3
|
6%
|
6%
|
|
4
|
5%
|
5%
|
|
5
|
4%
|
4%
|
|
6
years or more |
0%
|
0%
|
(1)
The
Contract provides a free withdrawal privilege that allows you to withdraw 10% of your total Purchase Payments annually without incurring
a withdrawal charge, as discussed in section 8, Access to Your Money – Free Withdrawal Privilege.
(2)
The Withdrawal Charge Basis is the total amount under
your Contract that is subject to a withdrawal charge, as discussed in section 7, Expenses and Adjustments – Withdrawal Charge.
The next table describes
the Daily Adjustment, in addition to any transaction expenses, that applies if all or a portion of the Contract Value is removed from
an Index Option before the end of a Term.
Adjustments
|
|
Index
Protection Strategy
with
Trigger |
Index
Dual Precision Strategy,
Index
Precision Strategy,
and
Index
Performance Strategy |
Index
Guard
Strategy
|
|
Daily
Adjustment Maximum Potential Loss |
0%
|
99%
|
35%
|
|
(as
a percentage of Index Option Value, applies for
distributions
from an Index Option before any Term
End
Date)(1)
|
|
|
|
(1)
This table shows the maximum potential loss due to
the application of the Daily Adjustment (e.g., maximum loss could occur if there is a total distribution within a Term at a time when
the Index price has declined to zero). The Daily Adjustment could result in a loss beyond the protection of the 10%, 20%, or 30% Buffer;
or -10% Floor. The Daily Adjustment applies if, before the Term End Date, you take a full or partial withdrawal, you execute a Performance
Lock, you annuitize the Contract, we pay a death benefit, or we deduct Contract fees or expenses. The actual Daily Adjustment calculation
is determined by a formula described in Appendix C.
(2)
The Withdrawal Charge Basis is the total amount under
your Contract that is subject to a withdrawal charge, as discussed in section 7, Expenses and Adjustments – Withdrawal Charge.
The next table describes
the fees and expenses that you will pay each year during the time that you own the Contract (not including Fund fees and expenses). If
you purchased the optional Maximum Anniversary Value Death Benefit, you pay additional charges, as shown below.
Annual
Contract Expenses
|
Administrative
Expenses (or contract maintenance charge)(1)
(per
year) |
$50
|
|
Optional
Benefit Expenses – Maximum Anniversary Value Death Benefit
(as
a percentage of the Charge Base) |
0.20%
|
(1)
Referred
to as the “contract maintenance charge” in the Contract and elsewhere in this prospectus. Waived if the Contract Value is
at least $100,000. During the Annuity Phase, we deduct the contract maintenance charge proportionately from each Annuity Payment. See
section 7, Expenses and Adjustments – Contract Maintenance Charge (Administrative Expenses).
The
next item shows the total operating expenses charged by the Fund that you may pay periodically during the time that you own the Contract.
Expenses shown may change over time and may be higher or lower in the future. More information about the Fund, including its annual expenses,
may be found in Appendix A – Investment Options Available Under the Contract.
Annual
Fund Expenses
|
(expenses
that are deducted from Fund assets, including management fees,
distribution
and/or service (12b-1) fees, and other expenses) |
0.65%
|
|
|
1
Year |
3
Years |
5
Years |
10
Years |
|
Contracts
issued on or before April 30, 2024 |
$9,365
|
$9,704
|
$9,699
|
$10,455
|
|
Contracts
issued on or after May 1, 2024 |
$8,865
|
$9,704
|
$9,699
|
$10,455
|
|
|
1
Year |
3
Years |
5
Years |
10
Years |
|
Contracts
issued on or before April 30, 2024 |
N/A
|
$2,704
|
$4,699
|
$10,455
|
|
Contracts
issued on or after May 1, 2024 |
N/A*
|
$2,704
|
$4,699
|
$10,455
|
|
|
1
Year |
3
Years |
5
Years |
10
Years |
|
Contracts
issued on or before April 30, 2024 |
$865
|
$2,704
|
$4,699
|
$10,455
|
|
Contracts
issued on or after May 1, 2024 |
$865
|
$2,704
|
$4,699
|
$10,455
|
Principal Risks of Investing In the Contract
The Contract involves certain risks
that you should understand before investing. You should carefully consider your income needs and risk tolerance to determine whether the
Contract is appropriate for you. The level of risk you bear and your potential investment performance will differ depending on the Index
Options you choose.
Risk
of Loss
Returns on securities and securities
Indexes can vary substantially, which may result in investment losses. The historical performance of the Investment Options does not guarantee
future results. It is impossible to predict whether underlying investment values will fall or rise. Trading prices of the securities underlying
the Investment Options are influenced by economic, financial, regulatory, geographic, judicial, political and other complex and interrelated
factors. These factors can affect capital markets generally and markets on which the underlying securities are traded and these factors
can influence the performance of the underlying securities. Depending on your individual circumstances (e.g.,
your selected Index Options and the timing of any Purchase Payments, transfers, or withdrawals), you may experience (perhaps significant)
negative returns under the Contract. You should consult with a Financial Professional.
The Variable
Option does not provide any protection against loss of principal. You
can lose principal and previous earnings for Purchase Payments held in the Variable Option and such losses could be significant.
If you allocate Purchase Payments
or transfer Contract Value to an Index Option with the Index Dual Precision Strategy, Index Precision Strategy, Index Guard
Strategy, or Index Performance Strategy, negative Index Returns may cause Performance Credits to be either negative after application
of the 10%, 20%, or 30% Buffer, or negative down to the -10% Floor. For the Index Dual Precision Strategy and Index Performance Strategy,
we apply the Buffer for the entire Term length; we do not apply the Buffer annually on a 3-year or 6-year Term Index Option. Ongoing
deductions we make for Contract fees and expenses could also cause amounts available for withdrawal to be less than what you invested
even if Index performance has been positive. You
can lose principal and previous earnings if you allocate Purchase Payments or transfer Contract Value to the Index Options with the Index
Dual Precision Strategy, Index Precision Strategy, Index Guard Strategy, or Index Performance Strategy, and such losses could
be significant. If you allocate Purchase Payments or transfer Contract Value to the Index Options with the Index Protection Strategy with
Trigger you can also lose principal and previous earnings if you do not receive a Performance Credit, or if the Contract fees and
expenses are greater than the Performance Credit.
The maximum potential
negative Performance Credit for the Index Dual Precision Strategy, Index Precision Strategy, and Index Performance Strategy is based
on the Buffer. If the Buffer is 10%, the maximum negative Performance Credit is -90%; if the Buffer is 20%, the maximum negative Performance
Credit is -80%; and if the Buffer is 30%, the maximum negative Performance Credit is -70%. The maximum potential negative Performance
Credit for the Index Guard Strategy is the -10% Floor. Such
losses will be greater if you take a withdrawal that is subject to a withdrawal charge, or is a deduction of Contract fees and expenses.
At least one Index Option with a Buffer no lower than 5% or Floor no lower than -25%, or an Index Option that provides complete protection
from Index losses, will always be available for renewal under the Contract.
Early
Withdrawal Risk
We designed the Contract to be a
long-term investment that you can use to help build and provide income for retirement. The Contract is not suitable for short-term investment.
If you need to take a full or partial
withdrawal during the withdrawal charge period we deduct a withdrawal charge unless the withdrawal is a Penalty-Free Withdrawal. While
Penalty-Free Withdrawals provide some liquidity, they are permitted in only limited amounts or in special circumstances. If you need to
withdraw most or all of your Contract Value in a short period, you will exceed the Penalty-Free Withdrawal amounts available to you and
incur withdrawal charges. For more information on the withdrawal charge, see the Fee Tables and section 7, Expenses and Adjustments –
Withdrawal Charge.
We calculate the withdrawal charge
as a percentage of your Purchase Payments, not Contract Value. Consequently, if the Contract Value has declined since you made a Purchase
Payment, it is possible the percentage of Contract Value withdrawn to cover the withdrawal charge would be greater than the withdrawal
charge percentage. For example, assume you buy the Contract with a single Purchase Payment of $10,000. If your Contract Value in the fifth
year is $8,000 and you take a full withdrawal a 5% withdrawal charge applies. The total withdrawal charge would be $500 (5% of $10,000).
As your Contract Value is less than $100,000, we will also deduct the $50 contract maintenance charge. This results in you receiving $7,450. For
purposes of this example, we have not factored in any final rider fees that may apply and be deducted in connection with a full withdrawal.
In addition, upon a full withdrawal,
the free withdrawal privilege is not available to you, and we apply a withdrawal charge against Purchase Payments that are still within
their withdrawal charge period, including amounts previously withdrawn under the free withdrawal privilege. On
a full withdrawal, your Withdrawal Charge Basis may be greater than your Contract Value because the following reduce your Contract Value,
but do not reduce your Withdrawal Charge Basis: deductions we make for prior Penalty-Free Withdrawals and Contract fees or expenses; and/or
poor performance.
Amounts withdrawn from this Contract
are subject to income taxes and may also be subject to a 10% additional federal tax for amounts withdrawn before age 59 1∕2.
We only apply Performance Credits
to the Index Options once each Term on the Term End Date, rather than daily. In the interim, we calculate Index Option Values based on
the Daily Adjustment. For more information, see “Risks Associated with the Daily Adjustment” later in this section. The
Variable Option is not subject to the Daily Adjustment. Any assets removed from an Index Option during the Term for withdrawals you take
(including Penalty-Free Withdrawals), Annuity Payments, or deductions we make for Contract fees and expenses, or if we pay a death benefit,
will not be eligible to
receive a Performance
Credit on the Term End Date. These removed assets will not receive the full benefit of the Index Value, Index Return, and the 10%, 20%,
or 30% Buffer; or -10% Floor that would have been available on the Term End Date, and losses could exceed the protection offered by the
10%, 20%, or 30% Buffer; or -10% Floor. You will receive a Performance Credit only on any unlocked Index Option Value remaining in an
Index Option on the Term End Date.
You can typically transfer Index
Option Value among the Index Options only on Term End Dates. At other times, you can only move assets out of an Index Option by taking
a full or partial withdrawal, or entering the Annuity Phase. However, you can transfer assets out of an Index Option before the Term End
Date by executing a Performance Lock. Once an Index Option is locked, you can transfer assets out of it on the Index Anniversary that
occurs on or immediately after the Lock Date. For a 3-year or 6-year Term Index Option this means you can transfer out of the locked Index
Option before the Term End Date by executing a Performance Lock on or before the second Index Anniversary of a 3-year Term, or on or before
the fifth Index Anniversary of a 6-year Term. You can also transfer assets out of any locked Index Option, including 1-year Term
Index Options, before the Term End Date by requesting an Early Reallocation. You may execute twelve Early Reallocations each Index Year,
but each request can involve multiple locked Index Options. These restrictions may limit your ability to react to changes in market conditions.
You should consider whether investing in an Index Option is consistent with your financial needs.
Index
Risks
Index Option returns depend on the
performance of an Index although you are not directly invested in the Index or in the securities tracked by the Index. You will have no
voting rights, no rights to receive cash dividends or other distributions, and no other rights with respect to the companies that make
up the Indexes. Because the S&P 500®
Index, Russell 2000®
Index, Nasdaq-100®
Index, EURO STOXX 50®
and iShares®
MSCI Emerging Markets ETF are each comprised of a collection of equity securities, in each case the value of the component securities
is subject to market risk, or the risk that market fluctuations may cause the value of the component securities to go up or down, sometimes
rapidly and unpredictably. In addition, the value of equity securities may decline for reasons directly related to the issuers of the
securities.
The S&P 500®
Index, Russell 2000®
Index, Nasdaq-100®
Index, and EURO STOXX 50®
are all “price return indexes,” not “total return indexes,” and therefore do not reflect dividends paid on
the securities composing the Index. This will reduce the Index Return and may cause the Index to underperform a direct investment in the
securities composing the Index. For the EURO STOXX 50®,
this Index is a euro “price return index” and Index Returns are determined without any exchange rate adjustment. Because
Index performance for the iShares®
MSCI Emerging Markets ETF is based on the ETF’s closing share price, Index performance is calculated on a “price return”
basis, not a “total return” basis, and therefore does not reflect dividends paid on the securities in which the ETF invests.
In addition, an ETF deducts fees and costs, which reduce Index performance. These factors will reduce the Index Return and may cause the
ETF to underperform a direct investment in the ETF or the securities in which the ETF invests.
In addition to the foregoing, each
Index has its own unique risks, as follows:
●
S&P
500®
Index: This Index is comprised of equity securities issued
by large-capitalization (“large cap”) U.S. companies. In general, large capitalization companies may be unable to respond
quickly to new competitive challenges or changes in their industries, and may not be able to attain the high growth rate of successful
smaller companies.
●
Russell
2000®
Index: This Index is comprised of equity securities of
small-capitalization (“small-cap”) U.S. companies. Generally, the securities of small-cap companies are more volatile and
riskier than the securities of large-cap companies.
●
Nasdaq-100®
Index: This Index is comprised of equity securities of
the largest U.S. and non-U.S. companies listed on the Nasdaq Stock Market, including companies across all major industry groups except
financial companies. In general, large-capitalization companies may be unable to respond quickly to new competitive challenges or changes
in their industries, and may not be able to attain the high growth rate of successful smaller companies. To the extent that the Index
is comprised of securities issued by companies in a particular sector, those securities may not perform as well as the securities of companies
in other sectors or the market as a whole. Also, any securities issued by non-U.S. companies are subject to the risks related to investments
in foreign markets (e.g.,
increased volatility; changing currency exchange rates; and greater political, regulatory, and economic uncertainty).
●
EURO
STOXX 50®:
This Index is comprised of the equity securities of large-capitalization companies in the Eurozone. In general, large-capitalization companies
may be unable to respond quickly to new competitive challenges or changes in their industries, and may not be able to attain the high
growth rate of successful smaller companies. Securities issued by non-U.S. companies are subject to the risks related to investments in
foreign markets (e.g.,
increased volatility; changing currency exchange rates; and greater political, regulatory, and economic uncertainty).
iShares®
MSCI Emerging Markets ETF: The iShares MSCI Emerging Markets
ETF seeks to track the investment results of an index composed of large- and mid-capitalization emerging market equities. Investments
in emerging market issuers may be subject to a greater risk of loss than investments in issuers located or operating in more developed
markets. Emerging markets may be more likely to experience inflation, social instability, political turmoil or rapid changes in economic
conditions than more developed markets. Companies in many emerging markets are not subject to the same degree of regulatory requirements,
accounting standards or auditor oversight as companies in more developed countries, and as a result, information about the securities
in which the ETF invests may be less reliable or complete. Emerging markets often have less reliable securities valuations and greater
risk associated with custody of securities than developed markets. There may be significant obstacles to obtaining information necessary
for investigations into or litigation against companies and shareholders may have limited legal remedies.
Risks
Associated with the Daily Adjustment
The Daily Adjustment is how we calculate
Index Option Values on Business Days other than the Term Start Date or Term End Date. The
Variable Option is not subject to the Daily Adjustment.
The Daily Adjustment can affect the amounts available for withdrawal, Performance Locks, annuitization, payment of the death benefit,
and the Contract Value used to determine the contract maintenance charge and Charge Base for the rider fee. The Daily Adjustment
can be less than the Trigger Rate or Cap even if the current Index return during the Term is greater than the Trigger Rate or Cap. In
addition, even though the current Index return during the Term may be positive, the Daily Adjustment may be negative due to changes in
Proxy Value inputs, such as volatility, dividend yield, and interest rate. However, the Daily Adjustment for the Index Protection Strategy
with Trigger cannot be negative. The Daily Adjustment is generally negatively affected by:
●
interest
rate decreases,
●
dividend
rate increases,
●
poor
market performance, and
●
the
expected volatility of Index prices. Generally, increases in the expected volatility of Index prices negatively affect the Index Dual
Precision Strategy, Index Precision Strategy, and Index Performance Strategy 1-year Term Index Options, while decreases in the expected
volatility of Index prices negatively affect the Index Guard Strategy. For the Index Performance Strategy 3-year and 6-year Term Index
Options, the impact of changes in the expected volatility of Index prices is dependent on the market environment and the applicable Caps
and Participation Rates. For the Index Protection Strategy with Trigger, the impact of changes in the expected volatility of Index prices
is dependent on the market environment.
The Daily Adjustment for Index Options
with a Term length of more than 1 year (3-year and 6-year Term Index Options and Early Reallocation to a 1-year Term Index Option) may
be more negatively impacted by changes in the expected volatility of Index prices than 1-year Term Index Options due to the difference
in Term length. Also, the risk of a negative Daily Adjustment is generally greater for Index Options with a Term length of more than 1
year than for 1-year Term Index Options due to the Term length. The Index Performance Strategy 3-year and 6-year Term Index Options with
a Participation Rate above 100% may also have larger fluctuations in the Daily Adjustment than Index Options either without a Participation
Rate, or with a Participation Rate equal to 100%. For shorter Term lengths, there is more certainty in both the final Index Values and
how Trigger Rates, Caps, Buffers, and Floors determine Performance Credits. This means there may be less fluctuation in the Daily Adjustment
due to changes in Index return for Index Options with shorter Term lengths.
If you take a withdrawal from an
Index Option with the Index Dual Precision Strategy, Index Precision Strategy, Index Guard Strategy, or Index Performance Strategy
before the Term End Date, you could lose
principal and previous earnings because of the Daily Adjustment even
if Index performance is positive on that day or has been positive since the Term Start Date.
If the current Index return during the Term is negative, the Daily Adjustment for these Index Options could result in losses greater than
the protection provided by the 10%, 20%, or 30% Buffer; or -10% Floor.
The maximum potential loss from a negative
Daily Adjustment is: -99% for the Index Dual Precision Strategy, Index Precision Strategy, and Index Performance Strategy; and -35%
for the Index Guard Strategy. Such
losses will be greater if you take a withdrawal that is subject to a withdrawal charge, or is a deduction of Contract fees and expenses.
Risks
Associated with Calculation of Performance Credits
We calculate Performance Credits
each Term on the Term End Date. Because we calculate Index Returns only on a single date in time, you may experience negative or flat
performance even though the Index you selected for a given Crediting Method experienced gains through some, or most, of the Term. If you
allocate Purchase Payments or transfer Contract
Value to the
Index Options with Index Protection Strategy with Trigger, positive returns are limited by the Trigger Rates. You are not subject, however,
to potential negative Performance Credits. The Trigger Rates on the Index Dual Precision Strategy and Index Precision Strategy Index
Options, and the Caps on the Index Guard Strategy and Index Performance Strategy Index Options also limit positive returns and could cause
performance to be lower than it would otherwise have been if you invested in a mutual fund or exchange-traded fund designed to track the
performance of the applicable Index. For the Index Performance Strategy, we apply the Cap and any Participation Rate for the entire Term
length; we do not
apply the Cap and any Participation Rate annually on a
3-year or 6-year Term Index Option. For the Index Dual Precision Strategy, we apply the Trigger Rate for the entire Term length; we do
not
apply the Trigger Rate annually on a 3-year or 6-year Term Index Option.
The Index Options do not receive
any dividends payable on these securities. The Index Options also do not directly participate in the returns of the Indexes or the Indexes’
component securities. Index Returns would be higher if they included the dividends from the component securities.
Trigger Rates, Caps, and Participation
Rates may be adjusted on the next Term Start Date and may vary significantly from Term to Term. Changes to Trigger Rates, Caps, and Participation
Rates may significantly affect the Performance Credit you receive. For more information, see the “Risks Associated with Changes
to Trigger Rates, Caps, and Participation Rates” discussion later in this section.
The Crediting Methods only capture
Index Values on the Term Start Date and Term End Date, so you will bear the risk that the Index Value might be abnormally low on these
days.
Risks
Associated with Performance Locks and Early Reallocations
If a Performance Lock is executed:
●
You
will no longer participate in Index performance, positive or negative, for the remainder of the Term for the locked Index Option. This
means that under no circumstances will your Index Option Value increase during the remainder of the Term for a locked Index Option, and
you will begin a new Index Option with a new Term Start Date on the next Index Anniversary that occurs on or immediately after the
Lock Date unless you execute an Early Reallocation (if available to you). If you decide to execute an Early Reallocation,
you can execute a Performance Lock and then, at the earliest, execute an Early Reallocation on the same Business Day. When executing both
the Performance Lock and Early Reallocation on the same Business Day, your Lock Date is also the Term Start Date for the new Index Option.
●
You
will not receive a Performance Credit on any locked Index Option on the Term End Date.
●
We
use the Daily Adjustment calculated at the end of the current
Business Day on the Lock Date to determine your locked Index Option Value. This means that, if you request a Performance Lock, your Index
Option Value will lock at an unknown future value which may be higher or lower than it was at the point in time you requested a Performance
Lock. In addition, if you set a lower target, your Index Option Value may lock at a lower value than the target you set.
●
If
a Performance Lock is executed when your Daily Adjustment has declined, you will lock in any loss. It is possible that you would have
realized less of a loss or no loss if the Performance Lock occurred at a later time, or if the Index Option was not locked.
●
We
will not execute a Performance Lock on the Index Protection Strategy with Trigger Index Options if the Daily Adjustment is zero. This
may limit your ability to take advantage of the benefits of the Early Reallocation feature.
●
There
are limits on Early Reallocations. We do not accept Early Reallocation requests within 14 calendar days before an Index Anniversary; and
you are limited to twelve Early Reallocation requests each Index Year, but each request can involve multiple locked Index Options. After
you reach the Early Reallocation request limit in an Index Year, any locked Index Options will remain locked until the next Index Anniversary.
These limitations mean you may not be able to take advantage of any increases to Early Reallocation rates, or any advantageous changes
to Index values that may become available at the optimal time. This may limit your return potential. Early Reallocation is available for
amounts allocated to any locked Index Option, subject to the restrictions described in this prospectus.
●
Early
Reallocation Trigger Rates, Caps, and Participation Rates you receive may be less than the Early Reallocation rates that become available
later in the Index Year, or the renewal rates available on the next Index Anniversary. This may limit your return potential.
|
We
will not provide advice or notify you regarding whether you should execute a Performance Lock or Early
Reallocation
or the optimal time for doing so. We will not warn you if you execute a Performance Lock or Early
Reallocation
at a sub-optimal time. We are not responsible for any losses related to your decision whether or not to
execute
a Performance Lock or Early Reallocation. |
Risks
Associated with Substitution of an Index and Limitation on Further Investments
There is no guarantee that the Indexes
will be available during the entire time that you own your Contract. Once we add an Index to your Contract, we cannot remove it without
simultaneously substituting it. For the Index Options, if we substitute a new Index for an existing Index, the performance of the new
Index may be different and this may affect your ability to receive positive Performance Credits.
Depending on the constitution of
the substituted Index, the volatility of its investments, and our ability to hedge the Index’s performance, we may determine, in
our discretion, to increase or decrease renewal Trigger Rates, Caps, and Participation Rates associated with the new Index, subject to
their respective minimums. However, we would not implement any change to reflect this difference until the next Term Start Date after
the substitution. The substitution of an Index during a Term may result in an abnormally large change in the Daily Adjustment on the day
we substitute the Index due to changes in Proxy Value inputs (such as volatility, dividend yield, and interest rate). However, you would
only be affected by this change in the Daily Adjustment if a transaction to which the Daily Adjustment applies (such as a withdrawal you
take) occurs on the substitution date.
Risks
Associated with Changes to Trigger Rates, Caps, and Participation Rates
The 10%, 20%, and 30% Buffers,
and -10% Floors for the currently available Index Options do not change. However, if we add a new Index Option to your Contract after
the Issue Date, we establish the Buffer or Floor for it on the date we add the Index Option to your Contract.
Subject to their respective minimums,
we establish the initial Trigger Rates, Caps, and Participation Rates for a newly issued Contract on the Index Effective Date and they
cannot change until the next Term Start Date. You select the Index Effective Date when you purchase your Contract. It can be any Business
Day from the Issue Date up to and including the first Quarterly Contract Anniversary, but it cannot be the 29th,
30th,
or 31st
of a month.
You should be aware
that, generally, initial Trigger Rates, Caps, and Participation Rates could change every seven calendar days. However, these rates are
guaranteed to be available during the period stated on our website at https://www.allianzlife.com/RILAratesnf
and cannot be superseded until that period ends. If you select an Index Effective Date that is within the guaranteed period for the initial
rates that are available for review on the date you signed your application, you will receive the initial rates that were available on
the date you signed your application. However, if you select an Index Effective Date that is after this guaranteed period, you are subject
to the risk that initial Trigger Rates, Caps, and Participation Rates may change and be less advantageous to you. You are responsible
for reviewing the initial rates before your Index Effective Date to ensure your allocations and the product still meet your needs. Furthermore,
if your Index Effective Date is after the end of the free look period and you cancel the Contract, you will receive the Cash Value. On
or before the Index Effective Date, the Daily Adjustment does not apply.
You may review future rates at least seven calendar days before their effectiveness at https://www.allianzlife.com/RILAratesnf.
Subject to the limitations related to designating the Index Effective Date, you (or your Financial Professional, if authorized) can change
your Index Effective Date at any time before it occurs to be an earlier or later date by submitting a request.
We can change the renewal and Early
Reallocation Trigger Rates, Caps, and Participation Rates for an existing Contract on each new Term Start Date subject to the guaranteed
minimums, in our discretion.
We will send you a letter at least
30 days before each Index Anniversary. This letter advises you that current Trigger Rates, Caps, and Participation Rates are expiring,
and that renewal rates for the next Term Start Date will be available for your review. The Index Anniversary letter also reminds you of
your opportunity to transfer your Index Option Values on the upcoming Term End Date. On each Term End Date, you have the option of
remaining allocated to your current Index Options at the renewal Trigger Rates, Caps, and Participation Rates that we set on the next
Term Start Date, or transferring to another permitted Index Option. At least seven calendar days before each Index Anniversary, we publish
renewal rates for the next Term Start Date for your review in your account on our website, and on our public website at https://www.allianzlife.com/RILAratesnf.
If you do not review renewal change information when it is published or take no action to transfer to another permitted Index Option,
you will remain allocated to your current Index Options and will automatically become subject to the renewal Trigger Rates, Caps, and
Participation Rates until the next Term End Date.
You risk the possibility that the
renewal Trigger Rates, Caps, and Participation Rates you receive may be less than you would find acceptable. If you do not find the renewal
rates acceptable, you must give us transfer instructions no later than the end of the Business Day on the Term End Date (or the next Business
Day if the Term End Date is a non-Business Day) or you will be subject to these renewal Trigger Rates, Caps, and Participation Rates for
the next Term.
When your
renewal rates change, the only options available to you (other than to leave Index Option Value in the existing Index Option) are to transfer
Index Option Value between Index Options by changing your allocation instructions, or take a full withdrawal (which may be subject to
a withdrawal charge, is subject to income taxes, and may be subject to tax penalties).
If you execute a Performance Lock,
you may be able to request an Early Reallocation and begin a new Index Option with a new Term Start Date and a new Trigger Rate, Cap,
or Participation Rate before the next Index Anniversary. We can change Early Reallocation Trigger Rates, Caps, and Participation Rates
subject to the guaranteed minimums, in our discretion. We publish Early Reallocation rates at least seven calendar days before the end
of the current Early Reallocation offering period for your review in your account on our website. If you do not execute an Early Reallocation,
you will remain allocated to your current locked Index Options until the Index Anniversary that occurs on or immediately after the Lock
Date.
Initial, renewal, and Early Reallocation
Trigger Rates, Caps, and Participation Rates may vary significantly depending upon a variety of factors, including, but not limited to:
●
Term
length,
●
level
of downside protection,
●
market
volatility,
●
our
hedging strategies and investment performance,
●
the
availability of hedging instruments,
●
the
amount of money available to us through Contract fees and expenses to purchase hedging instruments,
●
expenses
incurred by the Company,
●
your
Index Effective Date,
●
the
level of interest rates,
●
utilization
of Contract benefits by Owners, and
●
our
profitability goals.
These factors also impact any new
Buffer or Floor Index Options that become available under the Contract. Due to a combination of factors, including potential changes in
interest rates and other market conditions (e.g. rising inflation), the current economic environment is evolving. The future impact on
initial, renewal, and Early Reallocation Trigger Rates, Caps, and Participation Rates cannot be predicted with certainty. The effect of
a change in interest rates or other market conditions may not be direct or immediate. There may be a lag in changes to Trigger Rates,
Caps, and Participation Rates. Interest rates could increase. In a rising interest rate environment, increases in initial Trigger Rates,
Caps, and Participation Rates, if any, may be substantially slower than increases in interest rates. However, a rising interest rate environment
may have the opposite effect on renewal rates and cause renewal Trigger Rates, Caps, and Participation Rates to decrease.
We manage our obligation to provide
Performance Credits in part by trading call and put options, and other derivatives on the available Indexes. The costs of the call and
put options and other derivatives vary based on market conditions, and we may adjust future renewal and Early Reallocation Trigger Rates,
Caps, and Participation Rates to reflect these cost changes. The primary factor affecting the differences in the initial Trigger Rates,
Caps, and Participation Rates for newly issued Contracts and renewal and Early Reallocation rates for existing Contracts is the difference
in what we can earn from these investments for newly issued Contracts versus what we are earning on the investments that were made for
existing Contracts. In some instances, we may need to reduce initial, renewal, and Early Reallocation Trigger Rates, Caps, and Participation
Rates, or we may need to substitute an Index. You bear the risk that we may reduce Trigger Rates, Caps, and Participation Rates, which
reduces your opportunity to receive positive Performance Credits.
Risks
Associated with Investment in Derivative Hedging Instruments
The Index Options are supported by
bonds and other fixed income securities which are also used to support the Contract guarantees, cash, and derivative hedging instruments
used to hedge the movements of the applicable Index.
At Contract issue, we invest a substantial
majority of the initial Contract Value in fixed income securities, with most of the remainder invested in derivative hedging instruments.
The derivative hedging instruments are purchased to track and hedge Index movements and support our obligations with regard to the Index
Options. The derivative hedging instruments we purchase include put options, call options, futures, swaps, and other derivatives.
We currently limit our purchase of
derivative hedging instruments to liquid securities. However, like many types of derivative hedging instruments, these securities may
be volatile and their price may vary substantially. In addition, because
we pay Performance
Credits regardless of the performance of derivative hedging instruments we purchase, we may incur losses on hedging mismatches or errors
in hedging. We may incur additional costs if the costs of our hedging program increase due to market conditions or other factors. Our
overall experience with hedging securities may affect renewal and Early Reallocation Trigger Rates, Caps, and Participation Rates for
existing Contracts.
Other
Contract Changes Risk
We reserve the right to modify or
restrict several benefits or features of the Contract. We restrict additional Purchase Payments. Each Index Year during the Accumulation
Phase, you cannot add more than your initial amount without our prior approval. Your initial amount is the total of all Purchase Payments
received before the first Quarterly Contract Anniversary of the first Contract Year. We allow you to add up to the initial amount in the
remainder of the first Index Year. In addition to this Purchase Payment restriction, we reserve the right to decline any or all Purchase
Payments at any time on a nondiscriminatory basis. For Contracts issued in certain states, we reserve the right to hold your initial Purchase
Payment in the Variable Option until the free look period ends, and then reallocate your Contract Value, less fees and expenses, according
to your allocation instructions. For further information regarding Purchase Payment restrictions, see section 3, Purchasing the Contract
– Purchase Requirements.
As it relates to the Index Options,
we reserve the right to close Index Options to new Purchase Payments and transfers. However, once an Index Option is added to a Contract,
we cannot remove it, change how it calculates Performance Credits, or change its Buffer or Floor.
We also reserve the right to substitute
the Fund in which the Variable Option invests. We reserve the right to add or eliminate additional variable investment options. However,
the extent to which we add, eliminate, or substitute variable investment options will be consistent with federal securities laws and,
when required, the SEC.
In states that assess a premium tax,
we do not currently deduct it from the Contract, although we reserve the right to do so in the future.
Lastly, we reserve the right to treat
a partial withdrawal that reduces Contract Value below $2,000 as a full withdrawal. If Annuity Payments would be less than $100, we reserve
the right to require you to take a full withdrawal and your Contract will then terminate. However, we do not assess a withdrawal charge
on this full withdrawal.
Risks
Associated with Our Financial Strength and Claims-Paying Ability
We make Annuity Payments, and pay
death benefits from our general account. Our general account assets are subject to claims by our creditors, and any payment we make from
our general account is subject to our financial strength and claims-paying ability. We apply Performance Credits from an unregistered,
non-unitized, non-insulated separate account (Separate
Account IANA). Like our general account, the assets in
Separate Account IANA are subject to our general business operation liabilities and the claims of our creditors, and are also subject
to our financial strength and claims-paying ability. For more information on Separate Account IANA, see The Insurance Company, Separate
Accounts, and General Account – Our Unregistered Separate Account.
Business
and Operational Risks Relevant to the Contract
Business Disruption
and Cybersecurity Risks. Our business relies on technology
systems and networks, including systems and networks managed by third parties to process, transmit and store information, and to conduct
business activities and transactions with clients, distributors, vendors, and other third parties. Maintaining the integrity of our systems
is critical to our business operations and to the protection of our clients’ personal information. To date, we have not identified
any material breaches or interference with our systems and networks; however, we routinely encounter and address such threats. Any cybersecurity
breaches or interference that may in the future occur could have a material adverse impact on our business operations and our financial
condition.
Publicly-reported cybersecurity threats
and incidents have dramatically increased in recent years, and financial services companies and their third-party service providers are
increasingly the targets of cyberattacks involving the encryption and/or threat to disclose personal or confidential information (e.g.,
ransomware) or disruptions of communications (e.g.,
denial of service) to extort money or for other malicious purposes.
We have implemented and maintain
security measures designed to protect against breaches of security and other interference with systems and networks, and require third
party vendors to meet certain information security standards; however, we cannot ensure that our systems and networks will not be subject
to breaches or interference. Any such event may result in operational disruptions as well as unauthorized access to or the disclosure
or loss of our proprietary information or our clients’ personal information. Any such event may interfere with, impede or cause
delays in our
calculation of
values, processing of transactions and making of payments under the Contract. Even if we successfully protected our technology infrastructure
and the confidentiality of sensitive data, we may incur significant expenses in responding to any such attacks. Although we maintain cybersecurity
insurance coverage against costs resulting from cybersecurity incidents, it is possible losses will exceed the amount available under
our coverage. We cannot be certain that advances in criminal capabilities, discovery of new vulnerabilities, attempts to exploit vulnerabilities
in our systems, data thefts, physical system or network break-ins or inappropriate access, or other developments will not compromise or
breach the technology or other security measures protecting our networks and systems used in connection with our products and services,
and it is possible that a cybersecurity incident could persist for an extended period of time without detection.
Natural or Man-made
Disasters. The occurrence of natural or man-made disasters
(e.g.,
extreme weather events, acts of terrorism, geo-political disputes, public health crises, industrial accidents, blackouts, cyberattacks,
computer viruses, insider threats, insurrections and military actions, unanticipated problems with our disaster recovery systems, or support
failures from external providers) could adversely affect our business operations and our business results, particularly if those events
affect our computer-based data processing, transmission, storage, and retrieval systems or destroy data. Such disasters may damage our
facilities, preventing our employees from performing their roles, otherwise disturbing our ordinary business operations, and impacting
claims processing. We rely on certain third-parties to provide certain services important to our business operations. While we monitor
the business continuity planning of such third-parties, successful implementation and execution of their business continuity plans are
largely outside of our control. Weaknesses or failures within a vendor’s business continuity plan in light of a natural or man-made
disaster could materially disrupt our business operations.
1. The Contract
An annuity is a contract between
you as the Owner, and an insurance company (in this case Allianz Life), where you make payments to us and we invest that money in the
Index Options you select. The Variable Option holds the money you invest before it is transferred to the Index Options. Depending on market
conditions and the returns of your selected Index Options, your Contract may gain or lose value. When you are ready to take money out,
we make payments to you according to your instructions and any restrictions associated with the payment option you select that is described
in this prospectus. Other than to add benefits that are beneficial to you, we do not make any changes to your Contract without your permission
except as may be required by law.
The Contract has an Accumulation
Phase and an Annuity Phase.
The
Accumulation Phase
The Accumulation
Phase is the first phase of your Contract, and it begins
on the Issue Date. During the Accumulation Phase, we invest your money in the Index Options you select and the Variable Option on a tax-deferred
basis. Tax deferral may not be available for certain non-individually owned contracts. Tax deferral means you are not taxed on any earnings
or appreciation on the assets in your Contract until you take money out of your Contract. For more information, see section 12, Taxes.
During the Accumulation Phase, you
can take withdrawals (subject to any withdrawal charge). You can also make additional Purchase Payments subject to the restrictions set
out in section 3, Purchasing the Contract – Purchase Requirements. The Contract also offers at issue the optional Maximum Anniversary
Value Death Benefit for an additional rider fee (see section 11) if all Owners and the Annuitant are age 75 or younger on the Issue Date.
The Maximum Anniversary Value Death Benefit can only be added to a Contract at issue. The Maximum Anniversary Value Death Benefit potentially
provides a death benefit greater than the Traditional Death Benefit based on the Maximum Anniversary Value (highest Contract Value on
any Index Anniversary before age 91, increased by the dollar amount of subsequent Purchase Payments, and reduced proportionately for subsequent
withdrawals you take including any withdrawal charge).
When
the Accumulation Phase Ends
The Accumulation Phase ends upon
the earliest of the following:
●
The
Business Day we process your request for a full withdrawal.
●
The
Business Day before the Annuity Date.
●
Upon
the death of any Owner (or the Annuitant if the Owner is a non-individual), the Business Day we first receive Valid Claim from any one
Beneficiary, unless the surviving spouse/Beneficiary continues the Contract. If there are multiple Beneficiaries, the remaining Contract
Value continues to fluctuate with the performance of the Investment Options until the complete distribution of the death benefit. A Valid
Claim is the documents we require to be received in Good
Order at our Service Center before we pay any death claim.
The
Annuity Phase
If you request Annuity Payments,
the Accumulation Phase of your Contract ends and you enter the Annuity
Phase. During the Annuity Phase, we make regular fixed
periodic Annuity Payments based on a guaranteed period, life, life with a guaranteed period, joint and last survivor, or joint and 2/3
survivor. We send Annuity Payments to the Payee
(the person or entity who receives Annuity Payments during the Annuity Phase). You can choose when Annuity Payments begin, subject to
certain restrictions. We base Annuity Payments on the Contract Value less the final rider fee (if applicable) and the payout rates
for the Annuity Option you select. Your Annuity Payments do not change unless an Annuitant dies. The Annuity Phase ends when we make the
last Annuity Payment under your selected Annuity Option. For more information, see section 9, The Annuity Phase.
When
the Contract Ends
The Contract ends
when:
●
all
applicable phases of the Contract (Accumulation Phase and/or Annuity Phase) have ended, and/or
●
if
we received a Valid Claim, all applicable death benefit payments have been made.
For example, if you take a full withdrawal of
the Cash Value, both the Accumulation Phase and the Contract end even though the Annuity Phase never began and we did not make any death
benefit payments.
2. Ownership, Annuitant, Determining Life, Beneficiary, and Payee
Owner
The Owner designated at Contract
issue has all the rights under the Contract. The Owner may be an individual, or a non-individual (such as a trust or other entity acting
as an agent for a natural person). Qualified Contracts and non-individually owned Contracts can only have one Owner. A Qualified
Contract qualifies for special tax treatment under sections
of the Code.
Joint
Owner
A Non-Qualified Contract can be owned
by up to two individual Owners (Joint
Owners). Joint Owners must be spouses within the meaning
of federal tax law. We generally require the signature of both Joint Owners on any forms that are submitted to our Service Center.
Annuitant
The Annuitant is the individual on
whose life we base Annuity Payments. Subject to our approval, you designate an Annuitant when you purchase a Contract. For Qualified Contracts,
before the Annuity Date, the Owner must be the Annuitant unless the Contract is owned by a qualified plan or is part of a custodial arrangement.
You can change the Annuitant on an individually owned Non-Qualified Contract at any time before the Annuity Date. You
cannot change the Annuitant if the Owner is a non-individual.
Subject to our approval, you can add a joint Annuitant on the Annuity Date. For Qualified Contracts, the ability to add a joint Annuitant
is subject to any plan requirements associated with the Contract. For individually owned Contracts, if the Annuitant who is not an Owner
dies before the Annuity Date, the sole Owner (or younger Joint Owner) automatically becomes the new Annuitant, but the Owner can subsequently
name another Annuitant.
Designating different
persons as Owner(s) and Annuitant(s) can have important impacts on whether a death benefit is paid, and on who receives it as indicated
below. For more examples, please see the Appendix A to
the Statement of
Additional Information
(SAI).
Use care when designating Owner(s) and
Annuitant(s), and consult your Financial Professional if you have questions.
|
UPON
THE DEATH OF A SOLE OWNER | |
|
Action
if the Contract is in the Accumulation Phase |
Action
if the Contract is in the Annuity Phase |
|
• If
this is an Inherited IRA Contract, the death benefit options for
the
Beneficiary of the Inherited IRA (successor beneficiary, i.e.
beneficiary
of the original Beneficiary) depend on several
factors.
For specific information regarding these Contracts,
please
see section 12, Taxes – Distributions Upon the Owner’s
Death
(or Annuitant’s Death if the Owner is a Non-Individual).
• For
all other Contracts, we pay a death benefit to the
Beneficiary
unless the Beneficiary is the surviving spouse and
continues
the Contract.
• If
the deceased Owner was a Determining Life and the
surviving
spouse Beneficiary continues the Contract:
– we
increase the Contract Value to equal the Guaranteed
Death
Benefit Value if greater and available, and the
death
benefit ends,
– the
surviving spouse becomes the new Owner,
– the
Accumulation Phase continues, and
– upon
the surviving spouse’s death, his or her
Beneficiary(ies)
receives the Contract Value.
• If
the deceased Owner was not a Determining Life, the
Traditional
Death Benefit or Maximum Anniversary Value Death
Benefit
are not available and the Beneficiary(ies) receives the
Contract
Value. |
• The
Beneficiary becomes the Payee. If we are still required to
make
Annuity Payments under the selected Annuity Option, the
Beneficiary
also becomes the new Owner.
• If
the deceased was not an Annuitant, Annuity Payments to the
Payee
continue. No death benefit is payable.
• If
the deceased was the only surviving Annuitant, Annuity
Payments
end or continue as follows.
– Annuity
Option A or C, payments end when the
guaranteed
period ends.
– Annuity
Option B, F, or G, payments end.
– For
more information on the Annuity Options, please see
section
9.
• If
the deceased was an Annuitant and there is a surviving joint
Annuitant,
Annuity Payments to the Payee continue during the
lifetime
of the surviving joint Annuitant. No death benefit is
payable.
• For
a Qualified Contract, the Annuity Payments generally must
end
no later than ten years after the Owner's death. However,
in
certain situations, payments may need to end earlier. |
Determining
Life (Lives)
The Determining Life (Lives) are
the individuals on whose life we base the Guaranteed Death Benefit Value provided by the Traditional Death Benefit or Maximum Anniversary
Value Death Benefit. We establish the Determining Life (Lives) at Contract issue. For an individually owned Contract, the Determining
Life (Lives) are the Owner(s). For a non-individually owned Contract, the Determining Life is the Annuitant. After the Issue Date, the
Determining Life (Lives) only change if:
●
you
remove a Joint Owner due to divorce, then we also remove that person as a Determining Life,
●
you
add or change a Joint Owner, then that person will become a Determining Life if they are the current spouse within the meaning of
federal tax law of an existing Owner, or
●
you
establish a jointly owned Non-Qualified Contract and change ownership to a Trust, then we remove the prior Owner who is not the Annuitant
as a Determining Life.
Beneficiary
The Beneficiary is the person(s)
or entity you designate to receive any death benefit. You can change the Beneficiary or contingent Beneficiary at any time before your
death unless you name an irrevocable Beneficiary. If a Beneficiary dies before you, or you and a Beneficiary die within 120 hours of each
other, that Beneficiary’s interest in this Contract ends unless your Beneficiary designation specifies otherwise. If there are
no surviving primary Beneficiaries, we pay the death benefit to the contingent Beneficiaries who survive you. If there are no surviving
Beneficiaries or if there is no named Beneficiary, we pay the death benefit to your estate or the Owner if the Owner is a non-individual.
|
● FOR
JOINTLY OWNED CONTRACTS: The sole primary
Beneficiary is the surviving Joint Owner regardless of
any
other named primary Beneficiaries. If both Joint Owners die within 120 hours of each other, we pay the death
benefit
to the named surviving primary Beneficiaries. If there are no named surviving primary Beneficiaries, we pay
the
death benefit to the named surviving contingent Beneficiaries, or equally to the estate of the Joint Owners if there
are
no named surviving contingent Beneficiaries. |
|
● NAMING
AN ESTATE AS A BENEFICIARY: If an estate
is the Beneficiary, the estate must be the sole primary
Beneficiary,
unless the Spouse is the sole primary Beneficiary. If the Spouse is the sole primary Beneficiary, then an
estate
can be a contingent Beneficiary. |
Payee
The Payee is the person or entity
who receives Annuity Payments during the Annuity Phase. The Owner receives tax reporting on those payments. Generally, we require the
Payee to be an Owner. However, we may allow you to name a charitable trust, financial institution, qualified plan, or an individual specified
in a court order as a Payee subject to our approval. For Qualified Contracts owned by a qualified plan, the qualified plan must be the
Payee.
Assignments,
Changes of Ownership and Other Transfers of Contract Rights
You can assign your rights under
this Contract to someone else during the Accumulation Phase. An assignment may be absolute or limited, and includes changes of ownership,
collateral assignments, or any other transfer of specific Contract rights. After an assignment, you may need the consent of the assignee
of record to exercise certain Contract rights depending on the type of assignment and the rights assigned.
The Contract cannot be assigned without
our consent. You must submit your request to assign the Contract in writing to our Service Center. We will not consent if the assignment
would violate or result in noncompliance with any applicable state or federal law or regulation.
We record the assignment as
of the date you signed the request, unless you specify otherwise. We are not responsible for the validity or effect of the assignment.
We are not liable for any actions we take or payments we make before we receive your request in Good Order and record it. Assigning the
Contract does not change, revoke or replace the originally named Annuitant or Beneficiary; if you also want to change the Annuitant or
Beneficiary, you must make a separate request.
|
● An
assignment may be a taxable event. In
addition, there are other restrictions on changing the ownership of a
Qualified
Contract and Qualified Contracts generally cannot be assigned absolutely or on a limited basis. You
should
consult
with your tax adviser before assigning this Contract.
|
|
● An
assignment will only change the Determining Life (Lives) if it involves removing a Joint Owner due to
divorce,
replacing Joint Owners with a Trust, or adding a Joint Owner if that person is a spouse within the
meaning
of federal tax law of the existing Owner. |
3. Purchasing the Contract
Purchase
Requirements
To purchase this Contract, on the
Issue Date, all Owners (or the Annuitant if the Owner is a non-individual) must be:
●
age
85 or younger, or
●
age
75 or younger if you select the Maximum Anniversary Value Death Benefit.
The Purchase Payment requirements
for this Contract are as follows.
●
The
minimum initial Purchase Payment due on the Issue Date is $10,000.
●
We
restrict additional Purchase Payments. Each Index Year
during the Accumulation Phase, you cannot add more than your initial amount without our prior approval. Your initial amount is the total
of all Purchase Payments received before the first Quarterly Contract Anniversary of the first Contract Year. We allow you to add up to
the initial amount in the remainder of the first Index Year. The minimum additional Purchase Payment we will accept is $50.
●
We
do not accept additional Purchase Payments on or after the Annuity Date.
●
If
this is an Inherited IRA or Inherited Roth IRA Contract, the death benefit proceeds of the previous tax-qualified investment were directly
transferred into this Contract, and we do not accept additional Purchase Payments (see section 12, Taxes – Qualified Contracts
– Inherited IRA).
●
The
maximum total Purchase Payments we accept without our prior approval is $1 million.
We may, at our sole discretion, waive
the minimum Purchase Payment requirements.
Once we receive your initial Purchase
Payment and all necessary information in Good Order at our Service Center, we issue the Contract within two Business Days. If the Issue
Date is the same as the Index Effective Date, we allocate your initial Purchase Payment to the Index Options. If the Issue Date is not
the Index Effective Date, we hold your initial Purchase Payment in the Variable Option before we transfer it to your selected Index Options.
If you do not give us all the information we need, we contact you or your Financial Professional. If for some reason we are unable to
complete this
process within
five Business Days, we either send back your Purchase Payment or get your permission to keep it until we get all the necessary information.
If you make additional Purchase Payments, we add this money to your Contract on the Business Day we receive it in Good Order.
If you submit a Purchase Payment
and/or application to your Financial Professional, we do not begin processing the payment and/or application until we receive it.
We may terminate
your ability to make additional Purchase Payments because we reserve the right to decline any or all Purchase Payments at any time on
a nondiscriminatory basis. This applies to Contracts issued
in all states except as disclosed in Appendix E. If mandated under applicable law, we may be required to reject a Purchase Payment. We
will decline a Purchase Payment we receive on the same Business Day that we receive in Good Order a request for full withdrawal, or Contract
cancellation during the free look period. If
we exercise our right to decline additional Purchase Payments, this may limit your ability to fund your Contract’s guaranteed benefits
such as the Traditional Death Benefit or Maximum Anniversary Value Death Benefit.
Applications
Sent Electronically
We accept manually signed applications
that are in Good Order and are sent by fax, or email, or uploaded to our website. It is important to verify receipt of any faxed application,
or to receive a confirmation number when using email or the web. We are not liable for applications that we do not receive. A manually
signed application sent by fax, email or over the web is considered the same as an application delivered by mail. Our electronic systems
(fax, email or website) may not always be available; any electronic system can experience outages or slowdowns which may delay application
processing. Although we have taken precautions to help our system handle heavy use, we cannot promise complete reliability. If you experience
problems, please submit your written application by mail to our Service Center. We reserve the right to discontinue or modify our electronic
application policy at any time and for any reason.
Allocation
of Purchase Payments and Contract Value Transfers
|
We
do not accept additional Purchase Payments if you have an Inherited IRA, or Inherited Roth IRA Contract. |
The allocation instructions you provide
on your application automatically become your default allocation instructions. We use these allocation instructions for all Purchase Payments
we receive unless you change them. Any change to allocation instructions will replace any existing allocation instructions and will be
used as the basis for transfers between and among the Index Options.
We
only allow Purchase Payments to move into the Index Options on the Index Effective Date and on subsequent Index Anniversaries.
As a result, we hold Purchase Payments in the Variable Option when we receive them on days other than the Index Effective Date or Index
Anniversaries. We then transfer them to the Index Options on the next Index Anniversary according to your allocation instructions. We
apply any Purchase Payments we receive on the Index Effective Date or on an Index Anniversary directly to the Index Options on that day;
these Purchase Payments are not held in the Variable Option.
We
only allow Index Option Value transfers between Index Options on Term End Dates. However, you can transfer between Index Options before
the Term End Date by executing a Performance Lock and an Early Reallocation. For multi-year Term Index Options you can also transfer between
Index Options before the Term End Date by executing a Performance Lock before the last year of the Term and changing your allocation instructions
before the next Index Anniversary. We do not allow assets to move into an established Index Option until the Term End Date. If you request
to transfer into an established Index Option on a date that is not a Term End Date, we will transfer those assets into the same Index
Option with a new Term Start Date.
You select the
Index Effective Date when you purchase your Contract. It can be any Business Day up to and including the first Quarterly Contract Anniversary,
but it cannot be the 29th,
30th,
or 31st
of a month.
|
On
your application if you select… |
Your
Index Effective Date will be either… |
|
the
earliest Index Effective Date |
• your
Issue Date, or
• the
first Business Day of the next month if the Issue Date is the 29th,
30th,
or 31st
of a
month
|
|
the
deferred Index Effective Date |
• your
first Quarterly Contract Anniversary, or
• the
next Business Day if the first Quarterly Contract Anniversary occurs on a non-Business
Day,
or the first Business Day of the next month if the first Quarterly Contract Anniversary
is
the 29th,
30th,
or 31st
of a month |
You should be aware
that, generally, initial Trigger Rates, Caps, and Participation Rates could change every seven calendar days. However, these rates are
guaranteed to be available during the period stated on our website at https://www.allianzlife.com/RILAratesnf
and cannot be superseded until that period ends. If you select an Index Effective Date that is within the guaranteed period for the initial
rates that are available for review on the date you signed your application, you will receive the initial rates that were available on
the date you signed your application. However, if you select an Index Effective Date that is after this guaranteed period, you are subject
to the risk that initial Trigger Rates, Caps, and Participation Rates may change and be less advantageous to you. Furthermore, if your
Index Effective Date is after the end of the free look period and you cancel your Contract, you will receive the Cash Value. On or before
the Index Effective Date, the Daily Adjustment does not apply.
You may review future rates at least seven
calendar days before their effectiveness at https://www.allianzlife.com/RILAratesnf.
Subject to the limitations related to designating the Index Effective Date, you (or your Financial Professional, if authorized) can change
your Index Effective Date at any time before it occurs to be an earlier or later date by submitting a request. However,
your new Index Effective Date cannot be later than the deferred Index Effective Date listed above. We must receive your request in Good
Order at our Service Center before the end of the Business Day on which you want the Index Effective Date to occur. Once your Index Effective
Date occurs, all Index Options for your Contract will have the same Index Anniversary.
You can change your allocation instructions
at any time without fee or penalty. These changes are effective on the Business Day we receive them in Good Order at our Service Center.
We accept changes to allocation instructions from any Owner unless you instruct otherwise. We may allow you to authorize someone else
to change these allocation instructions on your behalf. However, we must receive allocation instruction changes (which will transfer your
Index Option Values) in Good Order at our Service Center before the end of the Business Day on the Term End Date (or the next Business
Day if the Term End Date is a non-Business Day). Changes
to your allocation instructions will transfer existing Index Option Values on the Term End Date.
We notify you at least 30 days in
advance of each Index Anniversary as a reminder that on the upcoming anniversary you may transfer Index Option Value between Index Options.
In order to make a transfer between Index Options, you must provide us with allocation instruction changes in Good Order. For more information,
see the “Electronic Allocation Instructions” discussion next in this section. On each Term End Date, if we have not received
allocation instruction changes from you, all assets invested continue to be invested in the same Index Options with new Term Start Dates
at the renewal Trigger Rates, Caps, and Participation Rates.
We can add new Crediting Methods,
Terms, and Indexes to your Contract in the future, and you can allocate Purchase Payments or transfer Contract Value to them on the Term
Start Date after we make them available to you. Once we add a Crediting Method to your Contract we cannot remove it, or change how it
calculates Performance Credits. If we add a new Index Option to your Contract, we cannot change its Buffer or Floor after it is established.
For a new Index Option, the minimum Buffer is 5% and the minimum Floor is -25%. However, we can change the renewal and Early Reallocation
Trigger Rates, Caps, and Participation Rates associated with any Index Option on each Term Start Date subject to the guaranteed minimums.
|
● In
order to apply Purchase Payments we receive after
the Index Effective Date to your selected Index Option(s) on
the
next Index Anniversary, we must receive them before
the end of the Business Day on the Index Anniversary (or
before
the end of the prior
Business Day if the anniversary is a non-Business Day).
|
|
● Purchase
Payments we hold in the Variable Option before transferring them to your selected Index Options are
subject
to Contract fees and expenses (e.g. contract maintenance charge), and market risk and may lose value. |
Electronic
Allocation Instructions
We use reasonable procedures to confirm
that electronic allocation instructions given to us are genuine. If we do not use such procedures, we may be liable for any losses due
to unauthorized or fraudulent instructions. We record telephone instructions and log all fax, email and website instructions. We reserve
the right to deny any allocation instruction change, and to discontinue or modify our electronic instruction privileges at any time for
any reason.
Please note that telephone, fax,
email and/or the website may not always be available. Any electronic system, whether it is ours, yours, your service provider’s,
or your Financial Professional’s, can experience outages or slowdowns for a variety of reasons, which may delay or prevent our
processing of your allocation instruction change. Although we have taken precautions to help our systems handle heavy use, we cannot promise
complete reliability. If you are experiencing problems, you should submit your instructions in writing to our Service Center.
By authorizing electronic instructions,
you authorize us to accept and act upon these instructions for your Contract. There are risks associated with electronic communications
that do not occur with a written request. Anyone authorizing or making such requests bears those risks. You should protect your website
password, because the website is available to anyone with your password; we cannot verify that the person providing instructions on the
website is you, or is authorized by you.
Free
Look/Right To Examine Period
If you change your mind about the
Contract, you can cancel it within the free look period stated on the first page of your Contract. In most states, this is ten calendar
days after you receive the Contract. If you cancel your Contract during the free look period, in most states we return your Contract Value
as of the Business Day we receive your cancellation request in Good Order. This may be more or less than your initial Purchase Payment.
In states that require us to return Purchase Payments less withdrawals if you cancel your Contract, we return Contract Value if greater.
IRA Contracts require us to return
Purchase Payments less withdrawals. If you cancel your IRA Contract, we return the greater of Purchase Payments less withdrawals or Contract
Value.
If your cancellation request occurs
after the Index Effective Date, your Contract Value will include the Daily Adjustment, which may be negative for amounts allocated to
the Index Dual Precision Strategy, Index Precision Strategy, Index Guard Strategy, and Index Performance Strategy Index Options.
Some states and certain IRA Contracts
require return of Purchase Payments. For these Contracts, we reserve the right to hold your initial Purchase Payment in the Variable Option
until the free look period ends, and then re-allocate your Contract Value, less fees and expenses, according to your allocation instructions.
If we exercise this right, the Contract Value we use to determine your refund amount on a cancellation request will not include the Daily
Adjustment as the Index Effective Date will not yet have occurred. Currently, we only exercise this right on certain Contracts issued
in California as noted in Appendix E. If we hold your initial Purchase Payment in the Variable Option during the free look period and
the requested Index Effective Date would occur during this time, we change your Index Effective Date to the next Business Day after the
free look period that is not the 29th,
30th,
or 31st
of the month. Then, if you:
●
cancel
your Contract during this time, we return the greater of Purchase Payments less withdrawals, or Contract Value. We do not assess a withdrawal
charge or deduct any other Contract fees or expenses if you cancel your Contract during the free look period. If you take a withdrawal
that is subject to a withdrawal charge and then cancel your Contract during the free look period, we will refund any previously deducted
withdrawal charge upon cancellation.
●
do
not cancel your Contract during this time, we re-allocate your Contract Value to the Index Options according to your allocation instructions
on the Index Effective Date.
In the Contract, the free look provision
is also called the right to examine.
4. Index Options
Overview
of the Index Options
We apply positive, zero, or negative
Performance Credits at the end of a Term to amounts allocated to an Index Option based, in part, on the performance of the applicable
Index. An investment in an Index Option is not an investment in the Index or in any Index fund.
Some Index Options provide complete
protection against negative Index Returns at the end of a Term. Other Index Options provide limited protection against negative Index
Returns at the end of a Term through a Buffer or Floor. Despite the
Buffer or Floor,
you could lose a significant amount of money if the Index for such other Index Options declines in value. You may also lose a significant
amount of money due to a negative Daily Adjustment if amounts are removed from such other Index Options prior to the end of a Term.
The Contract currently offers Index
Options with different types of Crediting Methods, including the Index Protection Strategy with Trigger, Index Precision Strategy, Index
Dual Precision Strategy, Index Guard Strategy, and Index Performance Strategy. We can add new Index Options to your Contract in the future.
We can change certain features of an Index Option from one Term to the next, including the Index and the current limit on Index gains
(subject to minimum guarantees). We cannot change an existing Index Option’s limit on Index losses (including a Buffer or Floor)
or how it calculates Performance Credits. We reserve the right to close any Index Option to new Purchase Payments and transfers, but not
for renewal upon maturity.
The Contract allows you to transfer
between Index Options on Term End Dates. Additionally, you can transfer between Index Options before the Term End Date by executing a
Performance Lock and an Early Reallocation. For multi-year Term Index Options, you can also transfer between Index Options before the
Term End Date by executing a Performance Lock before the last year of the Term and changing your allocation instructions before the next
Index Anniversary. For more information, see section 3, Purchasing the Contract – Allocation of Purchase Payments and Contract
Value Transfers.
Information regarding the features
of each currently offered Index Option, including (i) the Index’s name, (ii) a brief statement describing the assets that the Index
seeks to track (e.g.,
U.S. large-cap equities), (iii) the Term length, (iv) the Index Option’s Crediting Methodology, (v) the current limit on Index
loss, and (vi) the minimum limit on Index gain, is available in Appendix A – Investment Options Available Under the Contract.
Limits
on Index Losses
Each Index Option offers a certain
level of protection from negative Index Returns, which limits the amount of negative Index Return used in calculating Performance Credits
for an Index Option at the end of a Term.
●
The
Index Protection Strategy with Trigger Index Option offers complete (or 100%) protection from negative Index Returns. For example, if
at the end of a Term, the Index Return is -25%, we will apply a 0% Performance Credit to your investment (i.e.,
no loss due to the negative Index Return).
●
Other
Index Options include a feature, either a Buffer or Floor, that provides limited protection from negative Index Returns.
−
A
Buffer is the maximum amount of negative Index Return that we
absorb before applying a negative Performance Credit. For example, if at the end of a Term, the Index Return is -25% and the Buffer is
10%, we apply a Performance Credit of -15%, meaning your Contract Value allocated to that Index Option will decrease by 15% since the
Term Start Date. This reflects the negative Index Return that exceeds the protection of the 10% Buffer. The Index Precision Strategy,
Index Dual Precision Strategy, and Index Performance Strategy offer Index Options with Buffers.
−
A
Floor, on the other hand, is the maximum amount of negative Index Return you
absorb as a negative Performance Credit. We absorb any negative Index Return beyond the Floor. For example, if the Index Return is -25%
and the Floor is -10%, we apply a Performance Credit of -10%, meaning your Contract Value allocated to that Index Option will decrease
by 10% since the Term Start Date. This reflects the negative Index Return down to the -10% Floor. The Index Guard Strategy offers Index
Options with a Floor.
−
We
currently offer Index Options with 10%, 20%, and 30% Buffers, and -10% Floors.
The current limit on Index loss for
an Index Option will not change for the life of that Index Option. However, we reserve the right to add new Index Options, as well as
close Index Options to new Purchase Payments and transfers. As such, the limits on Index loss offered under the Contract may change from
one Term to the next if we add an Index Option or discontinue accepting new allocations into an Index Option. However,
at least one Index Option with a Buffer no lower than 5% or Floor no lower than -25%,
or an Index Option that provides complete protection from Index losses, will always be available for renewal under the Contract.
Prior to selecting an Index Option,
you should evaluate the protection from negative Index Returns offered by an Index Option. See “Comparing Crediting Methods”
later in this section for additional factors that you should consider when comparing Index Options. Also, see “How We Set Limits
on Index Gains and Losses” below for a description of the factors that we consider when setting rates for the Index Options.
For detailed information on how we
calculate Index Option Values and Performance Credits, see “Determining Index Option Values” and “Calculating Performance
Credits” in section 6, Valuing Your Contract later in this prospectus.
Limits
on Index Gains
Each Index Option also has an upside
feature, either a Trigger Rate, Cap, and/or Participation Rate, used in the calculation of positive Performance Credits, if any,
that may be credited to your investment at the end of a Term. We may limit the amount you can earn on an Index Option based on the Trigger Rate,
Cap, or Participation Rate, as applicable.
●
A
Trigger Rate represents the positive Performance Credit, if any, that may apply on the Term End Date. The Index Precision Strategy, Index
Dual Precision Strategy, and Index Protection Strategy with Trigger offer Index Options with a Trigger Rate.
−
For
the Index Precision Strategy and Index Protection Strategy with Trigger, the Trigger Rate will apply if the Index Return is positive or
zero. For example, if at the end of a Term, the Index Return is 6% and the Trigger Rate is 3%, we apply a Performance Credit of 3%, meaning
your Contract Value allocated to that Index Option will increase by 3% since the Term Start Date.
−
For
the Index Dual Precision Strategy, the Trigger Rate will apply if the Index Return is positive, zero, or to a limited extent, negative.
For example, assume a Trigger Rate of 3% and a Buffer of 10%. If at the end of a Term, the Index Return is positive, zero, or negative
but no lower than -10% (i.e.,
not in excess of the Buffer), we apply a positive Performance Credit of 3%, meaning your Contract Value allocated to that Index Option
will increase by 3% since the Term Start Date. However, if the negative Index Return were lower than -10% (i.e.,
in excess of the Buffer), we apply a negative Performance Credit equal to the negative Index Return plus the Buffer.
●
A
Cap represents the maximum positive Performance Credit, if any, applied on a Term End Date. For example, if at the end of a Term, the
Index Return is 12% and the Cap is 10%, we apply a Performance Credit of 10%, meaning your Contract Value allocated to that Index Option
will increase by 10% since the Term Start Date. The Index Guard Strategy and Index Performance Strategy offer Index Options with a Cap.
Index Performance Strategy multi-year Term Index Options have both a Cap and a Participation Rate (as described below).
●
A
Participation Rate is the percentage that is multiplied by a positive Index Return in calculating a positive Performance Credit, if any,
subject to any applicable Cap. For example, if at the end of a Term, the Participation Rate is 100%, the Cap is 15%, and the Index Return
is 12% (which is lower than the Cap), we apply a Performance Credit of 12% (i.e.,
100% x 12%). However, if the Index Return were instead 20% (which is higher than the Cap), we would apply the Cap and a Performance Credit
of 15%. Index Performance Strategy multi-year Term Index Options have both a Cap and a Participation Rate.
The Trigger Rate, Cap, and/or
Participation Rate for an Index Option will change from Term to Term, subject to a specified guaranteed minimum that will not change for
the life of that Index Option. Guaranteed minimum Trigger Rates, Caps, and/or Participation Rates vary by Index Option.
The lowest Trigger Rate,
Cap, and Participation Rate that we may establish if we add a new Index Option to the Contract are 0.05%, 0.10%, and 5.00%, respectively.
The current Trigger Rates, Caps,
and Participation Rates being offered for new Terms of the available Index Options can be located at the following publicly accessible
website: https://www.allianzlife.com/RILAratesnf.
The Trigger Rates, Caps, and Participation Rates posted on that website address are incorporated by reference into this prospectus.
Prior to selecting an Index Option,
you should evaluate the Trigger Rates, Caps, and Participation Rates that we are offering. See “Comparing Crediting Methods”
later in this section for additional factors that you should consider when comparing Index Options. Also, see “How We Set Limits
on Index Gains and Losses” below for a description of the factors that we consider when setting rates for the Index Options.
For detailed information on how we
calculate Index Option Values and Performance Credits, see “Determining Index Option Values” and “Calculating Performance
Credits” in section 6, Valuing Your Contract later in this prospectus.
How
We Set Limits on Index Gains and Losses
We set Trigger Rates, Caps, and Participation
Rates in our discretion, subject to applicable guaranteed minimums. The rates applicable to new terms may differ for initial Terms, renewal
Terms, and Early Reallocations. When setting these limits on Index gains, we consider a variety of factors, including, but not limited
to:
●
Term
length,
●
level
of downside protection,
●
market
volatility,
●
our
hedging strategies and investment performance,
●
the
availability of hedging instruments,
●
the
amount of money available to us through Contract fees and expenses to purchase hedging instruments,
●
expenses
incurred by the Company,
●
your
Index Effective Date,
●
the
level of interest rates,
●
utilization
of Contract benefits by Owners, and
●
our
profitability goals.
We also set the limits on Index losses
for new Index Options (e.g.,
Buffers and Floors) in our discretion, but the Buffer or Floor will be no lower than 5% or -25%, respectively. When setting limits on
Index losses, we consider many of the factors listed above, as well as the fact that an Index Option’s limit on Index loss will
not change for the life of the Index Option.
Due to a combination of factors,
including potential changes in interest rates and other market conditions (e.g.
rising inflation), the current economic environment is evolving. The future impact on the rates we declare cannot be predicted with certainty.
The effect of a change in interest rates or other market conditions may not be direct or immediate. There may be a lag in changes to Trigger
Rates, Caps, and Participation Rates. Interest rates could increase. In a rising interest rate environment, increases in initial Trigger
Rates, Caps, and Participation Rates, if any, may be substantially slower than increases in interest rates. However, a rising interest
rate environment may have the opposite effect on renewal rates and cause renewal Trigger Rates, Caps, and Participation Rates to decrease.
We manage our obligation to provide
Performance Credits in part by trading call and put options, and other derivatives on the available Indexes. The costs of the call and
put options and other derivatives vary based on market conditions, and we may adjust future renewal and Early Reallocation Trigger Rates,
Caps, and Participation Rates to reflect these cost changes. The primary factor affecting the differences in the initial Trigger Rates,
Caps, and Participation Rates for newly issued Contracts and renewal and Early Reallocation rates for existing Contracts is the difference
in what we can earn from these investments for newly issued Contracts versus what we are earning on the investments that were made for
existing Contracts. In some instances, we may need to reduce initial, renewal, and Early Reallocation Trigger Rates, Caps, and Participation
Rates, or we may need to substitute an Index. You bear the risk that we may reduce Trigger Rates, Caps, and Participation Rates, which
reduces your opportunity to receive positive Performance Credits.
Terms
We currently offer Index Options
with 1-year, 3-year, and 6-year Terms. Not all Term lengths are available for all types of Crediting Methods. Each Crediting Method offers
1-year Terms. The Index Dual Precision Strategy and Index Performance Strategy also offer 3-year and 6-year Terms.
Prior to selecting an Index Option,
you should evaluate the various Term lengths. You should consider which Term lengths may be appropriate for you based on your liquidity
needs, investment time horizon, and financial goals. Investing in Index Options with shorter Terms will provide more opportunities for
Performance Credits and transferring Contract Value; however, assuming the same Index and limit on Index loss, Index Options with shorter
Terms generally tend to have less potential for Index gains. Conversely, investing in Index Options with longer Terms will provide fewer
opportunities for Performance Credits and transferring Contract Value; however, assuming the same Index and limit on Index loss, Index
Options with longer Terms generally tend to have more potential for gain. Some of the other factors to consider include:
●
How
long you intend to hold the Contract.
●
The
Daily Adjustment for Index Options with Term lengths of more than 1-year (including multi-year Terms or extended Term lengths resulting
from Early Reallocation) may be more negatively impacted by changes in the expected volatility of Index prices than 1-year Term Index
Options due to the difference in Term length.
●
The
risk of a negative Daily Adjustment is generally greater for Index Options with a Term length of more than 1 year than for 1-year
Term Index Options due to the Term length.
●
The
Index Performance Strategy 3-year and 6-year Term Index Options with a Participation Rate above 100% may also have larger fluctuations
in the Daily Adjustment than Index Options either without a Participation Rate, or with a Participation Rate equal to 100%.
●
For
shorter Term lengths, there is more certainty in both the final Index Values and how Trigger Rates, Caps, Buffers, and Floors determine
Performance Credits. This means there may be less fluctuation in the Daily Adjustment due to changes in Index return for Index Options
with shorter Term lengths.
Amounts
must remain in an Index Option until the end of its Term to receive a Performance Credit and to avoid a possible negative Daily Adjustment,
potential withdrawal charges, and any applicable tax consequences.
The Daily Adjustment applies to full or partial withdrawals taken from an Index Option before the end of a Term. The Daily Adjustment
also applies if, before the Term End Date, you execute a Performance Lock, you annuitize the Contract, we pay a death benefit, or we deduct
Contract fees and expenses. For more information, see section 7, Expenses and Adjustments – Daily Adjustment.
Maturity
We will send you a letter at least
30 days before each Index Anniversary. This letter advises you that current Trigger Rates, Caps, and Participation Rates are expiring,
and that renewal rates for the next Term Start Date will be available for your review. The Index Anniversary letter also reminds you of
your opportunity to transfer your Index Option Values on the upcoming Term End Date. Renewal rates could be higher or lower than
your current Trigger Rates, Caps, and Participation Rates, subject to the guaranteed minimums. On each Term End Date, you have the option
of remaining allocated to your current Index Options at the renewal Trigger Rates, Caps, and Participation Rates that we set on the next
Term Start Date, or transferring to another permitted Index Option.
At least seven calendar days before
each Index Anniversary, we publish renewal rates for the next Term Start Date for your review in your account on our website, and on our
public website at https://www.allianzlife.com/RILAratesnf.
If you do not review renewal rate change information when it is published or take no action to transfer to another permitted Index Option,
you will remain allocated to your current Index Options and will automatically become subject to the renewal Trigger Rates, Caps, and
Participation Rates until the next Term End Date.
For more information regarding your
availability to transfer into new Index Options, see section 3, Purchasing the Contract – Allocation of Purchase Payments and Contract
Value Transfers.
Indexes
The Contract currently offers Index
Options using the following Indexes. For more information on the Indexes, please see Appendix B – Available Indexes. Please note
that Index Values used to calculate Performance Credits are based on the Index’s closing value (for an Index that is a market
index) or closing share price (for an Index that is an ETF).
The S&P 500®
Index, Russell 2000®
Index, Nasdaq-100®
Index, and EURO STOXX 50®
are all “price return indexes,” not “total return indexes,” and therefore do not reflect dividends paid on
the securities composing the Index. This will reduce the Index Return and may cause the Index to underperform a direct investment in the
securities composing the Index. For the EURO STOXX 50®,
this Index is a euro “price return index” and Index Returns are determined without any exchange rate adjustment.
Because Index performance for the
iShares®
MSCI Emerging Markets ETF is based on the ETF’s closing share price, Index performance is calculated on a “price return”
basis, not a “total return” basis, and therefore does not reflect dividends paid on the securities in which the ETF invests.
In addition, an ETF deducts fees and costs, which reduce Index performance. These factors will reduce the Index Return and may cause the
ETF to underperform a direct investment in the ETF or the securities in which the ETF invests.
S&P 500®
Index. The S&P 500®
Index is comprised of equity securities issued by large-capitalization U.S. companies.
Russell 2000®
Index. The Russell 2000®
Index is comprised of equity securities of small-capitalization U.S. companies.
Nasdaq-100®
Index. The Nasdaq-100®
Index is comprised of equity securities of the largest U.S. and non-U.S. companies listed on The Nasdaq Stock Market, including companies
across all major industry groups except the financial industry.
EURO STOXX 50®.
The EURO STOXX 50®
is comprised of the equity securities of large-capitalization companies in the Eurozone.
iShares®
MSCI Emerging Markets ETF. The iShares®
MSCI Emerging Markets ETF seeks to track the investment results of the MSCI Emerging Markets Index, which is designed to measure equity
market performance in the global emerging markets. The underlying index may include large-and mid-capitalization companies. iShares®
MSCI Emerging Markets ETF is an exchange-traded fund. Additional information about iShares®
MSCI Emerging Markets ETF is available on the SEC’s website at https://www.sec.gov
and copies of that information may be obtained, upon payment of a duplicating fee, by electronic request at the following email address:
publicinfo@sec.gov. Please note that this information is not prepared by us and may be intended for shareholders of the ETF. You will
not be a shareholder of the ETF by
investing in
an Index Option that is linked to the performance of the ETF. You may also request additional information about the ETF from our Service
Center or your Financial Professional.
Index
Substitutions and Additions
We may substitute a new Index for
an existing Index if:
●
the
Index is discontinued,
●
we
are unable to use the Index because, for example, changes to an Index make it impractical or expensive to purchase derivative hedging
instruments to hedge the Index, or we are not licensed to use the Index,
●
the
method of calculation of the Index Values changes substantially, resulting in significantly different Index Values and performance results.
This could occur, for example, if an Index altered the types of securities tracked, or the weighting of different categories of securities,
or
●
we
determine in our sole discretion that the substitution is necessary due to unanticipated events outside of our direct control. This might
include other events similar to those listed above, other changes to the Index (such as name or ownership changes) that legally may be
considered a substitution, or a breach by the Index provider of the Index intent or performance expectations.
If we add or substitute an Index,
we first seek any required regulatory approval from each applicable state insurance regulator and then provide you with written notice.
We also provide you with written notice if an Index changes its name. Index substitutions can occur either on a Term Start Date or during
a Term. If we substitute an Index during a Term, we will combine the return of the previously available substituted Index from the Term
Start Date to the substitution date with the return of the new Index from the substitution date to the Term End Date. If we substitute
an Index during a Term:
●
we
do not
change the Charge Base we use to calculate the rider fee, and
●
the
Buffers, Floors, Trigger Rates, Caps, and Participation Rates for the substituted Index will apply to the new Index. We do not
change the Buffers, Floors, Trigger Rates, Caps, or Participation Rates that were in effect on the Term Start Date.
Similarly, if we substitute an Index
on a Term Start Date, the applicable Buffer, Floor, and minimum Trigger Rate, Cap, or Participation Rate will not change.
Changes to Trigger Rates, Caps, and
Participation Rates associated with the new Index, if any, may occur at the next regularly scheduled Term Start Date, subject to their
respective minimums.
The selection of a substitution Index
is in our discretion; however, it is anticipated that any substitute Index will be substantially similar to the Index it is replacing
and we will substitute any equity Index with a broad-based equity index. In the event a suitable replacement Index is not available, after
seeking any required regulatory approval, we will provide you written notice and information regarding the remaining available Index Options.
We may also close Index Options to
new Purchase Payments and transfers at any time.
Index
Historical Returns
The bar charts shown below provide
each Index’s annual returns for the last 10 calendar years, as well as the Index returns after applying a hypothetical 5% Cap and
a 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 Index Option. 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 Index Options, and does not
reflect Contract fees and expenses, including the withdrawal charge and Daily Adjustment, which may reduce performance.
*
This
Index is a “price return index,” not a “total return index,” and therefore does not reflect the dividends
paid on the securities composing the Index, which will reduce the Index Return and may cause the Index to underperform a direct investment
in the securities composing the Index.
*
This
Index is a “price return index,” not a “total return index,” and therefore does not reflect the dividends
paid on the securities composing the Index, which will reduce the Index Return and may cause the Index to underperform a direct investment
in the securities composing the Index.
*
This
Index is a “price return index,” not a “total return index,” and therefore does not reflect the dividends
paid on the securities composing the Index, which will reduce the Index Return and may cause the Index to underperform a direct investment
in the securities composing the Index.
*
This
Index is a “price return index,” not a “total return index,” and therefore does not reflect the dividends
paid on the securities composing the Index, which will reduce the Index Return and may cause the Index to underperform a direct investment
in the securities composing the Index. This Index is a euro “price return index” and Index Returns are determined without
any exchange rate adjustment.
*
This
Index is an ETF. Index Values are based on the ETF’s closing share price. Index performance is calculated on a “price return”
basis, not a “total return” basis, and therefore does not reflect the dividends paid on the securities in which the ETF
invests. In addition, an ETF deducts fees and costs, which reduce Index performance. These factors will reduce the Index Return and may
cause the Index to underperform a direct investment in the ETF or the securities in which the ETF invests.
How
the Crediting Methods Work
The Index
Protection Strategy with Trigger provides a Performance
Credit using the “point-to-point with step-up” method of calculation. You receive a Performance Credit equal to the Trigger
Rate if the Index Value on the Term End Date is equal to or greater than the Index Value on the Term Start Date, regardless of the amount
of actual Index Return. If the current Index Value is less than it was on the Term Start Date, the Performance Credit is zero.
The Index
Dual Precision Strategy provides a Performance Credit using
the “point-to-point with step-up” method of calculation.
●
You
receive a Performance Credit equal to the Trigger Rate if the Index Value on the Term End Date is:
−
equal
to or greater than the Index Value on the Term Start Date, regardless of the amount of actual Index Return, or
−
less
than the Index Value on the Term Start Date and the loss is less than or equal to the 10%, 20%, or 30% Buffer.
●
We
apply the Trigger Rate for the entire Term length; we do not apply
the Trigger Rate annually on a 3-year or 6-year Term Index Option.
●
If
the Index Return is negative and extends beyond the 10%, 20%, or 30% Buffer, the negative Performance Credit is equal to the negative
Index Return plus the 10%, 20%, or 30% Buffer. You participate in any losses in excess of the 10%, 20%, or 30% Buffer.
The Index
Precision Strategy provides a Performance Credit using
the “point-to-point with step-up” method of calculation.
●
If
the Index Value on the Term End Date is equal to or greater than the Index Value on the Term Start Date, regardless of the amount of actual
Index Return, the Performance Credit is equal to the Trigger Rate.
●
If
the Index Return is negative and the loss:
−
is
less than or equal to the 10% Buffer, the Performance Credit is zero. We absorb any loss up to the 10% Buffer.
−
extends
beyond the 10% Buffer, the negative Performance Credit is equal to the negative Index Return plus the 10% Buffer. You participate in any
losses in excess of the 10% Buffer.
The Index
Guard Strategy provides a Performance Credit using the
“point-to-point with Cap” method of calculation.
●
If
the Index Return is positive, the Performance Credit is equal to the Index Return up to the Cap.
●
If
the Index Value on the Term End Date is equal to the Index Value on the Term Start Date, the Performance Credit is zero.
●
If
the Index Return is negative, the negative Performance Credit is equal to the negative Index Return down to the -10% Floor. You participate
in any losses down to the -10% Floor. We absorb any negative Index Return beyond the -10% Floor.
The Index
Performance Strategy provides a Performance Credit. The
1-year Term Index Options use the “point-to-point with Cap” method of calculation. The 3-year and 6-year Term Index Options
use the “point-to-point with Cap and enhanced upside” method of calculation.
●
If
the Index Return is positive, the Performance Credit is equal to:
−
the
Index Return up to the Cap for a 1-year Term. If the 1-year Term is uncapped, the Performance Credit is equal to the Index Return.
−
the
Index Return multiplied by the Participation Rate, up to the Cap for a 3-year or 6-year Term. If the 3-year or 6-year Term is
uncapped, the Performance Credit is equal to the Index Return multiplied by the Participation Rate. We apply the Participation Rate
and Cap for the entire Term length; we do not
apply the Participation Rate and Cap annually on a 3-year or 6-year Term.
●
If
the Index Value on the Term End Date is equal to the Index Value on the Term Start Date, the Performance Credit is zero.
●
If
the Index Return is negative and the loss:
−
is
less than or equal to the 10%, 20%, or 30% Buffer, the Performance Credit is zero. We absorb any loss up to the 10%, 20%, or 30% Buffer.
We apply the Buffer for the entire Term length; we do not
apply the Buffer annually on a 3-year or 6-year Term Index Option.
−
extends
beyond the 10%, 20%, or 30% Buffer, the negative Performance Credit is equal to the negative Index Return plus the 10%, 20%, or 30% Buffer.
You participate in any losses in excess of the 10%, 20%, or 30% Buffer.
|
● The
Index Dual Precision Strategy, Index Precision Strategy, Index Guard Strategy, and Index Performance
Strategy
allow negative Performance Credits. As a result, you could lose a significant amount of money in the
form
of negative Performance Credits if an Index declines in value. The
maximum potential negative
Performance
Credit is: -90% with a 10% Buffer; -80% with a 20% Buffer; -70% with a 30% Buffer; and -10%
with
the Floor. |
|
● Because
we calculate Index Returns only on a single date in time, you may experience negative or flat
performance
even though the Index you selected for a given Crediting Method experienced gains through
some,
or most, of the Term. |
|
● If
an Index Performance
Strategy Index Option is “uncapped” for one Term (i.e., we do not declare a Cap for
that
Term) it does not mean that we will not declare a Cap for it on future Term Start Dates.
On the next Term
Start
Date we can declare a Cap for the next Term, or declare it to be uncapped. |
Comparing
Crediting Methods
The Crediting Methods have different
risk and return potentials.
|
What
is the asset protection? | |
|
Index
Protection
Strategy
with Trigger |
• Most
protection.
• If
the Index loses value, the Performance Credit is zero. You do not receive a negative Performance
Credit.
|
|
What
is the asset protection? | |
|
Index
Dual Precision
Strategy
|
• Less
protection than the Index Protection Strategy with Trigger and Index Guard Strategy. Protection
on
the Index Dual Precision Strategy 1-year Term is equal to or greater than what is available with the
Index
Precision Strategy depending on the Index Option. Offers the same protection levels as the
Index
Performance Strategy.
• Buffer
absorbs 10%, 20%, or 30% of loss, but you receive a negative Performance Credit for losses
greater
than the Buffer.
• Potential
for large losses in any Term.
• More
sensitive to large negative market movements because small or moderate negative market
movements
within the applicable 10%, 20%, or 30% Buffer result in a positive Performance Credit. In
a
period of extreme negative market performance, the risk of loss is greater with the Index Dual
Precision
Strategy than with the Index Guard Strategy.
• In
extended periods of moderate to large negative market performance, 3-year and 6-year Terms may
provide
less protection than the 1-year Terms because, in part, the Buffer is applied over a longer
period
of time. |
|
Index
Precision Strategy |
• Less
protection than the Index Protection Strategy with Trigger and Index Guard Strategy. Protection
may
be equal to or less than what is available with the Index Dual Precision Strategy and Index
Performance
Strategy depending on the Index Option.
• Buffer
absorbs 10% of loss, but you receive a negative Performance Credit for losses greater than
10%.
• Potential
for large losses in any Term.
• More
sensitive to large negative market movements because small negative market movements are
absorbed
by the 10% Buffer. In a period of extreme negative market performance, the risk of loss is
greater
with the Index Precision Strategy than with the Index Guard Strategy. |
|
Index
Guard Strategy |
• Less
protection than the Index Protection Strategy with Trigger, but more than Index Dual Precision
Strategy,
Index Precision Strategy, and Index Performance Strategy.
• Permits
a negative Performance Credit down to the -10% Floor.
• Protection
from significant losses.
• More
sensitive to smaller negative market movements that persist over time because the -10% Floor
reduces
the impact of large negative market movements.
• In
an extended period of smaller negative market returns, the risk of loss is greater with the Index
Guard
Strategy than with the Index Dual Precision Strategy, Index Precision Strategy, and Index
Performance
Strategy.
• Provides
certainty regarding the maximum loss in any Term. |
|
Index
Performance
Strategy
|
• Less
protection than the Index Protection Strategy with Trigger and Index Guard Strategy. 1-year
Term
Index Options with a 10% Buffer provide the same protection as the Index Precision Strategy.
The
20% and 30% Buffers provide more protection than what is available with the Index Precision
Strategy.
Offers the same protection levels as the Index Dual Precision Strategy.
• Buffer
absorbs 10%, 20%, or 30% of loss depending on the Index Option you select, but you receive
a
negative Performance Credit for losses greater than the Buffer.
• Potential
for large losses in any Term.
• More
sensitive to large negative market movements because small or moderate negative market
movements
are absorbed by the Buffer. In a period of extreme negative market performance, the risk
of
loss is greater with the Index Performance Strategy than with the Index Guard Strategy.
• In
extended periods of moderate to large negative market performance, 3-year and 6-year Terms may
provide
less protection than the 1-year Terms because, in part, the Buffer is applied over a longer
period
of time. |
|
What
is the growth opportunity? | |
|
Index
Protection
Strategy
with Trigger |
• Growth
opportunity limited by the Trigger Rates.
• May
perform best in periods of small positive market movements relative to the other Crediting
Methods,
because such small positive market movements may result in positive Performance Credits
that
are greater than the Index Return while also providing complete protection from any Index losses.
May
have lower return potential compared to other Crediting Methods.
• These
Trigger Rates will generally be less than Caps, and Index Precision Strategy's Trigger Rates.
Growth
opportunity may be more or less than the Index Dual Precision Strategy depending on Trigger
Rates.
|
|
Index
Dual Precision
Strategy
|
• Growth
opportunity limited by the Trigger Rates. We do not
apply the Trigger Rate annually on 3-year
and
6-year Term Index Options.
• May
perform best in periods of small or moderate negative market movements as it provides a
positive
Performance Credit in these environments while other Crediting Methods do not.
• Generally,
1-year Term Index Options have less growth opportunity than the Index Precision Strategy
and
the 1-year Term Index Options on the Index Performance Strategy.
• Generally,
3-year and 6-year Term Index Options have less growth opportunity than the 3-year and
6-year
Term Index Options on the Index Performance Strategy.
• Growth
opportunity may be more or less than the Index Protection Strategy with Trigger and Index
Guard
Strategy depending on Trigger Rates and Caps. |
|
Index
Precision Strategy |
• Growth
opportunity limited by the Trigger Rates.
• May
perform best in periods of small positive market movements.
• Generally
more growth opportunity than the Index Protection Strategy with Trigger and Index Dual
Precision
Strategy. However, less growth opportunity than the Index Dual Precision Strategy during
periods
of small or moderate negative market movements.
• Growth
opportunity may be more or less than the Index Guard Strategy or Index Performance
Strategy
depending on Trigger Rates and Caps. |
|
Index
Guard Strategy |
• Growth
opportunity limited by the Caps.
• May
perform best in a strong market.
• Growth
opportunity that generally may be matched or exceeded only by the Index Performance
Strategy.
However, growth opportunity may be more or less than the Index Dual Precision Strategy,
Index
Precision Strategy, or Index Performance Strategy depending on Trigger Rates and Caps. |
|
Index
Performance
Strategy
|
• Growth
opportunity limited by the Caps and/or Participation Rates. We do not
apply the Cap annually
on
3-year and 6-year Term Index Options. If
we do not declare a Cap for an Index Option, there is
no
maximum limit on the positive Index Return for that Index Option. In addition, you can
receive
more than the positive Index Return if the Participation Rate applies and is greater
than
its 100% minimum. However, the Participation Rate cannot boost Index Returns beyond a
declared
Cap.
• May
perform best in a strong market.
• Generally,
1-year Term with 10% Buffer Index Options, 3-year Term with 10%, 20%, or 30% Buffer
Index
Options, and 6-year Term with 10%, 20%, or 30% Buffer Index Options have the most growth
opportunity.
• Growth
opportunity for the 1-year Term with 20% or 30% Buffer may be less than the Index Dual
Precision
Strategy 1-year Term, Index Precision Strategy, and Index Guard Strategy depending on
Trigger
Rates and Caps. |
|
What
can change within a Crediting Method? | |
|
Index
Protection
Strategy
with Trigger |
• Renewal
and Early Reallocation Trigger Rates for existing Contracts can change on each Term Start
Date.
– 1-year
Term has a 0.10% minimum Trigger Rate. |
|
What
can change within a Crediting Method? | |
|
Index
Dual Precision
Strategy
|
• Renewal
and Early Reallocation Trigger Rates for existing Contracts can change on each Term Start
Date.
– 1-year
Term with 10%, 20%, or 30% Buffer has a 0.10% minimum Trigger Rate.
– 3-year
Term with 10%, 20%, or 30% Buffer has a 1% minimum Trigger Rate.
– 6-year
Term with 10%, 20%, or 30% Buffer has a 3% minimum Trigger Rate.
• The
10%, 20%, and 30% Buffers for the currently available Index Options cannot change. However, if
we
add a new Index Option to your Contract after the Issue Date, we establish the Buffer for it on the
date
we add the Index Option to your Contract. The minimum Buffer is 5% for a new Index Option. |
|
Index
Precision Strategy |
• Renewal
and Early Reallocation Trigger Rates for existing Contracts can change on each Term Start
Date.
– 1-year
Term has a 0.10% minimum Trigger Rate.
• The
10% Buffers for the currently available Index Options cannot change. However, if we add a new
Index
Option to your Contract after the Issue Date, we establish the Buffer for it on the date we add
the
Index Option to your Contract. The minimum Buffer is 5% for a new Index Option. |
|
Index
Guard Strategy |
• Renewal
and Early Reallocation Caps for existing Contracts can change on each Term Start Date.
– 1-year
Term has a 0.10% minimum Cap.
• The
-10% Floors for the currently available Index Options cannot change. However, if we add a new
Index
Option to your Contract after the Issue Date, we establish the Floor for it on the date we add the
Index
Option to your Contract. The minimum Floor is -25% for a new Index Option. |
|
Index
Performance
Strategy
|
• Renewal
and Early Reallocation Caps and/or Participation Rates for existing Contracts can change on
each
Term Start Date.
– 1-year
Term with 10%, 20%, or 30% Buffer has a 0.10% minimum Cap.
– 3-year
Term with 10%, 20%, or 30% Buffer has a 2% minimum Cap, and 100% minimum
Participation
Rate.
– 6-year
Term with 10%, 20%, or 30% Buffer has a 5% minimum Cap, and 100% minimum
Participation
Rate.
• The
10%, 20%, and 30% Buffers for the currently available Index Options cannot change. However, if
we
add a new Index Option to your Contract after the Issue Date, we establish the Buffer for it on the
date
we add the Index Option to your Contract. The minimum Buffer is 5% for a new Index Option. |
|
• For
any Index Option with the
Index Dual Precision
Strategy, Index Precision Strategy, or Index Performance
Strategy,
you
participate in any negative Index Return in excess of the Buffer,
which reduces your Contract Value.
For
example, for a 10% Buffer we absorb the first -10% of Index Return and you could lose up to 90% of the Index
Option
Value. However, for any Index Option with the Index
Guard Strategy, we
absorb any negative Index Return
in
excess of the -10% Floor, so your maximum loss is limited to -10% of the Index Option Value due to negative
Index
Returns.
|
|
• Trigger
Rates, Caps, and Participation Rates as set by us from time-to-time may vary substantially based on market
conditions.
However,
in extreme market environments, it is possible that all Trigger Rates, Caps, and Participation
Rates
will be reduced to their respective minimums of 0.10%, 1%, 2%, 3%, 5%, or 100% as stated in the table above.
|
|
• If
your Contract is within its free look period you may be able to take advantage of any increase in initial Trigger
Rates,
Caps, and/or Participation Rates by cancelling your Contract and purchasing a new Contract. |
|
• If
the initial Trigger Rates, Caps, and/or Participation Rates available on the Index Effective Date are not acceptable
you
have the following options: |
|
– Cancel
your Contract if you are still within the free look period. If you took a withdrawal that was subject to a
withdrawal
charge, we will refund any previously deducted withdrawal charge upon a free look cancellation. |
|
– Request
to extend your Index Effective Date if you have not reached your first Quarterly Contract Anniversary. |
|
– If
the free look period has expired, request a full withdrawal and receive the Cash Value. This withdrawal is subject
to
withdrawal charges, income taxes, and may also be subject to a 10% additional federal tax for amounts
withdrawn
before age 59 1∕2.
If this occurs on or
before the Index Effective Date, the
Daily Adjustment does not
apply.
If this occurs after
the Index Effective Date, you are
subject to the Daily Adjustment. |
|
• Trigger
Rates, Caps, and Participation Rates can be different from Index Option to Index Option. For
example,
Caps
for the Index Performance Strategy 1-year Terms can be different between the S&P 500®
Index and the
Nasdaq-100®
Index; and Caps for the S&P 500®
Index can be different between 1-year, 3-year, and 6-year Terms on
the
Index Performance Strategy, and between the 1-year Terms for the Index Guard Strategy and Index Performance
Strategy.
Initial,
renewal, and Early Reallocation rates may also be different from Contract-to-Contract.
For
example,
assume that on August 3, 2023 we set Caps for the Index Performance Strategy 1-year Term with 10% Buffer
using
the S&P 500®
Index as follows: |
|
– 13%
initial rate and 12% Early Reallocation rate for new Contracts issued in 2023, |
|
– 14%
renewal rate and 14% Early Reallocation rate for existing Contracts issued in 2022, and |
|
– 12%
renewal rate and 13% Early Reallocation rate for existing Contracts issued in 2021. |
We apply positive, zero, or negative
Performance Credits at the end of a Term to amounts allocated to an Index Option based, in part, on the performance of the applicable
Index. An investment in an Index Option is not an investment in the Index or in any Index fund.
Strategy
allow negative Performance Credits. As a result, you could lose a significant amount of money in the
form
of negative Performance Credits if an Index declines in value. The
maximum potential negative
Performance
Credit is: -90% with a 10% Buffer; -80% with a 20% Buffer; -70% with a 30% Buffer; and -10%
with
the Floor.
Limits
on Index Losses
Each Index Option offers a certain
level of protection from negative Index Returns, which limits the amount of negative Index Return used in calculating Performance Credits
for an Index Option at the end of a Term.
●
The
Index Protection Strategy with Trigger Index Option offers complete (or 100%) protection from negative Index Returns. For example, if
at the end of a Term, the Index Return is -25%, we will apply a 0% Performance Credit to your investment (i.e.,
no loss due to the negative Index Return).
●
Other
Index Options include a feature, either a Buffer or Floor, that provides limited protection from negative Index Returns.
−
A
Buffer is the maximum amount of negative Index Return that we
absorb before applying a negative Performance Credit. For example, if at the end of a Term, the Index Return is -25% and the Buffer is
10%, we apply a Performance Credit of -15%, meaning your Contract Value allocated to that Index Option will decrease by 15% since the
Term Start Date. This reflects the negative Index Return that exceeds the protection of the 10% Buffer. The Index Precision Strategy,
Index Dual Precision Strategy, and Index Performance Strategy offer Index Options with Buffers.
−
A
Floor, on the other hand, is the maximum amount of negative Index Return you
absorb as a negative Performance Credit. We absorb any negative Index Return beyond the Floor. For example, if the Index Return is -25%
and the Floor is -10%, we apply a Performance Credit of -10%, meaning your Contract Value allocated to that Index Option will decrease
by 10% since the Term Start Date. This reflects the negative Index Return down to the -10% Floor. The Index Guard Strategy offers Index
Options with a Floor.
−
We
currently offer Index Options with 10%, 20%, and 30% Buffers, and -10% Floors.
The current limit on Index loss for
an Index Option will not change for the life of that Index Option. However, we reserve the right to add new Index Options, as well as
close Index Options to new Purchase Payments and transfers. As such, the limits on Index loss offered under the Contract may change from
one Term to the next if we add an Index Option or discontinue accepting new allocations into an Index Option. However,
at least one Index Option with a Buffer no lower than 5% or Floor no lower than -25%,
or an Index Option that provides complete protection from Index losses, will always be available for renewal under the Contract.
Prior to selecting an Index Option,
you should evaluate the protection from negative Index Returns offered by an Index Option. See “Comparing Crediting Methods”
later in this section for additional factors that you should consider when comparing Index Options. Also, see “How We Set Limits
on Index Gains and Losses” below for a description of the factors that we consider when setting rates for the Index Options.
For detailed information on how we
calculate Index Option Values and Performance Credits, see “Determining Index Option Values” and “Calculating Performance
Credits” in section 6, Valuing Your Contract later in this prospectus.
Limits
on Index Gains
Each Index Option also has an upside
feature, either a Trigger Rate, Cap, and/or Participation Rate, used in the calculation of positive Performance Credits, if any,
that may be credited to your investment at the end of a Term. We may limit the amount you can earn on an Index Option based on the Trigger Rate,
Cap, or Participation Rate, as applicable.
●
A
Trigger Rate represents the positive Performance Credit, if any, that may apply on the Term End Date. The Index Precision Strategy, Index
Dual Precision Strategy, and Index Protection Strategy with Trigger offer Index Options with a Trigger Rate.
−
For
the Index Precision Strategy and Index Protection Strategy with Trigger, the Trigger Rate will apply if the Index Return is positive or
zero. For example, if at the end of a Term, the Index Return is 6% and the Trigger Rate is 3%, we apply a Performance Credit of 3%, meaning
your Contract Value allocated to that Index Option will increase by 3% since the Term Start Date.
−
For
the Index Dual Precision Strategy, the Trigger Rate will apply if the Index Return is positive, zero, or to a limited extent, negative.
For example, assume a Trigger Rate of 3% and a Buffer of 10%. If at the end of a Term, the Index Return is positive, zero, or negative
but no lower than -10% (i.e.,
not in excess of the Buffer), we apply a positive Performance Credit of 3%, meaning your Contract Value allocated to that Index Option
will increase by 3% since the Term Start Date. However, if the negative Index Return were lower than -10% (i.e.,
in excess of the Buffer), we apply a negative Performance Credit equal to the negative Index Return plus the Buffer.
●
A
Cap represents the maximum positive Performance Credit, if any, applied on a Term End Date. For example, if at the end of a Term, the
Index Return is 12% and the Cap is 10%, we apply a Performance Credit of 10%, meaning your Contract Value allocated to that Index Option
will increase by 10% since the Term Start Date. The Index Guard Strategy and Index Performance Strategy offer Index Options with a Cap.
Index Performance Strategy multi-year Term Index Options have both a Cap and a Participation Rate (as described below).
●
A
Participation Rate is the percentage that is multiplied by a positive Index Return in calculating a positive Performance Credit, if any,
subject to any applicable Cap. For example, if at the end of a Term, the Participation Rate is 100%, the Cap is 15%, and the Index Return
is 12% (which is lower than the Cap), we apply a Performance Credit of 12% (i.e.,
100% x 12%). However, if the Index Return were instead 20% (which is higher than the Cap), we would apply the Cap and a Performance Credit
of 15%. Index Performance Strategy multi-year Term Index Options have both a Cap and a Participation Rate.
The Trigger Rate, Cap, and/or
Participation Rate for an Index Option will change from Term to Term, subject to a specified guaranteed minimum that will not change for
the life of that Index Option. Guaranteed minimum Trigger Rates, Caps, and/or Participation Rates vary by Index Option.
*
This
Index is a “price return index,” not a “total return index,” and therefore does not reflect the dividends
paid on the securities composing the Index, which will reduce the Index Return and may cause the Index to underperform a direct investment
in the securities composing the Index.
*
This
Index is a “price return index,” not a “total return index,” and therefore does not reflect the dividends
paid on the securities composing the Index, which will reduce the Index Return and may cause the Index to underperform a direct investment
in the securities composing the Index.
*
This
Index is a “price return index,” not a “total return index,” and therefore does not reflect the dividends
paid on the securities composing the Index, which will reduce the Index Return and may cause the Index to underperform a direct investment
in the securities composing the Index.
*
This
Index is a “price return index,” not a “total return index,” and therefore does not reflect the dividends
paid on the securities composing the Index, which will reduce the Index Return and may cause the Index to underperform a direct investment
in the securities composing the Index. This Index is a euro “price return index” and Index Returns are determined without
any exchange rate adjustment.
*
This
Index is an ETF. Index Values are based on the ETF’s closing share price. Index performance is calculated on a “price return”
basis, not a “total return” basis, and therefore does not reflect the dividends paid on the securities in which the ETF
invests. In addition, an ETF deducts fees and costs, which reduce Index performance. These factors will reduce the Index Return and may
cause the Index to underperform a direct investment in the ETF or the securities in which the ETF invests.
The Daily Adjustment
approximates the Index Option Value that will be available on the Term End Date. It is the estimated present value of the future Performance
Credit that we will apply on the Term End Date. The Daily Adjustment primarily takes into account:
(i)
any
Index gains during the Term subject to the applicable Trigger Rate, Cap, and/or Participation Rate,
(ii)
for
the Index Dual Precision Strategy, any Index losses less than or equal to the 10%, 20%, or 30% Buffer,
(iii)
either
any Index losses greater than the 10%, 20%, or 30% Buffer, or Index losses down to the -10% Floor (not applicable to the Index Protection
Strategy with Trigger), and
(iv)
the
number of days until the Term End Date.
A withdrawal taken during the Term
may not receive the full benefit of the Buffer or Floor because the Daily Adjustment takes into account what may potentially happen between
the withdrawal date and the Term End Date. All other factors being equal, even if the current Index return during the Term is greater
than the Trigger Rate or Cap, the Daily Adjustment will usually be lower than the Cap or Trigger Rate. For the Index Protection Strategy
with Trigger and Index Precision Strategy, even if the current Index return during the Term is greater than or equal to zero, the Daily
Adjustment will usually be lower than the Trigger Rate. For the Index Dual Precision Strategy, even if the Index return during the
Term is positive, zero, or negative and within the applicable Buffer, the Daily Adjustment will usually be lower than the Trigger Rate.
This is because there is a possibility that the Index return could decrease before the Term End Date. Similarly, even though a negative
Index return may be within the 10%, 20%, or 30% Buffer for the Index Dual Precision Strategy, Index Precision Strategy, and
Index Performance Strategy, you still may receive a negative Daily Adjustment because there is a possibility that the Index Return could
decrease before the Term End Date. The Daily
Adjustment for Index Options with a Term length of more than 1 year may be more negatively impacted by changes in the expected volatility
of Index prices than 1-year Term Index Options due to the difference in Term length. Also, the risk of a negative Daily
Adjustment is generally greater for Index Options with a Term length of more than 1 year than for 1-year Term Index Options due to
the Term length. The Index Performance Strategy 3-year and 6-year Term Index Options with a Participation Rate above 100% may also have
larger fluctuations in the Daily Adjustment than Index Options either without a Participation Rate, or with a Participation Rate equal
to 100%. Finally, a negative Index return for the Index Guard Strategy may result in you receiving a Daily Adjustment lower than the -10%
Floor, because the Daily Adjustment reflects the present value of the Floor and you will not receive the full benefit of the -10% Floor
until the Term End Date.
A negative Daily Adjustment may cause you to realize loss of principal and previous earnings.
Such
losses will be greater if the amount withdrawn is also subject to a withdrawal charge, or is a deduction of Contract fees and expenses.
10. Benefits Available Under the Contract
The following tables summarize information
about the benefits available under the Contract.
|
Standard
Benefits (No Additional Charge) | ||
|
Name
of
Benefit
|
Purpose
|
Brief
Description of Restrictions/Limitations |
|
Free
Withdrawal
Privilege
|
Allows
you to withdraw up to 10% of your total
Purchase
Payments each Contract Year without
incurring
a withdrawal charge. |
• Only
available during the Accumulation Phase.
• Not
available upon a full withdrawal.
• Upon
a full withdrawal, we may assess a
withdrawal
charge against amounts previously
withdrawn
under the free withdrawal privilege.
• Unused
free withdrawal amounts not available in
future
years.
• Program
withdrawals may be subject to negative
Daily
Adjustments.
• Program
withdrawals are subject to income taxes,
and
may also be subject to a 10% additional
federal
tax for amounts withdrawn before age
59 1∕2.
|
|
Minimum
Distribution
Program
|
Allows
you to automatically take withdrawals to
satisfy
the required minimum distribution
requirements
(RMD) imposed by the Internal
Revenue
Code. |
• Only
available during the Accumulation Phase.
• Only
available to IRA or SEP IRA Contracts.
• Generally
required for Inherited IRA and Inherited
Roth
IRA Contracts.
• Program
withdrawals count against the free
withdrawal
privilege.
• Program
withdrawals may be subject to negative
Daily
Adjustments.
• Program
withdrawals are subject to income taxes.
• Program
withdrawals may be monthly, quarterly,
semi-annual
or annual, unless you have less than
$25,000
in Contract Value, in which case only
annual
payments are available.
• We
reserve the right to discontinue or modify the
program
subject to the requirements of law. |
|
Waiver
of
Withdrawal
Charge
Benefit
|
Waives
withdrawal charges if you are confined for
care,
or are unable to perform at least two out of six
activities
of daily living (ADLs). |
• Only
available during the Accumulation Phase.
• Confinement
must begin after the first Contract
Anniversary,
be for at least 90 days in a 120-day
period,
and requires proof of stay. We require
additional
proof of qualification for this benefit
annually.
• Inability
to perform two ADLs must be for at least
90
continuous days and may require an exam or
tests
by a physician.
• Not
available on the Issue Date if any Owner was
confined
to an eligible facility, or unable to perform
all
six ADLs.
• Program
withdrawals count against the free
withdrawal
privilege.
• Program
withdrawals may be subject to negative
Daily
Adjustments.
• Program
withdrawals are not subject to withdrawal
charges,
but are subject to income taxes, and may
also
be subject to a 10% additional federal tax for
amounts
withdrawn before age 59 1∕2.
• State
variations may apply. |
|
Standard
Benefits (No Additional Charge) | ||
|
Name
of
Benefit
|
Purpose
|
Brief
Description of Restrictions/Limitations |
|
Traditional
Death
Benefit |
Provides
a death benefit equal to the greater of the
Contract
Value, or Guaranteed Death Benefit Value.
The
Guaranteed Death Benefit Value is total
Purchase
Payments adjusted for withdrawals.
Examples
of the death benefit provided by the
Traditional
Death Benefit, and how withdrawals
impact
this benefit, are included in section 11, Death
Benefit.
|
• Benefit
only available during the Accumulation
Phase.
• Withdrawals,
including any negative Daily
Adjustments,
may significantly reduce the benefit
as
indicated in section 11, Death Benefit.
• Restrictions
on Purchase Payments may limit the
benefit.
• Annuitizing
the Contract will end the benefit. |
|
Performance
Lock
and Early
Reallocations
|
Performance
Lock allows you to capture the current
Index
Option Value during the Term for an Index
Option.
Performance Lock can help eliminate doubt
about
future Index performance and possibly limit the
impact
of negative performance. Early Reallocation
allows
you to transfer out of a locked Index Option
on
days other than an Index Anniversary, or a Term
End
Date.
A
Performance Lock example is included in section
6,
Valuing Your Contract — Performance Locks and
Early
Reallocations. |
• Available
during the Accumulation Phase.
•
Performance Locks must be executed before the
Term
End Date.
• If
a Performance Lock is executed, the locked
Index
Option will no longer participate in Index
performance
(positive or negative) for the
remainder
of the Term, and will not receive a
Performance
Credit on the Term End Date.
• You
will not know your locked Index Option Value
in
advance.
• The
locked Index Option Value will reflect a Daily
Adjustment.
• If
a Performance Lock is executed when the Daily
Adjustment
has declined, it will lock in any loss.
• A
Performance Lock can be executed only once
each
Term for each Index Option.
• Cannot
execute a Performance Lock for only a
portion
of the Index Option Value.
•
Early Reallocation requests are not accepted
within
14 calendar days before an Index
Anniversary.
• You
are limited to twelve Early Reallocation
requests
each Index Year.
• Deductions
(e.g. withdrawals, fees) decrease the
locked
Index Option Value.
• Cannot
transfer locked Index Option Value until the
next
Index Anniversary that occurs on or
immediately
after the Lock Date unless you
execute
an Early Reallocation.
• We
will not provide advice or notify you
regarding
whether you should execute a
Performance
Lock or Early Reallocation or the
optimal
time for doing so.
• We
will not warn you if you execute a
Performance
Lock or Early Reallocation at a
sub-optimal
time.
• We
are not responsible for any losses related
to
your decision whether or not to execute a
Performance
Lock or Early Reallocation. |
|
Optional
Benefits | |||
|
Name
of
Benefit
|
Purpose
|
Maximum
Fee
|
Brief
Description of Restrictions/Limitations |
|
Maximum
Anniversary
Value
Death
Benefit
|
Provides
a death benefit equal to the greater of
the
Contract Value, or Guaranteed Death Benefit
Value.
The Guaranteed Death Benefit Value is
the
Maximum Anniversary Value.
Examples
of the death benefit provided by the
Maximum
Anniversary Value Death Benefit,
including
calculation of the Maximum
Anniversary
Value and how withdrawals impact
this
benefit, are included in section 11, Death
Benefit.
|
0.20%
(as
a
percentage
of
the
Charge
Base)
|
• Must
be age 75 or younger to elect.
• Can
only be added to a Contract at issue.
• Replaces
the Traditional Death Benefit if
elected.
• Benefit
cannot be removed from the Contract.
• Only
available during the Accumulation Phase.
• Withdrawals,
including any negative Daily
Adjustment,
may significantly reduce the
benefit
as indicated in section 11, Death
Benefit..
• Withdrawals
reduce the likelihood of lock in.
• Restrictions
on Purchase Payments may limit
the
benefit.
• Annuitizing
the Contract will end the benefit. |
11. Death Benefit
“You” in this section
refers to the Owner, or the Annuitant if the Contract is owned by a non-individual.
The Contract provides the Traditional
Death Benefit, the standard death benefit, for no additional charge. If available, you can instead select the optional Maximum Anniversary
Value Death Benefit at Contract issue for an additional rider fee if all Owners and the Annuitant are age 75 or younger. The Maximum Anniversary
Value Death Benefit can only be added to a Contract at issue. The
Maximum Anniversary Value Death Benefit cannot be less than the Traditional Death Benefit, but they may be equal. Please discuss this
benefit’s appropriateness with your Financial Professional.
The death benefit is the greater of the Contract Value, or Guaranteed Death Benefit Value. The Guaranteed Death Benefit Value is either
total Purchase Payments reduced proportionately for withdrawals you take (including any withdrawal charge) if you select the Traditional
Death Benefit, or the Maximum Anniversary Value if you select the Maximum Anniversary Value Death Benefit.
The death benefit
is only available during the Accumulation Phase. If you
or the Determining Life (Lives) die during the Accumulation Phase, we process the death benefit using prices determined after we receive
the required information, which is either a Valid Claim or due proof of death as stated here. (For information on due proof of death see
the Glossary – Valid Claim). If we receive this information at or after the end of the current Business Day, we use the next Business
Day’s prices.
If there are multiple Beneficiaries,
each Beneficiary receives the portion of the death benefit he or she is entitled to when we receive his or her Valid Claim. If a Beneficiary
dies before you or the Designated Life, that Beneficiary’s interest in this Contract ends unless your Beneficiary designation specifies
otherwise. If there are no remaining Beneficiaries, or no named Beneficiaries, we pay the death benefit to your estate, or if the Owner
is a non-individual, to the Owner. Unless you instruct us to pay Beneficiaries a specific percentage of the death benefit, each Beneficiary
receives an equal share.
Each Beneficiary’s portion
of the death benefit remains in the Index Options based on the allocation instructions that were in effect on the date of death until
we receive his or her Valid Claim and we either pay the claim or the Beneficiary provides alternate allocation instructions. If there
is Variable Account Value in the Variable Option on the date of death, it remains there until the next Index Anniversary. If an Index
Anniversary occurs before we receive a Valid Claim, we will transfer that Beneficiary’s portion of the Variable Account Value to
the Index Options based on the allocation instructions that were in effect on the date of death.
From the time we determine the death
benefit until we make a complete distribution, any amount in the Investment Options continues to be subject to investment risk that is
borne by the recipient(s). Once we receive notification of death, we may no longer accept or process transfer requests. After we receive
the first Valid Claim from any Beneficiary, we also will not accept additional Purchase Payments or allow any partial or full withdrawals
unless the withdrawal is required to comply with federal tax law.
On the first
death of a Determining Life during the Accumulation Phase, if your selected death benefit is in effect, your Beneficiary(ies) will receive
the greater of the Contract Value or Guaranteed Death Benefit Value. The Guaranteed Death Benefit Value is either total Purchase
Payments reduced proportionately for withdrawals you take (including any withdrawal charge) if you select the Traditional Death Benefit,
or the Maximum Anniversary Value if you select the Maximum Anniversary Value Death Benefit. For example, assume total Purchase Payments
are $90,000, you take no withdrawals, the highest Contract Value on any Index Anniversary (the Maximum Anniversary Value) is $105,000,
and the current Contract Value is $100,000. The death benefit for the Traditional Death Benefit is the $100,000 Contract Value, and for
the Maximum Anniversary Value Death Benefit it is the $105,000 Maximum Anniversary Value.
If the date we are determining the
death benefit is not the Term End Date, the Contract Value reflects the Daily Adjustment. Withdrawals you take reduce your Guaranteed
Death Benefit Value by the percentage of Contract Value withdrawn (including any withdrawal charge), determined at the end of each Business
Day. All withdrawals
you take reduce the Guaranteed Death Benefit Value and Contract Value, even Penalty-Free Withdrawals. However,
we do not reduce the Guaranteed Death Benefit Value for deductions we make for Contract fees and expenses. Deductions
for Contract fees and expenses will, however, decrease the Contract Value by the dollar amount withdrawn and reduce the likelihood
of receiving increases to the Maximum Anniversary Value. In
addition, because the death benefit is the greater of Contract Value, or the Guaranteed Death Benefit Value, deductions we make for Contract
fees and expenses may reduce the death benefit available to your Beneficiaries.
Examples of the impact of withdrawals
from the Contract on the death benefit are included below in this section.
Maximum
Anniversary Value
The Maximum Anniversary Value is
initially equal to the Purchase Payment received on the Issue Date. At the end of each Business Day, we adjust the Maximum Anniversary
Value as follows.
●
We
increase it by the dollar amount of any additional Purchase Payments.
●
We
reduce it by the percentage of any Contract Value you withdraw (including any withdrawal charge).
If the Index Effective Date occurs
after the Issue Date, the Maximum Anniversary Value on the Index Effective Date is calculated in the same way as on an Index Anniversary.
On each Index Anniversary before
the end date (or on the next Business Day if the Index Anniversary is not on a Business Day) the Maximum Anniversary Value is equal to
the greater of:
●
its
current value after processing any additional Purchase Payments, or withdrawals you take (including any withdrawal charge), or
●
the
Contract Value determined at the end of the Business Day after we process all daily transactions including Performance Credits, any additional
Purchase Payments, withdrawals you take including any withdrawal charges, and deductions we make for other Contract fees and expenses.
Contract Value reflects the Daily Adjustment for an Index Option for which this anniversary is not a Term End Date. Negative
Index Option performance, withdrawals you take, and deductions we make for Contract fees or expenses decrease the Contract Value
and may reduce the likelihood of receiving increases to the Maximum Anniversary Value.
On and after the end date, we no
longer make this comparison and we no longer capture any annual investment gains in the Maximum Anniversary Value.
The end date occurs on the earliest
of:
●
the
older Determining Life’s 91st
birthday, or
●
the
end of the Business Day we receive the first Valid Claim from any one Beneficiary.
Example of the Maximum
Anniversary Value
|
|
Contract
Value |
Maximum
Anniversary Value |
|
Issue
Date |
$ 100,000
|
$ 100,000
|
|
1st
Index Anniversary |
$110,000
|
$110,000
|
|
2nd
Index Anniversary |
$95,000
|
$110,000
|
|
3rd
Index Anniversary |
$ 105,000
|
$110,000
|
|
4th
Index Anniversary |
$ 120,000
|
$ 120,000
|
●
On
the Issue Date the Maximum Anniversary Value is equal to the initial Purchase Payment of $100,000.
On
the 1st
Index Anniversary the Contract Value is greater than the Maximum Anniversary Value, so the Maximum Anniversary Value increases to equal
the Contract Value of $110,000.
●
On
the 2nd
and 3rd
Index Anniversaries the Contract Value is less than the Maximum Anniversary Value, so we neither increase nor decrease the Maximum Anniversary
Value. The Maximum Anniversary Value will stay at $110,000 until the Contract Value on an Index Anniversary is greater than this amount
or you make an additional Purchase Payment (either of which will increase the Maximum Anniversary Value), or you take a withdrawal (which
will decrease the Maximum Anniversary Value).
●
On
the 4th
Index Anniversary the Contract Value is greater than the Maximum Anniversary Value, so the Maximum Anniversary Value increases to equal
the Contract Value of $120,000.
Withdrawal Example
These calculations show the effects
of taking a withdrawal on the Contract Value and available Guaranteed Death Benefit Value. Withdrawals (including any withdrawal charges)
immediately reduce the Contract Value on a dollar for dollar basis, and reduce the available Guaranteed Death Benefit Value by the percentage
of Contract Value withdrawn.
The following example
assumes the Contract was purchased on or after May 1, 2024. The
example assumes a withdrawal of $5,000 once per year on days that are not Term End Dates starting when the Contract Value is $100,000,
the Guaranteed Death Benefit Value under the Traditional Death Benefit is $90,000, and the Guaranteed Death Benefit Value under the Maximum
Anniversary Value Death Benefit is $105,000. The first withdrawal assumes that there is no amount remaining under the free withdrawal
privilege for that year, so that withdrawal is subject to an 8% withdrawal charge. Subsequent withdrawals are all taken under the free
withdrawal privilege. All fractional numbers in these examples have been rounded up to the next whole number. All Contract Value figures
reflect the Daily Adjustment.
|
Withdrawal
|
Contract
Value
|
Guaranteed
Death Benefit
Value
for a Contract with the
Traditional
Death Benefit |
Guaranteed
Death Benefit Value
for
a Contract with the
Maximum
Anniversary Value
Death
Benefit |
|
Prior
to 1st
year’s withdrawal |
$
100,000 |
$
90,000 |
$
105,000 |
|
$5,000
withdrawal (subject to an 8% |
|
|
|
|
withdrawal
charge) |
–
[$5,000 ÷ (1 – 8%)] |
–
[($5,435 ÷ 100,000) x 90,000] |
–
[($5,435 ÷ 100,000) x 105,000] |
|
Amount
withdrawn |
=
- $5,435 |
=
- $4,892 |
=
- $5,707 |
|
After
1st
year’s withdrawal |
$
94,565 |
$
85,108 |
$
99,293 |
|
|
|
|
|
|
Prior
to 2nd
year’s withdrawal |
$
97,000 |
$
85,108 |
$
99,293 |
|
$5,000
withdrawal (not subject to a |
|
|
|
|
withdrawal
charge) |
-
$5,000 |
–
[($5,000 ÷ 97,000) x 85,108] |
–
[($5,000 ÷ 97,000) x 99,293] |
|
Amount
withdrawn |
=
- $5,000 |
=
- $4,388 |
=
- $5,119 |
|
After
2nd
year’s withdrawal |
$
92,000 |
$
80,720 |
$
94,174 |
|
|
|
|
|
|
Prior
to 3rd
year’s withdrawal |
$
80,000 |
$
80,720 |
$
94,174 |
|
$5,000
withdrawal (not subject to a |
|
|
|
|
withdrawal
charge) |
-
$5,000 |
–
[($5,000 ÷ 80,000) x 80,720] |
–
[($5,000 ÷ 80,000) x 94,174] |
|
Amount
withdrawn |
=
- $5,000 |
=
- $5,045 |
=
- $5,886 |
|
After
3rd
year’s withdrawal |
$
75,000 |
$
75,675 |
$
88,288 |
The death benefit is the greater
of the Contract Value, or the Guaranteed Death Benefit Value, so the death benefit would be:
●
$94,565
Contract Value under the Traditional Death Benefit, or the $99,293 Guaranteed Death Benefit Value under the Maximum Anniversary Value
Death Benefit after the first withdrawal.
●
$92,000
Contract Value under the Traditional Death Benefit, or the $94,174 Guaranteed Death Benefit Value under the Maximum Anniversary Value
Death Benefit after the second withdrawal.
●
$75,675
Guaranteed Death Benefit Value under the Traditional Death Benefit, or the $88,288 Guaranteed Death Benefit Value under the Maximum Anniversary
Value Death Benefit after the third withdrawal.
What
Happens Upon Death?
If you are the Determining Life,
or if you and the Determining Life (Lives) are different individuals and die within 120 hours of each other, we determine the Guaranteed
Death Benefit Value at the end of the Business Day we receive a Valid Claim. For multiple Beneficiaries, each surviving Beneficiary receives
the greater of their portion of the:
●
Guaranteed
Death Benefit Value determined at the end of the Business Day we receive the first Valid Claim from any one Beneficiary, or
●
Contract
Value determined at the end of the Business Day during which we receive his or her Valid Claim.
In this instance, if the Beneficiary:
−
is
a surviving spouse and chooses to continue the Contract;
−
selects
death benefit payment Option B; or
−
selects
death benefit payment Option C and takes payment over a period not extending beyond the Beneficiary’s life expectancy;
we increase the Contract Value to
equal the Guaranteed Death Benefit Value if greater when we receive a Valid Claim.
If you and the Determining Life (Lives)
are different individuals and do not die within 120 hours of each other, the death benefit is as follows. This
can only occur if you change the Owner after the Issue Date.
●
If
a Determining Life dies before you, we do not pay a death benefit to the Beneficiary(ies), but we may increase the Contract Value if the
Traditional Death Benefit or Maximum Anniversary Value Death Benefit are still in effect.
At the end of the Business Day we receive due proof of a Determining Life’s death, we increase the Contract Value to equal the
Guaranteed Death Benefit Value if greater, and
your selected death benefit ends.
●
Upon
your death, your Beneficiary(ies) receive the Contract Value determined at the end of the Business Day during which we receive each Beneficiary’s
Valid Claim.
Upon the death of a Determining Life,
if we increase the Contract Value to equal the Guaranteed Death Benefit Value, we allocate this increase to the Variable Option. On the
next Index Anniversary we transfer the Variable Account Value to the Index Options according to the allocation instructions.
The Traditional
Death Benefit and Maximum Anniversary Value Death Benefit end upon the earliest of the following:
●
The
Business Day before the Annuity Date.
●
The
Business Day that the Guaranteed Death Benefit Value and Contract Value are both zero.
●
Upon
the death of a Determining Life, the end of the Business Day we receive a Valid Claim from all Beneficiaries if you and the Determining
Life are the same individual, or if you and the Determining Life (Lives) are different individuals and die within 120 hours of each other.
●
Upon
the death of a Determining Life, the end of the Business Day we receive due proof of the Determining Life’s death if you and the
Determining Life (Lives) are different individuals and do not die within 120 hours of each other.
●
Upon
the death of an Owner (or Annuitant if the Owner is a non-individual), the end of the Business Day we receive the first Valid Claim from
any one Beneficiary, if the Owner (or Annuitant) is no longer a Determining Life.
●
The
Business Day the Contract ends.
|
We
base the Guaranteed Death Benefit Value on the first death of a Determining Life (or Lives). This means that upon
the
death of an Owner (or Annuitant if the Owner is a non-individual), if
a surviving spouse continues the Contract: |
|
● the
Guaranteed Death Benefit Value is no longer available, and |
|
● if
you selected the Maximum Anniversary Value Death Benefit, we no longer assess its 0.20% rider fee. |
|
Also,
if you and the Determining Life (Lives) are different individuals and you die first, the Guaranteed Death Benefit
Value
is not available to your Beneficiary(ies). |
Death
of the Owner and/or Annuitant
The SAI includes tables that are
intended to help you better understand what happens upon the death of any Owner and/or Annuitant under the different phases of the Contract.
Death
Benefit Payment Options During the Accumulation Phase
Each Beneficiary must select one
of the death benefit payment options listed below.
If a Beneficiary
requests a lump sum payment under Option A, we pay that Beneficiary within seven days of receipt of his or her Valid Claim, unless the
suspension of payments or transfers provision is in effect. Payment of the death benefit may be delayed, pending receipt of any state
forms.
Spousal Continuation:
If the Beneficiary is the deceased Owner’s spouse, he or she can choose to continue the Contract with the portion of the death
benefit the spouse is entitled to in his or her own name. However, spousal continuation is not available if this is an Inherited IRA,
or Inherited Roth IRA (i.e., spousal continuation is not available to a successor beneficiary - the spouse of the original Beneficiary).
For an IRA, Roth IRA, or SEP IRA Contract, spousal continuation can only occur if the surviving spouse is the Contract’s sole primary
Beneficiary. For Qualified Contracts purchased through a qualified plan and non-individually owned Contracts, spousal continuation is
only available to Qualified Contracts through a direct rollover to an IRA. Spouses
must qualify as such under federal law to continue the Contract.
Individuals who have entered into a registered domestic partnership, civil union, or other similar relationship that is not considered
to be a marriage under state law are also not considered to be married under federal law. An election by the spouse to continue the Contract
must be made on the death claim form before we pay the death benefit. If the deceased Owner was a Determining Life and the surviving spouse
Beneficiary continues the Contract, at the end of the Business Day we receive his or her Valid Claim, we increase the Contract Value to
equal the Guaranteed Death Benefit Value if greater and available, and your selected death benefit ends. If the surviving spouse
continues the Contract:
●
he
or she becomes the new Owner and may exercise all of the Owner’s rights, including naming a new Beneficiary or Beneficiaries;
●
he
or she is subject to any remaining withdrawal charge period; and
●
upon
the surviving spouse’s death, their Beneficiary(ies) receive the Contract Value determined at the end of the Business Day during
which we receive a Valid Claim from each Beneficiary.
Death
Benefit Payment Options
The following applies to Non-Qualified
Contracts. Different rules may apply to Qualified Contracts. For more information, please see section 12, Taxes – Distributions
Upon the Owner’s Death (or Annuitant’s Death if the Owner is a Non-Individual).
Option A:
Lump sum payment of the death benefit.
Option B:
Payment of the entire death benefit within five years of the date of any Owner’s death. The Beneficiary can continue to make transfers
between Index Options.
Option C:
If the Beneficiary is an individual, payment of the death benefit as Annuity Payments under Annuity Options A, B, or C. If you take the
death benefit as Annuity Payments, we do not require that the Annuity Date occur on an Index Anniversary. With our written consent other
options may be available for payment over a period not extending beyond the Beneficiary’s life expectancy under which the Beneficiary
can continue to make transfers between Index Options.
Distribution from Non-Qualified Contracts
under Option C must begin within one year of the date of the Owner’s death. Any portion of the death benefit from Non-Qualified
Contracts not applied to Annuity Payments within one year of the date of the Owner’s death must be distributed within five years
of the date of death.
If a Non-Qualified Contract is owned
by a non-individual, then we treat the death of an Annuitant as the death of an Owner for purposes of the Code’s distribution at
death rules, which are set forth in Section 72(s) of the Code.
In all events, notwithstanding any
provision to the contrary in the Contract or this prospectus, a Non-Qualified Contract is interpreted and administered in accordance with
Section 72(s) of the Code.
|
Standard
Benefits (No Additional Charge) | ||
|
Name
of
Benefit
|
Purpose
|
Brief
Description of Restrictions/Limitations |
|
Free
Withdrawal
Privilege
|
Allows
you to withdraw up to 10% of your total
Purchase
Payments each Contract Year without
incurring
a withdrawal charge. |
• Only
available during the Accumulation Phase.
• Not
available upon a full withdrawal.
• Upon
a full withdrawal, we may assess a
withdrawal
charge against amounts previously
withdrawn
under the free withdrawal privilege.
• Unused
free withdrawal amounts not available in
future
years.
• Program
withdrawals may be subject to negative
Daily
Adjustments.
• Program
withdrawals are subject to income taxes,
and
may also be subject to a 10% additional
federal
tax for amounts withdrawn before age
59 1∕2.
|
|
Minimum
Distribution
Program
|
Allows
you to automatically take withdrawals to
satisfy
the required minimum distribution
requirements
(RMD) imposed by the Internal
Revenue
Code. |
• Only
available during the Accumulation Phase.
• Only
available to IRA or SEP IRA Contracts.
• Generally
required for Inherited IRA and Inherited
Roth
IRA Contracts.
• Program
withdrawals count against the free
withdrawal
privilege.
• Program
withdrawals may be subject to negative
Daily
Adjustments.
• Program
withdrawals are subject to income taxes.
• Program
withdrawals may be monthly, quarterly,
semi-annual
or annual, unless you have less than
$25,000
in Contract Value, in which case only
annual
payments are available.
• We
reserve the right to discontinue or modify the
program
subject to the requirements of law. |
|
Waiver
of
Withdrawal
Charge
Benefit
|
Waives
withdrawal charges if you are confined for
care,
or are unable to perform at least two out of six
activities
of daily living (ADLs). |
• Only
available during the Accumulation Phase.
• Confinement
must begin after the first Contract
Anniversary,
be for at least 90 days in a 120-day
period,
and requires proof of stay. We require
additional
proof of qualification for this benefit
annually.
• Inability
to perform two ADLs must be for at least
90
continuous days and may require an exam or
tests
by a physician.
• Not
available on the Issue Date if any Owner was
confined
to an eligible facility, or unable to perform
all
six ADLs.
• Program
withdrawals count against the free
withdrawal
privilege.
• Program
withdrawals may be subject to negative
Daily
Adjustments.
• Program
withdrawals are not subject to withdrawal
charges,
but are subject to income taxes, and may
also
be subject to a 10% additional federal tax for
amounts
withdrawn before age 59 1∕2.
• State
variations may apply. |
|
Standard
Benefits (No Additional Charge) | ||
|
Name
of
Benefit
|
Purpose
|
Brief
Description of Restrictions/Limitations |
|
Traditional
Death
Benefit |
Provides
a death benefit equal to the greater of the
Contract
Value, or Guaranteed Death Benefit Value.
The
Guaranteed Death Benefit Value is total
Purchase
Payments adjusted for withdrawals.
Examples
of the death benefit provided by the
Traditional
Death Benefit, and how withdrawals
impact
this benefit, are included in section 11, Death
Benefit.
|
• Benefit
only available during the Accumulation
Phase.
• Withdrawals,
including any negative Daily
Adjustments,
may significantly reduce the benefit
as
indicated in section 11, Death Benefit.
• Restrictions
on Purchase Payments may limit the
benefit.
• Annuitizing
the Contract will end the benefit. |
|
Performance
Lock
and Early
Reallocations
|
Performance
Lock allows you to capture the current
Index
Option Value during the Term for an Index
Option.
Performance Lock can help eliminate doubt
about
future Index performance and possibly limit the
impact
of negative performance. Early Reallocation
allows
you to transfer out of a locked Index Option
on
days other than an Index Anniversary, or a Term
End
Date.
A
Performance Lock example is included in section
6,
Valuing Your Contract — Performance Locks and
Early
Reallocations. |
• Available
during the Accumulation Phase.
•
Performance Locks must be executed before the
Term
End Date.
• If
a Performance Lock is executed, the locked
Index
Option will no longer participate in Index
performance
(positive or negative) for the
remainder
of the Term, and will not receive a
Performance
Credit on the Term End Date.
• You
will not know your locked Index Option Value
in
advance.
• The
locked Index Option Value will reflect a Daily
Adjustment.
• If
a Performance Lock is executed when the Daily
Adjustment
has declined, it will lock in any loss.
• A
Performance Lock can be executed only once
each
Term for each Index Option.
• Cannot
execute a Performance Lock for only a
portion
of the Index Option Value.
•
Early Reallocation requests are not accepted
within
14 calendar days before an Index
Anniversary.
• You
are limited to twelve Early Reallocation
requests
each Index Year.
• Deductions
(e.g. withdrawals, fees) decrease the
locked
Index Option Value.
• Cannot
transfer locked Index Option Value until the
next
Index Anniversary that occurs on or
immediately
after the Lock Date unless you
execute
an Early Reallocation.
• We
will not provide advice or notify you
regarding
whether you should execute a
Performance
Lock or Early Reallocation or the
optimal
time for doing so.
• We
will not warn you if you execute a
Performance
Lock or Early Reallocation at a
sub-optimal
time.
• We
are not responsible for any losses related
to
your decision whether or not to execute a
Performance
Lock or Early Reallocation. |
|
Optional
Benefits | |||
|
Name
of
Benefit
|
Purpose
|
Maximum
Fee
|
Brief
Description of Restrictions/Limitations |
|
Maximum
Anniversary
Value
Death
Benefit
|
Provides
a death benefit equal to the greater of
the
Contract Value, or Guaranteed Death Benefit
Value.
The Guaranteed Death Benefit Value is
the
Maximum Anniversary Value.
Examples
of the death benefit provided by the
Maximum
Anniversary Value Death Benefit,
including
calculation of the Maximum
Anniversary
Value and how withdrawals impact
this
benefit, are included in section 11, Death
Benefit.
|
0.20%
(as
a
percentage
of
the
Charge
Base)
|
• Must
be age 75 or younger to elect.
• Can
only be added to a Contract at issue.
• Replaces
the Traditional Death Benefit if
elected.
• Benefit
cannot be removed from the Contract.
• Only
available during the Accumulation Phase.
• Withdrawals,
including any negative Daily
Adjustment,
may significantly reduce the
benefit
as indicated in section 11, Death
Benefit..
• Withdrawals
reduce the likelihood of lock in.
• Restrictions
on Purchase Payments may limit
the
benefit.
• Annuitizing
the Contract will end the benefit. |
Appendix A – Investment Options Available Under the Contract
Variable
Option
The following includes information
about the Fund available under the Contract. More information about the Fund is available in the Fund’s prospectus, which may be
amended from time to time and can be found online at https://www.allianzlife.com/variableoptions. You can also request this information
at no cost by calling (800) 624-0197, or by sending an email request to contact.us@allianzlife.com.
The current expenses and performance
information below reflects fees and expenses of the Fund, but do not reflect the other fees and expenses that your Contract may charge.
Expenses would be higher and performance would be lower if these other charges were included. The Fund’s past performance is not
necessarily an indication of future performance.
|
Investment
Objective |
Fund
and
Adviser/Subadviser
|
Current
Expenses
|
Average
Annual Total Returns
(as
of December 31, 2024) | ||
|
1
Year |
5
Years |
10
Years | |||
|
Current
income consistent with
stability
of principal |
AZL®
Government Money
Market
Fund(1)
Adviser:
Allianz
Investment
Management
LLC
Subadviser:
BlackRock
Advisors,
LLC |
0.64%
|
4.42%
|
1.92%
|
1.20%
|
(1)
The
AZL®
Government Money Market Fund’s annual expenses reflect a temporary fee reduction. Please see the AZL®
Government Money Market Fund’s prospectus for information regarding the expense reimbursement or fee waiver arrangement.
The following includes information
about the Fund available under the Contract. More information about the Fund is available in the Fund’s prospectus, which may be
amended from time to time and can be found online at https://www.allianzlife.com/variableoptions. You can also request this information
at no cost by calling (800) 624-0197, or by sending an email request to contact.us@allianzlife.com.
The current expenses and performance
information below reflects fees and expenses of the Fund, but do not reflect the other fees and expenses that your Contract may charge.
Expenses would be higher and performance would be lower if these other charges were included. The Fund’s past performance is not
necessarily an indication of future performance.
|
Investment
Objective |
Fund
and
Adviser/Subadviser
|
Current
Expenses
|
Average
Annual Total Returns
(as
of December 31, 2024) | ||
|
1
Year |
5
Years |
10
Years | |||
|
Current
income consistent with
stability
of principal |
AZL®
Government Money
Market
Fund(1)
Adviser:
Allianz
Investment
Management
LLC
Subadviser:
BlackRock
Advisors,
LLC |
0.64%
|
4.42%
|
1.92%
|
1.20%
|
The
AZL®
Government Money Market Fund’s annual expenses reflect a temporary fee reduction. Please see the AZL®
Government Money Market Fund’s prospectus for information regarding the expense reimbursement or fee waiver arrangement.
ITEM 31A. INFORMATION ABOUT CONTRACTS WITH INDEX-LINKED OPTIONS AND FIXED OPTIONS SUBJECT TO A CONTRACT ADJUSTMENT
(a) For the calendar year ended December 31, 2024:
| Name of the Contract | Number of Contracts outstanding | Total value attributable to the Index-Linked Option and/or Fixed Option subject to a Contract Adjustment | Number of Contracts sold during the prior calendar year | Gross premiums received during the prior calendar year | Amount of Contract value redeemed during the prior calendar year | Combination Contract (Yes/No) |
| Allianz Index Advantage+ NF | 23,572 | $4,788,351,455.86 | 21,370 | $3,117,445,422 | $560,977 | Yes |
(b) See Exhibit 27(r)
Current
income consistent with
stability
of principal
AZL®
Government Money
Market
Fund
Management
LLC
Advisors,
LLC
Maximum
Anniversary
Value
Death
Benefit
Provides
a death benefit equal to the greater of
the
Contract Value, or Guaranteed Death Benefit
Value.
The Guaranteed Death Benefit Value is
the
Maximum Anniversary Value.
Examples
of the death benefit provided by the
Maximum
Anniversary Value Death Benefit,
including
calculation of the Maximum
Anniversary
Value and how withdrawals impact
this
benefit, are included in section 11, Death
Benefit.
• Must
be age 75 or younger to elect.
• Can
only be added to a Contract at issue.
• Replaces
the Traditional Death Benefit if
elected.
• Benefit
cannot be removed from the Contract.
• Only
available during the Accumulation Phase.
• Withdrawals,
including any negative Daily
Adjustment,
may significantly reduce the
benefit
as indicated in section 11, Death
Benefit..
• Withdrawals
reduce the likelihood of lock in.
• Restrictions
on Purchase Payments may limit
the
benefit.
• Annuitizing
the Contract will end the benefit.
Maximum
Anniversary
Value
Death
Benefit
Maximum
Anniversary Value
The Maximum Anniversary Value is
initially equal to the Purchase Payment received on the Issue Date. At the end of each Business Day, we adjust the Maximum Anniversary
Value as follows.
●
We
increase it by the dollar amount of any additional Purchase Payments.
●
We
reduce it by the percentage of any Contract Value you withdraw (including any withdrawal charge).
If the Index Effective Date occurs
after the Issue Date, the Maximum Anniversary Value on the Index Effective Date is calculated in the same way as on an Index Anniversary.
On each Index Anniversary before
the end date (or on the next Business Day if the Index Anniversary is not on a Business Day) the Maximum Anniversary Value is equal to
the greater of:
●
its
current value after processing any additional Purchase Payments, or withdrawals you take (including any withdrawal charge), or
●
the
Contract Value determined at the end of the Business Day after we process all daily transactions including Performance Credits, any additional
Purchase Payments, withdrawals you take including any withdrawal charges, and deductions we make for other Contract fees and expenses.
Contract Value reflects the Daily Adjustment for an Index Option for which this anniversary is not a Term End Date. Negative
Index Option performance, withdrawals you take, and deductions we make for Contract fees or expenses decrease the Contract Value
and may reduce the likelihood of receiving increases to the Maximum Anniversary Value.
On and after the end date, we no
longer make this comparison and we no longer capture any annual investment gains in the Maximum Anniversary Value.
The end date occurs on the earliest
of:
●
the
older Determining Life’s 91st
birthday, or
●
the
end of the Business Day we receive the first Valid Claim from any one Beneficiary.
Example of the Maximum
Anniversary Value
|
|
Contract
Value |
Maximum
Anniversary Value |
|
Issue
Date |
$ 100,000
|
$ 100,000
|
|
1st
Index Anniversary |
$110,000
|
$110,000
|
|
2nd
Index Anniversary |
$95,000
|
$110,000
|
|
3rd
Index Anniversary |
$ 105,000
|
$110,000
|
|
4th
Index Anniversary |
$ 120,000
|
$ 120,000
|
●
On
the Issue Date the Maximum Anniversary Value is equal to the initial Purchase Payment of $100,000.
On
the 1st
Index Anniversary the Contract Value is greater than the Maximum Anniversary Value, so the Maximum Anniversary Value increases to equal
the Contract Value of $110,000.
●
On
the 2nd
and 3rd
Index Anniversaries the Contract Value is less than the Maximum Anniversary Value, so we neither increase nor decrease the Maximum Anniversary
Value. The Maximum Anniversary Value will stay at $110,000 until the Contract Value on an Index Anniversary is greater than this amount
or you make an additional Purchase Payment (either of which will increase the Maximum Anniversary Value), or you take a withdrawal (which
will decrease the Maximum Anniversary Value).
●
On
the 4th
Index Anniversary the Contract Value is greater than the Maximum Anniversary Value, so the Maximum Anniversary Value increases to equal
the Contract Value of $120,000.
Minimum
Distribution
Program
Allows
you to automatically take withdrawals to
satisfy
the required minimum distribution
requirements
(RMD) imposed by the Internal
Revenue
Code.
• Only
available during the Accumulation Phase.
• Only
available to IRA or SEP IRA Contracts.
• Generally
required for Inherited IRA and Inherited
Roth
IRA Contracts.
• Program
withdrawals count against the free
withdrawal
privilege.
• Program
withdrawals may be subject to negative
Daily
Adjustments.
• Program
withdrawals are subject to income taxes.
• Program
withdrawals may be monthly, quarterly,
semi-annual
or annual, unless you have less than
$25,000
in Contract Value, in which case only
annual
payments are available.
• We
reserve the right to discontinue or modify the
program
subject to the requirements of law.
Minimum
Distribution
Program
Performance
Lock
and Early
Reallocations
Performance
Lock allows you to capture the current
Index
Option Value during the Term for an Index
Option.
Performance Lock can help eliminate doubt
about
future Index performance and possibly limit the
impact
of negative performance. Early Reallocation
allows
you to transfer out of a locked Index Option
on
days other than an Index Anniversary, or a Term
End
Date.
A
Performance Lock example is included in section
6,
Valuing Your Contract — Performance Locks and
Early
Reallocations.
• Available
during the Accumulation Phase.
•
Performance Locks must be executed before the
Term
End Date.
• If
a Performance Lock is executed, the locked
Index
Option will no longer participate in Index
performance
(positive or negative) for the
remainder
of the Term, and will not receive a
Performance
Credit on the Term End Date.
• You
will not know your locked Index Option Value
in
advance.
• The
locked Index Option Value will reflect a Daily
Adjustment.
• If
a Performance Lock is executed when the Daily
Adjustment
has declined, it will lock in any loss.
• A
Performance Lock can be executed only once
each
Term for each Index Option.
• Cannot
execute a Performance Lock for only a
portion
of the Index Option Value.
•
Early Reallocation requests are not accepted
within
14 calendar days before an Index
Anniversary.
• You
are limited to twelve Early Reallocation
requests
each Index Year.
• Deductions
(e.g. withdrawals, fees) decrease the
locked
Index Option Value.
• Cannot
transfer locked Index Option Value until the
next
Index Anniversary that occurs on or
immediately
after the Lock Date unless you
execute
an Early Reallocation.
• We
will not provide advice or notify you
regarding
whether you should execute a
Performance
Lock or Early Reallocation or the
optimal
time for doing so.
• We
will not warn you if you execute a
Performance
Lock or Early Reallocation at a
sub-optimal
time.
• We
are not responsible for any losses related
to
your decision whether or not to execute a
Performance
Lock or Early Reallocation.
Performance
Lock
and Early
Reallocations
Traditional
Death
Benefit
Provides
a death benefit equal to the greater of the
Contract
Value, or Guaranteed Death Benefit Value.
The
Guaranteed Death Benefit Value is total
Purchase
Payments adjusted for withdrawals.
Examples
of the death benefit provided by the
Traditional
Death Benefit, and how withdrawals
impact
this benefit, are included in section 11, Death
Benefit.
• Benefit
only available during the Accumulation
Phase.
• Withdrawals,
including any negative Daily
Adjustments,
may significantly reduce the benefit
as
indicated in section 11, Death Benefit.
• Restrictions
on Purchase Payments may limit the
benefit.
• Annuitizing
the Contract will end the benefit.
Traditional
Death
Benefit
11. Death Benefit
“You” in this section
refers to the Owner, or the Annuitant if the Contract is owned by a non-individual.
The Contract provides the Traditional
Death Benefit, the standard death benefit, for no additional charge. If available, you can instead select the optional Maximum Anniversary
Value Death Benefit at Contract issue for an additional rider fee if all Owners and the Annuitant are age 75 or younger. The Maximum Anniversary
Value Death Benefit can only be added to a Contract at issue. The
Maximum Anniversary Value Death Benefit cannot be less than the Traditional Death Benefit, but they may be equal. Please discuss this
benefit’s appropriateness with your Financial Professional.
The death benefit is the greater of the Contract Value, or Guaranteed Death Benefit Value. The Guaranteed Death Benefit Value is either
total Purchase Payments reduced proportionately for withdrawals you take (including any withdrawal charge) if you select the Traditional
Death Benefit, or the Maximum Anniversary Value if you select the Maximum Anniversary Value Death Benefit.
The death benefit
is only available during the Accumulation Phase. If you
or the Determining Life (Lives) die during the Accumulation Phase, we process the death benefit using prices determined after we receive
the required information, which is either a Valid Claim or due proof of death as stated here. (For information on due proof of death see
the Glossary – Valid Claim). If we receive this information at or after the end of the current Business Day, we use the next Business
Day’s prices.
If there are multiple Beneficiaries,
each Beneficiary receives the portion of the death benefit he or she is entitled to when we receive his or her Valid Claim. If a Beneficiary
dies before you or the Designated Life, that Beneficiary’s interest in this Contract ends unless your Beneficiary designation specifies
otherwise. If there are no remaining Beneficiaries, or no named Beneficiaries, we pay the death benefit to your estate, or if the Owner
is a non-individual, to the Owner. Unless you instruct us to pay Beneficiaries a specific percentage of the death benefit, each Beneficiary
receives an equal share.
Each Beneficiary’s portion
of the death benefit remains in the Index Options based on the allocation instructions that were in effect on the date of death until
we receive his or her Valid Claim and we either pay the claim or the Beneficiary provides alternate allocation instructions. If there
is Variable Account Value in the Variable Option on the date of death, it remains there until the next Index Anniversary. If an Index
Anniversary occurs before we receive a Valid Claim, we will transfer that Beneficiary’s portion of the Variable Account Value to
the Index Options based on the allocation instructions that were in effect on the date of death.
From the time we determine the death
benefit until we make a complete distribution, any amount in the Investment Options continues to be subject to investment risk that is
borne by the recipient(s). Once we receive notification of death, we may no longer accept or process transfer requests. After we receive
the first Valid Claim from any Beneficiary, we also will not accept additional Purchase Payments or allow any partial or full withdrawals
unless the withdrawal is required to comply with federal tax law.
On the first
death of a Determining Life during the Accumulation Phase, if your selected death benefit is in effect, your Beneficiary(ies) will receive
the greater of the Contract Value or Guaranteed Death Benefit Value. The Guaranteed Death Benefit Value is either total Purchase
Payments reduced proportionately for withdrawals you take (including any withdrawal charge) if you select the Traditional Death Benefit,
or the Maximum Anniversary Value if you select the Maximum Anniversary Value Death Benefit. For example, assume total Purchase Payments
are $90,000, you take no withdrawals, the highest Contract Value on any Index Anniversary (the Maximum Anniversary Value) is $105,000,
and the current Contract Value is $100,000. The death benefit for the Traditional Death Benefit is the $100,000 Contract Value, and for
the Maximum Anniversary Value Death Benefit it is the $105,000 Maximum Anniversary Value.
If the date we are determining the
death benefit is not the Term End Date, the Contract Value reflects the Daily Adjustment. Withdrawals you take reduce your Guaranteed
Death Benefit Value by the percentage of Contract Value withdrawn (including any withdrawal charge), determined at the end of each Business
Day. All withdrawals
you take reduce the Guaranteed Death Benefit Value and Contract Value, even Penalty-Free Withdrawals. However,
we do not reduce the Guaranteed Death Benefit Value for deductions we make for Contract fees and expenses. Deductions
for Contract fees and expenses will, however, decrease the Contract Value by the dollar amount withdrawn and reduce the likelihood
of receiving increases to the Maximum Anniversary Value. In
addition, because the death benefit is the greater of Contract Value, or the Guaranteed Death Benefit Value, deductions we make for Contract
fees and expenses may reduce the death benefit available to your Beneficiaries.
Examples of the impact of withdrawals
from the Contract on the death benefit are included below in this section.
Maximum
Anniversary Value
The Maximum Anniversary Value is
initially equal to the Purchase Payment received on the Issue Date. At the end of each Business Day, we adjust the Maximum Anniversary
Value as follows.
●
We
increase it by the dollar amount of any additional Purchase Payments.
●
We
reduce it by the percentage of any Contract Value you withdraw (including any withdrawal charge).
If the Index Effective Date occurs
after the Issue Date, the Maximum Anniversary Value on the Index Effective Date is calculated in the same way as on an Index Anniversary.
On each Index Anniversary before
the end date (or on the next Business Day if the Index Anniversary is not on a Business Day) the Maximum Anniversary Value is equal to
the greater of:
●
its
current value after processing any additional Purchase Payments, or withdrawals you take (including any withdrawal charge), or
●
the
Contract Value determined at the end of the Business Day after we process all daily transactions including Performance Credits, any additional
Purchase Payments, withdrawals you take including any withdrawal charges, and deductions we make for other Contract fees and expenses.
Contract Value reflects the Daily Adjustment for an Index Option for which this anniversary is not a Term End Date. Negative
Index Option performance, withdrawals you take, and deductions we make for Contract fees or expenses decrease the Contract Value
and may reduce the likelihood of receiving increases to the Maximum Anniversary Value.
On and after the end date, we no
longer make this comparison and we no longer capture any annual investment gains in the Maximum Anniversary Value.
The end date occurs on the earliest
of:
●
the
older Determining Life’s 91st
birthday, or
●
the
end of the Business Day we receive the first Valid Claim from any one Beneficiary.
Example of the Maximum
Anniversary Value
|
|
Contract
Value |
Maximum
Anniversary Value |
|
Issue
Date |
$ 100,000
|
$ 100,000
|
|
1st
Index Anniversary |
$110,000
|
$110,000
|
|
2nd
Index Anniversary |
$95,000
|
$110,000
|
|
3rd
Index Anniversary |
$ 105,000
|
$110,000
|
|
4th
Index Anniversary |
$ 120,000
|
$ 120,000
|
●
On
the Issue Date the Maximum Anniversary Value is equal to the initial Purchase Payment of $100,000.
On
the 1st
Index Anniversary the Contract Value is greater than the Maximum Anniversary Value, so the Maximum Anniversary Value increases to equal
the Contract Value of $110,000.
●
On
the 2nd
and 3rd
Index Anniversaries the Contract Value is less than the Maximum Anniversary Value, so we neither increase nor decrease the Maximum Anniversary
Value. The Maximum Anniversary Value will stay at $110,000 until the Contract Value on an Index Anniversary is greater than this amount
or you make an additional Purchase Payment (either of which will increase the Maximum Anniversary Value), or you take a withdrawal (which
will decrease the Maximum Anniversary Value).
●
On
the 4th
Index Anniversary the Contract Value is greater than the Maximum Anniversary Value, so the Maximum Anniversary Value increases to equal
the Contract Value of $120,000.
Withdrawal Example
These calculations show the effects
of taking a withdrawal on the Contract Value and available Guaranteed Death Benefit Value. Withdrawals (including any withdrawal charges)
immediately reduce the Contract Value on a dollar for dollar basis, and reduce the available Guaranteed Death Benefit Value by the percentage
of Contract Value withdrawn.
The following example
assumes the Contract was purchased on or after May 1, 2024. The
example assumes a withdrawal of $5,000 once per year on days that are not Term End Dates starting when the Contract Value is $100,000,
the Guaranteed Death Benefit Value under the Traditional Death Benefit is $90,000, and the Guaranteed Death Benefit Value under the Maximum
Anniversary Value Death Benefit is $105,000. The first withdrawal assumes that there is no amount remaining under the free withdrawal
privilege for that year, so that withdrawal is subject to an 8% withdrawal charge. Subsequent withdrawals are all taken under the free
withdrawal privilege. All fractional numbers in these examples have been rounded up to the next whole number. All Contract Value figures
reflect the Daily Adjustment.
|
Withdrawal
|
Contract
Value
|
Guaranteed
Death Benefit
Value
for a Contract with the
Traditional
Death Benefit |
Guaranteed
Death Benefit Value
for
a Contract with the
Maximum
Anniversary Value
Death
Benefit |
|
Prior
to 1st
year’s withdrawal |
$
100,000 |
$
90,000 |
$
105,000 |
|
$5,000
withdrawal (subject to an 8% |
|
|
|
|
withdrawal
charge) |
–
[$5,000 ÷ (1 – 8%)] |
–
[($5,435 ÷ 100,000) x 90,000] |
–
[($5,435 ÷ 100,000) x 105,000] |
|
Amount
withdrawn |
=
- $5,435 |
=
- $4,892 |
=
- $5,707 |
|
After
1st
year’s withdrawal |
$
94,565 |
$
85,108 |
$
99,293 |
|
|
|
|
|
|
Prior
to 2nd
year’s withdrawal |
$
97,000 |
$
85,108 |
$
99,293 |
|
$5,000
withdrawal (not subject to a |
|
|
|
|
withdrawal
charge) |
-
$5,000 |
–
[($5,000 ÷ 97,000) x 85,108] |
–
[($5,000 ÷ 97,000) x 99,293] |
|
Amount
withdrawn |
=
- $5,000 |
=
- $4,388 |
=
- $5,119 |
|
After
2nd
year’s withdrawal |
$
92,000 |
$
80,720 |
$
94,174 |
|
|
|
|
|
|
Prior
to 3rd
year’s withdrawal |
$
80,000 |
$
80,720 |
$
94,174 |
|
$5,000
withdrawal (not subject to a |
|
|
|
|
withdrawal
charge) |
-
$5,000 |
–
[($5,000 ÷ 80,000) x 80,720] |
–
[($5,000 ÷ 80,000) x 94,174] |
|
Amount
withdrawn |
=
- $5,000 |
=
- $5,045 |
=
- $5,886 |
|
After
3rd
year’s withdrawal |
$
75,000 |
$
75,675 |
$
88,288 |
The death benefit is the greater
of the Contract Value, or the Guaranteed Death Benefit Value, so the death benefit would be:
●
$94,565
Contract Value under the Traditional Death Benefit, or the $99,293 Guaranteed Death Benefit Value under the Maximum Anniversary Value
Death Benefit after the first withdrawal.
●
$92,000
Contract Value under the Traditional Death Benefit, or the $94,174 Guaranteed Death Benefit Value under the Maximum Anniversary Value
Death Benefit after the second withdrawal.
●
$75,675
Guaranteed Death Benefit Value under the Traditional Death Benefit, or the $88,288 Guaranteed Death Benefit Value under the Maximum Anniversary
Value Death Benefit after the third withdrawal.
What
Happens Upon Death?
If you are the Determining Life,
or if you and the Determining Life (Lives) are different individuals and die within 120 hours of each other, we determine the Guaranteed
Death Benefit Value at the end of the Business Day we receive a Valid Claim. For multiple Beneficiaries, each surviving Beneficiary receives
the greater of their portion of the:
●
Guaranteed
Death Benefit Value determined at the end of the Business Day we receive the first Valid Claim from any one Beneficiary, or
●
Contract
Value determined at the end of the Business Day during which we receive his or her Valid Claim.
In this instance, if the Beneficiary:
−
is
a surviving spouse and chooses to continue the Contract;
−
selects
death benefit payment Option B; or
−
selects
death benefit payment Option C and takes payment over a period not extending beyond the Beneficiary’s life expectancy;
we increase the Contract Value to
equal the Guaranteed Death Benefit Value if greater when we receive a Valid Claim.
If you and the Determining Life (Lives)
are different individuals and do not die within 120 hours of each other, the death benefit is as follows. This
can only occur if you change the Owner after the Issue Date.
●
If
a Determining Life dies before you, we do not pay a death benefit to the Beneficiary(ies), but we may increase the Contract Value if the
Traditional Death Benefit or Maximum Anniversary Value Death Benefit are still in effect.
At the end of the Business Day we receive due proof of a Determining Life’s death, we increase the Contract Value to equal the
Guaranteed Death Benefit Value if greater, and
your selected death benefit ends.
●
Upon
your death, your Beneficiary(ies) receive the Contract Value determined at the end of the Business Day during which we receive each Beneficiary’s
Valid Claim.
Upon the death of a Determining Life,
if we increase the Contract Value to equal the Guaranteed Death Benefit Value, we allocate this increase to the Variable Option. On the
next Index Anniversary we transfer the Variable Account Value to the Index Options according to the allocation instructions.
The Traditional
Death Benefit and Maximum Anniversary Value Death Benefit end upon the earliest of the following:
●
The
Business Day before the Annuity Date.
●
The
Business Day that the Guaranteed Death Benefit Value and Contract Value are both zero.
●
Upon
the death of a Determining Life, the end of the Business Day we receive a Valid Claim from all Beneficiaries if you and the Determining
Life are the same individual, or if you and the Determining Life (Lives) are different individuals and die within 120 hours of each other.
●
Upon
the death of a Determining Life, the end of the Business Day we receive due proof of the Determining Life’s death if you and the
Determining Life (Lives) are different individuals and do not die within 120 hours of each other.
●
Upon
the death of an Owner (or Annuitant if the Owner is a non-individual), the end of the Business Day we receive the first Valid Claim from
any one Beneficiary, if the Owner (or Annuitant) is no longer a Determining Life.
●
The
Business Day the Contract ends.
|
We
base the Guaranteed Death Benefit Value on the first death of a Determining Life (or Lives). This means that upon
the
death of an Owner (or Annuitant if the Owner is a non-individual), if
a surviving spouse continues the Contract: |
|
● the
Guaranteed Death Benefit Value is no longer available, and |
|
● if
you selected the Maximum Anniversary Value Death Benefit, we no longer assess its 0.20% rider fee. |
|
Also,
if you and the Determining Life (Lives) are different individuals and you die first, the Guaranteed Death Benefit
Value
is not available to your Beneficiary(ies). |
Death
of the Owner and/or Annuitant
The SAI includes tables that are
intended to help you better understand what happens upon the death of any Owner and/or Annuitant under the different phases of the Contract.
Death
Benefit Payment Options During the Accumulation Phase
Each Beneficiary must select one
of the death benefit payment options listed below.
If a Beneficiary
requests a lump sum payment under Option A, we pay that Beneficiary within seven days of receipt of his or her Valid Claim, unless the
suspension of payments or transfers provision is in effect. Payment of the death benefit may be delayed, pending receipt of any state
forms.
Spousal Continuation:
If the Beneficiary is the deceased Owner’s spouse, he or she can choose to continue the Contract with the portion of the death
benefit the spouse is entitled to in his or her own name. However, spousal continuation is not available if this is an Inherited IRA,
or Inherited Roth IRA (i.e., spousal continuation is not available to a successor beneficiary - the spouse of the original Beneficiary).
For an IRA, Roth IRA, or SEP IRA Contract, spousal continuation can only occur if the surviving spouse is the Contract’s sole primary
Beneficiary. For Qualified Contracts purchased through a qualified plan and non-individually owned Contracts, spousal continuation is
only available to Qualified Contracts through a direct rollover to an IRA. Spouses
must qualify as such under federal law to continue the Contract.
Individuals who have entered into a registered domestic partnership, civil union, or other similar relationship that is not considered
to be a marriage under state law are also not considered to be married under federal law. An election by the spouse to continue the Contract
must be made on the death claim form before we pay the death benefit. If the deceased Owner was a Determining Life and the surviving spouse
Beneficiary continues the Contract, at the end of the Business Day we receive his or her Valid Claim, we increase the Contract Value to
equal the Guaranteed Death Benefit Value if greater and available, and your selected death benefit ends. If the surviving spouse
continues the Contract:
●
he
or she becomes the new Owner and may exercise all of the Owner’s rights, including naming a new Beneficiary or Beneficiaries;
●
he
or she is subject to any remaining withdrawal charge period; and
●
upon
the surviving spouse’s death, their Beneficiary(ies) receive the Contract Value determined at the end of the Business Day during
which we receive a Valid Claim from each Beneficiary.
Death
Benefit Payment Options
The following applies to Non-Qualified
Contracts. Different rules may apply to Qualified Contracts. For more information, please see section 12, Taxes – Distributions
Upon the Owner’s Death (or Annuitant’s Death if the Owner is a Non-Individual).
Option A:
Lump sum payment of the death benefit.
Option B:
Payment of the entire death benefit within five years of the date of any Owner’s death. The Beneficiary can continue to make transfers
between Index Options.
Option C:
If the Beneficiary is an individual, payment of the death benefit as Annuity Payments under Annuity Options A, B, or C. If you take the
death benefit as Annuity Payments, we do not require that the Annuity Date occur on an Index Anniversary. With our written consent other
options may be available for payment over a period not extending beyond the Beneficiary’s life expectancy under which the Beneficiary
can continue to make transfers between Index Options.
Distribution from Non-Qualified Contracts
under Option C must begin within one year of the date of the Owner’s death. Any portion of the death benefit from Non-Qualified
Contracts not applied to Annuity Payments within one year of the date of the Owner’s death must be distributed within five years
of the date of death.
If a Non-Qualified Contract is owned
by a non-individual, then we treat the death of an Annuitant as the death of an Owner for purposes of the Code’s distribution at
death rules, which are set forth in Section 72(s) of the Code.
In all events, notwithstanding any
provision to the contrary in the Contract or this prospectus, a Non-Qualified Contract is interpreted and administered in accordance with
Section 72(s) of the Code.
On the first
death of a Determining Life during the Accumulation Phase, if your selected death benefit is in effect, your Beneficiary(ies) will receive
the greater of the Contract Value or Guaranteed Death Benefit Value. The Guaranteed Death Benefit Value is either total Purchase
Payments reduced proportionately for withdrawals you take (including any withdrawal charge) if you select the Traditional Death Benefit,
or the Maximum Anniversary Value if you select the Maximum Anniversary Value Death Benefit. For example, assume total Purchase Payments
are $90,000, you take no withdrawals, the highest Contract Value on any Index Anniversary (the Maximum Anniversary Value) is $105,000,
and the current Contract Value is $100,000. The death benefit for the Traditional Death Benefit is the $100,000 Contract Value, and for
the Maximum Anniversary Value Death Benefit it is the $105,000 Maximum Anniversary Value.
If the date we are determining the
death benefit is not the Term End Date, the Contract Value reflects the Daily Adjustment. Withdrawals you take reduce your Guaranteed
Death Benefit Value by the percentage of Contract Value withdrawn (including any withdrawal charge), determined at the end of each Business
Day. All withdrawals
you take reduce the Guaranteed Death Benefit Value and Contract Value, even Penalty-Free Withdrawals. However,
we do not reduce the Guaranteed Death Benefit Value for deductions we make for Contract fees and expenses. Deductions
for Contract fees and expenses will, however, decrease the Contract Value by the dollar amount withdrawn and reduce the likelihood
of receiving increases to the Maximum Anniversary Value. In
addition, because the death benefit is the greater of Contract Value, or the Guaranteed Death Benefit Value, deductions we make for Contract
fees and expenses may reduce the death benefit available to your Beneficiaries.
Waiver
of
Withdrawal
Charge
Benefit
Waives
withdrawal charges if you are confined for
care,
or are unable to perform at least two out of six
activities
of daily living (ADLs).
• Only
available during the Accumulation Phase.
• Confinement
must begin after the first Contract
Anniversary,
be for at least 90 days in a 120-day
period,
and requires proof of stay. We require
additional
proof of qualification for this benefit
annually.
• Inability
to perform two ADLs must be for at least
90
continuous days and may require an exam or
tests
by a physician.
• Not
available on the Issue Date if any Owner was
confined
to an eligible facility, or unable to perform
all
six ADLs.
• Program
withdrawals count against the free
withdrawal
privilege.
• Program
withdrawals may be subject to negative
Daily
Adjustments.
• Program
withdrawals are not subject to withdrawal
charges,
but are subject to income taxes, and may
also
be subject to a 10% additional federal tax for
amounts
withdrawn before age 59 1∕2.
• State
variations may apply.
Waiver
of
Withdrawal
Charge
Benefit
Yes,
you can lose money by investing in the Contract, including loss of principal and
previous
earnings.
The
maximum amount of loss that you could experience from negative Index Return,
after
taking into account the current limits on Index loss provided under the
Contract,
is: -90% with a 10% Buffer; -80% with a 20% Buffer; -70% with a 30% Buffer;
-10%
with the Floor; and 0% with the Index Protection Strategy with Trigger.
The
limits on Index loss offered under the Contract may change from one Term to the
next
if we add an Index Option or discontinue accepting new allocations into an
Index
Option. However, at least one Index Option with a Buffer no lower than 5% or
Floor
no lower than -25%, or an Index Option that provides complete protection from
Index
losses, will always be available for renewal under the Contract.
Risk
of Loss
Returns on securities and securities
Indexes can vary substantially, which may result in investment losses. The historical performance of the Investment Options does not guarantee
future results. It is impossible to predict whether underlying investment values will fall or rise. Trading prices of the securities underlying
the Investment Options are influenced by economic, financial, regulatory, geographic, judicial, political and other complex and interrelated
factors. These factors can affect capital markets generally and markets on which the underlying securities are traded and these factors
can influence the performance of the underlying securities. Depending on your individual circumstances (e.g.,
your selected Index Options and the timing of any Purchase Payments, transfers, or withdrawals), you may experience (perhaps significant)
negative returns under the Contract. You should consult with a Financial Professional.
The Variable
Option does not provide any protection against loss of principal. You
can lose principal and previous earnings for Purchase Payments held in the Variable Option and such losses could be significant.
If you allocate Purchase Payments
or transfer Contract Value to an Index Option with the Index Dual Precision Strategy, Index Precision Strategy, Index Guard
Strategy, or Index Performance Strategy, negative Index Returns may cause Performance Credits to be either negative after application
of the 10%, 20%, or 30% Buffer, or negative down to the -10% Floor. For the Index Dual Precision Strategy and Index Performance Strategy,
we apply the Buffer for the entire Term length; we do not apply the Buffer annually on a 3-year or 6-year Term Index Option. Ongoing
deductions we make for Contract fees and expenses could also cause amounts available for withdrawal to be less than what you invested
even if Index performance has been positive. You
can lose principal and previous earnings if you allocate Purchase Payments or transfer Contract Value to the Index Options with the Index
Dual Precision Strategy, Index Precision Strategy, Index Guard Strategy, or Index Performance Strategy, and such losses could
be significant. If you allocate Purchase Payments or transfer Contract Value to the Index Options with the Index Protection Strategy with
Trigger you can also lose principal and previous earnings if you do not receive a Performance Credit, or if the Contract fees and
expenses are greater than the Performance Credit.
The maximum potential
negative Performance Credit for the Index Dual Precision Strategy, Index Precision Strategy, and Index Performance Strategy is based
on the Buffer. If the Buffer is 10%, the maximum negative Performance Credit is -90%; if the Buffer is 20%, the maximum negative Performance
Credit is -80%; and if the Buffer is 30%, the maximum negative Performance Credit is -70%. The maximum potential negative Performance
Credit for the Index Guard Strategy is the -10% Floor. Such
losses will be greater if you take a withdrawal that is subject to a withdrawal charge, or is a deduction of Contract fees and expenses.
At least one Index Option with a Buffer no lower than 5% or Floor no lower than -25%, or an Index Option that provides complete protection
from Index losses, will always be available for renewal under the Contract.
No,
this Contract is not a short-term investment and is not appropriate if you need ready
access
to cash.
• Considering
the benefits of tax deferral and long-term income, the Contract is generally
more
beneficial to investors with a long investment time horizon.
• Withdrawals
are subject to income taxes, and may also be subject to a 10% additional
federal
tax for amounts withdrawn before age 59 1∕2.
• If,
within six years after we receive a Purchase Payment, you take a full or partial
withdrawal,
withdrawal charges will apply. A withdrawal charge will reduce your Contract
Value
or the amount of money that you actually receive. Withdrawals may reduce or end
Contract
guarantees.
• Amounts
invested in an Index Option must be held in the Index Option for the full Term
before
they can receive a Performance Credit. We apply a Daily Adjustment if, before the
Term
End Date, you take a full or partial withdrawal, you execute a Performance Lock,
you
annuitize the Contract, we pay a death benefit, or we deduct Contract fees and
expenses.
• The
Daily Adjustment may be negative with the Index Dual Precision Strategy, Index
Precision
Strategy, Index Guard Strategy, and Index Performance Strategy. You will lose
money
if the Daily Adjustment is negative.
• Withdrawals
and other deductions from an Index Option prior to a Term End Date will
result
in a proportionate reduction to your Index Option Base. The proportionate reduction
could
be greater than the amount withdrawn or deducted. Reductions to your Index
Option
Base will result in lower Index Option Values for the remainder of the Term and
lower
gains (if any) on the Term End Date.
• On
the Term End Date, you can transfer assets invested in an Index Option by changing
your
allocation instructions. If you do not change your allocation instructions, you will
continue
to be invested in the same Index Option with a new Term Start Date. The new
Term
will be subject to the applicable renewal Trigger Rate, Cap, and/or Participation
Rate.
• An
investment in the Contract is subject to the risk of poor investment performance and
can
vary depending on the performance of the Variable Option and the Index Options
available
under the Contract.
• The
Variable Option and each Index Option have their own unique risks.
• You
should review the Fund’s prospectus and disclosures, including risk factors, before
making
an investment decision.
• Caps
and Trigger Rates will limit positive Performance Credits (e.g., limited upside). This
may
result in earning less than the Index Return.
– For
example, if at the end of a 1-year Term, the Index Return is 25% and the Cap is
15%,
we apply a Performance Credit of 15%, meaning your Contract Value allocated
to
that Index Option will increase by 15% since the Term Start Date. If at the end of the
Term,
the Index Return is 6% and the Trigger Rate is 3%, we apply a Performance
Credit
of 3%, meaning your Contract Value allocated to that Index Option will increase
by
3% since the Term Start Date.
• The
Buffer or Floor will limit negative Performance Credits (e.g., limited protection in the
case
of Index decline). However,
you bear the risk for all Index losses that exceed
the
Buffer. You also bear the risk for Index losses down to the Floor.
– For
example, if at the end of a Term, the Index Return is -25% and the Buffer is 10%,
we
apply a Performance Credit of -15%, meaning your Contract Value allocated to that
Index
Option will decrease by 15% since the Term Start Date. If the Index Return is
-25%
and the Floor is -10%, we apply a Performance Credit of -10%, meaning your
Contract
Value allocated to that Index Option will decrease by 10% since the Term
Start
Date.
• The
Indexes are price return indexes, not total return indexes. This means that the Index
Options
do not receive any dividends payable on these securities. The Index Options also
do
not directly participate in the returns of the Indexes or the Indexes’ component
securities.
This will reduce the Index Return and may cause the Index to underperform a
direct
investment in the securities composing the Index.
Early
Withdrawal Risk
We designed the Contract to be a
long-term investment that you can use to help build and provide income for retirement. The Contract is not suitable for short-term investment.
If you need to take a full or partial
withdrawal during the withdrawal charge period we deduct a withdrawal charge unless the withdrawal is a Penalty-Free Withdrawal. While
Penalty-Free Withdrawals provide some liquidity, they are permitted in only limited amounts or in special circumstances. If you need to
withdraw most or all of your Contract Value in a short period, you will exceed the Penalty-Free Withdrawal amounts available to you and
incur withdrawal charges. For more information on the withdrawal charge, see the Fee Tables and section 7, Expenses and Adjustments –
Withdrawal Charge.
We calculate the withdrawal charge
as a percentage of your Purchase Payments, not Contract Value. Consequently, if the Contract Value has declined since you made a Purchase
Payment, it is possible the percentage of Contract Value withdrawn to cover the withdrawal charge would be greater than the withdrawal
charge percentage. For example, assume you buy the Contract with a single Purchase Payment of $10,000. If your Contract Value in the fifth
year is $8,000 and you take a full withdrawal a 5% withdrawal charge applies. The total withdrawal charge would be $500 (5% of $10,000).
As your Contract Value is less than $100,000, we will also deduct the $50 contract maintenance charge. This results in you receiving $7,450. For
purposes of this example, we have not factored in any final rider fees that may apply and be deducted in connection with a full withdrawal.
In addition, upon a full withdrawal,
the free withdrawal privilege is not available to you, and we apply a withdrawal charge against Purchase Payments that are still within
their withdrawal charge period, including amounts previously withdrawn under the free withdrawal privilege. On
a full withdrawal, your Withdrawal Charge Basis may be greater than your Contract Value because the following reduce your Contract Value,
but do not reduce your Withdrawal Charge Basis: deductions we make for prior Penalty-Free Withdrawals and Contract fees or expenses; and/or
poor performance.
Amounts withdrawn from this Contract
are subject to income taxes and may also be subject to a 10% additional federal tax for amounts withdrawn before age 59 1∕2.
We only apply Performance Credits
to the Index Options once each Term on the Term End Date, rather than daily. In the interim, we calculate Index Option Values based on
the Daily Adjustment. For more information, see “Risks Associated with the Daily Adjustment” later in this section. The
Variable Option is not subject to the Daily Adjustment. Any assets removed from an Index Option during the Term for withdrawals you take
(including Penalty-Free Withdrawals), Annuity Payments, or deductions we make for Contract fees and expenses, or if we pay a death benefit,
will not be eligible to
receive a Performance
Credit on the Term End Date. These removed assets will not receive the full benefit of the Index Value, Index Return, and the 10%, 20%,
or 30% Buffer; or -10% Floor that would have been available on the Term End Date, and losses could exceed the protection offered by the
10%, 20%, or 30% Buffer; or -10% Floor. You will receive a Performance Credit only on any unlocked Index Option Value remaining in an
Index Option on the Term End Date.
You can typically transfer Index
Option Value among the Index Options only on Term End Dates. At other times, you can only move assets out of an Index Option by taking
a full or partial withdrawal, or entering the Annuity Phase. However, you can transfer assets out of an Index Option before the Term End
Date by executing a Performance Lock. Once an Index Option is locked, you can transfer assets out of it on the Index Anniversary that
occurs on or immediately after the Lock Date. For a 3-year or 6-year Term Index Option this means you can transfer out of the locked Index
Option before the Term End Date by executing a Performance Lock on or before the second Index Anniversary of a 3-year Term, or on or before
the fifth Index Anniversary of a 6-year Term. You can also transfer assets out of any locked Index Option, including 1-year Term
Index Options, before the Term End Date by requesting an Early Reallocation. You may execute twelve Early Reallocations each Index Year,
but each request can involve multiple locked Index Options. These restrictions may limit your ability to react to changes in market conditions.
You should consider whether investing in an Index Option is consistent with your financial needs.
An
investment in the Contract is subject to the risks related to us. All obligations,
guarantees
or benefits of the Contract, including those relating to the Index Options, are the
obligations
of Allianz Life and are subject to our claims-paying ability and financial strength.
More
information about Allianz Life, including our financial strength ratings, is available
upon
request by visiting https://www.allianzlife.com/about/financial-ratings, or contacting us
at
(800) 624-0197.
Business
and Operational Risks Relevant to the Contract
Business Disruption
and Cybersecurity Risks. Our business relies on technology
systems and networks, including systems and networks managed by third parties to process, transmit and store information, and to conduct
business activities and transactions with clients, distributors, vendors, and other third parties. Maintaining the integrity of our systems
is critical to our business operations and to the protection of our clients’ personal information. To date, we have not identified
any material breaches or interference with our systems and networks; however, we routinely encounter and address such threats. Any cybersecurity
breaches or interference that may in the future occur could have a material adverse impact on our business operations and our financial
condition.
Publicly-reported cybersecurity threats
and incidents have dramatically increased in recent years, and financial services companies and their third-party service providers are
increasingly the targets of cyberattacks involving the encryption and/or threat to disclose personal or confidential information (e.g.,
ransomware) or disruptions of communications (e.g.,
denial of service) to extort money or for other malicious purposes.
We have implemented and maintain
security measures designed to protect against breaches of security and other interference with systems and networks, and require third
party vendors to meet certain information security standards; however, we cannot ensure that our systems and networks will not be subject
to breaches or interference. Any such event may result in operational disruptions as well as unauthorized access to or the disclosure
or loss of our proprietary information or our clients’ personal information. Any such event may interfere with, impede or cause
delays in our
calculation of
values, processing of transactions and making of payments under the Contract. Even if we successfully protected our technology infrastructure
and the confidentiality of sensitive data, we may incur significant expenses in responding to any such attacks. Although we maintain cybersecurity
insurance coverage against costs resulting from cybersecurity incidents, it is possible losses will exceed the amount available under
our coverage. We cannot be certain that advances in criminal capabilities, discovery of new vulnerabilities, attempts to exploit vulnerabilities
in our systems, data thefts, physical system or network break-ins or inappropriate access, or other developments will not compromise or
breach the technology or other security measures protecting our networks and systems used in connection with our products and services,
and it is possible that a cybersecurity incident could persist for an extended period of time without detection.
Natural or Man-made
Disasters. The occurrence of natural or man-made disasters
(e.g.,
extreme weather events, acts of terrorism, geo-political disputes, public health crises, industrial accidents, blackouts, cyberattacks,
computer viruses, insider threats, insurrections and military actions, unanticipated problems with our disaster recovery systems, or support
failures from external providers) could adversely affect our business operations and our business results, particularly if those events
affect our computer-based data processing, transmission, storage, and retrieval systems or destroy data. Such disasters may damage our
facilities, preventing our employees from performing their roles, otherwise disturbing our ordinary business operations, and impacting
claims processing. We rely on certain third-parties to provide certain services important to our business operations. While we monitor
the business continuity planning of such third-parties, successful implementation and execution of their business continuity plans are
largely outside of our control. Weaknesses or failures within a vendor’s business continuity plan in light of a natural or man-made
disaster could materially disrupt our business operations.
Index
Risks
Index Option returns depend on the
performance of an Index although you are not directly invested in the Index or in the securities tracked by the Index. You will have no
voting rights, no rights to receive cash dividends or other distributions, and no other rights with respect to the companies that make
up the Indexes. Because the S&P 500®
Index, Russell 2000®
Index, Nasdaq-100®
Index, EURO STOXX 50®
and iShares®
MSCI Emerging Markets ETF are each comprised of a collection of equity securities, in each case the value of the component securities
is subject to market risk, or the risk that market fluctuations may cause the value of the component securities to go up or down, sometimes
rapidly and unpredictably. In addition, the value of equity securities may decline for reasons directly related to the issuers of the
securities.
The S&P 500®
Index, Russell 2000®
Index, Nasdaq-100®
Index, and EURO STOXX 50®
are all “price return indexes,” not “total return indexes,” and therefore do not reflect dividends paid on
the securities composing the Index. This will reduce the Index Return and may cause the Index to underperform a direct investment in the
securities composing the Index. For the EURO STOXX 50®,
this Index is a euro “price return index” and Index Returns are determined without any exchange rate adjustment. Because
Index performance for the iShares®
MSCI Emerging Markets ETF is based on the ETF’s closing share price, Index performance is calculated on a “price return”
basis, not a “total return” basis, and therefore does not reflect dividends paid on the securities in which the ETF invests.
In addition, an ETF deducts fees and costs, which reduce Index performance. These factors will reduce the Index Return and may cause the
ETF to underperform a direct investment in the ETF or the securities in which the ETF invests.
In addition to the foregoing, each
Index has its own unique risks, as follows:
●
S&P
500®
Index: This Index is comprised of equity securities issued
by large-capitalization (“large cap”) U.S. companies. In general, large capitalization companies may be unable to respond
quickly to new competitive challenges or changes in their industries, and may not be able to attain the high growth rate of successful
smaller companies.
●
Russell
2000®
Index: This Index is comprised of equity securities of
small-capitalization (“small-cap”) U.S. companies. Generally, the securities of small-cap companies are more volatile and
riskier than the securities of large-cap companies.
●
Nasdaq-100®
Index: This Index is comprised of equity securities of
the largest U.S. and non-U.S. companies listed on the Nasdaq Stock Market, including companies across all major industry groups except
financial companies. In general, large-capitalization companies may be unable to respond quickly to new competitive challenges or changes
in their industries, and may not be able to attain the high growth rate of successful smaller companies. To the extent that the Index
is comprised of securities issued by companies in a particular sector, those securities may not perform as well as the securities of companies
in other sectors or the market as a whole. Also, any securities issued by non-U.S. companies are subject to the risks related to investments
in foreign markets (e.g.,
increased volatility; changing currency exchange rates; and greater political, regulatory, and economic uncertainty).
●
EURO
STOXX 50®:
This Index is comprised of the equity securities of large-capitalization companies in the Eurozone. In general, large-capitalization companies
may be unable to respond quickly to new competitive challenges or changes in their industries, and may not be able to attain the high
growth rate of successful smaller companies. Securities issued by non-U.S. companies are subject to the risks related to investments in
foreign markets (e.g.,
increased volatility; changing currency exchange rates; and greater political, regulatory, and economic uncertainty).
iShares®
MSCI Emerging Markets ETF: The iShares MSCI Emerging Markets
ETF seeks to track the investment results of an index composed of large- and mid-capitalization emerging market equities. Investments
in emerging market issuers may be subject to a greater risk of loss than investments in issuers located or operating in more developed
markets. Emerging markets may be more likely to experience inflation, social instability, political turmoil or rapid changes in economic
conditions than more developed markets. Companies in many emerging markets are not subject to the same degree of regulatory requirements,
accounting standards or auditor oversight as companies in more developed countries, and as a result, information about the securities
in which the ETF invests may be less reliable or complete. Emerging markets often have less reliable securities valuations and greater
risk associated with custody of securities than developed markets. There may be significant obstacles to obtaining information necessary
for investigations into or litigation against companies and shareholders may have limited legal remedies.
Other
Contract Changes Risk
We reserve the right to modify or
restrict several benefits or features of the Contract. We restrict additional Purchase Payments. Each Index Year during the Accumulation
Phase, you cannot add more than your initial amount without our prior approval. Your initial amount is the total of all Purchase Payments
received before the first Quarterly Contract Anniversary of the first Contract Year. We allow you to add up to the initial amount in the
remainder of the first Index Year. In addition to this Purchase Payment restriction, we reserve the right to decline any or all Purchase
Payments at any time on a nondiscriminatory basis. For Contracts issued in certain states, we reserve the right to hold your initial Purchase
Payment in the Variable Option until the free look period ends, and then reallocate your Contract Value, less fees and expenses, according
to your allocation instructions. For further information regarding Purchase Payment restrictions, see section 3, Purchasing the Contract
– Purchase Requirements.
As it relates to the Index Options,
we reserve the right to close Index Options to new Purchase Payments and transfers. However, once an Index Option is added to a Contract,
we cannot remove it, change how it calculates Performance Credits, or change its Buffer or Floor.
We also reserve the right to substitute
the Fund in which the Variable Option invests. We reserve the right to add or eliminate additional variable investment options. However,
the extent to which we add, eliminate, or substitute variable investment options will be consistent with federal securities laws and,
when required, the SEC.
In states that assess a premium tax,
we do not currently deduct it from the Contract, although we reserve the right to do so in the future.
Lastly, we reserve the right to treat
a partial withdrawal that reduces Contract Value below $2,000 as a full withdrawal. If Annuity Payments would be less than $100, we reserve
the right to require you to take a full withdrawal and your Contract will then terminate. However, we do not assess a withdrawal charge
on this full withdrawal.
Risks
Associated with Calculation of Performance Credits
We calculate Performance Credits
each Term on the Term End Date. Because we calculate Index Returns only on a single date in time, you may experience negative or flat
performance even though the Index you selected for a given Crediting Method experienced gains through some, or most, of the Term. If you
allocate Purchase Payments or transfer Contract
Value to the
Index Options with Index Protection Strategy with Trigger, positive returns are limited by the Trigger Rates. You are not subject, however,
to potential negative Performance Credits. The Trigger Rates on the Index Dual Precision Strategy and Index Precision Strategy Index
Options, and the Caps on the Index Guard Strategy and Index Performance Strategy Index Options also limit positive returns and could cause
performance to be lower than it would otherwise have been if you invested in a mutual fund or exchange-traded fund designed to track the
performance of the applicable Index. For the Index Performance Strategy, we apply the Cap and any Participation Rate for the entire Term
length; we do not
apply the Cap and any Participation Rate annually on a
3-year or 6-year Term Index Option. For the Index Dual Precision Strategy, we apply the Trigger Rate for the entire Term length; we do
not
apply the Trigger Rate annually on a 3-year or 6-year Term Index Option.
The Index Options do not receive
any dividends payable on these securities. The Index Options also do not directly participate in the returns of the Indexes or the Indexes’
component securities. Index Returns would be higher if they included the dividends from the component securities.
Trigger Rates, Caps, and Participation
Rates may be adjusted on the next Term Start Date and may vary significantly from Term to Term. Changes to Trigger Rates, Caps, and Participation
Rates may significantly affect the Performance Credit you receive. For more information, see the “Risks Associated with Changes
to Trigger Rates, Caps, and Participation Rates” discussion later in this section.
The Crediting Methods only capture
Index Values on the Term Start Date and Term End Date, so you will bear the risk that the Index Value might be abnormally low on these
days.
Risks
Associated with Changes to Trigger Rates, Caps, and Participation Rates
The 10%, 20%, and 30% Buffers,
and -10% Floors for the currently available Index Options do not change. However, if we add a new Index Option to your Contract after
the Issue Date, we establish the Buffer or Floor for it on the date we add the Index Option to your Contract.
Subject to their respective minimums,
we establish the initial Trigger Rates, Caps, and Participation Rates for a newly issued Contract on the Index Effective Date and they
cannot change until the next Term Start Date. You select the Index Effective Date when you purchase your Contract. It can be any Business
Day from the Issue Date up to and including the first Quarterly Contract Anniversary, but it cannot be the 29th,
30th,
or 31st
of a month.
You should be aware
that, generally, initial Trigger Rates, Caps, and Participation Rates could change every seven calendar days. However, these rates are
guaranteed to be available during the period stated on our website at https://www.allianzlife.com/RILAratesnf
and cannot be superseded until that period ends. If you select an Index Effective Date that is within the guaranteed period for the initial
rates that are available for review on the date you signed your application, you will receive the initial rates that were available on
the date you signed your application. However, if you select an Index Effective Date that is after this guaranteed period, you are subject
to the risk that initial Trigger Rates, Caps, and Participation Rates may change and be less advantageous to you. You are responsible
for reviewing the initial rates before your Index Effective Date to ensure your allocations and the product still meet your needs. Furthermore,
if your Index Effective Date is after the end of the free look period and you cancel the Contract, you will receive the Cash Value. On
or before the Index Effective Date, the Daily Adjustment does not apply.
You may review future rates at least seven calendar days before their effectiveness at https://www.allianzlife.com/RILAratesnf.
Subject to the limitations related to designating the Index Effective Date, you (or your Financial Professional, if authorized) can change
your Index Effective Date at any time before it occurs to be an earlier or later date by submitting a request.
We can change the renewal and Early
Reallocation Trigger Rates, Caps, and Participation Rates for an existing Contract on each new Term Start Date subject to the guaranteed
minimums, in our discretion.
We will send you a letter at least
30 days before each Index Anniversary. This letter advises you that current Trigger Rates, Caps, and Participation Rates are expiring,
and that renewal rates for the next Term Start Date will be available for your review. The Index Anniversary letter also reminds you of
your opportunity to transfer your Index Option Values on the upcoming Term End Date. On each Term End Date, you have the option of
remaining allocated to your current Index Options at the renewal Trigger Rates, Caps, and Participation Rates that we set on the next
Term Start Date, or transferring to another permitted Index Option. At least seven calendar days before each Index Anniversary, we publish
renewal rates for the next Term Start Date for your review in your account on our website, and on our public website at https://www.allianzlife.com/RILAratesnf.
If you do not review renewal change information when it is published or take no action to transfer to another permitted Index Option,
you will remain allocated to your current Index Options and will automatically become subject to the renewal Trigger Rates, Caps, and
Participation Rates until the next Term End Date.
You risk the possibility that the
renewal Trigger Rates, Caps, and Participation Rates you receive may be less than you would find acceptable. If you do not find the renewal
rates acceptable, you must give us transfer instructions no later than the end of the Business Day on the Term End Date (or the next Business
Day if the Term End Date is a non-Business Day) or you will be subject to these renewal Trigger Rates, Caps, and Participation Rates for
the next Term.
When your
renewal rates change, the only options available to you (other than to leave Index Option Value in the existing Index Option) are to transfer
Index Option Value between Index Options by changing your allocation instructions, or take a full withdrawal (which may be subject to
a withdrawal charge, is subject to income taxes, and may be subject to tax penalties).
If you execute a Performance Lock,
you may be able to request an Early Reallocation and begin a new Index Option with a new Term Start Date and a new Trigger Rate, Cap,
or Participation Rate before the next Index Anniversary. We can change Early Reallocation Trigger Rates, Caps, and Participation Rates
subject to the guaranteed minimums, in our discretion. We publish Early Reallocation rates at least seven calendar days before the end
of the current Early Reallocation offering period for your review in your account on our website. If you do not execute an Early Reallocation,
you will remain allocated to your current locked Index Options until the Index Anniversary that occurs on or immediately after the Lock
Date.
Initial, renewal, and Early Reallocation
Trigger Rates, Caps, and Participation Rates may vary significantly depending upon a variety of factors, including, but not limited to:
●
Term
length,
●
level
of downside protection,
●
market
volatility,
●
our
hedging strategies and investment performance,
●
the
availability of hedging instruments,
●
the
amount of money available to us through Contract fees and expenses to purchase hedging instruments,
●
expenses
incurred by the Company,
●
your
Index Effective Date,
●
the
level of interest rates,
●
utilization
of Contract benefits by Owners, and
●
our
profitability goals.
These factors also impact any new
Buffer or Floor Index Options that become available under the Contract. Due to a combination of factors, including potential changes in
interest rates and other market conditions (e.g. rising inflation), the current economic environment is evolving. The future impact on
initial, renewal, and Early Reallocation Trigger Rates, Caps, and Participation Rates cannot be predicted with certainty. The effect of
a change in interest rates or other market conditions may not be direct or immediate. There may be a lag in changes to Trigger Rates,
Caps, and Participation Rates. Interest rates could increase. In a rising interest rate environment, increases in initial Trigger Rates,
Caps, and Participation Rates, if any, may be substantially slower than increases in interest rates. However, a rising interest rate environment
may have the opposite effect on renewal rates and cause renewal Trigger Rates, Caps, and Participation Rates to decrease.
We manage our obligation to provide
Performance Credits in part by trading call and put options, and other derivatives on the available Indexes. The costs of the call and
put options and other derivatives vary based on market conditions, and we may adjust future renewal and Early Reallocation Trigger Rates,
Caps, and Participation Rates to reflect these cost changes. The primary factor affecting the differences in the initial Trigger Rates,
Caps, and Participation Rates for newly issued Contracts and renewal and Early Reallocation rates for existing Contracts is the difference
in what we can earn from these investments for newly issued Contracts versus what we are earning on the investments that were made for
existing Contracts. In some instances, we may need to reduce initial, renewal, and Early Reallocation Trigger Rates, Caps, and Participation
Rates, or we may need to substitute an Index. You bear the risk that we may reduce Trigger Rates, Caps, and Participation Rates, which
reduces your opportunity to receive positive Performance Credits.
Risks
Associated with Investment in Derivative Hedging Instruments
The Index Options are supported by
bonds and other fixed income securities which are also used to support the Contract guarantees, cash, and derivative hedging instruments
used to hedge the movements of the applicable Index.
At Contract issue, we invest a substantial
majority of the initial Contract Value in fixed income securities, with most of the remainder invested in derivative hedging instruments.
The derivative hedging instruments are purchased to track and hedge Index movements and support our obligations with regard to the Index
Options. The derivative hedging instruments we purchase include put options, call options, futures, swaps, and other derivatives.
We currently limit our purchase of
derivative hedging instruments to liquid securities. However, like many types of derivative hedging instruments, these securities may
be volatile and their price may vary substantially. In addition, because
we pay Performance
Credits regardless of the performance of derivative hedging instruments we purchase, we may incur losses on hedging mismatches or errors
in hedging. We may incur additional costs if the costs of our hedging program increase due to market conditions or other factors. Our
overall experience with hedging securities may affect renewal and Early Reallocation Trigger Rates, Caps, and Participation Rates for
existing Contracts.
Risks
Associated with Our Financial Strength and Claims-Paying Ability
We make Annuity Payments, and pay
death benefits from our general account. Our general account assets are subject to claims by our creditors, and any payment we make from
our general account is subject to our financial strength and claims-paying ability. We apply Performance Credits from an unregistered,
non-unitized, non-insulated separate account (Separate
Account IANA). Like our general account, the assets in
Separate Account IANA are subject to our general business operation liabilities and the claims of our creditors, and are also subject
to our financial strength and claims-paying ability. For more information on Separate Account IANA, see The Insurance Company, Separate
Accounts, and General Account – Our Unregistered Separate Account.
Risks
Associated with Performance Locks and Early Reallocations
If a Performance Lock is executed:
●
You
will no longer participate in Index performance, positive or negative, for the remainder of the Term for the locked Index Option. This
means that under no circumstances will your Index Option Value increase during the remainder of the Term for a locked Index Option, and
you will begin a new Index Option with a new Term Start Date on the next Index Anniversary that occurs on or immediately after the
Lock Date unless you execute an Early Reallocation (if available to you). If you decide to execute an Early Reallocation,
you can execute a Performance Lock and then, at the earliest, execute an Early Reallocation on the same Business Day. When executing both
the Performance Lock and Early Reallocation on the same Business Day, your Lock Date is also the Term Start Date for the new Index Option.
●
You
will not receive a Performance Credit on any locked Index Option on the Term End Date.
●
We
use the Daily Adjustment calculated at the end of the current
Business Day on the Lock Date to determine your locked Index Option Value. This means that, if you request a Performance Lock, your Index
Option Value will lock at an unknown future value which may be higher or lower than it was at the point in time you requested a Performance
Lock. In addition, if you set a lower target, your Index Option Value may lock at a lower value than the target you set.
●
If
a Performance Lock is executed when your Daily Adjustment has declined, you will lock in any loss. It is possible that you would have
realized less of a loss or no loss if the Performance Lock occurred at a later time, or if the Index Option was not locked.
●
We
will not execute a Performance Lock on the Index Protection Strategy with Trigger Index Options if the Daily Adjustment is zero. This
may limit your ability to take advantage of the benefits of the Early Reallocation feature.
●
There
are limits on Early Reallocations. We do not accept Early Reallocation requests within 14 calendar days before an Index Anniversary; and
you are limited to twelve Early Reallocation requests each Index Year, but each request can involve multiple locked Index Options. After
you reach the Early Reallocation request limit in an Index Year, any locked Index Options will remain locked until the next Index Anniversary.
These limitations mean you may not be able to take advantage of any increases to Early Reallocation rates, or any advantageous changes
to Index values that may become available at the optimal time. This may limit your return potential. Early Reallocation is available for
amounts allocated to any locked Index Option, subject to the restrictions described in this prospectus.
●
Early
Reallocation Trigger Rates, Caps, and Participation Rates you receive may be less than the Early Reallocation rates that become available
later in the Index Year, or the renewal rates available on the next Index Anniversary. This may limit your return potential.
|
We
will not provide advice or notify you regarding whether you should execute a Performance Lock or Early
Reallocation
or the optimal time for doing so. We will not warn you if you execute a Performance Lock or Early
Reallocation
at a sub-optimal time. We are not responsible for any losses related to your decision whether or not to
execute
a Performance Lock or Early Reallocation. |
Risks
Associated with Substitution of an Index and Limitation on Further Investments
There is no guarantee that the Indexes
will be available during the entire time that you own your Contract. Once we add an Index to your Contract, we cannot remove it without
simultaneously substituting it. For the Index Options, if we substitute a new Index for an existing Index, the performance of the new
Index may be different and this may affect your ability to receive positive Performance Credits.
Depending on the constitution of
the substituted Index, the volatility of its investments, and our ability to hedge the Index’s performance, we may determine, in
our discretion, to increase or decrease renewal Trigger Rates, Caps, and Participation Rates associated with the new Index, subject to
their respective minimums. However, we would not implement any change to reflect this difference until the next Term Start Date after
the substitution. The substitution of an Index during a Term may result in an abnormally large change in the Daily Adjustment on the day
we substitute the Index due to changes in Proxy Value inputs (such as volatility, dividend yield, and interest rate). However, you would
only be affected by this change in the Daily Adjustment if a transaction to which the Daily Adjustment applies (such as a withdrawal you
take) occurs on the substitution date.
Risks
Associated with the Daily Adjustment
The Daily Adjustment is how we calculate
Index Option Values on Business Days other than the Term Start Date or Term End Date. The
Variable Option is not subject to the Daily Adjustment.
The Daily Adjustment can affect the amounts available for withdrawal, Performance Locks, annuitization, payment of the death benefit,
and the Contract Value used to determine the contract maintenance charge and Charge Base for the rider fee. The Daily Adjustment
can be less than the Trigger Rate or Cap even if the current Index return during the Term is greater than the Trigger Rate or Cap. In
addition, even though the current Index return during the Term may be positive, the Daily Adjustment may be negative due to changes in
Proxy Value inputs, such as volatility, dividend yield, and interest rate. However, the Daily Adjustment for the Index Protection Strategy
with Trigger cannot be negative. The Daily Adjustment is generally negatively affected by:
●
interest
rate decreases,
●
dividend
rate increases,
●
poor
market performance, and
●
the
expected volatility of Index prices. Generally, increases in the expected volatility of Index prices negatively affect the Index Dual
Precision Strategy, Index Precision Strategy, and Index Performance Strategy 1-year Term Index Options, while decreases in the expected
volatility of Index prices negatively affect the Index Guard Strategy. For the Index Performance Strategy 3-year and 6-year Term Index
Options, the impact of changes in the expected volatility of Index prices is dependent on the market environment and the applicable Caps
and Participation Rates. For the Index Protection Strategy with Trigger, the impact of changes in the expected volatility of Index prices
is dependent on the market environment.
The Daily Adjustment for Index Options
with a Term length of more than 1 year (3-year and 6-year Term Index Options and Early Reallocation to a 1-year Term Index Option) may
be more negatively impacted by changes in the expected volatility of Index prices than 1-year Term Index Options due to the difference
in Term length. Also, the risk of a negative Daily Adjustment is generally greater for Index Options with a Term length of more than 1
year than for 1-year Term Index Options due to the Term length. The Index Performance Strategy 3-year and 6-year Term Index Options with
a Participation Rate above 100% may also have larger fluctuations in the Daily Adjustment than Index Options either without a Participation
Rate, or with a Participation Rate equal to 100%. For shorter Term lengths, there is more certainty in both the final Index Values and
how Trigger Rates, Caps, Buffers, and Floors determine Performance Credits. This means there may be less fluctuation in the Daily Adjustment
due to changes in Index return for Index Options with shorter Term lengths.
If you take a withdrawal from an
Index Option with the Index Dual Precision Strategy, Index Precision Strategy, Index Guard Strategy, or Index Performance Strategy
before the Term End Date, you could lose
principal and previous earnings because of the Daily Adjustment even
if Index performance is positive on that day or has been positive since the Term Start Date.
If the current Index return during the Term is negative, the Daily Adjustment for these Index Options could result in losses greater than
the protection provided by the 10%, 20%, or 30% Buffer; or -10% Floor.
The maximum potential loss from a negative
Daily Adjustment is: -99% for the Index Dual Precision Strategy, Index Precision Strategy, and Index Performance Strategy; and -35%
for the Index Guard Strategy. Such
losses will be greater if you take a withdrawal that is subject to a withdrawal charge, or is a deduction of Contract fees and expenses.
Free
Withdrawal
Privilege
Allows
you to withdraw up to 10% of your total
Purchase
Payments each Contract Year without
incurring
a withdrawal charge.
• Only
available during the Accumulation Phase.
• Not
available upon a full withdrawal.
• Upon
a full withdrawal, we may assess a
withdrawal
charge against amounts previously
withdrawn
under the free withdrawal privilege.
• Unused
free withdrawal amounts not available in
future
years.
• Program
withdrawals may be subject to negative
Daily
Adjustments.
• Program
withdrawals are subject to income taxes,
and
may also be subject to a 10% additional
federal
tax for amounts withdrawn before age
59 1∕2.
Free
Withdrawal
Privilege