As filed with the Securities and Exchange Commission on August 10, 2006.
Commission File Nos. 333-_______
811-08664
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. [ ]
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 97 [X]
Jackson National Separate Account - I
(Exact Name of Registrant)
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Jackson National Life Insurance Company
(Name of Depositor)
1 Corporate Way, Lansing, Michigan 48951
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, including Area Code: (517) 381-5500
Thomas J. Meyer, Esq.
Senior Vice President, Secretary and General Counsel
Jackson National Life Insurance Company
1 Corporate Way
Lansing, MI 48951
(Name and Address of Agent for Service)
Copy to:
Anthony L. Dowling, Esq.
Jackson National Life Insurance Company
1 Corporate Way
Lansing, MI 48951
Approximate date of proposed public offering: Upon the effective date of this Registration Statement. December 29, 2006 requested.
The Registrant hereby agrees to amend this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
THE INFORMATION IN THIS PROSPECTUS MAY BE CHANGED. WE MAY NOT SELL BASED ON
THIS PROSPECTUS UNTIL THE REGISTRATION STATEMENT, FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION, IS EFFECTIVE. THIS PROSPECTUS
IS NOT AN OFFER TO SELL, AND IS NOT SOLICITING AN OFFER TO PURCHASE, IN ANY
STATE WHERE THE OFFER OR SALE
OF THESE SECURITIES IS NOT PERMITTED.
SIMPLIFIED RETIREMENT ANNUITY
MODIFIED SINGLE PREMIUM FIXED AND VARIABLE DEFERRED ANNUITY
ISSUED BY
JACKSON NATIONAL LIFE INSURANCE COMPANY(R) AND THROUGH
JACKSON NATIONAL SEPARATE ACCOUNT - I
THE DATE OF THIS PROSPECTUS IS DECEMBER 29, 2006, which states the information about the separate account, the Contract, and Jackson National(R) you should know before investing. THIS PROSPECTUS IS A SUMMARY AND IT IS IMPORTANT THAT YOU READ THE CONTRACT AND RIDERS, WHICH ARE THE CONTROLLING DOCUMENTS, REFLECTING STATE OR OTHER VARIATIONS. This information is meant to help you decide if the Contract will meet your needs. Please carefully read this prospectus and any related documents and keep everything together for future reference. Additional information about the separate account can be found in the statement of additional information (SAI) dated December 29, 2006 that is available upon request without charge. To obtain a copy, contact us at our:
ANNUITY SERVICE CENTER
P.O. BOX 17240
DENVER, COLORADO 80217-0240
1-800-766-4683
WWW.JNL.COM
This prospectus also describes a variety of optional features, not all of which may be available at the time you are interested in purchasing a Contract, as we reserve the right to prospectively restrict availability of the optional features. Broker-dealers selling the Contracts may limit the availability of an optional feature. Ask your representative about what optional features are or are not offered. If a particular optional feature that interests you is not offered, you may want to contact another broker-dealer to explore its availability. In addition, not all optional features may be available in combination with other optional features, as we also currently, as well as reserve the right to prospectively restrict the availability to elect certain features if certain other optional features have been elected. We reserve the right to limit the number of Contracts that you may purchase. We also reserve the right to refuse any premium payment. Please confirm with us or your representative that you have the most current prospectus and supplements to the prospectus that describe the availability and any restrictions on the optional features.
We offer other variable annuity products with different product features, benefits and charges. In some states, you may purchase the Contract through an automated electronic transmission/order ticket verification procedure. Ask your representative about availability and the details.
The SAI is incorporated by reference into this prospectus, and its table of contents begins on page 57. The prospectus and SAI are part of the registration statement that we filed with the Securities and Exchange Commission (SEC) about this securities offering. The registration statement, material incorporated by reference, and other information is available on the website the SEC maintains (http://www.sec.gov) regarding registrants that make electronic filings.
"JNL(R)," "Jackson National(R)" and "Jackson National Life(R)" are trademarks of Jackson National Life Insurance Company.
"Standard & Poor's(R)," "S&P(R)," "S&P 500(R)" "Standard & Poor's 500," "500," "Standard & Poor's MidCap 400" and "S&P MidCap 400 Index" are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by Jackson National Life Insurance Company. The JNL/Mellon Capital Management Enhanced S&P 500 Stock Index Fund, the JNL/Mellon Capital Management S&P 500 Index Fund, the JNL/Mellon Capital Management S&P 400 MidCap Index Fund, the JNL/Mellon Capital Management S&P(R) 10 Fund, the JNL/Mellon Capital Management JNL 5 Fund, the JNL/Mellon Capital Management VIP Fund and the JNL/S&P(R) 24 Fund are not sponsored, endorsed, sold or promoted by Standard & Poor's and Standard & Poor's makes no representation regarding the advisability of investing in these Funds. Among the fund options considered are index funds based on the S&P 500 and other indexes that are published by S&P. S&P typically receives license fees from the issuers of such fund, some of which may be based on the amount of assets invested in the fund. Please see the Statement of Additional Information which sets forth certain additional disclaimers and limitations of liabilities on behalf of S&P.
"Dow Jones," "Dow Jones Industrial AverageSM," "Dow Jones Select Dividend IndexSM," "DJIASM," "DowSM" and "Dow 10SM" are service marks of Dow Jones & Company, Inc. (Dow Jones) and have been licensed for use for certain purposes by Jackson National Life Insurance Company. Dow Jones has no relationship to the annuity and Jackson National Life Insurance Company, other than the licensing of the Dow Jones Industrial Average (DJIA) and its service marks for use in connection with the JNL/Mellon Capital Management DowSM 10 Fund, the JNL/Mellon Capital Management Global 15 Fund, the JNL/Mellon Capital Management DowSM Dividend Fund and the JNL/Mellon Capital Management JNL Optimized 5 Fund. Please see Appendix A for additional information. The JNL/Mellon Capital Management DowSM 10 Fund, the JNL/Mellon Capital Management Global 15 Fund, the JNL/Mellon Capital Management DowSM Dividend Fund and the JNL/Mellon Capital Management JNL Optimized 5 Fund are not sponsored, endorsed, sold or promoted by Dow Jones, and Dow Jones makes no representation regarding the advisability of investing in such product.
The Product(s) is not sponsored, endorsed, sold or promoted by The Nasdaq Stock Market, Inc. (including its affiliates) (Nasdaq, with its affiliates, are referred to as the CORPORATIONS). The Corporations have not passed on the legality or suitability of or the accuracy or adequacy of descriptions and disclosures relating to the Product(s). The Corporations make no representation or warranty, express or implied to the owners of the Product(s) or any member of the public regarding the advisability of investing in securities generally or in the Product(s) particularly, or the ability of the Nasdaq-100 Index(R) to track general stock market performance. The Corporations' only relationship to Jackson National Life Insurance Company (LICENSEE) is in the licensing of the Nasdaq-100(R), Nasdaq-100 Index(R) and Nasdaq(R) trademarks or service marks, and certain trade names of the Corporations and the use of the Nasdaq-100 Index(R) which is determined, composed and calculated by Nasdaq without regard to Licensee or the Product(s). Nasdaq has no obligation to take the needs of the Licensee or the owners of the Product(s) into consideration in determining, composing or calculating the Nasdaq-100 Index(R). The Corporations are not responsible for and have not participated in the determination of the timing of, prices at or quantities of the Product(s) to be issued or in the determination or calculation of the equation by which the Product(s) is to be converted into cash. The Corporations have no liability in connection with the administration, marketing or trading of the Product(s).
THE CORPORATIONS DO NOT GUARANTEE THE ACCURACY AND/OR UNINTERRUPTED CALCULATION OF THE NASDAQ-100 INDEX(R) OR ANY DATA INCLUDED THEREIN. THE CORPORATIONS MAKE NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE PRODUCT(S) OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE NASDAQ-100 INDEX(R) OR ANY DATA INCLUDED THEREIN. THE CORPORATIONS MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE NASDAQ-100 INDEX(R) OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL THE CORPORATIONS HAVE ANY LIABILITY FOR ANY LOST PROFITS OR SPECIAL, INCIDENTAL, PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGES, EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
"The Nasdaq-100(R)," "Nasdaq-100 Index(R)," "Nasdaq Stock Market(R)" and "Nasdaq(R)" are trade or servicE Marks of The Nasdaq, Inc. (which with its affiliates are the "Corporations") and have been licensed for use by Jackson National Life Insurance Company. The Corporations have not passed on the legality or suitability of the JNL/Mellon Capital Management Nasdaq(R)15 Fund, the JNL/Mellon Capital Management VIP Fund or the JNL/Mellon Capital Management JNL Optimized 5 Fund. The JNL/Mellon Capital Management Nasdaq(R) 15 Fund, the JNL/Mellon Capital Management VIP Fund and the JNL/Mellon Capital Management JNL Optimized 5 Fund are not issued, endorsed, sponsored, managed, sold or promoted by the Corporations. THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE JNL/MELLON CAPITAL MANAGEMENT NASDAQ(R) 15 FUND, THE JNL/MELLON CAPITAL MANAGEMENT VIP FUND AND THE JNL/MELLON CAPITAL MANAGEMENT JNL OPTIMIZED 5 FUND.
"Value Line(R)," "The Value Line Investment Survey," and "Value Line TimelinessTM Ranking System" arE trademarks of Value Line Securities, Inc. or Value Line Publishing, Inc. that have been licensed to Jackson National Life Insurance Company. The JNL/Mellon Capital Management Value Line(R) 25 Fund, thE JNL/Mellon Capital Management VIP Fund and the JNL/Mellon Capital Management JNL Optimized 5 Fund are not sponsored, recommended, sold or promoted by Value Line Publishing, Inc., Value Line, Inc. or Value Line Securities, Inc. ("Value Line"). Value Line makes no representation regarding the advisability of investing in the JNL/Mellon Capital Management Value Line(R) 25 Fund, the JNL/Mellon Capital Management VIP Fund, and the JNL/Mellon Capital Management JNL Optimized 5 Fund. Jackson National Life Insurance Company is not affiliated with any Value Line Company.
THE CONTRACT MAKES AVAILABLE FOR INVESTMENT FIXED AND VARIABLE OPTIONS. THE VARIABLE OPTIONS ARE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT, EACH OF WHICH INVESTS IN ONE OF THE FOLLOWING FUNDS - ALL CLASS A SHARES (THE "FUNDS"): [TO BE UPDATED BY AMENDMENT]
JNL SERIES TRUST JNL VARIABLE FUND LLC
THE FUNDS ARE NOT THE SAME MUTUAL FUNDS THAT YOU WOULD BUY THROUGH YOUR STOCKBROKER OR A RETAIL MUTUAL FUND. THE PROSPECTUSES FOR THE FUNDS ARE ATTACHED TO THIS PROSPECTUS.
TABLE OF CONTENTS
GLOSSARY 2
KEY FACTS 3
FEES AND EXPENSES TABLES 5
THE ANNUITY CONTRACT 9
JACKSON NATIONAL 10
THE FIXED ACCOUNT 10
THE SEPARATE ACCOUNT 12
INVESTMENT DIVISIONS 12
CONTRACT CHARGES 13
PURCHASES 21
TRANSFERS AND FREQUENT TRANSFER RESTRICTIONS 23
TELEPHONE AND INTERNET TRANSACTIONS 24
ACCESS TO YOUR MONEY 25
INCOME PAYMENTS (THE INCOME PHASE) 45
DEATH BENEFIT 46
TAXES 50
OTHER INFORMATION 54
PRIVACY POLICY 56
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION 57
APPENDIX A (about Dow Jones) A-1
APPENDIX B (GMWB examples) B-1
APPENDIX C C-1
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GLOSSARY
THESE TERMS ARE CAPITALIZED WHEN USED THROUGHOUT THIS PROSPECTUS BECAUSE THEY HAVE SPECIAL MEANING. IN READING THIS PROSPECTUS, PLEASE REFER BACK TO THIS GLOSSARY IF YOU HAVE ANY QUESTIONS ABOUT THESE TERMS.
ACCUMULATION UNIT - a unit of measure we use to calculate the value in an Investment Division prior to the Income Date.
AGGREGATE PREMIUM - the measure used to determine the applicable breakpoint for the amount of the Mortality and Expense Risk Charge. Aggregate Premium at issue is the amount of premium you expect to contribute that you specify when you apply for the Contract (Statement of Intention), and thereafter the actual premium you paid less total partial withdrawals as computed at the end of the sixth Contract Month. Premiums are accepted only during the first six Contract Months.
ANNUITANT - the natural person on whose life annuity payments for this Contract are based. The Contract allows for the naming of joint annuitants. Any reference to the Annuitant includes any joint Annuitant.
ANNUITY UNIT - a unit of measure we use in calculating the value of a variable annuity payment on and after the Income Date.
BENEFICIARY - the natural person or legal entity designated to receive any Contract benefits upon the Owner's death. The Contract allows for the naming of multiple beneficiaries.
COMPLETED YEAR - the succeeding twelve months from the date on which we receive a premium payment.
CONTRACT - the individual modified single premium deferred variable and fixed annuity contract and any optional endorsements you may have selected.
CONTRACT ANNIVERSARY - each one-year anniversary of the Contract's Issue Date.
CONTRACT MONTH - the period of time between consecutive monthly anniversaries of the Issue date.
CONTRACT VALUE - the sum of your allocations between the Contract's Investment Divisions and Fixed Account.
CONTRACT YEAR - the succeeding twelve months from a Contract's Issue Date and every anniversary.
EXCESS INTEREST ADJUSTMENT - an adjustment to the Contract Value allocated to the Fixed Account that is withdrawn, transferred, or annuitized before the end of the period.
FIXED ACCOUNT - part of our General Account to which the Contract Value you allocate is guaranteed to earn a stated rate of return over the specified period.
GENERAL ACCOUNT - the General Account includes all our assets, including any Contract Value you allocate to the Fixed Account, which are available to our creditors.
GOOD ORDER - when our administrative requirements are met for any requested action or change, including that we have received sufficient supporting documentation.
INCOME DATE - the date on which you begin receiving annuity payments.
ISSUE DATE - the date your Contract is issued.
INVESTMENT DIVISION - one of multiple variable options of the Separate Account to allocate your Contract's value, each of which exclusively invests in a different available Fund. The Investment Divisions are called variable because the return on investment is not guaranteed.
JACKSON NATIONAL, JNL, WE, OUR, OR US - Jackson National Life Insurance Company.
(We do not capitalize "we," "our," or "us" in the prospectus.)
OWNER, YOU OR YOUR - the natural person or legal entity entitled to exercise all rights and privileges under the Contract. Usually, but not always, the Owner is the Annuitant. The Contract allows for the naming of joint owners. (We do not capitalize "you" or "your" in the prospectus.) Any reference to the Owner includes any joint Owner.
SEPARATE ACCOUNT - Jackson National Separate Account - I.
STATEMENT OF INTENTION - the amount of total premium that you anticipate paying and specify in the annuity application when you apply for the Contract. The higher your anticipated total premium, the lower your Contract's initial Mortality and Expense Risk Charge will be for the first six months. Premiums are accepted during the first six Contract Months only.
KEY FACTS
THE IMMEDIATELY FOLLOWING TWO SECTIONS BRIEFLY INTRODUCE THE CONTRACT (AND ITS BENEFITS AND FEATURES) AND ITS COSTS; HOWEVER, PLEASE CAREFULLY READ THE WHOLE PROSPECTUS AND ANY RELATED DOCUMENTS BEFORE PURCHASING THE CONTRACT TO BE SURE THAT IT WILL MEET YOUR NEEDS.
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CURRENT AVAILABILITY The initial offering of this
Contract will be limited to the Individual
Retirement Account (IRA) and tax-qualified
plan annuity market. Although this
prospectus contains references to
non-qualified Contracts, applications for
non-qualified Contracts are not currently
being solicited or accepted. This
prospectus will be revised should Jackson
National Life Insurance Company later
offer this Contract in the non-qualified
market.
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ALLOCATION OPTIONS The Contract makes available
Investment Divisions and a Fixed Account
for allocation of your premium payments
and Contract Value. For more information
about the fixed options, please see "THE
FIXED ACCOUNT" beginning on page 10. For
more information about the Investment
Divisions, please see "INVESTMENT
DIVISIONS" beginning on page 12.
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INVESTMENT PURPOSE The Contract is intended to help
you save for retirement or another
long-term investment purpose. The Contract
is designed to provide tax deferral on
your earnings, if it is not issued under a
qualified retirement plan. Qualified plans
confer their own tax deferral. For more
information, please see "TAXES" beginning
on page 49.
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FREE LOOK If you change your mind about having
purchased the Contract, you may return it
without penalty. There are conditions and
time and other limitations depending on
where you live. For more information,
please see "Free Look" beginning on page
54. In some states, we are required to
hold the premiums of a senior citizen in
the Fixed Account during the free look
period, unless we are specifically
directed to allocate the premiums to the
Investment Divisions. State laws vary;
your free look rights will depend on the
laws of the state in which you purchased
the Contract.
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PURCHASES Premiums are accepted during the first six
Contract Months only. As a result, you
may have to buy additional Contracts to
meet your total annuity coverage goal.
Multiple Contracts may result in higher
charges and total expenses. There are also
minimum and maximum premium requirements.
In addition, the Contract has a premium
protection option, namely the Capital
Protection Program. For more information,
please see "PURCHASES" beginning on page
21. There is a breakpoint schedule for the
Mortality and Expense Risk Charge. The
breakpoints are based on the amount of
Aggregate Premium. Aggregate Premium
at issue is equal to the anticipated total
premium specified in the Statement of
Intention section of the annuity
application. If no Statement of Intention
is provided, the Aggregate Premium at
issue will equal the initial premium
received. The Aggregate Premium is
re-determined only at the end of the sixth
Contract Month and is equal to total
Premium actually paid less total partial
withdrawals. For more information, please
see "CONTRACT CHARGES" beginning on
page 13.
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WITHDRAWALS Before the Income Date, there are a number
of ways to access your Contract Value,
generally subject to a charge or
adjustment, particularly during the
early Contract Years. There are also a
number of optional withdrawal benefits
available. The Contract has a free
withdrawal provision and waives the
charges and adjustments in the event of
some unforeseen emergencies. However,
partial withdrawals within the first six
Contract Months may result in a change to
the Mortality and Expense Risk Charge
assessed after the sixth Contract Month.
For more information, please see "ACCESS
TO YOUR MONEY" beginning on page 25.
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INCOME PAYMENTS There are a number of income
options available. For more information,
please see "INCOME PAYMENTS (THE INCOME
PHASE)" beginning on page 45.
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DEATH BENEFIT The Contract has a death benefit
that becomes payable if you die before the
Income Date. There are also optional death
benefits available. For more information,
please see "DEATH BENEFIT" beginning on
page 46.
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FEES AND EXPENSES TABLES
THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN PURCHASING, OWNING AND SURRENDERING THE CONTRACT. THE FIRST TABLE (AND FOOTNOTES) DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU PURCHASE THE CONTRACT, SURRENDER THE CONTRACT OR TRANSFER CASH VALUE BETWEEN INVESTMENT OPTIONS.
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OWNER TRANSACTION EXPENSES
Front-end Sales Load None
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Maximum Withdrawal Charge (1) -
PERCENTAGE OF PREMIUM WITHDRAWN, IF APPLICABLE 5%
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Maximum Premium Taxes 2 -
PERCENTAGE OF EACH PREMIUM 3.5%
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Commutation Fee: If you make a total withdrawal from your Contract after income payments have commenced
under income option 4, or if after your death during the period for which
payments are guaranteed to be made under income option 3 your
Beneficiary elects to receive a lump sum payment, the amount
received will be reduced by an amount equal to the difference
between the present value of any remaining guaranteed payments (as
of the date of calculation) calculated using a discount rate that
is (a) equal to the rate assumed in calculating the initial income
payment and (b) no more than 1% higher than (a).
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Transfer Charge (3) -
PER TRANSFER AFTER 15 IN A CONTRACT YEAR $25
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Expedited Delivery Charge (4) $22.50
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(1) There may be a withdrawal charge on these withdrawals of Contract Value:
withdrawals in excess of the free withdrawal amounts; withdrawals under
a tax-qualified Contract that exceed the required minimum distributions
of the Internal Revenue Code; withdrawals in excess of the free
withdrawal amount to meet the required minimum distributions of a
tax-qualified Contract purchased with contributions from a nontaxable
transfer, after the Owner's death, of an Individual Retirement Annuity
(IRA), or to meet the required minimum distributions of a Roth IRA
annuity; a total withdrawal; and withdrawals on an Income Date that is
within one year of the Issue Date. The withdrawal charge is a schedule
lasting six Completed Years:
Completed Years Since Receipt Of Premium -
0 1 2 3 4 5 6+
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Base 5% 4% 3% 3% 2% 1% 0%
Schedule
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(2) Premium taxes generally range from 0 to 3.5% and vary by state.
(3) We do not count transfers in conjunction with dollar cost averaging, earnings sweep, automatic rebalancing, and periodic automatic transfers.
(4) For overnight delivery on Saturday; otherwise, the overnight delivery charge is $10 for withdrawals. We also charge $20 for wire transfers in connection with withdrawals.
THE NEXT TABLE (AND FOOTNOTES) DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING THE FUNDS' FEES AND EXPENSES.
PERIODIC EXPENSES
BASE CONTRACT
Annual Contract Maintenance Charge (5) $35
Mortality And Expense Risk Charge
The Mortality and Expense Risk Charge is expressed as an annual percentage of the average daily account value of the Investment Divisions and is set initially based upon the breakpoint schedule below using the Aggregate Premium determined at issue. Aggregate Premium at issue is equal to the anticipated total premium specified in the Statement of Intention section of the annuity application. If no Statement of Intention is indicated, the Aggregate Premium at issue will equal the initial premium received. THE AGGREGATE PREMIUM WILL BE RE-DETERMINED ONLY AT THE END OF THE SIXTH CONTRACT MONTH, WHICH MAY RESULT IN A CHANGE TO THE MORTALITY AND EXPENSE RISK CHARGE ASSESSED AFTER THE SIXTH CONTRACT MONTH. At the time the Aggregate Premium is re-determined, the Mortality and Expense Risk Charge will be based on the newly determined Aggregate Premium. (6)
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Aggregate Premium Years 1-7 Years 8+
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$50,000 to $99,999.99 x.xx% x.xx%
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$100,000 to $249,999.99 x.xx% x.xx%
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$250,000 to $499,999.99 x.xx% x.xx%
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$500,000 to $749,999.99 x.xx% x.xx%
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$750,000 to $999,999.99 x.xx% x.xx%
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$1,000,000+ x.xx% x.xx%
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[MORTALITY AND EXPENSE AND ADMINISTRATION CHARGES TO BE UPDATED BY AMENDMENT]
Administration Charge (in all years)
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Maximum Total Separate Account Annual Expenses for Base Contract for Years 1-7 x.xx%
Maximum Total Separate Account Annual Expenses for Base Contract for Years 8+ x.xx%
AS AN ANNUAL PERCENTAGE OF AVERAGE DAILY ACCOUNT VALUE OF INVESTMENT DIVISIONS
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OPTIONAL ENDORSEMENTS -
A VARIETY OF OPTIONAL ENDORSEMENTS TO THE CONTRACT ARE AVAILABLE. YOU MAY SELECT ONE OF EACH GROUPING
BELOW. (7)
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5% GMWB With Annual Step-Up Maximum Annual Charge ("AutoGuardSM") (8) 1.47%
5% for Life GMWB With Annual Step-Up Maximum Annual Charge ("LifeGuard ProtectorSM") (9) 1.47%
Joint 5% for Life GMWB With Annual Step-Up Maximum Annual Charge
("LifeGuard Protector with Joint Option") (10) 1.62%
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Return of Premium Death Benefit(11) 0.55%
Highest Anniversary Value Death Benefit Maximum Annual Charge (12) 0.55%
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(5) This charge is waived on Contract Value of $50,000 or more. This charge is deducted proportionally from your allocations to the Investment Divisions and Fixed Account either annually (on your Contract Anniversary) or in conjunction with a total withdrawal, as applicable.
(6) Premiums are accepted only during the first six Contract Months. The Aggregate Premium re-determined at the end of the sixth Contract Month is equal to total Premium paid less total partial withdrawals. If the Contract Owner dies prior to the end of the sixth Contract Month, there will not be an adjustment to the Mortality and Expense Risk Charge.
(7) The optional death benefits are only available to select when purchasing the Contract and once purchased cannot be canceled. In addition, the charges for the optional death benefits are based on average account value but the charges for the optional GMWBs are not. Please see footnotes 8 -10 below and "CONTRACT CHARGES" beginning on page 13 for more information concerning those charges not based on average account value.
(8) The charge is quarterly, currently 0.1625% of the GWB, which is 0.65% of the GWB on an annual basis, subject to a maximum annual charge of 1.45%. But for Contracts purchased IN WASHINGTON STATE, the charge is monthly, currently 0.055% of the GWB, which, annually, is 0.66% of the GWB subject to a maximum annual charge of 1.47% as used in the Table. The charge is deducted at the end of each calendar quarter/Contract Month, or upon termination of the endorsement, from your Contract Value on a pro rata basis. We deduct the charge from the Investment Divisions by canceling Accumulation Units; the charge is not part of the Accumulation Unit calculation. While the charge is deducted from Contract Value, it is based on the applicable percentage of the GWB. For more information, including how the GWB is calculated, please see "5% Guaranteed Minimum Withdrawal Benefit With Annual Step-Up" beginning on page 29. Please check with your representative to learn about the current level of the charge, or contact us at the Annuity Service Center for more information. Our contact information is on the first page of the prospectus.
(9) 1.47% is the maximum annual charge of the 5% for Life GMWB With Annual
Step-Up for a 65-69 year old, which charge is payable monthly. The
charge for the 5% for Life GMWB With Annual Step-Up varies by age group.
THE BELOW TABLES HAVE THE MAXIMUM AND CURRENT CHARGES FOR ALL AGE
GROUPS.
You pay the applicable percentage of the GWB each calendar quarter. But for Contracts purchased IN WASHINGTON STATE, the charge is monthly. We deduct the charge from your Contract Value. Quarterly charges are pro rata deducted over each applicable Investment Division and the Fixed Account. Monthly charges are pro rata deducted based on the applicable Investment Divisions only.
5% FOR LIFE GMWB WITH ANNUAL STEP-UP
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Annual Charge Maximum Current
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Ages 45 - 49 0.85%/4 0.87%/12 0.40%/4 0.42%/12
50 - 54 0.85%/4 0.87%/12 0.40%/4 0.42%/12
55 - 59 1.20%/4 1.20%/12 0.65%/4 0.66%/12
60 - 64 1.30%/4 1.32%/12 0.75%/4 0.75%/12
65 - 69 1.45%/4 1.47%/12 0.90%/4 0.90%/12
70 - 74 0.85%/4 0.87%/12 0.50%/4 0.51%/12
75 - 80 0.60%/4 0.60%/12 0.35%/4 0.36%/12
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Charge Basis GWB
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Charge Frequency Quarterly Monthly Quarterly Monthly
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For more information about the charge for this endorsement, please see "5% for Life GMWB With Annual Step-Up Charge" beginning on page 16. For more information about how the endorsement works, please see "5% for Life GMWB With Annual Step-Up" beginning on page 33.
(10) 1.62% is the maximum annual charge of the Joint 5% for Life GMWB With Annual Step-Up for a 65-69 year old, which charge is payable monthly. The charge for the Joint 5% for Life GMWB With Annual Step-Up varies by age group. THE BELOW TABLES HAVE THE MAXIMUM AND CURRENT CHARGES FOR ALL AGE GROUPS.
You pay the applicable percentage of the GWB each calendar quarter. But for Contracts purchased IN WASHINGTON STATE, the charge is monthly. We deduct the charge from your Contract Value. Quarterly charges are pro rata deducted over each applicable Investment Division and the Fixed Account. Monthly charges are pro rata deducted based on the applicable Investment Divisions only.
JOINT 5% FOR LIFE GMWB WITH ANNUAL STEP-UP
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Annual Charge Maximum Current
------------------- --------------------- ------------------------
------------------- --------- ----------- ----------- ------------
Ages 45 - 49 1.00%/4 1.02%/12 0.55%/4 0.57%/12
50 - 54 1.00%/4 1.02%/12 0.55%/4 0.57%/12
55 - 59 1.35%/4 1.35%/12 0.80%/4 0.81%/12
60 - 64 1.45%/4 1.47%/12 0.90%/4 0.90%/12
65 - 69 1.60%/4 1.62%/12 1.05%/4 1.05%/12
70 - 74 1.00%/4 1.02%/12 0.65%/4 0.66%/12
75 - 80 0.75%/4 0.75%/12 0.50%/4 0.51%/12
------------------- --------- ----------- ----------- ------------
------------------- ----------------------------------------------
Charge Basis GWB
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------------------- --------- ----------- ----------- ------------
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Charge Frequency Quarterly Monthly Quarterly Monthly
For more information about the charge for this endorsement, please see
"Joint 5% for Life GMWB With Annual Step-Up Charge" beginning on page
17. For more information about how the endorsement works, please see
"Joint 5% for Life GMWB With Annual Step-Up" beginning on page 38.
(11) The current charge is 0.20%.
(12) The current charge is 0.35%.
THE NEXT ITEM SHOWS THE MINIMUM AND MAXIMUM TOTAL ANNUAL OPERATING EXPENSES CHARGED BY THE FUNDS THAT YOU MAY PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT.
TOTAL ANNUAL FUND OPERATING EXPENSES
(Expenses that are deducted from Fund assets, including management and administration fees, 12b-1 service fees and other expenses) [TO BE UPDATED BY AMENDMENT]
Minimum: __%
Maximum: __%
MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS BELOW. BUT PLEASE REFER
TO THE FUNDS' PROSPECTUSES FOR EVEN MORE INFORMATION, INCLUDING INVESTMENT
OBJECTIVES, PERFORMANCE, AND INFORMATION ABOUT JACKSON NATIONAL ASSET
MANAGEMENT, LLC(R), THE FUNDS' ADVISER AND ADMINISTRATOR, AS WELL AS THE
SUB-ADVISERS.
[TO BE UPDATED BY AMENDMENT]
FUND OPERATING EXPENSES
(AS AN ANNUAL PERCENTAGE OF THE FUND'S AVERAGE DAILY NET ASSETS)
ANNUAL
MANAGEMENT AND SERVICE OTHER OPERATING
FUND NAME ADMIN FEE A (12B-1) FEE EXPENSES B EXPENSES
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A Certain Funds pay Jackson National Asset Management, LLC, the Administrator, an administrative fee for certain services provided to the Fund by the Administrator. The JNL/Select Global Growth Fund, the JNL/JPMorgan International Equity Fund, the JNL/JPMorgan International Value Fund, the JNL/Lazard Emerging Markets Fund, the JNL/Oppenheimer Global Growth Fund and all of the JNL/Mellon Capital Management Funds except the JNL/Mellon Capital Management S&P 500 Index Fund, JNL/Mellon Capital Management S&P 400 MidCap Index Fund, JNL/Mellon Capital Management Small Cap Index Fund, JNL/Mellon Capital Management Bond Index Fund, JNL/Mellon Capital Management Enhanced S&P 500 Stock Index Fund and the JNL/Mellon Capital Management Global 15 Fund pay an administrative fee of 0.15%; the JNL/Mellon Capital Management Global 15 Fund pays an administrative fee of 0.20%; the five JNL/S&P Funds pay an administrative fee of 0.05%; and the other Funds pay an administrative fee of 0.10%. The Management and Administrative Fee and the Annual Operating Expenses columns in this table reflect the inclusion of any applicable administrative fee.
B Other expenses include registration fees, licensing costs, a portion of the Chief Compliance Officer costs, directors and officers insurance, the fees and expenses of the disinterested Trustees/Managers and of independent legal counsel to the disinterested Trustees/Managers.
C UNDERLYING FUND EXPENSES. The expenses shown above are the annual operating expenses for the JNL/S&P Funds. Because the JNL/S&P Funds invest in other Funds of the JNL Series Trust and JNL Variable Fund LLC, the JNL/S&P Funds will indirectly bear its pro rata share of fees and expenses of the underlying Funds in addition to the expenses shown.
The total annual operating expenses for each JNL/S&P Fund (including both the annual operating expenses for the JNL/S&P Funds and the annual operating expenses for the underlying Funds) could range from ___% to ___% (this range reflects an investment in the Funds with the lowest and highest Annual Operating Expenses). The table below shows estimated total annual operating expenses for each of the JNL/S&P Funds based on the pro rata share of expenses that the JNL/S&P Funds would bear if they invested in a hypothetical mix of underlying Funds. The Adviser believes the expenses shown below to be a likely approximation of the expenses the JNL/S&P Funds will incur based on the actual mix of underlying Funds. The expenses shown below include both the annual operating expenses for the JNL/S&P Fund and the annual operating expenses for the underlying Funds. The actual expenses of each JNL/S&P Fund will be based on the actual mix of underlying Funds in which it invests. The actual expenses may be greater or less than those shown.
JNL/S&P Managed Conservative Fund x.xx% JNL/S&P Managed Moderate Fund x.xx% JNL/S&P Managed Moderate Growth Fund x.xx% JNL/S&P Managed Growth Fund x.xx% JNL/S&P Managed Aggressive Growth Fund x.xx% |
EXAMPLE. The example below is intended to help you compare the cost of investing in the Contract with the cost of investing in other variable annuity contracts. These costs include Contract owner transaction expenses, Contract fees, Separate Account annual expenses and Fund fees and expenses. (The Annual Contract Maintenance Charge is determined by dividing the total amount of such charges collected during the calendar year by the total market value of the Investment Divisions and Fixed Account.)
The example assumes that you invest $10,000 in the Contract for the time periods indicated. Neither transfer fees nor premium tax charges are reflected in the example. The example also assumes that your investment has a 5% annual return on assets each year.
The following example includes maximum Fund fees and expenses and the costs if you select the optional Highest Anniversary Value Death Benefit and the Guaranteed Minimum Withdrawal Benefit (using the maximum possible charge). Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
[TO BE UPDATED BY AMENDMENT]
If you surrender your Contract at the end of the applicable time period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
If you annuitize at the end of the applicable time period:
1 YEAR * 3 YEARS 5 YEARS 10 YEARS
* Withdrawal charges apply to income payments occurring within one year of the Contract's Issue Date.
If you do NOT surrender your Contract:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
THE EXAMPLE DOES NOT REPRESENT PAST OR FUTURE EXPENSES. YOUR ACTUAL
COSTS MAY BE HIGHER OR LOWER.
CONDENSED FINANCIAL INFORMATION. The Contracts have not been previously offered so there is no condensed financial information relating to Accumulation Unit Values under the Contracts. The value of an Accumulation Unit is determined on the basis of changes in the per share value of an underlying fund and Separate Account charges for the base Contract and the various combinations of optional endorsements. The financial statements of the Separate Account and Jackson National can be found in the Statement of Additional Information. The financial statements of the Separate Account include information about all the contracts offered through the Separate Account. The financial statements of Jackson National that are included should be considered only as bearing upon the company's ability to meet its contractual obligations under the Contracts. Jackson National's financial statements do not bear on the future investment experience of the assets held in the Separate Account. For your copy of the Statement of Additional Information, please contact us at the Annuity Service Center. Our contact information is on the cover page of this prospectus.
THE ANNUITY CONTRACT
Your Contract is a contract between you, the Owner, and us. Your Contract is intended to help facilitate your retirement savings on a tax-deferred basis, or other long-term investment purposes, and provides for a death benefit. Purchases under tax-qualified plans should be made for other than tax deferral reasons. Tax-qualified plans provide tax deferral that does not rely on the purchase of an annuity contract. We will not issue a Contract to someone older than age 90 (age 85 for Contracts purchased in Oklahoma). Optional benefits may have different requirements, as noted.
You may allocate your Contract Value to
* our Fixed Account, as may be made available by us, or as may be otherwise limited by us,
* Investment Divisions of the Separate Account that invest in underlying Funds.
Your Contract, like all deferred annuity contracts, has two phases:
* the ACCUMULATION PHASE, which is the period between the issue date of the Contract and the Income Date, and
* the INCOME PHASE, which begins on the Income Date and is when we make income payments to you.
As the Owner, you can exercise all the rights under your Contract. You can assign your Contract at any time during your lifetime, but we will not be bound until we receive written notice of the assignment (there is an assignment form). We reserve the right to refuse an assignment, and an assignment may be a taxable event. Your ability to change ownership is limited on Contracts with one of the For Life GMWBs. Please contact our Annuity Service Center for help and more information.
The Contract is a modified single premium fixed and variable deferred annuity and may be issued as either an individual or a group contract. Contracts issued in your state may provide different features and benefits than those described in this prospectus. This prospectus provides a general description of the Contracts. Your Contract and any endorsements are the controlling documents. In those states where Contracts are issued as group contracts, references throughout the prospectus to "Contract(s)" shall also mean "certificate(s)."
JACKSON NATIONAL
We are a stock life insurance company organized under the laws of the state of Michigan in June 1961. Our legal domicile and principal business address is 1 Corporate Way, Lansing, Michigan 48951. We are admitted to conduct life insurance and annuity business in the District of Columbia and all states except New York. We are ultimately a wholly owned subsidiary of Prudential plc (London, England).
We issue and administer the Contracts and the Separate Account. We maintain records of the name, address, taxpayer identification number and other pertinent information for each Owner, the number and type of Contracts issued to each Owner and records with respect to the value of each Contract.
We are working to provide documentation electronically. When this program is available, we will, as permitted, forward documentation electronically. Please contact us at our Annuity Service Center for more information.
THE FIXED ACCOUNT
CONTRACT VALUE THAT YOU ALLOCATE TO A FIXED ACCOUNT OPTION WILL BE PLACED WITH OTHER ASSETS IN OUR GENERAL ACCOUNT. THE FIXED ACCOUNT IS NOT REGISTERED WITH THE SEC, AND THE SEC DOES NOT REVIEW THE INFORMATION WE PROVIDE TO YOU ABOUT IT. DISCLOSURES REGARDING THE FIXED ACCOUNT, HOWEVER, MAY BE SUBJECT TO THE GENERAL PROVISIONS OF THE FEDERAL SECURITIES LAWS RELATING TO THE ACCURACY AND COMPLETENESS OF STATEMENTS MADE IN PROSPECTUSES. BOTH THE AVAILABILITY OF THE FIXED ACCOUNT OPTIONS, AND TRANSFERS INTO AND OUT OF THE FIXED ACCOUNT, MAY BE SUBJECT TO CONTRACTUAL AND ADMINISTRATIVE REQUIREMENTS. FOR MORE INFORMATION, PLEASE SEE THE APPLICATION, CHECK WITH THE REGISTERED REPRESENTATIVE HELPING YOU TO PURCHASE THE CONTRACT, OR CONTACT US AT OUR ANNUITY SERVICE CENTER.
Each Fixed Account option offers a base interest rate that we established and will credit to your Contract Value in the Fixed Account for a specified period (currently, one, three, five or seven years), subject to availability (and we reserve the right, in our sole discretion, to limit or suspend availability of the Fixed Account options), so long as the Contract Value in the Fixed Account is not withdrawn, transferred, or annuitized until the end of the specified period. The base interest rate is subject to your Contract's Fixed Account minimum interest rate, which will be 2% a year, credited daily, during the first ten Contract Years and 3% a year, credited daily, afterwards. Depending on the Issue Date of your Contract, however, the Fixed Account minimum interest rate may be 3% a year, credited daily, in all Contract Years. Subject to these minimum requirements, we may declare different base interest rates at different times.
Your Contract Value in the Fixed Account may be subject to an "Excess Interest Adjustment" and a withdrawal charge, however, if you decide to withdraw or transfer your Contract Value allocated to the Fixed Account, or if you annuitize the Contract, before the end of the specified period. The Excess Interest Adjustment depends on the base interest rate that was available when you allocated Contract Value to a Fixed Account option versus the base interest rate available for allocations to the same Fixed Account option at the time of withdrawal, transfer, or annuitization. If your base interest rate is higher than the base interest rate available for allocations to the same Fixed Account option at the time of withdrawal, transfer, or annuitization, then the Excess Interest Adjustment will increase your Contract Value, and vice versa. However, there will be no Excess Interest Adjustment when the base interest rate available for allocations to the same Fixed Account option at the time of the withdrawal, transfer, or annuitization is less than your base interest rate by 0.5% or less. Also, there is no Excess Interest Adjustment on: the one-year Fixed Account option; death benefit proceed payments; payments pursuant to a life contingent income option or an income option resulting in payments spread over at least five years; amounts withdrawn for Contract charges; and free withdrawals. In no event will the Excess Interest Adjustment reduce the Contract Value below the minimum interest rate applicable to the Fixed Account portion of your Contract.
Whenever a specified period ends, you will have 30 days to transfer or withdraw the Contract Value in the Fixed Account option, and there will not be an Excess Interest Adjustment. If you do nothing, then after 30 days, the Contract Value that remains in that Fixed Account option will be subject to another specified period of the same duration, subject to availability, and provided that that specified period will not extend beyond the Income Date. Otherwise, the next closest specified period, or the one-year Fixed Account option (if there is one year or less until the Income Date), will apply.
You may allocate premiums to the one-year Fixed Account option, but we may require that the amount in the one-year Fixed Account be automatically transferred on a monthly basis in equal installments to your choice of Investment Division within 12 months of the date we received the premium, so that at the end of the period, all amounts in the one-year Fixed Account will have been transferred. The amount will be determined based on the amount allocated to the one-year Fixed Account and the base interest rate. Charges, withdrawals and additional transfers taken from the one-year Fixed Account will shorten the length of time it takes to deplete the account balance. These automatic transfers will not count against the 15 free transfers in a Contract year.
Interest will continue to be credited daily on the account balance remaining in the one-year Fixed Account as funds are automatically transferred into your choice of Investment Divisions. However, the effective yield over the 12-month automatic transfer period will be less than the base interest rate, as it will be applied to a declining balance in the one-year Fixed Account.
The DCA+ FIXED ACCOUNT, IF AVAILABLE, offers a fixed interest rate that we guarantee for a period of up to one year in connection with dollar-cost-averaging transfers to one or more of the Investment Divisions or systematic transfers to other Fixed Account options. From time to time, we will offer special enhanced rates on the DCA+ Fixed Account. DCA+ Fixed Account is only available for new premiums. Premiums are accepted during the first six Contract Months only.
THE SEPARATE ACCOUNT
We established the Separate Account on June 14, 1993, pursuant to the provisions of Michigan law. The Separate Account is a separate account under state insurance law and a unit investment trust under federal securities law and is registered as an investment company with the SEC.
The assets of the Separate Account legally belong to us and the obligations under the Contracts are our obligations. However, we are not allowed to use the Contract assets in the Separate Account to pay our liabilities arising out of any other business we may conduct. All of the income, gains and losses resulting from these assets (whether or not realized) are credited to or charged against the Contracts and not against any other Contracts we may issue.
The Separate Account is divided into Investment Divisions. We do not guarantee the investment performance of the Separate Account or any of its Investment Divisions.
INVESTMENT DIVISIONS
Each Investment Division purchases the shares of one underlying Fund
(mutual fund portfolio) that has its own investment objective. The
Investment Divisions are designed to offer the potential for a higher
return than the Fixed Account options. HOWEVER, THIS IS NOT GUARANTEED.
IT IS POSSIBLE FOR YOU TO LOSE YOUR CONTRACT VALUE ALLOCATED TO ANY OF
THE INVESTMENT DIVISIONS. If you allocate Contract Values to the
Investment Divisions, the amounts you are able to accumulate in your
Contract during the accumulation phase will depend upon the performance
of the Investment Divisions you select. The amount of the income
payments you receive during the income phase also will depend, in part,
on the performance of the Investment Divisions you choose for the
income phase.
THE NAMES OF THE FUNDS THAT ARE AVAILABLE, ALONG WITH THE NAMES OF THE ADVISERS AND SUB-ADVISERS AND A BRIEF STATEMENT OF EACH INVESTMENT OBJECTIVE, ARE BELOW:
The investment objectives and policies of certain Funds are similar to the investment objectives and policies of other mutual funds that the Fund's investment sub-advisers also manage. Although the objectives and policies may be similar, the investment results of the Funds may be higher or lower than the results of those other mutual funds. We cannot guarantee, and make no representation, that the investment results of similar funds will be comparable even though the funds have the same investment sub-advisers. The underlying Funds are available only through variable annuity contracts issued by Jackson National. They are NOT offered or made available to the general public directly.
A Fund's performance may be affected by risks specific to certain types of investments, such as foreign securities, derivative investments, non-investment grade debt securities, initial public offerings (IPOs) or companies with relatively small market capitalizations. IPOs and other investment techniques may have a magnified performance impact on a Fund with a small asset base. A Fund may not experience similar performance as its assets grow.
You should read the prospectuses for the JNL Series Trust and the JNL Variable Fund LLC carefully before investing. Additional Funds and Investment Divisions may be available in the future.
VOTING PRIVILEGES. To the extent required by law, we will obtain instructions from you and other Owners about how to vote our shares of a Fund when there is a vote of shareholders of a Fund. We will vote all the shares we own in proportion to those instructions from Owners.
SUBSTITUTION. We reserve the right to substitute a different Fund or a different mutual fund for the one in which any Investment Division is currently invested, or transfer money to the General Account. We will not do this without any required approval of the SEC. We will give you notice of any substitution.
CONTRACT CHARGES
There are charges associated with your Contract, the deduction of which will reduce the investment return of your Contract. Charges are deducted proportionally from your Contract Value. Some of these charges are for optional endorsements, as noted, so they are deducted from your Contract Value only if you selected to add that optional endorsement to your Contract. These charges may be a lesser amount where required by state law or as described below, but will not be increased. We expect to profit from certain charges assessed under the Contract. These charges (and certain other expenses) are as follows:
MORTALITY AND EXPENSE RISK CHARGE. Each day, as part of our calculation of the value of the Accumulation Units and Annuity Units, we make a deduction for the Mortality and Expense Risk Charge. The Mortality and Expense Risk Charge is expressed as an annual percentage of the average daily account value of the Investment Divisions and is set based upon the breakpoint schedule below using the Aggregate Premium determined at issue. Aggregate Premium at issue is equal to the anticipated total premium breakpoint specified by you in the Statement of Intention section of the application. If no Statement of Intention is provided by you in the application, the Aggregate Premium at issue will equal the initial premium received. THE AGGREGATE PREMIUM WILL BE RE-DETERMINED ONLY AT THE END OF THE SIXTH CONTRACT MONTH, WHICH MAY RESULT IN A CHANGE TO THE MORTALITY AND EXPENSE RISK CHARGE ASSESSED AFTER THE SIXTH CONTRACT MONTH. At the time the Aggregate Premium is re-determined, the Mortality and Expense Risk Charge will be set by reference to the newly determined Aggregate Premium. If the Contract Owner dies prior to the end of the sixth Contract Month, there will not be an adjustment to the Mortality and Expense Risk Charge. Thus, while the Contract may continue for a period of time after the death of the Owner, premium payments made after the initial premium will not result in a change in the Mortality and Expense Risk Charge. The Mortality and Expense Risk Charge does not apply to the Fixed Account.
[TO BE UPDATED BY AMENDMENT]
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Aggregate Premium Years 1-7 Years 8+
--------------------------------- -------------- ------------
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$50,000 to $99,999.99 x.xx% x.xx%
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$100,000 to $249,999.99 x.xx% x.xx%
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$250,000 to $499,999.99 x.xx% x.xx%
--------------------------------- -------------- -------------
--------------------------------- -------------- -------------
$500,000 to $749,999.99 x.xx% x.xx%
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$750,000 to $999,999.99 x.xx% x.xx%
--------------------------------- -------------- -------------
--------------------------------- -------------- -------------
$1,000,000+ x.xx% x.xx%
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Premiums are accepted during the first six Contract Months only. The Aggregate Premium is re-determined at the end of the sixth Contract Month and is equal to total Premium paid less certain partial withdrawals, as discussed below. For information about withdrawals affecting Aggregate Premium, please see "Access To Your Money" beginning on page 25.
The Mortality and Expense Risk Charge compensates us for the risks we assume in connection with all the Contracts, not just your Contract. Our mortality risks under the Contracts arise from our obligations:
* to make income payments for the life of the Annuitant during the income phase;
* to waive the withdrawal charge in the event of the Owner's death; and
* to provide a basic death benefit prior to the Income Date.
Our expense risks under the Contracts include the risk that our actual cost of administering the Contracts and the Investment Divisions may exceed the amount that we receive from the administration charge and the annual contract maintenance charge. Included among these expense risks are those that we assume in connection with increasing distribution expenses, waivers of withdrawal charges under the Terminal Illness Benefit, the Specified Conditions Benefit and the Extended Care Benefit.
If your Contract Value were ever to become insufficient to pay this charge, your Contract would terminate without value.
ANNUAL CONTRACT MAINTENANCE CHARGE. During the accumulation phase, we deduct a $35 annual contract maintenance charge on the Contract Anniversary of the Issue Date. We will also deduct the annual contract maintenance charge if you make a total withdrawal. This charge is for administrative expenses. The annual contract maintenance charge will be assessed on the Contract Anniversary or upon full withdrawal and is taken from the Investment Divisions and the Fixed Account options based on the proportion their respective value bears to the Contract Value. We will not deduct this charge if, when the deduction is to be made, the value of your Contract is $50,000 or more.
ADMINISTRATION CHARGE. Each day, as part of our calculation of the value of the Accumulation Units and Annuity Units, we make a deduction for administration charges. On an annual basis, these charges equal X.XX% of the average daily net asset value of your allocations to the Investment Divisions. This charge does not apply to the Fixed Account. This charge compensates us for our expenses incurred in administering the Contracts and the Separate Account.
TRANSFER CHARGE. You must pay $25 for each transfer in excess of 15 in a Contract Year. This charge is deducted from the amount that is transferred prior to the allocation to a different Investment Division or the Fixed Account, as applicable. We waive the transfer charge in connection with Dollar Cost Averaging, Earnings Sweep, Rebalancing transfers and any transfers we require, and we may charge a lesser fee where required by state law.
WITHDRAWAL CHARGE. At any time during the accumulation phase (if and to the extent that Contract Value is sufficient to pay any remaining withdrawal charges that remain after a withdrawal), you may withdraw the following with no withdrawal charge:
* PREMIUMS THAT ARE NO LONGER SUBJECT TO A WITHDRAWAL CHARGE
(premiums in your annuity for at least six years), PLUS
* EARNINGS (excess of your Contract Value allocated to the Investment Divisions and the Fixed Account over your remaining premiums allocated to those accounts)
* during each Contract Year 10% OF PREMIUM that would otherwise incur a withdrawal charge or be reduced by an Excess Interest Adjustment, and that has not been previously withdrawn (this can be withdrawn at once or in segments throughout the Contract Year), MINUS earnings (required minimum distributions will be counted as part of the free withdrawal amount).
WE WILL DEDUCT A WITHDRAWAL CHARGE ON:
* withdrawals in excess of the free withdrawal amounts, or
* withdrawals under a tax-qualified Contract that exceed its required minimum distributions, or
* withdrawals in excess of the free withdrawal amounts to meet the required minimum distribution of a tax-qualified Contract purchased with contributions from a nontaxable transfer, after the Owner's death, of an Individual Retirement Annuity (IRA), or to meet the required minimum distribution of a Roth IRA annuity, or
* amounts withdrawn in a total withdrawal, or
* amounts applied to income payments on an Income Date that is within one year of the Issue Date.
The amount of the withdrawal charge deducted varies (depending upon how many years prior to the withdrawal you made the premium payment(s) you are withdrawing) according to the following schedule:
WITHDRAWAL CHARGE (AS A PERCENTAGE OF PREMIUM PAYMENTS):
COMPLETED YEARS SINCE RECEIPT 0 1 2 3 4 5 6+ OF PREMIUM BASE SCHEDULE 5% 4% 3% 3% 2% 1% 0% |
For purposes of the withdrawal charge, we treat withdrawals as coming first from earnings and then from the oldest remaining premium. If you make a full withdrawal, or elect to commence income payments within one year of the date your Contract was issued, the withdrawal charge is based on premiums remaining in the Contract and no free withdrawal amount applies. If you withdraw only part of the value of your Contract, we deduct the withdrawal charge from the remaining value in your Contract. The withdrawal charge compensates us for costs associated with selling the Contracts.
NOTE: Withdrawals under a non-qualified Contract will be taxable on an "income first" basis. This means that any withdrawal from a non-qualified Contract that does not exceed the accumulated income under the Contract will be taxable in full. Any withdrawals under a tax-qualified Contract will be taxable except to the extent that they are allocable to an investment in the Contract (any after-tax contributions). In most cases, there will be little or no investment in the Contract for a tax-qualified Contract because contributions will have been made on a pre-tax or tax-deductible basis.
We do NOT assess the withdrawal charge on any amounts paid out as:
* income payments (but the withdrawal charge is deducted at the Income Date if income payments are commenced in the first Contract Year);
* death benefits;
* withdrawals necessary to satisfy the required minimum distribution of the Internal Revenue Code (but if the withdrawal requested exceeds the required minimum distribution; if the Contract was purchased with contributions from a nontaxable transfer, after the Owner's death, of an Individual Retirement Annuity (IRA); or is a Roth IRA annuity, then the entire withdrawal in excess of the free withdrawal amount will be subject to the withdrawal charge);
* if permitted by your state, withdrawals of up to $250,000 from the Investment Divisions and Fixed Account if you incur a terminal illness or if you need extended hospital or nursing home care as provided in your Contract; or
* if permitted by your state, withdrawals of up to 25% of your Contract Value from the Investment Divisions and Fixed Account (12 1/2% for each of two joint Owners) if you incur certain serious medical conditions specified in your Contract.
We may reduce or eliminate the amount of the withdrawal charge when the Contract is sold under circumstances that reduce our sales expense. Some examples are the purchase of a Contract by a large group of individuals or an existing relationship between us and a prospective purchaser. We may not deduct a withdrawal charge under a Contract issued to an officer, director, agent or employee of Jackson National or any of our affiliates.
5% GUARANTEED MINIMUM WITHDRAWAL BENEFIT WITH ANNUAL STEP-UP CHARGE. If you select the 5% GMWB With Annual Step-Up, in most states you will pay 0.1625% of the GWB each calendar quarter. In some states, the charge is monthly, currently 0.055% of the GWB, which we will waive at the end of a Contract Month to the extent that the charge exceeds the amount of your Contract Value allocated to the Investment Divisions. For more information about the GWB, please see "5% Guaranteed Minimum Withdrawal Benefit With Annual Step-Up" beginning on page 29. We deduct this charge from your Contract Value on a pro rata basis over each applicable Investment Division and the Fixed Account. With the Investment Divisions, we deduct the charge by canceling Accumulation Units rather than as part of the calculation to determine Accumulation Unit Value. While the charge is deducted from Contract Value, it is based on the applicable percentage of the GWB. The charge is prorated, from the endorsement's effective date to the end of the first quarter or first month after selection. Similarly, the charge is prorated upon termination of the endorsement. The charge may be reduced if you do not take any withdrawals before the fifth Contract Anniversary, or before the tenth Contract Anniversary, after the endorsement's effective date. If the charge in your state is quarterly, and if you have not taken any withdrawals before the fifth Contract Anniversary, then you will pay 0.1125% of the GWB each calendar quarter. After the tenth Contract Anniversary if no withdrawals have been taken, you will pay 0.05% of the GWB each calendar quarter. If the charge in your state is monthly, and if you have not taken any withdrawals before the fifth Contract Anniversary, then you will pay 0.0375% of the GWB each Contract Month. After the tenth Contract Anniversary if no withdrawals have been taken, you will pay 0.0175% of the GWB each Contract Month. We reserve the right to prospectively change the charge: on new Contracts; if you select this benefit after your Contract is issued; or with a step-up that you request (not on step-ups that are automatic) - subject to a maximum charge of 1.45% annually in states where the charge is quarterly, 1.47% annually in states where the charge is monthly. We stop deducting this charge on the earlier date that you annuitize the Contract, or your Contract Value is zero. Please consult the representative who helped you purchase your Contract about the current GMWB charges. In addition, please consult the representative to be sure if a Step-Up is right for you and about any increase in charges upon a Step-Up. Upon election of the GMWB and a Step-Up, the applicable GMWB charge will be reflected in your confirmation. Also see "Guaranteed Minimum Withdrawal Benefit General Considerations" and "Guaranteed Minimum Withdrawal Benefit Important Special Considerations" beginning on page 27 for additional important information to consider when purchasing a Guaranteed Minimum Withdrawal Benefit.
5% FOR LIFE GUARANTEED MINIMUM WITHDRAWAL BENEFIT WITH ANNUAL STEP-UP CHARGE. The charge for this GMWB is expressed as an annual percentage of the GWB and depends on the Owner's age when the endorsement is added to the Contract. The charge varies by age group (see table below). For more information about the GWB, please see "5% For Life Guaranteed Minimum Withdrawal Benefit With Annual Step-Up" beginning on page 33. With joint Owners, the charge is based on the older Owner's age. For the Owner that is a legal entity, the charge is based on the Annuitant's age. (With joint Annuitants, the charge is based on the older Annuitant's age.)
Annual Charge Maximum Current
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Ages 45 - 49 0.85% / 4 0.87% / 12 0.40% / 4 0.42% / 12
50 - 54 0.85% / 4 0.87% / 12 0.40% / 4 0.42% / 12
55 - 59 1.20% / 4 1.20% / 12 0.65% / 4 0.66% / 12
60 - 64 1.30% / 4 1.32% / 12 0.75% / 4 0.75% / 12
65 - 69 1.45% / 4 1.47% / 12 0.90% / 4 0.90% / 12
70 - 74 0.85% / 4 0.87% / 12 0.50% / 4 0.51% / 12
75 - 80 0.60% / 4 0.60% / 12 0.35% / 4 0.36% / 12
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You pay the applicable annual percentage of the GWB each calendar quarter. For Contracts purchased IN WASHINGTON STATE, the charge is monthly, which charge is waived at the end of a Contract Month to the extent it exceeds the amount of your Contract Value allocated to the Investment Divisions. We deduct the charge from your Contract Value. Quarterly charges are pro rata deducted over each applicable Investment Division and the Fixed Account. Monthly charges are also pro rata, but deducted over the applicable Investment Divisions only. With the Investment Divisions, we deduct the charge by canceling Accumulation Units rather than as part of the calculation to determine Accumulation Unit Value. While the charge is deducted from Contract Value, it is based on the applicable percentage of the GWB. The charge is prorated, from the endorsement's effective date, to the end of the first quarter or first month after selection. Similarly, the charge is prorated upon termination of the endorsement.
We reserve the right to prospectively change the charge on new Contracts, or if you select this benefit after your Contract is issued, subject to the applicable maximum annual charge. We may also change the charge when you elect a step-up, (not on step-ups that are automatic), again subject to the applicable maximum annual charge. Please consult the representative who helped you purchase your Contract about the current GMWB charges. In addition, please consult the representative to be sure if a Step-Up is right for you and about any increase in charges upon a Step-Up. Upon election of the GMWB and a Step-Up, the applicable GMWB charge will be reflected in your confirmation.
You will continue to pay the charge for the endorsement through the earlier date that you annuitize the Contract or your Contract Value is zero. Also, we will stop deducting the charge under the other circumstances that would cause the endorsement to terminate. For more information, please see "Termination" under "5% For Life Guaranteed Minimum Withdrawal Benefit With Annual Step-Up" beginning on page 33. Please check with your representative to learn about the current level of the charge, or contact us at the Annuity Service Center for more information. Our contact information is on the first page of the prospectus. For more information about how the endorsement works, please see "5% For Life Guaranteed Minimum Withdrawal Benefit With Annual Step-Up" beginning on page 33. Also see "Guaranteed Minimum Withdrawal Benefit General Considerations" and "Guaranteed Minimum Withdrawal Benefit Important Special Considerations" beginning on page 27 for additional important information to consider when purchasing a Guaranteed Minimum Withdrawal Benefit.
JOINT 5% FOR LIFE GUARANTEED MINIMUM WITHDRAWAL BENEFIT WITH ANNUAL STEP-UP CHARGE. The charge for this GMWB is expressed as an annual percentage of the GWB and depends on the youngest Covered Life's age when the endorsement is added to the Contract. For more information about the GWB and for information on who is a Covered Life under this form of GMWB, please see "Joint 5% For Life Guaranteed Minimum Withdrawal Benefit With Annual Step-Up" beginning on page 38. The charge varies by age group (see table below), and both Covered Lives must be within the eligible age range.
Annual Charge Maximum Current
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Ages 45 - 49 1.00% / 4 1.02% / 12 0.55% / 4 0.57% / 12
50 - 54 1.00% / 4 1.02% / 12 0.55% / 4 0.57% / 12
55 - 59 1.35% / 4 1.35% / 12 0.80% / 4 0.81% / 12
60 - 64 1.45% / 4 1.47% / 12 0.90% / 4 0.90% / 12
65 - 69 1.60% / 4 1.62% / 12 1.05% / 4 1.05% / 12
70 - 74 1.00% / 4 1.02% / 12 0.65% / 4 0.66% / 12
75 - 80 0.75% / 4 0.75% / 12 0.50% / 4 0.51% / 12
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You pay the applicable annual percentage of the GWB each calendar quarter. For Contracts purchased IN WASHINGTON STATE, the charge is monthly, which charge is waived at the end of a Contract Month to the extent it exceeds the amount of your Contract Value allocated to the Investment Divisions. We deduct the charge from your Contract Value. Quarterly charges are pro rata deducted over each applicable Investment Division and the Fixed Account. Monthly charges are also pro rata, deducted over the applicable Investment Divisions only. With the Investment Divisions, we deduct the charge by canceling Accumulation Units rather than as part of the calculation to determine Accumulation Unit Value. While the charge is deducted from Contract Value, it is based on the applicable percentage of the GWB. The charge is prorated, from the endorsement's effective date to the end of the first quarter or first month after selection. Similarly, the charge is prorated upon termination of the endorsement.
We reserve the right to prospectively change the charge on new Contracts, or if you select this benefit after your Contract is issued, subject to the applicable maximum annual charge. We may also change the charge when you elect a step-up (not on step-ups that are automatic), again subject to the applicable maximum annual charge. Please consult the representative who helped you purchase your Contract about the current GMWB charges. In addition, please consult the representative to be sure if a Step-Up is right for you and about any increase in charges upon a Step-Up. Upon election of the GMWB and a Step-Up, the applicable GMWB charge will be reflected in your confirmation.
You will continue to pay the charge for the endorsement through the earlier date that you annuitize the Contract or your Contract Value is zero. Also, we will stop deducting the charge under the other circumstances that would cause the endorsement to terminate. For more information, please see "Termination" under "Joint 5% For Life Guaranteed Minimum Withdrawal Benefit With Annual Step-Up" beginning on page 38. Please check with your representative to learn about the current level of the charge, or contact us at the Annuity Service Center for more information. Our contact information is on the first page of the prospectus. For more information about how the endorsement works, please see "Joint 5% For Life Guaranteed Minimum Withdrawal Benefit With Annual Step-Up" beginning on page 38. Also see "Guaranteed Minimum Withdrawal Benefit General Considerations" and "Guaranteed Minimum Withdrawal Benefit Important Special Considerations" beginning on page 27 for additional important information to consider when purchasing a Guaranteed Minimum Withdrawal Benefit.
DEATH BENEFIT CHARGES. There is no additional charge for the Contract's basic death benefit. However, for an additional charge, you may select one of the Contract's available optional death benefits in place of the basic death benefit. Please ask your agent whether there are variations on these benefits in your state or contact our Annuity Service Center. Our contact information is on the cover page of this prospectus.
If you select the RETURN OF PREMIUM DEATH BENEFIT, you will pay 0.20%, subject to a maximum of 0.55% on new issues, on an annual basis of the average daily net asset value of your allocations to the Investment Divisions.
If you select the HIGHEST ANNIVERSARY VALUE DEATH BENEFIT, you will pay 0.35%, subject to a maximum of 0.55% on new issues, on an annual basis of the average daily net asset value of your allocations to the Investment Divisions.
We stop deducting either of these charges on the date you annuitize.
COMMUTATION FEE. If you make a total withdrawal from your Contract after income payments have commenced under income option 4, or if after your death during the period for which payments are guaranteed to be made under income option 3 your Beneficiary elects to receive a lump sum payment, the amount received will be reduced by (a) minus (b) where:
* (a) = the present value of the remaining income payments (as of the date of calculation) for the period for which payments are guaranteed to be made, discounted at the rate assumed in calculating the initial payment; and
* (b) = the present value of the remaining income payments (as of the date of calculation) for the period for which payments are guaranteed to be made, discounted at a rate no more than 1.00% higher than the rate used in (a).
OTHER EXPENSES. We pay the operating expenses of the Separate Account, including those not covered by the mortality and expense and administrative charges. There are deductions from and expenses paid out of the assets of the Funds. These expenses are described in the attached prospectuses for the JNL Series Trust and the JNL Variable Fund LLC. For more information, please see the "Fund Operating Expenses" table beginning on page 8.
PREMIUM TAXES. Some states and other governmental entities charge premium taxes or other similar taxes. We pay these taxes and may make a deduction from your Contract Values for them. Premium taxes generally range from 0% to 3.5% (the amount of state premium tax, if any, will vary from state to state).
INCOME TAXES. We reserve the right, when calculating unit values, to deduct a credit or charge with respect to any taxes we have paid or reserved for during the valuation period that we determine to be attributable to the operation of the Separate Account, or to a particular Investment Division. No federal income taxes are applicable under present law and we are not presently making any such deduction.
DISTRIBUTION OF CONTRACTS. Jackson National Life Distributors LLC ("JNLD"), located at 7601 Technology Way, Denver, Colorado 80237, serves as the distributor of the Contracts. JNLD is a wholly owned subsidiary of Jackson National.
Commissions are paid to broker-dealers who sell the Contracts. While commissions may vary, they are not expected to exceed 8% of any premium payment. Where lower commissions are paid up front, we may also pay trail commissions. We may also pay commissions on the Income Date if the annuity option selected involves a life contingency or a payout over a period of ten or more years.
Under certain circumstances, JNLD out of their own resources may pay bonuses, overrides, and marketing allowances, in addition to the standard commissions. These cash payments, or reimbursements, to broker-dealers are in recognition of their marketing and distribution and/or administrative services support and are sometimes referred to as "revenue sharing." They may not be offered to all broker-dealers, and the terms of any particular agreement may vary among broker-dealers depending on, among other things, the level and type of marketing and distribution support provided assets under management, and the volume and size of the sales of our insurance products. Such compensation is subject to applicable state insurance law and regulation and the NASD rules of conduct.
The two primary forms of such compensation paid by JNLD are overrides and marketing support payments. Overrides are payments that are designed as consideration for product placement, assets under management and sales volume. Overrides are generally based on a fixed percentage of product sales and currently range from 10 to 50 basis points (0.10% to 0.50%). Marketing support payments may be in the form of cash and/or non-cash compensation and allow us to, among other things, participate in sales conferences and educational seminars. Examples of such payments include, but are not limited to, reimbursements for representative training meetings, prospecting seminars, and business development and educational enhancement items. Payments or reimbursements for meetings and seminars are generally based on the anticipated level of participation and/or accessibility and the size of the audience.
Below is an alphabetical listing of the 19 broker-dealers that received the largest amounts of marketing and distribution and/or administrative support in 2005 from the Distributor in relation to the sale of our insurance products:
A. G. Edwards & Sons, Inc.
Centaurus Financial
Commonwealth Financial Group, Inc.
Fifth Third Securities, Inc.
Hantz Financial Services, Inc.
IFMG Securities, Inc.
Investment Centers of America, Inc.
Inter Securities, Inc.
Invest Financial Corp.
Linsco/Private Ledger Corp.
Mutual Service Corporation
National Planning Corporation
Prime Capital Services, Inc.
Raymond James & Associates, Inc.
Securities America, Inc.
SII Investments, Inc.
Thrivent Financial for Lutherans
Wachovia Securities, LLC
WM Financial Services
Please see Appendix C for a complete list of broker-dealers that received amounts of marketing and distribution and/or administrative support in 2005 from the Distributor in relation to the sale of our insurance products.
We may, under certain circumstances where permitted by applicable law, pay a bonus to a Contract purchaser to the extent the broker-dealer waives its commission. You can learn about the amount of any available bonus by calling the toll-free number on the cover page of this prospectus. Contract purchasers should inquire of the representative if such bonus is available to them and its compliance with applicable law. We may use any of our corporate assets to cover the cost of distribution, including any profit from the Contract's mortality and expense risk charge and other charges. Besides Jackson National Life Distributors LLC, we are affiliated with the following broker-dealers:
* National Planning Corporation,
* SII Investments, Inc.,
* IFC Holdings, Inc. d/b/a Invest Financial Corporation,
* Investment Centers of America, Inc., and
* Curian Clearing LLC
The Distributor also has the following relationships with the sub-advisers and their affiliates. The Distributor receives payments from certain sub-advisers to assist in defraying the costs of certain promotional and marketing meetings in which they participate. The amounts paid depend on the nature of the meetings, the number of meetings attended, the costs expected to be incurred and the level of the sub-adviser's participation. National Planning Corporation participates in the sales of shares of retail mutual funds advised by certain sub-advisers and other unaffiliated entities and receives selling and other compensation from them in connection with those activities, as described in the prospectus or statement of additional information for those funds. The fees range between 0.30% and 0.45% depending on these factors. In addition, the Distributor acts as distributor of variable annuity contracts and variable life insurance policies (the "Other Contracts") issued by Jackson National Life Insurance Company and its subsidiary, Jackson National Life Insurance Company of New York. Raymond James Financial Services, a brokerage affiliate of the sub-adviser to the JNL/Eagle Funds, participates in the sale of Contracts and is compensated by JNLD, as are unaffiliated broker-dealers, for its activities at the standard rates of compensation. The compensation consists of commissions, trail commissions and other compensation or promotional incentives as described above and in the prospectus or statement of additional information for the Other Contracts.
All of the compensation described here, and other compensation or benefits provided by JNL or our affiliates, may be greater or less than the total compensation on similar or other products. The amount and/or structure of the compensation may influence your registered representative, broker-dealer or selling institution to present this Contract over other investment alternatives. The variations in compensation, however, may also reflect differences in sales effort or ongoing customer services expected of the registered representative or the broker-dealer. You may ask your registered representative about any variations and how he or she and his or her broker-dealer are compensated for selling the Contract.
PURCHASES
MINIMUM INITIAL PREMIUM:
* $50,000 under most circumstances
MINIMUM ADDITIONAL PREMIUMS:
* $500 for a qualified or non-qualified plan; HOWEVER, ADDITIONAL PREMIUMS WILL NOT BE ACCEPTED BEYOND THE SIXTH CONTRACT MONTH.
As a result of the six Contract Month limit on subsequent premiums, you may have to buy additional Contracts to meet your total annuity coverage goal. Multiple Contracts may result in higher charges and total expenses. However, we reserve the right to limit the number of Contracts that you may purchase. We also reserve the right to refuse any premium payment.
The minimums apply to purchases, but do not preclude subsequent partial withdrawals that would reduce Contract Values below the minimum initial purchase amounts, as long as the amount left in the account is sufficient to pay any remaining withdrawal charge. There is a $100 minimum balance requirement for each Investment Division and Fixed Account. We reserve the right to restrict availability or impose restrictions on the Fixed Account.
MAXIMUM PREMIUMS:
* The maximum total of all premiums you may make without our prior approval is $1 million.
The payment of subsequent premiums within the limited period of the first six Contract Months, relative to market conditions at the time the payments are made, may or may not contribute to the various benefits under your Contract, including the optional enhanced death benefits or any GMWB.
ALLOCATIONS OF PREMIUM. You may allocate your premiums to one or more of the Investment Divisions and Fixed Account. Each allocation must be a whole percentage between 0% and 100%. The minimum amount you may allocate to the Investment Division or a Fixed Account is $100. We will allocate any additional premiums you pay in the same way unless you instruct us otherwise. These allocations will be subject to our minimum allocation rules.
We will issue your Contract and allocate your first premium within two business days (days when the New York Stock Exchange is open) after we receive your first premium and all information that we require for the purchase of a Contract. If we do not receive all of the information that we require, we will contact you to get the necessary information. If for some reason we are unable to complete this process within five business days, we will return your money.
Each business day ends when the New York Stock Exchange closes (usually 4:00 p.m. Eastern time).
CAPITAL PROTECTION PROGRAM. If you select our Capital Protection Program at issue, we will allocate enough of your premium to the Fixed Account you select to assure that the amount so allocated will equal, at the end of a selected period of 1, 3, 5, or 7 years, your total original premium paid. You may allocate the rest of your premium to any Investment Division(s). If any part of the Fixed Account value is surrendered or transferred before the end of the selected guaranteed period, the value at the end of that period will not equal the original premium. This program is available only if Fixed Account options are available. There is no charge for the Capital Protection Program. You should consult your JNL representative with respect to the current availability of Fixed Account options, their limitations, and the availability of the Capital Protection Program.
For an example of capital protection, assume you made a premium payment of $10,000 when the interest rate for the three-year guaranteed period was 3.00% per year. We would allocate $9,152 to that guarantee period because $9,152 would increase at that interest rate to $10,000 after three years, assuming no withdrawals are taken. The remaining $848 of the payment would be allocated to the Investment Division(s) you selected.
Alternatively, assume Jackson National receives a premium payment of $10,000 when the interest rate for the 7-year period is 6.75% per year. Jackson National will allocate $6,331 to that guarantee period because $6,331 will increase at that interest rate to $10,000 after 7 years. The remaining $3,669 of the payment will be allocated to the Investment Division(s) you selected.
Thus, as these examples demonstrate, the shorter guarantee periods require allocation of substantially all your premium to achieve the intended result. In each case, the results will depend on the interest rate declared for the guarantee period.
ACCUMULATION UNITS. Your Contract Value allocated to the Investment Divisions will go up or down depending on the performance of the Investment Divisions you select. In order to keep track of the value of your Contract during the accumulation phase, we use a unit of measure called an "Accumulation Unit." During the income phase we use a measure called an "Annuity Unit."
Every business day, we determine the value of an Accumulation Unit for each of the Investment Divisions by:
* determining the total amount of assets held in the particular Investment Division;
* subtracting any asset-based charges and taxes chargeable under the Contract; and
* dividing this amount by the number of outstanding Accumulation Units.
Charges deducted through the cancellation of units are not reflected in this computation.
The value of an Accumulation Unit may go up or down from day to day. The base Contract has a different Accumulation Unit value than each combination of optional endorsements an Owner may elect, based on the differing amount of charges applied in calculating that Accumulation Unit value.
When you make a premium payment, we credit your Contract with Accumulation Units. The number of Accumulation Units we credit is determined at the close of that business day by dividing the amount of the premium allocated to any Investment Division by the value of the Accumulation Unit for that Investment Division that reflects the combination of optional endorsements you have elected and their respective charges.
TRANSFERS AND FREQUENT TRANSFER RESTRICTIONS
You may transfer your Contract Value between and among the Investment Divisions at any time, unless transfers are subject to other limitations, but transfers between an Investment Division and the Fixed Account must occur prior to the Income Date. Transfers from the Fixed Account will be subject to any applicable Excess Interest Adjustment. There may be periods when we do not offer the Fixed Account, or when we impose special transfer requirements on the Fixed Account. If a renewal occurs within one year of the Income Date, we will continue to credit interest up to the Income Date at the then Current Interest Rate for the Fixed Account Option. You can make 15 transfers every Contract Year during the accumulation phase without charge.
A transfer will be effective as of the end of the business day when we receive your transfer request in Good Order, and we will disclaim all liability for transfers made based on your transfer instructions, or the instructions of a third party authorized to submit transfer requests on your behalf.
RESTRICTIONS ON TRANSFERS: MARKET TIMING. The Contract is not designed for frequent transfers by anyone. Frequent transfers between and among Investment Divisions may disrupt the underlying Funds and could negatively impact performance, by interfering with efficient management and reducing long-term returns, and increasing administrative costs. Frequent transfers may also dilute the value of shares of an underlying Fund. Neither the Contracts nor the underlying Funds are meant to promote any active trading strategy, like market timing. Allowing frequent transfers by one or some Owners could be at the expense of other Owners of the Contract. To protect Owners and the underlying Funds, we have policies and procedures to deter frequent transfers between and among the Investment Divisions.
Under these policies and procedures, there is a $25 charge per transfer after 15 in a Contract Year, and no round trip transfers are allowed within 15 calendar days. Also, we could restrict your ability to make transfers to or from one or more of the Investment Divisions, which possible restrictions may include, but are not limited to:
* limiting the number of transfers over a period of time;
* requiring a minimum time period between each transfer;
* limiting transfer requests from an agent acting on behalf of one or more Owners or under a power of attorney on behalf of one or more Owners; or
* limiting the dollar amount that you may transfer at any one time.
To the extent permitted by applicable law, we reserve the right to restrict the number of transfers per year that you can request, and to restrict you from making transfers on consecutive business days. In addition, your right to make transfers between and among Investment Divisions may be modified if we determine that the exercise by one or more Owners is, or would be, to the disadvantage of other Owners.
We continuously monitor transfers under the Contract for disruptive activity based on frequency, pattern and size. We will more closely monitor Contracts with disruptive activity, placing them on a watch list, and if the disruptive activity continues, we will restrict the availability of electronic or telephonic means to make a transfer, instead requiring that transfer instructions be mailed through regular U.S. postal service, and/or terminate the ability to make transfers completely, as necessary. If we terminate your ability to make transfers, you may need to make a partial withdrawal to access the Contract Value in the Investment Division(s) from which you sought a transfer. We will notify you and your representative in writing within five days of placing the Contract on a watch list.
Regarding round trip transfers, we will allow redemptions from an Investment Division; however, once a complete or partial redemption has been made from an Investment Division through an Investment Division transfer, you will not be permitted to transfer any value back into that Investment Division within 15 calendar days of the redemption. We will treat as short-term trading activity any transfer that is requested into an Investment Division that was previously redeemed within the previous 15 calendar days, whether the transfer was requested by you or a third party.
Our policies and procedures do not apply to the money market Investment Division, the Fixed Account, Dollar Cost Averaging, Earnings Sweep or the Automatic Rebalancing program. We may also make exceptions that involve an administrative error, or a personal unanticipated financial emergency of an Owner resulting from an identified health, employment, or other financial or personal event that makes the existing allocation imprudent or a hardship. These limited exceptions will be granted by an oversight team pursuant to procedures designed to result in their consistent application. Please contact our Annuity Service Center if you believe your transfer request entails a financial emergency.
Otherwise, we do not exempt any person or class of persons from our policies and procedures. We have agreements allowing for asset allocation and investment advisory services that are not only subject to our policies and procedures, but also to additional conditions and limitations, intended to limit the potential adverse impact of these activities on other Owners of the Contract. We expect to apply our policies and procedures uniformly, but because detection and deterrence involves judgments that are inherently subjective, we cannot guarantee that we will detect and deter every Contract engaging in frequent transfers every time. If these policies and procedures are ineffective, the adverse consequences described above could occur. We also expect to apply our policies and procedures in a manner reasonably designed to prevent transfers that we consider to be to the disadvantage of other Owners, and we may take whatever action we deem appropriate, without prior notice, to comply with or take advantage of any state or federal regulatory requirement.
TELEPHONE AND INTERNET TRANSACTIONS
THE BASICS. You can request certain transactions by telephone or at www.jnl.com, our Internet website, subject to our right to terminate electronic or telephonic transfer privileges described above. Our Annuity Service Center representatives are available during business hours to provide you with information about your account. We require that you provide proper identification before performing transactions over the telephone or through our Internet website. For Internet transactions, this will include a Personal Identification Number (PIN). You may establish or change your PIN at www.jnl.com.
WHAT YOU CAN DO AND HOW. You may make transfers by telephone or through the Internet unless you elect not to have this privilege. Any authorization you provide to us in an application, at our website, or through other means will authorize us to accept transaction instructions, including Investment Division transfers/allocations, by you and your financial representative unless you notify us to the contrary. To notify us, please call us at the Annuity Service Center. Our contact information is on the cover page of this prospectus and the number is referenced in your Contract or on your quarterly statement.
WHAT YOU CAN DO AND WHEN. When authorizing a transfer, you must complete your telephone call by the close of the New York Stock Exchange (usually 4:00 p.m. Eastern time) in order to receive that day's Accumulation Unit value for an Investment Division.
Transfer instructions you send electronically are considered to be received by us at the time and date stated on the electronic acknowledgement we return to you. If the time and date indicated on the acknowledgement is before the close of the New York Stock Exchange, the instructions will be carried out that day. Otherwise the instructions will be carried out the next business day. We will retain permanent records of all web-based transactions by confirmation number. If you do not receive an electronic acknowledgement, you should telephone our Annuity Service Center immediately.
HOW TO CANCEL A TRANSACTION. You may only cancel an earlier telephonic or electronic transfer request made on the same day by calling the Annuity Service Center before the New York Stock Exchange closes. Otherwise, your cancellation instruction will not be allowed because of the round trip transfer restriction.
OUR PROCEDURES. Our procedures are designed to provide reasonable assurance that telephone or any other electronic authorizations are genuine. Our procedures include requesting identifying information and tape-recording telephone communications and other specific details. We and our affiliates disclaim all liability for any claim, loss or expense resulting from any alleged error or mistake in connection with a transaction requested by telephone or other electronic means that you did not authorize. However, if we fail to employ reasonable procedures to ensure that all requested transactions are properly authorized, we may be held liable for such losses.
We do not guarantee access to telephonic and electronic information or that we will be able to accept transaction instructions via the telephone or electronic means at all times. We also reserve the right to modify, limit, restrict, or discontinue at any time and without notice the acceptance of instruction from someone other than you and/or this telephonic and electronic transaction privilege. Elections of any optional benefit or program must be in writing and will be effective upon receipt of the request in Good Order.
Upon notification of the Owner's death, any telephone transfer authorization, other than by the surviving joint Owners, designated by the Owner ceases and we will not allow such transactions unless the executor/representative provides written authorization for a person or persons to act on the executor's/representative's behalf.
ACCESS TO YOUR MONEY
You can have access to the money in your Contract:
* by making either a partial or complete withdrawal,
* by electing the Systematic Withdrawal Program,
* by electing a Guaranteed Minimum Withdrawal Benefit ("GMWB"), or
* by electing to receive income payments.
Your Beneficiary can have access to the money in your Contract when a death benefit is paid.
Except in connection with certain withdrawals associated with a GMWB or withdrawals made to satisfy minimum distribution requirements of the Internal Revenue Code, a withdrawal before the end of the sixth Contract month will affect the Aggregate Premium as re-determined at the end of the sixth Contract Month, and may result in a higher Mortality and Expense Risk Charge. At the end of the sixth Contract Month, the Aggregate Premium is re-determined to equal:
* The actual Premium paid to date;
* Less total partial withdrawals to date unless one of the two following conditions apply:
1. Total partial withdrawals are less than the maximum annual withdrawal permitted in accordance with the GMWB, if applicable, or
* Partial Withdrawals are assumed to be the total amount
withdrawn from the Contract, including any Withdrawal
Charges and Excess Interest ADJUSTMENTS.
* All withdrawals including systematic withdrawals,
required minimum distributions prior to the Income
Date, withdrawals of asset allocation and advisory
fees, and free withdrawals are counted toward the total
amount withdrawn in a Contract Year.
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2. All partial withdrawals taken during the first six Contract Months are made to satisfy required minimum distributions under the Internal Revenue Code for each applicable calendar year spanned by the six Contract Month period.
Withdrawals under the Contract may also be subject to a withdrawal charge. For purposes of the withdrawal charge, we treat withdrawals as coming first from earnings and then from the oldest remaining premium. When you make a complete withdrawal you will receive the value of your Contract as of the end of the business day your request is received by us in Good Order, MINUS any applicable taxes, the annual contract maintenance charge, charges due under any optional endorsement and all applicable withdrawal charges, adjusted for any applicable Excess Interest Adjustment. For more information about withdrawal charges, please see "Withdrawal Charge" beginning on page 14.
Your withdrawal request must be in writing. We will accept withdrawal requests submitted via facsimile. There are risks associated with not requiring original signatures in order to disburse the money. To minimize the risks, the proceeds will be sent to your last recorded address in our records, so be sure to notify us, in writing with an original signature of any address change. We do not assume responsibility for improper disbursements if you have failed to provide us with the current address to which the proceeds should be sent.
Except in connection with the Systematic Withdrawal Program, you must withdraw at least $500 or, if less, the entire amount in the Fixed Account or Investment Division from which you are making the withdrawal. If you are not specific, your withdrawal will be taken from your allocations to the Investment Divisions and Fixed Account based on the proportion their respective values bear to the Contract Value. With the Systematic Withdrawal Program, you may withdraw a specified dollar amount (of at least $50 per withdrawal) or a specified percentage. After your withdrawal, at least $100 must remain in each Fixed Account or Investment Division from which the withdrawal was taken. A withdrawal request that would reduce the remaining Contract Value to less than $100 will be treated as a request for a complete withdrawal.
If you have an investment adviser who, for a fee, manages your Contract Value, you may authorize payment of the fee from the Contract by requesting a partial withdrawal. There are conditions and limitations, so please contact our Annuity Service Center for more information. Our contact information is on the cover page of this prospectus. We neither endorse any investment advisers, nor make any representations as to their qualifications. The fee for this service would be covered in a separate agreement between the two of you, and would be in addition to the fees and expenses described in this prospectus.
INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS MAY APPLY TO ANY WITHDRAWAL YOU MAKE. THERE ARE LIMITATIONS ON WITHDRAWALS FROM QUALIFIED PLANS. FOR MORE INFORMATION, PLEASE SEE "TAXES" BEGINNING ON PAGE 49.
WAIVER OF WITHDRAWAL CHARGES FOR CERTAIN EMERGENCIES. We will waive the withdrawal charge (withdrawals from the Investment Divisions and the Fixed Account), but not any Excess Interest Adjustment that would otherwise apply in certain circumstances by providing you, at no charge, the following:
* TERMINAL ILLNESS BENEFIT, under which we will waive any withdrawal charges on amounts of up to $250,000 of your Contract Value from the Investment Divisions and Fixed Account that you withdraw after providing us with a physician's statement that you have been diagnosed with an illness that will result in your death within 12 months;
* SPECIFIED CONDITIONS BENEFIT, under which you may make a one-time withdrawal of up to 25% (for joint Owners, this benefit applies to each of them for 12 1/2%) of your Contract Value from the Investment Divisions and Fixed Account with no withdrawal charge after having provided us with a physician's statement that you have been diagnosed with one of the following conditions:
* Heart attack
* Stroke
* Coronary artery surgery
* Life-threatening cancer
* Renal failure or
* Alzheimer's disease; and
* EXTENDED CARE BENEFIT, under which we will waive any withdrawal charges on amounts of up to $250,000 of your Contract Value from the Investment Divisions and Fixed Account that you withdraw after providing us with a physician's statement that you have been confined to a nursing home or hospital for 90 consecutive days, beginning at least 30 days after your Contract was issued.
You may exercise these benefits once under your Contract.
GUARANTEED MINIMUM WITHDRAWAL BENEFIT GENERAL CONSIDERATIONS. Most people who are managing their investments to provide retirement income want to provide themselves with sufficient lifetime income and also to provide for an inheritance for their beneficiaries. The main obstacles they face in meeting these goals are the uncertainties as to (i) how much income their investments will produce, and (ii) how long they will live and will need to draw income from their investments. A Guaranteed Minimum Withdrawal Benefit (GMWB) is designed to help reduce these uncertainties.
A GMWB is intended to address those concerns but does not provide any guarantee the income will be sufficient to cover any individual's particular needs. Moreover, the GMWB does not assure that you will receive any return on your investments. The GMWB also does not protect against loss of purchasing power of assets covered by a GMWB due to inflation. Even relatively low levels of inflation may have a significant effect on purchasing power if not offset by stronger positive investment returns. The step-up feature on certain of the GMWBs may provide protection against inflation when there are strong investment returns that coincide with the availability of effecting a step-up.
Payments under the GMWB will first be made from your Contract Value. Our obligations to pay you more than your Contract Value will only arise under limited circumstances. Thus, in considering the election of any GMWB you need to consider whether the value to you of the level of protection that is provided by a GMWB and its costs, which reduce Contract Value and offset our risks, are consistent with your level of concern and the minimum level of assets that you want to be sure are guaranteed.
The 5% For Life GMWB with the Joint Option available only to spouses differs from the 5% For Life GMWB without the Joint Option available to spouses and unrelated parties and enjoys the following advantages:
o If the Contract Value falls to zero, benefit payments under the endorsement will continue until the death of the last surviving Covered Life if the For Life Guarantee is effective. (For more information about the For Life Guarantee and for information on who is a Covered Life under this form of GMWB, please see the "Joint 5% For Life Guaranteed Minimum Withdrawal Benefit With Annual Step-Up" beginning on page 38.)
o If an Owner dies before the automatic payment of benefits begins, the surviving Covered Life may continue the Contract and the For Life Guarantee is not automatically terminated (as it is on the For Life GMWB without the Joint Option).
GUARANTEED MINIMUM WITHDRAWAL BENEFIT IMPORTANT SPECIAL CONSIDERATIONS. Each of the GMWBs provides that the GMWB and all benefits thereunder will terminate on the Income Date, which is the date when annuity payments begin. The Income Date is either a date that you choose or the Latest Income Date. The Latest Income Date is the date on which the Owner attains age 90 under a Non-Qualified Contract, unless otherwise approved by the Company, or such earlier date as required by the applicable qualified plan, law or regulation.
Before (1) electing a GMWB, (2) electing to annuitize your Contract after having purchased a GMWB, or (3) when the Latest Income Date is approaching and you are thinking about electing or have elected a GMWB, you should consider whether the termination of all benefits under the GMWB and annuitizing produces the better financial results for you. Naturally, you should discuss with your JNL representative whether a GMWB is even suitable for you. Consultation with your financial and tax advisor is also recommended.
These considerations are of greater significance if you are thinking about electing or have elected a GMWB For Life, as the For Life payments will cease when you annuitize voluntarily or on the Latest Income Date. To the extent that we can extend the Latest Income Date without adverse tax consequences to you, we will do so, as permitted by the applicable qualified plan, law, or regulation. After you have consulted your financial and tax advisors you will need to contact us to request an extension of the Latest Income Date. Please also see "Extension of Latest Income Date" beginning on page 52 for further information regarding possible adverse tax consequences of extending the Latest Income Date.
In addition, with regard to required minimum distributions (RMDs) under an IRA only, it is important to consult your financial and tax advisor to determine whether the benefits of a particular GMWB will satisfy your RMD requirements. With regard to other qualified plans, you must determine what your qualified plan permits. Distributions under qualified plans and Tax-Sheltered Annuities must begin by the later of the calendar year in which you attain age 70 1/2 or the calendar year in which you retire. You do not necessarily have to annuitize your Contract to meet the minimum distribution.
5% GUARANTEED MINIMUM WITHDRAWAL BENEFIT WITH ANNUAL STEP-UP. THE FOLLOWING DESCRIPTION IS SUPPLEMENTED BY THE EXAMPLES IN APPENDIX B THAT MAY ASSIST YOU IN UNDERSTANDING HOW CALCULATIONS ARE MADE IN CERTAIN CIRCUMSTANCES. For Owners 80 years old and younger on the Contract's Issue Date, or on the date on which this endorsement is selected if after the Contract's Issue Date, a 5% GMWB With Annual Step-Up may be available, which permits an Owner to make partial withdrawals, prior to the Income Date that, in total, are guaranteed to equal the Guaranteed Withdrawal Balance (GWB) (as defined below), regardless of your Contract Value. THE 5% GMWB WITH ANNUAL STEP-UP IS NOT AVAILABLE ON A CONTRACT THAT ALREADY HAS A GMWB (ONE GMWB ONLY PER CONTRACT). We may further limit the availability of this optional endorsement. Once selected, the 5% GMWB With Annual Step-Up cannot be canceled. If you select the 5% GMWB With Annual Step-Up when you purchase your Contract, your premium payment net of any applicable taxes will be used as the basis for determining the GWB. The 5% GMWB With Annual Step-Up may also be selected after the Issue Date within 30 days before any Contract Anniversary, and the endorsement will take effect on the Contract Anniversary if your request is in Good Order. If you select the 5% GMWB With Annual Step-Up after the Issue Date, to determine the GWB, we will use your Contract Value on the date the endorsement is added to the Contract. THE GWB CAN NEVER BE MORE THAN $5 MILLION (including upon "step-up"), and the GWB is reduced with each withdrawal you take.
Once the GWB has been determined, we calculate the Guaranteed Annual Withdrawal Amount (GAWA), which is the maximum annual partial withdrawal amount, except for certain tax-qualified Contracts (as explained below). Upon selection, the GAWA is equal to 5% of the GWB. The GAWA will not be reduced if partial withdrawals taken within any one Contract Year do not exceed 5%. However, withdrawals are not cumulative. If you do not take 5% in one Contract Year, you may not take more than 5% the next Contract Year. If you withdraw more than 5%, the guaranteed amount available may be less than the total premium payments and the GAWA may be reduced. The GAWA can be divided up and taken on a payment schedule that you request. You can continue to take the GAWA each Contract Year until the GWB has been depleted.
Withdrawal charges and Excess Interest Adjustments, as applicable, are taken into consideration in calculating the amount of your partial withdrawals pursuant to the 5% GMWB With Annual Step-Up, but these charges or adjustments are offset by your ability to make free withdrawals under the Contract. For certain tax-qualified Contracts, the 5% GMWB With Annual Step-Up allows for withdrawals greater than GAWA to meet the required minimum distribution (RMD) under the Internal Revenue Code (Code) without compromising the endorsement's guarantees. Examples 3, 4, and 6 in Appendix B supplement this description.
Premiums are accepted during the first six Contract Months only; however, any time a subsequent premium payment is made, we recalculate the GWB and the GAWA. Each time you make a premium payment, the GWB is increased by the amount of the net premium payment. Also, the GAWA will increase by 5% of the net premium payment or 5% of the increase in the GWB, if the maximum GWB is reached. We require prior approval for a subsequent premium payment, however, that would result in your Contract having $1 million of premiums in the aggregate. We also reserve the right to refuse subsequent premium payments.
If the total of your partial withdrawals made in the current Contract Year is greater than the GAWA, we will recalculate your GWB and your GAWA may be lower in the future. In other words, WITHDRAWING MORE THAN THE GAWA IN ANY CONTRACT YEAR COULD CAUSE THE GWB TO BE REDUCED BY MORE THAN THE AMOUNT OF THE WITHDRAWAL(S) AND EVEN RESET TO THE THEN CURRENT CONTRACT VALUE, LIKELY REDUCING THE GAWA, TOO. Recalculation of the GWB and GAWA may result in reducing or extending the payout period. Examples 3, 4 and 6 in Appendix B illustrate the impact of such withdrawals.
If the partial withdrawal plus all prior partial withdrawals made in the current Contract Year is less than or equal to the GAWA, the GWB is equal to the greater of:
* the GWB prior to the partial withdrawal less the partial withdrawal; or
* zero.
If the partial withdrawal plus all prior partial withdrawals made in the current Contract Year is greater than the GAWA, the GWB is equal to the lesser of:
* the Contract Value after the partial withdrawal; or
* the greater of the GWB prior to the partial withdrawal less the partial withdrawal or zero.
If all your partial withdrawals made in the current Contract Year are less than or equal to the GAWA, the GAWA is the lesser of:
* the GAWA prior to the partial withdrawal; or
* the GWB after the partial withdrawal.
If the partial withdrawal plus all prior partial withdrawals made in the current Contract Year is greater than the GAWA, the GAWA is equal to the lesser of:
* the GAWA prior to the partial withdrawal, or
* the GWB after the partial withdrawal, or
* 5% of the Contract Value after the partial withdrawal.
For purposes of these calculations, all partial withdrawals are assumed to be the total amount withdrawn, including any withdrawal charges and Excess Interest Adjustments.
Withdrawals made under the guarantee of this endorsement are considered to be the same as any other partial withdrawals, including systematic withdrawals, for the purposes of calculating any other values under the Contract and any other endorsements. They are subject to the same restrictions and processing rules as described in the Contract. Withdrawals under the guarantee of this endorsement are also treated the same for federal income tax purposes. For more information about your non-qualified Contract, please see "Non-Qualified Contracts - Withdrawals and Income Payments" beginning on page 50. For more information about your tax-qualified Contract, please see "Tax-Qualified Contracts - Withdrawals and Income Payments" beginning on page 51.
REQUIRED MINIMUM DISTRIBUTION CALCULATIONS. Notice of an RMD is required at the time of your withdrawal request, and there is an administrative form for such notice. The administrative form allows for one time or systematic withdrawals. Eligible withdrawals that are specified as RMDs may only be taken based on the value of the Contract to which the endorsement applies, even where the Code allows for the taking of RMDs for multiple contracts from a single contract. Initiating and monitoring for compliance with the RMD requirements is the sole responsibility of the Owner.
Under the Code, RMDs are calculated and taken on a calendar year basis. But with the 5% GMWB With Annual Step-Up, GAWA is based on Contract Years. Because the intervals for the GAWA and RMDs are different, the endorsement's guarantees may be more susceptible to being compromised. With tax-qualified Contracts, if the sum of your total partial withdrawals in a Contract Year exceed the greatest of either of the RMD for each of the two calendar years occurring in that Contract Year and the GAWA for that Contract Year, then the GWB and GAWA could be adversely recalculated, as described above. (If your Contract Year is the same as the calendar year, then the sum of your total partial withdrawals should not exceed the greater of the RMD and the GAWA.) Below is an example of how this modified limit would apply.
Assume a tax-qualified Contract with a Contract Year that runs from July 1 to June 30, and that there are no withdrawals other than as described. The GAWA for the 2006 Contract Year (ending June 30) is 10. The RMD requirements for calendar years 2005 and 2006 are 14 and 16, respectively.
If the Owner takes 7 in each of the two halves of calendar year 2005 and 8 in each of the two halves of calendar year 2006, then at the time the withdrawal in the first half of calendar year 2006 is taken, the Owner will have withdrawn 15. Because the sum of the Owner's withdrawals for the 2006 Contract Year is less than the higher RMD requirement for either of the two calendar years occurring in that Contract Year, the GWB and GAWA would not be adversely recalculated.
An exception to this general rule is that with the calendar year in which your RMDs are to begin (generally, when you reach age 70 1/2), however, you may take your RMDs for the current and next calendar years during the same Contract Year, as necessary (see example below).
The following example illustrates this exception. It assumes an individual Owner, born January 1, 1935, of a tax-qualified Contract with a Contract Year that runs from July 1 to June 30.
If the Owner delays taking his first RMD (the 2005 RMD) until March 30, 2006, he may still take the 2006 RMD before the next Contract Year begins, June 30, 2006 without exposing the GWB and GAWA to the possibility of adverse recalculation. However, if he takes his second RMD (the 2006 RMD) after June 30, 2006, he should wait until the next Contract Year begins (that is after June 30, 2007) to take his third RMD (the 2007 RMD). Because, except for the calendar year in which RMDs begin, taking two RMDs in a single Contract Year could cause the GWB and GAWA to be adversely recalculated (if the two RMDs exceeded the applicable GAWA for that Contract Year).
EXAMPLES THAT ARE RELEVANT SPECIFIC TO TAX-QUALIFIED CONTRACTS, ILLUSTRATING THE GMWB IN VARYING CIRCUMSTANCES AND WITH SPECIFIC FACTUAL ASSUMPTIONS, ARE AT THE END OF THE PROSPECTUS IN APPENDIX B, PARTICULARLY EXAMPLES 3, 4, AND 6. PLEASE CONSULT THE REPRESENTATIVE WHO IS HELPING, OR WHO HELPED, YOU PURCHASE YOUR TAX-QUALIFIED CONTRACT, AND YOUR TAX ADVISER, TO BE SURE THAT THE 5% GMWB WITH ANNUAL STEP-UP ULTIMATELY SUITS YOUR NEEDS RELATIVE TO YOUR RMD.
STEP-UPS. Step-ups with the 5% GMWB With Annual Step-Up reset your GWB to the greater of Contract Value or the GWB before step-up, and GAWA becomes the greater of 5% of the new GWB or GAWA before step-up. Step-ups occur automatically upon each of the first 12 Contract Anniversaries from the endorsement's effective date, then on or after the 13th Contract Anniversary, at any time upon your request, so long as there is at least one year between step-ups. UPON ELECTION OF A STEP-UP, THE GWMB CHARGE MAY BE INCREASED, SUBJECT TO THE MAXIMUM CHARGES LISTED ABOVE. The request will be processed and effective on the day we receive the request in Good Order. Before deciding to "step-up," please consult the representative who helped you purchase your Contract to be sure if a Step-Up is right for you and about any increase in charges upon a Step-Up. Upon election of a Step-Up, the applicable GMWB charge will be reflected in your confirmation.
SPOUSAL CONTINUATION. If you die before annuitizing a Contract with the 5% GMWB With Annual Step-Up, the Contract's death benefit is still payable when Contract Value is greater than zero. Alternatively, the Contract allows the Beneficiary who is your spouse to continue it, retaining all rights previously held by the Owner. If the spouse continues the Contract and the 5% GMWB With Annual Step-Up endorsement already applies to the Contract, the 5% GMWB With Annual Step-Up will continue and no adjustment will be made to the GWB or the GAWA at the time of continuation. Step-ups will continue automatically or as permitted (as described above), and Contract Anniversaries will continue to be based on the anniversary of the original Contract's Issue Date. Upon spousal continuation of a Contract without the 5% GMWB With Annual Step-Up, if the 5% GMWB With Annual Step-Up is available at the time, the Beneficiary may request to add this endorsement within 30 days before any Contract Anniversary, and the endorsement will take effect on the Contract Anniversary if the request is made in Good Order.
TERMINATION. The 5% GMWB With Annual Step-Up endorsement terminates subject to a prorated GMWB Charge assessed for the period since the last quarterly or monthly statement charge on the date you annuitize or surrender the Contract. In surrendering the Contract, you will receive the Contract Value less any applicable charges and adjustments and not the GWB or the GAWA you would have received under the 5% GMWB With Annual Step-Up. The 5% GMWB With Annual Step-Up also terminates: with the Contract upon your death (unless the beneficiary who is your spouse continues the Contract) or upon the first date both the GWB and Contract Value equal zero - whichever occurs first.
CONTRACT VALUE IS ZERO. If your Contract Value is reduced to zero as the result of a partial withdrawal, contract charges or poor fund performance and the GWB is greater than zero, the GWB will be paid to you on a periodic basis elected by you, which will be no less frequently than annually. The total annual payment will equal the GAWA, but will not exceed the current GWB. The payments continue until the GWB is reduced to zero.
All other rights under your Contract cease and all optional endorsements are terminated without value. Upon your death as the Owner, your Beneficiary will receive the scheduled payments. No other death benefit will be paid.
ANNUITIZATION. If you decide to annuitize your Contract, you may choose the following income option instead of one of the other income options listed in your Contract:
FIXED PAYMENT INCOME OPTION. This income option provides payments in a fixed dollar amount for a specific number of years. The actual number of years that payments will be made is determined on the calculation date by dividing the GWB by the GAWA. Upon each payment, the GWB will be reduced by the payment amount. The total annual amount payable will equal the GAWA but will never exceed the current GWB. This annualized amount will be paid over the specific number of years in the frequency (no less frequently than annually) that you select. If you should die (assuming you are the Annuitant) before the payments have been completed, the remaining payments will be made to the Beneficiary, as scheduled.
This income option may not be available if the Contract is issued to qualify under Sections 401, 403, 408 or 457 of the Internal Revenue Code. For such Contracts, this income option will only be available if the guaranteed period is less than the life expectancy of the Annuitant at the time the option becomes effective.
SEE "GUARANTEED MINIMUM WITHDRAWAL BENEFIT GENERAL CONSIDERATIONS" AND "GUARANTEED MINIMUM WITHDRAWAL BENEFIT IMPORTANT SPECIAL CONSIDERATIONS" BEGINNING ON PAGE 27 FOR ADDITIONAL THINGS TO CONSIDER BEFORE ELECTING A GMWB; WHEN ELECTING TO ANNUITIZE YOUR CONTRACT AFTER HAVING PURCHASED A GMWB; OR WHEN THE LATEST INCOME DATE IS APPROACHING AND YOU ARE THINKING ABOUT ELECTING OR HAVE ELECTED A GMWB.
EFFECT OF GMWB ON TAX DEFERRAL. The purchase of the 5% GMWB With Annual Step-Up may not be appropriate for the Owners of Contracts who have as a primary objective taking maximum advantage of the tax deferral that is available to them under an annuity contract. Please consult your tax and financial advisors on this and other matters prior to electing the 5% GMWB With Annual Step-Up.
5% FOR LIFE GUARANTEED MINIMUM WITHDRAWAL BENEFIT WITH ANNUAL STEP-UP. The following description of this GMWB is supplemented by the examples in Appendix B, particularly examples 5 and 6 for the Step-Ups and examples 7 and 8 for the For Life guarantees. This GMWB guarantees partial withdrawals during the Contract's accumulation phase (i.e., before the Income Date) for the LONGER of:
* The Owner's life (the "For Life Guarantee") if the For Life Guarantee is in effect;
The For Life Guarantee is based on the life of the first Owner to die with joint Owners. There is also another GMWB option for joint owners that are spouses, as described below.
For the Owner that is a legal entity, the For Life Guarantee is based on the Annuitant's life (or the life of the first Annuitant to die if there is more than one Annuitant).
The For Life Guarantee becomes effective on the Contract Anniversary on or immediately following the Owner's 65th birthday (or with joint Owners, the oldest Owner's 65th birthday). If the Owner (or oldest Owner) is 65 years old or older on the endorsement's effective date, then the For Life Guarantee is effective when this GMWB is added to the Contract.
So long as the For Life Guarantee is in effect, withdrawals are guaranteed even in the event Contract Value is reduced to zero.
OR
* Until all withdrawals under the Contract equal the Guaranteed Withdrawal Balance (GWB), without regard to Contract Value.
The GWB is the guaranteed amount available for future periodic withdrawals.
BECAUSE OF THE FOR LIFE GUARANTEE, YOUR WITHDRAWALS COULD AMOUNT TO MORE THAN THE GWB. BUT PLEASE NOTE: THE GUARANTEES OF THIS GMWB ARE SUBJECT TO THE ENDORSEMENT'S TERMS, CONDITIONS, AND LIMITATIONS THAT ARE EXPLAINED BELOW.
Please consult the representative who is helping, or who helped, you purchase your Contract to be sure that this GMWB ultimately suits your needs.
This GMWB is available to Owners 45 to 80 years old (proof of age is
required); may be added to a Contract on the Issue Date or any Contract
Anniversary; and once added cannot be canceled except by a Beneficiary
who is the Owner's spouse, who, upon the Owner's death, may elect to
continue the Contract without the GMWB. At least 30 calendar days'
prior notice and proof of age is required for Good Order to add this
GMWB to a Contract on a Contract Anniversary. THIS GMWB IS NOT
AVAILABLE ON A CONTRACT THAT ALREADY HAS A GMWB (ONLY ONE GMWB PER
CONTRACT). We allow ownership changes of a Contract with this GMWB when
the Owner is a legal entity - to another legal entity or the Annuitant.
Otherwise, ownership changes are not allowed. Also, when the Owner is a
legal entity, charges will be determined based on the age of the
Annuitant and changing Annuitants is not allowed. Availability of this
GMWB may be subject to further limitation.
There is a limit on withdrawals each Contract Year to keep the guarantees of this GMWB in full effect - the greater of the Guaranteed Annual Withdrawal Amount (GAWA) and for certain tax-qualified Contracts, the required minimum distribution (RMD) under the Internal Revenue Code. Withdrawals exceeding the limit do not invalidate the For Life Guarantee, but cause the GWB and GAWA to be recalculated.
ELECTION. The GWB depends on when this GMWB is added to the Contract, and the GAWA derives from the GWB.
The GAWA equals 5% of the GWB.
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WHEN THIS GMWB IS ADDED TO THE The GWB equals Contract Value.
CONTRACT ON ANY CONTRACT
ANNIVERSARY - The GAWA equals 5% of the GWB.
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PLEASE NOTE: AT THE TIME THE FOR LIFE GUARANTEE BECOMES EFFECTIVE, THE
GAWA IS RESET TO EQUAL 5% OF THE THEN CURRENT GWB.
Premium net of any applicable premium taxes is used to calculate the GWB when this GMWB is added to the Contract on the Issue Date. If you were to instead add this GMWB to your Contract post issue on any Contract Anniversary, the GWB is calculated based on Contract Value on the date the endorsement is added to the Contract. THE GWB CAN NEVER BE MORE THAN $5 MILLION (including upon Step-up), and the GWB is reduced by each withdrawal.
WITHDRAWALS. Withdrawals may cause both the GWB and GAWA to be recalculated, depending on whether or not the withdrawal, plus all prior withdrawals in the current Contract Year, is less than or equal to the GAWA, or for certain tax-qualified Contracts only, the RMD (if greater than the GAWA). The two tables below clarify what happens in either instance. RMD denotes the required minimum distribution under the Internal Revenue Code for certain tax-qualified Contracts only.
(There is no RMD for non-qualified Contracts.)
REQUIRED MINIMUM DISTRIBUTION CALCULATIONS. For certain tax-qualified Contracts, this GMWB allows withdrawals greater than GAWA to meet the Contract's RMD without compromising the endorsement's guarantees. Examples 3, 4 and 6 in Appendix B supplement this description. Because the intervals for the GAWA and RMDs are different, namely Contract Years versus calendar years, and because RMDs are subject to other conditions and limitations, if your Contract is a tax-qualified Contract, then please see "RMD NOTES" below for more information.
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WHEN A WITHDRAWAL, PLUS ALL The GWB is recalculated, equaling the
PRIOR WITHDRAWALS IN THE greater of:
CURRENT CONTRACT YEAR, IS LESS
THAN OR EQUAL TO THE GREATER OF * The GWB before the withdrawal
THE GAWA OR RMD, AS APPLICABLE - less the withdrawal; OR
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* Zero.
The GAWA:
The GAWA is NOT reduced if all withdrawals during any one Contract Year do not exceed the greater of the GAWA or RMD, as applicable. You may withdraw the greater of the GAWA or RMD, as applicable, all at once or throughout the Contract Year. Withdrawing less than the greater of the GAWA or RMD, as applicable, in a Contract Year does not entitle you to withdraw more than the greater of the GAWA or RMD, as applicable, in the next Contract Year. The amount you may withdraw each Contract Year and not cause the GWB and GAWA to be recalculated does not accumulate.
Withdrawing more than the greater of the GAWA or RMD, as applicable, in a Contract Year causes the GWB and GAWA to be recalculated (see below). In recalculating the GWB, the GWB could be reduced by more than the withdrawal amount - even set equal to the Contract Value. The GAWA is also potentially impacted.
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WHEN A WITHDRAWAL, PLUS ALL The GWB is recalculated, equaling the
PRIOR WITHDRAWALS IN THE lesser of:
CURRENT CONTRACT YEAR, EXCEEDS
THE GREATER OF THE GAWA OR RMD, * Contract Value after the
AS APPLICABLE - withdrawal; OR
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* The greater of the GWB before the withdrawal less the withdrawal, or zero.
The GAWA is recalculated, equaling the lesser of:
Withdrawals under this GMWB are assumed to be the total amount withdrawn, including any charges and/or adjustments. Withdrawals in excess of free withdrawals may be subject to a withdrawal charge. Any withdrawals from Contract Value allocated to a Fixed Account option may be subject to an Excess Interest Adjustment. For more information, please see "THE FIXED ACCOUNT" beginning on page 10.
Withdrawals under this GMWB are considered the same as any other partial withdrawals for the purposes of calculating any other values under the Contract and any other endorsements (for example, the Contract's death benefit). All withdrawals count toward the total amount withdrawn in a Contract Year, including systematic withdrawals, RMDs for certain tax-qualified Contracts, withdrawals of asset allocation and advisory fees, and free withdrawals under the Contract. They are subject to the same restrictions and processing rules as described in the Contract. They are also treated the same for federal income tax purposes. For more information about your non-qualified Contract, please see "Non-Qualified Contracts - Withdrawals and Income Payments" beginning on page 50. For more information about your tax-qualified Contract, please see "Tax-Qualified Contracts - Withdrawals and Income Payments" beginning on page 51.
Under the Internal Revenue Code, RMDs are calculated and taken on a calendar year basis. But with this GMWB, the GAWA is based on Contract Years. Because the intervals for the GAWA and RMDs are different, the For Life Guarantee may be more susceptible to being invalidated. With tax-qualified Contracts, if the sum of your total partial withdrawals in a Contract Year exceed the greatest of the RMD for each of the two calendar years occurring in that Contract Year and the GAWA for that Contract Year, then the GWB and GAWA could be adversely recalculated, as described above. (If your Contract Year is the same as the calendar year, then the sum of your total partial withdrawals should not exceed the greater of the RMD and the GAWA.) Below is an example of how this modified limit would apply.
Assume a tax-qualified Contract with a Contract Year that runs from July 1 to June 30, and that there are no withdrawals other than as described. The GAWA for the 2006 Contract Year (ending June 30) is 10. The RMDs for calendar years 2005 and 2006 are 14 and 16, respectively.
If the Owner takes 7 in each of the two halves of calendar
year 2005 and 8 in each of the two halves of calendar year
2006, then at the time the withdrawal in the first half of
calendar year 2006 is taken, the Owner will have withdrawn
15. Because the sum of the Owner's withdrawals for the 2006
Contract Year is less than the higher RMD for either of the
two calendar years occurring in that Contract Year, the GWB
and GAWA would not be adversely recalculated.
AN EXCEPTION TO THIS GENERAL RULE IS THAT WITH THE CALENDAR YEAR IN WHICH YOUR RMDS ARE TO BEGIN (GENERALLY, WHEN YOU REACH AGE 70 1/2), HOWEVER, YOU MAY TAKE YOUR RMDS FOR THE CURRENT AND NEXT CALENDAR YEARS DURING THE SAME CONTRACT YEAR, AS NECESSARY (SEE EXAMPLE BELOW).
The following example illustrates this exception. It assumes an individual Owner, born January 1, 1935, of a tax-qualified Contract with a Contract Year that runs from July 1 to June 30.
If the Owner delays taking his first RMD (the 2005 RMD) until March 30, 2006, he may still take the 2006 RMD before the next Contract Year begins, June 30, 2006 without exposing the GWB and GAWA to the possibility of adverse recalculation. However, if he takes his second RMD (the 2006 RMD) after June 30, 2006, he should wait until the next Contract Year begins (that is after June 30, 2007) to take his third RMD (the 2007 RMD). Because, except for the calendar year in which RMDs begin, taking two RMDs in a single Contract Year could cause the GWB and GAWA to be adversely recalculated (if the two RMDs exceeded the applicable GAWA for that Contract Year).
PREMIUMS.
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PREMIUMS ARE ACCEPTED DURING The GWB is recalculated, increasing
THE FIRST SIX CONTRACT MONTHS by the amount of the premium net of
ONLY; HOWEVER, WITH EACH any applicable premium taxes.
SUBSEQUENT PREMIUM PAYMENT ON
THE CONTRACT - The GAWA is also recalculated,
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increasing by:
We require prior approval for a subsequent premium payment that would result in your Contract having $1 million of premiums in the aggregate. We also reserve the right to refuse subsequent premium payments. THE GWB CAN NEVER BE MORE THAN $5 MILLION.
STEP-UP. In the event Contract Value is greater than the GWB, this GMWB allows the GWB to be reset to the Contract Value (a "Step-Up"). UPON ELECTION OF A STEP-UP, THE GWMB CHARGE MAY BE INCREASED, SUBJECT TO THE MAXIMUM CHARGES LISTED ABOVE.
The GAWA is recalculated, equaling the greater of:
Step-Ups occur automatically upon each of the first ten Contract Anniversaries from the endorsement's effective date. Thereafter, a Step-Up is allowed at any time upon your request, so long as there is at least one year between Step-Ups. THE GWB CAN NEVER BE MORE THAN $5 MILLION WITH A STEP-UP. A request for Step-Up is processed and effective on the date received in Good Order. Please consult the representative who helped you purchase your Contract to be sure if a Step-Up is right for you and about any increase in charges upon a Step-Up. Upon election of a Step-Up, the applicable GMWB charge will be reflected in your confirmation.
OWNER'S DEATH. The Contract's death benefit is not affected by this GMWB SO LONG AS CONTRACT VALUE IS GREATER THAN ZERO and the Contract is still in the accumulation phase. Upon your death (or the first Owner's death with joint Owners), this GMWB terminates without value.
CONTRACT VALUE IS ZERO. With this GMWB, in the event Contract Value is zero, the GAWA is unchanged and payable SO LONG AS THE FOR LIFE GUARANTEE IS IN EFFECT. Otherwise, payments will be made while there is value to the GWB (until depleted). Payments are made on the periodic basis you elect, but no less frequently than annually.
* The GWB before the payment less
the payment; OR
* Zero.
The GAWA:
If you die before all scheduled payments are made, then your Beneficiary will receive the remainder. All other rights under your Contract cease, except for the right to change Beneficiaries. All optional endorsements terminate without value. And no other death benefit is payable.
SPOUSAL CONTINUATION. In the event of the Owner's death (or the first Owner's death with joint Owners), the Beneficiary who is the Owner's spouse may elect to:
* Continue the Contract WITH this GMWB - so long as Contract Value is greater than zero, and the Contract is still in the accumulation phase. (The date the spousal Beneficiary's election to continue the Contract is in Good Order is called the Continuation Date.)
* Upon the Owner's death, the For Life Guarantee is void.
* Only the GWB is payable while there is value to it (until depleted).
* Step-Ups will continue automatically or as permitted; otherwise, the above rules for Step-Ups apply.
* Contract Anniversaries will continue to be based on the Contract's Issue Date.
* Continue the Contract WITHOUT this GMWB (GMWB is terminated).
* Add this GMWB to the Contract on any Contract Anniversary after the Continuation Date, subject to the Beneficiary's eligibility - WHETHER OR NOT THE SPOUSAL BENEFICIARY TERMINATED THE GMWB IN CONTINUING THE CONTRACT.
For more information about spousal continuation of a Contract, please see "Special Spousal Continuation Option" beginning on page 48.
TERMINATION. This GMWB terminates subject to a prorated GMWB Charge assessed for the period since the last quarterly or monthly statement charge and all benefits cease on the earliest of:
* The Income Date;
* The date of complete withdrawal of Contract Value (full surrender of the Contract);
* The date of the Owner's death (or the first Owner's death with joint Owners), UNLESS the Beneficiary who is the
Owner's spouse elects to continue the Contract with the
GMWB;
* The Continuation Date if the spousal Beneficiary elects to
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continue the Contract without the GMWB; or
* The date all obligations under this GMWB are satisfied after the Contract Value is zero.
ANNUITIZATION. SEE "GUARANTEED MINIMUM WITHDRAWAL BENEFIT GENERAL CONSIDERATIONS" AND "GUARANTEED MINIMUM WITHDRAWAL BENEFIT IMPORTANT SPECIAL CONSIDERATIONS" BEGINNING ON PAGE 27 FOR ADDITIONAL THINGS TO CONSIDER BEFORE ELECTING A GMWB; WHEN ELECTING TO ANNUITIZE YOUR CONTRACT AFTER HAVING PURCHASED A GMWB; OR WHEN THE LATEST INCOME DATE IS APPROACHING AND YOU ARE THINKING ABOUT ELECTING OR HAVE ELECTED A GMWB.
EFFECT OF GMWB ON TAX DEFERRAL. This GMWB may not be appropriate for Owners who have as a primary objective taking maximum advantage of the tax deferral that is available to them under an annuity contract. Please consult your tax and financial advisors before adding this GMWB to a Contract.
JOINT 5% FOR LIFE GUARANTEED MINIMUM WITHDRAWAL BENEFIT WITH ANNUAL STEP-UP. The description of this GMWB is supplemented by the examples in Appendix B, particularly examples 5 and 6 for the Step-Ups and example 8 for the For Life Guarantee.
This GMWB is available for both non-qualified and tax-qualified Contracts. For non-qualified Contracts, there must be joint Owners and the joint Owners are required to be spouses (as defined under the Internal Revenue Code). Each joint Owner is considered to be a "Covered Life."
The Owners cannot be subsequently changed and new Owners cannot be added. Upon death of either joint Owner, the surviving joint Owner will be treated as the primary Beneficiary and all other Beneficiaries will be treated as contingent Beneficiaries. The For Life Guarantee will not apply to these contingent Beneficiaries, as they are not Covered Lives.
This GMWB is available on a limited basis under non-qualified Contracts for certain kinds of legal entities, such as (i) custodial accounts where the spouses are the joint annuitants and (ii) trusts where the spouses are the sole beneficial owners, and the For Life Guarantee is based on the Annuitant's life who dies last.
Tax-qualified Contracts cannot be issued to joint Owners and require the Owner and Annuitant to be the same person. Under a tax-qualified Contract, the election of this GMWB requires the Owner and primary Beneficiary to be spouses (as defined in the Internal Revenue Code). The Owner and only the primary spousal Beneficiary named at the election of this GMWB under a tax-qualified Contract will also each be considered a Covered Life, and these Covered Lives cannot be subsequently changed.
For tax-qualified Contracts, the Owner and primary spousal Beneficiary cannot be changed while both are living. If the Owner dies first, the primary spousal Beneficiary will become the Owner upon Spousal Continuation and he or she may name a Beneficiary; however, that Beneficiary is not considered a Covered Life. Likewise, if the primary spousal Beneficiary dies first, the Owner may name a new Beneficiary; however, that Beneficiary is also not considered a Covered Life and consequently the For Life Guarantee will not apply to the new Beneficiary.
For both non-qualified and tax-qualified Contracts, this GMWB guarantees partial withdrawals during the Contract's accumulation phase (i.e., before the Income Date) for the LONGER of:
* The lifetime of the last surviving Covered Life if the For Life Guarantee is in effect;
The For Life Guarantee becomes effective on the Contract Anniversary on or immediately following the youngest Covered Life's 65th birthday. If the youngest Covered Life is 65 years old or older on the endorsement's effective date, then the For Life Guarantee is effective when this GMWB is added to the Contract.
So long as the For Life Guarantee is in effect, withdrawals are guaranteed even in the event Contract Value is reduced to zero.
OR
* Until all withdrawals under the Contract equal the Guaranteed Withdrawal Balance (GWB), without regard to Contract Value.
The GWB is the guaranteed amount available for future periodic withdrawals.
BECAUSE OF THE FOR LIFE GUARANTEE, YOUR WITHDRAWALS COULD AMOUNT TO MORE THAN THE GWB. BUT PLEASE NOTE: THE GUARANTEES OF THIS GMWB ARE SUBJECT TO THE ENDORSEMENT'S TERMS, CONDITIONS, AND LIMITATIONS THAT ARE EXPLAINED IN THIS PROSPECTUS AND THE ENDORSEMENT.
Please consult the representative who is helping, or who helped, you purchase your Contract to be sure that this GMWB ultimately suits your needs.
This GMWB is available to Covered Lives 45 to 80 years old (proof of age is required and both Covered Lives must be within the eligible age range). If the age of any Covered Life is incorrectly stated at the time of election of the GMWB, on the date the misstatement is discovered, the Contract Value will be adjusted by the difference between the charges actually paid and the charges that would have been paid assuming the correct age. Future GMWB charges will be based on the correct age. If the age at election of either Covered Life falls outside the allowable age range, the GMWB will be null and void and all GMWB charges will be refunded.
This GMWB may be added to a Contract on the Issue Date or on any Contract Anniversary and it cannot be canceled except by a spousal Beneficiary who is not a Covered Life, who, upon the Owner's death, may elect to continue the Contract without the GMWB. To continue joint GMWB coverage upon the death of the Owner (or the death of either joint Owner of a non-qualified Contract), provided that the other Covered Life is still living, the Contract must be continued by election of Spousal Continuation. Upon continuation, the spouse becomes the Owner and obtains all rights as the Owner.
At least 30 calendar days' prior notice and proof of age is required
for Good Order to add this GMWB to a Contract on a Contract
Anniversary. THIS GMWB IS NOT AVAILABLE ON A CONTRACT THAT ALREADY HAS
A GMWB (ONLY ONE GMWB PER CONTRACT). Availability of this GMWB may be
subject to further limitation.
There is a limit on withdrawals each Contract Year to keep the guarantees of this GMWB in full effect, which is the maximum of the Guaranteed Annual Withdrawal Amount (GAWA) or the required minimum distribution. Withdrawals exceeding the limit do not invalidate the For Life Guarantee, but cause the GWB and GAWA to be recalculated.
ELECTION. The GWB depends on when this GMWB is added to the Contract, and the GAWA derives from the GWB.
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WHEN THIS GMWB IS ADDED TO THE The GWB equals initial premium net of
CONTRACT ON THE ISSUE DATE - any applicable premium taxes.
The GAWA equals 5% of the GWB.
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WHEN THIS GMWB IS ADDED TO THE The GWB equals Contract Value.
CONTRACT ON ANY CONTRACT
ANNIVERSARY - The GAWA equals 5% of the GWB.
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PLEASE NOTE: AT THE TIME THE FOR LIFE GUARANTEE BECOMES EFFECTIVE, THE
GAWA IS RESET TO EQUAL 5% OF THE THEN CURRENT GWB.
Premium net of any applicable premium taxes is used to calculate the GWB when this GMWB is added to the Contract on the Issue Date. If you were to instead add this GMWB to your Contract post issue on any Contract Anniversary, the GWB is calculated based on Contract Value on the date the endorsement is added to the Contract. THE GWB CAN NEVER BE MORE THAN $5 MILLION (including upon Step-up), and the GWB is reduced by each withdrawal.
WITHDRAWALS. Withdrawals may cause both the GWB and GAWA to be recalculated, depending on whether or not the withdrawal, plus all prior withdrawals in the current Contract Year, is less than or equal to the GAWA, or for certain tax-qualified Contracts only, the RMD (if greater than the GAWA). The two tables below clarify what happens in either instance. RMD denotes the required minimum distribution under the Internal Revenue Code for certain tax-qualified Contracts only.
(There is no RMD for non-qualified Contracts.)
REQUIRED MINIMUM DISTRIBUTION CALCULATIONS. For certain tax-qualified Contracts, this GMWB allows withdrawals greater than GAWA to meet the Contract's RMD without compromising the endorsement's guarantees. Examples 3, 4 and 6 in Appendix B supplement this description. Because the intervals for the GAWA and RMDs are different, namely Contract Years versus calendar years, and because RMDs are subject to other conditions and limitations, if your Contract is a tax-qualified Contract, then please see "RMD NOTES" below for more information.
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WHEN A WITHDRAWAL, PLUS ALL The GWB is recalculated, equaling the
PRIOR WITHDRAWALS IN THE greater of:
CURRENT CONTRACT YEAR, IS LESS
THAN OR EQUAL TO THE GREATER OF * The GWB before the withdrawal
THE GAWA OR RMD, AS APPLICABLE - less the withdrawal; OR
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* Zero.
The GAWA:
The GAWA is NOT reduced if all withdrawals during any one Contract Year do not exceed the greater of the GAWA or RMD, as applicable. You may withdraw the greater of the GAWA or RMD, as applicable, all at once or throughout the Contract Year. Withdrawing less than the greater of the GAWA or RMD, as applicable, in a Contract Year does not entitle you to withdraw more than the greater of the GAWA or RMD, as applicable, in the next Contract Year. The amount you may withdraw each Contract Year and not cause the GWB and GAWA to be recalculated does not accumulate.
Withdrawing more than the greater of the GAWA or RMD, as applicable, in a Contract Year causes the GWB and GAWA to be recalculated (see below). In recalculating the GWB, the GWB could be reduced by more than the withdrawal amount - even set equal to the Contract Value. The GAWA is also potentially impacted.
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WHEN A WITHDRAWAL, PLUS ALL The GWB is recalculated, equaling the
PRIOR WITHDRAWALS IN THE lesser of:
CURRENT CONTRACT YEAR, EXCEEDS
THE GREATER OF THE GAWA OR RMD, * Contract Value after the
AS APPLICABLE - withdrawal; OR
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* The greater of the GWB before the withdrawal less the withdrawal, or zero.
The GAWA is recalculated, equaling the lesser of:
Withdrawals under this GMWB are assumed to be the total amount withdrawn, including any charges and/or adjustments. Withdrawals in excess of free withdrawals may be subject to a withdrawal charge. Any withdrawals from Contract Value allocated to a Fixed Account option may be subject to an Excess Interest Adjustment. For more information, please see "THE FIXED ACCOUNT" beginning on page 10.
Withdrawals under this GMWB are considered the same as any other partial withdrawals for the purposes of calculating any other values under the Contract and any other endorsements (for example, the Contract's death benefit). All withdrawals count toward the total amount withdrawn in a Contract Year, including systematic withdrawals, RMDs for certain tax-qualified Contracts, withdrawals of asset allocation and advisory fees, and free withdrawals under the Contract. They are subject to the same restrictions and processing rules as described in the Contract. They are also treated the same for federal income tax purposes. For more information about your non-qualified Contract, please see "Non-Qualified Contracts - Withdrawals and Income Payments" beginning on page 50. For more information about your tax-qualified Contract, please see "Tax-Qualified Contracts - Withdrawals and Income Payments" beginning on page 51.
Under the Internal Revenue Code, RMDs are calculated and taken on a calendar year basis. But with this GMWB, the GAWA is based on Contract Years. Because the intervals for the GAWA and RMDs are different, the For Life Guarantee may be more susceptible to being invalidated. With tax-qualified Contracts, if the sum of your total partial withdrawals in a Contract Year exceed the greatest of the RMD for each of the two calendar years occurring in that Contract Year and the GAWA for that Contract Year, then the GWB and GAWA could be adversely recalculated, as described above. (If your Contract Year is the same as the calendar year, then the sum of your total partial withdrawals should not exceed the greater of the RMD and the GAWA.) Below is an example of how this modified limit would apply.
Assume a tax-qualified Contract with a Contract Year that runs from July 1 to June 30, and that there are no withdrawals other than as described. The GAWA for the 2006 Contract Year (ending June 30) is 10. The RMDs for calendar years 2005 and 2006 are 14 and 16, respectively.
If the Owner takes 7 in each of the two halves of calendar
year 2005 and 8 in each of the two halves of calendar year
2006, then at the time the withdrawal in the first half of
calendar year 2006 is taken, the Owner will have withdrawn
15. Because the sum of the Owner's withdrawals for the 2006
Contract Year is less than the higher RMD for either of the
two calendar years occurring in that Contract Year, the GWB
and GAWA would not be adversely recalculated.
AN EXCEPTION TO THIS GENERAL RULE IS THAT WITH THE CALENDAR YEAR IN WHICH YOUR RMDS ARE TO BEGIN (GENERALLY, WHEN YOU REACH AGE 70 1/2), HOWEVER, YOU MAY TAKE YOUR RMDS FOR THE CURRENT AND NEXT CALENDAR YEARS DURING THE SAME CONTRACT YEAR, AS NECESSARY (SEE EXAMPLE BELOW).
The following example illustrates this exception. It assumes an individual Owner, born January 1, 1935, of a tax-qualified Contract with a Contract Year that runs from July 1 to June 30.
If the Owner delays taking his first RMD (the 2005 RMD) until March 30, 2006, he may still take the 2006 RMD before the next Contract Year begins, June 30, 2006 without exposing the GWB and GAWA to the possibility of adverse recalculation. However, if he takes his second RMD (the 2006 RMD) after June 30, 2006, he should wait until the next Contract Year begins (that is after June 30, 2007) to take his third RMD (the 2007 RMD). Because, except for the calendar year in which RMDs begin, taking two RMDs in a single Contract Year could cause the GWB and GAWA to be adversely recalculated (if the two RMDs exceeded the applicable GAWA for that Contract Year).
PREMIUMS.
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PREMIUMS ARE ACCEPTED DURING The GWB is recalculated, increasing by
THE FIRST SIX CONTRACT MONTHS the amount of the premium net of any
ONLY; HOWEVER, WITH EACH applicable premium taxes.
SUBSEQUENT PREMIUM PAYMENT ON
THE CONTRACT - The GAWA is also recalculated,
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increasing by:
We require prior approval for a subsequent premium payment that would result in your Contract having $1 million of premiums in the aggregate. We also reserve the right to refuse subsequent premium payments. THE GWB CAN NEVER BE MORE THAN $5 MILLION.
STEP-UP. In the event Contract Value is greater than the GWB, this GMWB allows the GWB to be reset to the Contract Value (a "Step-Up"). UPON ELECTION OF A STEP-UP, THE GWMB CHARGE MAY BE INCREASED, SUBJECT TO THE MAXIMUM CHARGES LISTED ABOVE.
The GAWA is recalculated, equaling the greater of:
Step-Ups occur automatically upon each of the first ten Contract Anniversaries from the endorsement's effective date. Thereafter, a Step-Up is allowed at any time upon your request, so long as there is at least one year between Step-Ups. THE GWB CAN NEVER BE MORE THAN $5 MILLION WITH A STEP-UP. A request for Step-Up is processed and effective on the date received in Good Order. Please consult the representative who helped you purchase your Contract to be sure if a Step-Up is right for you and about any increase in charges upon a Step-Up. Upon election of a Step-Up, the applicable GMWB charge will be reflected in your confirmation.
OWNER'S DEATH. The Contract's death benefit is not affected by this GMWB SO LONG AS CONTRACT VALUE IS GREATER THAN ZERO and the Contract is still in the accumulation phase. Upon the death of the Owner (or the death of either joint Owner of a non-qualified Contract) while the Contract is still in force and before the Income Date, this GMWB terminates without value unless continued by the spouse.
CONTRACT VALUE IS ZERO. With this GMWB, in the event Contract Value is zero, the GAWA is unchanged and payable SO LONG AS THE FOR LIFE GUARANTEE IS IN EFFECT. Otherwise, payments will be made while there is value to the GWB (until depleted). Payments are made on the periodic basis you elect, but no less frequently than annually.
* The GWB before the payment less
the payment; OR
* Zero.
The GAWA:
If you die before all scheduled payments are made, then your Beneficiary will receive the remainder. All other rights under your Contract cease, except for the right to change Beneficiaries. All optional endorsements terminate without value. And no other death benefit is payable.
SPOUSAL CONTINUATION. In the event of the Owner's (or either joint Owner's) death, the surviving spousal beneficiary may elect to:
* Continue the Contract WITH this GMWB - so long as the Contract Value is greater than zero, and the Contract is still in the accumulation phase. (The date the spousal Beneficiary's election to continue the Contract is in Good Order is called the Continuation Date.)
* If the surviving spouse is a Covered Life and the For Life Guarantee is already in effect, then the For Life Guarantee remains effective on and after the Continuation Date. If the For Life Guarantee is not already in effect and the surviving spouse is a Covered Life, the For Life Guarantee becomes effective on the Contract Anniversary on or immediately following the youngest original Covered Life's 65th birthday, and the above rules for the For Life Guarantee apply. The effective date of the For Life Guarantee will be set on the effective date of the endorsement.
If the surviving spouse is not a Covered Life, the For Life Guarantee is null and void. However, the surviving spouse will be entitled to make withdrawals until the GWB is exhausted.
* For a surviving spouse who is a Covered Life, continuing the Contract with this GMWB is necessary to be able to fully realize the benefit of the For Life Guarantee. The For Life Guarantee is not a separate guarantee and only applies if the related GMWB has not terminated.
* Step-Ups will continue automatically or as permitted in accordance with the above rules for Step-Ups.
* Contract Anniversaries will continue to be based on the original Contract's Issue Date.
* A new joint Owner may not be added in a non-qualified Contract if a surviving spouse continues the Contract.
* Continue the Contract WITHOUT this GMWB (GMWB is terminated) if the surviving spouse is not a Covered Life. Thereafter, no GMWB charge will be assessed. If the surviving spouse is a Covered Life, the Contract cannot be continued without this GMWB.
* Add another GMWB to the Contract on any Contract Anniversary after the Continuation Date, subject to the spousal Beneficiary's eligibility, and provided that this GMWB was terminated on the Continuation Date.
For more information about spousal continuation of a Contract, please see "Special Spousal Continuation Option" beginning on page 48.
TERMINATION. This GMWB terminates subject to a prorated GMWB Charge assessed for the period since the last quarterly or monthly statement charge and all benefits cease on the earliest of:
* The Income Date;
* The date of complete withdrawal of Contract Value (full surrender of the Contract);
* The date of death of the Owner (or either joint Owner), UNLESS the Beneficiary who is the Owner's spouse elects to continue the Contract with the GMWB (continuing the Contract with this GMWB is necessary to be able to fully realize the benefit of the For Life Guarantee if the surviving spouse is a Covered Life);
* The Continuation Date if the spousal Beneficiary, who is not a Covered Life, elects to continue the Contract without the GMWB; or
* The date all obligations under this GMWB are satisfied after the Contract Value is zero.
ANNUITIZATION. SEE "GUARANTEED MINIMUM WITHDRAWAL BENEFIT GENERAL CONSIDERATIONS" AND "GUARANTEED MINIMUM WITHDRAWAL BENEFIT IMPORTANT SPECIAL CONSIDERATIONS" BEGINNING ON PAGE 27 FOR ADDITIONAL THINGS TO CONSIDER BEFORE ELECTING A GMWB; WHEN ELECTING TO ANNUITIZE YOUR CONTRACT AFTER HAVING PURCHASED A GMWB; OR WHEN THE LATEST INCOME DATE IS APPROACHING AND YOU ARE THINKING ABOUT ELECTING OR HAVE ELECTED A GMWB.
EFFECT OF GMWB ON TAX DEFERRAL. This GMWB may not be appropriate for Owners who have as a primary objective taking maximum advantage of the tax deferral that is available to them under an annuity contract. Please consult your tax and financial advisors before adding this GMWB to a Contract.
SYSTEMATIC WITHDRAWAL PROGRAM. You can arrange to have money automatically sent to you periodically while your Contract is still in the accumulation phase. You may withdraw a specified dollar amount (of at least $50 per withdrawal), a specified percentage or earnings. Your withdrawals may be on a monthly, quarterly, semi-annual or annual basis. If you have arranged for systematic withdrawals, schedule any planned Step-Up under a GMWB to occur prior to the withdrawal. Example 6 in Appendix B illustrates the consequences of a withdrawal preceding a Step-Up. There is no charge for the Systematic Withdrawal Program; however, you will have to pay taxes on the money you receive. You may also be subject to a withdrawal charge and an Excess Interest Adjustment.
SUSPENSION OF WITHDRAWALS OR TRANSFERS. We may be required to suspend or delay withdrawals or transfers to or from an Investment Division when:
* the New York Stock Exchange is closed (other than customary weekend and holiday closings);
* under applicable SEC rules, trading on the New York Stock Exchange is restricted;
* under applicable SEC rules, an emergency exists so that it is not reasonably practicable to dispose of securities in an Investment Division or determine the value of its assets; or
* the SEC, by order, may permit for the protection of Contract Owners.
We have reserved the right to defer payment for a withdrawal or transfer from the Fixed Account for up to six months or the period permitted by law.
INCOME PAYMENTS (THE INCOME PHASE)
The income phase of your Contract occurs when you begin receiving regular income payments from us. The Income Date is the day those payments begin. Once income payments begin, the Contract cannot be returned to the accumulation phase. You can choose the Income Date and an income option. All of the Contract Value must be annuitized. The income options are described below.
If you do not choose an income option, we will assume that you selected option 3, which provides a life annuity with 120 months of guaranteed payments.
You can change the Income Date or income option at least 7 days before the Income Date, but changes to the Income Date may only be to a later date. You must give us written notice at least seven days before the scheduled Income Date. Income payments must begin by your 90th birthday under a non-qualified Contract, or by such earlier date as required by the applicable qualified plan, law or regulation, unless otherwise approved by the Company. Under a traditional Individual Retirement Annuity, required minimum distributions must begin in the calendar year in which you attain age 70 1/2 (or such other age as required by law). Distributions under qualified plans and Tax-Sheltered Annuities must begin by the later of the calendar year in which you attain age 70 1/2 or the calendar year in which you retire. You do not necessarily have to annuitize your Contract to meet the minimum distribution requirements for Individual Retirement Annuities, qualified plans, and Tax-Sheltered Annuities. Distributions from Roth IRAs are not required prior to your death.
At the Income Date, you can choose to receive fixed payments or variable payments based on the Investment Divisions. Unless you tell us otherwise, your income payments will be based on the fixed and variable options that were in place on the Income Date.
You can choose to have income payments made monthly, quarterly, semi-annually or annually. Or you can choose a single lump sum payment. If you have less than $5,000 to apply toward an income option and state law permits, we may provide your payment in a single lump sum, part of which may be taxable as Federal Income. Likewise, if your first income payment would be less than $50 and state law permits, we may set the frequency of payments so that the first payment would be at least $50.
VARIABLE INCOME PAYMENTS. If you choose to have any portion of your income payments based upon one or more Investment Divisions, the dollar amount of your initial annuity payment will depend primarily upon the following:
* the amount of your Contract Value you allocate to the Investment Division(s) on the Income Date;
* the amount of any applicable premium taxes or withdrawal charges and any Excess Interest Adjustment deducted from your Contract Value on the Income Date;
* which income option you select; and
* the investment factors listed in your Contract that translate the amount of your Contract Value (as adjusted for applicable charges, frequency of payment and commencement date) into initial payment amounts that are measured by the number of Annuity Units of the Investment Division(s) you select credited to your Contract.
The investment factors in your Contract are calculated based upon a variety of factors, including an assumed investment rate of 3%. State variations may apply.
If the actual net investment rate experienced by an Investment Division exceeds the assumed net investment rate, variable annuity payments will increase over time. Conversely, if the actual net investment rate is less than the assumed net investment rate, variable annuity payments will decrease over time. If the actual net investment rate equals the assumed net investment rate, the variable annuity payments will remain constant.
If assumed net investment rate is a lower percentage, for example, 3% versus 4.5% under a particular Annuity Option, the initial payment will be smaller if the 3% assumed net investment rate applies instead of the 4.5% assumed net investment rate, but, all other things being equal, the subsequent 3% assumed net investment rate payments have the potential for increasing in amount by a larger percentage and for decreasing in amount by a smaller percentage.
We calculate the dollar amount of subsequent income payments that you receive based upon the performance of the Investment Divisions you select. If that performance (measured by changes in the value of Annuity Units) exceeds the assumed investment rate, then your income payments will increase; if that performance is less than the assumed investment rate, then your income payments will decrease. Neither expenses actually incurred (other than taxes on investment return), nor mortality actually experienced, will adversely affect the dollar amount of subsequent income payments.
INCOME OPTIONS. The Annuitant is the person whose life we look to when we make income payments (each description assumes that you are the Owner and Annuitant). The following income options may not be available in all states.
OPTION 1 - Life Income. This income option provides monthly payments for your life.
OPTION 2 - Joint and Survivor. This income option provides monthly payments for your life and for the life of another person (usually your spouse) selected by you.
OPTION 3 - Life Annuity With at Least 120 or 240 Monthly Payments. This income option provides monthly payments for the Annuitant's life, but with payments continuing to the Beneficiary for the remainder of 10 or 20 years (as you select) if the Annuitant dies before the end of the selected period. If the Beneficiary does not want to receive the remaining scheduled payments, a single lump sum may be requested, which will be equal to the present value of the remaining payments (as of the date of calculation) discounted at an interest rate that will be no more than 1% higher than the rate used to calculate the initial payment.
OPTION 4 - Income for a Specified Period. This income option provides monthly payments for any number of years from 5 to 30. If the Beneficiary does not want to receive the remaining scheduled payments, a single lump sum may be requested, which will be equal to the present value of the remaining payments (as of the date of calculation) discounted at an interest rate that will be no more than 1% higher than the rate used to calculate the initial payment.
ADDITIONAL OPTIONS - We may make other income options available.
No withdrawals are permitted during the income phase under an income option that is life contingent.
DEATH BENEFIT
The Contract has a death benefit, namely the basic death benefit, which is payable during the accumulation phase. Instead you may choose an optional death benefit for an additional charge, availability of which may vary by state. For more information about the availability of an optional death benefit in your state, please see the application, check with the registered representative helping you to purchase the Contract or contact us at our Annuity Service Center. Our contact information is on the first page of this prospectus. The optional death benefits are only available upon application, and once chosen, cannot be canceled. The effects of any GMWB on the amount payable to your beneficiaries upon your death should be considered in selecting the death benefits in combination with a GMWB.
The death benefit paid to your Beneficiary upon your death is calculated as of the date we receive all required documentation in Good Order which includes, but is not limited to, due proof of death and a completed claim form from the Beneficiary of record (if there are multiple beneficiaries, we will calculate the death benefit when we receive this documentation from the first Beneficiary). Payment will include any required interest from the date of death. The death benefit paid will be the basic death benefit unless you have selected one of the other death benefit endorsements. If you have a guaranteed minimum death benefit, the amount by which the guaranteed minimum death benefit exceeds the account value will be put into your account as of the date we receive all required documentation from the Beneficiary of record and will be allocated among the Investment Divisions and Fixed Account according to the current allocation instructions on file for your account as of that date. Each Beneficiary will receive their portion of the remaining value, subject to market fluctuations, when their option election form is received at our Home Office in Lansing, Michigan.
BASIC DEATH BENEFIT. If you die before moving to the income phase, the person you have chosen as your Beneficiary will receive a death benefit. If you have a joint Owner, the death benefit will be paid when the first joint Owner dies. The surviving joint Owner will be treated as the Beneficiary. Any other Beneficiary designated will be treated as a contingent Beneficiary. Only a spousal Beneficiary has the right to continue the Contract in force upon your death.
The death benefit equals the greater of your Contract Value on the date we receive all required documentation from your Beneficiary.
OPTIONAL DEATH BENEFITS. Optional death benefits are available that are designed to protect your Contract Value from potentially poor investment performance and the impact that poor investment performance could have on the amount of the basic death benefit. Because there is an additional annual charge for each of these optional death benefits, and because you cannot change your selection, please be sure that you have read about and understand the Contract's basic death benefit before selecting an optional death benefit. Optional death benefits are available if you are 79 years of age or younger on the Contract's Issue Date. However, the older you are when your Contract is issued, the less advantageous it would be for you to select an optional death benefit. These optional death benefits are subject to our administrative rules to assure appropriate use, which administrative rules may be changed, as necessary.
DEPENDING ON WHEN AND IN WHAT STATE YOU APPLY FOR THE CONTRACT: THE AVAILABILITY OF AN OPTIONAL DEATH BENEFIT MAY BE DIFFERENT AND HOW AN OPTIONAL DEATH BENEFIT IS CALCULATED VARIES - ALL AS NOTED BELOW.
For purposes of these optional death benefits, "Net Premiums" are defined as your premium payments net of premium taxes, reduced by any withdrawals (including applicable charges and deductions) at the time of the withdrawal in the same proportion that the Contract Value was reduced on the date of the withdrawal. Accordingly, if a withdrawal were to reduce the Contract Value by 50%, for example, Net Premiums would also be reduced by 50%. Similarly, with the "Highest Anniversary Value" component, the adjustment to your Contract Value for applicable charges will have occurred proportionally at the time of the deductions
FOLLOWING ARE THE CALCULATIONS FOR THE OPTIONAL DEATH BENEFITS: RETURN OF PREMIUM DEATH BENEFIT, changes your basic death benefit to the greatest of:
(a) your Contract Value on the date we receive all required documentation from your Beneficiary; or
(b) total Net Premiums since your Contract was issued. All withdrawals will reduce this portion of the calculation in the same proportion that the Contract Value was reduced on the date of the withdrawal.
HIGHEST ANNIVERSARY VALUE DEATH BENEFIT, changes your basic death benefit to the greatest of:
(a) your Contract Value as of the end of the business day on which we receive all required documentation from your Beneficiary; or
(b) total Net Premiums since your Contract was issued; or
(c) your greatest Contract Value on any Contract Anniversary prior to your 81st birthday, MINUS any withdrawals (including any applicable withdrawal charges and adjustments), PLUS any premiums paid (net of any applicable premium taxes) subsequent to that Contract Anniversary.
PAYOUT OPTIONS. The basic death benefit and the optional death benefits can be paid under one of the following payout options:
* single lump sum payment; or
* payment of entire death benefit within 5 years of the date of death; or
* payment of the entire death benefit under an income option over the Beneficiary's lifetime or for a period not extending beyond the Beneficiary's life expectancy; or payment of a portion of the death benefit under an income option over the Beneficiary's lifetime or for a period not extending beyond the Beneficiary's life expectancy, with the balance of the death benefit payable to the Beneficiary. Any portion of the death benefit not applied under an income option within one year of the Owner's death, however, must be paid within five years of the date of the Owner's death.
Under these payout options, the Beneficiary may also elect to receive additional lump sums at any time. The receipt of any additional lump sums will reduce the future income payments to the Beneficiary.
Unless the Beneficiary chooses to receive the entire death benefit in a single sum, the Beneficiary must elect a payout option within the 60-day period beginning with the date we receive proof of death and payments must begin within one year of the date of death. If the Beneficiary chooses to receive some or all of the death benefit in a single sum and all the necessary requirements are met, we will pay the death benefit within seven days. If your Beneficiary is your spouse, he/she may elect to continue the Contract, at the current Contract Value, in his/her own name. For more information, please see "Special Spousal Continuation Option" beginning on page 48.
PRE-SELECTED PAYOUT OPTIONS. As Owner, you may also make a predetermined selection of the death benefit payout option if your death occurs before the Income Date. However, at the time of your death, we may modify the death benefit option if the death benefit you selected exceeds the life expectancy of the Beneficiary. If this Pre-selected Death Benefit Option Election is in force at the time of your death, the payment of the death benefit may not be postponed, nor can the Contract be continued under any other provisions of this Contract. This restriction applies even if the Beneficiary is your spouse, unless such restriction is prohibited by the Internal Revenue Code. If the Beneficiary does not submit the required documentation for the death benefit to us within one year of your death, however, the death benefit must be paid, in a single lump sum, within five years of your death. The Pre-selected Death Benefit Option may not be available in your state.
SPECIAL SPOUSAL CONTINUATION OPTION. If your spouse is the Beneficiary and elects to continue the Contract in his or her own name after your death, pursuant to the Special Spousal Continuation Option, no death benefit will be paid at that time. Moreover, if the Contract has another optional death benefit (instead of the basic death benefit), we will contribute to the Contract a Continuation Adjustment, which is the amount by which the death benefit that would have been payable exceeds the Contract Value. We calculate this amount using the Contract Value and death benefit as of the date we receive completed forms and due proof of death from the Beneficiary of record and the spousal Beneficiary's written request to continue the Contract (the "Continuation Date"). We will add this amount to the Contract based on the current allocation instructions at the time of your death, subject to any minimum allocation restrictions, unless we receive other allocation instructions from your spouse. The Special Spousal Continuation Option may not be available in your state. See your financial advisor for information regarding the availability of the Special Spousal Continuation Option.
If your spouse continues the Contract in his/her own name under the Special Spousal Continuation Option, the new Contract Value will be considered the initial premium for purposes of determining any future death benefit under the Contract. The age of the surviving spouse at the time of the continuation of the Contract will be used to determine all benefits under the Contract prospectively, so the death benefit may be at a different level.
If your spouse elects to continue the Contract, your spouse, as new Owner, cannot terminate most of the optional benefits you elected. However, a GMWB will terminate upon your death (and no further GMWB charges will be deducted), unless your spouse is eligible for the benefit and elects to continue it with the Contract. The Contract, and its optional benefits, remains the same, except as described above. There is no charge for the Spousal Continuation Option; however, your spouse will also be subject to the same fees, charges and expenses under the Contract as you were.
The Special Spousal Continuation Option is available to elect one time on the Contract. However, if you have elected the Pre-Selected Death Benefit Option the Contract cannot be continued under the Special Spousal Continuation Option, unless preventing continuation would be prohibited by the Internal Revenue Code. The Pre-Selected Death Benefit Option may not be available in your state.
DEATH OF OWNER ON OR AFTER THE INCOME DATE. If you or a joint Owner dies, and is not the Annuitant, on or after the Income Date, any remaining payments under the income option elected will continue at least as rapidly as under the method of distribution in effect at the date of death. If you die, the Beneficiary becomes the Owner. If the joint Owner dies, the surviving joint Owner, if any, will be the designated Beneficiary. Any other Beneficiary designation on record at the time of death will be treated as a contingent Beneficiary. A contingent Beneficiary is entitled to receive payment only after the Beneficiary dies.
DEATH OF ANNUITANT. If the Annuitant is not an Owner or joint Owner and dies before the Income Date, you can name a new Annuitant, subject to our underwriting rules. If you do not name a new Annuitant within 30 days of the death of the Annuitant, you will become the Annuitant. However, if the Owner is a non-natural person (for example, a corporation), then the death of the Annuitant will be treated as the death of the Owner, and a new Annuitant may not be named.
If the Annuitant dies on or after the Income Date, any remaining guaranteed payment will be paid to the Beneficiary as provided for in the income option selected. Any remaining guaranteed payment will be paid at least as rapidly as under the method of distribution in effect at the Annuitant's death.
TAXES
THE FOLLOWING IS ONLY GENERAL INFORMATION AND IS NOT INTENDED AS TAX ADVICE TO ANY INDIVIDUAL. ADDITIONAL TAX INFORMATION IS INCLUDED IN THE SAI. YOU SHOULD CONSULT YOUR OWN TAX ADVISER AS TO HOW THESE GENERAL RULES WILL APPLY TO YOU IF YOU PURCHASE A CONTRACT.
CONTRACT OWNER TAXATION
TAX-QUALIFIED AND NON-QUALIFIED CONTRACTS. If you purchase your
Contract as a part of a tax-qualified plan such as an Individual
Retirement Annuity (IRA), Tax-Sheltered Annuity (sometimes referred to
as a 403(b) Contract), or pension or profit-sharing plan (including a
401(k) Plan or H.R. 10 Plan) your Contract will be what is referred to
as a tax-qualified contract. Tax deferral under a tax-qualified
contract arises under the specific provisions of the Internal Revenue
Code (Code) governing the tax-qualified plan, so a tax-qualified
contract should be purchased only for the features and benefits other
than tax deferral that are available under a tax-qualified contract,
and not for the purpose of obtaining tax deferral. You should consult
your own adviser regarding these features and benefits of the Contract
prior to purchasing a tax-qualified contract.
If you do not purchase your Contract as a part of any tax-qualified pension plan, specially sponsored program or an individual retirement annuity, your Contract will be what is referred to as a non-qualified contract.
The amount of your tax liability on the earnings under and the amounts received from either a tax-qualified or a non-qualified Contract will vary depending on the specific tax rules applicable to your Contract and your particular circumstances.
NON-QUALIFIED CONTRACTS - GENERAL TAXATION. Increases in the value of a non-qualified Contract attributable to undistributed earnings are generally not taxable to the Contract Owner or the Annuitant until a distribution (either a withdrawal or an income payment) is made from the Contract. This tax deferral is generally not available under a non-qualified Contract owned by a non-natural person (e.g., a corporation or certain other entities other than a trust holding the Contract as an agent for a natural person). Loans based on a non-qualified Contract are treated as distributions.
NON-QUALIFIED CONTRACTS - AGGREGATION OF CONTRACTS. For purposes of determining the taxability of a distribution, the Code provides that all non-qualified contracts issued by us (or an affiliate) to you during any calendar year must be treated as one annuity contract. Additional rules may be promulgated under this Code provision to prevent avoidance of its effect through the ownership of serial contracts or otherwise.
NON-QUALIFIED CONTRACTS - WITHDRAWALS AND INCOME PAYMENTS. Any withdrawal from a non-qualified Contract is taxable as ordinary income to the extent it does not exceed the accumulated earnings under the Contract. A part of each income payment under a non-qualified Contract is generally treated as a non-taxable return of premium. The balance of each income payment is taxable as ordinary income. The amounts of the taxable and non-taxable portions of each income payment are determined based on the amount of the investment in the Contract and the length of the period over which income payments are to be made. Income payments received after all of your investment in the Contract is recovered are fully taxable as ordinary income. Additional information is provided in the SAI.
The Code also imposes a 10% penalty on certain taxable amounts received under a non-qualified Contract. This penalty tax will not apply to any amounts:
* paid on or after the date you reach age 59 1/2;
* paid to your Beneficiary after you die;
* paid if you become totally disabled (as that term is defined in the Code);
* paid in a series of substantially equal periodic payments made annually (or more frequently) for your life (or life expectancy) or for a period not exceeding the joint lives (or joint life expectancies) of you and your Beneficiary;
* paid under an immediate annuity; or
* which come from premiums made prior to August 14, 1982.
NON-QUALIFIED CONTRACTS - REQUIRED DISTRIBUTIONS. In order to be treated as an annuity contract for federal income tax purposes, the Code requires any non-qualified Contract issued after January 18, 1985 to provide that (a) if an owner dies on or after the annuity starting date but prior to the time the entire interest in the contract has been distributed, the remaining portion of such interest will be distributed at least as rapidly as under the method of distribution being used as of the date of that owner's death; and (b) if an owner dies prior to the annuity starting date, the entire interest in the contract must be distributed within five years after the date of the owner's death.
The requirements of (b) above can be considered satisfied if any portion of the Owner's interest which is payable to or for the benefit of a "designated beneficiary" is distributed over the life of such beneficiary or over a period not extending beyond the life expectancy of that beneficiary and such distributions begin within one year of that Owner's death. The Owner's "designated beneficiary," who must be a natural person, is the person designated by such Owner as a Beneficiary and to whom ownership of the Contract passes by reason of death. However, if the Owner's "designated beneficiary" is the surviving spouse of the Owner, the contract may be continued with the surviving spouse as the new Owner.
TAX-QUALIFIED CONTRACTS - WITHDRAWALS AND INCOME PAYMENTS. The Code imposes limits on loans, withdrawals, and income payments under tax-qualified Contracts. The Code also imposes required minimum distributions for tax-qualified Contracts and a 10% penalty on certain taxable amounts received prematurely under a tax-qualified Contract. These limits, required minimum distributions, tax penalties and the tax computation rules are summarized in the SAI. Any withdrawals under a tax-qualified Contract will be taxable except to the extent they are allocable to an investment in the Contract (any after-tax contributions). In most cases, there will be little or no investment in the Contract for a tax-qualified Contract because contributions will have been made on a pre-tax or tax-deductible basis.
WITHDRAWALS - TAX-SHELTERED ANNUITIES. The Code limits the withdrawal of amounts attributable to purchase payments made under a salary reduction agreement from Tax-Sheltered Annuities. Withdrawals can only be made when an Owner:
* reaches age 59 1/2;
* leaves his/her job;
* dies;
* becomes disabled (as that term is defined in the Code); or
* experiences hardship. However, in the case of hardship, the Owner can only withdraw the premium and not any earnings.
WITHDRAWALS - ROTH IRAS. Subject to certain limitations, individuals may also purchase a type of non-deductible IRA annuity known as a Roth IRA annuity. Qualified distributions from Roth IRA annuities are entirely federal income tax free. A qualified distribution requires that the individual has held the Roth IRA annuity for at least five years and, in addition, that the distribution is made either after the individual reaches age 59 1/2, on account of the individual's death or disability, or as a qualified first-time home purchase, subject to $10,000 lifetime maximum, for the individual, or for a spouse, child, grandchild or ancestor.
CONSTRUCTIVE WITHDRAWALS - INVESTMENT ADVISER FEES. Withdrawals from non-qualified Contracts for the payment of investment adviser fees will be considered taxable distributions from the Contract. In a series of Private Letter Rulings, however, the Internal Revenue Service has held that the payment of investment adviser fees from a tax-qualified Contract need not be considered a distribution for income tax purposes. Under the facts in these Rulings:
* there was a written agreement providing for payments of the fees solely from the annuity Contract,
* the Contract Owner had no liability for the fees, and
* the fees were paid solely from the annuity Contract to the adviser.
EXTENSION OF LATEST INCOME DATE. If you do not annuitize your non-qualified Contract on or before the latest Income Date, it is possible that the IRS could challenge the status of your Contract as an annuity Contract for tax purposes. The result of such a challenge could be that you would be viewed as either constructively receiving the increase in the Contract Value each year from the inception of the Contract or the entire increase in the Contract Value would be taxable in the year you attain age 90. In either situation, you could realize taxable income even if the Contract proceeds are not distributed to you at that time. Accordingly, before purchasing a Contract, you should consult your tax advisor with respect to these issues.
DEATH BENEFITS. None of the death benefits paid under the Contract to the Beneficiary will be tax-exempt life insurance benefits. The rules governing the taxation of payments from an annuity Contract, as discussed above, generally apply to the payment of death benefits and depend on whether the death benefits are paid as a lump sum or as annuity payments. Estate or gift taxes may also apply.
ASSIGNMENT. An assignment of your Contract will generally be a taxable event. Assignments of a tax-qualified Contract may also be limited by the Code and the Employee Retirement Income Security Act of 1974, as amended. These limits are summarized in the SAI. You should consult your tax adviser prior to making any assignment of your Contract.
DIVERSIFICATION. The Code provides that the underlying investments for a non-qualified variable annuity must satisfy certain diversification requirements in order to be treated as an annuity Contract. We believe that the underlying investments are being managed so as to comply with these requirements.
OWNER CONTROL. In a Revenue Ruling issued in 2003, the Internal Revenue Service (IRS) considered certain variable annuity and variable life insurance contracts and held that the types of actual and potential control that the contract owners could exercise over the investment assets held by the insurance company under these variable contracts was not sufficient to cause the contract owners to be treated as the owners of those assets and thus to be subject to current income tax on the income and gains produced by those assets. Under the Contract, like the contracts described in the Revenue Ruling, there will be no arrangement, plan, contract or agreement between the contract owner and Jackson National regarding the availability of a particular investment option and other than the contract owner's right to allocate premiums and transfer funds among the available sub-accounts, all investment decisions concerning the sub-accounts will be made by the insurance company or an advisor in its sole and absolute discretion.
The Contract will differ from the contracts described in the Revenue Ruling, in two respects. The first difference is that the contract in the Revenue Ruling provided only 12 investment options with the insurance company having the ability to add an additional 8 options whereas a Contract offers __ Investment Divisions and at least one Fixed Account option, although a Contract owner can select no more than 18 fixed and variable options at any one time. The second difference is that the owner of a contract in the Revenue Ruling could only make one transfer per 30-day period without a fee whereas during the accumulation phase, a Contract owner will be permitted to make up to 15 transfers in any one year without a charge.
The Revenue Ruling states that whether the owner of a variable contract is to be treated as the owner of the assets held by the insurance company under the contract will depend on all of the facts and circumstances. Jackson National does not believe that the differences between the Contract and the contracts described in the Revenue Ruling with respect to the number of investment choices and the number of investment transfers that can be made under the contract without an additional charge should prevent the holding in the Revenue Ruling from applying to the Owner of a Contract. At this time, however, it cannot be determined whether additional guidance will be provided by the IRS on this issue and what standards may be contained in such guidance. We reserve the right to modify the Contract to the extent required to maintain favorable tax treatment.
WITHHOLDING. In general, distributions from a Contract are subject to 10% federal income tax withholding unless you elect not to have tax withheld. Some states have enacted similar rules. Different rules may apply to payments delivered outside the United States.
Any distribution from a tax-qualified contract eligible for rollover will be subject to federal tax withholding at a mandatory 20% rate unless the distribution is made as a direct rollover to a tax-qualified plan or to an individual retirement account or annuity.
The Code generally allows the rollover of most distributions to and from tax-qualified plans, tax-sheltered annuities, Individual Retirement Annuities and eligible deferred compensation plans of state or local governments. Distributions which may not be rolled over are those which are:
(a) one of a series of substantially equal annual (or more frequent) payments made (a) over the life or life expectancy of the employee, (b) the joint lives or joint life expectancies of the employee and the employee's beneficiary, or (c) for a specified period of ten years or more;
(b) a required minimum distribution;
(c) a hardship withdrawal; or
(d) the non-taxable portion of a distribution.
JNL TAXATION
We will pay company income taxes on the taxable corporate earnings created by this separate account product adjusted for various permissible deductions and certain tax benefits discussed below. While we may consider company income tax liabilities and tax benefits when pricing our products, we do not currently include our income tax liabilities in the charges you pay under the contract. We will periodically review the issue of charging for these taxes and may impose a charge in the future. (We do impose a so-called "Federal (DAC) Tax Charge" under variable life insurance policies, but the "Federal (DAC) Tax Charge" merely compensates us for the required deferral of acquisition cost and does not constitute company income taxes.)
In calculating our corporate income tax liability, we derive certain corporate income tax benefits associated with the investment of company assets, including separate account assets that are treated as company assets under applicable income tax law. These benefits reduce our overall corporate income tax liability. Under current law, such benefits may include dividends received deductions and foreign tax credits which can be material. We do not pass these benefits through to the separate accounts, principally because: (i) the great bulk of the benefits results from the dividends received deduction, which involves no reduction in the dollar amount of dividends that the separate account receives; (ii) product owners are not the owners of the assets generating the benefits under applicable income tax law; and (iii) while we impose a so-called "Federal (DAC) tax charge" under variable life insurance policies, we do not currently include company income taxes in the charges owners pay under the products.
OTHER INFORMATION
DOLLAR COST AVERAGING. If the amount allocated to the Investment Divisions plus the amount allocated to a Fixed Account option is at least $15,000, you can arrange to have a dollar amount or percentage of money periodically transferred automatically into the Investment Divisions and other Fixed Account options from the one-year Fixed Account or any of the Investment Divisions. If the Fixed Account options are not available or otherwise restricted, dollar cost averaging will be exclusively from the Investment Divisions. In the case of transfers from the one-year Fixed Account or Investment Divisions with a stable unit value to the Investment Divisions, this can let you pay a lower average cost per unit over time than you would receive if you made a one-time purchase. Transfers from the more volatile Investment Divisions may not result in lower average costs and such Investment Divisions may not be an appropriate source of dollar cost averaging transfers in volatile markets. There is no charge for Dollar Cost Averaging. Certain restrictions may apply.
DOLLAR COST AVERAGING PLUS (DCA+). The DCA+ Fixed Account is a "source account" designed for dollar cost averaging transfers to Investment Divisions or systematic transfers to other Fixed Accounts. The DCA+ Fixed Account is credited with an enhanced interest rate. If a DCA+ Fixed Account is selected, monies in the DCA+ Fixed Account will be systematically transferred to the Investment Divisions or other Fixed Accounts chosen over the DCA+ term selected. There is no charge for DCA+. The DCA+ Fixed Account is only available for new premiums. Premiums are accepted during the first six Contract Months only. You should consult your JNL representative with respect to the current availability of the Fixed Account options and the availability of DCA+.
EARNINGS SWEEP. You can choose to move your earnings from the source accounts (only applicable from the one year Fixed Account Option, if currently available, and the Money Market Investment Division). There is no charge for Earnings Sweep.
REBALANCING. You can arrange to have us automatically reallocate your Contract Value among Investment Divisions and the one-year Fixed Account (if currently available) periodically to maintain your selected allocation percentages. Rebalancing is consistent with maintaining your allocation of investments among market segments, although it is accomplished by reducing your Contract Value allocated to the better performing Investment Divisions. There is no charge for Rebalancing.
You may cancel a Dollar Cost Averaging, Earnings Sweep or Rebalancing program using whatever methods you use to change your allocation instructions.
FREE LOOK. You may return your Contract to the selling agent or us within ten days (or longer if required by your state) after receiving it. We will return
* the Contract Value, PLUS
* any fees (other than asset-based fees) and expenses deducted from the premiums.
We will determine the Contract Value in the Investment Divisions as of the date we receive the Contract or the date you return it to the selling agent. We will return premium payments where required by law. In some states, we are required to hold the premiums of a senior citizen in the Fixed Account during the free look period, unless we are specifically directed to allocate the premiums to the Investment Divisions. State laws vary; your free look rights will depend on the laws of the state in which you purchased the Contract.
ADVERTISING. From time to time, we may advertise several types of performance of the Investment Divisions.
* TOTAL RETURN is the overall change in the value of an investment in an Investment Division over a given period of time.
* STANDARDIZED AVERAGE ANNUAL TOTAL RETURN is calculated in accordance with SEC guidelines.
* NON-STANDARDIZED TOTAL RETURN may be for periods other than those required by, or may otherwise differ from, standardized average annual total return. For example, if a Fund has been in existence longer than the Investment Division, we may show non-standardized performance for periods that begin on the inception date of the Fund, rather than the inception date of the Investment Division.
* YIELD refers to the income generated by an investment over a given period of time.
Performance will be calculated by determining the percentage change in the value of an Accumulation Unit by dividing the increase (decrease) for that unit by the value of the Accumulation Unit at the beginning of the period. Performance will reflect the deduction of the mortality and expense risk and administration charges and may reflect the deduction of the annual contract maintenance and withdrawal charges, but will not reflect charges for optional features except in performance data used in sales materials that promote those optional features. The deduction of withdrawal charges and/or the charges for optional features would reduce the percentage increase or make greater any percentage decrease.
RESTRICTIONS UNDER THE TEXAS OPTIONAL RETIREMENT PROGRAM (ORP). Contracts issued to participants in ORP contain restrictions required under the Texas Administrative Code. In accordance with those restrictions, a participant in ORP will not be permitted to make withdrawals prior to such participant's retirement, death, attainment of age 70 1/2 or termination of employment in a Texas public institution of higher education. The restrictions on withdrawal do not apply in the event a participant in ORP transfers the Contract Value to another approved contract or vendor during the period of ORP participation. These requirements will apply to any other jurisdiction with comparable requirements.
MODIFICATION OF YOUR CONTRACT. Only our President, Vice President, Secretary or Assistant Secretary may approve a change to or waive a provision of your Contract. Any change or waiver must be in writing. We may change the terms of your Contract without your consent in order to comply with changes in applicable law, or otherwise as we deem necessary.
LEGAL PROCEEDINGS. Jackson National is a defendant in a number of civil proceedings substantially similar to other litigation brought against many life insurers alleging misconduct in the sale or administration of insurance products. These matters are sometimes referred to as market conduct litigation. The market conduct litigation currently pending against JNL asserts various theories of liability and purports to be filed on behalf of individuals or differing classes persons in the United States who purchased either life insurance or annuity products from JNL during periods ranging from 1981 to present. JNL has retained national and local counsel experienced in the handling of such litigation. To date, such litigation has either been resolved by Jackson National on a non-material basis, or is being vigorously defended. At this time, it is not feasible to make a meaningful estimate of the amount or range of loss that could result from an unfavorable outcome in such actions.
PRIVACY POLICY
COLLECTION OF NONPUBLIC PERSONAL INFORMATION. We collect nonpublic personal information (financial and health) about you from some or all of the following sources:
* Information we receive from you on applications or other forms;
* Information about your transactions with us;
* Information we receive from a consumer reporting agency;
* Information we obtain from others in the process of verifying information you provide us; and
* Individually identifiable health information, such as your medical history, when you have applied for a life insurance policy.
DISCLOSURE OF CURRENT AND FORMER CUSTOMER NONPUBLIC PERSONAL INFORMATION. We WILL NOT DISCLOSE our current and former customers' nonpublic personal information to affiliated or nonaffiliated third parties, EXCEPT AS PERMITTED BY LAW. TO THE EXTENT PERMITTED BY LAW, WE MAY DISCLOSE to either affiliated or nonaffiliated third parties all of the nonpublic personal financial information that we collect about our customers, as described above.
In general, any disclosures to affiliated or nonaffiliated parties will be for the purpose of them providing services for us so that we may more efficiently administer your Contract and process the transactions and services you request. WE DO NOT SELL INFORMATION TO EITHER AFFILIATED OR NON-AFFILIATED PARTIES.
We also share customer name and address information with unaffiliated mailers to assist in the mailing of company newsletters and other Contract Owner communications. Our agreements with these third parties require them to use this information responsibly and restrict their ability to share this information with other parties.
We do not internally or externally share nonpublic personal health information other than, as permitted by law, to process transactions or to provide services that you have requested. These transactions or services include, but are not limited to, underwriting life insurance policies, obtaining reinsurance of life policies and processing claims for waiver of premium, accelerated death benefits, terminal illness benefits or death benefits.
SECURITY TO PROTECT THE CONFIDENTIALITY OF NONPUBLIC PERSONAL INFORMATION. We HAVE SECURITY PRACTICES AND PROCEDURES in place to prevent unauthorized access to your nonpublic personal information. Our practices of safeguarding your information help protect against the criminal use of the information. Our employees are bound by a Code of Conduct requiring that all information be kept in strict confidence, and they are subject to disciplinary action for violation of the Code.
We RESTRICT ACCESS to nonpublic personal information about you to those employees who need to know that information to provide products or services to you. We MAINTAIN PHYSICAL, ELECTRONIC AND PROCEDURAL SAFEGUARDS that comply with federal and state regulations to guard your nonpublic personal information.
TABLE OF CONTENTS OF
THE STATEMENT OF ADDITIONAL INFORMATION
General Information and History 2 Services 4 Purchase of Securities Being Offered 4 Underwriters 4 Calculation of Performance 4 Additional Tax Information 6 Annuity Provisions 17 Net Investment Factor 18 Financial Statements 19 |
APPENDIX A
DOW JONES DOES NOT:
* Sponsor, endorse, sell or promote the JNL/Mellon Capital Management DowSM 10 Fund, the JNL/Mellon Capital Management Global 15 Fund, the JNL/Mellon Capital Management JNL 5 Fund, the JNL/Mellon Capital Management VIP Fund, the JNL/Mellon Capital Management DowSM Dividend Fund, and the JNL/Mellon Capital Management JNL Optimized 5 Fund.
* Recommend that any person invest in the JNL/Mellon Capital Management DowSM 10 Fund, the JNL/Mellon Capital Management Global 15 Fund, the JNL/Mellon Capital Management JNL 5 Fund, the JNL/Mellon Capital Management VIP Fund, JNL/Mellon Capital Management DowSM Dividend Fund, and the JNL/Mellon Capital Management JNL Optimized 5 Fund, or any other securities.
* Have any responsibility or liability for or make any decisions about the timing, amount or pricing of the JNL/Mellon Capital Management DowSM 10 Fund, the JNL/Mellon Capital Management Global 15 Fund, the JNL/Mellon Capital Management JNL 5 Fund, the JNL/Mellon Capital Management VIP Fund, the JNL/Mellon Capital Management DowSM Dividend Fund, and the JNL/Mellon Capital Management JNL Optimized 5 Fund.
* Have any responsibility or liability for the administration, management or marketing of the JNL/Mellon Capital Management DowSM 10 Fund, the JNL/Mellon Capital Management Global 15 Fund, the JNL/Mellon Capital Management JNL 5 Fund, the JNL/Mellon Capital Management VIP Fund, the JNL/Mellon Capital Management DowSM Dividend Fund, and the JNL/Mellon Capital Management JNL Optimized 5 Fund.
* Consider the needs of the JNL/Mellon Capital Management DowSM 10 Fund, the JNL/Mellon Capital Management Global 15 Fund, the JNL/Mellon Capital Management JNL 5 Fund, the JNL/Mellon Capital Management VIP Fund, the JNL/Mellon Capital Management DowSM Dividend Fund or the owners of the JNL/Mellon Capital Management DowSM 10 Fund, the JNL/Mellon Capital Management JNL 5 Fund, the JNL/Mellon Capital Management VIP Fund, the JNL/Mellon Capital Management DowSM Dividend Fund or the JNL/Mellon Capital Management JNL Optimized 5 Fund in determining, composing or calculating the DJIA or have any obligation to do so.
DOW JONES WILL NOT HAVE ANY LIABILITY IN CONNECTION WITH THE JNL/MELLON CAPITAL MANAGEMENT DOWSM 10 FUND, THE JNL/MELLON CAPITAL MANAGEMENT GLOBAL 15 FUND, THE JNL/MELLON CAPITAL MANAGEMENT JNL 5 FUND, THE JNL/MELLON CAPITAL MANAGEMENT VIP FUND, THE JNL/MELLON CAPITAL MANAGEMENT DOWSM DIVIDEND FUND, AND THE JNL/MELLON CAPITAL MANAGEMENT JNL OPTIMIZED 5 FUND. SPECIFICALLY,
* DOW JONES DOES NOT MAKE ANY WARRANTY, EXPRESS OR IMPLIED, AND DOW JONES DISCLAIMS ANY WARRANTY ABOUT:
* THE RESULTS TO BE OBTAINED BY THE JNL/MELLON CAPITAL MANAGEMENT DOWSM 10 FUND, THE JNL/MELLON CAPITAL MANAGEMENT GLOBAL 15 FUND, THE JNL/MELLON CAPITAL MANAGEMENT JNL 5 FUND, THE JNL/MELLON CAPITAL MANAGEMENT VIP FUND, THE JNL/MELLON CAPITAL MANAGEMENT DOWSM DIVIDEND FUND, THE JNL/MELLON CAPITAL MANAGEMENT JNL OPTIMIZED 5 FUND, THE JNL/MELLON CAPITAL MANAGEMENT COMMUNICATIONS SECTOR FUND, THE JNL/MELLON CAPITAL MANAGEMENT CONSUMER BRANDS SECTOR FUND, THE JNL/MELLON CAPITAL MANAGEMENT OIL & GAS SECTOR FUND, THE JNL/MELLON CAPITAL MANAGEMENT FINANCIAL SECTOR FUND, THE JNL/MELLON CAPITAL MANAGEMENT HEALTHCARE SECTOR FUND, AND THE JNL/MELLON CAPITAL MANAGEMENT TECHNOLOGY SECTOR FUND, THE OWNERS OF THE JNL/MELLON CAPITAL MANAGEMENT DOWSM 10 FUND, THE JNL/MELLON CAPITAL MANAGEMENT GLOBAL 15 FUND, THE JNL/MELLON CAPITAL MANAGEMENT JNL 5 FUND, THE JNL/MELLON CAPITAL MANAGEMENT VIP FUND, THE JNL/MELLON CAPITAL MANAGEMENT DOWSM DIVIDEND FUND, AND THE JNL/MELLON CAPITAL MANAGEMENT JNL OPTIMIZED 5 FUND, OR ANY OTHER PERSON IN CONNECTION WITH THE USE OF THE DJIA AND THE DATA INCLUDED IN THE DJIA;
* THE ACCURACY OR COMPLETENESS OF THE DJIA AND ITS DATA;
* THE MERCHANTABILITY AND THE FITNESS FOR A PARTICULAR PURPOSE OR USE OF THE DJIA AND ITS DATA.
* DOW JONES WILL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS OR INTERRUPTIONS IN THE DJIA OR ITS DATA.
* UNDER NO CIRCUMSTANCES WILL DOW JONES BE LIABLE FOR ANY LOST PROFITS OR INDIRECT, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES OR LOSSES, EVEN IF DOW JONES KNOWS THAT THEY MIGHT OCCUR.
APPENDIX B
GMWB PROSPECTUS EXAMPLES
Unless otherwise specified, the following examples assume you elected a 5% GMWB when you purchased your Contract, no other optional benefits were elected, your initial premium payment was $100,000, your GAWA is greater than your RMD at the time a withdrawal is requested, and all partial withdrawals requested include any applicable charges. The examples also assume that the GMWB and any For Life guarantee have not been terminated as described in the Access to Your Money section of this prospectus.
EXAMPLE 1: AT ELECTION, YOUR GWB AND GAWA ARE DETERMINED.
* Example 1a: If the GMWB is elected at issue:
- Your initial GWB is $100,000, which is your initial Premium payment.
- Your GAWA is $5,000, which is 5% of your initial GWB ($100,000*0.05 = $5,000).
* Example 1b: If the GMWB is elected after issue when the Contract Value is $105,000:
- Your initial GWB is $105,000, which is your Contract Value on the effective date of the endorsement.
- Your GAWA is $5,250, which is 5% of your initial GWB ($105,000*0.05 = $5,250).
EXAMPLE 2: UPON PAYMENT OF A SUBSEQUENT PREMIUM, YOUR GWB AND GAWA ARE RE-DETERMINED. YOUR GWB IS SUBJECT TO A MAXIMUM OF $5,000,000.
* Example 2a: If you make an additional Premium payment of $50,000 and your GWB is $100,000 at the time of payment:
- Your new GWB is $150,000, which is your GWB prior to the additional Premium payment ($100,000) plus your additional Premium payment ($50,000).
- Your GAWA is $7,500, which is your GAWA prior to the additional Premium payment ($5,000) plus 5% of your additional Premium payment ($50,000*0.05 = $2,500).
* Example 2b: If you make an additional Premium payment of $100,000 and your GWB is $4,950,000 and your GAWA is $247,500 at the time of payment:
- Your new GWB is $5,000,000, which is the maximum, since your GWB prior to the additional Premium payment ($4,950,000) plus your additional Premium payment ($100,000) exceeds the maximum of $5,000,000.
- Your GAWA is $250,000, which is your GAWA prior to the additional Premium payment ($247,500) plus 5% of the allowable $50,000 increase in your GWB (($5,000,000 - $4,950,000)*0.05 = $2,500).
EXAMPLE 3: UPON WITHDRAWAL OF THE GUARANTEED AMOUNT (WHICH IS YOUR GAWA FOR ENDORSEMENTS FOR NON-QUALIFIED CONTRACTS OR WHICH IS THE GREATER OF YOUR GAWA OR YOUR RMD FOR THOSE GMWBS RELATED TO QUALIFIED CONTRACTS), YOUR GWB AND GAWA ARE RE-DETERMINED.
* Example 3a: If you withdraw an amount equal to your GAWA ($5,000) when your GWB is $100,000:
- Your new GWB is $95,000, which is your GWB prior to the withdrawal ($100,000) less the amount of the withdrawal ($5,000).
- Your GAWA for the next year remains $5,000, since you did not withdraw an amount that exceeds your GAWA.
- If you continued to take annual withdrawals equal to your GAWA, it would take an additional 19 years to deplete your GWB ($95,000 / $5,000 per year = 19 years), provided that there are no further adjustments made to your GWB or your GAWA (besides the annual reduction of your GWB by the amount of the withdrawal). However, if you have elected a For Life GMWB and the For Life Guarantee is in effect, withdrawals equal to your GAWA could continue for the rest of your life (or in the case of Joint Owners, until the first death of the Joint Owners or until the death of the last surviving Covered Life if your endorsement is a For Life GMWB with Joint Option), even beyond 19 years, prior to the Latest Income Date.
* Example 3b: If you withdraw an amount equal to your RMD ($7,500), which is greater than your GAWA ($5,000) when your GWB is $100,000 and your RMD provision is in effect for your endorsement:
- Your new GWB is $92,500, which is your GWB prior to the withdrawal ($100,000) less the amount of the withdrawal ($7,500).
- Your GAWA for the next year remains $5,000, since your withdrawal did not exceed the greater of your GAWA ($5,000) or your RMD ($7,500).
- If you continued to take annual withdrawals equal to your GAWA, it would take an additional 19 years to deplete your GWB ($92,500 / $5,000 per year = 19 years), provided that there are no further adjustments made to your GWB or your GAWA (besides the annual reduction of your GWB by the amount of the withdrawal) and the amount of the final withdrawal would be less than your GAWA (and equal to your remaining GWB) if your endorsement is not a For Life GMWB or if your endorsement is a For Life GMWB and the For Life Guarantee is not in effect. However, if you have elected a For Life GMWB and the For Life Guarantee is in effect, withdrawals equal to your GAWA could continue for the rest of your life (or until the death of the last surviving Covered Life if your endorsement is a For Life GMWB with Joint Option), even beyond 19 years, prior to the Latest Income Date.
* Notes:
- If your endorsement does not include a For Life Guarantee or if the For Life Guarantee is not in effect, your GAWA would not be permitted to exceed your new GWB.
- Withdrawals taken in connection with a GMWB are considered the same as any other withdrawal for the purpose of determining all other values under the Contract. In the case where your minimum death benefit is reduced proportionately for withdrawals, your death benefit may be reduced by more than the amount of the withdrawal.
EXAMPLE 4: UPON WITHDRAWAL OF AN AMOUNT THAT EXCEEDS YOUR GUARANTEED AMOUNT (AS DEFINED IN EXAMPLE 3), YOUR GWB AND GAWA ARE RE-DETERMINED.
* Example 4a: If you withdraw an amount ($10,000) that exceeds your GAWA ($5,000) when your Contract Value is $120,000 and your GWB is $100,000:
- Your new GWB is $90,000, which is the lesser of 1) your GWB prior to the withdrawal less the amount of the withdrawal ($100,000 - $10,000 = $90,000) or 2) your Contract Value prior to the withdrawal less the amount of the withdrawal ($120,000 - $10,000 = $110,000).
- Your GAWA is recalculated based on the type of endorsement you have elected.
- If your endorsement is not a For Life GMWB, your GAWA for the next year remains $5,000, since it is recalculated to equal the lesser of 1) your GAWA prior to the withdrawal ($5,000) or 2) 5% of your Contract Value after the withdrawal ($110,000*0.05 = $5,500). If you continued to take annual withdrawals equal to your GAWA, it would take an additional 18 years to deplete your GWB ($90,000 / $5,000 per year = 18 years), provided that there are no further adjustments made to your GWB or your GAWA (besides the annual reduction of your GWB by the amount of the withdrawal).
- If your endorsement is a For Life GMWB, your GAWA is recalculated to equal $4,500, which is 5% of your new GWB ($90,000*0.05 = $4,500), and if the For Life Guarantee was effective prior to the withdrawal, it remains in effect. If you continued to take annual withdrawals equal to your GAWA, it would take an additional 20 years, prior to the Latest Income Date, to deplete your GWB ($90,000 / $4,500 per year = 20 years), provided that there are no further adjustments made to your GWB or your GAWA (besides the annual reduction of your GWB by the amount of the withdrawal). However, if your For Life Guarantee is in effect, withdrawals equal to your GAWA could continue for the rest of your life (or in the case of Joint Owners, until the first death of the Joint Owners or until the death of the last surviving Covered Life if your endorsement is a For Life GMWB with Joint Option), even beyond 20 years, prior to the Latest Income Date.
* Example 4b: If you withdraw an amount ($10,000) that exceeds your GAWA ($5,000) when your Contract Value is $105,000 and your GWB is $100,000:
- Your new GWB is $90,000, which is the lesser of 1) your GWB prior to the withdrawal less the amount of the withdrawal ($100,000 - $10,000 = $90,000) or 2) your Contract Value prior to the withdrawal less the amount of the withdrawal ($105,000 - $10,000 = $95,000).
- Your GAWA is recalculated based on the type of endorsement you have elected.
- If your endorsement is not a For Life GMWB, your GAWA for
the next year is recalculated to equal $4,750, which is the
lesser of 1) your GAWA prior to the withdrawal ($5,000) or
2) 5% of your Contract Value after the withdrawal
($95,000*0.05 = $4,750). If you continued to take annual
withdrawals equal to your GAWA, it would take an additional
19 years to deplete your GWB ($90,000 / $4,750 per year = 19
years), provided that there are no further adjustments made
to your GWB or your GAWA (besides the annual reduction of
your GWB by the amount of the withdrawal) and the amount of
your final withdrawal would be less than your GAWA (and
equal to your remaining GWB).
- If your endorsement is a For Life GMWB, your GAWA is recalculated to equal $4,500, which is 5% of your new GWB ($90,000*0.05 = $4,500), and if the For Life Guarantee was effective prior to the withdrawal, it remains in effect. If you continued to take annual withdrawals equal to your GAWA, it would take an additional 20 years, prior to the Latest Income Date, to deplete your GWB ($90,000 / $4,500 per year = 20 years), provided that there are no further adjustments made to your GWB or your GAWA (besides the annual reduction of your GWB by the amount of the withdrawal). However, if your For Life Guarantee is in effect, withdrawals equal to your GAWA could continue for the rest of your life (or in the case of Joint Owners, until the first death of the Joint Owners or until the death of the last surviving Covered Life if your endorsement is a For Life GMWB with Joint Option), even beyond 20 years, prior to the Latest Income Date.
* Example 4c: If you withdraw an amount ($10,000) that exceeds your GAWA ($5,000) when your Contract Value is $90,000 and your GWB is $100,000:
- Your new GWB is $80,000, which is the lesser of 1) your GWB prior to the withdrawal less the amount of the withdrawal ($100,000 - $10,000 = $90,000) or 2) your Contract Value prior to the withdrawal less the amount of the withdrawal ($90,000 - $10,000 = $80,000).
- Your GAWA is recalculated based on the type of endorsement you have elected.
- If your endorsement is not a For Life GMWB, your GAWA for
the next year is recalculated to equal $4,000, which is the
lesser of 1) your GAWA prior to the withdrawal ($5,000) or
2) 5% of your Contract Value after the withdrawal
($80,000*0.05 = $4,000). If you continued to take annual
withdrawals equal to your GAWA, it would take an additional
20 years to deplete your GWB ($80,000 / $4,000 per year = 20
years), provided that there are no further adjustments made
to your GWB or your GAWA (besides the annual reduction of
your GWB by the amount of the withdrawal).
- If your endorsement is a For Life GMWB, your GAWA is recalculated to equal $4,000, which is 5% of your new GWB ($80,000*0.05 = $4,000), and if the For Life Guarantee was effective prior to the withdrawal, it remains in effect. If you continued to take annual withdrawals equal to your GAWA, it would take an additional 20 years, prior to the Latest Income Date, to deplete your GWB ($80,000 / $4,000 per year = 20 years), provided that there are no further adjustments made to your GWB or your GAWA (besides the annual reduction of your GWB by the amount of the withdrawal). However, if your For Life Guarantee is in effect, withdrawals equal to your GAWA could continue for the rest of your life (or in the case of Joint Owners, until the first death of the Joint Owners or until the death of the last surviving Covered Life if your endorsement is a For Life GMWB with Joint Option), even beyond 20 years, prior to the Latest Income Date.
* Notes:
- If your endorsement does not include a For Life Guarantee or if the For Life Guarantee is not in effect, your GAWA would not be permitted to exceed your remaining GWB.
- Withdrawals taken in connection with a GMWB are considered the same as any other withdrawal for the purpose of determining all other values under the Contract. In the case where your minimum death benefit is reduced proportionately for withdrawals, your death benefit may be reduced by more than the amount of the withdrawal.
EXAMPLE 5: UPON STEP-UP, YOUR GWB AND GAWA ARE RE-DETERMINED.
* Example 5a: If at the time of step-up your Contract Value is $200,000, your GWB is $100,000 and your GAWA is $5,000:
- Your new GWB is recalculated to equal $200,000, which is equal to your Contract Value.
- Your GAWA for the next year is recalculated to equal $10,000, which is the greater of 1) your GAWA prior to the step-up ($5,000) or 2) 5% of your new GWB ($200,000*0.05 = $10,000).
- After step-up, if you continued to take annual withdrawals equal to your GAWA, it would take an additional 20 years to deplete your GWB ($200,000 / $10,000 per year = 20 years), provided that there are no further adjustments made to your GWB or your GAWA (besides the annual reduction of your GWB by the amount of the withdrawal). However, if you have elected a For Life GMWB and the For Life Guarantee is in effect, withdrawals equal to your GAWA could continue for the rest of your life (or in the case of Joint Owners, until the first death of the Joint Owners or until the death of the last surviving Covered Life if your endorsement is a For Life GMWB with Joint Option), even beyond 20 years, prior to the Latest Income Date.
* Example 5b: If at the time of step-up your Contract Value is $90,000, your GWB is $80,000 and your GAWA is $5,000:
- Your new GWB is recalculated to equal $90,000, which is equal to your Contract Value.
- Your GAWA for the next year remains $5,000, which is the greater of 1) your GAWA prior to the step-up ($5,000) or 2) 5% of your new GWB ($90,000*0.05 = $4,500).
- After step-up, if you continued to take annual withdrawals equal to your GAWA, it would take an additional 18 years to deplete your GWB ($90,000 / $5,000 per year = 18 years), provided that there are no further adjustments made to your GWB or your GAWA (besides the annual reduction of your GWB by the amount of the withdrawal). However, if you have elected a For Life GMWB and the For Life Guarantee is in effect, withdrawals equal to your GAWA could continue for the rest of your life (or in the case of Joint Owners, until the first death of the Joint Owners or until the death of the last surviving Covered Life if your endorsement is a For Life GMWB with Joint Option), even beyond 18 years, prior to the Latest Income Date.
* Notes:
- The election of an Owner-initiated step-up may result in an increase in the GMWB charge. If the charge does increase, a separate calculation would be recommended to establish if the step-up is a beneficial election.
- Your GWB will only automatically step up to the Contract Value if the Contract Value is greater than your GWB at the time of the automatic step-up.
EXAMPLE 6: IMPACT OF THE ORDER OF TRANSACTIONS.
* If prior to any transactions your Contract Value is $200,000, your GWB is $100,000 and you wish to step up your GWB (or your GWB is due to step up automatically) and you also wish to take a withdrawal of an amount equal to your GAWA ($5,000):
- If you request the withdrawal after the step-up, upon step-up, your GWB is set equal to $200,000, which is your Contract Value. At that time, your GAWA is recalculated and is equal to $10,000, which is the greater of 1) your GAWA prior to the step-up ($5,000) or 2) 5% of your new GWB ($200,000*0.05 = $10,000). Following the step-up and after the withdrawal of $5,000, your new GWB is $195,000, which is your GWB less the amount of the withdrawal ($200,000 - $5,000 = $195,000) and your GAWA will remain at $10,000 since the amount of the withdrawal does not exceed your GAWA. If you continued to take annual withdrawals equal to your GAWA, it would take an additional 20 years to deplete your GWB ($195,000 / $10,000 per year = 20 years), provided that there are no further adjustments made to your GWB or your GAWA (besides the annual reduction of your GWB by the amount of the withdrawal) and the amount of the final withdrawal would be less than your GAWA (and equal to your remaining GWB). However, if you have elected a For Life GMWB and the For Life Guarantee is in effect, withdrawals equal to your GAWA could continue for the rest of your life (or in the case of Joint Owners, until the first death of the Joint Owners or until the death of the last surviving Covered Life if your endorsement is a For Life GMWB with Joint Option), even beyond 20 years, prior to the Latest Income Date.
- If you requested the withdrawal prior to the step-up, immediately following the withdrawal transaction, your new GWB is $95,000, which is your GWB less the amount of the withdrawal ($100,000 - $5,000 = $95,000) and your Contract Value becomes $195,000, which is your Contract Value prior to the withdrawal less the amount of the withdrawal ($200,000 - $5,000 = $195,000). Upon step-up following the withdrawal, your GWB is set equal to $195,000, which is your Contract Value. At that time, your GAWA is recalculated and is equal to $9,750, which is the greater of 1) your GAWA prior to the step-up ($5,000) or 2) 5% of your new GWB ($195,000*0.05 = $9,750). If you continued to take annual withdrawals equal to your GAWA, it would take an additional 20 years to deplete your GWB ($195,000 / $9,750 per year = 20 years), provided that there are no further adjustments made to your GWB or your GAWA (besides the annual reduction of your GWB by the amount of the withdrawal). However, if you have elected a For Life GMWB and the For Life Guarantee is in effect, withdrawals equal to your GAWA could continue for the rest of your life (or in the case of Joint Owners, until the first death of the Joint Owners or until the death of the last surviving Covered Life if your endorsement is a For Life GMWB with Joint Option), even beyond 20 years, prior to the Latest Income Date.
* Notes:
- As the example illustrates, when considering a request for a withdrawal at or near the same time as the election or automatic application of a step-up, the order of the transactions may impact your GAWA. If the step-up would result in an increase in your GAWA and the requested withdrawal is less than or equal to your new GAWA, your GAWA resulting after the two transactions would be greater if the withdrawal is requested after the step-up is applied. If the step-up does not increase your GAWA or the withdrawal requested is greater than your new GAWA, your GAWA resulting from the transactions is the same regardless of the order of the transactions.
- This example would also apply in situations when the withdrawal exceeded your GAWA but not your permissible RMD.
- The election of an Owner-initiated step-up may result in an increase in the GMWB charge.
- Your GWB will only automatically step up to the Contract Value if the Contract Value is greater than your GWB at the time of the automatic step-up.
- If your endorsement does not include a For Life Guarantee or if the For Life Guarantee is not in effect, your GAWA would not be permitted to exceed your remaining GWB.
- Withdrawals taken in connection with a GMWB are considered the same as any other withdrawal for the purpose of determining all other values under the Contract. In the case where your minimum death benefit is reduced proportionately for withdrawals, your death benefit may be reduced by more than the amount of the withdrawal.
EXAMPLE 7: FOR LIFE GUARANTEE BECOMES EFFECTIVE AFTER THE EFFECTIVE DATE OF THE
ENDORSEMENT. AT THE TIME THE FOR LIFE GUARANTEE BECOMES EFFECTIVE, YOUR GAWA IS
RE-DETERMINED. (THIS EXAMPLE ONLY APPLIES IF YOUR ENDORSEMENT IS A FOR LIFE
GMWB.)
* Example 7a: If on the Contract Anniversary on or immediately following your 65th birthday your Contract Value is $30,000, your GWB is $50,000, and your GAWA is $5,000:
- Your GAWA for the next year is recalculated to equal $2,500, which is equal to 5% of the current GWB ($50,000*0.05 = $2,500).
- The For Life Guarantee becomes effective, thus allowing you to make annual withdrawals equal to your GAWA for the rest of your life (or in the case of Joint Owners, until the first death of the Joint Owners or until the death of the last surviving Covered Life if your endorsement is a For Life GMWB with Joint Option). Once the For Life Guarantee becomes effective, it remains in effect until the endorsement is terminated, as described in the Access to Your Money section of this prospectus, or upon continuation of the Contract by the spouse (unless your endorsement is a For Life GMWB with Joint Option and the spouse continuing the Contract is a Covered Life in which case the For Life Guarantee remains in effect upon continuation of the Contract by the spouse).
* Example 7b: If your Contract Value has fallen to $0 prior to the Contract Anniversary on or immediately following your 65th birthday, your GWB is $50,000 and your GAWA is $5,000:
- You will continue to receive automatic payments of a total annual amount that equals your GAWA until your GWB is depleted. However, your GAWA would not be permitted to exceed your remaining GWB. Your GAWA is not recalculated since the Contract Value is $0.
- The For Life Guarantee does not become effective due to the depletion of the Contract Value prior to the effective date of the For Life Guarantee.
* Example 7c: If on the Contract Anniversary on or immediately following your 65th birthday, your Contract Value is $50,000, your GWB is $0, and your GAWA is $5,000:
- Your GAWA for the next year is recalculated to equal $0, which is equal to 5% of the current GWB ($0*0.05 = $0).
- The For Life Guarantee becomes effective, thus allowing you to make annual withdrawals equal to your GAWA for the rest of your life (or in the case of Joint Owners, until the first death of the Joint Owners or until the death of the last surviving Covered Life if your endorsement is a For Life GMWB with Joint Option). Once the For Life Guarantee becomes effective, it remains in effect until the endorsement is terminated, as described in the Access to Your Money section of this prospectus, or upon continuation of the Contract by the spouse (unless your endorsement is a For Life GMWB with Joint Option and the spouse continuing the Contract is a Covered Life in which case the For Life Guarantee remains in effect upon continuation of the Contract by the spouse).
- Although your GAWA is $0, upon step-up your GWB and your GAWA would increase to values greater than $0 and since the For Life Guarantee has become effective, you could withdraw an annual amount equal to your GAWA for the rest of your life (or in the case of Joint Owners, until the first death of the Joint Owners or until the death of the last surviving Covered Life if your endorsement is a For Life GMWB with Joint Option).
* Notes:
- For endorsements with a Joint Option, your GAWA is recalculated and the For Life Guarantee becomes effective on the Contract Anniversary on or immediately following the youngest Covered Life's 65th birthday.
EXAMPLE 8: FOR LIFE GUARANTEE ON A FOR LIFE GMWB WITH JOINT OPTION. (THIS EXAMPLE ONLY APPLIES IF YOUR ENDORSEMENT IS A FOR LIFE GMWB WITH JOINT OPTION.)
* If at the time of the first death of the Covered Lives the Contract Value is $105,000, your GWB is $100,000, and your GAWA is $5,000:
- The spouse may continue the Contract and the For Life Guarantee will remain in effect or become effective on the Contract Anniversary on or immediately following the date that the youngest Covered Life attains (or would have attained) age 65. Once the For Life Guarantee becomes effective, the surviving Covered Life will be able to take annual withdrawals equal to the GAWA for the rest of his or her life.
- Your GWB remains $100,000 and your GAWA remains $5,000.
APPENDIX C
ABN AMRO Financial Services, Inc. Met Life Securities Inc.
Advest, Inc. Morgan Peabody, Inc.
A.G. Edwards & Sons, Inc. Mutual Service Corporation
American General Securities, Inc. National Planning Corporation
American Portfolios Financial Services, Inc. NFP Securities, Inc.
B. C. Ziegler & Company Ogilvie Securities
BancWest Investment Services Packerland Brokerage Services, Inc.
Blue Vase Securities, LLC PFIC Securities Corporation
Centaurus Financial Planning Corporation of America
Chevy Chase Securities, Inc. Pride Financial, LLC
Commonwealth Financial Group, Inc. Prime Capital Services, Inc.
CUSO Financial Services Pro Equities, Inc.
Ferris, Baker, Watts Incorporated Raymond James & Associates, Inc.
Fifth Third Securities, Inc. Sammons Securities Company, LLC
FNB Brokerage Services, Inc. Securities America, Inc.
Geneos Wealth Management, Inc. Securities Service Network, Inc.
Great American Advisors, Inc. Sigma Financial Corporation
G.W. Sherwold Associates, Inc. Signator Investors, Inc.
Hantz Financial Services, Inc. SII Investments, Inc.
Hibernia Investments L.L.C. Sky Insurance Inc.
ICBA Ins. Services Stifel, Nicolaus & Company, Incorporated
IFMG Securities, Inc. Talbot Financial Services, Inc.
Innovative Securities, Inc. Thrivent Financial for Lutherans
Investment Centers of America, Inc. UBOC Investment Services, Inc.
Investors Capital Corp. UVEST Financial Services Group, Inc.
Inter Securities Inc. Valmark Securities, Inc.
Invest Financial Corp. Vanderbilt Securities, LLC
Jefferson Pilot Securities Corporation Wachovia Securities, LLC
J.J.B. Hilliard, W.L. Lyons, Inc. Walnut Street Securities, Inc.
Lincoln Financial Advisors Corporation Waterstone Financial Group, Inc.
Lincoln Investment Planning, Inc. Webster Investment Services, Inc.
Linsco/Private Ledger Corp. WM Financial Services
McDonald Investments, Inc.
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QUESTIONS: If you have any questions about your Contract, you may contact us at:
ANNUITY SERVICE CENTER: 1 (800) 766-4683 (8 a.m. - 8 p.m. ET)
MAIL ADDRESS: P.O. Box 17240, Denver, Colorado 80217-0240
DELIVERY ADDRESS: 7601 Technology Way, Denver, Colorado 80237
INSTITUTIONAL MARKETING GROUP
SERVICE CENTER: 1 (800) 777-7779 (8 a.m. - 8 p.m. ET)
(for Contracts purchased through a bank
or another financial institution)
MAIL ADDRESS: P.O. Box 30392, Lansing, Michigan 48909-7892
DELIVERY ADDRESS: 1 Corporate Way, Lansing, Michigan 48951
Attn: IMG
HOME OFFICE: 1 Corporate Way, Lansing, Michigan 48951
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THE INFORMATION IN THIS STATEMENT OF ADDITIONAL INFORMATION (SAI) MAY BE
CHANGED. WE MAY NOT SELL BASED ON THIS SAI UNTIL THE REGISTRATION STATEMENT, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, IS EFFECTIVE. THIS SAI IS NOT AN OFFER TO SELL, AND IS NOT SOLICITING AN OFFER TO PURCHASE, IN ANY STATE WHERE THE OFFER OR SALE OF THESE SECURITIES IS NOT PERMITTED.
STATEMENT OF ADDITIONAL INFORMATION
DECEMBER 29, 2006
INDIVIDUAL AND GROUP MODIFIED SINGLE PREMIUM
FIXED AND VARIABLE DEFERRED ANNUITY CONTRACTS
ISSUED BY THE JACKSON NATIONAL SEPARATE ACCOUNT - I
OF JACKSON NATIONAL LIFE INSURANCE COMPANY(R)
This Statement of Additional Information (SAI) is not a prospectus. It contains information in addition to and more detailed than set forth in the Prospectus and should be read in conjunction with the Prospectus dated December 29, 2006. The Prospectus may be obtained from Jackson National Life Insurance Company by writing P.O. Box 17240, Denver, Colorado 80217-0240, or calling 1-800-766-4683.
TABLE OF CONTENTS
PAGE
General Information and History 2 Services 4 Purchase of Securities Being Offered 4 Underwriters 4 Calculation of Performance 4 Additional Tax Information 6 Annuity Provisions 17 Net Investment Factor 18 Financial Statements 19 |
GENERAL INFORMATION AND HISTORY
Jackson National Separate Account - I (Separate Account) is a separate investment account of Jackson National Life Insurance Company (Jackson National(R)). Jackson National is a wholly owned subsidiary of Brooke Life Insurance Company and is ultimately a wholly owned subsidiary of Prudential plc, London, England, a publicly traded life insurance company in the United Kingdom.
The JNL/Mellon Capital Management S&P Divisions and JNL/S&P Divisions are not sponsored, endorsed, sold or promoted by Standard & Poor's (S&P(R)), a division of The McGraw-Hill Companies, Inc. S&P makes no representation or warranty, express or implied, to the owners of the Divisions or any member of the public regarding the advisability of investing in securities generally or in the Divisions particularly or the ability of the S&P 500 Index and the S&P 400 Index to track general stock market performance. S&P's only relationship to the Separate Account (Licensee) is the licensing of certain trademarks and trade names of S&P and of the S&P 500(R) and S&P 400 Index which are determined, composed and calculated by S&P without regard to the Licensee or the Divisions. S&P has no obligation to take the needs of the Licensee or the owners of the Divisions into consideration in determining, composing or calculating the S&P 500 and S&P 400 Indexes. S&P is not responsible for and has not participated in the determination of the prices and amount of the Divisions or the timing of the issuance or sale of the Divisions or in the determination or calculation of the equation by which the Divisions are to be converted into cash. S&P has no obligation or liability in connection with the administration, marketing or trading of the Divisions.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500 INDEX AND THE S&P 400 INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE DIVISIONS, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX AND S&P 400 INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE S&P 500 INDEX AND THE S&P 400 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
Value Line Publishing, Inc.'s ("VLPI") only relationship to JNL is VLPI's licensing to JNL of certain VLPI trademarks and trade names and the Value Line Timeliness Ranking System (the "System"), which is composed by VLPI without regard to JNL, this Product or any investor. VLPI has no obligation to take the needs of JNL or any investor in the Product into consideration in composing the System. The Product results may differ from the hypothetical or published results of the Value Line Timeliness Ranking System. VLPI is not responsible for and has not participated in the determination of the prices and composition of the Product or the timing of the issuance for sale of the Product or in the calculation of the equations by which the Product is to be converted into cash.
VLPI MAKES NO WARRANTY CONCERNING THE SYSTEM, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY IMPLIED WARRANTIES ARISING FROM USAGE OF TRADE, COURSE OF DEALING OR COURSE OF PERFORMANCE, AND VLPI MAKES NO WARRANTY AS TO THE POTENTIAL PROFITS OR ANY OTHER BENEFITS THAT MAY BE ACHIEVED BY USING THE SYSTEM OR ANY INFORMATION OR MATERIALS GENERATED THEREFROM. VLPI DOES NOT WARRANT THAT THE SYSTEM WILL MEET ANY REQUIREMENTS OR THAT IT WILL BE ACCURATE OR ERROR-FREE. VLPI ALSO DOES NOT GUARANTEE ANY USES, INFORMATION, DATA OR OTHER RESULTS GENERATED FROM THE SYSTEM. VLPI HAS NO OBLIGATION OR LIABILITY (I) IN CONNECTION WITH THE ADMINISTRATION, MARKETING OR TRADING OF THE PRODUCT; OR (II) FOR ANY LOSS, DAMAGE, COST OR EXPENSE SUFFERED OR INCURRED BY ANY INVESTOR OR OTHER PERSON OR ENTITY IN CONNECTION WITH THIS PRODUCT, AND IN NO EVENT SHALL VLPI BE LIABLE FOR ANY LOST PROFITS OR OTHER CONSEQUENTIAL, SPECIAL, PUNITIVE, INCIDENTAL, INDIRECT OR EXEMPLARY DAMAGES IN CONNECTION WITH THE PRODUCT.
The Product(s) is not sponsored, endorsed, sold or promoted by The Nasdaq Stock Market, Inc. (including its affiliates) (Nasdaq, with its affiliates, are referred to as the CORPORATIONS). The Corporations have not passed on the legality or suitability of or the accuracy or adequacy of descriptions and disclosures relating to the Product(s). The Corporations make no representation or warranty, express or implied to the owners of the Product(s) or any member of the public regarding the advisability of investing in securities generally or in the Product(s) particularly, or the ability of the Nasdaq-100 Index(R) to track general stock market performance. The Corporations' only relationship to Jackson National Life Insurance Company (LICENSEE) is in the licensing of the Nasdaq-100(R), Nasdaq-100 Index(R) and Nasdaq(R) trademarks or service marks, and certain trade names of the Corporations and the use of the Nasdaq-100 Index(R) which is determined, composed and calculated by Nasdaq without regard to Licensee or the Product(s). Nasdaq has no obligation to take the needs of the Licensee or the owners of the Product(s) into consideration in determining, composing or calculating the Nasdaq-100 Index(R). The Corporations are not responsible for and have not participated in the determination of the timing of, prices at or quantities of the Product(s) to be issued or in the determination or calculation of the equation by which the Product(s) is to be converted into cash. The Corporations have no liability in connection with the administration, marketing or trading of the Product(s).
THE CORPORATIONS DO NOT GUARANTEE THE ACCURACY AND/OR UNINTERRUPTED CALCULATION OF THE NASDAQ-100 INDEX(R) OR ANY DATA INCLUDED THEREIN. THE CORPORATIONS MAKE NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE PRODUCT(S) OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE NASDAQ-100 INDEX(R) OR ANY DATA INCLUDED THEREIN. THE CORPORATIONS MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE NASDAQ-100 INDEX(R) OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL THE CORPORATIONS HAVE ANY LIABILITY FOR ANY LOST PROFITS OR SPECIAL, INCIDENTAL, PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGES, EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
"The Nasdaq-100(R)," "Nasdaq-100 Index(R)," "Nasdaq Stock Market(R)" and "Nasdaq(R)" are trade or service marks of The Nasdaq, Inc. (which with its affiliates are the "Corporations") and have been licensed for use by Jackson National Life Insurance Company. The Corporations have not passed on the legality or suitability of the JNL/Mellon Capital Management Nasdaq(R)15 Fund, the JNL/Mellon Capital Management JNL Optimized 5 Fund or the JNL/Mellon Capital Management VIP Fund. The JNL/Mellon Capital Management Nasdaq(R) 15 Fund, the JNL/Mellon Capital Management VIP Fund and the JNL/Mellon Capital Management JNL Optimized 5 Fund are not issued, endorsed, sponsored, managed, sold or promoted by the Corporations. THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE JNL/MELLON CAPITAL MANAGEMENT NASDAQ(R) 15 FUND, THE JNL/MELLON CAPITAL MANAGEMENT VIP FUND AND THE JNL/MELLON CAPITAL MANAGEMENT JNL OPTIMIZED 5 FUND.
SERVICES
Jackson National keeps the assets of the Separate Account. Jackson National holds all cash of the Separate Account and attends to the collection of proceeds of shares of the underlying Funds bought and sold by the Separate Account.
The financial statements of Jackson National Separate Account - I and Jackson National Life Insurance Company for the periods indicated have been included herein in reliance upon the reports of ___________, an independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing. Jackson National Life Insurance Company's audit report refers to the adoption effective January 1, 2004 of the Accounting Standards Executive Committee of the American Institute of Certified Public Accountant's Statement of Position 03-1, "Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts." ___________ is located at _____________.
PURCHASE OF SECURITIES BEING OFFERED
The Contracts will be sold by licensed insurance agents in states where the Contracts may be lawfully sold. The agents will be registered representatives of broker-dealers that are registered under the Securities Exchange Act of 1934 and members of the National Association of Securities Dealers, Inc. (NASD).
UNDERWRITERS
The Contracts are offered continuously and are distributed by Jackson National Life Distributors LLC (JNLD), 7601 Technology Way, Denver, Colorado 80237. JNLD is a subsidiary of Jackson National.
We expect to compensate broker/dealers selling the Contracts.
CALCULATION OF PERFORMANCE
When Jackson National advertises performance for an Investment Division (except the JNL/Select Money Market Division), we will include quotations of standardized average annual total return to facilitate comparison with standardized average annual total return advertised by other variable annuity separate accounts. Standardized average annual total return for an Investment Division will be shown for periods beginning on the date the Investment Division first invested in the corresponding Funds. We will calculate standardized average annual total return according to the standard methods prescribed by rules of the Securities and Exchange Commission.
Standardized average annual total return for a specific period is calculated by taking a hypothetical $1,000 investment in an Investment Division at the offering on the first day of the period ("initial investment") and computing the average annual compounded rate of return for the period that would equate the initial investment with the ending redeemable value ("redeemable value") of that investment at the end of the period, carried to at least the nearest hundredth of a percent. Standardized average annual total return reflects the deduction of all recurring charges that are charged to all Contracts. The redeemable value also reflects the effect of any applicable withdrawal charge or other charge that may be imposed at the end of the period. No deduction is made for premium taxes that may be assessed by certain states.
Jackson National may also advertise non-standardized total return on an annualized and cumulative basis. Non-standardized total return may be for periods other than those required to be presented or may otherwise differ from standardized average annual total return. The Contract is designed for long-term investment; therefore, Jackson National believes that non-standardized total return that does not reflect the deduction of any applicable withdrawal charge may be useful to investors. Reflecting the deduction of the withdrawal charge decreases the level of performance advertised. Non-standardized total return may also assume a larger initial investment that more closely approximates the size of a typical Contract.
Standardized average annual total return quotations will be current to the last day of the calendar quarter preceding the date on which an advertisement is submitted for publication. Both standardized average annual total return quotations and non-standardized total return quotations will be based on rolling calendar quarters and will cover at least periods of one, five, and ten years, or a period covering the time the Investment Division has been in existence, if it has not been in existence for one of the prescribed periods.
Quotations of standardized average annual total return and non-standardized total return are based upon historical earnings and will fluctuate. Any quotation of performance should not be considered a guarantee of future performance. Factors affecting the performance of an Investment Division and its corresponding Fund include general market conditions, operating expenses and investment management. An owner's withdrawal value upon surrender of a Contract may be more or less than its original cost.
Jackson National may advertise the current annualized yield for a 30-day period for an Investment Division. The annualized yield of an Investment Division refers to the income generated by the Investment Division over a specified 30-day period. Because this yield is annualized, the yield generated by an Investment Division during the 30-day period is assumed to be generated each 30-day period. The yield is computed by dividing the net investment income per accumulation unit earned during the period by the price per unit on the last day of the period, according to the following formula:
YIELD = 2 [( --- + 1) -1]
Where:
a = net investment income earned during the period by the Fund attributable
to shares owned by the Investment Division.
b = expenses for the Investment Division accrued for the period (net of
reimbursements).
c = the average daily number of accumulation units outstanding during the
period.
d = the maximum offering price per accumulation unit on the last day of the
period.
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The maximum withdrawal charge is 5%.
Net investment income will be determined in accordance with rules established by the Securities and Exchange Commission. Accrued expenses will include all recurring fees that are charged to all Contracts.
Because of the charges and deductions imposed by the Separate Account, the yield for an Investment Division will be lower than the yield for the corresponding Funds. The yield on amounts held in the Investment Division normally will fluctuate over time. Therefore, the disclosed yield for any given period is not an indication or representation of future yields or rates of return. An Investment Division's actual yield will be affected by the types and quality of portfolio securities held by the Fund and the Fund operating expenses.
Any current yield quotations of the JNL/Select Money Market Division will consist of a seven calendar day historical yield, carried at least to the nearest hundredth of a percent. We may advertise yield for the Division based on different time periods, but we will accompany it with a yield quotation based on a seven calendar day period. The JNL/Select Money Market Division's yield will be calculated by determining the net change, exclusive of capital changes, in the value of a hypothetical pre-existing account having a balance of one accumulation unit at the beginning of the base period, subtracting a hypothetical charge reflecting deductions from Contracts, and dividing the net change in account value by the value of the account at the beginning of the period to obtain a base period return and multiplying the base period return by (365/7). The JNL/Select Money Market Division's effective yield is computed similarly but includes the effect of assumed compounding on an annualized basis of the current yield quotations of the Division.
The JNL/Select Money Market Division's and effective yield will fluctuate daily. Actual yields will depend on factors such as the type of instruments in the Fund's portfolio, portfolio quality and average maturity, changes in interest rates, and the Fund's expenses. Although the Investment Division determines its yield on the basis of a seven calendar day period, it may use a different time period on occasion. The yield quotes may reflect the expense limitations described in the Fund's Prospectus or Statement of Additional Information. There is no assurance that the yields quoted on any given occasion will be maintained for any period of time and there is no guarantee that the net asset values will remain constant. It should be noted that neither a Contract owner's investment in the JNL/Select Money Market Division nor that Division's investment in the JNL/Select Money Market Division is guaranteed or insured. Yields of other money market Funds may not be comparable if a different base or another method of calculation is used.
ADDITIONAL TAX INFORMATION
NOTE: INFORMATION CONTAINED HEREIN SHOULD NOT BE SUBSTITUTED FOR THE ADVICE OF A PERSONAL TAX ADVISER. JACKSON NATIONAL DOES NOT MAKE ANY GUARANTEE REGARDING THE TAX STATUS OF ANY CONTRACT OR ANY TRANSACTION INVOLVING THE CONTRACTS. PURCHASERS BEAR THE COMPLETE RISK THAT THE CONTRACTS MAY NOT BE TREATED AS "ANNUITY CONTRACTS" UNDER FEDERAL INCOME TAX LAWS. IT SHOULD BE FURTHER UNDERSTOOD THAT THE FOLLOWING DISCUSSION IS NOT EXHAUSTIVE AND THAT OTHER SPECIAL RULES MAY BE APPLICABLE IN CERTAIN SITUATIONS. MOREOVER, NO ATTEMPT HAS BEEN MADE TO CONSIDER ANY APPLICABLE STATE OR OTHER TAX LAWS OR TO COMPARE THE TAX TREATMENT OF THE CONTRACTS TO THE TAX TREATMENT OF ANY OTHER INVESTMENT.
JACKSON NATIONAL'S TAX STATUS
Jackson National is taxed as a life insurance company under the Code. For federal income tax purposes, the Separate Account is not a separate entity from Jackson National and its operations form a part of Jackson National.
TAXATION OF ANNUITY CONTRACTS IN GENERAL
Section 72 of the Internal Revenue Code of 1986, as amended (the "Code"), governs taxation of annuities in general. An individual owner is not taxed on increases in the value of a Contract until distribution occurs, either in the form of a withdrawal or as annuity payments under the annuity option elected. For a withdrawal received as a total surrender (total redemption or a death benefit), the recipient is taxed on the portion of the payment that exceeds the cost basis of the Contract. For a payment received as a partial withdrawal from a non-qualified Contract, federal tax liability is generally determined on a last-in, first-out basis, meaning taxable income is withdrawn before the cost basis of the Contract is withdrawn. In the case of a partial withdrawal under a tax-qualified Contract, a ratable portion of the amount received is taxable. For Contracts issued in connection with non-qualified plans, the cost basis is generally the premiums, while for Contracts issued in connection with tax-qualified plans there may be no cost basis. The taxable portion of a withdrawal is taxed at ordinary income tax rates. Tax penalties may also apply.
For annuity payments, a portion of each payment in excess of an exclusion amount is includable in taxable income. All annuity payments in excess of the exclusion amount are fully taxable at ordinary income rates.
The exclusion amount for payments based on a fixed annuity option is determined by multiplying the payment by the ratio that the cost basis of the Contract (adjusted for any period certain or refund feature) bears to the expected return under the Contract. The exclusion amount for payments based on a variable annuity option is determined by dividing the cost basis of the Contract (adjusted for any period certain or refund guarantee) by the fixed or estimated number of years for which annuity payments are to be made. No exclusion is allowed with respect to any payments received after the investment in the Contract has been recovered (i.e., when the total of the excludable amounts equals the investment in the Contract). For certain types of tax-qualified plans there may be no cost basis in the Contract within the meaning of Section 72 of the Code. Owners, annuitants and beneficiaries under the Contracts should seek competent financial advice about the tax consequences of distributions.
WITHHOLDING TAX ON DISTRIBUTIONS
The Code generally requires Jackson National (or, in some cases, a plan administrator) to withhold tax on the taxable portion of any distribution or withdrawal from a Contract. For "eligible rollover distributions" from Contracts issued under certain types of tax-qualified plans, 20% of the distribution must be withheld, unless the payee elects to have the distribution "rolled over" to another eligible plan in a direct transfer. This requirement is mandatory and cannot be waived by the owner.
An "eligible rollover distribution" is the taxable portion of any amount received by a covered employee from a plan qualified under Section 401(a) or 403(a) of the Code, from a tax sheltered annuity qualified under Section 403(b) of the Code or an eligible deferred compensation plan of a state or local government under Section 457(b) of the Code (other than (1) a series of substantially equal periodic payments (not less frequently than annually) for the life (or life expectancy) of the employee, or joint lives (or joint life expectancies) of the employee, and his or her designated beneficiary, or for a specified period of ten years or more; (2) minimum distributions required to be made under the Code; and (3) hardship withdrawals). Failure to "roll over" the entire amount of an eligible rollover distribution (including the amount equal to the 20% portion of the distribution that was withheld) could have adverse tax consequences, including the imposition of a penalty tax on premature withdrawals, described later in this section.
Withdrawals or distributions from a Contract other than eligible rollover distributions are also subject to withholding on the taxable portion of the distribution, but the owner may elect in such cases to waive the withholding requirement. If not waived, withholding is imposed (1) for periodic payments, at the rate that would be imposed if the payments were wages, or (2) for other distributions, at the rate of 10%. If no withholding exemption certificate is in effect for the payee, the rate under (1) above is computed by treating the payee as a married individual claiming three withholding exemptions.
Generally, the amount of any payment of interest to a non-resident alien of the United States shall be subject to withholding of a tax equal to 30% of such amount or, if applicable, a lower treaty rate. A payment may not be subject to withholding where the recipient sufficiently establishes that such payment is effectively connected to the recipient's conduct of a trade or business in the United States and such payment is included in the recipient's gross income.
DIVERSIFICATION -- SEPARATE ACCOUNT INVESTMENTS
Section 817(h) of the Code imposes certain asset diversification standards on variable annuity Contracts. The Code provides that a variable annuity Contract will not be treated as an annuity Contract for any period (and any subsequent period) for which the investments held in any segregated asset account underlying the Contract are not adequately diversified, in accordance with regulations prescribed by the United States Treasury Department ("Treasury Department"). Disqualification of the Contract as an annuity Contract would result in imposition of federal income tax to the owner with respect to earnings allocable to the Contract prior to the receipt of payments under the Contract. The Code contains a safe harbor provision which provides that annuity Contracts, such as the Contracts, meet the diversification requirements if, as of the last day of each calendar quarter, or within 30 days after such last day, the underlying assets meet the diversification standards for a regulated investment company and no more than 55% of the total assets consist of cash, cash items, U.S. government securities and securities of other regulated investment companies.
The Treasury Department has issued Regulations establishing diversification requirements for the mutual Funds underlying variable Contracts. These Regulations amplify the diversification requirements for variable Contracts set forth in the Code and provide an alternative to the safe harbor provision described above. Under these Regulations, a mutual Fund will be deemed adequately diversified if (1) no more than 55% of the value of the total assets of the mutual Fund is represented by any one investment; (2) no more than 70% of the value of the total assets of the mutual Fund is represented by any two investments; (3) no more than 80% of the value of the total assets of the mutual Fund is represented by any three investments; and (4) no more than 90% of the value of the total assets of the mutual Fund is represented by any four investments.
Jackson National intends that each Fund of the JNL Series Trust will be managed by its respective investment adviser in such a manner as to comply with these diversification requirements.
At the time the Treasury Department issued the diversification Regulations, it did not provide guidance regarding the circumstances under which Contract owner control of the investments of a segregated asset account would cause the Contract owner to be treated as the owner of the assets of the segregated asset account. Revenue Ruling 2003-91 provides such guidance by describing the circumstances under which the owner of a variable contract will not possess sufficient control over the assets underlying the contract to be treated as the owner of those assets for federal income tax purposes.
Rev. Rul. 2003-91 considered certain variable annuity and variable life insurance contracts and held that the types of actual and potential control that the contract owners could exercise over the investment assets held by the insurance company under these variable contracts was not sufficient to cause the contract owners to be treated as the owners of those assets and thus to be subject to current income tax on the income and gains produced by those assets. Under the contracts in Rev. Rul. 2003-91 there was no arrangement, plan, contract or agreement between the contract owner and the insurance company regarding the availability of a particular investment option and other than the contract owner's right to allocate premiums and transfer funds among the available sub-accounts, all investment decisions concerning the sub-accounts were made by the insurance company or an advisor in its sole and absolute discretion. Twelve investment options were available under the contracts in Rev. Rul. 2003-91 although the insurance company had the right to increase (but to no more than 20) or decrease the number of sub-accounts at any time. The contract owner was permitted to transfer amounts among the various investment options without limitation, subject to incurring fees for more than one transfer per 30-day period.
Like the contracts described in Rev. Rul. 2003-91, under the Contract there will be no arrangement, plan, contract or agreement between a Contract owner and Jackson National regarding the availability of a particular Allocation Option and other than the Contract owner's right to allocate premiums and transfer funds among the available Allocation Options, all investment decisions concerning the Allocation Options will be made by Jackson National or an advisor in its sole and absolute discretion. The Contract will differ from the contracts described in Rev. Rul. 2003-91 in two respects. The first difference is that the contracts described in Rev. Rul. 2003-91 provided only 12 investment options with the insurance company having the ability to add an additional 8 options whereas the Contract offers __ Investment Divisions and 4 Fixed Account options although a Contract owner can select no more than 18 Allocation Options at any one time. The second difference is that the owner of a contract in Rev. Rul. 2003-91 could only make one transfer per 30-day period without a fee whereas during the accumulation phase, a Contract owner can make 15 transfers in any one year without a charge.
Rev. Rul. 2003-91 states that whether the owner of a variable contract is to be treated as the owner of the assets held by the insurance company under the contract will depend on all of the facts and circumstances. Jackson National does not believe that the differences between the Contract and the contracts described in Rev. Rul. 2003-91 with respect to the number of investment choices and the number of investment transfers that can be made under the Contract without an additional charge should prevent the holding in Rev. Rul. 2003-91 from applying to the owner of a Contract. At this time, however, it cannot be determined whether additional guidance will be provided by the IRS on this issue and what standards may be contained in such guidance. Jackson National reserves the right to modify the Contract to the extent required to maintain favorable tax treatment.
MULTIPLE CONTRACTS
The Code provides that multiple non-qualified annuity Contracts that are issued within a calendar year to the same Contract owner by one company or its affiliates are treated as one annuity Contract for purposes of determining the tax consequences of any distribution. Such treatment may result in adverse tax consequences including more rapid taxation of the distributed amounts from such multiple Contracts. For purposes of this rule, Contracts received in a Section 1035 exchange will be considered issued in the year of the exchange. Owners should consult a tax adviser prior to purchasing more than one annuity Contract in any calendar year.
PARTIAL 1035 EXCHANGES
Section 1035 of the Code provides that an annuity Contract may be exchanged in a tax-free transaction for another annuity Contract. Historically, it was presumed that only the exchange of an entire Contract, as opposed to a partial exchange, would be accorded tax-free status. In 1998, in CONWAY VS. COMMISSIONER, the Tax Court held that the direct transfer of a portion of an annuity Contract into another annuity Contract qualified as a non-taxable exchange. In response to the CONWAY decision, the IRS issued Notice 2003-51 announcing that pending the publication of final regulations, the IRS will consider all the facts and circumstances, using general principles of tax law, to determine whether a partial exchange and a subsequent withdrawal from, or surrender of, either the surviving annuity contract or the new annuity contract within 24 months of the date on which the partial exchange was completed should be treated as an integrated transaction. In the absence of further guidance from the Internal Revenue Service it is unclear what specific types of partial exchange designs and transactions will be challenged by the Internal Revenue Service. Due to the uncertainty in this area owners should consult their own tax advisers prior to entering into a partial exchange of an annuity Contract.
CONTRACTS OWNED BY OTHER THAN NATURAL PERSONS
Under Section 72(u) of the Code, the investment earnings on premiums for Contracts will be taxed currently to the owner if the owner is a non-natural person, e.g., a corporation or certain other entities. Such Contracts generally will not be treated as annuities for federal income tax purposes (except for the taxation of life insurance companies). However, this treatment is not applied to Contracts held by a trust or other entity as an agent for a natural person nor to Contracts held by certain tax-qualified plans. Purchasers should consult their own tax counsel or other tax adviser before purchasing a Contract to be owned by a non-natural person.
TAX TREATMENT OF ASSIGNMENTS
An assignment or pledge of a Contract may have tax consequences. Any assignment or pledge of a tax-qualified Contract may also be prohibited by ERISA in some circumstances. Owners should, therefore, consult competent legal advisers should they wish to assign or pledge their Contracts.
An assignment or pledge of all or any portion of the value of a Non-Qualified Contract is treated under Section 72 of the Code as an amount not received as an annuity. The value of the Contract assigned or pledged that exceeds the aggregate premiums paid will be included in the individual's gross income. In addition, the amount included in the individual's gross income could also be subject to the 10% penalty tax discussed below under Non-Qualified Contracts.
An assignment or pledge of all or any portion of the value of a Qualified Contract will disqualify the Qualified Contract. If the Qualified Contract is part of a qualified pension or profit-sharing plan, the Code prohibits the assignment or alienation of benefits provided under the plan. If the Qualified Contract is an IRA annuity or a 403(b) annuity, the Code requires the Qualified Contract to be nontransferable. If the Qualified Contract is part of an eligible deferred compensation plan, amounts cannot be made available to plan participants or beneficiaries: (1) until the calendar year in which the participant attains age 70 1/2; (2) when the participant has a severance from employment; or (3) when the participant is faced with an unforeseeable emergency.
DEATH BENEFITS
Any death benefits paid under the Contract are taxable to the beneficiary. The rules governing the taxation of payments from an annuity Contract, as discussed above, generally apply to the payment of death benefits and depend on whether the death benefits are paid as a lump sum or as annuity payments. Estate or gift taxes may also apply.
TAX-QUALIFIED PLANS
The Contracts offered by the Prospectus are designed to be suitable for use under various types of tax-qualified plans. Taxation of owners of a tax-qualified Contract will vary based on the type of plan and the terms and conditions of each specific plan. Owners, annuitants and beneficiaries are cautioned that benefits under a tax-qualified Contract may be subject to the terms and conditions of the plan, regardless of the terms and conditions of the Contracts issued to fund the plan. Owners, annuitant and beneficiaries are also reminded that a tax-qualified Contract will not provide any necessary or additional tax deferral if it is used to fund a tax-qualified plan that is already tax-deferred.
TAX TREATMENT OF WITHDRAWALS
NON-QUALIFIED CONTRACTS
Section 72 of the Code governs treatment of distributions from annuity Contracts. It provides that if the Contract value exceeds the aggregate premiums made, any amount withdrawn not in the form of an annuity payment will be treated as coming first from the earnings and then, only after the income portion is exhausted, as coming from the principal. Withdrawn earnings are included in a taxpayer's gross income. Section 72 further provides that a 10% penalty will apply to the income portion of any distribution. The penalty is not imposed on amounts received: (1) after the taxpayer reaches 59 1/2; (2) upon the death of the owner; (3) if the taxpayer is totally disabled as defined in Section 72(m)(7) of the Code; (4) in a series of substantially equal periodic payments made at least annually for the life (or life expectancy) of the taxpayer or for the joint lives (or joint life expectancies) of the taxpayer and his beneficiary; (5) under an immediate annuity; or (6) which are allocable to premium payments made prior to August 14, 1982.
With respect to (4) above, if the series of substantially equal periodic payments is modified before the later of your attaining age 59 1/2 or five years from the date of the first periodic payment, then the tax for the year of the modification is increased by an amount equal to the tax which would have been imposed (the 10% penalty tax) but for the exception, plus interest for the tax years in which the exception was used.
TAX-QUALIFIED CONTRACTS
In the case of a withdrawal under a tax-qualified Contract, a ratable portion of the amount received is taxable, generally based on the ratio of the individual's cost basis to the individual's total accrued benefit under the retirement plan. Special tax rules may be available for certain distributions from a tax-qualified Contract. Section 72(t) of the Code imposes a 10% penalty tax on the taxable portion of any distribution from qualified retirement plans, including Contracts issued and qualified under Code Sections 401 (pension and profit sharing plans), 403(b) (tax-sheltered annuities), individual retirement accounts and annuities under 408(a) and (b) (IRAs) and Roth IRAs under 408A. To the extent amounts are not included in gross income because they have been rolled over to an IRA or to another eligible qualified plan, no tax penalty will be imposed.
The tax penalty will not apply to the following distributions: (1) distributions
made on or after the date on which the owner or annuitant (as applicable)
reaches age 59 1/2; (2) distributions following the death or disability of the
owner or annuitant (as applicable) (for this purpose "disability" is defined in
Section 72(m)(7) of the Code); (3) upon separation from service after attainment
of age 55, distributions that are part of a series of substantially equal
periodic payments made not less frequently than annually for the life (or life
expectancy) of the owner or annuitant (as applicable) or the joint lives (or
joint life expectancies) of such owner or annuitant (as applicable) and his or
her designated beneficiary; (4) distributions to an owner or annuitant (as
applicable) who has separated from service after he has attained age 55; (5)
distributions made to the owner or annuitant (as applicable) to the extent such
distributions do not exceed the amount allowable as a deduction under Code
Section 213 to the owner or annuitant (as applicable) for amounts paid during
the taxable year for medical care; (6) distributions made to an alternate payee
pursuant to a qualified domestic relations order; (7) distributions made on
account of an IRS levy upon the qualified Contracts; (8) distributions from an
IRA after separation from employment for the purchase of medical insurance (as
described in Section 213(d)(1)(D) of the Code) for the Contract owner or
annuitant (as applicable) and his or her spouse and dependents if the Contract
owner or annuitant (as applicable) has received unemployment compensation for at
least 12 weeks (this exception will no longer apply after the Contract owner or
annuitant (as applicable) has been re-employed for at least 60 days); (9)
distributions from an IRA made to the owner or annuitant (as applicable) to the
extent such distributions do not exceed the qualified higher education expenses
(as defined in Section 72(t)(7) of the Code) (as applicable) for the taxable
year; and (10) distributions from an IRA made to the owner or annuitant (as
applicable) which are qualified first time home buyer distributions (as defined
in Section 72(t)(8) of the Code). The exceptions stated in items (4) and (6)
above do not apply in the case of an IRA. The exception stated in (3) above
applies to an IRA without the requirement that there be a separation from
service.
With respect to (3) above, if the series of substantially equal periodic payments is modified before the later of your attaining age 59 1/2 or five years from the date of the first periodic payment, then the tax for the year of the modification is increased by an amount equal to the tax which would have been imposed (the 10% penalty tax) but for the exception, plus interest for the tax years in which the exception was used.
Withdrawals of amounts attributable to contributions made pursuant to a salary reduction agreement (in accordance with Section 403(b)(11) of the Code) are limited to the following: when the owner attains age 59 1/2, severs employment, dies, becomes disabled (within the meaning of Section 72(m)(7) of the Code), or in the case of hardship. Hardship withdrawals do not include any earnings on salary reduction contributions. These limitations on withdrawals apply to: (1) salary reduction contributions made after December 31, 1988; (2) income attributable to such contributions; and (3) income attributable to amounts held as of December 31, 1988. The limitations on withdrawals do not affect rollovers or exchanges between certain tax-qualified plans. Tax penalties may also apply. While the foregoing limitations only apply to certain Contracts issued in connection with Section 403(b) plans, all owners should seek competent tax advice regarding any withdrawals or distributions.
The taxable portion of a withdrawal or distribution from tax-qualified Contracts may, under some circumstances, be "rolled over" into another eligible plan so as to continue to defer income tax on the taxable portion. Such treatment is available for an "eligible rollover distribution" made by certain types of plans (as described above under "Taxes - Withholding Tax on Distributions") that is transferred within 60 days of receipt into another eligible plan or an IRA. Plans making such eligible rollover distributions are also required, with some exceptions specified in the Code, to provide for a direct transfer of the distribution to the transferee plan designated by the recipient.
Amounts received from IRAs may also be rolled over into other IRAs or certain other plans, subject to limitations set forth in the Code.
Prior to the date that annuity payments begin under an annuity Contract, the required minimum distribution rules applicable to defined contribution plans and IRAs will be used. Generally, distributions from a tax-qualified plan must commence no later than April 1 of the calendar year following the year in which the employee attains the later of age 70 1/2 or the date of retirement. In the case of an IRA, distributions must commence no later than April 1 of the calendar year following the year in which the owner attains age 70 1/2. Required distributions from defined contribution plans and IRAs are determined by dividing the account balance by the appropriate distribution period found in a uniform lifetime distribution table set forth in IRS regulations. For this purpose, the entire interest under an annuity Contract is the account value under the Contract plus the actuarial value of any other benefits such as guaranteed death benefits that will be provided under the Contract.
If the sole beneficiary is the Contract holder's or employee's spouse and the spouse is more than 10 years younger than the employee, a longer distribution period measured by the joint life and last survivor expectancy of the Contract holder employee and spouse is permitted to be used. Distributions under a defined benefit plan or an annuity Contract must be paid in the form of periodic annuity payments for the employee's life (or the joint lives of the employee and beneficiary) or over a period certain that does not exceed the period under the uniform lifetime table for the employee's age in the year in which the annuity starting date occurs. If the required minimum distributions are not made, a 50% penalty tax on the amount not distributed is imposed on the individual.
TYPES OF TAX-QUALIFIED PLANS
The Contracts offered herein are designed to be suitable for use under various types of tax-qualified plans. Taxation of participants in each tax-qualified plan varies with the type of plan and terms and conditions of each specific plan. Owners, annuitants and beneficiaries are cautioned that benefits under a tax-qualified plan may be subject to the terms and conditions of the plan regardless of the terms and conditions of the Contracts issued pursuant to the plan. Some retirement plans are subject to distribution and other requirements that are not incorporated into Jackson National's administrative procedures. Jackson National is not bound by the terms and conditions of such plans to the extent such terms conflict with the terms of a Contract, unless Jackson National specifically consents to be bound. Owners, annuitants and beneficiaries are responsible for determining that contributions, distributions and other transactions with respect to the Contracts comply with applicable law.
A tax-qualified Contract will not provide any necessary or additional tax deferral if it is used to fund a tax-qualified plan that is tax deferred. However, the Contract has features and benefits other than tax deferral that may make it an appropriate investment for a tax-qualified plan. Following are general descriptions of the types of tax-qualified plans with which the Contracts may be used. Such descriptions are not exhaustive and are for general informational purposes only. The tax rules regarding tax-qualified plans are very complex and will have differing applications depending on individual facts and circumstances. Each purchaser should obtain competent tax advice prior to purchasing a Contract issued under a tax-qualified plan.
Contracts issued pursuant to tax-qualified plans include special provisions restricting Contract provisions that may otherwise be available as described herein. Generally, Contracts issued pursuant to tax-qualified plans are not transferable except upon surrender or annuitization. Various penalty and excise taxes may apply to contributions or distributions made in violation of applicable limitations. Furthermore, certain withdrawal penalties and restrictions may apply to surrenders from Tax-Qualified Contracts. (See "Tax Treatment of Withdrawals - Tax-Qualified Contracts" above.)
On July 6, 1983, the Supreme Court decided in ARIZONA GOVERNING COMMITTEE V. NORRIS that benefits provided under an employer's deferred compensation plan could not, under Title VII of the Civil Rights Act of 1964, vary between men and women. The Contracts sold by Jackson National in connection with certain Tax-Qualified Plans will utilize tables that do not differentiate on the basis of sex. Such annuity tables will also be available for use in connection with certain non-qualified deferred compensation plans.
(a) Tax-Sheltered Annuities
Section 403(b) of the Code permits the purchase of "tax-sheltered annuities" by public schools and certain charitable, educational and scientific organizations described in Section 501(c)(3) of the Code. These qualifying employers may make contributions to the Contracts for the benefit of their employees. Such contributions are not included in the gross income of the employee until the employee receives distributions from the Contract. The amount of contributions to the tax-sheltered annuity is limited to certain maximums imposed by the Code. Furthermore, the Code sets forth additional restrictions governing such items as transferability, distributions, non-discrimination and withdrawals. Employee loans are not allowed under these Contracts. Any employee should obtain competent tax advice as to the tax treatment and suitability of such an investment.
(b) Individual Retirement Annuities
Section 408(b) of the Code permits eligible individuals to contribute to an individual retirement program known as an "individual retirement annuity" ("IRA annuity"). Under applicable limitations, certain amounts may be contributed to an IRA annuity that will be deductible from the individual's gross income. IRA annuities are subject to limitations on eligibility, contributions, transferability and distributions. Sales of IRA annuities are subject to special requirements imposed by the Code, including the requirement that certain informational disclosure be given to persons desiring to establish an IRA. Purchasers of Contracts to be qualified as IRA annuities should obtain competent tax advice as to the tax treatment and suitability of such an investment.
(c) Roth IRA Annuities
Section 408A of the Code provides that individuals may purchase a non-deductible IRA annuity, known as a Roth IRA annuity. Purchase payments for Roth IRA annuities are limited to a maximum of $2,000 per year and are not deductible from taxable income. The Economic Growth & Tax Relief Reconciliation Act of 2001 (the "Act") increases the maximum annual dollar limitation limit for IRA contributions (including Roth IRA contributions) from $2,000 to $3,000 for calendar years 2002 through 2004; $4,000 for calendar years 2005 through 2007; and $5,000 for 2008. After 2008, the limit will be adjusted annually for inflation in $500 increments. In addition, the Act allows individuals age 50 and older to make additional catch-up IRA contributions. The otherwise maximum contribution limit (before application of adjusted gross income phase-out limits) for an individual who had celebrated his or her 50th birthday before the end of the tax year is increased by $500 for 2002 through 2005 and $1,000 for 2006 and later.
Lower maximum limitations apply to individuals with adjusted gross incomes between $95,000 and $110,000 in the case of single taxpayers, between $150,000 and $160,000 in the case of married taxpayers filing joint returns, and between $0 and $10,000 in the case of married taxpayers filing separately.
An overall $2,000 annual limitation (increased as discussed above) continues to apply to all of a taxpayer's IRA annuity contributions, including Roth IRA annuities and non-Roth IRA annuities.
Qualified distributions from Roth IRA annuities are free from federal income tax. A qualified distribution requires that the individual has held the Roth IRA annuity for at least five years and, in addition, that the distribution is made either after the individual reaches age 59 1/2, on the individual's death or disability, or as a qualified first-time home purchase, subject to a $10,000 lifetime maximum, for the individual, a spouse, child, grandchild, or ancestor. Any distribution that is not a qualified distribution is taxable to the extent of earnings in the distribution. Distributions are treated as made from contributions first and therefore no distributions are taxable until distributions exceed the amount of contributions to the Roth IRA annuity. The 10% penalty tax and the regular IRA annuity exceptions to the 10% penalty tax apply to taxable distributions from Roth IRA annuities.
Amounts may be rolled over from one Roth IRA annuity to another Roth IRA annuity. Furthermore, an individual may make a rollover contribution from a non-Roth IRA annuity to a Roth IRA annuity, unless the individual has adjusted gross income over $100,000 or the individual is a married taxpayer filing a separate return. The individual must pay tax on any portion of the IRA annuity being rolled over that would be included in income if the distributions were not rolled over. There are no similar limitations on rollovers from one Roth IRA annuity to another Roth IRA annuity.
(d) Pension and Profit-Sharing Plans
The Internal Revenue Code permits employers, including self-employed individuals, to establish various types of qualified retirement plans for employees. These retirement plans may permit the purchase of the Contracts to provide benefits under the plan. Contributions to the plan for the benefit of employees will not be included in the gross income of the employee until distributed from the plan. The tax consequences to owners may vary depending upon the particular plan design. However, the Code places limitations on all plans on such items as amount of allowable contributions; form, manner and timing of distributions; vesting and non-forfeitability of interests; nondiscrimination in eligibility and participation; and the tax treatment of distributions, transferability of benefits, withdrawals and surrenders. Purchasers of Contracts for use with pension or profit sharing plans should obtain competent tax advice as to the tax treatment and suitability of such an investment.
(e) Eligible Deferred Compensation Plans - Section 457
Under Code provisions, employees and independent Contractors performing services for state and local governments and other tax-exempt organizations may participate in eligible deferred compensation plans under Section 457 of the Code. The amounts deferred under a Plan that meets the requirements of Section 457 of the Code are not taxable as income to the participant until paid or otherwise made available to the participant or beneficiary. As a general rule, the maximum amount that can be deferred in any one year is the lesser of 100% of the participant's includible compensation or the elective deferral limitation. The Act increases the dollar limit on deferrals to conform to the elective deferral limitation. The Act also increases the elective deferral limitation to $11,000 for 2002 and in $1,000 annual increments thereafter until it reaches $15,000 in 2006. The limit is indexed for inflation after that in $500 increments. In addition, the Act allows individuals in eligible deferred compensation plans of state or local governments age 50 and older to make additional catch-up contributions. The otherwise maximum contribution limit for an individual who had celebrated his or her 50th birthday before the end of the tax year is increased by $1,000 for 2002 and by additional $1,000 increments through 2006, when the catch-up contribution will be $5,000.
The same contribution and catch-up contributions are also available for participants in qualified pension and profit-sharing plans and tax-sheltered annuities under Section 403(b) of the Code.
In limited circumstances, the plan may provide for additional catch-up contributions in each of the last three years before normal retirement age. Furthermore, the Code provides additional requirements and restrictions regarding eligibility and distributions.
All of the assets and income of an eligible deferred compensation plan established by a governmental employer must be held in trust for the exclusive benefit of participants and their beneficiaries. For this purpose, custodial accounts and certain annuity Contracts are treated as trusts. The requirement of a trust does not apply to amounts under a Plan of a tax-exempt (non-governmental) employer. In addition, the requirement of a trust does not apply to amounts under a Plan of a governmental employer if the Plan is not an eligible plan within the meaning of Section 457(b) of the Code. In the absence of such a trust, amounts under the plan will be subject to the claims of the employer's general creditors.
In general, distributions from a Plan are prohibited under Section 457 of the Code unless made after the participant:
* attains age 70 1/2,
* severs employment,
* dies, or
* suffers an unforeseeable financial emergency as defined in the regulations.
Under present federal tax law, amounts accumulated in a Plan of a tax-exempt (non-governmental) employer under Section 457 of the Code cannot be transferred or rolled over on a tax-deferred basis except for certain transfers to other Plans under Section 457. Amounts accumulated in a Plan of a state or local government employer may be transferred or rolled over to another eligible deferred compensation plan of a state or local government, an IRA, a qualified pension or profit-sharing plan or a tax-sheltered annuity under Section 403(b) of the Code.
ANNUITY PROVISIONS
VARIABLE ANNUITY PAYMENT
The initial annuity payment is determined by taking the Contract value allocated to that Investment Division, less any premium tax and any applicable Contract charges, and then applying it to the income option table specified in the Contract. The appropriate rate must be determined by the sex (except where, as in the case of certain Qualified Plans and other employer-sponsored retirement plans, such classification is not permitted) and age of the annuitant and designated second person, if any.
The dollars applied are divided by 1,000 and the result multiplied by the appropriate annuity factor appearing in the table to compute the amount of the first monthly payment. That amount is divided by the value of an annuity unit as of the Income Date to establish the number of annuity units representing each variable payment. The number of annuity units determined for the first variable payment remains constant for the second and subsequent monthly variable payments, assuming that no reallocation of Contract values is made.
The amount of the second and each subsequent monthly variable payment is determined by multiplying the number of annuity units by the annuity unit value as of the business day next preceding the date on which each payment is due.
The mortality and expense experience will not adversely affect the dollar amount of the variable annuity payments once payments have commenced.
ANNUITY UNIT VALUE
The initial value of an annuity unit of each Investment Division was set when the Investment Divisions were established. The value may increase or decrease from one business day to the next. The income option tables contained in the Contract are based on an assumed investment rate of 3% for option 4 or 4.5% for option 1-3.
The value of a fixed number of annuity units will reflect the investment performance of the Investment Divisions elected, and the amount of each payment will vary accordingly.
For each Investment Division, the value of an annuity unit for any business day is determined by multiplying the annuity unit value for the immediately preceding business day by the percentage change in the value of an accumulation unit from the immediately preceding business day to the business day of valuation, calculated by use of the Net Investment Factor, described below. The result is then multiplied by a second factor which offsets the effect of the assumed net investment rate of 3% for option 4 or 4.5% for option 1-3.
NET INVESTMENT FACTOR
The net investment factor is an index applied to measure the net investment performance of an Investment Division from one valuation date to the next. The net investment factor for any Investment Division for any valuation period during the accumulation and annuity phases is determined by dividing (a) by (b) and then subtracting (c) from the result where:
(a) is the net result of:
(1) the net asset value of a Fund's share held in the Investment Division determined as of the valuation date at the end of the valuation period, plus
(2) the per share amount of any dividend or other distribution declared by the Fund if the "ex-dividend" date occurs during the valuation period, plus or minus
(3) a per share credit or charge with respect to any taxes paid or reserved for by Jackson National during the valuation period which are determined by Jackson National to be attributable to the operation of the Investment Division (no federal income taxes are applicable under present law);
(b) is the net asset value of the Fund share held in the Investment Division determined as of the valuation date at the end of the preceding valuation period; and
(c) is the asset charge factor determined by Jackson National for the valuation period to reflect the asset-based charges (the mortality and expense risk charge), administration charge, and any applicable charges for optional benefits.
Also see "Income Payments (The Income Phase)" in the Prospectus.
[THE SEPARATE ACCOUNT AND LIFE COMPANY FINANCIALS WILL BE FILED BY AMENDMENT].
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
(1) Financial statements and schedules included in Part A:
Not Applicable
(2) Financial statements and schedules included in Part B [TO BE
FILED BY AMENDMENT]:
Jackson National Separate Account - I:
Report of Independent Registered Public Accounting
Firm
Statements of Assets and Liabilities as of
December 31, 2005
Statements of Operations for the period ended December 31,
2005
Statement of Changes in Net Assets for the Years Ended
December 31, 2005, December 31, 2004 and December 31,
2003
Notes to Financial Statements
Jackson National Life Insurance Company [TO BE
FILED BY AMENDMENT]:
Report of Independent Registered Public Accounting
Firm
Consolidated Balance Sheets as of December 31,
2005 and 2004
Consolidated Income Statements for the years ended
December 31, 2005, 2004, and 2003
Consolidated Statements of Stockholder's Equity and
Comprehensive Income for the years ended
December 31, 2005, 2004, and 2003
Consolidated Statements of Cash flows for the years
ended December 31, 2005, 2004, and 2003
Notes to Consolidated Financial Statement
Item 24.(b) Exhibits
Exhibit Description
No.
1. Resolution of Depositor's Board of Directors authorizing the
establishment of the Registrant, incorporated by reference to the
Registrant's Post-Effective Amendment No. 9 filed on April 21, 1999
(File Nos. 033-82080 and 811-08664).
2. Not Applicable
3.a. Amended and Restated General Distributor Agreement dated June 1,
2006, attached hereto.
4.a. Specimen of the Simplified Retirement Annuity Fixed and Variable
Annuity Contract, attached hereto.
b. Specimen of Tax Sheltered Annuity Endorsement, incorporated by
reference to the Registrant's Pre-Effective Amendment No. 1 filed
on December 19, 2001 (File Nos. 333-70472 and 811-08664).
c. Specimen of Retirement Plan Endorsement, incorporated by reference
to the Registrant's Pre-Effective Amendment No. 1 filed on December
19, 2001 (File Nos. 333-70472 and 811-08664).
d. Specimen of Individual Retirement Annuity Endorsement, incorporated
by reference to the Registrant's Pre-Effective Amendment No. 1
filed on December 19, 2001 (File Nos. 333-70472 and 811-08664).
e. Specimen of Roth IRA Endorsement, incorporated by reference to the
Registrant's Pre-Effective Amendment No. 1 filed on December 19,
2001 (File Nos. 333-70472 and 811-08664).
f. Specimen of Charitable Remainder Trust Endorsement, incorporated by
reference to the Registrant's Pre-Effective Amendment filed on
December 23, 2004 (File Nos. 333-118368 and 811-08664).
g. Specimen of the Return of Premium Death Benefit Endorsement,
incorporated by reference to the Registrant's Registration
Statement filed on September 30, 2004 (File Nos. 333-119427 and
811-08664).
h. Specimen of 5% Guaranteed Minimum Withdrawal Benefit With Annual
Step-up Endorsement, incorporated by reference to the Registrant's
Post-Effective Amendment No. 17 filed on June 20, 2005 (File Nos.
333-70472 and 811-08664).
h. Specimen of 5% For Life Guaranteed Minimum Withdrawal Benefit with
Annual Step-Up, incorporated by reference to the Registrant's
Post-Effective Amendment No. 24 filed on January 31, 2006 (File
Nos. 333-70472 and 811-08664).
j. Specimen of Joint 5% for Life Guaranteed Minimum Withdrawal Benefit
with Annual Step-Up, incorporated by reference to the Registrant's
Post-Effective Amendment No. 26 filed on June 23, 2006 (File Nos.
333-70472 and 811-08664).
k. Specimen of the Highest Anniversary Value Endorsement, attached
hereto.
5.a. Form of the Simplified Retirement Annuity Fixed and Variable
Annuity Application [TO BE FILED BY AMENDMENT].
6.a. Articles of Incorporation of Depositor, incorporated by reference
to the Registrant's Post-Effective Amendment No. 3 filed on April
30, 1996 (File Nos. 033-82080 and 811-08664).
b. By-laws of Depositor, incorporated by reference to the Registrant's
Post-Effective Amendment No. 3 filed on April 30, 1996 (File Nos.
033-82080 and 811-08664).
7.a. Not applicable.
8. Not Applicable
9. Opinion and Consent of Counsel, attached hereto.
10. Consent of Independent Registered Public Accounting Firm [TO BE
FILED BY AMENDMENT].
11. Not Applicable
12. Not Applicable
Item 25. Directors and Officers of the Depositor
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Name and Principal Business Address Positions and Offices with Depositor
Richard D. Ash Vice President
1 Corporate Way
Lansing, MI 48951
John B. Banez Vice President
1 Corporate Way
Lansing, MI 48951
James Binder Vice President & Treasurer
1 Corporate Way
Lansing, MI 48951
John H. Brown Vice President
1 Corporate Way
Lansing, MI 48951
Joseph Mark Clark Vice President
1 Corporate Way
Lansing, MI 48951
Marianne Clone Vice President
1 Corporate Way
Lansing, MI 48951
James B. Croom Vice President & Deputy General Counsel
1 Corporate Way
Lansing, MI 48951
Lisa C. Drake Senior Vice President
1 Corporate Way
Lansing, MI 48951
Phillip Brian Eaves Vice President
1 Corporate Way
Lansing, MI 48951
Robert A. Fritts Senior Vice President
1 Corporate Way
Lansing, MI 48951
James D. Garrison Vice President
1 Corporate Way
Lansing, MI 48951
Julia A. Goatley Assistant Vice President & Associate General Counsel
1 Corporate Way & Assistant Secretary
Lansing, MI 48951
James Golembiewski Vice President & Chief Compliance Officer - Separate
1 Corporate Way Accounts
Lansing, MI 48951
Andrew B. Hopping Executive Vice President, Chief Financial Officer
1 Corporate Way & Director
Lansing, MI 48951
Stephen A. Hrapkiewicz, Jr. Senior Vice President
1 Corporate Way
Lansing, MI 48951
Clifford J. Jack Executive Vice President & Chief Distribution Officer
8055 E. Tufts Avenue
Suite 1000
Denver, CO 80237
Timo P. Kokko Vice President
1 Corporate Way
Lansing, MI 48951
Everett W. Kunzelman Vice President
1 Corporate Way
Lansing, MI 48951
Lynn W. Lopes Vice President
1 Corporate Way
Lansing, MI 48951
Clark P. Manning, Jr. President & Chief Executive Officer & Director
1 Corporate Way
Lansing, MI 48951
Thomas J. Meyer Senior Vice President, General Counsel & Secretary
1 Corporate Way
Lansing, MI 48951
Dean M. Miller Vice President
1 Corporate Way
Lansing, MI 48951
Keith R. Moore Vice President
1 Corporate Way
Lansing, MI 48951
Jacky Morin Vice President
1 Corporate Way
Lansing, MI 48951
P. Chad Myers Senior Vice President
1 Corporate Way
Lansing, MI 48951
J. George Napoles Executive Vice President & Chief Administration Officer
1 Corporate Way
Lansing, MI 48951
Mark D. Nerud Vice President
225 W. Wacker Drive
Suite 1200
Chicago, IL 60606
Russell E. Peck Vice President
1 Corporate Way
Lansing, MI 48951
Laura L. Prieskorn Vice President
1 Corporate Way
Lansing, Michigan 48951
James B. Quinn Vice President
1 Corporate Way
Lansing, MI 48951
Kathleen M. Smith Vice President
1 Corporate Way
Lansing, MI 48951
Heather R. Strang Vice President
1 Corporate Way
Lansing, MI 48951
James R. Sopha Executive Vice President & Director
1 Corporate Way
Lansing, MI 48951
Robert M. Tucker, Jr. Vice President
1 Corporate Way
Lansing, MI 48951
Michael A. Wells Chief Operating Officer & Director
401 Wilshire Boulevard
Suite 1200
Santa Monica, CA 90401
Item 26. Persons Controlled by or Under Common Control with the Depositor or Registrant.
Company State of Organization Control/Ownership Business Principal
120 Orion, LLC South Carolina 100% Jackson National Real Estate
Life Insurance Company
Alcona Funding LLC Delaware 100% Jackson National Investment Related
Life Insurance Company Company
Berrien Funding LLC Delaware 100% Jackson National Investment Related
Life Insurance Company Company
Curian Clearing LLC Michigan 100% Jackson National Broker/Dealer
Life Insurance Company
Brook GP Delaware 100% Brook (Holdco 2) Holding Company
Inc. Activities
Brooke LLC Delaware 100% Prudential Four Holding Company
Limited Activities
Brook (Holdco 1) Inc. Delaware 100% Prudential (US Holding Company
Holdco3) BV Activities
Brook (Holdco 2) Inc. Delaware 100% Brook (Holdco 1) Holding Company
Inc. Activities
Brooke Holdings, LLC Delaware 100% Brooke Holdings Holding Company
(UK) Limited Activities
Brooke Holdings (UK) United Kingdom 100% Holborn Delaware Holding Company
Limited Corporation Activities
Brooke Investment, Inc. Delaware 100% Brooke Holdings, Investment Related
Inc. Company
Brooke Life Insurance Michigan 100% Brooke Holdings, Life Insurance
Company Inc.
Brooke (Jersey) Limited United Kingdom 100% Prudential One Holding Company
Limited Activities
Calhoun Funding LLC Delaware 100% Jackson National Investment Related
Life Insurance Company Company
Crescent Telephone Delaware 100% Jackson National Telecommunications
Life Insurance Company
Curian Capital, LLC Michigan 100% Jackson National Registered Investment
Life Insurance Company Advisor
Equestrian Pointe Illinois 100% Jackson National Real Estate
Investors, L.L.C. Life Insurance Company
Forty Partners #1, L.C. Missouri 100% Jackson National Real Estate
Life Insurance Company
GCI Holding Corporation Delaware 70% Jackson National Holding Company
Life Insurance Company Activities
GS28 Limited United Kingdom 100% Brooke Holdings Holding Company
(UK) Limited Activities
Hermitage Management, LLC Michigan 100% Jackson National Advertising Agency
Life Insurance Company
Holborn Delaware LLC Delaware 100% Prudential Four Holding Company
Limited Activities
Holliston Mills Delaware 70% Jackson National Textile Mfg.
Life Insurance Company
Industrial Coatings Group Delaware 70% Jackson National Textile Mfg.
Life Insurance Company
IFC Holdings, Inc. Delaware 100% National Planning Broker/Dealer
Holdings Inc.
Investment Centers of Delaware 100% IFC Holdings, Inc. Broker/Dealer
America
JNL Investors Series Trust Massachusetts 100% Jackson National Investment Company
Life Insurance Company
Jackson National Asset Michigan 100% Jackson National Investment Adviser and
Management, LLC Life Insurance Company Transfer Agent
Jackson National Life Bermuda 100% Jackson National Life Insurance
(Bermuda) Ltd. Life Insurance Company
Jackson National Life Delaware 100% Jackson National Advertising/Marketing
Distributors LLC Life Insurance Company Corporation and
Broker/Dealer
Jackson National Life New York 100% Jackson National Life Insurance
Insurance Company Life Insurance Company
of New York
JNLI LLC Delaware 100% Jackson National Tuscany Notes
Life Insurance Company
JNL Series Trust Massachusetts Common Law Trust with Investment Company
contractual association
with Jackson National
Life Insurance Company
of New York
JNL Southeast Agency LLC Michigan 100% Jackson National Insurance Agency
Life Insurance Company
JNL Variable Fund LLC Delaware 100% Jackson National Investment Company
Separate Account - I
JNLNY Variable Fund I LLC Delaware 100% JNLNY Separate Investment Company
Account I
LePages Management Delaware 50% LePages MC, LLC
Company, LP
LePages MC, LLC Delaware 100% PPM Management, Inc.
Meadows NRH Associates, Texas 100% Meadows NRH, Inc. Real Estate
L.P.
Meadows NRH, Inc. Texas 100% Jackson National Real Estate
Life Insurance Company
National Planning Delaware 100% National Planning Broker/Dealer and
Corporation Holdings, Inc. Investment Adviser
National Planning Delaware 100% Brooke Holdings, Holding Company
Holdings, Inc. Inc. Activities
Nicole Finance Inc. Delaware 100% Brooke GP Holding Company
Activities
PGDS (US One) LLC Delaware 100% Jackson National Holding Company
Life Insurance Company Activities
PGDS (US Two) LLC Delaware 100% PGDS (US One) LLC Holding Company
Activities
Piedmont Funding LLC Delaware 100% Jackson National Investment Related
Life Insurance Company Company
PPM Holdings, Inc. Delaware 100% Brooke Holdings, Holding Company
Inc. Activities
Prudential plc United Kingdom Publicly Traded Financial Institution
Prudential Corporation United Kingdom 100% Prudential Holdings Holding Company
Holdings, Limited Limited Activities
Prudential Holdings Limited Scotland 100% Prudential plc Holding Company
Activities
Prudential One Limited United Kingdom 100% Prudential plc Holding Company
Activities
Prudential Two Limited United Kingdom 100% Prudential One Holding Company
Limited Activities
Prudential Three Limited United Kingdom 100% Prudential One Holding Company
Limited Activities
Prudential Four Limited United Kingdom 80% Prudential One Holding Company
Limited, 10% Prudential Activities
Two Limited, 10%
Prudential Three Limited
Prudential (US Holdco 1) BV Netherlands 100% PUS Holdco 1 Limited Holding Company
Activities
Prudential (US Holdco 2) BV Netherlands 100% Prudential (US Holding Company
Holdco 1) BV Activities
Prudential (US Holdco 3) BV Netherlands 100% Prudential (US Holding Company
Holdco 2) BV Activities
PUS Holdco 1 Limited United Kingdom 100% Brooke LLC Holding Company
Activities
PUS Holdco 2 Limited Gibraltar 100% Holborn Delaware LLC Holding Company
Activities
SII Investments, Inc. Wisconsin 100% National Planning Broker/Dealer
Holdings, Inc.
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Item 27. Not applicable.
Item 28. Indemnification
Provision is made in the Company's Amended By-Laws for indemnification by the Company of any person who was or is a party or is threatened to be made a party to a civil, criminal, administrative or investigative action by reason of the fact that such person is or was a director, officer or employee of the Company, against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceedings, to the extent and under the circumstances permitted by the General Corporation Law of the State of Michigan.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 ("Act") may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
Item 29. Principal Underwriter
(a) Jackson National Life Distributors LLC. acts as general distributor for the Jackson National Separate Account - I. Jackson National Life Distributors LLC also acts as general distributor for the Jackson National Separate Account III, the Jackson National Separate Account IV, the Jackson National Separate Account V, the JNLNY Separate Account I, the JNLNY Separate Account II, and the JNLNY Separate Account IV.
(b) Directors and Officers of Jackson National Life Distributors
LLC:
Name and Business Address Positions and Officers with Underwriter
Michael A. Wells Director
401 Wilshire Blvd.
Suite 1200
Santa Monica, CA 90401
Andrew B. Hopping Director and Chief Financial Officer
1 Corporate Way
Lansing, MI 48951
Clifford J. Jack President and Chief Executive Officer
8055 E. Tufts Avenue
Suite 1000
Denver, CO 80237
Nikhil Advani Vice President
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
Stephen M. Ash Vice President
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
Pamela Aurbach Vice President
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
Brad Baker Vice President
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
Linda Baker Vice President
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
William Britt Vice President
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
Tori Bullen Vice President
210 Interstate North Parkway
Suite 401
Atlanta, GA 30339-2120
Greg Cicotte Executive Vice President
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
Maura Collins Vice President
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
Robert DiNardo Vice President
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
Paul Fitzgerald Vice President
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
Steve Goldberg Regional Vice President
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
Julia A. Goatley Assistant Secretary
1 Corporate Way
Lansing, MI 48951
Luis Gomez Vice President
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
Kevin Grant Vice President
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
Bonnie Howe Vice President and Deputy General Counsel
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
Thomas Hurley Senior Vice President
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
Mark Jones Vice President
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
Steve Kluever Senior Vice President
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
Christopher Kopka Vice President and Deputy General Counsel
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
Brian Lane Vice President
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
James Livingston Executive Vice President
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
Doug Mantelli Vice President
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
Susan McClure Vice President
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
James McCorkle Vice President
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
Thomas J. Meyer Director and Secretary
1 Corporate Way
Lansing, MI 48951
Jack Mishler Vice President
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
Peter Radloff Vice President
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
Gregory B. Salsbury Executive Vice President
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
Greg Smith Senior Vice President
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
Sam Somuri Vice President
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
David Sprague Senior Vice President
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
Daniel Starishevsky Senior Vice President
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
Doug Townsend Vice President and Controller and FinOp
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
C. Ray Trueblood Vice President
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
Daniel Wright Vice President and Chief Compliance Officer
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
Phil Wright Vice President
8055 E. Tufts Avenue
Suite 1100
Denver, CO 80237
(c)
Name of Principal Net Underwriting Compensation on Brokerage Compensation
Underwriter Discounts and Redemption or Commissions
Commissions Annuitization
Jackson National Life Not Applicable Not Applicable Not Applicable Not Applicable
Distributors LLC
|
Item. 30. Location of Accounts and Records
Jackson National Life Insurance Company
1 Corporate Way
Lansing, Michigan 48951
Jackson National Life Insurance Company
Institutional Marketing Group Service Center
1 Corporate Way
Lansing, Michigan 48951
Jackson National Life Insurance Company 8055 East Tufts Ave., Second Floor Denver, Colorado 80237
Jackson National Life Insurance Company 225 West Wacker Drive, Suite 1200 Chicago, IL 60606
Item. 31. Management Services
Not Applicable
Item. 32. Undertakings and Representations
a. Jackson National Life Insurance Company hereby undertakes to file a post-effective amendment to this registration statement as frequently as is necessary to ensure that the audited financial statements in the registration statement are never more than sixteen (16) months old for so long as payment under the variable annuity contracts may be accepted.
b. Jackson National Life Insurance Company hereby undertakes to
include either (1) as part of any application to purchase a
contract offered by the Prospectus, a space that an applicant
can check to request a Statement of Additional Information, or
(2) a postcard or similar written communication affixed to or
included in the Prospectus that the applicant can remove to send
for a Statement of Additional Information.
c. Jackson National Life Insurance Company hereby undertakes to deliver any Statement of Additional Information and any financial statement required to be made available under this Form promptly upon written or oral request.
d. Jackson National Life Insurance Company represents that the fees and charges deducted under the contract, in the aggregate, are reasonable in relation to the services rendered, the expenses to be incurred, and the risks assumed by Jackson National Life Insurance Company.
e. The Registrant hereby represents that any contract offered by the prospectus and which is issued pursuant to Section 403(b) of the Internal Revenue Code of 1986 as amended, is issued by the Registrant in reliance upon, and in compliance with, the Securities and Exchange Commission's industry-wide no-action letter to the American Council of Life Insurance (publicly available November 28, 1988) which permits withdrawal restrictions to the extent necessary to comply with IRS Section 403(b)(11).
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has caused this Registration Statement to be signed on its behalf, by the undersigned, duly authorized, in the City of Lansing, and State of Michigan, on this 10th day of August, 2006.
Jackson National Separate Account - I
(Registrant)
Jackson National Life Insurance Company
Jackson National Life Insurance Company
(Depositor)
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
THOMAS J. MEYER* August 10, 2006 ------------------- ------------- Clark P. Manning, Jr., President, Chief Executive Officer and Director THOMAS J. MEYER* August 10, 2006 ------------------- ------------- Michael A. Wells, Director THOMAS J. MEYER* August 10, 2006 ------------------- ------------- Andrew B. Hopping, Executive Vice President - Chief Financial Officer and Director THOMAS J. MEYER* August 10, 2006 ------------------- ------------- Robert A. Fritts, Senior Vice President and Controller THOMAS J. MEYER* August 10, 2006 ------------------- ------------- James R. Sopha, Executive Vice President and Director * Thomas J. Meyer, Senior Vice President, Secretary, General Counsel and Attorney-in-Fact |
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned as directors and/or officers of JACKSON NATIONAL LIFE INSURANCE COMPANY (the Depositor), a Michigan corporation, hereby appoints Clark P. Manning, Jr., Andrew B. Hopping, Thomas J. Meyer, Patrick W. Garcy, and Susan S. Rhee, (each with power to act without the others) his attorney-in-fact and agent, with full power of substitution and resubstitution, for and in his name, place and stead, in any and all capacities, to sign applications and registration statements, and any and all amendments, with power to affix the corporate seal and to attest it, and to file the applications, registration statements, and amendments, with all exhibits and requirements, in accordance with the Securities Act of 1933, the Securities and Exchange Act of 1934, and/or the Investment Company Act of 1940. This Power of Attorney concerns JNL Separate Account - I (33-82080, 333-70472, 333-73850, 333-118368, 333-132128 and 333-119656), JNL Separate Account III (333-41153), JNL Separate Account IV (333-36506, 333-108433 and 333-118131), and JNL Separate Account V (333-70697), as well as any future separate accounts the Depositor establishes through which securities, particularly variable annuity contracts and variable universal life insurance policies, are to be offered for sale. The undersigned grant to each attorney-in-fact and agent full authority to take all necessary actions to effectuate the above as fully, to all intents and purposes, as he/she could do in person, thereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof. This instrument may be executed in one or more counterparts.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney as of the 27th day of March, 2006.
/S/ CLARK P. MANNING, JR. ------------------------- Clark P. Manning, Jr., President, Chief Executive Officer and Director |
EXHIBIT LIST
Exhibit No. Description
3.a. Amended and Restated General Distributor Agreement dated June 1, 2006, attached hereto as EX-3.a.
4.a. Specimen of the Simplified Retirement Annuity Fixed and Variable Annuity Contract, attached hereto as EX-4.a.
4.k. Specimen of the Highest Anniversary Value Endorsement, attached hereto as EX-4.k.
9. Opinion and Consent of Counsel, attached hereto as EX-9.
EX-3.a.
AMENDED AND RESTATED
GENERAL DISTRIBUTOR AGREEMENT
This Amended and Restated General Distributor Agreement is by and among
JACKSON NATIONAL LIFE INSURANCE COMPANY (JNL), a Michigan corporation, JACKSON
NATIONAL LIFE INSURANCE COMPANY OF NEW YORK (JNLNY), a New York corporation
(together, "COMPANY"), and JACKSON NATIONAL LIFE DISTRIBUTORS, LLC (JNLD), a
Delaware limited liability company (the "Agreement").
Reference is made to the following agreements, which the parties now wish to combine, amend, and restate in their entirety: General Distributor Agreement between JNL and JNLD dated June 30, 1998 (Jackson National Separate Account-I); General Distributor Agreement between JNL and JNLD dated June 30, 1998 (Jackson National Separate Account III); General Distributor Agreement between JNL and JNLD dated August 2, 1999 (Jackson National Separate Account V); General Distributor Agreement between JNL and JNLD dated March 29, 2004 (Jackson National Separate Account IV); General Distributor Agreement between JNL and JNLD dated May 3, 2004 (Jackson National Separate Account IV); General Distributor Agreement between JNLNY and JNLD dated June 30, 1998 (JNLNY Separate Account I); General Distributor Agreement between JNLNY and JNLD dated December 29, 1999 (JNLNY Separate Account II); and General Distributor Agreement between JNLNY and JNLD dated March 29, 2004 (JNLNY Separate Account IV). This Agreement supercedes all prior agreements and understandings, both oral and written, among the parties with respect to the below subject matter, including the Amended and Restated General Distributor Agreement dated October 25, 2005.
I
COMPANY issues variable and fixed annuity contracts and variable
universal life insurance policies (the "Variable Products") through its separate
accounts named in attached and incorporated Appendix A. JNLD agrees to
distribute the Variable Products to Selling Broker Dealers (as defined in
Section III) and insurance agencies for sale to the public and to provide sales
services, subject to this Agreement's terms and conditions. JNLD is registered
as a broker-dealer under the Securities Exchange Act of 1934, as amended (the
"1934 Act"), and is a member of the National Association of Securities Dealers,
Inc. (NASD).
II
COMPANY authorizes JNLD and JNLD agrees to serve, during the term of this Agreement, as the distributor of the Variable Products. JNLD will distribute the Variable Products to Selling Broker-Dealers and insurance agencies to sell, at a price to be set by COMPANY, to purchasers permitted to buy such Variable Products as specified in the applicable prospectus.
III
Company authorizes JNLD, subject to disapproval by COMPANY, to select broker-dealers ("Selling Broker Dealers") to enter into separate written agreements ("Selling Agreements") with Company and JNLD to participate as JNLD shall deem appropriate in the distribution of the Variable Products. Selling Broker Dealers must be registered under the 1934 Act and members of the NASD, and either licensed as an insurance agency or affiliated with an insurance agency, which insurance agency must also execute the Selling Agreement. The Selling Agreements shall be in a form acceptable to COMPANY. Each Selling Broker-Dealer and its registered representatives soliciting applications for Variable Products ("Representatives") shall be duly and appropriately licensed, appointed by COMPANY, registered and otherwise qualified for the sale of Variable Products under the NASD rules and applicable federal and state securities and insurance laws. Each Selling Broker-Dealer shall be responsible for its Representatives continuing compliance with all applicable securities laws and regulations including, but not limited to, registration requirements, and with all applicable state laws.
IV
Each Selling Agreement shall provide as follows, in words or substance with respect to the training and supervision of Representatives and other persons associated with such Selling-Broker Dealer who are involved directly or indirectly in the offer or sale of Contracts:
A. All such persons shall be subject to the control of such Selling-Broker Dealer with respect to such persons' activities in connection with the sale of Variable Products. Such Selling-Broker Dealer shall be responsible for training and supervision of all such persons. JNLD and COMPANY shall not have responsibility for the training and supervision of any person associated with such Selling-Broker Dealer. JNLD shall require such Selling Broker-Dealer to agree to comply with COMPANY's position regarding legal and ethical business standards for its producers and to engage in active and fair competition as required by all applicable laws, rules and regulations.
B. Such Selling Broker-Dealer shall be required to assume full responsibility for continued compliance by itself and its associated persons (as defined in Section 3(a)(18) of the 1934 Act) with the NASD Conduct Rules ("NASD Rules") and applicable federal and state securities and insurance laws. Such Selling-Broker Dealer shall be specifically charged with the responsibility of supervising its representatives' compliance with all applicable suitability requirements under federal or state law or the regulations of the NASD. Such Selling Broker-Dealer shall be specifically charged with providing or arranging for adequate training to ensure that representatives have thorough knowledge of each Variable Product for sale and the ability to make appropriate product presentations and suitability determinations in compliance with applicable law. Such Selling Broker-Dealer and its representatives shall not recommend the purchase of a Variable Product to a prospective purchaser unless they have reasonable grounds to believe that such purchase is suitable for the prospective purchaser and is in accordance with applicable regulations of any regulatory authority, including the Securities and Exchange Commission (SEC) and the NASD.
V
The parties hereto recognize that any Representative selling Variable Products as contemplated by this Agreement shall be acting as an insurance agent of COMPANY. Such Representatives shall not be considered agents or employees of JNLD, unless any contract between JNLD and any such person specifically provides otherwise. Further, it is intended by the parties hereto that such Representatives have and shall continue to be considered to have a common law independent contractor relationship with COMPANY and not to be considered common law employees of COMPANY, unless any contract between COMPANY and any person selling the Variable Products specifically provides otherwise.
VI
JNLD shall be fully responsible for carrying out all compliance and supervisory obligations in connection with the distribution of the Variable Products, as required by NASD Rules, and by federal and any applicable state laws. JNLD shall assume full responsibility for training and oversight of its representatives engaged directly or indirectly in the distribution of the Variable Products to Selling Broker-Dealers, and shall have the authority to require that disciplinary action be taken with respect to its representatives. JNLD agrees to comply with COMPANY's position regarding legal and ethical business standards and to engage in active and fair competition as required by all applicable laws, rules and regulations.
VII
COMPANY and JNLD each agree to carry out its activities and obligations under this Agreement in continuous compliance with the federal and state laws and regulations, including those governing securities and insurance related activities or transactions, as applicable. Each shall notify the other parties immediately in writing if it fails to comply with any applicable law or regulation.
VIII
COMPANY reserves the right to review and accept or reject all applications for Variable Products. All applications forwarded to COMPANY shall be approved by an appropriate registered principal of the submitting Selling-Broker Dealer in accordance with all applicable rules and regulations, including but not limited to those regarding suitability. All premium payments for such Variable Products shall be sent promptly to the office designated for such by COMPANY.
IX
COMPANY shall furnish JNLD with copies of such information, financial statements and other documents requested by JNLD for use in connection with the distribution of the Variable Products, as may be deemed reasonable by COMPANY. COMPANY shall provide to JNLD such number of copies of the currently effective prospectuses and any supplements, as JNLD and COMPANY shall agree upon from time to time. COMPANY reserves the right to require the recall of any material approved by it at any time for any reason, and JNLD shall promptly comply, and use its best efforts to cause all Selling Broker-Dealers to promptly comply.
X
JNLD is not authorized to give any information, make any representations, or authorize anyone else to give any information or make any representation concerning COMPANY or the separate accounts, other than as contained in the current SEC-filed registration statement or such sales literature as may be authorized by COMPANY.
XI
COMPANY, as agent for JNLD, shall confirm to each applicant for and purchaser of a Variable Product acceptance of Premiums and such other transactions as are required by Rule 10b-10 under the 1934 Act, including administrative interpretations thereunder. COMPANY shall maintain and preserve such books and records with respect to such confirmations in conformity with the requirements of Rules 17a-3 and 17a-4 under the 1934 Act to the extent such requirements apply. COMPANY shall maintain all such books and records and hold such books and records on behalf of and as agent for JNLD whose property they are and shall remain, and acknowledges that such books and records are at all times subject to inspection by the SEC in accordance with Section 17(a) of the 1934 Act.
XII
The parties to this Agreement agree to keep necessary records as indicated by applicable state and federal law and to render the necessary assistance to one another for the accurate and timely preparation of such records. Each party shall make such books and records reasonably available to the other party. The parties shall promptly furnish each other with any reports and information the other party may reasonably request for the purpose of meeting its reporting and recordkeeping requirements under the insurance laws of any state, under any applicable federal or state securities laws, rules or regulations, or under the rules of the NASD.
XIII
Commissions payable with respect to Variable Products shall be paid by COMPANY as agent for JNLD, and nothing herein shall obligate JNLD to otherwise or directly pay any commissions or other remuneration to the Selling Broker-Dealers/Representatives selling the Variable Products or to reimburse such Selling Broker-Dealers/Representatives for expenses incurred by them, nor shall JNLD have any interest whatsoever in any commissions or other remuneration payable to any Selling Broker-Dealer/Representative by COMPANY.
XIV
Each party will promptly notify the other parties of any customer complaint or notice of any regulatory investigation or proceeding received by such party or their respective affiliates relating to the Variable Products or any threatened or filed arbitration action or civil litigation arising out of the offer or sale of the Variable Products. The parties shall cooperate fully in investigating and responding to any such complaint, regulatory investigation or proceeding, arbitration, or civil litigation, and in any settlement or trial of any actions arising out of the conduct of business under this Agreement.
JNLD will include in each Selling Agreement a notification provision
comparable to this Paragraph requiring the Selling Broker-Dealer (a) to notify
JNLD and COMPANY promptly of any complaint or claim or any notice of any
regulatory investigation or proceeding received by the Selling-Broker Dealer or
its affiliates relating to JNLD, COMPANY, any associated person of JNLD or
COMPANY, and any Variable Product, or any threatened or filed arbitration action
or civil litigation arising out of solicitation of the Variable Products, and
(b) to cooperate with COMPANY and JNLD in investigating and resolving such
matter.
XV
Each party (the "Indemnifying Party") hereby agrees to release, indemnify, and hold harmless the other parties, its officers, directors, employees, agents, servants, predecessors or successors from any claims or liability arising out of the breach of this Agreement by the Indemnifying Party or arising out of acts or omissions of the Indemnifying Party or its agents, appointees, independent contractors or employees not authorized by this Agreement, including the violation of the federal and state securities laws, state insurance laws, and tax laws, including the Employee Retirement Income Security Act of 1974 (ERISA), or arising from acts of misrepresentation or false declaration concerning the products sold hereunder.
XVI
No party will disclose Confidential Information (as defined below) to any person or entity other than their respective Representatives (as defined below) or use Confidential Information other than in connection with their activities under this Agreement, unless and to the extent (i) if the Confidential Information relates to a party or an affiliate thereof, such party otherwise agreed in writing to such usage, or (ii) if the Confidential Information relates to a client or prospective client of a party or an affiliate, such client and such party or affiliate otherwise agrees in writing to such usage.
"CONFIDENTIAL INFORMATION" relating to any person or entity means all information concerning the identity of, and the finances, business, operations, prospects, procedures, or relationships relating to such person or entity, which is received verbally or in writing by a party from the other party, unless and to the extent such information either becomes generally available to the public other than through disclosure by the receiving party or becomes available to the receiving party on a non-confidential basis from a person other than the other party, who to the receiving party's knowledge, is not prohibited from disclosing the information. Without limitation of the foregoing, COMPANY agrees to keep the identity of each client and all information of any nature relating to each client confidential and shall use such information only for the purposes set forth in this Agreement and not otherwise. "Representatives" of a party means its directors, officers, employees, attorneys, agents, and other representatives that are designated and provided in writing from time to time to the other party upon request of the other party.
The parties may disclose Confidential Information to the extent required by applicable law or at the request of any regulatory or supervisory authority having jurisdiction over that party.
XVII
No amendment or supplement to this Agreement shall bind the parties unless in writing, signed by duly authorized officers, except for any changes to Appendix A. The parties agree to be bound by any changes to Appendix A of which there is notice, and for which no signatures will be required.
This Agreement shall remain in effect unless terminated as hereinafter provided. This Agreement shall automatically terminate in the event of its assignment by JNLD. This Agreement may be terminated by either party hereto at any time upon not less than 60 days' written notice to the other party.
XVIII
All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been given on the date of service if served personally on the party to whom notice is to be given, or on the date of mailing if sent by first class mail, registered or certified, postage prepaid and properly addressed as follows:
TO COMPANY:
Jackson National Life Insurance Company
1 Corporate Way
Lansing, Michigan 48951
Attention: Thomas J. Meyer
And/or
Jackson National Life Insurance Company of New York
2900 Westchester Avenue
Purchase, New York 10577
Attention: Thomas J. Meyer
TO JNLD:
Jackson National Life Distributors, LLC
8055 E. Tufts Avenue
Suite 1000
Denver, Colorado 80237
Attention: Clifford J. Jack
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be signed on their behalf by their respective officers thereunto duly authorized.
This Agreement is effective as of the 1st day of June, 2006.
JACKSON NATIONAL LIFE INSURANCE COMPANY
Its: SENIOR VICE PRESIDENT AND GENERAL COUNSEL
JACKSON NATIONAL LIFE INSURANCE COMPANY OF NEW YORK
Its: SENIOR VICE PRESIDENT AND GENERAL COUNSEL
JACKSON NATIONAL LIFE DISTRIBUTORS, LLC
APPENDIX A
Dated June 1, 2006
JACKSON NATIONAL LIFE INSURANCE COMPANY:
Jackson National Separate Account I
Jackson National Separate Account III
Jackson National Separate Account IV
Jackson National Separate Account V
JACKSON NATIONAL LIFE INSURANCE COMPANY OF NEW YORK:
JNLNY Separate Account I
JNLNY Separate Account II
JNLNY Separate Account IV
EX-4.a
JACKSON(SM)
NATIONAL LIFE INSURANCE COMPANY
[1 Corporate Way
Lansing, Michigan 48951
www.jnl.com]
Thank you for choosing Jackson National Life Insurance Company, hereinafter also referred to as "the Company." If You have any questions, please contact the Company at the Service Center address and telephone number shown on the Contract Data Page.
THIS ANNUITY CONTRACT IS ISSUED BY THE COMPANY AND IS AN AGREEMENT
BETWEEN THE OWNER ("YOU") AND JACKSON NATIONAL LIFE INSURANCE
COMPANY.
READ YOUR CONTRACT CAREFULLY.
AMOUNTS ALLOCATED TO THE SEPARATE ACCOUNT INVESTMENT DIVISIONS ARE
NOT GUARANTEED AND MAY INCREASE OR DECREASE BASED UPON THE INVESTMENT
EXPERIENCE OF THE UNDERLYING MUTUAL FUNDS.
THE FIXED ACCOUNT OPTIONS ARE SUBJECT TO AN EXCESS INTEREST ADJUSTMENT WHICH
MAY INCREASE OR DECREASE AMOUNTS PAYABLE, TRANSFERRED OR WITHDRAWN, BUT THE
FIXED ACCOUNT CONTRACT VALUE WILL NEVER DECREASE TO LESS THAN THE SUM OF THE
FIXED ACCOUNT MINIMUM VALUES.
THE FIXED ACCOUNT CONTRACT VALUE AND DEATH BENEFIT WILL NEVER BE LESS
THAN THAT REQUIRED BY THE STATE WHERE THIS CONTRACT WAS ISSUED.
--------------------------------------------------------------------------------
INDIVIDUAL MODIFIED SINGLE THIS CONTACT IS SIGNED BY THE COMPANY
PREMIUM DEFERRED VARIABLE AND
FIXED ANNUITY CONTRACT. CLARK P. MANNING, JR.
DEATH BENEFIT AVAILABLE.
INCOME OPTIONS AVAILABLE. PRESIDENT AND CHIEF EXECUTIVE OFFICER
NONPARTICIPATING.
THOMAS J. MEYER
SECRETARY
|
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TABLE OF CONTENTS
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PROVISION PAGE NUMBER
CONTRACT DATA PAGE [3a
DEFINITIONS 4
GENERAL PROVISIONS 8
ACCUMULATION PROVISIONS 12
WITHDRAWAL PROVISIONS 14
DEATH BENEFIT PROVISIONS 20
INCOME PROVISIONS 23
TABLE OF INCOME OPTIONS 26]
VA320 2
|
Contract Number: 1234567890
Owner: John Doe
Owner Issue Age: 35
Joint Owner: Jane Doe
Joint Owner Issue Age: 35
Annuitant: John Doe
Annuitant Issue Age: 35
Joint Annuitant: Jane Doe
Joint Annuitant Issue Age: 35
Initial Premium: $50,000
Statement of Intention: [$50,000.00 to $99,999.99]
Issue Date: June 1, 2006
Issue State: Any State
Income Date: June 1, 2036
Fixed Account Minimum Interest Rate: [2% in the first 10 Contract
Years and 3% thereafter.]
Beneficiary(ies): Brian Doe
VA320 3a
|
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CONTRACT DATA PAGE (CONT'D)
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OPTIONAL BENEFITS ELECTED:
MORTALITY AND EXPENSE The Mortality and Expense Charge is based on the Aggregate
CHARGE: Premium determined at issue and equals, on an annual basis,
[0.90%] [during Contract Years 1-[7] and [0.30%] afterward]
of the daily net asset value of the Investment Divisions.
The Aggregate Premium will be re-determined at the end of
the [sixth] Contract Month. At that time the Mortality and
Expense Charge will be based on the band corresponding to
the new Aggregate Premium. This may result in a change to
the specific Mortality and Expense Charges stated above and
assessed after the [sixth] Contract Month.
MORTALITY AND EXPENSE CHARGE
BAND BASED ON (EXPRESSED AS AN ANNUAL PERCENTAGE)
AGGREGATE PREMIUM
CONTRACT YEARS [1-7] CONTRACT YEARS [8+]
[$50,000 to $99,999.99 0.90% 0.30%
$100,000 to $249,999.99 0.60% 0.30%
$250,000 to $499,999.99 0.35% 0.30%
$500,000 to $749,999.99 0.25% 0.25%
$750,000 to $999,999.99 0.20% 0.20%
$1,000,000+ 0.15% 0.15%]
ADMINISTRATION CHARGE: On an annual basis, this charge equals [0.15%] of the daily
net asset value of the Investment Divisions.
TOTAL ASSET BASED CHARGES: ON AN ANNUAL BASIS, THE TOTAL OF ALL ASSET BASED CHARGES AT
ISSUE IS EQUAL TO [X.XX%] [DURING CONTRACT YEARS 1-[7] AND
[X.XX%] AFTERWARD] OF THE DAILY NET ASSET VALUE OF THE
INVESTMENT DIVISIONS. THIS TOTAL IS SUBJECT TO CHANGE BASED
ON THE NEW AGGREGATE PREMIUM DETERMINED AT THE END OF THE
[SIXTH] CONTRACT MONTH.
Asset based charges are deducted daily as part of the
Accumulation Unit Value calculation. Total asset based
charges include the Mortality and Expense Charge (including
a distribution risk component), the Administration Charge
and asset based charges for optional benefits.
VA320 3b
|
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CONTRACT DATA PAGE (CONT'D)
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ANNUAL CONTRACT An annual charge of no more than [$35.00] will be deducted
MAINTENANCE CHARGE: by the Company from those Contracts where the Contract Value
is less than [$50,000] at the time such charge is assessed.
WITHDRAWAL CHARGE: COMPLETED YEARS SINCE
RECEIPT OF PREMIUM PERCENTAGE
[0 5%
1 4%
2 3%
3 3%
4 2%
5 1%
6+ 0%]
EXCESS INTEREST ADJUSTMENT: Certain payments, transfers and withdrawals from a Fixed
Account Option are subject to an Excess Interest Adjustment,
the calculation of which may result in an increase or
decrease in amounts payable. In no event will a total
withdrawal from a Fixed Account Option be less than the
Fixed Account Minimum Value. (See Fixed Account Option
section of the Contract for details.)
TRANSFER/TRANSFER CHARGE: A fee of [$25.00] is charged for each transfer in excess of
[15] in any Contract Year. Any Transfer Charge is deducted
from the amount transferred prior to the allocation to the
new Contract Option. Transfer Charges will not be applied to
transfers due to dollar cost averaging or other systematic
investment programs provided by the Company, nor will these
transfers count against the [15] free transfers allowed in a
Contract Year.
Asset allocation service providers must comply with the
Company's administrative systems, rules, and procedures.
A transfer will be effective as of the end of the Business
Day when the Company receives a transfer request prior to
market close in Good Order, otherwise the transfer will be
effective as of the end of the next Business Day.
The Company will not be liable for a transfer made in
accordance with the Owner's instructions.
FROM INVESTMENT DIVISION TO INVESTMENT DIVISION. Prior to
and after the Income Date, You may transfer all or a portion
of Your Contract Value in one Investment Division to any
available Investment Division(s).
VA320 3c
|
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CONTRACT DATA PAGE (CONT'D)
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TRANSFER/TRANSFER CHARGE FROM INVESTMENT DIVISION TO A FIXED ACCOUNT OPTION. If
(CONTINUED): allowed by the Company, in its sole discretion, prior to the
Income Date, You may transfer all or a portion of Your
Contract Value in an Investment Division to a Fixed Account
Option(s). The Company, in its sole discretion, may restrict
or prohibit this type of transfer from time to time on a
nondiscriminatory basis.
FROM A FIXED ACCOUNT OPTION TO AN INVESTMENT DIVISION OR TO
A FIXED ACCOUNT OPTION. If allowed by the Company, in its
sole discretion, prior to the Income Date, You may transfer
all or a portion of Your Contract Value in a Fixed Account
Option to any available Investment Division(s) or to a Fixed
Account Option(s), subject to any applicable Excess Interest
Adjustment. The Company may restrict or prohibit transfers,
in its sole discretion, to a Fixed Account Option(s) from
time to time on a nondiscriminatory basis.
PREMIUM(S): Premium payments will be accepted in the first [six (6)]
Contract Months only. The Owner may change the amounts,
frequency or timing of Premiums. The initial Premium must be
at least [$50,000] for Nonqualified Plan Contracts and
[$50,000] for Qualified Plan Contracts. Subsequent Premiums
must be at least [$500]. Total Premiums under a Contract may
not exceed [$1,000,000]. However, the Company may waive the
minimums or maximums at any time. The Company reserves the
right to refuse any Premium payment.
The Owner may allocate Premiums among the Fixed Account
Option(s) and Investment Divisions, subject to the approval
of the Company, which will be granted in advance on a
nondiscriminatory basis. Allocations may be made in any
percent from 0% to 100% in whole percentages. The minimum
that may be allocated to a Fixed Account Option or an
Investment Division is [$100]. The Company reserves the
right to restrict or refuse any Premium allocation to a
Fixed Account Option(s) at any time on a nondiscriminatory
basis. Any subsequent Premium will be allocated according to
Your most recent instructions on file with the Company,
provided that each allocation meets the minimums and
restrictions described above, regardless of such
instructions.
VA320 3d
|
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CONTRACT DATA PAGE (CONT'D)
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PREMIUM(S) (CONTINUED): The Company reserves the right to require, in advance, the
automatic transfer of amounts allocated to the 1-Year Fixed
Account Option to the Investment Division(s) of Your choice
in regular installments over a specified period from the
date of allocation on a nondiscriminatory basis. A
pre-determined amount will be transferred from the source
Fixed Account Option to the Owner selected Investment
Division(s) such that at the end of the specified period all
amounts in the 1-Year Fixed Account Option will have been
transferred. The Company reserves the right to specify in
advance the transfer amount, the length of the period, and
the transfer frequency over which the transfers will be
completed. The funds being transferred will be allocated to
the Investment Division(s) elected by You. You may change
Your selected Investment Division(s) at any time. These
automatic transfers will not count against the [15] free
transfers in a Contract Year.
CONTRACT OPTIONS:
INVESTMENT DIVISION(S): Availability is indicated in the current prospectus and any
supplements.
FIXED ACCOUNT OPTIONS: [1-Year Period; 3-Year Period; 5-Year Period; and 7-Year
Period, the availability of which to be determined by the
Company.]
The Contract Options You have selected will be detailed in a confirmation sent
to You by the Company on or after the Issue Date.
--------------------------------------------------------------------------------------------------------
Jackson National Life Service Center Express Mail:
[P.O. Box 17240 Jackson National Life Service Center
Denver, CO 80217-0240 [7601 Technology Way
800/766-4683] Denver, CO 80237]
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VA320 3e
|
ACCUMULATION UNIT. A unit of measure used to calculate the value in an Investment Division prior to the Income Date.
AGGREGATE PREMIUM. The measure used to determine the Mortality and Expense Charge. Aggregate Premium at issue is equal to the anticipated total premium breakpoint specified in the Statement of Intention section of the application. If no Statement of Intention is indicated, the Aggregate Premium at issue will equal the Initial Premium received. The Aggregate Premium is re-determined only at the end of the [sixth] Contract Month and is equal to total Premium paid less total partial withdrawals. (See Withdrawal Provisions section of the Contract for details.)
ANNUITANT. The natural person on whose life annuity payments for this Contract are based. Any reference to the Annuitant includes any Joint Annuitant.
ANNUITY UNIT. A unit of measure used to calculate the amount of a variable annuity payment.
BASE INTEREST RATE. The rate of interest established by the Company, at its sole discretion, for a specified Fixed Account Option period. In no event will the Base Interest Rate be less than the Fixed Account Minimum Interest Rate shown on the Contract Data Page.
BENEFICIARY(IES). The person(s) or entity(ies) designated to receive any Contract benefits upon the death of the Owner.
BUSINESS DAY. Each day that the New York Stock Exchange is open for business. All requests for transactions that are received at the Company's Service Center in Good Order on any Business Day prior to market close, generally 4 P.M. Eastern Time, will be processed effective the end of that Business Day.
CONTRACT. The Individual Modified Single Premium Deferred Variable and Fixed Annuity Contract between You and the Company.
CONTRACT ANNIVERSARY. Each one year anniversary of the Issue Date.
CONTRACT OPTION. One of the allocation options offered by the Company under this Contract. Each Contract Option is more fully explained in the Accumulation Provisions.
CONTRACT MONTH. The period of time between consecutive monthly anniversaries of the Issue Date.
CONTRACT VALUE. The Contract Value equals the sum of the Separate Account Contract Value and the Fixed Account Contract Value.
CONTRACT YEAR. The twelve-month period immediately following the Issue Date or any Contract Anniversary.
CURRENT INTEREST RATE. The Base Interest Rate plus any additional interest rate credited by the Company, less any charges due under any optional endorsements to the Contract. In no event will the Current Interest Rate be less than the Fixed Account Minimum Interest Rate shown on the Contract Data Page.
VA320 4
EXCESS INTEREST ADJUSTMENT. An adjustment applied, with certain exceptions, to amounts withdrawn, transferred or annuitized from a Fixed Account Option prior to the end of the applicable Fixed Account Option period.
FIXED ACCOUNT. Contract Values allocated to one or more of the Fixed Account Options. Allocations made to Fixed Account Options are held under the general account of the Company. The general account is made up of all general assets of the Company, other than those in the Separate Account and other segregated asset accounts.
FIXED ACCOUNT CONTRACT VALUE. The sum of all amounts allocated and credited to the Fixed Account Options under the Contract, less any amounts canceled or withdrawn for charges, deductions, withdrawals or transfers.
FIXED ACCOUNT MINIMUM VALUE. Premiums, net of any applicable premium tax, plus transfers allocated to the Fixed Account Option, less transfers, withdrawals, and charges from the Fixed Account Option, accumulated at the Fixed Account Minimum Interest Rate shown on the Contract Data Page, less any Withdrawal Charge or any tax due.
FIXED ACCOUNT OPTION. A Contract Option within the Fixed Account for a specific period under which the Current Interest Rate will be credited.
GOOD ORDER. The receipt by the Company of any and all information, documentation, instructions and/or Premium deemed necessary by the Company, in its sole discretion, to issue the Contract or execute any transaction pursuant to the terms of the Contract.
HOSPITAL. A facility located within the United States or its territories which is operated pursuant to law; operates primarily for the care and treatment of sick and injured persons as inpatients; provides continuous 24-hour nursing service by or under the supervision of a registered professional nurse (R.N.); is supervised by a staff of licensed physicians; and, has medical, diagnostic and major surgical facilities on a prearranged basis.
IMMEDIATE FAMILY. A spouse, child, brother, sister, parent or grandparent.
INCOME DATE. The date on which annuity payments are to begin.
INVESTMENT DIVISIONS. Separate and distinct divisions of the Separate Account to which specific Underlying Mutual Fund shares are allocated and for which Accumulation Units and Annuity Units are separately maintained. The Contract Value in the Investment Divisions will go up or down depending on the performance of the Underlying Mutual Funds. Investment Divisions may also be referred to as Portfolio(s) or Portfolio Options.
ISSUE DATE. The date the Contract was issued by the Company, as shown on the Contract Data Page.
JOINT OWNER. If there is more than one Owner, each Owner shall be a Joint Owner of the Contract. Joint Owners have equal ownership rights and must each authorize any exercising of those ownership rights under the Contract.
VA320 5
LATEST INCOME DATE. The date on which the Owner attains age 90 under a Nonqualified Plan Contract, or such earlier date as required by the applicable Qualified Plan, law, or regulation, unless otherwise approved by the Company.
NONQUALIFIED PLAN. A retirement plan which does not qualify for favorable tax treatment under Section [401, 403, 408, 408A or 457] of the Internal Revenue Code, as amended.
NURSING HOME. A facility located in the United States or its territories; operates pursuant to law in the jurisdiction in which it is located; provides custodial care under the supervision of a registered nurse (R.N.) or a Physician; and, DOES NOT include any place owned or operated by a member of the Beneficiary's, Annuitant's or Joint Annuitant's, Owner's or Joint Owner's Immediate Family.
OWNER ("YOU," "YOUR"). The person or entity shown on the Contract Data Page who is entitled to exercise all rights and privileges under this Contract. Usually, but not always, the Owner is the Annuitant. If Joint Owners are named, all references to Owner shall mean Joint Owner.
PHYSICIAN. An individual who is licensed to practice medicine and treat illness or injury in the United States or its territories where treatment is received and who is acting within the scope of his or her license. The term Physician only refers to a Physician licensed and currently practicing in the United States or its territories. Physician does not include:
1. an Annuitant or Joint Annuitant;
2. an Owner or Joint Owner;
3. Beneficiary(ies); or
4. a person who is part of the Beneficiary's, Annuitant's or Joint
Annuitant's, Owner's or Joint Owner's Immediate Family.
PORTFOLIO(S) OR PORTFOLIO OPTION(S). See definition of Investment Division.
PREMIUM(S). Considerations paid into this Contract by or on behalf of the Owner.
QUALIFIED PLAN. A retirement plan which qualifies for favorable tax treatment under Sections [401, 403, 408, 408A or 457] of the Internal Revenue Code, as amended.
REMAINING PREMIUM. The total Premium reduced by withdrawals that incur Withdrawal Charges and withdrawals of Premiums that are no longer subject to Withdrawal Charges.
SEPARATE ACCOUNT. A segregated asset account established and maintained by the Company in accordance with Michigan law in which a portion of the Company's assets have been allocated for this and certain other contracts.
SEPARATE ACCOUNT CONTRACT VALUE. The current value of the amounts allocated to the Investment Divisions of this Contract.
SERVICE CENTER. The Company's address and telephone number as specified on the Contract Data Page or as may be designated by the Company from time to time.
VA320 6
SOURCE FUND. The Investment Division or Fixed Account Option made available by the Company and selected by the Owner from which amounts will be transferred to a Target Fund(s) pursuant to one of the Company's systematic investment programs.
TARGET FUND(S). The Investment Division(s) and/or Fixed Account Option(s) made available by the Company and selected by the Owner to which amounts will be transferred from a Source Fund pursuant to one of the Company's systematic investment programs.
TERMINAL ILLNESS. A noncorrectable medical condition, which will result in the death of the Owner within (12) twelve months or less from the date of the Physician's statement.
UNDERLYING MUTUAL FUNDS. The registered management investment companies in which assets of the Investment Divisions of the Separate Account will be invested.
WITHDRAWAL CHARGE. The charge assessed against certain withdrawals from the Contract Value.
WITHDRAWAL VALUE. The Contract Value, less any tax payable, minus any applicable Withdrawal Charges, Annual Contract Maintenance Charges, and charges due under any optional endorsement to the Contract, adjusted for any applicable Excess Interest Adjustment.
VA320 7
ANNUITANT. The Owner may change the Annuitant at any time prior to the Income Date, unless the Owner is not a natural person. If the Owner is not a natural person, the age of the Annuitant will be used in lieu of the Owner's age for all purposes under this Contract, unless otherwise specified in the Contract. Also, if the Owner is not a natural person the following benefits will apply to the Annuitant: Waiver of Withdrawal Charge due to Terminal Illness, the Waiver of Withdrawal Charge for Specified Conditions and the Waiver of Withdrawal Charge for Extended Care.
ASSIGNMENT. The Owner may assign this Contract before the Income Date, but the Company will not be bound by an assignment unless it is in writing and has been accepted and recorded at the Company's Service Center. The Company reserves the right to refuse assignments at any time on a non-discriminatory basis. An assignment will take effect when recorded by the Company. The Company is not responsible for any payment made before an assignment is recorded. The Owner may exercise these rights subject to the interest of any assignee or irrevocable beneficiary. THE COMPANY ASSUMES NO RESPONSIBILITY FOR THE VALIDITY OR TAX CONSEQUENCES OF ANY ASSIGNMENT. IF YOU MAKE AN ASSIGNMENT, YOU MAY HAVE TO PAY INCOME TAX. YOU ARE ENCOURAGED TO SEEK COMPETENT LEGAL AND/OR TAX ADVICE.
BENEFICIARY. The individual(s) or entity(ies) designated by the Owner to receive any amount payable under this Contract upon the Owner's death or upon the death of the Annuitant on or after the Income Date pursuant to the terms of this Contract. (See Income Provision section for details.) The original Beneficiary(ies) will be shown on the Contract Data Page. If two or more persons are named, those surviving the Owner will share equally unless otherwise stated. If there are no surviving Beneficiaries at the death of the Owner, the death benefit will be paid to the Owner's estate. Upon the death of a Joint Owner, the surviving Joint Owner, if any, will be treated as the primary Beneficiary and all other Beneficiaries will be treated as contingent Beneficiaries. The Owner may change the Beneficiary(ies) by submitting a written request to the Service Center, unless an irrevocable beneficiary designation was previously filed with the Company. Any change will take effect when recorded by the Company. The Company is not liable for any payment made or action taken before the Company records such change.
CHARGES AND FEES. The Company may assess charges or fees under the Contract. Please see the Contract Data Page for more information as to charges or fees.
The Annual Contract Maintenance Charge specified on the Contract Data Page will be deducted on each Contract Anniversary that occurs on or prior to the Income Date. It will also be deducted when the Contract Value is withdrawn in full if the full withdrawal is not on a Contract Anniversary. The amount of Annual Contract Maintenance Charge may be reduced when sales of the Contract are made to a trustee, employer, or similar entity pursuant to an employee-sponsored retirement plan or when sales are made in a similar arrangement where offering the Contract to a group of individuals or certain individual(s) results in savings of administration expenses. The entitlement of such reduction in Annual Contract Maintenance Charge will be determined by the Company.
CONFORMITY WITH LAWS. This Contract will be interpreted under the law of the state in which it is issued and any applicable federal laws. Any provision that is in conflict with the law of such state or any federal law is amended to conform to the minimum requirements of such law.
VA320 8
CONTESTABILITY. The Company will not contest this Contract from its Issue Date, as shown on the Contract Data Page.
DEFERMENT OF PAYMENTS. The Company may defer payment from a Fixed Account Option for a period not exceeding six (6) months. Deferral for the six (6) month period will be made only if We make a written request and receive written approval from the regulatory official of the Issue State. Subject to state requirements, interest will be credited during such deferred period.
ENTIRE CONTRACT. The Contract, and any attached Company forms, endorsements and amendments together make up the entire Contract.
INCORRECT AGE OR SEX. If the age or sex of the Owner or Annuitant is incorrect, the payments will be those that the Premiums paid would have purchased at the correct age and sex. Any underpayments will be adjusted immediately by the Company. Overpayments will be deducted from future payments.
MODIFICATION OF CONTRACT. Any change or waiver of the provisions of this Contract must be in writing and signed by the President, a Vice President, the Secretary or Assistant Secretary of the Company. No financial representative or producer has authority to change or waive any provision of this Contract. The Company may amend or waive any portion of this Contract without notice or consent if state or federal law permits or so requires.
NONPARTICIPATING. This Contract does not share in the Company's surplus or earnings.
NOTICE. Information or instructions given to the Company by You must be in a form satisfactory to the Company, referred to as Good Order. Such notice takes effect when the Company accepts it and it is recorded at the Service Center.
Any notice the Company sends to the Owner will be sent to the Owner's last known address unless the Owner requests otherwise in writing. Any request or notice must be sent to the Service Center, unless the Company advises You otherwise. You are responsible for promptly notifying the Company of any address change.
PROOF OF AGE, SEX OR SURVIVAL. The Company may require satisfactory proof of correct age or sex at any time. If any payment under this Contract depends on the Annuitant, Owner or Beneficiary being alive, the Company may require satisfactory proof of survival.
PROTECTION OF PROCEEDS. Proceeds under this Contract are not assignable by any Beneficiary prior to the time such proceeds become payable. To the extent permitted by applicable law, proceeds are not subject to the claims of creditors or to legal process.
REPORTS. The Company will send You a report at least once a year. The Company will also send You reports as required by law. They shall be addressed to the last address of the Owner known to the Company.
VA320 9
SUBSTITUTION OF INVESTMENT DIVISION(S). The Company may substitute any Underlying Mutual Fund(s) with another Underlying Mutual Fund without Your consent. Substitution would occur if the Company determines that the use of certain Underlying Mutual Fund(s) is no longer possible or if the Company determines it is no longer appropriate for the purposes of the Contract. No substitution will be made without notice to You. Changes of Underlying Mutual Fund(s) are subject to the federal securities laws and, if required, the laws of the state where the Contract was issued for delivery. Should a substitution, addition, or deletion occur, You will be allowed to select from the then current Investment Divisions and substitution may be made with respect to both existing Contract Value in that Investment Division(s) and the allocation of future Premiums.
SUSPENSION OF PAYMENTS. The Company may suspend or postpone any transfers or payments to or from the Investment Divisions if any of the following occur:
1. The New York Stock Exchange is closed;
2. Trading on the New York Stock Exchange is restricted;
3. An emergency exists such that it is not reasonably practical to dispose of
securities in the Separate Account or to determine the value of its assets;
or
4. The Securities and Exchange Commission, by order, so permits for the
protection of Contract Owners.
The applicable rules and regulations of the Securities and Exchange Commission will govern whether conditions described in 2. and/or 3. exist.
TAXES. The Company may deduct from the Contract Value any premium taxes or other taxes payable to a state or other government entity because of this Contract. Should the Company advance any amount so due, the Company is not waiving any right to collect such amount at a later date. The Company will deduct any withholding taxes required by applicable law as a result of any withdrawals or amounts payable from this Contract.
TRANSFER. The conditions for transfer between Contract Options are explained in the Contract Data Page. The Company reserves the right to restrict the number, means and frequency of transfers per year that may be requested by the Owner.
Your ability to make transfers is subject to modification if the Company determines, at the Company's sole discretion, that the exercise by one or more owners is, or would be, to the disadvantage of other owners. Restrictions may be applied in any manner reasonably designed to prevent any use of the transfer provision which is considered by the Company to be to the disadvantage of other owners. A modification regarding Your ability to make transfers to or from one or more of the Investment Divisions could include, but not be limited to:
1. The requirement of a minimum time period between each transfer;
2. Limiting transfer requests of an agent acting on behalf of one or more
owners or under a power of attorney on behalf of one or more owners; or
3. Limiting the dollar amount that may be transferred at any one time. 1.
VA320 10
The Company may provide systematic investment programs that allow You to transfer funds among the Investment Divisions and the Fixed Account Options. These programs may include dollar cost averaging, portfolio rebalancing, and the automatic monthly transfer of earnings from the 1-Year Fixed Account Option and/or money market Investment Division to other Investment Divisions or Fixed Account Options. You may contact the Company's Service Center, and the Company will furnish all necessary forms to request these programs. The Company makes no guarantee that these programs will result in a profit or protect against loss in a declining market.
In order to participate in a dollar cost averaging program or automatic transfer of earnings program, the Separate Account Contract Value plus the Fixed Account Contract Value must be at least [$15,000]. The Company may waive this requirement at its discretion. For a dollar cost averaging program, You may authorize the automatic transfer of a fixed dollar amount or selected percentage of the value of a Source Fund, periodically to one or more Target Fund(s). The intervals between transfers may be monthly, quarterly, semi-annually or annually.
Additionally, the Company may offer Owners selecting dollar cost averaging an enhanced interest rate(s) on Premium allocated to the 1-Year Fixed Account Option (Source Fund) provided all amounts in the Source Fund are transferred to the Target Fund(s) within a specific duration determined by the Company. The duration and interest rates are available from the Service Center upon request. Each month, the Company will transfer a predetermined amount from the Source Fund. Upon the Owner's cancellation of this program, the Company will transfer the Source Fund balance, including any interest, into the Target Fund(s) selected by the Owner.
VA320 11
An Owner may not allocate Contract Values to more than [eighteen] Contract Options at any one time. The Company may waive this restriction at its discretion.
SEPARATE ACCOUNT. The Separate Account consists of assets the Company has set aside and has kept separate from the rest of the Company's general account assets and those of its other segregated asset accounts. These assets are not chargeable with liabilities arising out of any other business the Company may conduct. All the income, gains, and losses resulting from these assets are credited to or charged against the contracts supported by the Separate Account, and not against any other contracts the Company may issue. The assets of the Separate Account will be available to cover the liabilities of the Company's general account only to the extent that the assets of the Separate Account exceed the liabilities of the Separate Account arising under the Contracts supported by the Separate Account. The Separate Account consists of several Investment Divisions. The assets of the Separate Account shall be valued at least as often as any benefits of this Contract, but in no event will such valuation be less frequently than monthly.
ACCUMULATION UNITS. The Separate Account Contract Value will go up or down depending on the performance of the Investment Divisions. In order to monitor the Separate Account Contract Value during the accumulation phase, the Company uses a unit of measure called an Accumulation Unit. The value of an Accumulation Unit may go up or down from Business Day to Business Day. Adjustments to the Contract Value, such as withdrawals, transfers, and charges, result in the redemption of Accumulation Units. However, these adjustments do not affect the value of the Accumulation Units.
When You make an allocation to the Investment Divisions, the Company credits Your Contract with Accumulation Units. The number of Accumulation Units credited is determined by dividing the amount allocated to any Investment Division by the Accumulation Unit Value for that Investment Division at the close of the Business Day when the allocation is made.
ACCUMULATION UNIT VALUE. The Company determines the value of an Accumulation Unit for each of the Investment Divisions. This is done by:
1. Determining the total amount of money invested in the particular Investment
Division;
2. Subtracting from that amount any Mortality and Expense Charge,
Administration Charge, and any other charge for optional benefits and
taxes;
3. Dividing the remainder by the number of outstanding Accumulation Units.
FIXED ACCOUNT. For any amounts allocated to the Fixed Account, the Owner will select the duration of the Fixed Account Option from those made available by the Company. Such amounts will earn interest at the Current Interest Rate for the chosen duration, compounded annually during the entire Fixed Account Option period. Subsequent Base Interest Rates may be higher or lower than the Base Interest Rates previously declared by the Company.
You may allocate Premiums, or make transfers from the Investment Divisions, to the Fixed Account Options at any time prior to the Income Date, subject to the provisions of this Contract. However, no Fixed Account Option period other than one year may be chosen which extends beyond the Income Date. Withdrawals from a Fixed Account Option may take place 30 days following the end of the corresponding Fixed Account Option period without being subject to an Excess Interest Adjustment.
VA320 12
If the Owner does not specify a Fixed Account Option at the time of renewal, the Company will select the same Fixed Account Option period as has just expired, so long as such Fixed Account Option period is available and does not extend beyond the Income Date. If such Fixed Account Option period does extend beyond the Income Date, the Company will choose the longest Fixed Account Option period that will not extend beyond such date. If a renewal occurs within one year of the Income Date, the Company will credit interest up to the Income Date at the then Current Interest Rate for the 1-Year Fixed Account Option.
FIXED ACCOUNT CONTRACT VALUE. The Fixed Account Contract Value under the Contract shall be the sum of all monies allocated or transferred to the Fixed Account Options, reduced by any applicable taxes, plus all interest credited to the Fixed Account Options, adjusted for withdrawals, transfers, and charges.
EXCESS INTEREST ADJUSTMENT. Except in the 30-day period following the end of a Fixed Account Option, any amount withdrawn, transferred, or annuitized from a Fixed Account Option will be subject to an Excess Interest Adjustment. If the Base Interest Rate credited at the time of withdrawal or transfer (see J below) is higher than the Base Interest Rate guaranteed at allocation to a Fixed Account Option (see I below), a downward adjustment may apply, potentially reducing the amount withdrawn, transferred or annuitized. If the Base Interest Rate credited at the time of withdrawal or transfer (see J below) is lower than the Base Interest Rate guaranteed at the time of allocation to a Fixed Account Option (see I below), an upward adjustment may apply, potentially increasing the amount withdrawn, transferred or annuitized. The Excess Interest Adjustment will be calculated by multiplying the amount withdrawn, transferred or annuitized by the formula described below:
(m/12)
[1+I]
------------------ -1
(m/12)
[1+J+.005]
where:
I = The Base Interest Rate credited to the existing Fixed Account Option period.
J = The Base Interest Rate that would be credited to a new Fixed Account Option period of the same duration at the time of withdrawal, transfer, or annuitization. When no Fixed Account Option of the same duration is available, the rate will be established by linear interpolation.
m = The number of complete months remaining to the end of current Fixed Account Option period.
There will be no Excess Interest Adjustment when J is less than I by 0.5% or less.
In addition, the Excess Interest Adjustment will not be applied to:
1. the payment of death benefit proceeds;
2. an Income Option that is life contingent or results in payments spread over at least five years;
3. amounts withdrawn for Contract charges;
4. amounts transferred or withdrawn from the 1-Year Fixed Account Option; or
5. amounts withdrawn under the Additional Free Withdrawal provision.
In no event will a total withdrawal from a Fixed Account Option be less than the Fixed Account Minimum Value.
VA320 13
At or before the Income Date, the Owner may withdraw all or part of the amounts under this Contract by informing the Company at the Service Center. For full withdrawal, this Contract, or a completed Lost Contract Affidavit, must be returned to the Service Center.
Except in connection with certain withdrawals associated with a Guaranteed
Minimum Withdrawal Benefit (GMWB) or withdrawals made to satisfy minimum
distribution requirements of the Internal Revenue Code, a withdrawal before the
end of the [sixth] Contract Month will impact the Aggregate Premium as
determined at the end of the [sixth] Contract Month, and may result in a higher
Mortality and Expense Charge. If the total withdrawals associated with the GMWB
exception or the minimum distribution requirements exception referenced above
exceed the respective allowable amounts for those exceptions during the first
[six] Contract Months, the entire amount withdrawn will impact the Aggregate
Premium.
Premiums withdrawn from the Contract Value may be subject to a Withdrawal Charge as explained in more detail below.
Premiums that are no longer subject to a Withdrawal Charge (and not previously withdrawn), plus earnings may be withdrawn free of Withdrawal Charges at any time.
Upon full withdrawal, the Owner will receive the Withdrawal Value. The Withdrawal Value will be based on values at the end of the Business Day on which the request for withdrawal is received at the Service Center in Good Order. IN NO EVENT SHALL THE AMOUNT WITHDRAWN, WHETHER A FULL WITHDRAWAL OR PARTIAL WITHDRAWAL, EXCEED THE WITHDRAWAL VALUE.
Except in connection with a systematic withdrawal program, the minimum partial withdrawal amount is [$500], or if less, the Owner's entire interest in the Investment Division or Fixed Account Option from which a withdrawal is requested.
The Owner's interest in the Investment Division or Fixed Account Option from which the withdrawal is requested must be at least [$100] after the withdrawal is completed if anything is left in that Investment Division or Fixed Account Option.
Unless otherwise specified, the withdrawal will be made from each Investment Division and each Fixed Account Option in proportion to their current value. Withdrawals will be based on values at the end of the Business Day on which the request for withdrawal is received in Good Order at the Service Center.
In addition to a Withdrawal Charge, a withdrawal from a Fixed Account Option may also incur an Excess Interest Adjustment.
The Company will waive the Withdrawal Charge on any withdrawal necessary to satisfy the minimum distribution requirements of the Internal Revenue Code. If You request an amount greater than the required minimum distribution for this Contract, the entire withdrawal will be subject to the Withdrawal Charge.
You may elect to take a systematic withdrawal by surrendering a specific sum or a certain percentage on a monthly, quarterly, semiannual or annual basis, subject to a [$50] minimum withdrawal. Such withdrawals will be counted in determining the portion of the Contract Value taken as an Additional Free Withdrawal. Systematic withdrawals in excess of the Additional Free Withdrawal amount may be subject to a Withdrawal Charge and/or an Excess Interest Adjustment.
VA320 14
WITHDRAWAL CHARGE. As indicated above, a Withdrawal Charge may be imposed upon certain withdrawals. Withdrawal Charges will be calculated in accordance with the Withdrawal Charge table on the Contract Data Page.
The Withdrawal Charge is deducted from the remaining Contract Value so that the actual reduction in Contract Value as a result of the withdrawal will be greater than the withdrawal amount requested and paid. For purposes of determining the Withdrawal Charge, withdrawals will be allocated first to earnings, if any (which may be withdrawn free of Withdrawal Charge), and then to Remaining Premium to which the lowest (if any) Withdrawal Charge applies on a first-in, first-out basis. The Withdrawal Charge is based on the portion of the Remaining Premiums withdrawn.
ADDITIONAL FREE WITHDRAWAL. During a Contract Year, You may make partial
withdrawals from the Contract without the Withdrawal Charge being applied. This
Additional Free Withdrawal is equal to: 1. 10% of Premium that remains subject
to Withdrawal Charges and that has not been previously withdrawn (this can
be utilized once or in segments throughout the Contract Year); less
2. all remaining earnings, which are defined as the excess of the Contract Value
over Remaining Premiums.
IN NO EVENT SHALL THE AMOUNT WITHDRAWN, WHETHER A FULL WITHDRAWAL OR PARTIAL WITHDRAWAL, EXCEED THE WITHDRAWAL VALUE. IN NO EVENT SHALL THE ADDITIONAL FREE WITHDRAWAL EXCEED THE CONTRACT VALUE LESS ANY APPLICABLE CONTRACT CHARGES AND ADJUSTMENTS.
Both Withdrawal Charges and Excess Interest Adjustments are waived on amounts withdrawn that are less than or equal to the Additional Free Withdrawal. Although Additional Free Withdrawals reduce principal in either the Investment Division and/or the Fixed Account Option, they do not reduce Remaining Premium. As a result, You will not receive the benefit of an Additional Free Withdrawal if you take a full withdrawal. Withdrawals during the Contract Year in excess of the Additional Free Withdrawal may be subject to a Withdrawal Charge, as well as any applicable Excess Interest Adjustment. An Additional Free Withdrawal before the end of the [sixth] Contract Month will impact the Aggregate Premium as determined at the end of the [sixth] Contract Month, and may result in a higher Mortality and Expense Charge.
WAIVER OF THE WITHDRAWAL CHARGE DUE TO TERMINAL ILLNESS. If the Owner incurs a Terminal Illness while the Contract's Withdrawal Charge would normally apply, the Company will waive the Withdrawal Charge on any amounts the Owner requests withdrawn from the Contract under this provision.
You can withdraw an amount without a Withdrawal Charge pursuant to this benefit only once, regardless of the subsequent occurrence of the same condition or the occurrence of a different condition. You are not eligible for this waiver if You have a Terminal Illness on the Issue Date of the Contract.
VA320 15
The amount withdrawn pursuant to this provision shall be requested by the Owner up to 100% of the Contract Value. The amount withdrawn pursuant to this provision shall not exceed [$250,000] and will be taken from the Separate Account Contract Value and the Fixed Account Contract Value as stated in the Withdrawal Provisions of this Contract. A withdrawal from the Fixed Account Option(s) may be subject to an Excess Interest Adjustment. This may mean an increase or decrease in the amount of Your benefit.
All withdrawals taken due to the Terminal Illness benefit before the end of the
[sixth] Contract Month will impact the Aggregate Premium as determined at the
end of the [sixth] Contract Month, and may result in a higher Mortality and
Expense Charge.
CLAIM REQUIREMENTS. Written proof of the Owner's Terminal Illness must be received in Good Order at the Service Center before a Terminal Illness benefit payment will be considered. Written proof includes a properly completed Company claim form, Your signed medical records release, and a Physician's statement of condition satisfactory to the Company. The Company reserves the right to request additional medical information from any Physician or institution which may have provided treatment for the Terminal Illness. The Company may require, at its expense, an additional examination by a Physician of its choice. If there is a discrepancy between medical opinions, the opinion of the Company's Physician will govern, unless state law requires otherwise.
For the purpose of this Terminal Illness Benefit, Physician's statement means a written statement, acceptable to the Company, signed by a Physician which:
1. gives the Physician's diagnosis of the Owner's noncorrectable medical
condition; and
2. states with reasonable medical certainty, that the noncorrectable medical
condition will result in the death of the Owner within twelve (12) months
or less from the date of the Physician's statement.
This statement will take into consideration the ordinary and reasonable medical care, advice and treatment available in the same or similar communities.
Written notice and proof of claim must be submitted to the Service Center any time after the date the Owner develops a Terminal Illness. Contact the Service Center for details on how to apply for benefits under this provision.
A PAYMENT UNDER THIS PROVISION MAY BE TAXABLE. AS WITH ALL TAX MATTERS, YOU ARE ENCOURAGED TO SEEK LEGAL AND/OR TAX ADVICE.
WAIVER OF WITHDRAWAL CHARGE FOR SPECIFIED CONDITIONS. If the Owner incurs one of the Specified Conditions, as set out below, while the Contract's Withdrawal Charge would normally apply, the Company will waive the Withdrawal Charge on any amounts the Owner requests withdrawn from the Contract under this provision.
You can withdraw an amount without a Withdrawal Charge pursuant to this benefit only once, regardless of the subsequent occurrence of the same condition or the occurrence of a different condition. You are not eligible for this waiver if You have or have had one of these Specified Conditions on the Issue Date of the Contract.
VA320 16
Each of the following is a SPECIFIED CONDITION:
o HEART ATTACK: The death of a portion of heart muscle (myocardium) resulting from a blockage of one or more coronary arteries.
o STROKE: Any acute cerebral vascular accident producing neurological impairment and resulting in paralysis or other measurable objective neurological deficit persisting for at least 30 days.
o CORONARY ARTERY SURGERY: The actual undergoing of bypass surgery using either a saphenous vein or internal mammary artery graft for the treatment of coronary artery disease.
o LIFE-THREATENING CANCER: Only those types of cancer manifested by the presence of a malignant tumor characterized by the uncontrolled growth and spread of malignant cells and the invasion of tissue. As used herein, leukemia and Hodgkin's disease (except Stage I Hodgkin's disease) shall be considered life-threatening cancer. LIFE-THREATENING CANCER DOES NOT INCLUDE premalignant tumors or polyps, cancer in situ, intraductal noninvasive carcinoma of the breast, carcinoid of the appendix, Stage I transitional carcinoma of the urinary bladder or any skin cancers other than melanomas.
o RENAL FAILURE: The end stage of chronic, irreversible failure of both kidneys to function, necessitating regular renal dialysis expected to continue for a period of at least 6 months or resulting in renal transplantation.
o ALZHEIMER'S DISEASE: Shall be defined as a progressive degenerative disease of the brain characterized by the loss of intellectual capacity involving impairment of memory or judgment or changes in personality which result in a significant reduction in mental and social functioning and which requires continuous supervision. For the purpose of this benefit, Alzheimer's disease shall be evidenced by a diagnosis of Alzheimer's disease from a neurologist licensed in the United States. The term Alzheimer's disease does not include neuroses or psychotic illness.
The amount withdrawn under this provision without a Withdrawal Charge shall be as requested by the Owner up to 25% of the Contract Value. In the case of Joint Owners, this benefit applies to each of them up to 12 1/2% of the Contract Value. The amount withdrawn will be taken from the Separate Account Contract Value and the Fixed Account Contract Value as stated in the Withdrawal Provisions of this Contract. A withdrawal from the Fixed Account Option(s) may be subject to an Excess Interest Adjustment. This may mean an increase or decrease in the amount of Your benefit.
All withdrawals taken due to the Specified Condition benefit before the end of the [sixth] Contract Month will impact the Aggregate Premium as determined at the end of the [sixth] Contract Month, and may result in a higher Mortality and Expense Charge.
VA320 17
CLAIM REQUIREMENTS. Written proof of the Owner's Specified Condition must be received in Good Order by the Company at its Service Center before a Specified Condition benefit will be considered. Written proof includes a properly completed Company claim form, Your signed medical records release, and a Physician's statement of condition satisfactory to the Company. The Company reserves the right to request additional medical information from any Physician or institution which may have provided treatment for the Specified Condition. The Company may require, at its expense, an additional examination by a Physician of its choice. If there is a discrepancy between medical opinions, the opinion of the Company's Physician will govern, unless state law requires otherwise.
For purposes of this Specified Condition benefit, Physician's statement means a written statement, acceptable to the Company, signed by a Physician which:
1. gives the Physician's diagnosis of the Owner's Specified Condition, including documentation supported by clinical, radiological, histological or laboratory evidence of the condition; and
2. gives the Physician's diagnosis of life-threatening cancer according to the criteria of malignancy established by The American Board of Pathology after a study of the histocytologic architecture or pattern of the suspect tumor, tissue or specimen; or
3. gives the Physician's diagnosis of a heart attack including each and all the following three criteria:
a. a clinical picture of a myocardial infarction; and
b. electrocardiographic findings consistent with a myocardial infarction;
and
c. elevation of cardiac enzymes above standard laboratory levels of
normal (in the case of CPK, a CPK-MB measurement must be used).
Written notice and proof of claim must be submitted to the Service Center anytime after the date the Owner develops a Specified Condition. Contact the Service Center for details on how to apply for benefits under this provision.
A PAYMENT UNDER THIS PROVISION MAY BE TAXABLE. AS WITH ALL TAX MATTERS, YOU ARE ENCOURAGED TO SEEK LEGAL AND/OR TAX ADVICE.
WAIVER OF WITHDRAWAL CHARGE FOR EXTENDED CARE. If You are confined as an inpatient to a Nursing Home or Hospital for ninety (90) consecutive days, a period during which the Withdrawal Charge otherwise would normally apply, the Company will waive the Withdrawal Charge on any amounts You request withdrawn from the Contract under this provision.
You can withdraw an amount without a Withdrawal Charge pursuant to this benefit only once, regardless of the subsequent occurrence of the same condition or the occurrence of a different condition. You are not eligible for this waiver if:
1. You are confined to a Nursing Home or Hospital during the thirty-day (30)
period following the Issue Date, unless such confinement is not related to
a subsequent confinement for which You request the waiver; or,
2. You are no longer confined to a Nursing Home or Hospital.
VA320 18
Confinement to the Nursing Home or Hospital must be prescribed by a Physician and be medically necessary, meaning the confinement is appropriate and consistent with the diagnosis in accordance with accepted standards of practice, and which could not have been omitted without adversely affecting the confined Owner's condition.
Withdrawals made pursuant to this provision shall be up to 100% of the Contract
Value. The amount withdrawn pursuant to this provision shall not exceed
[$250,000] and will be taken from the Separate Account Contract Value and the
Fixed Account Contract Value as stated in the Withdrawal Provisions of this
Contract. A withdrawal from the Fixed Account Option(s) may be subject to an
Excess Interest Adjustment. This may mean an increase or decrease in the amount
of Your benefit.
All withdrawals taken due to the Extended Care benefit before the end of the
[sixth] Contract Month will impact the Aggregate Premium as determined at the
end of the [sixth] Contract Month, and may result in a higher Mortality and
Expense Charge.
CLAIM REQUIREMENTS. Written notice and proof of claim of the Owner's confinement must be submitted to the Company at its Service Center 90 days after the date the Owner becomes confined to a Nursing Home or Hospital before a waiver will be considered pursuant to this provision. Written proof includes: (1) a properly completed Company claim form; (2) Your signed medical records release; and (3) a Physician's statement of condition satisfactory to the Company. The Company reserves the right to request additional medical information from any Physician, Hospital or Nursing Home. The Company may require, at its expense, an additional examination by a Physician of its choice. If there is a discrepancy between medical opinions, the opinion of the Company's Physician will govern, unless state law requires otherwise.
A PAYMENT UNDER THIS PROVISION MAY BE TAXABLE. AS WITH ALL TAX MATTERS, YOU ARE ENCOURAGED TO SEEK LEGAL AND/OR TAX ADVICE.
VA320 19
DEATH OF OWNER BEFORE THE INCOME DATE. Upon the Owner's death, or the death of any Joint Owner, before the Income Date, the death benefit will be paid to the Beneficiary(ies) designated by the Owner. Upon the death of a Joint Owner, the surviving Joint Owner, if any, will be treated as the primary Beneficiary. Any other beneficiary designation on record at the Service Center at the time of death will be treated as a contingent Beneficiary.
o DEATH BENEFIT AMOUNT BEFORE THE INCOME DATE. The death benefit is equal to the current Contract Value.
The death benefit amount will be determined as of the end of the Business Day when due proof of the Owner's death satisfactory to the Company and an election as to the type of death benefit option is received by the Company at its Service Center in Good Order.
From the time of death of the Owner until the death benefit amount is determined, any amount allocated to an Investment Division will be subject to investment risk. This investment risk is borne by the Beneficiary(ies).
o DEATH BENEFIT OPTIONS BEFORE INCOME DATE. In the event of the Owner's death or the death of a Joint Owner before the Income Date, a Beneficiary must request that the death benefit be paid under one of the death benefit options below unless the Owner did so previously. The following are the available death benefit options:
1. Option 1 - single lump-sum payment of the death benefit; or
2. Option 2 - payment of the entire death benefit within five years of
the date of the death of the Owner or any Joint Owner; or
3. Option 3 - payment of the death benefit under an income option over
the lifetime of the Beneficiary or over a period not extending beyond
the life expectancy of the Beneficiary, with distribution beginning
within one year of the date of the death of the Owner or Joint Owner.
Any portion of the death benefit not applied under Option 3 within one year of the date of the Owner's death must be distributed within five years of the date of the Owner's death.
If a single lump-sum payment is requested, the amount will be paid within seven days of receipt of proof of death and the election in Good Order at the Service Center, unless either the Suspension of Payments or Deferment of Payments under the General Provisions is in effect.
Payment to the Beneficiary, other than in a single lump-sum, may only be elected during the 60-day period beginning with the date of receipt of proof of death in Good Order by the Service Center.
SPOUSAL CONTINUATION OPTION. If the Joint Owner, if any, or the Beneficiary is the spouse of the deceased Owner, he or she may elect to continue the Contract in lieu of taking the death benefit as a lump-sum payment, at the current Contract Value, in his or her own name and exercise all the Owner's rights under the Contract.
VA320 20
SPECIAL SPOUSAL CONTINUATION OPTION. In lieu of taking the death benefit as a lump-sum payment or continuing the Contract at the then current Contract Value, if the Beneficiary is the spouse of the Contract Owner, he or she may elect to continue the Contract at an adjusted Contract Value as described below. The spouse will then exercise all the Contract Owner's rights under the Contract. The date that the Company receives the spouse's written request to continue the Contract, under this Special Spousal Continuation Option, and proof of the death of the Contact Owner in Good Order will be referred to as the Continuation Date.
The Contract Value for the continuing Contract will be adjusted so that it will equal the amount of the death benefit that would have been payable as a lump-sum payment at Your death. If the Contract Value on the Continuation Date is less than the death benefit, an amount will be added to the Contract Value to make up the difference. This amount is referred to as the Continuation Adjustment. The Continuation Adjustment will be allocated among the Contract Options in accordance with the current instructions for the Contract, subject to any minimum allocation restrictions unless the Company receives other allocation instructions with the Special Spousal Continuation Option election. Withdrawal Charges will continue at the same level as prior to the initial Owner's death. However, no Withdrawal Charge schedule will apply to the Continuation Adjustment.
For purposes of determining future death benefits under the continuing Contract, the Contract Value following the application of any Continuation Adjustment will be considered as the initial Premium of the continuing Contract. Any future death benefit, including an enhanced death benefit, if any, will be determined on that basis and will use the age of the surviving spouse on the Continuation Date.
This Special Spousal Continuation Option can only be exercised one time under this Contract, but may not be available if the Owner elected to pre-select the death benefit option. Any benefit available under this Special Spousal Continuation Option will end upon the change of ownership or assignment of the Contract.
PRE-SELECTED DEATH BENEFIT OPTION ELECTION. Prior to the Income Date, the Owner may designate the option under which the death benefit will be paid. This designation of the death benefit option must be given in a form acceptable to the Company, and will take effect only after being recorded by the Company.
The Owner may elect any death benefit option described in this Contract, or other death benefit option, as agreed upon by the Company at the time of election. Once elected, the designation can only be revoked or changed by the Owner in a form acceptable to the Company. Upon the death of the Owner, the Beneficiary may not revoke or modify the death benefit option elected, subject to the requirements of the Internal Revenue Code. However, at the time of the Owner's death, the Company reserves the right to change or modify the death benefit option if the death benefit option previously elected exceeds the life expectancy of the Beneficiary. If a Pre-selected Death Benefit Option Election is not made by the Owner prior to the Owner's death, the Beneficiary may request that the death benefit be paid under any of the death benefit options described in this Contract, or other death benefit option, as agreed upon by the Company at the time of request.
VA320 21
If this Pre-selected Death Benefit Option Election is in force at the time of the Owner's death, the payment of the death benefit may not be postponed, nor can the Contract be continued under any provisions of this Contract. These restrictions apply even if the Beneficiary is the spouse of the Owner, unless such restriction is prohibited by law.
DEATH OF OWNER AFTER THE INCOME DATE. If the Owner or any Joint Owner, who is not an Annuitant, dies after the Income Date, any remaining payments under the income option elected will continue at least as rapidly as under the method of distribution in effect at the Owner's death. Upon the Owner's death after the Income Date, the Beneficiary becomes the Owner.
DEATH OF ANNUITANT BEFORE INCOME DATE. Upon the death of an Annuitant who is not an Owner before the Income Date, the Contract remains in force and the Owner will become the Annuitant. The Owner may designate a new Annuitant, subject to the Company's administrative rules then in effect. However, if the Owner is not a natural person, the death of the primary Annuitant will be treated as the death of the Owner and a new Annuitant may not be designated.
DEATH OF ANNUITANT AFTER INCOME DATE. Upon the death of the Annuitant after the Income Date, the death benefit, if any, will be as specified in the income option elected. Death benefits will be paid at least as rapidly as under the method of distribution in effect at the Annuitant's death.
VA320 22
INCOME DATE. If no Income Date is selected, the Income Date will be the Latest Income Date. At any time at least seven days prior to the Income Date then indicated on the Company's records, the Owner may change the Income Date to any date later than the Income Date currently on record by written notice to the Service Center, subject to the Latest Income Date.
INCOME OPTIONS. The Owner, or any Beneficiary who is so entitled, may elect to receive a single lump-sum. However, a single lump-sum distribution may be deemed to be a withdrawal. Alternatively, an income option may be elected. The Owner may, upon prior written notice to the Company at its Service Center, elect an income option at any time prior to the Income Date or change an income option up to seven days before the Income Date. Unless otherwise designated, the Owner will be the payee.
If no other income option is elected, monthly annuity payments will be made in accordance with Option 3 below, a life annuity with [120]-month period certain. Payments will be made in monthly, quarterly, semiannual or annual installments as selected by the Owner. However, if the amount available to apply under an income option is less than [$5,000], and state law permits, the Company has the right to make payments in one single lump-sum. In addition, if the first payment provided would be less than [$50], and state law permits, the Company may require the frequency of payments be at quarterly, semiannual or annual intervals so as to result in an initial payment of at least [$50].
NO WITHDRAWALS OF CONTRACT VALUE ARE PERMITTED DURING THE ANNUITY PERIOD FOR ANY INCOME OPTION UNDER WHICH PAYMENTS ARE BEING MADE PURSUANT TO LIFE CONTINGENCIES.
Upon written election filed with the Company at its Service Center, all of the Contract Value will be applied to provide one of the following income options. Withdrawal Charges will apply if the annuity payments begin within one year of the Issue Date. Any Excess Interest Adjustment will be waived if the Income Option selected is life contingent or results in payments spread over at least 5 years.
OPTION 1 - LIFE INCOME. An annuity payable monthly during the lifetime of the Annuitant. Under this income option, no further annuity payments are payable after the death of the Annuitant, and there is no provision for a death benefit payable to the Owner. Therefore, it is possible under Option 1 for the Owner to receive only one monthly annuity payment under this income option if the Annuitant has an early death.
OPTION 2 - JOINT AND SURVIVOR. An annuity payable monthly while both the Annuitant and a designated second person are living. Upon the death of either person, the monthly annuity payments will continue during the lifetime of the survivor at either the full amount previously payable or as a percentage (either one-half or two-thirds) of the full amount, as chosen at the time of election of the income option. If a reduced annuity payment to the survivor is desired, variable annuity payments will be determined using either one-half or two-thirds of the number of each type of Annuity Unit credited. Fixed annuity payments will be equal to either one-half or two-thirds of the fixed annuity payment payable during the joint life of the Annuitant and the designated second person.
Annuity payments terminate automatically and immediately upon the death of the surviving person without regard to the number or total amount of payments received. There is no minimum number of fixed annuity payments, and it is possible to have only one monthly annuity payment if both the Annuitant and the designated second person die before the due date of the second payment.
VA320 23
OPTION 3 - LIFE ANNUITY WITH [120] OR [240] MONTHLY PERIODS GUARANTEED. An annuity payable monthly during the lifetime of the Annuitant with the guarantee that if, at the death of the Annuitant, payments have been made for fewer than the guaranteed [120] or [240] monthly periods, as elected, the balance of the guaranteed number of payments will continue to be made to the Owner as scheduled. In the event the Owner dies before the specified number of guaranteed payments has been made, the Beneficiary(ies) may elect to continue receiving the fixed and variable payments according to the terms of this Contract or may alternatively elect to receive the present value of any remaining guaranteed payments in a single lump-sum, the amount of which is calculated by the Company. The present value of any remaining guaranteed payments will be based on the total annuity payment as of the date of the calculation.
OPTION 4 - INCOME FOR A SPECIFIED PERIOD. Under this income option, the Owner can elect monthly payments for any number of years from [5] to [30]. This election must be made for full 12-month periods. In the event the Owner dies before the specified number of payments has been made, the Beneficiary(ies) may elect to continue receiving the fixed and variable payments according to the terms of this Contract or may alternatively elect to receive the present value of any remaining guaranteed payments in a single lump-sum, the amount of which is calculated by the Company. The present value of any remaining guaranteed payments will be based on the total annuity payment as of the date of the calculation.
ADDITIONAL OPTIONS. The Company may make other income options available including income options for longer periods.
FIXED ANNUITY PAYMENTS. To the extent a fixed income option has been elected, the Contract Value allocated to the fixed annuity payment option, less any applicable taxes and Contract charges, shall be applied to the payment of the income option elected at annuity rates at least as great as the annuity rates based upon the Table of Income Options specified in the Contract.
The appropriate rate must be determined by the sex (except where, as in the case of certain Qualified Plans and other employer-sponsored retirement plans, such classification is not permitted) and age of the Annuitant and designated second person, if any.
In no event will the fixed payments be changed once they begin.
VARIABLE ANNUITY PAYMENT. The initial variable annuity payment is determined by taking the Contract Value allocated to that Investment Division, less any tax and any applicable Contract charges, and then applying it to the Table of Income Options specified in the Contract. The appropriate rate must be determined by the sex (except where, as in the case of certain Qualified Plans and other employer-sponsored retirement plans, such classification is not permitted) and age of the Annuitant and designated second person, if any.
VA320 24
The first variable annuity payment is divided by the value of an Annuity Unit as of the Income Date to establish the number of Annuity Units representing each variable annuity payment. The number of Annuity Units determined for the first variable annuity payment remains constant for the second and subsequent variable annuity payments, assuming that no reallocation of Contract Values is made.
The amount of the second and each subsequent variable annuity payment is determined by multiplying the number of Annuity Units by the Annuity Unit Value as of the Business Day next preceding the date on which each payment is due.
ANNUITY UNIT VALUE. The initial value of an Annuity Unit of each Investment Division was set when the Investment Divisions were established. The value may increase or decrease from one Business Day to the next. The Table of Income Options contained in the Contract is based on the assumed net investment rates described in the Basis of Computation provision. If the actual net investment rate experienced by an Investment Division exceeds the assumed net investment rate, variable annuity payments will increase over time. Conversely, if the actual net investment rate is less than the assumed net investment rate, variable annuity payments will decrease over time. If the actual net investment rate equals the assumed net investment rate, the variable annuity payments will remain constant.
The value of a fixed number of Annuity Units will reflect the investment performance of the Investment Divisions, and the amount of each payment will vary accordingly.
For each Investment Division, the value of an Annuity Unit for any Business Day
is determined by multiplying the Annuity Unit Value for the immediately
preceding Business Day by the net investment factor for the Business Day for
which the Annuity Unit Value is being calculated. The result is then multiplied
by a second factor which offsets the effect of the assumed net investment rate.
The net investment factor, which reflects changes in the net asset value of
Investment Divisions, is determined by dividing 1. by 2., and then subtracting
3. from the result, where:
1. Is the net result of:
a. the net asset value of an Investment Division determined as of the end
of the Business Day, plus
b. the per share amount of any dividend or other distribution declared by
the Investment Division if the "ex-dividend" date occurs on the
Business Day, plus or minus
c. a per share credit or charge with respect to any taxes paid or
reserved for by the Company which are determined by the Company to be
attributable to the operation of the Investment Division (no federal
income taxes are applicable under present law);
2. Is the net asset value of the Investment Division determined as of the end of the preceding Business Day; and
3. Is the asset charge factor determined by the Company for the Business Day to reflect the applicable Mortality and Expense Charge, and the Administration Charge.
VA320 25
----------------------------------------------------------------------------------------------------------------------------
TABLE OF INCOME OPTIONS
----------------------------------------------------------------------------------------------------------------------------
The following table is for this Contract whose net proceeds are $1,000, and will apply pro rata to the amount payable under
this Contract.
------------------- --------------------------------------------------------------------------------------------------------
UNDER OPTION 4 MONTHLY INSTALLMENT UNDER OPTIONS 1 OR 3
------------------- --------------------------------------------------------------------------------------------------------
No. of Monthly Age of Age of Age of Age of
Monthly Install- Annui- No. of Mos. Annui- No. of Mos. Annui- No. of Mos. Annui- No. of Mos.
Install- ments tant Certain tant Certain tant Certain tant Certain
ments ------------------------------------------------------------------------------------------------------------
Male Life 120 240 Male Life 120 240 Female Life 120 240 Female Life 120 240
---------- -------- ------ ----- ----- ----- ------- ------ ----- ----- ------- ----- ----- ----- ------- ------ ----- -----
60 17.59 40 3.48 3.47 3.44 70 6.58 6.13 5.08 40 3.32 3.31 3.30 70 5.92 5.69 4.97
72 14.87 41 3.52 3.51 3.48 71 6.81 6.30 5.12 41 3.35 3.35 3.33 71 6.13 5.85 5.03
84 12.93 42 3.57 3.56 3.51 72 7.06 6.46 5.17 42 3.39 3.39 3.37 72 6.35 6.02 5.08
96 11.48 43 3.61 3.60 3.56 73 7.33 6.63 5.20 43 3.43 3.42 3.40 73 6.59 6.20 5.13
108 10.35 44 3.66 3.65 3.60 74 7.62 6.80 5.24 44 3.47 3.46 3.44 74 6.85 6.38 5.18
120 9.44 45 3.72 3.70 3.64 75 7.92 6.97 5.27 45 3.51 3.51 3.48 75 7.13 6.57 5.22
132 8.71 46 3.77 3.75 3.69 76 8.25 7.15 5.29 46 3.56 3.55 3.52 76 7.43 6.76 5.25
144 8.09 47 3.83 3.80 3.73 77 8.60 7.32 5.32 47 3.61 3.60 3.56 77 7.76 6.96 5.29
156 7.58 48 3.89 3.86 3.78 78 8.98 7.49 5.34 48 3.66 3.65 3.60 78 8.11 7.15 5.31
168 7.13 49 3.95 3.92 3.83 79 9.38 7.66 5.35 49 3.71 3.70 3.65 79 8.50 7.35 5.33
180 6.75 50 4.01 3.98 3.88 80 9.81 7.83 5.37 50 3.76 3.75 3.70 80 8.92 7.55 5.35
192 6.41 51 4.08 4.05 3.94 81 10.27 7.99 5.38 51 3.82 3.81 3.75 81 9.37 7.74 5.37
204 6.12 52 4.15 4.12 3.99 82 10.76 8.14 5.39 52 3.88 3.86 3.80 82 9.86 7.92 5.38
216 5.86 53 4.23 4.19 4.05 83 11.29 8.28 5.40 53 3.95 3.93 3.85 83 10.40 8.10 5.39
228 5.62 54 4.31 4.26 4.11 84 11.85 8.42 5.40 54 4.02 3.99 3.91 84 10.97 8.27 5.40
240 5.42 55 4.39 4.34 4.17 85 12.44 8.55 5.41 55 4.09 4.06 3.97 85 11.60 8.42 5.40
252 5.23 56 4.48 4.42 4.23 86 13.08 8.67 5.41 56 4.16 4.13 4.02 86 12.27 8.56 5.41
264 5.06 57 4.58 4.51 4.29 87 13.76 8.78 5.41 57 4.24 4.21 4.09 87 12.99 8.69 5.41
276 4.90 58 4.68 4.60 4.35 88 14.48 8.88 5.41 58 4.33 4.29 4.15 88 13.76 8.80 5.41
288 4.76 59 4.79 4.70 4.42 89 15.25 8.97 5.41 59 4.42 4.37 4.22 89 14.57 8.91 5.41
300 4.63 60 4.90 4.80 4.48 90 16.06 9.05 5.41 60 4.52 4.46 4.28 90 15.43 9.00 5.41
312 4.51 61 5.02 4.91 4.55 91 16.92 9.12 5.42 61 4.62 4.56 4.35 91 16.32 9.08 5.41
324 4.40 62 5.15 5.03 4.61 92 17.84 9.19 5.42 62 4.73 4.66 4.42 92 17.26 9.15 5.42
336 4.29 63 5.29 5.14 4.68 93 18.81 9.24 5.42 63 4.84 4.77 4.49 93 18.23 9.21 5.42
348 4.20 64 5.44 5.27 4.74 94 19.84 9.29 5.42 64 4.97 4.88 4.56 94 19.24 9.26 5.42
360 4.11 65 5.60 5.40 4.80 95 20.95 9.33 5.42 65 5.10 5.00 4.63 95 20.30 9.31 5.42
66 5.77 5.54 4.86 96 22.15 9.36 5.42 66 5.24 5.12 4.70 96 21.42 9.34 5.42
67 5.96 5.68 4.92 97 23.46 9.39 5.42 67 5.39 5.25 4.77 97 22.63 9.38 5.42
68 6.15 5.83 4.98 98 24.93 9.41 5.42 68 5.56 5.39 4.84 98 23.95 9.40 5.42
69 6.36 5.98 5.03 99 26.58 9.42 5.42 69 5.73 5.54 4.91 99 25.45 9.42 5.42
---------- -------- ------ ----- ----- ----- ------- ------ ----- ----- ------- ----- ----- ----- ------- ------ ----- -----
|
NOTE: Due to the length of the information, the factors for Option 2 are available from the Service Center upon Your request.
BASIS OF COMPUTATION. [The actuarial basis for the Table of Income Options shall be the Annuity 2000 Mortality Table, with an assumed net investment rate of 3%, and a 2% expense load.] The interest rate used in the present value calculation referred to in Options 3 and 4 will be determined by the Company, but in no instance will it be greater than 1% higher than the rate used to calculate the initial payment. The differential in the interest rates is equivalent to a fee for the recalculation and commutation of the payments. The Table of Income Options does not include any applicable tax. The benefits of this Contract will not vary due to expense and/or mortality results.
VA320 26
EX-4.k.
JACKSON
NATIONAL LIFE INSURANCE COMPANY
HIGHEST ANNIVERSARY VALUE DEATH
BENEFIT OPTION ENDORSEMENT
THIS ENDORSEMENT IS MADE A PART OF THE CONTRACT TO WHICH IT IS ATTACHED AND IS EFFECTIVE ON THE ISSUE DATE. TO THE EXTENT ANY PROVISIONS CONTAINED IN THIS ENDORSEMENT ARE CONTRARY TO OR INCONSISTENT WITH THOSE OF THE CONTRACT TO WHICH IT IS ATTACHED, THE PROVISIONS OF THIS ENDORSEMENT WILL CONTROL. THE BENEFITS DESCRIBED IN THIS ENDORSEMENT WILL CEASE UPON TERMINATION OF THE CONTRACT. THIS HIGHEST ANNIVERSARY VALUE DEATH BENEFIT OPTION MAY ONLY BE ELECTED PRIOR TO THE ISSUE DATE. THE CONTRACT IS AMENDED AS FOLLOWS:
1. In consideration for the payment of the charge shown on the CONTRACT DATA PAGE, the DEATH BENEFIT AMOUNT BEFORE THE INCOME DATE provision is deleted and replaced with the following:
"DEATH BENEFIT AMOUNT BEFORE THE INCOME DATE. The death benefit is equal to the greatest of:
1. The current Contract Value;
2. All Premiums paid into the Contract (net of any applicable premium taxes) less any withdrawals (including any applicable charges and adjustments to such withdrawals); or
3. The greatest Contract Value on any Contract Anniversary prior to the Owner's 81st birthday
a. less any withdrawals subsequent to that Contract Anniversary (including any applicable charges and adjustments for such withdrawals),
b. plus any Premium paid (net of any applicable premium taxes) subsequent to that Contract Anniversary.
For purposes of calculating the amounts in items 2 and 3 above, (a) all adjustments will occur at the time of the withdrawal or Premium payment, and (b) all adjustments for amounts withdrawn will reduce items 2 and 3 above in the same proportion that the Contract Value was reduced on the date of such withdrawal.
The death benefit amount will be determined as of the end of the Business Day when due proof of the Owner's death satisfactory to the Company and an election as to the type of death benefit option is received by the Company at its Service Center in Good Order.
From the time of death of the Owner until the death benefit amount is determined, any amount allocated to an Investment Division will be subject to investment risk. This investment risk is borne by the Beneficiary(ies)."
SIGNED FOR THE
JACKSON NATIONAL LIFE INSURANCE COMPANY
CLARK P. MANNING, JR.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
7512
EX-9
[JACKSON NATIONAL LIFE INSURANCE COMPANY LETTERHEAD]
August 10, 2006
Board of Directors
Jackson National Life Insurance Company
1 Corporate Way
Lansing, MI 48951
Re: Jackson National Life Insurance Company
Jackson National Separate Account - I
Registration Statement on Form N-4 (File No. 811-08664)
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Gentlemen:
You have requested our Opinion of Counsel in connection with the filing with the Securities and Exchange Commission of this Registration Statement on Form N-4 for the Individual Fixed and Variable Annuity Contracts (the "Contracts") to be issued by Jackson National Life Insurance Company and its separate account, Jackson National Separate Account - I. This filing constitutes an initial filing for the offering of the Contracts and Amendment No. 97 for the Separate Account.
We have made such examination of the law and have examined such records and documents as in our judgment are necessary or appropriate to enable us to render the opinions expressed below.
We are of the following opinions:
1. Jackson National Separate Account - I is a Unit Investment Trust as that term is defined in Section 4(2) of the Investment Company Act of 1940 (the "Act"), and is currently registered with the Securities and Exchange Commission, pursuant to Section 8(a) of the Act.
2. Upon the acceptance of premiums made by an Owner pursuant to a Contract issued in accordance with the Prospectus contained in the Registration Statement and upon compliance with applicable law, such an Owner will have a legally issued, fully paid, non-assessable contractual interest under such Contract.
You may use this opinion letter, or a copy thereof, as an exhibit to the Registration Statement.
Sincerely,
/s/ Anthony L. Dowling Anthony L. Dowling Senior Attorney |