<PAGE>
LINCOLN CHOICEPLUS-SM-
LINCOLN NEW YORK ACCOUNT N FOR VARIABLE ANNUITIES
HOME OFFICE:
Lincoln Life & Annuity Company of New York
120 Madison Street
Suite 1700
Syracuse, NY 13202
This prospectus describes an individual flexible premium deferred variable
annuity contract. It is for use with nonqualified and qualified retirement
plans. Generally, you do not pay federal income tax on the contract's growth
until it is paid out. The contract is designed to accumulate ANNUITY ACCOUNT
VALUE and to provide retirement income that you cannot outlive or for an agreed
upon time. These benefits may be a variable or fixed amount or a combination of
both. If you die before the ANNUITY DATE, we will pay your BENEFICIARY A DEATH
BENEFIT.
The minimum initial PREMIUM PAYMENT for the
contract is:
1. $10,000 for a nonqualified plan and for certain rollovers to IRA'S; and
2. $2,000 for a qualified plan.
Additional PREMIUM PAYMENTS may be made to the contract and must be at least $25
if transmitted electronically; otherwise the minimum amount is $100. The minimum
annual amount of subsequent premium payments is $100 per VAA subaccount, or
$2,000 per fixed account guarantee period.
You choose whether your contract value accumulates on a variable or fixed
(guaranteed) basis or both. We guarantee your principal and a minimum interest
rate on premium payments you put into the fixed account. WE LIMIT TRANSFERS FROM
THE FIXED ACCOUNT. A MARKET VALUE ADJUSTMENT (MVA) MAY BE APPLIED TO ANY
SURRENDER OR TRANSFER FROM THE FIXED ACCOUNT BEFORE THE EXPIRATION OF A
GUARANTEE PERIOD.
All PREMIUM PAYMENTS for benefits on a variable basis will be placed in Lincoln
New York Account N for Variable Annuities (VARIABLE ANNUITY ACCOUNT [VAA]). The
VAA is a segregated investment account of LNY. If you put all or some of your
PREMIUM PAYMENTS into one or more of the contract's variable options, you take
all of the investment risk on the ANNUITY ACCOUNT VALUE and the retirement
income. If the SUBACCOUNTS you select make money, your CONTRACT VALUE goes up;
if they lose money, your ANNUITY ACCOUNT VALUE goes down. How much the ANNUITY
ACCOUNT VALUE goes up or down depends on the performance of the SUBACCOUNTS you
select. WE DO NOT GUARANTEE HOW ANY OF THE VARIABLE OPTIONS OR THEIR FUNDS WILL
PERFORM. ALSO, NEITHER THE U.S. GOVERNMENT NOR ANY FEDERAL AGENCY INSURES OR
GUARANTEES YOUR INVESTMENT IN THE CONTRACT.
AIM Variable Insurance Funds,:
- AIM V.I. Growth Fund
- AIM V.I. International Equity Fund
- AIM V.I. Value Equity Fund
- AIM V.I. Capital Appreciation Fund
Alliance Variable Products Series Fund (Class B):
- Alliance Growth and Income Portfolio
- Alliance Growth Portfolio
- Alliance Premium Growth Portfolio
- Alliance Technology Portfolio
SERVICING OFFICE:
Lincoln ChoicePlus-SM-
P.O. Box 7866
Fort Wayne, IN 46801
American Variable Insurance series (AVIS) a.k.a.
American Funds Insurance Series (AFIS)(Class 2):
- AFIS Global Small Capitalization Fund
- AFIS Growth Fund
- AFIS International Fund
- AFIS Growth-Income Fund
Deutsche Asset Management VIT Funds:
- Deutsche VIT Equity 500 Index Fund
Delaware Group Premium Fund (Standard Class):
-Delaware Premium Growth & Income Series
- Delaware Premium High Yield Series
- Delaware Premium Emerging Markets Series
- Delaware Premium Select Growth Series
- Delaware Premium REIT Series
- Delaware Premium Small Cap Value Series
- Delaware Premium Social Awareness Series
- Delaware Premium Trend Series
Franklin Templeton Variable Insurance Products Trust (Class 2):
- Franklin Small Cap Securities Fund
- Franklin Mutual Shares Securities Fund
- Templeton Growth Securities Fund (formerly Global Growth)
- Templeton International Securities Fund
Liberty Variable Investment Trust:
- Newport Tiger Fund
Lincoln National:
- Bond Fund
- Money Market Fund
MFS-Registered Trademark- Variable Insurance Trust:
- MFS Emerging Growth Series
- MFS Research Series
- MFS Total Return Series
- MFS Utilities Series
Variable Insurance Products Fund
- Fidelity VIP Equity-Income Portfolio
- Fidelity VIP Growth Portfolio
- Fidelity VIP Overseas Portfolio
Variable Insurance Products Fund III
- Fidelity VIP III Growth Opportunities Portfolio
This Prospectus gives you information about the contract that you should know
before you decide to buy a contract and make PREMIUM PAYMENTS. You should also
review the prospectuses for the funds that are attached, and keep these
prospectuses for future reference.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THIS CONTRACT
OR DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENCE.
You can obtain a Statement of Additional Information (SAI dated the same date as
this Prospectus) about the contracts that has more information. Its terms are
made part of this Prospectus. For a free copy, write: Lincoln ChoicePlus-SM-,
P.O. Box 7866, Fort Wayne, Indiana 46801, or call 1-888-868-2583. The SAI and
other information about LNY and the VAA are also available on the SEC's web site
(http:\\www.sec.gov). There is a table of contents for the SAI on the last page
of this Prospectus.
Prospectus Dated: May 12, 2000
1
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
-------------------------------------------
Special terms 2
Expense tables 3
Summary 7
Condensed financial information for
the VAA 9
Financial statements 9
Lincoln Life & Annuity Company of
New York 9
Variable annuity account (VAA) 9
Investments of the variable annuity
account 9
Charges and other deductions 12
The contracts 14
Annuity payouts 18
Annuity options 18
</TABLE>
<TABLE>
-------------------------------------------
<CAPTION>
PAGE
<S> <C>
Fixed side of the contract 19
Federal tax matters 21
Voting rights 24
Distribution of the contracts 24
Return privilege 25
State regulation 25
Records and reports 25
Other information 25
Statement of additional information
table of contents for Lincoln Life
Variable Annuity Account N Lincoln
ChoicePlus-SM- 26
</TABLE>
SPECIAL TERMS
(We have ITALICIZED the terms that have special meaning throughout the
Prospectus).
ACCOUNT OR VARIABLE ANNUITY ACCOUNT (VAA) -- The segregated investment account,
Lincoln New York Account N for Variable Annuities, into which LNY sets aside and
invests the assets for the variable side of the contract offered in this
Prospectus.
ACCUMULATION UNIT -- A measure used to calculate ANNUITY ACCOUNT VALUE for the
variable side of the contract before the ANNUITY DATE.
ANNUITANT -- The person upon whose life the ANNUITY BENEFIT PAYMENTS are based
and made to after the ANNUITY DATE.
ANNUITY ACCOUNT VALUE -- At a given time before the ANNUITY DATE, the total
value of all ACCUMULATION UNITS for a contract plus the value of the fixed side
of the contract.
ANNUITY DATE -- The VALUATION DATE when values are withdrawn or converted into
ANNUITY UNITS or fixed dollar payout for payment of retirement income benefits
under the ANNUITY PAYOUT option you select.
ANNUITY PAYOUT -- An amount paid at regular intervals on a variable or fixed
basis or a combination of both after the ANNUITY DATE under one of several
options available to the ANNUITANT and/or any other payee.
ANNUITY UNIT -- A measure used to calculate the amount of each ANNUITY PAYOUT
after the ANNUITY DATE. See Annuity payout.
BENEFICIARY -- The person you choose to receive any DEATH BENEFIT paid if you
die before the ANNUITY DATE.
CONTRACTOWNER (you, your, owner) -- The person who can exercise the rights
within the contract (e.g., decides on investment allocations, transfers, payout
option, designates the BENEFICIARY, etc.) Usually, but not always, the owner is
the ANNUITANT.
CONTRACT YEAR -- Each one-year period starting with the effective date of the
contract and ending with each contract anniversary after that.
DEATH BENEFIT -- An amount payable to your designated BENEFICIARY if you die
before the ANNUITY DATE.
LINCOLN LIFE -- The Lincoln National Life Insurance Company.
LNC -- Lincoln National Corporation.
LINCOLN NEW YORK (we, us, our) -- Lincoln Life & Annuity Company of New York.
PREMIUM PAYMENTS -- Amounts paid into the contract.
SAI -- Statement of Additional Information.
SUBACCOUNT -- The portion of the VAA that reflects investments in ACCUMULATION
and ANNUITY UNITS of a particular fund available under the contract.
VALUATION DATE -- Each day the New York Stock Exchange (NYSE) is open for
trading.
VALUATION PERIOD -- The period starting at the close of trading (currently
4:00 p.m. New York time) on each VALUATION DATE and ending at the close of such
trading on the next VALUATION DATE.
2
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EXPENSE TABLES
SUMMARY OF CONTRACTOWNER EXPENSES:
THE MAXIMUM SURRENDER CHARGE (CONTINGENT DEFERRED SALES CHARGE) AS A PERCENTAGE
OF PREMIUM PAYMENTS SURRENDERED/WITHDRAWN: 6%
<TABLE>
<S> <C>
Transfer fee: $10
</TABLE>
The surrender charge percentage is reduced over time. The later the redemption
occurs, the lower the surrender charge with respect to that surrender or
withdrawal. We may waive this charge in certain situations. See Charges and
other deductions -- Surrender charge.
A market value adjustment (MVA) may be applied to surrenders or transfers
(except for dollar cost averaging and account rebalancing) from a fixed account
guarantee period amount. See Fixed side of the contract.
The transfer charge will not be imposed on the first 12 transfers during a
CONTRACT YEAR. We reserve the right to charge a $10 fee for transfers over
12 times during any CONTRACT YEAR. Automatic dollar cost averaging and automatic
rebalancing transfers are not included in these first twelve transfers.
ACCOUNT N ANNUAL EXPENSES FOR LINCOLN CHOICEPLUS-SM- SUBACCOUNTS:
(as a percentage of average account value)
<TABLE>
<S> <C>
Mortality and expense risk charge.................... 1.25%
Administrative charge................................ .15%
----
Total annual charge for each Delaware-Lincoln
ChoicePlus-SM- SUBACCOUNT.......................... 1.40%
</TABLE>
FUND ANNUAL EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1999:
(as a percentage of each fund's average net assets):
<TABLE>
<CAPTION>
MANAGEMENT OTHER
FEES EXPENSES
(AFTER ANY - + (AFTER ANY =
WAIVERS/ 12b-1 WAIVERS/
REIMBURSEMENTS) FEES REIMBURSEMENTS)
--------------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
1. AIM V.I. Capital Appreciation............... 0.62% N/A 0.11%
2. AIM V.I. Growth............................. 0.63 N/A 0.10
3. AIM V.I. International Equity............... 0.75 N/A 0.22
4. AIM V.I. Value.............................. 0.61 N/A 0.15
5. Alliance Growth (Class B)................... 0.75 0.25 0.12
6. Alliance Growth and Income (Class B)........ 0.63 0.25 0.09
7. Alliance Premier Growth (Class B)........... 1.00 0.25 0.04
8. Alliance Technology (Class B)............... 0.71 0.25 0.24
9. AVIS Global Small Capitalization Class 2.... 0.78 0.25 0.03
10. AVIS Growth Class 2......................... 0.38 0.25 0.01
11. AVIS Growth Income Class 2.................. 0.34 0.25 0.01
12. AVIS International Class 2.................. 0.55 0.25 0.05
13. Delaware GPF Emerging Markets Standard
Class(2)................................... 1.19 N/A 0.28
14. Delaware GPF Growth and Income Standard
Class(2)................................... 0.60 N/A 0.11
15. Delaware GPF High Yield Standard Class(2)... 0.65 N/A 0.07
16. Delaware GPF REIT Standard Class(2)......... 0.64 N/A 0.21
17. Delaware GPF Select Growth Standard
Class(2)................................... 0.75 N/A 0.06
18. Delaware GPF Small Value Standard
Class(2)................................... 0.75 N/A 0.10
19. Delaware GPF Social Awareness Standard
Class(2)................................... 0.70 N/A 0.15
20. Delaware GPF Trend Standard Class........... 0.75 N/A 0.07
21. Deutsche VIT Equity 500 Index............... 0.14 N/A 0.16
22. Franklin Mutual Shares Securities
Class 2(5)(9).............................. 0.60 0.25 0.19
23. Franklin Small Cap Class 2(4)(9)............ 0.55 0.25 0.27
24. LN Bond..................................... 0.45 N/A 0.08
25. LN Money Market............................. 0.48 N/A 0.11
26. MFS Emerging Growth (Initial Class)(10)..... 0.75 N/A 0.09(1)
27. MFS Research (Initial Class)(10)............ 0.75 N/A 0.11(1)
<CAPTION>
TOTAL
EXPENSES
(AFTER ANY
WAIVERS/
REIMBURSEMENTS)
---------------
<S> <C>
1. 0.73%
2. 0.73
3. 0.97
4. 0.76
5. 1.12
6. 0.97
7. 1.29
8. 1.20
9. 1.06
10. 0.64
11. 0.60
12. 0.85
13.
1.47
14.
0.71
15. 0.72
16. 0.85
17.
0.81
18.
0.85
19.
0.85
20. 0.82
21. 0.30
22.
1.04
23. 1.07
24. 0.53
25. 0.59
26. 0.84
27. 0.86
</TABLE>
3
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<TABLE>
<CAPTION>
MANAGEMENT OTHER
FEES EXPENSES
(AFTER ANY - + (AFTER ANY =
WAIVERS/ 12b-1 WAIVERS/
REIMBURSEMENTS) FEES REIMBURSEMENTS)
--------------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
28. MFS Total Return (Initial Class)(10)........ 0.75% N/A 0.15%(1)
29. MFS Utilities (Initial Class)(10)........... 0.75 N/A 0.16(1)
30. Newport Tiger Fund.......................... 0.49 N/A 0.31
31. Templeton Growth Securities Fund Class 2
(formerly Global Growth)(7)(8)(9).......... 0.83 0.25 0.05
32. Templeton International Securities Fund
Class 2(6)(9).............................. 0.69 0.25 0.19
33. VIP: Equity-Income Initial Class(3)......... 0.48 N/A 0.09
34. VIP: Growth Initial Class(3)................ 0.58 N/A 0.08
35. VIP: Overseas Initial Class(3).............. 0.73 N/A 0.18
36. VIP III Growth Opportunities Initial
Class(3)................................... 0.58 N/A 0.11
<CAPTION>
TOTAL
EXPENSES
(AFTER ANY
WAIVERS/
REIMBURSEMENTS)
---------------
<S> <C>
28. 0.90%
29. 0.91
30. 1.21
31.
1.13
32.
1.13
33. 0.57
34. 0.66
35. 0.91
36.
0.69
</TABLE>
(1) Under the Advisory Agreement with Bankers Trust Company (the "Advisor"), the
fund will pay an advisory fee at an annual percentage rate of 0.20% of the
average daily net assets of the Equity 500 Index Fund. These fees are
accrued daily and paid monthly. The Advisor has VOLUNTARILY undertaken to
waive its fee and to reimburse the fund for certain expenses so that the
fund's total operating expenses will not exceed 0.30% of average daily net
assets. Without the reimbursement to the Funds for the year ended 12/31/99
total expenses would have been 0.43% for the Equity 500 Index Fund.
(2) Effective May 1, 2000 through October 31, 2000, DMC has VOLUNTARILY agreed
to waive its management fee and reimburse the Series for expenses to the
extent that total expenses will not exceed 0.80% for Devon, High Yield and
Growth and Income; 0.85% for Global Bond, REIT, Select Growth, Small Cap
Value, Social Awareness and Trend; 0.95% for International Equity; 1.50% for
Emerging Markets. Without such an arrangement, the total operating expenses
would have been 0.96% for REIT, 0.90% for Social Awareness, 0.94% for Social
Awareness, and 1.53% for Emerging Markets. DMC voluntarily elected to cap
its management fee for the Growth and Income Series at 0.60% indefinitely.
(3) A portion of the brokerage commissions that certain funds pay was used to
reduce fund expenses. In addition, through arrangements with certain funds',
or FMR on behalf of certain funds' custodian, credits realized as a result
of uninvested cash balances were used to reduce a portion of each applicable
fund's expenses. The total operating expenses, after reimbursement would
have been: Equity-Income 0.56%; Growth 0.65%; Growth Opportunities 0.68%.
(4) On 2/8/00, a merger and reorganization was approved that combined the assets
of the fund with a similar fund of the Templeton Variable Products Series
Fund, effective 5/01/00. On 2/8/00, fund shareholders approved new
management fees, which apply to the combined fund effective 5/1/00. The
table shows restated total expenses based on the new fees and assets of the
fund as of 12/31/99, and not the assets of the combined fund. However, if
the table reflected both the new fees and the combined assets, the fund's
expenses after 5/1/00 would be estimated as: Management Fees 0.55%,
Distribution and Service Fees 0.25%, Other Expenses 0.27% and Total Fund
Operating Expenses 1.07%.
(5) On 2/8/00, a merger and reorganization was approved that combined the assets
of the fund with a similar fund of the Templeton Variable Products Series
Fund, effective 5/01/00. The table shows restated total expenses based on
the new fees and assets of the fund as of 12/31/99, and not the assets of
the combined fund. However, if the table reflected both the new fees and the
combined assets, the fund's expenses after 5/1/00 would be estimated as:
Management Fees 0.60%, Distribution and Service Fees 0.25%, Other Expenses
0.19% and Total Fund Operating Expenses 1.04%.
(6) On 2/8/00, a merger and reorganization was approved that combined the assets
of the fund with a similar fund of the Templeton International Equity Fund,
effective 5/01/00. The shareholders of that fund approved new management
fees, which apply to the combined fund effective 5/1/00. The table shows
restated total expenses based on the new fees and assets of the fund as of
12/31/99, and not the assets of the combined fund. However, if the table
reflected both the new fees and the combined assets, the fund's expenses
after 5/1/00 would be estimated as: Management Fees 0.65%, Distribution and
Service Fees 0.25%, Other Expenses 0.20% and Total Fund Operating Expenses
1.10%.
(7) On 2/8/00, a merger and reorganization was approved that combined the assets
of the fund with a similar fund of the Templeton Variable Products Series
Fund, effective 5/01/00. The table shows restated total expenses based on
the new fees and assets of the fund as of 12/31/99, and not the assets of
the combined fund. However, if the table reflected both the new fees and the
combined assets, the fund's expenses after 5/1/00 would be estimated
4
<PAGE>
as: Management Fees 0.80%, Distribution and Service Fees 0.25%, Other
Expenses 0.05% and Total Fund Operating Expenses 1.10%.
(8) The Fund administration fee is paid indirectly through the management fee.
(9) The fund's class 2 distribution plan or "rule 12b-1 plan" is described in
the fund's prospectus. While the maximum amount payable under the fund's
class 2 rule 12b-1 plan is 0.35% per year of the fund's average daily net
assets, the Board of Trustees of Franklin Templeton Variable Insurance
Products Trust has set the current rate at 0.25% per year.
(10) Each series has an expense offset arrangement which reduces the series'
custodian fee based on the amount of cash maintained by the series with its
custodian and dividend disbursing agent. Each series may enter into other
such arrangement and directed brokerage arrangements, which would also have
the effect of reducing the series' expenses. "Other Expenses" do not take
into account these expense reductions, and are therefore higher than the
actual expenses of the series. Had the fee reductions been taken into
account, "Net Expenses" would be lower for certain series and would equal:
0.83% for Emerging Growth Series; 0.85% for Research Series; 0.89% for Total
Return Series; 0.90% for Utilities Series.
EXAMPLES
(expenses of the SUBACCOUNTS and the funds)
If you surrender your contract at the end of the time period shown, you would
pay the following expenses on a $1,000 investment, assuming a 5% annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C> <C>
1. AIM V.I. Capital Appreciation Fund.......................... $82 $118 $147 $251
2. AIM V.I. Growth Fund........................................ 82 118 147 251
3. AIM V.I. International Equity Fund.......................... 85 126 159 276
4. AIM V.I. Value Fund......................................... 82 119 148 254
5. Alliance Premier Growth Portfolio........................... 88 136 176 308
6. Alliance Growth and Income Portfolio........................ 85 126 159 276
7. Alliance Growth Portfolio................................... 86 130 167 291
8. Alliance Technology Portfolio............................... 87 133 171 299
9. AFIS Global Small Capitalization Fund....................... 86 128 164 285
10. AFIS Growth Fund............................................ 81 115 142 242
11. AFIS International Fund..................................... 83 122 153 264
12. AFIS Growth-Income Fund..................................... 81 114 140 238
13. Deutsche VIT Equity 500 Index Fund.......................... 78 105 124 205
14. Delaware Premium Growth and Income Series................... 82 118 148 249
15. Delaware Premium High Yield Series.......................... 82 118 146 250
16. Delaware Premium Emerging Markets Series.................... 90 141 185 326
17. Delaware Premium REIT Series................................ 83 121 151 259
18. Delaware Premium Select Growth Series....................... 83 122 153 264
19. Delaware Premium Small Cap Value Series..................... 83 122 153 264
20. Delaware Premium Social Awareness Series.................... 83 121 152 261
21. Delaware Premium Trend Series............................... 83 121 152 261
22. Fidelity VIP Equity-Income Portfolio........................ 85 128 163 283
23. Fidelity VIP Growth Portfolio............................... 86 129 164 286
24. Fidelity VIP Overseas Portfolio............................. 87 133 171 300
25. Fidelity VIP III Growth Opportunities Portfolio............. 80 112 137 230
26. Franklin Small Cap Securities Fund.......................... 86 129 164 286
27. Franklin Mutual Shares Securities Fund...................... 85 128 163 283
28. Templeton Growth Securities Fund (formerly Global Growth)... 84 122 154 265
29. Templeton International Securities Fund..................... 84 124 156 269
30. Liberty Variable Trust Newport Tiger Fund................... 87 133 171 300
31. Lincoln National Bond Fund.................................. 80 112 137 230
32. Lincoln National Money Market Fund.......................... 81 114 140 237
33. MFS Variable Trust Emerging Growth Series................... 83 122 153 263
34. MFS Variable Trust Research Series.......................... 84 122 154 265
35. MFS Variable Trust Total Return Series...................... 84 124 156 269
36. MFS Variable Trust Utilities Series......................... 84 124 156 270
</TABLE>
5
<PAGE>
If you do not surrender your contract, or if you annuitize, you would pay the
following expenses on a $1,000 investment, assuming a 5% annual return.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C> <C>
1. AIM V.I. Capital Appreciation Fund.......................... $22 $ 68 $117 $251
2. AIM V.I. Growth Fund........................................ 22 68 117 251
3. AIM V.I. International Equity Fund.......................... 25 76 129 276
4. AIM V.I. Value Fund......................................... 22 69 118 254
5. Alliance Premier Growth Portfolio........................... 28 85 146 308
6. Alliance Growth and Income Portfolio........................ 25 76 129 276
7. Alliance Growth Portfolio................................... 26 80 137 291
8. Alliance Technology Portfolio............................... 27 83 141 299
9. AFIS Global Small Capitalization Fund....................... 26 70 134 285
10. AFIS Growth Fund............................................ 21 65 112 242
11. AFIS International Fund..................................... 23 72 123 264
12. AFIS Growth-Income Fund..................................... 21 64 110 238
13. Deutsche VIT Equity 500 Index Fund.......................... 19 55 94 205
14. Delaware Premium Growth and Income Series................... 22 68 116 249
15. Delaware Premium High Yield Series.......................... 22 68 116 250
16. Delaware Premium Emerging Markets Series.................... 23 72 123 264
17. Delaware Premium REIT Series................................ 23 72 123 264
18. Delaware Premium Select Growth Series....................... 23 71 121 259
19. Delaware Premium Small Cap Value Series..................... 23 72 123 264
20. Delaware Premium Social Awareness Series.................... 23 72 123 264
21. Delaware Premium Trend Series............................... 23 71 122 261
22. Fidelity VIP Equity-Income Portfolio........................ 21 63 109 234
23. Fidelity VIP Growth Portfolio............................... 21 56 113 244
24. Fidelity VIP Overseas Portfolio............................. 24 74 126 270
25. Fidelity VIP III Growth Opportunities Portfolio............. 22 67 115 247
26. Franklin Small Cap Securities Fund.......................... 26 79 134 286
27. Franklin Mutual Shares Securities Fund...................... 25 78 133 283
28. Templeton Growth Securities Fund (formerly Global Growth)... 26 80 137 292
29. Templeton International Securities Fund..................... 26 80 137 292
30. Liberty Variable Trust Newport Tiger Fund................... 27 83 141 300
31. Lincoln National Bond Fund.................................. 20 62 107 230
32. Lincoln National Money Market Fund.......................... 21 64 110 237
33. MFS Variable Trust Emerging Growth Series................... 23 72 123 263
34. MFS Variable Trust Research Series.......................... 24 72 124 265
35. MFS Variable Trust Total Return Series...................... 24 74 126 269
36. MFS Variable Trust Utilities Series......................... 24 74 126 270
</TABLE>
We provide these examples to help you understand the direct and indirect costs
and expenses of the contract.
For more information, see Charges and other deductions in this Prospectus, and
in the Prospectuses for the funds. Premium taxes may also apply, although they
do not appear in the examples. THESE EXAMPLES SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
6
<PAGE>
SUMMARY
WHAT KIND OF CONTRACT AM I BUYING?
It is an individual annuity contract issued by LNY. It may provide for a fixed
annuity and/or a variable annuity. This Prospectus describes the variable side
of the contract. See The contracts.
WHAT IS THE VARIABLE ANNUITY ACCOUNT (VAA)?
It is a separate account we established under New York insurance law, and
registered with the SEC as a unit investment trust. We allocate VAA assets to
one or more SUBACCOUNTS, according to your investment choices. VAA assets are
not chargeable with liabilities arising out of any other business which LNY may
conduct. See Variable annuity account (VAA).
WHAT ARE MY INVESTMENT CHOICES?
Based upon your instruction, the VAA applies premium payments to buy shares in
one or more of the following investment options: AIM V.I. Growth Fund, AIM V.I.
Value Equity Fund, AIM V.I. International Equity Fund, AIM V.I. Capital
Appreciation Fund, Alliance Growth and Income Portfolio, Alliance Growth
Portfolio, Alliance Technology Portfolio, Alliance Premier Growth Portfolio,
AFIS Global Small Capitalization Fund, AFIS Growth Fund, AFIS International
Fund, AFIS Growth-Income Fund, BT Equity 500 Index Fund, Delaware Premium Growth
& Income Series, Delaware Premium High Yield Series, Delaware Premium REIT
Series, Delaware Premium Emerging Markets Series, Delaware Premium Small Cap
Value Series, Delaware Premium Trend Series, Delaware Premium Social Awareness
Growth Series, Delaware Premium Select Growth Series, Fidelity VIP Equity-Income
Portfolio, Fidelity VIP Growth Portfolio, Fidelity VIP Overseas Portfolio,
Fidelity VIP III Growth Opportunities Portfolio, Liberty Newport Tiger Fund,
Lincoln National Money Market Fund, Lincoln National Bond Fund, MFS Emerging
Growth Series, MFS Research Series, MFS Total Return Series, MFS Utilities
Series, Franklin Small Cap Investments Fund, Franklin Mutual Shares Securities
Fund, Templeton International Fund, Templeton Global Growth Fund.
HOW DOES THE CONTRACT WORK?
If we approve your application, we will send you a contract. When make PREMIUM
PAYMENTS during the accumulation phase, you buy ACCUMULATION UNITS. If you later
decide to receive retirement income payments, your ACCUMULATION UNITS are
converted to ANNUITY UNITS. We base your retirement income payments on the
number of ANNUITY UNITS you received and the value of each ANNUITY UNIT on
payout days. See Charges and other deductions -- The contracts.
WHAT CHARGES DO I PAY?
If you withdraw from your ANNUITY ACCOUNT, you pay a surrender or withdrawal
charge which may range from 0% to 6%, depending upon how many CONTRACT YEARS
your premium payments have been in the contract. We may waive surrender charges
in certain situations. See Charges and other deductions -- Surrender charge.
We reserve the right to charge a $10 fee for transfers over 12 times during any
CONTRACT YEAR, excluding automatic dollar cost averaging and automatic
rebalancing program transfers.
The surrender or transfer of value from a fixed account guaranteed period may be
subject to a market value adjustment (MVA). See Fixed side of the contract.
We will deduct any applicable premium tax from PREMIUM PAYMENTS or ANNUITY
ACCOUNT VALUE at the time the tax is incurred or at another time we choose.
We apply an annual charge totaling 1.40% to the daily net asset value of the
VAA. This charge includes 0.15% as an administrative charge and 1.25% as a
mortality and expense risk charge. See Charges and other deductions. We may
waive these charges in certain situations.
The funds' investment management fees, expenses and expense limitations, if
applicable, are more fully described in the funds' Prospectuses.
WHAT PREMIUM PAYMENTS DO I MAKE, AND HOW OFTEN?
Subject to minimum and maximum PREMIUM PAYMENT AMOUNTS, your PREMIUM PAYMENTS
are completely flexible. See The contracts -- premium payments.
HOW WILL MY ANNUITY PAYOUTS BE CALCULATED?
If you decide to annuitize, you may select an annuity option and start receiving
retirement income payments from your contract as a fixed option or variable
option or a combination of both. See Annuity Payouts -- Annuity Options.
REMEMBER THAT PARTICIPANTS IN THE VAA BENEFIT FROM ANY GAIN, AND TAKE A RISK OF
ANY LOSS IN THE VALUE OF THE SECURITIES IN THE FUNDS' PORTFOLIOS.
WHAT HAPPENS IF I DIE BEFORE I ANNUITIZE?
Your BENEFICIARY will receive the greatest of the PREMIUM PAYMENTS, ANNUITY
ACCOUNT VALUE or the highest ANNUITY ACCOUNT VALUE as of the most recent
CONTRACT ANNIVERSARY occurring on or before the CONTRACTOWNER'S 80th birthday.
Your BENEFICIARY has options as to how the DEATH BENEFIT is paid. See The
contracts -- death benefit before the ANNUITY DATE.
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MAY I TRANSFER CONTRACT VALUE AMONG VARIABLE OPTIONS AND BETWEEN THE FIXED SIDE
AND VARIABLE SIDE OF THE CONTRACT?
Yes, with certain limits. See The contracts -- Transfers between SUBACCOUNTS on
or before the ANNUITY DATE; Transfers after the ANNUITY DATE; and Transfers to
and from a Fixed Account on or before the ANNUITY DATE.
MAY I SURRENDER THE CONTRACT OR MAKE A WITHDRAWAL?
Yes, subject to contract requirements and to restrictions of any qualified
retirement plan for which the contract was purchased. See The Contracts --
Surrenders and withdrawals. If you surrender the contract or make a withdrawal,
certain charges may apply. In addition, if you decide to take a distribution
before age 59-1/2, a 10% Internal Revenue Service (IRS) tax penalty may apply. A
surrender or withdrawal may also be subject to 20% withholding. See Federal tax
matters.
DO I GET A FREE LOOK AT THIS CONTRACT?
Yes. You can cancel the contract within ten days of the date you first received
the contract. You need to return the contract, postage prepaid, to our Servicing
Office. You assume the risk of any market drop on PREMIUM PAYMENTS you allocate
to the variable side of the contract. See Return privilege.
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CONDENSED FINANCIAL INFORMATION FOR THE VARIABLE ANNUITY ACCOUNT
ACCUMULATION UNIT VALUES
No condensed financial information for the VAA is presented because as of
December 31, 1999, the Account had not yet commenced operations.
FINANCIAL STATEMENTS
The audited statutory-basis financial statements of LNY as of December 31, 1999
and 1998 and for each of the three years ended December 31, 1999 may be found in
the Statement of Additional Information. No financial statements are included
for the VAA because as of December 31, 1999, the Account had not yet commenced
operations.
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
LNY is a life insurance company founded in New York on June 6, 1996. LNY is a
subsidiary of LINCOLN LIFE. LINCOLN LIFE is one of the largest stock life
insurance companies in the United States. LINCOLN LIFE, an Indiana corporation,
is owned by Lincoln National Corp. (LNC) which is also organized under Indiana
law. LNC's primary businesses are insurance and financial services.
VARIABLE ANNUITY ACCOUNT (VAA)
On March 11, 1999, the VAA was established as an insurance company separate
account under New York law. It is registered with the SEC as a unit investment
trust under the provisions of the Investment Company Act of 1940 (1940 Act). The
SEC does not supervise the VAA or LNY. The VAA is a segregated investment
account, meaning that its assets may not be charged with liabilities resulting
from any other business that we may conduct. Income, gains and losses, whether
realized or not, from assets allocated to the VAA are, in accordance with the
applicable annuity contracts, credited to or charged against the VAA. They are
credited or charged without regard to any other income, gains or losses of LNY.
The VAA satisfies the definition of separate account under the federal
securities laws. We do not guarantee the investment performance of the VAA. Any
investment gain or loss depends on the investment performance of the funds. You
assume the full investment risk for all amounts placed in the VAA.
The VAA may be used to support other contracts offered by LNY in addition to the
contracts described in this Prospectus.
INVESTMENTS OF THE VARIABLE ANNUITY ACCOUNT
You decide the SUBACCOUNT(S) to which you allocate PREMIUM PAYMENTS. You may
change your allocation without penalty or charges. Shares of the funds will be
sold at net asset value with no initial sales charge to the VAA in order to fund
the contracts. Each fund is required to redeem fund shares at net asset value
upon our request. We reserve the right to add, delete or substitute funds,
subject to compliance with applicable law.
INVESTMENT ADVISORS
The investment advisors of the funds are:
AIM Variable Insurance Funds, Inc. ("AIM V.I. Funds"), managed by A I M
Advisors, Inc.
Alliance Variable Products Series Fund is managed by Alliance Capital
Management, L.P.
American Funds Insurance Series is managed by Capital Research and Management
Company.
Deutsche Asset Management VIT Funds (formerly the "BT Insurance Trust") managed
by Bankers Trust Company.
Delaware Group Premium Fund Inc., ("Delaware Group"), managed by Delaware
Management Company. The Social Awareness Series is sub-advised by Vantage
Investment Advisors. The REIT Series is sub-advised by Lincoln Investment
Management. The International and Emerging Markets are managed by Delaware
International Advisers Ltd.
Variable Insurance Products Fund ("Fidelity VIP") and Variable Insurance
Products Fund III ("Fidelity VIP III") managed by Fidelity Management & Research
Company.
Franklin Templeton Variable Insurance Products Trust -- Franklin Small Cap is
managed by Franklin Advisers, Inc.; Mutual Shares Securities is managed by
Franklin Mutual Advisers, LLC; Templeton Growth Securities is managed by
Templeton Global Advisors Limited; Templeton International Securities is managed
by Templeton Investment Counsel, Inc.
Liberty Variable Investment Trust ("Liberty Variable Trust") managed by Liberty
Advisory Series Corp., and sub-advised by Colonial Management Associates, Inc.
and Newport Fund Management, Inc.
Lincoln National Bond Fund, Inc., and Lincoln National Money Market Fund, Inc.,
managed by Lincoln Investment Management, Inc.
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MFS -- Variable Insurance Trust ("MFS Variable Trust") managed by Massachusetts
Financial Services Company.
As compensation for their services to a fund, the investment advisors receive a
fee from each fund, which is accrued daily and paid monthly. This fee is based
on the net assets of each fund.
With respect to a fund, the advisor and/or distributor, or an affiliate thereof,
may compensate LNY or an affiliate for administrative, distribution, or other
services. It is anticipated that such compensation will be based on assets of
the particular fund attributable to the contracts along with certain other
variable contracts issued or administered by LNY or an affiliate.
The funds' shares are issued and redeemed only in connection with variable
annuity contracts and variable life insurance policies (mixed funding) issued
through separate accounts of LNY and other life insurance companies (shared
funding). The funds do not foresee any disadvantage to CONTRACTOWNERS arising
out of mixed or shared funding. Nevertheless, the funds' Boards intend to
monitor events in order to identify any material irreconcilable conflicts which
may possibly arise and to determine what action, if any, should be taken in
response thereto. If such a conflict were to occur, one of the separate accounts
might withdraw its investment in a fund. This might force a fund to sell
portfolio securities at disadvantageous prices.
DESCRIPTION OF THE FUNDS
Certain funds offered under this contract have similar investment objectives and
policies to other portfolios managed by the advisor or sub-advisor. The
investment results of the funds, however, may be higher or lower than the other
portfolios that are managed by the advisor or sub-advisor. There can be no
assurance, and no representation is made, that the investment results of any of
the funds will be comparable to the investment results of any other portfolio
managed by the advisor or sub-advisor.
Following are brief summaries of the investment objectives and policies of the
funds. Each fund is subject to certain investment policies and restrictions
which may not be changed without a majority vote of shareholders of that fund.
More detailed information may be obtained from the current Prospectus for the
fund which accompanies or precedes this Prospectus. PLEASE BE ADVISED THAT THERE
IS NO ASSURANCE THAT ANY OF THE FUNDS WILL ACHIEVE THEIR STATED OBJECTIVES.
1. AIM V.I. Growth Fund: Seeks growth of capital primarily by investing in
seasoned and better capitalized companies considered to have strong
earnings momentum.
2. AIM V.I. International Equity Fund: Seeks to provide long-term growth of
capital by investing in a diversified portfolio of international equities
whose issuers are considered to have strong earnings momentum.
3. AIM V.I. Value Fund: Seeks to achieve long-term growth of capital by
investing primarily in equity securities judged by its investment advisor
to be undervalued relative to the investment advisor's appraisal of the
current or projected earnings of the companies issuing the securities, or
relative to the current market values of assets owned by the companies
issuing the securities or relative to the equity market generally. Income
is a secondary objective.
4. AIM V.I. Capital Appreciation Fund: Seeks growth of capital through
investment in common stocks, with emphasis on medium and small-sized
growth companies. The investment advisor will be particularly interested
in companies that are likely to benefit from new or innovative products,
services or processes that should enhance such companies prospects' for
future growth in earnings.
5. Alliance Premier Growth Portfolio: Seeks long-term growth of capital by
investing predominantly in the equity securities of a limited number of
large, carefully selected, high-quality U.S. companies that are judged
likely to achieve superior earnings growth.
6. Alliance Growth and Income Portfolio: Seeks reasonable current income and
reasonable appreciation through investments primarily in dividend-paying
common stocks of good quality. The portfolio also may invest in
fixed-income securities and convertible securities.
7. Alliance Growth Portfolio: Seeks to provide long-term growth of capital.
Current income is only an incidental consideration. The portfolio invests
primarily in equity securities of companies with favorable earnings
outlooks, which have long-term growth rates that are expected to exceed
that of the U.S. economy over time.
8. Alliance Technology Portfolio: Emphasizes growth of capital and invests
for capital appreciation. Current income is only an incidental
consideration. The portfolio may seek income by writing listed call
options. The portfolio invests primarily in securities of companies
expected to benefit from technological advances and improvements (i.e.,
companies that use technology extensively in the development of new or
improved products or processes).
9. AFIS Global Small Capitalization Fund: Seeks to make your investment grow
over time by investing primarily in stocks of smaller companies located
around the world that typically have market capitalizations of $50 million
to $1.5 billion. The fund is designed for investors seeking capital
appreciation through stocks. Investors in the fund should have a long-term
perspective and be
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able to tolerate potentially wide price fluctuations.
10. AFIS Growth Fund: Seeks to make your investment grow by investing
primarily in common stocks of companies that appear to offer superior
opportunities for growth of capital. The fund is designed for investors
seeking capital appreciation through stocks. Investors in the fund should
have a long-term perspective and be able to tolerate potentially wide
price fluctuations.
11. AFIS International Fund: Seeks to make your investment grow over time by
investing primarily in common stocks of companies located outside the
United States. The fund is designed for investors seeking capital
appreciation through stocks. Investors in the fund should have a long-term
perspective and be able to tolerate potentially wide price fluctuations.
12. AFIS Growth and Income Fund: Seeks to make your investment grow and
provide you with income over time by investing primarily in common stocks
or other securities which demonstrate the potential for appreciation
and/or dividends. The fund is designed for investors seeking both capital
appreciation and income.
13. Deutsche VIT Equity 500 Index Funds: Seeks to match the performance of the
stock market as represented by Standard & Poor's 500-Registered Trademark-
Index, before fund expenses.
14. Delaware Premium Growth and Income Series: Seeks the highest possible
total return by investing in stocks that exhibit the potential for growth
while providing higher than average dividend income.
15. Delaware Premium High Yield Series: Seeks total return and, as a secondary
objective, a high current income. The Series invests in rated and unrated
corporate bonds (including high-risk, high-yield bonds commonly known as
junk bonds), foreign bonds, U.S. government securities and commercial
paper. An investment in this series may involve greater risks than an
investment in a portfolio comprised primarily of investment grade bonds.
16. Delaware Premium Emerging Markets Series: Seeks long-term growth by
investing primarily in stocks of companies located or operating in
emerging or developing countries.
17. Delaware Premium Select Growth Series: Seeks long-term capital
appreciation by primarily investing in common stocks of companies that
have the potential for high earnings growth. Companies of any size are
considered, as long as they are larger than $300 million in market
capitalization.
18. Delaware Premium REIT Series: Seeks to achieve maximum long-term total
return by investing primarily in the securities of real estate investment
trusts and real estate operating companies.
19. Delaware Premium Small Cap Value Series: Seeks growth by investing
primarily in stocks of small cap companies whose market values appear low
relative to underlying value or future earnings and growth potential.
20. Delaware Premium Trend Series: Seeks long-term growth by investing
primarily in stocks of small companies and convertible securities of
emerging and other growth-oriented companies.
21. Delaware Premium Aggressive Growth Series: Seeks long-term capital
appreciation by primarily investing in common stocks of companies that
have the potential for high earnings growth. Companies of any size are
considered, as long as they are larger than $300 million in market
capitalization.
22. Fidelity VIP Equity-Income Portfolio: Seeks reasonable income by investing
primarily in income-producing equity securities, with some potential for
capital appreciation, seeking a yield that exceeds the composite yield on
the securities comprising the Standard and Poor's 500 Index (S&P 500).
23. Fidelity VIP Growth Portfolio: Seeks long-term capital appreciation. The
portfolio normally purchases common stocks.
24. Fidelity VIP Overseas Portfolio: Seeks long-term growth of capital by
investing primarily in foreign securities.
25. Fidelity VIP III Growth Opportunities Portfolio: Seeks capital growth by
investing primarily in common stocks.
26. Franklin Small Cap Securities Fund: Seeks long-term capital growth by
investing in equity securities of U.S. small cap growth companies. Small
cap companies are generally those with market cap values of less than $1.5
billion at time of purchase.
27. Franklin Mutual Shares Securities Fund: Seeks capital appreciation with
income as a secondary goal. It invests in equity securities of companies
that the manager believes are available at market prices less than their
actual value on certain recognized or objective criteria.
28. Liberty Newport Tiger Fund: Seeks long-term capital growth by investing
primarily in the stocks of high quality international companies located in
the nine "Tigers" of Asia: Hong Kong, China, Singapore, Malaysia,
Thailand, Indonesia, the Philippines, South Korea and Taiwan.
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29. Lincoln National Bond Fund: Seeks maximum current income consistent with
prudent investment strategy. The fund invests primarily in medium- and
long-term corporate and government bonds.
30. Lincoln National Money Market Fund: Seeks maximum current income
consistent with the preservation of capital. The fund invests in short-
term obligations issued by U.S. corporations; the U.S. Government; and
federally chartered banks and U.S. branches of foreign banks.
31. MFS Emerging Growth Series: Seeks to provide long-term growth by investing
primarily in the common stocks of companies the managers believe are in
the early stages of their life cycle but which have the potential to
become major enterprises.
32. MFS Research Series: Seeks long-term growth and future income by investing
primarily in equity companies believed to possess better than average
prospects for long-term growth. A committee of investment research
analysts selects the securities for the fund, with individual analysts
responsible for choosing securities within an assigned industry.
33. MFS Total Return Series: Seeks to provide above-average income consistent
with the prudent employment of capital and to provide a reasonable
opportunity for capital growth and income. The fund invests in a broad
range of securities, including short-term obligations, and may be
diversified not only by company and industry, but also by security type.
34. MFS Utilities Series: Seeks capital growth and current income by investing
the majority of its assets in equity and debt securities of both domestic
and foreign companies in the utilities industry.
35. Templeton International Securities Fund: Seeks long-term capital growth.
It invests primarily in stocks of companies outside the United States,
including emerging markets. Any income realized will be incidental.
36. Templeton Growth Securities Fund: Seeks long-term capital growth. It
invests primarily in equity securities issued by companies, large and
small, in various nations throughout the world, including the United
States and emerging markets.
FUND SHARES
We will purchase shares of the funds at net asset value and direct them to the
appropriate SUBACCOUNTS of the VAA. We will redeem sufficient shares of the
appropriate funds to pay ANNUITY PAYOUTS, DEATH BENEFITS, surrender/ withdrawal
proceeds or for other purposes described in the contract. If you want to
transfer all or part of your investment from one SUBACCOUNT to another, we may
redeem shares held in the first and purchase shares of the other. Redeemed
shares are retired, but they may be reissued later.
When a fund sells any of its shares both to variable annuity and to variable
life insurance separate accounts, it is said to engage in mixed funding. When a
fund sells any of its shares to separate accounts of unaffiliated life insurance
companies, it is said to engage in shared funding.
The funds currently engage in mixed and shared funding. Therefore, due to
differences in redemption rates or tax treatment, or other considerations, the
interest of various CONTRACTOWNERS participating in a fund could conflict. Each
of the fund's Board of Directors will monitor for the existence of any material
conflicts, and determine what action, if any, should be taken. See the
Prospectuses for the funds.
Shares of the funds are not sold directly to the general public. They are sold
to LNY, and may be sold to other insurance companies, for investment of the
assets of the SUBACCOUNTS established by those insurance companies to fund
variable annuity and variable life insurance contracts.
REINVESTMENT OF DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
All dividends and capital gain distributions of the funds are automatically
reinvested in shares of the distributing funds at their net asset value on the
date of distribution. Dividends are not paid out to CONTRACTOWNERS as additional
units, but are reflected as changes in unit values.
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS
WE RESERVE THE RIGHT, WITHIN THE LAW, TO MAKE ADDITIONS, DELETIONS AND
SUSTITUTIONS FOR THE FUNDS IN WHICH THE VAA PARTICIPATES. We may substitute
shares of other funds for shares already purchased, or to be purchased in the
future, under the contract. This substitution might occur if shares of a fund
should no longer be available, or if investment in any fund's shares should
become inappropriate, in the judgment of our management, for the purposes of the
contract. We cannot substitute shares of one fund for another without the
approval by the SEC. We will also notify you.
CHARGES AND OTHER DEDUCTIONS
We will deduct the charges described below to cover our costs and expenses,
services provided and risks assumed under the contracts. We incur certain costs
and expenses for the distribution and administration of the
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contracts and for providing the benefits payable thereunder. More particularly,
our administrative services include: processing applications for and issuing the
contracts, processing purchases and redemptions of fund shares as required
(including dollar cost averaging, account rebalancing and automatic withdrawal
services), maintaining records, administering ANNUITY PAYOUTS, furnishing
accounting and valuation services (including the calculation and monitoring of
daily SUBACCOUNT values), reconciling and depositing cash receipts, providing
contract confirmations, providing toll-free inquiry services and furnishing
telephone fund transfer services. The risks we assume include: the risk that
ANNUITANTS receiving ANNUITY PAYOUTS under contract live longer than we assumed
when we calculated our guaranteed rates (these rates are incorporated in the
contract and cannot be changed); the risk that more owners than expected will
qualify for waivers of the surrender charge; and the risk that our costs in
providing the services will exceed our revenues from the contract charges (which
we cannot change). The amount of a charge may not necessarily correspond to the
costs associated with providing the services or benefits indicated by the
description of the charge. For example, the surrender charge collected may not
fully cover all of the sales and distribution expenses actually incurred by us.
DEDUCTIONS FROM THE VAA FOR LINCOLN CHOICEPLUS-SM-
We deduct from the VAA an amount, computed daily, which is equal to an annual
rate of 1.40% of the average daily net assets. The charge consists of a 0.15%
administrative charge and a 1.25% mortality and expense risk charge.
SURRENDER CHARGE
A surrender charge applies (except as described below) to surrenders and
withdrawals of PREMIUM PAYMENTS that have been invested for the periods
indicated as follows:
<TABLE>
<CAPTION>
Number of complete CONTRACT YEARS that a
PREMIUM PAYMENT has been invested
<S> <C> <C>
---------------------------------------------------------------
Less than At least
One year 1 2 3 4 5 6 7+
Surrender charge as a
percentage of the
PREMIUM PAYMENTS
surrendered or
withdrawn 6% 6 5 4 3 2 1 0
</TABLE>
A surrender charge does not apply to:
1. A surrender or withdrawal of PREMIUM PAYMENTS that have been invested for
more than seven full CONTRACT YEARS;
2. Withdrawals of ANNUITY ACCOUNT VALUE during a CONTRACT YEAR to the extent
that the total ANNUITY ACCOUNT VALUE withdrawn during the current contract
year does not exceed 15% of PREMIUM PAYMENTS;
3. Electing an annuity option available within
the contract;
4. The surviving spouse's assuming ownership of the contract as a result of
the death of the original owner;
5. A surrender amount equal to a maximum of 75% of the ANNUITY ACCOUNT VALUE
as a result of 180 days of continuous confinement of the CONTRACTOWNER in
an accredited nursing home or equivalent health care facility subsequent
to the effective date of the contract;
6. A surrender of the contract as a result of the death of the CONTRACTOWNER,
JOINT OWNER OR ANNUITANT. However, the surrender charge is not waived as a
result of the death of an ANNUITANT who is not the CONTRACTOWNER.
For purposes of calculating the surrender charge on withdrawals on contracts
where the CONTRACTOWNER is not a Charitable Remainder Trust, LNY assumes that:
a. the FREE AMOUNT will be withdrawn from PURCHASE PAYMENTS on a "first in-first
out (FIFO)" basis.
b. Prior to the seventh anniversary of the contract, any amount withdrawn above
the FREE AMOUNT during a CONTRACT YEAR will be withdrawn in the following
order:
1. from PURCHASE PAYMENTS (on a FIFO basis) until exhausted; then
2. from earnings.
c. On or after the seventh anniversary of the contract, any amount withdrawn
above the FREE AMOUNT during a CONTRACT YEAR will be withdrawn in the
following order:
1. from PURCHASE PAYMENTS (on a FIFO basis) to which a surrender charge no
longer applies until exhausted; then
2. from earnings until exhausted; then
3. from PURCHASE PAYMENTS (on a FIFO basis) to which a surrender charge still
applies.
For purposes of calculating the surrender charge on withdrawals on contracts
where the CONTRACTOWNER is a Charitable Remainder Trust, LNY assumes that:
a. the FREE AMOUNT will be withdrawn from PURCHASE PAYMENTS on a FIFO basis.
b. Any amount withdrawn above the FREE AMOUNT during a CONTRACT YEAR will be
withdrawn in the following order:
1. from PURCHASE PAYMENTS (on a FIFO basis) to which a surrender charge no
longer applies until exhausted; then
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2. from earnings until exhausted; then
3. from PURCHASE PAYMENTS (on a FIFO basis) to which a surrender charge still
applies.
The surrender charge is calculated separately for each CONTRACT YEAR'S PURCHASE
PAYMENTS to which a charge applies. The surrender charges associated with
surrender or withdrawal are paid to us to compensate us for the loss we
experience on contract distribution costs when CONTRACTOWNERS surrender or
withdraw before distribution costs have been recovered.
If the CONTRACTOWNER is a corporation or other non-individual (non-natural
person), the ANNUITANT or joint annuitant will be considered the CONTRACTOWNER
or joint owner for purposes of determining when a surrender charge does not
apply.
TRANSFER FEE
We reserve the right to impose a $10 fee for transfers over 12 times during any
CONTRACT YEAR. Automatic dollar cost averaging and automatic rebalancing
transfers are not included in the limit of twelve transfers.
RIDER CHARGES
A fee or expense may also be deducted in connection with any benefits added to
the contract by rider or endorsement. See the rider for any applicable fee
or expense.
DEDUCTIONS FOR PREMIUM TAXES
Any premium tax or other tax levied by any government entity with respect to the
contracts will be deducted from the ANNUITY ACCOUNT VALUE when incurred, or at
another time of our choosing.
The applicable premium tax rates that states and other governmental entities
impose on the purchase of an annuity are subject to change by legislation, by
administrative interpretation or by judicial action. These premium taxes
generally depend upon the law of your state of residence. The tax ranges from 0%
to 3.5%.
OTHER CHARGES AND DEDUCTIONS
Deductions from and expenses paid out of the assets of each underlying fund are
more fully described in the Prospectus for each fund.
ADDITIONAL INFORMATION
We may reduce or eliminate the administrative and surrender charges and the
account fees described previously for any particular contract. However, we will
do so only to the extent that we anticipate lower distribution and/or
administrative expenses, or that we perform fewer sales or administrative
services than those originally contemplated in establishing the level of those
charges.
THE CONTRACTS
PURCHASE OF CONTRACTS
If you wish to purchase a contract, you must apply for it through a sales
representative authorized by us. We review the completed application and decide
whether to accept or reject it. If we accept it, a CONTRACT is prepared and
executed by our legally authorized officers. We then send the CONTRACT to you
through your sales representative. See Distribution of the contracts.
When a completed application and all other information necessary for processing
a purchase order is received, an initial PREMIUM PAYMENT will be priced no later
than two business days after we receive the order. While attempting to finish an
incomplete application, we may hold the initial PREMIUM PAYMENT for no more than
five business days. If the incomplete application cannot be completed within
those five days, you will be informed of the reasons, and the PREMIUM PAYMENT
will be returned immediately. Once the application is complete, the initial
PREMIUM PAYMENT must be priced within two business days.
WHO CAN INVEST?
To apply for a contract, you must be of legal age in New York where the
contracts may be lawfully sold and also be eligible to participate in any of the
qualified or nonqualified plans for which the contracts are designed. The
CONTRACTOWNER cannot be older than age 89 at the time of application. The
maximum annuitization age is 90.
PREMIUM PAYMENTS
PREMIUM PAYMENTS are payable to us at a frequency and in an amount selected by
you in the application. The minimum initial PREMIUM PAYMENT is $10,000 for
nonqualified contracts and Section 403(b) transfers/rollovers to IRAs; and
$2,000 for other qualified contracts. The minimum annual amount for additional
PREMIUM PAYMENTS for nonqualified and qualified contracts is $25 if transmitted
electronically; otherwise the minimum amount is $100. There is no set maximum
for additional PREMIUM PAYMENTS. However, PREMIUM PAYMENTS in excess of
$1,000,000 require pre-approval by LNY. LNY also reserves the right to limit
aggregate premium payments to $2,000,000. If you stop making PREMIUM PAYMENTS
for three consecutive years, and the ANNUITY ACCOUNT VALUE decreases to less
than $2,000, we may terminate the contract as allowed by New York non-forfeiture
law for deferred annuities and pay the CONTRACTOWNER an adjusted ANNUITY ACCOUNT
VALUE.
We will notify the CONTRACTOWNER at least 30 days in advance of the intended
action. During the notification period, the CONTRACTOWNER may make additional
PREMIUM PAYMENTS to meet the minimum value requirements and to avoid
cancellation of the contract.
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VALUATION DATE
ACCUMULATION and ANNUITY units will be valued once daily at the close of trading
(currently) 4:00 p.m., New York time) on each day the New York Stock Exchange is
open (VALUATION DATE). On any date other than a VALUATION DATE, the ACCUMULATION
UNIT value and the ANNUITY UNIT value will not change.
ALLOCATION OF PREMIUM PAYMENTS
PREMIUM PAYMENTS are placed, according to your instructions into either (a) one
or more fixed account(s), or (b) one or more of the VAA'S SUBACCOUNTS, each of
which invests in shares of its corresponding fund.
The minimum amount of any PREMIUM PAYMENT that can be put into any one variable
SUBACCOUNT is $50, or $2,000 for a fixed account. No allocation can be made that
would result in a variable SUBACCOUNT of less than $50, or that would result in
a fixed account of less than $2,000. Upon allocation to a VAA SUBACCOUNT,
PREMIUM PAYMENTS are converted into ACCUMULATION UNITS. The number of
ACCUMULATION UNITS credited is determined by dividing the amount allocated to
each SUBACCOUNT by the value of an ACCUMULATION UNIT for that SUBACCOUNT on the
VALUATION DATE on which the PREMIUM PAYMENT is received at our servicing office
if received before 4:00 p.m., New York time. If the PREMIUM PAYMENT is received
at or after 4:00 p.m., New York time, we will use the ACCUMULATION UNIT value
computed on the next VALUATION DATE. The number of ACCUMULATION UNITS determined
in this way is not changed by any subsequent change in the value of an
ACCUMULATION UNIT. However, the dollar value of an ACCUMULATION UNIT will vary
depending not only upon how well the underlying fund's investments perform, but
also upon the expenses of the VAA and the underlying funds.
VALUATION OF ACCUMULATION UNITS
PREMIUM PAYMENTS allocated to the VAA are converted into ACCUMULATION UNITS.
This is done by dividing each PREMIUM PAYMENT by the value of an ACCUMULATION
UNIT for the VALUATION PERIOD during which the PREMIUM PAYMENT is allocated to
the VAA. The ACCUMULATION UNIT value for each SUBACCOUNT was or will be
established at the inception of the SUBACCOUNT. It may increase or decrease from
VALUATION PERIOD to VALUATION PERIOD. The ACCUMULATION UNIT value for a
SUBACCOUNT for a later VALUATION PERIOD is determined as follows:
(1) The total value of the fund shares held in the SUBACCOUNT is calculated by
multiplying the number of fund shares owned by the SUBACCOUNT at the beginning
of the VALUATION PERIOD by the net asset value per share of the fund at the end
of the VALUATION PERIOD, and adding any dividend or other distribution of the
fund if an ex-dividend date occurs during the VALUATION PERIOD; minus
(2) The liabilities of the SUBACCOUNT at the end of the valuation period; these
liabilities include daily charges imposed on the SUBACCOUNT, and may include a
charge or credit with respect to any taxes paid or reserved for by us that we
determine result from the operations of the VAA; and
(3) The result of (2) is divided by the number of SUBACCOUNT units outstanding
at the beginning of the valuation period.
The charges imposed on a SUBACCOUNT for any VALUATION PERIOD are equal to the
sum of the daily mortality and expense risk charge and the daily administrative
charge, multiplied by the number of calendar days in the VALUATION PERIOD.
TRANSFERS BETWEEN SUBACCOUNTS ON OR BEFORE THE ANNUITY DATE
You may transfer all or a portion of your investment from one SUBACCOUNT to
another. A transfer involves the surrender of ACCUMULATION UNITS in one
SUBACCOUNT and the purchase of ACCUMULATION UNITS in the other SUBACCOUNT. A
transfer will be done using the respective ACCUMULATION UNIT values determined
at the end of the VALUATION DATE on which the transfer request is received. We
reserve the right to impose a $10 fee for transfers after the first 12 times
during a CONTRACT YEAR.
The minimum amount that may be transferred between subaccounts is $100 per
SUBACCOUNT. If the transfer from a SUBACCOUNT would leave you with less than $50
in the SUBACCOUNT, we may transfer the entire balance of the SUBACCOUNT.
Transfers will also be subject to any restrictions that may be imposed by the
funds themselves.
A transfer request may be made in writing to our Servicing Office.
When thinking about a transfer of ANNUITY ACCOUNT VALUE, you should consider the
inherent risk involved. Frequent transfers based on short-term expectations may
increase the risk that a transfer will be made at an inopportune time. LNY may
refuse to permit more than twelve transfers in any year and may modify the
transfer provisions of the contract. This contract is not designed for
professional market timing organizations or other entities using programmed and
frequent transfers.
Repeated patterns of frequent transfers are disruptive to the operation of the
sub-accounts, and should LNY become aware of such disruptive practices, LNY may
refuse to permit more than 12 transfers in any year and may modify the transfer
provisions of the contract.
We may delay transfer as permitted by the 1940 Act.
TRANSFERS TO AND FROM A FIXED ACCOUNT ON OR BEFORE THE ANNUITY DATE
You may transfer all or any part of the ANNUITY ACCOUNT VALUE from the
SUBACCOUNT(S) to the fixed side of the contract. The minimum amount which can be
transferred to a fixed account is $2,000 or the total amount in the
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SUBACCOUNT if less than $2,000. However, if a transfer from a SUBACCOUNT would
leave you with less than $50 in the SUBACCOUNT, we may transfer the total amount
to the fixed side of the contract.
You may also transfer all or any part of the ANNUITY ACCOUNT VALUE from a fixed
account to the various SUBACCOUNT(S) subject to the following restrictions:
(1) the sum of the percentages of a fixed account transferred is limited to 15%
of the value of that fixed account in any contract year and, (2) the minimum
amount transferred is $2,000 (or the amount in the fixed account, if less).
Currently, there is no charge to you for a transfer. However, we reserve the
right to impose a charge in the future for any transfers in excess of 12 times
per contract year. Transfers of all or a portion of a fixed account (other than
dollar cost averaging) may be subject to a MVA.
We may delay transfer as permitted by the 1940 Act.
TRANSFERS AFTER THE ANNUITY DATE
You may transfer all or a portion of your investment in one SUBACCOUNT to
another SUBACCOUNT in the VAA or to the fixed side of the contract. Those
transfers will be limited to three times per CONTRACT YEAR. Currently, there is
no charge for those transfers. However, we reserve the right to impose a charge.
NO TRANSFERS ARE ALLOWED FROM THE FIXED SIDE OF THE CONTRACT TO THE SUBACCOUNTS.
DEATH BENEFIT BEFORE THE ANNUITY DATE
You may designate a BENEFICIARY during your lifetime and change the BENEFICIARY
by filing a written request with our Servicing Office. Each change of
beneficiary revokes any previous designation. We reserve the right to request
that you send us the contract for endorsement of a change of BENEFICIARY.
If you die before the annuity date, the DEATH BENEFIT will be equal to the
greatest of: the VALUE for the valuation period during which the death benefit
election becomes effective; the sum of all PREMIUM PAYMENTS less the sum of all
withdrawals; or the highest ANNUITY ACCOUNT VALUE as of any contract anniversary
occurring on or before the CONTRACTOWNER'S 80th birthday, adjusted for any
subsequent PREMIUM PAYMENTS, withdrawals and charges made since the contract
anniversary.
On or after your 89th birthday, the amount of any DEATH BENEFIT will be the
greater of: the ANNUITY ACCOUNT VALUE for the valuation period during which the
death benefit election becomes effective; or the sum of all PREMIUM PAYMENTS
less the sum of all withdrawals.
The amount of the DEATH BENEFIT will be determined as of the date on which we
receive all of the following requirements: (1) proof, satisfactory to us, of the
death of the CONTRACTOWNER; (2) written election of a method of settlement; and
(3) our receipt of any other required claim forms, fully completed.
Unless you have already selected a settlement option, the BENEFICIARY may elect
to receive payment of the DEATH BENEFIT either in the form of a lump settlement
or an annuity payout.
If a lump sum settlement is requested, the proceeds will be mailed within seven
days of receipt of satisfactory claim documentation as discussed previously,
subject to laws and regulations governing payment of DEATH BENEFITS. If an
election has not been made by the end of a 60-day period, a lump sum settlement
will be made to the BENEFICIARY at that time. This payment may be postponed as
permitted by the 1940 Act.
We will follow the applicable laws and regulations governing payment of DEATH
BENEFITS.
Unless otherwise provided in the BENEFICIARY designation, one of the following
procedures will take place on the death of a BENEFICIARY.
1. The interest of any BENEFICIARY who dies before the CONTRACTOWNER will go to
any other BENEFICIARIES named, according to their respective interests (there
are no restrictions on the BENEFICIARY'S use of the proceeds); and/ or
2. If no BENEFICIARY survives the CONTRACTOWNER, the proceeds will be paid to
the CONTRACTOWNER'S estate.
The DEATH BENEFIT payable to the BENEFICIARY must be distributed within five
years after the contractowner dies unless the BENEFICIARY begins receiving it
within one year of the CONTRACTOWNER'S death in the form of a life annuity over
an annuity for a designated period not extending beyond the BENEFICIARY'S life
expectancy. This payment may be postponed as permitted by the 1940 Act.
If the BENEFICIARY is the spouse of the CONTRACTOWNER, then the spouse may elect
to continue as owner. If the CONTRACTOWNER is a corporation or other
non-individual (non-natural person), the death of the annuitant will be treated
as death of the CONTRACTOWNER and the above distribution rules will apply.
DEATH OF ANNUITANT
If the ANNUITANT dies before the ANNUITY DATE, and the annuitant is not the
CONTRACTOWNER, then the CONTRACTOWNER (if a natural person) may select a new
ANNUITANT. The CONTRACTOWNER will become the new ANNUITANT until a new person
has been selected. If the CONTRACTOWNER is not a natural person, then the death
benefit will be based on the ANNUITANT and will be paid upon due proof of the
ANNUITANT'S death.
If the ANNUITANT dies after the ANNUITY DATE, the death benefit, if any, will be
paid based on the annuity option selected. LNY will require proof of the
ANNUITANT'S death. Under any option providing for guaranteed payouts, the number
of payouts which remain unpaid at the date of
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the ANNUITANT'S death (or surviving ANNUITANT'S death in the case of a joint
life annuity) will be paid to your BENEFICIARY as payouts become due.
SURRENDERS AND WITHDRAWALS
Before the ANNUITY DATE, we will allow the surrender of the contract or a
withdrawal of the ANNUITY ACCOUNT upon your written request, subject to the
rules discussed below. Surrender or withdrawal rights after the ANNUITY DATE
depend upon the annuity option you select.
The amount available upon the surrender/withdrawal is the cash surrender value
(ANNUITY ACCOUNT, plus or minus any market value adjustment, less any applicable
surrender charges, account fees and premium tax charges) at the end of the
VALUATION PERIOD during which the written request for surrender/withdrawal is
received at our Servicing Office. Unless a request for withdrawal specifies
otherwise, withdrawals will be made from all SUBACCOUNTS within the VAA and from
the fixed account in the same proportion that the amount of withdrawal bears to
the total ANNUITY ACCOUNT. As long as surrender charges apply, the maximum
amount which can be withdrawn is 15% of your PREMIUM PAYMENTS per contract year
without incurring any surrender charges and the remaining ANNUITY ACCOUNT VALUE
must be at least $1,000. Unless prohibited, surrender/withdrawal payments will
be mailed within seven days after we receive a valid written request at the
Servicing Office. The payment may be postponed as permitted by the 1940 Act.
The tax consequences of a surrender/withdrawal are discussed later in this
booklet. See Federal tax matters.
We may terminate the contract, if your PREMIUM PAYMENT frequency or your ANNUITY
ACCOUNT VALUE falls below New York's minimum standards.
DELAY OF PAYMENTS
Contract proceeds from the VAA will be paid within seven days, except (i) when
the NYSE is closed (except weekends and holidays); (ii) times when the market
trading is restricted or the SEC declares an emergency, and we cannot value
units or the funds cannot redeem shares; or (iii) when the SEC so orders to
protect CONTRACTOWNERS.
REINVESTMENT PRIVILEGE
You may, only once, elect to make a reinvestment purchase with any part of the
proceeds of a surrender/withdrawal, and we will recredit the
surrender/withdrawal charges previously deducted. You must make this election
within 30 days of the date of the surrender/withdrawal, and the repurchase must
be of a contract covered by this Prospectus. You must represent that the
proceeds being used to make the purchase have retained their tax-favored status
under an arrangement for which the contracts offered by this Prospectus are
designed. The number of ACCUMULATION UNITS which will be credited when the
proceeds are reinvested will be based on the value of the ACCUMULATION UNIT(S)
on the next VALUATION DATE. This computation will occur following receipt of the
proceeds and request for reinvestment at the Servicing Office. You may use the
reinvestment privilege only once. For tax reporting purposes, we will treat a
surrender/withdrawal and a subsequent reinvestment purchase as separate
transactions. You should consult a tax advisor before you request a
surrender/withdrawal or subsequent reinvestment purchase.
AMENDMENT OF CONTRACT
We reserve the right to amend the contract to meet the requirements of the 1940
Act or other applicable federal or state laws or regulations. Any changes are
subject to prior approval by the New York Superintendent of Insurance. You will
be notified in writing of any changes, modifications or waivers.
COMMISSIONS
The commissions paid to dealers are a maximum of 7.0% of each PREMIUM PAYMENT.
In some instances, commissions on deposits may be lowered by as much as 2.50%
and replaced by a commission of up to .65% of annual ANNUITY ACCOUNT VALUES. LNY
will incur all other promotional or distribution expenses associated with the
marketing of the contracts. These commissions are not deducted from PREMIUM
PAYMENTS or ANNUITY ACCOUNT VALUE, they are paid by us.
OWNERSHIP
The Owner on the date of issue will be the person designated in the contract
specifications. If no owner is designated, the annuitants(s) will be the owner.
The owner may name a Joint Owner. Joint owner(s) shall be treated as having
equal, individed interests in the contract, including rights of survivorship.
Either joint owner, independently of the other, may exercise any ownership
rights in the contract.
As CONTRACTOWNER, you have all rights under the contract. According to New York
law, the assets of the VAA are held for the exclusive benefit of all
CONTRACTOWNERS and their designated BENEFICIARIES; and the assets of the VAA are
not chargeable with liabilities arising from any other business that we may
conduct. Qualified CONTRACTS may not be assigned or transferred except as
permitted by the Employee Retirement Income Security Act of 1974 (ERISA) and
upon written notification to us. Non-qualified CONTRACTS may not be collaterally
assigned. We assume no responsibility for the validity or effect of any
assignment. An assignment affects the death benefit calculated under the
contract. Consult your tax advisor about the tax consequences of an assignment.
For non-qualified contracts, in accordance with Code Section 72(u), a deferred
annuity contract held by a corporation or other entity that is not a natural
person is not treated as an annuity contract for tax purposes.
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Income on the contract is treated as ordinary income received by the owner
during the taxable year. But in accordance with Code Section 72(u), an annuity
contract held by a trust or other entity as agent for a natural person is
considered held by a natural person.
CONTRACTOWNER QUESTIONS
The obligations to purchasers under the contracts are those of LNY. Questions
about your contract should be directed to us at 1-888-868-2583.
ANNUITY PAYOUTS
When you apply for a contract, you may select any ANNUITY DATE permitted by law
which must be on or before the CONTRACTOWNER'S 90th birthday. (PLEASE NOTE THE
FOLLOWING EXCEPTION: Contracts issued under qualified employee pension and
profit-sharing trusts [described in the Section 401(a) and tax exempt under
Section 501(a) of the tax code] and qualified annuity plans [described in
Section 403(a) of the tax code], including H.R. 10 trusts and plans covering
self-employed individuals and their employees, provide for annuity payouts to
start at the date and under the option specified.)
The contract provides optional forms of payouts of annuities (annuity options),
which are payable on a variable basis, fixed basis or a combination of both as
you specify. The contract provides that all or part of the ANNUITY ACCOUNT VALUE
may be used to purchase an annuity. You may elect ANNUITY PAYOUTS in monthly,
quarterly, semiannual or annual installments. If the payouts from any SUBACCOUNT
would be or become less than $50, we have the right to reduce their frequency
until the payouts are at least $50 each. Following are explanations of the
annuity options available.
ANNUITY OPTIONS
CONTRACT CALLS THIS "SETTLEMENT OPTIONS"
LIFE ANNUITY. A periodic payout during the lifetime of the ANNUITANT and ends
with the last payout before the death of the ANNUITANT. This option offers the
highest periodic payout since there is no guarantee of a minimum number of
payments or provision for a DEATH BENEFIT for BENEFICIARIES. HOWEVER, THERE IS
THE RISK UNDER THIS OPTION THAT THE RECIPIENT WOULD RECEIVE NO PAYMENTS IF THE
ANNUITANT DIES BEFORE THE DATE SET FOR THE FIRST PAYMENT; ONLY ONE PAYMENT IF
DEATH OCCURS BEFORE THE SECOND SCHEDULED PAYMENT, AND SO ON.
LIFE ANNUITY WITH GUARANTEED PERIOD. Guaranteed periodic payouts during a
designated period, usually 10 or 20 years, which then continue throughout the
lifetime of the ANNUITANT. The guarantee period is selected by the
CONTRACTOWNER.
JOINT LIFE ANNUITY. A periodic payout during the joint lifetime of the ANNUITANT
and a joint ANNUITANT until the survivor of them dies.
JOINT LIFE AND TWO-THIRDS SURVIVOR ANNUITY. A periodic payout during the joint
lifetime of the ANNUITANT and a designated joint ANNUITANT. When one of the
joint ANNUITANTS dies, the survivor receives two-thirds of the periodic payout
made when both were alive.
JOINT LIFE ANNUITY WITH GUARANTEED PERIOD. Guaranteed periodic payouts during a
period, usually 10 or 20 years, which continue during the joint lifetime of the
ANNUITANT and a joint ANNUITANT until the survivor of them dies. The payout
continues during the lifetime of the survivor. The designated period is elected
by the CONTRACTOWNER.
JOINT LIFE AND TWO-THIRDS SURVIVOR ANNUITY WITH GUARANTEED PERIOD. A periodic
payout during the joint lifetime of the ANNUITANT and a joint ANNUITANT. When
one of the joint ANNUITANTS dies, the survivor receives two-thirds of the
periodic payout made when both were alive. This option further provides that
should one or both of the ANNUITANTS die during the elected guaranteed period,
usually 10 or 20 years, full benefit payment will continue for the rest of the
guaranteed period.
LIFE ANNUITY WITH UNIT REFUND. VARIABLE ANNUITY benefit payments that will be
made for the lifetime of the ANNUITANT with the guarantee that upon death,
should (a) the number of ANNUITY UNITS purchased, as determined by dividing the
total dollar amount applied to purchase this option by the ANNUITY UNIT VALUE at
the ANNUITY DATE be greater than (b) the number of ANNUITY UNITS paid in each
variable annuity benefit payment multiplied by the number of annuity benefit
payments paid prior to death, then a refund payment equal to the number of
ANNUITY UNITS determined by (a) minus (b) will be made. The refund payment value
will be determined using the ANNUITY UNIT VALUE on the date the death claim is
approved by us and payment is made after LNY is in receipt of: (1) proof,
satisfactory to LNY, of the death; (2) written authorization for payment; and
(3) all claim forms, fully completed.
LIFE ANNUITY WITH CASH REFUND. Fixed ANNUITY benefit payments that will be made
for the lifetime of the ANNUITANT with the guarantee that upon death, should
(a) the total dollar amount applied to purchase this option be greater than
(b) the fixed annuity benefit payment multiplied by the number of ANNUITY
benefit payments paid prior to death, then a refund payment
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equal to the dollar amount of (a) minus (b) will be made after LNY is in receipt
of: (1) proof, satisfactory to LNY, of the death; (2) written authorization for
payment; and (3) all claim forms, fully completed.
GENERAL INFORMATION
Under the options listed above, you may not make withdrawals. We may make
available other options, with or without withdrawal features. Options are only
available to the extent they are consistent with the requirements of the
contract as well as Sections 72(s) and 401(a)(9) of the Code, if applicable. We
will assess the mortality and expense risk charge and the charge for
administrative services on all variable ANNUITY PAYOUTS, including options that
do not have a life contingency and therefore no mortality risk.
The ANNUITY DATE must be on or before the CONTRACTOWNER'S 90th birthday. You may
change the ANNUITY DATE, change the annuity option or change the allocation of
the investment among SUBACCOUNTS up to 30 days before the scheduled ANNUITY
DATE, upon written notice to the Servicing Office. You must give us at least 30
days notice before the date on which you want payouts to begin. If you have not
already chosen an annuity payout option, the BENEFICIARY of the death benefit
may choose any annuity payout option.
Unless you select another option, the contract automatically provides for a life
annuity with ANNUITY PAYOUTS guaranteed for 10 years (on a fixed, variable or
combination fixed and variable basis, in proportion to the account allocation at
the time of annuitization) except when a joint life payout is required by law.
Under any option providing for guaranteed period payouts, the number of payouts
which remain unpaid at the date of the ANNUITANT'S death (or surviving
ANNUITANT'S death in case of joint life annuity) will be paid to your
BENEFICIARY as payouts become due.
VARIABLE ANNUITY PAYOUTS
Variable ANNUITY PAYOUTS will be determined using:
1. The ANNUITY ACCOUNT VALUE on the ANNUITY DATE;
2. The annuity purchase rate tables contained in the contract;
3. The annuity option selected; and
4. The investment performance of the fund(s) selected.
To determine the amount of variable payouts, we make this calculation:
1. Determine the dollar amount of the first periodic payout; then
2. Credit the contract with a fixed number of ANNUITY UNITS equal to the
first periodic payout divided by the ANNUITY UNIT value; and
3. Calculate the value of the ANNUITY UNITS each period thereafter.
We assume an investment return of 4% per year, as applied to the applicable
mortality table. The amount of each variable payout after the initial payout
will depend upon how the underlying fund(s) perform, relative to the 4% assumed
rate. If the actual net investment rate (annualized) exceeds 4%, the variable
annuity payout will increase at a rate proportional to the amount of such
excess. Conversely, if the actual rate is less than 4%, annuity variable payouts
will decrease. There is a more complete explanation of this calculation in the
SAI.
FIXED SIDE OF THE CONTRACT
PREMIUM PAYMENTS allocated to the fixed side of the contract become part of
LNY'S general account, and DO NOT participate in the investment experience of
the VAA. The general account is subject to regulation and supervision by the New
York Insurance Department.
In reliance on certain exemptions, exclusions and rules, LNY has not registered
interests in the general account as a security under the Securities Act of 1933
and has not registered the general account as an investment company under the
1940 Act. Accordingly, neither the general account nor any interests in it are
regulated under the 1933 Act or the 1940 Act. LNY has been advised that the
staff of the SEC has not made a review of the disclosures which are included in
this Prospectus which relate to our general account and to the fixed account
under the contract. These disclosures, however, may be subject to certain
provisions of the federal securities laws relating to the accuracy and
completeness of statements made in Prospectuses. This Prospectus is generally
intended to serve as a disclosure document only for aspects of the contract
involving the VAA, and therefore contains only selected information regarding
the fixed side of the contract. Complete details regarding the fixed side of the
contract are in the contract.
GUARANTEED PERIODS
The owner may allocate PREMIUM PAYMENTS to one or more fixed accounts with
guaranteed periods of 1, 3, 5, 7, or 10 years. LNY may offer a fixed account for
a period of less than one year for the purpose of dollar cost averaging. Each
PREMIUM PAYMENT allocated to a fixed account will start its own guaranteed
period and will earn a guaranteed interest rate. The duration of the guaranteed
period affects the guaranteed interest rate of the fixed account. A fixed
account guarantee period ends on the date after the number of calendar years in
the fixed account's guaranteed period. Interest will be credited daily at a
guaranteed rate that is equal to the compound annual rate determined on the
first day of the fixed
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account guaranteed period. Amounts transferred or withdrawn from a fixed account
prior to the end of the guaranteed period will be subject to the MVA. Each
guaranteed period PREMIUM PAYMENT amount will be treated separately for purposes
of determining any applicable market value adjustment. Any amount withdrawn from
a fixed account may be subject to any applicable surrender charges, account fees
or premium taxes.
LNY will notify the CONTRACTOWNER in writing at least 15 but not more than 45
days prior to the expiration date for any guaranteed period amount. A new fixed
account guaranteed period of the same duration as the previous fixed account
guaranteed period will begin automatically at the end of the previous guaranteed
period, unless LNY receives, prior to the end of a guaranteed period, a written
election by the contractowner. The written election may request the transfer of
the guaranteed period amount to a different fixed account or to a variable
subaccount from among those being offered by LNY. Transfers of any guaranteed
period amount which become effective upon the date of expiration of the
applicable guaranteed period are not subject to the limitation of twelve
transfers per CONTRACT YEAR or the additional fixed account transfer
restrictions.
MARKET VALUE ADJUSTMENT
Any surrender or transfer of a fixed account guaranteed period amount before the
end of the guaranteed period (other than Dollar Cost Averaging transfers) will
be subject to a market value adjustment (MVA). A surrender or transfer effective
upon the expiration date of the guaranteed period will not be subject to an MVA.
The MVA will be added to the amount being surrendered or transferred. The MVA
will be added after the deduction of any applicable account fees and before any
applicable surrender or transfer charges. In general, the MVA reflects the
relationship between the index rate in effect at the time a PREMIUM PAYMENT is
allocated to a fixed account's guaranteed period under the contract and the
index rate in effect at the time of the PREMIUM PAYMENT'S surrender or transfer.
It also reflects the time remaining in the fixed account's guaranteed period. If
the index rate at the time of the surrender or transfer is lower than the index
rate at the time the PREMIUM PAYMENT was allocated, then the addition of the MVA
will generally result in a higher payment at the time of the surrender or
transfer. Similarly, if the index rate at the time of surrender or transfer is
higher than the index rate at the time of the allocation of the PURCHASE
PAYMENT, then the application of the MVA will generally result in a lower
payment at the time of the surrender or transfer.
The amount of the MVA is calculated by multiplying the dollar amount of the cash
withdrawal or transfer by the following amount:
1 subtracted from the result of (1 + a)TO THE POWER OF n divided by (1 + b)TO
THE POWER OF n , where:
a = The yield rate for a Treasury security with time to maturity equal to the
Guaranteed Period, determined at the beginning of the Guaranteed Period.
b = The yield rate for a Treasury security with time to maturity equal to
Guaranteed Period, determined at the time of transfer or withdrawal plus, if
yield rates "a" and "b" differ by more than 0.25%, 0.25%. This adjustment builds
into the formula a factor representing direct and indirect costs to LNY
associated with liquidating general account assets in order to satisfy surrender
requests. This adjustment of 0.25% has been added to the denominator of the
formula because it is anticipated that a substantial portion of applicable
general account portfolio assets will be in relatively illiquid securities.
Thus, in addition to direct transaction costs, if such securities must be sold
(e.g., because of surrenders), the market price may be lower. As used herein
"The yield rate for a Treasury security" means the applicable yield rate for
United States Treasury Bonds, Notes or Bills as published in the Wall Street
Journal. If such yields are no longer published, the Company will substitute an
appropriate index of publicly traded obligations subject to approval by the
Superintendent of Insurance of the State of New York. Straight-line
interpolation is used for periods to maturity not quoted.
n = The number of years, including fractional years, remaining in the
Guaranteed Period (e.g. 1 year and 73 days = 1 + (73 divided by 365) =
1.2 years)
We guarantee an interest rate of not less than 3.0% per year on amounts held in
a fixed account. Any amount withdrawn from or transferred out of a fixed account
prior to the expiration of the guaranteed period is subject to a MVA (see Market
value adjustment below) and Charges and other deductions -- Surrender charge.
The Market Value Adjustment will NOT reduce the amount available for a
surrender, withdrawal or transfer to an amount less than the initial amount
allocated or transferred to a fixed account plus interest of 3.0% per year, less
surrender charges and account fees, if any.
ANY INTEREST IN EXCESS OF 3.0% WILL BE DECLARED IN ADVANCE AT LNY'S SOLE
DISCRETION, CONTRACTOWNERS BEAR THE RISK THAT NO INTEREST IN EXCESS OF 3.0% WILL
BE DECLARED.
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FEDERAL TAX MATTERS
INTRODUCTION
The Federal income tax treatment of the contract is complex and sometimes
uncertain. The Federal income tax rules may vary with your particular
circumstances. This discussion does not include all the Federal income tax rules
that may affect you and your contract. This discussion also does not address
other Federal tax consequences or state or local tax consequences, associated
with the contract. As a result, you should always consult a tax adviser about
the application of tax rules to your individual situation.
TAXATION OF NONQUALIFIED ANNUITIES
This part of the discussion describes some of the Federal income tax rules
applicable to nonqualified annuities. A nonqualified annuity is a contract not
issued in connection with a qualified retirement plan receiving special tax
treatment under the tax law, such as an IRA.
TAX DEFERRAL ON EARNINGS
The Federal income tax law generally does not tax any increase in your contract
value until you receive a contract distribution. However, for this general rule
to apply, certain requirements must be satisfied:
- An individual must own the contract (or the tax law must treat the contract as
owned by an individual).
- The investments of the VAA must be "adequately diversified" in accordance with
IRS regulations.
- Your right to choose particular investments for a contract must be limited.
- The ANNUITY DATE must not occur near the end of the ANNUITANT'S life
expectancy.
CONTRACTS NOT OWNED BY AN INDIVIDUAL
If a contract is owned by an entity (rather than an individual), the tax law
generally does not treat it as an annuity contract for Federal income tax
purposes. This means that the entity owning the contract pays tax currently on
the excess of the contract value over the purchase payments for the contract.
Examples of contracts where the owner pays current tax on the contract's
earnings are contracts issued to a corporation or a trust. Exceptions to this
rule exist. For example, the tax law treats a contract as owned by an individual
if the named owner is a trust or other entity that holds the contract as an
agent for an individual. However, this exception does not apply in the case of
any employer that owns a contract to provide deferred compensation for its
employees.
INVESTMENTS IN THE VAA MUST BE DIVERSIFIED
For a contract to be treated as an annuity for Federal Income tax purposes, the
investments of the VAA must be "adequately diversified." IRS regulations define
standards for determining whether the investments of the VAA are adequately
diversified. If the VAA fails to comply with these diversification standards,
you could be required to pay tax currently on the excess of the CONTRACT VALUE
over the contract PREMIUM PAYMENTS. Although we do not control the investments
of the underlying investment options, we expect that the underlying investment
options will comply with the IRS regulations so that the VAA will be considered
"adequately diversified."
RESTRICTIONS
Federal income tax law limits your right to choose particular investments for
the contract. Because the IRS has not issued guidance specifying those limits,
the limits are uncertain and your right to allocate ANNUITY ACCOUNT VALUES among
the SUBACCOUNTS may exceed those limits. If so, you would be treated as the
owner of the assets of the VAA and thus subject to current taxation on the
income and gains from those assets. We do not know what limits may be set by the
IRS in any guidance that it may issue and whether any such limits will apply to
existing contracts. We reserve the right to modify the contract without your
consent to try to prevent the tax law from considering you as the owner of the
assets of the VAA.
AGE AT WHICH ANNUITY PAYOUTS BEGIN
Federal income tax rules do not expressly identify a particular age by which
ANNUITY PAYOUTS must begin. However, those rules do require that the annuity
contract provide for amortization, through ANNUITY PAYOUTS, of the contract's
PREMIUM PAYMENTS and earnings. If ANNUITY PAYOUTS under the contract begin or
are scheduled to begin on a date past the ANNUITANT'S 85th birthday, it is
possible that the tax law will not treat the contract as an annuity for Federal
income tax purposes. In that event, you would be currently taxable on the excess
of the ANNUITY ACCOUNT VALUE over the PREMIUM PAYMENTS of the contract.
TAX TREATMENT OF PAYMENTS
We make no guarantees regarding the tax treatment of any contract or of any
transaction involving a contract. However, the rest of this discussion assumes
your contract will be treated as an annuity for Federal income tax purposes and
that the tax law will not tax any increase in your ANNUITY ACCOUNT VALUE until
there is a distribution from your contract.
TAXATION OF WITHDRAWALS AND SURRENDERS
You will pay tax on withdrawals to the extent your ANNUITY ACCOUNT VALUE exceeds
your PREMIUM PAYMENTS in
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the contract. This income (and all other income from your contract) is
considered ordinary income. A higher rate of tax is paid on ordinary income than
on capital gains. You will pay tax on a surrender to the extent the amount you
receive exceeds your PREMIUM PAYMENTS. In certain circumstances, your PREMIUM
PAYMENTS are reduced by amounts received from your contract that were not
included in income.
TAXATION OF ANNUITY PAYOUTS
The tax law imposes tax on a portion of each ANNUITY PAYOUT (at ordinary income
tax rates) and treats a portion as a nontaxable return of your PREMIUM PAYMENTS
in the contract. We will notify you annually of the taxable amount of your
ANNUITY PAYOUT. Once you have recovered the total amount of the PREMIUM PAYMENTS
in the contract, you will pay tax on the full amount of your ANNUITY PAYOUTS. If
ANNUITY PAYOUTS end because of the ANNUITANT'S death and before the total amount
of the PREMIUM PAYMENTS in the contract has been received, the amount not
received generally will be deductible.
TAXATION OF DEATH BENEFITS
We may distribute amounts from your contract because of the death of a
CONTRACTOWNER or an ANNUITANT. The tax treatment of these amounts depends on
whether you or the ANNUITANT dies before or after the ANNUITY DATE.
- Death prior to the ANNUITY DATE
- If the beneficiary receives DEATH BENEFITS under an ANNUITY PAYOUT option,
they are taxed in the same manner as ANNUITY PAYOUTS.
- If the BENEFICIARY does not receive DEATH BENEFITS under an ANNUITY PAYOUT
option, they are taxed in the same manner as a withdrawal.
- Death after the ANNUITY DATE
- If DEATH BENEFITS are received in accordance with the existing ANNUITY
PAYOUT option, they are excludible from income if they do not exceed the
PURCHASE PAYMENTS not yet distributed from the contract. All ANNUITY
PAYOUTS in excess of the PURCHASE PAYMENTS not previously received are
included in income.
- If DEATH BENEFITS are received in a lump sum, the tax law imposes tax on
the amount of DEATH BENEFITS which exceeds the amount of PREMIUM PAYMENTS
not previously received.
PENALTY TAXES PAYABLE ON WITHDRAWALS, SURRENDERS OR ANNUITY PAYOUTS
The tax law may impose a 10% penalty tax on any distribution from your contract
which you must include in your gross income. The 10% penalty tax does not apply
if one of several exceptions exists. These exceptions include withdrawals,
surrenders or ANNUITY PAYOUTS that:
- You receive on or after you reach age 59 1/2,
- You receive because you became disabled (as defined in the tax law),
- A beneficiary receives on or after your death, or
- You receive as a series of substantially equal periodic payments for your life
(or life expectancy).
SPECIAL RULES IF YOU OWN MORE THAN ONE ANNUITY CONTRACT
In certain circumstances, you must combine some or all of the nonqualified
annuity contracts you own in order to determine the amount of an ANNUITY PAYOUT,
a surrender or a withdrawal that you must include in income. For example, if you
purchase two or more deferred annuity contracts from the same life insurance
company (or its affiliates) during any calendar year the tax law treats all such
contracts as one contract. Treating two or more contracts as one contract could
affect the amount of a surrender, a withdrawal or an ANNUITY PAYOUT that you
must include in income and the amount that might be subject to the penalty tax
described above.
LOANS AND ASSIGNMENTS
Except for certain qualified contracts, the tax law treats any amount received
as a loan under a contract, and any assignment or pledge (or agreement to assign
or pledge) any portion of your ANNUITY ACCOUNT VALUE, as a withdrawal of such
amount or portion.
GIFTING A CONTRACT
If you transfer ownership of your contract to a person other than your spouse
(or to your former spouse incident to divorce), and receive a payment less than
your contract's value to the extent that it exceeds your PREMIUM PAYMENTS not
previously received, the new owner's PREMIUM PAYMENTS in the contract would then
be increased to reflect the amount included in your income.
LOSS OF INTEREST DEDUCTION
After June 8, 1997, if a contract is issued to a taxpayer that is not an
individual, or if a contract is held for the benefit of an entity, the entity
will lose a portion of its deduction for otherwise deductible interest expenses.
This disallowance does not apply if you pay tax on the annual increase in the
ANNUITY ACCOUNT VALUE. Entities that are considering purchasing a contract, or
entities that will benefit from someone else's ownership of a contract, should
consult a tax advisor.
QUALIFIED RETIREMENT PLANS
We have also designed the contracts for use in connection with certain types of
retirement plans that receive favorable treatment under the tax law. Contracts
issued to or in connection with a qualified retirement plan are called
"qualified contracts". We issue contracts for use
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with different types of qualified plans. The Federal income tax
rules applicable to those plans are complex and varied. As a result, this
Prospectus does not attempt to provide more than general information about use
of the contract with the various types of qualified plans. Persons planning to
buy the contract in connection with a qualified plan should obtain advice from a
competent tax advisor.
TYPES OF QUALIFIED CONTRACTS AND TERMS OF CONTRACTS
Currently, we issue contracts in connection with the following types of
qualified plans:
- Individual Retirement Accounts and Annuities
("Traditional IRAs")
Subject to the approval of the New York Superintendent of Insurance, we intend
to make available contracts in connection with the following types of qualified
plans:
- Roth IRAs
- Public school system and tax-exempt organization annuity plans ("403(b)
plans")
We may in the future issue contracts in connection with the following types of
qualified plans:
- Simplified Employee Pensions ("SEPs")
- Savings Incentive Matched Plan for Employees
("Simple 401(k) plans")
- Qualified corporate employee pension and profit sharing plans ("401(a)") and
qualified annuity plans ("403(a) plans")
- Self-employed individual plans ("H.R. 10 plans" or "Keogh Plans")
- Deferred compensation plans of state and local governments and tax-exempt
organizations ("457 plans")
We may issue contracts for use with other types of qualified plans in the
future.
We will amend contracts to be used with a qualified plan as generally necessary
to conform to tax law requirements for the type of plan. However, the rights of
a person to any qualified plan benefits may be subject to the plan's terms and
conditions, regardless of the contract's terms and conditions. In addition, we
are not bound by the terms and conditions of qualified plans to the extent such
terms and conditions contradict the contract, unless we consent.
TAX TREATMENT OF QUALIFIED CONTRACTS
The Federal income tax rules applicable to qualified plans and qualified
contracts vary with the type of plan and contract. For example,
- Federal tax rules limit the amount of PREMIUM PAYMENTS that can be made and
the tax deduction or exclusion that may be allowed for the PREMIUM PAYMENTS.
These limits vary depending on the type of qualified plan and the plan
participant's specific circumstances, e.g., the participant's compensation.
- Under most qualified plans, e.g., 403(b) plans and Traditional IRAs, the
ANNUITANT must begin receiving payments from the contract in certain minimum
amounts by a certain age, typically age 70 1/2. However, these "minimum
distribution rules" do not apply to a Roth IRA.
- Loans are allowed under certain types of qualified plans, but Federal income
tax rules permit loans under some section 403(b) plans, but prohibit loans
under Traditional and Roth IRAs. If allowed, loans are subject to a variety of
limitations, including restrictions as to the loan amount, the loan duration,
and the manner of repayment. Your contract or plan may not permit loans.
TAX TREATMENT OF PAYMENTS
Federal income tax rules generally include distributions from a qualified
contract in the recipient's income as ordinary income. These taxable
distributions will include PREMIUM PAYMENTS that were deductible or excludible
from income. Thus, under many qualified contracts the total amount received is
included in income since a deduction or exclusion from income was taken for
PREMIUM PAYMENTS. There are exceptions. For example, you do not include amounts
received from a Roth IRA in income if certain conditions are satisfied.
Failure to comply with the minimum distribution rules applicable to certain
qualified plans, such as Traditional IRAs, will result in the imposition of an
excise tax. This excise tax generally equals 50% of the amount by which a
minimum required distribution exceeds the actual distribution from the qualified
plan.
FEDERAL PENALTY TAXES PAYABLE ON DISTRIBUTIONS
The tax law may impose a 10% penalty tax on the amount received from the
qualified contract that must be included in income. The tax law does not impose
the penalty tax if one of several exceptions applies. The exceptions vary
depending on the type of qualified contract you purchase. For example, in the
case of an IRA, exceptions provide that the penalty tax does not apply to a
withdrawal, surrender or ANNUITY PAYOUT:
- received on or after the annuitant reaches age 59 1/2,
- received on or after the ANNUITANT'S death or because of the ANNUITANT'S
disability (as defined in the tax law),
- received as a series of substantially equal periodic payments for the
ANNUITANT'S life or (life expectancy), or
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- received as reimbursement for certain amounts paid for medical care.
These exceptions, as well as certain others not described here, generally apply
to taxable distributions from other qualified plans. However, the specific
requirements of the exception may vary.
TRANSFERS AND DIRECT ROLLOVERS
In many circumstances, money may be moved between qualified contracts and
qualified plans by means of a rollover or a transfer. Special rules apply to
such rollovers and transfers. If the applicable rules are not followed, you may
suffer adverse Federal income tax consequences, including paying taxes which
might not otherwise have had to be paid. A qualified advisor should always be
consulted before you move or attempt to move funds between any qualified plan or
contract and another qualified plan or contract.
The direct rollover rules apply to certain payments (called "eligible rollover
distributions") from section 401(a) plans, section 403(a) or (b) plans, HR 10
plans, and contracts used in connection with these types of plans. (The direct
rollover rules do not apply to distributions from IRAs or section 457 plans).
The direct rollover rules require that we withhold Federal income tax equal to
20% of the eligible rollover distribution from the distribution amount unless
you elect to have the amount directly transferred to certain qualified plans or
contracts. Before we send a rollover distribution, we will provide the recipient
with a notice explaining these requirements and how the 20% withholding can be
avoided by electing a direct rollover.
FEDERAL INCOME TAX WITHHOLDING
We will withhold and remit to the IRS a part of the taxable portion of each
distribution made under a contract unless the distributee notifies us at or
before the time of distribution that tax is not to be withheld. In certain
circumstances, Federal income tax rules may require us to withhold tax. At the
time a withdrawal, surrender or ANNUITY PAYOUT is requested, we will give the
recipient an explanation of the withholding requirements.
TAX STATUS OF LINCOLN NEW YORK
Under existing Federal income tax laws, LNY does not pay tax on investment
income and realized capital gains of the VAA. LNY does not expect that it will
incur any Federal income tax liability on the income and gains earned by the
VAA. We, therefore, do not impose a charge for Federal income taxes. If Federal
income tax law changes and we must pay tax on some or all of the income and
gains earned by the VAA, we may impose a charge against the VAA to pay the
taxes.
CHANGES IN THE LAW
The above discussion is based on the tax law existing on the date of this
Prospectus. However, Congress, the IRS and the courts may modify these
authorities, sometimes retroactively.
VOTING RIGHTS
As required by law, we will vote the fund shares held in the VAA at meetings of
the shareholders of the fund. The voting will be done according to the
instructions of CONTRACTOWNERS who have interests in the SUBACCOUNTS which
invest in classes of funds. If the 1940 Act or any regulation under it should be
amended or if present interpretations should be amended or if present
interpretations should change, and if as a result we determine that we are
permitted to vote the fund shares in our own right, we may elect to do so.
The number of votes which you have the right to cast will be determined by
applying your percentage interest in a SUBACCOUNT to the total number of votes
attributable to the SUBACCOUNT. In determining the number of votes, fractional
shares will be recognized.
Fund shares of a class held in a SUBACCOUNT for which no timely instructions are
received will be voted by us in proportion to the voting instructions which are
received for all contracts participating in that SUBACCOUNT. Voting instructions
to abstain on any item to be voted on will be applied on a pro-rata basis to
reduce the number of votes eligible to be cast.
Whenever a shareholders meeting is called, each person having a voting interest
in a SUBACCOUNT will receive proxy voting material, reports and other materials
relating to the trust. Since the fund engages in shared funding, other persons
or entities besides LNY may vote fund shares. See Sale of fund shares by the
fund.
DISTRIBUTION OF THE CONTRACTS
LINCOLN FINANCIAL ADVISORS CORPORATION ("LFA"), an Indiana corporation
registered with the Securities and Exchange Commission as a broker-dealer, is
the distributor and principal underwriter of the contracts. Under an agreement
with LFA, Delaware Distributors, L.P. ("DDLP") will act as wholesaler and will
assist LFA in forming the selling group. DDLP will also perform certain
enumerated marketing and ancillary functions in support of the selling group.
The contracts will be sold by LFA registered representatives and by properly
licensed registered representatives of independent broker-dealers which in turn
have selling agreements with LFA and have been licensed by state insurance
departments to represent us. LNY will offer the contracts in New York only.
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RETURN PRIVILEGE
Within the 10-day free-look period after you receive the contract, you may
cancel it for any reason by delivering or mailing it postage prepaid, to the
Servicing Office at P.O. Box 7866, Fort Wayne, Indiana, 46801. A contract
canceled under this provision will be void. With respect to the fixed portion of
a contract, we will return PREMIUM PAYMENTS. With respect to the VAA, except as
explained in the following paragraph, we will return the ANNUITY ACCOUNT VALUE
as of the date of receipt of the cancellation, plus any premium taxes which had
been deducted. No surrender charge will be assessed. A PURCHASER WHO
PARTICIPATES IN THE VAA IS SUBJECT TO THE RISK OF A MARKET LOSS DURING THE
FREE-LOOK PERIOD.
STATE REGULATION
As a life insurance company organized and operated under New York law, we are
subject to provisions governing life insurers and to regulation by the New York
Superintendent of Insurance.
Our books and accounts are subject to review and examination by the New York
Insurance Department at all times. A full examination of our operations is
conducted by that Department at least every five years.
RECORDS AND REPORTS
As presently required by the 1940 Act and applicable regulations, we are
responsible for maintaining all records and accounts relating to the VAA. We
will enter into an agreement with the Delaware Management Holdings Company,
Inc., 2005 Market Street, Philadelphia, PA 19203, that provides accounting
services to the VAA. We will mail to you, at your last known address of record
at the Servicing Office, at least semiannually after the first contract year,
reports containing information required by that Act or any other applicable law
or regulation. Administration services necessary for the operation of the VAA
and the contracts are currently provided by Lincoln Life. However, neither the
assets of Lincoln Life nor the assets of LNC support the obligations of LNY
under the contracts.
OTHER INFORMATION
A Registration Statement has been filed with the SEC, under the Securities Act
of 1933 as amended, for the contracts being offered here. This Prospectus does
not contain all the information in the Registration Statement, its amendments
and exhibits. Please refer to the Registration Statement for further information
about the VAA, LNY and the contracts offered. Statements in this Prospectus
about the content of contracts and other legal instruments are summaries. For
the complete text of those contracts and instruments, please refer to those
documents as filed with the SEC.
We are a member of the Insurance Marketplace Standards Association ("IMSA") and
may include the IMSA logo and information about IMSA membership in our
advertisements. Companies that belong to IMSA subscribe to a set of ethical
standards covering the various aspects of sales and services for individually
sold life insurance and annuities.
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STATEMENT OF ADDITIONAL
INFORMATION TABLE OF
CONTENTS FOR LINCOLN
NEW YORK ACCOUNT N
FOR VARIABLE ANNUITIES (REGISTRANT)
LINCOLN LIFE & ANNUITY
COMPANY OF NEW YORK
(DEPOSITOR)
<TABLE>
<S> <C>
ITEM Page
---------------------------------------------
Lincoln Life & Annuity Company of
New York B-2
---------------------------------------------
Special terms B-2
---------------------------------------------
Services B-2
---------------------------------------------
Principal underwriter B-2
ITEM Page
---------------------------------------------
Purchase of securities being offered B-2
---------------------------------------------
Calculation of investment results B-2
---------------------------------------------
Annuity payouts B-6
---------------------------------------------
Advertising and sales literature B-6
---------------------------------------------
Financial statements B-9
</TABLE>
<PAGE>
................................................................................
PLEASE SEND ME A FREE COPY OF THE CURRENT STATEMENT OF ADDITIONAL INFORMATION
FOR LINCOLN NEW YORK ACCOUNT N FOR VARIABLE ANNUITIES (LINCOLN CHOICEPLUS-SM-).
(PLEASE PRINT)
NAME: _______________________________________ SOCIAL SECURITY NO.: _____________
ADDRESS: _______________________________________________________________________
CITY: ______________________________________________________________ STATE _____
ZIP ____________________________________________________________________________
MAIL TO LINCOLN CHOICEPLUS-SM-, P.O. BOX 7866, FORT WAYNE, INDIANA 46801
