<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 14, 2000
Registration No.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
LINCOLN LIFE VARIABLE ANNUITY ACCOUNT T
(EXACT NAME OF REGISTRANT)
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
(NAME OF DEPOSITOR)
1300 South Clinton Street, P.O. Box 1110, Fort Wayne, Indiana 46801
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES)
DEPOSITOR'S TELEPHONE NUMBER, INCLUDING AREA CODE
(219)455-2000
ELIZABETH A. FREDERICK, ESQ.
1300 S. Clinton Street
Post Office Box 1110
Fort Wayne, Indiana 46802
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(Name and Address of Agent for Service)
COPY TO:
Gary D. Cohen, Esq.
Freedman, Levy, Kroll & Simonds
Washington Square, Suite 825
1050 Connecticut Avenue, N.W.
Washington, DC 20036
Title of securities being registered:
Interests in a separate account under individual flexible premium deferred
variable annuity contracts.
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The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
shall determine.
<PAGE>
This Registration Statement contains two annuity contracts, which are identical,
except the contracts have different charges because they will be offered for
sale through two different distribution channels. Each contract variation has
its own prospectus.
<PAGE>
SEI Variable Annuity
Lincoln Life Variable Annuity Account T
Individual variable annuity contract
Home Office:
Lincoln National Life Insurance Company
1300 South Clinton Street
Fort Wayne, IN 46801
This prospectus describes the individual flexible premium deferred variable
annuity contract that is issued by Lincoln National Life Insurance Company
(Lincoln Life). It is primarily for use with nonqualified plans and retirement
plans under Sections 408 (IRAs) and 408A (Roth IRAs) of the tax code. Non-ERISA
403(b) business will only be accepted for purchase payments that are either
lump sum or rollovers. Generally, you do not pay federal income tax on the
contract's growth until it is paid out. The contract is designed to accumulate
account value and to provide retirement income that you cannot outlive or for
an agreed upon time. If you die before the annuity commencement date, we will
pay your beneficiary a death benefit. In the alternative, you may choose to
receive a death benefit on the death of the annuitant.
The minimum initial purchase payment for the contract is $25,000.
Additional purchase payments may be made to the contract and must be at least
$100.
All purchase payments for benefits will be placed in Lincoln Life Variable
Annuity Account T (variable annuity account [VAA]). The VAA is a segregated
investment account of Lincoln Life. You take all of the investment risk on the
account value and the retirement income. If the subaccounts you select make
money, your account value goes up; if they lose money, your account value goes
down. How much it 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.
The available funds, listed below, are each part of SEI Insurance Products
Trust (trust):
SEI VP Large Cap Value Fund
SEI VP Large Cap Growth Fund
SEI VP Small Cap Value Fund
SEI VP Small Cap Growth Fund
SEI VP International Equity Fund
SEI VP Emerging Markets Equity Fund
SEI VP Core Fixed Income Fund
SEI VP High Yield Bond Fund
SEI VP International Fixed Income Fund
SEI VP Emerging Markets Debt Fund
SEI VP Prime Obligations Fund
This Prospectus gives you information about the contract that you should know
before you decide to buy a contract and make purchase payments. You should also
review the prospectus for the funds that are attached, and keep both
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 offense.
You can obtain a Statement of Additional Information (SAI) about the contract
that has more information. Its terms are made part of this Prospectus. For a
free copy, write: Lincoln National Life Insurance Company, P.O. Box 2348, Fort
Wayne, Indiana 46801, or call 1-800-942-5500. The SAI and other information
about Lincoln Life and Account T 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.
, 2000
1
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Table of contents
<TABLE>
<CAPTION>
Page
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<S> <C>
Special terms.............................................................. 2
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Expense tables............................................................. 3
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Summary.................................................................... 6
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Investment results......................................................... 6
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Financial statements....................................................... 7
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Lincoln National Life Insurance Co......................................... 7
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General account............................................................ 7
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Variable annuity account (VAA)............................................. 7
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Investments of the variable annuity account................................ 8
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Charges and other deductions............................................... 10
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The contracts.............................................................. 10
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Annuity payouts............................................................ 14
</TABLE>
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<TABLE>
<CAPTION>
Page
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<S> <C>
Federal tax matters....................................................... 16
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Voting rights............................................................. 19
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Distribution of the contracts............................................. 19
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Return privilege.......................................................... 20
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State regulation.......................................................... 20
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Restrictions under the Texas Optional Retirement Program.................. 20
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Records and reports....................................................... 20
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Other information......................................................... 20
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Statement of additional information table of contents for Variable Annuity
Account T SEI Variable Annuity........................................... 21
</TABLE>
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Special terms
(We have italicized the terms that have special meaning throughout the
Prospectus).
Account or variable annuity account (VAA)--The segregated investment account,
Account T, into which Lincoln Life sets aside and invests the assets of the
contract offered in this Prospectus.
Account value --At a given time before the annuity commencement date, the total
value of all accumulation units for a contract.
Accumulation unit--A measure used to calculate account value before the annuity
commencement date.
Annuitant--The person on whose life the annuity benefit payments are based and
upon whose death a death benefit may be paid.
Annuity commencement date--The valuation date when funds are withdrawn or
converted into annuity units for payment of retirement income benefits under
the annuity payout option you select.
Annuity payout--An amount paid at regular intervals after the annuity
commencement date under one of several options available to the annuitant
and/or any other payee. This amount may be paid on a variable or fixed basis or
a combination of both.
Annuity unit--A measure used to calculate the amount of annuity payouts after
the annuity commencement date.
Beneficiary--The person you choose to receive the death benefit.
Contractowner (you, your, owner)--The person who has the ability to exercise
the rights within the contract (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 starting with each contract anniversary after that.
Death benefit--The amount payable to your designated beneficiary if the owner
dies before the annuity commencement date or, if selected, to the contractowner
if the annuitant dies. Four death benefit options are available.
Lincoln Life (we, us, our)--Lincoln National Life Insurance Company.
Purchase payments--Amounts paid into the contract.
Subaccount or SEI Variable Annuity subaccount--The portion of the VAA that
reflects investments in accumulation and annuity units of a class of a
particular fund available under the contracts. There is a separate subaccount
which corresponds to each class of a fund.
Trust--SEI Insurance Products Trust (trust), the funds to which you direct
purchase payments.
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 day that the NYSE is open for trading (valuation
date) and ending at the close of such trading on the next valuation date.
2
<PAGE>
Expense tables
Summary of Contractowner expenses:
Annual Account Fee: $40
(See Charges and other deductions).
The account fee will be waived for any contract year if your account value
equals or exceeds $50,000.00.
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Account T annual expenses for SEI Variable Annuity subaccounts:*
(as a percentage of average account value)
<TABLE>
<CAPTION>
Death benefit options
----------------------------
Return Annual 5%
Account of Step- Step-
Value Premium Up Up
<S> <C> <C> <C> <C>
Mortality and expense risk charge: 1.20% 1.25% 1.35% 1.50%
Administrative charge: 0.15% 0.15% 0.15% 0.15%
----- ----- ----- -----
Total annual charge for each subaccount: 1.35% 1.40% 1.50% 1.65%
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
The
mortality
and expense
risk charge
is based on
the
particular
death
benefit
option you
choose. (See
Charges and
other
deductions.)
</TABLE>
Annual expenses of the funds:
(as a percentage of each fund's average net assets):
<TABLE>
<CAPTION>
Management Other expenses Total expenses Total expenses
Fees (before (before any (before any (after any
any waivers/ waivers/ waivers/ waivers/
reimbursements) reimbursements)** reimbursements) reimbursements)***
--------------- + ----------------- = --------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
1. Large Cap Value 0.35% 0.60% 0.95% 0.85%
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2. Large Cap Growth 0.40% 0.60% 1.00% 0.85%
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3. Small Cap Value 0.65% 0.55% 1.20% 1.10%
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4. Small Cap Growth 0.65% 0.55% 1.20% 1.10%
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5. International Equity 0.51% 0.90% 1.41% 1.28%
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6. Emerging Markets
Equity 1.05% 1.29% 2.34% 1.95%
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7. Core Fixed Income 0.28% 0.42% 0.70% 0.60%
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8. High Yield Bond 0.49% 0.50% 0.99% 0.85%
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9. International Fixed
Income 0.30% 0.91% 1.21% 1.00%
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10. Emerging Markets Debt 0.85% 1.10% 1.95% 1.35%
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11. Prime Obligations 0.08% 0.70% 0.78% 0.44%
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</TABLE>
* The VAA is divided into separately named subaccounts, eleven of which are
available under the contracts. Each subaccount, in turn, invests purchase
payments in shares of its respective fund.
** Other expenses are based on estimated amounts for the current fiscal year.
***The funds' total actual fund operating expenses for the current fiscal year
are expected to be less than the amount shown above because SIMC and SEI
Investments Fund Management will each voluntarily waive a portion of its fee in
order to keep total operating expenses at a specified level. SIMC and/or SEI
Investments Fund Management may discontinue all or part of their waivers at any
time.
3
<PAGE>
Examples
(expenses of the subaccounts and of 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
<S> <C> <C>
For Account Value Death Benefit:
1. SEI VP Large Cap Growth Fund $23 $72
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2. SEI VP Large Cap Value Fund 24 72
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3. SEI VP Small Cap Growth Fund 26 77
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4. SEI VP Small Cap Value Fund 26 77
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5. SEI VP International Equity Fund 28 83
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6. SEI VP Emerging Markets Equity Fund 37 109
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7. SEI VP Core Fixed Income Fund 21 63
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8. SEI VP High Yield Bond Fund 24 71
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9. SEI VP International Fixed Income Fund 26 78
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10. SEI VP Emerging Markets Debt Fund 33 98
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11. SEI VP Prime Obligations Fund 21 64
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For Return of Premium Death Benefit:
1. SEI VP Large Cap Growth Fund $24 $74
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2. SEI VP Large Cap Value Fund 24 73
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3. SEI VP Small Cap Growth Fund 26 79
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4. SEI VP Small Cap Value Fund 26 79
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5. SEI VP International Equity Fund 28 85
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6. SEI VP Emerging Markets Equity Fund 38 110
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7. SEI VP Core Fixed Income Fund 21 64
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8. SEI VP High Yield Bond Fund 24 73
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9. SEI VP International Fixed Income Fund 26 79
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10. SEI VP Emerging Markets Debt Fund 34 100
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11. SEI VP Prime Obligations Fund 22 65
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</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
1 year 3 years
<S> <C> <C>
For Annual Step-Up Death Benefit:
1. SEI VP Large Cap Growth Fund $25 $77
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2. SEI VP Large Cap Value Fund 25 76
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3. SEI VP Small Cap Growth Fund 27 82
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4. SEI VP Small Cap Value Fund 27 82
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5. SEI VP International Equity Fund 29 87
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6. SEI VP Emerging Markets Equity Fund 39 113
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7. SEI VP Core Fixed Income Fund 22 67
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8. SEI VP High Yield Bond Fund 25 76
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9. SEI VP International Fixed Income Fund 27 82
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10. SEI VP Emerging Markets Debt Fund 35 102
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11. SEI VP Prime Obligations Fund 23 68
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For 5% Step-Up Death Benefit:
1. SEI VP Large Cap Growth Fund $26 $81
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2. SEI VP Large Cap Value Fund 27 80
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3. SEI VP Small Cap Growth Fund 29 86
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4. SEI VP Small Cap Value Fund 29 86
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5. SEI VP International Equity Fund 31 92
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6. SEI VP Emerging Markets Equity Fund 40 117
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7. SEI VP Core Fixed Income Fund 24 72
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8. SEI VP High Yield Bond Fund 27 80
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9. SEI VP International Fixed Income Fund 29 86
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10. SEI VP Emerging Markets Debt Fund 36 106
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11. SEI VP Prime Obligations Fund 24 72
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</TABLE>
We provide these examples to help you understand the direct and indirect costs
and expenses of the contract. Examples are given for each of the death benefit
options.
For more information, see Charges and other deductions in this Prospectus, and
in the Prospectus 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.
5
<PAGE>
Summary
What kind of contract am I buying? It is an individual variable annuity
contract between you and Lincoln Life. See The contracts.
What is the variable annuity account (VAA)? It is a separate account we
established under Indiana insurance law, and registered with the SEC as a unit
investment trust. VAA assets are allocated to one or more subaccounts,
according to your investment choices. VAA assets are not chargeable with
liabilities arising out of any other business which Lincoln Life may conduct.
See Variable annuity account.
What are my investment choices? Based upon your instruction, the VAA applies
purchase payments to buy trust shares in one or more of the investment funds of
the trust: Large Cap Value Fund, Large Cap Growth Fund, Small Cap Value Fund,
Small Cap Growth Fund, International Equity Fund, Emerging Markets Equity Fund,
Core Fixed Income Fund, High Yield Bond Fund, International Fixed Income Fund,
Emerging Markets Debt Fund, Prime Obligations Fund. In turn, each fund holds a
portfolio of securities consistent with its investment policy. See Investments
of the variable annuity account and Description of the trust.
Who invests my money? The investment adviser for the trust is SEI Investments
Management Corporation (SIMC). SIMC is registered as an investment adviser with
the SEC. See Investments of the variable annuity and Investment adviser.
How does the contract work? If we approve your application, we will send you a
contract. When you make purchase payments during the accumulation phase, you
buy accumulation units. If you decide to receive retirement income payments,
your accumulation units are converted to annuity units. Your retirement income
payments will be based on the number of annuity units you received and the
value of each annuity unit on payout days. See The contracts.
What charges do I pay under the contract? We will deduct any applicable premium
tax from purchase payments or account value at the time the tax is incurred or
at another time we choose.
We apply an annual charge totaling 1.35%, 1.40%, 1.50% or 1.65% to the daily
net asset value of the VAA depending on the death benefit option chosen. This
charge includes 0.15% as an administrative charge; the balance of the charge is
a mortality and expense risk charge. We charge an account fee of $40 per
contract year if the account value is less than $50,000. See Charges and other
deductions.
This trust pays a management fee to SIMC based on the average daily net asset
value of each fund. See Investments of the variable annuity account-Investment
adviser. Each fund also has additional operating expenses. These are described
in the Prospectus for the trust.
What purchase payments do I make, and how often? Subject to minimum and maximum
purchase payment amounts, your payments are completely flexible. See The
contracts--Purchase 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 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
death benefit you have chosen. Your beneficiary has options as to how the death
benefit is paid or you may choose an option for your beneficiary. See Death
benefit before the annuity commencement date.
May I transfer account value between variable options? Yes, with certain
limits. See The contracts--Transfers on or before the annuity commencement
date: and Transfers after the annuity commencement date.
May I surrender the contract or make a withdrawal? Yes, subject to contract
requirements and to the restrictions of any qualified retirement plan for which
the contract was purchased. See Surrenders and withdrawals.
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 a
withdrawal also may be subject to 20% withholding. See Federal tax status and
withholding.
Do I get a free look at this contract? Yes. You can cancel the contract within
ten days (in some states longer) of the date you first receive the contract.
You need to return the contract, postage prepaid, to our home office. In most
states you assume the risk of any market drop on purchase payments you allocate
to the variable side of the contract. See Return privilege.
Investment results
At times, the VAA may compare its investment results to various unmanaged
indices or other variable annuities in reports to shareholders, sales
literature and advertisements. The results will be calculated on a total return
basis for various periods. Total returns include the reinvestment of all
distributions, which are reflected in changes in unit value. See the SAI for
further information.
6
<PAGE>
Financial statements
The financial statements of the VAA and the statutory-basis financial
statements of Lincoln Life are located in the SAI. If you would like a free
copy of the SAI, complete and mail the enclosed card, or call 1-800-942-5500.
Lincoln National Life Insurance Co.
Lincoln Life was founded in 1905 and is organized under Indiana law. We are one
of the largest stock life insurance companies in the United States. We are
owned by Lincoln Financial Group (LFG) which is also organized under Indiana
law. LFG's primary businesses are insurance and financial services.
General account
The general account of Lincoln Life is subject to regulation and supervision by
the Indiana Department of Insurance as well as the insurance laws and
regulations of the jurisdictions in which the contracts are distributed.
In reliance on certain exemptions, exclusions and rules, Lincoln Life 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 Investment Company Act of 1940. Accordingly, neither the general
account nor any interests in it are regulated under the 1933 Act or the 1940
Act. Lincoln Life 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. These disclosures, however, may be subject to certain
generally applicable provisions of the federal securities laws regulating 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 annuity payouts.
Variable annuity account
(VAA)
On January 25, 2000, the VAA was established as an insurance company separate
account under Indiana 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 Lincoln Life. 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 Lincoln Life. The VAA satisfies the definition of a
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 is used to support other annuity contracts offered by Lincoln Life in
addition to the contracts described in this Prospectus. The other annuity
contracts supported by the VAA invest in the same portfolios of the trust as
the contracts described in this Prospectus. These other annuity contracts may
have different charges that could affect the performance of the subaccount.
7
<PAGE>
Investments of the variable annuity account
You decide the subaccount(s) to which you allocate purchase payments. You may
change your allocation without penalty or charges. Shares of the funds will be
sold at net asset value. The trust is required to redeem fund shares at net
asset value upon our request. We reserve the right to add, delete or substitute
funds.
Investment adviser
The investment adviser for the trust is SEI Investments Management Corporation
(SIMC). As compensation for its services to the trust, the investment adviser
receives a fee from the trust which is accrued daily and paid monthly. This fee
is based on the net assets of each fund, as defined under Purchase and
Redemption of Shares, in the Prospectus for the trust.
Additionally, SIMC currently has thirty-two sub-advisory agreements in which
the sub-adviser may perform some or substantially all of the investment
advisory services required by those respective funds. See the trust prospectus
for additional information on the sub-adviser.
No additional compensation from the assets of those funds will be assessed as a
result of the sub-advisory agreements.
Description of the trust
SEI Insurance Products Trust (trust) is an open-end management investment
company that has diversified and non-diversified portfolios. The trust was
organized as a Massachusetts business trust under a Declaration of Trust dated
December 14, 1998. The Declaration of Trust permits the trust to offer separate
series ("funds") of units of beneficial interest ("shares") and different
classes of shares. Each share of each fund represents an equal proportionate
interest in that fund with each other share of that fund. All consideration
received by the trust for shares of any class of any fund and all assets of
such fund or class belong to that fund or class, respectively, and would be
subject to the liabilities related thereto.
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
trust which is included in this booklet. Please be advised that there is no
assurance that any of the funds will achieve their stated objectives.
1. SEI VP LARGE CAP VALUE FUND--The investment objective of the SEI VP Large
Cap Value Fund is long-term growth of capital and income.
The Fund invests primarily in common stocks of U.S. companies with market
capitalizations of more than $1 billion.
2. SEI VP LARGE CAP GROWTH FUND--The investment objective of the SEI VP Large
Cap Growth Fund is capital appreciation.
The Fund invests primarily in U.S. companies with market capitalizations of
more than $1 billion.
3. SEI VP SMALL CAP VALUE FUND--The investment objective of the SEI VP Small
Cap Value Fund is capital appreciation.
The Fund invests primarily in common stocks of U.S. companies with market
capitalizations of less than $2 billion.
4. SEI VP SMALL CAP GROWTH FUND--The investment objective of the SEI VP Small
Cap Growth Fund is long-term capital appreciation.
The Fund invests primarily in common stocks of U.S. companies with market
capitalizations less than $2 billion.
5. SEI VP INTERNATIONAL EQUITY FUND--The SEI VP International Equity Fund seeks
to provide long-term capital appreciation by investing primarily in a diver-
sified portfolio of equity securities of non-U.S. issuers.
6. SEI VP EMERGING MARKETS EQUITY FUND--The SEI VP Emerging Markets Equity Fund
seeks to provide capital appreciation by investing primarily in a diversi-
fied portfolio of equity securities of emerging market issuers.
7. SEI VP CORE FIXED INCOME FUND--The investment objective of the SEI VP Core
Fixed Income Fund is current income consistent with the preservation of cap-
ital.
The Fund invests primarily in investment grade U.S. corporate and government
fixed income securities, including mortgage-backed securities.
8. SEI VP HIGH YIELD BOND FUND--The investment objective of the SEI VP High
Yield Bond Fund is to maximize total return.
The Fund invests primarily in fixed income securities that are rated below
investment grade ("junk bonds"), including corporate bonds and debentures,
convertible and preferred securities, and zero coupon obligations.
9. SEI VP INTERNATIONAL FIXED INCOME FUND--The SEI VP International Fixed In-
come Fund seeks to provided capital appreciation and current income through
investment primarily in investment grade, non-U.S. dollar denominated gov-
ernment, corporate, mortgage-backed and asset-backed fixed income securi-
ties.
8
<PAGE>
10. SEI VP EMERGING MARKETS DEBT FUND--The investment objective of the SEI VP
Emerging Markets Debt Fund is to maximize total return.
The Fund invests primarily in U.S. dollar denominated debt securities of
government, government-related and corporate issuers in emerging market
countries and of entities organized to restructure the outstanding debt of
such issuers.
11. SEI VP PRIME OBLIGATION FUND--The SEI VP Prime Obligation Fund seeks to
preserve principal value and maintain a high degree of liquidity while pro-
viding current income.
Asset allocation portfolios
SIMC currently offers twelve asset allocation portfolios which are available to
variable annuity purchasers. You can choose one of these asset allocation
portfolios or choose the customized allocation in which you determine your own
allocations among the funds. If you choose one of these asset allocation
portfolios, SIMC will determine the allocation of your purchase payments into
the funds.
If you want to change your portfolio selection, you must notify us in writing
or over the telephone, if we have received proper telephone authorization.
The available portfolios are:
1. VP INSTITUTIONAL MODERATE GROWTH & INCOME PORTFOLIO
2. VP INSTITUTIONAL GROWTH & INCOME PORTFOLIO
3. VP INSTITUTIONAL CAPITAL GROWTH PORTFOLIO
4. VP INSTITUTIONAL EQUITY PORTFOLIO
5. VP GLOBAL MODERATE GROWTH & INCOME PORTFOLIO
6. VP GLOBAL GROWTH & INCOME PORTFOLIO
7. VP GLOBAL CAPITAL GROWTH PORTFOLIO
8. VP GLOBAL EQUITY PORTFOLIO
9. VP MODERATE GROWTH & INCOME PORTFOLIO
10. . VP GROWTH & INCOME PORTFOLIO
11. VP CAPITAL GROWTH PORTFOLIO
12. VP DOMESTIC EQUITY PORTFOLIO
Sale of 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. The shares
are retired, but they may be reissued later.
Shares of the funds are not sold directly to the general public. They are sold
to Lincoln Life, 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.
When the trust sells shares in any of its funds both to variable annuity and to
variable life insurance separate accounts, it is said to engage in mixed
funding. When the trust sells shares in any of its funds to separate accounts
of unaffiliated life insurance companies, it is said to engage in shared
funding.
The trust currently engages in mixed and shared funding. Therefore, due to
differences in redemption rates or tax treatment, or other considerations, the
interests of various contractowners participating in a fund could conflict. The
trust's Board of Trustees will monitor for the existence of any material
conflicts, and determine what action, if any, should be taken. See the
Prospectus for the trust.
Reinvestment of dividends and capital gain distributions
All dividend 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
substitutions for the trust 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.
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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 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, cross-reinvestment 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, upon whose lives annuity payouts under contract are based, 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 death
benefits paid will exceed the actual account value; and the risk that our costs
in providing the services will exceed our revenues from the contract charges
(which we cannot change). However, if the charges deducted prove more than
sufficient to cover our risks, we will keep the profit. 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.
Deductions from the VAA for SEI Variable Annuity
We deduct from the VAA an amount, computed daily, which is equal to an annual
rate depending on the death benefit option elected of the daily net asset
value. The charge includes a 0.15% administrative charge and a mortality and
expense risk charge. The mortality and expense risk charge is 1.20% for the
account value death benefit option; 1.25% for the return of premium death
benefit option; 1.35% for the annual step-up death benefit option and 1.50% for
the 5% step-up death benefit option.
Account fee
For contracts with an account value of $50,000 or less, during the accumulation
period, we will deduct $40 from the account value on each contract anniversary
to compensate us for the administrative services provided to you; this $40
account fee will also be deducted from the account value upon surrender. This
fee may be lower in certain states, if required. The account fee will be waived
for any contract with an account value that is greater than $50,000.
Deductions for premium taxes
Any premium tax or other tax levied by any government entity as a result of the
existence of the contracts of the VAA will be deducted from the 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
administration interpretation or by judicial action. These premium taxes
generally depend upon the law of your state of residence. The tax ranges from
0.5% to 5.0%.
Other charges and deductions
There are deductions from and expenses paid out of the assets of the underlying
trust that are more fully described in the Prospectus for the trust.
Additional information
The charges described previously may be reduced or eliminated for any
particular contract. However, these charges will be reduced 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. Lower distribution and
administrative expenses may be the result of economies associated with (1) the
use of mass enrollment procedures, (2) the performance of administrative or
sales functions by the employer, (3) the use by an employer of automated
techniques in submitting deposits or information related to deposits on behalf
of its employees or (4) any other circumstances which reduce distribution or
administrative expenses. The exact amount of charges applicable to a particular
contract will be stated in that contract.
The contracts
Purchase of contracts
If you wish to purchase a contract, you must apply for it through a sales
representative authorized by us. The completed application is sent to us and we
decide whether to accept or reject it. If the application is accepted, a
contract is prepared and executed by our legally authorized officers. The
contract is then sent 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 purchase 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 purchase payment for
no more than five business days. If the incomplete application
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cannot be completed within those five days, you will be informed of the
reasons, and the purchase payment will be returned immediately. Once the
application is complete, the initial purchase payment must be priced within two
business days.
Who can invest
To apply for a contract, you must be of legal age in a state 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, joint owner and annuitant must be less than age 91.
Purchase payments
Purchase payments are payable to us at a frequency and in an amount selected by
you in the application. The minimum initial purchase payment is $25,000. The
minimum payment to the contract at any one time must be at least $100 ($25 if
transmitted electronically). Purchase payments in total may not exceed
$2,000,000 for an owner or $1,000,000 for each joint owner without our
approval. We may terminate the contract as allowed by your state's non-
forfeiture law for individual deferred annuities. Payments may be made or, if
stopped, resumed at any time until the annuity commencement date, the surrender
of the contract, maturity date or the payment of any death benefit, whichever
comes first.
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 purchase payments
Purchase payments are placed into the VAA's subaccounts, each of which invests
in shares of its corresponding fund of the trust, according to your
instructions.
The minimum amount of any purchase payment that can be put into any one
subaccount is $20. Upon allocation to a subaccount, purchase 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 purchase payment is received at
our home office if received before 4:00 p.m., New York time. If the purchase
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 investment perform, but also upon the expenses of the VAA and the
underlying funds.
Valuation of accumulation units
Purchase payments allocated to the VAA are converted into accumulation units.
This is done by dividing each purchase payment by the value of an accumulation
unit for the valuation period during which the purchase 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 daily charges imposed on a subaccount for any valuation period are equal to
the daily mortality and expense risk charge and the daily administrative charge
multiplied by the number of calendar days in the valuation period. Because a
different daily charge is made for contracts with different death benefit
options, contracts with different death benefit options will have different
corresponding accumulation unit values on any given day.
Transfers on or before the annuity commencement 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.
Currently, there is no charge for a transfer. However, we reserve the right to
impose a charge in the future for transfers.
Transfers between subaccounts are restricted to twelve times every contract
year. We reserve the right to waive this twelve-time limit. This limit does not
apply to
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transfers made under a dollar cost averaging or other automatic transfer
program elected on forms available from us. (The SAI contains more information
about these programs.) The minimum amount that may be transferred between
subaccounts is $300 (or the entire amount in the subaccount, if less than
$300). If the transfer from a subaccount would leave you with less than $300 in
the subaccount, we may transfer the entire balance of the subaccount.
A transfer request may be made to our home office using written, telephone or
electronic instructions, if the appropriate authorization is on file with us.
In order to prevent unauthorized or fraudulent telephone or electronic
transfers, we may require the user to provide certain identifying information
before we will act upon their instructions. We may also assign the
contractowner a Personal Identification Number (PIN) to serve as
identification. We will not be liable for following instructions we reasonably
believe are genuine. Telephone requests may be recorded and written
confirmation of all transfer requests will be mailed to the contractowner on
the next valuation date. Telephone and electronic transfers will be processed
on the valuation date that they are received when they are received at our
customer service center before 4 p.m. New York time.
When thinking about a transfer of 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.
Transfers after the annuity commencement 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 account to the subaccounts.
Death benefit before the annuity commencement date
You may designate a beneficiary during your lifetime and change the beneficiary
by filing a written request with our home 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.
Upon the death of the contractowner, a death benefit will be paid to the
beneficiary. Upon the death of a joint owner, the death benefit will be paid to
the surviving joint owner. Upon the death of an annuitant who is not the
contractowner or joint owner, a death benefit may be paid to the contractowner
(and joint owner, if applicable, in equal shares). 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.
If the death occurs before the annuity commencement date, the death benefit
paid will depend on the death benefit option in effect on the day on which we
approve payment of the claim. Four death benefit options are available:
Account Value death benefit option: The death benefit is equal at all times to
the account value on the date on which the death claim is approved by us for
payment.
Return of Premium death benefit option: The death benefit is equal to the
greater of the account value on the date on which the death claim is approved
by us for payment or the sum of all purchase payments minus withdrawals,
partial annuitizations, and premium tax incurred.
Annual Step-Up death benefit option: The death benefit is equal to the greatest
of three amounts:
a) the account value on the date on which the death claim is approved by us for
payment,
b) the sum of all purchase payments minus withdrawals, partial annuitizations,
and premium tax collected.
c) the highest account value on any contract anniversary prior to the 81st
birthday of the deceased, increased by purchase payments and decreased by
partial withdrawals, partial annuitizations, and premium tax incurred
subsequent to the contract anniversary on which the highest account value is
obtained.
5% Step-Up death benefit option: The death benefit is equal to the greatest of
four amounts:
a) the account value on the date on which the death claim is approved by us for
payment,
b) the sum of all purchase payments minus withdrawals, partial annuitizations,
and premium tax collected,
c) the highest account value on any contract anniversary prior to the 81st
birthday of the deceased, increased by purchase payments and decreased by
partial withdrawals, partial annuitizations, and premium tax incurred
subsequent to the contract anniversary on which the highest account value is
obtained,
d) the accumulation of all purchase payments minus the accumulation of all
withdrawals, partial annuitizations and premium tax; where each purchase
payment, withdrawal, partial annuitization and premium tax will be
accumulated daily at an annual rate of 5% from the date of the purchase
payment, withdrawal, partial annuitization and premium tax until the earlier
of the date of death
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of the deceased (owner, joint owner or annuitant) or the contract date
anniversary immediately preceding the 81st birthday of the deceased (owner,
joint owner, or annuitant) except that the accumulation of any purchase
payment, withdrawal, partial annuitization and premium tax will not exceed
200% of that purchase payment, withdrawal, partial annuitization and premium
tax.
If there are joint owners, upon the death of the first contractowner, Lincoln
Life will pay a death benefit to the surviving joint owner. The surviving joint
owner will be treated as the primary, designated beneficiary. Any other
beneficiary designation on record at the time of death will be treated as a
contingent beneficiary. If the surviving joint owner is the spouse of the
deceased joint owner he/she may continue the contract as a sole contractowner.
Upon the death of the spouse who continues the contract, Lincoln Life will pay
a death benefit to the designated beneficiary(s).
If the beneficiary is the spouse of the contractowner, then the spouse may
elect to continue the contract as contractowner.
Upon the death of a contractowner, joint owner or annuitant, if the surviving
spouse continues the contract, any portion of the death benefit that would have
been payable (if the contract had not been continued) that exceeds the current
contract value will be credited to the contract. This provision applies only
one time for each contract.
If an annuitant who is not the contractowner or a joint owner dies, then the
contingent annuitant, if named, becomes the annuitant and no death benefit is
payable on the death of the annuitant. If no contingent annuitant is named, the
contractowner (or younger of joint owners) becomes the annuitant.
Alternatively, a death benefit may be paid to the contractowner (and joint
owner, if applicable, in equal shares) upon the death of the annuitant.
Notification of the election of this death benefit must be received by us
within 75 days of the death of the annuitant. If no contractowner is living on
the date of death of the annuitant, the death benefit will be available to the
beneficiary. The contract terminates when any death benefit is paid due to the
death of the annuitant. If the annuitant has been changed subsequent to the
effective date of this contract, unless the change occurred because of the
death of a prior annuitant, the death benefit option in effect will be
terminated and the Account Value death benefit option will become effective as
of the valuation date that the written notification to change the annuitant was
received in the home office.
The value of the death benefit will be determined as of the date on which the
death claim is approved for payment. This payment will occur upon receipt of:
(1) proof (e.g. an original certified death certificate), or any other proof of
death satisfactory to us, of the death; (2) written authorization for payment;
and (3) our receipt of all required claim forms, fully completed. If the
beneficiary is a minor, court documents appointing the guardian/custodian must
be submitted.
When applying for a contract, an applicant may request one of the four death
benefit options available. If no death benefit option is chosen, the Return of
Premium death benefit option will be the death benefit as of the contract date.
After a contract is issued, the contractowner may substitute a lower level
death benefit option for the option currently in effect. For purposes of
determining allowable substitutions, Account Value is the lowest level of death
benefit. Return of Premium is the next highest option, followed by Annual Step-
Up, with 5% Step-Up being the highest level of death benefit. A request for
substitution must be in writing on a form acceptable to us. The current death
benefit option will be discontinued and the new death benefit option will begin
as of the valuation date we receive the substitution request, and we will stop
deducting the charge for the current option and begin deducting the charge for
the new option as of that same date. A death benefit option may be substituted
for the current death benefit option only if the new option provides a lower
level of death benefit. See Charges and deductions.
Unless otherwise provided in the beneficiary designation, one of the following
procedures will take place on the death of a beneficiary:
(1) If any beneficiary dies before the contractowner, that beneficiary's
interest will go to any other beneficiaries named, according to their
respective interest; and/or
(2) If no beneficiary survives the contractowner, the proceeds will be paid to
the contractowner's estate.
Unless the contractowner has already selected a settlement option, the
beneficiary may choose the method of payment of the death benefit. The death
benefit payable to the beneficiary or joint owner must be distributed within
five years of the contractowner's date of death unless the beneficiary begins
receiving within one year of the contractowner's death the distribution in the
form of a life annuity or an annuity for a designated period not extending
beyond the beneficiary's life expectancy.
The death benefit payable on the death of the annuitant will be distributed in
either a lump sum or under an annuity payout. The annuity payout must be
selected within 60 days after we have approved the death claim.
If a lump sum settlement is elected, the proceeds will be mailed within seven
days of approval by us of the claim, subject to the laws, regulations and tax
code governing payment of death benefits. This payment may be postponed as
permitted by the Investment Company Act of 1940.
Joint ownership
If a joint owner is named in the application, the joint owners shall be treated
as having equal undivided interests in the contract. Either owner,
independently of the other, may exercise ownership rights in this contract.
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Surrenders and withdrawals
Before the annuity commencement date, we will allow the surrender of the
contract or a withdrawal of the account value upon your written request,
subject to the rules discussed below. The surrender/withdrawal option is not
available after the annuity commencement date.
The amount available upon the surrender/withdrawal is the account value less
any applicable charges, fees and taxes at the end of the valuation period
during which the written request for surrender/withdrawal is received at the
home office. Unless a request for withdrawal specifies otherwise, withdrawals
will be made from all subaccounts within the VAA in the same proportion that
the amount of withdrawal bears to the total account value. Unless prohibited,
surrender/ withdrawal payments will be mailed within seven days after we
receive a valid written request at the home office. The payment may be
postponed as permitted by the 1940 Act. 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 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.
The minimum withdrawal is $300. Lincoln Life reserves the right to surrender
this contract if any withdrawal reduces the total account value to a level at
which this contract may be surrendered in accordance with applicable law for
individual deferred annuities.
The tax consequences of a surrender/withdrawal are discussed later, in this
booklet. See Federal tax status.
Special restrictions on surrenders/withdrawals apply if your contract is
purchased as part of a retirement plan of a public school system or 501(c)(3)
organization under Section 403(b) of the tax code. Beginning January 1, 1989,
in order for a contract to retain its tax-qualified status, Section 403(b)
prohibits a withdrawal from a 403(b) contract of post-1988 contributions (and
earnings on those contributions) pursuant to a salary reduction agreement.
However, this restriction does not apply if the annuitant (a) attains age 59
1/2, (b) separates from service, (c) dies, (d) becomes totally and permanently
disabled and/or (e) experiences financial hardship (in which event the income
attributable to those contributions may not be withdrawn).
Pre-1989 contributions and earnings through December 31, 1988, are not subject
to the previously stated restriction. Funds transferred to the contract from a
403(b)(7) custodial account will be subject to restrictions.
Participants in the Texas Optional Retirement Program should refer to the
Restrictions under the Texas Optional Retirement Program, later in this
Prospectus booklet.
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.
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. You will be
notified in writing of any changes, modifications or waivers.
Commissions
The commissions paid to dealers are a maximum of 1% account value annually.
Upon annuitization, an annual continuing commission of up to 1.00% of statutory
reserves can be paid to dealers. These commissions are not deducted from
purchase payments or account value; they are paid by us. In the future,
additional sales incentives may be provided to dealers.
Ownership
As contractowner, you have all rights under the contract. According to Indiana
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 (ERISA) of 1974 and
upon written notification to us. Nonqualified contracts may not be collaterally
assigned. We assume no responsibility for the validity or affect of any
assignment. Consult your tax adviser about the tax consequence of an
assignment.
Contractowner questions
The obligations to purchasers under the contracts are those of Lincoln Life.
Questions about your contract should be directed to us at 1-800-942-5500.
Annuity payouts
When you apply for a contract, you may select any annuity commencement date
permitted by state insurance or tax law.
The contract provides optional forms of payouts of annuities (annuity options),
each of which is payable on a variable basis, fixed basis or a combination of
both as you specify. The contract provides that all or part of the 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
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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
Life Annuity. This option offers 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 payouts or provision for a death benefit for beneficiaries.
However, there is the risk under this option that the recipient would receive
no payouts if the annuitant dies before the date set for the first payout; only
one payout if death occurs before the second scheduled payout, and so on.
Life Income with Payouts Guaranteed for Designated Period. This option
guarantees periodic payouts during a designated period, usually 10 or 20 years,
and then continues throughout the lifetime of the annuitant. The designated
period is selected by the contractowner.
Joint Life Annuity. This option offers a periodic payout during the joint
lifetime of the annuitant and a designated joint annuitant. The payouts
continue during the lifetime of the survivor.
Joint Life Annuity with Guaranteed Period. This option guarantees periodic
payouts during a designated period, usually 10 or 20 years, and continues
during the joint lifetime of the annuitant and a designated joint annuitant.
The payouts continue during the lifetime of the survivor. The designated period
is elected by the contractowner.
Joint and Two-Thirds Survivor Annuity. This option provides 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.
Unit Refund Life Annuity. This option offers a periodic payout during the
lifetime of the annuitant with the guarantee that upon death a payout will be
made of the value of the number of annuity units (see Variable annuity payouts)
equal to the excess, if any, of: (a) the total amount applied under this option
divided by the annuity unit value for the date payouts begin, divided by (b)
the annuity units represented by each payout to the annuitant multiplied by the
number of payouts paid before death. The value of the number of annuity units
is computed on the date the death claim is approved for payment by the home
office.
General Information
Under the options listed above, you may not make withdrawals. Other options,
with or without withdrawal features, may be made available by us. You may pre-
select an annuity payout option as a method of paying the death benefit to a
beneficiary. If you do, the beneficiary cannot change this payout option. At
death, 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 tax
code, if applicable. The mortality and expense risk charge and the charge for
administrative services will be assessed on all variable annuity payouts,
including options that may be offered that do not have a life contingency and
therefore no mortality risk.
The annuity commencement date is usually on or before the contractowner's 90th
birthday. You may change the annuity commencement date, change the annuity
option or change the allocation of the investment among subaccounts up to 30
days before the scheduled annuity commencement date, upon written notice to the
home office. You must give us at least 30 days notice before the date on which
you want payouts to begin. If proceeds become available to a beneficiary in a
lump sum, the beneficiary 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
allocations 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 you,
if living, otherwise to your beneficiary as payouts become due.
Variable annuity payouts
Variable annuity payouts will be determined using:
1. The account value on the annuity commencement date;
2. The annuity 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 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 3%, 4%, 5% or 6% per year, as applied to the
applicable mortality table. The amount of each payout after the initial
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payout will depend upon how the underlying fund(s) perform, relative to the
assumed rate. If the actual net investment rate (annualized) exceeds the
assumed rate, the payment will increase at a rate proportional to the amount of
such excess. Conversely, if the actual rate is less than the assumed rate,
annuity payouts will decrease. There is a more complete explanation of this
calculation in the SAI.
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 code, such as an IRA or a section 403(b) plan.
Tax deferral on earnings
The Federal income tax law generally does not tax any increase in your account
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 the 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 commencement date must not occur near the end of the annuitant's
life expectancy.
Contracts not owned by the individual
If a contract is owned by an entity (rather than an individual) the tax code
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 account 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 code 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 contact 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 account value
over the contract purchase 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 account value among
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 an annuity
contract provide for amortization, through annuity payouts, of the contract's
purchase 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 account value over the purchase 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
that 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 account value
until there is a distribution from your contract.
16
<PAGE>
Taxation of withdrawals and surrenders
You will pay tax on withdrawals to the extent your account value exceeds your
purchase payments in 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 extends your purchase payments. In certain
circumstances, your purchase payments are reduced by amounts received from your
contract that were not included in income.
Taxation of annuity payouts
The tax code imposes tax on a portion of each annuity payout (at ordinary tax
rates) and treats a portion as a nontaxable return of your purchase 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 purchase payment 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 purchase 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 commencement
date.
. Death prior to the annuity commencement 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 withdrawal.
. Death after the annuity commencement 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
includable 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 purchase payments
not previously received.
Penalty taxes payable on withdrawals, surrenders, or annuity payouts
The tax code 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 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
code treats all such contracts as one contract. Treating two or more contracts
as one contract could affect the amount of a surrender, 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 code treats any amount received
as a loan under a contract, and any assignments or pledge (or agreement to
assign or pledge) any portion of your account value, as 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 account's value, you will pay tax on your account value to the extent it
exceeds your purchase payments not previously received. The new owner's
purchase payments in the contract would then be increased to reflect the amount
included in income.
Charges for a contract's death benefit
Your contract may have a death benefit, for which you may pay an annual charge,
computed daily. It is possible that the tax law may treat all or a portion of
the death benefit charge as a contract withdrawal.
Loss of income 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 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 adviser.
17
<PAGE>
Qualified retirement plans
We also designed the contracts for use in connection with certain types of
retirement plans that receive favorable treatment under the tax code.
Contracts issued to or in connection with a qualified retirement plan are
called "qualified contracts." We issue contracts for use 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 various types of
qualified plans. Persons planning to use the contract in connection with a
qualified plan should obtain advice from a competent tax adviser.
Types of qualified contracts and terms of contracts
Currently, we may issue contracts in connection with the following types of
qualified plans:
. Individual Retirement Accounts and Annuities ("Traditional IRAs")
. Roth IRAs
. Savings Incentive Matched Plan for Employees ("SIMPLE 401(k) plans")
. Public School system and tax-exempt organization annuity plans ("403(b)
plans")
. Qualified corporate employee pension and profit sharing plans ("401(a)
plans") 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").
Section 403(b) business will normally be accepted only for purchase payments
qualifying as a 403(b) lump sum transfer or rollover. We may issue a contract
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 purchase payments that can be made,
and the tax deduction or exclusion that may be allowed for the purchase
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 prohibit loans under other types of qualified plans. For example,
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's duration, and the manner of repayment. Your contract or
plan may or 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 purchase 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 purchase 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 code may impose a 10% penalty tax on the amount received from the
qualified contract that must be included in income. The tax code 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
. received as reimbursement for certain amounts paid for medical care.
18
<PAGE>
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 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 adviser 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, H.R. 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.
The death benefit and IRAs
Pursuant to IRS regulations, IRAs may not invest in life insurance contracts.
We do not believe that these regulations prohibit the death benefit from being
provided under the contracts when we issue the contract as Traditional IRAs or
Roth IRAs. However, the law is unclear and it is possible that the presence of
the death benefit under a contract issued as a Traditional IRA or Roth IRA
could result in increased taxes to you.
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 the 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 Life
Under existing Federal income tax laws, Lincoln Life does not pay tax on
investment income and realized capital gains of the VAA. Lincoln Life 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 law
The above discussion is based on the tax code, IRS regulations and
interpretations 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 trust shares held in the VAA at meetings
of the shareholders of the trust. The voting will be done according to the
instructions of contractowners who have interests in the subaccounts which
invest in classes of funds of the trust. 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 trust 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.
Trust 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 trust engages in shared funding, other persons
or entities besides Lincoln Life may vote trust shares. See Sale of fund shares
by the trust.
Distribution of the contracts
Lincoln Life is the distributor and principal underwriter of the contracts.
Under an agreement with Lincoln Life, SEI Investment Distribution Co. (SEI)
will assist Lincoln Life in forming the selling group. SEI will also perform
certain functions in support of the selling group. The contracts will be sold
by properly licensed registered representatives of independent broker-dealers
which in
19
<PAGE>
turn have selling agreements with Lincoln Life and have been licensed by state
insurance departments to represent us. Lincoln Life will offer the contracts in
all states it is licensed to do business.
Return privilege
Within the free-look period after you receive the contract, you may cancel it
for any reason by delivering or mailing it postage prepaid, to the home office
at P.O. Box 2348, 1300 South Clinton Street, Fort Wayne, Indiana, 46801. A
contract canceled under this provision will be void. With respect to the VAA,
except as explained in the following paragraph, we will return the account
value as of the date of receipt of the cancellation, plus any premium taxes
which had been deducted. A purchaser who participates in the VAA is subject to
the risk of a market loss during the free-look period.
For contracts written in those states whose laws require that we assume this
market risk during the free-look period, a contract may be canceled, subject to
the conditions explained before, except that we will return only the purchase
payment(s).
State regulation
As a life insurance company organized and operated under Indiana law, we are
subject to provisions governing life insurers and to regulation by the Indiana
Commissioner of Insurance.
Our books and accounts are subject to review and examination by the Indiana
Insurance Department at all times. A full examination of our operations is
conducted by that Department at least every five years.
Restrictions under the Texas Optional Retirement Program
Title 8, Section 830.105 of the Texas Government Code, consistent with prior
interpretations of the Attorney General of the State of Texas, permits
participants in the Texas Optional Retirement Program (ORP) to redeem their
interest in a variable annuity contract issued under the ORP only upon:
1. Termination of employment in all institutions of higher education as defined
in Texas law;
2. Retirement; or
3. Death.
Accordingly, a participant in the ORP will be required to obtain a certificate
of termination from their employer before accounts can be redeemed.
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
have entered into an agreement with the Delaware Management Company, 2005
Market Street, Philadelphia, PA, 19203, to provide accounting services to the
VAA. We will mail to you, at your last known address of record at the home
office, at least semiannually after the first contract year, reports containing
information required that Act or any other applicable law or regulation.
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, Lincoln Life 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 files 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.
The fund may also offer shares of the funds to other segregated investment
accounts.
Legal proceedings
Lincoln Life is involved in various pending or threatened legal proceedings
arising from the conduct of its business. Most of those proceedings are routine
and in the ordinary course of business. In some instances they include claims
for unspecified or substantial punitive damages and similar types of relief in
addition to amounts for equitable relief. After consultation with legal counsel
and a review of available facts, it is management's opinion that the ultimate
liability, if any, under these suits will not have a material adverse effect on
the financial position of Lincoln Life.
Lincoln Life is presently defending four lawsuits in which Plaintiffs seek to
represent national classes of policyholders in connection with alleged fraud,
breach of contract and other claims relating to the sale of interest-sensitive
universal and participating whole life insurance policies. As of the date of
this Prospectus, the
20
<PAGE>
courts have not certified a class in any of the suits. Plaintiffs seek
unspecified damages and penalties for themselves and on behalf of the putative
class. Although the relief sought in these cases is substantial, the cases are
in the preliminary stages of litigation, and it is premature to make
assessments about potential loss, if any. Management is defending these suits
vigorously. The amount of liability, if any, which may ultimately arise as a
result of these suits cannot be reasonably determined at this time.
Statement of additional
information table of
contents for Variable Annuity Account T SEI Variable Annuity
<TABLE>
<CAPTION>
Item
- -----------------------------------------
<S> <C>
General information and history of
Lincoln Life B-2
- -----------------------------------------
Special terms B-2
- -----------------------------------------
Services B-2
- -----------------------------------------
Principal underwriter B-2
- -----------------------------------------
Purchase of securities being offered B-2
- -----------------------------------------
</TABLE>
For a free copy of the SAI please see page one of this booklet.
<TABLE>
<CAPTION>
Item
- --------------------------------------
<S> <C>
Calculation of investment results
B-2
- --------------------------------------
Annuity payouts B-6
- --------------------------------------
Advertising and sales literature B-7
- --------------------------------------
Financial statements B-8
- --------------------------------------
</TABLE>
21
<PAGE>
SEI Variable Annuity
Lincoln Life
Variable Annuity Account T (Registrant)
The Lincoln National
Life Insurance Company (Depositor)
Statement of Additional Information (SAI)
This Statement of Additional Information should be read in conjunction with the
Prospectus of Lincoln Life Variable Annuity Account T dated , 2000.
You may obtain a copy of the SEI Variable Annuity Prospectus on request and
without charge. Please write, The Lincoln National Life Insurance Company, P.O.
Box 2348, Fort Wayne, Indiana 46801 or call 1-800-942-5500.
Table of Contents
<TABLE>
<CAPTION>
Item Page
- -----------------------------------------------------
<S> <C>
General information and history of Lincoln Life B-2
- -----------------------------------------------------
Special terms B-2
- -----------------------------------------------------
Services B-2
- -----------------------------------------------------
Principal underwriter B-2
- -----------------------------------------------------
Purchase of securities being offered B-2
- -----------------------------------------------------
</TABLE>
This SAI is not a Prospectus.
The date of this SAI is , 2000.
<TABLE>
<CAPTION>
Item Page
- ---------------------------------------
<S> <C>
Calculation of investment results
B-2
- ---------------------------------------
Annuity payouts B-6
- ---------------------------------------
Advertising and sales literature B-7
- ---------------------------------------
Financial statements B-8
- ---------------------------------------
</TABLE>
B-1
<PAGE>
General information
and history of Lincoln National Life Insurance Company (Lincoln Life)
The Lincoln National Life Insurance Company (Lincoln Life), organized in 1905,
is an Indiana stock insurance corporation, engaged primarily in the direct
insurance of life insurance contracts and annuities, and is also a professional
reinsurer. Lincoln Life is wholly owned by Lincoln National Corporation (LNC),
a publicly held insurance and financial services holding company domiciled in
Indiana.
Special terms
The special terms used in this SAI are the ones defined in the Prospectus. In
connection with the term, valuation date, the New York Stock Exchange is
currently closed on weekends and on these holidays: New Year's Day, Martin
Luther King's Birthday, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. If any of
these holidays occurs on a weekend day, the Exchange may also be closed on the
business day occurring just before or just after the holiday.
Services
Independent auditors
The financial statements of the variable annuity account (VAA) and the
statutory-basis financial statements of Lincoln Life appearing in this SAI and
Registration Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports also appearing elsewhere in this
document and in the Registration Statement. The financial statements and
schedules audited by Ernst & Young LLP have been included in this document in
reliance on their reports given on their authority as experts in accounting and
auditing.
Keeper of records
All accounts, books, records and other documents which are required to be
maintained for the VAA are maintained by Lincoln Life or by third parties
responsible to Lincoln Life. We have entered into an agreement with the
Delaware Management Company, 2005 Market Street, Philadelphia, PA 19203, to
provide accounting services to the VAA. No separate charge against the assets
of the VAA is made by Lincoln Life for this service.
Principal underwriter
Lincoln Life is the principal underwriter for the contracts, which are offered
continuously. SEI Investment Distribution Co. (SEI) will assist Lincoln Life in
forming the selling group. SEI will also perform certain functions in support
of the selling group.
Purchase of securities being offered
The contracts are offered to the public through certain securities
broker/dealers who have entered into selling agreements with SEI and whose
personnel are legally authorized to sell annuity products. See Charges and
other deductions in the Prospectus.
Both before and after the annuity commencement date, there are exchange
privileges between variable subaccounts, subject to restrictions set out in the
Prospectus. See The contracts, in the Prospectus. No exchanges are permitted
between the VAA and other variable separate accounts.
The offering of the contracts is continuous.
Calculation of investment results
No performance data is included because, as of the date hereof, the VAA and the
funds had not yet commenced operations. Nonstandardized performance data will
be accompanied by standard performance data once available.
Once available, the paragraphs set forth below will present performance
information for the VAA and the variable subaccounts calculated in several
different ways. Paragraph (A) will show the historical performance of each
subaccount over the periods indicated. The information that will be presented
in Paragraph (A) is referred to as "standard performance" because it is
calculated in accordance with formulas prescribed by the SEC. The standard
performance of each subaccount will be calculated with each of the death
benefit options. Standard performance is described in Paragraph (B). Under
rules prescribed by the SEC, standard performance must be included in certain
advertising material that discusses the performance of the VAA and the
subaccounts.
Paragraph (C) shows additional "non-standardized" performance information
(i.e., performance information not calculated in accordance with SEC
guidelines) for each of the variable subaccounts that may
B-2
<PAGE>
be used to advertise the performance of the VAA and the variable subaccounts.
THIS INFORMATION DOES NOT INDICATE OR REPRESENT FUTURE PERFORMANCE.
(A) Average Annual Total Return
Period ending December 31, xxxx
<TABLE>
<CAPTION>
1 year-period
<S> <C> <C> <C> <C>
Account Value Return of Premium Annual Step-Up 5% Step-Up
Death Benefit Death Benefit Death Benefit Death Benefit
- --------------------------------------------------------------------------------------
SEI VP Large Cap Value
Fund
- --------------------------------------------------------------------------------------
SEI VP Large Cap Growth
Fund
- --------------------------------------------------------------------------------------
SEI VP Small Cap Value
Fund
- --------------------------------------------------------------------------------------
SEI VP Small Cap Growth
Fund
- --------------------------------------------------------------------------------------
SEI VP International
Equity Fund
- --------------------------------------------------------------------------------------
SEI VP Emerging Markets
Equity
Fund
- --------------------------------------------------------------------------------------
SEI VP Core Fixed Income
Fund
- --------------------------------------------------------------------------------------
SEI VP High Yield Bond
Fund
- --------------------------------------------------------------------------------------
SEI VP International
Fixed
Income Fund
- --------------------------------------------------------------------------------------
SEI VP Emerging Markets
Debt
Fund
- --------------------------------------------------------------------------------------
SEI VP Prime Obligations
Fund
- --------------------------------------------------------------------------------------
</TABLE>
(B) Formulas
Average annual total return for each period was determined by finding the
average annual compounded rate of return over each period that would equate the
initial amount invested to the ending redeemable value for that period,
according to the following formula--
P(1 + T)n = ERV
Where: P = a hypothetical initial purchase payment of $1,000
T = average annual total return for the period in question
n = number of years
ERV = redeemable value (as of the end of the period in question) of a
hypothetical $1,000 purchase payment made at the beginning of the 1-
year, 5-year, or 10-year period in question (or fractional portion
thereof)
B-3
<PAGE>
(C) Other Non-Standardized investment results:
The VAA may illustrate its results over various periods and compare its
results to indices and other variable annuities in sales materials including
advertisements, brochures and reports. Such results may be computed on a
cumulative and/or annualized basis.
Cumulative quotations are arrived at by calculating the change in the
accumulation unit value between the first and last day of the base period
being measured, and expressing the difference as a percentage of the unit
value at the beginning of the base period.
Annualized quotations are arrived at by applying a formula which determines
the level rate of return which, if earned over the entire base period, would
produce the cumulative return.
Non-Standardized investment results
Variable subaccounts of Account T
$10,000 invested in
this fund through
SEI Variable Annuity
this many years ago . . . . . . would have grown to this amount on
.*
<TABLE>
<CAPTION>
VP Large Cap Value Fund
Return of
Account Value Premium Annual Step-Up 5% Step-Up
Death Benefit Death Benefit Death Benefit Death Benefit
--------------- --------------- --------------- ---------------
Compound Compound Compound Compound
Growth Growth Growth Growth
Number of Years Periods Amount Rate Amount Rate Amount Rate Amount Rate
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ % $ % $ % $ %
- ---------------------------------------------------------------------------------------------------
Lifetime of Fund % % % %
- ---------------------------------------------------------------------------------------------------
<CAPTION>
VP Large Cap Growth Fund
Return of
Account Value Premium Annual Step-Up 5% Step-Up
Death Benefit Death Benefit Death Benefit Death Benefit
--------------- --------------- --------------- ---------------
Compound Compound Compound Compound
Growth Growth Growth Growth
Number of Years Periods Amount Rate Amount Rate Amount Rate Amount Rate
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ % $ % $ % $ %
- ---------------------------------------------------------------------------------------------------
Lifetime of Fund % % % %
- ---------------------------------------------------------------------------------------------------
<CAPTION>
VP Small Cap Value Fund
Return of
Account Value Premium Annual Step-Up 5% Step-Up
Death Benefit Death Benefit Death Benefit Death Benefit
--------------- --------------- --------------- ---------------
Compound Compound Compound Compound
Growth Growth Growth Growth
Number of Years Periods Amount Rate Amount Rate Amount Rate Amount Rate
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ % $ % $ % $ %
- ---------------------------------------------------------------------------------------------------
Lifetime of Fund % % % %
- ---------------------------------------------------------------------------------------------------
<CAPTION>
VP Small Cap Growth Fund
Return of
Account Value Premium Annual Step-Up 5% Step-Up
Death Benefit Death Benefit Death Benefit Death Benefit
--------------- --------------- --------------- ---------------
Compound Compound Compound Compound
Growth Growth Growth Growth
Number of Years Periods Amount Rate Amount Rate Amount Rate Amount Rate
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ % $ % $ % $ %
- ---------------------------------------------------------------------------------------------------
Lifetime of Fund % % % %
- ---------------------------------------------------------------------------------------------------
</TABLE>
B-4
<PAGE>
<TABLE>
<CAPTION>
VP International Equity Fund
Return of
Account Value Premium Annual Step-Up 5% Step-Up
Death Benefit Death Benefit Death Benefit Death Benefit
--------------- --------------- --------------- ---------------
Compound Compound Compound Compound
Growth Growth Growth Growth
Number of Years Periods Amount Rate Amount Rate Amount Rate Amount Rate
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ % $ % $ % $ %
- ---------------------------------------------------------------------------------------------------
Lifetime of Fund % % % %
- ---------------------------------------------------------------------------------------------------
<CAPTION>
VP Emerging Markets Equity Fund
Return of
Account Value Premium Annual Step-Up 5% Step-Up
Death Benefit Death Benefit Death Benefit Death Benefit
--------------- --------------- --------------- ---------------
Compound Compound Compound Compound
Growth Growth Growth Growth
Number of Years Periods Amount Rate Amount Rate Amount Rate Amount Rate
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ % $ % $ % $ %
- ---------------------------------------------------------------------------------------------------
Lifetime of Fund % % % %
- ---------------------------------------------------------------------------------------------------
<CAPTION>
VP Core Fixed Income Fund
Return of
Account Value Premium Annual Step-Up 5% Step-Up
Death Benefit Death Benefit Death Benefit Death Benefit
--------------- --------------- --------------- ---------------
Compound Compound Compound Compound
Growth Growth Growth Growth
Number of Years Periods Amount Rate Amount Rate Amount Rate Amount Rate
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ % $ % $ % $ %
- ---------------------------------------------------------------------------------------------------
Lifetime of Fund % % % %
- ---------------------------------------------------------------------------------------------------
<CAPTION>
VP High Yield Bond Fund
Return of
Account Value Premium Annual Step-Up 5% Step-Up
Death Benefit Death Benefit Death Benefit Death Benefit
--------------- --------------- --------------- ---------------
Compound Compound Compound Compound
Growth Growth Growth Growth
Number of Years Periods Amount Rate Amount Rate Amount Rate Amount Rate
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ % $ % $ % $ %
- ---------------------------------------------------------------------------------------------------
Lifetime of Fund % % % %
- ---------------------------------------------------------------------------------------------------
<CAPTION>
VP International Fixed Income Fund
Return of
Account Value Premium Annual Step-Up 5% Step-Up
Death Benefit Death Benefit Death Benefit Death Benefit
--------------- --------------- --------------- ---------------
Compound Compound Compound Compound
Growth Growth Growth Growth
Number of Years Periods Amount Rate Amount Rate Amount Rate Amount Rate
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ % $ % $ % $ %
- ---------------------------------------------------------------------------------------------------
Lifetime of Fund % % % %
- ---------------------------------------------------------------------------------------------------
<CAPTION>
VP Emerging Markets Debt Fund
Return of
Account Value Premium Annual Step-Up 5% Step-Up
Death Benefit Death Benefit Death Benefit Death Benefit
--------------- --------------- --------------- ---------------
Compound Compound Compound Compound
Growth Growth Growth Growth
Number of Years Periods Amount Rate Amount Rate Amount Rate Amount Rate
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ % $ % $ % $ %
- ---------------------------------------------------------------------------------------------------
Lifetime of Fund % % % %
- ---------------------------------------------------------------------------------------------------
</TABLE>
B-5
<PAGE>
<TABLE>
<CAPTION>
VP Prime Obligations Fund
Return of
Account Value Premium Annual Step-Up 5% Step-Up
Death Benefit Death Benefit Death Benefit Death Benefit
--------------- --------------- --------------- ---------------
Compound Compound Compound Compound
Growth Growth Growth Growth
Number of Years Periods Amount Rate Amount Rate Amount Rate Amount Rate
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ % $ % $ % $ %
- ---------------------------------------------------------------------------------------------------
Lifetime of Fund % % % %
- ---------------------------------------------------------------------------------------------------
</TABLE>
*For purposes of determining these investment results, the mortality and
expense risk charge and administrative fee have been taken into account. No $40
account fee has been deducted. The total annual charge for the Account Value
death benefit option is 1.35%; 1.40% for the Return of Premium death benefit
option; 1.50% for the Annual Step-up death benefit option; and 1.65% for the 5%
Step-up death benefit option.
Annuity payouts
Variable annuity payouts
Variable annuity payouts will be determined on the basis of: (1) the dollar
value of the contract on the annuity commencement date; (2) the annuity tables
contained in the contract; (3) the type of annuity option selected; and (4) the
investment results of the fund(s) selected. In order to determine the amount of
variable annuity payouts, Lincoln Life makes the following calculation: first,
it determines the dollar amount of the first payout; second, it credits the
contract with a fixed number of annuity units based on the amount of the first
payout; and third, it calculates the value of the annuity units each period
thereafter. These steps are explained below.
The dollar amount of the first periodic variable annuity payout is determined
by applying the total value of the accumulation units credited under the
contract valued as of the annuity commencement date (less any premium taxes) to
the annuity tables contained in the contract. The first variable annuity payout
will be paid 14 days after the annuity commencement date. This day of the month
will become the day on which all future annuity payouts will be paid. Amounts
shown in the tables are based on the 1983 Table "a" Individual Annuity
Mortality Tables, modified, with an assumed investment return at the rate of
3%, 4%, 5% or 6% per annum. The first annuity payout is determined by
multiplying the benefit per $1,000 of value shown in the contract tables by the
number of thousands of dollars of value accumulated under the contract. These
annuity tables vary according to the form of annuity selected and the age of
the annuitant at the annuity commencement date. The assumed interest rate
described above is the measuring point for subsequent annuity payouts. If the
actual net investment rate (annualized) exceeds the assumed interest rate, the
payout will increase at a rate equal to the amount of such excess. Conversely,
if the actual rate is less than the assumed interest rate, annuity payouts will
decrease. If the assumed interest rate were to be increased, annuity payouts
would start at a higher level but would decrease more rapidly or increase more
slowly.
Lincoln Life may use sex distinct annuity tables in contracts that are not
associated with employer sponsored plans and where not prohibited by law.
At an annuity commencement date, the contract is credited with annuity units
for each variable subaccount on which variable annuity payouts are based. The
number of annuity units to be credited is determined by dividing the amount of
the first periodic payout by the value of an annuity unit in each variable
subaccount selected. Although the number of annuity units is fixed by this
process, the value of such units will vary with the value of the underlying
fund. The amount of the second and subsequent periodic payouts is determined by
multiplying the contractowner's fixed number of annuity units in each variable
subaccount by the appropriate annuity unit value for the valuation date ending
14 days prior to the date that payout is due.
The value of each variable subaccount's annuity unit will be set initially at
$1.00. The annuity unit value for each variable subaccount at the end of any
valuation date is determined as follows:
1. The total value of fund shares held in a given variable subaccount is
calculated by multiplying the number of shares by the net asset value at the
end of the valuation period plus any dividend or other distribution.
2. The liabilities of the variable subaccount, including daily charges and
taxes, are subtracted.
3. The result is divided by the number of annuity units in the variable
subaccount at the beginning of the valuation period, and adjusted by a
factor to neutralize the assumed investment return in the annuity table.
The value of the annuity units is determined as of a valuation date 14 days
prior to the payment date in order to permit calculation of amounts of annuity
payouts and mailing of checks in advance of their due dates. Such checks will
normally be issued and mailed at least three days before the due date.
B-6
<PAGE>
Proof of age, sex and survival
Lincoln Life may require proof of age, sex, or survival of any payee upon whose
age, sex, or survival payments depend.
Advertising and sales literature
As set forth in the Prospectus, Lincoln Life may refer to the following
organizations (and others) in its marketing materials:
A.M. BEST'S RATING SYSTEM is designed to evaluate the various factors affecting
the overall performance of an insurance company in order to provide an opinion
as to an insurance company's relative financial strength and ability to meet
its contractual obligations. The procedure includes both a quantitative and
qualitative review of each company. A.M. Best also provides certain rankings,
to which Lincoln Life intends to refer.
DUFF & PHELPS insurance company claims paying ability (CPA) service provides
purchasers of insurance company policies and contracts with analytical and
statistical information on the solvency and liquidity of major U.S. licensed
insurance companies, both mutual and stock.
EAFE INDEX is prepared by Morgan Stanley Capital International (MSCI). It
measures performance of equity securities in Europe, Australia and the Far
East. The index reflects the movements of world stock markets by representing
the evolution of an unmanaged portfolio. The EAFE Index offers international
diversification representing over 1,000 companies across 20 different
countries.
LIPPER VARIABLE INSURANCE PRODUCTS PERFORMANCE ANALYSIS SERVICE is a publisher
of statistical data covering the investment company industry in the United
States and overseas. Lipper is recognized as the leading source of data on
open-end and closed-end funds. Lipper currently tracks the performance of over
5,000 investment companies and publishes numerous specialized reports,
including reports on performance and portfolio analysis, fee and expense
analysis.
MOODY'S insurance financial strength rating is an opinion of an insurance
company's financial strength and ability to meet financial obligations. The
purpose of Moody's ratings is to provide investors with a simple system of
gradation by which the relative quality of insurance companies may be noted.
MORNINGSTAR is an independent financial publisher offering comprehensive
statistical and analytical coverage of open-end and closed-end funds and
variable annuities.
STANDARD & POOR'S insurance claims-paying ability rating is an opinion of an
operating insurance company's financial capacity to meet obligations under an
insurance policy in accordance with the terms. The likelihood of a timely flow
of funds from the insurer to the trustee for the bondholders is a key element
in the rating determination for such debt issues.
VARDS (VARIABLE ANNUITY RESEARCH DATA SERVICE) provides a comprehensive guide
to variable annuity contract features and historical fund performance. The
service also provides a readily understandable analysis of the comparative
characteristics and market performance of funds inclusive in variable
contracts.
STANDARD & POOR'S 500 INDEX is a broad-based measurement of U.S. stock-market
performance based on the weighted average performance of 500 common stocks of
leading companies in leading industries; commonly known as the Standard &
Poor's 500 (S&P 500). The selection of stocks, their relative weightings to
reflect differences in the number of outstanding shares, and publication of the
index itself are services of Standard & Poor's Corporation, a financial
advisory, securities rating, and publishing firm.
NASDAQ-OTC PRICE INDEX is based on the National Association of Securities
Dealers Automated Quotations (NASDAQ) and represents all domestic over-the-
counter stocks except those traded on exchanges and those having only one
market maker, a total of some 3,500 stocks. It is market value- weighted and
was introduced with a base of 100.00 on February 5, 1971.
DOW JONES INDUSTRIAL AVERAGE (DJIA) is a price-weighted average of 30 actively
traded blue chip stocks, primarily industrials currently including American
Express Company and American Telephone and Telegraph Company. Prepared and
published by Dow Jones & Company, it is the oldest and most widely quoted of
all the market indicators. The average is quoted in points, not dollars.
In its advertisements and other sales literature for the VAA and the trust
funds, Lincoln Life intends to illustrate the advantages of the contracts in a
number of ways:
COMPOUND INTEREST ILLUSTRATIONS will emphasize several advantages of the
variable annuity contract. For example, but not by way of illustration, the
literature may emphasize the potential tax savings through tax deferral; the
potential advantage of the variable annuity account over the fixed account; and
the compounding effect when a client makes regular deposits to his or her
contract.
INTERNET is an electronic communications network which may be used to provide
information regarding Lincoln Life, performance of the variable subaccounts and
advertisement literature.
B-7
<PAGE>
DOLLAR-COST AVERAGING (DCA) may be used by you to systematically transfer on a
monthly basis amounts from the SEI VP Prime Obligations subaccount into the
other variable subaccounts. We reserve the right to change subaccounts under
this program. You may elect to participate in the DCA program at the time of
application or at anytime before the annuity commencement date by completing
an election form available from us. The minimum amount to be dollar cost
averaged is $1,500 over any period between six and 60 months. Once elected,
the program will remain in effect until the earlier of: (1) the annuity
commencement date; (2) the value of the amount being DCA'd is depleted; or (3)
you cancel the program by written request or by telephone if we have your
telephone authorization on file. Currently, there is no charge for this
service. However, we reserve the right to impose one. A transfer under this
program is not considered a transfer for purposes of limiting the number of
transfers that may be made, or assessing any charges which may apply to
transfers. We reserve the right to discontinue this program at any time. DCA
does not assure a profit or protect against loss.
AUTOMATIC WITHDRAWAL SERVICE (AWS) provides an automatic, periodic withdrawal
of account value to you. You may elect to participate in AWS at the time of
application or at any time before the annuity commencement date by sending a
written request to our home office. The minimum account value required to
establish AWS is $10,000. You may cancel or make changes to your AWS program
at any time by sending a written request to our home office. If telephone
authorization has been elected, certain changes may be made by telephone.
Notwithstanding the requirements of the program, any withdrawal must be
permitted by Section 401(a)(9) of the code for qualified plans or permitted
under Section 72 for non-qualified contracts. Currently, there is no charge
for this service. However, we reserve the right to impose one. If a charge is
imposed, it will not exceed $25 per transaction or 2% of the amount withdrawn,
whichever is less. We reserve the right to discontinue this service at any
time.
CROSS-REINVESTMENT SERVICE allows the account value in a designated variable
subaccount that exceeds a certain baseline amount to automatically be
transferred to another specific variable subaccount(s) at specific intervals.
You may elect to participate in cross-reinvestment at the time of application
or at any time before the annuity commencement date by sending a written
request to our home office or by telephone if we have your telephone
authorization on file. You designate the holding account, the receiving
account(s), and the baseline amount. Cross-reinvestment will continue until we
receive authorization to terminate the program.
The minimum holding account value required to establish cross-reinvestment is
$10,000. Currently, there is no charge for this service. However, we reserve
the right to impose one. A transfer under this program is not considered a
transfer for purposes of limiting the number of transfers that may be made, or
assessing any charges which may apply to transfers. We reserve the right to
discontinue this service at any time.
SEI's Asset Management Program
SEI's Asset Management Program is a comprehensive investment management
program that utilizes actively managed portfolios with the underlying SEI
insurance funds with the potential for enhanced returns and lower risk. Under
the program SIMC, the portfolio manager, determines how account values should
be allocated to the funds. SIMC reviews the allocations periodically and may
make changes from time to time. At the end of each calendar quarter, account
values are automatically rebalanced to equal the correct portfolio allocation
as determined by SIMC. This rebalancing is normally necessary because the
funds have performed differently (resulting in various funds having more or
less than the targeted allocations) or because the portfolio manager has
decided to change the allocations. SIMC is a registered investment adviser
with the SEC.
Lincoln Life's customers. Sales literature for the VAA and the trust's funds
may refer to the number of employers and the number of individual annuity
clients which Lincoln Life serves. As of the date of this SAI, Lincoln Life
was serving over 10,000 employers and more than 1 million individuals.
Lincoln Life's assets, size. Lincoln Life may discuss its general financial
condition (see, for example, the reference to A.M. Best Company, above); it
may refer to its assets; it may also discuss its relative size and/or ranking
among companies in the industry or among any sub-classification of those
companies, based upon recognized evaluation criteria (see reference to A.M.
Best Company above). For example, at year-end 1999 Lincoln Life had statutory
admitted assets of over $70 billion.
Financial statements
The statutory-basis financials statements of Lincoln Life appear on the
following pages. Financial Statements for the VAA are not included because, as
of the date hereof, the VAA had no assets, had incurred no liabilities, and
had not yet commenced operations.
B-8
<PAGE>
SEI Variable Annuity
Lincoln Life Variable Annuity Account T
Individual variable annuity contract
Home Office:
Lincoln National Life Insurance Company
1300 South Clinton Street
Fort Wayne, IN 46801
This prospectus describes the individual flexible premium deferred variable
annuity contract that is issued by Lincoln National Life Insurance Company
(Lincoln Life). It is primarily for use with nonqualified plans and retirement
plans under Sections 408 (IRAs) and 408A (Roth IRAs) of the tax code. Non-ERISA
403(b) business will only be accepted for purchase payments that are either
lump sum or rollovers. Generally, you do not pay federal income tax on the
contract's growth until it is paid out. The contract is designed to accumulate
account value and to provide retirement income that you cannot outlive or for
an agreed upon time. If you die before the annuity commencement date, we will
pay your beneficiary a death benefit. In the alternative, you may choose to
receive a death benefit on the death of the annuitant.
The minimum initial purchase payment for the contract is $25,000.
Additional purchase payments may be made to the contract and must be at least
$100.
All purchase payments for benefits will be placed in Lincoln Life Variable
Annuity Account T (variable annuity account [VAA]). The VAA is a segregated
investment account of Lincoln Life. You take all of the investment risk on the
account value and the retirement income. If the subaccounts you select make
money, your account value goes up; if they lose money, your account value goes
down. How much it 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.
The available funds, listed below, are each part of SEI Insurance Products
Trust (trust):
SEI VP Large Cap Value Fund
SEI VP Large Cap Growth Fund
SEI VP Small Cap Value Fund
SEI VP Small Cap Growth Fund
SEI VP International Equity Fund
SEI VP Emerging Markets Equity Fund
SEI VP Core Fixed Income Fund
SEI VP High Yield Bond Fund
SEI VP International Fixed Income Fund
SEI VP Emerging Markets Debt Fund
SEI VP Prime Obligations Fund
This Prospectus gives you information about the contract that you should know
before you decide to buy a contract and make purchase payments. You should also
review the prospectus for the funds that are attached, and keep both
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 offense.
You can obtain a Statement of Additional Information (SAI) about the contract
that has more information. Its terms are made part of this Prospectus. For a
free copy, write: Lincoln National Life Insurance Company, P.O. Box 2348, Fort
Wayne, Indiana 46801, or call 1-800-942-5500. The SAI and other information
about Lincoln Life and Account T 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.
, 2000
1
<PAGE>
Table of contents
<TABLE>
<CAPTION>
Page
- --------------------------------------------------------------------------------
<S> <C>
Special terms.............................................................. 2
- --------------------------------------------------------------------------------
Expense tables............................................................. 3
- --------------------------------------------------------------------------------
Summary.................................................................... 6
- --------------------------------------------------------------------------------
Investment results......................................................... 6
- --------------------------------------------------------------------------------
Financial statements....................................................... 7
- --------------------------------------------------------------------------------
Lincoln National Life Insurance Co......................................... 7
- --------------------------------------------------------------------------------
General account............................................................ 7
- --------------------------------------------------------------------------------
Variable annuity account (VAA)............................................. 7
- --------------------------------------------------------------------------------
Investments of the variable annuity account................................ 8
- --------------------------------------------------------------------------------
Charges and other deductions............................................... 10
- --------------------------------------------------------------------------------
The contracts.............................................................. 10
- --------------------------------------------------------------------------------
Annuity payouts............................................................ 14
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page
- --------------------------------------------------------------------------------
<S> <C>
Federal tax matters....................................................... 16
- --------------------------------------------------------------------------------
Voting rights............................................................. 19
- --------------------------------------------------------------------------------
Distribution of the contracts............................................. 19
- --------------------------------------------------------------------------------
Return privilege.......................................................... 20
- --------------------------------------------------------------------------------
State regulation.......................................................... 20
- --------------------------------------------------------------------------------
Restrictions under the Texas Optional Retirement Program.................. 20
- --------------------------------------------------------------------------------
Records and reports....................................................... 20
- --------------------------------------------------------------------------------
Other information......................................................... 20
- --------------------------------------------------------------------------------
Statement of additional information table of contents for Variable Annuity
Account T SEI Variable Annuity........................................... 21
</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,
Account T, into which Lincoln Life sets aside and invests the assets of the
contract offered in this Prospectus.
Account value --At a given time before the annuity commencement date, the total
value of all accumulation units for a contract.
Accumulation unit--A measure used to calculate account value before the annuity
commencement date.
Annuitant--The person on whose life the annuity benefit payments are based and
upon whose death a death benefit may be paid.
Annuity commencement date--The valuation date when funds are withdrawn or
converted into annuity units for payment of retirement income benefits under
the annuity payout option you select.
Annuity payout--An amount paid at regular intervals after the annuity
commencement date under one of several options available to the annuitant
and/or any other payee. This amount may be paid on a variable or fixed basis or
a combination of both.
Annuity unit--A measure used to calculate the amount of annuity payouts after
the annuity commencement date.
Beneficiary--The person you choose to receive the death benefit.
Contractowner (you, your, owner)--The person who has the ability to exercise
the rights within the contract (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 starting with each contract anniversary after that.
Death benefit--The amount payable to your designated beneficiary if the owner
dies before the annuity commencement date or, if selected, to the contractowner
if the annuitant dies. Four death benefit options are available.
Lincoln Life (we, us, our)--Lincoln National Life Insurance Company.
Purchase payments--Amounts paid into the contract.
Subaccount or SEI Variable Annuity subaccount--The portion of the VAA that
reflects investments in accumulation and annuity units of a class of a
particular fund available under the contracts. There is a separate subaccount
which corresponds to each class of a fund.
Trust--SEI Insurance Products Trust (trust), the funds to which you direct
purchase payments.
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 day that the NYSE is open for trading (valuation
date) and ending at the close of such trading on the next valuation date.
2
<PAGE>
Expense tables
Summary of Contractowner expenses:
Annual Account Fee: $40
(See Charges and other deductions).
The account fee will be waived for any contract year if your account value
equals or exceeds $50,000.00.
- --------------------------------------------------------------------------------
Account T annual expenses for SEI Variable Annuity subaccounts:*
(as a percentage of average account value)
<TABLE>
<CAPTION>
Death benefit options
----------------------------
Return Annual 5%
Account of Step- Step-
Value Premium Up Up
<S> <C> <C> <C> <C>
Mortality and expense risk charge: .20% .25% .35% .50%
Administrative charge: 0.15% 0.15% 0.15% 0.15%
----- ----- ----- -----
Total annual charge for each subaccount: .35% .40% .50% .65%
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
The
mortality
and expense
risk charge
is based on
the
particular
death
benefit
option you
choose. (See
Charges and
other
deductions.)
</TABLE>
Annual expenses of the funds:
(as a percentage of each fund's average net assets):
<TABLE>
<CAPTION>
Management Other expenses Total expenses Total expenses
Fees (before (before any (before any (after any
any waivers/ waivers/ waivers/ waivers/
reimbursements) reimbursements)** reimbursements) reimbursements)***
--------------- + ----------------- = --------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
1. Large Cap Value 0.35% 0.60% 0.95% 0.85%
- -------------------------------------------------------------------------------------------------------
2. Large Cap Growth 0.40% 0.60% 1.00% 0.85%
- -------------------------------------------------------------------------------------------------------
3. Small Cap Value 0.65% 0.55% 1.20% 1.10%
- -------------------------------------------------------------------------------------------------------
4. Small Cap Growth 0.65% 0.55% 1.20% 1.10%
- -------------------------------------------------------------------------------------------------------
5. International Equity 0.51% 0.90% 1.41% 1.28%
- -------------------------------------------------------------------------------------------------------
6. Emerging Markets
Equity 1.05% 1.29% 2.34% 1.95%
- -------------------------------------------------------------------------------------------------------
7. Core Fixed Income 0.28% 0.42% 0.70% 0.60%
- -------------------------------------------------------------------------------------------------------
8. High Yield Bond 0.49% 0.50% 0.99% 0.85%
- -------------------------------------------------------------------------------------------------------
9. International Fixed
Income 0.30% 0.91% 1.21% 1.00%
- -------------------------------------------------------------------------------------------------------
10. Emerging Markets Debt 0.85% 1.10% 1.95% 1.35%
- -------------------------------------------------------------------------------------------------------
11. Prime Obligations 0.08% 0.70% 0.78% 0.44%
- -------------------------------------------------------------------------------------------------------
</TABLE>
* The VAA is divided into separately named subaccounts, eleven of which are
available under the contracts. Each subaccount, in turn, invests purchase
payments in shares of its respective fund.
** Other expenses are based on estimated amounts for the current fiscal year.
***The funds' total actual fund operating expenses for the current fiscal year
are expected to be less than the amount shown above because SIMC and SEI
Investments Fund Management will each voluntarily waive a portion of its fee in
order to keep total operating expenses at a specified level. SIMC and/or SEI
Investments Fund Management may discontinue all or part of their waivers at any
time.
3
<PAGE>
Examples
(expenses of the subaccounts and of 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
<S> <C> <C>
For Account Value Death Benefit:
1. SEI VP Large Cap Growth Fund $13 $42
- ----------------------------------------------------------
2. SEI VP Large Cap Value Fund 14 42
- ----------------------------------------------------------
3. SEI VP Small Cap Growth Fund 16 48
- ----------------------------------------------------------
4. SEI VP Small Cap Value Fund 16 48
- ----------------------------------------------------------
5. SEI VP International Equity Fund 18 54
- ----------------------------------------------------------
6. SEI VP Emerging Markets Equity Fund 27 81
- ----------------------------------------------------------
7. SEI VP Core Fixed Income Fund 11 33
- ----------------------------------------------------------
8. SEI VP High Yield Bond Fund 14 42
- ----------------------------------------------------------
9. SEI VP International Fixed Income Fund 16 48
- ----------------------------------------------------------
10. SEI VP Emerging Markets Debt Fund 23 70
- ----------------------------------------------------------
11. SEI VP Prime Obligations Fund 11 34
- ----------------------------------------------------------
For Return of Premium Death Benefit:
1. SEI VP Large Cap Growth Fund $24 $74
- ----------------------------------------------------------
2. SEI VP Large Cap Value Fund 24 73
- ----------------------------------------------------------
3. SEI VP Small Cap Growth Fund 26 79
- ----------------------------------------------------------
4. SEI VP Small Cap Value Fund 26 79
- ----------------------------------------------------------
5. SEI VP International Equity Fund 28 85
- ----------------------------------------------------------
6. SEI VP Emerging Markets Equity Fund 38 110
- ----------------------------------------------------------
7. SEI VP Core Fixed Income Fund 21 64
- ----------------------------------------------------------
8. SEI VP High Yield Bond Fund 24 73
- ----------------------------------------------------------
9. SEI VP International Fixed Income Fund 26 79
- ----------------------------------------------------------
10. SEI VP Emerging Markets Debt Fund 34 100
- ----------------------------------------------------------
11. SEI VP Prime Obligations Fund 22 65
- ----------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
1 year 3 years
<S> <C> <C>
For Annual Step-Up Death Benefit:
1. SEI VP Large Cap Growth Fund $25 $77
- ----------------------------------------------------------
2. SEI VP Large Cap Value Fund 25 76
- ----------------------------------------------------------
3. SEI VP Small Cap Growth Fund 27 82
- ----------------------------------------------------------
4. SEI VP Small Cap Value Fund 27 82
- ----------------------------------------------------------
5. SEI VP International Equity Fund 29 87
- ----------------------------------------------------------
6. SEI VP Emerging Markets Equity Fund 39 113
- ----------------------------------------------------------
7. SEI VP Core Fixed Income Fund 22 67
- ----------------------------------------------------------
8. SEI VP High Yield Bond Fund 25 76
- ----------------------------------------------------------
9. SEI VP International Fixed Income Fund 27 82
- ----------------------------------------------------------
10. SEI VP Emerging Markets Debt Fund 35 102
- ----------------------------------------------------------
11. SEI VP Prime Obligations Fund 23 68
- ----------------------------------------------------------
For 5% Step-Up Death Benefit:
1. SEI VP Large Cap Growth Fund $26 $81
- ----------------------------------------------------------
2. SEI VP Large Cap Value Fund 27 80
- ----------------------------------------------------------
3. SEI VP Small Cap Growth Fund 29 86
- ----------------------------------------------------------
4. SEI VP Small Cap Value Fund 29 86
- ----------------------------------------------------------
5. SEI VP International Equity Fund 31 92
- ----------------------------------------------------------
6. SEI VP Emerging Markets Equity Fund 40 117
- ----------------------------------------------------------
7. SEI VP Core Fixed Income Fund 24 72
- ----------------------------------------------------------
8. SEI VP High Yield Bond Fund 27 80
- ----------------------------------------------------------
9. SEI VP International Fixed Income Fund 29 86
- ----------------------------------------------------------
10. SEI VP Emerging Markets Debt Fund 36 106
- ----------------------------------------------------------
11. SEI VP Prime Obligations Fund 24 72
- ----------------------------------------------------------
</TABLE>
We provide these examples to help you understand the direct and indirect costs
and expenses of the contract. Examples are given for each of the death benefit
options.
For more information, see Charges and other deductions in this Prospectus, and
in the Prospectus 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.
5
<PAGE>
Summary
What kind of contract am I buying? It is an individual variable annuity
contract between you and Lincoln Life. See The contracts.
What is the variable annuity account (VAA)? It is a separate account we
established under Indiana insurance law, and registered with the SEC as a unit
investment trust. VAA assets are allocated to one or more subaccounts,
according to your investment choices. VAA assets are not chargeable with
liabilities arising out of any other business which Lincoln Life may conduct.
See Variable annuity account.
What are my investment choices? Based upon your instruction, the VAA applies
purchase payments to buy trust shares in one or more of the investment funds of
the trust: Large Cap Value Fund, Large Cap Growth Fund, Small Cap Value Fund,
Small Cap Growth Fund, International Equity Fund, Emerging Markets Equity Fund,
Core Fixed Income Fund, High Yield Bond Fund, International Fixed Income Fund,
Emerging Markets Debt Fund, Prime Obligations Fund. In turn, each fund holds a
portfolio of securities consistent with its investment policy. See Investments
of the variable annuity account and Description of the trust.
Who invests my money? The investment adviser for the trust is SEI Investments
Management Corporation (SIMC). SIMC is registered as an investment adviser with
the SEC. See Investments of the variable annuity and Investment adviser.
How does the contract work? If we approve your application, we will send you a
contract. When you make purchase payments during the accumulation phase, you
buy accumulation units. If you decide to receive retirement income payments,
your accumulation units are converted to annuity units. Your retirement income
payments will be based on the number of annuity units you received and the
value of each annuity unit on payout days. See The contracts.
What charges do I pay under the contract? We will deduct any applicable premium
tax from purchase payments or account value at the time the tax is incurred or
at another time we choose.
We apply an annual charge totaling .35%, .40%, .50% or .65% to the daily net
asset value of the VAA depending on the death benefit option chosen. This
charge includes 0.15% as an administrative charge; the balance of the charge is
a mortality and expense risk charge. We charge an account fee of $40 per
contract year if the account value is less than $50,000. See Charges and other
deductions.
This trust pays a management fee to SIMC based on the average daily net asset
value of each fund. See Investments of the variable annuity account-Investment
adviser. Each fund also has additional operating expenses. These are described
in the Prospectus for the trust.
What purchase payments do I make, and how often? Subject to minimum and maximum
purchase payment amounts, your payments are completely flexible. See The
contracts--Purchase 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 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
death benefit you have chosen. Your beneficiary has options as to how the death
benefit is paid or you may choose an option for your beneficiary. See Death
benefit before the annuity commencement date.
May I transfer account value between variable options? Yes, with certain
limits. See The contracts--Transfers on or before the annuity commencement
date: and Transfers after the annuity commencement date.
May I surrender the contract or make a withdrawal? Yes, subject to contract
requirements and to the restrictions of any qualified retirement plan for which
the contract was purchased. See Surrenders and withdrawals.
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 a
withdrawal also may be subject to 20% withholding. See Federal tax status and
withholding.
Do I get a free look at this contract? Yes. You can cancel the contract within
ten days (in some states longer) of the date you first receive the contract.
You need to return the contract, postage prepaid, to our home office. In most
states you assume the risk of any market drop on purchase payments you allocate
to the variable side of the contract. See Return privilege.
Investment results
At times, the VAA may compare its investment results to various unmanaged
indices or other variable annuities in reports to shareholders, sales
literature and advertisements. The results will be calculated on a total return
basis for various periods. Total returns include the reinvestment of all
distributions, which are reflected in changes in unit value. See the SAI for
further information.
6
<PAGE>
Financial statements
The financial statements of the VAA and the statutory-basis financial
statements of Lincoln Life are located in the SAI. If you would like a free
copy of the SAI, complete and mail the enclosed card, or call 1-800-942-5500.
Lincoln National Life Insurance Co.
Lincoln Life was founded in 1905 and is organized under Indiana law. We are one
of the largest stock life insurance companies in the United States. We are
owned by Lincoln Financial Group (LFG) which is also organized under Indiana
law. LFG's primary businesses are insurance and financial services.
General account
The general account of Lincoln Life is subject to regulation and supervision by
the Indiana Department of Insurance as well as the insurance laws and
regulations of the jurisdictions in which the contracts are distributed.
In reliance on certain exemptions, exclusions and rules, Lincoln Life 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 Investment Company Act of 1940. Accordingly, neither the general
account nor any interests in it are regulated under the 1933 Act or the 1940
Act. Lincoln Life 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. These disclosures, however, may be subject to certain
generally applicable provisions of the federal securities laws regulating 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 annuity payouts.
Variable annuity account
(VAA)
On January 25, 2000, the VAA was established as an insurance company separate
account under Indiana 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 Lincoln Life. 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 Lincoln Life. The VAA satisfies the definition of a
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 is used to support other annuity contracts offered by Lincoln Life in
addition to the contracts described in this Prospectus. The other annuity
contracts supported by the VAA invest in the same portfolios of the trust as
the contracts described in this Prospectus. These other annuity contracts may
have different charges that could affect the performance of the subaccount.
7
<PAGE>
Investments of the variable annuity account
You decide the subaccount(s) to which you allocate purchase payments. You may
change your allocation without penalty or charges. Shares of the funds will be
sold at net asset value. The trust is required to redeem fund shares at net
asset value upon our request. We reserve the right to add, delete or substitute
funds.
Investment adviser
The investment adviser for the trust is SEI Investments Management Corporation
(SIMC). As compensation for its services to the trust, the investment adviser
receives a fee from the trust which is accrued daily and paid monthly. This fee
is based on the net assets of each fund, as defined under Purchase and
Redemption of Shares, in the Prospectus for the trust.
Additionally, SIMC currently has thirty-two sub-advisory agreements in which
the sub-adviser may perform some or substantially all of the investment
advisory services required by those respective funds. See the trust prospectus
for additional information on the sub-adviser.
No additional compensation from the assets of those funds will be assessed as a
result of the sub-advisory agreements.
Description of the trust
SEI Insurance Products Trust (trust) is an open-end management investment
company that has diversified and non-diversified portfolios. The trust was
organized as a Massachusetts business trust under a Declaration of Trust dated
December 14, 1998. The Declaration of Trust permits the trust to offer separate
series ("funds") of units of beneficial interest ("shares") and different
classes of shares. Each share of each fund represents an equal proportionate
interest in that fund with each other share of that fund. All consideration
received by the trust for shares of any class of any fund and all assets of
such fund or class belong to that fund or class, respectively, and would be
subject to the liabilities related thereto.
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
trust which is included in this booklet. Please be advised that there is no
assurance that any of the funds will achieve their stated objectives.
1. SEI VP LARGE CAP VALUE FUND--The investment objective of the SEI VP Large
Cap Value Fund is long-term growth of capital and income.
The Fund invests primarily in common stocks of U.S. companies with market
capitalizations of more than $1 billion.
2. SEI VP LARGE CAP GROWTH FUND--The investment objective of the SEI VP Large
Cap Growth Fund is capital appreciation.
The Fund invests primarily in U.S. companies with market capitalizations of
more than $1 billion.
3. SEI VP SMALL CAP VALUE FUND--The investment objective of the SEI VP Small
Cap Value Fund is capital appreciation.
The Fund invests primarily in common stocks of U.S. companies with market
capitalizations of less than $2 billion.
4. SEI VP SMALL CAP GROWTH FUND--The investment objective of the SEI VP Small
Cap Growth Fund is long-term capital appreciation.
The Fund invests primarily in common stocks of U.S. companies with market
capitalizations less than $2 billion.
5. SEI VP INTERNATIONAL EQUITY FUND--The SEI VP International Equity Fund seeks
to provide long-term capital appreciation by investing primarily in a diver-
sified portfolio of equity securities of non-U.S. issuers.
6. SEI VP EMERGING MARKETS EQUITY FUND--The SEI VP Emerging Markets Equity Fund
seeks to provide capital appreciation by investing primarily in a diversi-
fied portfolio of equity securities of emerging market issuers.
7. SEI VP CORE FIXED INCOME FUND--The investment objective of the SEI VP Core
Fixed Income Fund is current income consistent with the preservation of cap-
ital.
The Fund invests primarily in investment grade U.S. corporate and government
fixed income securities, including mortgage-backed securities.
8. SEI VP HIGH YIELD BOND FUND--The investment objective of the SEI VP High
Yield Bond Fund is to maximize total return.
The Fund invests primarily in fixed income securities that are rated below
investment grade ("junk bonds"), including corporate bonds and debentures,
convertible and preferred securities, and zero coupon obligations.
9. SEI VP INTERNATIONAL FIXED INCOME FUND--The SEI VP International Fixed In-
come Fund seeks to provided capital appreciation and current income through
investment primarily in investment grade, non-U.S. dollar denominated gov-
ernment, corporate, mortgage-backed and asset-backed fixed income securi-
ties.
8
<PAGE>
10. SEI VP EMERGING MARKETS DEBT FUND--The investment objective of the SEI VP
Emerging Markets Debt Fund is to maximize total return.
The Fund invests primarily in U.S. dollar denominated debt securities of
government, government-related and corporate issuers in emerging market
countries and of entities organized to restructure the outstanding debt of
such issuers.
11. SEI VP PRIME OBLIGATION FUND--The SEI VP Prime Obligation Fund seeks to
preserve principal value and maintain a high degree of liquidity while pro-
viding current income.
Asset allocation portfolios
SIMC currently offers twelve asset allocation portfolios which are available to
variable annuity purchasers. You can choose one of these asset allocation
portfolios or choose the customized allocation in which you determine your own
allocations among the funds. If you choose one of these asset allocation
portfolios, SIMC will determine the allocation of your purchase payments into
the funds.
If you want to change your portfolio selection, you must notify us in writing
or over the telephone, if we have received proper telephone authorization.
The available portfolios are:
1. VP INSTITUTIONAL MODERATE GROWTH & INCOME PORTFOLIO
2. VP INSTITUTIONAL GROWTH & INCOME PORTFOLIO
3. VP INSTITUTIONAL CAPITAL GROWTH PORTFOLIO
4. VP INSTITUTIONAL EQUITY PORTFOLIO
5. VP GLOBAL MODERATE GROWTH & INCOME PORTFOLIO
6. VP GLOBAL GROWTH & INCOME PORTFOLIO
7. VP GLOBAL CAPITAL GROWTH PORTFOLIO
8. VP GLOBAL EQUITY PORTFOLIO
9. VP MODERATE GROWTH & INCOME PORTFOLIO
10. . VP GROWTH & INCOME PORTFOLIO
11. VP CAPITAL GROWTH PORTFOLIO
12. VP DOMESTIC EQUITY PORTFOLIO
Sale of 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. The shares
are retired, but they may be reissued later.
Shares of the funds are not sold directly to the general public. They are sold
to Lincoln Life, 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.
When the trust sells shares in any of its funds both to variable annuity and to
variable life insurance separate accounts, it is said to engage in mixed
funding. When the trust sells shares in any of its funds to separate accounts
of unaffiliated life insurance companies, it is said to engage in shared
funding.
The trust currently engages in mixed and shared funding. Therefore, due to
differences in redemption rates or tax treatment, or other considerations, the
interests of various contractowners participating in a fund could conflict. The
trust's Board of Trustees will monitor for the existence of any material
conflicts, and determine what action, if any, should be taken. See the
Prospectus for the trust.
Reinvestment of dividends and capital gain distributions
All dividend 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
substitutions for the trust 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.
9
<PAGE>
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 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, cross-reinvestment 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, upon whose lives annuity payouts under contract are based, 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 death
benefits paid will exceed the actual account value; and the risk that our costs
in providing the services will exceed our revenues from the contract charges
(which we cannot change). However, if the charges deducted prove more than
sufficient to cover our risks, we will keep the profit. 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.
Deductions from the VAA for SEI Variable Annuity
We deduct from the VAA an amount, computed daily, which is equal to an annual
rate depending on the death benefit option elected of the daily net asset
value. The charge includes a 0.15% administrative charge and a mortality and
expense risk charge. The mortality and expense risk charge is .20% for the
account value death benefit option; .25% for the return of premium death
benefit option; .35% for the annual step-up death benefit option and .50% for
the 5% step-up death benefit option.
Account fee
For contracts with an account value of $50,000 or less, during the accumulation
period, we will deduct $40 from the account value on each contract anniversary
to compensate us for the administrative services provided to you; this $40
account fee will also be deducted from the account value upon surrender. This
fee may be lower in certain states, if required. The account fee will be waived
for any contract with an account value that is greater than $50,000.
Deductions for premium taxes
Any premium tax or other tax levied by any government entity as a result of the
existence of the contracts of the VAA will be deducted from the 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
administration interpretation or by judicial action. These premium taxes
generally depend upon the law of your state of residence. The tax ranges from
0.5% to 5.0%.
Other charges and deductions
There are deductions from and expenses paid out of the assets of the underlying
trust that are more fully described in the Prospectus for the trust.
Additional information
The charges described previously may be reduced or eliminated for any
particular contract. However, these charges will be reduced 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. Lower distribution and
administrative expenses may be the result of economies associated with (1) the
use of mass enrollment procedures, (2) the performance of administrative or
sales functions by the employer, (3) the use by an employer of automated
techniques in submitting deposits or information related to deposits on behalf
of its employees or (4) any other circumstances which reduce distribution or
administrative expenses. The exact amount of charges applicable to a particular
contract will be stated in that contract.
The contracts
Purchase of contracts
This product will only be sold as part of an asset management program made
available by fee based financial planners. If you wish to purchase a contract,
you must apply for it through a sales representative authorized by us. The
completed application is sent to us and we decide whether to accept or reject
it. If the application is accepted, a contract is prepared and executed by our
legally authorized officers. The contract is then sent 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 purchase 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 purchase payment for
no more than five business days. If the incomplete application
10
<PAGE>
cannot be completed within those five days, you will be informed of the
reasons, and the purchase payment will be returned immediately. Once the
application is complete, the initial purchase payment must be priced within two
business days.
Who can invest
To apply for a contract, you must be of legal age in a state 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, joint owner and annuitant must be less than age 91.
Purchase payments
Purchase payments are payable to us at a frequency and in an amount selected by
you in the application. The minimum initial purchase payment is $25,000. The
minimum payment to the contract at any one time must be at least $100 ($25 if
transmitted electronically). Purchase payments in total may not exceed
$2,000,000 for an owner or $1,000,000 for each joint owner without our
approval. We may terminate the contract as allowed by your state's non-
forfeiture law for individual deferred annuities. Payments may be made or, if
stopped, resumed at any time until the annuity commencement date, the surrender
of the contract, maturity date or the payment of any death benefit, whichever
comes first.
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 purchase payments
Purchase payments are placed into the VAA's subaccounts, each of which invests
in shares of its corresponding fund of the trust, according to your
instructions.
The minimum amount of any purchase payment that can be put into any one
subaccount is $20. Upon allocation to a subaccount, purchase 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 purchase payment is received at
our home office if received before 4:00 p.m., New York time. If the purchase
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 investment perform, but also upon the expenses of the VAA and the
underlying funds.
Valuation of accumulation units
Purchase payments allocated to the VAA are converted into accumulation units.
This is done by dividing each purchase payment by the value of an accumulation
unit for the valuation period during which the purchase 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 daily charges imposed on a subaccount for any valuation period are equal to
the daily mortality and expense risk charge and the daily administrative charge
multiplied by the number of calendar days in the valuation period. Because a
different daily charge is made for contracts with different death benefit
options, contracts with different death benefit options will have different
corresponding accumulation unit values on any given day.
Transfers on or before the annuity commencement 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.
Currently, there is no charge for a transfer. However, we reserve the right to
impose a charge in the future for transfers.
Transfers between subaccounts are restricted to twelve times every contract
year. We reserve the right to waive this twelve-time limit. This limit does not
apply to
11
<PAGE>
transfers made under a dollar cost averaging or other automatic transfer
program elected on forms available from us. (The SAI contains more information
about these programs.) The minimum amount that may be transferred between
subaccounts is $300 (or the entire amount in the subaccount, if less than
$300). If the transfer from a subaccount would leave you with less than $300 in
the subaccount, we may transfer the entire balance of the subaccount.
A transfer request may be made to our home office using written, telephone or
electronic instructions, if the appropriate authorization is on file with us.
In order to prevent unauthorized or fraudulent telephone or electronic
transfers, we may require the user to provide certain identifying information
before we will act upon their instructions. We may also assign the
contractowner a Personal Identification Number (PIN) to serve as
identification. We will not be liable for following instructions we reasonably
believe are genuine. Telephone requests may be recorded and written
confirmation of all transfer requests will be mailed to the contractowner on
the next valuation date. Telephone and electronic transfers will be processed
on the valuation date that they are received when they are received at our
customer service center before 4 p.m. New York time.
When thinking about a transfer of 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.
Transfers after the annuity commencement 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 account to the subaccounts.
Death benefit before the annuity commencement date
You may designate a beneficiary during your lifetime and change the beneficiary
by filing a written request with our home 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.
Upon the death of the contractowner, a death benefit will be paid to the
beneficiary. Upon the death of a joint owner, the death benefit will be paid to
the surviving joint owner. Upon the death of an annuitant who is not the
contractowner or joint owner, a death benefit may be paid to the contractowner
(and joint owner, if applicable, in equal shares). 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.
If the death occurs before the annuity commencement date, the death benefit
paid will depend on the death benefit option in effect on the day on which we
approve payment of the claim. Four death benefit options are available:
Account Value death benefit option: The death benefit is equal at all times to
the account value on the date on which the death claim is approved by us for
payment.
Return of Premium death benefit option: The death benefit is equal to the
greater of the account value on the date on which the death claim is approved
by us for payment or the sum of all purchase payments minus withdrawals,
partial annuitizations, and premium tax incurred.
Annual Step-Up death benefit option: The death benefit is equal to the greatest
of three amounts:
a) the account value on the date on which the death claim is approved by us for
payment,
b) the sum of all purchase payments minus withdrawals, partial annuitizations,
and premium tax collected.
c) the highest account value on any contract anniversary prior to the 81st
birthday of the deceased, increased by purchase payments and decreased by
partial withdrawals, partial annuitizations, and premium tax incurred
subsequent to the contract anniversary on which the highest account value is
obtained.
5% Step-Up death benefit option: The death benefit is equal to the greatest of
four amounts:
a) the account value on the date on which the death claim is approved by us for
payment,
b) the sum of all purchase payments minus withdrawals, partial annuitizations,
and premium tax collected,
c) the highest account value on any contract anniversary prior to the 81st
birthday of the deceased, increased by purchase payments and decreased by
partial withdrawals, partial annuitizations, and premium tax incurred
subsequent to the contract anniversary on which the highest account value is
obtained,
d) the accumulation of all purchase payments minus the accumulation of all
withdrawals, partial annuitizations and premium tax; where each purchase
payment, withdrawal, partial annuitization and premium tax will be
accumulated daily at an annual rate of 5% from the date of the purchase
payment, withdrawal, partial annuitization and premium tax until the earlier
of the date of death
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of the deceased (owner, joint owner or annuitant) or the contract date
anniversary immediately preceding the 81st birthday of the deceased (owner,
joint owner, or annuitant) except that the accumulation of any purchase
payment, withdrawal, partial annuitization and premium tax will not exceed
200% of that purchase payment, withdrawal, partial annuitization and premium
tax.
If there are joint owners, upon the death of the first contractowner, Lincoln
Life will pay a death benefit to the surviving joint owner. The surviving joint
owner will be treated as the primary, designated beneficiary. Any other
beneficiary designation on record at the time of death will be treated as a
contingent beneficiary. If the surviving joint owner is the spouse of the
deceased joint owner he/she may continue the contract as a sole contractowner.
Upon the death of the spouse who continues the contract, Lincoln Life will pay
a death benefit to the designated beneficiary(s).
If the beneficiary is the spouse of the contractowner, then the spouse may
elect to continue the contract as contractowner.
Upon the death of a contractowner, joint owner or annuitant, if the surviving
spouse continues the contract, any portion of the death benefit that would have
been payable (if the contract had not been continued) that exceeds the current
contract value will be credited to the contract. This provision applies only
one time for each contract.
If an annuitant who is not the contractowner or a joint owner dies, then the
contingent annuitant, if named, becomes the annuitant and no death benefit is
payable on the death of the annuitant. If no contingent annuitant is named, the
contractowner (or younger of joint owners) becomes the annuitant.
Alternatively, a death benefit may be paid to the contractowner (and joint
owner, if applicable, in equal shares) upon the death of the annuitant.
Notification of the election of this death benefit must be received by us
within 75 days of the death of the annuitant. If no contractowner is living on
the date of death of the annuitant, the death benefit will be available to the
beneficiary. The contract terminates when any death benefit is paid due to the
death of the annuitant. If the annuitant has been changed subsequent to the
effective date of this contract, unless the change occurred because of the
death of a prior annuitant, the death benefit option in effect will be
terminated and the Account Value death benefit option will become effective as
of the valuation date that the written notification to change the annuitant was
received in the home office.
The value of the death benefit will be determined as of the date on which the
death claim is approved for payment. This payment will occur upon receipt of:
(1) proof (e.g. an original certified death certificate), or any other proof of
death satisfactory to us, of the death; (2) written authorization for payment;
and (3) our receipt of all required claim forms, fully completed. If the
beneficiary is a minor, court documents appointing the guardian/custodian must
be submitted.
When applying for a contract, an applicant may request one of the four death
benefit options available. If no death benefit option is chosen, the Return of
Premium death benefit option will be the death benefit as of the contract date.
After a contract is issued, the contractowner may substitute a lower level
death benefit option for the option currently in effect. For purposes of
determining allowable substitutions, Account Value is the lowest level of death
benefit. Return of Premium is the next highest option, followed by Annual Step-
Up, with 5% Step-Up being the highest level of death benefit. A request for
substitution must be in writing on a form acceptable to us. The current death
benefit option will be discontinued and the new death benefit option will begin
as of the valuation date we receive the substitution request, and we will stop
deducting the charge for the current option and begin deducting the charge for
the new option as of that same date. A death benefit option may be substituted
for the current death benefit option only if the new option provides a lower
level of death benefit. See Charges and deductions.
Unless otherwise provided in the beneficiary designation, one of the following
procedures will take place on the death of a beneficiary:
(1) If any beneficiary dies before the contractowner, that beneficiary's
interest will go to any other beneficiaries named, according to their
respective interest; and/or
(2) If no beneficiary survives the contractowner, the proceeds will be paid to
the contractowner's estate.
Unless the contractowner has already selected a settlement option, the
beneficiary may choose the method of payment of the death benefit. The death
benefit payable to the beneficiary or joint owner must be distributed within
five years of the contractowner's date of death unless the beneficiary begins
receiving within one year of the contractowner's death the distribution in the
form of a life annuity or an annuity for a designated period not extending
beyond the beneficiary's life expectancy.
The death benefit payable on the death of the annuitant will be distributed in
either a lump sum or under an annuity payout. The annuity payout must be
selected within 60 days after we have approved the death claim.
If a lump sum settlement is elected, the proceeds will be mailed within seven
days of approval by us of the claim, subject to the laws, regulations and tax
code governing payment of death benefits. This payment may be postponed as
permitted by the Investment Company Act of 1940.
Joint ownership
If a joint owner is named in the application, the joint owners shall be treated
as having equal undivided interests in the contract. Either owner,
independently of the other, may exercise ownership rights in this contract.
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Surrenders and withdrawals
Before the annuity commencement date, we will allow the surrender of the
contract or a withdrawal of the account value upon your written request,
subject to the rules discussed below. The surrender/withdrawal option is not
available after the annuity commencement date.
The amount available upon the surrender/withdrawal is the account value less
any applicable charges, fees and taxes at the end of the valuation period
during which the written request for surrender/withdrawal is received at the
home office. Unless a request for withdrawal specifies otherwise, withdrawals
will be made from all subaccounts within the VAA in the same proportion that
the amount of withdrawal bears to the total account value. Unless prohibited,
surrender/ withdrawal payments will be mailed within seven days after we
receive a valid written request at the home office. The payment may be
postponed as permitted by the 1940 Act. 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 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.
The minimum withdrawal is $300. Lincoln Life reserves the right to surrender
this contract if any withdrawal reduces the total account value to a level at
which this contract may be surrendered in accordance with applicable law for
individual deferred annuities.
The tax consequences of a surrender/withdrawal are discussed later, in this
booklet. See Federal tax status.
Special restrictions on surrenders/withdrawals apply if your contract is
purchased as part of a retirement plan of a public school system or 501(c)(3)
organization under Section 403(b) of the tax code. Beginning January 1, 1989,
in order for a contract to retain its tax-qualified status, Section 403(b)
prohibits a withdrawal from a 403(b) contract of post-1988 contributions (and
earnings on those contributions) pursuant to a salary reduction agreement.
However, this restriction does not apply if the annuitant (a) attains age 59
1/2, (b) separates from service, (c) dies, (d) becomes totally and permanently
disabled and/or (e) experiences financial hardship (in which event the income
attributable to those contributions may not be withdrawn).
Pre-1989 contributions and earnings through December 31, 1988, are not subject
to the previously stated restriction. Funds transferred to the contract from a
403(b)(7) custodial account will be subject to restrictions.
Participants in the Texas Optional Retirement Program should refer to the
Restrictions under the Texas Optional Retirement Program, later in this
Prospectus booklet.
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.
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. You will be
notified in writing of any changes, modifications or waivers.
Commissions
Since the financial planners who sell this contract normally charge a fee
directly to their clients for their services, Lincoln Life does not pay any
compensation for the sale of this contract.
Ownership
As contractowner, you have all rights under the contract. According to Indiana
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 (ERISA) of 1974 and
upon written notification to us. Nonqualified contracts may not be collaterally
assigned. We assume no responsibility for the validity or affect of any
assignment. Consult your tax adviser about the tax consequence of an
assignment.
Contractowner questions
The obligations to purchasers under the contracts are those of Lincoln Life.
Questions about your contract should be directed to us at 1-800-942-5500.
Annuity payouts
When you apply for a contract, you may select any annuity commencement date
permitted by state insurance or tax law.
The contract provides optional forms of payouts of annuities (annuity options),
each of which is payable on a variable basis, fixed basis or a combination of
both as you specify. The contract provides that all or part of the 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
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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
Life Annuity. This option offers 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 payouts or provision for a death benefit for beneficiaries.
However, there is the risk under this option that the recipient would receive
no payouts if the annuitant dies before the date set for the first payout; only
one payout if death occurs before the second scheduled payout, and so on.
Life Income with Payouts Guaranteed for Designated Period. This option
guarantees periodic payouts during a designated period, usually 10 or 20 years,
and then continues throughout the lifetime of the annuitant. The designated
period is selected by the contractowner.
Joint Life Annuity. This option offers a periodic payout during the joint
lifetime of the annuitant and a designated joint annuitant. The payouts
continue during the lifetime of the survivor.
Joint Life Annuity with Guaranteed Period. This option guarantees periodic
payouts during a designated period, usually 10 or 20 years, and continues
during the joint lifetime of the annuitant and a designated joint annuitant.
The payouts continue during the lifetime of the survivor. The designated period
is elected by the contractowner.
Joint and Two-Thirds Survivor Annuity. This option provides 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.
Unit Refund Life Annuity. This option offers a periodic payout during the
lifetime of the annuitant with the guarantee that upon death a payout will be
made of the value of the number of annuity units (see Variable annuity payouts)
equal to the excess, if any, of: (a) the total amount applied under this option
divided by the annuity unit value for the date payouts begin, divided by (b)
the annuity units represented by each payout to the annuitant multiplied by the
number of payouts paid before death. The value of the number of annuity units
is computed on the date the death claim is approved for payment by the home
office.
General Information
Under the options listed above, you may not make withdrawals. Other options,
with or without withdrawal features, may be made available by us. You may pre-
select an annuity payout option as a method of paying the death benefit to a
beneficiary. If you do, the beneficiary cannot change this payout option. At
death, 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 tax
code, if applicable. The mortality and expense risk charge and the charge for
administrative services will be assessed on all variable annuity payouts,
including options that may be offered that do not have a life contingency and
therefore no mortality risk.
The annuity commencement date is usually on or before the contractowner's 90th
birthday. You may change the annuity commencement date, change the annuity
option or change the allocation of the investment among subaccounts up to 30
days before the scheduled annuity commencement date, upon written notice to the
home office. You must give us at least 30 days notice before the date on which
you want payouts to begin. If proceeds become available to a beneficiary in a
lump sum, the beneficiary 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
allocations 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 you,
if living, otherwise to your beneficiary as payouts become due.
Variable annuity payouts
Variable annuity payouts will be determined using:
1. The account value on the annuity commencement date;
2. The annuity 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 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 3%, 4%, 5% or 6% per year, as applied to the
applicable mortality table. The amount of each payout after the initial
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payout will depend upon how the underlying fund(s) perform, relative to the
assumed rate. If the actual net investment rate (annualized) exceeds the
assumed rate, the payment will increase at a rate proportional to the amount of
such excess. Conversely, if the actual rate is less than the assumed rate,
annuity payouts will decrease. There is a more complete explanation of this
calculation in the SAI.
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 code, such as an IRA or a section 403(b) plan.
Tax deferral on earnings
The Federal income tax law generally does not tax any increase in your account
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 the 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 commencement date must not occur near the end of the annuitant's
life expectancy.
Contracts not owned by the individual
If a contract is owned by an entity (rather than an individual) the tax code
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 account 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 code 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 contact 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 account value
over the contract purchase 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 account value among
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 an annuity
contract provide for amortization, through annuity payouts, of the contract's
purchase 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 account value over the purchase 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
that 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 account value
until there is a distribution from your contract.
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Taxation of withdrawals and surrenders
You will pay tax on withdrawals to the extent your account value exceeds your
purchase payments in 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 extends your purchase payments. In certain
circumstances, your purchase payments are reduced by amounts received from your
contract that were not included in income.
Taxation of annuity payouts
The tax code imposes tax on a portion of each annuity payout (at ordinary tax
rates) and treats a portion as a nontaxable return of your purchase 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 purchase payment 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 purchase 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 commencement
date.
. Death prior to the annuity commencement 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 withdrawal.
. Death after the annuity commencement 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
includable 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 purchase payments
not previously received.
Penalty taxes payable on withdrawals, surrenders, or annuity payouts
The tax code 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 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
code treats all such contracts as one contract. Treating two or more contracts
as one contract could affect the amount of a surrender, 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 code treats any amount received
as a loan under a contract, and any assignments or pledge (or agreement to
assign or pledge) any portion of your account value, as 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 account's value, you will pay tax on your account value to the extent it
exceeds your purchase payments not previously received. The new owner's
purchase payments in the contract would then be increased to reflect the amount
included in income.
Charges for a contract's death benefit
Your contract may have a death benefit, for which you may pay an annual charge,
computed daily. It is possible that the tax law may treat all or a portion of
the death benefit charge as a contract withdrawal.
Loss of income 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 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 adviser.
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Qualified retirement plans
We also designed the contracts for use in connection with certain types of
retirement plans that receive favorable treatment under the tax code.
Contracts issued to or in connection with a qualified retirement plan are
called "qualified contracts." We issue contracts for use 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 various types of
qualified plans. Persons planning to use the contract in connection with a
qualified plan should obtain advice from a competent tax adviser.
Types of qualified contracts and terms of contracts
Currently, we may issue contracts in connection with the following types of
qualified plans:
. Individual Retirement Accounts and Annuities ("Traditional IRAs")
. Roth IRAs
. Savings Incentive Matched Plan for Employees ("SIMPLE 401(k) plans")
. Public School system and tax-exempt organization annuity plans ("403(b)
plans")
. Qualified corporate employee pension and profit sharing plans ("401(a)
plans") 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").
Section 403(b) business will normally be accepted only for purchase payments
qualifying as a 403(b) lump sum transfer or rollover. We may issue a contract
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 purchase payments that can be made,
and the tax deduction or exclusion that may be allowed for the purchase
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 prohibit loans under other types of qualified plans. For example,
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's duration, and the manner of repayment. Your contract or
plan may or 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 purchase 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 purchase 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 code may impose a 10% penalty tax on the amount received from the
qualified contract that must be included in income. The tax code 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
. received as reimbursement for certain amounts paid for medical care.
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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 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 adviser 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, H.R. 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.
The death benefit and IRAs
Pursuant to IRS regulations, IRAs may not invest in life insurance contracts.
We do not believe that these regulations prohibit the death benefit from being
provided under the contracts when we issue the contract as Traditional IRAs or
Roth IRAs. However, the law is unclear and it is possible that the presence of
the death benefit under a contract issued as a Traditional IRA or Roth IRA
could result in increased taxes to you.
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 the 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 Life
Under existing Federal income tax laws, Lincoln Life does not pay tax on
investment income and realized capital gains of the VAA. Lincoln Life 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 law
The above discussion is based on the tax code, IRS regulations and
interpretations 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 trust shares held in the VAA at meetings
of the shareholders of the trust. The voting will be done according to the
instructions of contractowners who have interests in the subaccounts which
invest in classes of funds of the trust. 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 trust 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.
Trust 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 trust engages in shared funding, other persons
or entities besides Lincoln Life may vote trust shares. See Sale of fund shares
by the trust.
Distribution of the contracts
Lincoln Life is the distributor and principal underwriter of the contracts.
Under an agreement with Lincoln Life, SEI Investment Distribution Co. (SEI)
will assist Lincoln Life in forming the selling group. SEI will also perform
certain functions in support of the selling group. The contracts will be sold
by properly licensed registered representatives of independent broker-dealers
which in
19
<PAGE>
turn have selling agreements with Lincoln Life and have been licensed by state
insurance departments to represent us. Lincoln Life will offer the contracts in
all states it is licensed to do business.
Return privilege
Within the free-look period after you receive the contract, you may cancel it
for any reason by delivering or mailing it postage prepaid, to the home office
at P.O. Box 2348, 1300 South Clinton Street, Fort Wayne, Indiana, 46801. A
contract canceled under this provision will be void. With respect to the VAA,
except as explained in the following paragraph, we will return the account
value as of the date of receipt of the cancellation, plus any premium taxes
which had been deducted. A purchaser who participates in the VAA is subject to
the risk of a market loss during the free-look period.
For contracts written in those states whose laws require that we assume this
market risk during the free-look period, a contract may be canceled, subject to
the conditions explained before, except that we will return only the purchase
payment(s).
State regulation
As a life insurance company organized and operated under Indiana law, we are
subject to provisions governing life insurers and to regulation by the Indiana
Commissioner of Insurance.
Our books and accounts are subject to review and examination by the Indiana
Insurance Department at all times. A full examination of our operations is
conducted by that Department at least every five years.
Restrictions under the Texas Optional Retirement Program
Title 8, Section 830.105 of the Texas Government Code, consistent with prior
interpretations of the Attorney General of the State of Texas, permits
participants in the Texas Optional Retirement Program (ORP) to redeem their
interest in a variable annuity contract issued under the ORP only upon:
1. Termination of employment in all institutions of higher education as defined
in Texas law;
2. Retirement; or
3. Death.
Accordingly, a participant in the ORP will be required to obtain a certificate
of termination from their employer before accounts can be redeemed.
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
have entered into an agreement with the Delaware Management Company, 2005
Market Street, Philadelphia, PA, 19203, to provide accounting services to the
VAA. We will mail to you, at your last known address of record at the home
office, at least semiannually after the first contract year, reports containing
information required that Act or any other applicable law or regulation.
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, Lincoln Life 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 files 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.
The fund may also offer shares of the funds to other segregated investment
accounts.
Legal proceedings
Lincoln Life is involved in various pending or threatened legal proceedings
arising from the conduct of its business. Most of those proceedings are routine
and in the ordinary course of business. In some instances they include claims
for unspecified or substantial punitive damages and similar types of relief in
addition to amounts for equitable relief. After consultation with legal counsel
and a review of available facts, it is management's opinion that the ultimate
liability, if any, under these suits will not have a material adverse effect on
the financial position of Lincoln Life.
Lincoln Life is presently defending four lawsuits in which Plaintiffs seek to
represent national classes of policyholders in connection with alleged fraud,
breach of contract and other claims relating to the sale of interest-sensitive
universal and participating whole life insurance policies. As of the date of
this Prospectus, the
20
<PAGE>
courts have not certified a class in any of the suits. Plaintiffs seek
unspecified damages and penalties for themselves and on behalf of the putative
class. Although the relief sought in these cases is substantial, the cases are
in the preliminary stages of litigation, and it is premature to make
assessments about potential loss, if any. Management is defending these suits
vigorously. The amount of liability, if any, which may ultimately arise as a
result of these suits cannot be reasonably determined at this time.
Statement of additional
information table of
contents for Variable Annuity Account T SEI Variable Annuity
<TABLE>
<CAPTION>
Item
- -----------------------------------------
<S> <C>
General information and history of
Lincoln Life B-2
- -----------------------------------------
Special terms B-2
- -----------------------------------------
Services B-2
- -----------------------------------------
Principal underwriter B-2
- -----------------------------------------
Purchase of securities being offered B-2
- -----------------------------------------
</TABLE>
For a free copy of the SAI please see page one of this booklet.
<TABLE>
<CAPTION>
Item
- --------------------------------------
<S> <C>
Calculation of investment results
B-2
- --------------------------------------
Annuity payouts B-6
- --------------------------------------
Advertising and sales literature B-7
- --------------------------------------
Financial statements B-8
- --------------------------------------
</TABLE>
21
<PAGE>
SEI Variable Annuity
Lincoln Life
Variable Annuity Account T (Registrant)
The Lincoln National
Life Insurance Company (Depositor)
Statement of Additional Information (SAI)
This Statement of Additional Information should be read in conjunction with the
Prospectus of Lincoln Life Variable Annuity Account T dated , 2000.
You may obtain a copy of the SEI Variable Annuity Prospectus on request and
without charge. Please write, The Lincoln National Life Insurance Company, P.O.
Box 2348, Fort Wayne, Indiana 46801 or call 1-800-942-5500.
Table of Contents
<TABLE>
<CAPTION>
Item Page
- -----------------------------------------------------
<S> <C>
General information and history of Lincoln Life B-2
- -----------------------------------------------------
Special terms B-2
- -----------------------------------------------------
Services B-2
- -----------------------------------------------------
Principal underwriter B-2
- -----------------------------------------------------
Purchase of securities being offered B-2
- -----------------------------------------------------
</TABLE>
This SAI is not a Prospectus.
The date of this SAI is , 2000.
<TABLE>
<CAPTION>
Item Page
- ---------------------------------------
<S> <C>
Calculation of investment results
B-2
- ---------------------------------------
Annuity payouts B-6
- ---------------------------------------
Advertising and sales literature B-7
- ---------------------------------------
Financial statements B-8
- ---------------------------------------
</TABLE>
B-1
<PAGE>
General information
and history of Lincoln National Life Insurance Company (Lincoln Life)
The Lincoln National Life Insurance Company (Lincoln Life), organized in 1905,
is an Indiana stock insurance corporation, engaged primarily in the direct
insurance of life insurance contracts and annuities, and is also a professional
reinsurer. Lincoln Life is wholly owned by Lincoln National Corporation (LNC),
a publicly held insurance and financial services holding company domiciled in
Indiana.
Special terms
The special terms used in this SAI are the ones defined in the Prospectus. In
connection with the term, valuation date, the New York Stock Exchange is
currently closed on weekends and on these holidays: New Year's Day, Martin
Luther King's Birthday, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. If any of
these holidays occurs on a weekend day, the Exchange may also be closed on the
business day occurring just before or just after the holiday.
Services
Independent auditors
The financial statements of the variable annuity account (VAA) and the
statutory-basis financial statements of Lincoln Life appearing in this SAI and
Registration Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports also appearing elsewhere in this
document and in the Registration Statement. The financial statements and
schedules audited by Ernst & Young LLP have been included in this document in
reliance on their reports given on their authority as experts in accounting and
auditing.
Keeper of records
All accounts, books, records and other documents which are required to be
maintained for the VAA are maintained by Lincoln Life or by third parties
responsible to Lincoln Life. We have entered into an agreement with the
Delaware Management Company, 2005 Market Street, Philadelphia, PA 19203, to
provide accounting services to the VAA. No separate charge against the assets
of the VAA is made by Lincoln Life for this service.
Principal underwriter
Lincoln Life is the principal underwriter for the contracts, which are offered
continuously. SEI Investment Distribution Co. (SEI) will assist Lincoln Life in
forming the selling group. SEI will also perform certain functions in support
of the selling group.
Purchase of securities being offered
The contracts are offered to the public through certain securities
broker/dealers who have entered into selling agreements with SEI and whose
personnel are legally authorized to sell annuity products. See Charges and
other deductions in the Prospectus.
Both before and after the annuity commencement date, there are exchange
privileges between variable subaccounts, subject to restrictions set out in the
Prospectus. See The contracts, in the Prospectus. No exchanges are permitted
between the VAA and other variable separate accounts.
The offering of the contracts is continuous.
Calculation of investment results
No performance data is included because, as of the date hereof, the VAA and the
funds had not yet commenced operations. Nonstandardized performance data will
be accompanied by standard performance data once available.
Once available, the paragraphs set forth below will present performance
information for the VAA and the variable subaccounts calculated in several
different ways. Paragraph (A) will show the historical performance of each
subaccount over the periods indicated. The information that will be presented
in Paragraph (A) is referred to as "standard performance" because it is
calculated in accordance with formulas prescribed by the SEC. The standard
performance of each subaccount will be calculated with each of the death
benefit options. Standard performance is described in Paragraph (B). Under
rules prescribed by the SEC, standard performance must be included in certain
advertising material that discusses the performance of the VAA and the
subaccounts.
Paragraph (C) shows additional "non-standardized" performance information
(i.e., performance information not calculated in accordance with SEC
guidelines) for each of the variable subaccounts that may
B-2
<PAGE>
be used to advertise the performance of the VAA and the variable subaccounts.
THIS INFORMATION DOES NOT INDICATE OR REPRESENT FUTURE PERFORMANCE.
(A) Average Annual Total Return
Period ending December 31, xxxx
<TABLE>
<CAPTION>
1 year-period
<S> <C> <C> <C> <C>
Account Value Return of Premium Annual Step-Up 5% Step-Up
Death Benefit Death Benefit Death Benefit Death Benefit
- --------------------------------------------------------------------------------------
SEI VP Large Cap Value
Fund
- --------------------------------------------------------------------------------------
SEI VP Large Cap Growth
Fund
- --------------------------------------------------------------------------------------
SEI VP Small Cap Value
Fund
- --------------------------------------------------------------------------------------
SEI VP Small Cap Growth
Fund
- --------------------------------------------------------------------------------------
SEI VP International
Equity Fund
- --------------------------------------------------------------------------------------
SEI VP Emerging Markets
Equity
Fund
- --------------------------------------------------------------------------------------
SEI VP Core Fixed Income
Fund
- --------------------------------------------------------------------------------------
SEI VP High Yield Bond
Fund
- --------------------------------------------------------------------------------------
SEI VP International
Fixed
Income Fund
- --------------------------------------------------------------------------------------
SEI VP Emerging Markets
Debt
Fund
- --------------------------------------------------------------------------------------
SEI VP Prime Obligations
Fund
- --------------------------------------------------------------------------------------
</TABLE>
(B) Formulas
Average annual total return for each period was determined by finding the
average annual compounded rate of return over each period that would equate the
initial amount invested to the ending redeemable value for that period,
according to the following formula--
P(1 + T)n = ERV
Where: P = a hypothetical initial purchase payment of $1,000
T = average annual total return for the period in question
n = number of years
ERV = redeemable value (as of the end of the period in question) of a
hypothetical $1,000 purchase payment made at the beginning of the 1-
year, 5-year, or 10-year period in question (or fractional portion
thereof)
B-3
<PAGE>
(C) Other Non-Standardized investment results:
The VAA may illustrate its results over various periods and compare its
results to indices and other variable annuities in sales materials including
advertisements, brochures and reports. Such results may be computed on a
cumulative and/or annualized basis.
Cumulative quotations are arrived at by calculating the change in the
accumulation unit value between the first and last day of the base period
being measured, and expressing the difference as a percentage of the unit
value at the beginning of the base period.
Annualized quotations are arrived at by applying a formula which determines
the level rate of return which, if earned over the entire base period, would
produce the cumulative return.
Non-Standardized investment results
Variable subaccounts of Account T
$10,000 invested in
this fund through
SEI Variable Annuity
this many years ago . . . . . . would have grown to this amount on
.*
<TABLE>
<CAPTION>
VP Large Cap Value Fund
Return of
Account Value Premium Annual Step-Up 5% Step-Up
Death Benefit Death Benefit Death Benefit Death Benefit
--------------- --------------- --------------- ---------------
Compound Compound Compound Compound
Growth Growth Growth Growth
Number of Years Periods Amount Rate Amount Rate Amount Rate Amount Rate
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ % $ % $ % $ %
- ---------------------------------------------------------------------------------------------------
Lifetime of Fund % % % %
- ---------------------------------------------------------------------------------------------------
<CAPTION>
VP Large Cap Growth Fund
Return of
Account Value Premium Annual Step-Up 5% Step-Up
Death Benefit Death Benefit Death Benefit Death Benefit
--------------- --------------- --------------- ---------------
Compound Compound Compound Compound
Growth Growth Growth Growth
Number of Years Periods Amount Rate Amount Rate Amount Rate Amount Rate
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ % $ % $ % $ %
- ---------------------------------------------------------------------------------------------------
Lifetime of Fund % % % %
- ---------------------------------------------------------------------------------------------------
<CAPTION>
VP Small Cap Value Fund
Return of
Account Value Premium Annual Step-Up 5% Step-Up
Death Benefit Death Benefit Death Benefit Death Benefit
--------------- --------------- --------------- ---------------
Compound Compound Compound Compound
Growth Growth Growth Growth
Number of Years Periods Amount Rate Amount Rate Amount Rate Amount Rate
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ % $ % $ % $ %
- ---------------------------------------------------------------------------------------------------
Lifetime of Fund % % % %
- ---------------------------------------------------------------------------------------------------
<CAPTION>
VP Small Cap Growth Fund
Return of
Account Value Premium Annual Step-Up 5% Step-Up
Death Benefit Death Benefit Death Benefit Death Benefit
--------------- --------------- --------------- ---------------
Compound Compound Compound Compound
Growth Growth Growth Growth
Number of Years Periods Amount Rate Amount Rate Amount Rate Amount Rate
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ % $ % $ % $ %
- ---------------------------------------------------------------------------------------------------
Lifetime of Fund % % % %
- ---------------------------------------------------------------------------------------------------
</TABLE>
B-4
<PAGE>
<TABLE>
<CAPTION>
VP International Equity Fund
Return of
Account Value Premium Annual Step-Up 5% Step-Up
Death Benefit Death Benefit Death Benefit Death Benefit
--------------- --------------- --------------- ---------------
Compound Compound Compound Compound
Growth Growth Growth Growth
Number of Years Periods Amount Rate Amount Rate Amount Rate Amount Rate
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ % $ % $ % $ %
- ---------------------------------------------------------------------------------------------------
Lifetime of Fund % % % %
- ---------------------------------------------------------------------------------------------------
<CAPTION>
VP Emerging Markets Equity Fund
Return of
Account Value Premium Annual Step-Up 5% Step-Up
Death Benefit Death Benefit Death Benefit Death Benefit
--------------- --------------- --------------- ---------------
Compound Compound Compound Compound
Growth Growth Growth Growth
Number of Years Periods Amount Rate Amount Rate Amount Rate Amount Rate
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ % $ % $ % $ %
- ---------------------------------------------------------------------------------------------------
Lifetime of Fund % % % %
- ---------------------------------------------------------------------------------------------------
<CAPTION>
VP Core Fixed Income Fund
Return of
Account Value Premium Annual Step-Up 5% Step-Up
Death Benefit Death Benefit Death Benefit Death Benefit
--------------- --------------- --------------- ---------------
Compound Compound Compound Compound
Growth Growth Growth Growth
Number of Years Periods Amount Rate Amount Rate Amount Rate Amount Rate
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ % $ % $ % $ %
- ---------------------------------------------------------------------------------------------------
Lifetime of Fund % % % %
- ---------------------------------------------------------------------------------------------------
<CAPTION>
VP High Yield Bond Fund
Return of
Account Value Premium Annual Step-Up 5% Step-Up
Death Benefit Death Benefit Death Benefit Death Benefit
--------------- --------------- --------------- ---------------
Compound Compound Compound Compound
Growth Growth Growth Growth
Number of Years Periods Amount Rate Amount Rate Amount Rate Amount Rate
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ % $ % $ % $ %
- ---------------------------------------------------------------------------------------------------
Lifetime of Fund % % % %
- ---------------------------------------------------------------------------------------------------
<CAPTION>
VP International Fixed Income Fund
Return of
Account Value Premium Annual Step-Up 5% Step-Up
Death Benefit Death Benefit Death Benefit Death Benefit
--------------- --------------- --------------- ---------------
Compound Compound Compound Compound
Growth Growth Growth Growth
Number of Years Periods Amount Rate Amount Rate Amount Rate Amount Rate
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ % $ % $ % $ %
- ---------------------------------------------------------------------------------------------------
Lifetime of Fund % % % %
- ---------------------------------------------------------------------------------------------------
<CAPTION>
VP Emerging Markets Debt Fund
Return of
Account Value Premium Annual Step-Up 5% Step-Up
Death Benefit Death Benefit Death Benefit Death Benefit
--------------- --------------- --------------- ---------------
Compound Compound Compound Compound
Growth Growth Growth Growth
Number of Years Periods Amount Rate Amount Rate Amount Rate Amount Rate
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ % $ % $ % $ %
- ---------------------------------------------------------------------------------------------------
Lifetime of Fund % % % %
- ---------------------------------------------------------------------------------------------------
</TABLE>
B-5
<PAGE>
<TABLE>
<CAPTION>
VP Prime Obligations Fund
Return of
Account Value Premium Annual Step-Up 5% Step-Up
Death Benefit Death Benefit Death Benefit Death Benefit
--------------- --------------- --------------- ---------------
Compound Compound Compound Compound
Growth Growth Growth Growth
Number of Years Periods Amount Rate Amount Rate Amount Rate Amount Rate
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ % $ % $ % $ %
- ---------------------------------------------------------------------------------------------------
Lifetime of Fund % % % %
- ---------------------------------------------------------------------------------------------------
</TABLE>
*For purposes of determining these investment results, the mortality and
expense risk charge and administrative fee have been taken into account. No $40
account fee has been deducted. The total annual charge for the Account Value
death benefit option is .35%; .40% for the Return of Premium death benefit
option; .50% for the Annual Step-up death benefit option; and .65% for the 5%
Step-up death benefit option.
Annuity payouts
Variable annuity payouts
Variable annuity payouts will be determined on the basis of: (1) the dollar
value of the contract on the annuity commencement date; (2) the annuity tables
contained in the contract; (3) the type of annuity option selected; and (4) the
investment results of the fund(s) selected. In order to determine the amount of
variable annuity payouts, Lincoln Life makes the following calculation: first,
it determines the dollar amount of the first payout; second, it credits the
contract with a fixed number of annuity units based on the amount of the first
payout; and third, it calculates the value of the annuity units each period
thereafter. These steps are explained below.
The dollar amount of the first periodic variable annuity payout is determined
by applying the total value of the accumulation units credited under the
contract valued as of the annuity commencement date (less any premium taxes) to
the annuity tables contained in the contract. The first variable annuity payout
will be paid 14 days after the annuity commencement date. This day of the month
will become the day on which all future annuity payouts will be paid. Amounts
shown in the tables are based on the 1983 Table "a" Individual Annuity
Mortality Tables, modified, with an assumed investment return at the rate of
3%, 4%, 5% or 6% per annum. The first annuity payout is determined by
multiplying the benefit per $1,000 of value shown in the contract tables by the
number of thousands of dollars of value accumulated under the contract. These
annuity tables vary according to the form of annuity selected and the age of
the annuitant at the annuity commencement date. The assumed interest rate
described above is the measuring point for subsequent annuity payouts. If the
actual net investment rate (annualized) exceeds the assumed interest rate, the
payout will increase at a rate equal to the amount of such excess. Conversely,
if the actual rate is less than the assumed interest rate, annuity payouts will
decrease. If the assumed interest rate were to be increased, annuity payouts
would start at a higher level but would decrease more rapidly or increase more
slowly.
Lincoln Life may use sex distinct annuity tables in contracts that are not
associated with employer sponsored plans and where not prohibited by law.
At an annuity commencement date, the contract is credited with annuity units
for each variable subaccount on which variable annuity payouts are based. The
number of annuity units to be credited is determined by dividing the amount of
the first periodic payout by the value of an annuity unit in each variable
subaccount selected. Although the number of annuity units is fixed by this
process, the value of such units will vary with the value of the underlying
fund. The amount of the second and subsequent periodic payouts is determined by
multiplying the contractowner's fixed number of annuity units in each variable
subaccount by the appropriate annuity unit value for the valuation date ending
14 days prior to the date that payout is due.
The value of each variable subaccount's annuity unit will be set initially at
$1.00. The annuity unit value for each variable subaccount at the end of any
valuation date is determined as follows:
1. The total value of fund shares held in a given variable subaccount is
calculated by multiplying the number of shares by the net asset value at the
end of the valuation period plus any dividend or other distribution.
2. The liabilities of the variable subaccount, including daily charges and
taxes, are subtracted.
3. The result is divided by the number of annuity units in the variable
subaccount at the beginning of the valuation period, and adjusted by a
factor to neutralize the assumed investment return in the annuity table.
The value of the annuity units is determined as of a valuation date 14 days
prior to the payment date in order to permit calculation of amounts of annuity
payouts and mailing of checks in advance of their due dates. Such checks will
normally be issued and mailed at least three days before the due date.
B-6
<PAGE>
Proof of age, sex and survival
Lincoln Life may require proof of age, sex, or survival of any payee upon whose
age, sex, or survival payments depend.
Advertising and sales literature
As set forth in the Prospectus, Lincoln Life may refer to the following
organizations (and others) in its marketing materials:
A.M. BEST'S RATING SYSTEM is designed to evaluate the various factors affecting
the overall performance of an insurance company in order to provide an opinion
as to an insurance company's relative financial strength and ability to meet
its contractual obligations. The procedure includes both a quantitative and
qualitative review of each company. A.M. Best also provides certain rankings,
to which Lincoln Life intends to refer.
DUFF & PHELPS insurance company claims paying ability (CPA) service provides
purchasers of insurance company policies and contracts with analytical and
statistical information on the solvency and liquidity of major U.S. licensed
insurance companies, both mutual and stock.
EAFE INDEX is prepared by Morgan Stanley Capital International (MSCI). It
measures performance of equity securities in Europe, Australia and the Far
East. The index reflects the movements of world stock markets by representing
the evolution of an unmanaged portfolio. The EAFE Index offers international
diversification representing over 1,000 companies across 20 different
countries.
LIPPER VARIABLE INSURANCE PRODUCTS PERFORMANCE ANALYSIS SERVICE is a publisher
of statistical data covering the investment company industry in the United
States and overseas. Lipper is recognized as the leading source of data on
open-end and closed-end funds. Lipper currently tracks the performance of over
5,000 investment companies and publishes numerous specialized reports,
including reports on performance and portfolio analysis, fee and expense
analysis.
MOODY'S insurance financial strength rating is an opinion of an insurance
company's financial strength and ability to meet financial obligations. The
purpose of Moody's ratings is to provide investors with a simple system of
gradation by which the relative quality of insurance companies may be noted.
MORNINGSTAR is an independent financial publisher offering comprehensive
statistical and analytical coverage of open-end and closed-end funds and
variable annuities.
STANDARD & POOR'S insurance claims-paying ability rating is an opinion of an
operating insurance company's financial capacity to meet obligations under an
insurance policy in accordance with the terms. The likelihood of a timely flow
of funds from the insurer to the trustee for the bondholders is a key element
in the rating determination for such debt issues.
VARDS (VARIABLE ANNUITY RESEARCH DATA SERVICE) provides a comprehensive guide
to variable annuity contract features and historical fund performance. The
service also provides a readily understandable analysis of the comparative
characteristics and market performance of funds inclusive in variable
contracts.
STANDARD & POOR'S 500 INDEX is a broad-based measurement of U.S. stock-market
performance based on the weighted average performance of 500 common stocks of
leading companies in leading industries; commonly known as the Standard &
Poor's 500 (S&P 500). The selection of stocks, their relative weightings to
reflect differences in the number of outstanding shares, and publication of the
index itself are services of Standard & Poor's Corporation, a financial
advisory, securities rating, and publishing firm.
NASDAQ-OTC PRICE INDEX is based on the National Association of Securities
Dealers Automated Quotations (NASDAQ) and represents all domestic over-the-
counter stocks except those traded on exchanges and those having only one
market maker, a total of some 3,500 stocks. It is market value- weighted and
was introduced with a base of 100.00 on February 5, 1971.
DOW JONES INDUSTRIAL AVERAGE (DJIA) is a price-weighted average of 30 actively
traded blue chip stocks, primarily industrials currently including American
Express Company and American Telephone and Telegraph Company. Prepared and
published by Dow Jones & Company, it is the oldest and most widely quoted of
all the market indicators. The average is quoted in points, not dollars.
In its advertisements and other sales literature for the VAA and the trust
funds, Lincoln Life intends to illustrate the advantages of the contracts in a
number of ways:
COMPOUND INTEREST ILLUSTRATIONS will emphasize several advantages of the
variable annuity contract. For example, but not by way of illustration, the
literature may emphasize the potential tax savings through tax deferral; the
potential advantage of the variable annuity account over the fixed account; and
the compounding effect when a client makes regular deposits to his or her
contract.
INTERNET is an electronic communications network which may be used to provide
information regarding Lincoln Life, performance of the variable subaccounts and
advertisement literature.
B-7
<PAGE>
DOLLAR-COST AVERAGING (DCA) may be used by you to systematically transfer on a
monthly basis amounts from the SEI VP Prime Obligations subaccount into the
other variable subaccounts. We reserve the right to change subaccounts under
this program. You may elect to participate in the DCA program at the time of
application or at anytime before the annuity commencement date by completing
an election form available from us. The minimum amount to be dollar cost
averaged is $1,500 over any period between six and 60 months. Once elected,
the program will remain in effect until the earlier of: (1) the annuity
commencement date; (2) the value of the amount being DCA'd is depleted; or (3)
you cancel the program by written request or by telephone if we have your
telephone authorization on file. Currently, there is no charge for this
service. However, we reserve the right to impose one. A transfer under this
program is not considered a transfer for purposes of limiting the number of
transfers that may be made, or assessing any charges which may apply to
transfers. We reserve the right to discontinue this program at any time. DCA
does not assure a profit or protect against loss.
AUTOMATIC WITHDRAWAL SERVICE (AWS) provides an automatic, periodic withdrawal
of account value to you. You may elect to participate in AWS at the time of
application or at any time before the annuity commencement date by sending a
written request to our home office. The minimum account value required to
establish AWS is $10,000. You may cancel or make changes to your AWS program
at any time by sending a written request to our home office. If telephone
authorization has been elected, certain changes may be made by telephone.
Notwithstanding the requirements of the program, any withdrawal must be
permitted by Section 401(a)(9) of the code for qualified plans or permitted
under Section 72 for non-qualified contracts. Currently, there is no charge
for this service. However, we reserve the right to impose one. If a charge is
imposed, it will not exceed $25 per transaction or 2% of the amount withdrawn,
whichever is less. We reserve the right to discontinue this service at any
time.
CROSS-REINVESTMENT SERVICE allows the account value in a designated variable
subaccount that exceeds a certain baseline amount to automatically be
transferred to another specific variable subaccount(s) at specific intervals.
You may elect to participate in cross-reinvestment at the time of application
or at any time before the annuity commencement date by sending a written
request to our home office or by telephone if we have your telephone
authorization on file. You designate the holding account, the receiving
account(s), and the baseline amount. Cross-reinvestment will continue until we
receive authorization to terminate the program.
The minimum holding account value required to establish cross-reinvestment is
$10,000. Currently, there is no charge for this service. However, we reserve
the right to impose one. A transfer under this program is not considered a
transfer for purposes of limiting the number of transfers that may be made, or
assessing any charges which may apply to transfers. We reserve the right to
discontinue this service at any time.
SEI's Asset Management Program
SEI's Asset Management Program is a comprehensive investment management
program that utilizes actively managed portfolios with the underlying SEI
insurance funds with the potential for enhanced returns and lower risk. Under
the program SIMC, the portfolio manager, determines how account values should
be allocated to the funds. SIMC reviews the allocations periodically and may
make changes from time to time. At the end of each calendar quarter, account
values are automatically rebalanced to equal the correct portfolio allocation
as determined by SIMC. This rebalancing is normally necessary because the
funds have performed differently (resulting in various funds having more or
less than the targeted allocations) or because the portfolio manager has
decided to change the allocations. SIMC is a registered investment adviser
with the SEC.
Lincoln Life's customers. Sales literature for the VAA and the trust's funds
may refer to the number of employers and the number of individual annuity
clients which Lincoln Life serves. As of the date of this SAI, Lincoln Life
was serving over 10,000 employers and more than 1 million individuals.
Lincoln Life's assets, size. Lincoln Life may discuss its general financial
condition (see, for example, the reference to A.M. Best Company, above); it
may refer to its assets; it may also discuss its relative size and/or ranking
among companies in the industry or among any sub-classification of those
companies, based upon recognized evaluation criteria (see reference to A.M.
Best Company above). For example, at year-end 1999 Lincoln Life had statutory
admitted assets of over $70 billion.
Financial statements
The statutory-basis financials statements of Lincoln Life appear on the
following pages. Financial Statements for the VAA are not included because, as
of the date hereof, the VAA had no assets, had incurred no liabilities, and
had not yet commenced operations.
B-8
<PAGE>
Part C
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements provided in the Statement of Additional Information.
1. Part A The Table of Condensed Financial Information is included in Part A of
this Registration Statement. (To be filed by amendment)
2. Part B The following Financial Statements for the Variable Account are
included in Part B of this Registration Statement. Not applicable
3. Part B The following Statutory-Basis Financial Statements of The Lincoln
National Life Insurance Company are included in the SAI: (To be filed by
amendment)
(b) Exhibits
(1) Resolution of the Board of Directors and Memorandum from the
President of The Lincoln National Life Insurance Company authorizing
establishment of the Variable Account.
(2) Not Applicable.
(3) (a) Underwriting Agreement (To be filed by amendment)
(3) (b) Selling Group Agreement (To be filed by amendment)
(4) (a) Variable Annuity contract.
(5) Application.
(6) (a) Articles of Incorporation of The Lincoln National Life Insurance
Company are incorporated herein by reference to Registration
Statement on Form N-4 (333-40937) filed on November 9, 1998.
(b) By-laws of The Lincoln National Life Insurance Company are
incorporated herein by reference to Registration Statement on Form
N-4 (333-40937) filed on November 9, 1998.
(7) Not applicable.
(8) (a) Participation Agreement (To be filed by amendment)
(b) Service Agreement between Delaware Management Holdings, Inc.,
Delaware Services Company, Inc. and The Lincoln National Life
Insurance Company is incorporated herein by reference to the
Registration Statement of Flexible Premium Variable Life Account F,
Form S-6 (333-40745) filed November 21, 1997.
<PAGE>
(9) Opinion and Consent of Mary Jo Ardington, Counsel, of The Lincoln
National Life Insurance Company. (To be filed by amendment)
(10) Consent of Ernst & Young LLP, Independent Auditors. (To be filed by
amendment)
(11) Not applicable.
(12) Not applicable.
(13) Schedule for Computation of Performance Quotations. (To be filed by
amendment)
(14) Not applicable.
(15) (a) Organizational Chart of the Lincoln National Insurance Holding
Company System. (To be filed by amendment)
(b) Books and Records Report. (To be filed by amendment)
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
NAME POSITIONS AND OFFICES WITH DEPOSITOR
- ---- ------------------------------------
Jon A. Boscia** President and Director
John H. Gotta**** Senior Vice President, Chief Executive Officer of
Life Insurance and Director
Stephen H. Lewis* Senior Vice President, Interim Chief Executive
Officer of Annuities and Director
H. Thomas McMeekin** Director
Cynthia A. Rose** Secretary and Assistant Vice President
Lawrence T. Rowland*** Executive Vice President and Director
Keith J. Ryan* Vice President, Controller, and Chief Accounting
Officer
Todd R. Stephenson* Senior Vice President, Chief Financial Officer and
Assistant Treasurer
Eldon J. Summers** Second Vice President and Treasurer
Richard C. Vaughan** Director
Roy V. Washington***** Vice President and Chief Compliance Officer
* Principal business address is 1300 South Clinton Street,
Fort Wayne, IN 46802-3506
** Principal business address is Central Square, West Tower, 1500
Market St., Ste 3900, Philadelphia, PA 19102-2112
*** Principal business address is 1700 Magnavox Way, One Reinsurance
Place, Fort Wayne, IN 46804-1538
**** Principal business address is 350 Church Street, Hartford,
CT 06103
***** Principal business address is 915 S. Clinton, Fort Wayne, IN
46802
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
See Exhibit 15(a): Organizational Chart of the Lincoln National Insurance
Holding Company System. (To be filed by amendment)
ITEM 27. NUMBER OF PURCHASERS
Not applicable.
ITEM 28. INDEMNIFICATION
(a) Brief description of indemnification provisions.
In general, Article VII of the By-laws of The Lincoln National Life
Insurance Company (Lincoln Life) provides that Lincoln Life will indemnify
certain persons against expenses, judgments and certain other specified
costs incurred by any such person if he/she is made a party or is
threatened to be made a party to a suit or proceeding because he/she was a
director, officer, or employee of Lincoln Life, as long as he/she acted in
good faith and in a manner he/she reasonably believed to be in the best
interests of, or not opposed to the best interests of, Lincoln Life.
Certain additional conditions apply to indemnification in criminal
proceedings.
In particular, separate conditions govern indemnification of directors,
officers, and employees of Lincoln Life in connection with suits by, or in
the right of, Lincoln Life. Please refer to Article VII of the By-laws of
Lincoln Life (Exhibit No. 6(b) hereto) for the full text of the
indemnification provisions. Indemnification is permitted by, and is subject
to the requirements of, Indiana law.
(b) Undertaking pursuant to Rule 484 of Regulation C under the Securities
Act of 1933.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions described in Item 28(a) above or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is again public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Life Insurance (avail. Nov. 28, 1988) no-action letter
with respect to Contracts used in connection with retirement plans meeting
the requirements of Section 403(b) of the Internal Revenue Code, and
represents further that it will comply with the provisions of paragraphs
(1) through (4) set forth in that no-action letter.
ITEM 29. PRINCIPAL UNDERWRITER
(a) SEI Investments Distribution Co. ("SIDCo") does not act as principal
underwriter for any other funds.
1) 2)
(b) Name and Principal Positions and offices
Business Address* with Underwriter
------------------ ---------------------
Alfred P. West, Jr. Director, Chairman of the Board of Directors
Richard B. Lieb Director, Executive Vice President
Carmen V. Romeo Director
Mark J. Held President & Chief Operating Officer
Gilbert L. Beebower Executive Vice President
Dennis J. McGonigle Executive Vice President
Robert M. Silvestri Chief Financial Officer & Treasurer
Leo J. Dolan, Jr. Senior Vice President
Carl A. Guarino Senior Vice President
Larry Hutchison Senior Vice President
Jack May Senior Vice President
Hartland J. McKeown Senior Vice President
Kevin P. Robins Senior Vice President & General Counsel
Patrick K. Walsh Senior Vice President
Robert Aller Vice President
Timothy D. Barto Vice President & Assistant Secretary
Gordon W. Carpenter Vice President
Todd Cipperman Vice President & Assistant Secretary
S. Courtney E. Collier Vice President & Assistant Secretary
Robert Crudup Vice President & Managing Director
Richard A. Deak Vice President & Assistant Secretary
Barbara Doyne Vice President
Jeff Drennen Vice President
James R. Foggo Vice President & Assistant Secretary
Vic Galef Vice President & Managing Director
Lydia A. Gavalis Vice President & Assistant Secretary
Greg Gettinger Vice President & Assistant Secretary
Kathy Heilig Vice President
Jeff Jacobs Vice President
Samuel King Vice President
Kim Kirk Vice President & Managing Director
John Krzeminski Vice President & Managing Director
Christine M. McCullough Vice President & Assistant Secretary
Carolyn McLaurin Vice President & Managing Director
Mark Nagle Vice President
Joanne Nelson Vice President
Cynthia M. Parrish Vice President & Secretary
Rob Redican Vice President
Maria Rinehart Vice President
Edward T. Searle Vice President & Assistant Secretary
Steve Smith Vice President
Daniel Spaventa Vice President
Kathryn L. Stanton Vice President
Lynda J. Striegel Vice President & Assistant Secretary
Lori L. White Vice President & Assistant Secretary
Wayne M. Withrow Vice President & Managing Director
* The principal business address is One Freedom Valley Drive,
Oaks, PA 19456
<PAGE>
ITEM 29. PRINCIPAL UNDERWRITER
(c) Name of Principal Underwriter: Net Underwriting Discounts and Commissions:
None.
Item 30. Location of Accounts and Records
See Exhibit 14(b) is hereby incorporated herein by reference. (TO BE FILED
BY AMENDMENT)
Item 31. Management Services
Not Applicable.
Item 32
- -------
(a) Registrant undertakes that it will file a post-effective amendment to this
registration statement as frequently as necessary to ensure that the
audited financial statements in the registration statement are never more
than 16 months old for so long as payments under the variable annuity
contracts may be accepted.
(b) Registrant undertakes that it will include either (1) as part of any
application to purchase a Certificate or an Individual Contract offered by
the Prospectus, a space that an applicant can check to request a Statement
of Additional Information, or (2) a post card or a similar written
communication affixed to or included in the Prospectus that the applicant
can remove to send for a statement of Additional Information.
(c) Registrant undertakes to deliver any Statement of Additional Information
and any financial statements required to be made available under this Form
promptly upon written or oral request to Lincoln Life at the address or
phone number listed in the Prospectus.
(d) The Lincoln National Life Insurance Company hereby represents that the fees
and charges deducted under the contract, in the aggregate, are reasonable
in relation to the services rendered, the expenses expected to be incurred,
and the risks assumed by The Lincoln National Life Insurance Company.
(e) Registrant hereby represents that it is relying on the American Council of
Life Insurance (avail. Nov. 28, 1988) no-action letter with respect to
Contracts used in connection with retirement plans meeting the requirements
of Section 403(b) of the Internal Revenue Code, and represents further that
it will comply with the provisions of paragraphs (1) through (4) set forth
in that no-action letter.
(f) For Contracts sold in connection with the Texas Option Retirement Program,
Registrant is relying on Rule 6c-7 and represents that paragraphs (a)
through (d) of that rule have been complied with.
<PAGE>
SIGNATURES
(a) As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has caused this Registration Statement to be signed on its
behalf, in the City of Fort Wayne, and the State of Indiana on this 13th day of
March, 2000.
LINCOLN LIFE VARIABLE ANNUITY
ACCOUNT T -- SEI VARIABLE ANNUITY
(Registrant)
By: /s/ Kelly D. Clevenger
-------------------------------------
Kelly D. Clevenger
Vice President, Lincoln Life
(Title)
By: THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY
(Depositor)
By: /s/ Stephen H. Lewis
-------------------------------------
Stephen H. Lewis
(Signature-Officer of Depositor)
Senior Vice President, Lincoln Life
(Title)
(b) As required by the Securities Act of 1933, this Registration Statement has
been signed for the Depositor by the following persons in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Jon A. Boscia President and Director March 13, 2000
- ---------------------- (Principal Executive Officer)
Jon A. Boscia
/s/ Keith J. Ryan Vice President and Controller March 13, 2000
- ---------------------- (Principal Accounting Officer)
Keith J. Ryan
/s/ Todd R. Stephenson Senior Vice President, March 13, 2000
- ---------------------- Chief Financial Officer
Todd R. Stephenson and Assistant Treasurer
(Principal Financial Officer)
/s/ Stephen H. Lewis Second Vice President, March 13, 2000
- ---------------------- Interim Chief Executive Officer
Stephen H. Lewis of Annuities and Director
/s/ John H. Gotta Senior Vice President, March 13, 2000
- ---------------------- Chief Executive Officer of
John H. Gotta Life Insurance and Director
Executive Vice President March 13, 2000
- ---------------------- and Director
Lawrence T. Rowland
/s/ H. Thomas McMeekin Director March 13, 2000
- ----------------------
H. Thomas McMeekin
Director March 13, 2000
/s/ Richard C. Vaughan
- ----------------------
Richard C. Vaughan
</TABLE>
<PAGE>
93-18 RESOLVED, That Resolution No. 82-28, adopted by the Board of Directors on
November 4, 1982 relating to the establishment of segregated investment
accounts, is amended in its entirety to read as follows:
"RESOLVED, That the chief executive officer of the Company
is hereby authorized in his discretion from time to time to
establish one or more segregated investment accounts in
accordance with the provisions of the Indiana Insurance Law, any
one or more of such accounts which may be used for the purpose of
maintaining principal and interest as guaranteed by group annuity
contracts issued by the Company, and for any other purpose or
purposes as the chief executive officer may determine and as may
be appropriate under the Indiana Insurance Law; and
RESOLVED FURTHER, That if in the opinion of legal counsel of
the Company it is necessary or desirable to register any of such
accounts under the Investment Company Act of 1940 or to register
a security issued by any such account under the Securities Act of
1933, or to make application for exemption from registration, the
chief executive officer or such other officers as he may
designate are hereby authorized to accomplish any such
registration or to make any such application for exemption, and
to perform all other acts as may be desirable or necessary in
connection with the conduct of business of the Company with
respect to any such account.
<PAGE>
ESTABLISHMENT OF SEGREGATED INVESTMENT ACCOUNT
of
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
Pursuant to the authority given me by Resolution No. 93-18 of the Board of
Directors of The Lincoln National Life Insurance Company (the "Company") dated
May 13, 1993, I hereby establish a segregated investment account designated as
"Lincoln Life Variable Annuity Account T" (the "Separate Account"). The Separate
Account is to be used in connection with the issuance by the Company of certain
variable annuity contracts (the "Contracts").
The Separate Account will be registered as a unit investment trust
with the Securities and Exchange Commission ("SEC") and shall invest in shares
of investment companies which are registered with the SEC.
The establishment and operation of the Separate Account will be in
accordance with the applicable provisions of the Indiana Insurance Code ("IIC")
and all rules and regulations issued pursuant thereto. In particular, but not by
way of limitation, the Separate Account shall not be chargeable with liabilities
arising out of any other business the Company may conduct and which has no
specific relation to or dependence upon the Separate Account. The Contracts
issued in connection with the Separate Account are subject to review by the
Commissioner of Insurance of the State of Indiana.
The Separate Account's investment objectives, contracts, and limitations
shall be in accordance with (1) the registration statement for the Contracts
filed with the SEC under the Securities Act of 1933, and (2) applicable
provisions of IIC and all other applicable legal requirements.
/s/ Jon A. Boscia
-----------------
Jon A. Boscia
President
Effective Date:
January 25, 2000
- ----------------
<PAGE>
[LOGO OF LINCOLN NATIONAL LIFE INSURANCE CO.]
ANNUITY CONTRACT
Flexible Premium Deferred
Variable Annuity
With Benefit Payment Options
Nonparticipating
The Lincoln National Life Insurance Company (LNL) agrees to provide the benefits
and other rights described in this Contract in accordance with the terms of this
Contract.
NOTICE OF 10-DAY RIGHT TO EXAMINE CONTRACT. Within 10 days after this Contract
is first received, it may be cancelled for any reason without penalty by
delivering or mailing it to the representative through whom it was purchased or
to the Home Office of LNL. Upon cancellation, LNL will return the value of any
Purchase Payments made to the Variable Account on the Valuation Date on which
LNL receives the cancellation request.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED UPON INVESTMENT
EXPERIENCE OF THE VARIABLE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT (SEE PAGES 6 AND 12).
Signed for The Lincoln National Life Insurance Company at its Home Office in
Fort Wayne, Indiana.
/s/ Jon A. Boscia
Jon A. Boscia, President
<PAGE>
Table of Contents
Article Page
1 Definitions............................................ 4
2 Purchase Payments...................................... 5
3 Variable Account....................................... 6
4 Options, Charges and Fees.............................. 7
5 Death Benefits......................................... 9
6 Annuity Payments Option................................11
7 Beneficiary............................................14
8 General Provisions.....................................15
9 Annuity Purchase Rates Under a Variable Payment Option.17
10 Annuity Purchase Rates Under a Fixed Payment Option....21
<PAGE>
CONTRACT DATA
Contract Number 96-0123456
Annuitant TODD LINCOLN
Age at Issue 35
Contract Date April 1, 2000
Purchase Payment $50,000.00
Purchase Payment Frequency FLEXIBLE
Maturity Date April 1, 2055
OWNER
Abraham Lincoln
Mary Lincoln
BENEFICIARY DESIGNATION
Please refer to the client information profile for beneficiary designation.
VARIABLE ACCOUNT
There are currently [eleven] Sub-accounts in the Variable Account available to
the Owner. The Owner may direct Purchase Payments under the Contract to any of
the available Sub-accounts, subject to limitations. The amounts allocated to
each Sub-account will be invested at Net Asset Value in the shares of one of the
Funds. The Sub-accounts are:
1. SEI VP Large Cap Value Fund
2. SEI VP Large Cap Growth Fund
3. SEI VP Small Cap Value Fund
4. SEI VP Small Cap Growth Fund
5. SEI VP International Equity Fund
6. SEI VP Emerging Markets Equity Fund
7. SEI VP Core Fixed Fund
8. SEI VP High Yield Bond Fund
9. SEI VP International Fixed Income Fund
10. SEI VP Emerging Markets Debt Fund
11. SEI VP Prime Obligation Fund
12. Other Funds made available by LNL
See Section 3.01 for provisions governing any limitations, substitution or
elimination of a Fund.
<PAGE>
ARTICLE 1
DEFINITIONS
1.01
ACCOUNT VALUE -- Prior to the Annuity Commencement Date, the sum on a given
Valuation Date of the value of all the Accumulation Units attributable to this
Contract.
1.02
ACCUMULATION UNIT -- A unit of measure used in the calculation of the value of a
Variable Sub-account prior to the Annuity Commencement Date.
1.03
ANNUITANT -- The person who will be the measuring life for the annuity benefit
payments made after the Annuity Commencement Date.
1.04
ANNUITY COMMENCEMENT DATE - The Valuation Date on which the Account Value is
withdrawn for payment of annuity benefits under the Annuity Payment Option
selected.
1.05
ANNUITY PAYMENT DATE -- The date on which the Owner is entitled to the annuity
benefit payment.
1.06
ANNUITY PAYMENT OPTION -- An optional form of payment of the annuity benefits
provided for under this Contract.
1.07
ANNUITY UNIT -- A unit of measure used on and after the Annuity Commencement
Date to calculate the amount of a variable annuity benefit payment.
1.08
BENEFICIARY -- The person or entity designated by the Owner to receive the Death
Benefit, if any.
1.09
CODE -- The Internal Revenue Code of 1986, as amended.
1.10
CONTINGENT ANNUITANT -- The individual who will become the Annuitant upon the
death of the Annuitant.
1.11
CONTRACT -- The agreement, between LNL and the Owner, providing a variable
annuity.
1.12
CONTRACT DATE -- The date this Contract became effective. The Contract Date is
shown on the Contract Data pages.
1.13
CONTRACT YEAR -- Each twelve-month period starting with the Contract Date on the
Contract Data pages and with each Contract Date anniversary thereafter.
1.14
DEATH BENEFIT -- The amount payable upon death of an Owner, Joint Owner, or an
Annuitant.
1.15
DOLLAR COST AVERAGING (DCA) -- An option that allows the automatic transfer of a
portion of the Account Value in periodic installments from a designated DCA
holding account to one or more of the Variable Sub-accounts
<PAGE>
available under the Contract. The periodic installments will be over any DCA
period made available by LNL and selected by the Owner.
1.16
FUND -- Any of the underlying investment options available in the Variable
Account.
1.17
HOME OFFICE -- The principal office of LNL located at 1300 South Clinton Street,
Fort Wayne, Indiana, 46802, or an institution designated by LNL.
1.18
LNL -- The Lincoln National Life Insurance Company.
1.19
MATURITY DATE -- The date specified on the Contract Data pages of this Contract.
1.20
NET ASSET VALUE PER SHARE -- The market value of a Fund share calculated each
day by taking the closing market value of all securities owned, adding the value
of all other assets (such as cash), subtracting all liabilities, and then
dividing the result (total net assets) by the number of shares outstanding.
1.21
OWNER OR JOINT OWNERS -- The one person, two persons or entity who exercises
rights of ownership under this Contract.
1.22
PURCHASE PAYMENTS -- Amounts paid into this Contract.
1.23
QUALIFIED PLAN -- A retirement plan qualified for special tax treatment under
the Code, including Sections 401, 403, 408, 408A and 457. All other plans are
considered Non-Qualified.
1.24
VALUATION DATE -- Close of the market of each day that the New York Stock
Exchange is open for business.
1.25
VALUATION PERIOD -- The period commencing at the close of business on a
particular Valuation Date and ending at the close of business on the next
succeeding Valuation Date.
1.26
VARIABLE ACCOUNT -- The segregated investment account into which LNL sets aside
and invests the assets allocated to the Variable Sub-account(s) made available
by LNL and selected by the Owner. The Variable Account for this Variable
Annuity Contract is the Lincoln National Variable Account T.
1.27
VARIABLE SUB-ACCOUNT -- That portion of the Variable Account which invests in
shares of a particular Fund. There is a separate Variable Sub-account for each
particular Fund.
ARTICLE 2
PURCHASE PAYMENTS
2.01 WHERE PAYABLE
All Purchase Payments must be made to LNL at its Home Office or to an agent
designated by LNL.
2.02 AMOUNT AND FREQUENCY
<PAGE>
Purchase Payments are made in the amount and at the frequency shown on the
Contract Data Pages. The Owner may change the frequency or amount of Purchase
Payments subject to LNL's rules in effect at the time of the change.
Purchase Payments may be made until the earliest of the Annuity Commencement
Date, termination of the Contract upon payment of any Death Benefit, surrender
of the Contract, or the Maturity Date.
ARTICLE 3
VARIABLE ACCOUNT
3.01 THE VARIABLE ACCOUNT
The Variable Account is for the exclusive benefit of persons entitled to receive
benefits under variable annuity contracts. The Variable Account will not be
charged with the liabilities arising from any other part of LNL's business.
Subject to any required regulatory approvals, LNL reserves the right to
eliminate the shares of any Fund and substitute the securities of a different
Fund or investment company or mutual fund. Such elimination and substitution
may occur if the shares of a Fund are no longer available for investment, or, if
in the judgement of LNL, further investment in any Fund should become
inappropriate in view of the purposes of the Contract. LNL may add a new
Variable Sub-account in order to invest the assets of the Variable Account into
a Fund. LNL shall give the Owner written notice of the elimination and
substitution of any Fund within fifteen days after such substitution occurs.
3.02 ALLOCATION OF PURCHASE PAYMENTS INTO THE VARIABLE ACCOUNT
All Purchase Payment to this Contract will be allocated to the Variable Account.
Purchase Payments allocated to the Variable Account of the Contract will be
credited to the Variable Sub-account(s) made available by LNL and selected by
the Owner.
If the Owner elects to allocate any Purchase Payment to a new Variable Sub-
account not previously selected, that election must be made to LNL through
written, voice or electronic instructions, provided LNL has received the
appropriate authorization from the Owner for voice or electronic transfers in
accordance with LNL procedures.
Purchase Payments allocated to each Variable Sub-account will be invested at Net
Asset Value in the shares of one of the Funds. LNL shall use each Purchase
Payment to buy Accumulation Units in the Variable Sub-account(s) selected by the
Owner. The number of Accumulation Units bought shall be determined by dividing
the amount allocated to a Variable Sub-account by the dollar value of an
Accumulation Unit in such Variable Sub-account as of the Valuation Date
immediately following receipt of the Purchase Payment at the Home Office. The
number of Accumulation Units held for an Owner in a Variable Sub-account shall
not be changed by any change in the dollar value of Accumulation Units in the
Variable Sub-account.
3.03 VALUATION OF THE VARIABLE ACCOUNT ALLOCATIONS
The value of this Contract at any time prior to the Annuity Commencement Date is
equal to the sum of the values allocated under this Contract to the Variable
Sub-accounts. The value of the portion of this Contract allocated to a Variable
Sub-account at any time prior to the Annuity Commencement Date is equal to the
Accumulation Units credited under this Contract to a Variable Sub-account
multiplied by the value of the Accumulation Unit for the respective Variable
Sub-account.
Accumulation Units for each Variable Sub-account are valued separately.
Initially, the value of an Accumulation Unit was arbitrarily established at the
inception of the Variable Sub-account. The value of a Variable Sub-account
Accumulation Unit may increase or decrease from Valuation Period to Valuation
Period. The Accumulation Unit value for a Variable Sub-account for any later
Valuation Period is determined as follows:
a. the total value of Fund shares held in the Variable Sub-account is
calculated by multiplying the number of Fund shares owned by the Variable
Sub-account 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
b. the liabilities of the Variable Sub-account at the end of the Valuation
Period (such liabilities include daily charges imposed on the Variable Sub-
account and may include a charge or credit with respect to any taxes paid
or reserved for by LNL that LNL determines as a result of the operation
from the Variable Account); the result divided by
<PAGE>
c. the outstanding number of Accumulation Units in the Variable Sub-account at
the beginning of the Valuation Period.
The daily charge imposed on a Variable Sub-account for any Valuation Period
represents the daily mortality and expense risk charge and the daily
administrative charge adjusted for the number of calendar days in the Valuation
Period. On an annual basis, this daily charge will not exceed the level as
determined by the Death Benefit option (see Section 5.01) in effect:
for any Valuation Period the Account Value Death Benefit is in effect, on an
annual basis the daily charge will not exceed 1.35% of the average daily net
assets of the Variable Sub-account;
for any Valuation Period the Return of Premium Death Benefit is in effect, on
an annual basis the daily charge will not exceed 1.40% of the average daily
net assets of the Variable Sub-account;
for any Valuation Period the Annual Step-up Death Benefit is in effect, on an
annual basis the daily charge will not exceed 1.50% of the average daily net
assets of the Variable Sub-account;
for any Valuation Period the 5% Step-up Death Benefit is in effect, on an
annual basis the daily charge will not exceed 1.65% of the average daily net
assets of the Variable Sub-account.
The Accumulation Unit value may increase or decrease the dollar value of
benefits under the Contract. Expenses incurred by LNL will not adversely affect
the dollar value of benefits.
ARTICLE 4
OPTIONS, CHARGES AND FEES
4.01 TRANSFER OPTION
Prior to the earlier of:
a. the Annuity Commencement Date;
b. termination of the Contract upon payment of any Death Benefit;
c. surrender of this Contract; or
d. the Maturity Date;
the Owner may direct a transfer of a portion of the Account Value from one
Variable Sub-account to another Variable Sub-account subject to the limitations
described below. Such a transfer request must be made to LNL through written,
voice or electronic instructions, provided LNL has received the appropriate
authorization from the Owner for voice or electronic transfers in accordance
with LNL procedures.
Transfers from a Variable Sub-account will result in the redemption of
Accumulation Units from this Variable Sub-account. Transfers to a Variable Sub-
account will result in the purchase of Accumulation Units in that Variable Sub-
account. Such transfers will be accomplished at Accumulation Unit values as of
the Valuation Date the transfer request is received in the Home Office. The
valuation of Accumulation Units is described in Section 3.02.
Transfers shall be subject to the following restrictions.
a. Twelve (12) transfers within the Variable Account may be made per Contract
Year. There will be no fee imposed for these twelve (12) transfers.
Transfers made as part of an automatic transfer program (such as a DCA
program) will not be counted against these twelve (12) transfers.
b. LNL reserves the right to allow more than twelve (12) transfers per
Contract Year, but in doing so may impose a fee of up to $10.00 for each
transfer after twelve (12) in a Contract Year.
c. The minimum single transfer amount from a Variable Sub-account is $300 or
the entire amount in the Variable Sub-account, whichever is less. If,
after the transfer, the amount remaining under this Contract in the
Variable Sub-account from which the transfer is taken is less than $300,
the entire amount held in that Variable Sub-account will be transferred
with the requested transfer amount.
<PAGE>
d. The minimum transfer amount to a Variable Sub-account is $300.
4.02 WITHDRAWAL OPTION
Prior to the earlier of:
a. the Annuity Commencement Date;
b. termination of the Contract upon payment of any Death Benefit;
c. surrender of this Contract; or
d. the Maturity Date;
the Owner may withdraw a part of the Account Value. The request may specify
from which Sub-account the withdrawal will be made. If no Sub-account is
specified, LNL will withdraw the amount requested on a pro-rata basis from each
Variable Sub-account. Any cash payment will be mailed from LNL's Home Office
within seven days after the date of withdrawal; however, LNL may be permitted to
defer such payment under the Investment Company Act of 1940, as in effect at the
time such request of withdrawal is received.
Withdrawals from a Variable Sub-account will result in the redemption of
Accumulation Units from this Variable Sub-account. Such withdrawals will be
accomplished at Accumulation Unit values as of the Valuation Date the withdrawal
request is received in the Home Office. The valuation of Accumulation Units is
described in Section 3.02.
The minimum withdrawal is $300. LNL reserves the right to surrender this
Contract if any withdrawal reduces the total Account Value to a level at which
this Contract may be surrendered in accordance with the terms set forth in the
standard nonforfeiture law, applicable in your state, for individual deferred
annuities.
The Withdrawal Option is not available after the Annuity Commencement Date.
4.03 SURRENDER OPTION
Prior to the earlier of:
a. the Annuity Commencement Date;
b. termination of the Contract upon payment of any Death Benefit; or
c. the Maturity Date;
the Owner may surrender this Contract for its Account Value. This Contract will
terminate upon surrender. The surrender will be effective on the Valuation Date
on which LNL receives a written request at its Home Office.
Any cash payment will be mailed from LNL's Home Office within seven days after
the date of surrender; however, LNL may be permitted to defer such payment under
the Investment Company Act of 1940, as in effect at the time a request for
surrender is received in its Home Office.
The Surrender Option is not available after the Annuity Commencement Date.
4.06 ANNUITY ACCOUNT FEE
An Annuity Account Fee of $40 per Contract Year will be deducted on the next
Valuation Date following the last day of each Contract Year. If the Contract is
surrendered prior to the last day of a Contract Year, the full Annuity Account
Fee will be deducted upon the surrender. The Annuity Account Fee shall be
deducted from each Variable Sub-account on a pro-rata basis.
The Annuity Account Fee will be waived for any Contract Year in which the
Account Value equals or exceeds $50,000.00 as of the Valuation Date on which the
Annuity Account Fee would otherwise be deducted. The Annuity Account Fee will
also be waived on and after the Annuity Commencement Date.
<PAGE>
ARTICLE 5
DEATH BENEFITS
5.01 DEATH BEFORE THE ANNUITY COMMENCEMENT DATE
Entitlement.
If there is a single Owner, then upon the death of the Owner LNL will pay a
Death Benefit to the designated Beneficiary(s) in accordance with the terms of
Article 7. If the designated Beneficiary of the Death Benefit is the surviving
spouse of the deceased Owner, the spouse may elect to continue the Contract as
the new Owner. If there are no designated Beneficiaries, LNL will pay a Death
Benefit to the Owner's estate. Upon the death of the spouse who continues the
Contract as the new Owner, LNL will pay a Death Benefit to the designated
Beneficiary(s) named by the spouse, as the new Owner, in accordance with the
terms of Article 7.
If there are Joint Owners, upon the death of the first Joint Owner, LNL will pay
a Death Benefit to the surviving Joint Owner. If the surviving Joint Owner is
the spouse of the deceased Joint Owner, then the spouse may elect to continue
the Contract as sole Owner. Upon the death of the Joint Owner who continues the
Contract, LNL will pay a Death Benefit to the designated Beneficiary(s) in
accordance with the terms of Article 7.
If the Annuitant is also the Owner or a Joint Owner, then the Death Benefit paid
upon the death of the Annuitant will be subject to the Contract provisions
regarding death of the Owner or a Joint Owner. If the surviving spouse of the
deceased Annuitant assumes the Contract, the Contingent Annuitant, if any, will
become the Annuitant. If there is no named Contingent Annuitant, the surviving
spouse will become the Annuitant.
If an Annuitant who is not the Owner or a Joint Owner dies, then the Contingent
Annuitant, if named, becomes the Annuitant and no Death Benefit is payable on
the death of the Annuitant. If no Contingent Annuitant is named, the Owner (or
younger Joint Owner) becomes the Annuitant. In lieu of continuing the Contract,
a Death Benefit may be paid to the Owner (and Joint Owner in equal shares, if
applicable) if the Annuitant named on this Contract has not been changed, except
on death of a prior Annuitant, and written notification of the election to
receive the Death Benefit is received by LNL within 75 days of the death of the
Annuitant. If no Owner is living on the date of death of the Annuitant, the
Death Benefit will be paid to the Beneficiary in accordance with Article 7. This
Contract will terminate when any Death Benefit is paid due to the death of the
Annuitant. A Death Benefit payable on the death of the Annuitant will not be
paid if the Annuitant has been changed subsequent to the effective date of this
Contract unless the change occurred because of the death of a prior Annuitant
(see Section 8.03).
If the Owner is a corporation or other non-individual (non-natural person), the
Death Benefit is payable only with respect to the death of the Annuitant or
Joint Annuitant. If there is a single Annuitant, then upon the death of the
Annuitant, LNL will pay a Death Benefit to the Owner. If there are Joint
Annuitants (see Section 8.03), upon the death of the first Joint Annuitant to
die, LNL will pay a Death Benefit to the Owner. If the Contract is continued by
the Owner until the death of the second Joint Annuitant to die, then upon that
second death LNL will pay a Death Benefit to the Owner.
The Death Benefit will be paid if LNL is in receipt of:
a. proof, satisfactory to LNL, of the death;
b. written authorization for payment; and
c. all claim forms, fully completed.
Due proof of death may be a certified copy of a death certificate, a certified
copy of a decree of a court of competent jurisdiction as to the findings of
death, or any other proof of death acceptable to LNL.
All Death Benefit payments will be subject to the laws and regulations governing
death benefits.
Notwithstanding any provision of this Contract to the contrary, the payment of
Death Benefits provided under the Contract must be made in compliance with Code
Section 72(s) or 401(a)(9) as applicable, as amended from time to time.
Determination of Amounts.
This Contract provides four options for the Death Benefit. The Owner may pre-
select one of these four Death Benefit options to be effective as of the
Contract Date. If no Death Benefit option is pre-selected, the Return of Premium
Death Benefit option will be the Death Benefit effective as of the Contract
Date. Each Death Benefit option has a different level of daily charges (see
Section 3.03).
<PAGE>
After the Contract Date, the Owner (or a spouse who continues the Contract as
the Owner) may change at any time to a lower Death Benefit option (see the order
of the Death Benefits below) than the Death Benefit option in effect, but may
never change to a higher Death Benefit option. If the Death Benefit option is
changed after the Contract Date, the change will be effective as of the
Valuation Date the written notification to change the Death Benefit option is
received at the Home Office.
The four Death Benefit options, in order from lowest to highest, are:
1. Account Value Death Benefit.
The Account Value Death Benefit is equal to the current Account Value as of
the date on which the death claim is approved by LNL for payment.
2. Return of Premium Death Benefit.
The Return of Premium is equal to the greater of:
a. the current Account Value as of the date on which the death claim is
approved by LNL for payment; or
b. the sum of all Purchase Payments minus withdrawals, partial
annuitizations, and premium tax incurred.
3. Annual Step-up Death Benefit.
The Annual Step-up Value Death Benefit is equal to the greater of:
a. the current Account Value as of the date on which the death claim is
approved by LNL for payment; or
b. the sum of all Purchase Payments minus withdrawals, partial
annuitizations, and premium tax incurred; or
c. the highest Account Value on any Contract Date anniversary (including
the Contract Date itself) prior to the 81st birthday of the deceased
(Owner, Joint Owner, or Annuitant) and prior to the date of death of the
deceased; where the highest Account Value is increased by Purchase
Payments and decreased for partial withdrawals, partial annuitizations,
and premium tax deduction (if applicable) subsequent to such Contract
Date anniversary on which the highest Account Value is obtained.
4. 5% Step-up Death Benefit.
The 5% Step-Up Death Benefit is equal to the greatest of:
a. the current Account Value as of the date on which the death claim is
approved by LNL for payment; or
b. the sum of all Purchase Payments minus withdrawals, partial
annuitizations, and premium tax incurred; or
c. the highest Account Value on any Contract Date anniversary (including
the Contract Date itself) prior to the 81st birthday of the deceased
(Owner, Joint Owner, or Annuitant) and prior to the date of death of the
deceased; where the highest Account Value is increased by Purchase
Payments and decreased for partial withdrawals, partial annuitizations,
and premium tax deduction (if applicable) subsequent to such Contract
Date anniversary on which the highest Account Value is obtained; or
d. the sum of all Purchase Payments minus all withdrawals and partial
annuitizations; where each Purchase Payment, withdrawal and partial
annuitization will be accumulated daily at an annual rate of [5%] from
the date of the Purchase Payment, withdrawal and partial annuitization
until the earlier of the date of death of the deceased (Owner, Joint
Owner or Annuitant) or the Contract Date anniversary immediately
preceding the 81st birthday of the deceased (Owner, Joint Owner, or
Annuitant), except that the accumulation of any Purchase Payment,
withdrawal or partial annuitization will not exceed [200%] of that
Purchase Payment, withdrawal and partial annuitization.
Upon the death of the Owner, Joint Owner, or Annuitant of this Contract, if a
surviving spouse continues the Contract, the excess, if any, of the Death
Benefit over the current Account Value as of the date on which the death claim
is approved by LNL for payment will be credited into the Contract. This benefit
will only apply one time for each Contract.
<PAGE>
If the Owner is a corporation or other non-individual (non-natural person) and
there are Joint Annuitants, upon the death of the first Joint Annuitant to die,
if the Owner continues the Contract, the excess of, if any, of the Death Benefit
over the current Account Value as of the date on which the death claim is
approved by LNL for payment will be credited into the Contract. This benefit
will only apply one time for each Contract.
Payment of Amounts.
The Death Benefit payable on the death of the Owner, or after the death of the
first Joint Owner, or upon the death of the spouse who continues the Contract,
will be distributed to the designated Beneficiary(s) as follows:
a. the Death Benefit must be completely distributed within five years of the
Owner's date of death; or
b. the designated Beneficiary may elect, within the one year period after the
Owner's date of death, to receive the Death Benefit in substantially equal
installments over the life of such designated Beneficiary or over a period
not extending beyond the life expectancy of such designated Beneficiary;
provided that such distributions begin not later than one year after the
Owner's date of death.
The Death Benefit payable upon the death of the Annuitant, if elected by the
Owner or Joint Owner within 75 days of the death of the Annuitant, will be
distributed to the Owner or Joint Owners in either the form of a lump sum or
under an Annuity Payment Option. An Annuity Payment Option must be selected
within 60 days after LNL approves the death claim. This payment may be postponed
as permitted by the Investment Company Act of 1940.
If a lump sum settlement is elected, the proceeds will be mailed within seven
days of approval by LNL of the claim.
5.02 DEATH ON OR AFTER THE ANNUITY COMMENCEMENT DATE
If the Owner or a Joint Owner dies on or after the Annuity Commencement Date,
any remaining benefits payable will continue to be distributed under the Annuity
Payment Option then in effect. The rights of ownership granted by the Contract
will pass to the Joint Owner, if any, otherwise to the Beneficiary. If there is
no named Beneficiary at the time of the Owner's or last surviving Joint Owner's
death, then the rights of ownership will pass to the Annuitant, if still living;
otherwise to the Joint Annuitant, if applicable. If no named Beneficiary,
Annuitant, or Joint Annuitant survives the Owner, any remaining benefits payable
will continue to the Owner's estate.
On receipt of due proof of death, as described in Section 6.01, of the Annuitant
or both Joint Annuitants, any remaining benefits payable under the Annuity
Payment Option will be paid to the Owner or Joint Owner, if living; otherwise,
to the Beneficiary. If there is no Beneficiary, any remaining benefits payable
will continue to the Annuitant's estate.
ARTICLE 6
ANNUITY PAYMENT OPTION
6.01 ANNUITY BENEFIT PAYMENTS
An election to receive payments under an Annuity Payment Option must be made by
the Maturity Date. If an Annuity Payment Option is not chosen prior to the
Maturity Date, payments will commence to the Owner on the Maturity Date under
the Annuity Payment Option providing a Life Annuity with annuity benefit
payments guaranteed for 10 years. The Maturity Date is set forth on the
Contract Data Page. Upon written request by the Owner and any Beneficiary who
cannot be changed, the Maturity Date may be deferred. Purchase Payments may be
made until the new Maturity Date.
If the Maturity Date is extended, LNL reserves the right to restrict the
availability of certain Annuity Payment Options.
6.02 CHOICE OF ANNUITY PAYMENT OPTION
By Owner
Prior to the Annuity Commencement Date, the Owner may choose or change any
Annuity Payment Option. In addition, the Owner may select an Annuity Payment
Option as the distribution method for payment of the Death Benefit to a
Beneficiary. Such selection of a distribution method must be made in writing to
the Home Office and approved by LNL. The Owner may change or revoke, in writing
to the Home Office, any such selection, unless such selection was made
irrevocable.
<PAGE>
By Beneficiary
If an Annuity Payment Option had not been previously selected by the Owner as
the distribution option for the payment of Death Benefit to the Beneficiary,
then at the time proceeds are payable to a Beneficiary, a Beneficiary may choose
any Annuity Payment Option that meets the requirements of Code Section 72(s) or
401(a)(9). The Beneficiary then becomes the Annuitant.
A choice or change must be in writing to LNL.
After the Annuity Commencement Date, the Annuity Payment Option may not be
changed.
6.03 ANNUITY PAYMENT OPTIONS
a. Life Annuity / Life Annuity with Certain Period -- Fixed and/or variable
annuity benefit payments will be made for the lifetime of the Annuitant
with no Certain Period, or life and a 10 year Certain Period, or life and a
20 year Certain Period.
b. Unit Refund Life Annuity -- Variable annuity benefit payments will be made
for the lifetime of the Annuitant with the guarantee that upon death, if:
1) the number of Annuity Units initially purchased (determined by dividing
the total dollar amount applied to purchase this option by the Annuity
Unit value on the Annuity Commencement Date) is greater than;
2) the number of Annuity Units paid as part of 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
(1) minus (2) will be made.
The refund payment value will be determined using the Annuity Unit value on
the Valuation Date on which the death claim is approved by LNL for payment
after LNL is in receipt of:
(a) proof of death acceptable to LNL;
(b) written authorization for payment; and
(c) all claim forms, full completed.
c. Cash Refund Life Annuity -- Fixed annuity benefit payments will be made for
the lifetime of the Annuitant with the guarantee that upon death, if:
1) the total dollar amount applied to purchase this option is greater
than;
2) the fixed annuity benefit payment multiplied by the number of annuity
benefit payments paid prior to death;
then a refund payment equal to the dollar amount of (1) minus (2) will be
made.
The refund payment will be approved and paid by LNL after LNL is in
(a) proof of death acceptable to LNL;
(b) written authorization for payment; and
(c) all claim forms, fully completed.
d. Joint Life Annuity / Joint Life Annuity with Certain Period -- Fixed and/or
variable annuity benefit payments will be made during the joint life of the
Annuitant and a Joint Annuitant. Payments will be made for joint life with
no Certain Period, or joint life and a 10-year Certain Period, or joint
life and a 20-year Certain Period. Upon the death of either Annuitant,
annuity benefit payments continue for the life of the surviving Annuitant.
<PAGE>
e. Joint Life and Two-Thirds to Survivor Annuity / Joint Life and Two-Thirds
to Survivor Annuity with Certain Period - Fixed and/or variable annuity
benefit payments will be made during the joint life of the Annuitant and a
Joint Annuitant. Upon the death of either Annuitant, two-thirds of the
annuity benefit payment due while both Annuitants were alive will continue
for the life of the surviving Annuitant. Payments will be made for joint
life with no Certain Period, or joint life and a 10-year Certain Period, or
joint life and a 20-year Certain Period.
f. Other options may be available as agreed upon in writing by LNL.
At the time an Annuity Payment Option is selected under the provisions of this
Contract, the Owner may elect to have the total Account Value applied to provide
a variable annuity benefit payment, a fixed annuity benefit payment, or a
combination fixed and variable annuity benefit payment. If no election is made,
the full Account Value shall be used to provide a variable annuity benefit
payment. A fixed annuity benefit payment will be provided by the general account
of LNL.
6.04 DETERMINATION OF THE AMOUNT OF THE FIRST ANNUITY PAYMENT
The amount of annuity benefit payment will depend on the age and sex (except in
cases where unisex rates are required) of the Annuitant(s) as of the Annuity
Commencement Date. A choice may be made to receive payments once each month,
four times each year, twice each year, or once each year.
Article 9 of this Contract illustrates the minimum payment amounts and the age
adjustments which will be used to determine the first monthly payment for a
unisex variable annuity benefit payment based upon the Assumed Interest Rate
selected by the Owner. The tables show the dollar amount of the first monthly
payment which can be purchased with each $1,000 of Account Value, after
deduction of any applicable premium taxes. Amounts shown use the 1983 'a'
Individual Annuity Mortality Table, modified, with an assumed interest rate of
3.0%, 4.0%, 5.0% and 6.0% per year. The Owner must select one of the Assumed
Interest Rates for the variable annuity benefit payment prior to the Annuity
Commencement Date. The Assumed Interest Rate may not be changed after the
annuity commencement date.
Article 10 of this Contract illustrates the minimum payment amounts and the age
adjustments which will be used to determine the monthly payments for a fixed
annuity benefit payment. The tables show the dollar amount of the guaranteed
monthly payments which can be purchased with each $1,000 of Contract Value,
after deduction of any applicable premium taxes. Amounts shown use the 1983 'a'
Individual Annuity Mortality Table, modified, with an interest rate of 3.0% per
year.
For a 100% fixed annuity benefit payment, the Annuity Payment Date must be at
least 30 days after the Annuity Commencement Date. If any portion of the annuity
benefit payment will be on a variable basis, the Annuity Payment Date will be 14
days after the Annuity Commencement Date. The Annuity Unit value, if applicable,
and Contract Value used to effect annuity benefit payments will be determined as
of the Annuity Commencement Date.
6.05 DETERMINATION OF THE AMOUNT OF VARIABLE ANNUITY PAYMENTS AFTER THE FIRST
PAYMENT
The first variable annuity benefit payment is sub-divided into components, each
of which represents the product of:
a. the percentage elected by the Contract Owner of a specific Variable Sub-
account the performance of which will determine future variable annuity
benefit payments, and
b. the entire first variable annuity benefit payment.
Each variable annuity benefit payment after the first payment attributable to a
specific Variable Sub-account will be determined by multiplying the Annuity Unit
value for the Variable Sub-account for the date each payment is due by a
constant number of Annuity Units. This constant number of each specific Variable
Sub-account is determined by dividing the component of the first payment
attributable to such Variable Sub-account as described above by the Annuity Unit
value for that Variable Sub-account on the Annuity Commencement Date. The total
variable annuity benefit payment will be the sum of the payments attributable to
each Variable Sub-account.
The Annuity Unit value for any Valuation Period for any Variable Sub-account is
determined by multiplying the Annuity Unit value for the immediately preceding
Valuation Period by the product of (a) the daily factor raised to a power equal
to the number of days in the current Valuation Period and (b) the Accumulation
Unit value of the same Variable Sub-account for this Valuation Period divided by
the Accumulation Unit value of the same Variable Sub-account for the immediately
preceding Valuation Period. The daily factor is equal to 0.999919020 for a 3%
Assumed Interest Rate, 0.999892552 for a 4% Assumed Interest Rate, 0.999866337
for a 5% Assumed Interest Rate, and 0.999840372 for a 6% Assumed Interest Rate.
<PAGE>
The valuation of all assets in the Variable Sub-account shall be determined in
accordance with the provisions of applicable laws, rules, and regulations. The
method of determination by LNL of the value of an Accumulation Unit and of any
Annuity Unit will be conclusive upon the Owner and any Beneficiary.
LNL guarantees that the dollar amount of each installment after the first shall
not be affected by variations in mortality experience from mortality assumptions
on which the first installment is based. After the Annuity Commencement Date the
Owner may direct a transfer of assets from one Variable Sub-account to another
Variable Sub-account or to a fixed annuity benefit payment. Such transfers will
be limited to three (3) times per Contract Year. Assets may not be transferred
from a fixed annuity benefit payment to a variable annuity benefit payment.
A transfer from one Variable Sub-account to another Variable Sub-account will
result in the purchase of Annuity Units in one Variable Sub-account and the
redemption of Annuity Units in the other Variable Sub-account. Such a transfer
will be accomplished at relative Annuity Unit values as of the Valuation Date
the transfer request is received. The valuation of Annuity Units is described
above.
6.06 PROOF OF AGE
Payment will be subject to proof of age that LNL will accept, such as a
certified copy of a birth certificate.
6.07 MINIMUM ANNUITY BENEFIT PAYMENT REQUIREMENTS
If the Annuity Payment Option chosen results in payments of less than $50 from
any Variable Sub-account and/or a fixed annuity benefit payment of less than
$50, the frequency will be changed so that payments will be at least $50.
6.08 EVIDENCE OF SURVIVAL
LNL has the right to ask for proof that the person (or persons) on whose life
(or lives) the payment is based is alive when each payment is due.
6.09 CHANGE IN ANNUITY PAYMENT OPTION
The Annuity Payment Option may not be changed after the Annuity Commencement
Date.
ARTICLE 7
BENEFICIARY
7.01 DESIGNATION OF BENEFICIARY
The Owner may designate a Beneficiary(s) and a contingent Beneficiary(s).
If there is a single Owner, the designated Beneficiary(s) will receive the Death
Benefit proceeds upon the death of the Owner unless the Beneficiary as the
surviving spouse elects to continue the Contract.
If there are Joint Owners, upon the death of the first Joint Owner, the
surviving Joint Owner will receive the Death Benefit proceeds. The surviving
Joint Owner will be treated as the primary designated Beneficiary. Any other
Beneficiary designation on record at the time of death will be treated as a
contingent Beneficiary.
If the surviving spouse of the deceased continues the Contract as the sole
Owner, then the designated Beneficiary(s) move up, in the order of their
original designation, to replace the spouse as original Beneficiary, unless the
Beneficiary designation is subsequently changed by the surviving spouse as the
new Owner (see Section 7.02).
If the Annuitant dies and a Death Benefit is paid, the Owner (and Joint Owner if
applicable) will be treated as the primary designated Beneficiary(s). Any other
Beneficiary designation on record at the time of death will be treated as a
contingent Beneficiary.
Unless otherwise stated in the Beneficiary designation, if there is more than
one Beneficiary they are presumed to share equally.
7.02 CHANGE OF BENEFICIARY
<PAGE>
The Owner may change any Beneficiary unless otherwise provided in the previous
designation. A change of Beneficiary will revoke any previous designation. A
change may be made by filing a written request, in a form acceptable to LNL, at
its Home Office. The change will become effective upon receipt of the written
request by LNL at its Home Office.
LNL reserves the right to request the Contract for endorsement of the change.
7.03 DEATH OF BENEFICIARY
Unless otherwise provided in the Beneficiary designation, if any Beneficiary
dies before the Owner, that Beneficiary's interest will go to any other
Beneficiaries named, according to their respective interest. If there are no
Beneficiaries, the Beneficiary's interest will pass to a contingent
Beneficiary(s), if any. Prior to the Annuity Commencement Date, if no
Beneficiary or contingent Beneficiary survives the Owner, the Death Benefits
will be paid to the Owner's estate.
Unless otherwise provided in the Beneficiary designation, once a Beneficiary is
receiving Death Benefits or annuity benefit payments under an Annuity Payment
Option, the Beneficiary may name his or her own Beneficiary(s) to receive any
remaining benefits due under the Contract, should the original Beneficiary die
prior to receipt of all benefits. If no Beneficiary is named or the named
Beneficiary predeceases the original Beneficiary, any remaining benefits will
continue to the original Beneficiary's estate. A Beneficiary designation must be
made in writing to the LNL Home Office in a form acceptable to LNL.
ARTICLE 8
GENERAL PROVISIONS
8.01 THE CONTRACT
The Contract and any riders attached constitute the entire Contract. Only the
President, a Vice President, the Secretary or an Assistant Secretary of LNL has
the power, on behalf of LNL, to change, modify, or waive any provisions of this
Contract.
LNL reserves the right to unilaterally change the Contract for the purpose of
keeping the Contract in compliance with federal or state law.
Any changes, modifications, or waivers must be in writing. No representative or
person other than the above named officers has authority to change or modify
this Contract or waive any of its provisions. All terms used in this Contract
will have their usual and customary meaning except when specifically defined.
8.02 OWNERSHIP
The Owner is the person who has the ability to exercise the rights within this
Contract.
The Owner may name a Joint Owner. Joint Owner(s) shall be treated as having
equal, undivided interests in the contract, including rights of survivorship.
Either Joint Owner, independently of the other, may exercise any ownership
rights in the Contract.
8.03 ANNUITANTS
Prior to the Annuity Commencement Date.
If the Owner is a natural person, the Owner has the right to change the
Annuitant at any time by notifying LNL in writing of the change. A change in the
Annuitant will terminate the Death Benefit as described in Section 6.01, unless
such change is as the result of the death of the Annuitant. The new Annuitant
must be under the age of 90 as of the effective date of the change. For such
Contracts, the Owner may name a Contingent Annuitant by notifying LNL in
writing.
If the Owner is a corporation or other non-individual (non-natural person), the
Owner may name one Annuitant or two Joint Annuitants. A Contingent Annuitant may
be named by notifying LNL in writing.
On or After the Annuity Commencement Date.
The Annuitant or Joint Annuitants may not be changed. Any Contingent Annuitant
designation is no longer applicable and is terminated.
<PAGE>
8.04 ASSIGNMENTS
If this Contract is used with a Qualified Plan, the Contract will not be
transferable unless allowed under applicable law. In addition, if this Contract
is used with either a Qualified or Non-Qualified Plan, it may not be sold,
discounted or pledged as collateral for a loan or as security for the
performance of an obligation or for any other purpose.
8.05 INCONTESTABILITY
This Contract will not be contested by LNL.
8.06 MISSTATEMENT OF AGE AND/OR SEX
If the age and/or sex of the Annuitant(s) has been misstated, the benefits
available under this Contract will be those which the Purchase Payments would
have purchased using the correct age and/or sex. Any underpayment already made
by LNL shall be made up immediately and any overpayments already made by LNL
shall be charged against the annuity benefit payments falling due after the
correction is made.
8.07 NONPARTICIPATING
The Contract is nonparticipating and will not share in the surplus earnings of
LNL.
8.08 VOTING RIGHTS
The Owner shall have a right to vote only at the meetings of the Funds of the
Variable Account invested in by the Owner due to the Owner's interest in the
Variable Sub-accounts of the Variable Account. Ownership of this Contract shall
not entitle any person to vote at any meeting of shareholders of LNL. Votes
attributable to the Contract shall be cast in conformity with applicable law.
8.09 OWNERSHIP OF THE ASSETS
LNL shall have exclusive and absolute ownership and control of its assets,
including all assets in the Variable Account.
8.10 REPORTS
Prior to the Annuity Commencement Date, at least once each Contract Year LNL
shall mail a report to the Owner. The report shall be mailed to the last address
known to LNL. The report shall include a statement of the number of Accumulation
Units credited to the Variable Account under this Contract and the dollar value
of such units. The information in the report shall be as of a date not more than
two months prior to the date of mailing the report. LNL shall also mail to the
Owner at least once in each Contract Year a report of the investments held in
the Variable Sub-accounts under this Contract.
8.11 PREMIUM TAX
State and local government premium tax, if applicable, will be deducted from
Purchase Payments or Account Value when incurred by LNL or at another time of
LNL's choosing.
8.12 MAXIMUM ISSUE AGE
The Owner (or both Joint Owners, if applicable) and the Annuitant (or both Joint
Annuitants, if applicable) must be under the age of 90 when this Contract is
issued.
<PAGE>
ARTICLE 9
ANNUITY PURCHASE RATES UNDER A VARIABLE PAYMENT OPTION
9.01 A VARIABLE PAYMENT OPTION WITH A 3.0% ASSUMED INTEREST RATE
<TABLE>
<CAPTION>
- --------------------------------------------------------------
DOLLAR AMOUNT OF FIRST MONTHLY PAYMENT WHICH IS
PURCHASED WITH EACH $1000 APPLIED
- --------------------------------------------------------------
SINGLE LIFE ANNUITIES
- --------------------------------------------------------------
<S> <C> <C> <C> <C>
No 120 240
Period Months Months Unit
Age Certain Certain Certain Refund
- --------------------------------------------------------------
60 $4.33 $4.29 $4.13 $4.10
61 $4.43 $4.38 $4.20 $4.17
62 $4.53 $4.47 $4.27 $4.24
63 $4.64 $4.57 $4.34 $4.32
64 $4.75 $4.68 $4.40 $4.40
65 $4.87 $4.79 $4.47 $4.48
66 $5.00 $4.90 $4.55 $4.57
67 $5.15 $5.03 $4.61 $4.67
68 $5.30 $5.16 $4.68 $4.77
69 $5.46 $5.30 $4.75 $4.87
70 $5.64 $5.44 $4.81 $4.98
71 $5.83 $5.60 $4.88 $5.10
72 $6.03 $5.76 $4.93 $5.22
73 $6.25 $5.93 $4.99 $5.35
74 $6.50 $6.10 $5.04 $5.48
75 $6.76 $6.29 $5.08 $5.62
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------
JOINT AND SURVIVOR ANNUITIES
- --------------------------------------------------------------
Joint and Full to Survivor Joint and Two-Thirds Survivor
- --------------------------------------------------------------
Certain Period Certain Period
- --------------------------------------------------------------
None 120 240 Joint Age None 120 240
- --------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$3.85 $3.84 $3.81 60 $4.25 $4.20 $4.05
$3.92 $3.92 $3.88 61 $4.34 $4.29 $4.12
$4.00 $3.99 $3.95 62 $4.44 $4.38 $4.18
$4.08 $4.07 $4.02 63 $4.54 $4.48 $4.25
$4.17 $4.16 $4.09 64 $4.66 $4.58 $4.32
$4.26 $4.25 $4.16 65 $4.78 $4.69 $4.38
$4.36 $4.35 $4.24 66 $4.90 $4.80 $4.45
$4.47 $4.45 $4.32 67 $5.04 $4.92 $4.52
$4.58 $4.57 $4.39 68 $5.19 $5.05 $4.58
$4.70 $4.68 $4.47 69 $5.34 $5.18 $4.65
$4.83 $4.81 $4.55 70 $5.51 $5.32 $4.71
$4.97 $4.94 $4.62 71 $5.69 $5.47 $4.77
$5.12 $5.08 $4.69 72 $5.89 $5.62 $4.83
$5.28 $5.23 $4.76 73 $6.09 $5.78 $4.88
$5.46 $5.39 $4.83 74 $6.32 $5.95 $4.93
$5.65 $5.56 $4.88 75 $6.56 $6.12 $4.97
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Age Adjustment Table
<S> <C> <C> <C>
Year of Birth Adjustment to Age Year of Birth Adjustment to Age
Before 1920 + 2 1960-1969 - 3
1920-1929 + 1 1970-1979 - 4
1930-1939 0 1980-1989 - 5
1940-1949 - 1 1990-1999 - 6
1950-1959 - 2 ETC. ETC.
</TABLE>
<PAGE>
9.02 A VARIABLE PAYMENT OPTION WITH A 4.0% ASSUMED INTEREST RATE
<TABLE>
<CAPTION>
- --------------------------------------------------------------
DOLLAR AMOUNT OF FIRST MONTHLY PAYMENT WHICH IS
PURCHASED WITH EACH $1000 APPLIED
- --------------------------------------------------------------
SINGLE LIFE ANNUITIES
- --------------------------------------------------------------
No 120 240
Period Months Months Unit
Age Certain Certain Certain Refund
- --------------------------------------------------------------
<S> <C> <C> <C> <C>
60 $4.88 $4.83 $4.66 $4.67
61 $4.97 $4.92 $4.72 $4.74
62 $5.07 $5.01 $4.79 $4.82
63 $5.18 $5.11 $4.85 $4.90
64 $5.30 $5.21 $4.92 $4.99
65 $5.42 $5.32 $4.99 $5.08
66 $5.55 $5.43 $5.05 $5.17
67 $5.69 $5.55 $5.12 $5.27
68 $5.84 $5.68 $5.18 $5.38
69 $6.00 $5.82 $5.25 $5.49
70 $6.18 $5.96 $5.31 $5.61
71 $6.37 $6.11 $5.37 $5.73
72 $6.57 $6.27 $5.42 $5.86
73 $6.80 $6.44 $5.47 $6.00
74 $7.04 $6.61 $5.52 $6.14
75 $7.30 $6.79 $5.56 $6.29
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------
JOINT AND SURVIVOR ANNUITIES
- --------------------------------------------------------------
Joint and Full to Survivor Joint and Two-Thirds Survivor
- --------------------------------------------------------------
Certain Period Certain Period
- --------------------------------------------------------------
None 120 240 Joint Age None 120 240
- --------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$4.37 $4.37 $4.34 60 $4.78 $4.74 $4.57
$4.44 $4.44 $4.40 61 $4.88 $4.82 $4.63
$4.52 $4.51 $4.46 62 $4.97 $4.91 $4.69
$4.60 $4.59 $4.53 63 $5.08 $5.00 $4.76
$4.68 $4.68 $4.60 64 $5.19 $5.10 $4.82
$4.77 $4.77 $4.67 65 $5.31 $5.21 $4.88
$4.87 $4.86 $4.74 66 $5.44 $5.32 $4.95
$4.98 $4.96 $4.82 67 $5.57 $5.44 $5.01
$5.09 $5.07 $4.89 68 $5.72 $5.56 $5.08
$5.21 $5.19 $4.96 69 $5.87 $5.69 $5.14
$5.34 $5.31 $5.04 70 $6.04 $5.83 $5.20
$5.47 $5.44 $5.11 71 $6.22 $5.97 $5.25
$5.62 $5.58 $5.18 72 $6.42 $6.12 $5.31
$5.78 $5.73 $5.24 73 $6.62 $6.28 $5.36
$5.96 $5.88 $5.30 74 $6.85 $6.44 $5.40
$6.14 $6.05 $5.36 75 $7.09 $6.61 $5.44
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Age Adjustment Table
<S> <C> <C> <C>
Year of Birth Adjustment to Age Year of Birth Adjustment to Age
Before 1920 + 2 1960-1969 - 3
1920-1929 + 1 1970-1979 - 4
1930-1939 0 1980-1989 - 5
1940-1949 - 1 1990-1999 - 6
1950-1959 - 2 ETC. ETC.
</TABLE>
<PAGE>
9.03 A VARIABLE PAYMENT OPTION WITH A 5.0% ASSUMED INTEREST RATE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
DOLLAR AMOUNT OF FIRST MONTHLY PAYMENT WHICH IS
PURCHASED WITH EACH $1000 APPLIED
- --------------------------------------------------------------------------
SINGLE LIFE ANNUITIES
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
No 120 240
Period Months Months Unit
Age Certain Certain Certain Refund
- --------------------------------------------------------------------------
60 $5.45 $5.39 $5.21 $5.26
61 $5.55 $5.48 $5.27 $5.33
62 $5.64 $5.57 $5.33 $5.41
63 $5.75 $5.66 $5.39 $5.49
64 $5.86 $5.76 $5.46 $5.58
65 $5.98 $5.87 $5.52 $5.67
66 $6.11 $5.98 $5.58 $5.77
67 $6.25 $6.10 $5.64 $5.87
68 $6.40 $6.22 $5.70 $5.98
69 $6.56 $6.35 $5.76 $6.10
70 $6.73 $6.49 $5.82 $6.22
71 $6.92 $6.64 $5.88 $6.35
72 $7.13 $6.80 $5.93 $6.48
73 $7.35 $6.96 $5.98 $6.62
74 $7.60 $7.13 $6.02 $6.77
75 $7.86 $7.30 $6.06 $6.93
- --------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
JOINT AND SURVIVOR ANNUITIES
- --------------------------------------------------------------------------
Joint and Full to Survivor Joint and Two-Thirds Survivor
- --------------------------------------------------------------------------
Certain Period Certain Period
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
None 120 240 Joint Age None 120 240
- --------------------------------------------------------------------------
$4.92 $4.92 $4.89 60 $5.35 $5.29 $5.11
$4.99 $4.99 $4.94 61 $5.43 $5.37 $5.17
$5.06 $5.06 $5.01 62 $5.53 $5.46 $5.22
$5.14 $5.13 $5.07 63 $5.63 $5.55 $5.28
$5.22 $5.21 $5.13 64 $5.74 $5.65 $5.34
$5.31 $5.30 $5.20 65 $5.86 $5.75 $5.40
$5.40 $5.39 $5.27 66 $5.99 $5.86 $5.47
$5.51 $5.49 $5.34 67 $6.12 $5.97 $5.53
$5.61 $5.60 $5.41 68 $6.26 $6.09 $5.58
$5.73 $5.71 $5.48 69 $6.42 $6.22 $5.64
$5.86 $5.83 $5.55 70 $6.59 $6.35 $5.70
$5.99 $5.96 $5.61 71 $6.77 $6.49 $5.75
$6.14 $6.09 $5.68 72 $6.96 $6.64 $5.80
$6.30 $6.24 $5.74 73 $7.17 $6.79 $5.85
$6.47 $6.39 $5.80 74 $7.39 $6.95 $5.89
$6.65 $6.55 $5.85 75 $7.63 $7.11 $5.93
- --------------------------------------------------------------------------
</TABLE>
Age Adjustment Table
<TABLE>
<CAPTION>
Year of Birth Adjustment to Age Year of Birth Adjustment to Age
<S> <C> <C> <C>
Before 1920 + 2 1960-1969 - 3
1920-1929 + 1 1970-1979 - 4
1930-1939 0 1980-1989 - 5
1940-1949 - 1 1990-1999 - 6
1950-1959 - 2 ETC. ETC.
</TABLE>
<PAGE>
9.04 A VARIABLE PAYMENT OPTION WITH A 6.0% ASSUMED INTEREST RATE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
DOLLAR AMOUNT OF FIRST MONTHLY PAYMENT WHICH IS
PURCHASED WITH EACH $1000 APPLIED
- --------------------------------------------------------------------------
SINGLE LIFE ANNUITIES
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
No 120 240
Period Months Months Unit
Age Certain Certain Certain Refund
- --------------------------------------------------------------------------
60 $6.05 $5.98 $5.78 $5.86
61 $6.13 $6.06 $5.84 $5.93
62 $6.23 $6.14 $5.90 $6.01
63 $6.33 $6.23 $5.95 $6.10
64 $6.44 $6.33 $6.01 $6.18
65 $6.56 $6.43 $6.07 $6.28
66 $6.69 $6.54 $6.13 $6.37
67 $6.82 $6.65 $6.19 $6.48
68 $6.97 $6.78 $6.24 $6.59
69 $7.13 $6.90 $6.30 $6.70
70 $7.30 $7.04 $6.35 $6.83
71 $7.49 $7.18 $6.40 $6.96
72 $7.70 $7.33 $6.45 $7.10
73 $7.92 $7.49 $6.50 $7.24
74 $8.16 $7.65 $6.54 $7.40
75 $8.43 $7.82 $6.58 $7.56
- --------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
JOINT AND SURVIVOR ANNUITIES
- --------------------------------------------------------------------------
Joint and Full to Survivor Joint and Two-Thirds Survivor
- --------------------------------------------------------------------------
Certain Period Certain Period
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
None 120 240 Joint Age None 120 240
- --------------------------------------------------------------------------
$5.50 $5.49 $5.46 60 $5.92 $5.86 $5.67
$5.56 $5.56 $5.51 61 $6.01 $5.94 $5.72
$5.63 $5.62 $5.57 62 $6.10 $6.02 $5.78
$5.70 $5.69 $5.63 63 $6.20 $6.11 $5.83
$5.78 $5.77 $5.69 64 $6.31 $6.20 $5.89
$5.86 $5.85 $5.75 65 $6.43 $6.30 $5.94
$5.95 $5.94 $5.81 66 $6.55 $6.41 $6.00
$6.05 $6.04 $5.88 67 $6.68 $6.52 $6.06
$6.16 $6.14 $5.94 68 $6.83 $6.63 $6.11
$6.27 $6.25 $6.01 69 $6.98 $6.76 $6.17
$6.40 $6.36 $6.07 70 $7.15 $6.89 $6.22
$6.53 $6.49 $6.14 71 $7.32 $7.02 $6.27
$6.67 $6.62 $6.20 72 $7.51 $7.16 $6.32
$6.83 $6.76 $6.26 73 $7.72 $7.31 $6.36
$7.00 $6.91 $6.31 74 $7.94 $7.47 $6.40
$7.18 $7.06 $6.36 75 $8.18 $7.63 $6.44
- --------------------------------------------------------------------------
</TABLE>
Age Adjustment Table
<TABLE>
<CAPTION>
Year of Birth Adjustment to Age Year of Birth Adjustment to Age
<S> <C> <C> <C>
Before 1920 + 2 1960-1969 - 3
1920-1929 + 1 1970-1979 - 4
1930-1939 0 1980-1989 - 5
1940-1949 - 1 1990-1999 - 6
1950-1959 - 2 ETC. ETC.
</TABLE>
<PAGE>
ARTICLE 10
ANNUITY PURCHASE RATES UNDER A FIXED PAYMENT OPTION
<TABLE>
<CAPTION>
- -----------------------------------------------
DOLLAR AMOUNT OF FIRST MONTHLY PAYMENT WHICH IS
PURCHASED WITH EACH $1000 APPLIED
- -----------------------------------------------
SINGLE LIFE ANNUITIES
- -----------------------------------------------
<S> <C> <C> <C> <C>
No 120 240
Period Months Months Unit
Age Certain Certain Certain Refund
- -----------------------------------------------
60 $4.42 $4.38 $4.22 $4.18
61 4.52 4.47 4.29 4.26
62 4.62 4.56 4.36 4.34
63 4.73 4.66 4.43 4.42
64 4.85 4.77 4.50 4.51
65 4.97 4.89 4.57 4.60
66 5.11 5.01 4.64 4.69
67 5.25 5.13 4.71 4.79
68 5.41 5.27 4.78 4.90
69 5.57 5.41 4.85 5.01
70 5.75 5.56 4.91 5.13
71 5.95 5.71 4.98 5.25
72 6.16 5.88 5.04 5.38
73 6.38 6.05 5.09 5.52
74 6.63 6.23 5.14 5.66
75 6.90 6.42 5.19 5.81
- -----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
JOINT AND SURVIVOR ANNUITIES
- ----------------------------------------------------------------------------
Joint and Full to Survivor Joint and Two-Thirds Survivor
- ----------------------------------------------------------------------------
Certain Period Certain Period
- ----------------------------------------------------------------------------
None 120 240 Joint Age None 120 240
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$4.01 $4.01 $3.98 60 $4.43 $4.38 $4.22
4.09 4.08 4.05 61 4.52 4.47 4.29
4.17 4.16 4.12 62 4.63 4.57 4.36
4.25 4.25 4.19 63 4.74 4.67 4.43
4.34 4.34 4.26 64 4.85 4.78 4.50
4.44 4.43 4.34 65 4.98 4.89 4.57
4.54 4.54 4.42 66 5.11 5.01 4.64
4.66 4.64 4.50 67 5.26 5.13 4.71
4.77 4.76 4.58 68 5.41 5.27 4.78
4.90 4.88 4.66 69 5.57 5.41 4.85
5.04 5.01 4.74 70 5.75 5.55 4.91
5.18 5.15 4.82 71 5.94 5.70 4.98
5.34 5.30 4.89 72 6.14 5.86 5.03
5.51 5.45 4.96 73 6.35 6.03 5.09
5.69 5.62 5.03 74 6.59 6.20 5.14
5.89 5.79 5.09 75 6.84 6.38 5.18
- ----------------------------------------------------------------------------
</TABLE>
Age Adjustment Table
<TABLE>
<CAPTION>
Year of Birth Adjustment to Age Year of Birth Adjustment to Age
<S> <C> <C> <C>
Before 1920 + 2 1960-1969 - 3
1920-1929 + 1 1970-1979 - 4
1930-1939 0 1980-1989 - 5
1940-1949 - 1 1990-1999 - 6
1950-1959 - 2 ETC. ETC.
</TABLE>
<PAGE>
ANNUITY
CONTRACT
Flexible Premium Deferred
Variable Annuity
With Benefit Payment Options
Nonparticipating
If you have any questions concerning
this Contract, please
contact your Lincoln National Life
representative or the Home Office of LNL.
THE LINCOLN NATIONAL
LIFE INSURANCE COMPANY
1300 South Clinton Street
P.O. Box 7866
Fort Wayne, Indiana 46802
888-868-2583
<PAGE>
---------------------------
SEI Variable Annuity Application The Lincoln National Life
Investments Insurance Comapny
VARIABLE ANNUITY Fort Wayne, Indiana
---------------------------
- --------------------------------------------------------------------------------
Instructions: Please type or print. ANY ALTERATIONS TO THIS APPLICATION MUST BE
INITIALED BY THE CONTRACT OWNER.
- --------------------------------------------------------------------------------
1a Contract Owner
- --------------------------------------------------------------------------------
_____________________________________________________
Full legal name or trust name*
_____________________________________________________
Contract owner e-mail address (if applicable)
_____________________________________________________
Street Address
_____________________________________________________
City State ZIP
_____________________________________________________
Trustee name*
Social Security number/TIN [_][_][_]-[_][_]-[_][_][_][_]
Date of birth [_][_] [_][_] [_][_] [_] Male [_] Female
Month Day Year
Home telephone number [_][_][_] [_][_][_]-[_][_][_][_]
Date of trust* [_][_] [_][_] [_][_] Is trust revocable?*
Month Day Year [_] Yes [_] No
Note: Maximum age of Contract Owner is 90.
*This information is required for trusts.
- --------------------------------------------------------------------------------
1b Joint Contract Owner
- --------------------------------------------------------------------------------
_____________________________________________________
Full legal name
Social Security number [_][_][_]-[_][_]-[_][_][_][_]
Date of birth [_][_] [_][_] [_][_] [_] Male [_] Female
Month Day Year [_] Spouse [_] Non-Spouse
Note: Maximum age of Joint Contract Owner is 90.
- --------------------------------------------------------------------------------
2a Annuitant (if no Annuitant is specified the Contract Owner or Joint Owner if
younger will be the Annuitant)
- --------------------------------------------------------------------------------
_____________________________________________________
Full legal name
_____________________________________________________
Street address
_____________________________________________________
City State ZIP
Social Security number [_][_][_]-[_][_]-[_][_][_][_]
Date of birth [_][_] [_][_] [_][_] [_] Male [_] Female
Month Day Year
Home telephone number [_][_][_] [_][_][_]-[_][_][_][_]
Note: Maximum age of Annuitant is 90.
- --------------------------------------------------------------------------------
2b Contingent Annuitant
- --------------------------------------------------------------------------------
_____________________________________________________
Full legal name
Social Security number [_][_][_]-[_][_]-[_][_][_][_]
Note: Maximum age of Contingent Annuitant is 90.
- --------------------------------------------------------------------------------
3 Beneficiary(ies) Of Contract Owner (List additional beneficiaries on separate
sheet. If listing children use full legal names)
- --------------------------------------------------------------------------------
_____________________________________________________
Primary: Full legal name or trust name*
%
_________________________________ ________________ ________
Relationship to Contract Owner SSN/TIN
_____________________________________________________
Primary: Full legal name
%
_________________________________ ________________ ________
Relationship to Contract Owner SSN/TIN
_____________________________________________________
Contingent: Full legal name or trust name
%
_________________________________ ________________ ________
Relationship to Contract Owner SSN/TIN
_____________________________________________________
Executor/Trustee name*
Date of trust* [_][_] [_][_] [_][_] Is trust revocable?*
Month Day Year [_] Yes [_] No
*This information is required for trusts.
To specify an annuity payment option for your beneficiary, please complete the
Beneficiary Payment Options form (29953SEI).
- --------------------------------------------------------------------------------
4 Type of SEI Variable Annuity Contract
- --------------------------------------------------------------------------------
Nonqualified: [_] Initial Contribution OR [_] 1035 Exchange
Tax-Qualified (must complete plan type):
[_] Initial Contribution, Tax Year_______ OR [_] Transfer OR [_] Rollover
Plan Type (check one): [_] Roth IRA [_] Traditional IRA
Form 30269 1/00 Page 1 [Copyright information (SEI will provide]
<PAGE>
- --------------------------------------------------------------------------------
5 Allocation (This section must be completed.)
- --------------------------------------------------------------------------------
Initial minimums: Nonqualified/403(b) $25,000 Qualified $25,000
If no allocations are specified, the entire amount will be allocated to the
Money Market Fund pending instructions from the Contract Owner.
Please allocate my contribution of: $ __________________________
Initial contribution
OR $ ________________________________________
Approximate amount from previous carrier
- --------------------------------------------------------------------------------
SELECT ONE OF THE FOLLOWING PORTFOLIOS
- --------------------------------------------------------------------------------
[_] Institutional Moderate Growth & Income
[_] Global Moderate Growth & Income
[_] Moderate Growth & Income
[_] Institutional Growth & Income
[_] Global Growth & Income
[_] Growth & Income
[_] Institutional Capital Growth
[_] Global Capital Growth
[_] Capital Growth
[_] Institutional Equity
[_] Global Equity
[_] Equity
- --------------------------------------------------------------------------------
All contributions will be allocated to the funds in the percentages determined
by the portfolio manager.
Portfolio Rebalancing occurs each quarter according to the portfolios then
current percentages.
- --------------------------------------------------------------------------------
OR
- --------------------------------------------------------------------------------
SELECT YOUR OWN ALLOCATION
- --------------------------------------------------------------------------------
Use whole percentages
% Large Cap Growth
_________
% Large Cap Value
_________
% Small Cap Growth
_________
% Small Cap Value
_________
% International Equity
_________
% Emerging Markets
_________
% Emerging Markets Debt
_________
% Core Fixed Income
_________
% High Yield
_________
% International Fixed
_________
% Money Market
_________
% Total (must = 100%)
_________
- --------------------------------------------------------------------------------
Future contributions will follow the allocation above, unless DCA is selected.
To elect DCA, complete form 28065SEI.
To elect Portfolio Rebalancing or Cross-Reinvestment, complete the appropriate
form (available from your financial advisor).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6 Automatic Withdrawals
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[_] Please provide me with automatic withdrawals totaling _____% of the total
contract value or $_________________ payable as follows:
(minimum of $50)
[_] Monthly [_] Quarterly [_] Semiannually [_] Annually
Begin withdrawals in [_][_] [_][_]
Month Year
- --------------------------------------------------------------------------------
ELECT ONE: [_] Do withhold taxes [_] Do not withhold taxes
ELECT ONE: [_] Send check to address of record OR
[_] Send check to the following alternate address:
_______________________________________
_______________________________________
_______________________________________
Note: If no tax withholding selection is made, taxes will be withheld.
For direct deposit into your bank account, an electronic fund transfer form must
be completed and submitted with a voided check.
- --------------------------------------------------------------------------------
7 Death Benefit Option
- --------------------------------------------------------------------------------
If a death benefit is not selected, the default will be: Maximum of (account
value, return of premium).
ELECT ONE: [_] Account Value [_] Return of Premium [_] Annual Step Up
[_] 5% Step Up
Page 2
<PAGE>
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8 Automatic Bank Draft
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________________________________________________________________________________
Print account holder name(s) EXACTLY as shown on bank records
____________________________________________________________ ATTACH VOIDED CHECK
Bank name ABA number
________________________________________________________________________________
Bank street address City State ZIP
Automatic bank draft start date: [_][_] [_][_] [_][_]
Month Day (1-26) Year
____________________________ $_____________________________
Checking account number Monthly amount ($100 minimum)
I/We hereby request and authorize you to pay and charge to my/our account checks
or electronic fund transfer debits processed by and payable to the order of
Lincoln Life, P.O. Box [0000], Fort Wayne, IN 46801-[0000], provided there are
sufficient collected funds in said account to pay the same upon presentation. It
will not be necessary for any officer or employee of Lincoln Life to sign such
checks. I/We agree that your rights in respect to each such check shall be the
same as if it were a check drawn on you and signed personally by me/us. This
authority is to remain in effect until revoked by me/us, and until you actually
receive such notice I/we agree that you shall be fully protected in honoring any
such check or electronic fund transfer debit. I/We further agree that if any
such check or electronic fund transfer debit be dishonored, whether with or
without cause and whether intentionally or inadvertently, you shall be under no
liability whatsoever even though such dishonor results in the forfeiture of
insurance or investment loss to me/us.
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9 Telephone/Internet Authorization (Check box if this option is desired)
- --------------------------------------------------------------------------------
[_] I/We hereby authorize and direct Lincoln Life to accept instructions via
telephone or Internet from any person who can furnish proper identification to
exchange units from subaccount to subaccount, change the allocation of future
investments, and/or clarify any unclear or missing administrative information
contained on this application at the time of issue. I/We agree to hold harmless
and indemnify Lincoln Life and their affiliates and any mutual fund managed by
such affiliates and their directors, trustees, officers, employees and agents
for any losses arising from such instructions.
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10 Replacement Will the proposed contract replace any existing annuity XXXXXXX
- --------------------------------------------------------------------------------
ELECT ONE: [_] No [_] Yes If yes, complete the 1035 Exchange or Qualified
Retirement Account Transfer form.
(Attach a replacement form if required by the state in which the application is
signed.)
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Company name
- --------------------------------------------------------------------------------
Plan name Year issued
================================================================================
Fraud Warning Residents of all states except Virginia and Washington, please
note:
Any person who knowingly, and with intent to defraud any insurance company or
other person, files or submits an application or statement of claim containing
any materially false or deceptive information, or conceals, for the purpose of
misleading, information concerning any fact material thereto, commits a
fraudulent insurance act, which is a crime and subjects such person to criminal
and civil penalties.
- --------------------------------------------------------------------------------
11 Signatures
- --------------------------------------------------------------------------------
All statements made in this application are true to the best of my/our knowledge
and belief, and I/we agree to all terms and conditions as shown. I/We
acknowledge receipt of current prospectuses for [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]
and verify my/our understanding that all payments and values provided by the
contract, when based on investment experience of the funds in the Series, are
variable and not guaranteed as to dollar amount. Under penalty of perjury, the
Contract Owner(s) certifies that the Social Security (or taxpayer
identification) number(s) is correct as it appears in this application.
- --------------------------------------------------------------------------------
Signed at (city) State
- ----------------------------------- -------------------------------------------
Signature of Contract Owner Joint Contract Owner (if applicable)
Date [_][_] [_][_] [_][_]
Month Day Year
- --------------------------------------------------------------------------------
Signed at (city) State
Date [_][_] [_][_] [_][_]
Month Day Year
- --------------------------------------------------------------------------------
Signature of Annuitant (Annuitant must sign if Contract Owner is a trust or
custodian.)
================================================================================
FINANCIAL ADVISER MUST COMPLETE REVERSE SIDE (PAGE 4)
================================================================================
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<PAGE>
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THE FOLLOWING SECTIONS MUST BE COMPLETED BY THE FINANCIAL ADVISER OR SECURITIES
DEALER. Please type or print.
- --------------------------------------------------------------------------------
12 Insurance In Force. Will the proposed contract replace any existing annuity
or life insurance contract?
- --------------------------------------------------------------------------------
ELECT ONE: [_] No [_] Yes If yes, please list the insurance in force on the
life of the proposed Contract Owner(s) and
Annuitant(s):
$
- --------------------------------------------------------------------------------
Company name Year issued Amount
- --------------------------------------------------------------------------------
13 Additional Remarks
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
14 Dealer Information
- --------------------------------------------------------------------------------
Note: Licensing appointment with Lincoln Life is required for this application
to be processed. If more than one representative, please indicate names
and percentages in Section 12.
[_] No Load
[_] C-Share
_______________________________________________ [_][_][_] [_][_][_]-[_][_][_][_]
Registered representative's name (print as it Registered representative's
appears on NASD licensing) telephone number
_______________________________________________ [_][_][_]-[_][_]-[_][_][_][_]
Client account number at dealer (if applicable) Registered representative's SSN
________________________________________________________________________________
Dealer's name
________________________________________________________________________________
Branch address City State ZIP
[_] CHECK IF BROKER CHANGE OF ADDRESS
- --------------------------------------------------------------------------------
15 Representative's Signature
- --------------------------------------------------------------------------------
The representative hereby certifies that he/she witnessed the signature(s) in
section 10 and that all information contained in this application is true to the
best of his/her knowledge and belief.
________________________________________________________________________________
Signature
================================================================================
Send completed application -- with a check made payable to Lincoln Life -- to
your investment dealer's home office or to:
SEI
Investments
VARIABLE ANNUITY
Lincoln Life
P.O. Box [0000]
Fort Wayne, IN 46801-[0000]
By Express Mail: Lincoln Life
Attention: SEI Operations
1300 South Clinton Street
Fort Wayne, IN 46802
If you have any questions regarding this application, call Lincoln Life at
[800 000-0000.]
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