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LOAN ENDORSEMENT
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This Endorsement is attached to and made a part of this Contract as of the
Contract Date, or if later, the date shown below. Terms not defined in this
Endorsement have the meaning given to them in the Contract.
GENERAL
Prior to the date annuity payments are to begin, Security Benefit Life Insurance
Company ("SBL") shall lend an amount applied for by the Owner subject to the
limitations, interest rates and repayment procedures set forth herein and in the
loan agreement between SBL and the Owner. Any loan applied for must be for a
minimum of $1,000. Only two loans per calendar year are permitted, and SBL may
limit to one the number of loans outstanding at any time. All loans must be
repaid before annuity payments may begin. Except for loans that qualify under
the Internal Revenue Code of 1986, as amended (the "Code"), for a longer
repayment period, as determined by SBL, all loans must be repaid within five
years of approval. All loan repayments must be scheduled to be made in equal
amounts on the same day of each month or quarter. For monthly repayments, the
first scheduled repayment shall be not less than 30 days following the date of
approval of the loan application by SBL. For quarterly repayments, the first
scheduled repayment shall be not less than 90 days following the date of
approval of the loan application by SBL. Before a loan is made, the Owner must
submit a written loan application and agreement to SBL. SBL may postpone final
approval or disapproval of a loan for up to six months after the application for
the loan is received.
TAX CONSEQUENCES
SBL makes no representations or guarantees as to the tax consequences of a loan
to the Owner. The Owner should consult his or her tax counsel for specific
advice.
MAXIMUM LOAN AMOUNT
The maximum amount of all loans on all contracts combined is generally equal to
the lesser of:
(1) $50,000 reduced by the excess of:
(a) the highest outstanding loan balance within the preceding 12-month
period ending on the day before the date the loan is made; over
(b) the outstanding loan balance on the date the loan is made; or
(2) 50% of your Contract Value or $10,000, whichever is greater.
For loans issued under plans that are subject to ERISA, the maximum loan amount
is the lesser of:
(1) $50,000 reduced by the excess of:
(a) the highest outstanding loan balance within the preceding 12-month
period ending on the day before the date the loan is made; over
(b) the outstanding loan balance on the date the loan is made; or
(2) 50% of your Contract Value.
For any loan that refinances and replaces an existing loan and does not extend
the final payment date of the loan being replaced, the outstanding balance of
the loan being replaced will not be considered in determining the maximum loan
amount for the replacement loan. In any case, the maximum loan balance
outstanding at any time may not exceed 80% of Contract Value.
LOAN ACCOUNT AND INTEREST EARNED THEREON
When a loan is approved, SBL will transfer an amount equal to the loan amount to
the Loan Account. The Loan Account is an account within the Fixed
Account/General Account. Amounts allocated to the Loan Account earn interest at
the minimum Guaranteed Rate.
LOAN INTEREST RATE
The Owner must pay interest on the outstanding loan balance. Interest shall
accrue on the loan balance from the effective date of any loan. The loan
interest rate shall be as declared from time to time by SBL. If a loan payment
is not made when due, interest will continue to accrue.
LOAN PAYMENTS
Each loan payment must be labeled as such. If not labeled as a loan payment,
amounts received by SBL will be treated as Purchase Payments. Each loan payment
will reduce the Loan Account by the amount the payment reduces the outstanding
loan balance. Amounts that are no longer needed in the Loan Account will be
transferred to the Accounts in accordance with current allocation instructions
for Purchase Payments. The Owner may repay the loan in full at any time, in
which event the Loan Account will be reduced to $0.
FAILURE TO MAKE LOAN PAYMENTS
If any required loan payment is not made by the end of the calendar quarter
following the calendar quarter in which the missed payment was due, the TOTAL
OUTSTANDING LOAN BALANCE will be deemed to be in default. The total outstanding
loan balance, which includes accrued interest, will be reported to the Internal
Revenue Service ("IRS") on form 1099-R for the year in which the default
occurred. Once a loan has defaulted, regularly scheduled loan payments will not
be accepted by SBL. The principal plus accrued interest may, however, be paid in
full at any time. Notwithstanding any other provision of the Contract or this
Endorsement to the contrary, no new loans will be allowed when there is a loan
in default.
Interest will continue to accrue on a loan in default. Contract Value equal to
the amount of the accrued interest will be transferred to the Loan Account. If a
loan continues to be in default, when you attain age 59 1/2, the total
outstanding loan balance, which includes accrued interest, will be deducted from
your Contract Value. The Contract will terminate automatically if the
outstanding loan balance of a loan in default equals or exceeds the Withdrawal
Value. Contract Value will be used to repay the loan and any applicable
withdrawal charges.
WITHDRAWALS, DEATH BENEFITS AND CERTAIN RIDERS
If the Contract is surrendered or a death benefit becomes payable, the amount
otherwise payable to the Owner will be reduced by the amount of the outstanding
loan balance. In addition, no partial withdrawal request will be permitted which
would result in the withdrawal of Contract Value from the Loan Account. If a
Guaranteed Growth Death Benefit Rider or Guaranteed Minimum Income Benefit Rider
is in effect, amounts allocated to the Loan Account will earn the minimum
Guaranteed Rate for the purpose of calculating the benefit under any such Rider.
Until the loan is repaid, SBL reserves the right to restrict any transfer of the
Contract which would otherwise qualify as a transfer permitted in the Code.
SECURITY BENEFIT LIFE INSURANCE COMPANY
ROGER K. VIOLA
Roger K. Viola
Secretary
Endorsement Date
(If Other Than Contract Date)
V6066 (10-00)
