<PAGE>
As filed with the Securities and Exchange Commission on April 23, 1998
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
Amendment No. 26
(Check appropriate box or boxes.)
LINCOLN NATIONAL VARIABLE ANNUITY ACCOUNT C (e-Annuity)
-------------------------------------------
(Exact Name of Registrant)
LINCOLN NATIONAL LIFE INSURANCE COMPANY
-------------------------------------------
(Name of Depositor)
1300 South Clinton Street
Fort Wayne, Indiana 46802
-------------------------------------------
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code: (219)455-2000
Jack D. Hunter, Esq.
200 East Berry Street
Fort Wayne, Indiana 46802
Telephone No. (219)455-2000
-------------------------------------------
(Name and Address of Agent for Service)
Copies of all communications to Porter, Wright, Morris & Arthur
1667 K Street NW, Suite 1100
Washington, D.C. 20006
Attention: Patrice M. Pitts, Esq.
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), may determine.
<PAGE>
ACCOUNT C
CROSS REFERENCE SHEET TO ITEMS REQUIRED BY FORM N-4
N-4 ITEM CAPTION IN PROSPECTUS (PART A)
- -------- ------------------------------
1. Cover Page
2. Special Terms
3.(a) Expense Table
(b) Not Applicable
(c) Not Applicable
(d) For Your Information
4.(a) Condensed Financial Information
(b) Condensed Financial Information
(c) Financial Statements
5.(a) Cover Page; Lincoln National Life
Insurance Company
(b) Cover Page; Variable Annuity Account;
Investments of the Variable Annuity
Account
(c) Investments of the Variable Account
(d) Cover Page
(e) Voting Rights
(f) Not Applicable
6.(a) For Your Information; Charges and
Other Deductions
(b) Charges and Other Deductions
(c) Charges and Other Deductions
(d) Charges and Other Deductions
(e) Charges and Other Deductions
(f) Charges and Other Deductions
7.(a) The Contracts; Investments of the Variable
Account; Annuity Payments; Voting Rights;
Return Privilege
(b) Investments of the Variable Account;
The Contracts; Cover Page
(c) The Contracts
(d) The Contracts
<PAGE>
CROSS REFERENCE SHEET TO ITEMS REQUIRED BY FORM N-4
N-4 ITEM CAPTION IN PROSPECTUS (PART A)
- -------- ------------------------------
1. Cover Page
8. (a) Annuity Payments
(b) Annuity Payments
(c) Annuity Payments
(d) Annuity Payments
(e) Cover Page; Annuity Payments
(f) The Contracts; Annuity Payments
9. (a) The Contracts; Annuity Payments
(b) The Contracts; Annuity Payments
10.(a) The Contracts; Cover Page; Charges
and Other Deductions
(b) The Contracts; Investments of the
Variable Account
(c) The Contracts
(d) Distribution of the Contracts
11.(a) The Contracts
(b) Restrictions Under the Texas
Optional Retirement Program
(c) The Contracts
(d) The Contracts
(e) Return Privilege
12.(a) Federal Tax Status
(b) Cover Page; Federal Tax Status
(c) Federal Tax Status
13.
14. Table of Contents to the Statement
of Additional Information (SAI)
for Lincoln National Variable
Annuity Account C
<PAGE>
CROSS REFERENCE SHEET TO ITEMS REQUIRED BY FORM N-4
CAPTION IN STATEMENT OF ADDITIONAL
----------------------------------
N-4 ITEM INFORMATION (PART B)
- -------- --------------------
15. Cover Page for Part B
16. Cover Page for Part B
17.(a) Not Applicable
(b) Not Applicable
(c) General Information and History
of Lincoln National Life
Insurance Co. (Lincoln Life)
18.(a) Not Applicable
(b) Not Applicable
(c) Services
(d) Not Applicable
(e) Not Applicable
(f) Services
19.(a) Purchase of Securities Being
Offered
(b) Not Applicable
20.(a) Underwriters
(b) Underwriters
(c) Underwriters
(d) Underwriters
21. Calculation of Performance Data
22. Annuity Payouts
23.(a) Financial Statements -- Lincoln
National Variable Annuity
Account C
(b) Consolidated Financial Statements --
Lincoln National Life
Insurance Co. (Lincoln Life)
<PAGE>
LINCOLN NATIONAL VARIABLE ANNUITY ACCOUNT C
INDIVIDUAL VARIABLE ANNUITY CONTRACT
ISSUED BY:
Lincoln National Life Insurance Co.
1300 South Clinton Street
Fort Wayne, Ind. 46802
This Prospectus describes an individual flexible premium deferred variable
annuity contract (CONTRACT or VARIABLE ANNUITY CONTRACT) issued by The Lincoln
National Life Insurance Company (LINCOLN LIFE). Most transactions involving this
CONTRACT may be performed through Lincoln Life's Internet Service Center.
The CONTRACT described in this prospectus is offered for both traditional and
Roth individual retirement annuities (IRAs) and as a nonqualified CONTRACT. A
nonqualified CONTRACT can be owned jointly only by spouses and is purchased with
after-tax money.
The CONTRACT offers you the accumulation of CONTRACT VALUE and payment of
periodic annuity benefits. These benefits are paid on a variable basis. Annuity
benefits start at the ANNUITY COMMENCEMENT DATE which you select. If the
CONTRACTOWNER dies before the ANNUITY COMMENCEMENT DATE, the CONTRACT VALUE will
be paid to the BENEFICIARY. (See DEATH BENEFIT BEFORE ANNUITY COMMENCEMENT
DATE.)
The minimum initial PURCHASE PAYMENT for the CONTRACT is $1,000. The minimum
payment to the CONTRACT, after the initial PURCHASE PAYMENT, is $100 per
payment. LINCOLN LIFE reserves the right to limit the sum of PURCHASE PAYMENTS
made under this CONTRACT to $5,000,000.
All PURCHASE PAYMENTS will be placed in Lincoln National Variable Annuity
Account C (VARIABLE ANNUITY ACCOUNT [VAA]). The VAA is a segregated investment
account of LINCOLN LIFE, which is the depositor. Based upon your instructions,
the VAA invests PURCHASE PAYMENTS (at net asset value) in specified mutual funds
(the FUND or FUNDS and SERIES). Both the value of a contract before the ANNUITY
COMMENCEMENT DATE and the amount of payouts afterward will depend upon the
investment performance of THE FUND(S) or SERIES selected. Investments in these
FUNDS are neither insured nor guaranteed by the U.S. Government or by any other
person or entity.
This prospectus details the information regarding the VAA that you should know
before investing. You should read it carefully and it will remain available
through Lincoln Life's Internet Service Center. We have also attached a current
prospectus of the following FUNDS: Lincoln National Aggressive Growth Fund,
Inc., Lincoln National Bond Fund, Inc., Lincoln National Capital Appreciation
Fund, Inc., Lincoln National Equity-Income Fund, Inc., Lincoln National Global
Asset Allocation Fund, Inc., Lincoln National Growth and Income Fund, Inc.,
Lincoln National International Fund, Inc., Lincoln National Managed Fund, Inc.,
Lincoln National Money Market Fund, Inc., Lincoln National Social Awareness
Fund, Inc. and Lincoln National Special Opportunities Fund, Inc. and a current
prospectus for the Delaware Group Premium Fund, Inc. which contains information
regarding the Decatur Total Return Series, Global Bond Series and the Trend
Series. You should read each of these prospectuses carefully before purchasing a
CONTRACT and they will remain available through Lincoln Life's Internet Service
Center.
A STATEMENT OF ADDITIONAL INFORMATION (SAI), dated , 1998,
concerning the VAA has been filed with the SEC and is incorporated by this
reference into this prospectus. A table of contents for the SAI appears on the
last page of this prospectus. You may download a free copy of the SAI from our
Internet Service Center (http://www.AnnuityNet.com) The SAI is also available
through the SEC website (HTTP://WWW.SEC.GOV). In addition, the material
incorporated by reference and other information regarding registrants who file
electronically with the SEC is available through the SEC website.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION (SEC) NOR HAS THE SEC PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is .
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
- ----------------------------------------------------------
SPECIAL TERMS 3
- ----------------------------------------------------------
EXPENSE TABLES 5
Contractowner transaction expenses: 5
VAA annual expenses for [Annuity]
subaccounts: 5
Annual expenses of the funds and series for
the year ended 1997 5
Examples 6
- ----------------------------------------------------------
SYNOPSIS 7
- ----------------------------------------------------------
CONDENSED FINANCIAL INFORMATION 9
- ----------------------------------------------------------
INVESTMENT RESULTS 9
- ----------------------------------------------------------
FINANCIAL STATEMENTS 9
- ----------------------------------------------------------
LINCOLN NATIONAL LIFE INSURANCE CO. 9
- ----------------------------------------------------------
VARIABLE ANNUITY ACCOUNT (VAA) 9
- ----------------------------------------------------------
INVESTMENTS OF THE VARIABLE ANNUITY ACCOUNT 9
Investment advisor 9
Funds/Series 10
Funds 10
Series 11
Investment objectives, policies and
restrictions 11
Reinvestment 11
Addition, deletion or substitution of
investments 11
- ----------------------------------------------------------
CHARGES AND OTHER DEDUCTIONS 12
Deductions from the VAA for [Annuity] 12
Surrender charge 12
Deductions for premium taxes 12
Other charges and deductions 12
Additional information 12
- ----------------------------------------------------------
THE CONTRACTS 13
Purchase of contracts 13
Who can invest 13
Purchase payments 13
<CAPTION>
PAGE
- ----------------------------------------------------------
<S> <C>
Valuation date 13
Allocation of purchase payments 13
Valuation of accumulation units 13
Transfers between subaccounts on or before
the annuity commencement date 14
Transfers after the annuity commencement date 14
Death benefit before the annuity commencement
date 14
Joint ownership 15
Death of annuitant 15
Surrenders and withdrawals 15
Amendment of contract 15
Ownership 15
Contractowner questions 15
- ----------------------------------------------------------
ANNUITY PAYOUTS 15
Annuity options 15
General information 16
Variable annuity payouts 16
- ----------------------------------------------------------
FEDERAL TAX STATUS 16
Taxation of nonqualified contracts 17
Taxation of IRAs 17
Multiple contracts 17
Investor control 17
Withholding 18
- ----------------------------------------------------------
VOTING RIGHTS 18
- ----------------------------------------------------------
DISTRIBUTION OF THE CONTRACTS 18
- ----------------------------------------------------------
RETURN PRIVILEGE 18
- ----------------------------------------------------------
STATE REGULATION 18
- ----------------------------------------------------------
RECORDS AND REPORTS 18
- ----------------------------------------------------------
OTHER INFORMATION 19
- ----------------------------------------------------------
ADVERTISEMENTS/SALES LITERATURE 19
- ----------------------------------------------------------
PREPARING FOR THE YEAR 2000 19
- ----------------------------------------------------------
LEGAL PROCEEDINGS 20
- ----------------------------------------------------------
</TABLE>
2
<PAGE>
SPECIAL TERMS
ACCOUNT OR VARIABLE ANNUITY ACCOUNT (VAA) -- The segregated investment account,
Account C, into which LINCOLN LIFE sets aside and invests the assets for the
contract offered in this Prospectus.
ACCUMULATION UNIT -- A measure used to calculate CONTRACT VALUE before the
ANNUITY COMMENCEMENT DATE. See THE CONTRACTS.
ADVISOR OR INVESTMENT ADVISOR -- Lincoln Investment Management, Inc. (LINCOLN
LIFE), which provides investment management services to each of the FUNDS. See
INVESTMENT ADVISOR.
ANNUITANT -- The person upon whose life the ANNUITY benefit payments made after
the ANNUITY COMMENCEMENT DATE will be based.
ANNUITY COMMENCEMENT DATE -- The VALUATION DATE when the FUNDS are withdrawn or
converted into ANNUITY UNITS for payment of ANNUITY BENEFITS under the ANNUITY
PAYOUT OPTION selected. For purposes of determining whether an event occurs
before or after the ANNUITY COMMENCEMENT DATE, the ANNUITY COMMENCEMENT DATE is
deemed to begin at close of business on the VALUATION DATE.
ANNUITY PAYOUT OPTION -- An optional form of payout of the annuity available
under the CONTRACT. See ANNUITY PAYOUTS.
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 will be paid on a variable basis.
ANNUITY UNIT -- A measure used to calculate the amount of annuity payouts after
the ANNUITY COMMENCEMENT DATE. See ANNUITY PAYOUTS.
BENEFICIARY -- The person whom you designate to receive the DEATH BENEFIT, if
any, in case of the CONTRACTOWNER'S death.
CASH SURRENDER VALUE -- Upon SURRENDER, the CONTRACT VALUE less any applicable
charges, fees and taxes.
CODE -- The Internal Revenue Code of 1986, as amended.
CONTRACT (VARIABLE ANNUITY CONTRACT) -- The agreement between you and us
providing a variable annuity.
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 also the ANNUITANT.
CONTRACT VALUE -- At a given time, the total value of all ACCUMULATION UNITS for
a CONTRACT.
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 the owner's designated BENEFICIARY if the
owner dies before the ANNUITY COMMENCEMENT DATE. See THE CONTRACTS.
DELAWARE MANAGEMENT -- Delaware Management Company, Inc., an indirect subsidiary
of LINCOLN LIFE and the INVESTMENT ADVISOR for the SERIES.
FUND -- Any of the eleven individual Lincoln National underlying investment
options in which your PURCHASE PAYMENTS are invested.
HOME OFFICE -- The headquarters of Lincoln National Life Insurance Co., located
at 1300 South Clinton Street, Fort Wayne, Indiana 46802.
INTERNET SERVICE CENTER -- The Internet site that LINCOLN LIFE maintains to
provide variable annuity contract documents and information to current and
prospective annuity CONTRACTOWNERS and through which various transactions may be
performed. Certain of these transactions may require faxed or mailed signatures.
LINCOLN INVESTMENT -- Lincoln Investment Management, Inc.
LINCOLN LIFE (WE, US, OUR) -- Lincoln National Life Insurance Co.
PURCHASE PAYMENTS -- Amounts paid into the CONTRACT.
SERIES -- Any of the three underlying portfolios of the Delaware Group Premium
Fund, Inc., in which your PURCHASE PAYMENTS are invested.
STATEMENT OF ADDITIONAL INFORMATION (SAI) -- A document required by the SEC to
be provided upon request to a prospective purchaser of a CONTRACT, you. This
free document gives more information about LINCOLN LIFE, the VAA and the
CONTRACT.
SUBACCOUNT -- That portion of the VAA that reflects investments in Accumulation
and ANNUITY UNITS of a class of a particular FUND or SERIES. A SUBACCOUNT
corresponds to each FUND or SERIES.
3
<PAGE>
SURRENDER -- A CONTRACT right that allows you to terminate your CONTRACT and
receive your CASH SURRENDER VALUE. See THE CONTRACTS.
SURRENDER CHARGE -- Also known as a contingent deferred sales charge, this
charge may be assessed upon premature WITHDRAWALS or SURRENDER of the CONTRACT.
See CHARGES AND OTHER DEDUCTIONS.
VALUATION DATE -- Each day the New York Stock Exchange (NYSE) is open for
trading.
VALUATION PERIOD -- The period commencing at the close of trading (currently
4:00 p.m. EST) on each day that the NYSE is open for trading (i.e., the
VALUATION DATE) and ending at the close of such trading on the next succeeding
VALUATION DATE.
WITHDRAWAL -- A CONTRACT right that allows you to obtain a portion of your CASH
SURRENDER VALUE.
4
<PAGE>
EXPENSE TABLES
CONTRACTOWNER TRANSACTION EXPENSES:
The SURRENDER CHARGE percentage is reduced to zero after three years. The
SURRENDER CHARGE percentage applied to SURRENDER or WITHDRAWAL amounts follows
the following schedule:
<TABLE>
<CAPTION>
CONTRACT TYPE CONTRACT YEAR
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------
1 2 3 4 or more
Surrender Charge 3% 2% 1% 0%
- ---------------------------------------------------------------------
</TABLE>
(Note: This charge may be waived in certain cases. See CHARGES AND OTHER
DEDUCTIONS.)
VAA ANNUAL EXPENSES FOR [ANNUITY] SUBACCOUNTS:
(as a percentage of average account value for each SUBACCOUNT):
<TABLE>
<S> <C>
ANNUITY ASSET CHARGE: 0.55%
</TABLE>
ANNUAL EXPENSES OF THE FUNDS and SERIES for the year ended 1997
(as a percentage of each FUND'S and SERIES' average net assets):
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL
FEES + EXPENSES = EXPENSES
<C><S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
1. Aggressive Growth (AG) 0.73% 0.08% 0.81%
- --------------------------------------------------------------------------------------------
2. Bond (B) 0.46 0.07 0.53
- --------------------------------------------------------------------------------------------
3. Capital Appreciation (CA) 0.75 0.09 0.84
- --------------------------------------------------------------------------------------------
4. Equity-Income (EI) 0.75 0.07 0.82
- --------------------------------------------------------------------------------------------
5. Global Asset Allocation (GAA) 0.72 0.17 0.89
- --------------------------------------------------------------------------------------------
6. Growth and Income (GI) 0.32 0.03 0.35
- --------------------------------------------------------------------------------------------
7. International (I) 0.79 0.14 0.93
- --------------------------------------------------------------------------------------------
8. Managed (M) 0.37 0.05 0.42
- --------------------------------------------------------------------------------------------
9. Money Market (MM) 0.48 0.11 0.59
- --------------------------------------------------------------------------------------------
10. Social Awareness (SA) 0.36 0.05 0.41
- --------------------------------------------------------------------------------------------
11. Special Opportunities (SO) 0.37 0.05 0.42
- --------------------------------------------------------------------------------------------
12. Trend Series (TS)* 0.67* 0.13 0.80
- --------------------------------------------------------------------------------------------
13. Decatur Total Return Series(DTRS)* 0.60* 0.11 0.71
- --------------------------------------------------------------------------------------------
14. Global Bond Series (DGBS)* 0.47* 0.33 0.80
- --------------------------------------------------------------------------------------------
</TABLE>
*The Investment Advisors for these SERIES currently voluntarily waive management
fees to the extent necessary to maintain the SERIES total expense ratio at a
maximum of .80%. The management fees and total expenses, absent the waiver,
would have been .75% and .88% for TS and .75% and 1.08% for GBS. Should they
cease to waive those amounts in the future, these management fee percentages and
total expenses may be higher in future years.
5
<PAGE>
EXAMPLES
(reflecting expenses of the VAA, the FUNDS and SERIES):
If you SURRENDER your CONTRACT at the end of the applicable time period, you
would pay the following expenses on a $1,000 investment, assuming a 5% annual
return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
- ----------------------------------------------
<C> <S> <C> <C>
1. AG 45 54
- ----------------------------------------------
2. B 42 46
- ----------------------------------------------
3. CA 45 55
- ----------------------------------------------
4. EI 45 54
- ----------------------------------------------
5. GAA 46 57
- ----------------------------------------------
6. GI 40 40
- ----------------------------------------------
7. I 46 58
- ----------------------------------------------
8. M 41 42
- ----------------------------------------------
9. MM 43 47
- ----------------------------------------------
10. SA 41 42
- ----------------------------------------------
11. SO 41 42
- ----------------------------------------------
12. TS 45 54
- ----------------------------------------------
13. DTRS 44 51
- ----------------------------------------------
14. GBS 45 54
- ----------------------------------------------
</TABLE>
If you do not Surrender your CONTRACT, or if you annuitize, you would pay the
following expenses on a $1,000 investment, assuming a 5% annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
- -----------------------------------------------
<C> <S> <C> <C>
1. AG 14 43
- -----------------------------------------------
2. B 11 34
- -----------------------------------------------
3. CA 14 44
- -----------------------------------------------
4. EI 14 43
- -----------------------------------------------
5. GAA 15 46
- -----------------------------------------------
6. GI 9 29
- -----------------------------------------------
7. I 15 47
- -----------------------------------------------
8. M 10 31
- -----------------------------------------------
9. MM 12 36
- -----------------------------------------------
10. SA 10 31
- -----------------------------------------------
11. SO 10 31
- -----------------------------------------------
12 TS 14 43
- -----------------------------------------------
13. DTRS 13 40
- -----------------------------------------------
14. GBS 14 43
- -----------------------------------------------
</TABLE>
This table is provided to assist you in understanding the various costs and
expenses that you will bear directly or indirectly. The table reflects expenses
of the VAA, the 11 FUNDS and the three SERIES for the year ended December 31,
1997, although the expenses have been restated to reflect the current fees for
CAPITAL APPRECIATION and EQUITY-INCOME. For more complete descriptions of the
various costs and expenses involved, see CHARGES AND OTHER DEDUCTIONS in this
prospectus, and MANAGEMENT OF THE FUNDS in the Appendix to the FUNDS'
prospectuses and the prospectus for Delaware Group Premium Fund, Inc. In
addition, premium taxes may be applicable, although they do not appear in the
table. Also, we reserve the right to impose a charge on transfers between
SUBACCOUNTS, although we do not currently do so. THE EXAMPLES SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE
MORE OR LESS THAN THOSE SHOWN. This table is unaudited.
6
<PAGE>
SYNOPSIS
WHAT TYPE OF CONTRACT AM I BUYING? It is an individual variable annuity contract
issued by Lincoln Life. See THE CONTRACT.
WHAT IS THE VARIABLE ANNUITY ACCOUNT (VAA)? It is a segregated asset account
established under Indiana insurance law, and registered with the SEC as a unit
investment trust. The assets of the VAA are allocated to one or more
Subaccounts, according to your investment choice. Those 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? Through its various Subaccounts, the VAA uses
your Purchase Payments to purchase shares, at your direction, in one or more of
eleven Funds managed by Lincoln Investment or the three Series managed by
Delaware Management. In turn, each Fund or Series holds a portfolio of
securities consistent with its own particular investment policy. See INVESTMENTS
OF THE VARIABLE ANNUITY ACCOUNT.
HOW DOES THE CONTRACT WORK? During the accumulation period, while you are paying
in, your Purchase Payments will buy Accumulation Units under the Contract.
Should you decide to annuitize (that is, change your Contract to a payout mode
rather than an accumulation mode), your Accumulation Units will be converted to
Annuity Units. Your periodic Annuity Payout will be based upon the number of
Annuity Units to which you became entitled at the time you decided to annuitize
and the value of each unit on the Valuation Date. See THE CONTRACTS.
WHAT CAN I DO THROUGH THE INTERNET SERVICE CENTER? Almost every transaction can
be accomplished through the Internet Service Center. Only in very rare cases
will transactions bypass the Internet Service Center. Documents can be received,
accounts can be monitored, funds moved from one Subaccount to another, addresses
changed, Beneficiaries changed, funds withdrawn from the Contract, etc. As
technology matures the ease with which transactions can be performed through the
Internet Service Center will improve. For security reasons you may be issued a
PIN or password. Also, for legal reasons, certain transactions, such as change
of Beneficiary or Withdrawal of funds from the Contract, will require the
Contractowner to print or write a document, sign it, and mail or fax it to us.
WHAT CHARGES ARE ASSOCIATED WITH THIS CONTRACT? Should you decide to withdraw
Contract Value before your initial Purchase Payment has been in your Contract
for a period of three years, you will incur a Surrender Charge of anywhere from
1% to 3% of Contract Value. (Note: This charge is not assessed upon either, (1)
a Surrender of this Contract as a result of the death of the Contractowner, or
in the case of joint Contractowners, the death of one of the Contractowners, or
(2) election of an Annuity Payout Option available within this Contract.
If your state assesses a premium tax with respect to your Contract, then at the
time the tax is incurred (or at such other time as we may choose), we will
deduct those amounts from Purchase Payments or Contract Value, as applicable.
We assess annual charges in the aggregate amount of .55% against the daily net
asset value of the VAA, including that portion of the account attributable to
your Purchase Payments. This charge is the annuity asset charge. For a complete
discussion of the charges associated with the Contract, see CHARGES AND OTHER
DEDUCTIONS.
The VAA pays a fee to its Investment Advisor, based upon the average daily net
asset value of each Fund or Series. In addition, there are other expenses
associated with the daily operation of the Funds and Series. See the EXPENSE
TABLES. These fees and expenses are more fully described in the prospectus for
the Funds and Series.
HOW MUCH MUST I PAY, AND HOW OFTEN? Subject to the minimum payments and maximum
total stated on the first page of the Prospectus, the amount and frequency of
your payments are completely flexible. See THE CONTRACT--PURCHASE PAYMENTS.
HOW WILL MY ANNUITY PAYOUTS BE CALCULATED? If you decide to annuitize, you elect
an Annuity Payout Option. Once you have done so, your periodic payout will be
based upon a number of factors. The changing values of the funds in which you
have invested will be one factor. See Annuity payouts. REMEMBER THAT
PARTICIPANTS IN THE VAA BENEFIT FROM ANY GAIN, AND TAKE A RISK OF ANY DROP, IN
THE VALUE OF THE SECURITIES IN THE FUNDS' OR SERIES' PORTFOLIOS.
WHAT HAPPENS IF I DIE BEFORE I ANNUITIZE? The Beneficiary whom you designate
will receive the then current value of the Contract. Your Beneficiary will have
certain options for how the money is to be paid out. SEE DEATH BENEFIT BEFORE
THE ANNUITY COMMENCEMENT DATE.
7
<PAGE>
MAY I TRANSFER CONTRACT VALUE BETWEEN FUNDS OR SERIES? Yes. Transfers are
allowed before the Annuity Commencement Date. Transfers are limited to three
times annually after the Annuity Commencement Date. See THE CONTRACTS --
TRANSFERS BETWEEN SUBACCOUNTS 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. See SURRENDERS AND WITHDRAWALS.
If you Surrender the Contract or make a Withdrawal, certain charges may be
assessed, as discussed above and under Charges and other deductions. In
addition, the Internal Revenue Service (IRS) may assess a 10% premature
withdrawal penalty tax. A Surrender or a Withdrawal may be subject to 10%
withholding. See FEDERAL TAX STATUS -- WITHHOLDING.
DO I GET A FREE LOOK AT THIS CONTRACT? Yes. If within ten days (or a longer
period if required by law) of the date you receive the signed Contract through
the Internet Service Center, you cancel the Contract through the Internet
Service Center or return it, postage prepaid to the home office of Lincoln Life,
it will be canceled. During this period, your Purchase Payments will be invested
in the Money Market Fund. See RETURN PRIVILEGE.
8
<PAGE>
CONDENSED FINANCIAL INFORMATION
Because the Subaccounts which are available under the Contract did not begin
operation before the date of this prospectus, financial information for the
Subaccounts is not included in this prospectus or in the SAI.
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, with or without Surrender Charges. Results calculated without
Surrender Charges will be higher. Total returns include the reinvestment of all
distributions, which are reflected in changes in Accumulation Unit value. See
the SAI for further information.
FINANCIAL STATEMENTS
The financial statements for LINCOLN LIFE are located in the SAI. If you would
like a free copy of the SAI, you may download it from our Internet Service
Center.
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 National Corp. (LNC) which is also organized under Indiana law. LNC's
primary businesses are insurance and financial services. Lincoln Life is the
issuer of the variable annuity Contracts. The obligations set forth in the
Contracts, other than those of the Contractowner, are our obligations. We also
serve as principal underwriter for the Contracts.
VARIABLE ANNUITY ACCOUNT (VAA)
On February 7, 1989, the VAA was established as an insurance company separate
account under Indiana law. The VAA is registered with the SEC as a unit
investment trust under the provisions of the Investment Company Act of 1940
(1940 Act), but 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 is used to support
annuity contracts other than the contract described in this prospectus. The VAA
satisfies the definition of separate account under the federal securities laws.
We do not guarantee the investment performance of the VAA. Any investment gain
or loss depends on the investment performance of the FUNDS and SERIES. You
assume the full investment risk for all amounts placed in the VAA.
INVESTMENTS OF THE VARIABLE ANNUITY ACCOUNT
You decide the SUBACCOUNT(s) to which you allocate PURCHASE PAYMENTS. The VAA
consists of several SUBACCOUNTS. A separate SUBACCOUNT corresponds to each FUND
and SERIES. You may change your allocations without penalty or charges. Shares
of the FUNDS and SERIES will be sold at net asset value (See the Appendix to the
FUNDS' prospectuses for an explanation of net asset value) to the VAA in order
to fund the Contracts. The FUNDS and SERIES are required to redeem their shares
at net asset value upon our request. We reserve the right to add, delete or
substitute FUNDS and SERIES, subject to any regulatory approval.
INVESTMENT ADVISOR
LINCOLN INVESTMENT (owned by LNC) is the ADVISOR for each of the FUNDS and is
primarily responsible for the investment decisions affecting the FUNDS. The
services it provides are explained in the prospectuses of the FUNDS. Under an
advisory agreement with each FUND, LINCOLN INVESTMENT provides portfolio
management and investment advice to that FUND, subject to the supervision of the
FUND'S Board of Directors.
Additionally, LINCOLN INVESTMENT currently has six sub-advisory agreements in
which the sub-advisor may perform some or substantially all the investment
advisory services required by those respective FUNDS.
No additional compensation from the assets of those FUNDS will be assessed as a
result of the sub-advisory agreements.
9
<PAGE>
Following is a chart that shows the Fund names and the six sub-advisors under
LINCOLN INVESTMENT (the ADVISOR):
<TABLE>
<CAPTION>
SUB-ADVISOR FUND
<S> <C>
- ---------------------------------------------------
Delaware
International
Advisors, Ltd. International
<CAPTION>
- ---------------------------------------------------
<S> <C>
Fidelity Management
Trust Co. Equity-Income
<CAPTION>
- ---------------------------------------------------
<S> <C>
Janus Capital Corp. Capital Appreciation
<CAPTION>
- ---------------------------------------------------
<S> <C>
Lynch & Mayer, Inc. Aggressive Growth
<CAPTION>
- ---------------------------------------------------
<S> <C>
Putnam Investment
Management, Inc. Global Asset Allocation
<CAPTION>
- ---------------------------------------------------
<S> <C>
Vantage Investment
Advisors Growth and Income; Managed
(for stock portfolio);
Social Awareness; and
Special Opportunities
<CAPTION>
- ---------------------------------------------------
</TABLE>
The Bond and Money Market FUNDS do not have sub-advisors.
DELAWARE MANAGEMENT, an indirect subsidiary of LNC, is the advisor for the TREND
SERIES and the DECATUR TOTAL RETURN SERIES and is primarily responsible for the
investment decisions affecting the SERIES. Delaware International Advisers Ltd.
(Delaware International), an affiliate of DELAWARE MANAGEMENT, furnishes
investment management services to the GLOBAL BOND SERIES.
Additional information about DELAWARE MANAGEMENT and Delaware International may
be found in the Delaware Group Premium Fund, Inc. prospectuses under MANAGEMENT
OF THE FUND.
FUNDS/SERIES
Following are brief summaries of the investment objectives and policies of the
FUNDS and SERIES. The year in which each FUND or SERIES started trading is in
parentheses. There is more detailed information in the current prospectuses for
the FUNDS and SERIES.
All of the FUNDS with the exception of the Special Opportunities Fund are
diversified, open-end management investment companies. Diversified funds do not
own too large a percentage of the securities of any one company. An open-end
company is one which, in this case, permits LINCOLN LIFE to sell its shares back
to the FUND or SERIES when you make a WITHDRAWAL, Surrender the CONTRACT or
transfer from one FUND or SERIES to another. Management investment company is
the legal term for a mutual fund. The Special Opportunities Fund is open-end,
but is non-diversified. Non-diversified means the FUND may own a larger
percentage of the securities of particular companies than will a diversified
company. These definitions are very general. The precise legal definitions for
these terms are contained in the Investment Company Act of 1940. PLEASE BE
ADVISED THAT THERE IS NO ASSURANCE THAT ANY OF THE FUNDS OR SERIES WILL ACHIEVE
ITS STATED OBJECTIVES.
FUNDS
1. Aggressive Growth Fund (1994) -- The investment objective is to increase
the value of your shares (capital appreciation). The FUND invests in
stocks of smaller, lesser-known companies which have a chance to grow
significantly in a short time.
2. Bond Fund (1981) -- The investment objective is maximum current income
consistent with prudent investment strategy. The FUND invests primarily in
medium-and long-term corporate and government bonds.
3. Capital Appreciation Fund (1994) -- The investment objective is long-term
growth of capital in a manner consistent with preservation of capital. The
FUND primarily buys stock in companies of all sizes that are competing
well and with products or services that are in high demand. It may also
buy some money market securities and bonds, including high risk (junk)
bonds.
4. Equity-Income Fund (1994) -- The investment objective is to achieve
reasonable income by investing primarily in income-producing equity
securities. The FUND invests mostly in high-income stocks and some
high-yielding bonds (including junk bonds).
5. Global Asset Allocation Fund (1987) -- The investment objective is
long-term return consistent with preservation of capital. The FUND invests
in equity and fixed-income securities, both of U.S. and foreign issuers.
6. Growth and Income Fund (1981) -- The investment objective is long-term
capital appreciation. The FUND buys stocks of established companies.
7. International Fund (1991) -- The investment objective is long-term capital
appreciation. The FUND trades in securities issued outside the United
States-- mostly stocks, with an occasional bond or money market security.
8. Managed Fund (1983) -- The investment objective is maximum long-term total
return (capital gains plus income) consistent with prudent investment
strategy. The FUND invests in a mix of stocks, bonds, and money market
securities, as determined by an investment committee.
9. Money Market Fund (1981) -- The investment objective is maximum current
income consistent with the preservation of capital. The FUND invests in
short-term obligations issued U.S. corporation; the U.S. Government; and
federally-chartered banks and U.S. branches of foreign banks.
10
<PAGE>
10. Social Awareness Fund (1988) -- The investment objective is long-term
capital appreciation. The FUND buys stocks of established companies which
adhere to certain specific social responsibility criteria.
11. Special Opportunities Fund (1981) -- The investment objective is maximum
capital appreciation. The FUND primarily invests in mid-size companies
whose stocks have significant growth potential. Current income is a
secondary consideration.
SERIES
Following are brief summaries of the investment objectives and policies of the
three SERIES being offered by Delaware Group Premium Fund, Inc. More detailed
information may be obtained from the current prospectuses for those SERIES.
PLEASE BE ADVISED THAT THERE IS NO ASSURANCE THAT ANY OF THE SERIES WILL ACHIEVE
ITS STATED OBJECTIVES.
1. Decatur Total Return Series -- seeks the highest possible total rate of
return by selecting issues that exhibit the potential for capital
appreciation while providing higher than average dividend income. Decatur
Total Return Series invests generally, but not exclusively, in common
stocks and income-producing securities convertible into common stocks,
consistent with the SERIES' objective.
2. Trend Series -- seeks long-term capital appreciation by investing
primarily in small-cap common stocks and convertible securities of
emerging and other growth-oriented companies. These securities will have
been judged to be responsive to changes in the market place and to have
fundamental characteristics to support growth. Income is not an objective.
3. Global Bond Series -- seeks current income consistent with preservation of
principal by investing primarily in fixed income securities that may also
provide the potential for capital appreciation. This SERIES is a global
fund. As such, at least 65% of the SERIES' assets will be invested in
fixed income securities of issuers organized or having a majority of their
assets in or deriving a majority of their operating income in at least
three different countries, one of which may be the United States.
Shares of the FUNDS and SERIES are sold to LINCOLN LIFE for investment of the
assets of the VAA, Lincoln Life Variable Annuity Account Q and Lincoln Life
Flexible Premium Variable Life Account K and for variable life insurance
contracts. Shares of some, but not all, of the FUNDS are also sold to LINCOLN
LIFE for investment of the assets of Lincoln Life Flexible Premium Variable Life
Accounts D and G, also to fund variable life insurance contracts. In addition,
shares of the Delaware Group Premium Fund, Inc. are sold to separate accounts of
life insurance companies other than LINCOLN LIFE. See OTHER INFORMATION. Shares
of the Funds and Series are not sold directly to the general public.
We will purchase shares of the Funds and Series at net asset value and direct
them to the appropriate Subaccounts of the VAA. We will redeem sufficient shares
of the appropriate Funds and Series to pay annuity payouts, Death Benefits,
Surrender/Withdrawal proceeds or for purposes described in the Contract. If you
desire to transfer all or part of your investment from one Subaccount to
another, we may redeem shares held in the that Subaccount and purchase shares
for the other Subaccount. The shares are retired, but they may be reissued
later.
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
All of the investment objectives of the FUNDS and SERIES are fundamental, which
means that no changes may be made without the affirmative vote of a majority of
the outstanding voting securities of each respective FUND or SERIES. The extent
to which the particular investment policies, practices or restrictions for each
FUND or SERIES are fundamental or non-fundamental depends on the particular FUND
or SERIES. If they are non-fundamental, they may be changed by the Board of
Directors of the FUNDS or SERIES without shareholder approval.
You are urged to consult the Prospectus and SAI for each individual FUND or
SERIES for additional information regarding the fundamental and non-fundamental
policies, practices and restrictions of each of the FUNDS and SERIES.
REINVESTMENT
All dividend and capital gain distributions of the FUNDS and SERIES are
automatically reinvested in shares of the distributing FUNDS and SERIES at their
net asset value on the date of distribution. Dividends are not paid out to
Contractowners as additional Accumulation Units or Annuity Units, but are
reflected in 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 FUNDS and SERIES held by the VAA. (We may substitute
shares of another SERIES or 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 and SERIES should no longer be available, or if investment in
any FUND'S and SERIES' shares should no longer be available, or if investment in
any Fund's and Series' share should become inappropriate, in the judgement of
our management, for the purposes for the Contract.) LINCOLN LIFE shall give the
owner notice of the elimination and substitution of any FUND or SERIES within
fifteen days after
11
<PAGE>
such substitution occurs. Such notice will be placed in your personal folder at
the Internet Service Center and sent to your last known e-mail address. Any such
elimination, substitution or addition will be subject to compliance with any
applicable regulatory requirements.
CHARGES AND OTHER DEDUCTIONS
We will deduct the charges described below to cover our costs and expenses for
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 or SERIES 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; and furnishing an Internet Service Center. The risks we
assume include: the risk that the actual life-span of persons receiving annuity
payouts under Contract guarantees will exceed the assumptions reflected in our
guaranteed rates (these rates are incorporated in the Contract and cannot be
changed); the risk that more owners than expected will qualify for waivers of
the Surrender Charge; and the risk that our costs in providing the services will
exceed our revenues from Contract charges (which cannot be changed by us). The
amount of a charge may not necessarily correspond to the costs associated with
providing the services or benefits indicated by the designation of the charge.
For example, the Surrender Charge collected may not fully cover all of the sales
and distribution expenses actually incurred by us.
DEDUCTIONS FROM THE VAA FOR [EANNUITY]
We deduct from the VAA an amount, computed daily, which is equal to an annual
rate of 0.55% of the daily net asset value. This is our annuity asset charge.
SURRENDER CHARGE
The Surrender Charge percentage applies (except as described below) to
Surrenders or Withdrawals according to the following schedule:
<TABLE>
<CAPTION>
CONTRACT YEAR
1 2 3 4 OR MORE
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Surrender Charge as %
of
Contract Value
Withdrawn 3% 2% 1% 0%
</TABLE>
A Surrender Charge does not apply to:
1. A Surrender or Withdrawal after the initial payment has been invested at
least three full years.
2. Annuitization of the Contract by electing an Annuity Payout Option
available within the Contract.
3. A Surrender of the Contract as a result of the death of the Contractowner;
or in the case of joint Contractowners, the death of one of the
Contractowners. The Surrender Charges are not waived as a result of the
death of an Annuitant who is not the Contractowner.
If a non-natural person (e.g., a corporation) is the Contractowner, the
Annuitant will be considered the Contractowner for purposes of (3) above.
DEDUCTIONS FOR PREMIUM TAXES
Any premium tax or other tax levied by any governmental entity as a result of
the existence of the Contracts or the VAA will be deducted from the CONTRACT
VALUE when incurred, or at another time of our choosing.
The applicable premium tax rates that states and other governmental entities
impose on the purchase of an annuity are subject to change by legislation, by
administrative interpretation or by judicial action. These premium taxes will
vary, depending upon the law of your state of residence. In those states which
tax these premiums, the tax generally ranges from 0.5% to 4.0%.
OTHER CHARGES AND DEDUCTIONS
There are deductions from and expenses paid out of the assets of the underlying
SERIES that are more fully described in the prospectus for the SERIES.
ADDITIONAL INFORMATION
The Surrender 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
Internet Service Center; (2) the use of mass enrollment procedures; (3) the
performance of administrative or sales functions by the employer; (4) the use by
an employer of automated techniques in submitting deposits or information
related to deposits on behalf of its employees; or (5) any other circumstances
which reduce distribution or administrative expenses. The exact amount of
Surrender Charges applicable to a particular Contract will be stated in that
Contract.
12
<PAGE>
THE CONTRACT
PURCHASE OF CONTRACT
If you wish to purchase a CONTRACT, you must apply for it through the Internet
Service Center. When we receive the completed application, 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 the Internet Service Center. See DISTRIBUTION OF THE CONTRACTS.
Once a completed application and all other information necessary for processing
a purchase order are received, the initial PURCHASE PAYMENT will be invested in
the VAA 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 an incomplete application cannot
be completed within those five days, you will be informed of the reasons, and
the PURCHASE PAYMENT will be returned immediately (unless you specifically
authorize us to keep it until the application is complete). Once the application
is complete, the initial PURCHASE PAYMENT must be invested in the VAA 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. A Contractowner
cannot be older than age 85 (or older than age 80 in Pennsylvania).
PURCHASE PAYMENTS
The minimum initial Purchase Payment is $1,000. Subsequent Purchase Payments to
the Contract must be at least $100. Lincoln Life reserves the right to limit the
sum of Purchase Payments made under this Contract to $5,000,000. Payments may be
made or, if stopped, resumed at any time until the Annuity Commencement Date,
the Surrender of the Contract, the maturity date or the death of the
Contractowner (or joint Contractowner, if applicable), whichever comes first.
VALUATION DATE
ACCUMULATION UNITS and ANNUITY UNITS will be valued once daily at the close of
trading (currently 4:00 p.m., EST) 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. Following your
allocation instructions, each VAA SUBACCOUNT invests in shares of the
corresponding FUND or SERIES.
Upon allocation to the appropriate 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 investments perform, but also upon the expenses of
the VAA and the underlying FUNDS.
VALUATION OF ACCUMULATION UNITS
The CONTRACT VALUE at any time prior to the ANNUITY COMMENCEMENT DATE equals the
sum of the values of the ACCUMULATION UNITS credited in the SUBACCOUNTS under
the CONTRACT.
The value of a SUBACCOUNT on any VALUATION DATE is the number of ACCUMULATION
UNITS in the SUBACCOUNT multiplied by the value of an ACCUMULATION UNIT in the
SUBACCOUNT at the end of the VALUATION PERIOD.
ACCUMULATION UNITS for each SUBACCOUNT are valued separately. Initially, the
value of an ACCUMULATION UNIT was arbitrarily 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 any later VALUATION
PERIOD is determined as follows:
(1) THE TOTAL VALUE OF FUND OR SERIES SHARES HELD IN THE SUBACCOUNT is
calculated by multiplying the number of FUND or SERIES shares owned by the
SUBACCOUNT at the beginning of the VALUATION PERIOD by the Net Asset Value
Per Share of the FUND or SERIES at the end of the VALUATION PERIOD, and
adding any dividend or other distribution of the FUND or SERIES if an
ex-dividend date occurs during the Valuation Period; MINUS
(2) THE LIABILITIES OF THE SUBACCOUNT AT THE END OF THE VALUATION PERIOD (such
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 LNL that LNL determines are as a result of the operations from the
VARIABLE ACCOUNT); the result DIVIDED BY
13
<PAGE>
(3) THE OUTSTANDING NUMBER OF ACCUMULATION UNITS IN THE SUBACCOUNT AT THE
BEGINNING OF THE VALUATION PERIOD.
The daily charges imposed on a SUBACCOUNT for any VALUATION PERIOD represent the
annuity asset charge adjusted for the number of calendar days in the VALUATION
PERIOD. On an annual basis the annuity asset charge will not exceed 0.55%. The
ACCUMULATION UNIT value and ANNUITY UNIT value may increase or decrease the
dollar value of benefits under the CONTRACT. The dollar value of benefits will
not be adversely affected by expenses incurred by LNL.
TRANSFERS BETWEEN SUBACCOUNTS 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.
LINCOLN LIFE reserves the right to refuse a transfer if, in the Investment
Advisor's judgement, we would be unable to invest effectively according to the
FUND'S or SERIES' investment objectives as result of such a transfer. We reserve
the right to revise the transfer privilege at any time.
A transfer may be made through our Internet Service Center or by writing to our
home office. In order to prevent unauthorized or fraudulent Internet transfers,
we may require CONTRACTOWNERS to provide certain identifying information before
we will act upon their instructions. We may also assign the CONTRACTOWNER a
password to serve as identification. We will not be liable for following
instructions we reasonably believe are genuine. Confirmation of all transfer
requests will be mailed electronically to the CONTRACTOWNER on the next
VALUATION DATE. Internet transfers will be processed on the VALUATION DATE that
they are received when they are received at our Internet Service Center before 4
p.m. EST.
When thinking about a transfer of CONTRACT 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. Those transfers will be limited to three times per CONTRACT
YEAR. Currently, there is no charge for these transfers. However, we reserve the
right to impose a charge in the future for transfers.
DEATH BENEFIT BEFORE THE ANNUITY COMMENCEMENT DATE
You may designate a BENEFICIARY during your lifetime and, unless prohibited by a
previous designation, change the BENEFICIARY by filing a written request with
our home office, or through our Internet Service Center. Each change of
BENEFICIARY revokes any previous designation. We reserve the right to request
that you send us the CONTRACT for endorsement of a change of BENEFICIARY.
If there is a single CONTRACTOWNER and the CONTRACTOWNER dies before the ANNUITY
COMMENCEMENT DATE, the DEATH BENEFIT paid to the designated Beneficiary will be
the CONTRACT VALUE as of the day on which Lincoln Life approves the payment of
the claim.
The value of the DEATH BENEFIT will be determined as of the date on which the
death claim is approved for payment. This approval will be granted upon receipt
of: (1) proof, satisfactory to us, of the death of the owner; (2) written
authorization for payment; and (3) our receipt of all required claim forms,
fully completed.
If a lump sum settlement is requested, the proceeds will be paid within seven
days of receipt of satisfactory claim documentation as discussed previously.
This payment may be postponed as permitted by the 1940 Act.
Payment will be made in accordance with applicable laws and regulations
governing payment of DEATH BENEFITS. No payment will be allowed that does not
satisfy the requirements of Code section 72(s) or 401(a)(9) as applicable, as
amended from time to time.
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 interests; and/or
2. If no BENEFICIARY survives the CONTRACTOWNER, the proceeds will be paid to
the CONTRACTOWNER'S estate.
The DEATH BENEFIT payable to the BENEFICIARY must be distributed within five
years of the CONTRACTOWNER'S date of death unless the BENEFICIARY begins
receiving within one year of the CONTRACTOWNER'S death substantially equal
installments over a period not extending beyond the BENEFICIARY'S life
expectancy.
If the BENEFICIARY is the spouse of the CONTRACTOWNER, then the spouse may elect
to continue the CONTRACT as CONTRACTOWNER. If the CONTRACTOWNER is a corporation
or other non-individual (non-natural person), the death of the ANNUITANT will be
treated as death of the CONTRACTOWNER and the above distribution rules apply.
14
<PAGE>
If there are joint CONTRACTOWNERS, upon the death of the first joint
CONTRACTOWNER, the surviving joint CONTRACTOWNER will receive the DEATH
BENEFIT.The surviving joint CONTRACTOWNER 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 CONTRACTOWNER, as spouse of the deceased joint
CONTRACTOWNER, continues the CONTRACT as the sole owner in lieu of receiving the
DEATH BENEFIT, then the designated BENEFICIARY(S) will receive the DEATH BENEFIT
upon the death of the surviving spouse.
JOINT OWNERSHIP
If a joint CONTRACTOWNER is named in the application, the joint CONTRACTOWNERS
shall be treated as having equal undivided interests in the CONTRACT. Either
CONTRACTOWNER, independently of the other, may exercise any ownership rights in
this CONTRACT. Only spouses may be joint CONTRACTOWNERS.
DEATH OF ANNUITANT
If the ANNUITANT is also the CONTRACTOWNER or a joint CONTRACTOWNER, then the
DEATH BENEFIT will be subject to the provisions of this CONTRACT regarding death
of the CONTRACTOWNER. If the surviving spouse assumes the CONTRACT, the
contingent ANNUITANT becomes the ANNUITANT. If no contingent ANNUITANT is named,
the surviving spouse becomes the ANNUITANT.
If an ANNUITANT who is not the CONTRACTOWNER or joint CONTRACTOWNER dies, then
the contingent ANNUITANT, if any, becomes the ANNUITANT. If no contingent
ANNUITANT is named, the CONTRACTOWNER (or joint owner if younger) becomes the
ANNUITANT.
SURRENDERS AND WITHDRAWALS
Before the ANNUITY COMMENCEMENT DATE, we will allow the SURRENDER of the
CONTRACT or a WITHDRAWAL of the CONTRACT VALUE upon your written request or
through the our Internet Service Center, subject to the rules discussed below.
None of the current annuitization options allow SURRENDER or WITHDRAWAL rights
after the ANNUITY COMMENCEMENT DATE.
The CONTRACT VALUE available upon SURRENDER/WITHDRAWAL is the CASH SURRENDER
VALUE at the end of the VALUATION PERIOD during which the request for
SURRENDER/WITHDRAWAL is received at the home office or Internet Service Center.
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 CONTRACT VALUE. The minimum amount which can be
withdrawn is $300, and the remaining CONTRACT VALUE must be at least $1000.
Unless prohibited, SURRENDER/WITHDRAWAL payments will be mailed or
electronically transferred within seven days after we receive a valid request at
the home office or through the Internet Service Center. The payment may be
postponed as permitted by the Investment Company Act of 1940.
There may be charges associated with SURRENDER of a CONTRACT or WITHDRAWAL of
CONTRACT VALUE. These charges are deducted from the amount you request to be
withdrawn. See CHARGES AND OTHER DEDUCTIONS.
The tax consequences of a SURRENDER or WITHDRAWAL are discussed later in this
booklet. See FEDERAL TAX STATUS.
We reserve the right to terminate the CONTRACT, if your CONTRACT fails to meet
minimum CONTRACT VALUE or payment frequencies as set forth in your state's
nonforfeiture law for individual deferred annuities.
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 of any changes, modifications or waivers.
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. The assets of the VAA are not
chargeable with liabilities arising from any other business that we may conduct.
IRAs may not be assigned or transferred except as permitted by a domestic
relations order and upon written notification to us. We assume no responsibility
for the validity or effect of any assignment, which we reasonably believe to be
authentic. Consult your tax ADVISOR about the tax consequences 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 through our Internet
Service Center.
ANNUITY PAYOUTS
You may select any ANNUITY COMMENCEMENT DATE permitted by law. The CONTRACT
provides optional forms of payouts of annuities, each of which is payable on a
variable basis. Annuity payments to you under any of the ANNUITY PAYOUT OPTIONS
are made on a monthly basis. Following are explanations of the ANNUITY PAYOUT
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
15
<PAGE>
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 life
time 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
selected 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.
GENERAL INFORMATION
None of the options listed above currently provide WITHDRAWAL features
permitting the CONTRACTOWNER to WITHDRAW commuted values as a LUMP SUM payment.
We may make other options, with or without Withdrawal features, available.
Options are only available to the extent they are consistent with the
requirements of the CONTRACT as well as Sections 72(s) and 401(a)(9) of the
CODE, if applicable. The annuity asset charge 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 85th
birthday. You may change the ANNUITY COMMENCEMENT DATE, change the annuity
option or change the allocation of the investment among SUBACCOUNTS up to the
scheduled ANNUITY COMMENCEMENT DATE, through our Internet Service Center or by
written notice to the home office. You must give us at least 14 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 variable basis, in
proportion to the SUBACCOUNT allocations at the time of annuitization) except
when a joint life payout is required by law. Under any option providing for
payouts for a guaranteed period, 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 the CONTRACTOWNER if living: otherwise to
your BENEFICIARY as payouts become due.
VARIABLE ANNUITY PAYOUTS
Variable annuity payouts will be determined using:
1. The CONTRACT VALUE on the ANNUITY COMMENCEMENT DATE;
2. The annuity tables contained in the CONTRACT;
3. The ANNUITY PAYOUT OPTION selected; and
4. The investment performance of the FUND(S) and SERIES selected.
We determine the amount of ANNUITY PAYOUTS by:
1. Determining the dollar amount of the first periodic payout; then
2. Crediting the CONTRACT with a fixed number of ANNUITY UNITS equal to the
first periodic payout divided by the ANNUITY UNIT value; and
3. Calculating the value of the ANNUITY UNITS each period thereafter.
We assume an investment return of 5% per year, as applied to the applicable
mortality table. The amount of each payout after the initial payout will depend
upon how the underlying FUND(s) and SERIES perform, relative to the 5% assumed
rate. The SAI contains a more complete explanation of this calculation.
FEDERAL TAX STATUS
This section is a discussion of the Federal income tax rules applicable to the
CONTRACTS as of the date of this Prospectus. More information is provided in the
SAI. THESE DISCUSSIONS AND THOSE IN THE SAI ARE NOT INTENDED AS TAX ADVICE. This
section does not discuss the Federal tax consequences resulting from every
possible situation. No attempt has been made to consider any applicable state,
local, or foreign tax law, other than the imposition of any state premium taxes
(See DEDUCTIONS FOR PREMIUM TAXES). If you are concerned about the tax
implications with respect to the CONTRACTS, you should consult a tax advisor.
The following discussion is based upon our understanding of
16
<PAGE>
the present Federal income tax laws as they are currently interpreted by the
IRS. The United States Congress has in the past and may again in the future
enact legislation changing the tax treatment of annuities in both the
non-qualified and IRA markets. The Treasury Department may issue new or amended
regulations or other interpretations of existing law. Judicial interpretations
may also affect the tax treatment of annuities. It is possible that such changes
could have retroactive effect. We suggest that you consult your legal or tax
advisor on these issues.
TAXATION OF NONQUALIFIED CONTRACTS
Generally, you are not taxed on increases in the value of your CONTRACT until a
distribution occurs. This distribution can be in the form of a LUMP SUM payout
received by requesting all or part of the CASH SURRENDER VALUE (i.e. SURRENDERS
or WITHDRAWALS) or as ANNUITY PAYOUTS. For this purpose, the assignment or
pledge of, or the agreement to assign or pledge, any portion of the value of a
CONTRACT will be treated as a distribution. A change of ownership of a CONTRACT
may result in tax consequences. The taxable portion of a distribution (in the
form of a LUMP SUM payout or an annuity) is taxed as ordinary income. In
general, a CONTRACTOWNER who is not a natural person (for example, a
corporation), subject to limited exceptions, will be taxed on any increase in
the CONTRACT'S cash value over the investment in the CONTRACT during the taxable
year, even if no distribution occurs. (See Section 72(u) of the Code.) The next
discussion applies to CONTRACTS owned by natural persons.
In the case of a SURRENDER under the CONTRACT or WITHDRAWAL of CONTRACT VALUE,
generally amounts received are first treated as taxable income to the extent
that the cash value of the CONTRACT immediately before the SURRENDER exceeds the
investment in the CONTRACT at that time. Any additional amount withdrawn is not
taxable. The investment in the CONTRACT generally equals the portion, if any, of
any PURCHASE PAYMENT made by or on behalf of an individual under a CONTRACT
which is not excluded from the individual's gross income.
Even though the tax consequences may vary depending on the form of ANNUITY
PAYOUT selected under the CONTRACT, the CONTRACTOWNER of an ANNUITY PAYOUT
generally is taxed on the portion of the ANNUITY PAYOUT that exceeds the
investment in the CONTRACT. For variable ANNUITY PAYOUTS, the taxable portion is
determined by a formula that establishes a specific dollar amount of each payout
that is not taxed. The dollar amount is determined by dividing the investment in
the CONTRACT by the total number of expected periodic payouts. For individuals,
the entire distribution (whether fixed or variable) will be fully taxable once
the recipient is deemed to have recovered the dollar amount of the investment in
the CONTRACT.
There may be imposed a penalty tax on distributions equal to 10% of the amount
treated as taxable income. The penalty tax is not imposed in certain
circumstances--generally, distributions:
1. Received on or after the CONTRACTOWNER attains age 59 1/2;
2. Made as a result of death or disability of the CONTRACTOWNER;
3. Received in substantially equal periodic payments such as a life annuity
(subject to special recapture rules if the series of payouts is
subsequently modified);
4. Under a qualified funding asset in a structured settlement;
5. Under an immediate annuity contract as defined in the CODE; and/or
6. Under a CONTRACT purchased in connection with the termination of certain
retirement plans.
TAXATION OF IRAS
The CONTRACTS may be purchased in connection with traditional and Roth
Individual Retirement Annuities (IRAs), qualified under Sections 408 and 408A of
the Code.
The tax rules applicable to these IRAs, including restrictions on contributions
and benefits, taxation of distributions and any tax penalties are covered in the
SAI.
MULTIPLE CONTRACTS
All CONTRACTS issued by the same insurance company (or its affiliates) to the
same CONTRACTOWNER during any calendar year will be treated as a single CONTRACT
for tax purposes.
INVESTOR CONTROL
The Treasury Department has indicated that guidelines may be issued under which
a variable annuity CONTRACT will not be treated as an annuity contract for tax
purposes if the CONTRACTOWNER has excessive control over investments underlying
the CONTRACT. They may consider the number of investment options or the number
of transfer opportunities available between options as relevant when determining
excessive control. The issuance of those guidelines may require us to impose
limitations on your right to control the investment. We do not know whether any
such guidelines would have a retroactive effect.
Section 817(h) of the CODE and the related regulation that the Treasury
Department has adopted require that assets underlying a variable annuity
CONTRACT be adequately diversified. The regulations provide that a variable
annuity CONTRACT which does not satisfy the diversification standards will not
be treated as an annuity CONTRACT, unless the failure to satisfy the regulations
was inadvertent, the failure is corrected, and the CONTRACTOWNER or we pay an
amount to the Internal Revenue
17
<PAGE>
Service. The amount will be based on the tax that would have been paid by the
CONTRACTOWNER if the income, for the period the CONTRACT was not diversified,
had been received by the CONTRACTOWNER. If the failure to diversify is not
corrected in this manner, the CONTRACTOWNER of an annuity CONTRACT will be
deemed the owner of the underlying securities and will be taxed on the earnings
of his or her account. We believe, under our interpretation of the CODE and
regulations thereunder, that the investments underlying this CONTRACT meet these
diversification standards.
WITHHOLDING
Generally, annuity distributions are subject to withholding for the recipient's
Federal income tax liability at a rate of 10%. Recipients, however, generally
are provided the opportunity to elect not to have tax withheld from
distributions.
VOTING RIGHTS
As required by law, we will vote the FUNDS and SERIES shares held in the VAA at
meetings of the shareholders of the various FUNDS and SERIES. The voting will be
done according to the instructions of CONTRACTOWNERS who have interests in any
SUBACCOUNTS which invest in a FUND or FUNDS and SERIES. If the Investment
Company Act of 1940 or any regulation under it should be amended or if present
interpretations should change, and if as a result we determine that we are
permitted to vote the FUND or SERIES 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. After the Annuity Commencement Date, the votes
attributable to a CONTRACT will decrease.
FUND shares of a class held in a SUBACCOUNT for which no timely instructions are
received will be voted by us in proportion to the voting instructions which are
received for all CONTRACTS participating in that SUBACCOUNT. Voting instructions
to abstain on any item to be voted on will be applied on a pro-rata basis to
reduce the number of votes eligible to be cast.
Whenever a shareholders meeting is called, each person having a voting interest
in a SUBACCOUNT will be sent proxy voting material, reports and other materials
relating to the SERIES. Since the SERIES engages in shared funding, other
persons or entities besides LINCOLN LIFE may vote SERIES shares.
DISTRIBUTION OF THE CONTRACTS
We are the distributors of the Contracts. They will be sold through the Internet
Service Center we maintain for this purpose. We are registered with the SEC
under the Securities Exchange Act of 1934 as a broker-dealer and are a member of
the National Association of Securities Dealers (NASD).
RETURN PRIVILEGE
Within the free-look period after you receive the CONTRACT, you may cancel it
for any reason through our Internet Service Center or by delivering or mailing
it postage prepaid, to the HOME OFFICE at P.O. Box (TBD), 1300 South Clinton
Street, Fort Wayne, Indiana, 46801. A CONTRACT canceled under this provision
will be void. No Surrender Charge will be assessed.
The Purchase Payments will be invested in the Lincoln National Money Market Fund
during the free-look period.
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. That Department conducts a full examination
of our operations at least every five years.
RECORDS AND REPORTS
As presently required by the 1940 Act and applicable regulations, we are
responsible for maintaining all records and accounts relating to the VAA. We
have entered into an agreement with the DELAWARE SERVICE COMPANY, 2005 Market
Street, Philadelphia, PA 19203, to provide accounting services to the VAA. We
will electronically mail to you, at your last known e-mail address, at least
semiannually after the first CONTRACT YEAR, reports containing information
required by that Act or any other applicable law or regulation.
18
<PAGE>
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 filed with the SEC.
Lincoln National Flexible Premium Variable Life Accounts D, G and K (all
registered as investment companies under the 1940 Act) are authorized to invest
assets in the following FUNDS and SERIES: Bond, Growth and Income, Managed,
Money Market and Special Opportunities (for Account D); Growth and Income and
Special Opportunities (for Account G) and all FUNDS and SERIES for Account K.
Through the VAA and the Variable Life Accounts we are the sole shareholder in
the eleven FUNDS. However, we are not the sole shareholder of SERIES shares in
the Delaware Group Premium Fund, Inc. Collectively, the VAA and the Variable
Life Accounts may be referred to in the Prospectus and in the SAI as the
VARIABLE ACCOUNTS. Due to differences in redemption rates, tax treatment or
other considerations, the interests of CONTRACTOWNERS under the Variable Life
Accounts could conflict with those of CONTRACTOWNERS under the VAA. In those
cases where assets from variable life and VARIABLE ANNUITY SEPARATE ACCOUNTS are
invested in the same FUND or FUNDS or SERIES (i.e., where mixed funding occurs),
the Boards of Directors of the FUNDS or SERIES involved will monitor for any
material conflicts and determine what action, if any, should be taken. If it
becomes necessary for any separate account to replace shares of any FUND or
SERIES with another investment, that FUND or SERIES may have to liquidate
securities on a disadvantageous basis. Refer to the prospectus for each FUND and
SERIES for more information about mixed funding. In the future, we may purchase
shares in the FUNDS and SERIES for one or more unregistered segregated
investment accounts.
ADVERTISEMENTS/SALES LITERATURE
In marketing the VARIABLE ANNUITY CONTRACTS, we may refer to certain ratings
assigned to us under the Rating System of the A.M. Best Co., Oldwick, New
Jersey. The objective of Best's Rating System is to evaluate the various factors
affecting the overall performance of an insurance company in order to provide
Best's opinion about that company's relative financial strength and ability to
meet its contractual obligations. The procedure includes both a quantitative and
qualitative review of the insurance company. In marketing the CONTRACTS and the
underlying FUNDS and SERIES, we may at times use data published by other
nationally-known independent statistical services. These service organizations
provide relative measures of such factors as an insurer's claim paying ability,
the features of particular CONTRACTS, and the comparative investment performance
of the FUNDS and SERIES with other portfolios having similar objectives. A few
such services are: Duff & Phelps, the Lipper Group, Moody's, Morningstar,
Standard and Poor's and VARDS. There is more information about each of these
services under Advertising and sales literature in the SAI. Marketing materials
may employ illustrations of compound interest and dollar-cost averaging; discuss
automatic Withdrawal services; describe our customer base, assets, and our
relative size in the industry. They may also discuss other features of LINCOLN
LIFE, the VAA, the FUNDS, the SERIES and their investment management.
PREPARING FOR THE YEAR 2000
LINCOLN LIFE, as part of its year 2000 updating process, is responsible for the
updating of the VAA related computer systems. Many existing computer programs
use only two digits to identify a year in the date field. These programs were
designed and developed without considering the impact of the upcoming change in
the century. If not corrected, many computer applications could fail or create
erroneous results by or at the year 2000. The year 2000 issue affects virtually
all companies and organizations. An affiliate of LINCOLN LIFE, Delaware Services
Company (Delaware), provides substantially all of the necessary accounting and
valuation services for the VAA. Delaware, for its part, is responsible for
updating all of its computer systems, including those which service VAA, to
accommodate the year 2000. LINCOLN LIFE and Delaware have begun formal
discussions with each other to asses the requirements for their respective
systems to interface properly in order to facilitate the accurate and orderly
operation of the VAA beginning in the year 2000.
The year 2000 issue is pervasive and complex and affects virtually every aspect
of the businesses of both LINCOLN LIFE and Delaware (the Companies). The
computer systems of the companies and their interfaces with the computer systems
of vendors, suppliers, customers and other business partners are particularly
vulnerable. The inability to properly recognize date-sensitive electronic
information and to transfer data between systems could cause errors or even
complete failure of systems, which would result in a temporary inability to
process transactions correctly and engage in normal
19
<PAGE>
business activities for the VAA. The Companies respectively are redirecting
significant portions of their internal information technology efforts and are
contracting, as needed, with outside consultants to help update their systems to
accommodate the year 2000. Also, in addition to the discussions with each other
noted above, the Companies have respectively initiated formal discussions with
other critical parties that interface with their systems to gain an
understanding of the progress by those parties in addressing year 2000 issues.
While the Companies are making substantial efforts to address their own systems
and the systems with which they interface, it is not possible to provide
assurance that operational problems will not occur. The Companies presently
believe that, assuming the modification of existing computer systems, updates by
vendors and conversion to new software and hardware, the year 2000 issue will
not pose significant operations problems for their respective computer systems.
In addition, the Companies are incorporating potential issues surrounding year
2000 into their contingency planning process, in the event that, despite these
substantial efforts, there are unresolved year 2000 problems. If the remediation
efforts noted above are not completed timely or properly, the year 2000 issue
could have a material adverse impact on the operation of the businesses of
LINCOLN LIFE or Delaware, or both.
The cost of addressing year 2000 issues and the timeliness of completion will be
closely monitored by management of the respective Companies. Nevertheless, there
can be no guarantee either by LINCOLN LIFE or by Delaware the estimated costs
will be achieved, and actual results could differ significantly from those
anticipated. Specific factors that might cause such differences include, but are
not limited to, the availability and cost of personnel trained in this area, the
ability to locate and correct all relevant computer problems, and other
uncertainties.
LEGAL PROCEEDINGS
LINCOLN LIFE is involved in various pending or threatened legal proceedings
arising from the conduct of its business. Most of these proceedings are routine
and in the ordinary course of business. In some instances these proceedings
include claims for unspecified or substantial punitive damages and similar types
of relief in addition to amounts for alleged contractual liability or requests
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 of the financial
position of LINCOLN LIFE.
During the 1990's class action lawsuits alleging sales practices fraud have been
filed against many life insurance companies, and Lincoln Life has not been
immune. Two lawsuits involve alleged fraud in the sale of interest-sensitive
universal and whole life insurance policies. These two suits have been filed as
class actions, although as of the date of this prospectus the court had not
certified a class in either case. 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 early stages
of litigation, and it is premature to make assessments about potential loss, if
any. Management denies the allegations and intends to defend these suits
vigorously. The amount of the liability, if any, which may arise as a result of
these suits (exclusive of any indemnification from professional liability
insurers) cannot be reasonably estimated at this time.
[Table of contents for SAI]
20
<PAGE>
LINCOLN NATIONAL
VARIABLE ANNUITY ACCOUNT C (VAA) (REGISTRANT)
LINCOLN NATIONAL
LIFE INSURANCE COMPANY (DEPOSITOR)
STATEMENT OF ADDITIONAL INFORMATION (SAI)
This SAI should be read in conjunction with the eAnnuity Prospectus of the VAA
dated .
You may download a free copy of the eAnnuity VAA Prospectus from
http://www.AnnuityNet.com or you may write Lincoln National Life Insurance Co.,
P.O. Box 2340, Fort Wayne, Indiana 46801.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
- -------------------------------------------------------
GENERAL INFORMATION AND HISTORY
OF LINCOLN LIFE B-2
- -------------------------------------------------------
SPECIAL TERMS B-2
- -------------------------------------------------------
SERVICES B-2
- -------------------------------------------------------
PURCHASE OF SECURITIES BEING OFFERED B-2
- -------------------------------------------------------
UNDERWRITERS B-2
- -------------------------------------------------------
CALCULATION OF PERFORMANCE DATA B-2
- -------------------------------------------------------
<CAPTION>
PAGE
- -------------------------------------------------------
<S> <C>
ANNUITY PAYOUTS B-5
- -------------------------------------------------------
FEDERAL TAX STATUS B-6
- -------------------------------------------------------
DETERMINATION OF ACCUMULATION AND
ANNUITY UNIT VALUE B-7
- -------------------------------------------------------
ADVERTISING AND SALES
LITERATURE/GRAPHICS B-7
- -------------------------------------------------------
FINANCIAL STATEMENTS B-8
- -------------------------------------------------------
</TABLE>
THIS SAI IS NOT A PROSPECTUS.
The date of this SAI is .
B-1
<PAGE>
GENERAL INFORMATION
AND HISTORY OF
LINCOLN NATIONAL LIFE
INSURANCE CO. (LINCOLN LIFE)
The prior Depositor of the ACCOUNT, Lincoln National Pension Insurance Co., was
merged into LINCOLN LIFE, effective January 1, 1989. LINCOLN LIFE, organized in
1905, is an Indiana stock insurance corporation, engaged primarily in insurance
and financial services. LINCOLN LIFE is owned by Lincoln National Corp., a
publicly held insurance holding company domiciled in Indiana.
SPECIAL TERMS
The special terms used in this SAI are the ones defined in the prospectus. They
are italicized to make this document more understandable.
SERVICES
INDEPENDENT AUDITORS
The statutory-basis financial statements and schedules 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 which also appear 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 report 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. No separate charge
against the assets of the VAA is made by LINCOLN LIFE for this service. We have
entered into an agreement with DELAWARE SERVICE CO., 2005 Market Street,
Philadelphia, PA 19203, to provide accounting services to the VAA.
PRINCIPAL UNDERWRITER
LINCOLN LIFE is the principal underwriter for the VARIABLE ANNUITY CONTRACTS.
PURCHASE OF SECURITIES BEING OFFERED
The VARIABLE ANNUITY CONTRACTS are offered to the public through Lincoln Life's
Internet Service Center. There are no special purchase plans for any class of
prospective buyers. However, under certain limited circumstances described in
the prospectus, the SURRENDER CHARGES may be waived.
There are exchange privileges between SUBACCOUNTS. (See Transfers of
accumulation units between SUBACCOUNTS in the prospectus.) No exchanges are
permitted between the VAA and other separate accounts.
UNDERWRITER
LINCOLN LIFE is the principal underwriter for the VARIABLE ANNUITY CONTRACTS. We
may not offer a contract continuously or in every state. LINCOLN LIFE retains no
underwriting commissions from the sale of the VARIABLE ANNUITY CONTRACTS.
CALCULATION OF PERFORMANCE DATA
A. MONEY MARKET FUNDED SUBACCOUNTS:
Standardized performance data is not included because, as of the date hereof,
the CONTRACTS have not yet been sold. Nonstandardized performance data will be
accompanied by standard performance data once available.
1. Seven-day yield: 4.37%
Length of base period used in computing the yield: 7 days
Last Day in the base period: December 31, 1997
2. The yield reported above and in the table of condensed financial
information in the Prospectus is determined by calculating the change in
unit value for the base period (the 7-day period ended December 31,
1997); then dividing this figure by the account value at the beginning
of the period; then annualizing this result by the factor of 365/7. This
yield includes all deductions charged to the CONTRACTOWNER'S account,
and excludes any realized gains and losses from the sale of securities.
B-2
<PAGE>
B. OTHER SUBACCOUNTS:
1. TOTAL RETURN -- the tables below show, for the various SUBACCOUNTS of
the VAA, an average annual total return as of the stated periods, based
upon a hypothetical initial PURCHASE PAYMENT of $1,000, calculated
according to the formula set out after the table.
HISTORICAL FUND/SERIES PERFORMANCE ADJUSTED FOR CONTRACT AND VAA FEES AND
CHARGES. Returns are provided for years before the fund and series were
available investment options under the contract. Returns for those periods
reflect an adjusted return as if those funds and series were available under the
contract, and reflect the deduction of the annuity asset charge.
Tables 1A and 1B below assume a hypothetical investment of $1,000 at the
beginning of the period via the subaccount investing in the applicable fund or
series and withdrawal of the investment on 12/31/97. The adjusted returns shown
thus reflect the annuity asset charge and the CDSC. THIS INFORMATION DOES NOT
INDICATE OR REPRESENT FUTURE PERFORMANCE.
TABLE 1A
SUBACCOUNT "ADJUSTED" AVERAGE ANNUAL RETURN
<TABLE>
<CAPTION>
1-YEAR 5-YEARS 10-YEARS
ENDING ENDING ENDING
12/31/97 12/31/97 12/31/97
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------
Bond
Commenced Activity on December 21, 1981
- ---------------------------------------------------------------------------------
Growth and Income
Commenced Activity on December 21, 1981
- ---------------------------------------------------------------------------------
International
Commenced Activity on May 1, 1991
- ---------------------------------------------------------------------------------
Managed
Commenced Activity on April 29, 1983
- ---------------------------------------------------------------------------------
Global Asset Allocation
Commenced Activity on August 3, 1987
- ---------------------------------------------------------------------------------
Social Awareness
Commenced Activity on May 2, 1988
- ---------------------------------------------------------------------------------
Special Opportunities
Commenced Activity on December 21, 1981
- ---------------------------------------------------------------------------------
Aggressive Growth
Commenced Activity on January 3, 1994
- ---------------------------------------------------------------------------------
Capital Appreciation
Commenced Activity on January 3, 1994
- ---------------------------------------------------------------------------------
Equity-Income
Commenced Activity on January 3, 1994
- ---------------------------------------------------------------------------------
Trend Series
Commenced Activity on May 1, 1996
- ---------------------------------------------------------------------------------
Decatur Total Return Series
Commenced Activity on May 1, 1996
- ---------------------------------------------------------------------------------
Global Bond Series
Commenced Activity on May 1, 1996
- ---------------------------------------------------------------------------------
</TABLE>
* The lifetime of this SUBACCOUNT is less than the complete period indicated.
The performance shown is for the period from commencement of activity.
B-3
<PAGE>
TABLE 1B
SUBACCOUNT "ADJUSTED" CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
1-YEAR 5-YEARS 10-YEARS
ENDING ENDING ENDING
12/31/97 12/31/97 12/31/97
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------
Bond
Commenced Activity on December 21, 1981
- ---------------------------------------------------------------------------------
Growth and Income
Commenced Activity on December 21, 1981
- ---------------------------------------------------------------------------------
International
Commenced Activity on May 1, 1991
- ---------------------------------------------------------------------------------
Managed
Commenced Activity on April 29, 1983
- ---------------------------------------------------------------------------------
Global Asset Allocation
Commenced Activity on August 3, 1987
- ---------------------------------------------------------------------------------
Social Awareness
Commenced Activity on May 2, 1988
- ---------------------------------------------------------------------------------
Special Opportunities
Commenced Activity on December 21, 1981
- ---------------------------------------------------------------------------------
Aggressive Growth
Commenced Activity on January 3, 1994
- ---------------------------------------------------------------------------------
Capital Appreciation
Commenced Activity on January 3, 1994
- ---------------------------------------------------------------------------------
Equity-Income
Commenced Activity on January 3, 1994
- ---------------------------------------------------------------------------------
Trend Series
Commenced Activity on May 1, 1996
- ---------------------------------------------------------------------------------
Decatur Total Return Series
Commenced Activity on May 1, 1996
- ---------------------------------------------------------------------------------
Global Bond Series
Commenced Activity on May 1, 1996
- ---------------------------------------------------------------------------------
</TABLE>
* The lifetime of this SUBACCOUNT is less than the complete period indicated.
The performance shown is for the period from commencement of activity.
The length of the periods and the last day of each period used in the above
tables are set out in the table headings. The 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)
The formula assumes that: 1) all recurring fees have been charged to
CONTRACTOWNER accounts; 2) all applicable nonrecurring charges are deducted at
the end of the period in question; and 3) there will be a complete redemption at
the end of the period in question. The performance figures shown in the tables
above relate to the contract form containing the highest level of charges.
B-4
<PAGE>
2. NONSTANDARDIZED PERFORMANCE DATA
The VAA advertises the performance of its various SUBACCOUNTS by observing how
they perform over various time periods -- monthly, year-to-date, yearly (fiscal
year); and over periods of three years and more. Monthly, year-to-date and
yearly performance are computed on a cumulative basis; performance for a
three-year period and for greater periods is computed both on a cumulative and
on an 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. The calculation reflects the annuity asset charge
under the CONTRACTS and the management fees and other expenses of the FUND or
SERIES. The calculation does not include SURRENDER CHARGES, which, if included,
would decrease the performance.
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.
ANNUITY PAYOUTS
VARIABLE ANNUITY PAYOUTS
Variable ANNUITY PAYOUTS will be determined on the basis of: (1) the 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
performance of the eligible 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 ANNUITANT 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 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 within
14 days after the ANNUITY COMMENCEMENT DATE. The monthly anniversary of the
Annuity Commencement Date will become the date on which all future ANNUITY
PAYOUTS will be calculated. Amounts shown in the tables are based on the 1983(a)
Individual Mortality Table modified, with an assumed investment return at the
rate of 5% 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 CONTRACT VALUE 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 5% interest rate stated above is the
measuring point for subsequent ANNUITY PAYOUTS. If the actual Net Investment
Rate (annualized) exceeds 5%, the payment will increase at a rate equal to the
amount of such excess. Conversely, if the actual rate is less than 5%, ANNUITY
PAYOUTS will decrease. If the assumed rate of interest 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 where not
prohibited by law.
At an ANNUITY COMMENCEMENT DATE, the ANNUITANT is credited with ANNUITY UNITS
for each 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
payout by the value of an ANNUITY UNIT in each 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 eligible FUNDS. The amount of the second
and subsequent ANNUITY PAYOUTS is determined by multiplying the CONTRACTOWNER'S
fixed number of ANNUITY UNITS in each SUBACCOUNT by the appropriate ANNUITY UNIT
value for the VALUATION DATE ending on the monthly anniversary of the ANNUITY
COMMENCEMENT DATE.
The value of each SUBACCOUNT ANNUITY UNIT was arbitrarily established. The
ANNUITY UNIT value for each SUBACCOUNT at the end of any VALUATION DATE is
determined as follows:
1. The total value of fund or series shares held in the SUBACCOUNT is
calculated by multiplying the number of shares by the net asset value at end
of valuation period plus any dividend or other distribution.
2. The liabilities of the SUBACCOUNT, including daily charges and taxes, are
subtracted
3. The result is divided by the number of ANNUITY UNITS in the SUBACCOUNT at
the beginning of 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 the monthly anniversary of
the ANNUITY COMMENCEMENT DATE 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.
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 PAYOUTS depend.
B-5
<PAGE>
FEDERAL TAX STATUS
GENERAL
The operations of the VAA form a part of, and are taxed with, the operations of
LINCOLN LIFE under the Internal Revenue Code of 1986, as amended (the CODE).
Investment income and realized net capital gains on the assets of the VAA are
reinvested and taken into account in determining the ACCUMULATION and ANNUITY
UNIT values. As a result, such investment income and realized net capital gains
are automatically retained as part of the reserves under the CONTRACT. Under
existing federal income tax law, LINCOLN LIFE believes that VAA investment
income and realized net capital gains are not taxed to the extent they are
retained as part of the reserves under the CONTRACTS. Accordingly, LINCOLN LIFE
does not anticipate that it will incur any federal income tax liability
attributable to the VAA, and therefore it does not intend to make any provision
for such taxes. However, if changes in the federal tax laws or interpretations
thereof result in LINCOLN LIFE'S being taxed on income or gains attributable to
the VAA, then LINCOLN LIFE may impose a charge against the VAA in order to make
provision for payment of such taxes.
TAX STATUS OF NONQUALIFIED CONTRACTS
The CODE (Section 72(s)) provides that CONTRACTS issued after January 18, 1985,
will not be treated as annuity CONTRACTS for purposes of Section 72 unless the
CONTRACT provides that (A) if any CONTRACTOWNER dies on or after the annuity
starting date, but before the time the entire interest in the CONTRACT has been
distributed, the remaining portion of such interest must be distributed at least
as rapidly as under the method of distribution in effect at the time of the
CONTRACTOWNER'S death; and (B) if any CONTRACTOWNER dies before the annuity
starting date, the entire interest must be distributed within five years after
the death of the CONTRACTOWNER. These requirements are considered satisfied to
the extent that any portion of the CONTRACTOWNER'S interest that is payable to
or for the benefit of a designated BENEFICIARY is distributed over that
designated BENEFICIARY'S life, or a period not extending beyond the designated
BENEFICIARY'S life expectancy, and if that distribution begins within one year
of the CONTRACTOWNER'S death. The designated BENEFICIARY must be a natural
person. CONTRACTS issued after January 18, 1985 contain provisions intended to
comply with these CODE requirements, although regulations interpreting these
requirements have yet to be issued. LINCOLN LIFE intends to review such
provisions and modify them if necessary to assure that they comply with the
requirements of Section 72(s) when clarified by regulation or otherwise.
INDIVIDUAL RETIREMENT ANNUITIES (IRA)
Under Section 408 of the CODE, individuals may participate in a retirement
program known as an IRA. An individual may make an annual IRA contribution of up
to the lesser of $2,000 (or $4,000 if IRAs are maintained for both the
individual and the nonworking spouse and they file a joint tax return) or 100%
of compensation. However, IRA contributions may be nondeductible in whole or in
part if (1) the individual or the spouse is an active participant in certain
other retirement programs and (2) the income of the individual (or of the
individual and the spouse) exceeds a specified amount. Distributions from
certain types of retirement plans may be rolled over to an IRA on a tax-deferred
basis if certain requirements are met. Distributions from IRA's are subject to
certain restrictions. Deductible IRA contributions and all earnings will be
taxed as ordinary income when distributed. The failure to satisfy certain CODE
requirements with respect to an IRA results in adverse tax consequences.
ROTH IRAS
Beginning in 1998, individuals may purchase a new type of non-deductible IRA,
known as a Roth IRA. Purchase payments for a Roth IRA are limited to $2,000 per
year. This limitation is phased out for adjusted gross income between $95,000
and $110,000 in the case of single taxpayers, between $150,000 and $160,000 in
the case of married taxpayers filing joint returns, and between $0 and $15,000
in the case of married taxpayers filing separately. An overall $2,000 annual
limitation continues to apply to all of a taxpayer's IRA contributions,
including Roth IRAs and non-Roth IRAs.
Qualified distributions from Roth IRAs are entirely tax free. A qualified
distribution requires that the individual has held the Roth IRA for at least
five years and, in addition, that the distribution is made either after the
individual reaches age 59 1/2, on the individual's death or disability, or as a
qualified first-time home purchase, subject to a $10,000 lifetime maximum, for
the individual, a spouse, child, grandchild, or ancestor.
An individual may make a rollover contribution from a non-Roth IRA to a Roth
IRA, unless the individual has adjusted gross income over $100,000 or the
individual is a married taxpayer filing a separate return. The individual must
pay tax on any portion of the non-Roth IRA being rolled over that represents
income or a previously deductible IRA contribution. For rollovers in 1998, the
individual may pay that tax ratably in 1998 and over the succeeding three years.
There are no similar limitations on rollovers from a Roth IRA to another Roth
IRA.
TAX ON DISTRIBUTIONS FROM TRADITIONAL IRAS
IRS Rules generally provide that all distributions which are not received as an
annuity will be taxed as a pro rata distribution of taxable and nontaxable
amounts (rather than as a distribution first of nontaxable amounts).
Distributions will be subject to a 10% penalty
B-6
<PAGE>
tax if made before age 59 1/2 unless certain other exceptions apply. Failure to
meet certain minimum distribution requirements will result in a 50% excise tax.
Upon an employee's death, the taxation of benefits payable to the BENEFICIARY
generally follows these same principles, subject to a variety of special rules.
All participants in a Traditional IRA and a Roth IRA receive an IRA Disclosure.
This document explains the tax rules that apply to IRAs in greater detail.
OTHER CONSIDERATIONS
It should be understood that the foregoing comments about the federal tax
consequences under these CONTRACTS are not exhaustive and that special rules are
provided with respect to other tax situations not discussed herein. Further, the
foregoing discussion does not address any applicable state, local or foreign tax
laws. Finally, in recent years numerous changes have been made in the federal
income tax treatment of CONTRACTS and retirement plans, which are not fully
discussed above. Before an investment is made in any of the CONTRACTS, a
competent tax advisor should be consulted.
DETERMINATION OF
ACCUMULATION AND
ANNUITY UNIT VALUE
A description of the days on which ACCUMULATION and ANNUITY UNITS will be valued
is given in the Prospectus. The New York Stock Exchange's (NYSE) most recent
announcement (which is subject to change) states that in 1998 it will be closed
on New Year's Day, Martin Luther King Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
It may also be closed on other days.
Since the portfolios of some of the FUNDS and SERIES will consist of securities
primarily listed on foreign exchanges or otherwise traded outside the United
States, those securities may be traded (and the net asset value of those FUNDS
and SERIES and of the VARIABLE ACCOUNT could therefore be significantly
affected) on days when the investor has no access to those FUNDS and SERIES.
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 evaluates 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.
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 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 with over 1000 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 claims-paying rating is a system of rating insurance company's
financial strength, market leadership 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 ANNUITY CONTRACTS.
STANDARD & POOR's CORP. insurance claims-paying ability rating is an assessment
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.
B-7
<PAGE>
STANDARD & POOR'S 500 INDEX (S&P 500) -- broad-based measurement of changes in
stock-market conditions based on the average performance of 500 widely held
common stocks; commonly known as the 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 Corp., a
financial advisory, securities rating and publishing firm.
NASDAQ-OTC Price Index -- this 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) -- price-weighted average of 30 actively
traded blue chip stocks, primarily industrials but including American Express
Co. and American Telephone and Telegraph Co. Prepared and published by Dow Jones
& Co., 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 eligible
FUNDS, LINCOLN LIFE intends to illustrate the advantages of the CONTRACTS in a
number of ways:
DOLLAR-COST AVERAGING ILLUSTRATIONS. These illustrations will generally discuss
the price-leveling effect of making regular purchases in the same SUBACCOUNTS
over a period of time, to take advantage of the trends in market prices of the
portfolio securities purchased for those SUBACCOUNTS.
AUTOMATIC WITHDRAWAL SERVICE. A service provided by LINCOLN LIFE, through which
a CONTRACTOWNER may take any distribution allowed by CODE Section 401(a)(9) in
the case of qualified CONTRACTS, or permitted under CODE Section 72 in the case
of nonqualified CONTRACTS, by way of an automatically generated payment.
LINCOLN LIFE'S CUSTOMERS. Sales literature for the VAA, the FUNDS and series may
refer to the number of employers and the number of individual annuity clients
which LINCOLN LIFE serves. As of March 17, 1998, LINCOLN LIFE was serving over
13,000 organizations and had more than 1 million annuity clients.
LINCOLN LIFE'S ASSETS, SIZE. LINCOLN LIFE may discuss its general financial
condition (see, for example, the reference to A.M. Best Co., 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 subclassification of those companies,
based upon recognized evaluation criteria. For example, at year-end 1997,
LINCOLN LIFE was the 6th largest U.S. stock life insurance company based upon
overall assets.
Sales literature and advertisements may reference these and other similar
reports from Best's or other similar publications which report on the insurance
and financial services industries.
The graphs below compare accumulations attributable to contributions to
conventional savings vehicles such as savings accounts at a bank or credit
union, nonqualified CONTRACTS purchased with after tax contributions, and
qualified CONTRACTS purchased with pre-tax contributions under tax-favored
retirement programs.
FINANCIAL STATEMENTS
Financial statements for the company appear on the following pages.
B-8
<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 State of Indiana on
this 23rd day of April, 1998.
LINCOLN NATIONAL VARIABLE ANNUITY
ACCOUNT C (e-Annuity),
(Registrant)
By /s/ Stephen H. Lewis
-----------------------------------
Stephen H. Lewis,
Senior Vice President, Lincoln Life
(Signature and Title)
By THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY (Lincoln Life)
(Depositor)
By /s/ Gabriel L. Shaheen
-----------------------------------
Gabriel L. Shaheen
Chief Executive Officer
(Name and title of officer of Depositor)
(b) As required by the Securities Act of 1993, this Registration
Statement has been signed by the Following persons in the capacities and on
the dates indicated.
/s/ Gabriel L. Shaheen President, Chief April 23, 1998
- ------------------------------ Executive Officer --------------
Gabriel L. Shaheen and Director
(Principal Executive
Officer)
/s/ Jon A. Boscia April 23, 1998
- ------------------------------ Director --------------
Jon A. Boscia
/s/ Ian M. Rolland April 23, 1998
- ------------------------------ Director --------------
Ian M. Rolland
Executive Vice President
- ------------------------------ and Director --------------
Lawrence T. Rowland
/s/ Richard C. Vaughan Director April 23, 1998
- ------------------------------ --------------
Richard C. Vaughan
Director
- ------------------------------ --------------
H. Thomas McMeekin
<PAGE>
LINCOLN NATIONAL VARIABLE ANNUITY SEPARATE ACCOUNT C
SIGNATURES (Continued)
Executive Vice President,
- ------------------------------ General Counsel and --------------
Jack D. Hunter Director
/s/ Keith J. Ryan Senior Vice President, April 23, 1998
- ------------------------------ Chief Financial Officer --------------
Keith J. Ryan and Assistant Treasurer
(Principal Financial
Officer)
<PAGE>
PART C--OTHER INFORMATION
Item 24.
- --------
(a) LIST OF FINANCIAL STATEMENTS
(1) Part A The Table of Condensed Financial Information is included in
Part A of this Registration Statement.
(2) Part B Not Applicable.
(3) Part B TO BE FILED BY AMENDMENT
24 (b) LIST OF EXHIBITS
(1) Resolution of the Board of Directors of the Lincoln National Life
Insurance Company establishing Separate Account C is
incorporated herein by reference to Registration Statement on
Form N-4 (File No. 33-25990) filed on April 22, 1998.
(2) None.
(3) Not Applicable.
(4) Variable annuity contract.
(5) Application.
(6) (a) Articles of Incorporation of Lincoln National Life Insurance
Company are hereby incorporated by reference to Registration
Statement on Form S-6 (333-40745) filed November 21, 1997.
(b) Bylaws of Lincoln National Life Insurance Company are hereby
incorporated by reference to Registration Statement on
Form S-6 (333-40745) filed on November 21, 1997.
(7) Not applicable.
(8) (a) Services Agreement between Delaware Management Holdings,
Inc., Delaware Service Company, Inc. and Lincoln National
Life Insurance Company is incorporated herein by reference
to the Registration Statement on Form S-6 (333-40745)
filed on November 21, 1997.
(9) Opinion and Consent of Mary Jo Ardington, Counsel*
(10) Consent of Ernst & Young LLP, Independent Auditors*
(11) Not applicable.
(12) Not applicable.
(13) Schedule of Computation*
(14) Not applicable.
(15) (a) Organizational Chart of Lincoln National Life Insurance
Holding Company System
(b) Memorandum Concerning Books and Records*
<PAGE>
Item 25.
- --------
DIRECTORS AND OFFICERS OF THE DEPOSITOR
<TABLE>
<CAPTION>
Positions and Offices with Lincoln National
Name Life Insurance Company
- ---- ----------------------
<S> <C>
Ian M. Rolland** Director
Jon A. Boscia* and Director
Carolyn P. Brody* Vice President
Thomas L. Clagg* Vice President and Associate General Counsel
Kelly D. Clevenger* Vice President
Jeffrey K. Dellinger* Vice President
Jack D. Hunter** Executive Vice President and General Counsel
Donald E. Keller* Vice President
H. Thomas Mc Meekin** Director
Reed P. Miller* Vice President
Stephen H. Lewis* Senior Vice President
Lawrence T. Rowland*** Executive Vice President
Keith J. Ryan* Senior Vice President, Asst. Treasurer and Chief Financial Officer
Gabriel L. Shaheen* President, Chief Executive Officer and Director
Richard C. Vaughan** Director
Roy V. Washington* Vice President
Janet C. Whitney** Vice President and Treasurer
C. Suzanne Womack** Assistant Vice President and Secretary
</TABLE>
* Principal business address is 1300 South Clinton Street, Fort Wayne, Indiana
46802.
** Principal business address is 200 East Berry Street, Fort Wayne, Indiana
46802-2706.
*** Principal business address is 1700 Magnavox Way, One Reinsurance Place, Fort
Wayne, Indiana 46804.
Item 26.
- --------
PERSONS CONTROLLED BY OR UNDER COMMON
CONTROL WITH THE DEPOSITOR OR REGISTRANT
See Exhibit 15(a): The Organizational Chart of The Lincoln National
Insurance Holding Company System is hereby incorporated herein by this
reference.
Item 27.
- --------
NUMBER OF CONTRACT OWNERS
As of , 1998, there were Contract Owners under Account
C.
Item 28.
- - --------
INDEMNIFICATION--UNDERTAKING
(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 LNL, as long as he/she
acted in good faith and in a manner he/she reasonably believed to be in
the best
<PAGE>
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 rights 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 against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
<PAGE>
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling person of the
Registrant in the successful defense of any such action, suit or
proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 29.
- --------
PRINCIPAL UNDERWRITER
(a) Lincoln National Variable Annuity Fund A (Group); Lincoln National
Variable Annuity Fund A (Individual); Lincoln Life Flexible Premium
Variable Life Account D; Lincoln National Variable Annuity Account E;
Lincoln Life Flexible Premium Variable Life Account F; Lincoln
Life Flexible Premium Variable Life Account G; Lincoln National
Variable Annuity Account H; Lincoln Life Flexible Premium Variable Life
Account K; Lincoln National Variable Annuity Accounts 50 and 51;
(b) See Item 25.
(c) Commissions and Other Compensation Received by Lincoln National Life
Insurance Company from Account C during the fiscal year which ended
December 31, 1997:
<PAGE>
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Net Underwriting
Name of Principal Discounts and Compensation Brokerage
Underwriter Commissions on Redemption Commissions Compensation
----------- ----------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
The Lincoln National
Life Insurance a b
Company None None None None
</TABLE>
Notes:
(a) These figures represent compensation received by Lincoln National Life
Insurance Company for surrender, withdrawal and contract charges. See Charges
and other deductions, in the Prospectus.
(b) These figures represent compensation received by Lincoln National Life
Insurance Company for mortality and expense guarantees. See Charges and other
deductions, in the Prospectus.
Item 30.
- --------
LOCATION OF ACCOUNTS AND RECORDS
Exhibit 15(b) is hereby expressly incorporated herein by this reference.
(TO BE FILED BY AMENDMENT.)
Item 31.
- --------
Item 32. Undertakings
- --------
(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 cared or similar written
communication affixed to or included in the Prospectus that the applicant
can remove to send for a Statement of Additional Information.
(c) Registrant undertakes to deliver any Statement of Additional Information
and any financial statement required to be made available under this Form
promptly upon written or oral request 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.
<PAGE>
EXHIBIT INDEX
(4) Variable Annuity Contract
(5) (a) Application
(15)
(a) Organizational Chart of The Lincoln National Life Insurance
Holding Company System
<PAGE>
<TABLE>
<CAPTION>
<S><C>
- ------------------------------------------------------------------------------------------------------------------------------------
LINCOLN NATIONAL LIFE INSURANCE COMPANY
eANNUITY APPLICATION
- ------------------------------------------------------------------------------------------------------------------------------------
CONTRACT OWNER: JOINT CONTRACT OWNER: (MAY ONLY BE SPOUSE)
Abraham Lincoln Mary Lincoln
--------------- ------------
Full Legal Name Full Legal Name
NOTE: MAXIMUM AGE OF 108-G South Street 108-G South Street
CONTRACT OWNER IS 85 ------------------ ------------------
(80 IN PENNSYLVANIA). Street Address Street Address
Leesburg VA 20175 Leesburg VA 20175
------------------------------ ------------------------------
City State ZIP City State ZIP
[email protected] [email protected]
---------------- ----------------
email address email address
Social Security # ###-##-#### Social Security # ###-##-####
Date of Birth: 2/17/1963 Male Date of Birth: 6/8/1968 Female
---- ------
- ------------------------------------------------------------------------------------------------------------------------------------
ANNUITANT Same as Contract Owner
- ------------------------------------------------------------------------------------------------------------------------------------
PRIMARY BENEFICIARY Contract Owner and Joint Contract Owner
CONTINGENT BENEFICIARY Todd Lincoln Relation to Contract Owner: son
------------ ---
- ------------------------------------------------------------------------------------------------------------------------------------
CONTRACT TYPE Non-qualified -- initial contribution
- ------------------------------------------------------------------------------------------------------------------------------------
ALLOCATION After the free look period, please allocate my initial purchase payment of $1,500 as follows:
------
LINCOLN NATIONAL FUNDS DELAWARE SERIES
8 % Growth and Income 3 % Global Asset Allocation 20 % Trend
THIS ALLOCATION -- -- --
WILL APPLY TO 0 % Bond 9 % Equity Income 20 % Decatur Total Return
FUTURE PURCHASE -- -- --
PAYMENT UNLESS 0 % Money Market 0 % Aggressive Growth 0 % Global Bond
OTHERWISE -- -- --
SPECIFIED THROUGH 0 % Managed 20 % Capital Appreciation
THE INTERNET -- --
SERVICE CENTER. 20 % Special Opportunities 0 % Social Awareness
-- --
0 % International
--
- ------------------------------------------------------------------------------------------------------------------------------------
REPLACEMENTS
Will the proposed contract replace any existing annuity or insurance contract (including any Lincoln National Life contracts)
which have been, or are being, reduced in premium amount, placed on paid-up, or surrendered? Yes. Existing company AETNA.
Address 151 Farmington Avenue, Hartford, CT 06156. Policy number 1234567.
Approximate amount $1,500.
- ------------------------------------------------------------------------------------------------------------------------------------
SUITABILITY
Number of dependents: 2 Total family income $150,000 Estimated net worth: $250,000
----- -------- --------
Financial Objectives: x Long term growth Maximum capital appreciation Preservation of capital Income
----- ----- ----- -----
Contract Owner's occupation: Lawyer
------
Name and Address of Contract Owner's Employer: Lincoln Law, 123 Penny Lane, Ft. Wayne, IN 00000
--------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Form 28978 Page 1
<PAGE>
- ------------------------------------------------------------------------------------------------------------------------------------
LINCOLN NATIONAL LIFE INSURANCE COMPANY
eANNUITY APPLICATION
- ------------------------------------------------------------------------------------------------------------------------------------
INTERNET SERVICE CENTER AND TELEPHONE AUTHORIZATION
I hereby consent to receive all documents, including, without limitation, the annuity contract, required in connection with the
variable annuity through the Internet Service Center. I hereby authorize and direct Lincoln National Life Insurance Company to
accept any instructions received through the Internet Service Center or by telephone from any person who can furnish proper
identification. The undersigned agrees that LNL is not liable for any loss arising from following any such instructions.
Initial of Contract Owner:
---------------------
- ------------------------------------------------------------------------------------------------------------------------------------
AUTOMATIC BANK DRAFT
TO: Mount Vernon National Bank 123456890
-------------------------- ---------
Bank Name ABA NUMBER
123 Memorial Drive Fort Wayne IN 12345
------------------ ------------------------------
Bank street address City State ZIP
Automatic bank draft start date: 06/30/98 9876543 $100.00
-------- ------- -------
Checking account number Monthly amount
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 2348, Fort Wayne, IN 46801-2348, 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. In addition to regular bank draft I/We authorize such ad hoc drafts as are requested
through the Internet Service Center. 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.
--------------------------------------------------- ---------------------------------------------------
Signature(s) EXACTLY as shown on bank records Signature(s) EXACTLY as shown on bank records
Abraham Lincoln Date 7/1/1998 Mary Lincoln Date 7/1/1998
---------------- -------- ------------ --------
Print full legal name(s) Print full legal name(s)
- ------------------------------------------------------------------------------------------------------------------------------------
SIGNATURES
Under penalty of perjury the contract Owner certifies that the social security (or taxpayer ID) is correct as it appears
in this application. I acknowledge receipt of a Prospectus. I agree to accept the copy of the application (without
original signature) delivered to me with the LNL policy as a binding, valid contract. Documents will be considered
delivered when LNL places them in the contract owner's personal folder on the Internet Service Center. I UNDERSTAND ALL
PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT ARE BASED ON THE INVESTMENT EXPERIENCE OF A VARIABLE ACCOUNT AND SO ARE
VARIABLE AND ARE NOT GUARANTEED TO A FIXED DOLLAR AMOUNT.
Application signed at: Fort Wayne, IN
--------------
Date 7/1/1998 Date 7/1/1998
--------------------------- -------- --------------------------------------------- --------
Signature of Annuitant Signature of Contract Owner if other than Annuitant
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Form 28978 Page 2
<PAGE>
LINCOLN NATIONAL
LIFE INSURANCE CO.
A PART OF LINCOLN NATIONAL CORPORATION
ANNUITY CONTRACT
FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY
BENEFIT PAYMENT OPTIONS
NON-PARTICIPATING
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 (E.G., NO
SURRENDER CHARGE WILL BE DEDUCTED) BY DELIVERING OR MAILING IT TO THE HOME
OFFICE OF LNL, OR BY CANCELING THE CONTRACT THROUGH LNL'S INTERNET SERVICE
CENTER. THE PURCHASE PAYMENT WILL BE INVESTED IN THE LINCOLN NATIONAL MONEY
MARKET FUND DURING THIS FREE LOOK PERIOD. UPON CANCELLATION, LNL WILL RETURN THE
VALUE OF ANY PAYMENTS MADE TO THE VARIABLE ACCOUNT.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT ARE VARIABLE AND ARE NOT
GUARANTEED AS TO FIXED DOLLAR AMOUNT (SEE SECTIONS 2 AND 3).
Signed for the Lincoln National Life Insurance Company at its Home Office in
Fort Wayne, Indiana.
JON A BOSCIA, PRESIDENT NANCY J. ALFORD, VICE PRESIDENT
Page 1
<PAGE>
CONTRACT DATA
CONTRACT NUMBER: XX-0123456
CONTRACT OWNER INFORMATION
PRIMARY JOINT
------- -----
CONTRACT OWNER: Abraham Lincoln Mary Lincoln
CONTRACT OWNER ADDRESS: 1080 Spruce Street 1080 Spruce Street
Indianapolis, IN 46520 Indianapolis, IN 46520
CONTRACT OWNER SSN/TAX ID: 123-45-6789 234-56-7890
ANNUITANT INFORMATION
ANNUITANT: Abraham Lincoln DATE OF BIRTH: 2/17/1938
SEX: Male
CONTINGENT ANNUITANT: Mary Lincoln DATE OF BIRTH: 4/12/1938
SEX: Female
CONTRACT INFORMATION
TYPE OF CONTRACT: Non-Qualified
EFFECTIVE DATE: July 1, 1998
MATURITY DATE July 1, 2048
PRODUCT: [eAnnuity]
PURCHASE PAYMENT: $1,500.00
PURCHASE PAYMENT FREQUENCY: Monthly
PURCHASE PAYMENT ALLOCATION: 25% Lincoln National Managed Fund, Inc.
75% Lincoln National Growth and Income Fund, Inc.
BENEFICIARY INFORMATION
Beneficiary Name: Todd Lincoln
Relationship: son
LINCOLN NATIONAL LIFE INSURANCE COMPANY CONTACT INFORMATION
Lincoln National Life Insurance Company
P.O. Box 2340
Fort Wayne, IN 46801
URL: http:\\www.[annuitynet].com
Form 28977
Page 2
<PAGE>
VARIABLE ACCOUNT
There are currently [fourteen] Subaccounts in the Variable Account available to
the Owner. The Owner may direct Purchase Payments under the Contract to any of
the available Subaccounts, subject to limitations. The amounts allocated to
each Subaccount will be invested at net asset value in the shares of one of the
regulated investment companies (the Funds or Series). The Funds or Series are:
1. [Lincoln National Growth and Income Fund, Inc.]
2. [Lincoln National Bond Fund, Inc.]
3. [Lincoln National Money Market Fund, Inc.]
4. [Lincoln National Managed Fund, Inc.]
5. [Lincoln National Special Opportunities Fund, Inc.]
6. [Lincoln National Global Asset Allocation Fund, Inc.]
7. [Lincoln National Equity Income Fund, Inc.]
8. [Lincoln National Aggressive Growth Fund, Inc.]
9. [Lincoln National Capital Appreciation Fund, Inc.]
10. [Lincoln National Social Awareness Fund, Inc.]
11. [Lincoln National International Fund, Inc.]
12. [Delaware Group Premium Fund, Inc. Trend Series]
13. [Delaware Group Premium Fund, Inc. Decatur Total Return Series]
14. [Delaware Group Premium Fund, Inc. Global Bond Series]
15. [Other Funds or Series made available by LNL]
See Section 2.03 for provisions governing any limitations, substitution or
elimination of Funds or Series.
Page 3
<PAGE>
ARTICLE 1
DEFINITIONS
Account or Variable Account -- Lincoln National Variable Annuity Account C, the
segregated investment account into which the Lincoln National Life Insurance
Company sets aside and invests the assets attributable to this variable annuity
Contract. The Variable Account is a unit investment trust registered with the
SEC under the Investment Company Act of 1940.
Accumulation Unit -- A unit of measure used to calculate the Contract Value
during the accumulation period and in other ancillary computations.
Annuitant -- The person upon whose life the annuity benefit payments made after
the Annuity Commencement Date will be based.
Annuity Commencement Date -- The date when the funds are withdrawn for payment
of annuity benefits under the Annuity Payment Option selected.
Annuity Payment Option - Any of the forms of annuity benefit payments allowed
under this Contract.
Annuity Unit -- A unit of measure, used after the Annuity Commencement Date, to
calculate the amount of variable annuity benefit payments.
Beneficiary -- The person or entity designated by the Owner to receive the Death
Benefit, if any, payable upon the death of the Owner.
Code -- The Internal Revenue Code (IRC) of 1986, as amended.
Contract -- The agreement between LNL and the Owner in which LNL provides a
variable annuity.
Contract Surrender Value -The Contract Value less any applicable Surrender
Charges.
Contract Value -- The sum of the values of all the Accumulation Units
attributable to this Contract at a given time.
Contract Year -- Each one year period from the anniversary of the effective date
on the Contract Data page to the anniversary of that date in the following year.
Death Benefit -- The amount payable to the Owner's designated Beneficiary upon
death of the Owner.
Fund - Any of the mutual funds into which Purchase Payments are allocated.
Home Office -- The principal office of LNL located at 1300 South Clinton Street,
Fort Wayne, Indiana 46802, or an institution designated by LNL.
Individual Retirement Annuity (IRA) -- A retirement plan qualified for special
tax treatment under the Code, including traditional IRAs under section 408 and
Roth IRAs under section 408A.
Internet Service Center - The Internet site LNL maintains specifically for this
Contract to provide variable annuity contract information and other information
to current and prospective annuity Contract Owners and through which various
transactions may be performed. Certain of these transactions may require faxed
or mailed signatures. The URL for the Internet Service Center can be found on
the Contract Data page.
LNL -- The Lincoln National Life Insurance Company.
Page 4
<PAGE>
Maturity Date -- The date specified on the Contract Data page. This is the date
at which annuitization will automatically occur. This date may be changed.
Net Asset Value Per Share - The market value of a Fund or Series 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.
Owner -- The individual or entity who exercises rights of ownership under this
Contract.
Purchase Payments -- Amounts paid into this Contract.
Series - Any of the underlying portfolios of the [Delaware Group Premium Fund,
Inc.] in which Purchase Payments allocated to the Variable Account are
indirectly invested.
Subaccount -- That portion of the Variable Account which invests in shares of a
particular Fund or Series. There is a separate Subaccount that corresponds to
each Fund and Series.
Surrender Charge -- The charge assessed on premature withdrawals or surrender of
the Contract, calculated according to the Contract provisions.
Valuation Date -- Close of the stock market of each day that the New York Stock
Exchange (NYSE) is open for business.
Valuation Period -- The period commencing at the close of trading on the NYSE
on a particular Valuation Date and ending at the close of trading on the NYSE on
the next succeeding Valuation Date.
ARTICLE 2
PURCHASE PAYMENTS, OPTIONS, AND BENEFITS
2.01 WHERE PAYABLE
All Purchase Payments must be made either to LNL at its Home Office or through
the Internet Service Center.
2.02 AMOUNT AND FREQUENCY
The minimum initial Purchase Payment is $1,000. The minimum subsequent payment
to the Contract at any one time must be at least $100.00. Purchase Payments may
be made until the earliest of the Annuity Commencement Date, the surrender of
the Contract, the Maturity Date, or payment of any Death Benefit. LNL reserves
the right to limit the sum of Purchase Payments made under this Contract to
$5,000,000.
2.03 VARIABLE ACCOUNT
Purchase Payments under the Contract are allocated to 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. The
Owner may direct Purchase Payments under the Contract to any of the available
Subaccounts. The amounts allocated to each Subaccount will be invested at net
asset value in the shares of one of the Funds or Series. The Funds and Series
are shown on the Contract Data page.
LNL reserves the right to eliminate the shares of any Fund or Series and
substitute the securities of a different Fund,
Page 5
<PAGE>
Series, investment company or mutual fund if the shares of a Fund or Series are
no longer available for investment, or, if in the judgment of LNL, further
investment in any Fund or Series should become inappropriate in view of the
purposes of the Contract. LNL may add new Subaccounts investing in a new Fund
or Series. LNL will give the Owner notice of the elimination and substitution
of any Fund or Series within fifteen days after such substitution occurs. Such
notice will be posted on the Internet Service Center, and sent to the Owner's
last known e-mail address. Any such elimination, substitution or addition will
be subject to compliance with any applicable regulatory requirements.
LNL will use each Purchase Payment allocated to the Variable Account by the
Owner to buy Accumulation Units in the Subaccount(s) selected by the Owner. The
number of Accumulation Units purchased will be determined by dividing the amount
directed to the Subaccount by the dollar value of an Accumulation Unit in such
Subaccount as of the next valuation of such Subaccount immediately following
LNL's receipt of the Purchase Payment. The number of Accumulation Units held for
an Owner in a Subaccount will not change simply because of a change in the
dollar value of those Units.
2.04 VALUATION OF ACCUMULATION UNITS
The Contract Value at any time prior to the Annuity Commencement Date equals the
sum of the values of the Accumulation Units credited in the Subaccounts under
the Contract.
The value of a Subaccount on any Valuation Date is the number of Accumulation
Units in the Subaccount multiplied by the value of an Accumulation Unit in the
Subaccount at the end of the Valuation Period.
Accumulation Units for each Subaccount are valued separately. Initially, the
value of an Accumulation Unit was arbitrarily 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 any later
Valuation Period is determined as follows:
(1) THE TOTAL VALUE OF FUND OR SERIES SHARES HELD IN THE SUBACCOUNT is
calculated by multiplying the number of Fund or Series shares owned by
the Subaccount at the beginning of the Valuation Period by the Net
Asset Value Per Share of the Fund or Series at the end of the
Valuation Period, and adding any dividend or other distribution of the
Fund or Series if an ex-dividend date occurs during the Valuation
Period; MINUS
(2) THE LIABILITIES OF THE SUBACCOUNT AT THE END OF THE VALUATION PERIOD
(such 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 LNL that LNL determines are as a result of the
operations from the Variable Account); the result DIVIDED BY
(3) THE OUTSTANDING NUMBER OF ACCUMULATION UNITS IN THE SUBACCOUNT AT THE
BEGINNING OF THE VALUATION PERIOD.
The daily charges imposed on a Subaccount for any Valuation Period represent the
annuity asset charge adjusted for the number of calendar days in the Valuation
Period. On an annual basis the annuity asset charge will not exceed 0.55%. The
Accumulation Unit value and Annuity Unit value may increase or decrease the
dollar value of benefits under the Contract. The dollar value of benefits will
not be adversely affected by expenses incurred by LNL.
2.05 TRANSFERS
Prior to the earlier of:
(1) the Maturity Date;
(2) surrender of the Contract;
(3) payment of any Death Benefit; or
Page 6
<PAGE>
(4) the Annuity Commencement Date;
the Owner may direct a transfer of assets from one Subaccount to another
Subaccount.
A transfer will result in the purchase of Accumulation Units in one Subaccount
and the redemption of Accumulation Units in the other Subaccount. Such a
transfer will be accomplished at relative Accumulation Unit values as of the
Valuation Date the transfer request is received.
LNL does not currently charge for this service. However, LNL reserves the right
to impose a charge in the future for transfers between Subaccounts. In addition,
LNL reserves the right to refuse a transfer if, in the investment advisor's
judgement, LNL would be unable to invest effectively according to the Fund's or
Series' investment objectives as a result of such a transfer. LNL reserves the
right to revise the transfer privilege at any time.
2.06 WITHDRAWAL OPTION
The Owner may withdraw a part of the surrender value of this Contract, subject
to a Surrender Charge (see section 2.08). The withdrawal will be effective on
the Valuation Date on which LNL receives a request:
(1) in writing at its Home Office; or
(2) through the Internet Service Center.
The minimum withdrawal is $300. Partial withdrawals will not be permitted if
they lower the Contract Value below $1,000. LNL reserves the right to surrender
this Contract if any withdrawal reduces the total Contract Value to a level in
which this Contract may be surrendered in accordance with the terms set forth in
the nonforfeiture law, applicable in the Owner's home state, for individual
deferred annuities. LNL may surrender the Contract for its surrender value.
The request should specify from which Subaccount the withdrawal will be made.
If no Subaccount is specified, LNL will withdraw the amount requested on a
pro-rata basis from each Subaccount. Any cash payment will be mailed or
electronically transferred 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 for
withdrawal is received.
The withdrawal option is not available after the Annuity Commencement Date.
2.07 SURRENDER OPTION
The Owner may surrender this Contract for its surrender value. On surrender,
this Contract terminates. Surrender will be effective on the Valuation Date on
which LNL receives a written request at its Home Office or a request through the
Internet Service Center. The Contract Surrender Value will be the total
Contract Value on the Valuation Date, less any Surrender Charge.
Payment will be made 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 at its Home Office.
The surrender option is not available after the Annuity Commencement Date.
2.08 SURRENDER CHARGE
The Surrender Charge is calculated as follows:
Page 7
<PAGE>
Surrender
Number of complete Charge (as a
Contract years percentage of
Since initial payment Contract
was invested Value withdrawn)
1 year or less 3%
More than 1 year 2%
More than 2 years 1%
More than 3 years 0%
2.09 WAIVER OF SURRENDER CHARGES
A surrender of this Contract or withdrawal of Contract Value prior to the
Annuity Commencement Date may be subject to a Surrender Charge, except that such
charges do not apply to:
(1) a surrender of the Contract as a result of the death of the Owner; or
in the case of joint Owners, the death of one of the Owners; or
(2) annuitization of the Contract as provided for in Article 3.
The Surrender Charge will only be waived if LNL is in receipt of proof,
acceptable to LNL, of the exception.
If a non-natural person is the Owner of the Contract, the Annuitant will be
considered the Owner of the Contract for purposes of (1) above.
2.10 DEATH OF OWNER
BEFORE THE ANNUITY COMMENCEMENT DATE
ENTITLEMENT
If there is a single Owner, upon the death of the Owner LNL will pay a
Death Benefit to the designated Beneficiary(s). If the designated
Beneficiary is the surviving spouse of the deceased Owner, the designated
Beneficiary may elect to continue the Contract as the new Owner in lieu of
receiving the Death Benefit. If there are no designated Beneficiaries, LNL
will pay a Death Benefit to the Owner's estate. Upon the death of the
designated Beneficiary who continues the Contract as the new Owner, LNL
will pay a Death Benefit to the designated Beneficiary(s) named by the
spouse as new Owner.
If there are joint Owners, upon the death of the first joint Owner, the
surviving joint Owner, as the spouse of the deceased joint Owner, may
either continue the Contract as sole Owner or receive a Death Benefit.
Upon the death of the joint Owner who continues the Contract, LNL will pay
a Death Benefit to the designated Beneficiary(s).
The Death Benefit will be paid if LNL is in receipt of:
(1) proof of death acceptable to LNL;
(2) authorization for payment; and
(3) all claim forms, fully completed.
Proof of death may be:
(1) a certified copy of a death certificate;
Page 8
<PAGE>
(2) a certified copy of the statement of death from the attending
physician;
(3) a certified copy of a decree of a court of competent jurisdiction
as to the findings of death; or
(4) 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, no payment
of Death Benefits provided under the Contract will be allowed that does not
satisfy the requirements of Code section 72(s) or 401(a)(9), as applicable,
and as amended from time to time.
DETERMINATION OF AMOUNTS
In the case of the death of the Owner, or in the case of joint Owners, one
of the Owners; this Contract provides a Death Benefit equal to the Contract
Value. If the Owner is a corporation or other non-individual person
(non-natural person), the death of the Annuitant will be treated as the
death of the Owner.
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:
(1) The Death Benefit must be completely distributed within five
years of the Owner's date of death; or
(2) 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.
If a lump sum settlement is elected, the proceeds will be paid within seven
days of approval by LNL of the claim. This payment may be postponed as
permitted by the Investment Company Act of 1940.
ON OR AFTER THE ANNUITY COMMENCEMENT DATE
If the 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. All of the Owner's rights granted by the Contract
will pass to the joint Owner, if any; otherwise to the designated
Beneficiary.
If there is no named Beneficiary at the time of the Owner's death, then the
Owner's rights will pass to the Annuitant, if applicable. If no named
Beneficiary, Annuitant, or joint Annuitant survives the Owner, any
remaining annuity benefit payments will continue to the Owner's estate.
2.11 DEATH OF ANNUITANT
BEFORE THE ANNUITY COMMENCEMENT DATE
If the Annuitant is also the Owner or a joint Owner, then the Death Benefit
paid will be subject to the Contract provisions regarding death of the
Owner. If the surviving spouse of the Owner/Annuitant assumes the Contract,
the contingent Annuitant becomes the Annuitant. If no contingent Annuitant
is named, the surviving spouse becomes the Annuitant.
If an Annuitant who is not the Owner or joint Owner dies, then the
contingent Annuitant, if any, becomes the
Page 9
<PAGE>
Annuitant. If no contingent Annuitant is named, the Owner (or the younger
of the joint Owners) becomes the Annuitant.
ON OR AFTER THE ANNUITY COMMENCEMENT DATE
On receipt of proof of death, as described in Section 2.10, of the
Annuitant or both joint Annuitants, any remaining annuity benefit payments
under the Annuity Payment Option will be paid to the Owner, if living,
otherwise, to the Beneficiary. If there is no Beneficiary, any remaining
benefit payments will continue to the Annuitant's estate.
ARTICLE 3
ANNUITY PAYOUT OPTION
BENEFITS
3.01 ANNUITY PAYMENTS
An election to receive payments under an Annuity Payment Option must be made
before the Maturity Date.
If an Annuity Payment Option is not chosen before the Maturity Date, payments
will commence to the Owner on the Maturity Date under the Annuity Payment Option
which provides a life annuity with annuity payments guaranteed for 10 years.
The Maturity Date may be deferred upon request (either in writing or through the
Internet Service Center) by the Owner and any Beneficiary who cannot be changed.
Purchase Payments may be made until the new Maturity Date.
3.02 CHOICE OF ANNUITY PAYMENT OPTION
BY OWNER -- Before the Annuity Commencement Date, the Owner may choose or change
any Annuity Payment Option.
BY BENEFICIARY -- At the time proceeds are payable to a Beneficiary, a
Beneficiary may choose or change any Annuity Payment Option that meets the
requirements of Code section 72(s) or 401(a)(9) if proceeds are available to the
Beneficiary in a lump sum. The Beneficiary then becomes the Annuitant.
A choice or change must be in writing to LNL, or through the Internet Service
Center.
After the Annuity Commencement Date, the Annuity Payment Option may not be
changed.
3.03 ANNUITY PAYMENT OPTIONS
(1) Life annuity / life annuity with guaranteed period -- payments will be made
for life with no period certain, for life with a 10 year period certain, or
for life with a 20 year period certain.
(2) Joint life annuity / joint life annuity with guaranteed period -- payments
will be made during the joint life of the Annuitant and a joint Annuitant
of the Owner's choice. Payments will be made for life with no period
certain, for life with a 10 year period certain, or for life with a 20 year
period certain. Payments continue for the life of the survivor at the death
of the Annuitant or joint Annuitant.
(3) Other Annuity payment Options may be offered by LNL from time to time.
Page 10
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The amount of annuity payment will depend on the age and sex (except in cases
where unisex rates are required) of the Annuitant as of the Annuity Commencement
Date. Annuity payments will be made once each month. The Contract Value and
Annuity Unit value used to effect benefit payments will be calculated as of the
Annuity Commencement Date and each monthly anniversary of the Annuity
Commencement Date. Payments will be made within fourteen days after the
Annuity Commencement Date and monthly anniversaries.
3.04 DETERMINATION OF THE AMOUNT OF THE FIRST VARIABLE ANNUITY PAYMENT
Article 6 of this Contract illustrates the minimum payment amounts and the age
adjustments that will be used to determine the first monthly payment under a
variable Annuity Payment Option. The tables show the dollar amount of the first
monthly payment that 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 assumed rate of return of
5% per year.
3.05 DETERMINATION OF THE AMOUNT OF SUBSEQUENT VARIABLE ANNUITY PAYMENTS
The first variable annuity payment is sub-divided into components, each of which
represents the product of:
(1) the percentage elected by the Contract Owner of a specific Subaccount;
and
(2) the entire first variable annuity payment.
On the Annuity Commencement Date, the Contract is credited with Annuity Units
for each Subaccount. The number of Annuity Units credited is computed by
dividing the component of the first payment for that Subaccount by the Annuity
Unit value for that Subaccount. Each component of each variable annuity
payment after the first payment will be determined by multiplying the Annuity
Unit value for that Subaccount on the monthly anniversary of the Annuity
Commencement Date by the number of Annuity Units attributable to that
Subaccount. The total variable annuity payment will be the sum of the
payments attributable to each Subaccount. In the absence of transfers between
Subaccounts, the number of Annuity Units attributable to each Subaccount
remains constant, although the Annuity Unit values will vary with the
investment performance of the Funds and Series.
The Annuity Unit value for any Valuation Period for any Subaccount is determined
by multiplying the Annuity Unit value for the immediately preceding Valuation
Period by the product of (A) and (B), where:
(A) is 0.999866337 raised to a power equal to the number of days in the
current Valuation Period; and
(B) is the Accumulation Unit value of the same Subaccount for this
Valuation Period divided by the Accumulation Unit value of the same
Subaccount for the immediately preceding Valuation Period.
LNL will value all assets in the Subaccount in accordance with the provisions of
applicable laws, rules, and regulations. The determination by LNL of the value
of an Accumulation Unit or of an Annuity Unit, consistent with the above
described methodology, will be binding on the Owner(s) and any Beneficiaries.
LNL guarantees that the dollar amount of each payment after the first will not
be affected by variations in mortality experience from mortality assumptions on
which the first payment is based.
After the Annuity Commencement Date, the Owner may direct a transfer of assets
from one Subaccount to another. Such transfers will be limited to three (3) per
Contract Year.
A transfer from one Subaccount to another Subaccount will result in the purchase
of Annuity Units in one Subaccount, and the redemption of Annuity Units in the
other Subaccount. Such a transfer will be accomplished at relative Annuity Unit
values as of the Valuation Date the transfer request is received.
Page 11
<PAGE>
3.06 PROOF OF AGE
Payment will be subject to proof of age acceptable to LNL, such as a certified
copy of a birth certificate.
3.07 EVIDENCE OF SURVIVAL
If payments depend upon the continuing life of an annuitant, then LNL may
require proof that the annuitant is alive when each payment is due.
3.08 CHANGE IN ANNUITY PAYMENT OPTION
The Annuity Payment Option may not be changed after the Annuity Commencement
Date.
ARTICLE 4
BENEFICIARY
4.01 DESIGNATION
The Owner may designate a Beneficiary(s). Unless there are joint Owners, the
designated Beneficiary(s) will receive the Death Benefit proceeds upon the death
of the Owner.
If there are joint Owners, the surviving joint Owner will receive the Death
Benefit proceeds upon the death of the first 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 of the first joint Owner
will be treated as a contingent Beneficiary.
If the surviving joint Owner, as spouse of the deceased joint Owner, continues
the Contract as the sole Owner in lieu of receiving the Death Benefit proceeds,
then the designated Beneficiary(s) will receive the Death Benefit proceeds upon
the death of the surviving spouse.
Unless otherwise stated in the Beneficiary designation, designated Beneficiaries
will share the Death Benefit equally.
4.02 CHANGE
The Owner may change any designated Beneficiary, unless prohibited by the
previous designation. A change of Beneficiary will then revoke any previous
designation.
A change may be made either by filing a written request, in a form acceptable to
LNL, at its Home Office, or through the Internet Service Center. The change will
become effective upon receipt of the request by LNL.
4.03 DEATH
Unless otherwise provided in the Beneficiary designation, if any Beneficiary
dies before the Owner, that Beneficiary's interest will go to any other named
Beneficiaries, according to their respective interests. If there are no other
named Beneficiaries, benefits will be paid to the contingent Beneficiary(s), if
any. Before the Annuity Commencement Date, if no Beneficiary or contingent
Beneficiary survives the Owner the proceeds will be paid to the Owner's estate.
Once a Beneficiary is entitled to Death Benefit proceeds, the Beneficiary may
name his or her own Beneficiary(s) to receive any remaining benefits due under
the Contract, should the Beneficiary die prior to receipt of all benefits. If
no
Page 12
<PAGE>
Beneficiary is named, or if the named Beneficiary predeceases the original
Beneficiary, any remaining benefits will continue to the original Beneficiary's
estate. This designation must be made to the LNL Home Office or through the
Internet Service Center.
ARTICLE 5
GENERAL PROVISIONS
5.01 THE CONTRACT
The Contract, the application, and any riders attached to the Contract
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.
5.02 THE INTERNET SERVICE CENTER
The Internet Service Center is maintained to provide information to current and
prospective customers and to enable various transactions. For security LNL may
issue the Owner a PIN or password. The Owner is responsible for any use of this
PIN or password. For legal reasons certain transactions require a document with
a signature (faxed or mailed). E-mailed requests for transactions that require
a signature will not be processed. Detailed instructions on how to perform
various transactions such as transferring funds from one Subaccount to another
Subaccount, changing the Beneficiary or making a withdrawal can be found at
LNL's Internet Service Center. These procedures must be followed. The Owner
agrees to receive all required documents through LNL's Internet Service Center.
Documents will be considered to be delivered to the Owner when they are placed
in the Owner's personal folder at the Internet Service Center.
5.03 OWNERSHIP
The Owner is the person who has the ability to exercise the rights within this
Contract.
The Owner may name only his or her spouse as a joint Owner. Joint Owner(s) will
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.
Before the Annuity Commencement Date, the Owner has the right to change the
Annuitant at any time by notifying LNL of the change in writing or through the
Internet Service Center. The Annuitant may not be changed in a Contract owned by
a non-natural person. The Owner may also name a contingent Annuitant by
notifying LNL in writing or through the Internet Service Center. The contingent
Annuitant designation is no longer applicable after the Annuity Commencement
Date.
5.04 ASSIGNMENTS
If used with an Individual Retirement Annuity, the Contract will not be
transferable. It may not be sold, assigned, discounted or pledged as collateral
for a loan or as security for the performance of an obligation or for any other
purpose.
Page 13
<PAGE>
5.05 INCONTESTABILITY
LNL will not contest this Contract.
5.06 MISSTATEMENT OF AGE AND/OR SEX
If the age and/or sex of the Annuitant 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 will be made up immediately and any overpayments already made by LNL will
be charged against the annuity payments falling due after the correction is
made.
5.07 NONPARTICIPATING
The Contract is nonparticipating and will not share in the surplus earnings of
LNL.
5.08 VOTING RIGHTS
LNL will vote the Fund and Series shares held in the VAA at meetings of the
various Funds and Series. The votes will be cast according to the instructions
of Owners with interests in a Fund or Series. An Owner may give instructions
for a number of votes equal to the Owner's percentage interest in a subaccount
of the total number of votes attributable to the subaccount, fractional shares
will be recognized.
Ownership of this Contract will not entitle any person to vote at any meeting of
shareholders of LNL.
5.09 OWNERSHIP OF THE ASSETS
LNL will have exclusive and absolute ownership and control of its assets,
including all assets in the Variable Account.
5.10 REPORTS
LNL will send a report to the Owner at least once each Contract Year. The
report will be mailed electronically to the last e-mail address known to LNL.
The report will include a statement of the number of units credited to the
Variable Account under this Contract and the dollar value of such units. The
information in the report will be as of a date not more than one month prior to
the date of e-mailing the report. In addition, LNL will e-mail to the Owner at
least once in each Contract Year a report of the investments held in the
Subaccounts under this Contract. These reports will also be available through
the Internet Service Center.
5.11 PREMIUM TAX
State and local government premium tax, if applicable, will be deducted from
Purchase Payments or Contract Value when incurred by LNL or at another time of
LNL's choosing.
5.12 MAXIMUM ISSUE AGE
This Contract will not be issued to Owners or joint Owners over the age of 85.
Page 14
<PAGE>
ARTICLE 6
ANNUITY PURCHASE RATES UNDER A VARIABLE PAYMENT OPTION
DOLLAR AMOUNT OF FIRST MONTHLY PAYMENT WHICH IS
PURCHASED WITH EACH $1,000 APPLIED
SINGLE LIFE ANNUITIES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
MALE MALE MALE FEMALE FEMALE FEMALE
WITH NO WITH 120 WITH 240 WITH NO WITH 120 WITH 240
PERIOD MONTHS MONTHS PERIOD MONTHS MONTH
AGE CERTAIN CERTAIN CERTAIN CERTAIN CERTAIN CERTAIN
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
60 $6.29 $6.16 $5.75 $5.73 $5.68 $5.48
- ------------------------------------------------------------------------------
61 $6.42 $6.27 $5.81 $5.83 $5.77 $5.54
- ------------------------------------------------------------------------------
62 $6.56 $6.39 $5.87 $5.94 $5.86 $5.61
- ------------------------------------------------------------------------------
63 $6.71 $6.51 $5.93 $6.05 $5.96 $5.67
- ------------------------------------------------------------------------------
64 $6.88 $6.64 $5.98 $6.17 $6.07 $5.74
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
65 $7.05 $6.77 $6.04 $6.30 $6.19 $5.80
- ------------------------------------------------------------------------------
66 $7.24 $6.91 $6.09 $6.44 $6.31 $5.87
- ------------------------------------------------------------------------------
67 $7.44 $7.06 $6.14 $6.59 $6.43 $5.93
- ------------------------------------------------------------------------------
68 $7.65 $7.21 $6.19 $6.75 $6.57 $6.00
- ------------------------------------------------------------------------------
69 $7.88 $7.36 $6.24 $6.93 $6.71 $6.06
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
70 $8.13 $7.52 $6.28 $7.11 $6.86 $6.12
- ------------------------------------------------------------------------------
71 $8.38 $7.68 $6.32 $7.32 $7.02 $6.17
- ------------------------------------------------------------------------------
72 $8.66 $7.85 $6.35 $7.54 $7.19 $6.23
- ------------------------------------------------------------------------------
73 $8.95 $8.01 $6.38 $7.79 $7.36 $6.27
- ------------------------------------------------------------------------------
74 $9.27 $8.18 $6.41 $8.05 $7.54 $6.32
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
75 $9.61 $8.35 $6.44 $8.34 $7.72 $6.36
- ------------------------------------------------------------------------------
76 $9.97 $8.52 $6.46 $8.64 $7.91 $6.39
- ------------------------------------------------------------------------------
77 $10.36 $8.69 $6.47 $8.97 $8.10 $6.42
- ------------------------------------------------------------------------------
78 $10.78 $8.86 $6.49 $9.33 $8.30 $6.45
- ------------------------------------------------------------------------------
79 $11.23 $9.02 $6.50 $9.72 $8.49 $6.47
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
80 $11.71 $9.18 $6.51 $10.14 $8.69 $6.49
- ------------------------------------------------------------------------------
81 $12.22 $9.33 $6.52 $10.60 $8.88 $6.50
- ------------------------------------------------------------------------------
82 $12.77 $9.47 $6.53 $11.10 $9.07 $6.52
- ------------------------------------------------------------------------------
83 $13.36 $9.61 $6.53 $11.64 $9.24 $6.52
- ------------------------------------------------------------------------------
84 $13.99 $9.74 $6.53 $12.23 $9.41 $6.53
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
85 $14.66 $9.85 $6.54 $12.87 $9.57 $6.53
- ------------------------------------------------------------------------------
</TABLE>
Page 15
<PAGE>
JOINT AND SURVIVOR ANNUITIES
<TABLE>
<CAPTION>
--------------------------------------------
WITH NO WITH 120 WITH 240
JOINT PERIOD MONTHS MONTHS
AGE CERTAIN CERTAIN CERTAIN
--------------------------------------------
<S> <C> <C> <C>
60 $5.27 $5.28 $5.25
--------------------------------------------
61 $5.35 $5.35 $5.31
--------------------------------------------
62 $5.43 $5.43 $5.38
--------------------------------------------
63 $5.51 $5.52 $5.45
--------------------------------------------
64 $5.60 $5.61 $5.52
--------------------------------------------
--------------------------------------------
65 $5.70 $5.70 $5.59
--------------------------------------------
66 $5.80 $5.80 $5.66
--------------------------------------------
67 $5.92 $5.91 $5.74
--------------------------------------------
68 $6.04 $6.03 $5.81
--------------------------------------------
69 $6.17 $6.15 $5.89
--------------------------------------------
--------------------------------------------
70 $6.31 $6.29 $5.96
--------------------------------------------
71 $6.46 $6.43 $6.03
--------------------------------------------
72 $6.62 $6.58 $6.10
--------------------------------------------
73 $6.79 $6.73 $6.16
--------------------------------------------
74 $6.98 $6.90 $6.22
--------------------------------------------
--------------------------------------------
75 $7.19 $7.08 $6.28
--------------------------------------------
76 $7.40 $7.26 $6.32
--------------------------------------------
77 $7.64 $7.45 $6.37
--------------------------------------------
78 $7.89 $7.65 $6.41
--------------------------------------------
79 $8.17 $7.86 $6.44
--------------------------------------------
--------------------------------------------
80 $8.47 $8.07 $6.47
--------------------------------------------
81 $8.79 $8.28 $6.49
--------------------------------------------
82 $9.14 $8.50 $6.50
--------------------------------------------
83 $9.51 $8.71 $6.52
--------------------------------------------
84 $9.92 $8.92 $6.53
--------------------------------------------
--------------------------------------------
85 $10.35 $9.12 $6.53
--------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
AGE ADJUSTMENT TABLE
--------------------------------------------------
YEAR OF ADJUSTMENT YEAR OF ADJUSTMENT
BIRTH TO AGE BIRTH 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 16
<PAGE>
ANNUITY
CONTRACT
FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY
BENEFIT PAYMENT OPTIONS
NON-PARTICIPATING
If you have any questions concerning
this Contract, please contact
Lincoln National Life by
mail or through the
Internet Service Center
LINCOLN NATIONAL
LIFE INSURANCE COMPANY
1300 SOUTH CLINTON STREET
P.O. BOX 2340
FORT WAYNE, INDIANA 46801
URL: http:\\www.[annuitynet].com
Page 17
<PAGE>
ORGANIZATIONAL CHART OF THE
LINCOLN NATIONAL INSURANCE HOLDING COMPANY SYSTEM
All the members of the holding company system are corporations, with
the exception of, Delaware Distributors, L.P and Founders CBO, L.P.
--------------------------------
| |
| Lincoln National Corporation |
| Indiana - Holding Company |
--------------------------------
| --------------------------------------------
|--| City Financial Planners, Ltd. |
| | 100% - Englad/Wales - Distribution of life|
| | assurance & pension products |
| --------------------------------------------
| -------------------------------
|--| The Insurers' Fund, Inc. # |
| | 100% - Maryland - Inactive |
| -------------------------------
| ------------------------------------------------
|--| LNC Administrative Services Corporation |
| | 100% - Indiana - Third Party Administrator |
| ------------------------------------------------
| ------------------------------------------------
|--| Lincoln Funds Corporation |
| | 100% - Delaware - Intermediate Holding Company |
| ------------------------------------------------
| ---------------------------------------------------
|--|Lincoln National Financial Institutions Group, Inc.|
| |(fka The Richard Leahy Corporation) |
| | 100% - Indiana - Insurance Agency |
| ---------------------------------------------------
| | ---------------------------------
| |--| The Financial Alternative, Inc. |
| | | 100% - Utah- Insurance Agency |
| | ---------------------------------
| | ---------------------------------------
| |--| Financial Alternative Resources, Inc. |
| | | 100% - Kansas - Insurance Agency |
| | ---------------------------------------
| | -----------------------------------------
| |--| Financial Choices, Inc. |
| | | 100% - Pennsylvania - Insurance Agency |
| | -----------------------------------------
| | -----------------------------------------------
| | | Financial Investment Services, Inc. |
| |--| (formerly Financial Services Department, Inc.)|
| | | 100% - Indiana - Insurance Agency |
| | -----------------------------------------------
| | -----------------------------------------
| | | Financial Investments, Inc. |
| |--| (formerly Insurance Alternatives, Inc.) |
| | | 100% - Indiana - Insurance Agency |
| | -----------------------------------------
| | -------------------------------------------
| |--| The Financial Resources Department, Inc. |
| | | 100% - Michigan - Insurance Agency |
| | -------------------------------------------
| | -----------------------------------------
| |--| Investment Alternatives, Inc. |
| | | 100% - Pennsylvania - Insurance Agency |
| | -----------------------------------------
| | --------------------------------------
| |--| The Investment Center, Inc. |
| | | 100% - Tennessee - Insurance Agency |
| | --------------------------------------
| | --------------------------------------
| |--| The Investment Group, Inc. |
| | | 100% - New Jersey - Insurance Agency |
| | --------------------------------------
<PAGE>
-------------------------------
| |
| Lincoln National Corporation |
| Indiana - Holding Company |
-------------------------------
| ---------------------------------------------------
|--|Lincoln National Financial Institutions Group, Inc.|
| |(fka The Richard Leahy Corporation) |
| | 100% - Indiana - Insurance Agency |
| ---------------------------------------------------
| | ------------------------------------
| |--| Personal Financial Resources, Inc. |
| | | 100% - Arizona - Insurance Agency |
| | ------------------------------------
| | ----------------------------------------
| |--| Personal Investment Services, Inc. |
| | 100% - Pennsylvania - Insurance Agency |
| ----------------------------------------
| -------------------------------------------
|--| LincAm Properties, Inc. |
| | 50% - Delaware - Real Estate Investment |
| -------------------------------------------
|
| ----------------------------------------------
| | Lincoln Financial Group, Inc. |
|--| (formerly Lincoln National Sales Corporation)|
| | 100% - Indiana - Insurance Agency |
| ----------------------------------------------
| | ----------------------------------------
| |--| Lincoln Financial Advisors Corporation |
| | | (formerly LNC Equity Sales Corporation)|
| | | 100% - Indiana - Broker-Dealer |
| | ----------------------------------------
| | -------------------------------------------------------------
| | |Corporate agencies: Lincoln Financial Group, Inc. ("LFG") |
| |--|has subsidiaries of which LFG owns from 80%-100% of the |
| | |common stock (see Attachment #1). These subsidiaries serve |
| | |as the corporate agency offices for the marketing and |
| | |servicing of products of The Lincoln National Life Insurance |
| | |Company. Each subsidiary's assets are less than 1% of the |
| | |total assets of the ultimate controlling person. |
| | -------------------------------------------------------------
| |
| | ------------------------------------------------
| |--| Professional Financial Planning, Inc. |
| | 100% - Indiana - Financial Planning Services |
| ------------------------------------------------
| ---------------------------------------
|--| Lincoln Life Improved Housing, Inc. |
| | 100% - Indiana |
| ---------------------------------------
|
| -----------------------------------------------
|--| Lincoln National (China) Inc. |
| | 100% - Indiana - China Representative Office |
| -----------------------------------------------
|
| -----------------------------------------------
|--| Lincoln National (India) Inc. |
| | 100% - Indiana - India Representative Office |
| -----------------------------------------------
| ---------------------------------------------
|--| Lincoln National Intermediaries, Inc. |
| | 100% - Indiana - Reinsurance Intermediary |
| ---------------------------------------------
| --------------------------------------------------
|__| Lincoln National Investments, Inc. |
| | (fka Lincoln National Investment Companies, Inc.)|
| | 100% - Indiana - Holding Company |
| --------------------------------------------------
| | --------------------------------------------
| |--| Lincoln National Investment Companies, Inc.|
| | |(fka Lincoln National Investments, Inc.) |
| | | 100% - Indiana - Holding Company |
| | --------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
<S><C>
-------------------------------
| |
| Lincoln National Corporation |
| Indiana - Holding Company |
-------------------------------
| --------------------------------------------------
|__| Lincoln National Investments, Inc. |
| | (fka Lincoln National Investment Companies, Inc.)|
| | 100% - Indiana - Holding Company |
| --------------------------------------------------
| | --------------------------------------------
| |--| Lincoln National Investment Companies, Inc.|
| | |(fka Lincoln National Investments, Inc.) |
| | | 100% - Indiana - Holding Company |
| | --------------------------------------------
| | | ----------------------------------
| | |--|Delaware Management Holdings, Inc.|
| | | | 100% - Delaware - Holding Company|
| | | ----------------------------------
| | | | -----------------------------------
| | | |--| DMH Corp. |
| | | | 100% - Delaware - Holding Company |
| | | -----------------------------------
| | | | ----------------------------------------
| | | |--| Delaware International Advisers Ltd. |
| | | | | 81.1% - England - Investment Advisor |
| | | | ----------------------------------------
| | | | --------------------------------------
| | | |--| Delaware Management Trust Company |
| | | | | 100% - Pennsylvania - Trust Service |
| | | | --------------------------------------
| | | | ------------------------------------------------
| | | |--| Delaware International Holdings, Ltd. |
| | | | | 100% - Bermuda - Investment Advisor |
| | | | ------------------------------------------------
| | | | | | --------------------------------------
| | | | | --| Delaware International Advisers, Ltd.|
| | | | | | 18.9% - England - Investment Advisor |
| | | | | --------------------------------------
| | | | -------------------------------------------------
| | | |--| Delvoy, Inc. |
| | | | | 100% - Minnesota - Holding Company |
| | | | -------------------------------------------------
| | | | ---------------------------------------
| | | | |--| Delaware Management Company, Inc. |
| | | | | | 100% - Delaware - Investment Advisor |
| | | | | ---------------------------------------
| | | | | | -------------------------------------------------------
| | | | | |--| Delaware Distributors, L.P. |
| | | | | | | 98%-Delaware-MutualFund Distributor & Broker/Dealer |
| | | | | | | 1% Equity-Delaware Capital Management, Inc. |
| | | | | | | 1% Equity-Delaware Distributors, Inc. |
| | | | | | | |
| | | | | | -------------------------------------------------------
| | | | | | ------------------------------------
| | | | | |--| Founders Holdings, Inc. |
| | | | | | | 100% - Delaware - General Partner |
| | | | | | ------------------------------------
| | | | | | | -----------------------------------------
| | | | | | | | Founders CBO, L.P. |
| | | | | | --| 1% - Delaware - Investment Partnership |
| | | | | | | 99% held by outside investors |
| | | | | | -----------------------------------------
| | | | | | | ------------------------------------------
| | | | | | --|Founders CBO Corporation |
| | | | | | |100%-Delaware-Co-Issuer with Founders CBO |
------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S><C>
--------------------------------
| |
| Lincoln National Corporation |
| Indiana - Holding Company |
--------------------------------
| --------------------------------------------------
|--| Lincoln National Investments, Inc. |
| | (fka Lincoln National Investment Companies, Inc.)|
| | 100% - Indiana - Holding Company |
| --------------------------------------------------
| | --------------------------------------------
| |--| Lincoln National Investment Companies, Inc.|
| | |(fka Lincoln National Investments, Inc.) |
| | | 100% - Indiana - Holding Company |
| | --------------------------------------------
| | | ----------------------------------
| | |--|Delaware Management Holdings, Inc.|
| | | | 100% - Delaware - Holding Company|
| | | ----------------------------------
| | | | -----------------------------------
| | | |--| DMH Corp. |
| | | | 100% - Delaware - Holding Company |
| | | -----------------------------------
| | | | -------------------------------------
| | | |--| Delvoy, Inc. |
| | | | | 100% - Minnesota - Holding Company |
| | | | -------------------------------------
| | | | | ------------------------------------
| | | | |---| Delaware Distributors, Inc. |
| | | | | | 100% - Delaware - General Partner |
| | | | | ------------------------------------
| | | | | | ------------------------------------------------------
| | | | | |--| Delaware Distributors, L.P. |
| | | | | | 98%-Delaware-Mutual Fund Distributor & Broker/Dealer |
| | | | | | 1% Equity-Delaware Capital Management, Inc. |
| | | | | | 1% Equity-Delaware Distributors, Inc. |
| | | | | ------------------------------------------------------
| | | | | -----------------------------------------------
| | | | |---| Delaware Capital Management, Inc. |
| | | | | |(formerly Delaware Investment Counselors, Inc.)|
| | | | | | 100% - Delaware - Investment Advisor |
| | | | | -----------------------------------------------
| | | | | | -------------------------------------------------------
| | | | | |-- | Delaware Distributors, L.P. |
| | | | | | | 98%-Delaware-Mutual Fund Distributor & Broker/Dealer |
| | | | | | |1% Equity-Delaware Capital Management, Inc. |
| | | | | | | 1% Equity-Delaware Distributors, Inc. |
| | | | | | -------------------------------------------------------
| | | | | -----------------------------------------------------
| | | | |---| Delaware Service Company, Inc. |
| | | | | | 100%-Delaware-Shareholder Services & Transfer Agent |
| | | | | -----------------------------------------------------
| | | | | -----------------------------------------------------
| | | | |---| Delaware Investment & Retirement Services, Inc. |
| | | | | 100% - Delaware - Registered Transfer Agent |
| | | | -----------------------------------------------------
| | | -----------------------------------------
| | |--| Lynch & Mayer, Inc. |
| | | | 100% - Indiana - Investment Adviser |
| | | -----------------------------------------
| | | | -----------------------------------------
| | | |--| Lynch & Mayer Asia, Inc. |
| | | | | 100% - Delaware - Investment Management |
| | | | -----------------------------------------
| | | | ----------------------------------------
| | | |--| Lynch & Mayer Securities Corp. |
| | | | 100% - Delaware - Securities Broker |
| | | ----------------------------------------
| | | ----------------------------------------------------
| | | | Vantage Global Advisors, Inc. |
| | |--| (formerly Modern Portfolio Theory Associates, Inc.)|
| | | | 100% - Delaware - Investment Adviser |
| | | ----------------------------------------------------
</TABLE>
<PAGE>
--------------------------------
| |
| Lincoln National Corporation |
| Indiana - Holding Company |
--------------------------------
| --------------------------------------------------
|--| Lincoln National Investments, Inc. |
| | (fka Lincoln National Investment Companies, Inc.)|
| | 100% - Indiana - Holding Company |
| --------------------------------------------------
| | -----------------------------------------------------------
| | | Lincoln Investment Management, Inc. |
| |--| (formerly Lincoln National Investment Management Company) |
| | | 100% - Illinois - Mutual Fund Manager and |
| | | Registered Investment Adviser |
| -----------------------------------------------------------
| -----------------------------------------------
|--| The Lincoln National Life Insurance Company |
| | 100% - Indiana |
| -----------------------------------------------
| | --------------------------------------------------
| |--| AnnuityNet, Inc. |
| | | 100% - Indiana - Distribution of annuity products|
| | --------------------------------------------------
| | -------------------------------------------
| |--| Cigna Associates, Inc. |
| | | 100% - Connecticut - Insurance Agency |
| | -------------------------------------------
| | | ----------------------------------------------------------
| | |--| Cigna Associates of Massachusetts, Inc. |
| | | | 100% - Massachusetts - Insurance Agency |
| | ----------------------------------------------------------
| | -------------------------------------------
| |--|Cigna Financial Advisors, Inc. |
| | | 100% - Connecticut - Broker Dealer |
| | -------------------------------------------
| | -------------------------------------------
| |--| First Penn-Pacific Life Insurance Company |
| | | 100% - Indiana |
| | -------------------------------------------
| | -----------------------------------------------
| |--| Lincoln Life & Annuity Company of New York |
| | | 100% - New York |
| | -----------------------------------------------
| |
| | ------------------------------------------------
| |--| Lincoln National Aggressive Growth Fund, Inc. |
| | | 100% - Maryland - Mutual Fund |
| | ------------------------------------------------
| | -----------------------------------
| |--| Lincoln National Bond Fund, Inc. |
| | | 100% - Maryland - Mutual Fund |
| | -----------------------------------
| | --------------------------------------------------
| |--| Lincoln National Capital Appreciation Fund, Inc. |
| | | 100% - Maryland - Mutual Fund |
| | --------------------------------------------------
| | --------------------------------------------
| |--| Lincoln National Equity-Income Fund, Inc. |
| | | 100% - Maryland - Mutual Fund |
| | --------------------------------------------
| | ------------------------------------------------------
| | | Lincoln National Global Asset Allocation Fund, Inc. |
| |--| (formerly Lincoln National Putnam Master Fund, Inc.) |
| | | 100% - Maryland - Mutual Fund |
| | ------------------------------------------------------
| | ------------------------------------------------
| | | Lincoln National Growth and Income Fund, Inc. |
| |--| (formerly Lincoln National Growth Fund, Inc.) |
| | | 100% - Maryland - Mutual Fund |
| | ------------------------------------------------
<PAGE>
--------------------------------
| Lincoln National Corporation |
| Indiana - Holding Company |
--------------------------------
| -----------------------------------------------
|--| The Lincoln National Life Insurance Company |
| | 100% - Indiana |
| -----------------------------------------------
| | --------------------------------------------------------
| |--| Lincoln National Health & Casualty Insurance Company |
| | | 100% - Indiana |
| --------------------------------------------------------
| | -----------------------------------------------
| |--| Lincoln Re, S.A. |
| | | 1% Argentina - General Business Corp |
| | | (Remaining 99% owned by Lincoln National |
| | | Reassurance Company) |
| -----------------------------------------------
| -------------------------------------------
| |--| Lincoln National International Fund, Inc. |
| | | 100% - Maryland - Mutual Fund |
| | | -------------------------------------------
| | ---------------------------------------
| |--| Lincoln National Managed Fund, Inc. |
| | | 100% - Maryland - Mutual Fund |
| | ---------------------------------------
| | --------------------------------------------
| |--| Lincoln National Money Market Fund, Inc. |
| | | 100% - Maryland - Mutual Fund |
| | --------------------------------------------
| | -----------------------------------------------
| |--| Lincoln National Social Awareness Fund, Inc. |
| | | 100% - Maryland - Mutual Fund |
| | -----------------------------------------------
| | -----------------------------------------------------
| |--| Lincoln National Special Opportunities Fund, Inc. |
| | | 100% - Maryland - Mutual Fund |
| | -----------------------------------------------------
| | ------------------------------------------------------
| |--| Lincoln National Reassurance Company |
| | 100% - Indiana - Life Insurance |
| ------------------------------------------------------
| | -----------------------------------------------
| |--| Lincoln Re, S.A. |
| | | 99% Argentina - General Business Corp |
| | | (Remaining 1% owned by Lincoln National Health|
| | | & Casualty Insurance Company) |
| | -----------------------------------------------
| | -----------------------------------------------
| |--| Special Pooled Risk Administrators, Inc. |
| | 100% - New Jersey - Catastrophe Reinsurance |
| | Pool Administrator |
| -----------------------------------------------
| ---------------------------------------------------------
|--| Lincoln National Management Services, Inc. |
| | 100% - Indiana - Underwriting and Management Services |
| ---------------------------------------------------------
| ---------------------------------------
|--| Lincoln National Realty Corporation |
| | 100% - Indiana - Real Estate |
| ---------------------------------------
| -----------------------------------------------------------
|--| Lincoln National Reinsurance Company (Barbados) Limited |
| | 100% - Barbados |
| -----------------------------------------------------------
|
| ----------------------------------------------
|--| Lincoln National Reinsurance Company Limited |
| | (formerly Heritage Reinsurance, Ltd.) |
| | 100% ** - Bermuda |
| ----------------------------------------------
| | -------------------------------------------------------
| |--| Lincoln European Reinsurance S.A. |
| | | 79% - Belgium |
| | | (Remaining 21% owned by Lincoln National Underwriting |
| | | Services, Ltd. |
| | -------------------------------------------------------
<PAGE>
--------------------------------
| Lincoln National Corporation |
| Indiana - Holding Company |
--------------------------------
| ----------------------------------------------
|--| Lincoln National Reinsurance Company Limited |
| | (formerly Heritage Reinsurance, Ltd.) |
| | 100% ** - Bermuda |
| ----------------------------------------------
| | ---------------------------------------------------------
| | | Lincoln National Underwriting Services, Ltd. |
| |--| 90% - England/Wales - Life/Accident/Health Underwriter |
| | | (Remaining 10% owned by Old Fort Ins. Co. Ltd.) |
| | ---------------------------------------------------------
| | | ------------------------------------------------------
| | |--| Lincoln European Reinsurance S.A. |
| | | | 21% - Belgium |
| | | |(Remaining 79% owned by Lincoln National Reinsurance |
| | | | Company Limited |
| | | ------------------------------------------------------
| | --------------------------------------------------------
| | | Servicios de Evaluacion de Riesgos, S. de R.L. de C.V. |
| |--| 51% - Mexico - Reinsurance Underwriter |
| | | (Remaining 49% owned by Lincoln National Corp.) |
| | --------------------------------------------------------
| ---------------------------------------------
|--| Lincoln National Risk Management, Inc. |
| | 100% - Indiana - Risk Management Services |
| ---------------------------------------------
| ------------------------------------------------
|--| Lincoln National Structured Settlement, Inc. |
| | 100% - New Jersey |
| ------------------------------------------------
| -----------------------------------------
|--| Lincoln National (UK) PLC |
| | 100% - England/Wales - Holding Company |
| -----------------------------------------
| | -------------------------------------------------------
| |--| Allied Westminster & Company Limited |
| | | (formerly One Olympic Way Financial Services Limited) |
| | | 100% - England/Wales - Sales Services |
| | -------------------------------------------------------
| | -----------------------------------
| |--|Cannon Fund Managers Limited |
| | | 100% - England/Wales - Inactive |
| | -----------------------------------
| | --------------------------------------------------------
| |--| Culverin Property Services Limited |
| | | 100% - England/Wales - Property Development Services |
| | --------------------------------------------------------
| | ---------------------------------------------------------
| |--| HUTM Limited |
| | | 100% - England/Wales - Unit Trust Management (Inactive) |
| | ---------------------------------------------------------
| |
| | --------------------------------------------
| |--| ILI Supplies Limited |
| | | 100% - England/Wales - Computer Leasing |
| | --------------------------------------------
| | ------------------------------------------------
| |--| Lincoln Financial Advisers Limited |
| | | (formerly: Laurentian Financial Advisers Ltd.) |
| | | 100% - England/Wales - Sales Company |
| | ------------------------------------------------
| |
| | --------------------------------------------------
| |--| Lincoln Financial Group PLC |
| | | (formerly: Laurentian Financial Group PLC) |
| | | 100% - England/Wales - Holding Company |
| | --------------------------------------------------
| | | ----------------------------------------------------
| | |--| Lincoln Unit Trust Management Limited |
| | | |(formerly: Laurentian Unit Trust Management Limited)|
| | | | 100% - England/Wales - Unit Trust Management |
| | | ----------------------------------------------------
| | | | --------------------------------------------------
| | | |--| LUTM Nominees Limited |
| | | | | 100% - England/Wales - Nominee Services (Dormat) |
| | | | --------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
<S><C>
--------------------------------
| Lincoln National Corporation |
| Indiana - Holding Company |
--------------------------------
| -----------------------------------------
|--| Lincoln National (UK) PLC |
| | 100% - England/Wales - Holding Company |
| -----------------------------------------
| | --------------------------------------------------
| |--| Lincoln Financial Group PLC |
| | | (formerly: Laurentian Financial Group PLC) |
| | | 100% - England/Wales - Holding Company |
| | --------------------------------------------------
| | | ---------------------------------------
| | |--| Lincoln Milldon Limited |
| | | |(formerly: Laurentian Milldon Limited) |
| | | | 100% - England/Wales - Sales Company |
| | | ---------------------------------------
| | | -----------------------------------------------------------
| | |--| Laurtrust Limited |
| | | | 100% - England/Wales - Pension Scheme Trustee (Inactive) |
| | | -----------------------------------------------------------
| | | --------------------------------------------------
| | |--| Lincoln Management Services Limited |
| | | |(formerly: Laurentian Management Services Limited)|
| | | | 100% - England/Wales - Management Services |
| | | --------------------------------------------------
| | | | ------------------------------------------------
| | | |--|Laurit Limited |
| | | | |100% - England/Wales - Data Processing Systems |
| | | | ------------------------------------------------
| | --------------------------------------------------------
| |--| Liberty Life Pension Trustee Company Limited |
| | | 100% - England/Wales - Corporate Pension Fund (Dormat) |
| | --------------------------------------------------------
| | ----------------------------------------------------------
| |--| LN Management Limited |
| | | 100% - England/Wales - Administrative Services (Dormat) |
| | ----------------------------------------------------------
| | | -----------------------------------
| | |--| UK Mortgage Securities Limited |
| | | 100% - England/Wales - Inactive |
| | -----------------------------------
| | ------------------------------------------
| |--| Liberty Press Limited |
| | | 100% - England/Wales - Printing Services |
| ------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S><C>
--------------------------------
| Lincoln National Corporation |
| Indiana - Holding Company |
--------------------------------
| -----------------------------------------
|--| Lincoln National (UK) PLC |
| | 100% - England/Wales - Holding Company |
| -----------------------------------------
| | ----------------------------------------------
| |--| Lincoln General Insurance Co. Ltd. |
| | | 100% - Accident & Health Insurance |
| | ----------------------------------------------
| | --------------------------------------------
| |--|Lincoln Assurance Limited |
| | | 100% ** - England/Wales - Life Assurance |
| | --------------------------------------------
| | | |
| | | | ---------------------------------------------
| | | |--|Barnwood Property Group Limited |
| | | | |100% - England/Wales - Property Management Co|
| | | | ---------------------------------------------
| | | | | ------------------------------------------
| | | | |--| Barnwood Developments Limited |
| | | | | | 100% England/Wales - Property Development|
| | | | | ------------------------------------------
| | | | |
| | | | | --------------------------------------------
| | | | |--| Barnwood Properties Limited |
| | | | | | 100% - England/Wales - Property Investment |
| | | | --------------------------------------------
| | | | -----------------------------------------------------
| | | |--|IMPCO Properties G.B. Ltd. |
| | | | |100% - England/Wales - Property Investment (Inactive)|
| | | | -----------------------------------------------------
| | | | ----------------------------------------------------
| | | |--| Lincoln Insurance Services Limited |
| | | | 100% - Holding Company |
| | | ----------------------------------------------------
| | | | ---------------------------------
| | | |--| British National Life Sales Ltd.|
| | | | | 100% - Inactive |
| | | | ---------------------------------
| | | |
| | | | ----------------------------------------------------------
| | | |--| BNL Trustees Limited |
| | | | | 100% - England/Wales - Corporate Pension Fund (Inactive) |
| | | | ----------------------------------------------------------
| | | | -------------------------------------
| | | |--| Chapel Ash Financial Services Ltd. |
| | | | | 100% - Direct Insurance Sales |
| | | | -------------------------------------
| | | | --------------------------
| | | |--| P.N. Kemp-Gee & Co. Ltd. |
| | | | | 100% - Inactive |
--------------------------
</TABLE>
<PAGE>
--------------------------------
| |
| Lincoln National Corporation |
| Indiana - Holding Company |
--------------------------------
|
| -----------------------------------------
|--| Lincoln National (UK) PLC |
| | 100% - England/Wales - Holding Company |
| -----------------------------------------
| | ----------------------------------------------
| |--| Lincoln Unit Trust Managers Limited |
| | | 100% - England/Wales - Investment Management |
| | ----------------------------------------------
| | ----------------------------------------------------------
| |--| LIV Limited (formerly Lincoln Investment Management Ltd.)|
| | | 100% - England/Wales - Investment Management Services |
| | ----------------------------------------------------------
| | | -----------------------------------------------
| | |--| CL CR Management Ltd. |
| | | 50% - England/Wales - Administrative Services |
| | -----------------------------------------------
| | -----------------------------------------------------------
| |--| Lincoln Independent Limited |
| | |(formerly: Laurentian Independent Financial Planning Ltd.) |
| | | 100% - England/Wales - Independent Financial Adviser |
| | -----------------------------------------------------------
| | ----------------------------------------------
| |--| Lincoln Investment Management Limited |
| | |(formerly: Laurentian Fund Management Ltd.) |
| | | 100% - England/Wales - Investment Management |
| | ----------------------------------------------
| | ------------------------------------------
| |--| LN Securities Limited |
| | | 100% - England/Wales - Nominee Company |
| | ------------------------------------------
| |
| | ---------------------------------------------
| |--| Niloda Limited |
| | | 100% - England/Wales - Investment Company |
| | ---------------------------------------------
| |
| | --------------------------------------------------
| |--| Lincoln National Training Services Limited |
| | | 100% - England/Wales - Training Company |
| | --------------------------------------------------
| | -------------------------------------------------
| |--| Lincoln Pension Trustees Limited |
| | | 100% - England/Wales - Corporate Pension Fund |
| | -------------------------------------------------
| |
| | --------------------------------------------------
| |--| Lincoln National (Jersey) Limited |
| | | 100% - England/Wales - Dormat |
| | --------------------------------------------------
| |
| | -------------------------------------------------
| |--| Lincoln National (Guernsey) Limited |
| | | 100% - England/Wales - Dormat |
| | -------------------------------------------------
| |
| | -------------------------------------------------
| |--| Lincoln SBP Trustee Limited |
| | 100% - England/Wales |
--------------------------------------------------
<PAGE>
--------------------------------
| |
| Lincoln National Corporation |
| Indiana - Holding Company |
--------------------------------
| -------------------------------------------------
| | Linsco Reinsurance Company |
|--| (formerly Lincoln National Reinsurance Company) |
| | 100% - Indiana - Property/Casualty |
| -------------------------------------------------
|
| ------------------------------------
|--| Old Fort Insurance Company, Ltd. |
| | 100% ** - Bermuda |
| ------------------------------------
| | --------------------------------------------------------
| | | Lincoln National Underwriting Services, Ltd. |
| |--| 10% - England/Wales - Life/Accident/Health Underwriter |
| | | (Remaining 90% owned by Lincoln Natl. Reinsurance Co.) |
| | --------------------------------------------------------
| | ---------------------------------------------------
| | | Solutions Holdings, Inc. |
| |--| 100% - Delaware - General Business Corporation |
| | ---------------------------------------------------
| | | ----------------------------------------
| | |--|Solutions Reinsurance Limited |
| | | 100% - Bermuda - Class III Insurance Co|
| ----------------------------------------
| ----------------------------------------------------------
| | Seguros Serfin Lincoln, S.A. |
|--| 49% - Mexico - Insurance |
| ----------------------------------------------------------
| ----------------------------------------------------------
| | Servicios de Evaluacion de Riesgos, S. de R.L. de C.V. |
|--| 49% - Mexico - Reinsurance Underwriter |
| | (Remaining 51% owned by Lincoln Natl. Reinsurance Co.) |
| ----------------------------------------------------------
| --------------------------------------------
|--| Underwriters & Management Services, Inc. |
| 100% - Indiana - Underwriting Services |
--------------------------------------------
FOOTNOTES:
* The funds contributed by the Underwriters were, and continue to be subject
to trust agreements between American States Insurance Company, the grantor,
and each Underwriter, as trustee.
** Except for director-qualifying shares
# Lincoln National Corporation has subscribed for and paid for 100 shares of
Common Stock (with a par value of $1.00 per share) at a price of $10 per
share, as part of the organizing of the fund. As such stock is further
sold, the ownership of voting securities by Lincoln National Corporation
will decline and fluctuate.
<PAGE>
ATTACHMENT #1
LINCOLN FINANCIAL GROUP, INC.
CORPORATE AGENCY SUBSIDIARIES
1) Lincoln Financial Group, Inc. (AL)
2) Lincoln Southwest Financial Group, Inc. (Phoenix, AZ)
3) Lincoln Financial and Insurance Services Corporation (Walnut Creek, CA)
3a) California Fringe Benefit and Insurance Marketing Corporation
DBA/California Fringe Benefit Company (Walnut Creek, CA)
4) Colorado-Lincoln Financial Group, Inc. (Denver, CO)
5) Lincoln National Financial Services, Inc. (Lake Worth, FL)
6) CMP Financial Services, Inc. (Chicago, IL)
7) Lincoln Financial Group of Northern Indiana, Inc. (Fort Wayne, IN)
8) Financial Planning Partners, Ltd. (Mission, KS)
9) The Lincoln National Financial Group of Louisiana, Inc. (Shreveport, LA)
10) Benefits Marketing Group, Inc. (D.C. & Chevy Chase, MD)
11) Lincoln Financial Services and Insurance Brokerage of New England, Inc
(formerly: Lincoln National of New England Insurance Agency, Inc.)
(Worcester, MA)
12) Lincoln Financial Group of Michigan, Inc. (Troy, MI)
12a) Financial Consultants of Michigan, Inc. (Troy, MI)
13) Lincoln Financial Group of Missouri, Inc. (formerly: John J. Moore &
Associates, Inc.) (St. Louis, MO)
14) Beardslee & Associates, Inc. (Clifton, NJ)
15) Lincoln Financial Group, Inc. (formerly: Resources/Financial, Inc.
(Albuquerque, NM)
16) Lincoln Cascades, Inc. (Portland, OR)
17) Lincoln Financial Group, Inc. (Salt Lake City, (UT)
<PAGE>
Summary of Changes to Organizational Chart:
JANUARY 1, 1995-DECEMBER 31, 1995
SEPTEMBER 1995
a. Lincoln National (Jersey) Limited was incorporated on September 18,
1995. Company is dormat and was formed for tax reasons per Barbara
Benoit, Assistant Corporate Secretary at Lincoln UK.
JANUARY 1, 1996-DECEMBER 1, 1996
MARCH 1996
a. Delaware Investment Counselors, Inc. changed its name to Delaware
Capital Management, Inc. effective March 29, 1996.
AUGUST 1996
a. Lincoln National (Gernsey) Limited was incorporated on August 9, 1996;
company is dormat and was formed for tax reasons.
SEPTEMBER 1996
a. Morgan Financial Group, Inc. changed its name to Lincoln National
Sales Corporation of Maryland effective September 23, 1996.
OCTOBER 1996
a. Addition of Lincoln National (India) Inc., incorporated as an Indiana
corporation on October 17, 1996.
NOVEMBER 1996
a. Lincoln National SBP Trustee Limited was bought "off the shelf" and
was incorporated on November 26, 1996; it was formed to act ast
Trustee for Lincoln Staff Benefits Plan.
DECEMBER 1996
a. Addition of Lincoln National Investments, Inc., incorporated as an
Indiana corporation on December 12, 1996.
JANUARY 1, 1997-DECEMBER 31, 1997
JANUARY 1997
a. Delaware Management Holdings, Inc., Lynch & Mayer, Inc. and Vantage
Global Advisors, Inc. were transferred via capital contribution to
Lincoln National Investments, Inc. effective January 2, 1997.
b. Lincoln National Investments, Inc. changed its name to Lincoln
National Investment Companies, Inc. effective January 24, 1997.
c. Lincoln National Investment Companies, Inc. changed its named to
Lincoln National Investments, Inc. effective January 24, 1997.
<PAGE>
JANUARY 1997 CON'T
d. The following Lincoln National (UK) subsidiaries changed their name
effective January 1, 1997: Lincoln Financial Group PLC (formerly
Laurentian Financial Group PLC); Lincoln Milldon Limited (formerly
Laurentian Milldon Limited); Lincoln Management Services Limited
(formerly Laurentian Management Services Limited).
FEBRUARY 1997
a. Removal of Lincoln National Financial Group of Philadelphia, Inc.
which was dissolved effective February 25, 1997.
MARCH 1997
a. Removal of Lincoln Financial Services, Inc. which was dissolved
effective March 4, 1997.
APRIL 1997
a. Acquisition of Dougherty Financial Group, Inc. on April 30, 1997.
Company then changed its name to Delvoy, Inc. The acquisition
included the mutual fund group of companies as part of the Voyager
acquisition. The following companies all then were moved under the
newly formed holding company, Delvoy, Inc. effective April 30, 1997:
Delaware Management Company, Inc., Delaware Distributors, Inc.,
Delaware Capital Management, Inc., Delaware Service Company, Inc. and
Delaware Investment & Retirement Services, Inc.
b. Acquisition of Voyager Fund Managers, Inc. and Voyager Fund
Distributors, Inc. on April 30, 1997; merger is scheduled for May 31,
1997 for Voyager Fund Managers, Inc. into Delaware Management Company,
Inc. and Voyager Fund Distributors, Inc. is to merge into Delaware
Distributors, L.P.
c. Removal of Aseguradora InverLincoln, S.A. Compania de Seguros y
Reaseguros, Grupo Financiero InverMexico. Stock was sold to Grupo
Financiero InverMexico effective April 18, 1997.
MAY 1997
a. Name change of The Richard Leahy Corporation to Lincoln National
Financial Institutions Group, Inc. effective May 6, 1997.
b. Voyager Fund Managers, Inc. merged into Delaware Management Company,
Inc. effective May 30, 1997 at 10:00 p.m. with Delaware Management
Company, Inc. surviving.
c. On May 31, 1997 at 2:00 a.m., Voyager Fund Distributors, Inc. merged
into a newly formed company Voyager Fund Distributors (Delaware),
Inc., incorporated as a Delaware corporation on May 23, 1997. Voyager
Fund Distributors (Delaware), Inc. then merged into Delaware
Distributors, L.P. effective May 31, 1997 at 2:01 a.m. Delaware
Distributors, L.P. survived.
JUNE 1997
a. Removal of Lincoln National Sales Corporation of Maryland -- company
dissolved June 13, 1997.
b. Addition of Lincoln Funds Corporation, incorporated as a Delaware
corporation on June 10, 1997 at 2:00 p.m.
<PAGE>
c. Addition of Lincoln Re, S.A., incorporated as an Argentina company on
June 30, 1997.
JULY 1997
a. LNC Equity Sales Corporation changed its name to Lincoln Financial
Advisors Corporation effective July 1, 1997.
b. Addition of Solutions Holdings, Inc., incorporated as a Delaware
corporation on July 27, 1997.
SEPTEMBER 1997
a. Addition of Solutions Reinsurance Limited, incorporated as a Bermuda
corporation on September 29, 1997.
OCTOBER 1997
a. Removal of the following companies: American States Financial
Corporation, American States Insurance Company, American Economy
Insurance Company, American States Insurance Company of Texas,
American States Life Insurance Company, American States Lloyds
Insurance Company, American States Preferred Insurance Company, City
Insurance Agency, Inc. And Insurance Company of Illinois -- all were
sold 10-1-97 to SAFECO Corporation.
b. Liberty Life Assurance Limited was sold to Liberty International
Holdings PLC effective 10-6-97.
c. Addition of Seguros Serfin Lincoln, S.A., acquired by LNC on 10-15-97.
DECEMBER 1997
a. Addition of City Financial Planners, Ltd. as a result of its
acquisition by Lincoln National Corporation on December 22, 1997.
This company will distribute life assurance and pension products of
Lincoln Assurance Limited.
JANUARY 1998
a. Addition of Cigna Associates, Inc., Cigna Financial Advisors, Inc. and
Cigna Associates of Massachusetts, Inc., acquired by The Lincoln
National Life Insurance Company on January 1, 1998. Cigna Associates
of Massachusetts is 100% owned by Cigna Associates, Inc.
b. Removal of Lincoln National Mezzanine Corporation and Lincoln National
Mezzanine Fund, L.P. Lincoln National Mezzanine Corporation was
dissolved on January 12, 1998 and Lincoln National Mezzanine Fund,
L.P. was cancelled January 12, 1998.
c. Corporate organizational changes took place in the UK group of
companies on January 21, 1998: Lincoln Insurance Services Limited and
its subsidiaries were moved from Lincoln National (UK) PLC to Lincoln
Assurance Limited; Lincoln General Insurance Co. Ltd. was moved from
Lincoln Insurance Services Limited to Lincoln National (UK) PLC.
d. Addition of AnnuityNet, Inc., incorporated as an Indiana corporation
on January 16, 1998 and a wholly-owned subsidiary of The Lincoln
National Life Insurance Company.
