<PAGE>
As filed with the Securities and Exchange Commission on June 11, 1999
File No. 2-77283
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER SECURITIES ACT OF 1933 /X/
-
Pre-Effective Amendment No. ___ / /
Post-Effective Amendment No. 26 /X/
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT of 1940 /X/
Amendment No. 29 /X/
-------------
Penn Mutual Variable Annuity Account III
(Exact Name of Registrant)
-------------
THE PENN MUTUAL LIFE INSURANCE COMPANY
(Name of Depositor)
-------------
600 Dresher Road
Horsham, Pennsylvania 19044
(Address of Principal Executive Offices of Depositor)
Depositor's Telephone Number: 215-956-8000
-------------
Richard F. Plush
Vice President, Products and Programs
The Penn Mutual Life Insurance Company
600 Dresher Road
Horsham, Pennsylvania 19044
(Name and Address of Agent for Service)
Copy to:
C. Ronald Rubley
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103
-------------
It is proposed that this filing will become effective (check appropriate box)
x immediately upon filing pursuant to paragraph (b) of Rule 485
---
on May 1, 1999 pursuant to paragraph (b) of Rule 485
---
60 days after filing pursuant to paragraph (a) of Rule 485
---
on (date) pursuant to paragraph (a) of Rule 485
---
<PAGE>
CROSS REFERENCE SHEET
================================================================================
<TABLE>
<CAPTION>
Location in Statement of
Form N-4 Item Number Location in Prospectuses Additional Information
- -------------------- ------------------------ ----------------------
<S> <C> <C> <C>
Item 1. Cover Page Cover Page N/A
Item 2. Definitions Glossary N/A
Item 3. Synopsis Cover Page; Expenses N/A
or Highlights
Item 4. Condensed Financial Condensed Financial N/A
Information Information
Item 5. General Description The Penn Mutual Life N/A
of Registrant, Depositor Insurance Company;
and Portfolio Companies The Separate Account
Item 6. Deductions The Contract - What Charges N/A
and Expenses Do I Pay?
Item 7. General Description of The Contract N/A
of Variable Annuity
Contracts
Item 8. Annuity Period Options The Contract - What Types of N/A
Payments May I Choose?
Item 9. Death Benefit On Death The Contract - What are the N/A
the Death Benefits Under My
Contract?
Item 10. Purchases and The Contract - How Do I Purchase N/A
Contract Value a Contract?
The Separate Account
- Accumulation Unit Value
Item 11. Redemptions The Contract - May I Withdraw N/A
Any of My Money?
Item 12. Taxes Federal Income Tax N/A
Considerations
Item 13. Legal Proceedings N/A N/A
</TABLE>
<PAGE>
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Location in Statement of
Form N-4 Item Number Location in Prospectuses Additional Information
- -------------------- ------------------------ ----------------------
<S> <C> <C> <C>
Item 14. Table of Contents of Statement of Additional N/A
Statement of Additional Information Contents
Information
Item 15. Cover Page N/A Cover Page
Item 16. Table of Contents N/A Cover Page
Item 17. General Information N/A N/A
and History
Item 18. Services N/A Administrative and
Recordkeeping Services;
Custodian; Auditors
Item 19. Purchase of Securities The Contract - How Do I Purchase Distribution of
Being Offered and Expenses A Contract? The Contract - May I Contracts and
Transfer Money Among Subaccounts Certificates
and Fixed Interest Accounts? The
Contract - What Charges Do I Pay?
Item 20. Underwriters N/A Distribution of Contracts
and Certificates
Item 21. Calculation of N/A Performance Data
Performance Data
Item 22. Annuity Payments N/A Variable Annuity
Payments
Item 23. Financial Statements N/A Financial Statements
</TABLE>
<PAGE>
PART A
------
Information Required in a Prospectus
------------------------------------
The Prospectuses filed with the Commission on May 26, 1999 pursuant to Rule
497(d) (CIK No. 0000702184) (Accession No. 0000950116-99-001105) are
incorporated herein by reference.
<PAGE>
PART B
------
Information Required in a Statement
-----------------------------------
of Additional Information
-------------------------
The Statement of Additional Information filed with the Commission on May 26,
1999 pursuant to Rule 497(d) (CIK No. 0000702184) (Accession No.
0000950116-99-001105) is incorporated herein by reference.
<PAGE>
PART C
------
Other Information
-----------------
<PAGE>
Item 24. Financial Statements and Exhibits
(a) Financial Statements included in Part B:
Financial Statements of Penn Mutual Variable Annuity Account III:
Report of Independent Auditors
Statement of Assets and Liabilities - December 31, 1998 and 1997
Statement of Operations - For the years ended December 31, 1998,
1997 and 1996
Statements of Changes in Net Assets - For the years ended
December 31, 1998, 1997 and 1996
Notes to Financial Statements
Financial Statements of The Penn Mutual Life Insurance Company:
Report of Independent Auditors
Statements of Financial Condition at December 31, 1998, and 1997
Statements of Operations and Surplus for the years
ended December 31, 1998, 1997, and 1996
Statements of Cash Flows for the years ended December 31, 1998,
1997 and 1996
Notes to Financial Statements
(b) Exhibits
1. (a) Resolutions of Executive Committee of Board of
Trustees of The Penn Mutual Life Insurance
Company authorizing the establishment of the
Registrant. Incorporated herein by reference to
Exhibit 1(a) to the Registration Statement filed
on September 3, 1998 (File No. 333-62811 and
Accession No. 0001036050-98-001504).
(b) Resolutions of Executive Committee of Board
of Trustees of The Penn Mutual Life
Insurance Company authorizing investments of
the Registrant. Incorporated herein by
reference to Exhibit 1(b) to Post-Effective
Amendment No. 1 to the Registration
Statement filed on April 27, 1999 (File No.
333-62825 and Accession No.
0000950116-99-000834).
2. Not applicable.
3. (a) Sales Support Agreement between The Penn Mutual
Life Insurance Company and Horner, Townsend &
Kent, Inc., a wholly-owned subsidiary of Penn
Mutual. Incorporated herein by reference to
Exhibit 3(a) to Pre-Effective Amendment No. 1
C-1
<PAGE>
to the Registration Statement filed on November
30, 1998 (File No. 333-62811 and Accession No.
0001036050-98-002055).
(b) Form of Distribution Agreement between The
Penn Mutual Life Insurance Company and
Horner, Townsend & Kent, Inc., a
wholly-owned subsidiary of Penn Mutual).
Incorporated herein by reference to Exhibit
3(a) to Pre-Effective Amendment No. 1 to the
Registration Statement filed on November 30,
1998 (File No. 333-62811 and Accession No.
0001036050-98-002055).
(c) Form of Agent's Agreement relating to
broker-dealer supervision. Incorporated
herein by reference to Exhibit 3(c) to the
Registration Statement filed on September 3,
1998 (File No. 333-62811 Accession No.
0001036050-98-002055).
(d) Form of Broker-Dealer Selling Agreement (for
broker-dealers licensed to sell variable
annuity contracts and/or variable life
insurance contracts under state insurance
laws). Incorporated herein by reference to
Exhibit 3(d) to Pre-Effective Amendment No.
1 to the Registration Statement on Form N-4
filed on November 30, 1998 (File No.
333-62811 Accession No. 0001036050-98-002055).
(e) Form of Broker-Dealer Selling Agreement (for
broker-dealers with affiliated corporations
licensed to sell variable annuity contracts
and/or variable life insurance contracts
under state insurance laws. Incorporated
herein by reference to Exhibit 3(e) to
Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-4 filed on
April 27, 1999 (File No. 333-62825 Accession
No. 0000950116-99-000834).
4. (a) Group Variable and Fixed Annuity Contract
(primarily for Section 403(b) retirement plans)
(Form GDI-385) and Certificate issued under the
Contract (Form EB 1611). Previously filed as
Exhibit 4(a) to this Registration Statement on
April 28, 1999 (Accession No. 0000950116-
99-000851) and incorporated herein by reference.
(b) Individual Variable Annuity Contract (Form
DI-1182-V). Previously filed as Exhibit 4(b) to
this Registration Statement on April 28, 1999
(Accession No. 0000950116-99-000851) and
incorporated herein by reference.
(c) Endorsement No. 1309-82 to Individual Variable
Annuity Contract. Previously filed as Exhibit 4(c)
to this Registration Statement on April 28, 1999
(Accession No. 0000950116-99-000851) and
incorporated herein by reference.
C-2
<PAGE>
(d) Individual Variable and Fixed Annuity Contract -
Flexible Purchase Payments (Form DV-790).
Previously filed as Exhibit 4(d) to this
Registration Statement on April 28, 1999
(Accession No. 0000950116-99-000851) and
incorporated herein by reference.
(e) Endorsement No. 1536-90 to Individual Variable and
Fixed Annuity Contract. Previously filed as
Exhibit 4(e) to this Registration Statement on
April 28, 1999 (Accession No. 0000950116-99-
000851) and incorporated herein by reference.
(f) Endorsement No. 1534-96 to Individual Variable and
Fixed Annuity Contract. Previously filed as
Exhibit 4(f) to this Registration Statement on
April 28, 1999 (Accession No. 0000950116-99-
000851) and incorporated herein by reference.
(g) Endorsement No. 1542-97 to Individual Variable and
Fixed Annuity Contract. Previously filed as
Exhibit 4(g) to this Registration Statement on
April 28, 1999 (Accession No. 0000950116-99-
000851) and incorporated herein by reference.
(h) Endorsement No. 1504-94 to 403(b) Policy Loan.
Previously filed as Exhibit 4(h) to this
Registration Statement on April 28, 1999
(Accession No. 0000950116-99-000851) and
incorporated herein by reference.
(i) Individual Variable Annuity Contract - Flexible
Purchase Payments. Filed herewith.
(j) Group Variable and Fixed Annuity Contract -
Flexible Purchase Payments Participating. Filed
herewith.
(k) Group Variable and Fixed Annuity Certificate -
Flexible Purchase Payments. Filed herewith.
(l) Group Variable and Fixed Annuity Contract -
Flexible Purchase Payments - Participating. Filed
herewith.
(m) Group Variable and Fixed Annuity Certificate -
Flexible Purchase Payments. Filed herewith.
(n) Group Variable and Fixed Annuity Certificate -
Flexible Purchase Payments. Filed herewith.
5. (a) Application (Form EB 1610) for participation
in Group Variable and Fixed Annuity Contract.
Previously filed as Exhibit 5(a) to
C-3
<PAGE>
this Registration Statement on April 28, 1999
(Accession No. 0000950116-99-000851) and
incorporated herein by reference.
(b) Application (Form PM3502 11/94) for Individual
Variable and Fixed Annuity Contract. Previously
filed as Exhibit 5(b) to this Registration
Statement on April 28, 1999 (Accession No.
0000950116-99-000851) and incorporated herein by
reference.
6. (a) Charter of The Penn Mutual Life Insurance Company
(May 1983). Incorporated herein by reference to
Exhibit 6(a) to this Registration Statement on
Form N-4 filed on September 3, 1998 (File No.
333-62811 and Accession No. 0001036050-98-
001504).
(b) By-laws of The Penn Mutual Life Insurance Company,
as amended through February 21, 1997. Incorporated
herein by reference to Exhibit 6(b) to the
Registration Statement filed on September 3, 1998
(File No. 333-62811 and Accession No.
0001036050-98-001504).
7. None.
8. (a)(1) Form of Sales Agreement between The Penn Mutual
Life Insurance Company and Neuberger & Berman
Advisers Management Trust. Previously filed as
Exhibit 8(b)(1) to the Registration Statement on
September 3, 1998 (File No. 333-62811 and
Accession No. 0001036050-98-001504) and
incorporated herein by reference.
(a)(2) Form of Assignment and Modification Agreement
between Neuberger & Berman Management
Incorporated, Neuberger & Berman Advisers
Management Trust, Advisers Managers Trust and The
Penn Mutual Life Insurance Company. Previously
filed as Exhibit 8(b)(2) to the Registration
Statement on September 3, 1998 (File No. 333-62811
and Accession No. 0001036050-98-001504) and
incorporated herein by reference.
(a)(3) Amendment to Fund Participation Agreement between
The Penn Mutual Life Insurance Company and
Neuberger & Berman Advisers Management Trust.
Previously filed as Exhibit 8(b)(3) to
Post-Effective Amendment No.5 to the Registration
Statement of Penn Mutual Variable Life Account I
on April 30, 1997 (File No. 33-54662 and Accession
No. 0000950109-97-003328) and incorporated herein
by reference.
(b) Form of Sales Agreement between The Penn Mutual
Life Insurance Company and Penn Series Funds, Inc.
Previously filed as Exhibit 8(c) to the
Registration Statement on September 3,
C-4
<PAGE>
1998 (File No. 333-62811 and Accession No.
0001036050-98-001504) and incorporated herein by
reference.
(c) Form of Participation Agreement between The Penn
Mutual Life Insurance Company, Variable Insurance
Products Fund and Fidelity Distributors
Corporation. Previously filed as Exhibit 8(d) to
the Registration Statement on September 3, 1998
(File No. 333-62811 and Accession No.
0001036050-98-001504) and incorporated herein by
reference.
(d) Form of Participation Agreement between The Penn
Mutual Life Insurance Company, Variable Insurance
Products Fund II and Fidelity Distributors
Corporation. Previously filed as Exhibit 8(e) to
the Registration Statement on September 3, 1998
(File No. 333-62811 and Accession No.
0001036050-98-001504) and incorporated herein by
reference.
(e) Participation Agreement between The Penn Mutual
Life Insurance Company, Morgan Stanley Universal
Funds, Inc., Morgan Stanley Asset Management Inc.
and Miller Andersen & Sherrerd LLP. Previously
filed as Exhibit 8(f) to Post-Effective Amendment
No. 2 to the Registration Statement of PIA
Variable Annuity Account I on April 30, 1998 (File
No. 33-83120 and Accession No. 0000950109-97-
003327) and incorporated herein by reference.
9. Opinion and Consent of Franklin L. Best, Jr., Esq.,
Associate General Counsel of The Penn Mutual Life
Insurance Company, as to the legality of the
variable annuity contracts being registered. Filed
herewith.
10. (a) Consent of Ernst & Young LLP, Independent
Auditors. Previously filed as Exhibit 10(a) to
this Registration Statement on April 28, 1999
(Accession No. 0000950116-99-000851) and
incorporated herein by reference.
(b) Consent of Morgan, Lewis & Bockius LLP. Previously
filed as Exhibit 10(b) to this Registration
Statement on April 28, 1999 (Accession No.
0000950116-99-000851) and incorporated herein by
reference.
11. None.
12. None.
13. Schedule for Computation of Performance Quotations.
Previously filed as Exhibit 13 to this Registration
Statement on April 28, 1999 (Accession No.
0000950116-99-000851) and incorporated herein by
reference.
C-5
<PAGE>
14. (a) Powers of Attorney of Trustees (except Ms. Bloch
and Messrs. Notebaert and Rock). Incorporated
herein by reference to Exhibit 14(a) to
Post-Effective Amendment No. 22 to this
Registration Statement filed on April 29, 1997.
(b) Powers of Attorney of Edmond F. Notebaert and
Robert H. Rock. Incorporated herein by reference
to Exhibit 14(b) to Post-Effective Amendment No.
24 to this Registration Statement on Form N-4
filed on April 24, 1998 (Accession No.
0001036050-98-001504).
(c) Power of Attorney for Julia Chang Bloch. Filed
herewith.
Item 25. Directors and Officers of the Depositor
The following table sets forth the names of the officers and
trustees of the Depositor who are engaged directly or indirectly
in activities relating to the Registrant or the variable annuity
contracts offered by the Registrant and the executive officers of
the Depositor.
Robert E. Chappell Nancy S. Brodie
Chairman of the Board and Chief Executive Vice President and
Executive Officer and Member of Chief Financial Officer
the Board of Trustees
Peter M. Sherman
Daniel J. Toran Executive Vice President and
President and Chief Operating Chief Investment Officer
Officer and Member of the Board of
Trustees
Ann M. Strootman
Larry L. Mast Vice President and Controller
Executive Vice President, Sales and
Marketing Steven M. Herzberg
Assistant Vice President
Harold E. Maude, Jr. and Treasurer
Senior Vice President,
Independence Financial Network James McElwain
Assistant Vice President,
Richard F. Plush Retirement and Investment Sales
Vice President and Senior Actuary Operations
John M. Albanese George W. Bentham
Senior Vice President, Customer Service Senior Vice President, Career
and Information Systems Agency System
Frederick M. Rackovan
Vice President, Insurance Service
C-6
<PAGE>
Ralph I. Pence
Vice President and Chief Actuary
The business address of the director and officers is The Penn
Mutual Life Insurance Company, Philadelphia, PA 19172.
Item 26. Persons Controlled By or Under Common Control with the Depositor
or Registrant
<TABLE>
<CAPTION>
Penn Mutual Wholly-Owned Subsidiaries
-------------------------------------
Corporation Principal Business State of Incorporation
- ----------- ------------------ ----------------------
<S> <C> <C>
The Penn Insurance and Life Insurance and Annuities Delaware
Annuity Company
Independence Capital Investment Adviser Pennsylvania
Management, Inc.
Penn Janney Fund, Inc. Investments Pennsylvania
Independence Square Holding Company Pennsylvania
Properties, Inc.
The Pennsylvania Trust Trust Company Pennsylvania
Company
Independence Square Properties, Inc.
Wholly-Owned Subsidiaries
-------------------------
Corporation Principal Business State of Incorporation
- ----------- ------------------ ----------------------
Indepro Corporation Real Estate Investment Delaware
WPI Investment Company Real Estate Investment Delaware
Hornor, Townsend & Kent, Registered Broker-Dealer and Pennsylvania
Inc. Investment Adviser
Janney Montgomery Scott Registered Broker-Dealer and Delaware
Inc. Investment Adviser
</TABLE>
C-7
<PAGE>
<TABLE>
<CAPTION>
Indepro Corporation
Wholly-Owned Subsidiaries
-------------------------
Corporation Principal Business State of Incorporation
- ----------- ------------------ ----------------------
<S> <C> <C>
Indepro Property Fund I Real Estate Investment Delaware
Corporation
Indepro Property Fund II Real Estate Investment Delaware
Corporation
Commons One Corporation Real Estate Investment Delaware
West Hazleton, Inc. Real Estate Investment Delaware
Janney Montgomery Scott, Inc.
Wholly-Owned Subsidiaries
-------------------------
Corporation Principal Business State of Incorporation
- ----------- ------------------ ----------------------
Addison Capital Investment Adviser Pennsylvania
Management, Inc.
JMS Resources, Inc. Oil and Gas Development Pennsylvania
JMS Investor Services, Inc. Insurance Sales Delaware
</TABLE>
Item 27. Number of Contract Owners
As of March 31, 1999, there were:
28,910 owners of qualified individual variable annuity contracts;
23,083 owners of qualified group variable annuity contracts;
521 owners of certificates issued under qualified group variable
annuity contracts;
and
7,892 owners of nonqualified individual variable annuity
contracts.
Item 28. Indemnification
Section 6.2 of the By-laws of The Penn Mutual Life Insurance
Company provides that, in accordance with the provisions of the
Section, the Company shall indemnify trustees and officers
against expenses (including attorneys' fees), judgments, fines,
excise taxes and amounts paid in settlement actually and
reasonably incurred in connection with actions, suits and
proceedings, to the extent such indemnification is not prohibited
by law, and may provide other indemnification to the extent not
prohibited by law. The By-laws are filed as Exhibit 6(b) to
Post-Effective
C-8
<PAGE>
Amendment No. 12 to this Registration Statement and are
incorporated in this Post-Effective Amendment by reference.
Pennsylvania law (15 Pa. C.S.A. ss.ss. 1741-1750) authorizes
Pennsylvania corporations to provide indemnification to
directors, officers and other persons.
Penn Mutual owns a directors and officers liability insurance
policy covering liabilities directors and officers of Penn Mutual
and its subsidiaries may incur in acting as directors and
officers.
Selling Agreements entered into by The Penn Mutual Life Insurance
Company ("Penn Mutual") and its subsidiary, Hornor, Townsend &
Kent, Inc. ("HTK") with securities brokers and insurance agents
generally provide for indemnification of Penn Mutual and HTK and
their directors and officers in the event of liability resulting
from unauthorized acts of the brokers and insurance agents.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, 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 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 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 Underwriters
Hornor Townsend & Kent, Inc. serves as principal underwriters of
the securities of the Registrant.
Hornor Townsend & Kent, Inc. serves as principal underwriter for
Addison Capital Shares, Inc., a registered investment company.
Hornor, Townsend & Kent, Inc. - Directors and Officers
------------------------------------------------------
John J. Gray, Director and Chairman of the Board
Larry L. Mast, Director
Nina M. Mulrooney, Director
Norman T. Wilde, Jr., Director
Daniel J. Toran, Director
Ronald C. Zimmerman, Director, President
and Chief Executive Officer
Michael D. Sweeney, Vice President, Compliance and Secretary
Edward G. Pecelli, Vice President, Sales and Marketing
Laura M. Ritzko, Assistant Secretary
C-9
<PAGE>
Henry S. Buck, Assistant Vice President and Assistant Treasurer
Barbara S. Wood, Senior Vice President, Finance and Treasurer
Joseph R. Englert, Vice President, Trading and Operations
Franklin L. Best, Jr., Counsel
Constance Flaville, Assistant Secretary
The principal business address of Messrs. Gray and Wilde is
Janney, Montgomery, Scott Inc., 1801 Market Street, Philadelphia,
Pennsylvania. The principal business address of Mses. Mulrooney
and Ritzko and Messrs. Mast, Toran and Best is The Penn Mutual
Life Insurance Company, Philadelphia, Pennsylvania, 19172. The
principal business address of the other directors and officers is
Hornor, Townsend & Kent, Inc., 600 Dresher Road, Horsham,
Pennsylvania.
Commissions and Other Compensation Received By Each Principal
Underwriter During Last Fiscal Year
<TABLE>
<CAPTION>
Net Underwriting
Name of Principal Discounts and Compensation Brokerage Other
Underwriter Commissions on Redemption Commissions Compensation
- ---------------------- -------------------- ----------------- ---------------- ------------------
<S> <C> <C> <C> <C>
Hornor, Townsend $ 450,661 0 0 0
& Kent, Inc.
</TABLE>
Item 30. Location of Accounts and Records
The name and address of the person who maintains physical
possession of each account, book or other documents required by
Section 31(a) of the Investment Company Act of 1940 is as
follows:
The Penn Mutual Life Insurance Company
600 Dresher Road
Horsham, Pennsylvania 19044
Item 31. Management Services
See "Administrative and Recordkeeping Services" in Part B of this
Registration Statement.
Item 32. Undertakings
The Penn Mutual Life Insurance Company hereby undertakes:
(a) to file a post-effective amendment to this registration
statement as frequently as is necessary to ensure that
the audited financial statements in the registration
statement are never more than 16 months old for so long
as payments under the variable annuity contracts may be
accepted;
(b) to include either (1) as part of any application to
purchase a contract or account offered by the prospectus,
a space that an applicant can check to
C-10
<PAGE>
request a statement of additional information, or (2) a
post card 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) to deliver any statement of additional information and
any financial statements required to be made available
under Form N-4 promptly upon written or oral request.
Restrictions on withdrawals under Section 403(b) Contracts are
imposed in reliance upon, and in compliance with, a no-action
letter issued by the Chief of the Office of Insurance Products
and Legal Compliance of the Securities and Exchange Commission to
the American Council of Life Insurance on November 28, 1988.
The Penn Mutual Life Insurance Company represents that the fees
and charges deducted under the Individual Combination Variable
and Fixed Annuity Contract and the Variable Annuity Contract, in
the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks
assumed by the Registrant.
C-11
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets the requirements of Securities Act
Rule 485(b) for effectiveness of this Post-Effective Amendment No.26 of this
Registration Statement and has caused this Post-Effective Amendment to the
Registration Statement to be signed on its behalf, by the undersigned, thereunto
duly authorized, in the Township of Horsham and Commonwealth of Pennsylvania on
this 28th day of May, 1999.
PENN MUTUAL VARIABLE ANNUITY ACCOUNT III
(Registrant)
By: THE PENN MUTUAL LIFE INSURANCE COMPANY
(Depositor)
By: /s/ Robert E. Chappell
-------------------------------------
Robert E. Chappell
Chairman of the Board of Trustees
and Chief Executive Officer
As required by the Securities Act of 1933, this Post-Effective
Amendment No. 26 to the Registration Statement has been signed by the following
persons, in the capacities indicated, on the 28th day of May, 1999.
Signature Title
- --------- -----
/s/Robert E. Chappell Chairman of the Board of Trustees
- ------------------------- and Chief Executive Officer
Robert E. Chappell
/s/Nancy S. Brodie Executive Vice President and
- ------------------------- Chief Financial Officer
Nancy S. Brodie
*JULIA CHANG BLOCH Trustee
*JAMES A. HAGEN Trustee
*PHILLIP E. LIPPINCOTT Trustee
*JOHN F. MCCAUGHAN Trustee
*ALAN B. MILLER Trustee
*EDMOND F. NOTEBAERT Trustee
*ROBERT H. ROCK Trustee
*DANIEL J. TORAN Trustee
*NORMAN T. WILDE, JR. Trustee
*WESLEY S. WILLIAMS, JR. Trustee
*By: /s/Robert E. Chappell
-----------------------------------
Robert E. Chappell, attorney-in-fact
C-12
<PAGE>
EXHIBIT INDEX
EX-99.B4(i) Individual Variable Annuity Contract - Flexible Purchase Payments
EX-99.B4(j) Group Variable and Fixed Annuity Contract - Flexible Purchase
Payments Participating.
EX-99.B4(k) Group Variable and Fixed Annuity Certificate - Flexible Purchase
Payments.
EX-99.B4(l) Group Variable and Fixed Annuity Contract - Flexible Purchase
Payments - Participating.
EX-99.B4(m) Group Variable and Fixed Annuity Certificate - Flexible Purchase
Payments.
EX-99.B4(n) Group Variable and Fixed Annuity Certificate - Flexible Purchase
Payments.
EX-99.B9 Opinion of Franklin L. Best, Jr., Esq., Associate General Counsel
of The Penn Mutual Life Insurance Company, as to the legality of
the variable annuity contracts being registered.
EX-99.B14(c) Power of Attorney for Julia Chang Bloch.
C-13
<PAGE>
THE PENN MUTUAL LIFE INSURANCE COMPANY
FOUNDED 1847
- --------------------------------------------------------------------------------
Annuitant Annuity Date
MAY 1, 2009
Contract Number Contract Date
- --------------------------------------------------------------------------------
The Penn Mutual Life Insurance Company will make monthly annuity payments and
other payments as set forth in this contract.
This is a legal contract between you and us. Please read the contract carefully.
VALUES AND PAYMENTS TO YOU UNDER THIS CONTRACT VARY ACCORDING TO THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT.
TEN DAY RIGHT TO REVIEW CONTRACT: You may cancel this contract within ten days
after its receipt. Simply return or mail it to us or our agent. We will refund
the contract value.
/s/Joseph J. Horvath /s/Robert E. Chappell
General Counsel and Secretary Chairman and
Chief Executive Officer
INDIVIDUAL VARIABLE
ANNUITY CONTRACT--
FLEXIBLE PURCHASE PAYMENTS
o Annuity Payments payable on Annuity Date
o Flexible Purchase Payments payable until Annuity Date
o Participating
The Penn Mutual Life Insurance Company, Independence Square, Philadelphia,
Pennsylvania 19172
DI-783-V
<PAGE>
TABLE OF CONTENTS
PAGE
Section 1-- Contract Specifications 3
Section 2-- Endorsements 4
Section 3-- Definitions 5
Section 4-- Purchase Payments 5
Section 5-- Charges and Deductions 5
Section 6-- The Separate Account 6
Section 7-- Accumulation Values 7
Section 8-- Annuity Payments 8
Section 9-- Annuity Options 10
Section 10-- Annuity Option Tables 11
Section 11-- Payment on Death 13
Section 12-- Transfer To Or From Another Contract 13
Section 13-- Withdrawal 14
Section 14--Miscellaneous 15
<PAGE>
SECTION 1 -- CONTRACT SPECIFICATIONS
ANNUITANT MAY 1, 2009 ANNUITY DATE
CONTRACT NUMBER APRIL 20, 1999 CONTRACT DATE
FIRST PURCHASE PAYMENT AGE OF ANNUITANT
---------------------- ----------------
$25,671.42 69
DATE CONTRACT ADMINISTRATION
THE SEPARATE ACCOUNT CHARGE IS DEDUCTED EACH YEAR
-------------------- ----------------------------
PENN MUTUAL VARIABLE ACCOUNT III APRIL 4
ELIGIBLE FUNDS
FIDELITY MANAGEMENT ICMI/ROBERTSON STEPHENS
Equity Income Emerging Growth
Growth
Asset Manager OPCAP ADVISORS
Index 500 Value Equity
Small Capitalization
INDEPENDENCE CAPITAL (ICMI)
Money Market T. ROWE PRICE
Quality Bond High Yield Bond
Growth Equity Flexibly Managed
VONTOBEL USA AMERICAN CENTURY
International Equity VP Capital Appreciation
NEUBERGER & BERMAN MORGAN STANLEY ASSET MANAGEMENT
Limited Maturity Bond Portfolio Emerging Markets Equity
Balanced
Partners
EXCEPT WITH THE CONSENT OF PENN MUTUAL, THERE CAN BE NO ALLOCATION OF PURCHASE
PAYMENTS AND TRANSFERS TO MORE THAN 17 OF THE FUNDS LISTED ABOVE OVER THE
DURATION OF THE CONTRACT.
DIVISIBLE SURPLUS APPORTIONED TO THIS CONTRACT, IF ANY, WILL BE APPLIED TO
PROVIDE ADDITIONAL ACCUMULATION UNITS OR ANNUITY UNITS UNLESS YOU ELECT TO
HAVE IT PAID IN CASH.
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SECTION 2 -- ENDORSEMENTS
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<PAGE>
SECTION 3 -- DEFINITIONS
OWNER: The person entitled to exercise all rights under the
contract. In this contract, the word "you" means Owner.
PURCHASE PAYMENTS: The money you pay us for this contract.
ANNUITANT: The person during whose life annuity payments are
made.
ANNUITY DATE: The date on which annuity payments are to start.
ACCUMULATION UNIT: An index used to compute the contract value
prior to the annuity date.
ANNUITY UNIT: An index used to compute annuity payments.
CONTRACT VALUE: The value of all accumulation units credited
to the contract.
QUALIFIED PLAN: A retirement plan that receives special tax
treatment under Sections 401, 403, 404, 408 or any similar
provisions of the Internal Revenue Code.
NONQUALIFIED PLAN: A retirement plan other than a Qualified
Plan.
SECTION 4 -- PURCHASE PAYMENTS
FIRST PURCHASE PAYMENT. The first Purchase Payment must be
made prior to issue of the contract. The minimum first
Purchase Payment is $250 for Qualified Plans and $1,500 for
Nonqualified Plans, or such lower minimums as we may
establish.
SUBSEQUENT PURCHASE PAYMENT. Subsequent Purchase Payments may
be made at any time without prior notice to us. The minimum
subsequent Purchase Payment is $40 for Qualified Plans and
$300 for Nonqualified Plans, or such lower minimums as we may
establish. Subsequent Purchase Payments are not required to
keep this contract in force.
SECTION 5 -- CHARGES AND DEDUCTIONS
CONTRACT ADMINISTRATION CHARGE. This charge of $30 will be
deducted each year on the date specified in Section 1. It will
also be deducted when the Contract Value is withdrawn in full
if withdrawal is not on the date specified. The charge will
never increase. The charge will not be deducted on or after
the Annuity Date.
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EXPENSE RISK CHARGE. This charge is made to compensate us for
guaranteeing that the contract administration charge will
never increase. On an annual basis it equals 0.5% of the daily
net asset value of the Separate Account.
MORTALITY RISK CHARGE. This charge is made to compensate us
for the mortality guarantees we make under this contract. On
an annual basis it equals 0.8% of the daily net asset value of
the Separate Account.
CONTINGENT DEFERRED SALES CHARGE. This charge may be deducted
upon withdrawal, in whole or in part, of the Contract Value or
the present value of remaining annuity payments (if
applicable). See Section 13.
PREMIUM TAXES. Any premium taxes imposed by a state or other
government will be deducted when due.
DEDUCTIONS. The expense risk and mortality risk charge will be
computed and deducted from each subaccount of each investment
account established under the contract for each day the
contract is in force. Other charges will be deducted by
cancelling accumulation units or annuity units (if applicable)
of a value equal to the deduction. Unless you notify us
otherwise, cancellation of accumulation units will be in the
ratio of your interest in each subaccount to your Contract
Value.
SECTION 6 -- THE SEPARATE ACCOUNT
THE SEPARATE ACCOUNT. The name of the Separate Account is
specified in Section 1. It is a separate account of The Penn
Mutual Life Insurance Company. It is for this and other
contracts. Your Purchase Payments will be allocated to the
Separate Account.
INVESTMENT OF SEPARATE ACCOUNT ASSETS. Assets held in the
Separate Account will be invested in one or more eligible
mutual funds. Current eligible mutual funds are specified in
Section 1.
For this and other contracts the Separate Account is divided
into investment accounts. There is an investment account for
each eligible mutual fund. For each investment account, there
is a subaccount for Qualified Plans and a subaccount for
Nonqualified Plans.
You choose the investment account to which you want your
Purchase Payments allocated.
We own the assets held in the Separate Account. However, the
portion of such assets equal to the reserves and other
contract liabilities with respect to each subaccount of each
investment account of the Separate Account are not chargeable
with liabilities arising out of any other business we may
conduct.
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Upon notice to us, you may transfer part or all the value of
the Accumulation Units or Annuity Units credited under this
contract from one investment account to another. No more than
two such transfers may be made in a calendar year. Such
investment account transfers, as well as all other
investments, are subject to the limits and rules applicable to
each mutual fund.
SUBSTITUTION OF INVESTMENT. If investment in a mutual fund
should no longer be possible or in our judgment becomes
inappropriate to the purposes of the contract, we may
substitute another mutual fund. Substitution may be made with
respect to existing investments and the investment of future
Purchase Payments. Substitution will be subject to the
approval of the Insurance Department of the jurisdiction in
which this contract is delivered.
SECTION 7 - ACCUMULATION VALUES
NUMBER OF ACCUMULATION UNITS. For each subaccount of each
investment account of the Separate Account, the number of your
Accumulation Units is the sum of
Each Purchase Payment allocated to the subaccount
divided by
The value of an Accumulation Unit for that subaccount
for the valuation period in which we received the
Purchase Payment.
The number will be adjusted for transfers, withdrawals and
charges. Adjustments will be made as of the valuation period
in which we receive all requirements for the transaction, as
appropriate.
VALUE OF EACH ACCUMULATION UNIT. For each subaccount of each
investment account of the Separate Account, the value was
arbitrarily set at $10 when the subaccount was established.
The value may increase or decrease from one valuation period
to the next. For any valuation period the value is
The value of an Accumulation Unit for the prior
valuation period
multiplied by
The net investment factor for that subaccount for the
valuation period.
NET INVESTMENT FACTOR. As used in this contract, is an index
used to measure the investment performance of a subaccount
from one valuation period to the next. For any subaccount, the
net investment factor for a valuation period is found by
dividing (a) by (b) and subtracting (c):
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Where (a) is
The net asset value per share of the mutual
fund held in the subaccount, as of the
end of the valuation period
plus
The per-share amount of any dividend or
capital gain distributions by the mutual
fund if the "exdividend" date occurs in the
valuation period
plus or minus
A per-share charge or credit as we may
determine, as of the end of the valuation
period, for tax reserves.
Where (b) is
The net asset value per share of the mutual
fund held in the subaccount as of the end of
the last prior valuation period
plus or minus
The per-share charge or credit for tax
reserves as of the end of the last prior
valuation period.
Where (c) is
The sum of the daily expense risk charge and
the daily mortality risk charge. See Section
5. On an annual basis, the sum of such
charges equals 1.30% of the daily net asset
value of the Separate Account.
VALUATION PERIOD. As used in this contract, this is the
interval from one valuation time to the next valuation time.
Valuation time is the time as of which each mutual fund
determines the net asset value of its shares.
SECTION 8 -- ANNUITY PAYMENTS
ANNUITY DATE. The Annuity Date must be on the first day of a
month. It may not be later than the first day of the next
month after the Annuitant's 85th birthday. You choose the
Annuity Date in the application. You may change the Annuity
Date up to 30 days prior to the current Annuity Date.
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<PAGE>
ANNUITY OPTIONS. You or your surviving beneficiary may choose
an annuity option up to 30 days prior to the Annuity Date. An
option not set forth in the contract may be chosen if
acceptable to us.
FIRST VARIABLE ANNUITY PAYMENT. Any premium taxes will be
deducted. The net Contract Value as of the Annuity Date will
be applied to the annuity table for the option chosen. The
annuity tables show the amount of the first payment for each
$1,000 so applied, according to the age at the Annuity Date.
The tables are based on the 1971 Individual Annuity Mortality
Table with interest at 4%. Adjusted ages are used in entering
those tables.
SUBSEQUENT VARIABLE ANNUITY PAYMENTS. Payments after the first
will vary in amount according to the investment performance of
the subaccount or subaccounts you have chosen. The amount may
change from month to month. The amount of each subsequent
payment is the sum of the following amounts attributable to
each applicable subaccount
The number of Annuity Units for the subaccount
multiplied by
The value of an Annuity Unit for that subaccount for
the valuation period in which payment is due.
We guarantee that the amount of each annuity payment after the
first will not be affected by variations in expense or
mortality experience.
MINIMUM ANNUITY PAYMENTS. If the net Contract Value to be
applied at the Annuity Date is less than $2,000, we may pay
such amount in a lump sum. Annuity payments will be made
monthly; but if any payment would be less than $50, we may
change the frequency so payments are at least $50 each.
NUMBER OF ANNUITY UNITS. The number of units for the
subaccount of each investment account you have chosen is
The amount of the first variable annuity payment
attributable to that subaccount
divided by
The value of Annuity Unit for the subaccount as of
the Annuity Date.
The number is fixed except for adjustments for subaccount
transfers. Adjustments will be made as of the valuation period
in which we receive all requirements for the transfer, as
appropriate.
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<PAGE>
VALUE OF EACH ANNUITY UNIT. For each subaccount of each
investment account, the value was arbitrarily set at $10 when
the subaccount was established. The value may increase or
decrease from one valuation period to the next. For any
valuation period the value is
The value of an Annuity Unit for the last prior
valuation period
multiplied by
The net investment factor for that subaccount for
the valuation period
multiplied by
An interest factor to neutralize the assumed
investment rate of 4% built into the annuity tables.
SECTION 9 -- ANNUITY OPTIONS
OPTION 1 - ANNUITY FOR SPECIFIED NUMBER OF YEARS. Payments
will be made for a specified number of years, which may not be
less than 5 or more than 30.
OPTION 2 - LIFE ANNUITY. Payments will be made for the life of
the Annuitant. Payments will cease with the last payment due
prior to the Annuitant's death.
OPTION 3 - LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10 OR 20
YEARS. Payments will be made for the life of the Annuitant. A
guaranteed payment period of either 10 or 20 years may be
chosen.
OPTION 4 - JOINT AND SURVIVOR LIFE ANNUITY. Payments will be
made during the lifetimes of the Annuitant and a designated
second Annuitant. Payments will continue as long as either is
living. The amount of such payments will not change by reason
of the death of the first Annuitant to die.
If the Annuitant dies prior to the end of the specified period
under Option 1 or the guaranteed period under Option 3, the
beneficiary may choose either:
(1) To have the payments continue for the specified or
guaranteed period, or
(2) To receive at any time in lump sum the present value of
the remaining payments to be made over the specified or
guaranteed period.
If a beneficiary dies while receiving annuity payments under
this option, the present value will be paid in a lump sum to
the beneficiary's estate. The present value will be (a)
computed as of
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the valuation period in which due proof of death is received
at our designated service office, and (b) commuted at the
assumed investment rate of the annuity tables.
PAYMENTS. Payments will be made on the first day of each month
starting with the Annuity Date. Payments under all options
will be made to the Owner or to such person(s) designated by
the Owner, except under Option 4. Under Option 4, payments
will be jointly payable while both Annuitants are alive.
SECTION 10 -- ANNUITY OPTION TABLES
The following tables show the amount of the first monthly income payment for
each $1,000 of value applied under a variable settlement option. "Age" as used
in the tables means an adjusted age determined in the following manner from the
actual age of the Annuitant on the birthday nearest the date of the first
payment:
CALENDAR YEAR OF BIRTH ADJUSTED AGE
Before 1900 Actual Age increased by 1
1900-1919 Actual Age
1920-1939 Actual Age decreased by 1
1940-1959 Actual Age decreased by 2
1960 and later Actual Age decreased by 3
OPTION 1 -- ANNUITY FOR SPECIFIED NUMBER OF YEARS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Number of Years 5 6 7 8 9 10 11 12 13 14 15
Monthly Income -- -- -- 18.32 15.56 13.59 12.12 10.97 10.06 9.31 8.69 8.17 7.72 7.34
- ------------------------------------------------------------------------------------------------------------------------------------
Number of Years 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Monthly Income $7.00 6.71 6.44 6.21 6.00 5.81 5.64 5.49 5.35 5.22 5.10 5.00 4.90 4.80 4.72
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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OPTION 2 -- LIFE ANNUITY AND OPTION 3 -- LIFE ANNUITY
WITH PAYMENTS GUARANTEED FOR 10 OR 20 YEARS
LIFE 10 YEARS 20 YEARS
AGE ANNUITY GUARANTEED GUARANTEED
- --------------------------------------------------------------------------------
50 4.59 4.56 4.47
51 4.65 4.62 4.52
52 4.72 4.69 4.57
53 4.80 4.76 4.63
54 4.87 4.83 4.69
55 4.96 4.91 4.75
56 5.05 4.99 4.81
57 5.14 5.07 4.87
58 5.24 5.16 4.93
59 5.34 5.25 5.00
60 5.45 5.35 5.07
61 5.56 5.45 5.14
62 5.69 5.56 5.20
63 5.82 5.68 5.27
64 5.96 5.80 5.34
65 6.11 5.93 5.41
66 6.27 6.07 5.48
67 6.45 6.22 5.54
68 6.64 6.37 5.60
69 6.85 6.54 5.66
70 7.08 6.71 5.71
71 7.33 6.89 5.76
72 7.60 7.08 5.81
73 7.90 7.28 5.84
74 8.22 7.48 5.88
75 8.57 7.68 5.90
76 8.95 7.89 5.92
77 9.37 8.10 5.94
78 9.82 8.30 5.96
79 10.32 8.50 5.97
80 10.86 8.69 5.98
81 11.46 8.88 5.98
82 12.11 9.04 5.99
83 12.82 9.20 5.99
84 13.59 9.33 6.00
85 14.43 9.45 6.00
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OPTION 4 -- JOINT AND SURVIVOR LIFE ANNUITY
<TABLE>
<CAPTION>
AGE 55 60 65 70 75 80 85 AGE
- --------------------------------------------------------- ------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 4.25 4.34 4.41 4.46 4.51 4.54 4.56 50
55 4.40 4.53 4.64 4.74 4.81 4.87 4.90 55
60 4.53 4.72 4.90 5.05 5.18 5.28 5.35 60
65 4.64 4.90 5.16 5.40 5.62 5.79 5.91 65
70 4.74 5.05 5.40 5.77 6.11 6.39 6.59 70
75 4.81 5.18 5.62 6.11 6.65 7.12 7.48 75
80 4.87 5.28 5.79 6.39 7.12 7.94 8.59 80
85 4.90 5.35 5.91 6.59 7.48 8.59 9.88 85
</TABLE>
SECTION 11 -- PAYMENT ON DEATH
DEATH BEFORE THE ANNUITY DATE. Upon receipt of due proof of
the death of the Annuitant prior to the Annuity Date, we will
pay to the beneficiary the greater of:
(1) The sum of all Purchase Payments, adjusted for withdrawals
and contract transfers, or
(2) The Contract Value for the valuation period in which we
receive such proof at our designated service office.
Payment will be in a lump sum or the beneficiary may choose an
Annuity Option under this contract. If we are issuing new
contracts on this form at the time of payment, the beneficiary
may elect to apply for a new contract and apply the payment as
a transfer to the new contract.
DEATH AFTER THE ANNUITY DATE. If the Annuitant dies after the
Annuity Date, the amount payable, if any, will be according to
the Annuity Option in force. See Section 9.
SECTION 12 -- TRANSFER TO OR FROM ANOTHER CONTRACT
TRANSFER TO ANOTHER ANNUITY CONTRACT
You may transfer all or part of your Contract Value to another
annuity contract issued to you by us which contains a
reciprocal transfer provision. The Owner, contingent owner,
Annuitant and beneficiaries of the other annuity contract must
be the same as under this contract.
Transfer to a new contract for a Nonqualified Plan must be at
least $1,000 or such lower minimum as we may establish. Other
contract transfers must be at least $250.
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For partial transfers the remaining Contract Value for this
contract must be at least $250. For full transfers this
contract must be surrendered to our designated service office.
A request to transfer must be received by us and any other
applicable requirement must be met prior to the death of the
Annuitant. No more than two transfers may be made to another
annuity contract in a calendar year. No transfer may be made
after the thirtieth day before the Annuity Date.
TRANSFERS FROM ANOTHER ANNUITY CONTRACT
You may make transfers to this contract from another annuity
contract issued by us which provides for such transfers,
subject to the limits set forth in that contract.
SECTION 13 -- WITHDRAWAL
WITHDRAWAL. Prior to the earlier of the Annuity Date or the
death of the Annuitant, you may withdraw all or part of the
Contract Value. After the Annuity Date and the election of
Option 1 in Section 9, the payee may withdraw the present
value of the annuity payments remaining to be made. The
present value will be (a) computed as of valuation period in
which notice of the withdrawal is received at our designated
service office and (b) commuted at the assumed investment rate
of the annuity tables.
For full withdrawal, this contract must be surrendered to our
designated service office. For partial withdrawals of the
Contract Value, the withdrawal must be at least $250. The
amount remaining under the contract must be at least $250.
CONTINGENT DEFERRED SALES CHARGES. This charge will be made at
withdrawal. It will be lesser of
(1) 5% of the sum of the Purchase Payments made within 7 years
prior to the date of the withdrawal, or
(2) 5% of the amount withdrawn.
The cumulative sum of such charges made within 7 years prior
to the day of withdrawal will never be more than 5% of the sum
of all Purchase Payments made during the same period.
No charge will be made for that portion of the first
withdrawal made in a contract year that does not exceed 10% of
the sum of all Purchase Payments which were made more than one
year prior to the date of withdrawal.
For purposes of this Section, if there has been a transfer
from another contract, the most recent Purchase Payments under
that contract shall be deemed to have been made under this
contract to the extent of the amount transferred.
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PAYMENT OF WITHDRAWALS. Unless you notify us otherwise,
partial withdrawals prior to the Annuity Date and related
charges will be deducted from each subaccount of each
investment account in the ratio of your interest in each
subaccount to your Contract Value. Withdrawals will be based
on values for the valuation period in which the notice, and
contract if required, are received at our designated service
office.
SECTION 14 --MISCELLANEOUS
BENEFICIARY. The Beneficiary is the person who is to receive
(1) Payment on death of the Annuitant prior to the Annuity
Date or
(2) Guaranteed annuity payments, if any, on death of the
Annuitant on or after the Annuity Date.
You choose the beneficiary in the application. You may change
the beneficiary while the Annuitant is alive.
The estate or heirs of a beneficiary who dies before the
Annuitant have no rights under this contract. If no
beneficiary survives the Annuitant, payment will be made to
you or your estate.
OWNERSHIP OF CONTRACT. The Annuitant is the Owner unless
another owner is named in the application or an endorsement.
Only an Owner may name or change a contingent owner.
Upon notice to us you may assign the contract to a new Owner.
The assignment cancels a designation of contingent owner.
DEFERMENT OF TRANSFERS AND PAYMENTS. Transfers and payments of
withdrawals will be made within seven days. However, we may
defer a transfer, a withdrawal, the Annuity Date or annuity
payments if:
(1) The New York Stock Exchange is closed (other than
customary weekend and holiday closings);
(2) Trading on the New York Stock Exchange is restricted;
(3) An emergency exists such that it is not reasonably
practical to dispose of securities held in the Separate
Account or to determine the value of its assets; or
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(4) The Securities and Exchange Commission by order so permits
for the protection of security holders.
Conditions in (2) and (3) will be decided by, or in accordance
with rules of, the Securities and Exchange Commission.
COLLATERAL ASSIGNMENT. Upon notice to us you may make a
collateral assignment. It does not change contract ownership.
RESTRICTIONS OF QUALIFIED PLANS. If the contract is issued
pursuant to a Qualified Plan, it may not be assigned, pledged
or transferred unless permitted by law.
MISSTATEMENT OF AGE. If the age of the Annuitant or a joint
payee is misstated, any amount payable under this contract
will be that amount which the Purchase Payments paid would
have purchased on the basis of the correct age.
If the annuity payments have been overpaid because the age of
the Annuitant or joint payee has been misstated, the amount
overpaid, with interest at the rate of 6% per year compounded
annually, will be charged against the payments still to be
made under this contract.
If the annuity payments have been underpaid because the age of
the Annuitant or joint payee has been misstated, the amount
underpaid, with interest at the rate of 6% per year compounded
annually, will be paid in full with the next payment due under
this contract.
PROOF OF AGE AND SURVIVAL. We may require satisfactory proof
of correct age at any time. If any payment under this contract
depends on the payee being alive, we may require satisfactory
proof of survival.
INCONTESTABILITY. No statement made by the applicant will void
the contract unless it is contained in the written application
attached to the contract. The contract will be incontestable
after it has been in force for 2 years from the Contract Date.
THE CONTRACT. The contract, any endorsements, and its attached
application are the entire contract. It is issued in
consideration of the application and your Purchase Payments.
Only our President, a Vice President, Actuary or Secretary may
change the contract. Any change must be in writing.
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At any time we may make such changes in this contract as are
required to make it conform with any law or regulation issued
by any government agency to which it is subject.
PARTICIPATING CONTRACT. The contract may participate in our
divisible surplus. Divisible surplus, if any, to be
apportioned to the contract shall be apportioned annually and
shall be paid in cash or applied to provide additional
accumulation units or annuity units under the contract. No
divisible surplus is expected to be apportioned to this
contract in the foreseeable future.
Divisible surplus apportioned to this contract, if any, will
be applied to provide additional accumulation units or annuity
units unless you elect to have it paid in cash.
DATES. Contract years and anniversaries are measured from the
Contract Date.
NOTICE, CHANGES AND CHOICES. To be effective, all notices,
changes and choices you may make under the contract must be in
writing, signed and received by us at our designated service
office. If acceptable to us, notices, changes and choices
relating to beneficiaries and ownership will take effect as of
the date signed unless we have already acted in reliance on
the prior status. We are not responsible for their validity.
CONTRACT PAYMENTS. All sums payable to or by us are payable at
our designated service office. We may require return of the
contract prior to making payment.
PROTECTION OF PROCEEDS. Payments under this contract may not
be assigned by the payee prior to their due dates. To the
extent allowed by law, payments are not subject to legal
process for debts of a payee.
PERIODIC REPORTS. At least once a year prior to the Annuity
Date, we will furnish you a report. It will set forth the
current number of Accumulation Units, the value per
Accumulation Unit and the total Contract Value. Each person
with voting rights in the Separate Account will be furnished
reports required by the Investment Company Act of 1940.
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ENDORSEMENT -- INDIVIDUAL VARIABLE ANNUITY CONTRACT -- FLEXIBLE
PURCHASE PAYMENTS
This contract is amended as follows:
1. The following endorsement which has or may have been added to this contract
is rescinded and replaced in its entirety by this endorsement:
Endorsement No. 1447-805.
2. The following provision is added to Section 4--Purchase Payments:
Total purchase payments in any calendar year may not exceed $1,000,000
without our consent.
3. The first three paragraphs in Section 5--Charges and Deductions are changed
to read as follows:
CONTRACT ADMINISTRATION CHARGE. This charge is the lesser of 2% of the
Contract Value at the end of the contract year or $30. It will be deducted
each year on the date specified in Section 1. It will also be deducted when
the Contract Value is withdrawn in full if withdrawal is not on the date
specified. The charge will never exceed $30. The charge will not be
deducted on or after the Annuity Date.
EXPENSE RISK CHARGE. This charge is made to compensate us for guaranteeing
that the contract administration charge will never exceed $30. On an annual
basis it equals 0.5% of the daily net asset value of the Separate Account.
MORTALITY RISK CHARGE. This charge is made to compensate us for the
mortality guarantees we make under this contract. On an annual basis it
equals 0.75% of the daily net asset value of the Separate Account.
4. Section 11 -- Payment on Death is amended in its entirety to read as
follows:
SECTION 11 -- PAYMENT ON DEATH
Death payments described in this Section shall be payable upon the earlier
of:
(1) the death of the Annuitant, or
(2) the death of the Owner (other than the trustee of a Qualified Plan).
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DEATH BEFORE THE ANNUITY DATE. Upon receipt of due proof of death prior to
the Annuity Date, Penn Mutual will pay to the beneficiary the greatest of:
(1) The sum of all Purchase Payments, adjusted for withdrawals and contract
transfers.
(2) The Contract Value on the date of receipt of such proof of death, or
(3) The Contract Value as of the Contract Date or, if later, the most
recent seven year anniversary of the contract occurring before the
Owner's 81st birthday, increased by subsequent Purchase Payments and
transfers to the contract and reduced by subsequent withdrawals and
transfers from the contract.
If the beneficiary is not the decedent's spouse, the beneficiary can choose
an Annuity Option for death payments. The Option must provide for payments
over the beneficiary's life or over a period not longer than the
beneficiary's life expectancy. Payments shall begin within one year after
the date of death. If payment is made in a lump sum, such payment shall be
made within five years after the date of death.
If the beneficiary is the decedent's surviving spouse, the surviving spouse
shall become the owner of this contract.
DEATH AFTER THE ANNUITY DATE. If death occurs after the Annuity Date, the
amount payable, if any, will be according to the annuity option in force.
5. The first paragraph in Section 8 -- Annuity Payments is changed to read as
follows:
ANNUITY DATE. Unless another Annuity Date was chosen in the application or
later written notification, the Annuity Date for Nonqualified Plans will be
the first day of the next month after the Annuitant's 85th birthday and for
Qualified Plans, the first day of April in the calendar year following the
year in which the Annuitant attained age 70 1/2. The Annuity Date must be
on the first day of a month. You may change the Annuity Date up to 30 days
before the current Annuity Date.
6. Section 13 -- Withdrawal is amended in its entirety to read as follows:
SECTION 13 -- WITHDRAWAL
WITHDRAWAL. Prior to the earlier of the Annuity Date or the first death to
occur of the Owner or the Annuitant, the Owner may withdraw all or part of
the Contract Value. After the Annuity Date if Option 1 in Section 9 is in
force, the payee may withdraw the present value of the annuity payments
remaining to be made.
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<PAGE>
For full withdrawal, this contract must be surrendered to Penn Mutual. For
partial withdrawals of the Contract Value, the withdrawal must be at least
$250. The amount remaining under the contract must be at least $250.
CONTINGENT DEFERRED SALES CHARGE. This charge will be made at withdrawal.
It will be the lesser of:
(1) 5% of the sum of the Purchase Payments made within 7 years prior to the
date of the withdrawal, or
(2) 5% of the amount withdrawn in excess of the free withdrawal amount.
The cumulative sum of such charges made within 7 years prior to the date of
withdrawal will never be more than 5% of the sum of all Purchase Payments
made during the same period.
FREE WITHDRAWAL. The Owner may at any time withdraw all or any part of the
Contract Value free from Contingent Deferred Sales Charges if (i) the Owner
in a Nonqualified Plan, or the Annuitant in a Qualified Plan, is then
disabled as defined in Section 72(m)(7) of the Internal Revenue Code and as
applied under the Social Security Act, (ii) the disability began after the
Contract Date, and (iii) the disability had continued without interruption
for four months.
No charge will be made for that portion of the first withdrawal made in a
contract year which does not exceed 10% of the sum of all Purchase Payments
which were made one year or more prior to the date of withdrawal.
No charge will be made on the portion of the first withdrawal made in the
contract years set forth below which does not exceed the following
percentages of the Contract Value:
CONTRACT YEAR PERCENTAGE
------------- ----------
Eighth 25%
Ninth 50%
Tenth 75%
No contingent deferred sales charge will be applicable after this contract
has been in force for ten years.
For purposes of this Section, if there has been a transfer from another
contract, the most recent Purchase Payments under that contract shall be
deemed to have been made under this contract to the extent of the amount
transferred.
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<PAGE>
PAYMENTS OF WITHDRAWALS. Unless you notify us otherwise, partial
withdrawals prior to the Annuity Date and related charges will be deducted
from each subaccount of each investment account in the ratio of your
interest in each subaccount to your Contract Value. Withdrawals will be
based on values for the valuation period in which the notice, and contract
if required, are received at our designated service office.
7. EFFECTIVE DATE
The effective date of this endorsement is the Contract Date unless a later
date is shown below.
Philadelphia, Pennsylvania The Penn Mutual Life Insurance Company
/s/ Robert E. Chappell
-------------------------------------------
Endorsement No. 1499-91 Assistant Vice President and Senior Actuary
Page 21
<PAGE>
- --------------------------------------------------------------------------------
This contract provides valuable benefits. Please contact Penn Mutual or its
agent if you have questions about this contract.
Please notify Penn Mutual promptly of any change in address.
ANNUAL ELECTION -- Penn Mutual is a mutual life insurance company. It has no
stockholders. The Owner of this contract is a member of Penn Mutual while this
contract is in force during the life of the Annuitant before the Annuity Date
and before total withdrawal of the contract value. Members have the right to
vote in person or by proxy at the annual election of Trustees held at the Home
Office, Independence Square, Philadelphia, Pennsylvania, on the first Tuesday of
March. If more information is desired, it may be obtained from the Secretary.
- --------------------------------------------------------------------------------
VALUES AND PAYMENTS TO YOU UNDER THIS CONTRACT VARY ACCORDING TO
THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT AND ARE NOT
GUARANTEED AS TO FIXED DOLLAR AMOUNT.
INDIVIDUAL VARIABLE
ANNUITY CONTRACT--
FLEXIBLE PURCHASE PAYMENTS
o Annuity Payments payable on Annuity Date
o Flexible Purchase Payments payable until Annuity Date
o Participating
The Penn Mutual Life Insurance Company, Independence Square, Philadelphia,
Pennsylvania 19172
<PAGE>
THE PENN MUTUAL LIFE INSURANCE COMPANY
INDEPENDENCE SQUARE
PHILADELPHIA, PA 19172
- ------------------------------------------------------------------------------
Group Contract Number:
Issued To:
Date of Issue:
Effective Date:
- ------------------------------------------------------------------------------
The Penn Mutual Life Insurance Company will make annuity payments and other
payments as set forth in this contract.
This contract is delivered in and is subject to the laws of
VALUES AND PAYMENTS UNDER THIS CONTRACT WHEN BASED UPON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE
NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT.
Executed by The Penn Mutual Life Insurance Company at its Home Office in
Philadelphia, Pennsylvania on the date of issue.
/s/ Laura M. Ritzko /s/ Robert E. Chappell
Chairman of the Board
Secretary and Chief Executive Officer
Group Variable and Fixed
Annuity Contract - Flexible
Purchase Payments - Participating
GDI-1085
<PAGE>
Table of Contents
Page
----
Section I - Specification 3
Section II - Definitions 3
Section III - Purchase Payments 4
Section IV - Variable Account Provisions 5
Section V - Fixed Account Provisions 13
Section VI - Payment on Death 19
Section VII - Transfer From Variable to Fixed Account 20
Section VIII - Transfer From Fixed to Variable Account 20
Section IX - Withdrawal 20
Section X - Termination of Contract 22
Section XI - Miscellaneous 23
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Section I - SPECIFICATIONS
THE SEPARATE ACCOUNT
Penn Mutual Variable Annuity Account III
ELIGIBLE MUTUAL FUNDS
Penn Series Equity Fund
Penn Series Aggressive Capital Appreciation Fund
Penn Series Aggressive High Yield Fund
DATE VARIABLE ACCOUNT ADMINISTRATION CHARGE IS DEDUCTED
Each anniversary of the Participant's Enrollment Date
Section II - DEFINITIONS
OWNER: The Employer or the Trustees to whom this group contract is
issued. The Owner shall have all rights of ownership set forth under
this group contract.
PLAN: The qualified pension, profit sharing or deferred compensation
plan established under applicable provisions of the Internal Revenue
Code.
PARTICIPANT: The person on whose behalf Purchase Payments are made
under this group contract.
PARTICIPANT'S ENROLLMENT DATE: The date specified in the Certificate
issued by Penn Mutual to the Owner for each Participant.
PARTICIPANT'S ENROLLMENT YEAR: The twelve month period commencing on
the Participant's Enrollment Date, or any anniversary of the
Participant's Enrollment Date.
ACCUMULATION UNIT: An index used to compute a Participant's Variable
Account Value prior to the Variable Annuity Date.
ANNUITY UNIT: An index used to compute a Participant's Variable Annuity
Payment.
PARTICIPANT'S VARIABLE ACCOUNT: An account established and maintained
by Penn Mutual for each Participant and to which Purchase Payments are
allocated under Section IV.
PARTICIPANT'S VARIABLE ACCOUNT VALUE: The value of all Accumulation
Units credited to a Participant's Variable Account.
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PARTICIPANT'S FIXED ACCOUNT: An account established and maintained by
Penn Mutual for each Participant and to which Purchase Payments are
allocated under Section V.
PARTICIPANT'S FIXED ACCOUNT VALUE: The sum of all amounts credited to a
Participant's Fixed Account, increased by interest credited and reduced
by amounts withdrawn or transferred from a Participant's Fixed Account.
ANNUITY DATE: The date on which annuity payments are to start.
PURCHASE PAYMENTS: Amounts paid to Penn Mutual on behalf of
Participants under this group contract.
Section III - PURCHASE PAYMENTS
Purchase Payments may be made on behalf of each Participant subject to
the following provisions:
(a) The minimum Purchase Payment for any one Participant is $25.00
or such lower minimum as we may establish.
(b) The Owner will direct the allocation of Purchase Payments to a
Participant's Variable Account or a Participant's Fixed
Account, subject to the provisions of Sections IV and V.
(c) Total Purchase Payments in a calendar year for a Participant
are subject to the limits of the Sections of the Internal
Revenue Code which apply to Owner's Plan.
(d) Total Purchase Payment in a calendar year for a Participant
may not exceed $1,000,000 without Penn Mutual's consent.
(e) Purchase Payments for a Participant may be made only by or
through the Owner.
(f) Purchase Payments will be credited to Participants' Variable
Accounts and Participants' Fixed Accounts in accordance with
information provided by the Owner.
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<PAGE>
Section IV - VARIABLE ACCOUNT PROVISIONS
A. The Separate Account
THE SEPARATE ACCOUNT. The name of the Separate Account is set
forth in Section I. We established the Separate Account for
this contract and other contracts we may issue. Amounts
credited to the Participant's Variable Account will be
allocated to the Separate Account.
INVESTMENT OF SEPARATE ACCOUNT ASSETS. Assets held in the
Separate Account will be invested in one or more eligible
mutual funds. Current eligible mutual funds are specified in
Section I.
For this and other contracts the Separate Account is divided
into investment accounts. There is an investment account for
each eligible mutual fund.
The Owner may choose the investment account to which amounts
credited to a Participant's Variable Account are to be
allocated.
We own the assets held in the Separate Account. However, the
portion of such assets equal to the reserves and other
contract liabilities with respect to each investment account
of the Separate Account are not chargeable with liabilities
arising out of any other business we may conduct.
Upon notice to us, the Owner may transfer part or all the
value of the Accumulation Units or Annuity Units credited to a
Participant's Variable Account from one investment account to
another. No more than four such transfers may be made in a
calendar year. Such investment account transfers, as well as
all other investments, are subject to the limits and rules
applicable to each mutual fund.
SUBSTITUTION OF INVESTMENT. If investment in a mutual fund
should no longer be possible or in our judgment becomes
inappropriate to the purposes of the contract, we may
substitute another mutual fund. Substitution may be made with
respect to existing investments and the investment of future
Purchase Payments. Substitution will be subject to the
approval of the Insurance Department of the jurisdiction in
which this contract is delivered.
B. Charges and Deductions
VARIABLE ACCOUNT ADMINISTRATION CHARGE. With respect to each
Participant's Variable Account, a charge of $30 will be
deducted each year on the date specified in Section I. It will
also be deducted when the Participant's Variable
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Account Value is withdrawn in full if withdrawal is not on the
date specified in Section I. The charge will never increase.
The charge will not be deducted on or after the Annuity Date.
EXPENSE RISK CHARGE. This charge is made to compensate us for
guaranteeing that the Variable account administration charge
will never increase. On an annual basis it equals 0.5% of the
daily net asset value of the Separate Account. This charge is
reflected in the Net Investment Factor set forth in Subsection
C of this Section IV.
MORTALITY RISK CHARGE. This charge is made to compensate us
for the mortality guarantees we make under this contract. On
an annual basis it equals 0.8% of the daily net asset value of
the Separate Account. This charge is reflected in the Net
Investment Factor set forth in Subsection C of this Section
IV.
CONTINGENT DEFERRED SALES CHARGE. This charge may be deducted
upon withdrawal, in whole or in part, of the Participant's
Variable Account Value or the present value of remaining
annuity payments (if applicable). The Contingent Deferred
Sales Charge is set forth in Section IX.
DEDUCTIONS. The expense risk and mortality risk charge will be
computed and deducted from each subaccount of each investment
account of the Separate Account for each day the contract is
in force. Other charges will be deducted by cancelling
Accumulation Units or Annuity Units (if applicable) of a value
equal to the deduction. Cancellation of Accumulation Units
will be in the ratio of the Participant's interest in each
investment account to the Participant's Variable Account
Value.
C. Variable Accumulation Values
NUMBER OF PARTICIPANT'S ACCUMULATION UNITS. For each
investment account of the Separate Account, the number of a
Participant's Accumulation Units is the sum of
Amounts allocated to the investment account for the
Participant divided by
The value of an Accumulation Unit for the investment
account for the valuation period in which we received
the amount allocated.
The number will be adjusted for transfers, withdrawals and
charges. Adjustments will be made as of the valuation period
in which we receive all requirements for the transaction, as
appropriate.
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<PAGE>
VALUE OF ACCUMULATION UNIT. For each investment account of the
Separate Account, the value was arbitrarily set at $10 when
the investment account was established. The value may increase
or decrease from one valuation period to the next. For any
valuation period the value is
The value of an Accumulation Unit for the prior
valuation period multiplied by
The net investment factor for the investment account
for the valuation period.
NET INVESTMENT FACTOR. As used in this contract, net
investment factor is an index used to measure the investment
performance of an investment account from one valuation period
to the next. For any investment account, the net investment
factor for a valuation period is found by dividing (a) by (b)
and subtracting (c):
Where (a) is
The net asset value per share of the mutual
fund held in the investment account, as of
the end of the valuation period
plus
The per-share amount of any dividend or
capital gain distributions by the mutual
fund if the "exdividend" date occurs in the
valuation period
plus or minus
A per-share charge or credit as of the end
of the valuation period, for tax reserves,
if applicable;
Where (b) is
The net asset value per share of the mutual
fund held in the investment account as of
the end of the last prior valuation period
plus or minus
The per-share charge or credit for tax
reserves, if applicable, as of the end of
the last prior valuation period;
Where (c) is
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The sum of the daily expense risk charge and
the daily mortality risk charge. On an
annual basis, the sum of such charges equals
1.30% of the daily net asset value of the
Separate Account.
VALUATION PERIOD. Valuation period is the interval from one
valuation time to the next valuation time. Valuation time is
the time as of which the mutual fund determines the net asset
value of its shares.
D. Variable Annuity Payments
ANNUITY DATE. The Annuity Date must be on the first day of a
month. It may not be later than the first day of the next
month after the Annuitant's 85th birthday. The Owner will
choose the Annuity Date in the application. The Owner may
change the Annuity Date up to 30 days prior to the current
Annuity Date.
VARIABLE ANNUITY OPTIONS. The Owner may choose a variable
annuity option up to 30 days prior to the Annuity Date. An
option not set forth in the contract may be chosen if
acceptable to us.
FIRST VARIABLE ANNUITY PAYMENT. Any premium taxes will be
deducted from the Participant's Variable Account Value. The
net Participant's Variable Account Value as of the Annuity
Date will be applied to the annuity table for the option
chosen. The variable annuity tables show the amount of the
first payment for each $1,000 so applied, according to the age
at the Annuity Date. The tables are based on the 1971
Individual Annuity Mortality Table with interest at 4%.
Adjusted ages are used in entering those tables.
SUBSEQUENT VARIABLE ANNUITY PAYMENTS. Payments after the first
will vary in amount according to the investment performance of
the investment account(s) chosen. The amount may change from
month to month. The amount of each subsequent payment is the
sum of the following amounts attributable to each applicable
investment account
The number of Annuity Units for the investment account
multiplied by The value of an Annuity Unit for the investment
account for the valuation period in which payment is due.
We guarantee that the amount of each annuity payment after the
first will not be affected by variations in expense or
mortality experience.
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<PAGE>
MINIMUM ANNUITY PAYMENTS. If the net Participant's Variable
Account Value to be applied at the Annuity Date is less than
$2,000, we may pay such amount in a lump sum. Variable annuity
payments will be made monthly; but if any payment would be
less than $50, we may change the frequency so payments are at
least $50 each.
NUMBER OF PARTICIPANT'S ANNUITY UNITS. The number of a
Participant's Annuity Units for each investment account chosen
by the Owner is
The amount of the first variable annuity payment
attributable to that investment account
divided by
The value of an Annuity Unit for the investment
account as of the Annuity Date.
The number is fixed except for adjustments for investment
account transfers. Adjustments will be made as of the
valuation period in which we receive all requirements for the
transfer, as appropriate.
VALUE OF ANNUITY UNIT. For each investment account of the
Separate Account the value was arbitrarily set at $10 when the
investment account was established. The value may increase or
decrease from one valuation period to the next. For any
valuation period the value is
The value of an Annuity Unit for the last prior
valuation period
multiplied by
The net investment factor for the investment account
for the valuation period
multiplied by
An interest factor to neutralize the assumed
investment rate of 4% built into the annuity tables.
E. Variable Annuity Options
OPTION 1 - VARIABLE ANNUITY FOR SPECIFIED NUMBER OF YEARS.
Payments will be made for a specified number of years, which
may not be less than 5 years nor more than 30 years.
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OPTION 2 - VARIABLE LIFE ANNUITY. Payments will be made for
the life of the Annuitant. Payments will cease with the last
payment due prior to the Annuitant's death.
OPTION 3 - VARIABLE LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR
10 OR 20 YEARS. Payments will be made for the life of the
Annuitant. A guaranteed payment period of either 10 or 20
years may be chosen.
OPTION 4 - VARIABLE JOINT AND SURVIVOR LIFE ANNUITY. Payments
will be made during the lifetimes of the Annuitant and a
designated second Annuitant. Payments will continue as long as
either is living. The amount of such payments will not change
by reason of the death of the first Annuitant to die.
If the Annuitant dies prior to the end of the specified period
under Option 1 or the guaranteed period under Option 3, the
beneficiary may choose either
(1) To have the payments continue for the specified or
guaranteed period, or
(2) To receive at any time in lump sum the present value
of the remaining payments to be made over the
specified or guaranteed period.
If the beneficiary dies while receiving continued annuity
payments, the present value of remaining payments will be paid
in a lump sum to the beneficiary's estate. The present value
will be (a) computed as of the valuation period in which due
proof of death is received at our designated service office,
and (b) commuted at the assumed investment rate of the annuity
tables.
PAYMENTS. Payments will be made on the first day of each month
starting with the Annuity Date. Except under Option 4,
payments will be made to the Participant. Under Option 4,
payments will be jointly payable while both Annuitants are
alive.
F. Variable Annuity Option Tables
The following tables show the amount of the first monthly
income payment for each $1,000 of value applied under a
variable settlement option. "Age" as used in the tables means
an adjusted age determined in the following manner from the
actual age of the Annuitant on the birthday nearest the date
of the first payment.
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<PAGE>
CALENDAR YEAR OF BIRTH ADJUSTED AGE
Before 1900 Actual Age increased by 1
1900-1919 Actual Age
1920-1939 Actual Age decreased by 1
1940-1959 Actual Age decreased by 2
1960 and later Actual Age decreased by 3
Option 1 - Variable Annuity for Specified Number of Years
- --------------------------------------------------------------------------------
Number of Years 5 6 7 8
Monthly Income -- -- -- 18.32 15.56 13.59 12.12
Number of Years 9 10 11 12 13 14 15 16
Monthly Income 10.97 10.06 9.31 8.69 8.17 7.72 7.34 7.00
Number of Years 17 18 19 20 21 22 23 24
Monthly Income 6.71 6.44 6.21 6.00 5.81 5.64 5.49 5.35
Number of Years 25 26 27 28 29 30
Monthly Income 5.22 5.10 5.00 4.90 4.80 4.72
- --------------------------------------------------------------------------------
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<PAGE>
Option 2 - Variable Life Annuity and
Option 3 - Variable Life Annuity with
Payments Guaranteed for 10 or 20 Years
LIFE 10 YEARS 20 YEARS
AGE ANNUITY GUARANTEED GUARANTEED
--- ------- ---------- ----------
50 4.59 4.56 4.47
51 4.65 4.62 4.52
52 4.72 4.69 4.57
53 4.80 4.76 4.63
54 4.87 4.83 4.69
55 4.96 4.91 4.75
56 5.05 4.99 4.81
57 5.14 5.07 4.87
58 5.24 5.16 4.93
59 5.34 5.25 5.00
60 5.45 5.35 5.07
61 5.56 5.45 5.14
62 5.69 5.56 5.20
63 5.82 5.68 5.27
64 5.96 5.80 5.34
65 6.11 5.93 5.41
66 6.27 6.07 5.48
67 6.45 6.22 5.54
68 6.64 6.37 5.60
69 6.85 6.54 5.66
70 7.08 6.71 5.71
71 7.33 6.89 5.76
72 7.60 7.08 5.81
73 7.90 7.28 5.84
74 8.22 7.48 5.88
75 8.57 7.68 5.90
76 8.95 7.89 5.92
77 9.37 8.10 5.94
78 9.82 8.30 5.96
79 10.32 8.50 5.97
80 10.86 8.69 5.98
81 11.46 8.88 5.98
82 12.11 9.04 5.99
83 12.82 9.20 5.99
84 13.59 9.33 6.00
85 14.43 9.45 6.00
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<PAGE>
Option 4 - Variable Joint and Survivor Life Annuity
<TABLE>
<CAPTION>
AGE 55 60 65 70 75 80 85 AGE
--- -- -- -- -- -- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 4.25 4.34 4.41 4.46 4.51 4.54 4.56 50
55 4.40 4.53 4.64 4.74 4.81 4.87 4.90 55
60 4.53 4.72 4.90 5.05 5.18 5.28 5.35 60
65 4.64 4.90 5.16 5.40 5.62 5.79 5.91 65
70 4.74 5.05 5.40 5.77 6.11 6.39 6.59 70
75 4.81 5.18 5.62 6.11 6.65 7.12 7.48 75
80 4.87 5.28 5.79 6.39 7.12 7.94 8.59 80
85 4.90 5.35 5.91 6.59 7.48 8.59 9.88 85
</TABLE>
Section V - FIXED ACCOUNT PROVISIONS
A. Interest Options
Interest will be earned on each Participant's Fixed Account
Value from the date amounts are credited to the Participant's
Fixed Account to the date amounts are applied to an annuity
option, paid upon the death of the annuitant, transferred or
withdrawn.
Each amount credited to a Participant's Fixed Account will be
credited with interest under Interest Option A, Interest
Option B, or Interest Option C. The Owner chooses the interest
options. The minimum initial amount for which an Interest
Option may be elected is $25.00 or such lower minimum as we
may establish.
INTEREST OPTION A
With respect to each amount for which Interest Option A is
elected, interest will be credited at an effective annual rate
declared by us. The effective annual rate will be declared as
of the first day of each calendar quarter. The declared rate
will apply, for Interest Option A elections made in that
calendar quarter, through the end of the same calendar quarter
in the next calendar year. Thereafter, interest will be
credited at the declared effective annual rate then applicable
to new Interest Option A elections, for successive twelve
month periods.
We will declare an effective annual interest rate under
Interest Option A which is not less than the published 52 week
United States Treasury Bill discount rate from the most recent
regularly scheduled auction held before the beginning of the
calendar quarter. If the auction program is discontinued, we
will substitute an
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index which in our opinion is comparable and which is approved
by the Insurance Department of the jurisdiction in which this
contract is delivered.
The declared effective annual interest rate under Interest
Option A will never be less than 4%.
INTEREST OPTION B
With respect to each amount for which Interest Option B is
elected, interest will be credited at an effective annual rate
declared by us. The declared rate will apply through the end
of the calendar month in which the election is made.
Thereafter, interest will be credited on such amount for
successive calendar month periods at the declared effective
annual rate then applicable to new Interest Option B elections
made as of the beginning of each such calendar month.
The declared effective annual interest rate under Interest
Option B will never be less than 4%.
INTEREST OPTION C
With respect to each amount for which interest Option C is
elected, interest will be credited at an effective annual rate
declared by us. The effective annual rate will be declared as
of the first day of each calendar quarter. The declared rate
will apply, for Interest Option C elections made in that
calendar quarter, through the end of the same calendar quarter
in the third following calendar year. Thereafter, interest
will be credited at the declared effective annual rate then
applicable to new Interest Option C elections, for successive
thirty-six month periods.
The owner may change the interest option election or withdraw
or transfer any portion of an amount for which Interest Option
C is elected before the end of a period for which a declared
effective annual rate of interest is guaranteed for such
amount. However, in such event, the amount withdrawn or
transferred or the amount for which the interest option
election is changed will be reduced by a premature transaction
charge equal to 2 1/2% of such amount
The declared effective annual interest rate under Interest
Option C will never be less than 4%.
CHANGE OF INTEREST OPTION
The Owner may change the interest option election applicable
to all or part of a Participant's Fixed Account Value, subject
to the provisions set forth below.
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The Owner may change the election for an amount held under
Interest Option A only at the end of the period for which a
declared effective annual interest rate is guaranteed for such
amount.
The Owner may change the election for an amount held under
Interest Option B only at the end of a calendar month.
The Owner may change the election for all or any part of an
amount held under Interest Option C before the end of the
period for which a declared effective annual interest rate is
guaranteed for such amount, subject to the Premature
transaction charge set forth in Interest Option C.
The minimum amount for which an interest option may be changed
is $250.
B. Fixed Annuity Payments
ANNUITY DATE. The Annuity Date must be on the first day of a
month. It may not be later than the first day of the next
month after the Annuitant's 85th birthday. The Owner will
choose the Annuity Date in the application. The Owner may
change the Annuity Date up to 30 days prior to the current
Annuity Date.
FIXED ANNUITY OPTIONS. The Owner may choose a fixed annuity
option up to 30 days prior to the Annuity Date. An option not
set forth in the contract may be chosen if acceptable to us.
AMOUNT OF FIXED ANNUITY PAYMENTS. Any premium taxes will be
deducted from the Participant's Fixed Account Value. The net
Participant's Fixed Account Value as of the Annuity Date will
be applied to the fixed annuity option chosen. If fixed
annuity payments begin within 5 years after the Participant's
Enrollment Date, the monthly income under Options 1, 2, 3 and
4 will equal the monthly income under a comparable single
premium nonparticipating annuity available from us at the time
fixed annuity payments are to begin.
If fixed annuity payments begin more than 5 years after the
Participant's Enrollment Date, the monthly income under
Options 1, 2, 3 and 4 will equal 103% of the monthly income
under a comparable single premium nonparticipating annuity
available from us at the time fixed annuity payments are to
begin. In no event will the monthly income be less than shown
in the Fixed Annuity Option Tables.
The guaranteed monthly income under Option 1 and 3 will be
based on interest at a rate of 3% per year compounded
annually. The guaranteed monthly income under Option 2 and 4
will be based on interest at a rate of 2 3/4% per year
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compounded annually. Fixed Annuity Options 1, 2, 3 and 4 will
not participate in divisible surplus.
MINIMUM ANNUITY PAYMENTS. If the net Participant's Fixed
Account Value to be applied at the Annuity Date is less than
$2,000, we may pay such amount in a lump sum. Fixed Annuity
payments will be made monthly; but if any payment would be
less than $50, we may change the frequency so payments are at
least $50 each.
C. Fixed Annuity Options
OPTION 1 - FIXED ANNUITY FOR SPECIFIED NUMBER OF YEARS.
Payments will be made for a specified number of years, which
may not be less than 5 years nor more than 30 years.
OPTION 2 - FIXED LIFE ANNUITY. Payments will be made for the
life of the Annuitant. Payments will cease with the last
payment due prior to the Annuitant's death.
OPTION 3 - FIXED LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10
OR 20 YEARS. Payments will be made for the life of the
Annuitant. A guaranteed payment period of either 10 or 20
years may be chosen.
OPTION 4 - FIXED JOINT AND SURVIVOR LIFE ANNUITY. Payments
will be made during the lifetimes of the Annuitant and a
designated second Annuitant. Payments will continue as long as
either is living. The amount of such payments will not change
by reason of the death of the first Annuitant to die.
If the Annuitant dies prior to the end of the specified period
under Option 1 or the guaranteed period under Option 3, the
beneficiary may choose either:
(1) to have the payments continue for the specified or
guaranteed period, or
(2) to receive at any time in lump sum the present value of
the remaining payments to be made over the specified or
guaranteed period.
If a beneficiary dies while receiving continued annuity
payments, the present value of remaining payments will be paid
in a lump sum to the beneficiary's estate. The present value
of remaining payments under Option 1 will be based on interest
at a rate of 3% per year compounded annually. The present
value of remaining payments during the guaranteed period under
Option 3 will be based on interest at a rate set by us at the
time payments are to begin.
Page 16
<PAGE>
PAYMENT. Payments will be made on the first day of each month
starting with the Annuity Date. Except under Option 4,
payments will be made to the Participant. Under Option 4,
payments will be jointly payable while both Annuitants are
alive.
D. Fixed Annuity Option Tables
Amount of monthly income provided by each $1,000 applied under
an income option.
Option 1 - Fixed Income for Specified Number of Years
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
MONTHLY MONTHLY MONTHLY
YEARS INCOME YEARS INCOME YEARS INCOME
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
11 $8.86 21 $5.32
12 8.24 22 5.15
13 7.71 23 4.99
14 7.26 24 4.84
5 17.91 15 6.87 25 4.71
6 15.14 16 6.53 26 4.59
7 13.16 17 6.23 27 4.47
8 11.68 18 5.96 28 4.37
9 10.53 19 5.73 29 4.27
10 9.61 20 5.51 30 4.18
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Page 17
<PAGE>
Option 2 - Fixed Life Annuity and
Option 3 - Fixed Life Annuity with
Payments Guaranteed for 10 or 20 Years
The amount of monthly income will be based on the age of the option annuitant on
the birthday nearest the date of the first payment.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
2 3 2 3
AGE OF --- --------------------------- AGE OF --- ---------------------------
OPTION 20 YEAR 10 YEAR OPTION 20 YEAR 10 YEAR
ANNUI- LIFE GUARANTEED GUARANTEED ANNUI- LIFE GUARANTEED GUARANTEED
TANT INCOME PERIOD PERIOD TANT INCOME PERIOD PERIOD
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
15 & under $2.90 $2.87 $2.88 35 3.33 3.30 3.31
16 2.91 2.88 2.89 36 3.36 3.33 3.34
17 2.92 2.89 2.90 37 3.40 3.36 3.38
18 2.94 2.91 2.92 38 3.43 3.40 3.41
19 2.96 2.93 2.94 39 3.47 3.43 3.45
20 2.97 2.94 2.95 40 3.51 3.47 3.49
21 2.99 2.96 2.97 41 3.55 3.51 3.53
22 3.01 2.98 2.99 42 3.59 3.55 3.57
23 3.03 3.00 3.01 43 3.64 3.59 3.62
24 3.05 3.02 3.03 44 3.69 3.63 3.67
25 3.07 3.04 3.05 45 3.74 3.68 3.72
26 3.09 3.06 3.07 46 3.79 3.72 3.77
27 3.11 3.08 3.09 47 3.85 3.77 3.83
28 3.14 3.11 3.12 48 3.91 3.82 3.88
29 3.16 3.13 3.14 49 3.97 3.88 3.94
30 3.18 3.15 3.16 50 $4.03 $3.83 $4.01
31 3.21 3.18 3.19 51 4.11 3.99 4.08
32 3.24 3.21 3.22 52 4.19 4.05 4.15
33 3.27 3.24 3.25 53 4.27 4.11 4.22
34 3.30 3.27 3.28 54 4.35 4.17 4.30
55 4.44 4.23 4.38 70 6.71 5.22 6.30
56 4.53 4.30 4.47 71 6.95 5.25 6.48
57 4.63 4.36 4.56 72 7.20 5.25 6.48
58 4.74 4.43 4.66 73 7.47 5.25 6.85
59 4.86 4.50 4.76 74 7.76 5.25 7.05
60 4.98 4.57 4.87 75 8.06 5.25 7.25
61 5.11 4.64 4.98 76 8.43 5.25 7.44
62 5.25 4.72 5.10 77 8.84 5.25 7.64
63 5.39 4.79 5.23 78 9.28 5.25 7.84
64 5.55 4.86 5.36 79 9.75 5.25 8.04
80 and 10.27 5.25 8.23
over
65 5.71 4.92 5.50
66 5.89 4.99 5.65
67 6.08 5.05 5.80
68 6.27 5.11 5.96
69 6.49 5.17 6.13
</TABLE>
Page 18
<PAGE>
Option 4 - Fixed Joint and Survivor Life Annuity
The amount of monthly income will be based on the ages of the option annuitants
on their respective birthdays nearest the date of the first payment. The table
shows income for certain ages for two option annuitants. The amount is shown
under the age of the first annuitant and opposite the age of the second
annuitant. Amounts of income for other combinations of ages will be furnished
upon request.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
AGE OF AGE OF FIRST OPTION ANNUITANT
SECOND OPTION
ANNUITANT 50 55 60 65 70 75 60 85
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $3.40 $3.48 $3.54 $3.60 $3.64 $3.67 $3.70 $3.71
50 3.52 3.64 3.74 3.82 3.89 3.94 3.97 3.99
55 3.65 3.80 3.95 4.08 4.19 4.27 4.33 4.38
60 3.76 3.96 4.17 4.37 4.54 4.68 4.79 4.86
62 3.80 4.02 4.26 4.49 4.69 4.86 5.00 5.09
65 3.85 4.11 4.38 4.67 4.93 5.15 5.34 5.48
70 3.93 4.22 4.57 4.95 5.32 5.68 6.00 6.25
75 3.99 4.31 4.72 5.19 5.70 6.21 6.74 7.18
80 4.03 4.38 4.84 5.39 6.03 6.75 7.55 8.32
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Section VI - PAYMENT ON DEATH
A. DEATH BEFORE THE ANNUITY DATE. Upon receipt of due proof of
the death of the Participant prior to the Annuity Date, we
will pay to the beneficiary the greater of:
(1) The sum of all Purchase Payments, adjusted for
withdrawals and transfers, or
(2) The sum of the Participant's Variable Account Value
and the Participant's Fixed Account Value for the
valuation period in which we receive such proof at
our designated service office.
If the beneficiary is not the decedent's spouse, the
beneficiary can choose an Annuity Option for death
payments. The Option must provide for payments over
the beneficiary's life or over a period not longer
than the beneficiary's life expectancy. Payments
shall begin within one year after the date of death.
If payment is made in a lump sum, such payment shall
be made within five years after the date of death.
If the beneficiary is the decedent's surviving
spouse, the spouse shall be treated as the decedent
for purposes of contract death benefits.
B. DEATH AFTER THE ANNUITY DATE
If the Participant dies after the Annuity Date, the amount
payable, if any, will be according to the annuity option in
force as provided in Sections IV and V.
Page 19
<PAGE>
Section VII - TRANSFER FROM VARIABLE TO FIXED ACCOUNT
The Owner may transfer all or part of a Participant's Variable Account
Value to a Participant's Fixed Account, subject to the following
provisions:
The minimum transfer amount is $250.
No more than four such transfers may be made on behalf of a Participant
in a calendar year.
No transfer may be made after the thirtieth day before the Annuity
Date.
Request for transfer must be received by us and any other applicable
requirements must be met before the death of the Participant.
Section VIII - TRANSFER FROM FIXED TO VARIABLE ACCOUNT
The Owner may transfer all or part of a Participant's Fixed Account
Value to a Participant's Variable Account, subject to the following
provisions:
The minimum transfer amount is $250.
An amount held under Interest Option A may be transferred only at the
end of the period for which a declared effective annual interest rate
is guaranteed for such amount.
An amount held under Interest Option B may be transferred only at the
end of a calendar month.
All or any part of an amount held under Interest Option C may be
transferred before the end of the period for which a declared effective
annual interest rate is guaranteed for such amount, subject to the
premature transaction charge set forth in Interest Option C.
No transfer may be made after the thirtieth day before the Annuity
Date.
Request for transfer must be received by us and any other applicable
requirements must be met before the death of the Participant.
Section IX - WITHDRAWAL
A. Withdrawal. Prior to the earlier of the Annuity Date or the
death of the Participant, the Owner may withdraw all or part
of the Participant's Variable Account Value and the
Participant's Fixed Account Value.
Page 20
<PAGE>
After the Annuity Date and the election of Variable Annuity
Option 1, the payee may withdraw the present value of the
variable annuity payments remaining to be made. The present
value will be (a) computed as of the valuation period in which
notice of the withdrawal is received at our designated service
office and (b) commuted at the assumed investment rate of the
Variable Annuity tables.
After the Annuity Date and the election of Fixed Annuity
Option 1, the payee may withdraw the present value of the
fixed annuity payments remaining to be made.
For full withdrawal of all a Participant's Variable and Fixed
Account Values, the Certificate must be surrendered to our
designated service office.
For partial withdrawals, the withdrawal must be at least $250.
Withdrawal of all or any part of a Participant's Fixed Account
Value held under Interest Option C before the end of the
period for which a declared effective annual interest rate is
guaranteed for such amount will be subject to the premature
transaction charge set forth in Interest Option C. The total
of the premature transaction charge and the Contingent
Deferred Sales Charge set forth below will never be more than
7% of the amount withdrawn.
B. CONTINGENT DEFERRED SALES CHARGES. A charge equal to 5% of the
amount withdrawn will be made at the time of withdrawal,
subject to the following provisions:
(1) If the Owner makes a total withdrawal of a
Participant's Fixed Account Value as a result of
termination of participation in the Plan, the amount
received will never be less than the total of all
amounts allocated to the Participant's Fixed Account,
less prior transfers and withdrawals from the
Participant's Fixed Account.
(2) No charge will be made for withdrawal if the Owner
has provided due proof of the Participant's
disability. Disability shall mean the inability, by
reason of medically determinable physical or mental
impairment which can be expected to result in death
or be of long-continued and indefinite duration, to
engage in the Participant's usual and customary
occupation or in any other substantial gainful
activity for which the Participant is reasonably
suited by education, training or experience.
(3) No charge will be made for a withdrawal after the
death of the Participant.
Page 21
<PAGE>
(4) No charge will be made for a withdrawal after the
Participant's Fifth Enrollment Year if the
Participant has attained at least 65 years of age.
(5) No charge will be made for that portion of the first
withdrawal made in a Participant's Enrollment Year
after the first Participant's Enrollment Year which
does not exceed 10% of the sum of the Participant's
Variable Account and Fixed Account Values.
(6) No charge will be made for that portion of the first
withdrawal, made in a Participant's Eighth Enrollment
Year, which does not exceed 25% of the sum of the
Participant's Variable Account and Fixed Account
Values.
(7) No charge will be made for that portion of the first
withdrawal, made in a Participant's Ninth Enrollment
Year, which does not exceed 50% of the sum of the
Participant's Variable Account and Fixed Account
Values.
(8) No charge will be made for that portion of the first
withdrawal, made in a Participant's Tenth Enrollment
Year, which does not exceed 75% of the Participant's
Variable Account and Fixed Account Values.
(9) No charge will be made for a withdrawal made after
the Participant has been enrolled for ten years.
C. PAYMENT OF WITHDRAWALS. Unless the Owner directs otherwise,
partial withdrawals prior to the Annuity Date, and related
charges, will be deducted from the Participant's Fixed and
Variable Accounts in the following order
First from Interest Option B;
Next from Interest Option A;
Then from each investment account of the Separate Account in
the ratio of the Owner's interest in each investment account
to the Participant's Variable Account Value; and
Finally from Interest Option C.
Partial withdrawal of amounts held under Interest Option A or
Interest Option C will be made from amounts most recently
placed under that option.
Section X - TERMINATION OF CONTRACT
A. Termination by the Contractholder
Page 22
<PAGE>
The Owner may terminate this group contract by giving at least
15 days advance written notice to Penn Mutual at its Home
Office.
B. Termination by Penn Mutual
Under one or more of the following conditions, Penn Mutual may
terminate this group contract on the last day of any month by
giving at least 15 days advance written notice to the owner:
(1) Penn Mutual does not receive acceptable evidence that
the Plan is qualified or that a representative acting
on behalf of the Plan has filed for qualification
under applicable sections of the Internal Revenue
Code within 2 years of the effective date of this
contract, or receives evidence or otherwise acquires
knowledge that the Plan has failed to qualify;
(2) Penn Mutual receives evidence or otherwise acquires
knowledge that the Plan has failed to remain
qualified; or
(3) the Plan is amended and Penn Mutual reasonably
determines such amendment to have an adverse affect
on its obligations under this group contract.
C. Effect of Termination
As of the date this group is terminated:
(1) no further payments will be accepted by Penn Mutual
and no further withdrawals or transfers may be made,
except as provided below, and
(2) the Variable Account Administration Charge will be
deducted from each Participant's Variable Account
Value.
Immediately following the date this group contract is terminated the
Owner will withdraw all Participants' Variable Account Value and all
Participants' Fixed Account Values. After deduction of applicable
premature transaction charges under Interest Option C, if any, and
Contingent Deferred Sales Charges, if any, the amounts withdrawn will
be paid to the Owner.
Section XI - MISCELLANEOUS
BENEFICIARY. The Beneficiary is the person chosen by the Owner in the
application, who is to receive:
Page 23
<PAGE>
(1) Payment on death of the Participant prior to the Annuity Date
or
(2) Guaranteed annuity payments, if any, on death of the Annuitant
on or after the Annuity Date.
The Owner may change the beneficiary while the Participant is alive.
The estate or heirs of a beneficiary who dies before the Participant
have no rights under this contract. If no beneficiary survives the
Participant, payment will be made to the Owner.
MISSTATEMENT OF AGE. If the age of the Annuitant or a joint payee is
misstated, any amount payable under this contract will be that amount
which the Purchase Payments paid would have purchased on the basis of
the correct age.
If the annuity payments have been overpaid because the age of the
Annuitant or joint payee has been misstated, the amount overpaid, with
interest at the rate of 6% per year compounded annually, will be
charged against the payments still to be made under this contract.
If the annuity payments have been underpaid because the age of the
Annuitant or joint payee has been misstated, the amount underpaid, with
interest at the rate of 6% per year compounded annually, will be paid
in full with the next payment due under this contract.
PROOF OF AGE AND SURVIVAL. We may require satisfactory proof of correct
age at any time. If any payment under this contract depends on the
payee being alive, we may require satisfactory proof of survival.
DEFERMENT OF TRANSFERS AND PAYMENTS. Transfers and payments of
withdrawals from the Participant's Variable Account will be made within
seven days. However, we may defer a transfer, a withdrawal, the Annuity
Date or annuity payments, under the variable account provisions of
Section IV if:
(1) The New York Stock Exchange is closed (other than customary
weekend and holiday closings);
(2) Trading on the New York Stock Exchange is restricted;
(3) An emergency exists such that it is not reasonably practical
to dispose of securities held in the Separate Account or to
determine the value of its assets; or
(4) The Securities and Exchange Commission by order so permits for
the protection of security holders.
Page 24
<PAGE>
Conditions in (2) and (3) will be decided by, or in accordance with
rules of, the Securities and Exchange Commission.
We may defer a transfer or withdrawal from the Participant's Fixed
Account for such period, not exceeding six months, as we reasonably
determine that investment conditions are such that an orderly sale of
assets held as part of our general assets is not possible.
PARTICIPATING CONTRACT. This contract may participate in our divisible
surplus. Divisible surplus, if any, to be apportioned to this contract
shall be apportioned annually and will be allocated by us equitably
among all Participants. Divisible surplus so allocated will be credited
as Purchase Payments to the Participants' Variable and Fixed Accounts,
unless the Owner elects to have it paid in cash. No divisible surplus
is expected to be apportioned to this contract in the foreseeable
future.
APPLICATIONS ON BEHALF OF PARTICIPANTS. Purchase Payments made to Penn
Mutual on behalf of a Participant will be accepted under this contract
when an application by the Owner on behalf of the Participant,
satisfactory to Penn Mutual, has been received and accepted by Penn
Mutual.
Penn Mutual may decline at any time to accept applications on behalf of
proposed new Participants.
ASSIGNMENT AND OWNERSHIP. The contractholder may not assign this
contract without the prior written consent of Penn Mutual. Accounts
established and maintained for Participant's are owned by the Owner.
ENTIRE CONTRACT. This contract and the application therefor, a copy of
which is attached hereto and made a part hereof, constitute the entire
contract. All statements made in the application shall be deemed
representations and not warranties.
Only the President, a Vice President, the Secretary, the Chief Actuary,
an Actuary, or Associate Actuary may, on behalf of Penn Mutual, modify
or change the terms of this contract or waive any of its conditions. No
agent may modify or change the terms of this contract or waive any of
its conditions.
CERTIFICATES - TEN DAY RIGHT TO EXAMINE. Penn Mutual will furnish
certificates to the Owner evidencing the interest of the Owner under
this contract and describing certain provisions of this contract.
The interest evidenced by a certificate may be cancelled by returning
the certificate within 10 days after it is received by the Owner. It
must be returned to Penn Mutual or the agent through whom it was
purchased. The interest will then be considered void as of its
inception. The Participant's Variable and Fixed Account Values will be
refunded.
Page 25
<PAGE>
FAILURE TO ENFORCE NOT WAIVER. A waiver by the Owner or Penn Mutual of
the right to enforce any rights arising from a breach of this contract
will not constitute a waiver of any right arising from a subsequent
breach. The forbearance by the Owner or Penn Mutual to enforce any
right hereunder will not be considered a waiver of such right.
AMENDMENT. To the extent necessary to comply with applicable law and
regulations, Penn Mutual reserves the right to change any or all of the
contract provisions at any time, including retroactive changes, without
the consent of Participants.
Changes in the Internal Revenue Code or in regulations or revenue
rulings thereunder may require amendments to this contract. In
accordance with the preceding paragraph, Penn Mutual may make such
amendments without the consent of Participants.
The Owner will be informed of amendments when they are made.
NOTICES, CHANGES AND CHOICES. To be effective, all notices, changes and
choices the Owner may make under the contract must be in writing,
signed and received by us at our designated service office. If
acceptable to us, notices, changes and choices relating to
beneficiaries and ownership will take effect as of the date signed
unless we have already acted in reliance on the prior status. We are
not responsible for their validity.
CONTRACT PAYMENTS. All sums payable to or by us are payable at our
designated service office. We may require return of a Certificate prior
to making payment.
PROTECTION OF PROCEEDS. Payments under this contract may not be
assigned by the payee prior to their due dates. To the extent allowed
by law, payments are not subject to legal process for debts of a payee.
COMPLIANCE WITH MINIMUM VALUE REQUIREMENTS. Annuity, death and
withdrawal benefits are not less than the minimum benefits required
under applicable laws and regulations of the jurisdiction in which this
contract is delivered.
The benefits provided under this contract from the Participant's Fixed
Account are increased by interest credited in excess of the guaranteed
minimums, if any.
PLAN DOCUMENTS. The Owner will furnish Penn Mutual with a certified
copy of the Plan and related trust agreement.
In the event of an amendment to the Plan or related trust agreement,
the Owner will furnish Penn Mutual with a certified copy of the
amendment within 30 days of such amendment.
Page 26
<PAGE>
PERIODIC REPORTS. At least once a year we will furnish the Owner a
report for each Participant's Variable and Fixed Accounts. It will set
forth the current number of Accumulation Units or Annuity Units, the
value per Accumulation or Annuity Unit, the Participant's Variable
Account Value and the Participant's Fixed Account Value. All reports
required by the Investment Company Act of 1940 will be furnished.
Page 27
<PAGE>
THE PENN MUTUAL LIFE INSURANCE COMPANY
FOUNDED 1847
================================================================================
Participant: SEPTEMBER 1, 2016 Annuity Date
Contractholder: PENN MUTUAL Group
500 Contract Number
Participant's
Certificate Number: 7300000 OCTOBER 1, 1985 Enrollment Date
================================================================================
The Penn Mutual Life Insurance Company certifies that the above named person is
a Participant under the Group Annuity Contract.
This certificate is evidence of your interest in the Group Annuity Contract. All
matters pertaining to such interest are subject to the provisions of the Group
Annuity Contract. Relevant provisions of the Group Annuity Contract are
described in the following pages.
This certificate replaces any certificate previously issued to you by Penn
Mutual with respect to the Group Annuity Contract.
VALUES AND PAYMENTS TO YOU UNDER THE GROUP ANNUITY CONTRACT, WHEN BASED UPON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED
AS TO FIXED DOLLAR AMOUNT.
/s/Robert E. Chappell
Chairman of the Board
and Chief Executive Officer
10 DAY RIGHT TO EXAMINE CERTIFICATE - You may cancel this certificate within ten
days after its receipt. Simply return or mail it to us or our agent. We will
refund your Participant's Variable and Fixed Account Values.
Group Variable and Fixed
Annuity Certificate --
Flexible Purchase Payments
The Penn Mutual Life Insurance Company, Independence Square, Philadelphia,
Pennsylvania 19172
EB1650 10/85
<PAGE>
TABLE OF CONTENTS
Page
Section I -- Specification 3
Section II --Definitions 4
Section III -- Purchase Payments 5
Section IV-- Variable Account Provisions 5
Section V-- Fixed Account Provisions 13
Section VI-- Payment on Death 19
Section VII-- Transfer From Variable to Fixed Account 20
Section VIII-- Transfer From Fixed to Variable Account 20
Section IX -- Withdrawal 21
Section X-- Termination of Contract 23
Section XI -- Miscellaneous 24
Table of Guaranteed Benefits 28
<PAGE>
SECTION I -- CERTIFICATE SPECIFICATIONS
PARTICIPANT: KAREN J. STEEDLE SEPTEMBER 1, 2016 ANNUITY DATE
CONTRACT HOLDER: PENN MUTUAL GROUP
500 CONTRACT NUMBER
CERTIFICATE NUMBER: 7300000 OCTOBER 1, 1985 ENROLLMENT DATE
AGE OF PARTICIPANT
------------------
34
THE SEPARATE ACCOUNT FIRST PURCHASE PAYMENT -- VARIABLE ACCOUNT
-------------------- ------------------------------------------
PENN MUTUAL VARIABLE ANNUITY
ACCOUNT III $ 500.00
ELIGIBLE MUTUAL FUNDS
--------------------- DATE VARIABLE ACCOUNT
PENN SERIES EQUITY FUND ADMINISTRATION CHARGES DEDUCTED
PENN SERIES AGGRESSIVE CAPITAL -------------------------------
APPRECIATION FUND OCTOBER 1
PENN SERIES AGGRESSIVE HIGH YIELD FUND EACH YEAR
GUARANTEED EFFECTIVE ANNUAL RATES OF INTEREST -- FIXED ACCOUNT
- --------------------------------------------------------------
INTEREST OPTION B: 7.00% THROUGH OCTOBER 31, 1985 FOR PURCHASE PAYMENTS
BEFORE OCTOBER 31, 1985; OTHERWISE 4.00%.
INTEREST OPTION A: 8.50% THROUGH DECEMBER 31, 1986 FOR PURCHASE PAYMENTS
BEFORE DECEMBER 31, 1985; OTHERWISE 4.00%.
INTEREST OPTION C: 9.00% THROUGH DECEMBER 31, 1988 FOR PURCHASE PAYMENTS
BEFORE DECEMBER 31, 1985; OTHERWISE 4.00%.
SCHEDULE OF BENEFITS -- FIXED ACCOUNT
- -------------------------------------
GUARANTEED MONTHLY PAID-UP ANNUITY BENEFIT BEGINNING ON ANNUITY DATE:
$524.45*
*LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10 YEARS (OPTION 3).
THE AMOUNT OF MONTHLY ANNUITY BENEFIT ON THE ANNUITY DATE DEPENDS ON THE
AMOUNT AND FREQUENCY OF PURCHASE PAYMENTS MADE AND INTEREST OPTION(S)
ELECTED. ELECTION OF INTEREST OPTIONS WITH PURCHASE PAYMENTS MADE IN THE
AMOUNTS AND AT THE INTERVALS STATED IN THE SCHEDULE OF PURCHASE PAYMENTS
WILL PROVIDE SUCH AMOUNT.
SCHEDULE OF PURCHASE PAYMENTS -- FIXED ACCOUNT
- ----------------------------------------------
FIRST PURCHASE PAYMENT ON THE ENROLLMENT DATE.
PURCHASE PAYMENT PURCHASE PAYMENT PURCHASE PAYMENT
DATE OF PAYMENT INTEREST OPTION B INTEREST OPTION A INTEREST OPTION C
OCTOBER 1, 1985 $500.00 $500.00 $500.00
SUBSEQUENT PURCHASE PAYMENTS MADE AT ANNUAL INTERVALS UNTIL ANNUITY DATE.
PURCHASE PAYMENTS PURCHASE PAYMENTS PURCHASE PAYMENTS
BEGINNING AS OF INTEREST OPTION B INTEREST OPTION A INTEREST OPTION C
OCTOBER 1, 1986 $500.00 $500.00 $500.00
THE AMOUNT OF PURCHASE PAYMENTS AND THE INTERVAL OF PAYMENT MAY BE CHANGED BY
THE OWNER SUBJECT TO THE PROVISIONS OF THIS ACCOUNT. ANY CHANGE WILL AFFECT THE
AMOUNT OF ANNUITY BENEFIT.
3
<PAGE>
SECTION II -- DEFINITIONS
OWNER: The Employer or the Trustees to whom the group contract is
issued. The Owner shall have all rights of ownership set forth under
the group contract.
PLAN: The qualified pension, profit sharing or deferred compensation
plan established under applicable provisions of the Internal Revenue
Code.
PARTICIPANT: The person on whose behalf Purchase Payments are made
under the group contract.
PARTICIPANT'S ENROLLMENT YEAR: The twelve month period commencing on
the Participant's Enrollment Date, or any anniversary of the
Participant's Enrollment Date.
ACCUMULATION UNIT: An index used to compute a Participant's Variable
Account Value prior to the Variable Annuity Date.
ANNUITY UNIT: An index used to compute a Participant's Variable
Annuity Payment.
PARTICIPANT'S VARIABLE ACCOUNT: An account established and maintained
by Penn Mutual for each Participant and to which Purchase Payments
are allocated under Section IV.
PARTICIPANT'S VARIABLE ACCOUNT VALUE: The value of all Accumulation
Units credited to a Participant's Variable Account.
PARTICIPANT'S FIXED ACCOUNT: An account established and maintained by
Penn Mutual for each Participant and to which Purchase Payments are
allocated under Section V.
PARTICIPANT'S FIXED ACCOUNT VALUE: The sum of all amounts credited to
a Participant's Fixed Account, increased by interest credited and
reduced by amounts withdrawn or transferred from a Participant's
Fixed Account.
ANNUITY DATE: The date on which annuity payments are to start.
PURCHASE PAYMENTS: Amounts paid to Penn Mutual on behalf of
Participants under the group contract.
4
<PAGE>
SECTION III -- PURCHASE PAYMENTS
Purchase Payments may be made on behalf of each Participant subject
to the following provisions:
(a) The minimum Purchase Payment for any one Participant is $25.00 or
such lower minimum as we may establish.
(b) The Owner will direct the allocation of Purchase Payments to a
Participant's Variable Account or a Participant's Fixed Account,
subject to the provisions of Sections IV and V.
(c) Total Purchase Payments in a calendar year for a Participant are
subject to the limits of the Sections of the Internal Revenue
Code which apply to Owner's Plan.
(d) Total Purchase Payment in a calendar year for a Participant may
not exceed $1,000,000 without Penn Mutual's consent.
(e) Purchase Payments for a Participant may be made only by or
through the Owner.
(f) Purchase Payments will be credited to Participants' Variable
Accounts and Participants' Fixed Accounts in accordance with
information provided by the Owner.
SECTION IV -- VARIABLE ACCOUNT PROVISIONS
A. THE SEPARATE ACCOUNT
THE SEPARATE ACCOUNT. The name of the Separate Account is set
forth in Section I. We established the Separate Account for the
group contract and other contracts we may issue. Amounts credited
to the Participant's Variable Account will be allocated to the
Separate Account.
INVESTMENT OF SEPARATE ACCOUNT ASSETS. Assets held in the Separate
Account will be invested in one or more eligible mutual funds.
Current eligible mutual funds are specified in Section I.
For this and other contracts the Separate Account is divided into
investment accounts. There is an investment account for each
eligible mutual fund.
5
<PAGE>
The Owner may choose the investment account to which amounts
credited to a Participant's Variable Account are to be allocated.
We own the assets held in the Separate Account. However, the
portion of such assets equal to the reserves and other contract
liabilities with respect to each investment account of the
Separate Account are not chargeable with liabilities arising out
of any other business we may conduct.
Upon notice to us, the Owner may transfer part or all the value of
the Accumulation Units or Annuity Units credited to a
Participant's Variable Account from one investment account to
another. No more than four such transfers may be made in a
calendar year. Such investment account transfers, as well as all
other investments, are subject to the limits and rules applicable
to each mutual fund.
SUBSTITUTION OF INVESTMENT. If investment in a mutual fund should
no longer be possible or in our judgment becomes inappropriate to
the purposes of the contract, we may substitute another mutual
fund. Substitution may be made with respect to existing
investments and the investment of future Purchase Payments.
Substitution will be subject to the approval of the Insurance
Department of the jurisdiction in which this contract is
delivered.
B. CHARGES AND DEDUCTIONS
VARIABLE ACCOUNT ADMINISTRATION CHARGE. With respect to each
Participant's Variable Account, a charge of $30 will be deducted
each year on the date specified in Section I. It will also be
deducted when the Participant's Variable Account Value is
withdrawn in full if withdrawal is not on the date specified in
Section I. The charge will never increase. The charge will not be
deducted on or after the Annuity Date.
EXPENSE RISK CHARGE. This charge is made to compensate us for
guaranteeing that the Variable account administration charge will
never increase. On an annual basis it equals 0.5% of the daily net
asset value of the Separate Account. This charge is reflected in
the Net Investment Factor set forth in Subsection C of this
Section IV.
MORTALITY RISK CHARGE. This charge is made to compensate us for
the mortality guarantees we make under this contract. On an annual
basis it equals 0.8% of the daily net asset value of the Separate
Account. This charge is reflected in the Net Investment Factor set
forth in Subsection C of this Section IV.
6
<PAGE>
CONTINGENT DEFERRED SALES CHARGE. This charge may be deducted upon
withdrawal, in whole or in part, of the Participant's Variable
Account Value or the present value of remaining annuity payments
(if applicable). The Contingent Deferred Sales Charge is set forth
in Section IX.
DEDUCTIONS. The expense risk and mortality risk charge will be
computed and deducted from each subaccount of each investment
account of the Separate Account for each day the contract is in
force. Other charges will be deducted by canceling Accumulation
Units or Annuity Units (if applicable) of a value equal to the
deduction. Cancellation of Accumulation Units will be in the ratio
of the Participant's interest in each investment account to the
Participant's Variable Account Value.
C. VARIABLE ACCUMULATION VALUES
NUMBER OF PARTICIPANT'S ACCUMULATION UNITS. For each investment
account of the Separate Account, the number of a Participant's
Accumulation Units is the sum of
Amounts allocated to the investment account for the Participant
divided by
The value of an Accumulation Unit for the investment account
for the valuation period in which we received the amount
allocated.
The number will be adjusted for transfers, withdrawals and
charges. Adjustments will be made as of the valuation period in
which we receive all requirements for the transaction, as
appropriate.
VALUE OF ACCUMULATION UNIT. For each investment account of the
Separate Account, the value was arbitrarily set at $10 when the
investment account was established. The value may increase or
decrease from one valuation period to the next. For any valuation
period the value is
The value of an Accumulation Unit for the prior valuation
period multiplied by
The net investment factor for the investment account for the
valuation period.
NET INVESTMENT FACTOR. Net investment factor is an index used to
measure the investment performance of an investment account from
one valuation period to the next. For any investment account, the
net investment factor for a
7
<PAGE>
valuation period is found by dividing (a) by (b) and subtracting
(c):
Where (a) is
The net asset value per share of the mutual fund held in the
investment account, as of the end of the valuation period
plus
The per-share amount of any dividend or capital gain
distributions by the mutual fund if the "exdividend" date
occurs in the valuation period
plus or minus
A per-share charge or credit as of the end of the valuation
period, for tax reserves, if applicable;
Where (b) is
The net asset value per share of the mutual fund held in the
investment account as of the end of the last prior valuation
period
plus or minus
The per-share charge or credit for tax reserves, if
applicable, as of the end of the last prior valuation
period;
Where (c) is
The sum of the daily expense risk charge and the daily
mortality risk charge. On an annual basis, the sum of such
charges equals 1.30% of the daily net asset value of the
Separate Account.
VALUATION PERIOD. Valuation period is the interval from one
valuation time to the next valuation time. Valuation time is the
time as of which the mutual fund determines the net asset value of
its shares.
D. VARIABLE ANNUITY PAYMENTS
ANNUITY DATE. The Annuity Date must be on the first day of a
month. It may not be later than the first day of the next month
after the Annuitant's 85th birthday. The Owner will choose the
Annuity Date in the application. The
8
<PAGE>
Owner may change the Annuity Date up to 30 days prior to the
current Annuity Date.
VARIABLE ANNUITY OPTIONS. The Owner may choose a variable annuity
option up to 30 days prior to the Annuity Date. An option not set
forth in this certificate may be chosen if acceptable to us.
FIRST VARIABLE ANNUITY PAYMENT. Any premium taxes will be deducted
from the Participant's Variable Account Value. The net
Participant's Variable Account Value as of the Annuity Date will
be applied to the annuity table for the option chosen. The
variable annuity tables show the amount of the first payment for
each $1,000 so applied, according to the age at the Annuity Date.
The tables are based on the 1971 Individual Annuity Mortality
Table with interest at 4%. Adjusted ages are used in entering
those tables.
SUBSEQUENT VARIABLE ANNUITY PAYMENTS. Payments after the first
will vary in amount according to the investment performance of the
investment account(s) chosen. The amount may change from month to
month. The amount of each subsequent payment is the sum of the
following amounts attributable to each applicable investment
account
The number of Annuity Units for the investment account
multiplied by
The value of an Annuity Unit for the investment account for the
valuation period in which payment is due.
We guarantee that the amount of each annuity payment after the
first will not be affected by variations in expense or mortality
experience.
MINIMUM ANNUITY PAYMENTS. If the net Participant's Variable
Account Value to be applied at the Annuity Date is less than
$2,000, we may pay such amount in a lump sum. Variable annuity
payments will be made monthly; but if any payment would be less
than $50, we may change the frequency so payments are at least $50
each.
NUMBER OF PARTICIPANT'S ANNUITY UNITS. The number of a
Participant's Annuity Units for each investment account chosen by
the Owner is
The amount of the first variable annuity payment attributable
to that investment account
9
<PAGE>
divided by
The value of an Annuity Unit for the investment account as of
the Annuity Date.
The number is fixed except for adjustments for investment account
transfers. Adjustments will be made as of the valuation period in
which we receive all requirements for the transfer, as
appropriate.
VALUE OF ANNUITY UNIT. For each investment account of the Separate
Account the value was arbitrarily set at $10 when the investment
account was established. The value may increase or decrease from
one valuation period to the next. For any valuation period the
value is
The value of an Annuity Unit for the last prior valuation
period
multiplied by
The net investment factor for the investment account for the
valuation period
multiplied by
An interest factor to neutralize the assumed investment rate of
4% built into the annuity tables.
E. VARIABLE ANNUITY OPTIONS
OPTION 1 -- VARIABLE ANNUITY FOR SPECIFIED NUMBER OF YEARS.
Payments will be made for a specified number of years, which may
not be less than 5 years nor more than 30 years.
OPTION 2 -- VARIABLE LIFE ANNUITY. Payments will be made for the
life of the Annuitant. Payments will cease with the last payment
due prior to the Annuitant's death.
OPTION 3 -- VARIABLE LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10
OR 20 YEARS. Payments will be made for the life of the Annuitant.
A guaranteed payment period of either 10 or 20 years may be
chosen.
OPTION 4 -- VARIABLE JOINT AND SURVIVOR LIFE ANNUITY. Payments
will be made during the lifetimes of the Annuitant and a
designated second
10
<PAGE>
Annuitant. Payments will continue as long as either is living. The
amount of such payments will not change by reason of the death of
the first Annuitant to die.
If the Annuitant dies prior to the end of the specified period
under Option 1 or the guaranteed period under Option 3, the
beneficiary may choose either
(1) To have the payments continue for the specified or guaranteed
period, or
(2) To receive at any time in lump sum the present value of the
remaining payments to be made over the specified or guaranteed
period.
If the beneficiary dies while receiving continued annuity
payments, the present value of remaining payments will be paid in
a lump sum to the beneficiary's estate. The present value will be
(a) computed as of the valuation period in which due proof of
death is received at our designated service office, and (b)
commuted at the assumed investment rate of the annuity tables.
PAYMENTS. Payments will be made on the first day of each month
starting with the Annuity Date. Except under Option 4, payments
will be made to the Participant. Under Option 4, payments will be
jointly payable while both Annuitants are alive.
F. VARIABLE ANNUITY OPTION TABLE
The following tables show the amount of the first monthly income
payment for each $1,000 of value applied under a variable
settlement option. "Age" as used in the tables means an adjusted
age determined in the following manner from the actual age of the
Annuitant on the birthday nearest the date of the first payment.
CALENDAR YEAR OF BIRTH ADJUSTED AGE
---------------------- -------------------------
Before 1990 Actual Age increased by 1
1900 - 1919 Actual Age
1920 - 1939 Actual Age decreased by 1
1940 - 1959 Actual Age decreased by 2
1960 and later Actual Age decreased by 3
-------------------------------------------------------------
11
<PAGE>
<TABLE>
<CAPTION>
Option 1 -- Variable Annuity for Specified Number of Years
- ----------------------------------------------------------------------------------------------------------------------
NUMBER OF MONTHLY NUMBER OF MONTHLY NUMBER OF MONTHLY
YEARS INCOME YEARS INCOME YEARS INCOME
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
11 $9.31 21 $5.81
12 8.69 22 5.64
13 8.17 23 5.49
14 7.72 24 5.35
5 $18.32 15 7.34 25 5.22
6 15.56 16 7.00 26 5.10
7 13.59 17 6.71 27 5.00
8 12.12 18 6.44 28 4.90
9 10.97 19 6.21 29 4.80
10 10.06 20 6.00 30 4.72
- ----------------------------------------------------------------------------------------------------------------------
Option 2 -- Variable Life Annuity and
Option 3 -- Variable Life Annuity with
Payments Guaranteed for 10 or 20 Years
- ------------------------------------------------------------------------------------------------------------------------------------
LIFE 10 YEARS 20 YEARS LIFE 10 YEARS 20 YEARS
AGE ANNUITY GUARANTEED GUARANTEED AGE ANNUITY GUARANTEED GUARANTEED
- ------------------------------------------------------------------------------------------------------------------------------------
50 $4.59 $4.56 $4.47 70 $7.08 $6.71 $5.71
51 4.65 4.62 4.52 71 7.33 6.89 5.76
52 4.72 4.69 4.57 72 7.60 7.08 5.81
53 4.80 4.76 4.63 73 7.90 7.28 5.84
54 4.87 4.83 4.69 74 8.22 7.48 5.88
55 4.96 4.91 4.75 75 8.57 7.68 5.90
56 5.05 4.99 4.81 76 8.95 7.89 5.92
57 5.14 5.07 4.87 77 9.37 8.10 5.94
58 5.24 5.16 4.93 78 9.82 8.30 5.96
59 5.34 5.25 5.00 79 10.32 8.50 5.97
60 5.45 5.35 5.07 80 10.86 8.69 5.98
61 5.56 5.45 5.14 81 11.46 8.88 5.98
62 5.69 5.56 5.20 82 12.11 9.04 5.99
63 5.82 5.68 5.27 83 12.82 9.20 5.99
64 5.96 5.80 5.34 84 13.59 9.33 6.00
65 6.11 5.93 5.41 85 14.43 9.45 6.00
66 6.27 6.07 5.48
67 6.45 6.22 5.54
68 6.64 6.37 5.60
69 6.85 6.54 5.66
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Option 4 - Variable Joint and Survivor Life Annuity
- ------------------------------------------------------------------------------------------------------------------------------
AGE 55 60 65 70 75 80 85 AGE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 $4.25 $4.34 $4.41 $4.46 $4.51 $4.54 $4.5 50
55 4.40 4.53 4.64 4.74 4.81 4.87 4.90 55
60 4.53 4.72 4.90 5.05 5.18 5.28 5.35 60
65 4.64 4.90 5.16 5.40 5.62 5.79 5.91 65
70 4.74 5.05 5.40 5.77 6.11 6.39 6.59 70
75 4.81 5.18 5.62 6.11 6.65 7.12 7.48 75
80 4.87 5.28 5.79 6.39 7.12 7.94 8.59 80
85 4.90 5.35 5.91 6.59 7.48 8.59 9.88 85
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SECTION V -- FIXED ACCOUNT PROVISIONS
A. INTEREST OPTIONS
Interest will be earned on each Participant's Fixed Account Value
from the date amounts are credited to the Participant's Fixed
Account to the date amounts are applied to an annuity option, paid
upon the death of the annuitant, transferred or withdrawn.
Each amount credited to a Participant's Fixed Account will be
credited with interest under Interest Option A, Interest Option B,
or Interest Option C. The Owner chooses the interest options. The
minimum initial amount for which an Interest Option may be elected
is $25.00 or such lower minimum as we may establish.
INTEREST OPTION A
With respect to each amount for which Interest Option A is
elected, interest will be credited at an effective annual rate
declared by us. The effective annual rate will be declared as of
the first day of each calendar quarter. The declared rate will
apply, for Interest Option A elections made in that calendar
quarter, through the end of the same calendar quarter in the next
calendar year. Thereafter, interest will be credited at the
declared effective annual rate then applicable to new Interest
Option A elections, for successive twelve month periods.
We will declare an effective annual interest rate under Interest
Option A which is not less than the published 52 week United
States Treasury Bill discount rate from the most recent regularly
scheduled auction held before the beginning of the calendar
quarter. If the auction program is discontinued, we will
substitute an index which in our opinion is comparable and which
is approved by the Insurance Department of the jurisdiction in
which the group
13
<PAGE>
contract is delivered.
The declared effective annual interest rate under Interest Option
A will never be less than 4%.
INTEREST OPTION B
With respect to each amount for which Interest Option B is
elected, interest will be credited at an effective annual rate
declared by us. The declared rate will apply through the end of
the calendar month in which the election is made. Thereafter,
interest will be credited on such amount for successive calendar
month periods at the declared effective annual rate then
applicable to new Interest Option B elections made as of the
beginning of each such calendar month.
The declared effective annual interest rate under Interest Option
B will never be less than 4%.
INTEREST OPTION C
With respect to each amount for which interest Option C is
elected, interest will be credited at an effective annual rate
declared by us. The effective annual rate will be declared as of
the first day of each calendar quarter. The declared rate will
apply, for Interest Option C elections made in that calendar
quarter, through the end of the same calendar quarter in the third
following calendar year. Thereafter, interest will be credited at
the declared effective annual rate then applicable to new Interest
Option C elections, for successive thirty-six month periods.
The owner may change the interest option election or withdraw or
transfer any portion of an amount for which Interest Option C is
elected before the end of a period for which a declared effective
annual rate of interest is guaranteed for such amount. However, in
such event, the amount withdrawn or transferred or the amount for
which the interest option election is changed will be reduced by a
premature transaction charge equal to 2 1/2% of such amount.
The declared effective annual interest rate under Interest Option
C will never be less than 4%.
CHANGE OF INTEREST OPTION
The Owner may change the interest option election applicable to
all or part of a Participant's Fixed Account Value, subject to the
provisions set forth below.
The Owner may change the election for an amount held under
Interest Option A only at the end of the period for which a
declared effective annual interest
14
<PAGE>
rate is guaranteed for such amount.
The Owner may change the election for an amount held under
Interest Option B only at the end of a calendar month.
The Owner may change the election for all or any part of an amount
held under Interest Option C before the end of the period for
which a declared effective annual interest rate is guaranteed for
such amount, subject to the Premature transaction charge set forth
in Interest Option C.
The minimum amount for which an interest option may be changed is
$250.
B. FIXED ANNUITY PAYMENTS
ANNUITY DATE. The Annuity Date must be on the first day of a
month. It may not be later than the first day of the next month
after the Annuitant's 85th birthday. The Owner will choose the
Annuity Date in the application. The Owner may change the Annuity
Date up to 30 days prior to the current Annuity Date.
FIXED ANNUITY OPTIONS. The Owner may choose a fixed annuity option
up to 30 days prior to the Annuity Date. An option not set forth
in this certificate may be chosen if acceptable to us.
AMOUNT OF FIXED ANNUITY PAYMENTS. Any premium taxes will be
deducted from the Participant's Fixed Account Value. The net
Participant's Fixed Account Value as of the Annuity Date will be
applied to the fixed annuity option chosen. If fixed annuity
payments begin within 5 years after the Participant's Enrollment
Date, the monthly income under Options 1, 2, 3 and 4 will equal
the monthly income under a comparable single premium
nonparticipating annuity available from us at the time fixed
annuity payments are to begin.
If fixed annuity payments begin more than 5 years after the
Participant's Enrollment Date, the monthly income under Options 1,
2, 3 and 4 will equal 103% of the monthly income under a
comparable single premium nonparticipating annuity available from
us at the time fixed annuity payments are to begin. In no event
will the monthly income be less than shown in the Fixed Annuity
Option Tables.
The guaranteed monthly income under Option 1 and 3 will be based
on interest at a rate of 3% per year compounded annually. The
guaranteed
15
<PAGE>
monthly income under Option 2 and 4 will be based on interest at a
rate of 2 3/4% per year compounded annually. Fixed Annuity Options
1, 2, 3 and 4 will not participate in divisible surplus.
MINIMUM ANNUITY PAYMENTS. If the net Participant's Fixed Account
Value to be applied at the Annuity Date is less than $2,000, we
may pay such amount in a lump sum. Fixed Annuity payments will be
made monthly; but if any payment would be less than $50, we may
change the frequency so payments are at least $50 each.
C. Fixed Annuity Options
OPTION 1 -- FIXED ANNUITY FOR SPECIFIED NUMBER OF YEARS. Payments
will be made for a specified number of years, which may not be
less than 5 years nor more than 30 years.
OPTION 2 -- FIXED LIFE ANNUITY. Payments will be made for the life
of the Annuitant. Payments will cease with the last payment due
prior to the Annuitant's death.
OPTION 3 -- FIXED LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10 OR
20 YEARS. Payments will be made for the life of the Annuitant. A
guaranteed payment period of either 10 or 20 years may be chosen.
OPTION 4 -- FIXED JOINT AND SURVIVOR LIFE ANNUITY. Payments will
be made during the lifetimes of the Annuitant and a designated
second Annuitant. Payments will continue as long as either is
living. The amount of such payments will not change by reason of
the death of the first Annuitant to die.
If the Annuitant dies prior to the end of the specified period
under Option 1 or the guaranteed period under Option 3, the
beneficiary may choose either:
(1) to have the payments continue for the specified or guaranteed
period, or
(2) to receive at any time in lump sum the present value of the
remaining payments to be made over the specified or guaranteed
period.
If a beneficiary dies while receiving continued annuity payments,
the present value of remaining payments will be paid in a lump sum
to the beneficiary's estate. The present value of remaining
payments under Option 1 will be based on interest at a rate of 3%
per year compounded annually. The present value of remaining
payments during the guaranteed period under Option 3 will be
16
<PAGE>
based on interest at a rate set by us at the time payments are to
begin.
PAYMENT. Payments will be made on the first day of each month
starting with the Annuity Date. Except under Option 4, payments
will be made to the Participant. Under Option 4, payments will be
jointly payable while both Annuitants are alive.
D. FIXED ANNUITY OPTION TABLES
Amount of monthly income provided by each $1,000 applied under an
income option
<TABLE>
<CAPTION>
Option 1 -- Fixed Income for Specified Number of Years
-------------------------------------------------------------------------------------
MONTHLY YEARS MONTHLY MONTHLY
YEARS INCOME INCOME YEARS INCOME
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
11 $8.86 21 $5.32
12 8.24 22 5.15
13 7.71 23 4.99
14 7.26 24 4.84
5 $17.91 15 6.87 25 4.71
6 15.14 16 6.53 26 4.59
7 13.16 17 6.23 27 4.47
8 11.68 18 5.96 28 4.37
9 10.53 19 5.73 29 4.27
10 9.61 20 5.51 30 4.18
-------------------------------------------------------------------------------------
Option 2 -- Fixed Life Annuity and
Option 3 -- Fixed Life Annuity with
Payments Guaranteed for 10 or 20 Years
</TABLE>
The amount of monthly income will be based on the age of the
option annuitant on the birthday nearest the date of the first
payment
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
2 3 2 3
------ ------------------------------ ------ ---------------------------------
AGE OF 20 YEAR 10 YEAR AGE OF 20 YEAR 10 YEAR
OPTION LIFE GUARANTEED GUARANTEED OPTION LIFE GUARANTEED GUARANTEED
ANNUITANT INCOME PERIOD PERIOD ANNUITANT INCOME PERIOD PERIOD
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
15 and-
under $2.90 $2.87 $2.88 50 $4.03 $3.93 $4.01
16 2.91 2.88 2.89 51 4.11 3.99 4.08
17 2.92 2.89 2.90 52 4.19 4.05 4.15
18 2.94 2.91 2.92 53 4.27 4.11 4.22
19 2.96 2.93 2.94 54 4.35 4.17 4.30
20 2.97 2.94 2.95 55 4.44 4.23 4.38
21 2.99 2.96 2.97 56 4.53 4.30 4.47
22 3.01 2.98 2.99 57 4.63 4.36 4.56
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
23 3.03 3.00 3.01 58 4.74 4.43 4.66
24 3.05 3.02 3.03 59 4.86 4.50 4.76
25 3.07 3.04 3.05 60 4.98 4.57 4.87
26 3.09 3.06 3.07 61 5.11 4.64 4.98
27 3.11 3.08 3.09 62 5.25 4.72 5.10
28 3.14 3.11 3.12 63 5.39 4.79 5.23
29 3.16 3.13 3.14 64 5.55 4.86 5.36
30 3.18 3.15 3.16 65 5.71 4.92 5.50
31 3.21 3.18 3.19 66 5.89 4.99 5.65
32 3.24 3.21 3.22 67 6.08 5.05 5.80
33 3.27 3.24 3.25 68 6.27 5.11 5.96
34 3.30 3.27 3.28 69 6.49 5.17 6.13
35 3.33 3.30 3.31 70 6.71 5.22 6.30
36 3.36 3.33 3.34 71 6.95 5.25 6.48
37 3.40 3.36 3.38 72 7.20 5.25 6.48
38 3.43 3.40 3.41 73 7.47 5.25 6.85
39 3.47 3.43 3.45 74 7.76 5.25 7.05
40 3.51 3.47 3.49 75 8.06 5.25 7.25
41 3.55 3.51 3.53 76 8.43 5.25 7.44
42 3.59 3.55 3.57 77 8.84 5.25 7.64
43 3.64 3.59 3.62 78 9.28 5.25 7.84
44 3.69 3.63 3.67 79 9.75 5.25 8.04
45 3.74 3.68 3.72 80 and
over 10.27 5.25 8.23
46 3.79 3.72 3.77
47 3.85 3.77 3.83
48 3.91 3.82 3.88
49 3.97 3.88 3.94
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
Option 4 -- Fixed Joint and Survivor Life Annuity
The amount of monthly income will be based on the ages of the option annuitants
on their respective birthdays nearest the date of the first payment. The table
shows income for certain ages for two option annuitants. The amount is shown
under the age of the first annuitant and opposite the age of the second
annuitant. Amounts of income for other combinations of ages will be furnished
upon request.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
AGE OF SECOND
OPTION ANNUITANT AGE OF FIRST OPTION ANNUITANT
ANNUITANT 50 55 60 65 70 75 80 85
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
45 $3.40 $3.48 $3.54 $3.60 $3.64 $3.67 $3.70 $3.71
50 3.52 3.64 3.74 3.82 3.89 3.94 3.97 3.99
55 3.65 3.80 3.95 4.08 4.19 4.27 4.33 4.38
60 3.76 3.96 4.17 4.37 4.54 4.68 4.79 4.86
62 3.80 4.02 4.26 4.49 4.69 4.86 5.00 5.09
65 3.85 4.11 4.38 4.67 4.93 5.15 5.34 5.48
70 3.93 4.22 4.57 4.95 5.32 5.68 6.00 6.25
75 3.99 4.31 4.72 5.19 5.70 6.21 6.74 7.18
80 4.03 4.38 4.84 5.39 6.03 6.75 7.55 8.32
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SECTION VI -- PAYMENT ON DEATH
A. DEATH BEFORE THE ANNUITY DATE. Upon receipt of due proof of the
death of the Participant prior to the Annuity Date, we will pay to
the beneficiary the greater of:
(1) The sum of all Purchase Payments, adjusted for withdrawals and
transfers, or
(2) The sum of the Participant's Variable Account Value and the
Participant's Fixed Account Value for the valuation period in
which we receive such proof at our designated service office.
If the beneficiary is not the decedent's spouse, the beneficiary
can choose an Annuity Option for death payments. The Option must
provide for payments over the beneficiary's life or over a period
not longer than the beneficiary's life expectancy. Payments shall
begin within one year after the date of death. If payment is made
in a lump sum, such payment shall be made within five years after
the date of death.
If the beneficiary is the decedent's surviving spouse, the spouse
shall be treated as the decedent for purposes of contract death
benefits.
19
<PAGE>
B. DEATH AFTER THE ANNUITY DATE
If the Participant dies after the Annuity Date, the amount
payable, if any, will be according to the annuity option in force
as provided in Sections IV and V.
SECTION VII -- TRANSFER FROM VARIABLE TO FIXED ACCOUNT
The Owner may transfer all or part of a Participant's Variable
Account Value to a Participant's Fixed Account, subject to the
following provisions:
The minimum transfer amount is $250.
No more than four such transfers may be made on behalf of a
Participant in a calendar year.
No transfer may be made after the thirtieth day before the Annuity
Date.
Request for transfer must be received by us and any other
applicable requirements must be met before the death of the
Participant.
SECTION VIII -- TRANSFER FROM FIXED TO VARIABLE ACCOUNT
The Owner may transfer all or part of a Participant's Fixed
Account Value to a Participant's Variable Account, subject to the
following provisions:
The minimum transfer amount is $250.
An amount held under Interest Option A may be transferred only at
the end of the period for which a declared effective annual
interest rate is guaranteed for such amount.
An amount held under Interest Option B may be transferred only at
the end of a calendar month.
All or any part of an amount held under Interest Option C may be
transferred before the end of the period for which a declared
effective annual interest rate is guaranteed for such amount,
subject to the premature transaction charge set forth in Interest
Option C.
20
<PAGE>
No transfer may be made after the thirtieth day before the Annuity
Date.
Request for transfer must be received by us and any other
applicable requirements must be met before the death of the
Participant.
SECTION IX -- WITHDRAWAL
A. WITHDRAWAL. Prior to the earlier of the Annuity Date or the
death of the Participant, the Owner may withdraw all or part of
the Participant's Variable Account Value and the Participant's
Fixed Account Value.
After the Annuity Date and the election of Variable Annuity Option
1, the payee may withdraw the present value of the variable
annuity payments remaining to be made. The present value will be
(a) computed as of the valuation period in which notice of the
withdrawal is received at our designated service office and (b)
commuted at the assumed investment rate of the Variable Annuity
tables.
After the Annuity Date and the election of Fixed Annuity Option 1,
the payee may withdraw the present value of the fixed annuity
payments remaining to be made.
For full withdrawal of all a Participant's Variable and Fixed
Account Values, the Certificate must be surrendered to our
designated service office.
For partial withdrawals, the withdrawal must be at least $250.
Withdrawal of all or any part of a Participant's Fixed Account
Value held under Interest Option C before the end of the period
for which a declared effective annual interest rate is guaranteed
for such amount will be subject to the premature transaction
charge set forth in Interest Option C. The total of the premature
transaction charge and the Contingent Deferred Sales Charge set
forth below will never be more than 7% of the amount withdrawn.
B. CONTINGENT DEFERRED SALES CHARGES. A charge equal to 5% of the
amount withdrawn will be made at the time of withdrawal, subject
to the following provisions:
(1) If the Owner makes a total withdrawal of a Participant's Fixed
Account Value as a result of termination of participation in the
Plan, the amount
21
<PAGE>
received will never be less than the total of all amounts
allocated to the Participant's Fixed Account, less prior transfers
and withdrawals from the Participant's Fixed Account.
(2) No charge will be made for withdrawal if the Owner has
provided due proof of the Participant's disability.
Disability shall mean the inability, by reason of medically
determinable physical or mental impairment which can be
expected to result in death or be of long-continued and
indefinite duration, to engage in the Participant's usual and
customary occupation or in any other substantial gainful
activity for which the Participant is reasonably suited by
education, training or experience.
(3) No charge will be made for a withdrawal after the death of
the Participant.
(4) No charge will be made for a withdrawal after the
Participant's Fifth Enrollment Year if the Participant has
attained at least 65 years of age.
(5) No charge will be made for that portion of the first
withdrawal made in a Participant's Enrollment Year after the
first Participant's Enrollment Year which does not exceed 10%
of the sum of the Participant's Variable Account and Fixed
Account Values.
(6) No charge will be made for that portion of the first
withdrawal, made in a Participant's Eighth Enrollment Year,
which does not exceed 25% of the sum of the Participant's
Variable Account and Fixed Account Values.
(7) No charge will be made for that portion of the first
withdrawal, made in a Participant's Ninth Enrollment Year,
which does not exceed 50% of the sum of the Participant's
Variable Account and Fixed Account Values.
(8) No charge will be made for that portion of the first
withdrawal, made in a Participant's Tenth Enrollment Year,
which does not exceed 75% of the Participant's Variable
Account and Fixed Account Values.
(9) No charge will be made for a withdrawal made after the
Participant has been enrolled for ten years.
C. PAYMENT OF WITHDRAWALS. Unless the Owner directs otherwise,
partial withdrawals prior to the Annuity Date, and related
charges, will be deducted from the Participant's Fixed and
Variable Accounts in the following order
First from Interest Option B;
22
<PAGE>
Next from Interest Option A;
Then from each investment account of the Separate Account in the
ratio of the Owner's interest in each investment account to the
Participant's Variable Account Value; and
Finally from Interest Option C.
Partial withdrawal of amounts held under Interest Option A or
Interest Option C will be made from amounts most recently placed
under that option.
SECTION X -- TERMINATION OF CONTRACT
A. TERMINATION BY THE CONTRACTHOLDER
The Owner may terminate the group contract by giving at least 15
days advance written notice to Penn Mutual at its Home Office.
B. TERMINATION BY PENN MUTUAL
Under one or more of the following conditions, Penn Mutual may
terminate the group contract on the last day of any month by
giving at least 15 days advance written notice to the owner:
(1) Penn Mutual does not receive acceptable evidence that the Plan
is qualified or that a representative acting on behalf of the
Plan has filed for qualification under applicable sections of
the Internal Revenue Code within 2 years of the effective
date of the group contract, or receives evidence or otherwise
acquires knowledge that the Plan has failed to qualify;
(2) Penn Mutual receives evidence or otherwise acquires knowledge
that the Plan has failed to remain qualified; or
(3) the Plan is amended and Penn Mutual reasonably determines such
amendment to have an adverse affect on its obligations under
the group contract.
23
<PAGE>
C. EFFECT OF TERMINATION
As of the date the group is terminated:
(1) no further payments will be accepted by Penn Mutual and no
further withdrawals or transfers may be made, except as
provided below, and
(2) the Variable Account Administration Charge will be deducted
from each Participant's Variable Account Value.
Immediately following the date the group contract is terminated
the Owner will withdraw all Participants' Variable Account Value
and all Participants' Fixed Account Values. After deduction of
applicable premature transaction charges under Interest Option C,
if any, and Contingent Deferred Sales Charges, if any, the amounts
withdrawn will be paid to the Owner.
SECTION XI -- MISCELLANEOUS
BENEFICIARY. The Beneficiary is the person chosen by the Owner in
the application, who is to receive:
(1) Payment on death of the Participant prior to the Annuity Date
or
(2) Guaranteed annuity payments, if any, on death of the Annuitant
on or after the Annuity Date.
The Owner may change the beneficiary while the Participant is
alive.
The estate or heirs of a beneficiary who dies before the
Participant have no rights under the group contract. If no
beneficiary survives the Participant, payment will be made to the
Owner.
MISSTATEMENT OF AGE. If the age of the Annuitant or a joint payee
is misstated, any amount payable under the group contract will be
that amount which the Purchase Payments paid would have purchased
on the basis of the correct age.
If the annuity payments have been overpaid because the age of the
Annuitant or joint payee has been misstated, the amount overpaid,
with interest at the rate of 6% per year compounded annually, will
be charged against the payments still to be made under the group
contract.
24
<PAGE>
If the annuity payments have been underpaid because the age of the
Annuitant or joint payee has been misstated, the amount underpaid,
with interest at the rate of 6% per year compounded annually, will
be paid in full with the next payment due under the group
contract.
PROOF OF AGE AND SURVIVAL. We may require satisfactory proof of
correct age at any time. If any payment under the group contract
depends on the payee being alive, we may require satisfactory
proof of survival.
DEFERMENT OF TRANSFERS AND PAYMENTS. Transfers and payments of
withdrawals from the Participant's Variable Account will be made
within seven days. However, we may defer a transfer, a withdrawal,
the Annuity Date or annuity payments, under the variable account
provisions of Section IV if:
(1) The New York Stock Exchange is closed (other than customary
weekend and holiday closings);
(2) Trading on the New York Stock Exchange is restricted;
(3) An emergency exists such that it is not reasonably practical
to dispose of securities held in the Separate Account or to
determine the value of its assets; or
(4) The Securities and Exchange Commission by order so permits for
the protection of security holders.
Conditions in (2) and (3) will be decided by, or in accordance
with rules of, the Securities and Exchange Commission.
We may defer a transfer or withdrawal from the Participant's Fixed
Account for such period, not exceeding six months, as we
reasonably determine that investment conditions are such that an
orderly sale of assets held as part of our general assets is not
possible.
PARTICIPATING CONTRACT. The group contract may participate in our
divisible surplus. Divisible surplus, if any, to be apportioned to
the contract shall be apportioned annually and will be allocated
by us equitably among all Participants. Divisible surplus so
allocated will be credited as Purchase Payments to the
Participants' Variable and Fixed Accounts, unless the Owner elects
to have it paid in cash. No divisible surplus is expected to be
apportioned to the group contract in the foreseeable future.
FAILURE TO ENFORCE NOT WAIVER. A waiver by the Owner or Penn
Mutual of the
25
<PAGE>
right to enforce any rights arising from a breach of the group
contract will not constitute a waiver of any right arising from a
subsequent breach. The forbearance by the Owner or Penn Mutual to
enforce any right hereunder will not be considered a waiver of
such right.
AMENDMENT. To the extent necessary to comply with applicable law
and regulations, Penn Mutual reserves the right to change any or
all of the group contract provisions at any time, including
retroactive changes, without the consent of Participants.
Changes in the Internal Revenue Code or in regulations or revenue
rulings thereunder may require amendments to the group contract.
In accordance with the preceding paragraph, Penn Mutual may make
such amendments without the consent of Participants.
The Owner will be informed of amendments when they are made.
NOTICES, CHANGES AND CHOICES. To be effective, all notices,
changes and choices the Owner may make under the group contract
must be in writing, signed and received by us at our designated
service office. If acceptable to us, notices, changes and choices
relating to beneficiaries and ownership will take effect as of the
date signed unless we have already acted in reliance on the prior
status. We are not responsible for their validity.
CONTRACT PAYMENTS. All sums payable to or by us are payable at our
designated service office. We may require return of a Certificate
prior to making payment.
PROTECTION OF PROCEEDS. Payments under the group contract may not
be assigned by the payee prior to their due dates. To the extent
allowed by law, payments are not subject to legal process for
debts of a payee.
COMPLIANCE WITH MINIMUM VALUE REQUIREMENTS. Annuity, death and
withdrawal benefits are not less than the minimum benefits
required under applicable laws and regulations of the jurisdiction
in which the group contract is delivered.
The benefits provided under the group contract from the
Participant's Fixed Account are increased by interest credited in
excess of the guaranteed minimums, if any.
PLAN DOCUMENTS. The Owner will furnish Penn Mutual with a
certified copy of the Plan and related trust agreement.
26
<PAGE>
In the event of an amendment to the Plan or related trust
agreement, the Owner will furnish Penn Mutual with a certified
copy of the amendment within 30 days of such amendment.
PERIODIC REPORTS. At least once a year we will furnish the Owner a
report for each Participant's Variable and Fixed Accounts. It will
set forth the current number of Accumulation Units or Annuity
Units, the value per Accumulation or Annuity Unit, the
Participant's Variable Account Value and the Participant's Fixed
Account Value. All reports required by the Investment Company Act
of 1940 will be furnished.
27
<PAGE>
THE FIXED ACCOUNT
TABLE OF GUARANTEED BENEFITS (PAGE 1 OF 2)
<TABLE>
<CAPTION>
GUARANTEED GUARANTEED GUARANTEED GUARANTEED
ACCOUNT ACCOUNT ACCOUNT TOTAL PAID-UP MONTHLY
AS OF VALUE VALUE VALUE GUARANTEED ANNUITY BENEFIT
DECEMBER, INTEREST INTEREST INTEREST ACCOUNT BEGINNING ON
31ST OPTION B OPTION A OPTION C VALUE ANNUITY DATE
<S> <C> <C> <C> <C> <C>
1986 1,031.22 1,058.48 1,061.66 3,151.37 57.19
1987 1,577.40 1,605.75 1,636.89 4,820.04 83.18
1988 2,145.42 2,174.90 2,237.64 6,557.96 108.16
1989 2,736.16 2,766.83 2,832.07 8,335.06 132.18
1990 3,350.54 3,382.43 3,450.28 10,183.24 155.28
1991 3,989.49 4,022.65 4,093.22 12,105.35 177.49
1992 4,653.99 4,688.48 4,761.87 14,104.35 198.85
1993 5,345.08 5,380.95 5,457.28 16,183.30 219.38
1994 6,063.81 6,101.11 6,180.49 18,345.42 239.12
1995 6,811.29 6,850.08 6,932.64 20,594.01 258.11
1996 7,588.67 7,629.01 7,714.87 22,932.55 276.36
1997 8,397.14 8,439.10 8,528.39 25,364.63 293.92
1998 9,237.95 9,281.59 9,374.46 27,894.00 310.79
1999 10,112.40 10,157.78 10,254.36 30,524.54 327.02
2000 11,021.82 11,069.02 11,169.46 33,260.30 342.63
2001 11,967.62 12,016.71 12,121.17 36,105.49 357.63
2002 12,951.25 13,002.30 13,110.94 39,064.49 372.06
2003 13,974.23 14,027.32 14,140.31 42,141.85 385.93
2004 15,038.12 15,093.34 15,210.84 45,342.31 399.27
2005 16,144.57 16,202.00 16,324.21 48,670.78 412.10
AT AGE 65 31,663.45 31,751.86 31,939.98 95,355.29 524.45
</TABLE>
THE ABOVE TABLE SHOWS THE GUARANTEED ACCOUNT VALUE AND THE GUARANTEED PAID-UP
MONTHLY ANNUITY BENEFIT ON DECEMBER, 31 OF EACH YEAR LISTED. EACH OF THESE
VALUES IS APPLICABLE ONLY IF THE SCHEDULE OF PURCHASE PAYMENTS, AS SHOWN ABOVE,
IS FOLLOWED FROM THE ENROLLMENT DATE TO DECEMBER, 31 OF THE YEAR LISTED. THE
GUARANTEED ACCOUNT VALUE IS THE ACCOUNT VALUE WITH INTEREST CREDITED AT THE
GUARANTEED RATE(S) STATED ABOVE WITHOUT ANY ADJUSTMENT FOR WITHDRAWAL OR
DIVIDENDS CREDITED. THE GUARANTEED PAID-UP MONTHLY ANNUITY BENEFIT IS THE
MINIMUM MONTHLY INCOME BEGINNING ON THE ANNUITY DATE THAT THE GUARANTEED ACCOUNT
VALUE WOULD PROVIDE ASSUMING NO FURTHER PURCHASE PAYMENTS AFTER THE DATE LISTED.
VALUES NOT SHOWN IN THE TABLE WILL BE PROVIDED UPON REQUEST.
28
<PAGE>
THE FIXED ACCOUNT
TABLE OF GUARANTEED BENEFITS (PAGE 2 OF 2)
<TABLE>
<CAPTION>
GUARANTEED GUARANTEED GUARANTEED
WITHDRAWAL WITHDRAWAL WITHDRAWAL TOTAL
AS OF VALUE VALUE VALUE GUARANTEED
DECEMBER, INTEREST INTEREST INTEREST WITHDRAWAL
31ST OPTION B OPTION A OPTION C VALUE
<S> <C> <C> <C> <C>
1986 984.82 1,010.85 987.35 2,983.01
1987 1,506.42 1,533.49 1,522.31 4,562.22
1988 2,048.88 2,077.03 2,097.54 6,223.45
1989 2,613.04 2,642.32 2,648.03 7,903.38
1990 3,199.76 3,230.22 3,222.96 9,652.94
1991 3,809.96 3,841.63 3,839.49 11,491.08
1992 4,479.47 4,512.66 4,494.43 13,486.56
1993 5,211.45 5,246.42 5,214.58 15,672.46
1994 5,988.01 6,024.85 5,999.82 18,012.68
1995 6,811.29 6,850.08 6,807.46 20,468.83
1996 7,588.67 7,629.01 7,570.14 22,787.82
1997 8,397.14 8,439.10 8,386.86 25,223.10
1998 9,237.95 9,281.59 9,208.44 27,727.99
1999 10,112.40 10,157.78 10,066.35 30,336.53
2000 11,021.82 11,069.02 10,985.05 33,075.89
2001 11,967.62 12,016.71 11,909.22 35,893.55
2002 12,951.25 13,002.30 12,874.25 38,827.80
2003 13,974.23 14,027.32 13,907.66 41,909.21
2004 15,038.12 15,093.34 14,947.23 45,078.69
2005 16,144.57 16,202.00 16,032.75 48,379.33
AT AGE 65 31,663.45 31,751.86 31,396.60 94,811.90
</TABLE>
THE ABOVE TABLE SHOWS THE GUARANTEED WITHDRAWAL VALUE ON DECEMBER, 31 OF EACH
YEAR LISTED. EACH OF THESE VALUES IS APPLICABLE ONLY IF THE SCHEDULE OF PURCHASE
PAYMENTS, AS SHOWN ABOVE, IS FOLLOWED FROM THE ENROLLMENT DATE TO DECEMBER, 31
OF THE YEAR LISTED. THE GUARANTEED WITHDRAWAL VALUE IS THE GUARANTEED ACCOUNT
VALUE REDUCED BY ANY APPLICABLE WITHDRAWAL CHARGE (AND ALSO ANY PREMATURE
TRANSACTION PENALTIES IF INTEREST OPTION C IS ELECTED). VALUES NOT SHOWN IN THE
TABLE WILL BE PROVIDED UPON REQUEST.
29
<PAGE>
================================================================================
================================================================================
VALUES AND PAYMENTS TO YOU UNDER THE GROUP ANNUITY CONTRACT, WHEN BASED UPON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED
AS TO FIXED DOLLAR AMOUNT.
GROUP VARIABLE AND FIXED
ANNUITY CERTIFICATE --
FLEXIBLE PURCHASE PAYMENTS
The Penn Mutual Life Insurance Company, Independence Square,
Philadelphia, Pennsylvania 19172
30
<PAGE>
THE PENN MUTUAL LIFE INSURANCE COMPANY
INDEPENDENCE SQUARE
PHILADELPHIA, PA 19172
- --------------------------------------------------------------------------------
Group Contract Number:
Issued To:
Date of Issue:
Effective Date:
- --------------------------------------------------------------------------------
The Penn Mutual Life Insurance Company will make annuity payments and other
payments as set forth in this contract.
This contract is delivered in and is subject to the laws of .
VALUES AND PAYMENTS UNDER THIS CONTRACT WHEN BASED UPON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE
NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT.
Executed by The Penn Mutual Life Insurance Company at its Home Office in
Philadelphia, Pennsylvania on the date of issue.
/s/ Laura M. Ritzko /s/Robert E. Chappell
Chairman of the Board
Secretary and Chief Executive Officer
Group Variable and Fixed
Annuity Contract - Flexible
Purchase Payments - Participating
GDI-385
Page 1
<PAGE>
Table of Contents
Page
Section I - Specification................................................Page 3
Section II - Definitions.................................................Page 3
Section III - Purchase Payments..........................................Page 4
Section IV - Variable Account Provisions.................................Page 4
Section V - Fixed Account Provisions....................................Page 13
Section VI - Payment on Death..........................................Page 18
Section VII - Transfer From Variable to Fixed Account...................Page 19
Section VIII - Transfer From Fixed to Variable Account..................Page 19
Section IX - Transfer From Another Annuity Contract.....................Page 20
Section X - Withdrawal..................................................Page 20
Section XI - Miscellaneous..............................................Page 22
Page 2
<PAGE>
Section I - SPECIFICATIONS
THE SEPARATE ACCOUNT
Penn Mutual Variable Annuity Account III
ELIGIBLE MUTUAL FUNDS
Penn Series Equity Fund
Penn Series Aggressive Capital Appreciation Fund
Penn Series Aggressive High Yield Fund
DATE VARIABLE ACCOUNT ADMINISTRATION CHARGE IS DEDUCTED
May 1 each year.
Section II - DEFINITIONS
PARTICIPANT: An employee who has made application through
Contractholder to make Purchase Payments on behalf of the Participant
under this contract.
PARTICIPANT'S ENROLLMENT DATE: The date specified in the Certificate
issued to the Participant by Penn Mutual.
PARTICIPANT'S ENROLLMENT YEAR: The twelve month period commencing on
the Participant's Enrollment Date, or any anniversary of the
Participant's Enrollment Date.
ACCUMULATION UNIT: An index used to compute a Participant's Variable
Account Value prior to the Variable Annuity Date.
ANNUITY UNIT: An index used to compute a Participant's Variable Annuity
Payment.
PARTICIPANT'S VARIABLE ACCOUNT: An account established and maintained
by Penn Mutual for each Participant and to which Purchase Payments are
allocated under Section IV.
PARTICIPANT'S VARIABLE ACCOUNT VALUE: The value of all Accumulation
Units credited to a Participant's Variable Account.
PARTICIPANT'S FIXED ACCOUNT: An account established and maintained by
Penn Mutual for each Participant and to which Purchase Payments are
allocated under Section V.
Page 3
<PAGE>
PARTICIPANT'S FIXED ACCOUNT VALUE: The sum of all amounts credited to a
Participant's Fixed Account, increased by interest credited and reduced
by amounts withdrawn or transferred from a Participant's Fixed Account.
ANNUITY DATE: The date on which annuity payments to a Participant are
to start.
PURCHASE PAYMENTS: Amounts paid to Penn Mutual on behalf of
Participants under this contract.
Section III - PURCHASE PAYMENTS
Purchase Payments may be made on behalf of each Participant subject to
the following provisions:
(a) The minimum Purchase Payment for any one Participant is $25.00
or such lower minimum as we may establish.
(b) The Participant will direct the allocation of Purchase
Payments to the Participant's Variable Account or the
Participant's Fixed Account, subject to the provisions of
Sections IV and V.
(c) Total Purchase Payments in a calendar year for a Participant
are limited as provided by Section 403(b) of the Internal
Revenue Code.
(d) Total Purchase Payment in a calendar year for a Participant
may not exceed $1,000,000 without Penn Mutual's consent.
(e) Purchase Payments for a Participant may be made only through
the Contractholder.
(f) Purchase Payments will be credited to Participants' Variable
Accounts and Participants' Fixed Accounts in accordance with
information provided by Participant.
Section IV - VARIABLE ACCOUNT PROVISIONS
A. The Separate Account
THE SEPARATE ACCOUNT. The name of the Separate Account is
specified in Section I. We established the Separate Account
for this contract and other contracts we may issue. Amounts
credited to the Participant's Variable Account will be
allocated to the Separate Account.
Page 4
<PAGE>
INVESTMENT OF SEPARATE ACCOUNT ASSETS. Assets held in the
Separate Account will be invested in one or more eligible
mutual funds. Current eligible mutual funds are specified in
Section I.
For this and other contracts the Separate Account is divided
into investment accounts. There is an investment account for
each eligible mutual fund. For each investment account, there
is a subaccount for Qualified Plans and a subaccount for
Nonqualified Plans.
Each Participant may choose the investment account to which
amounts credited to the Participant's Variable Account are to
be allocated.
We own the assets held in the Separate Account. However, the
portion of such assets equal to the reserves and other
contract liabilities with respect to each subaccount of each
investment account of the Separate Account are not chargeable
with liabilities arising out of any other business we may
conduct.
Upon notice to us, a Participant may transfer part or all the
value of the Accumulation Units or Annuity Units credited to
the Participant's Variable Account from one investment account
to another. No more than four such transfers may be made in a
calendar year. Such investment account transfers, as well as
all other investments, are subject to the limits and rules
applicable to each mutual fund.
SUBSTITUTION OF INVESTMENT. If investment in a mutual fund
should no longer be possible or in our judgment becomes
inappropriate to the purposes of the contract, we may
substitute another mutual fund. Substitution may be made with
respect to existing investments and the investment of future
Purchase Payments. Substitution will be subject to the
approval of the Insurance Department of the jurisdiction in
which this contract is delivered.
B. Charges and Deductions
VARIABLE ACCOUNT ADMINISTRATION CHARGE. With respect to each
Participant's Variable Account, a charge of $30 will be
deducted each year on the date specified in Section I. It will
also be deducted when the Participant's Variable Account Value
is withdrawn in full if withdrawal is not on the date
specified in Section I. The charge will never increase. The
charge will not be deducted on or after the Annuity Date.
EXPENSE RISK CHARGE. This charge is made to compensate us for
guaranteeing that the Variable account administration charge
will never increase. On an annual basis it equals 0.5% of the
daily net asset value of the Separate Account. This
Page 5
<PAGE>
charge is reflected in the Net Investment Factor set forth in
Subsection C of this Section IV.
MORTALITY RISK CHARGE. This charge is made to compensate us
for the mortality guarantees we make under this contract. On
an annual basis it equals 0.8% of the daily net asset value of
the Separate Account. This charge is reflected in the Net
Investment Factor set forth in Subsection C of this Section
IV.
CONTINGENT DEFERRED SALES CHARGE. This charge may be deducted
upon withdrawal, in whole or in part, of the Participant's
Variable Account Value or the present value of remaining
annuity payments (if applicable). The Contingent Deferred
Sales Charge is set forth in Section X.
DEDUCTIONS. The expense risk and mortality risk charge will be
computed and deducted from each subaccount of each investment
account of the Separate Account for each day the contract is
in force. Other charges will be deducted by cancelling
Accumulation Units or Annuity Units (if applicable) of a value
equal to the deduction. Cancellation of Accumulation Units
will be in the ratio of the Participant's interest in each
subaccount to the Participant's Variable Account Value.
C. Variable Accumulation Values
NUMBER OF PARTICIPANT'S ACCUMULATION UNITS. For each
subaccount of each investment account of the Separate Account,
the number of a Participant's Accumulation Units is the sum of
Amounts allocated to the subaccount for the
Participant
divided by
The value of an Accumulation Unit for that subaccount
for the valuation period in which we received the
amount allocated.
The number will be adjusted for transfers, withdrawals and
charges. Adjustments will be made as of the valuation period
in which we receive all requirements for the transaction, as
appropriate.
VALUE OF EACH ACCUMULATION UNIT. For each subaccount of each
investment account of the Separate Account, the value was
arbitrarily set at $10 when the subaccount was established.
The value may increase or decrease from one valuation period
to the next. For any valuation period the value is
Page 6
<PAGE>
The value of an Accumulation Unit for the prior
valuation period
multiplied by
The net investment factor for that subaccount for the
valuation period.
Net Investment Factor. As used in this contract, Net
Investment Factor is an index used to measure the investment
performance of a subaccount from one valuation period to the
next. For any subaccount, the net investment factor for a
valuation period is found by dividing (a) by (b) and
subtracting (c):
Where (a) is
The net asset value per share of the mutual fund
held in the subaccount, as of the end of the
valuation period
plus
The per-share amount of any dividend or capital
gain distributions by the mutual fund if the
"exdividend" date occurs in the valuation period
plus or minus
A per-share charge or credit as we may determine,
as of the end of the valuation period, for tax
reserves;
Where (b) is
The net asset value per share of the mutual fund
held in the subaccount as of the end of the last
prior valuation period
plus or minus
The per-share charge or credit for tax reserves
as of the end of the last prior valuation period;
Where (c) is
The sum of the daily expense risk charge and the
daily mortality risk charge. On an annual basis,
the sum of such charges equals 1.30% of the daily
net asset value of the Separate Account.
Page 7
<PAGE>
VALUATION PERIOD. Valuation period is the interval from one
valuation time to the next valuation time. Valuation time is
the time as of which the mutual fund determines the net asset
value of its shares.
D. Variable Annuity Payments
ANNUITY DATE. The Annuity Date must be on the first day of a
month. It may not be later than the first day of the next
month after the Annuitant's 85th birthday. The Participant
will choose the Annuity Date in the application. The
Participant may change the Annuity Date up to 30 days prior to
the current Annuity Date.
VARIABLE ANNUITY OPTIONS. The Participant or the Participant's
surviving beneficiary may choose a variable annuity option up
to 30 days prior to the Annuity Date. An option not set forth
in the contract may be chosen if acceptable to us.
FIRST VARIABLE ANNUITY PAYMENT. Any premium taxes will be
deducted from the Participant's Variable Account Value. The
net Participant's Variable Account Value as of the Annuity
Date will be applied to the annuity table for the option
chosen. The variable annuity tables show the amount of the
first payment for each $1,000 so applied, according to the age
at the Annuity Date. The tables are based on the 1971
Individual Annuity Mortality Table with interest at 4%.
Adjusted ages are used in entering those tables.
SUBSEQUENT VARIABLE ANNUITY PAYMENTS. Payments after the first
will vary in amount according to the investment performance of
the subaccount or subaccounts chosen. The amount may change
from month to month. The amount of each subsequent payment is
the sum of the following amounts attributable to each
applicable subaccount
The number of Annuity Units for the subaccount
multiplied by
The value of an Annuity Unit for that subaccount for
the valuation period in which payment is due.
We guarantee that the amount of each annuity payment after the
first will not be affected by variations in expense or
mortality experience.
MINIMUM ANNUITY PAYMENTS. If the net Participant's Variable
Account Value to be applied at the Annuity Date is less than
$2,000, we may pay such amount in a
Page 8
<PAGE>
lump sum. Annuity payments will be made monthly; but if any
payment would be less than $50, we may change the frequency so
payments are at least $50 each.
NUMBER OF PARTICIPANT'S ANNUITY UNITS. The number of units for
the subaccount of each investment account chosen by the
Participant is
The amount of the first variable annuity payment
attributable to that subaccount
divided by
The value of Annuity Unit for the subaccount as of
the Annuity Date.
The number is fixed except for adjustments for subaccount
transfers. Adjustments will be made as of the valuation period
in which we receive all requirements for the transfer, as
appropriate.
VALUE OF EACH ANNUITY UNIT. For each subaccount of each
investment account of the Separate Account the value was
arbitrarily set at $10 when the subaccount was established.
The value may increase or decrease from one valuation period
to the next. For any valuation period the value is
The value of an Annuity Unit for the last prior
valuation period
multiplied by
The net investment factor for that subaccount for the
valuation period
multiplied by
An interest factor to neutralize the assumed
investment rate of 4% built into the annuity tables.
E. Variable Annuity Options
OPTION 1 - VARIABLE ANNUITY FOR SPECIFIED NUMBER OF YEARS.
Payments will be made for a specified number of years, which
may not be less than 5 years nor more than 30 years.
OPTION 2 - VARIABLE LIFE ANNUITY. Payments will be made for
the life of the Annuitant. Payments will cease with the last
payment due prior to the Annuitant's death.
Page 9
<PAGE>
OPTION 3 - VARIABLE LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR
10 OR 20 YEARS. Payments will be made for the life of the
Annuitant. A guaranteed payment period of either 10 or 20
years may be chosen.
OPTION 4 - VARIABLE JOINT AND SURVIVOR LIFE ANNUITY. Payments
will be made during the lifetimes of the Annuitant and a
designated second Annuitant. Payments will continue as long as
either is living. The amount of such payments will not change
by reason of the death of the first Annuitant to die.
If the Annuitant dies prior to the end of the specified period
under Option 1 or the guaranteed period under Option 3, the
beneficiary may choose either
(1) To have the payments continue for the specified or
guaranteed period, or
(2) To receive at any time in lump sum the present value
of the remaining payments to be made over the
specified or guaranteed period.
If a beneficiary dies while receiving annuity payments under
this Option 4, the present value will be paid in a lump sum to
the beneficiary's estate. The present value will be (a)
computed as of the valuation period in which due proof of
death is received at our designated service office, and (b)
commuted at the assumed investment rate of the annuity tables.
PAYMENTS. Payments will be made on the first day of each month
starting with the Annuity Date. Except under Option 4,
payments will be made to the Participant. Under Option 4,
payments will be jointly payable while both Annuitants are
alive.
F. Variable Annuity Option Tables
The following tables show the amount of the first monthly
income payment for each $1,000 of value applied under a
variable settlement option. "Age" as used in the tables means
an adjusted age determined in the following manner from the
actual age of the Annuitant on the birthday nearest the date
of the first payment.
Page 10
<PAGE>
CALENDAR YEAR OF BIRTH ADJUSTED AGE
---------------------- ------------
Before 1900 Actual Age increased by 1
1900-1919 Actual Age
1920-1939 Actual Age decreased by 1
1940-1959 Actual Age decreased by 2
1960 and later Actual Age decreased by 3
Option 1 - Variable Annuity for Specified Number of Years
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Number of Years 5 6 7 8
Monthly Income - - - - 18.32 15.56 13.59 12.12
- ---------------------------------------------------------------------------------------------------------------------------------
Number of Years 9 10 11 12 13 14 15 16
Monthly Income 10.97 10.06 9.31 8.69 8.17 7.72 7.34 7.00
- ---------------------------------------------------------------------------------------------------------------------------------
Number of Years 17 18 19 20 21 22 23 24
Monthly Income 6.71 6.44 6.21 6.00 5.81 5.64 5.49 5.35
- ---------------------------------------------------------------------------------------------------------------------------------
Number of Years 25 26 27 28 29 30
Monthly Income 5.22 5.10 5.00 4.90 4.80 4.72
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 11
<PAGE>
Option 2 - Variable Life Annuity and
Option 3 - Variable Life Annuity with
Payments Guaranteed for 10 or 20 Years
LIFE 10 YEARS 20 YEARS
AGE ANNUITY GUARANTEED GUARANTEED
- --- ------- ---------- ----------
50 4.59 4.56 4.47
51 4.65 4.62 4.52
52 4.72 4.69 4.57
53 4.80 4.76 4.63
54 4.87 4.83 4.69
55 4.96 4.91 4.75
56 5.05 4.99 4.81
57 5.14 5.07 4.87
58 5.24 5.16 4.93
59 5.34 5.25 5.00
60 5.45 5.35 5.07
61 5.56 5.45 5.14
62 5.69 5.56 5.20
63 5.82 5.68 5.27
64 5.96 5.80 5.34
65 6.11 5.93 5.41
66 6.27 6.07 5.48
67 6.45 6.22 5.54
68 6.64 6.37 5.60
69 6.85 6.54 5.66
70 7.08 6.71 5.71
71 7.33 6.89 5.76
72 7.60 7.08 5.81
73 7.90 7.28 5.84
74 8.22 7.48 5.88
75 8.57 7.68 5.90
76 8.95 7.89 5.92
77 9.37 8.10 5.94
78 9.82 8.30 5.96
79 10.32 8.50 5.97
80 10.86 8.69 5.98
81 11.46 8.88 5.98
82 12.11 9.04 5.99
83 12.82 9.20 5.99
84 13.59 9.33 6.00
85 14.43 9.45 6.00
Page 12
<PAGE>
Option 4 - Variable Joint and Survivor Life Annuity
<TABLE>
<CAPTION>
AGE 55 60 65 70 75 80 85 AGE
- --- -- -- -- -- -- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 4.25 4.34 4.41 4.46 4.51 4.54 4.56 50
55 4.40 4.53 4.64 4.74 4.81 4.87 4.90 55
60 4.53 4.72 4.90 5.05 5.18 5.28 5.35 60
65 4.64 4.90 5.16 5.40 5.62 5.79 5.91 65
70 4.74 5.05 5.40 5.77 6.11 6.39 6.59 70
75 4.81 5.18 5.62 6.11 6.65 7.12 7.48 75
80 4.87 5.28 5.79 6.39 7.12 7.94 8.59 80
85 4.90 5.35 5.91 6.59 7.48 8.59 9.88 85
</TABLE>
Section V - FIXED ACCOUNT PROVISIONS
A. Interest Options
Interest will be earned on each Participant's Fixed Account
Value from the date amounts are credited to the Participant's
Fixed Account to the date amounts are applied to an annuity
option, paid upon the death of the annuitant, transferred or
withdrawn.
Each amount credited to a Participant's Fixed Account will be
credited with interest under Interest Option A, Interest
Option B, or Interest Option C. The Participant chooses the
interest options. The minimum initial amount for which an
Interest Option may be elected is $25.00 or such lower minimum
as we may establish.
INTEREST OPTION A
With respect to each amount for which Interest Option A is
elected, interest will be credited at an effective annual rate
declared by us. The effective annual rate will be declared as
of the first day of each calendar quarter. The declared rate
will apply, for Interest Option A elections made in that
calendar quarter, through the end of the same calendar quarter
in the next calendar year. Thereafter, interest will be
credited at the declared effective annual rate then applicable
to new Interest Option A elections, for successive twelve
month periods.
We will declare an effective annual interest rate under
Interest Option A which is not less than the published 52 week
United States Treasury Bill discount rate from the most recent
regularly scheduled auction held before the beginning of the
calendar quarter. If the auction program is discontinued, we
will substitute an index which in our opinion is comparable
and which is approved by the Insurance Department of the
jurisdiction in which this contract is delivered.
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<PAGE>
The declared effective annual interest rate under Interest
Option A will never be less than 4%.
INTEREST OPTION B
With respect to each amount for which Interest Option B is
elected, interest will be credited at an effective annual rate
declared by us. The declared rate will apply through the end
of the calendar month in which the election is made.
Thereafter, interest will be credited on such amount for
successive calendar month periods at the declared effective
annual rate then applicable to new Interest Option B elections
made as of the beginning of each such calendar month.
The declared effective annual interest rate under Interest
Option B will never be less than 4%.
INTEREST OPTION C
With respect to each amount for which interest Option C is
elected, interest will be credited at an effective annual rate
declared by us. The effective annual rate will be declared as
of the first day of each calendar quarter. The declared rate
will apply, for Interest Option C elections made in that
calendar quarter, through the end of the same calendar quarter
in the third following calendar year. Thereafter, interest
will be credited at the declared effective annual rate then
applicable to new Interest Option C elections, for successive
thirty-six month periods.
The participant may change the interest option election or
withdraw or transfer any portion of an amount for which
Interest Option C is elected before the end of a period for
which a declared effective annual rate of interest is
guaranteed for such amount. However, in such event, the amount
withdrawn or transferred or the amount for which the interest
option election is changed will be reduced by a premature
transaction charge equal to 2 1/2% of such amount
The declared effective annual interest rate under Interest
Option C will never be less than 4%.
CHANGE OF INTEREST OPTION
The Participant may change the interest option election
applicable to all or part of the Participant's Fixed Account
Value, subject to the provisions set forth below.
The Participant may change the election for an amount held
under Interest Option A only at the end of the period for
which a declared effective annual interest rate is guaranteed
for such amount.
The Participant may change the election for an amount held
under Interest Option B only at the end of a calendar month.
Page 14
<PAGE>
The Participant may change the election for all or any part of
an amount held under Interest Option C before the end of the
period for which a declared effective annual interest rate is
guaranteed for such amount, subject to the Premature
transaction charge set forth in Interest Option C.
The minimum amount for which an interest option may be changed
is $250.
B. Fixed Annuity Payments
ANNUITY DATE. The Annuity Date must be on the first day of a
month. It may not be later than the first day of the next
month after the Annuitant's 85th birthday. The Participant
will choose the Annuity Date in the application. The
Participant may change the Annuity Date up to 30 days prior to
the current Annuity Date.
FIXED ANNUITY OPTIONS. The Participant or the Participant's
surviving beneficiary may choose a fixed annuity option up to
30 days prior to the Annuity Date. An option not set forth in
the contract may be chosen if acceptable to us.
AMOUNT OF FIXED ANNUITY PAYMENTS. Any premium taxes will be
deducted from the Participant's Fixed Account Value. The net
Participant's Fixed Account Value as of the Annuity Date will
be applied to the fixed annuity option chosen. If fixed
annuity payments begin within 5 years after the Participant's
Enrollment Date, the monthly income under Options 1, 2, 3 and
4 will equal the monthly income under a comparable single
premium nonparticipating annuity available from us at the time
fixed annuity payments are to begin.
If fixed annuity payments begin more than 5 years after the
Participant's Enrollment Date, the monthly income under
Options 1, 2, 3 and 4 will equal 104% of the monthly income
under a comparable single premium nonparticipating annuity
available from us at the time fixed annuity payments are to
begin. In no event will the monthly income be less than shown
in the Fixed Annuity Option Tables.
The guaranteed monthly income under Option 1 and 3 will be
based on interest at a rate of 3% per year compounded
annually. The guaranteed monthly income under Option 2 and 4
will be based on interest at a rate of 2 3/4% per year
compounded annually. Fixed Annuity Options 1, 2, 3 and 4 will
not participate in divisible surplus.
MINIMUM ANNUITY PAYMENTS. If the net Participant's Fixed
Account Value to be applied at the Annuity Date is less than
$2,000, we may pay such amount in a lump sum. Fixed Annuity
payments will be made monthly. But if any payment would be
less than $50, we may change the frequency so payments are at
least $50 each.
Page 15
<PAGE>
C. Fixed Annuity Options
OPTION 1 - FIXED ANNUITY FOR SPECIFIED NUMBER OF YEARS.
Payments will be made for a specified number of years, which
may not be less than 5 years nor more than 30 years.
OPTION 2 - FIXED LIFE ANNUITY. Payments will be made for the
life of the Annuitant. Payments will cease with the last
payment due prior to the Annuitant's death.
OPTION 3 - FIXED LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10
OR 20 YEARS. Payments will be made for the life of the
Annuitant. A guaranteed payment period of either 10 or 20
years may be chosen.
OPTION 4 - FIXED JOINT AND SURVIVOR LIFE ANNUITY. Payments
will be made during the lifetimes of the Annuitant and a
designated second Annuitant. Payments will continue as long as
either is living. The amount of such payments will not change
by reason of the death of the first Annuitant to die.
If the Annuitant dies prior to the end of the specified period
under Option 1 or the guaranteed period under Option 3, the
beneficiary may choose either: (1) to have the payments
continue for the specified or guaranteed period, or (2) to
receive at any time in lump sum the present value of the
remaining payments to be made over the specified or guaranteed
period.
If a beneficiary dies while receiving annuity payments under
this option, the present value will be paid in a lump sum to
the beneficiary's estate.
The present value of payments under Option 1 will be based on
interest at a rate of 3% per year compounded annually. The
present value of the remaining payments during the guaranteed
period under Option 3 will be based on interest at a rate set
by us at the time payments are to begin.
PAYMENT. Payments will be made on the first day of each month
starting with the Annuity Date. Payments under all options
will be made to the Participant, except under Option 4. Under
Option 4, payments will be jointly payable while both
Annuitants are alive.
D. Fixed Annuity Option Tables
Amount of monthly income provided by each $1,000 applied under
an income option.
Page 16
<PAGE>
Option 1 - Fixed Income for Specified Number of Years
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
MONTHLY MONTHLY MONTHLY
YEARS INCOME YEARS INCOME YEARS INCOME
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
11 $8.86 21 $5.32
12 8.24 22 5.15
13 7.71 23 4.99
14 7.26 24 4.84
5 17.91 15 6.87 25 4.71
6 15.14 16 6.53 26 4.59
7 13.16 17 6.23 27 4.47
8 11.68 18 5.96 28 4.37
9 10.53 19 5.73 29 4.27
10 9.61 20 5.51 30 4.18
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
Option 2 - Fixed Life Annuity and
Option 3 - Fixed Life Annuity with
Payments Guaranteed for 10 or 20 Years
The amount of monthly income will be based on the age of the option annuitant on
the birthday nearest the date of the first payment.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
2 3 2 3
--- ------------------------ --- ---------------------------
Age of 20 Year 10 Year Age of 20 Year 10 Year
Option Life Guaranteed Guarantee Option Guaranteed Guaranteed
Annuitant Income Period d Period Annuitant Life Income Period Period
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
15 and under $2.90 $2.87 $2.88 35 3.33 3.30 3.31
16 2.91 2.88 2.89 36 3.36 3.33 3.34
17 2.92 2.89 2.90 37 3.40 3.36 3.38
18 2.94 2.91 2.92 38 3.43 3.40 3.41
19 2.96 2.93 2.94 39 3.47 3.43 3.45
20 2.97 2.94 2.95 40 3.51 3.47 3.49
21 2.99 2.96 2.97 41 3.55 3.51 3.53
22 3.01 2.98 2.99 42 3.59 3.55 3.57
23 3.03 3.00 3.01 43 3.64 3.59 3.62
24 3.05 3.02 3.03 44 3.69 3.63 3.67
25 3.07 3.04 3.05 45 3.74 3.68 3.72
26 3.09 3.06 3.07 46 3.79 3.72 3.77
27 3.11 3.08 3.09 47 3.85 3.77 3.83
28 3.14 3.11 3.12 48 3.91 3.82 3.88
29 3.16 3.13 3.14 49 3.97 3.88 3.94
30 3.18 3.15 3.16 50 $4.03 $3.83 $4.01
31 3.21 3.18 3.19 51 4.11 3.99 4.08
32 3.24 3.21 3.22 52 4.19 4.05 4.15
33 3.27 3.24 3.25 53 4.27 4.11 4.22
34 3.30 3.27 3.28 54 4.35 4.17 4.30
55 4.44 4.23 4.38 70 6.71 5.22 6.30
56 4.53 4.30 4.47 71 6.95 5.25 6.48
57 4.63 4.36 4.56 72 7.20 5.25 6.48
58 4.74 4.43 4.66 73 7.47 5.25 6.85
59 4.86 4.50 4.76 74 7.76 5.25 7.05
60 4.98 4.57 4.87 75 8.06 5.25 7.25
61 5.11 4.64 4.98 76 8.43 5.25 7.44
62 5.25 4.72 5.10 77 8.84 5.25 7.64
63 5.39 4.79 5.23 78 9.28 5.25 7.84
64 5.55 4.86 5.36 79 9.75 5.25 8.04
80 and 10.27 5.25 8.23
over
65 5.71 4.92 5.50
66 5.89 4.99 5.65
67 6.08 5.05 5.80
68 6.27 5.11 5.96
69 6.49 5.17 6.13
</TABLE>
Page 17
<PAGE>
Option 4 - Fixed Joint and Survivor Life Annuity
The amount of monthly income will be based on the ages of the option annuitants
on their respective birthdays nearest the date of the first payment. The table
shows income for certain ages for two option annuitants. The amount is shown
under the age of the first annuitant and opposite the age of the second
annuitant. Amounts of income for other combinations of ages will be furnished
upon request.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Age of
Second
Option
Annuitant Age of First Option Annuitant
50 55 60 65 70 75 60 85
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
45 $3.40 $3.48 $3.54 $3.60 $3.64 $3.67 $3.70 $3.71
50 3.52 3.64 3.74 3.82 3.89 3.94 3.97 3.99
55 3.65 3.80 3.95 4.08 4.19 4.27 4.33 4.38
60 3.76 3.96 4.17 4.37 4.54 4.68 4.79 4.86
62 3.80 4.02 4.26 4.49 4.69 4.86 5.00 5.09
65 3.85 4.11 4.38 4.67 4.93 5.15 5.34 5.48
70 3.93 4.22 4.57 4.95 5.32 5.68 6.00 6.25
75 3.99 4.31 4.72 5.19 5.70 6.21 6.74 7.18
80 4.03 4.38 4.84 5.39 6.03 6.75 7.55 8.32
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
Section VI - PAYMENT ON DEATH
DEATH BEFORE THE ANNUITY DATE. Upon receipt of due proof of
the death of the Participant prior to the Annuity Date, we
will pay to the beneficiary the greater of:
(1) The sum of all Purchase Payments, adjusted for
withdrawals and transfers, or
Page 18
<PAGE>
(2) The sum of the Participant's Variable Account Value
and the Participant's Fixed Account Value for the
valuation period in which we receive such proof at
our designated service office.
If the beneficiary is not the decedent's spouse, the
beneficiary can choose an Annuity Option for death payments.
The Option must provide for payments over the beneficiary's
life or over a period not longer than the beneficiary's life
expectancy. Payments shall begin within one year after the
date of death. if payment is made in a lump sum, such payment
shall be made within five years after the date of death.
If the beneficiary is the decedent's surviving spouse, the
spouse shall be treated as the decedent for purposes of
contract death benefits.
Section VII - TRANSFER FROM VARIABLE TO FIXED ACCOUNT
A Participant may transfer all or part of the Participant's
Variable Account Value to the Participant's Fixed Account,
subject to the following provisions:
The minimum transfer amount is $250.
No more than four such transfers may be made by a Participant
in a calendar year.
No transfer may be made after the thirtieth day before the
Annuity Date.
Request for transfer must be received by us and any other
applicable requirements must be met before the death of the
Participant.
Section VIII - TRANSFER FROM FIXED TO VARIABLE ACCOUNT
A Participant may transfer all or part of the Participant's
Fixed Account Value to the Participant's Variable Account,
subject to the following provisions:
The minimum transfer amount is $250.
An amount held under Interest Option A may be transferred only
at the end of the period for which a declared effective annual
interest rate is guaranteed for such amount.
An amount held under Interest Option B may be transferred only
at the end of a calendar month.
All or any part of an amount held under Interest Option C may
be transferred before the end of the period for which a
declared effective annual interest rate is
Page 19
<PAGE>
guaranteed for such amount, subject to the premature
transaction charge set forth in Interest Option C.
No transfer may be made after the thirtieth day before the
Annuity Date.
Request for transfer must be received by us and any other
applicable requirements must be met before the death of the
Participant.
Section IX - TRANSFER FROM ANOTHER ANNUITY CONTRACT
A Participant may, through the Contractholder, transfer to the
Participant's Variable or Fixed Accounts under this contract,
amounts held under another annuity contract purchased for the
Participant under the provisions of Section 403(b) of the
Internal Revenue Code.
Section X - WITHDRAWAL
A. WITHDRAWAL. Prior to the earlier of the Annuity Date or the
death of the Participant, the Participant may withdraw all or
part of the Participant's Variable Account Value and the
Participant's Fixed Account Value.
After the Annuity Date and the election of Variable Annuity
Option 1, the payee may withdraw the present value of the
variable annuity payments remaining to be made. The present
value will be (a) computed as of the valuation period in which
notice of the withdrawal is received at our designated service
office and (b) commuted at the assumed investment rate of the
Variable Annuity tables.
After the Annuity Date and the election of Fixed Annuity
Option 1. the payee may withdraw the present value of the
fixed annuity payments remaining to be made.
For full withdrawal of all the Participant's Variable and
Fixed Account Values, the Participant's Certificate must be
surrendered to our designated service office.
For partial withdrawals, the withdrawal must be at least $250.
Withdrawal of all or any part of the Participant's Fixed
Account Value held under Interest Option C before the end of
the period for which a declared effective annual interest rate
is guaranteed for such amount will be subject to the premature
transaction charge set forth in Interest Option C. The total
of the premature transaction charge and the Contingent
Deferred Sales Charge set forth below will never be more than
7% of the amount withdrawn.
Page 20
<PAGE>
B. CONTINGENT DEFERRED SALES CHARGES. A charge equal to 5% of the
amount withdrawn will be made at the time of withdrawal,
subject to the following provisions:
(1) If the Participant makes a total withdrawal of the
Participant's Fixed Account Value as a result of
termination of participation in this contract, the
amount received will never be less than the total of
all amounts allocated to the Participant's Fixed
Account, less prior transfers and withdrawals from
the Participant's Fixed Account.
(2) No charge will be made for withdrawal if the
Participant has provided due proof of disability.
Disability shall mean the inability, by reason of
medically determinable physical or mental impairment
which can be expected to result in death or be of
long-continued and indefinite duration, to engage in
the Participant's usual and customary occupation or
in any other substantial gainful activity for which
the Participant is reasonably suited by education,
training or experience.
(3) No charge will be made for a withdrawal after the
death of the Participant.
(4) No charge will be made for that portion of the first
withdrawal made in a Participant's Enrollment Year
after the first Participant's Enrollment Year which
does not exceed 10% of the sum of the Participant's
Variable Account and Fixed Account Values.
(5) No charge will be made for that portion of the first
withdrawal, made in the Participant's Eighth
Enrollment Year, which does not exceed 25% of the sum
of the Participant's Variable Account and Fixed
Account Values.
(6) No charge will be made for that portion of the first
withdrawal, made in the Participant's Ninth
Enrollment Year, which does not exceed 50% of the sum
of the Participant's Variable Account and Fixed
Account Values.
(7) No charge will be made for that portion of the first
withdrawal, made in the Participant's Tenth
Enrollment Year, which does not exceed 75% of the
Participant's Variable Account and Fixed Account
Values.
(8) No charge will be made for any withdrawal made after
the Participant has been enrolled for ten years.
C. PAYMENT OF WITHDRAWALS. Unless the Participant directs
otherwise, partial withdrawals prior to the Annuity Date, and
related charges, will be deducted from the Participant's Fixed
and Variable Accounts in the following order
first from Interest Option B;
Page 21
<PAGE>
next from Interest Option A;
then from each subaccount of each investment account of the
Separate Account in the ratio of the Participant's interest in
each subaccount to the Participant's Variable Account Value;
and
finally from Interest Option C.
Partial withdrawal of amounts held under Interest Option A or
Interest Option C will be made from amounts most recently
placed under that option.
Section XI - MISCELLANEOUS
BENEFICIARY. The Beneficiary is the person chosen by the Participant in
the application, who is to receive:
(1) Payment on death of the Participant prior to the Annuity Date
or
(2) Guaranteed annuity payments, if any, on death of the Annuitant
on or after the Annuity Date.
The Participant may change the beneficiary while the Participant is
alive.
The estate or heirs of a beneficiary who dies before the Participant
have no rights under this contract. If no beneficiary survives the
Participant, payment will be made to the Participant's estate.
MISSTATEMENT OF AGE. If the age of the Annuitant or a joint payee is
misstated, any amount payable under this contract will be that amount
which the Purchase Payments paid would have purchased on the basis of
the correct age.
If the annuity payments have been overpaid because the age of the
Annuitant or joint payee has been misstated, the amount overpaid, with
interest at the rate of 6% per year compounded annually, will be
charged against the payments still to be made under this contract.
If the annuity payments have been underpaid because the age of the
Annuitant or joint payee has been misstated, the amount underpaid, with
interest at the rate of 6% per year compounded annually, will be paid
in full with the next payment due under this contract.
PROOF OF AGE AND SURVIVAL. We may require satisfactory proof of correct
age at any time. If any payment under this contract depends on the
payee being alive, we may require satisfactory proof of survival.
Page 22
<PAGE>
DEFERMENT OF TRANSFERS AND PAYMENTS. Transfers and payments of
withdrawals from the Participant's Variable Account will be made within
seven days. However, we may defer a transfer, a withdrawal, the Annuity
Date or annuity payments, under the Variable Account Provisions of
Section IV if:
(1) The New York Stock Exchange is closed (other than customary
weekend and holiday closings);
(2) Trading on the new York Stock Exchange is restricted;
(3) An emergency exists such that it is not reasonably practical
to dispose of securities held in the Separate Account or to
determine the value of its assets; or
(4) The Securities and Exchange Commission by order so permits for
the protection of security holders.
Conditions in (2) and (3) will be decided by, or in accordance with
rules of, the Securities and Exchange Commission.
We may defer a transfer or withdrawal from the Participant's Fixed
Account for such period, not exceeding six months, as we reasonably
determine that investment conditions are such that an orderly sale of
assets held as part of our general assets is not possible.
PARTICIPATING CONTRACT. This contract may participate in our divisible
surplus. Divisible surplus, if any, to be apportioned to this contract
shall be apportioned annually and will be allocated by us equitably
among all Participants. Divisible surplus so allocated will be credited
as Purchase Payments to the Participants' Variable and Fixed Accounts,
unless the Participant elects to have it paid in cash. No divisible
surplus is expected to be apportioned to this contract in the
foreseeable future.
APPLICATIONS ON BEHALF OF PARTICIPANTS. Purchase Payments made to Penn
Mutual on behalf of a Participant will be accepted under this contract
when an application on behalf of the Participant, satisfactory to Penn
Mutual, has been received and accepted by Penn Mutual.
Penn Mutual may decline at any time to accept applications on behalf of
proposed new Participants.
ASSIGNMENT AND OWNERSHIP. The Contractholder may not assign this
contract without the prior written consent of Penn Mutual.
Accounts established and maintained for a Participant are owned by the
Participant for his or her lifetime. The entire interest in a
Participant's Variable or Fixed Account is for the exclusive benefit of
the Participant. A Participant's Variable or Fixed Account is
Page 23
<PAGE>
nontransferable and the entire interest of the Participant is
nonforfeitable in accordance with applicable provisions of the Internal
Revenue Code.
ENTIRE CONTRACT. This contract and the application therefore, a copy of
which is attached hereto and made a part hereof, constitute the entire
contract. All statements made in the application shall be deemed
representations and not warranties.
Only the President, a Vice President, the Secretary, the Chief Actuary,
an Actuary, or Associate Actuary may, on behalf of Penn Mutual, modify
or change the terms of this contract or waive any of its conditions. No
agent may modify or change the terms of this contract or waive any of
its conditions.
CERTIFICATES - TEN DAY RIGHT OF EXAMINE. Penn Mutual will furnish
certificates to Participants evidencing the interest of the Participant
in this contract and describing certain provisions of this contract.
The interest evidenced by a certificate may be cancelled by returning
the certificate within 10 days after it is received by the Participant.
It must be returned to Penn Mutual or the agent through whom it was
purchased. The interest will then be considered void as of its
inception. Any payment made on it will be refunded.
FAILURE TO ENFORCE NOT WAIVER. A waiver by a Participant or Penn Mutual
of the right to enforce any rights arising from a breach of this
contract will not constitute a waiver of any right arising from a
subsequent breach. The forbearance by a Participant or Penn Mutual to
enforce any right hereunder will not be considered a waiver of such
right.
AMENDMENT. To the extent necessary to comply with applicable law and
regulations, Penn Mutual reserves the right to change any or all of the
contract provisions at any time, including retroactive changes, without
the consent of Participants.
Changes in the Internal Revenue Code or in regulations or revenue
rulings thereunder may require amendments to this contract. In
accordance with the preceding paragraph, Penn Mutual may make such
amendments without the consent of Participants.
Participants will be informed of amendments when they are made.
DISCONTINUANCE. Upon giving Penn Mutual 90 days prior written notice,
the Contractholder may discontinue the contract with respect to new
Purchase Payments, provided, however, that the contract shall continue
in full force and effect in accordance with its terms with respect to
Purchase Payments made prior to discontinuance.
NOTICES, CHANGES AND CHOICES. To be effective, all notices, changes and
choices the Participant may make under the contract must be in writing,
signed and received by us at our designated service office. If
acceptable to us, notices, changes and choices relating to
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<PAGE>
beneficiaries and ownership will take effect as of the date signed
unless we have already acted in reliance on the prior status. We are
not responsible for their validity.
CONTRACT PAYMENTS. All sums payable to or by us are payable at our
designated service office. We may require return of the contract prior
to making payment.
PROTECTION OF PROCEEDS. Payments under this contract may not be
assigned by the payee prior to their due dates. To the extent allowed
by law, payments are not subject to legal process for debts of a payee.
COMPLIANCE WITH MINIMUM VALUE REQUIREMENTS. Annuity, death and
withdrawal benefits are not less than the minimum benefits required
under applicable laws and regulations of the jurisdiction in which this
contract is delivered.
The benefits provided under this contract from the Participant's Fixed
Account are increased by interest credited in excess of the guaranteed
minimums, if any.
PERIODIC REPORTS. At least once a year we will furnish each Participant
a report. It will set forth the current number of Accumulation Units or
Annuity Units, the value per Accumulation or Annuity Unit, the
Participant's Variable Account Value and the Participant's Fixed
Account Value. Each person with voting rights in the Separate Account
will be furnished reports required by the Investment Company Act of
1940.
Page 25
<PAGE>
THE PENN MUTUAL LIFE INSURANCE COMPANY
FOUNDED 1847
- --------------------------------------------------------------------------------
Participant AUGUST 01, 2020 Annuity Date
FEBRUARY 28, 1985 Participant's
Certificate Number 411022914 Enrollment Date
- --------------------------------------------------------------------------------
Group Variable and Fixed Annuity Contract Number --
Contractholder
The Penn Mutual Life Insurance Company certifies that the above named person is
a Participant under the Group Annuity Contract.
This certificate is evidence of your interest in the Group Annuity Contract. All
matters pertaining to such interest are subject to the provisions of the Group
Annuity Contract. Relevant provisions of the Group Annuity Contract are
described in the following pages.
This certificate replaces any certificate previously issued to you by Penn
Mutual with respect to the Group Annuity Contract.
VALUES AND PAYMENTS TO YOU UNDER THE GROUP ANNUITY CONTRACT, WHEN BASED UPON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED
AS TO FIXED DOLLAR AMOUNT.
/s/Robert E. Chappell
Chairman of the Board
and Chief Executive Officer
10 DAY RIGHT TO EXAMINE CERTIFICATE -- You may cancel this certificate within
ten days after its receipt. Simply return or mail it to us or our agent. We will
refund your Participant's Variable and Fixed Account Values.
GROUP VARIABLE AND FIXED
ANNUITY CERTIFICATE --
FLEXIBLE PURCHASE PAYMENTS
The Penn Mutual Life Insurance Company, Independence Square, Philadelphia,
Pennsylvania 19172
EB 1611 3/85
<PAGE>
TABLE OF CONTENTS
PAGE
Section 1 -- Specifications 1
Section 2 -- Definitions 3
Section 3 -- Purchase Payments 3
Section 4 -- Variable Account Provisions 4
Section 5 -- Fixed Account Provisions 13
Section 6 -- Payment on Death 19
Section 7 -- Transfer From Variable To Fixed Account 19
Section 8 -- Transfer From Fixed To Variable Account 19
Section 9 -- Transfer From Another Annuity Contract 20
Section 10 -- Withdrawal 20
Section 11 -- Miscellaneous 22
Table of Guaranteed Benefits 26
<PAGE>
SECTION 1 -- CONTRACT SPECIFICATIONS
ANNUITANT AUGUST 01, 2020 ANNUITY DATE
CONTRACT NUMBER 411022914 FEBRUARY 28, 1985 CONTRACT DATE
FIRST PURCHASE PAYMENT AGE OF ANNUITANT
---------------------- ------------------
$50.00 30
GUARANTEED MONTHLY
PAID-UP ANNUITY BENEFIT
-----------------------
$248.29
BEGINNING ON ANNUITY DATE*
* LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10 YEARS (OPTION 3) THE AMOUNT OF
MONTHLY ANNUITY BENEFIT ON THE ANNUITY DATE DEPENDS ON THE AMOUNT AND
FREQUENCY OF PURCHASE PAYMENTS MADE. PURCHASE PAYMENTS OF $50.00 EACH MONTH
UNTIL THE ANNUITY DATE WILL PROVIDE THE AMOUNT SHOWN IF YOU MAKE NO
WITHDRAWALS OR TRANSFERS FROM THIS CONTRACT. INTEREST CREDITED IN EXCESS OF
THE GUARANTEED RATE WILL INCREASE THE AMOUNT OF THE MONTHLY ANNUITY BENEFIT.
DIVISIBLE SURPLUS APPORTIONED TO THIS CONTRACT, IF ANY, WILL BE CREDITED TO THE
CONTRACT VALUE UNLESS YOU ELECT TO HAVE IT PAID IN CASH.
1
<PAGE>
PARTICIPANT AUGUST 1, 2020 ANNUITY DATE
PARTICIPANT
CERTIFICATE NUMBER 411022914 FEBRUARY 28, 1985 ENROLLMENT DATE
FIRST PURCHASE PAYMENT AGE OF ANNUITANT
---------------------- ----------------
$50.00 30
THE SEPARATE ACCOUNT
--------------------
PENN MUTUAL VARIABLE ANNUITY ACCOUNT III
DATE VARIABLE ACCOUNT
ELIGIBLE MUTUAL FUNDS ADMINISTRATION CHARGES DEDUCTED
--------------------- -------------------------------
PENN SERIES EQUITY FUND FEBRUARY 28
PENN SERIES AGGRESSIVE CAPITAL APPRECIATION FUND EACH YEAR
PENN SERIES AGGRESSIVE HIGH YIELD FUND
2
<PAGE>
SECTION 2 - DEFINITIONS
PARTICIPANT: An employee who has made application through
Contractholder to make Purchase Payments on behalf of the Participant
under the Group Annuity Contract. In this certificate you are the
Participant.
PARTICIPANT'S ENROLLMENT YEAR: The twelve month period commencing on
the Participant's Enrollment Date, or any anniversary of the
Participant's Enrollment Date.
ACCUMULATION UNIT: An index used to compute a Participant's Variable
Account Value prior to the Variable Annuity Date.
ANNUITY UNIT: An index used to compute a Participant's Variable Annuity
Payment.
PARTICIPANT'S VARIABLE ACCOUNT: An account established and maintained
by Penn Mutual for each Participant and to which Purchase Payments are
allocated under section 4.
PARTICIPANT'S VARIABLE ACCOUNT VALUE: The value of all Accumulation
Units credited to a Participant's Variable Account.
PARTICIPANT'S FIXED ACCOUNT: An account established and maintained by
Penn Mutual for each Participant and to which Purchase Payments are
allocated under Section 5.
PARTICIPANT'S FIXED ACCOUNT VALUE: The sum of all amounts credited to a
Participant's Fixed Account, increased by interest credited and reduced
by amounts withdrawn or transferred from a Participant's Fixed Account.
ANNUITY DATE: The date on which annuity payments to a Participant are
to start.
PURCHASE PAYMENTS: Amounts paid to Penn Mutual on behalf of
Participants under the Group Annuity Contract.
SECTION 3 - PURCHASE PAYMENTS
Purchase Payments may be made on behalf of each Participant subject to
the following provisions:
(a) The minimum Purchase Payment for any one Participant
is $25.00 or such lower minimum as we may establish.
3
<PAGE>
(b) The Participant will direct the allocation of
Purchase Payments to the Participant's Variable
Account or the Participant's Fixed Account, subject
to the provisions of Sections 4 and 5.
(c) Total Purchase Payments in a calendar year for a
Participant are limited as provided by Section 403(b)
of the Internal Revenue Code.
(d) Total Purchase Payment in a calendar year for a
Participant may not exceed $1,000,000 without Penn
Mutual's consent.
(e) Purchase Payments for a Participant may be made only
through the Contractholder.
(f) Purchase Payments will be credited to Participant's
Variable Accounts and Participant's Fixed Accounts in
accordance with information provided by Participant.
SECTION 4 - VARIABLE ACCOUNT PROVISIONS
A. THE SEPARATE ACCOUNT
THE SEPARATE ACCOUNT. The name of the Separate Account is
specified in Section 1. We established the Separate Account
for the Group Annuity Contract and other contracts we may
issue. Amounts credited to the Participant's Variable Account
will be allocated to the Separate Account.
INVESTMENT OF SEPARATE ACCOUNT ASSETS. Assets held in the
Separate Account will be invested in one or more eligible
mutual funds. Current eligible mutual funds are specified in
Section 1.
For the Group Annuity Contract and other contracts the
Separate Account is divided into investment accounts. There is
an investment account for each eligible mutual fund. For each
investment account, there is a subaccount for Qualified Plans
and a subaccount for Nonqualified Plans.
Each Participant may choose the investment account to which
amounts credited to the Participant's Variable Account are to
be allocated.
We own the assets held in the Separate Account. However, the
portion of such assets equal to the reserves and other
contract liabilities with respect to each
4
<PAGE>
subaccount of each investment account of the Separate Account
are not chargeable with liabilities arising out of any other
business we may conduct.
Upon notice to us, a Participant may transfer part or all the
value of the Accumulation Units or Annuity Units credited to
the Participant's Variable Account from one investment account
to another. No more than four such transfers may be made in a
calendar year. Such investment account transfers, as well as
all other investments, are subject to the limits and rules
applicable to each mutual fund.
SUBSTITUTION OF INVESTMENT. If investment in a mutual fund
should no longer be possible or in our judgment becomes
inappropriate to the purposes of the contract, we may
substitute another mutual fund. Substitutions may be made with
respect to existing investments and the investment of future
Purchase Payments. Substitution will be subject to the
approval of the Insurance Department of the jurisdiction in
which this contract is delivered.
B. CHARGES AND DEDUCTIONS
VARIABLE ACCOUNT ADMINISTRATION CHARGE. With respect to each
Participant's Variable Account, a charge of $30 will be
deducted each year on the date specified in Section 1. It will
also be deducted when the Participant's Variable Account Value
is withdrawn in full if withdrawal is not on the date
specified in Section 1. The charge will never increase. The
charge will not be deducted on or after the Annuity Date.
EXPENSE RISK CHARGE. This charge is made to compensate us for
guaranteeing that the Variable account administration charge
will never increase. On an annual basis it equals 0.5% of the
daily net asset value of the Separate Account. This charge is
reflected in the Net Investment Factor set forth in Subsection
C of this Section 4.
MORTALITY RISK CHARGE. This charge is made to compensate us
for the mortality guarantees we make under this contract. On
an annual basis it equals 0.8% of the daily net asset value of
the Separate Account. This charge is reflected in the Net
Investment Factor set forth in Subsection C of this Section 4.
CONTINGENT DEFERRED SALES CHARGE. This charge may be deducted
upon withdrawal, in whole or in part, of the Participant's
Variable Account Value or the present value of remaining
annuity payments (if applicable). The Contingent Deferred
Sales Charge is set forth in Section 10.
DEDUCTIONS. The expense risk and mortality risk charge will be
computed and deducted from each subaccount of each investment
account of the Separate Account
5
<PAGE>
for each day the Group Annuity Contract is in force. Other
charges will be deducted by cancelling Accumulation Units or
Annuity Units (if applicable) of a value equal to the
deduction. Cancellation of Accumulation Units will be in the
ratio of the Participant's interest in each subaccount to the
Participant's Variable Account Value.
C. VARIABLE ACCUMULATION VALUES
NUMBER OF PARTICIPANT'S ACCUMULATION UNITS. For each
subaccount of each investment account of the Separate Account,
the number of a Participant's Accumulation Units is the sum of
Amounts allocated to the subaccount for the Participant
divided by
The value of an Accumulation Unit for that subaccount
for the valuation period in which we received the
amount allocated.
The number will be adjusted for transfers, withdrawals and
charges. Adjustments will be made as of the valuation period
in which we receive all requirements for the transactions, as
appropriate.
VALUE OF EACH ACCUMULATION UNIT. For each subaccount of each
investment account on the Separate Account, the value was
arbitrarily set at $10 when the subaccount was established.
The value may increase or decrease from one valuation period
to the next. For any valuation period the value is
The value of an Accumulation Unit for the prior
valuation period
multiplied by
The net investment factor for that subaccount for the
valuation period.
Net Investment Factor. Net Investment Factor is an index used
to measure the investment performance of a subaccount from one
valuation period to the next. For any subaccount, the net
investment factor for a valuation period is found by dividing
(a) by (b) and subtracting (c):
6
<PAGE>
Where (a) is
The net asset value per share of the mutual
fund held in the subaccount, as of the end
of the valuation period
plus
The per-share amount of any dividend or
capital gain distributions by the mutual
fund if the "exdividend" date occurs in the
valuation period
plus or minus
A per-share charge or credit as we may determine, as
of the end of the valuation period, for tax reserves;
Where (b) is
The net asset value per share of the mutual
fund held in the subaccount as of the end of
the last prior valuation period
plus or minus
The per-share charge or credit for tax
reserves as of the end of the last prior
valuation period;
Where (c) is
The sum of the daily expense risk charge and
the daily mortality risk charge. On an
annual basis, the sum of such charges equals
1.30% of the daily net asset value of the
Separate Account.
VALUATION PERIOD. Valuation period is the interval from one
valuation time to the next valuation time. Valuation time is
the time as of which the mutual fund determines the net asset
value of its shares.
D. VARIABLE ANNUITY PAYMENTS
ANNUITY DATE. The Annuity Date must be on the first day of a
month. It may not be later than the first day of the next
month after the Annuitant's 85th birthday. You chose the
Annuity Date in the application. You may change the Annuity
Date up to 30 days prior to the current Annuity Date.
7
<PAGE>
VARIABLE ANNUITY OPTIONS. You or your surviving beneficiary
may choose a variable annuity option up to 30 days prior to
the Annuity Date. An option not set forth in the contract may
be chosen if acceptable to us.
FIRST VARIABLE ANNUITY PAYMENT. Any premium taxes will be
deducted from the Participant's Variable Account Value. The
net Participant's Variable Account Value as of the Annuity
Date will be applied to the annuity table for the option
chosen. The variable annuity tables show the amount of the
first payment for each $1,000 so applied, according to the age
at the Annuity Date. The tables are based on the 1971
Individual Annuity Mortality Table with interest at 4%.
Adjusted ages are used in entering those tables.
SUBSEQUENT VARIABLE ANNUITY PAYMENTS. Payments after the first
will vary in amount according to the investment performance of
the subaccount or subaccounts chosen. The amount may change
from month to month. The amount of each subsequent payment is
the sum of the following amounts attributable to each
applicable subaccount
The number of Annuity Units for the subaccount
multiplied by
The value of an Annuity Unit for that subaccount for
the valuation period in which payment is due.
We guarantee that the amount of each annuity payment after the
first will not be affected by variations in expense or
mortality experience.
MINIMUM ANNUITY PAYMENTS. If the net Participant's Variable
Account Value to be applied at the Annuity Date is less than
$2,000, we may pay such amount in a lump sum. Annuity payments
will be made monthly; but if any payment would be less than
$50, we may change the frequency so payments are at least $50
each.
NUMBER OF PARTICIPANT'S ANNUITY UNITS. The number of units for
the subaccount of each investment account chosen by the
Participant is
The amount of the first variable annuity payment
attributable to that subaccount
divided by
The value of Annuity Unit for the subaccount as of
the Annuity Date.
8
<PAGE>
The number is fixed except for adjustments for subaccount
transfers. Adjustments will be made as of the valuation period
in which we receive all requirements for the transfer, as
appropriate.
VALUE OF EACH ANNUITY UNIT. For each subaccount of each
investment account of the Separate Account the value was
arbitrarily set at $10 when the subaccount was established.
The value may increase or decrease from one valuation period
to the next. For any valuation period the value is
The value of an Annuity Unit for the last prior
valuation period
multiplied by
The net investment factor for that subaccount for the
valuation period
multiplied by
An interest factor to neutralize the assumed
investment rate of 4% built into the annuity tables.
E. VARIABLE ANNUITY OPTIONS
OPTION 1 - VARIABLE ANNUITY FOR SPECIFIED NUMBER OF YEARS.
Payments will be made for a specified number of years, which
may not be less than 5 years nor more than 30 years.
OPTION 2 - VARIABLE LIFE ANNUITY. Payments will be made for
the life of the Annuitant. Payments will cease with the last
payment due prior to the Annuitant's death.
OPTION 3 - VARIABLE LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR
10 OR 20 YEARS. Payments will be made for the life of the
Annuitant. A guaranteed payment period of either 10 or 20
years may be chosen.
OPTION 4 - VARIABLE JOINT AND SURVIVOR LIFE ANNUITY. Payments
will be made during the lifetimes of the Annuitant and a
designated second Annuitant. Payments will continue as long as
either is living. The amount of such payment will not change
by reason of the death of the first Annuitant to die.
If the Annuitant dies prior to the end of the specified period
under Option 1 or the guaranteed period under Option 3, the
beneficiary may choose either
9
<PAGE>
(1) To have the payments continue for the specified or
guaranteed period, or
(2) To receive at any time in lump sum the present value of
the remaining payments to be made over the specified or
guaranteed period.
If a beneficiary dies while receiving annuity payments under
this Option 4, the present value will be paid in a lump sum to
the beneficiary's estate. The present value will be (a)
computed as of the valuation period in which due proof of
death is received at our designated service office, and (b)
commuted at the assumed investment rate of the annuity tables.
PAYMENTS. Payments will be made on the first day of each month
starting with the Annuity Date. Except under Option 4,
payments will be made to the Participant. Under Option 4,
payments will be jointly payable while both Annuitants are
alive.
F. VARIABLE ANNUITY OPTION TABLE
The following tables show the amount of the first monthly
income payment for each $1,000 of value applied under a
variable settlement option. "Age" as used in the tables means
an adjusted age determined in the following manner from the
actual age of the Annuitant on the birthday nearest the date
of the first payment.
CALENDAR YEAR OF BIRTH ADJUSTED AGE
---------------------- ------------
Before 1900 Actual Age increased by 1
1900-1919 Actual Age
1920-1939 Actual Age decreased by 1
1940-1959 Actual Age decreased by 2
1960 and later Actual Age decreased by 3
________________________________________________________________________________
10
<PAGE>
Option 1 - Variable Annuity for Specified Number of Years
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
NUMBER OF MONTHLY NUMBER OF MONTHLY NUMBER OF MONTHLY
YEARS INCOME YEARS INCOME YEARS INCOME-
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
11 $9.31 21 $5.81
12 8.69 22 5.64
13 8.17 23 5.49
14 7.72 24 5.35
5 $18.32 15 7.34 25 5.22
6 15.56 16 7.00 26 5.10
7 13.59 17 6.71 27 5.00
8 12.12 18 6.44 28 4.90
9 10.97 19 6.21 29 4.80
10 10.06 20 6.00 30 4.72
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
Option 2 - Variable Life Annuity and
Option 3 - Variable Life Annuity with
Payments Guaranteed for 10 or 20 Years
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
LIFE 10 YEARS 20 YEARS LIFE 10 YEARS 20 YEARS
AGE ANNUITY GUARANTEED GUARANTEED AGE ANNUITY GUARANTEED GUARANTEED
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
50 $4.59 $4.56 $4.47 70 $7.08 $6.71 $5.71
51 4.65 4.62 4.52 71 7.33 6.89 5.76
52 4.72 4.69 4.57 72 7.60 7.08 5.81
53 4.80 4.76 4.63 73 7.90 7.28 5.84
54 4.87 4.83 4.69 74 8.22 7.48 5.88
55 4.96 4.91 4.75 75 8.57 7.68 5.90
56 5.05 4.99 4.81 76 8.95 7.89 5.92
57 5.14 5.07 4.87 77 9.37 8.10 5.94
58 5.24 5.16 4.93 78 9.82 8.30 5.96
59 5.34 5.25 5.99 79 10.32 8.50 5.97
60 5.45 5.35 5.07 80 10.86 8.69 5.98
61 5.56 5.45 5.14 81 11.46 8.88 5.98
62 5.69 5.56 5.20 82 12.11 9.04 5.99
63 5.82 5.68 5.27 83 12.82 9.20 5.99
64 5.96 5.80 5.34 84 13.59 9.33 6.00
65 6.11 5.93 5.41 85 14.43 9.45 6.00
66 6.27 6.07 5.48
67 6.45 6.22 5.54
68 6.64 6.37 5.60
69 6.85 6.54 5.66
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
Option 4 - Variable Joint and Survivor Life Annuity
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
AGE 55 60 65 70 75 80 85 AGE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 $4.25 $4.34 $4.41 $4.46 $4.51 $4.54 $4.56 50
55 4.40 4.53 4.64 4.74 4.81 4.87 4.90 55
60 4.53 4.72 4.90 5.05 5.18 5.28 5.35 60
65 4.64 4.90 5.16 5.40 5.62 5.79 5.91 65
70 4.74 5.05 5.40 5.77 6.11 6.39 6.59 70
75 4.81 5.18 5.62 6.11 6.65 7.12 7.48 75
80 4.87 5.28 5.79 6.39 7.12 7.94 8.59 80
85 4.90 5.35 5.91 6.59 7.48 8.59 9.88 85
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
SECTION 5 - FIXED ACCOUNT PROVISIONS
A. INTEREST OPTIONS
Interest will be earned on each Participant's Fixed Account
Value from the date amounts are credited to the Participant's
Fixed Account to the date amounts are applied to an annuity
option, paid upon the death of the annuitant, transferred or
withdrawn.
Each amount credited to a Participant's Fixed Account will be
credited with interest under Interest Option A, Interest
Option B, or Interest Option C. You choose the interest
options. The minimum initial amount for which an Interest
Option may be elected is $25.00 or such lower minimum as we
may establish.
INTEREST OPTION A
With respect to each amount for which Interest Option A is
elected, interest will be credited at an effective annual rate
declared by us. The effective annual rate will be declared as
of the first day of each calendar quarter. The declared rate
will apply, for Interest Option A elections made in that
calendar quarter, through the end of the same calendar quarter
in the next calendar year. Thereafter, interest will be
credited at the declared effective annual rate then applicable
to new Interest Option A elections, for successive twelve
month periods.
We will declare an effective annual interest rate under
Interest Option A which is not less than the published 52 week
United States Treasury Bill discount rate from the most recent
regularly scheduled auction held before the beginning of the
calendar quarter. It the auction program is discontinued, we
will substitute an index which in our opinion is comparable
and which is approved by the Insurance Department of the
jurisdiction in which this contract is delivered.
The declared effective annual interest rate under Interest
Option A will never be less than 4%.
INTEREST OPTION B
With respect to each amount for which Interest Option B is
elected, interest will be credited at an effective annual rate
declared by us. The declared rate will apply through the end
of the calendar month in which the election is made.
Thereafter, interest will be credited on such amount for
successive calendar month periods at the declared effective
annual rate then applicable to new Interest Option B elections
made as of the beginning of each such calendar month.
13
<PAGE>
The declared effective annual interest rate under Interest
Option B will never be less than 4%.
INTEREST OPTION C
With respect to each amount for which interest Option C is
elected, interest will be credited at an effective annual rate
declared by us. The effective annual rate will be declared as
of the first day of each calendar quarter. The declared rate
will apply, for Interest Option C elections made in that
calendar quarter, through the end of the same calendar quarter
in the third following calendar year. Thereafter, interest
will be credited at the declared effective annual rate then
applicable to new Interest Option C elections, for successive
thirty-six month periods.
You may change the interest option election or withdraw or
transfer any portion of an amount for which Interest Option C
is elected before the end of a period for which a declared
effective annual rate of interest is guaranteed for such
amount. However, in such event, the amount withdrawn or
transferred or the amount for which the interest option
election is changed will be reduced by a premature transaction
charge equal to 2 1/2% of such amount.
The declared effective annual interest rate under Interest
Option C will never be less than 4%.
CHANGE OF INTEREST OPTION
You may change the interest option election applicable to all
or part of your Participant's Fixed Account Value, subject to
the provisions set forth below.
You may change the election for an amount held under Interest
Option A only at the end of the period for which a declared
effective annual interest rate is guaranteed for such amount.
You may change the election for an amount held under Interest
Option B only at the end of a calendar month.
You may change the election for all or any part of an amount
held under Interest Option C before the end of the period for
which a declared effective annual interest rate is guaranteed
for such amount, subject to the premature transaction charge
set forth in Interest Option C.
The minimum amount for which an interest option may be changed
is $250.
14
<PAGE>
B. FIXED ANNUITY PAYMENTS
ANNUITY DATE. The Annuity Date must be on the first day of a
month. It may not be later than the first day of the next
month after the Annuitant's 85th birthday. You chose the
Annuity Date in the application. You may change the Annuity
Date up to 30 days prior to the current Annuity Date.
FIXED ANNUITY OPTION. You or your surviving beneficiary may
choose a fixed annuity option up to 30 days prior to the
Annuity Date. An option not set forth in the contract may be
chosen if acceptable to us.
AMOUNT OF FIXED ANNUITY PAYMENTS. Any premium taxes will be
deducted from the Participant's Fixed Account Value. The net
Participant's Fixed Account Value as of the Annuity Date will
be applied to the fixed annuity option chosen. If fixed
annuity payments begin within 5 years after the Participant's
Enrollment Date, the monthly income under Options 1, 2, 3 and
4 will equal the monthly income under a comparable single
premium nonparticipating annuity available from us at the time
fixed annuity payments are to begin.
If fixed annuity payments begin more than 5 years after the
Participant's Enrollment Date, the monthly income under
Options 1, 2, 3 and 4 will equal 104% of the monthly income
under a comparable single premium nonparticipating annuity
available from us at the time fixed annuity payments are to
begin. In no event will the monthly income be less than shown
in the Fixed Annuity Option Tables.
The guaranteed monthly income under Option 1 and 3 will be
based on interest at a rate of 3% per year compounded
annually. The guaranteed monthly income under Option 2 and 4
will be based on interest at a rate of 2 3/4% per year
compounded annually. Fixed Annuity Options 1, 2, 3 and 4 will
not participate in divisible surplus.
MINIMUM ANNUITY PAYMENTS. If the net Participant's Fixed
Account Value to be applied at the Annuity Date is less than
$2,000, we may pay such amount in a lump sum. Fixed Annuity
payments will be made monthly. But if any payment would be
less than $50, we may change the frequency so payments are at
least $50 each.
C. FIXED ANNUITY OPTIONS
OPTION 1 - FIXED ANNUITY FOR SPECIFIED NUMBER OF YEARS.
Payments will be made for a specified number of years, which
may not be less than 5 years nor more than 30 years.
15
<PAGE>
OPTION 2 - FIXED LIFE ANNUITY. Payments will be made for the
life of the Annuitant. Payments will cease with the last
payment due prior to the Annuitant's death.
OPTION 3 - FIXED LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10
OR 20 YEARS. Payments will be made for the life of the
Annuitant. A guaranteed payment period of either 10 or 20
years may be chosen.
OPTION 4 - FIXED JOINT AND SURVIVOR LIFE ANNUITY. Payments
will be made during the lifetimes of the Annuitant and a
designated second Annuitant. Payments will continue as long as
either is living. The amount of such payments will not change
by reason of the death of the first Annuitant to die.
If the Annuitant dies prior to the end of the specified period
under Option 1 or the guaranteed period under Option 3, the
beneficiary may choose either:
(1) to have the payments continue for the specified
or guaranteed period, or
(2) to receive at any time in lump sum the present
value of the remaining payments to be made over
the specified or guaranteed period.
If a beneficiary dies while receiving annuity payments under
this option; the present value will be paid in a lump sum to
the beneficiary's estate.
The present value of payments under Option 1 will be based on
interest at a rate of 3% per year compounded annually. The
present value of the remaining payments during the guaranteed
period under Option 3 will be based on interest at a rate set
by us at the time payments are to begin.
PAYMENT. Payments will be made on the first day of each month
starting with the Annuity Date. Payments under all options
will be made to the Participant, except under Option 4. Under
Option 4, payments will be jointly payable while both
Annuitants are alive.
D. FIXED ANNUITY OPTION TABLES
Amount of monthly income provided by each $1,000 applied under an
income option.
16
<PAGE>
Option 1 - Fixed Income for Specified Number of Years
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
MONTHLY MONTHLY MONTHLY
YEARS INCOME YEARS INCOME YEARS INCOME
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
11 $8.86 21 $5.32
12 8.24 22 5.15
13 7.71 23 4.99
14 7.26 24 4.84
5 $17.91 15 6.87 25 4.71
6 15.14 16 6.53 26 4.59
7 13.16 17 6.23 27 4.47
8 11.68 18 5.96 28 4.37
9 10.53 19 5.73 29 4.27
10 9.61 20 5.51 30 4.18
- ---------------------------------------------------------------------------------------
</TABLE>
Option 2 - Fixed Life Annuity and
Option 3 - Fixed Life Annuity with
Payments Guaranteed for 10 or 20 Years
The amount of monthly income will be based on the age of the option annuitant on
the birthday nearest the date of the first payment.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
2 3 2 3
----- -------------------------- ----- ----------------------------
AGE OF 20 YEAR 10 YEAR AGE OF 20 YEAR 10 YEAR
OPTION LIFE GUARANTEED GUARANTEED OPTION LIFE GUARANTEED GUARANTEED
ANNUITANT INCOME PERIOD PERIOD ANNUITANT INCOME PERIOD PERIOD
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
15 and
under $2.90 $2.87 $2.88 50 $4.03 $3.93 $4.01
16 2.91 2.88 2.89 51 4.11 3.99 4.08
17 2.92 2.89 2.90 52 4.19 4.05 4.15
18 2.94 2.91 2.92 53 4.27 4.11 4.22
19 2.96 2.93 2.94 54 4.35 4.17 4.30
20 2.97 2.94 2.95 55 4.44 4.23 4.38
21 2.99 2.96 2.97 56 4.53 4.30 4.47
22 3.01 2.98 2.99 57 4.63 4.36 4.56
23 3.03 3.00 3.01 58 4.74 4.43 4.66
24 3.05 3.02 3.03 59 4.86 4.50 4.76
25 3.07 3.04 3.05 60 4.98 4.57 4.87
26 3.09 3.06 3.07 61 5.11 4.64 4.98
27 3.11 3.08 3.09 62 5.25 4.72 5.10
28 3.14 3.11 3.12 63 5.39 4.79 5.23
29 3.16 3.13 3.14 64 5.55 4.86 5.36
30 3.18 3.15 3.16 65 5.71 4.92 5.50
31 3.21 3.18 3.19 66 5.89 4.99 5.65
32 3.24 3.21 3.22 67 6.08 5.05 5.80
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
2 3 2 3
----- -------------------------- ----- ----------------------------
AGE OF 20 YEAR 10 YEAR AGE OF 20 YEAR 10 YEAR
OPTION LIFE GUARANTEED GUARANTEED OPTION LIFE GUARANTEED GUARANTEED
ANNUITANT INCOME PERIOD PERIOD ANNUITANT INCOME PERIOD PERIOD
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
33 3.27 3.24 3.25 68 6.27 5.11 5.96
34 3.30 3.27 3.28 69 6.49 5.17 6.13
35 3.33 3.30 3.31 70 6.71 5.22 6.30
36 3.36 3.33 3.34 71 6.95 5.25 6.48
37 3.40 3.36 3.38 72 7.20 5.25 6.48
38 3.43 3.40 3.41 73 7.47 5.25 6.85
39 3.47 3.43 3.45 74 7.76 5.25 7.05
40 3.51 3.47 3.49 75 8.06 5.25 7.25
41 3.55 3.51 3.53 76 8.43 5.25 7.44
42 3.59 3.55 3.57 77 8.84 5.25 7.64
43 3.64 3.59 3.62 78 9.28 5.25 7.84
44 3.69 3.63 3.67 79 9.75 5.25 8.04
45 3.74 3.68 3.72 80 and 10.27 5.25 8.23
over
46 3.79 3.72 3.77
47 3.85 3.77 3.83
48 3.91 3.82 3.88
49 3.97 3.88 3.94
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Option 4 - Fixed Joint and Survivor Life Annuity
The amount of monthly income will be based on the ages of the option annuitants
on their respective birthdays nearest the date of the first payment. The table
shows income for certain ages for two option annuitants. The amount is shown
under the age of the first annuitant and opposite the age of the second
annuitant. Amounts of income for other combinations of ages will be furnished
upon request.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
AGE OF SECOND
OPTION ANNUITANT AGE OF FIRST OPTION ANNUITANT
ANNUITANT 50 55 60 65 70 75 80 85
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
45 $3.40 $3.48 $3.54 $3.60 $3.64 $3.67 $3.70 $3.71
50 3.52 3.64 3.74 3.82 3.89 3.94 3.97 3.99
55 3.65 3.80 3.95 4.08 4.19 4.27 4.33 4.38
60 3.76 3.96 4.17 4.37 4.54 4.68 4.79 4.86
62 3.80 4.02 4.26 4.49 4.69 4.86 5.00 5.09
65 3.85 4.11 4.38 4.67 4.93 5.15 5.34 5.48
70 3.93 4.22 4.57 4.95 5.32 5.68 6.00 6.25
75 3.99 4.31 4.72 5.19 5.70 6.21 6.74 7.18
80 4.03 4.38 4.84 5.39 6.03 6.75 7.55 8.32
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
SECTION 6 -- PAYMENT ON DEATH
DEATH BEFORE THE ANNUITY DATE. Upon receipt of due proof of the death
of the Participant prior to the Annuity Date, we will pay to the
beneficiary the greater of:
(1) The sum of all Purchase Payments, adjusted for withdrawals and
transfers, or
(2) The sum of the Participant's Variable Account Value and the
Participant's Fixed Account Value for the valuation period in which
we receive such proof at our designated service office.
If the beneficiary is not the decedent's spouse, the beneficiary can
choose an Annuity Option for death payments. The Option must provide
for payments over the beneficiary's life or over a period not longer
than the beneficiary's life expectancy. Payments shall begin within one
year after the date of death. If payment is made in a lump sum, such
payment shall be made within five years after the death.
If the beneficiary is the decedent's surviving spouse, the spouse shall
be treated as the decedent for purposes of contract death benefits.
DEATH AFTER THE ANNUITY DATE. If the Participant dies after the Annuity
Date, the amount payable, if any, will be according to the Annuity
Option or Annuity Options in force.
Section 7 -- TRANSFER FROM VARIABLE TO FIXED ACCOUNT
You may transfer all or part of your Participant's Variable Account
Value to your Participant's Fixed Account, subject to the following
provisions:
The minimum transfer amount is $250.
No more than four such transfers may be made by a Participant in a
calendar year.
No transfer may be made after the thirtieth day before the Annuity
Date.
Request for transfer must be received by us and any other applicable
requirements must be met before the death of the Participant.
SECTION 8 -- TRANSFER FROM FIXED TO VARIABLE ACCOUNT
You may transfer all or part of your Participant's Fixed Account Value
to your Participant's Variable Account, subject to the following
provisions:
19
<PAGE>
The minimum transfer amount is $250.
An amount held under Interest Option A may be transferred only at the
end of the period for which a declared effective annual interest rate
is guaranteed for such amount.
An amount held under Interest Option B may be transferred only at the
end of a calendar month.
All or any part of an amount held under Interest Option C may be
transferred before the end of the period for which a declared effective
annual interest rate is guaranteed for such amount, subject to the
premature transaction charge set forth in Interest Option C.
No transfer may be made after the thirtieth day before the Annuity
Date.
Request for transfer must be received by us and any other applicable
requirements must be met before the death of the Participant.
SECTION 9 -- TRANSFER FROM ANOTHER ANNUITY CONTRACT
A Participant may, through the Contractholder, transfer to your
Participant's Variable or Fixed Accounts under this contract, amounts
held under another annuity contract purchased for the Participant under
the provisions of Section 403(b) of the Internal Revenue Code.
SECTION 10 -- WITHDRAWAL
A. WITHDRAWAL. Prior to the earlier of the Annuity Date or the
death of the Participant, the Participant may withdraw all or
part of the Participant's Variable Account Value and the
Participant's Fixed Account Value.
After the Annuity Date and the election of Variable Annuity
Option 1, the payee may withdraw the present value of the
variable annuity payments remaining to be made. The present
value will be (a) computed as of valuation period in which
notice of the withdrawal is received at our designated service
office and (b) commuted at the assumed investment rate of the
Variable Annuity tables.
After the Annuity Date and the election of Fixed Annuity
Option 1, the payee may withdraw the present value of the
fixed annuity payments remaining to be made.
For full withdrawal of all the Participant's Variable and
Fixed Account Values, the Participant's Certificate must be
surrendered to our designated service office.
20
<PAGE>
For partial withdrawals, the withdrawal must be at least $250.
Withdrawal of all or any part of the Participant's Fixed
Account Value held under Interest Option C before the end of
the period for which a declared effective annual interest rate
is guaranteed for such amount will be subject to the premature
transaction charge set forth in Interest Option C. The total
of the premature transaction charge and the Contingent
Deferred Sales Charge set forth below will never be more than
7% of the amount withdrawn.
B. CONTINGENT DEFERRED SALES CHARGES. A charge equal to 5% of the
amount withdrawn will be made at the time of withdrawal,
subject to the following provisions:
(1) If the Participant makes a total withdrawal of the
Participant's Fixed Account Value as a result of
termination of participation in the Group Annuity
contract, the amount received will never be less than
the total of all amounts allocated to the
Participant's Fixed Account, less prior transfers and
withdrawals from the Participant's Fixed Account.
(2) No charge will be made for withdrawal if the
Participant has provided due proof of disability.
Disability shall mean the inability, by reason of
medically determinable physical or mental impairment
which can be expected to result in death or be of
long-continued and indefinite duration, to engage in
the Participant's usual and customary occupation or
in any other substantial gainful activity for which
the Participant is reasonably suited by education,
training or experience.
(3) No charge will be made for a withdrawal after the
death of the Participant.
(4) No charge will be made for that portion of the first
withdrawal made in a Participant's Enrollment Year
after the first Participant's Enrollment Year which
does not exceed 10% of the sum of the Participant's
Variable Account and Fixed Account Values.
(5) No charge will be made for that portion of the first
withdrawal, made in the Participant's Eighth
Enrollment Year, which does not exceed 25% of the sum
of the Participant's Variable Account and Fixed
Account Value(s).
(6) No charge will be made for that portion of the first
withdrawal, made in the Participant's Ninth
Enrollment Year, which does not exceed 50% of the sum
of the Participant's Variable Account and Fixed
Account Values.
21
<PAGE>
(7) No charge will be made for that portion of the first
withdrawal, made in the Participant's Tenth
Enrollment Year, which does not exceed 75% of the
Participant's Variable Account and Fixed Account
Values.
(8) No charge will be made for any withdrawal made after
the Participant has been enrolled for ten years.
C. PAYMENT OF WITHDRAWALS. Unless you direct otherwise, partial
withdrawals prior to the Annuity date, and related charges,
will be deducted from your Participant's Fixed and Variable
Accounts in the following order
first from Interest Option B;
next from Interest Option A;
then from each subaccount of each investment account
of the Separate Account in the ratio of your interest
in each subaccount to your Participant's Variable
Account Value; and
finally from Interest Option C.
Partial withdrawal of amounts held under Interest Option A or
Interest Option C will be made from amounts most recently
placed under that option.
SECTION 11 -- MISCELLANEOUS
BENEFICIARY. The Beneficiary is the person chosen by the Participant in
the application, who is to receive:
(1) Payment on death of the Participant prior to the Annuity
Date or
(2) Guaranteed annuity payments, if any, on death of the
Annuitant on or after the Annuity Date.
The Participant may change the beneficiary while the Participant is
alive.
The estate or heirs of a beneficiary who dies before the Participant
have no rights under this contract. If no beneficiary survives the
Participant, payment will be made to the Participant's estate.
22
<PAGE>
MISSTATEMENT OF AGE. If the age of the Annuitant or a joint payee is
misstated, any amount payable under the Group Annuity Contract will be
that amount which the Purchase Payments paid would have purchased on
the basis of the correct age.
If the annuity payments have been overpaid because the age of the
Annuitant or joint payee has been misstated, the amount overpaid, with
interest at the rate of 6% per year compounded annually, will be
charged against the payments still to be made under this contract.
If the annuity payments have been underpaid because the age of the
Annuitant or joint payee has been misstated, the amount underpaid, with
interest at the rate of 6% per year compounded annually, will be paid
in full with the next payment due under this contract.
PROOF OF AGE AND SURVIVAL. We may require satisfactory proof of correct
age at any time. If any payment under the Group Annuity Contract
depends on the payee being alive, we may require satisfactory proof of
survival.
DEFERMENT OF TRANSFERS AND PAYMENTS. Transfers and payments of
withdrawals from the Participant's Variable Account will be made within
seven days. However, we may defer a transfer, a withdrawal, the Annuity
Date or annuity payments, under the Variable Account Provisions of
Section 4 if:
(1) The New York Stock Exchange is closed (other than
customary weekend and holiday closings);
(2) Trading on the New York Stock Exchange is restricted;
(3) An emergency exists such that it is not reasonably
practical to dispose of securities held in the
Separate Account or to determine the value of its
assets; or
(4) The Securities and Exchange Commission by order so
permits for the protection of security holders.
Conditions in (2) and (3) will be decided by, or in accordance with
rules of, the Securities and Exchange Commission.
We may defer a transfer or withdrawal from the Participant's Fixed
Account for such period not exceeding six months, as we reasonably
determine that investment conditions are such that an orderly sale of
assets held as part of our general assets is not possible.
PARTICIPATING CONTRACT. The Group Annuity Contract may participate in
our divisible surplus. Divisible surplus, if any, to be apportioned to
the contract shall be apportioned
23
<PAGE>
annually and will be allocated by us equitably among all Participants.
Divisible surplus so allocated will be credited as Purchase Payments to
the Participants' Variable and Fixed Accounts, unless the Participant
elects to have it paid in cash. No divisible surplus is expected to be
apportioned to the contract in the foreseeable future.
ASSIGNMENT AND OWNERSHIP. Accounts established and maintained for a
Participant are owned by the Participant for his or her lifetime. The
entire interest in a Participant's Variable or Fixed Account is for the
exclusive benefit of the Participant. A Participant's Variable or Fixed
Account is nontransferable and the entire interest of the Participant
is nonforfeitable in accordance with applicable provisions of the
Internal Revenue Code.
FAILURE TO ENFORCE NOT WAIVER. A waiver by a Participant or Penn Mutual
of the right to enforce any rights arising from a breach of the Group
Annuity Contract will not constitute a waiver of any right arising from
a subsequent breach. The forbearance by a Participant or Penn Mutual to
enforce any right hereunder will not be considered a waiver of such
right.
AMENDMENT. To the extent necessary to comply with applicable law and
regulations, Penn Mutual reserves the right to change any or all of the
Group Annuity Contract provisions at any time, including retroactive
changes, without the consent of Participants. Changes in the Internal
Revenue Code or in regulations or revenue rulings thereunder may
require amendments to the Group Annuity Contract. In accordance with
the preceding paragraph, Penn Mutual may make such amendments without
the consent of Participants.
Participants will be informed of amendments when they are made.
DISCONTINUANCE OF CONTRACT. Upon giving Penn Mutual 90 days prior
written notice, the Contractholder may discontinue the contract with
respect to new Purchase Payments, provided, however, that the contract
shall continue in full force and effect in accordance with its terms
with respect to Purchase Payments made prior to discontinuance.
NOTICES, CHANGES AND CHOICES. To be effective, all notices, changes and
choices the Participant may make under the Group Annuity Contract must
be in writing, signed and received by us at our designated service
office. If acceptable to us, notices, changes and choices relating to
beneficiaries and ownership will take effect as of the date signed
unless we have already acted in reliance on the prior status. We are
not responsible for their validity.
CONTRACT PAYMENTS. All sums payable to or by us are payable at our
designated service office. We may require return of the contract prior
to making payment.
PROTECTION OF PROCEEDS. Payments under this contract may not be
assigned by the payee prior to their due dates. To the extent allowed
by law, payments are not subject to legal process for debts of a payee.
24
<PAGE>
COMPLIANCE WITH MINIMUM VALUE REQUIREMENTS. Annuity, death and
withdrawal benefits are not less than the minimum benefits required
under applicable laws and regulations of the jurisdiction in which this
certificate is delivered.
The benefits provided under the Group Annuity Contract from the
Participant's Fixed Account are increased by interest credited in
excess of the guaranteed minimums, if any.
PERIODIC REPORTS. At least once a year we will furnish each Participant
a report. It will set forth the current number of Accumulation Units or
Annuity Units, the value per Accumulation or Annuity Unit, the
Participant's Variable Account Value and the Participant's Fixed
Account Value. Each person with voting rights in the Separate Account
will be furnished reports required by the Investment Company Act of
1940.
<PAGE>
TABLE OF GUARANTEED BENEFITS
BASED ON THE FOLLOWING MONTHLY DEPOSITS OF $50.00
ASSUMPTIONS: --NO PARTIAL WITHDRAWALS
ISSUE AGE 30
PAID-UP ANNUITY -- LIFE ANNUITY
WITH PAYMENTS GUARANTEED
FOR 10 YEARS (OPTION 3)
GUARANTEED EFFECTIVE ANNUAL
INTEREST RATE -- 4.00%
<TABLE>
<CAPTION>
GUARANTEED WITHDRAWAL VALUES GUARANTEED MONTHLY
END OF ---------------------------- PAID-UP ANNUITY
CONTRACT INTEREST INTEREST BENEFIT COMMENCING
YEAR OPTIONS A OR B OPTION C AT AGE 65
<S> <C> <C> <C>
1 $ 585.34 $ 570.02 $ 12.79
2 1,194.09 1,162.84 25.09
3 1,827.20 1,780.77 36.92
4 2,485.63 2,421.97 48.29
5 3,170.39 3,088.81 59.22
6 3,882.55 3,783.90 69.73
7 4,659.50 4,541.46 79.84
8 5,506.41 5,368.21 89.56
9 6,405.35 6,247.95 98.91
10 7,358.81 7,179.61 107.90
11 8,266.08 8,064.20 116.54
12 9,209.65 8,986.18 124.85
13 10,190.96 9,942.95 132.83
14 11,211.52 10,938.00 140.52
15 12,272.90 11,975.10 147.90
16 13,376.74 13,051.34 155.01
17 14,524.73 14,170.63 161.83
18 15,718.64 15,337.23 168.40
19 16,960.31 16,547.85 174.71
20 18,251.64 17,806.90 180.79
AT AGE 65 45,143.08 44,044.32 248.29
</TABLE>
26
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
VALUES AND PAYMENTS TO YOU UNDER THE GROUP ANNUITY CONTRACT, WHEN BASED UPON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED
AS TO FIXED DOLLAR AMOUNT.
Group Variable and Fixed
Annuity Certificate --
Flexible Purchase Payments
The Penn Mutual Life Insurance Company, Independence Square, Philadelphia,
Pennsylvania 19172
<PAGE>
The Penn Mutual Life Insurance Company
Founded 1847
- --------------------------------------------------------------------------------
Participant Annuity Date
Participant's
Certificate Number Enrollment Date
- --------------------------------------------------------------------------------
Group Variable and Fixed Annuity Contract Number -- GDI-1
Contractholder -- Chicago Hospital Council
The Penn Mutual Life Insurance Company certifies that the above named person is
a Participant under the Group Annuity Contract.
This certificate is evidence of your interest in the Group Annuity Contract. All
matters pertaining to such interest are subject to the provisions of the Group
Annuity Contract. Relevant provisions of the Group Annuity Contract are
described in the following pages.
This certificate replaces any certificate previously issued to you by Penn
Mutual with respect to the Group Annuity Contract.
VALUES AND PAYMENTS TO YOU UNDER THE GROUP ANNUITY CONTRACT, WHEN BASED UPON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED
AS TO FIXED DOLLAR AMOUNT.
/s/Robert E. Chappell
CHAIRMAN AND
CHIEF EXECUTIVE OFFICER
10 DAY RIGHT TO EXAMINE CERTIFICATE -- You may cancel this certificate within
ten days after its receipt. Simply return or mail it to us or our agent. We will
refund your Participant's Variable and Fixed Account Values.
GROUP VARIABLE AND FIXED
ANNUITY CERTIFICATE --
FLEXIBLE PURCHASE PAYMENTS
The Penn Mutual Life Insurance Company, Independence Square, Philadelphia,
Pennsylvania 19172
EB 1555 3/89
<PAGE>
TABLE OF CONTENTS
PAGE
Section 1-- Specifications 3
Section 2-- Definitions 4
Section 3-- Purchase Payments 5
Section 4-- Variable Account Provisions 5
Section 5-- Fixed Account Provisions 14
Section 6-- Payment on Death 22
Section 7-- Transfer From Variable To Fixed Account 22
Section 8-- Transfer From Fixed To Variable Account 22
Section 9-- Transfer From Another Annuity Contract 23
Section 10-- Withdrawal 23
Section 11-- Miscellaneous 26
Table of Guaranteed Benefits 30
<PAGE>
SECTION 1 -- CONTRACT SPECIFICATIONS
ANNUITANT EVA M THOMPSON JUNE 1, 2006 ANNUITY DATE
CONTRACT NUMBER 116-247667713 JAN 18, 1996 CONTRACT DATE
FIRST PURCHASE PAYMENT AGE OF ANNUITANT
---------------------- ----------------
$31.20 55
GUARANTEED MONTHLY
PAID-UP ANNUITY BENEFIT
-----------------------
$25.26
BEGINNING ON ANNUITY DATE*
* LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10 YEARS (OPTION 3) THE AMOUNT OF
MONTHLY ANNUITY BENEFIT ON THE ANNUITY DATE DEPENDS ON THE AMOUNT AND
FREQUENCY OF PURCHASE PAYMENTS MADE. PURCHASE PAYMENTS OF $31.20 EACH MONTH
UNTIL THE ANNUITY DATE WILL PROVIDE THE AMOUNT SHOWN IF YOU MAKE NO
WITHDRAWALS OR TRANSFERS FROM THIS CONTRACT. INTEREST CREDITED IN EXCESS OF
THE GUARANTEED RATE WILL INCREASE THE AMOUNT OF THE MONTHLY ANNUITY
BENEFIT.
DIVISIBLE SURPLUS APPORTIONED TO THIS CONTRACT, IF ANY, WILL BE
CREDITED TO THE CONTRACT VALUE UNLESS YOU ELECT TO HAVE
IT PAID IN CASH.
<PAGE>
SECTION 2 -- DEFINITIONS
MEMBER HOSPITAL: A health care institution which is a member
of the Chicago Hospital Council.
PARTICIPANT: An employee of a Member Hospital which has made
application through Contractholder to make Purchase Payments
on behalf of the Participant under the Group Annuity Contract.
In this certificate you are the Participant.
PARTICIPANT'S ENROLLMENT YEAR: The twelve month period
commencing on the Participant's Enrollment Date, or any
anniversary of the Participant's Enrollment Date.
ACCUMULATION UNIT: An index used to compute a Participant's
Variable Account Value prior to the Variable Annuity Date.
ANNUITY UNIT: An index used to compute a Participant's
Variable Annuity Payment.
PARTICIPANT'S VARIABLE ACCOUNT: An account established and
maintained by Penn Mutual for each Participant and to which
Purchase Payments are allocated under section 4.
PARTICIPANT'S VARIABLE ACCOUNT VALUE: The value of all
Accumulation Units credited to a Participant's Variable
Account.
PARTICIPANT'S FIXED ACCOUNT: An account established and
maintained by Penn Mutual for each Participant and to which
Purchase Payments are allocated under Section 5.
PARTICIPANT'S FIXED ACCOUNT VALUE: The sum of all amounts
credited to a Participant's Fixed Account, increased by
interest credited and reduced by amounts withdrawn or
transferred from a Participant's Fixed Account.
ANNUITY DATE: The date on which annuity payments to a
Participant are to start.
PURCHASE PAYMENTS: Amounts paid to Penn Mutual on behalf of
Participants under the Group Annuity Contract.
4
<PAGE>
SECTION 3 -- PURCHASE PAYMENTS
Purchase Payments may be made on behalf of each Participant
subject to the following provisions:
(a) The minimum Purchase Payment for any one
Participant is $25.00 or such lower minimum
as we may establish.
(b) The Participant will direct the allocation
of Purchase Payments to the Participant's
Variable Account or the Participant's Fixed
Account, subject to the provisions of
Sections 4 and 5.
(c) Total Purchase Payments in a calendar year
for a Participant are limited as provided by
Section 403(b) of the Internal Revenue Code.
(d) Total Purchase Payment in a calendar year
for a Participant may not exceed $1,00,000
without Penn Mutual's consent.
(e) Purchase Payments for a Participant may be
made only while the Participant is an
employee of a Member Hospital.
(f) Purchase Payments will be credited to
Participant's Variable Accounts and
Participant's Fixed Accounts in accordance
with information provided by Participant.
SECTION 4 -- VARIABLE ACCOUNT PROVISIONS
A. THE SEPARATE ACCOUNT
THE SEPARATE ACCOUNT. The name of the Separate
Account is specified in Section 1. We established the
Separate Account for the Group Annuity Contract and
other contracts we may issue. Amounts credited to the
Participant's Variable Account will be allocated to
the Separate Account.
INVESTMENT OF SEPARATE ACCOUNT ASSETS. Assets held in
the Separate Account will be invested in one or more
eligible mutual funds. Current eligible mutual funds
are specified in Section 1.
For the Group Annuity Contract and other contracts
the Separate Account is divided into investment
accounts. There is an investment account for
5
<PAGE>
each eligible mutual fund. For each investment
account, there is a subaccount for Qualified Plans
and a subaccount for Nonqualified Plans.
Each Participant may choose the investment account to
which amounts credited to the Participant's Variable
Account are to be allocated.
We own the assets held in the Separate Account.
However, the portion of such assets equal to the
reserves and other contract liabilities with respect
to each subaccount of each investment account of the
Separate Account are not chargeable with liabilities
arising out of any other business we may conduct.
Upon notice to us, a Participant may transfer part or
all the value of the Accumulation Units or Annuity
Units credited to the Participant's Variable Account
from one investment account to another. No more than
four such transfers may be made in a calendar year.
Such investment account transfers, as well as all
other investments, are subject to the limits and
rules applicable to each mutual fund.
SUBSTITUTION OF INVESTMENT. If investment in a mutual
fund should no longer be possible or in our judgment
becomes inappropriate to the purposes of the
contract, we may substitute another mutual fund.
Substitutions may be made with respect to existing
investments and the investment of future Purchase
Payments. Substitution will be subject to the
approval of the Insurance Department of the
jurisdiction in which this contract is delivered.
B. CHARGES AND DEDUCTIONS
VARIABLE ACCOUNT ADMINISTRATION CHARGE. With respect
to each Participant's Variable Account, a charge of
$30 will be deducted each year on the date specified
in Section 1. It will also be deducted when the
Participant's Variable Account Value is withdrawn in
full if withdrawal is not on the date specified in
Section 1. The charge will never increase. The charge
will not be deducted on or after the Annuity Date.
EXPENSE RISK CHARGE. This charge is made to
compensate us for guaranteeing that the Variable
account administration charge will never increase. On
an annual basis it equals 0.5% of the daily net asset
value of the Separate Account. This charge is
reflected in the Net Investment Factor set forth in
Subsection C of this Section 4.
6
<PAGE>
MORTALITY RISK CHARGE. This charge is made to
compensate us for the mortality guarantees we make
under this contract. On an annual basis it equals
0.8% of the daily net asset value of the Separate
Account. This charge is reflected in the Net
Investment Factor set forth in Subsection C of this
Section 4.
CONTINGENT DEFERRED SALES CHARGE. This charge may be
deducted upon withdrawal, in whole or in part, of the
Participant's Variable Account Value or the present
value of remaining annuity payments (if applicable).
The Contingent Deferred Sales Charge is set forth in
Section 10.
DEDUCTIONS. The expense risk and mortality risk
charge will be computed and deducted from each
subaccount of each investment account of the Separate
Account for each day the Group Annuity Contract is in
force. Other charges will be deducted by canceling
Accumulation Units or Annuity Units (if applicable)
of a value equal to the deduction. Cancellation of
Accumulation Units will be in the ratio of the
Participant's interest in each subaccount to the
Participant's Variable Account Value.
C. VARIABLE ACCUMULATION VALUES
NUMBER OF PARTICIPANT'S ACCUMULATION UNITS. For each
subaccount of each investment account of the Separate
Account, the number of a Participant's Accumulation
Units is the sum of
Amounts allocated to the subaccount for the
Participant
divided by
The value of an Accumulation Unit for that
subaccount for the valuation period in which
we received the amount allocated.
The number will be adjusted for transfers,
withdrawals and charges. Adjustments will be made as
of the valuation period in which we receive all
requirements for the transactions, as appropriate.
VALUE OF EACH ACCUMULATION UNIT. For each subaccount
of each investment account on the Separate Account,
the value was arbitrarily set at $10 when the
subaccount was established. The value may increase or
decrease from one valuation period to the next. For
any valuation period the value is
7
<PAGE>
The value of an Accumulation Unit for the
prior valuation period
multiplied by
The net investment factor for that
subaccount for the valuation period.
NET INVESTMENT FACTOR. Net Investment Factor is an
index used to measure the investment performance of a
subaccount from one valuation period to the next. For
any subaccount, the net investment factor for a
valuation period is found by dividing (a) by (b) and
subtracting (c):
Where (a) is
The net asset value per share of the mutual
fund held in the subaccount, as of the end
of the valuation period
plus
The per-share amount of any dividend or
capital gain distributions by the mutual
fund if the "exdividend" date occurs in the
valuation period
plus or minus
A per-share charge or credit as we may
determine, as of the end of the valuation
period, for tax reserves;
Where (b) is
The net asset value per share of the mutual
fund held in the subaccount as of the end of
the last prior valuation period
plus or minus
The per-share charge or credit for tax
reserves as of the end of the last prior
valuation period;
Where (c) is
The sum of the daily expense risk charge and
the daily morality risk charge. On an annual
basis, the sum of such charges equals 1.30%
of the daily net asset value of the Separate
Account.
8
<PAGE>
VALUATION PERIOD. Valuation period is the interval
from one valuation time to the next valuation time.
Valuation time is the time as of which the mutual
fund determines the net asset value of its shares.
D. VARIABLE ANNUITY PAYMENTS
ANNUITY DATE. The Annuity Date must be on the first
day of a month. It may not be later than the first
day of the next month after the Annuitant's 85th
birthday. You chose the Annuity Date in the
application. You may change the Annuity Date up to 30
days prior to the current Annuity Date.
VARIABLE ANNUITY OPTIONS. You or your surviving
beneficiary may choose a variable annuity option up
to 30 days prior to the Annuity Date. An option not
set forth in the contract may be chosen if acceptable
to us.
FIRST VARIABLE ANNUITY PAYMENT. Any premium taxes
will be deducted from the Participant's Variable
Account Value. The net Participant's Variable Account
Value as of the Annuity Date will be applied to the
annuity table for the option chosen. The variable
annuity tables show the amount of the first payment
for each $1,000 so applied, according to the age at
the Annuity Date. The tables are based on the 1971
Individual Annuity Mortality Table with interest at
4%. Adjusted ages are used in entering those tables.
SUBSEQUENT VARIABLE ANNUITY PAYMENTS. Payments after
the first will vary in amount according to the
investment performance of the subaccount or
subaccounts chosen. The amount may change from month
to month. The amount of each subsequent payment is
the sum of the following amounts attributable to each
applicable subaccount
The number of Annuity Units for the
subaccount
multiplied by
The value of an Annuity Unit for that
subaccount for the valuation period in which
payment is due.
We guarantee that the amount of each annuity payment
after the first will not be affected by variations in
expense or mortality experience.
9
<PAGE>
MINIMUM ANNUITY PAYMENTS. If the net Participant's
Variable Account Value to be applied at the Annuity
Date is less than $2,000, we may pay such amount in a
lump sum. Annuity payments will be made monthly; but
if any payment would be less than $50, we may change
the frequency so payments are at least $50 each.
NUMBER OF PARTICIPANT'S ANNUITY UNITS. The number of
units for the subaccount of each investment account
chosen by the Participant is
The amount of the first variable annuity
payment attributable to that subaccount
divided by
The value of Annuity Unit for the subaccount
as of the Annuity Date.
The number is fixed except for adjustments for
subaccount transfers. Adjustments will be made as of
the valuation period in which we receive all
requirements for the transfer as appropriate.
VALUE OF EACH ANNUITY UNIT. For each subaccount of
each investment account of the Separate Account the
value was arbitrarily set at $10 when the subaccount
was established. The value may increase or decrease
from one valuation period to the next. For any
valuation period the value is
The value of an Annuity Unit for the last
prior valuation period
multiplied by
The net investment factor for that
subaccount for the valuation period
multiplied by
An interest factor to neutralize the assumed
investment rate of 4% built into the annuity
tables.
E. VARIABLE ANNUITY OPTIONS
OPTION 1 - VARIABLE ANNUITY FOR SPECIFIED NUMBER OF
YEARS. Payments will be made for a specified number
of years, which may not be less than 5 years nor more
than 30 years.
10
<PAGE>
OPTION 2 - VARIABLE LIFE ANNUITY. Payments will be
made for the life of the Annuitant. Payments will
cease with the last payment due prior to the
Annuitant's death.
OPTION 3 - VARIABLE LIFE ANNUITY WITH PAYMENTS
GUARANTEED FOR 10 OR 20 YEARS. Payments will be made
for the life of the Annuitant. A guaranteed payment
period of either 10 or 20 years may be chosen.
OPTION 4 - VARIABLE JOINT AND SURVIVOR LIFE ANNUITY.
Payments will be made during the lifetimes of the
Annuitant and a designated second Annuitant. Payments
will continue as long as either is living. The amount
of such payment will not change by reason of the
death of the first Annuitant to die.
If the Annuitant dies prior to the end of the
specified period under Option 1 or the guaranteed
period under Option 3, the beneficiary may choose
either
(1) To have the payments continue for the
specified or guaranteed period, or
(2) To receive at any time in lump sum the
present value of the remaining payments to
be made over the specified or guaranteed
period.
If a beneficiary dies while receiving annuity
payments under this Option 4, the present value will
be paid in a lump sum to the beneficiary's estate.
The present value will be (a) computed as of the
valuation period in which due proof of death is
received at our designated service office, and (b)
commuted at the assumed investment rate of the
annuity tables.
PAYMENTS. Payments will be made on the first day of
each month starting with the Annuity Date. Except
under Option 4, payments will be made to the
Participant. Under Option 4, payments will be jointly
payable while both Annuitants are alive.
F. VARIABLE ANNUITY OPTION TABLE
The following tables show the amount of the first
monthly income payment for each $1,000 of value
applied under a variable settlement option. "Age"
as used in the tables means an adjusted age
determined in the following manner from the actual
age of the Annuitant on the birthday nearest the date
of the first payment.
11
<PAGE>
CALENDAR YEAR OF BIRTH ADJUSTED AGE
- ---------------------- ----------------------
Before 1900 Actual Age increased by 1
1900-1919 Actual Age
1920-1939 Actual Age decreased by 1
1940-1959 Actual Age decreased by 2
1960 and later Actual Age decreased by 3
- --------------------------------- -----------------------------------
Option 1 -- Variable Annuity for Specified Number of Years
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
NUMBER OF MONTHLY NUMBER OF MONTHLY NUMBER OF MONTHLY
YEARS INCOME YEARS INCOME YEARS INCOME
- -------------------- -------------------- ------------------- ------------------- ------------------- --------------------
<S> <C> <C> <C> <C> <C>
11 $9.31 21 $5.81
12 8.69 22 5.64
13 8.17 23 5.49
14 7.72 24 5.35
5 $18.32 15 7.34 25 5.22
6 15.56 16 7.00 26 5.10
7 13.59 17 6.71 27 5.00
8 12.12 18 6.44 28 4.90
9 10.97 19 6.21 29 4.80
10 10.06 20 6.00 30 4.72
- -------------------- -------------------- ------------------- ------------------- ------------------- --------------------
</TABLE>
12
<PAGE>
Option 2 -- Variable Life Annuity and
Option 3 -- Variable Life Annuity with
Payments Guaranteed for 10 or 20 Years
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
LIFE 10 YEARS 20 YEARS LIFE 10 YEARS 20 YEARS
AGE ANNUITY GUARANTEED GUARANTEED AGE ANNUITY GUARANTEED GUARANTEED
- -------------- ------------ ---------------- ---------------- --------- -------- ------------ ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
50 $4.59 $4.56 $4.47 70 $7.08 $6.71 $5.71
51 4.65 4.62 4.52 71 7.33 6.89 5.76
52 4.72 4.69 4.57 72 7.60 7.08 5.81
53 4.80 4.76 4.63 73 7.90 7.28 5.84
54 4.87 4.83 4.69 74 8.22 7.48 5.88
55 4.96 4.91 4.75 75 8.57 7.68 5.90
56 5.05 4.99 4.81 76 8.95 7.89 5.92
57 5.14 5.07 4.87 77 9.37 8.10 5.94
58 5.24 5.16 4.93 78 9.82 8.30 5.96
59 5.34 5.25 5.00 79 10.32 8.50 5.97
60 5.45 5.35 5.07 80 10.86 8.69 5.98
61 5.56 5.45 5.14 81 11.46 8.88 5.98
62 5.69 5.56 5.20 82 12.11 9.04 5.99
63 5.82 5.68 5.27 83 12.82 9.20 5.99
64 5.96 5.80 5.34 84 13.59 9.33 6.00
65 6.11 5.93 5.41 85 14.43 9.45 6.00
66 6.27 6.07 5.48
67 6.45 6.22 5.54
68 6.64 6.37 5.60
69 6.85 6.54 5.66
- -------------- ------------ ---------------- ---------------- --------- -------- ------------ ---------------- ----------------
</TABLE>
Option 4 - Variable Joint and Survivor Life Annuity
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
AGE 55 60 65 70 75 80 85 AGE
- ------------- ------------- ------------- ------------ ------------- ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 $4.25 $4.34 $4.41 $4.46 $4.51 $4.54 $4.56 50
55 4.40 4.53 4.64 4.74 4.81 4.87 4.90 55
60 4.53 4.72 4.90 5.05 5.18 5.28 5.35 60
65 4.64 4.90 5.16 5.40 5.62 5.79 5.91 65
70 4.74 5.05 5.40 5.77 6.11 6.39 6.59 70
75 4.81 5.18 5.62 6.11 6.65 7.12 7.48 75
80 4.87 5.28 5.79 6.39 7.12 7.94 8.59 80
85 4.90 5.35 5.91 6.59 7.48 8.59 9.88 85
</TABLE>
13
<PAGE>
SECTION 5 -- FIXED ACCOUNT PROVISIONS
A. INTEREST OPTIONS
Interest will be earned on each Participant's Fixed
Account Value from the date amounts are credited to
the Participant's Fixed Account to the date amounts
are applied to an annuity option, paid upon the death
of the annuitant, transferred or withdrawn.
Each amount credited to a Participant's Fixed Account
will be credited with interest under Interest Option
A, Interest Option B, or Interest Option C. You
choose the interest options. The minimum initial
amount for which an Interest Option may be elected is
$25.00 or such lower minimum as we may establish.
INTEREST OPTION A
With respect to each amount for which Interest Option
A is elected, interest will be credited at an
effective annual rate declared by us. The effective
annual rate will be declared as of the first day of
each calendar quarter. The declared rate will apply
for Interest Option A elections made in that calendar
quarter, through the end of the same calendar quarter
in the next calendar year. Thereafter, interest will
be credited at the declared effective annual rate
then applicable to new Interest Option A elections,
for successive twelve month periods.
We will declare an effective annual interest rate
under Interest Option A which is not less than the
published 52 week United States Treasury Bill
discount rate from the most recent regularly
scheduled auction held before the beginning of the
calendar quarter. If the auction program is
discontinued, we will substitute an index which in
our opinion is comparable and which is approved by
the Insurance Department of the jurisdiction in which
this contract is delivered.
The declared effective annual interest rate under
Interest Option A will never be less than 4%.
INTEREST OPTION B
With respect to each amount for which Interest Option
B is elected, interest will be credited at an
effective annual rate declared by us. The declared
rate will apply through the end of the calendar month
in which the election is made. Thereafter, interest
will be credited on such amount for successive
14
<PAGE>
calendar month periods at the declared effective
annual rate then applicable to new Interest Option B
elections made as of the beginning of each such
calendar month.
The declared effective annual interest rate under
Interest Option B will never be less than 4%.
INTEREST OPTION C
With respect to each amount for which Interest Option
C is elected, interest will be credited at an
effective annual rate declared by us. The effective
annual rate will be declared as of the first day of
each calendar quarter. The declared rate will apply,
for Interest Option C elections made in that calendar
quarter, through the end of the same calendar quarter
in the third following calendar year. Thereafter,
interest will be credited at the declared effective
annual rate then applicable to new Interest Option C
elections, for successive thirty-six month periods.
You may change the interest option election or
withdraw or transfer any portion of an amount for
which Interest Option C is elected before the end of
a period for which a declared effective annual rate
of interest is guaranteed for such amount. However,
in such event, the amount withdrawn or transferred or
the amount for which the interest option election is
changed will be reduced by a premature transaction
charge equal to 2 1/2% of such amount.
The declared effective annual interest rate under
Interest Option C will never be less than 4%.
CHANGE OF INTEREST OPTION
You may change the interest option election
applicable to all or part of your Participant's Fixed
Account Value, subject to the provisions set forth
below.
You may change the election for an amount held under
Interest Option A only at the end of the period for
which a declared effective annual interest rate is
guaranteed for such amount.
You may change the election for an amount held under
Interest Option B only at the end of a calendar
month.
15
<PAGE>
You may change the election for all or any part of an
amount held under Interest Option C before the end of
the period for which a declared effective annual
interest rate is guaranteed for such amount, subject
to the premature transaction charge set forth in
Interest Option C.
The minimum amount for which an interest option may
be changed is $250.
If you make a partial change of interest option for
amounts held under Interest Option A or Interest
Option C, at least $250 must be left under that
option.
If you make a partial change of interest option for
amounts held under Interest Option B, at least $40
must be left under that option.
B. FIXED ANNUITY PAYMENTS
ANNUITY DATE. The Annuity Date must be on the first
day of a month. It may not be later than the first
day of the next month after the Annuitant's 85th
birthday. You chose the Annuity Date in the
application. You may change the Annuity Date up to 30
days prior to the current Annuity Date.
FIXED ANNUITY OPTION. You or your surviving
beneficiary may choose a fixed annuity option up to
30 days prior to the Annuity Date. An option not set
forth in the contract may be chosen if acceptable to
us.
AMOUNT OF FIXED ANNUITY PAYMENTS. Any premium taxes
will be deducted from the Participant's Fixed Account
Value. The net Participant's Fixed Account Value as
of the Annuity Date will be applied to the fixed
annuity option chosen. If fixed annuity payments
begin within 5 years after the Participant's
Enrollment Date, the monthly income under Options 1,
2, 3 and 4 will equal the monthly income under a
comparable single premium nonparticipating annuity
available from us at the time fixed annuity payments
are to begin.
If fixed annuity payments begin more than 5 years
after the Participant's Enrollment Date, the monthly
income under Options 1, 2, 3 and 4 will equal 104% of
the monthly income under a comparable single premium
nonparticipating annuity available from us at the
time fixed annuity payments are to begin. In no event
will the monthly income be less than shown in the
Fixed Annuity Option Tables.
16
<PAGE>
The guaranteed monthly income under Option 1 and 3
will be based on interest at a rate of 3% per year
compounded annually. The guaranteed monthly income
under Option 2 and 4 will be based on interest at a
rate of 2 3/4% per year compounded annually. Fixed
Annuity Options 1, 2, 3 and 4 will not participate in
divisible surplus.
MINIMUM ANNUITY PAYMENTS. If the net Participant's
Fixed Account Value to be applied at the Annuity Date
is less than $2,000, we may pay such amount in a lump
sum. Fixed Annuity payments will be made monthly. But
if any payment would be less than $50, we may change
the frequency so payments are at least $50 each.
C. FIXED ANNUITY OPTIONS
OPTION 1 -- FIXED ANNUITY FOR SPECIFIED NUMBER OF
YEARS. Payments will be made for a specified number
of years, which may not be less than 5 years nor more
than 30 years.
OPTION 2 -- FIXED LIFE ANNUITY. Payments will be made
for the life of the Annuitant. Payments will cease
with the last payment due prior to the Annuitant's
death.
OPTION 3 -- FIXED LIFE ANNUITY WITH PAYMENTS
GUARANTEED FOR 10 OR 20 YEARS. Payments will be made
for the life of the Annuitant. A guaranteed payment
period of either 10 or 20 years may be chosen.
OPTION 4 -- FIXED JOINT AND SURVIVOR LIFE ANNUITY.
Payments will be made during the lifetimes of the
Annuitant and a designated second Annuitant. Payments
will continue as long as either is living. The amount
of such payments will not change by reason of the
death of the first Annuitant to die.
If the Annuitant dies prior to the end of the
specified period under Option 1 or the guaranteed
period under Option 3, the beneficiary may choose
either:
(1) to have the payments continue for the
specified or guaranteed period, or
(2) to receive at any time in lump sum the
present value of the remaining payments to
be made over the specified or guaranteed
period.
If a beneficiary dies while receiving annuity
payments under this option; the present value will be
paid in a lump sum to the beneficiary's estate.
17
<PAGE>
The present value of payments under Option 1 will be
based on interest at a rate of 3% per year compounded
annually. The present value of the remaining payments
during the guaranteed period under Option 3 will be
based on interest at a rate set by us at the time
payments are to begin.
PAYMENT. Payments will be made on the first day of
each month starting with the Annuity Date. Payments
under all options will be made to the Participant,
except under Option 4. Under Option 4, payments will
be jointly payable while both Annuitants are alive.
18
<PAGE>
D. FIXED ANNUITY OPTION TABLES
Amount of monthly income provided by each $1,000
applied under an income option
Option 1-- Fixed Income for Specified Number of Years
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
YEARS MONTHLY INCOME YEARS MONTHLY INCOME YEARS MONTHLY INCOME
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
11 $8.86 21 $5.32
12 8.24 22 5.15
13 7.71 23 4.99
14 7.26 24 4.84
5 $ 17.91 15 6.87 25 4.71
6 15.14 16 6.53 26 4.59
7 13.16 17 6.23 27 4.47
8 11.68 18 5.96 28 4.37
9 10.53 19 5.73 29 4.27
10 9.61 20 5.51 30 4.18
- ----------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
Option 2 -- Fixed Life Annuity and
Option 3 -- Fixed Life Annuity with
Payments Guaranteed for 10 or 20 Years
The amount of monthly income will be based on the age of the option annuitant on
the birthday nearest the date of the first payment
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
2 3 2 3
--- ------------------------- --- -------------------------
20 YEAR 10 YEAR AGE OF 20 YEAR 10 YEAR
AGE OF OPTION LIFE GUARANTEED GUARANTEED OPTION LIFE GUARANTEED GUARANTEED
ANNUITANT INCOME PERIOD PERIOD ANNUITANT INCOME PERIOD PERIOD
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
15 and under $2.90 $2.87 $2.88 50 $4.03 $3.93 $4.01
16 2.91 2.88 2.89 51 4.11 3.99 4.08
17 2.92 2.89 2.90 52 4.19 4.05 4.15
18 2.94 2.91 2.92 53 4.27 4.11 4.22
19 2.96 2.93 2.94 54 4.35 4.17 4.30
20 2.97 2.94 2.95 55 4.44 4.23 4.38
21 2.99 2.96 2.97 56 4.53 4.30 4.47
22 3.01 2.98 2.99 57 4.63 4.36 4.56
23 3.03 3.00 3.01 58 4.74 4.43 4.66
24 3.05 3.02 3.03 59 4.86 4.50 4.76
25 3.07 3.04 3.05 60 4.98 4.57 4.87
26 3.09 3.06 3.07 61 5.11 4.64 4.98
27 3.11 3.08 3.09 62 5.25 4.72 5.10
28 3.14 3.11 3.12 63 5.39 4.79 5.23
29 3.16 3.13 3.14 64 5.55 4.86 5.36
30 3.18 3.15 3.16 65 5.71 4.92 5.50
31 3.21 3.18 3.19 66 5.89 4.99 5.65
32 3.24 3.21 3.22 67 6.08 5.05 5.80
33 3.27 3.24 3.25 68 6.27 5.11 5.96
34 3.30 3.27 3.28 69 6.49 5.17 6.13
35 3.33 3.30 3.31 70 6.71 5.22 6.30
36 3.36 3.33 3.34 71 6.95 5.25 6.48
37 3.40 3.36 3.38 72 7.20 5.25 6.48
38 3.43 3.40 3.41 73 7.47 5.25 6.85
39 3.47 3.43 3.45 74 7.76 5.25 7.05
40 3.51 3.47 3.49 75 8.06 5.25 7.25
41 3.55 3.51 3.53 76 8.43 5.25 7.44
42 3.59 3.55 3.57 77 8.84 5.25 7.64
43 3.64 3.59 3.62 78 9.28 5.25 7.84
44 3.69 3.63 3.67 79 9.75 5.25 8.04
45 3.74 3.68 3.72 80 and over 10.27 5.25 8.23
46 3.79 3.72 3.77
47 3.85 3.77 3.83
48 3.91 3.82 3.88
49 3.97 3.88 3.94
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
Option 4-- Fixed Joint and Survivor Life Annuity
The amount of monthly income will be based on the ages of the option annuitants
on their respective birthdays nearest the date of the first payment. The table
shows income for certain ages for two option annuitants. The amount is shown
under the age of the first annuitant and opposite the age of the second
annuitant. Amounts of income for other combinations of ages will be furnished
upon request.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
AGE OF SECOND
OPTION
ANNUITANT
ANNUITANT AGE OF FIRST OPTION ANNUITANT
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 55 60 65 70 75 80 85
45 $3.40 $3.48 $3.54 $3.60 $3.64 $3.67 $3.70 $3.71
50 3.52 3.64 3.74 3.82 3.89 3.94 3.97 3.99
55 3.65 3.80 3.95 4.08 4.19 4.27 4.33 4.38
60 3.76 3.96 4.17 4.37 4.54 4.68 4.79 4.86
62 3.80 4.02 4.26 4.49 4.69 4.86 5.00 5.09
65 3.85 4.11 4.38 4.67 4.93 5.15 5.34 5.48
70 3.93 4.22 4.57 4.95 5.32 5.68 6.00 6.25
75 3.99 4.31 4.72 5.19 5.70 6.21 6.74 7.18
80 4.03 4.38 4.84 5.39 6.03 6.75 7.55 8.32
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
SECTION 6 -- PAYMENT ON DEATH
DEATH BEFORE THE ANNUITY DATE. Upon receipt of due proof of
the death of the Participant prior to the Annuity Date, we
will pay to the beneficiary the greater of:
(1) The sum of all Purchase Payments, adjusted
for withdrawals and transfers, or
(2) The sum of the Participant's Variable
Account Value and the Participant's Fixed
Account Value for the valuation period in
which we receive such proof at our
designated service office.
Payment will be in a lump sum, or the beneficiary may choose
an Annuity Option under this contract.
DEATH AFTER THE ANNUITY DATE. If the Participant dies after
the Annuity Date, the amount payable, if any, will be
according to the Annuity Option or Annuity Options in force.
SECTION 7 -- TRANSFER FROM VARIABLE TO FIXED ACCOUNT
You may transfer all or part of your Participant's Variable
Account Value to your Participant's Fixed Account, subject to
the following provisions:
The minimum transfer amount is $250. For partial transfers the
remaining Participant's Variable Account Value must be at
least $250.
No more than four such transfers may be made by a Participant
in a calendar year.
No transfer may be made after the thirtieth day before the
Annuity Date.
Request for transfer must be received by us and any other
applicable requirements must be met before the death of the
Participant.
SECTION 8 -- TRANSFER FROM FIXED TO VARIABLE ACCOUNT
You may transfer all or part of your Participant's Fixed
Account Value to your Participant's Variable Account, subject
to the following provisions:
22
<PAGE>
The minimum transfer amount is $250. For partial transfer the
remaining Participant's Fixed Account Value must be at least
$250.
An amount held under Interest Option A may be transferred only
at the end of the period for which a declared effective annual
interest rate is guaranteed for such amount.
An amount held under Interest Option B may be transferred only
at the end of a calendar month.
All or any part of an amount held under Interest Option C may
be transferred before the end of the period for which a
declared effective annual interest rate is guaranteed for such
amount, subject to the premature transaction charge set forth
in Interest Option C.
No transfer may be made after the thirtieth day before the
Annuity Date.
Request for transfer must be received by us and any other
applicable requirements must be met before the death of the
Participant.
SECTION 9 -- TRANSFER FROM ANOTHER ANNUITY CONTRACT
You may, through your Member Hospital employer, transfer to
your Participant's Variable or Fixed Accounts under this
contract, amounts held under another annuity contract
purchased for you under the provisions of Section 403(b) of
the Internal Revenue Code.
SECTION 10 -- WITHDRAWAL
A. WITHDRAWAL. Prior to the earlier of the Annuity Date
or the death of the Participant, you may withdraw all
or part of your Participant's Variable Account Value
and your Participant's Fixed Account Value.
After the Annuity Date and the election of Variable
Annuity Option 1, the payee may withdraw the present
value of the variable annuity payments remaining to
be made. The present value will be (a) computed as of
valuation period in which notice of the withdrawal is
received at our designated service office and (b)
commuted at the assumed investment rate of the
Variable Annuity tables.
23
<PAGE>
After the Annuity Date and the election of Fixed
Annuity Option 1, the payee may withdraw the present
value of the fixed annuity payments remaining to be
made.
For full withdrawal of all the Participant's Variable
and Fixed Account Values, the Participant's
Certificate must be surrendered to our designated
service office.
For partial withdrawals, the withdrawal must be at
least $250 and the amount remaining in the
Participant's Variable Account or Fixed Account must
be at least $250.
Withdrawal of all or any part of the Participant's
Fixed Account Value held under Interest Option C
before the end of the period for which a declared
effective annual interest rate is guaranteed for such
amount will be subject to the premature transaction
charge set forth in Interest Option C. The total of
the premature transaction charge and the Contingent
Deferred Sales Charge set forth below will never be
more than 7% of the amount withdrawn.
B. CONTINGENT DEFERRED SALES CHARGES. A charge equal to
5% of the amount withdrawn will be made at the time
of withdrawal, subject to the following provisions:
(1) If the Participant makes a total withdrawal
of the Participant's Fixed Account Value as
a result of termination of participation in
the Group Annuity contract, the amount
received will never be less than the total
of all amounts allocated to the
Participant's Fixed Account, less prior
transfers and withdrawals from the
Participant's Fixed Account.
(2) No charge will be made for withdrawal if the
Participant has provided due proof of
disability. Disability shall mean the
inability, by reason of medically
determinable physical or mental impairment
which can be expected to result in death or
be of long-continued and indefinite
duration, to engage in the Participant's
usual and customary occupation or in any
other substantial gainful activity for which
the Participant is reasonably suited by
education, training or experience.
(3) No charge will be made for a withdrawal
after the death of the Participant.
24
<PAGE>
(4) No charge will be made for the withdrawal of
amounts which were transferred from another
annuity contract as provided in Section 9.
THE FOLLOWING PARAGRAPHS 5, 6, 7, 8 AND 9 WILL NOT
APPLY TO ANY AMOUNT WITHDRAWN FROM INTEREST OPTION C
BEFORE THE END OF THE PERIOD FOR WHICH A DECLARED
EFFECTIVE ANNUAL INTEREST RATE IS GUARANTEED FOR SUCH
AMOUNT.
(5) No charge will be made for that portion of
the first withdrawal made in a Participant's
Enrollment Year after the first
Participant's Enrollment Year which does not
exceed 10% of the sum of the Participant's
Variable Account and Fixed Account Values.
(6) No charge will be made for that portion of
the first withdrawal, made in the
Participant's Eighth Enrollment Year, which
does not exceed 25% of the sum of the
Participant's Variable Account and Fixed
Account Value(s).
(7) No charge will be made for that portion of
the first withdrawal, made in the
Participant's Ninth Enrollment Year, which
does not exceed 50% of the sum of the
Participant's Variable Account and Fixed
Account Values.
(8) No charge will be made for that portion of
the first withdrawal, made in the
Participant's Tenth Enrollment Year, which
does not exceed 75% of the Participant's
Variable Account and Fixed Account Values.
(9) No charge will be made for any withdrawal
made after the Participant has been enrolled
for ten years.
C. PAYMENT OF WITHDRAWALS. Unless you direct otherwise,
partial withdrawals prior to the Annuity date, and
related charges, will be deducted from your
Participant's Fixed and Variable Accounts in the
following order
first from Interest Option B;
next from Interest Option A;
25
<PAGE>
then from each subaccount of each investment
account of the Separate Account in the ratio
of your interest in each subaccount to your
Participant's Variable Account Value; and
finally from Interest Option C.
Partial withdrawal of amounts held under Interest
Option A or Interest Option C will be made from
amounts most recently placed under that option.
SECTION 11 -- MISCELLANEOUS
BENEFICIARY. The Beneficiary is the person chosen by the
Participant in the application, who is to receive:
(1) Payment on death of the Participant prior
to the Annuity Date or
(2) Guaranteed annuity payments, if any, on
death of the Annuitant on or after the
Annuity Date.
The Participant may change the beneficiary while the
Participant is alive.
The estate or heirs of a beneficiary who dies before the
Participant have no rights under this contract. If no
beneficiary survives the Participant, payment will be made to
the Participant's estate.
MISSTATEMENT OF AGE. If the age of the Annuitant or a joint
payee is misstated, any amount payable under the Group Annuity
Contract will be that amount which the Purchase Payments paid
would have purchased on the basis of the correct age.
If the annuity payments have been overpaid because the age of
the Annuitant or joint payee has been misstated, the amount
overpaid, with interest at the rate of 6% per year compounded
annually, will be charged against the payments still to be
made under this contract.
If the annuity payments have been underpaid because the age of
the Annuitant or joint payee has been misstated, the amount
underpaid, with interest at the rate of 6% per year compounded
annually, will be paid in full with the next payment due under
this contract.
26
<PAGE>
PROOF OF AGE AND SURVIVAL. We may require satisfactory proof
of correct age at any time. If any payment under the Group
Annuity Contract depends on the payee being alive, we may
require satisfactory proof of survival.
DEFERMENT OF TRANSFERS AND PAYMENTS. Transfers and payments of
withdrawals from the Participant's Variable Account will be
made within seven days. However, we may defer a transfer, a
withdrawal, the Annuity Date or annuity payments, under the
Variable Account Provisions of Section 4 if:
(1) The New York Stock Exchange is closed (other
than customary weekend and holiday
closings);
(2) Trading on the New York Stock Exchange
is restricted;
(3) An emergency exists such that it is not
reasonably practical to dispose of
securities held in the Separate Account or
to determine the value of its assets; or
(4) The Securities and Exchange Commission by
order so permits for the protection of
security holders.
Conditions in (2) and (3) will be decided by, or in accordance
with rules of, the Securities and Exchange Commission.
We may defer a transfer or withdrawal from the Participant's
Fixed Account for such period not exceeding six months, as we
reasonably determine that investment conditions are such that
an orderly sale of assets held as part of our general assets
is not possible.
PARTICIPATING CONTRACT. The Group Annuity Contract may
participate in our divisible surplus. Divisible surplus, if
any, to be apportioned to the contract shall be apportioned
annually and will be allocated by us equitably among all
Participants. Divisible surplus so allocated will be credited
as Purchase Payments to the Participants' Variable and Fixed
Accounts, unless the Participant elects to have it paid in
cash. No divisible surplus is expected to be apportioned to
the contract in the foreseeable future.
ASSIGNMENT AND OWNERSHIP. Accounts established and maintained
for a Participant are owned by the Participant for his or her
lifetime. The entire interest in a Participant's Variable or
Fixed Account is for the exclusive benefit of the Participant.
A Participant's Variable or Fixed Account is nontransferable
and the entire interest of the Participant is nonforfeitable
in accordance with applicable provisions of the Internal
Revenue Code.
27
<PAGE>
FAILURE TO ENFORCE NOT WAIVER. A waiver by a Participant or
Penn Mutual of the right to enforce any rights arising from a
breach of the Group Annuity Contract will not constitute a
waiver of any right arising from a subsequent breach. The
forbearance by a Participant or Penn Mutual to enforce any
right hereunder will not be considered a waiver of such right.
AMENDMENT. To the extent necessary to comply with applicable
law and regulations, Penn Mutual reserves the right to change
any or all of the Group Annuity Contract provisions at any
time, including retroactive changes, without the consent of
Participants.
Changes in the Internal Revenue Code or in regulations or
revenue rulings thereunder may require amendments to the Group
Annuity Contract. In accordance with the preceding paragraph,
Penn Mutual may make such amendments without the consent of
Participants.
Participants will be informed of amendments when they are
made.
DISCONTINUANCE OF CONTRACT. Upon giving Penn Mutual 90 days
prior written notice, the Contractholder may discontinue the
contract with respect to new Purchase Payments, provided,
however, that the contract shall continue in full force and
effect in accordance with its terms with respect to Purchase
Payments made prior to discontinuance.
NOTICES, CHANGES AND CHOICES. To be effective, all notices,
changes and choices the Participant may make under the Group
Annuity Contract must be in writing, signed and received by us
at our designated service office. If acceptable to us,
notices, changes and choices relating to beneficiaries and
ownership will take effect as of the date signed unless we
have already acted in reliance on the prior status.
We are not responsible for their validity.
CONTRACT PAYMENTS. All sums payable to or by us are payable at
our designated service office. We may require return of the
contract prior to making payment.
PROTECTION OF PROCEEDS. Payments under this contract may not
be assigned by the payee prior to their due dates. To the
extent allowed by law, payments are not subject to legal
process for debts of a payee.
COMPLIANCE WITH MINIMUM VALUE REQUIREMENTS. Annuity, death and
withdrawal benefits are not less than the minimum benefits
required under applicable laws and regulations of the
jurisdiction in which this certificate is delivered.
28
<PAGE>
The benefits provided under the Group Annuity Contract from
the Participant's Fixed Account are increased by interest
credited in excess of the guaranteed minimums, if any.
PERIODIC REPORTS. At least once a year we will furnish each
Participant a report. It will set forth the current number of
Accumulation Units or Annuity Units, the value per
Accumulation or Annuity Unit, the Participant's Variable
Account Value and the Participant's Fixed Account Value. Each
person with voting rights in the Separate Account will be
furnished reports required by the Investment Company Act of
1940.
29
<PAGE>
TABLE OF GUARANTEED BENEFITS
BASED ON THE FOLLOWING ASSUMPTIONS: MONTHLY DEPOSITS OF $31.20
--NO PARTIAL WITHDRAWALS
ISSUE AGE 55
PAID-UPANNUITY -- LIFE ANNUITY
WITH PAYMENTS GUARANTEED
FOR 10 YEARS (OPTION 3)
GUARANTEED EFFECTIVE ANNUAL
INTEREST RATE -- 4.00%
GUARANTEED WITHDRAWAL VALUES
----------------------------
<TABLE>
<CAPTION>
GUARANTEED MONTHLY
END OF PAID-UP ANNUITY BENEFIT
CONTRACT INTEREST OPTIONS INTEREST COMMENCING
YEAR A OR B OPTION C AT AGE 65
<S> <C> <C> <C>
1 $363.74 $355.69 $2.99
2 743.09 725.61 5.87
3 1,137.95 1,110.32 8.64
4 1,549.24 1,510.43 11.30
5 1,977.95 1,927.03 13.86
6 2,424.55 2,362.99 16.32
7 2,907.53 2,833.87 18.69
8 3,436.00 3,349.76 20.96
9 3,996.94 3,898.72 23.15
AT AGE 65 4,591.90 4,480.07 25.26
</TABLE>
30
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
VALUES AND PAYMENTS TO YOU UNDER THE GROUP ANNUITY CONTRACT, WHEN BASED UPON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED
AS TO FIXED DOLLAR AMOUNT.
GROUP VARIABLE AND FIXED
ANNUITY CERTIFICATE --
FLEXIBLE PURCHASE PAYMENTS
The Penn Mutual Life Insurance Company, Independence Square, Philadelphia,
Pennsylvania 19172
<PAGE>
[Penn Mutual Letter Head]
June 11, 1999
Board of Trustees
The Penn Mutual Life Insurance Company
Philadelphia, PA 19172
Re: Individual Variable and Fixed Annuity Contracts
SEC Registration Statement -- SEC File No. 2-77283
------------------------------------------ -------
Ladies and Gentlemen:
In my opinion the individual variable annuity contract, registered with
the U.S. Securities and Exchange Commission under the above-reference
registration statement, will, when issued, be legally issued and represent legal
obligations of the Company.
I hereby consent to the inclusion of this opinion in the above
referenced registration statement as an exhibit.
Sincerely,
/s/ Franklin L. Best, Jr.
- --------------------------------
Franklin L. Best, Jr.
Associate General Counsel
<PAGE>
The Penn Mutual Life Insurance Company
Power of Attorney
Julia Chang Bloch, whose signature appears below, does hereby
constitute and appoint Robert E. Chappell and Daniel J. Toran, and each of them
severally, her true and lawful attorneys and agents, with power of substitution
and resubstitution, to do any and all acts and things and to execute any and all
instruments which said attorney and agents, and each of them, may deem necessary
or advisable or which may be required to enable The Penn Mutual Life Insurance
Company (the "Company") to comply with the Investment Company Act of 1940 and
the Securities Act of 1933, as amended, and any rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing and effectiveness of the Company's Registration
Statement on Form N-4 (SEC Registration No. 2-77283) pursuant to such Acts,
including specifically, but without limiting the generality of the foregoing,
the power and authority to sign in the name and on behalf of the undersigned as
a trustee and/or officer of the Company such Registration Statement and any and
all amendments and supplements to such Registration Statement filed with the
Securities and Exchange Commission under said Acts, and any other instruments or
documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorneys and agents, and each of them, shall do or cause to be
done by virtue hereof.
Date: April 30 , 1998 /s/ Julia Chang Bloch
----------------------------
Julia Chang Bloch
