Prospectus Supplement Dated January 2, 1996 for
Lincoln National Variable Annuity Account E
(The American Legacy )
This document is a Supplement to the Prospectus dated April 1, 1995.
PAGE ONE (1), PARAGRAPH SIX (4); PAGE FOUR (4) UNDER THE TEXT LABELED,
"WHAT ARE MY INVESTMENT CHOICES"; AND PAGE EIGHT (8) UNDER THE
TEXT LABELED, "DESCRIPTION OF THE SERIES", OF THE CURRENT
PROSPECTUS: These sections are hereby amended to add the bond Fund to the
listing of portfolios within the American Variable Insurance Series (AVIS).
As a result, the number of investment options (and subaccounts) within AVIS has
increased from seven to eight.
TO BE INSERTED ON PAGE THREE (3) OF THE PROSPECTUS AFTER THE TEXT
LABELED, "Variable Account E Annual Expenses":
BA
Mortality and Expense Risk Fees 1.25%
TOTAL ACCOUNT H ANNUAL EXPENSES 1.25%
BA = Bond Sub-Account
TO BE INSERTED ON PAGE THREE (3) OF THE CURRENT PROSPECTUS AFTER
THE TEXT LABELED, "Annual Expenses of the Funds":
BF*
Management Fees 0.60%
Other Expenses 0.05
TOTAL FUND ANNUAL EXPENSES 0.65%
BF = Bond Fund
* These expenses are estimated amounts for the current fiscal year ended
November 30, 1995.
TO BE INSERTED ON PAGE FOUR (4) OF THE CURRENT PROSPECTUS AFTER
THE TEXT LABELED, "Examples (reflecting expenses of both the Variable Account
and of the Funds)":
A. If you surrender your contract at the end of the applicable time
period, you would pay the following expenses (1) on a $1,000
investment, assuming a 5%
annual return (2) on assets:
1 Year* 3 Years*
Bond Fund $ 79 $110
B. If you do not surrender your contract (or if you annuitize) at the
end of the applicable time period, you would pay the following
expenses (1) on a $1,000
investment, assuming a 5% annual return (2) on assets:
1 Year* 3 Years*
Bond Fund $ 19 $ 60
* These expenses are estimated amounts for the fiscal year ended
November 30, 1995.
TO BE INSERTED ON PAGE EIGHT (8) OF THE CURRENT PROSPECTUS AFTER
THE PARAGRAPH WHICH BEGINS WITH "High-Yield Bond Fund":
The Bond Fund seeks a high level of current income as in consistent with
the preservation of capital by investing in a broad variety of fixed
income securities including: marketable corporate debt securities, loan
participations, U.S. Government Securities, mortgage-related securities,
other asset-backed securities and cash or money market instruments.
Please note: As of the date of this Prospectus Supplement, this fund will not
be available in California, Connecticut, District of Columbia, Massachusetts,
Montana, New Hampshire, North Dakota, South Carolina, and Vermont until
necessary regulatory approvals are obtained in those states. Please consult
your investment dealer for current information about the Bond Fund's
availability.
PLEASE KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS FOR FUTURE
REFERENCE.
THE AMERICAN LEGACY
LINCOLN NATIONAL
VARIABLE ANNUITY ACCOUNT E
INDIVIDUAL VARIABLE ANNUITY CONTRACTS ISSUED BY
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
1300 South Clinton Street, Fort Wayne, Indiana 46802
Telephone: 1-800-942-5500
The individual flexible premium deferred variable annuity contract described
in this Prospectus (Contract or Variable Annuity Contract) is designed and
offered by The Lincoln National Life Insurance Company (LNL). The Contract
can be used in both qualified and non-qualified plans. It is offered for
use in connection with the following retirement plans qualified for
special tax treatment under the Internal Revenue Code of 1986 as amended
(Code): (1) public school systems and certain tax-exempt organizations
[403(b)]; (2) qualified corporate employee pension and profit-sharing trusts
and qualified annuity plans; (3) corresponding plans of self-employed
individuals (H.R. 10 or Keogh); (4) individual retirement annuities
(IRA); (5) deferred compensation plans (457); and (6) simplified employee
pension plans. Section 403(b) business under number 1 above will normally be
accepted only for deposits qualifying as 403(b) lump sum transfers or
rollovers. The Contract is also offered for use in connection with plans
established by persons who are not entitled to participate in one of the
aforementioned plans (non-qualified contracts).
Type of contract being offered--this Prospectus offers an individual flexible
premium deferred variable annuity contract.
The Contract provides for the accumulation of Contract Value and payment of
annuity benefits on a variable or fixed basis, or a combination variable and
fixed basis. Payment of annuity benefits commences at a future date no later
than the first day of the next month after the Annuitant's 85th birthday as
selected by the Contract Owner (the Annuity Commencement Date). In the event
of the death of the Annuitant prior to the Annuity Commencement Date,
the greater of the value of the Contract Owner's account or the Guaranteed
Minimum Death Benefit (GMDB) will be paid to the Contract Owner's designated
Beneficiary. (See "Death Benefit Prior to Annuity Commencement Date").
MINIMUM INITIAL PURCHASE PAYMENT: $1,500 for Non-Qualified Contract
$ 300 for Qualified Contract
MINIMUM SUBSEQUENT PURCHASE PAYMENTS: $ 25 per payment, subject to a
$ 300 annual minimum
All investments (Purchase Payments) for benefits on a variable basis will be
allocated to Lincoln National Variable Annuity Account E (the Variable
Account), a unit investment trust, which is divided into seven separate
subaccounts. The Variable Account will invest the Purchase Payments (at
net asset value) in shares of one or more specified Funds of the
American Variable Insurance Series, referred to as "the Fund(s)": the Growth
Fund, the International Fund, the Growth-Income Fund, the Asset Allocation
Fund, the High-Yield Bond Fund, the U.S. Government/AAA-Rated Securities
Fund, and the Cash Management Fund as directed by the Contract Owner. (As of
the date of this prospectus, the Asset Allocation and International Funds
are not yet available to California residents. See "Description of the
Series," below). The value of a Contract prior to the Annuity Commencement
Date, and the amount of the variable annuity payments thereafter, will depend
upon the investment results of the Fund(s) selected. Investments in these
Funds are neither insured nor guaranteed by the U.S. Government or any other
entity or person.
Purchase Payments for benefits on a fixed basis will be allocated to the fixed
portion of the Contract, part of the general account of Lincoln Life. This
Prospectus describes only the elements of the Contracts pertaining to the
Variable Account except where reference to the fixed portion of the Contract
is specifically made.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS SETS FORTH CONCISELY THE INFORMATION ABOUT THE
VARIABLE ACCOUNT THAT A PROSPECTIVE INVESTOR OUGHT TO KNOW
BEFORE INVESTING. PLEASE READ IT CAREFULLY AND RETAIN IT FOR
FUTURE REFERENCE.
ADDITIONAL INFORMATION ABOUT THE VARIABLE ACCOUNT HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THAT
STATEMENT OF ADDITIONAL INFORMATION (SAI), DATED APRIL 29, 1994, HAS
BEEN INCORPORATED BY REFERENCE INTO THIS PROSPECTUS AND WILL BE
PROVIDED ON REQUEST AND WITHOUT CHARGE.
FOR A COPY, COMPLETE AND MAIL THE ENCLOSED CARD, OR CALL 1-800-942-5500,
EXTENSION 4912. A TABLE OF CONTENTS FOR THE SAI APPEARS ON THE
LAST PAGE OF THIS PROSPECTUS.
THIS PROSPECTUS MUST BE ACCOMPANIED OR PRECEDED BY A CURRENT
PROSPECTUS OF THE AMERICAN VARIABLE INSURANCE SERIES, WHICH
SHOULD ALSO BE READ CAREFULLY BEFORE INVESTING AND RETAINED FOR
FUTURE REFERENCE.
THIS PROSPECTUS IS DATED APRIL 29, 1995
TABLE OF CONTENTS
PAGE PAGE
SPECIAL TERMS 2 FEDERAL TAX STATUS 14
EXPENSE TABLE 3 VOTING RIGHTS 15
SYNOPSIS 4 DISTRIBUTION OF CONTRACTS 16
CONDENSED FINANCIAL INFORMATION 6 RETURN PRIVILEGE 16
FINANCIAL STATEMENTS 7 STATE REGULATION 16
THE LINCOLN NATIONAL LIFE RESTRICTIONS UNDER THE TEXAS
INSURANCE COMPANY 7 OPTIONAL RETIREMENT PROGRAM 16
VARIABLE ACCOUNT 7 RECORDS AND REPORTS 16
INVESTMENTS OF THE VARIABLE OTHER INFORMATION 17
ACCOUNT 7 TABLE OF CONTENTS OF THE
CHARGES AND OTHER DEDUCTIONS 8 STATEMENT OF ADDITIONAL
THE CONTRACTS 10 INFORMATION (SAI) 17
ANNUITY PAYMENTS 13
SPECIAL TERMS
As used in this Prospectus, the following terms have the indicated meanings:
ACCOUNT OR VARIABLE ACCOUNT: The segregated investment account in which The
Lincoln National Life Insurance Company sets aside and invests the assets
attributable to the Variable Annuity Contract offered by this Prospectus.
ACCUMULATION UNIT: A unit of measurement used to calculate the Contract Value
prior to the Annuity Commencement Date. See "Allocation of Purchase
Payments" below.
ADVISER OR INVESTMENT ADVISER: Capital Research and Management Company,
which provides investment management services to the Series. See "Investment
Adviser" below.
ANNUITANT: The person on whose life or life expectancy the payments are based.
ANNUITY COMMENCEMENT DATE: The date which the Contract Owner has designated
for commencement of annuity payments.
ANNUITY OPTION: An optional form of payment of the annuity provided for
under the Contract. See "Annuity Payments" below.
ANNUITY UNIT: A unit of measurement used after the Annuity Commencement Date to
calculate the amount of annuity payments. See "Annuity Payments" below.
BENEFICIARY: The person designated by the Contract Owner to receive the Death
Benefit, if any, payable upon death of the Annuitant.
CASH SURRENDER VALUE: Upon surrender, the Contract Value less any applicable
charges, fees and taxes.
CODE: The Internal Revenue Code of 1986, as amended.
CONTRACT: The agreement between Lincoln Life and the Contract Owner providing a
variable annuity for an Annuitant who is named in the Contract (also referred
to in this Prospectus as the Variable Annuity Contract).
CONTRACT OWNER: The Annuitant (or other designated person), except in cases
where a Contract is issued to a trustee of a trust or to a custodian of a
qualified pension or profit-sharing plan under Section 401(a) of the Code or of
an Individual Retirement Annuity under Section 408(a) of the Code, or where a
Contract is issued in connection with a deferred compensation plan pursuant
to Section 457 of the Code. In cases where the Contract is issued to such a
trustee or custodian, as defined above, the Contract Owner is the trustee or
custodian.
CONTRACT VALUE: The sum of the values of all the Accumulation Units and all
monies held in the general account attributable to a Contract at a given time.
CONTRACT YEAR: Each year commencing with the date of issue of the Contract
and with each Contract anniversary thereafter.
DEATH BENEFIT: The amount payable to the Contract Owner's designated
Beneficiary upon death of the Annuitant prior to the Annuity Commencement
Date. See "Death Benefit Prior to Annuity Commencement Date" below.
DEPOSITOR: The Lincoln National Life Insurance Company.
HOME OFFICE: The principal office of Lincoln Life, located at 1300 South
Clinton Street, Fort Wayne, Indiana 46802.
LINCOLN LIFE: The Lincoln National Life Insurance Company.
FUND(S): The underlying investment options available in the American Variable
Insurance Series.
LNL: The Lincoln National Life Insurance Company.
PURCHASE PAYMENTS: Amounts paid to purchase an annuity by or on behalf of an
Annuitant.
SERIES: American Variable Insurance Series (the "Series"), the fund in which
Purchase Payments are invested.
SUB-ACCOUNT: That portion of the Variable Account which pertains to
investments in Accumulation Units of a particular Fund.
VALUATION DATE: Each day that the New York Stock Exchange is open for
business. See "The Contracts--Valuation Date" below.
VALUATION PERIOD: The period commencing at the close of business on a
particular Valuation Date and ending at the close of business on the next
succeeding Valuation Date.
EXPENSE TABLE
CONTRACT OWNER TRANSACTION EXPENSES:
Contingent Deferred Sales Charge
(as a percentage of Purchase Payments): 6%
(Note: This charge may be waived in certain cases. See "Contingent Deferred
Sales Charges" below.)
Reduced Contingent Deferred Sales Charges Over Time
The contingent deferred sales charge percentage listed above is the
MAXIMUM percentage charged. The later a redemption occurs, the lower the
contingent deferred sales charge with respect to those withdrawals.
(See the table under "Contingent Deferred Sales Charges," below.
ANNUAL CONTRACT FEE: $35*
*This is a single charge assessed against Contract Value on the last
Valuation Date of each Contract Year and upon full surrender, it is NOT a
separate charge for each sub-account.
___________________________________________________________________________
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
VARIABLE ACCOUNT E ANNUAL EXPENSES
(as a percentage of average
account value for each
sub-account): GA* IA** GIA AAA** HBA G/A CMA
Mortality and Expense Risk Fees 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25%
TOTAL ACCOUNT E ANNUAL EXPENSES 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25%
*The symbols shown represent these sub-accounts: GA=Growth Sub-Account;
IA=International Sub-Account; GIA=Growth-Income Sub-Account; HBA=High-Yield
Bond Sub-Account; AAA=Asset Allocation Sub-Account; G/A=U.S.
Government/AAA-Rated Sub-Account; CMA=Cash Management Sub-Account
**These Sub-Accounts were added effective December 6, 1993, and were first
offered to Contract Owners on January 3, 1994.
</TABLE>
___________________________________________________________________________
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ANNUAL EXPENSES OF THE FUNDS
(as a percentage of each Fund's
average net assets): GF* IF** GIF AAF** HBF GAF CMF
Management Fees .46% .69% .44% .50% .51% .51% .46%
Other Expenses .03 .11 .03 .03 .03 .03 .03
TOTAL FUND ANNUAL EXPENSES .49% .80% .47% .53% .54% .54% .49%
</TABLE>
*The symbols shown represent these Funds: GF=Growth Fund;
IF=International Fund; GIF=Growth-Income Fund; AAF=Asset Allocation Fund;
HBF=High-Yield Bond Fund; GAF=U.S. Government/AAA-Rated Securities Fund;
CMF=Cash Management Fund.
**These Funds were added effective December 6, 1993, and were first offered
to Contract Owners on January 3, 1994.
EXAMPLES (reflecting expenses both of the Variable Account and of the Funds):
A. If you surrender your contract at the end of the applicable time period,
you would pay the following expenses(1) on a $1,000 investment, assuming 5%
annual return(2) on assets:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS(4)
GF(3) $78 $105 $124 $204
IF(5) 81 114 140 237
GIF 77 104 123 202
AAF(5) 78 106 126 209
HBF 78 106 127 210
GAF 78 106 127 210
CMF 78 105 124 204
</TABLE>
B. If you do not surrender your contract (or if you annuitize), you would
pay the following expenses(1) on a $1,000 investment, assuming 5% annual
return(2) on assets:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS(4)
GF(3) $18 $55 $ 94 $204
IF(4) 21 64 110 237
GIF 17 54 93 202
AAF(4) 18 56 96 209
HBF 18 56 97 210
GAF 18 56 97 210
CMF 18 55 94 204
</TABLE>
(1) These expenses, calculated as mandated by the Securities and Exchange
Commission, reflect the Annual Contract Fee as the ratio of the total
contract fees collected in the most recent fiscal year to the total average
net assets of the Account.
(2) Use of this assumed return is mandated by the Securities and Exchange
Commission and is not intended to be an illustration of past or future
investment results.
(3) Key: GF=Growth Fund; IF=International Fund; GIF=Growth-Income Fund;
AAF=Asset Allocation Fund; HBF=High-Yield Bond Fund;
GAF=U.S. Government/AAA-Rated Securities Fund; CMF=Cash Management Fund
(4) The average expenses paid over a 10-year period would be approximately
$20-$24 per year per Contract.
(5) This fund, although made available to Account E Contract Owners on
January 3, 1994, is not a new fund. Therefore, these expense examples are
based on 1993 data.
All of the figures provided under the sub-heading "Annual Expenses of the
Funds" and part of the data used to produce the figures in the "Examples"
were supplied by the underlying portfolio company (American Variable
Insurance Series) through the Variable Account's principal underwriter,
American Funds Distributors, Inc.
This table is provided to assist the Contract Owner in understanding the
various costs and expenses that he or she will bear directly or indirectly.
The table reflects expenses both of the Variable Account and of the five
Funds. For more complete descriptions of the various costs and expenses
involved, see "Charges and Other Deductions" in this Prospectus, and "Fund
Organization and Management" in the Prospectus for the Funds. Premium taxes
may also be applicable, although they do not appear in the table. THE
"Examples" SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES; ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN. This
table is unaudited.
SYNOPSIS
WHAT TYPE OF CONTRACT AM I BUYING?--It is an annuity contract issued by
LINCOLN Life. It may provide for a fixed annuity and/or a variable annuity.
This Prospectus is intended to provide disclosure only about the variable
portion of the Contract. (See "The Contracts," below.)
WHAT IS THE VARIABLE ACCOUNT?--It is a segregated asset account established
under Indiana insurance law, and registered with the Securities and Exchange
Commission as a unit investment trust. The assets in the Variable Account
are allocated to one or more Sub-Accounts, according to the investment
preference of the Contract Owner, and those assets are not chargeable with
liabilities arising out of any other business which Lincoln Life may
conduct. (See "Variable Account," below.)
WHAT ARE MY INVESTMENT CHOICES?--Through its various Sub-Accounts, the
Variable Account uses your Purchase Payments to purchase Series shares, at
your direction, in one or more of the following investment funds of the
American Variable Insurance Series (Series): Growth Fund, International Fund,
Growth-Income Fund, Asset Allocation Fund, High-Yield Bond Fund,
U.S. Government/AAA-Rated Securities Fund, and Cash Management Fund. In
turn, each fund holds a portfolio of securities consistent with its own
particular investment policy. (See "Investments of the Variable
Account--Description of the Series," below.)
WHO INVESTS MY MONEY?--The investment adviser for the Series is Capital
Research and Management Company (CRMC), Los Angeles, California. CRMC is a
long-established investment management organization, and is registered as an
investment adviser with the Securities and Exchange Commission. (See
"Investments of the Variable Account--Investment Adviser," below.)
HOW DOES THE CONTRACT WORK?--Once your application is approved by Lincoln
Life, you will be issued an individual annuity Contract. During the
Accumulation Period, your Purchase Payments will buy Accumulation Units under
the Contract. Should you decide to annuitize (that is, change your contract
to a payout mode rather than an accumulation mode), your Accumulation Units
will be converted to Annuity Units. Your periodic annuity check will be
based upon the number of Annuity Units to which you became entitled at the
time you decided to annuitize, and the value of each unit on the valuation
date. (See "The Contracts," below.)
WHAT CHARGES ARE ASSOCIATED WITH THIS CONTRACT?--At the end of each
Contract Year and at time of surrender, Lincoln Life will deduct $35 from your
Contract Value as a maintenance charge. Should you decide to withdraw
Contract Value before your Purchase Payments have been in your account for
a certain minimum period, you will incur a contingent deferred sales charge
of anywhere from 1% to 6%, depending upon how many years those payments have
been on deposit. (Note: This sales charge is not assessed upon
annuitization, or upon the death or where total and permanent disability
occurs subsequent to the contract effective date and prior to the 65th
birthday, of the annuitant.) If your state assesses a premium tax with
respect to your Contract, then at the time the tax is incurred,
Lincoln Life will deduct those amounts from Purchase Payments or Contract
Value, as applicable.
Lincoln assesses a charge of .8 of 1% of net asset value for the mortality
risk guarantees given in the Contract, and .45 of 1% for administrative
expense risks assumed by Lincoln Life. (For a complete discussion of the
charges associated with the Contract, see "Charges and Other Deductions,"
below.)
American Variable Insurance Series pays a fee to its investment adviser,
CRMC, based upon the average daily net asset value of each fund in the
Series. (See "Investments of the Variable Account--Investment Adviser,"
below.) In addition, there are other expenses associated with
the daily operation of the Series. These are more fully described in the
Prospectus for the Series.
HOW MUCH MUST I PAY, AND HOW OFTEN?--Subject to the minimum and maximum
payments stated on the first page of this Prospectus, the amount and
frequency of payments is completely flexible. (See "The Contracts--Purchase
Payments," below.)
HOW WILL MY ANNUITY PAYMENTS BE CALCULATED?--If you decide to annuitize,
you elect an annuity payment option. Once you have done so, your monthly
payment will be based upon a number of factors. For a Contract Owner
participating in the Variable Account, the changing values of the Series
Funds in which you have invested will be one such factor. (See "Annuity
Payments," below.) Remember that participants in the Variable Account take
the risk of any drop, and benefit from any gain, in the value of the
securities in the Series' portfolios.
WHAT HAPPENS IF I DIE BEFORE I ANNUITIZE?--If you are the Annuitant and also the
Contract Owner, then a Beneficiary whom you designate will receive either the
sum of all Purchase Payments minus prior withdrawals/partial surrenders, or
the then current value of the Contract, whichever is greater. Your
Beneficiary will have certain options for how the money is to be paid out.
A Contract Owner who is not also an Annuitant is subject to certain special
rules. (See "The Contracts--Death Benefit Prior to Annuity Commencement
Date/Death of Contract Owner," below.)
MAY I TRANSFER CONTRACT VALUE BETWEEN FUNDS IN THE SERIES?--Yes;
however, there are limits on how often you may do so. (See "The
Contracts--Transfers of Accumulation Units Between Sub-Accounts and
Transfers on or Following the Annuity Commencement Date, below.)
MAY I TRANSFER CONTRACT VALUE FROM THE FIXED TO THE VARIABLE
SIDE OF THE ACCOUNT, AND VICE-VERSA? Yes, subject once again to specific
restrictions in the Contract. (See "The Contracts--Transfers of Accumulation
Units to and From the General Account," below.)
MAY I SURRENDER THE CONTRACT OR MAKE A PARTIAL WITHDRAWAL?--Yes,
subject to any contract requirements and to any restrictions imposed under
certain retirement plans. (Contract Owners under a public school system or
tax-exempt institution qualifying under Section 403(b) of the Internal
Revenue Code are subject to special restrictions upon surrender and withdrawal.)
If you surrender the Contract or make a partial withdrawal, certain charges
may be assessed, as discussed above and under "Charges and Other Deductions,"
below. In addition, the IRS may assess a premature withdrawal penalty tax.
A surrender may be subject to 20% withholding. (See "Federal Tax
Status--Withholding, below.)
DO I GET A 'FREE LOOK' AT THIS CONTRACT?--Yes. If within 20 days of the date
you first receive the Contract you return it, postage pre-paid, to the Home
Office of Lincoln Life, it will be cancelled. However, except in a very few
states, you assume the risk of a market drop with respect to Purchase
Payments which you allocated to the variable side of the Contract. (See
"Return Privilege," below.)
LINCOLN NATIONAL VARIABLE ANNUITY ACCOUNT E
CONDENSED FINANCIAL INFORMATION
The following information relating to accumulated unit values and number of
accumulation units for the life of the Account is derived from the Variable
Account's financial statements. The information relating to accumulation unit
values and number of accumulation units should be read in conjunction with
the Variable Account's financial statements and notes included in the SAI.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
HIGH U.S. GOV- CASH
GROWTH- ASSET YIELD ERNMENT/ MANAGE-
GROWTH INCOME ALLOCATION BOND AAA-RATED MENT INTERNATIONAL
SUB- SUB- SUB- SUB- SUB- SUB- SUB-
1987* ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
Accumulation Unit Value
--Beginning of Period $1.000 $1.000 $1.000 $1.000 $1.000
--End of Period .818 .842 .974 .948 1.037
Number of Accumulation Units
--End of Period (000's) 28,656 58,406 9,304 11,177 8,749
1988
Accumulation Unit Value
--Beginning of Period $.818 $.842 $ .974 $ .948 $1.037
--End of Period .925 .952 1.103 1.012 1.097
Number of Accumulation Units
--End of Period (000's) 54,124 111,918 23,858 26,477 26,381
1989
Accumulation Unit Value
--Beginning of Period $ .925 $ .952 $1.103 $1.012 $1.097
--End of Period 1.200 1.180 1.204 1.108 1.179
Number of Accumulation Units
--End of Period (000's) 93,979 195,478 34,050 42,915 31,446
1990
Accumulation Unit Value
--Beginning of Period $1.200 $1.180 $1.204 $1.108 $1.179
--End of Period 1.133 1.136 1.234 1.187 1.256
Number of Accumulation Units
--End of Period (000's) 99,094 199,880 29,430 43,779 29,312
1991
Accumulation Unit Value
--Beginning of Period $1.133 $1.136 $1.234 $1.187 $1.256
--End of Period 1.492 1.392 1.543 1.359 1.309
Number of Accumulation Units
--End of Period (000's) 106,335 203,868 28,254 44,335 19,913
1992
Accumulation Unit Value
--Beginning of Period $1.492 $1.392 $1.543 $1.359 $1.309
--End of Period 1.632 1.484 1.714 1.444 1.335
Number of Accumulation Units
--End of Period (000's) 110,169 201,913 27,823 42,291 21,963
1993
Accumulation Unit Value
--Beginning of Period $1.632 $1.484 $1.000** $1.714 $1.444 $1.335 $1.000**
--End of Period 1.875 1.646 0.986 1.971 1.586 1.353 1.001
Number of Accumulation Units
--End of Period (000's) 111,230 199,178 3,807 29,951 39,387 13,982 13.982 _________________________
</TABLE>
*Account E commenced operations on March 9, 1987. Therefore, the figures for
1987 in this table represent experience of less than one year.
**The International Sub-Account and Asset Allocation Sub-Account commenced
operations on January 3, 1994.
The International Sub-Account and Asset Allocation Sub-Account commenced
operations on January 3, 1994, so they have been excluded from the table.
FINANCIAL STATEMENTS
The financial statements for the Variable Account and for Lincoln Life are
located in the SAI. See the cover page of this Prospectus for information on
how to obtain a copy.
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
The Lincoln National Life Insurance Company (Lincoln Life), P.O. Box 2348,
1300 South Clinton Street, Fort Wayne, Indiana 46802, is a stock life
insurance company organized in 1905 under the laws of the State of Indiana,
which is in turn wholly owned by Lincoln National Corporation, a
publicly-held holding company organized under Indiana law. Lincoln
National Corporation, through subsidiaries, engages primarily in the
issuance of annuities, life insurance, property-casualty insurance,
reinsurance, and financial services. The obligations under the Contracts
are those of Lincoln Life.
VARIABLE ACCOUNT
The Variable Account was established by Lincoln Life (its Depositor) under
Indiana law on September 26, 1986. The Variable Account has been registered
with the Securities and Exchange Commission as a unit investment trust pursuant
to the provisions of the Investment Company Act of 1940 (the 1940 Act). Such
registration does not involve supervision of the management of the Variable
Account or Lincoln Life by the Securities and Exchange Commission. The
Variable Account is a segregated investment account, and as such satisfies
the definition of "separate account" under the federal securities laws. Thus,
the Variable Account is not chargeable with liabilities arising out of any
other business that Lincoln Life may conduct. Income, gains, and losses,
whether or not realized, from assets allocated to the Variable Account, are,
in accordance with the applicable Contracts, credited to or charged
against the Variable Account without regard to other income, gains, or losses
of the Depositor. The investment results of the Variable Account will
fluctuate, and are not guaranteed. The Contract's value and the amount of
variable annuity payments depend on the investment results of the underlying
Series' Fund(s). Thus, THE CONTRACT OWNER BEARS THE FULL INVESTMENT RISK
FOR ALL AMOUNTS ALLOCATED TO THE VARIABLE ACCOUNT.
INVESTMENTS OF THE VARIABLE ACCOUNT
Purchase Payments to be invested in the Variable Account will be allocated
among one or more sub-accounts, each of which invests solely in shares of
one of the Series' Funds, according to the instructions contained in the
Contract Owner's application. Contract Owners may change their allocation
of Purchase Payments without penalty or other charge, subject to restrictions
set forth in this Prospectus. Shares of the Funds will be sold at net asset
value (no sales charge) to the Variable Account for the purpose of funding the
Contracts, and the Series is required to redeem the shares of all Funds at net
asset value at Lincoln Life's request.
INVESTMENT ADVISER
The Series has retained, as its investment adviser, Capital Research and
Management Company, 333 South Hope Street, Los Angeles, California 90071,
one of the nation's largest and oldest investment management organizations.
As compensation for its services to the Series, the Investment Adviser
receives from the Series a fee, accrued daily and paid monthly, based on
the net assets of each Fund, as described in the prospectus for the Series.
DESCRIPTION OF THE SERIES
The Series was organized as a Massachusetts business trust in 1983 and is
registered as a diversified, open-end management investment company under
the 1940 Act. The Series consists of seven Funds: the Growth Fund, the
International Fund, the Growth-Income Fund, the Asset Allocation Fund, the
High-Yield Bond Fund, the U.S. Government/AAA-Rated Securities Fund and the
Cash Management Fund. The Series' Board of Trustees may at any time
establish additional Funds, which may or may not be available to the
Variable Account. The Series offers its shares to insurance company
separate accounts only. Fund assets are segregated and a shareholder's
interest is limited to those Funds in which the shareholder owns shares.
The seven Funds available to Variable Account Contract Owners have, and are
subject to, certain investment policies and restrictions which may not be
changed without a majority vote of shareholders of the respective Funds. A
summary of the investment objectives of each Fund of the Series available to
Contract Owners is given below. More detailed information may be found in
the current Prospectus for the American Variable Insurance Series, which
must accompany or precede this Prospectus and which should be read carefully.
THERE IS NO ASSURANCE THAT ANY OF THE FUNDS WILL ACHIEVE THEIR STATED
OBJECTIVES.
GROWTH FUND--The Growth Fund seeks to provide growth of capital. Whatever
current income is generated by the Fund is likely to be incidental to the
objective of capital growth. Ordinarily, accomplishment of the Fund's
objective of capital growth will be sought by investing primarily in common
stocks or securities with common stock characteristics.
INTERNATIONAL FUND--The International Fund seeks long-term growth of capital by
investing primarily in securities of issuers domiciled outside the United
States.
GROWTH-INCOME FUND--The Growth-Income Fund seeks growth of capital and income.
In the selection of securities for investment, the possibilities of
appreciation and potential dividends are given more weight than current
yield. Ordinarily, the assets of the Growth-Income Fund consist principally of
a diversified group of common stocks, but other types of securities may be
held when deemed advisable including preferred stocks and corporate
bonds, including convertible bonds.
ASSET ALLOCATION FUND--The Asset Allocation Fund seeks high total return
(including income and capital gains) consistent with preservation of capital
over the long-term through a diversified portfolio that can include common
stocks and other equity-type securities, bonds and other intermediate and
long-term fixed-income securities and money market instruments in any
combination.
HIGH-YIELD BOND FUND--The High-Yield Bond Fund is a fully managed, diversified
bond portfolio. It seeks high current income and secondarily seeks capital
appreciation. The High-Yield Bond Fund will generally be invested
substantially in intermediate-and long-term corporate obligations, with
emphasis on higher yielding, higher risk, lower rated or unrated securities.
U.S. GOVERNMENT/AAA-RATED SECURITIES FUND--The U.S. Government/AAA-Rated
Securities Fund seeks a high level of current income consistent with prudent
investment risk and preservation of capital by investing primarily in a
combination of securities guaranteed by the U.S. Government and other debt
securities rated AAA or Aaa.
CASH MANAGEMENT FUND--The Cash Management Fund seeks high current yield while
preserving capital by investing in a diversified selection of money market
instruments.
SALE OF FUND SHARES BY THE SERIES
LNL will purchase shares of the Funds at net asset value and allocate them to
the appropriate sub-accounts of the Variable Account. Lincoln Life will
redeem sufficient shares of the appropriate Fund to pay annuity payments,
Death Benefits or surrender or withdrawal proceeds, or for other purposes
contemplated by the Contract. In addition, if a Contract Owner elects to
transfer all or part of his/her investment in one Fund to another Fund, Lincoln
Life may redeem shares held in the first Fund and purchase shares of the
other Fund.
Shares of the Funds are not sold directly to the general public. They are
sold only to Lincoln Life, and may be sold to other insurance companies for
investment of the assets of the sub-accounts established by those insurance
companies to fund variable annuity and variable life insurance contracts.
When the Series sells shares in any of its Funds both to variable annuity and
to variable life insurance separate accounts, it is said to engage in "mixed
funding." When the Series sells shares in any of its Funds to separate
accounts of unaffiliated life insurance companies, it is said to engage in
"shared funding."
The Series currently engages in mixed and shared funding. Therefore, due to
differences in redemption rates or tax treatment, or other considerations,
the interests of various Contract Owners participating in a Fund could
conflict. The Series' Board of Trustees will monitor for the existence of
any material conflicts, and determine what action, if any, should be taken.
(See the Prospectus for the Series.)
REINVESTMENT
All dividend and capital gain distributions of the Funds will be automatically
reinvested in shares of the distributing Funds at their net asset value on
the record date.
ADDITION, DELETION, OR SUBSTITUTION OF INVESTMENTS
Lincoln Life reserves the right, subject to compliance with the law as
currently applicable or subsequently changed, to make additions to,
deletions from, or substitutions for the Series and/or any Funds within the
Series in which the Variable Account participates. Thus, if shares of any of
the above Funds should no longer be available for investment, or if in the
judgement of Lincoln Life's management further investment in any Fund should
become inappropriate in view of the purposes of the Contract, then Lincoln
Life may substitute shares of another Series, or of other Funds, for shares
already purchased, or to be purchased in the future, under the Contract.
No substitution of securities in any Contract Owner's account may take place
without notice to Contract Owners and prior approval of the Securities and
Exchange Commission, in accordance with the 1940 Act.
CHARGES AND OTHER DEDUCTIONS
ADMINISTRATIVE AND MAINTENANCE CHARGE
Lincoln Life will deduct a Contract maintenance charge of $35 per Contract
Year. This charge will be deducted from the Contract Value on the last
Valuation Date of each Contract Year to compensate Lincoln Life for
administrative services provided to Contract Owners. In addition, the
Contract maintenance charge will be deducted from the Contract Value as of the
Valuation Date immediately following receipt of a written request by the
Contract Owner for surrender, irrespective of when during the Contract Year
the surrender occurs. Lincoln Life does not intend to profit from the annual
maintenance charge.
CONTINGENT DEFERRED SALES CHARGES
A surrender of a Contract or withdrawal of Contract Value prior to Annuity
Commencement Date may be subject to a Contingent Deferred Sales Charge as set
forth in the table below, except that such charge does not apply to (1) the
first withdrawal of Contract Value during a Contract Year to the extent such
withdrawal does not exceed 10% of the Purchase Payments (this 10% withdrawal
exception does not apply to a surrender of a Contract), (2) automatic
withdrawals not in excess of 10% of the Purchase Payments during a Contract
Year made by Contract Owners who are at least age 59 1/2, (3) a surrender of a
Contract as a result of the "permanent and total disability" of the Annuitant
as defined in section 22(e)(3) of the Code prior to the 65th birthday of the
annuitant, (4) a surrender of a Contract or withdrawal of Contract Value of
a Contract issued to employees and registered representatives of any
member of the selling group and their spouses and minor children; or
officers, directors, trustees or bona-fide full-time employees of Lincoln
National Corporation or The Capital Group, Inc. or their affiliated or
managed companies (based upon the Contract Owner's status at the time the
Contract was purchased), and (5) a surrender of the Contract as a result of
the death of the Annuitant. These charges are not waived in connection with
withdrawals or a surrender of the Contract as a result of the death of an
Owner who is not an annuitant. The contingent deferred sales charge is
calculated separately for each Contract Year's Purchase Payments to which a
charge applies. Lincoln Life assumes that Purchase Payments are withdrawn
on a "first in-first out (FIFO) basis," and that all Purchase Payments are
withdrawn before any earnings are withdrawn. The contingent deferred sales
charges associated with surrender or withdrawal are paid to Lincoln Life to
compensate it for the loss it experiences on Contract distribution costs
when Contract Owners surrender or withdraw before distribution costs have
been recovered.
The Contingent Deferred Sales charges will be as follows:
NUMBER OF COMPLETE CONTRACT CONTINGENT DEFERRED SALES CHARGE
YEARS THAT PURCHASE PAYMENTS AS A PERCENTAGE OF THESURRENDERED
HAVE BEEN INVESTED OR WITHDRAWN PURCHASE PAYMENTS
Less than 2 years 6%
At least 2 years but less than 3 years 5%
At least 3 years but less than 4 years 4%
At least 4 years but less than 5 years 3%
At least 5 years but less than 6 years 2%
At least 6 years but less than 7 years 1%
At least 7 years 0%
Participants in the Texas Optional Retirement Program should refer to
"Restrictions Under the Texas Optional Retirement Program" below.
The administrative and contingent deferred sales charges described above may
be reduced or eliminated for any particular Contract but only to the extent
that Lincoln Life estimates that it will incur lower administrative and/or
distribution expenses or perform fewer administrative or sales services than
those originally contemplated in establishing the level of those charges.
Lower administrative and distribution expenses may be the result of economies
associated with (1) the use of mass enrollment procedures, (2) the
performance of administrative or sales functions by an employer, (3) the
use by an employer of automated techniques in submitting deposits or
information related to deposits on behalf of its employees or (4) any other
circumstances which reduce administrative or distribution expenses. The exact
amount for administrative and contingent deferred sales charges applicable
to a particular Contract will be stated in that Contract.
DEDUCTIONS FROM THE VARIABLE ACCOUNT FOR ASSUMPTION
OF DISTRIBUTION, MORTALITY AND EXPENSE RISKS
Lincoln Life deducts from the net asset value of the Variable Account an
amount, computed daily, which is equal to an annual rate of 1.25% to
compensate Lincoln Life for its assumption of certain risks described below.
This charge is allocable .80% to Lincoln Life's assumption of mortality
risks and .45% to its assumption of administrative and distribution expense
risks. The level of this charge is guaranteed and will not change.
Lincoln Life's assumption of mortality risks guarantees that the variable
annuity payments made to Contract Owners will not be affected by the
mortality experience (life span) of persons receiving such payments or of
the general population. LNL assumes this mortality risk by virtue of annuity
rates incorporated in the Contract which cannot be changed. LNL also
assumes the mortality risk inherent in the Death Benefit prior to the Annuity
Commencement Date.
Lincoln Life also assumes the risk that the charges for administrative and
distribution expenses, which cannot be increased by Lincoln Life, will be
insufficient to cover actual costs. The administrative services which
Lincoln Life provides to Contract Owners include processing of applications
for and issuance of the Contracts; processing purchases and redemptions of
Fund shares as required; maintaining records; administering annuity payments;
providing accounting and valuation services; and providing regulatory and
reporting services.
If the 1.25% charge proves insufficient to cover underwriting, administrative
and distribution costs in excess of the charges made for these expenses, the
loss will be borne by Lincoln Life; conversely, if the 1.25% charge proves
more than sufficient, the excess will be a profit to Lincoln Life.
Based on its actuarial determination, Lincoln Life does not anticipate that
the contingent deferred sales charge will cover all sales and administrative
expenses which Lincoln Life will incur in connection with the Contract.
Lincoln Life expects to profit from the daily deduction for mortality and
expense risks. Any such profit, as well as any other profit realized by
Lincoln Life and held in the general account (which supports insurance and
annuity obligations), would be available for any proper corporate purpose,
including, but not limited to, payment of sales and distribution expenses.
DEDUCTIONS FOR PREMIUM TAXES
Any premium tax or other tax (herein collectively referred to as premium
taxes) levied by any governmental entity as a result of the existence of the
Contracts or the Variable Account may be deducted from Contract Values when
incurred (or at such other time as Lincoln Life may choose).
The applicable premium tax rates that states and other governmental entities
impose on the purchase of an annuity are subject to change by legislation, by
administrative interpretation, or by judicial acts. Such premium taxes will
depend on the insurance tax laws of the relevant state. The tax ranges from
0.5% to 3.5%.
OTHER CHARGES AND DEDUCTIONS
There are deductions from and expenses paid out of the assets of the underlying
Series.
THE CONTRACTS
PURCHASE OF CONTRACTS
A person wishing to purchase a Contract must apply for it through an
authorized sales representative of Lincoln Life. The completed application
is then forwarded to Lincoln Life for acceptance or rejection. If the
application is accepted, a Contract is prepared and executed by duly
authorized officers of Lincoln Life, and then delivered to the Contract
Owner. See "Distribution of Contracts" below. Lincoln Life reserves the
right to reject applications in its sole discretion.
An initial Purchase Payment will be priced not later than two business days
after receipt of an order to purchase, if the application and all
information necessary for processing the purchase order are complete upon
receipt. Lincoln Life may retain the Purchase Payment for up to five
business days while attempting to complete an incomplete application. If
the application cannot be made complete within five days, the applicant will
be informed of the reasons for the delay and the Purchase Payment will be
returned immediately unless the applicant specifically consents to Lincoln
Life retaining the Purchase Payment until the application is made complete.
Thereafter, the Purchase Payment must be priced within two business days.
WHO CAN INVEST
Any individual of legal age in the states where the Contracts may be
lawfully sold who is eligible to participate in any of the qualified or
nonqualified plans for which the Contracts are designed, who fits Lincoln
Life's underwriting guidelines and where the annuitant does not have an
attained age of more than 85, may apply for a Contract.
PURCHASE PAYMENTS
Purchase Payments are payable to Lincoln Life at the frequency and in the
amount selected by the Contract Owner in the Application. The minimum
initial Purchase Payment is $1,500 for Non-Qualified Contracts and $300 for
Qualified Contracts. The minimum annual amount for subsequent Purchase
Payments is $300 for Non-Qualified and Qualified Contracts, with a minimum
of $25 per payment. Purchase Payments in the aggregate may not exceed
$1,000,000 for each Contract issued. In the event that a Contract Owner
ceases to make Purchase Payments, the Contract will remain in force as a
paid-up Contract as long as the total Contract Value is at least $300, and
payments may be resumed at any time until the earliest of the Annuity
Commencement Date, surrender of the Contract, or death of the Annuitant.
VALUATION DATE
Accumulation and Annuity Units will be valued once daily at the close of
trading (currently 4:00 p.m., New York time) on each day the New York Stock
Exchange is open (Valuation Date). On any date other than a Valuation Date,
the Accumulation and Annuity Unit value will be the same as that on the next
following Valuation Date.
ALLOCATION OF PURCHASE PAYMENTS
Purchase Payments are normally allocated to sub-accounts within the Variable
Account, each of which invests in one of the designated Funds of the Series,
according to the instructions of the Contract Owner. The minimum amount of
any Purchase Payment which can be allocated to any one sub-account is $20
under the Contract. Upon allocation to the appropriate sub-account, Purchase
Payments are converted into Accumulation Units. The number of Accumulation
Units credited is determined by dividing the amount allocated to each
sub-account by the value of an Accumulation Unit for that sub-account on the
Valuation Date on which the Purchase Payment is received, if received prior
to 2:00 p.m., E.S.T. on that date, and by the value computed on the next
Valuation Date, if received at or after 4:00 E.S.T. The number of
Accumulation Units so determined shall not be changed by any subsequent change
in the value of an Accumulation Unit, but the dollar value of an
Accumulation Unit will vary in amount depending upon the investment
experience, expenses, and other deductions of the underlying Fund.
VALUATION OF ACCUMULATION UNITS
Accumulation Units for each sub-account are valued separately. Initially,
the value of each Accumulation Unit was arbitrarily set at $1.00.
Thereafter, the value of an Accumulation Unit in any sub-account on any
Valuation Date equals the value of an Accumulation Unit in that sub-account
as of the immediately preceding Valuation Date, multiplied by the "net
investment factor" of that sub-account for the current Valuation Period. In
order to arrive at the net investment factor, a "gross investment rate" is
first determined for each Fund Valuation Period. Such rate is equal to:
(a) the investment income of the Fund for the Valuation Period (plus capital
gains and minus capital losses for the period, whether realized or unrealized)
minus (b) a daily charge against net assets for investment advisory services
and other expenses accrued by the Fund for each day of the Valuation Period,
divided by (c) the net asset value of the Fund as of the beginning of the
Valuation Period. The gross investment rate may be positive or negative.
The net investment rate with respect to each sub-account is then determined.
Such rate is equal to the gross investment rate for the Fund minus a daily
charge at an annual rate of 1.25% for each day of the Valuation Period.
TRANSFERS OF ACCUMULATION UNITS BETWEEN SUB-ACCOUNTS
Prior to the Annuity Commencement Date, a Contract Owner may transfer all or
a portion of his/her investment in one sub-account to another sub-account. A
transfer will result in the purchase of Accumulation Units in one
sub-account, and the redemption of Accumulation Units in the other
sub-account. Such a transfer will be accomplished at relative Accumulation
Unit values as of the Valuation Date immediately following receipt of the
transfer request.
A transfer between sub-accounts cannot be elected more than six times every
Contract Year. Lincoln Life reserves the right to waive this six-time limit.
The minimum amount which may be transferred between sub-accounts is $300 or
the amount in the sub-account, if less. If a transfer from a sub-account
would leave the Contract Owner with less than $300 in the sub-account,
Lincoln Life may transfer the total amount credited to such sub-account. A
transfer may be made by writing to Lincoln Life's Home Office or, if a
telephone exchange authorization form is on file with Lincoln Life, by
toll-free telephone call.
TRANSFERS OF ACCUMULATION UNITS TO AND FROM THE GENERAL
ACCOUNT
Prior to the Annuity Commencement Date, a Contract Owner may transfer all or
any part of the Contract Value from the sub-account(s) to the fixed side
(general account) of the Contract. Such transfers cannot be elected more
than six times every Contract Year. Lincoln Life reserves the right to waive
this six-time limit. The minimum amount which can be transferred to the
general account is $300 or the amount in the sub-account, if less. However,
if a transfer from a sub-account would leave the Contract Owner with less
than $300 in the sub-account, Lincoln Life may transfer the total amount to
the general account.
A Contract Owner may also transfer all or part of the Contract Value from the
general account to any of the sub-accounts, subject to the following
restrictions: (a) no more than 25% of the value of the general account may
be transferred to the sub-accounts in any Contract Year; and (b) the minimum
amount which can be transferred is $300 or the amount in the general account,
if less; and (c) this transfer cannot be made during the first 30 days after
the issue date of the Contract and cannot be elected more than six times
every Contract Year. Lincoln Life reserves the right to waive any of these
restrictions.
A Contract Owner who contemplates the transfer of Contract Value should
consider the risk inherent when he or she shifts from one sub-account to
another or to the general account. In general, frequent transfers based on
short-term expectations will tend to accentuate the danger that a transfer
will be made at an inopportune time.
TRANSFERS ON OR FOLLOWING THE ANNUITY COMMENCEMENT DATE
On or after the Annuity Commencement Date, a Contract Owner may direct a
transfer of assets from one sub-account to another sub-account or to the
general account. Such transfer will be limited to three times per Contract
Year. On or after the annuity commencement date, no assets may be
transferred from the general account to the sub-accounts.
DEATH BENEFIT PRIOR TO ANNUITY COMMENCEMENT DATE
The Contract Owner may designate a Beneficiary during the life of the
Annuitant and change the Beneficiary by filing a written request with Lincoln
Life at its Home Office. Each change of Beneficiary revokes any previous
designation. Lincoln Life reserves the right to require presentation of the
Contract for endorsement of a change of Beneficiary.
If the Annuitant dies prior to the Annuity Commencement Date, a Death Benefit
equal to the greater of (a) the Guaranteed Minimum Death Benefit (GMDB); or
(b) the current value of the Contract, will be paid to the Beneficiary
designated by the Contract Owner upon receipt of: (1) proof, satisfactory to
Lincoln Life, of the death of the Annuitant; (2) written authorization for
payment; and (3) receipt by Lincoln Life of all claim forms, fully completed.
The GMDB is equal to the sum of all Purchase Payments plus any Attributable
Gain (AG), minus any Withdrawals, partial annuitizations, and premium taxes
incurred. Lincoln Life determines the AG separately for each Contract Year
on its seventh anniversary (once its surrender charge period has expired).
The AG consists of the earnings on a Contract Year's Net Purchase Payment(s)
[Purchase Payment(s) minus any Withdrawals and partial annuitizations,
applied on a First-In-First-Out basis] as of the Valuation Date just before its
seventh anniversary. This amount will then be included in the GMDB
calculation. If contract conditions are met, the GMDB will be increased
automatically by Lincoln Life according to a prescribed formula based upon
the Contract's internal rate of return. For this to occur the annuitant, as
of the seventh anniversary of each eligible Contract Year, must still be
living and must be less than 81 years of age. For more information about
GMDB calculations, please refer to the SAI.
The value of the Death Benefit will be determined as of the date on which
the death claim is approved for payment. At any time during a 60-day period
commencing with the date of death of the Annuitant, the Beneficiary may elect
to receive payment either in the form of a single sum settlement or an
Annuity Option. If a single sum settlement is requested, the proceeds will
be mailed within seven days of receipt of such election and due proof of death
in accordance with any applicable laws and regulations governing payment of
death benefits. Any single sum payment may be postponed as permitted by the
1940 Act. If an election has not been made by the end of such 60-day period,
a single sum settlement will be made to the Beneficiary. If an Annuity
Option is elected, the Annuity Commencement Date shall be the date specified
in the election but not later than 60 days after receipt by Lincoln Life of
notification of death. Payment will be made in accordance with any
applicable laws and regulations governing payment of Death Benefits.
Unless otherwise provided in the Beneficiary designation, one of the
following procedures will take place on the death of a Beneficiary: (1) If
any Beneficiary dies before the Annuitant, that Beneficiary's interest will
pass to any other Beneficiaries named according to their respective
interests; (2) If no Beneficiary survives the Annuitant, the proceeds will be
paid to the Contract Owner if living; otherwise, to the Contract Owner's estate.
DEATH OF CONTRACT OWNER
If the Contract Owner of a non-qualified contract dies before annuity payments
have begun, then in accordance with the provisions of the Code, the Cash
Surrender Value (proceeds) of the Contract will be paid as follows: (1) Upon
the death of a non-annuitant owner, the proceeds shall be paid to any
surviving joint or contingent owner(s); (2) If no joint or contingent owner
has been named, then the proceeds shall be paid to the Annuitant named in
the Contract.
If the decedent Contract Owner or joint owner is also the Annuitant, then the
death will be treated as death of the Annuitant subject to the provisions of
this Contract regarding death of Annuitant. If the recipient of the proceeds
is the surviving spouse of the Contract Owner, the Contract may be continued
in the name of such spouse as Contract Owner.
Any distribution must be paid within 5 years of the death of the Contract
Owner unless the Beneficiary begins receiving, within one year of the
Contract Owner's death, the distribution in the form of a life annuity or an
annuity for a period certain not exceeding the beneficiary's life expectancy.
JOINT/CONTINGENT OWNERSHIP
If a joint owner is named in the application such joint owners shall be treated
as having equal undivided interests in the Contract. Either owner,
independent of the other, may exercise any ownership rights in this Contract.
A contingent owner cannot exercise any ownership rights in this Contract
while the Contract Owner is alive.
SURRENDERS AND WITHDRAWALS
No surrender of the Contract or withdrawal of Contract Value may be made
subsequent to the Annuity Commencement Date. With respect to such Contracts,
Lincoln Life will, upon the written request of the Contract Owner prior to
the Annuity Commencement Date, allow the surrender of the Contract in its
entirety or the withdrawal of a portion of the Contract Value.
[Note: Special restrictions on surrenders and withdrawals now apply if your
Contract was purchased as part of a retirement plan of a public school system
or tax-exempt institution under Section 403(b) of the Code. Beginning
January 1, 1989, in order for a Contract to retain its tax-qualified status,
the Code prohibits the withdrawal of post-1988 contributions pursuant to a
salary reduction agreement, and earnings thereon, from a 403(b) contract
except in the event the participant: 1) attains age 59 1/2; 2) separates
from service; 3) dies; 4) becomes totally and permanently disabled; or
5) experiences financial hardship (in which event the income attributable to
such contributions may not be withdrawn). Pre-1989 contributions and
earnings through December 31, 1988, are not subject to the above restrictions.
Funds transferred to the Contract from a 403(b)(7) custodial account will be
subject to these restrictions.]
The amount available upon surrender or withdrawal is the Cash Surrender
Value of the Contract at the end of the Valuation Period during which the
written request for surrender is received at the Home Office of Lincoln Life.
Unless a request for withdrawal shall specify otherwise, withdrawals will be
made from all sub-accounts within the Variable Account and from the general
account in the same proportion that the amount of withdrawal bears to the
total Contract Value. The minimum amount which can be withdrawn is $300,
and the remaining Contract Value must be at least $300. Where permitted by
the Contract, surrender or withdrawal payments will be mailed within seven
days after Lincoln Life receives a written request at its Home Office.
However, the payment may be postponed as permitted by the 1940 Act.
There are certain charges associated with surrender of a Contract or withdrawal
of Contract Value prior to the Annuity Commencement Date. See "Charges and
Other Deductions" above.
The tax consequences of surrender or withdrawal of Contract Value are discussed
later. See "Federal Tax Status" below. If the total Contract Value is less
than $300, and if no Purchase Payments have been made for at least two years,
Lincoln Life may surrender the Contract.
REINVESTMENT PRIVILEGE
The Contract Owner may elect to make a reinvestment purchase with any part of
the proceeds of a total or partial liquidation of the Contract and Lincoln
Life will recredit the surrender or withdrawal charges previously deducted.
Such election must be made within 30 days of the date of such liquidation
and the repurchase must be of a Contract covered by this Prospectus. A
representation must be made that the proceeds being used to make the
purchase have retained their tax favored status under an arrangement for
which the Contracts offered by this Prospectus are designed. The number of
Accumulation Units which will be credited upon reinvesting the funds will be
based on the value of the Accumulation Unit(s) the next time such value is
computed following receipt of the proceeds and request for reinvestment at the
Home Office of Lincoln Life. This reinvestment privilege may be utilized only
once with respect to any Contract Owner. For tax reporting purposes, a
liquidation and subsequent reinvestment purchase will be treated by Lincoln
Life as separate transactions. Prior to a liquidation or subsequent
reinvestment purchase, a tax adviser should be consulted by the Contract Owner.
AMENDMENT OF CONTRACT
Lincoln Life reserves the right to amend the Contracts to meet the
requirements of the 1940 Act or other applicable federal or state laws or
regulations. Any changes, modifications or waivers must be in writing and
Contract Owners notified.
COMMISSIONS
The maximum commission which will be paid to dealers is equal to 4.0% of each
Purchase Payment; plus an annual continuing commission equal to .25% of the
value of Contract Purchase Payments invested for at least one year; plus an
annual persistency bonus equal to .40% of each Contract Year's increased
GMDB, paid over a period of seven years. In addition, the equivalent of
4.0% of Contract Value can be paid to dealers upon annuitization. These
commissions are not deducted from Purchase Payments or Contract Value; they are
paid by Lincoln Life.
OWNERSHIP
The contract owner has all rights under the contract. Under Indiana law, the
assets of the variable account are held for the exclusive benefit of the
Contract Owners and their designated beneficiaries and are not chargeable
with liabilities arising out of any other business that Lincoln Life may
conduct. Qualified Contracts may not be assigned or transferred except as
permitted by the Employee Retirement Income Security Act of 1974 and upon
written notification to Lincoln Life. Lincoln Life assumes no responsibility
for the validity or effect of any assignment. Contract Owners should consult
their tax advisers regarding the tax consequences of an assignment.
CONTRACT OWNER INQUIRIES
The obligations to purchasers under the Contracts are the obligations of LNL.
Inquiries from Contract Owners should be directed to Lincoln Life at
1-800-942-5500.
ANNUITY PAYMENTS
A Contract Owner may select, prior to issuance of the Contract, an Annuity
Commencement Date of any time permitted by law and not later than the
Annuitant's 85th birthday, except that Contracts issued in connection with
qualified employee pension and profit-sharing trusts (described in Section
401(a) and tax-exempt under Section 501(a) of the Code) and qualified
annuity plans (described in Section 403(a) of the Code), including H.R. 10
trusts and plans covering self-employed individuals and their employees,
provide for annuity payments to commence at the date and under the option
specified in the plan.
The Contract provides the optional forms of payment of annuities (Annuity
Options) described below, each of which is payable on a variable basis, as
well as such other Annuity Options as Lincoln Life may choose to make
available in the future. The Contract also provides for fixed annuity
payments or annuity payments that are on a combination fixed and
variable basis. The Contract provides that all or part of the Contract
Value may be used to purchase an annuity.
The Contract Owner may postpone or accelerate the Annuity Commencement Date,
change his/her selection of an Annuity Option, or alter the allocation of
his/her investment among sub-accounts up to 30 days prior to the date annuity
payments are to commence, upon written notice to Lincoln Life at its Home
Office. THE CONTRACT OWNER MUST GIVE LINCOLN LIFE AT LEAST 30 DAYS NOTICE
BEFORE EFFECTING THE COMMENCEMENT OF ANNUITY PAYMENTS. If proceeds become
available to a Beneficiary, the Beneficiary may choose or change any payment
option if proceeds are available to the Beneficiary in one sum.
If a Contract Owner does not elect otherwise, the Contract automatically
provides for a life annuity (on a fixed, variable, or combination fixed and
variable basis, in proportion to the account allocations at time of
annuitization) with 120 monthly payments certain, except in those cases in
which a joint and survivor annuity payout is required by law. Under any option
providing for guaranteed payments, the number of such payments which remain
unpaid at the date of the Annuitant's death will be paid to the Contract
Owner's Beneficiary as such payments become due.
The Contracts contain no provision under which an Annuitant or a Beneficiary
may surrender his/her Contract or make a partial withdrawal and receive a
lump-sum settlement in lieu thereof once annuity payments have commenced.
See "Surrenders and Withdrawals" above. Options are only available to the
extent they are consistent with the requirements of Section 72(s) of the
Code, if applicable.
OPTION NO. 1: LIFE ANNUITY. This option provides an annuity payable monthly
during the lifetime of the Annuitant and terminating with the last monthly
payment preceding the death of the Annuitant. This option offers the maximum
level of periodic payments since there is no guarantee of a minimum number of
payments or provision for a Death Benefit for Beneficiaries. It would be
possible under this option for the Annuitant to receive no annuity payment if
he or she died prior to the due date of the first annuity payment, one annuity
payment if the Annuitant died before the second annuity payment date, etc.
OPTION NO. 2: LIFE INCOME WITH PAYMENTS GUARANTEED FOR
DESIGNATED PERIOD. This option provides for monthly payments during a
designated period and thereafter throughout the lifetime of the payee. The
designated period may be selected by the Annuitant.
OPTION NO. 3: JOINT AND SURVIVOR ANNUITY. This option provides an annuity
payable periodically during the joint lifetime of the Annuitant and a
designated second person, and thereafter during the remaining lifetime of the
survivor.
OPTION NO. 4: JOINT AND TWO-THIRDS TO SURVIVOR ANNUITY. This option
provides an annuity payable periodically during the joint lifetime of the
Annuitant and designated second person, with two-thirds of the amount payable
during the remaining lifetime of the survivor.
OPTION NO. 5: UNIT REFUND LIFE ANNUITY. This option provides an annuity payable
periodically during the lifetime of the Annuitant with the guarantee that upon
death a payment will be made of the value of the number of Annuity Units
equal to the excess, if any, of: (a) the total amount applied under this
option divided by the Annuity Unit value for the date annuity payments
commence over (b) the Annuity Units represented by each payment to the
Annuitant multiplied by the number of payments paid prior to death. See
"Variable Annuity Payments: below. The value of the number of Annuity Units
is computed on the date the Home Office receives written notice of the
Annuitant's death provided that if notice is not received prior to the close
of trading at the New York Stock Exchange on such date computation shall be
made on the first Valuation Date thereafter.
Other options may be made available, as agreed upon by Lincoln Life. The
mortality and expense risk charge and the charge for administrative services
will be assessed on all annuity options, including those that do not have a
life contingency and thus no mortality risk.
VARIABLE ANNUITY PAYMENTS
Variable annuity payments will be determined on the basis of: (1) the value
of the Contract prior to the Annuity Commencement Date; (2) the annuity
tables contained in the Contract; (3) the type of Annuity Option selected;
and (4) the investment results of the Funds selected. In order to determine
the amount of variable annuity payments, Lincoln Life makes the following
calculation: first, it determines the dollar amount of the first payment;
second, it credits the Annuitant with a fixed number of Annuity Units based on
the amount of the first payment and the Annuity Unit Value for that Valuation
Date; and third, it calculates the value of the Annuity units each month
thereafter. In making this calculation, Lincoln Life assumes an investment
return of 4% per year, as applied to the applicable mortality table. The amount
of each payment after the initial payment will depend upon how the underlying
Funds perform, relative to the 4% assumed rate. There is a more complete
explanation of this calculation in the SAI.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS
Annuity payments may be paid as monthly, quarterly, semi-annual or annual
installments as the Annuitant requests. However, if the payments from any
sub-account would be or become less than $50, Lincoln Life shall have the
right to change the frequency of payments to such intervals as will result
in payments of at least $50.
FEDERAL TAX STATUS
The following is a general discussion of the federal income tax rules
applicable to the Contracts as of the date of this Prospectus. Further
information is provided in the Statement of Additional Information (SAI).
NEITHER THESE DISCUSSIONS NOR THOSE IN THE SAI ARE INTENDED AS TAX ADVICE.
This Section does not discuss the federal tax consequences resulting from
every possible situation. Moreover, no attempt has been made to consider any
applicable state, local or foreign tax law, other than the imposition of state
premium taxes. See "Deductions for Premium Taxes" above. Any person
concerned about the tax implications with respect to the Contracts should
consult a competent tax adviser. The following discussion is based upon
Lincoln Life's understanding of the present federal tax laws as they are
currently interpreted by the Internal Revenue Service. No representation is
made as to the likelihood of continuation of the present federal income tax
laws or of their current interpretations by the Internal Revenue Service.
TAXATION OF NON-QUALIFIED CONTRACTS
An annuity Contract Owner generally is not taxed on increases in the value of a
Contract until distribution occurs, either in the form of a lump sum payment
received by withdrawing all or part of the cash value (i.e., "surrenders") or
as the annuity payments under the Annuity Option elected. For this purpose,
the assignment or pledge of, or the agreement to assign or pledge, any
portion of the value of a Contract will be treated as a distribution. A
transfer of ownership of a Contract, or designation of an annuitant or other
beneficiary who is not also the Contract Owner, may also have tax
consequences. The taxable portion of a distribution (in the form of a lump
sum payment or an annuity) is taxed as ordinary income. However, for
Purchase Payments made by a Contract Owner who is a non-natural person
(subject to limited exceptions) there will be tax on any increase in the
Contract's cash value over the "investment in the contract" during the
taxable year, even if no distribution occurs. The following discussion
applies to Contracts owned by natural persons.
In the case of a surrender under a Contract or withdrawal of Contract Value,
generally amounts received are first treated as taxable income to the extent
that the cash value of the Contract immediately before the surrender exceeds
the "investment in the Contract" at that time. Any additional amount
withdrawn is not taxable. The "investment in the Contract" generally equals
the portion, if any, of any premium paid by or on behalf of an individual under
a Contract which is not excluded from the individual's gross income.
Although the tax consequences may vary depending on the form of the annuity
selected under the Contract, the recipient of an annuity payment under a
Contract generally is taxed on the portion of such payment that exceeds the
"investment in the Contract." For variable annuity payments, the taxable
portion is determined by a formula that establishes a specific dollar
amount of each payment that is not taxed. The dollar amount is determined by
dividing the "investment in the Contract" by the total number of expected
periodic payments. For fixed annuity payments, there generally is no tax on
the portion of each payment that represents the same ratio that the
"investment in the Contract" bears to the total expected value of payments
for the term of the annuity; the remainder of each payment is taxable.
However, all distributions (whether fixed or variable) will be fully taxable
once the recipient is deemed to have recovered the dollar amount of his
"investment in the Contract."
There may be imposed a penalty tax on distributions, equal to 10% of the amount
treated as taxable income. In general, there is no penalty tax on
distributions (1) made on or after age 59 1/2, (2) made as a result of death
or disability, (3) received in substantially equal periodic payments such as
a life annuity (subject to special "recapture" rules if the series of payments
is subsequently modified), (4) under a "qualified funding asset" in a
structured settlement; (5) under an "immediate annuity contract" as defined
in the Code, or (6) under a contract purchased in connection with the
termination of certain retirement plans.
QUALIFIED CONTRACTS
The Contracts may be purchased in connection with the following types of
tax-favored retirement plans: (1) annuity contracts purchased for employees
by public school systems and 501(c)(3) organizations, qualified under
Section 403(b) of the Code (normally for transfers or rollovers only);
(2) pension and profit-sharing plans of self-employed individuals ("H.R. 10" or
"Keogh" plans) or corporations, qualified under Section 401(a) or 403(a) of
the Code; (3) individual retirement annuities (IRA); (4) deferred
compensation plans of state or local governments and tax-exempt
organizations (457); and (5) simplified employee pension plans (SEP). The
tax rules applicable to these plans, including restrictions on contributions and
benefits, taxation of distributions, and any tax penalties, vary according to
the type of plan and its terms and conditions. Participants under such
plans, as well as Contract Owners, Annuitants and Beneficiaries, should be
aware that the rights of any person to any benefits under such plans may be
subject to the terms and conditions of the plans themselves, regardless of
the terms and conditions of the Contracts. Purchasers of Contracts for use
with any qualified plan, as well as plan participants and Beneficiaries,
should consult counsel and other competent advisers as to the suitability of
the Contracts to their specific needs, and as to applicable Code limitations
and tax consequences.
MULTIPLE CONTRACTS
All Non-Qualified Contracts entered into after October 21, 1988, and issued
by the same insurance company (or its affiliates) to the same Contract Owner
during any calendar year will be treated as a single Contract, for tax purposes.
WITHHOLDING
Pension and annuity distributions generally are subject to withholding for the
recipient's federal income tax liability at rates that vary according to the
type of distribution and the recipient's tax status. Recipients may be
provided the opportunity to elect not to have tax withheld from
distributions. Under the Unemployment Compensation Amendments of 1992
("UCA"), twenty (20%) percent income tax withholding may apply to "eligible
rollover distributions." All taxable distributions from qualified plans and
Section 403(b) annuities are "eligible rollover distributions," except
(1) annuities paid out over life or life expectancy, (2) installments paid
for a period spanning ten years or more, and (3) required minimum
distributions. The UCA imposes a mandatory twenty (20%) percent income tax
withholding on any eligible rollover distribution that the holder does not
elect to have paid in a direct rollover to another qualified plan, Section
403(b) annuity, or individual retirement account. Distributions from
governmental or not-for-profit deferred compensation plans are subject to
the general wage withholding rules.
INVESTOR CONTROL
The Treasury Department has indicated that guidelines may be forthcoming
under which a variable annuity contract will not be treated as an annuity
contract for tax purposes if the owner of the contract has excessive control
over the investments underlying the contract. The issuance of such
guidelines may require the Company to impose limitations on a Contract
Owner's right to control the investment. It is not known whether any such
guidelines would have a retroactive effect.
VOTING RIGHTS
To the extent required by law, Lincoln Life will vote the Series shares held in
the Variable Account at meetings of shareholders of the Series in accordance
with instructions received from Contract Owners having interests in the Funds
of the Series due to their investment in the sub-accounts of the Variable
Account. However, if the 1940 Act or any regulation thereunder should be
amended or if the present interpretation thereof should change, and as a
result Lincoln Life determines that it is permitted to vote the Series shares
in its own right, it may elect to do so.
The number of votes which a Contract Owner has the right to cast will be
determined by applying his/her percentage interest in a sub-account to the
total number of votes attributable to the sub-account. In determining the
number of votes, fractional shares will be recognized.
Fund shares held in a sub-account as to which no timely instructions are
received will be voted by Lincoln Life in proportion to the voting
instructions which are received with respect to all Contracts participating
in that sub-account. Voting instructions to abstain on any item to be
voted upon will be applied on a pro rata basis to reduce the votes eligible
to be cast.
Each person having a voting interest in a sub-account will receive proxy
material, reports and other materials relating to the American Variable
Insurance Series. Since the Series engages in shared funding, other persons
or entities besides Lincoln Life Contract Owners may vote Series shares.
See "Sale of Fund Shares by the Series" above.
DISTRIBUTION OF CONTRACTS
American Funds Distributors, Inc. (AFD), 333 South Hope Street, Los Angeles,
CA 90071, is the distributor and principal underwriter of the Contracts.
The Contracts will be sold by properly licensed registered representatives of
independent broker-dealers which in turn have been licensed by state
insurance departments to represent Lincoln Life and which have selling
agreements with AFD. AFD is registered with the Securities and Exchange
Commission under the Securities Exchange Act of 1934 as a broker-dealer and
is a member of the National Association of Securities Dealers, Inc. Lincoln
Life will offer the Contracts in all states where it is licensed to do business.
RETURN PRIVILEGE
Within 20 days (or a longer period, if required by law) after the Contract is
first received (the "free-look period"), it may be cancelled for any reason
by delivering or mailing it postage pre-paid, to the Home Office of Lincoln
Life at the address set out under The Lincoln National Life Insurance
Company, above. A Contract cancelled under this provision will be deemed
void. With respect to the fixed portion of a Contract, Lincoln Life will
return Purchase Payments. With respect to the Variable Account (except as
provided just below), Lincoln Life will return the Contract Value as of the
date of receipt of the cancellation, plus any contract maintenance and
administrative fees and any premium taxes which had been deducted, and no
contingent deferred sales charge will be made. A PURCHASER WHO
PARTICIPATES IN THE VARIABLE ACCOUNT IS SUBJECT TO THE RISK OF A
MARKET LOSS DURING THE FREE-LOOK PERIOD.
For Contracts written in those states whose laws require that Lincoln Life
assume this market risk, a Contract may be cancelled, subject to the
conditions set out above, except that Lincoln Life will return only the
Purchase Payment(s).
STATE REGULATION
As a life insurance company organized and operated under Indian law, Lincoln
Life is subject to provisions governing such companies and to regulation by
the Indiana Commissioner of Insurance. Lincoln Life's books and accounts
are subject to review and examination by the Indiana Department of Insurance
at all times and a full examination of its operation is normally conducted
by the Department at least once every five years.
RESTRICTIONS UNDER THE TEXAS OPTIONAL RETIREMENT PROGRAM
Title 8, Section 830.105 of the Texas Government Code, consistent with prior
interpretations of the Attorney General of the State of Texas, permits
participants in the Texas Optional Retirement Program (ORP) to redeem their
interest in a variable annuity contract issued under the ORP only upon
(1) termination of employment in all institutions of higher education as
defined in Texas law, (2) retirement, or (3) death. Accordingly, a
participant in ORP will be required to obtain a certificate of termination
from his/her employer before he/she can redeem his/her account.
RECORDS AND REPORTS
Lincoln Life will maintain all records and accounts relating to the Variable
Account. As presently required by the 1940 Act and regulations promulgated
thereunder, Lincoln Life will mail to the Contract Owners at the last known
address of record at Lincoln Life's Home Office, at least semi-annually,
reports containing such information as may be required under the 1940 Act or
by any other applicable law or regulation.
OTHER INFORMATION
A registration statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933 as amended, with respect to the
Contracts offered hereby. This Prospectus does not contain all the
information set forth in the registration statement and amendments thereto
and exhibits filed as a part thereof, to all of which reference is made for
further information concerning the Variable Account, Lincoln Life and the
Contracts offered hereby. Statements contained in this Prospectus as to the
content of Contracts and other legal instruments are summaries. For a
complete statement of the terms thereof reference is made to such instruments
as filed.
Lincoln National Variable Annuity Account H and Lincoln National Flexible
Premium Variable Life Accounts F, G and J (all registered as investment
companies under the 1940 Act), and Lincoln National Flexible Premium Group
Variable Annuity Accounts 50 and 51 are all segregated investment accounts
of The Lincoln National Life Insurance Company (Lincoln Life) which also
invest in the American Variable Insurance Series. American Variable
Insurance Series also offers shares of the Funds to other segregated
investment accounts.
TABLE OF CONTENTS
OF THE
STATEMENT OF ADDITIONAL INFORMATION (SAI)
FOR LINCOLN NATIONAL LIFE VARIABLE ANNUITY ACCOUNT E
ITEM PAGE
General Information and History of Lincoln Life B-2
Special Terms B-2
Services B-2
Purchase of Securities being Offered B-2
Underwriters B-2
Annuity Payments B-3
Federal Tax Status B-3
Automatic Increase In The Guaranteed Minimum Death Benefit B-6
Financial Statements B-7
NOTE: To obtain a copy of the Statement of Additional Information, see
page .
