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PROSPECTUS
SEPTEMBER 28, 1995
TEMPLETON RETIREMENT ANNUITIES
ISSUED BY TEMPLETON FUNDS RETIREMENT ANNUITY
SEPARATE ACCOUNT
OF
TEMPLETON FUNDS ANNUITY COMPANY
700 Central Avenue
St. Petersburg, Florida 33701-3628
Telephone (800) 774-5001
A TEMPLETON RETIREMENT ANNUITY ("Annuity") is an immediate variable
annuity. The Annuities are available only to an investor who has maintained a
Franklin Templeton Tax Deferred Retirement Plan ("Plan") with one of the
Franklin Templeton Mutual Funds for a period of at least one year and wishes
to use all or a portion of his or her Plan to purchase an Annuity. The
Annuities will not be available to any investor who resides in a state where
the Annuities may not lawfully be sold. The minimum amount required to pur-
chase an Annuity is $10,000. The Annuities are sold without a sales charge.
Once Annuity Payments commence, the purchase price may not be refunded or
redeemed.
The Annuities are issued pursuant to either (i) a Group Contract between
Templeton Funds Annuity Company (the "Company") and Franklin Templeton Trust
Company (the "Contractholder") and represent participations in the Group
Contract or (ii) an Individual Contract between the Company and an individual
Contractowner ("Individual Contractowner"). Both Individual Contracts and
Group Contracts are referred to in this Prospectus by the term "Contract."
All assets under the Contracts are invested, through Templeton Funds
Retirement Annuity Separate Account (the "Separate Account"), in shares of
Templeton Variable Annuity Fund (the "Fund") and the value of the Annuities,
and the amount of each Annuity Payment, will vary with the performance of the
Fund.
TEMPLETON VARIABLE ANNUITY FUND has for its investment objective long term
capital growth through a flexible policy of investing in stocks and debt
obligations of companies and governments of any nation.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus sets forth concisely information about the Annuities and
the Separate Account that a prospective investor should know before
investing.
A Statement of Additional Information (the "SAI") dated September 28,
1995, is on file with the Securities and Exchange Commission and is, in its
entirety, incorporated by reference into and made a part of this Prospectus.
(See page 13 for the Statement of Additional lnformation Table of Contents.)
A copy of the SAI is made available upon request and without charge by
calling or writing Templeton Funds Annuity Company at the address indicated
above.
THIS PROSPECTUS SHOULD BE ACCOMPANIED BY A CURRENT PROSPECTUS OF TEMPLETON
VARIABLE ANNUITY FUND. BOTH PROSPECTUSES SHOULD BE READ CAREFULLY AND
RETAINED FOR FUTURE REFERENCE.
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TABLE OF CONTENTS
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PAGE
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Glossary of Special Terms .............................................. 3
Expense Table .......................................................... 5
Summary ................................................................ 5
Annuity Unit Values .................................................... 6
Templeton Funds Annuity Company ........................................ 6
The Separate Account ................................................... 6
Templeton Variable Annuity Fund ........................................ 6
Purchase of Annuities .................................................. 6
The Annuities
Payment Options ...................................................... 7
Beneficiaries ........................................................ 8
Annuity Payments ..................................................... 8
Annuity Units ........................................................ 9
Value of the Separate Account ........................................ 9
Delays in Valuation and Payment ...................................... 9
Deductions and Charges ................................................. 10
Tax Information
Internal Revenue Code Limitations .................................... 10
Federal Income Tax Status ............................................ 10
(a)Federal Tax Status of the Company and the Separate Account ..... 10
(b)Federal Tax Status of Annuitants ................................ 11
(c)Withholding ..................................................... 11
Voting Rights .......................................................... 11
Substitution of Securities and Other Changes ........................... 11
Statement of Additional Information Table of Contents .................. 13
Appendix A--Compliance with Internal Revenue Code Rules ................ 14
Appendix B--Dollar Value of First Monthly Payment ...................... 15
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GLOSSARY OF SPECIAL TERMS
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ANNUITANT A person on whose life the Annuity Payments are
based.
ANNUITY A Templeton Retirement Annuity issued pursuant to
the Contracts.
ANNUITY BENEFITS Those benefit payments, including Annuity
Payments, made to an Annuitant, a Joint Annuitant,
one or more Beneficiaries and/or any of their
respective estates under the terms of the
Contracts.
ANNUITY PAYMENTS The monthly payments made in accordance with the
Annuity Option elected by the Participant under
the Group Contract or the Individual Contractowner
under an Individual Contract. Annuity Payments
will be determined by applying the initial
contribution, less any applicable taxes, to the
tables shown in Appendix B hereto.
ANNUITY PURCHASE DATE The date the contribution is made and the order to
purchase the Annuity is effected.
ANNUITY UNIT An accounting unit of measure used to calculate
the dollar amount of Annuity Payments and Annuity
Benefits. The value of an Annuity Unit fluctuates
generally with the value of the Fund.
APPLICANT A Plan accountholder who submits an application or
enrollment form requesting that his or her Plan
purchase an Annuity.
BENEFICIARY A person or persons designated by a Participant to
receive benefits under an Annuity, if any, payable
after the last death of an Annuitant and any Joint
Annuitant.
BUSINESS DAY Any day on which the New York Stock Exchange is
open for business.
COMPANY Templeton Funds Annuity Company, a Florida
insurance company which maintains the Separate
Account and issues the Annuities.
GROUP CONTRACTHOLDER Franklin Templeton Trust Company, a trust company
chartered under California law, and its successors
and assigns.
FUND Templeton Variable Annuity Fund, the registered
open-end management investment company in which
the Contracts' assets are invested by the Separate
Account.
GROUP CONTRACT The Group Retirement Annuity Contract number
GA-002 between the Company and the Contractholder.
INDIVIDUAL CONTRACT An individual Retirement Annuity Contract between
the Company and an Individual Contractowner.
INDIVIDUAL CONTRACTOWNER An individual or individuals entitled to the
ownership rights stated in the Individual Contract
and in whose name the Contract is issued.
JOINT ANNUITANT A person other than the Annuitant designated by
the Participant as a person on whose life Annuity
Payments may also be based.
PARTICIPANT An Applicant whose application or enrollment form
requesting that his or her Plan purchase an
Annuity has been approved. A Participant will
generally also be an Annuitant.
PAYMENT DATE A day on which the value of Annuity Units for a
given Annuity Payment is calculated.
PERIODIC CHARGE An amount deducted periodically from the Separate
Account to compensate the Company for assuming
mortality and expense risks. (See "Deductions and
Charges.")
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PLAN Any one of the group of Franklin Templeton Tax
Deferred Retirement Plans offered in connection
with the Franklin Templeton Mutual Funds, and for
which the Contractholder acts as trustee or
custodian, to provide for the accumulation of
retirement funds for individuals or groups of
individuals under which at least a part of the
accumulation is tax deferred under the Internal
Revenue Code and under which an Annuity may be
purchased. These Plans currently include the
Franklin Templeton Individual Retirement Account
("IRA"), the Franklin Templeton Simplified
Employee Pension ("SEP-IRA"), Franklin Templeton
"403(b)" retirement plans for employees of tax
exempt organizations, Franklin Templeton "401(k)"
plans and qualified plans for corporations, self
employed individuals and partnerships, and are
held for the individuals or groups by Franklin
Templeton Trust Company as trustee or custodian.
SEPARATE ACCOUNT Templeton Funds Retirement Annuity Separate
Account, a separate account of the Company
registered with the Securities and Exchange
Commission as a unit investment trust. The
Separate Account invests all its assets in the
Fund. The assets of the Separate Account are not
commingled with the general assets of the Company,
and the investment performance of the Separate
Account is kept separate from that of the general
assets of the Company.
FRANKLIN TEMPLETON MUTUAL FUNDS The Franklin Templeton Mutual Funds include each
existing and future U.S. registered open- end
investment company for which Franklin Advisors,
Inc. or Templeton, Galbraith & Hansberger Ltd. or
an affiliate acts as investment adviser or manager
and for which Franklin Templeton Distributors,
Inc. acts as principal underwriter, unless
otherwise specified by the Company. (See "The
Annuities.")
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EXPENSE TABLE
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Separate Account Annual Expenses (As a
percentage of average account value) ........
Mortality and Expense Risk Fee ........................0.80%
Administration Fee ....................................0.30%
Total Separate Account Annual Expenses ................1.10%
Templeton Variable Annuity Fund Annual
Expenses (As a percentage of Fund average net
assets)* .....................................
Management Fees .......................................0.50%
Other Expenses ........................................0.50%
Administrative Fees .........................0.15%
Other (after expense reimbursement) ........0.35%
Total Fund Annual Expenses ............................1.00%
<FN>
*Templeton Funds Annuity Company, the Fund's Business Manager, has agreed to
reimburse the Fund an amount by which the Fund's annual expenses for all
purposes exceed 1.0% of the Fund's average daily net assets through May 1,
1996. Expenses borne by the Business Manager amounted to $0.09 per share for
the fiscal year ended December 31, 1994. If these expenses had been incurred
by the Fund, the annualized ratio of expenses to average net assets would
have been 1.49%.
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1 YEAR 3 YEARS 5 YEARS 10 YEARS
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You would pay the following expenses on a $1,000 investment,
assuming a 5% annual return on the Fund's assets (based on a
Joint and 100% Survivor Annuity with 120 payments guaranteed,
both Annuitants age 70 and with a 3% assumed annual interest
rate; see "The Annuities--Payment Options"): .................... $21 $59 $95 $168
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The information in the above table is an estimate based on the Separate
Account's and the Fund 's expenses as of the end of the most recent fiscal
year and is provided for purposes of assisting current and prospective
Annuitants in understanding the various costs and expenses that an investor
in the Annuity will bear, directly or indirectly. The 5% annual return and
annual expenses should not be considered a representation of actual or
expected Annuity performance or expenses, both of which may vary. For a more
detailed discussion of the Separate Account's and the Fund's fees and
expenses, see "Deductions and Charges" and "Management of the Fund,"
respectively.
SUMMARY
A Templeton Retirement Annuity is an immediate variable annuity designed
to be used to distribute the benefits of tax deferred retirement plans. The
Annuities are available only to persons who have maintained an account in a
Plan for at least one year. The minimum Annuity purchase is $10,000. Once
Annuity Payments commence, the purchase price may not be refunded or
redeemed.
The Participant may select an assumed annual interest rate of 3% or 7% and
from a variety of payment options based on his life (or his life and that of
a Joint Annuitant) or for a period certain (see "Payment Options"). The value
of the first Annuity Payment depends on the amount invested, the assumed
annual interest rate specified and the Annuity Payment option selected by the
Participant. The amount of each Annuity Payment thereafter will fluctuate
based on the performance of the underlying mutual fund in which the Annuity
assets are invested (see "Templeton Variable Annuity Fund"). The investment
objective of the Fund is long term capital growth through a flexible policy
of investing in stocks and debt obligations of companies and governments of
any nation.
The Annuities are available under the Group Contract issued to the
Contractholder by the Company. In those states where the Group Contract may
not be offered, an Individual Contract, with substantially similar terms,
will be issued to the Applicant. All obligations under the Contracts are
obligations of the Company. All assets under the Contracts are held in a
segregated account of the Company and are not chargeable with other
liabilities of the Company (see "The Separate Account").
The Annuities are sold without a sales charge. Any applicable state
premium taxes are deducted, as required, from the initial contribution or
from Annuity Payments or Annuity Benefits. The Company assesses a total
charge on an annual basis of 1.1% of assets of the Separate Account as
compensation for Separate Account expenses and for assuming expense and
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mortality risks. The Company guarantees that these charges will not increase
for Annuities already issued (see "Deductions and Charges"). Expenses of
Templeton Variable Annuity Fund are described in its prospectus.
ANNUITY UNIT VALUES
(For an Annuity Unit outstanding for the periods shown and with a 9%
assumed annual interest rate)
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YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1993 1992 1991 1990
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Annuity Unit value at
beginning of period ... $1.36 $1.10 $1.10 $0.92 $1.15
Annuity Unit value at
end of period .......... $1.19 $1.36 $1.10 $1.10 $0.92
Number of Annuity Units
outstanding at the end
of period .............. 98,101 96,190 90,655 67,630 56,401
</TABLE>
The value of an Annuity Unit changes to reflect the investment results of
the Fund, the expenses of the Separate Account, and the assumed annual
interest rate used to determine Annuity Payments. The value of an Annuity
Unit will increase only when the actual investment results of the Separate
Account exceed the assumed annual rate of interest selected by the
Participant. If actual results are less than the assumed rate, the value of
an Annuity Unit will decrease.
TEMPLETON FUNDS ANNUITY COMPANY
Templeton Funds Annuity Company (the "Company"), 700 Central Avenue, St.
Petersburg, Florida 33701-3628, is the sponsor of the Separate Account. The
Company was organized as a Florida corporation on January 25, 1984 and is
licensed to engage in the life insurance business in Florida. The Company is
an indirect wholly-owned subsidiary of Franklin Resources, Inc. (See
"Templeton Funds Annuity Company" in the SAI for additional information.)
THE SEPARATE ACCOUNT
The Separate Account was established on February 4, 1987, by resolution of
the Board of Directors of the Company and is registered with the Securities
and Exchange Commission (the "Commission") as a unit investment trust. This
registration does not involve any supervision by the Commission of the
administration or investment practices or policies of the Separate Account or
of the Fund. The Separate Account invests its assets, net of certain
expenses (see "Deductions and Charges"), exclusively in Templeton Variable
Annuity Fund (the "Fund"). Although empowered to establish subaccounts which
may make other investments, the Separate Account has no present intention of
so doing.
The Separate Account is administered and accounted for as part of the
general business of the Company, but the income and capital gains or losses
from assets allocated to the Separate Account, whether or not realized, are,
in accordance with the resolution establishing the Separate Account, credited
to or charged against those assets without regard to other income, gains or
losses of the Company. The assets of the Separate Account are not chargeable
with liabilities arising out of any other business of the Company. The
obligations arising under the Contracts are obligations of the Company.
TEMPLETON VARIABLE ANNUITY FUND
The Fund is registered under the Investment Company Act of 1940 as an
open-end diversified management investment company and is currently used only
as a funding vehicle for the Annuities. The Fund was organized as a
Massachusetts business trust on February 5, 1987. The Fund's investment
objective is long term capital growth. It pursues this objective through a
flexible policy of investing primarily in stocks and debt obligations of
companies and governments of any nation, including issuers inside as well as
outside the United States. The Fund's Investment Manager is Templeton
Investment Counsel, Inc., an affiliate of the Company. A prospectus
containing more complete information concerning the Fund accompanies this
Prospectus and should be read carefully before purchasing an Annuity.
PURCHASE OF ANNUITIES
Applications and enrollment forms for requesting the purchase of an
Annuity are available from Templeton Funds Annuity Company, 700 Central
Avenue, St. Petersburg, Florida 33701-3628. Annuities are available on a
continuing basis only to
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eligible persons and are sold with no sales charge. Persons eligible to
request the purchase of an Annuity are those who have maintained an account
in a Plan for at least one year prior to the Annuity Purchase Date. The
Contractholder will determine whether each Applicant meets the eligibility
requirements. For each eligible Applicant requesting to have an Annuity
purchased by his Plan, the Contractholder acting in its capacity as custodian
or trustee under the particular Plan will effect the purchase of an Annuity
in accordance with the Applicant's instructions. Annuity purchases will be
effected only for Applicants who reside in states where the Annuities may
lawfully be sold.
To arrange for the purchase of an Annuity, each Applicant must return a
properly completed application or enrollment form to the Company together
with any other forms which the Company may require. The form contains an
authorization for the Contractholder, as trustee or custodian under the
Applicant's Plan, to use a specified amount of Plan assets to purchase an
Annuity. The minimum amount for purchase of an Annuity is $10,000. After the
Contractholder has reviewed each application or enrollment form to determine
eligibility, the Company will notify each Applicant whether his or her
request to have an Annuity purchased has been approved. Each approved
Applicant covered by the Group Contract will be sent a certificate confirming
the terms, the Annuity Payment option and amount of the Annuity selected as
well as the identity of the Annuitant, any Joint Annuitant and Beneficiaries.
The certificate will also describe applicable terms of the Group Contract.
Other approved Applicants will receive their own Individual Contract.
Each order to purchase an Annuity will be effected on the 10th Business
Day prior to the first day of the month or on such earlier Business Day as
the Company, in its sole discretion, may determine. On each such day, the
payment for each approved application or enrollment request will be
transferred from the applicable Plan and invested in accordance with the
Contract at the Annuity Unit value determined on that day (see "Annuity
Units"). (Prior to such transfer, amounts to be transferred from Plans will
continue to be invested under such Plans.) Completed application or
enrollment forms must be received by the Company at least 10 days prior to a
Business Day on which the Company effects orders to purchase Annuities in
order for the order to be processed on that latter date. Applicants whose
application or enrollment forms are not complete or are not timely received
will be notified that the order will be processed on the next day on which
orders are effected, provided any additional necessary information is timely
provided. An Applicant may withdraw his or her request for application or
enrollment at any time before the Annuity Purchase Date.
THE ANNUITIES
The Annuities are offered only to persons who have maintained an account
for at least one year in a Franklin Templeton Tax Deferred Retirement Plan
("Plan") with any one or more of the Franklin Templeton Mutual Funds. The
Annuities are designed to permit such persons, on or after the retirement date
permitted under the applicable Plan, to instruct the Contractholder, in its
capacity as custodian or trustee under the Plan, to have the Plan purchase an
immediate variable annuity having a payout option selected by the
Applicant (see "Payment Options"). Once Annuity Payments commence, the
purchase price may not be refunded or redeemed, and no exchanges may be made
to another Franklin Templeton Mutual Fund. Benefits payable under the
Annuities will vary in amount based on the performance of the Fund. The
Company guarantees that the dollar amount of Annuity Payments for Annuities
already issued will not be affected by the changes in the expense assumptions
used in determining the first Annuity Payment. However, because the Fund in
which assets used to purchase the Annuity are invested fluctuates in value
daily, there can be no guarantee that the remaining value of an Annuity (net
of deductions and charges), together with any Annuity Payments already made,
will at any given time exceed or even equal the amount of assets used to
purchase the Annuity.
PAYMENT OPTIONS
Annuity Payments will be made monthly. The value of the first Annuity
Payment is determined as indicated in Appendix B, based on the amount of
contribution and the payment option specified in the application or
enrollment form, which may be one of the following:
Option I--Life Annuity--An Annuity payable monthly during the lifetime of
the Annuitant. The Annuity will stop with the last Annuity Payment due prior
to the death of the Annuitant. Only one Annuity Payment would be made under
this Option if the Annuitant dies before the second Annuity Payment is due;
only two Annuity Payments would be made if the Annuitant dies before the
third Annuity Payment is due, etc.
Option II--Life Annuity with 60 or 120 Monthly Payments Guaranteed--An
Annuity payable monthly during the lifetime of an Annuitant with a guarantee
that if, at the death of the Annuitant, Annuity Payments have been made for
less than 60 or 120 months, as elected, then Annuity Payments will be
continued thereafter, to a Beneficiary designated by the Participant during
the remainder of said period.
Option III--Joint and Last Survivor Annuity--An Annuity payable monthly
during the joint lifetime of the Annuitant and a designated Joint Annuitant.
Upon the death of the Annuitant, Annuity Payments will be made to the Joint
Annuitant during
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the Joint Annuitant's remaining lifetime at a level of 100%, 75% or 50% of
the original level, as elected by the Participant. This percentage is
selected by the Participant in his application or enrollment form. Under this
Option, only one Annuity Payment would be made if both the Annuitant and the
Joint Annuitant die before the second Annuity Payment is due; only two
Annuity Payments would be made if they both die before the third Annuity
Payment is due, etc.
Option IV--Joint and Last Survivor Annuity with 60 or 120 Monthly Payments
Guaranteed--An Annuity payable monthly during the joint lifetime of an
Annuitant and a Joint Annuitant with no reduction in amount after the death
of the Annuitant and with a guarantee that if, at the latter death of either
the Annuitant or the Joint Annuitant, Annuity Payments have been made for
less than 60 or 120 months as elected, then Annuity Payments will be
continued thereafter to a Beneficiary designated by the Participant during
the remainder of said period.
Option V--Unit Refund Life Annuity--An Annuity payable monthly during the
lifetime of an Annuitant, ceasing with the last Annuity Payment due prior to
the death of the Annuitant with a guarantee that, at the death of the
Annuitant, the Beneficiary will receive in one sum the then dollar value of
the number of Annuity Units equal to (1) the total net amount applied to
purchase the Annuity divided by the Annuity Unit value used to determine the
first Annuity Payment, minus (2) the product of the number of the Annuity
Units represented by each payment and the number of payments made. No payment
will be made if the difference of (1) minus (2) is negative.
Other payment options may be arranged subject to prior approval by the
Company.
See "Tax Information--Internal Revenue Code Limitations," regarding
limitations and other requirements which should be considered when selecting
a payment option. For Internal Revenue Code requirements which may modify
payments under the Annuity options in certain cases, see Appendix A.
BENEFICIARIES
An Applicant for an Annuity may designate a Beneficiary or Beneficiaries
to receive any remaining payments or sums which may become payable upon the
last death of the Annuitant and the Joint Annuitant. An Applicant may also
designate one or more contingent Beneficiaries to receive Annuity Benefits in
the event all Beneficiaries die before all Annuity Benefits payable to such
Beneficiaries have been paid. These designations may be changed by the
Participant from time to time.
If more than one Beneficiary or contingent Beneficiary is designated and
the respective interest of each is not specified, they will be paid in equal
shares. If any of several Beneficiaries dies before the Annuitant and any
Joint Annuitant, any amounts payable upon the death of the Annuitant and any
Joint Annuitant will be paid to the surviving Beneficiaries, in equal shares
or as otherwise designated by the Participant. If any of several contingent
Beneficiaries dies before all the Beneficiaries, any amounts payable upon the
death of all Beneficiaries will be paid to the surviving contingent
Beneficiaries, in equal shares or as otherwise designated by the Participant.
After the start of Annuity Payments to one or more of several Beneficiaries
or contingent Beneficiaries, if any of the designated Beneficiaries or
contingent Beneficiaries dies, Annuity Payments will be continued in equal
shares to the remaining Beneficiaries or contingent Beneficiaries then
eligible to receive such payments unless otherwise specified by the
Participant. After the start of Annuity Payments to a Beneficiary or
contingent Beneficiary and after the death of all designated Beneficiaries or
contingent Beneficiaries, the commuted value of any remaining guaranteed
Annuity Payments due or to become due will be paid in one sum to the estate
of the person or persons then receiving such payments. Such commuted value
will be determined on the basis of the assumed interest rate selected by the
Applicant, compounded annually. (See "Annuity Payments.")
Any designation or change of Beneficiary or contingent Beneficiary shall
be made to the Company's home office by filing satisfactory written notice.
When acknowledged in writing by the Company, such designation or change will
take effect on the date the notice was signed. The Company will not be liable
for any payment made or action taken by it before notice was acknowledged.
ANNUITY PAYMENTS
The first payment under any of the Annuity Options will be determined in
accordance with the Annuity Payment rate based on the assumed annual interest
rate selected by the Applicant. No purchase of an Annuity will be effected
until the Company has received proof acceptable to it of the birthdate of the
Annuitant and any Joint Annuitant.
Under the Contract the Annuitant may choose between an assumed annual
interest rate of 3% or 7%. If the Annuitant chooses the 7% assumed annual
interest rate, as compared to choosing the 3% interest rate, Annuity Payments
would start at a higher level but would increase more slowly if investment
returns are more than 7% and decrease more rapidly. Therefore, election of
the 7% assumed annual rate of interest would result in a higher first monthly
payment, but would increase the possibility of reduced future payments during
the periods when net investment performance of the Separate Account did not
exceed the 7% assumed annual interest rate.
If the Annuitant chooses the 3% assumed annual interest rate, Annuity
Payments would start at a lower level but would increase more rapidly if the
investment returns are greater than 3% and decrease more slowly. Therefore,
election of the 3%
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assumed annual interest rate would result in a lower first monthly payment
but would decrease the possibility of reduced future payments.
The first Annuity Payment, for payments made on a monthly basis, is
calculated by dividing the Purchase Payment, less any applicable taxes, by
1000 and multiplying the result by the appropriate figure shown on Appendix
B. Values not shown will be calculated on an equivalent basis. The first
Annuity Payment is then divided by the then current value of an Annuity
Unit (see below) to determine the fixed number of Annuity Units used to
calculate each subsequent Annuity Payment. Thereafter, each Annuity Payment
is calculated by multiplying the fixed number of Annuity Units, as determined
above, by the current Annuity Unit Value, less any applicable taxes. Since
the value of an Annuity Unit will fluctuate from month to month, the amount
of each Annuity Payment may also be expected to fluctuate. However, the
Company guarantees that the Administrative Fee and the Periodic Charge will
not be changed for any Annuity once issued. (See "Deductions and Charges.")
In some states the combination of the 7% and 3% assumed interest rates may
not be available. Alternate rates may be offered as permitted under
applicable state law.
ANNUITY UNITS
The value of an Annuity Unit was initially set at $1.00 upon commencement
of the Separate Account's operations. The value of an Annuity Unit is
thereafter determined as follows on each Payment Date:
First: The Net Investment Factor is determined by dividing (a) by (b) and
adding (c) to the result, where:
(a) is the net increase or decrease in the net asset value per share of
the Fund, plus the per share amount of any dividend or capital gain
distribution paid or deemed paid by the Fund since the preceding Payment
Date, plus or minus a per share charge or credit for any taxes incurred by or
reserved for in the Separate Account as of the end of the current Payment
Date which the Company determines to have resulted from maintenance of the
Separate Account;
(b) is the net asset value per share of the Fund on the preceding Payment
Date, plus or minus a per share charge or credit for any taxes incurred by or
reserved for in the Separate Account as of the end of the immediately
preceding Payment Date which the Company determines to have resulted from
maintenance of the Separate Account;
(c) is the net result of 1.000, less the Periodic Charge (see "Deductions
and Charges").
The Net Investment Factor may be more or less than one.
Second: An Annuity Unit value for a Payment Date is equal to:
(a) the value of the Annuity Unit on the immediately preceding Payment
Date;
(b) multiplied by the Net Investment Factor for the period from the
preceding Payment Date ending on the current Payment Date;
(c) divided by the Assumed Net Investment Factor for that period.
The Assumed Net Investment Factor is equal to one plus the interest rate
used in determining the basis for purchase of Annuities, adjusted to reflect
the performance of the Separate Account during the particular valuation
period. For example, using the 7% assumed annual interest rate, the Assumed
Net lnvestment Factor for a one-year valuation period would be 1.07. For a
one-day valuation period, the Assumed Net lnvestment Factor would be
1.000185. Using the 3% assumed annual interest rate, the Assumed Net
Investment Factor for a one-year valuation period would be 1.03. For a
one-day valuation period, the Assumed Net Investment Factor would be
1.000081. The value of an Annuity Unit will increase only when the actual
investment results of the Separate Account exceeds the assumed rate of
interest. If actual results are less than the assumed rate, the value of an
Annuity Unit will decrease.
The value of an Annuity Unit as of any date other than a given Payment
Date is equal to its value on the next succeeding Payment Date.
VALUE OF THE SEPARATE ACCOUNT
The value of the Separate Account on a Payment Date is equal to (a) its
value on the previous Payment Date, less (b) the Periodic Charge, the
Administration Fee and applicable taxes for the period since the preceding
Payment Date (see "Deductions and Charges"), less (c) Annuity Benefits paid
since the previous Payment Date, plus (d) net new contributions, plus (e) any
dividend or capital gains distributions paid to the Separate Account by the
Fund, and plus or minus (f) the increase or decrease in the net asset value of
the Fund since the preceding Payment Date.
DELAYS IN VALUATION AND PAYMENT
The determination of Net Asset Value or of Annuity Unit value and making
of payments under the Annuities may be suspended or delayed:
9
<PAGE>
(a) for any period (i) during which the New York Stock Exchange is closed
other than customary weekend and holiday closings or (ii) during which trading
on the New York Stock Exchange is restricted;
(b) for any period during which an emergency exists (as determined in
accordance with any applicable regulatory requirements) as a result of
which (i) disposal by the Separate Account or the Fund of securities owned by
it is not reasonably practicable or (ii) it is not reasonably practicable for
the Separate Account or the Fund fairly to determine the value of its net
assets; or
(c) for such other periods as the Commission may by order permit for the
protection of Participants, Annuitants, Joint Annuitants and/or
Beneficiaries.
DEDUCTIONS AND CHARGES
Any applicable state premium taxes and other taxes will be deducted either
from the initial Purchase Payment at the time an Annuity is purchased or from
Annuity Payments or Annuity Benefits, as required by applicable law from time
to time.
The Company assesses a Periodic Charge against the Separate Account, equal
on an annual basis to 0.8% of Separate Account assets. The Periodic Charge,
in the following amounts, compensates the Company for assuming the risks that
mortality experience will be lower than the rate assumed and that expenses
will be greater than what is assumed: 0.3% of average annual net assets to
cover expense risk and 0.5% to cover the mortality risk. The Periodic Charge
is guaranteed as to Annuities issued prior to the effective date of any
change in the Periodic Charge. The Company also assesses an administrative
charge (the "Administration Fee"), equal on an annual basis to 0.3% of the
Separate Account assets, to reimburse the Company for a portion of its
administrative expenses incurred in administering the Separate Account. The
Company does not expect to recover from the Administration Fee an amount in
excess of its accumulated administrative expenses. Even though the
administrative expenses may increase, the Company guarantees it will not
increase the amount of the Administration Fee. The Company also levies a
charge against the Separate Account to reimburse the Company for the amount
of any tax liability paid or reserved by the Company that results from the
maintenance of the Separate Account. (For expenses borne by the Fund, see the
current prospectus of the Fund.)
TAX INFORMATION
INTERNAL REVENUE CODE LIMITATIONS
The availability or terms of any payment option may be modified or
restricted to the extent necessary to comply with U.S. Treasury Regulations
covering permissible distributions from retirement plans. (See Appendix A.)
In addition, persons contemplating the purchase of an Annuity should refer to
the terms of their Plan for any limitations or restrictions regarding the
date on which Annuity Payments must commence. In general, and except as
otherwise permitted by U.S. Treasury Regulations, federal tax law requires
that Annuity Payment must commence no later than April 1 of the year after
the year in which the Annuitant attains age 70 1/2 . If the minimum
distribution is not made, a 50% nondeductible excise tax is imposed as to the
amount not distributed in accordance with U.S. Treasury Regulations.
In selecting a payment option for an Annuity, purchasers should also note
that the Internal Revenue Code (the "Code") provides that benefit payments may
be made only (a) over the life of the Annuitant or the lives of the Annuitant
and any Joint Annuitant; or (b) over a period certain that does not exceed the
life expectancy of the Annuitant or the joint life expectancy of the
Annuitant and any Joint Annuitant. Additionally, the Code allows selection of
a payment option with a 100% joint and survivor annuity (i.e., the 100% level
under Option III under the Contracts) only if the Joint Annuitant is either
the Annuitant's spouse or is no more than 10 years younger than the
Annuitant. If the Annuitant dies before the entire distribution due under the
Annuity has been paid, such unpaid portion of the Annuity will be
distributed (without interest) at least as rapidly as under the method of
distribution being used as of the date of his death.
FEDERAL INCOME TAX STATUS
The following discussion is general in nature and is not intended as tax
advice. Each person concerned should consult a competent tax adviser. The
discussion is based on the Company's understanding of current federal income
tax laws as they are currently interpreted by the Internal Revenue
Service (the "I.R.S."). No representation is made regarding the likelihood
that either the particular laws or their interpretation will continue. No
attempt is made to consider any state or other tax laws which may be
applicable.
(A) FEDERAL TAX STATUS OF THE COMPANY AND THE SEPARATE ACCOUNT
General: The Company is taxed as a life insurance company under Part I,
Subchapter L of the Code. Because the Separate Account is not a separate
entity from the Company for purposes of the Code, the Company will be liable
for any
10
<PAGE>
federal income taxes which become payable with respect to the income of the
Separate Account. Under current law, no item of dividend income, interest
income or realized capital gain attributable, at a minimum, to appreciation
after January 1,1985, of the Separate Account will be taxed to the Company to
the extent it is applied to increase reserves under the Contracts.
Under the principles set forth in I.R.S. Revenue Ruling 81-225 and Section
817(h) of the Code and regulations thereunder, the Company believes that the
Company will be treated as owner of the assets invested in the Separate
Account for federal income tax purposes, with the result that earnings and
gains, if any, derived from those assets will not be included in an
Annuitant's gross income until amounts are received pursuant to an Annuity.
(B) FEDERAL TAX STATUS OF ANNUITANTS
The Annuities are designed for use with the Plans and other similar tax
deferred retirement plans. The tax rules applicable to participants in such
plans who purchase an Annuity vary according to the type of plan and the
terms and conditions of the plan itself. Therefore, this discussion is
designed to provide only general information about the use of the Annuities
in connection with the various types of plans. Participants in plans are
cautioned that the rights of any person to any benefits under the plans may
be subject to the terms and conditions of the plans themselves regardless of
the terms and conditions of the Contract and the Annuities.
The Company believes that the Annuitant is not subject to federal income
tax on increases in Annuity value until payments are received under the
Annuity. Federal income taxation of Annuity Payments and Annuity Benefits is
determined under Section 72 of the Code. Section 72 provides, in general,
that a portion of each Annuity Payment which represents the Annuitant's
"investment" in the Annuity is excluded from gross income for income tax
purposes. ("Investment" refers generally to contributions that were not
deductible or excludable from income when made.) If the Annuity is purchased
entirely with assets which were excludable from the Annuitant/Participant's
income, the "investment" by the Annuitant/Participant will be deemed to be
zero and distributions will be fully taxable as payments are received. To the
extent an Annuity is purchased with contributions that were subject to income
tax when made to such a plan, proportional amounts of each Annuity Payment
may be excluded from gross income for income tax purposes up to the aggregate
amount of such contributions. In some circumstances, Annuity Payments made
before the Annuitant attains age 59 1/2 may be subject to an additional 10%
penalty tax. In addition, distributions in excess of $150,000 per year in the
case of periodic distributions and in excess of $750,000 in the case of lump
sum distributions may be subject to an additional 15% excise tax.
(C) WITHHOLDING
With certain limited exceptions, withholding is required on Annuity
Payments and Annuity Benefits. However, with certain exceptions, recipients
of Annuity Payments and Annuity Benefits are allowed to make an election not
to have federal income tax withheld, which election is revocable at any time.
The withholding rate, as determined from the recipient's withholding
certificate, will be applied against the taxable portion of each Annuity
Payment. If no withholding certificate is filed with the Company, tax will be
withheld from Annuity Payments and Annuity Benefits on the basis that the
payee is married with three withholding exemptions.
Persons who elect not to have withholding made are nonetheless liable for
federal income tax on the Annuity Payments and Annuity Benefits received by
them and may become subject to penalties under the estimated tax payment
rules if withholding and estimated tax payments are not sufficient.
VOTING RIGHTS
In accordance with its view of present applicable law, the Company will
vote the shares of the Fund held in the Separate Account at special meetings
of the shareholders of the Fund in accordance with instructions received from
persons having a voting interest in the Separate Account. The Company
understands that under present applicable law, persons currently receiving
payments under an Annuity have such voting interest. The Company will vote
shares for which it has not received instructions in the same proportion as
it votes shares for which it has received instructions.
The number of votes which a person has a right to instruct will be
determined by dividing the reserve for the applicable Annuity in the Separate
Account by the net asset value per share of the Fund. Such number of shares
will be determined as of a date coincident with the date established by the
Fund for determining shareholders eligible to vote at the meeting of the
Fund, which shall not be more than 90 days prior to any meeting of the Fund.
Voting instructions will be solicited by written communication at least 14
days prior to such meeting. The votes attributable to each Annuity decrease
as reserves allocated to that Annuity decrease.
SUBSTITUTION OF SECURITIES AND OTHER CHANGES
If the shares of the Fund should no longer be available for investment by
the Separate Account or if, in the judgment of the Company, further
investment in such shares should be inappropriate in view of the purpose of
the Annuities, the Company may
11
<PAGE>
substitute shares of another mutual fund or other investment vehicle for
shares of the Fund already purchased or to be purchased in the future under
the Annuities. No substitution of securities may take place without prior
approval of the Securities and Exchange Commission in accordance with such
requirements as it may impose, without notice to or approval by persons
having voting interest, or without complying with filing or other procedures
established by applicable state insurance regulators.
At the Company's election and subject to any necessary vote by persons
having the right to give instructions with respect to the voting of Fund
shares, the Separate Account may be operated as a management company under
the Investment Company Act of 1940 or in any other permitted form, or it may
be deregistered under the Act in the event registration is no longer
required. The Company also reserves the right to add or delete other separate
accounts or subaccount of the Separate Account; to combine the Separate
Account with other separate accounts and to combine one or more subaccounts;
to transfer assets among separate accounts and subaccounts established by the
Company or its affiliate or their successors or assigns; to add or delete
mutual funds, other investment vehicles, or series of either as investments
for a separate account or subaccount; to add a fixed account providing for
the provision of Annuity Benefits out of the Company's general account; and
to split or combine the value of the Annuity Units provided such action has
no material effect on benefits or other provisions of Annuities previously
issued under the Contracts.
On the first anniversary of the effective date of the Group Contract and
on each anniversary of that date thereafter, the Company, upon 90 days'
advance written notice to the Contractholder, may change any or all of the
terms of the Group Contract, except that no such change may affect in any way
the amount, value or terms of any Annuity purchased prior to the effective
date of the change. In addition, upon notice to the person(s) currently
receiving payments under an Annuity, the Contracts or an Annuity may be
modified by the Company, but only if such modification: (1) is necessary to
make the Contracts and/or the Annuities comply with any law or regulation
issued by a governmental agency to which the Company, the Separate Account,
the Contracts and/or an Annuity are subject; or (2) is necessary to assure
continued qualification of the Contracts or the Annuities under the Internal
Revenue Code or other applicable federal or state laws relating to annuity
contracts, deferred compensation plans, pension or profit sharing plans,
individual retirement accounts or other retirement plans, as such laws may be
amended from time to time; or (3) is necessary to reflect a change in the
operation of the Separate Account as described in the preceding paragraph. In
the event of any such modifications, the Company will make appropriate
endorsement to the Contracts and, if applicable, the certificates.
12
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS
Templeton Funds Annuity Company
Independent Accountants
Financial Information
Financial Statements--Templeton Funds Retirement Annuity Separate Account
Financial Statements--Templeton Funds Annuity Company
13
<PAGE>
APPENDIX A
Compliance with Internal Revenue Code Rules Relating
To Annuity Contracts Purchased for Distributions
From Qualified Retirement Plans
And Individual Retirement Accounts
1. Benefit payments may be made only (a) over the life of the Annuitant or
the lives of the Annuitant and a Joint Annuitant, or (b) for a period certain
that does not exceed the life expectancy of the Annuitant or the joint life
expectancy of the Annuitant and any Joint Annuitant.
2. If the Annuitant dies before his entire interest in the Annuity has
been paid him, the unpaid interest of the Annuitant will be distributed at
least as rapidly as under the method of distribution being used as of the
date of his death.
3. The availability of, and payments pursuant to, the various Annuity
Options under the Contracts may be restricted or altered to the extent
necessary to comply with applicable U.S. Treasury Regulations.
4. The above rules may be supplemented or amended in order to comply with
U.S. Treasury Regulations, including such regulations as may be issued from
time to time under the Internal Revenue Code Sections 72, 401(a)(9) and 408.
14
<PAGE>
APPENDIX B
DOLLAR VALUE OF FIRST MONTHLY PAYMENT
FOR EACH $1,000 OF NET PURCHASE PAYMENT
The following Tables show the dollar value of the first monthly payment
for each $1,000 of Net Purchase Payment. The amount of each payment depends
upon the Annuity Option chosen and the Annuitant's and Joint Annuitant's, if
any, actual age at the time the first payment is due. "Actual age", as used
above, shall mean actual age to the nearest month on the Annuity Purchase
Date. Annuity Payments under the Contracts will normally be made monthly. The
Company may, in its discretion, agree to less frequent payments, based upon
appropriate Annuity values and procedures.
OPTION 1--LIFE ANNUITY
<TABLE>
<CAPTION>
FIRST MONTHLY PAYMENT FIRST MONTHLY PAYMENT
USING 7% ASSUMED USING 3% ASSUMED
INTEREST RATE INTEREST RATE
ACTUAL FIRST MONTHLY ACTUAL FIRST MONTHLY
AGE PAYMENT AGE PAYMENT
- --------------------------------------------------
<S> <C> <C> <C>
50 $ 6.59 50 $4.09
51 6.65 51 4.16
52 6.72 52 4.23
53 6.79 53 4.31
54 6.86 54 4.39
55 6.94 55 4.48
56 7.02 56 4.57
57 7.11 57 4.67
58 7.21 58 4.77
59 7.31 59 4.88
60 7.42 60 5.00
61 7.54 61 5.13
62 7.67 62 5.26
63 7.81 63 5.41
64 7.95 64 5.56
65 8.11 65 5.73
66 8.29 66 5.90
67 8.47 67 6.09
68 8.67 68 6.29
69 8.88 69 6.50
70 9.11 70 6.74
71 9.36 71 6.98
72 9.63 72 7.25
73 9.92 73 7.54
74 10.23 74 7.85
75 10.57 75 8.18
</TABLE>
15
<PAGE>
OPTION 2--LIFE ANNUITY WITH 60 OR 120 PAYMENTS GUARANTEED
<TABLE>
<CAPTION>
FIRST MONTHLY FIRST MONTHLY
PAYMENT USING PAYMENT USING
7% ASSUMED 3% ASSUMED
INTEREST INTEREST
NUMBER OF NUMBER OF
GUARANTEED GUARANTEED
ACTUAL MONTHLY MONTHLY
AGE PAYMENTS PAYMENTS
- -----------------------------------------
60 120 60 120
- --------------------------------- --------
<S> <C> <C> <C> <C>
50 $ 6.58 $6.53 $4.08 $4.06
- --------------------------------- --------
51 6.64 6.59 4.15 4.12
- --------------------------------- --------
52 6.70 6.65 4.22 4.19
- --------------------------------- --------
53 6.77 6.71 4.30 4.27
- --------------------------------- --------
54 6.84 6.77 4.38 4.35
- --------------------------------- --------
55 6.91 6.84 4.47 4.43
- --------------------------------- --------
56 6.99 6.91 4.56 4.51
- --------------------------------- --------
57 7.08 6.99 4.65 4.60
- --------------------------------- --------
58 7.17 7.07 4.76 4.70
- --------------------------------- --------
59 7.27 7.16 4.86 4.80
- --------------------------------- --------
60 7.37 7.25 4.98 4.90
- --------------------------------- --------
61 7.49 7.35 5.10 5.02
- --------------------------------- --------
62 7.61 7.46 5.23 5.13
- --------------------------------- --------
63 7.74 7.56 5.37 5.26
- --------------------------------- --------
64 7.88 7.68 5.52 5.39
- --------------------------------- --------
65 8.03 7.80 5.68 5.52
- --------------------------------- --------
66 8.19 7.93 5.84 5.67
- --------------------------------- --------
67 8.36 8.06 6.02 5.81
- --------------------------------- --------
68 8.54 8.20 6.21 5.97
- --------------------------------- --------
69 8.73 8.35 6.41 6.13
- --------------------------------- --------
70 8.94 8.50 6.63 6.30
- --------------------------------- --------
71 9.16 8.65 6.85 6.47
- --------------------------------- --------
72 9.40 8.81 7.10 6.65
- --------------------------------- --------
73 9.65 8.97 7.36 6.83
- --------------------------------- --------
74 9.91 9.14 7.63 7.02
- --------------------------------- --------
75 10.19 9.31 7.92 7.20
- -----------------------------------------
</TABLE>
OPTION 3(A)--JOINT AND 100% SURVIVOR LIFE ANNUITY
FIRST MONTHLY PAYMENT USING 7% ASSUMED INTEREST RATE
<TABLE>
<CAPTION>
ACTUAL AGE OF
ANNUITANT
ACTUAL AGE
OF JOINT
ANNUITANT 50 55 60 65 70 75
- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
50 $6.12 $6.20 $6.29 $6.36 $6.43 $6.48
- -------------------------------------------------------------
55 6.20 6.32 6.45 6.56 6.67 6.75
- -------------------------------------------------------------
60 6.29 6.45 6.62 6.80 6.96 7.10
- -------------------------------------------------------------
65 6.36 6.56 6.80 7.05 7.31 7.54
- -------------------------------------------------------------
70 6.43 6.67 6.96 7.31 7.68 8.06
- -------------------------------------------------------------
75 6.48 6.75 7.10 7.54 8.06 8.62
ACTUAL AGE OF
ANNUITANT
ACTUAL AGE
OF JOINT
ANNUITANT 50 55 60 65 70 75
- -------------------------------------------------------------
- -------------------------------------------------------------
</TABLE>
16
<PAGE>
FIRST MONTHLY PAYMENT USING 3% ASSUMED INTEREST RATE
<TABLE>
<CAPTION>
ACTUAL AGE OF
ANNUITANT
ACTUAL AGE
OF JOINT
ANNUITANT 50 55 60 65 70 75
- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
50 $3.62 $3.74 $3.83 $3.91 $3.97 $4.02
- -------------------------------------------------------------
55 3.74 3.90 4.05 4.18 4.28 4.35
- -------------------------------------------------------------
60 3.83 4.05 4.26 4.46 4.64 4.77
- -------------------------------------------------------------
65 3.91 4.18 4.46 4.76 5.03 5.27
- -------------------------------------------------------------
70 3.97 4.28 4.64 5.03 5.45 5.83
- -------------------------------------------------------------
75 4.02 4.35 4.77 5.27 5.83 6.42
- -------------------------------------------------------------
</TABLE>
OPTION 3(B)--JOINT AND 75% SURVIVOR LIFE ANNUITY
FIRST MONTHLY PAYMENT USING 7% ASSUMED INTEREST RATE
<TABLE>
<CAPTION>
ACTUAL AGE OF
ANNUITANT
ACTUAL AGE
OF JOINT
ANNUITANT 50 55 60 65 70 75
- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
50 $6.23 $6.37 $6.54 $6.73 $6.94 $7.17
- -------------------------------------------------------------
55 6.30 6.47 6.66 6.89 7.15 7.42
- -------------------------------------------------------------
60 6.36 6.56 6.80 7.08 7.40 7.74
- -------------------------------------------------------------
65 6.42 6.65 6.94 7.29 7.69 8.12
- -------------------------------------------------------------
70 6.47 6.73 7.07 7.49 8.00 8.57
- -------------------------------------------------------------
75 6.51 6.80 7.18 7.68 8.30 9.03
- -------------------------------------------------------------
</TABLE>
FIRST MONTHLY PAYMENT USING 3% ASSUMED INTEREST RATE
<TABLE>
<CAPTION>
ACTUAL AGE OF
ANNUITANT
ACTUAL AGE
OF JOINT
ANNUITANT 50 55 60 65 70 75
- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
50 $3.73 $3.90 $4.07 $4.25 $4.43 $4.60
- -------------------------------------------------------------
55 3.82 4.03 4.25 4.48 4.71 4.93
- -------------------------------------------------------------
60 3.90 4.15 4.43 4.72 5.03 5.32
- -------------------------------------------------------------
65 3.96 4.25 4.59 4.97 5.37 5.78
- -------------------------------------------------------------
70 4.00 4.33 4.72 5.19 5.72 6.28
- -------------------------------------------------------------
75 4.03 4.38 4.83 5.37 6.03 6.79
- -------------------------------------------------------------
</TABLE>
OPTION 3(C)--JOINT AND 50% SURVIVOR LIFE ANNUITY
FIRST MONTHLY PAYMENT USING 7% ASSUMED INTEREST RATE
<TABLE>
<CAPTION>
ACTUAL AGE OF
ANNUITANT
ACTUAL AGE
OF JOINT
ANNUITANT 50 55 60 65 70 75
- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
50 $6.35 $6.55 $6.81 $7.13 $7.54 $8.04
- -------------------------------------------------------------
55 6.39 6.62 6.90 7.26 7.70 8.24
- -------------------------------------------------------------
60 6.44 6.68 7.00 7.40 7.89 8.50
- -------------------------------------------------------------
65 6.48 6.75 7.09 7.55 8.11 8.80
- -------------------------------------------------------------
70 6.51 6.80 7.18 7.69 8.34 9.14
- -------------------------------------------------------------
75 6.54 6.84 7.26 7.82 8.55 9.49
ACTUAL AGE OF
ANNUITANT
ACTUAL AGE
OF JOINT
ANNUITANT 50 55 60 65 70 75
- -------------------------------------------------------------
- -------------------------------------------------------------
</TABLE>
17
<PAGE>
FIRST MONTHLY PAYMENT USING 3% ASSUMED INTEREST RATE
<TABLE>
<CAPTION>
ACTUAL AGE OF
ANNUITANT
ACTUAL AGE
OF JOINT
ANNUITANT 50 55 60 65 70 75
- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
50 $3.84 $4.07 $4.34 $4.65 $5.00 $5.39
- -------------------------------------------------------------
55 3.90 4.17 4.47 4.83 5.23 5.68
- -------------------------------------------------------------
60 3.96 4.25 4.60 5.02 5.49 6.03
- -------------------------------------------------------------
65 4.00 4.32 4.72 5.20 5.76 6.41
- -------------------------------------------------------------
70 4.03 4.38 4.81 5.36 6.02 6.81
- -------------------------------------------------------------
75 4.05 4.42 4.88 5.49 6.25 7.20
- -------------------------------------------------------------
</TABLE>
OPTION 4(A)--JOINT AND 100% SURVIVOR LIFE ANNUITY
WITH 60 PAYMENTS GUARANTEED
FIRST MONTHLY PAYMENT USING 7% ASSUMED INTEREST RATE
<TABLE>
<CAPTION>
ACTUAL AGE OF
ANNUITANT
ACTUAL AGE
OF JOINT
ANNUITANT 50 55 60 65 70 75
- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
50 $6.12 $6.21 $6.29 $6.36 $6.43 $6.48
- -------------------------------------------------------------
55 6.21 6.32 6.45 6.56 6.67 6.75
- -------------------------------------------------------------
60 6.29 6.45 6.62 6.80 6.96 7.10
- -------------------------------------------------------------
65 6.36 6.56 6.80 7.05 7.30 7.53
- -------------------------------------------------------------
70 6.43 6.67 6.96 7.30 7.68 8.04
- -------------------------------------------------------------
75 6.48 6.75 7.10 7.53 8.04 8.59
- -------------------------------------------------------------
</TABLE>
FIRST MONTHLY PAYMENT USING 3% ASSUMED INTEREST RATE
<TABLE>
<CAPTION>
ACTUAL AGE OF
ANNUITANT
ACTUAL AGE
OF JOINT
ANNUITANT 50 55 60 65 70 75
- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
50 $3.62 $3.74 $3.83 $3.91 $3.97 $4.02
- -------------------------------------------------------------
55 3.74 3.90 4.05 4.18 4.28 4.35
- -------------------------------------------------------------
60 3.83 4.05 4.26 4.46 4.63 4.77
- -------------------------------------------------------------
65 3.91 4.18 4.46 4.76 5.03 5.26
- -------------------------------------------------------------
70 3.97 4.28 4.63 5.03 5.44 5.82
- -------------------------------------------------------------
75 4.02 4.35 4.77 5.26 5.82 6.41
- -------------------------------------------------------------
</TABLE>
OPTION 4(B)--JOINT AND 100% SURVIVOR LIFE ANNUITY
WITH 120 PAYMENTS GUARANTEED
FIRST MONTHLY PAYMENT USING 7% ASSUMED INTEREST RATE
<TABLE>
<CAPTION>
ACTUAL AGE OF
ANNUITANT
ACTUAL AGE
OF JOINT
ANNUITANT 50 55 60 65 70 75
- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
50 $6.12 $6.20 $6.29 $6.36 $6.42 $6.47
- -------------------------------------------------------------
55 6.20 6.32 6.44 6.56 6.66 6.73
- -------------------------------------------------------------
60 6.29 6.44 6.61 6.78 6.94 7.07
- -------------------------------------------------------------
65 6.36 6.56 6.78 7.03 7.27 7.48
- -------------------------------------------------------------
70 6.42 6.66 6.94 7.27 7.62 7.94
ACTUAL AGE OF
ANNUITANT
ACTUAL AGE
OF JOINT
ANNUITANT 50 55 60 65 70 75
- -------------------------------------------------------------
- -------------------------------------------------------------
75 6.47 6.73 7.07 7.48 7.94 8.41
- -------------------------------------------------------------
</TABLE>
18
<PAGE>
FIRST MONTHLY PAYMENT USING 3% ASSUMED INTEREST RATE
<TABLE>
<CAPTION>
ACTUAL AGE OF
ANNUITANT
ACTUAL AGE
OF JOINT
ANNUITANT 50 55 60 65 70 75
- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
50 $3.62 $3.74 $3.83 $3.91 $3.97 $4.01
- -------------------------------------------------------------
55 3.74 3.90 4.05 4.17 4.27 4.34
- -------------------------------------------------------------
60 3.83 4.05 4.26 4.46 4.62 4.75
- -------------------------------------------------------------
65 3.91 4.17 4.46 4.75 5.01 5.23
- -------------------------------------------------------------
70 3.97 4.27 4.62 5.01 5.40 5.75
- -------------------------------------------------------------
75 4.01 4.34 4.75 5.23 5.75 6.27
- -------------------------------------------------------------
</TABLE>
OPTION 5--UNIT REFUND LIFE ANNUITY
<TABLE>
<CAPTION>
FIRST MONTHLY PAYMENT FIRST MONTHLY PAYMENT
USING 7% ASSUMED USING 3% ASSUMED
INTEREST RATE INTEREST RATE
ACTUAL FIRST MONTHLY ACTUAL FIRST MONTHLY
AGE PAYMENT AGE PAYMENT
- --------------------------------------------------
<S> <C> <C> <C>
50 $6.46 50 $3.90
51 6.51 51 3.95
52 6.56 52 4.00
53 6.61 53 4.06
54 6.67 54 4.13
55 6.74 55 4.19
56 6.80 56 4.26
57 6.87 57 4.33
58 6.95 58 4.41
59 7.03 59 4.49
60 7.11 60 4.57
61 7.20 61 4.66
62 7.30 62 4.75
63 7.40 63 4.84
64 7.50 64 4.94
65 7.61 65 5.05
66 7.73 66 5.15
67 7.86 67 5.27
68 7.99 68 5.39
69 8.13 69 5.52
70 8.28 70 5.65
71 8.43 71 5.79
72 8.60 72 5.94
73 8.78 73 6.10
74 8.96 74 6.26
75 9.16 75 6.43
</TABLE>
19
<PAGE>
