File Nos. 333-
811-05618
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 (X)
Pre-Effective Amendment No. ( )
Post-Effective Amendment No. ( )
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 ( )
Amendment No. 50 (X)
(Check appropriate box or boxes.)
ALLIANZ LIFE VARIABLE ACCOUNT B
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(Exact Name of Registrant)
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
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(Name of Depositor)
1750 Hennepin Avenue, Minneapolis, MN 55403
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(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (612) 347-6596
Name and Address of Agent for Service
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Michael T. Westermeyer
Allianz Life Insurance Company of North America
1750 Hennepin Avenue
Minneapolis, MN 55403
Copies to:
Judith A. Hasenauer
Blazzard, Grodd & Hasenauer, P.C.
P.O. Box 5108
Westport, CT 06881
(203) 226-7866
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of this Filing.
Title of Securities Registered:
Individual Deferred Variable Annuity Contracts
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The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
CROSS REFERENCE SHEET
(Required by Rule 495)
Item No. Location
- -------- --------
PART A
Item 1. Cover Page . . . . . . . . . . . . . . . . . Cover Page
Item 2. Definitions . . . . . . . . . . . . . . . . Index of Terms
Item 3. Synopsis or Highlights. . . . . . . . . . . Summary
Item 4. Condensed Financial Information. . . . . . . Not Applicable
Item 5. General Description of Registrant, Depositor,
and Portfolio Companies. . . . . . . . . . . . Other Information-
The Separate Account,
Allianz Life,
Investment Options
Item 6. Deductions. . . . . . . . .. . . . . . . . . . Expenses
Item 7. General Description of Variable
Annuity Contracts . . . . . . . . . . . . . . .The Variable
Annuity Contract
Item 8. Annuity Period. . .. . . . . . . . . . . . . . Annuity Payments
(The Payout Phase)
Item 9. Death Benefit. . . . . . . . . . . . . . . . . Death Benefit
Item 10. Purchases and Contract Value. . . . . . . . . .Purchase
Item 11. Redemptions. . . . . . . . . . . . . . . . . . Access to Your Money
Item 12. Taxes. . . . . . . . . . . . . . . . . . . . . Taxes
Item 13. Legal Proceedings. . . . . . . . . . . . . . . None
Item 14. Table of Contents of the Statement of
Additional Information. . . . . . . . . . . Table of Contents
of the Statement of
Additional Information
CROSS REFERENCE SHEET (cont'd)
(Required by Rule 495)
Item No. Location
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PART B
Item 15. Cover Page. . . . . . . . .. . . . . . . . Cover Page
Item 16. Table of Contents. . . . . . . . . . . . . Table of Contents
Item 17. General Information and History. . . . . . Insurance Company
Item 18. Services. . . . . . . . . . . . .. . . . . Not Applicable
Item 19. Purchase of Securities Being Offered. . . . Not Applicable
Item 20. Underwriters. . . . . . . . . . . . . . . . Distributor
Item 21. Calculation of Performance Data. . . . . . Calculation of
Performance Data
Item 22. Annuity Payments. . . . . . . . . . . . . . Annuity Provisions
Item 23. Financial Statements. . . . . . . . . . . Financial Statements
PART C
Information required to be included in Part C is set forth under the appropriate
Item so numbered, in Part C to this Registration Statement.
PART A
THE VARIABLE ANNUITY CONTRACT
issued by
ALLIANZ LIFE VARIABLE ACCOUNT B
and
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
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This prospectus describes the variable annuity contract with a Fixed Account
offered by Allianz Life Insurance Company of North America (Allianz Life).
The annuity has 24 Variable Options, each of which invests in one of the
Portfolios of Franklin Templeton Variable Insurance Products Trust listed below,
and a Fixed Account of Allianz Life. You can select up to 10 investment choices
(which includes any of the Variable Options and the Fixed Account). The Fixed
Account may not be available in your state.
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST:
PORTFOLIO SEEKING CAPITAL PRESERVATION AND INCOME
Money Market Fund
PORTFOLIOS SEEKING INCOME
High Income Fund
Templeton Global Income Securities Fund
U.S. Government Securities Fund
Zero Coupon Funds - 2005 and 2010
PORTFOLIOS SEEKING GROWTH AND INCOME
Global Utilities Securities Fund
Growth and Income Fund
Income Securities Fund
Mutual Shares Securities Fund
Real Estate Securities Fund
Rising Dividends Fund
Templeton Global Asset Allocation Fund
Value Securities Fund
PORTFOLIOS SEEKING CAPITAL GROWTH
Capital Growth Fund
Global Health Care Securities Fund
Mutual Discovery Securities Fund
Natural Resources Securities Fund
Small Cap Fund
Templeton Developing Markets Equity Fund
Templeton Global Growth Fund
Templeton International Equity Fund
Templeton International Smaller Companies Fund
Templeton Pacific Growth Fund
Please read this prospectus before investing and keep it for future reference.
It contains important information about the variable annuity contract with a
Fixed Account.
To learn more about the annuity offered by this prospectus, you can obtain a
copy of the Statement of Additional Information (SAI) dated ______________ ,
1999. The SAI has been filed with the Securities and Exchange Commission (SEC)
and is legally a part of this prospectus. The Table of Contents of the SAI is on
page of this prospectus. The SEC maintains a Web site (http://www.sec.gov) that
contains the SAI, material incorporated by reference and other information about
companies that file electronically with the SEC. For a free copy of the SAI,
call us at (800) 342-3863 or write us at: 1750 Hennepin Avenue, Minneapolis,
Minnesota 55403-2195.
The Variable Annuity Contracts:
o are not bank deposits
o are not federally insured
o are not endorsed by any bank or government agency
o are not guaranteed and may be subject to loss of principal
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
This prospectus is not an offering of the securities in any state, country, or
jurisdiction in which we are not authorized to sell the Contracts. You should
rely only on the information contained in this prospectus or that we have
referred you to. We have not authorized anyone to provide you with information
that is different.
Dated: , 1999
TABLE OF CONTENTS
Index of Terms
Summary
Fee Table
The Variable Annuity Contract
Ownership
Contract Owner
Joint Owner
Annuitant
Beneficiary
Assignment
Annuity Payments (The Payout Phase)
Income Date
Annuity Payments
Annuity Options
Guaranteed Minimum Protection Benefits - Annuity Income Protection
Purchase
Purchase Payments
Automatic Investment Plan
Allocation of Purchase Payments
Free Look
Accumulation Units
Investment Options
Transfers
Dollar Cost Averaging Program
Flexible Rebalancing
Financial Advisers - Asset Allocation Programs
Voting Privileges
Substitution
Expenses
Insurance Charges
Mortality and Expense Risk Charge
Administrative Charge
Distribution Expense Charge
Contract Maintenance Charge
Contingent Deferred Sales Charge
Waiver of Contingent Deferred
Sales Charge Benefits
Reduction or Elimination of the
Contingent Deferred Sales Charge
Commutation Fee
Transfer Fee
Premium Taxes
Income Taxes
Portfolio Expenses
Taxes
Annuity Contracts in General
Qualified and Non-Qualified Contracts
Multiple Contracts
Withdrawals - Non-Qualified Contracts
Withdrawals - Qualified Contracts
Withdrawals - Tax-Sheltered Annuities
Diversification
Access to Your Money
Systematic Withdrawal Program
Minimum Distribution Program
Suspension of Payments or Transfers
Performance
Death Benefit
Upon Your Death
Guaranteed Minimum Protection Benefits - Death Benefit
Death of Annuitant
Other Information
Allianz Life
Year 2000 Matters
The Separate Account
Distribution
Administration
Financial Statements
Table of Contents of the Statement of Additional Information
Appendix
INDEX OF TERMS
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This prospectus is written in plain English to make it as understandable as
possible. However, there are some technical terms used which are capitalized in
the prospectus. The page that is indicated below is where you will find the
definition for the word or term.
Page
Accumulation Phase
Accumulation Unit
Annuitant
Annuity Options
Annuity Payments
Annuity Unit
Beneficiary
Contract
Contract Owner
Fixed Account
Income Date
Joint Owner
Non-Qualified
Payout Phase
Portfolios
Purchase Payment
Qualified
Tax Deferral
Variable Option
SUMMARY
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The sections in this summary correspond to sections in this prospectus which
discuss the topics in more detail.
The Variable Annuity Contract: The annuity contract offered by Allianz Life
provides a means for investing on a tax-deferred basis in 24 Portfolios of
Franklin Templeton Variable Insurance Products Trust and the Allianz Life Fixed
Account. The Contract is intended for retirement savings or other long-term
investment purposes. The Contract provides a Traditional Guaranteed Minimum
Protection Benefit (Traditional GMPB). You can elect the Enhanced Guaranteed
Minimum Protection Benefit (Enhanced GMPB) instead. These features provide for a
guaranteed death benefit and a guaranteed annuity income benefit (which provides
for guaranteed minimum payments during the Payout Phase).
Annuity Payments: If you want to receive regular income from your annuity, you
can choose an Annuity Option. You can choose whether to have payments come from
our general account, the available Variable Options or both. If you choose to
have any part of your payments come from the Variable Options, the dollar amount
of your payments may go up or down based on the performance of the Portfolios.
This product offers guaranteed income protection through either the Traditional
GMPB or the Enhanced GMPB. To receive the GMPB annuity income benefit, your
Income Date must be within 30 days following a Contract anniversary beginning
with the seventh Contract anniversary.
Purchase: You can buy the Contract with $5,000 or more under most circumstances.
You can add $250 or more any time you like during the Accumulation Phase.
Investment Options: You can put your money in the Variable Options which invest
in the Portfolios of Franklin Templeton Variable Insurance Products Trust and/or
you can invest in the Allianz Life Fixed Account. The investment returns on the
Portfolios are not guaranteed. You can lose money. You can make transfers
between investment choices.
Expenses: The contract has insurance features and investment features, and there
are costs related to each.
Each year, Allianz Life deducts a $40 contract maintenance charge from your
Contract. During the Accumulation Phase, Allianz Life currently waives this
charge if the value of your Contract is at least $100,000.
Allianz Life deducts a mortality and expense risk charge which varies depending
upon whether you select the Traditional GMPB or the Enhanced GMPB. During the
Accumulation Phase, the charge is equal, on an annual basis, to 1.10% of the
average daily value of the Contract invested in a Variable Option if you select
the Traditional GMPB and 1.60% of the average daily value of the Contract
invested in a Variable Option if you select the Enhanced GMPB. The charge is
1.00%, on an annual basis, during the Payout Phase. Allianz Life also deducts an
administrative charge which is equal, on an annual basis, to .15% of the value
of the Contract invested in a Variable Option.
If you take money out of the contract, Allianz Life may assess a contingent
deferred sales charge against each Purchase Payment withdrawn. The contingent
deferred sales charge starts at 6% in the first year and declines to 0% after 5
years.
You can make 12 free transfers each year. After that, Allianz Life deducts a $25
transfer fee for each additional transfer.
There are also daily investment charges which range, on an annual basis, from
.74% to 1.66% of the average daily value of the Portfolio, depending upon the
Portfolio.
Taxes: Your earnings are not taxed until you take them out. If you take money
out during the Accumulation Phase, earnings come out first and are taxed as
income. If you are younger than 59 1/2 when you take money out, you may be
charged a 10% federal tax penalty.
Access to Your Money: You can take money out of your Contract during the
Accumulation Phase. Withdrawals during the Accumulation Phase may be subject to
a contingent deferred sales charge. You may also have to pay income tax and a
tax penalty on any money you take out. Under certain circumstances, you can also
take money out during the Payout Phase if you select Annuity Option 2, 4 or 6.
Money you take out during the Payout Phase is subject to a commutation fee.
Death Benefit: If you die before moving to the Payout Phase, the person you have
chosen as a Beneficiary will receive a death benefit. The amount of the death
benefit depends on whether you select the Traditional GMPB or the Enhanced GMPB.
Free-Look: You can cancel the contract within 10 days after receiving it (or
whatever period is required in your state). Allianz Life will refund the value
of your Contract on the day it receives your request to cancel the Contract.
This may be more or less than your original payment. In certain states, or if
you have purchased the Contract as an individual retirement annuity, Allianz
Life will refund the Purchase Payment.
FEE TABLE
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The purpose of this Fee Table is to help you understand the costs of investing,
directly or indirectly, in the Contract. It reflects expenses of the Separate
Account as well as the Portfolios.
CONTRACT OWNER TRANSACTION FEES
Contingent Deferred Sales Charge*
(as a percentage of Purchase Payments)
Number of Complete Contract Years
Since Receipt of Purchase
Payment Charge
---------------------------------------------------------
0 6%
1 5%
2 4%
3 3%
4 2%
5 years or more 0%
Transfer Fee
First 12 transfers in a Contract year are free. Thereafter,
the fee is $25. Dollar Cost Averaging transfers and Flexible
Rebalancing transfers are not counted.
CONTRACT MAINTENANCE CHARGE** $40 per Contract per year
<TABLE>
<CAPTION>
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Traditional Enhanced
GMPB GMPB
---- ----
<S> <C> <C>
Mortality and Expense Risk Charge*** 1.10% 1.60%
Administrative Charge .15% .15%
Distribution Expense Charge 0% 0%
----- -----
Total Separate Account Annual Expenses 1.25% 1.75%
<FN>
* Each year, on a cumulative basis (minus any previous withdrawals you make
which are not subject to a contingent deferred sales charge), you may make
partial withdrawals of up to a total of 10% of Purchase Payments and no
contingent deferred sales charge will be assessed. See "Access to Your
Money" for additional options.
** During the Accumulation Phase, the charge is waived if the value of your
Contract is at least $100,000. If you own more than one Contract offered
under this Prospectus (registered with the same social security number), we
will determine the total value of all your Contracts. If the total value of
all your Contracts is at least $100,000, the charge is waived on all your
Contracts.
*** During the Payout Phase, the Mortality and Expense Risk Charge is 1.00%.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Franklin Templeton Variable Insurance Products Trust's Annual Expenses: Class 2
Shares (as a percentage of Franklin Templeton Variable Insurance Products
Trust's average net assets)
The Management and Portfolio Administration Fees and Total Annual Expenses for
each Portfolio are based on a percentage of that Portfolio's average net assets
for the most recent fiscal year. Class 2 shares have a distribution plan which
is referred to as a Rule 12b-1 plan. See the accompanying prospectus for
Franklin Templeton Variable Insurance Products Trust for a description of these
fees and the Rule 12b-1 plan. While the maximum amount payable under each
Portfolio's Class 2 Rule 12b-1 plan is .35% per year of the Portfolio's average
daily net assets, the Board of Trustees of Franklin Templeton Variable Insurance
Products Trust has set the current rate at .25% per year. Prior to July 1, 1999,
the Class 2 shares had Rule 12b-1 expenses of .30% per year. Because Class 2
shares are relatively new, the figures below (other than 12b-1 fees) are based
on the expenses of each Portfolio's Class 1 shares for the most recent fiscal
year, except as noted.
Management
Portfolio Total Annual
Administration Fees 1 12b-1 Fees Other Expenses Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital Growth Fund .75% .25% .02% 1.02%
Global Health Care
Securities Fund 2 .75% .25% .09% 1.09%
Global Utilities Securities Fund .47% .25% .03% .75%
Growth and Income Fund .47% .25% .02% .74%
High Income Fund .50% .25% .03% .78%
Income Securities Fund .47% .25% .02% .74%
Money Market Fund .51% .25% .02% .78%
Mutual Discovery Securities
Fund .95% .25% .05% 1.25%
Mutual Shares Securities Fund .74% .25% .03% 1.02%
Natural Resources
Securities Fund .62% .25% .02% .89%
Real Estate Securities Fund .52% .25% .02% .79%
Rising Dividends Fund .70% .25% .02% .97%
Small Cap Fund .75% .25% .02% 1.02%
Templeton Developing Markets
Equity Fund 1.25% .25% .16% 1.66%
Templeton Global Asset
Allocation Fund .80% .25% .04% 1.09%
Templeton Global Growth Fund .83% .25% .05% 1.13%
Templeton Global Income
Securities Fund .57% .25% .06% .88%
Templeton International
Equity Fund .80% .25% .08% 1.13%
Templeton International Smaller
Companies Fund 1.00% .25% .10% 1.35%
Templeton Pacific Growth
Fund .99% .25% .11% 1.35%
U.S. Government Securities
Fund .48% .25% .02% .75%
Value Securities Fund 2 .75% .25% .08% 1.08%
Zero Coupon Fund - 2005 .63% .25% .03% .91%
Zero Coupon Fund - 2010 .62% .25% .04% .91%
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<FN>
1. The Portfolio Administration Fee is a direct expense for the Global Health
Care Securities Fund, the Mutual Discovery Securities Fund, the Mutual
Shares Securities Fund, the Templeton Global Asset Allocation Fund, the
Templeton International Smaller Companies Fund, and the Value Securities
Fund; other Portfolios pay for similar services indirectly through the
Management Fee. See the accompanying Franklin Templeton Variable Insurance
Products Trust prospectus for further information regarding these fees.
2. The Global Health Care Securities Fund and the Value Securities Fund
commenced operations May 1, 1998. The expenses shown above for these
Portfolios are therefore estimated for 1999.
</FN>
</TABLE>
Examples
o The examples below should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than those shown.
o The $40 contract maintenance charge is included in the examples as a
prorated charge of $1. Since the average Contract size is greater than
$1,000, the contract maintenance charge is reduced accordingly.
o Premium taxes are not reflected in the tables. Premium taxes may apply.
o For additional information, see "Expenses."
<TABLE>
<CAPTION>
You would pay the following expenses on a $1,000 investment, assuming a 5% annual
return on your money if you surrender your Contract at the end of each time period for
Contracts with:
(a) the Traditional GMPB
(b) the Enhanced GMPB
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital Growth Fund
Global Health Care Securities Fund*
Global Utilities Securities Fund
Growth and Income Fund
High Income Fund
Income Securities Fund
Money Market Fund
Mutual Discovery Securities Fund
Mutual Shares Securities Fund
Natural Resources Securities Fund
Real Estate Securities Fund
Rising Dividends Fund
Small Cap Fund
Templeton Developing Markets Equity Fund
Templeton Global Asset Allocation Fund
Templeton Global Growth Fund
Templeton Global Income Securities Fund
Templeton International Equity Fund
Templeton International Smaller Companies Fund
Templeton Pacific Growth Fund
U.S. Government Securities Fund
Value Securities Fund*
Zero Coupon Fund - 2005
Zero Coupon Fund - 2010
- ------------------------------------------------------------------------------------------------------------------
<FN>
* Estimated
</FN>
</TABLE>
<TABLE>
<CAPTION>
You would pay the following expenses on a $1,000 investment, assuming a 5% annual
return on your money if your Contract is not surrendered or if you apply your Contract
value to an Annuity Option for Contracts with:
(a) the Traditional GMPB
(b) the Enhanced GMPB
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital Growth Fund
Global Health Care Securities Fund*
Global Utilities Securities Fund
Growth and Income Fund
High Income Fund
Income Securities Fund
Money Market Fund
Mutual Discovery Securities Fund
Mutual Shares Securities Fund
Natural Resources Securities Fund
Real Estate Securities Fund
Rising Dividends Fund
Small Cap Fund
Templeton Developing Markets Equity Fund
Templeton Global Asset Allocation Fund
Templeton Global Growth Fund
Templeton Global Income Securities Fund
Templeton International Equity Fund
Templeton International Smaller Companies Fund
Templeton Pacific Growth Fund
U.S. Government Securities Fund
Value Securities Fund*
Zero Coupon Fund - 2005
Zero Coupon Fund - 2010
- ------------------------------------------------------------------------------------------------------------------
<FN>
* Estimated
</FN>
</TABLE>
THE VARIABLE ANNUITY CONTRACT
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This prospectus describes a flexible purchase payment variable deferred annuity
contract with a Fixed Account offered by Allianz Life.
* Flexible Purchase Payments means that you may choose to make Purchase
Payments at any time during the Accumulation Phase, in whatever amount
you choose, subject to certain minimum and maximum requirements.
* A deferred annuity contract means that Annuity Payments do not begin
for a specified period of time in the future (usually when you retire)
or until you reach a certain age.
* A variable annuity is one in which Contract values and the Annuity
Payments vary depending on the performance of the underlying
Portfolios.
An annuity is a contract between you, the owner, and an insurance company (in
this case Allianz Life), where the insurance company promises to pay you (or
someone else you choose) an income, in the form of Annuity Payments. The Annuity
Payments must begin on a designated date that is at least two years after you
buy the Contract. Until you decide to begin receiving Annuity Payments, your
annuity is in the Accumulation Phase. Once you begin receiving Annuity Payments,
your Contract switches to the Payout Phase.
The Contract benefits from Tax Deferral. Tax Deferral means that you are not
taxed on any earnings or appreciation on the assets in your Contract until you
take money out of your Contract.
You have 25 investment choices - the 24 Variable Options, each of which invests
in one of the Portfolios of Franklin Templeton Variable Insurance Products
Trust, and the Fixed Account of Allianz Life. Depending upon market conditions,
you can make or lose money in the Contract based on the investment performance
of the Portfolios of Franklin Templeton Variable Insurance Products Trust. The
Portfolios are designed to offer a better return than the Fixed Account.
However, this is not guaranteed.
If you select the variable annuity portion of the Contract, the amount of money
you are able to accumulate in your Contract during the Accumulation Phase
depends in large part upon the investment performance of the Portfolio(s) you
select. The amount of the Annuity Payments you receive during the Payout Phase
from the variable annuity portion of the Contract also depends in large part
upon the investment performance of the Portfolios you select for the Payout
Phase.
The Contract also contains a Fixed Account. The Fixed Account offers an interest
rate that is guaranteed by Allianz Life for all deposits made within the twelve
month period. Your initial interest rate is set on the date when your money is
invested in the Fixed Account and remains effective for one year. Initial
interest rates are declared monthly. Allianz Life guarantees that the interest
credited to the Fixed Account will not be less than 3% per year. If you select
the Fixed Account, your money will be placed with the other general assets of
Allianz Life. Allianz Life may change the terms of the Fixed Account in the
future - please contact Allianz Life for the most current terms.
If you select the Fixed Account, the amount of money you are able to accumulate
in your Contract during the Accumulation Phase depends upon the total interest
credited to your Contract.
We will not make any changes to your Contract without your permission except as
may be required by law.
Ownership
Contract Owner. You, as the Contract Owner, have all the rights under the
Contract. The Contract Owner is as designated at the time the Contract is
issued, unless changed. You may change Contract Owners at any time. The change
will become effective as of the date the request is signed. This may be a
taxable event. You should consult with your tax adviser before doing this.
Joint Owner. The Contract can be owned by Joint Owners. Any Joint Owner must be
the spouse of the other Contract Owner (this requirement may not apply in
certain states). Upon the death of either Joint Owner, the surviving Joint Owner
will be the designated Beneficiary. Any other Beneficiary designation at the
time the Contract was issued or as may have been later changed will be treated
as a contingent Beneficiary unless otherwise indicated.
Annuitant. The Annuitant is the natural person on whose life we base Annuity
Payments. You name an Annuitant. You may change the Annuitant at any time before
the Income Date unless the Contract is owned by a non-individual (for example, a
corporation).
Beneficiary. The Beneficiary is the person(s) or entity you name to receive any
death benefit. The Beneficiary is named at the time the Contract is issued
unless changed at a later date. Unless an irrevocable Beneficiary has been
named, you can change the Beneficiary or contingent Beneficiary.
Assignment. You can transfer ownership of (assign) the Contract at any time
during your lifetime. Allianz Life will not be bound by the assignment until it
records the assignment. Allianz Life will not be liable for any payment or other
action we take in accordance with the Contract before we receive notice of the
assignment. Any assignment made after the death benefit has become payable can
only be done with our consent. An assignment may be a taxable event.
If the Contract is issued pursuant to a Qualified plan, you may be unable to
assign the Contract.
ANNUITY PAYMENTS (THE PAYOUT PHASE)
- --------------------------------------------------------------------------------
Income Date
You can receive regular monthly income payments under your Contract. You can
choose the month and year in which those payments begin. We call that date the
Income Date. Your Income Date must be the first day of a calendar month and must
be at least 2 years after you buy the Contract. To receive the annuity income
protection of the Guaranteed Minimum Protection Benefit, your Income Date must
be within 30 days following a Contract anniversary beginning with the 7th
Contract anniversary.
We ask you to choose your Income Date when you purchase the Contract. You can
change it at any time before the Income Date with 30 days notice to us. Your
Income Date must not be later than the Annuitant's 90th birthday or 10 years
from the date the Contract was issued, or the maximum date permitted under state
law. This limitation may not apply when the Contract is issued to a charitable
remainder trust.
Annuity Payments
As long as your Income Date is within 30 days following a Contract anniversary
beginning with the 7th Contract anniversary, the Contract provides for minimum
guaranteed Annuity Payments. The amount of the minimum guaranteed payment
depends on whether you select the Traditional GMPB or the Enhanced GMPB (see
below).
You may elect to receive your Annuity Payments as:
* a variable payout,
* a fixed payout, or
* a combination of both.
Under a fixed payout, all of the Annuity Payments will be the same dollar amount
(equal installments). If you choose a variable payout, you can select from the
available Variable Options. If you do not tell us otherwise, your Annuity
Payments will be based on the investment allocations that were in place on the
Income Date.
If you choose to have any portion of your Annuity Payments based on the
investment performance of the Variable Option(s), the dollar amount of your
payments will depend upon three factors:
1) the value of your Contract in the Variable Option(s) on the Income
Date,
2) the assumed investment rate used in the annuity table for the
Contract, and
3) the performance of the Variable Option(s) you selected.
You can choose a 3%, 5% or 7% assumed investment rate (AIR). The 7% AIR is not
be available in all states. If the actual performance exceeds the AIR you
selected, your Annuity Payments will increase. Similarly, if the actual rate is
less than the AIR you selected, your Annuity Payments will decrease.
You (or someone you designate) will receive the Annuity Payments. You will
receive tax reporting on those payments.
Annuity Options
You can choose among income plans. We call those Annuity Options. You can choose
one of the Annuity Options described below or any other Annuity Option you want
and that Allianz Life agrees to provide. You may, at any time prior to the
Income Date, 30 days in advance, select and/or change the Annuity Option. After
Annuity Payments begin, you cannot change the Annuity Option. If you do not
choose an Annuity Option prior to the Income Date, we will assume that you
selected Option 2 which provides a life annuity with 5 years of monthly payments
guaranteed.
Option 1. Life Annuity. Under this option, we will make monthly Annuity Payments
so long as the Annuitant is alive. After the Annuitant dies, we stop making
Annuity Payments.
Option 2. Life Annuity with Monthly Payments Over 5, 10, 15 or 20 Years
Guaranteed. Under this option, we will make monthly Annuity Payments so long as
the Annuitant is alive. However, if the Annuitant dies before the end of the
selected guaranteed period, we will continue to make Annuity Payments to you or
any person you choose for the rest of the guaranteed period. Alternatively, if
you do not want to receive Annuity Payments after the Annuitant's death, you can
ask us for a single lump sum equal to the present value of the guaranteed
monthly Annuity Payments remaining, as of the date Allianz Life receives notice
of the Annuitant's death, commuted as set forth in the Contract.
During the lifetime of the Annuitant, and while the number of Annuity Payments
made is less than the guaranteed number of payments elected, and if you elected
to receive payments on a variable basis, you may request a withdrawal (partial
liquidation) of an amount up to 75% of the Total Liquidation Value, less any
previously liquidated amounts. The Total Liquidation Value is equal to the
present value of the remaining guaranteed Annuity Payments, to the end of the
period certain, commuted at the AIR, less a commutation fee. The minimum amount
that you can liquidate is the lesser of $500 or the remaining portion of the
Total Liquidation Value available. The partial liquidation will be processed on
the next annuity calculation date after your written request is received. The
liquidation feature allows any portion of the 75% that you do not use in a
Contract year to carry over from year to year. It will be based on the Total
Liquidation Value for the year that you make a liquidation.
Option 3. Joint and Last Survivor Annuity. Under this option, we will make
monthly Annuity Payments during the joint lifetime of the Annuitant and the
joint Annuitant. When the Annuitant dies, if the joint Annuitant is still alive,
we will continue to make Annuity Payments so long as the joint Annuitant
continues to live. The amount of the Annuity Payments we will make to you can be
equal to 100%, 75% or 50% of the amount that was being paid when both Annuitants
were alive. The monthly Annuity Payments will end when the last surviving
Annuitant dies.
Option 4. Joint and Last Survivor Annuity with Monthly Payments Over 5, 10, 15
or 20 Years Guaranteed. Under this option, we will make monthly Annuity Payments
during the joint lifetime of the Annuitant and the joint Annuitant. When the
Annuitant dies, if the joint Annuitant is still alive, we will continue to make
Annuity Payments, so long as the surviving Annuitant continues to live, at 100%
of the amount that was being paid when both were alive. If, when the last death
occurs, we have made Annuity Payments for less than the selected guaranteed
period, we will continue to make Annuity Payments to you or any person you
choose for the rest of the guaranteed period. Alternatively, if you do not want
to receive Annuity Payments after the Annuitant's death, you can ask us for a
single lump sum equal to the present value of the guaranteed monthly Annuity
Payments remaining, as of the date Allianz Life receives notice of the
Annuitant's death, commuted as set forth in the Contract.
During the lifetime of the Annuitant and joint Annuitant, and while the number
of Annuity Payments made is less than the guaranteed number of payments elected,
and if you elected to receive payments on a variable basis, you may request a
withdrawal (partial liquidation) of an amount up to 75% of the Total Liquidation
Value, less any previously liquidated amounts. The minimum amount that you can
liquidate is the lesser of $500 or the remaining portion of the Total
Liquidation Value available. The partial liquidation will be processed on the
next annuity calculation date after your written request. The liquidation
feature allows any portion of the 75% that you do not use in a Contract year to
carry over from year to year. It will be based on the Total Liquidation Value
for the year that you make a liquidation.
Option 5. Refund Life Annuity. Under this option, we will make monthly Annuity
Payments during the Annuitant's lifetime. The last Annuity Payment will be made
before the Annuitant dies and if the value of the Annuity Payments made is less
than the value applied to the Annuity Option, then you will receive a refund as
set forth in the Contract.
Option 6. Specified Period Certain Annuity. Under this option, we will make
monthly Annuity Payments for a specified period of time. You elect the specified
period which must be a whole number of years from 5 to 30. If at the time of the
death of the last Annuitant and any joint Annuitant, Annuity Payments have been
made for less than the specified period certain, then we will continue to make
Annuity Payments to you for the rest of the period certain. If you have selected
to receive payments on a variable basis, you may make a liquidation at least
once each Contract year of up to 100% of the Total Liquidation Value in the
Contract. The liquidation will be processed on the next annuity calculation date
after your written request is received commuted as set forth in the Contract.
Guaranteed Minimum Protection Benefits (GMPB) - Annuity Income Protection
The annuity automatically includes a basic Guaranteed Minimum Protection Benefit
(Traditional GMPB). At the time you buy the Contract, you can elect the Enhanced
Guaranteed Minimum Protection Benefit (Enhanced GMPB) instead of the Traditional
GMPB. Once selected, you cannot change it. If you do not make an election, you
will receive the Traditional GMPB. The Traditional and Enhanced GMPB provide a
death benefit protection benefit and an annuity income protection benefit. The
mortality and expense risk charge is higher for Contracts with the Enhanced
GMPB. If the Contract is owned by a non-natural person, then the GMPB only
applies if the Contract is owned for the benefit of an individual.
The annuity income benefits provided are described below and are used in
determining the amount of each Annuity Payment you receive during the Payout
Phase. The GMPB can be used with any Annuity Option provided for in the Contract
and provides for guaranteed minimum Annuity Payments during the Payout Phase.
However, your Income Date must be within 30 days following a Contract
anniversary beginning with the 7th Contract anniversary to receive the benefit.
The death benefit protection benefit is described in the "Death Benefit" section
of this prospectus. Please refer to the applicable endorsements to your Contract
for the specific terms and conditions of these benefits.
The Traditional Guaranteed Minimum Protection Benefit guarantees that your
Annuity Payments will be equal to the greater of:
* current payout rates applied to the current Contract value (less any
premium tax); or
* guaranteed payout rates applied to the guaranteed minimum income
benefit (GMIB).
The GMIB is equal to Purchase Payments reduced by each withdrawal's
percentage of Contract value withdrawn (including any contingent
deferred sales charges paid on the withdrawals).
The Enhanced Guaranteed Minimum Protection Benefit guarantees that your Annuity
Payments will be equal to the greater of:
* current payout rates applied to the current Contract value (less any
premium tax); or
* guaranteed payout rates applied to the enhanced guaranteed minimum
income benefit (Enhanced GMIB);
The Enhanced GMIB is equal to the greater of A or B below:
A. 5% Annual Increase Amount
On the date your Contract is issued: the 5% Annual Increase
Amount is equal to your initial Purchase Payment.
On each business day other than a Contract anniversary: the 5%
Annual Increase Amount is equal to its value on the immediately
preceding business day reduced by the percentage of any Contract
value you withdraw (including any contingent deferred sales
charge) and increased by any additional Purchase Payments you
make.
On every Contract Anniversary: the 5% Annual Increase Amount is
equal to its value on the immediately preceding business day
increased by 5% prior to your 81st birthday, reduced by the
percentage of any Contract value you withdraw (including any
contingent deferred sales charge), increased by any additional
Purchase Payments you make.
B. Greatest Anniversary Value.
The anniversary value is equal to the value of your Contract on a
Contract anniversary, reduced by the percentage of any Contract
value you withdraw (including any contingent deferred sales
charge) since that Contract anniversary. When determining this
benefit, Allianz Life will not take into consideration any
Contract anniversaries occurring on or after your 81st birthday
or date of death.
If Joint Owners are named, Allianz Life will use the age of the oldest Joint
Owner to determine the GMIB.
If a non-natural person owns the Contract, then for purposes of these benefits,
you means the Annuitant.
If your Income Date is before the 7th Contract anniversary or on any date other
than 30 days following a Contract anniversary after the 7th Contract
anniversary, then the annuity payout for your Contract will be determined by
applying the current payout rates to the current Contract value.
The Appendix contains examples of how the Guaranteed Minimum Protection Benefits
are calculated. The amounts used in the examples are purely hypothetical and are
for illustrative purposes only.
PURCHASE
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Purchase Payments
A Purchase Payment is the money you invest in the Contract. The Purchase Payment
requirements are:
* the minimum payment Allianz Life will accept is $5,000 when the
Contract is bought as a Non-Qualified Contract. If you enroll in the
Automatic Investment Plan (which is described below), your Purchase
Payment can be $2,000.
* if you are buying the Contract as part of an IRA (Individual
Retirement Annuity), 401(k) or other Qualified plan, the minimum
amount we will accept is $2,000.
* the maximum amount we will accept without our prior approval is $1
million.
* you can make additional Purchase Payments of $250 (or as low as $100
if you have selected the Automatic Investment Plan) or more to either
type of Contract.
Allianz Life may, at its sole discretion, waive the minimum payment
requirements. We reserve the right to decline any Purchase Payments. At the time
you buy the Contract, you and the Annuitant cannot be older than 90 years old.
This product is not designed for professional market timing organizations, other
entities, or persons using programmed, large or frequent transfers.
Automatic Investment Plan
The Automatic Investment Plan (AIP) is a program which allows you to make
additional Purchase Payments to your Contract on a monthly or quarterly basis by
electronic transfer of monies from your savings or checking account. You may
participate in this program by completing the appropriate form. We must receive
your form by the first of the month in order for AIP to begin that same month.
Investments will take place on the 20th of the month, or the next business day.
The minimum investment that can be made by AIP is $100. You may stop AIP at any
time you want. We need to be notified by the first of the month in order to stop
or change AIP that month. If AIP is used for a Qualified Contract, you should
consult your tax adviser for advice regarding maximum contributions.
Allocation of Purchase Payments
When you purchase a Contract, we will allocate your Purchase Payment to the
Fixed Account and/or one or more of the Variable Options you have selected. We
ask that you allocate your money in either whole percentages or round dollars.
The Fixed Account may not be available in your state (check with your registered
representative). Transfers do not change the allocation instructions for
payments. You can instruct us how to allocate additional Purchase Payments you
make. If you do not instruct us, we will allocate them in the same way as your
previous instructions to us. You may change the allocation of future payments
without fee, penalty or other charge upon written notice or telephone
instructions to the Valuemark Service Center. A change will be effective for
payments received on or after we receive your notice or instructions.
Allianz Life reserves the right to limit the number of Variable Options that you
may invest in at one time. Currently, you may invest in 10 Variable Options and
the Allianz Life Fixed Account. We may change this in the future. However, we
will always allow you to invest in at least five Variable Options.
Once we receive your Purchase Payment and the necessary information, we will
issue your Contract and allocate your first Purchase Payment within 2 business
days. If you do not give us all of the information we need, we will contact you
or your registered representative to get it. If for some reason we are unable to
complete this process within 5 business days, we will either send back your
money or get your permission to keep it until we get all of the necessary
information. If you make additional Purchase Payments, we will credit these
amounts to your Contract within one business day. Our business day closes when
the New York Stock Exchange closes, which is usually at 4:00 p.m. Eastern time.
Free Look
If you change your mind about owning the Contract, you can cancel it within 10
days after receiving it (or the period required in your state). When you cancel
the Contract within this time period, Allianz Life will not assess a contingent
deferred sales charge. You will receive back whatever your Contract is worth on
the day we receive your request. In certain states, or if you have purchased the
Contract as an IRA, we may be required to give you back your Purchase Payment if
you decide to cancel your Contract within 10 days after receiving it (or
whatever period is required in your state). If that is the case, we reserve the
right to allocate your initial Purchase Payment to the Money Market Fund for 15
days after we receive it. (In some states, the period may be longer.) At the end
of that period, we will re-allocate your money as you selected. Currently,
however, we will directly allocate your money to the Variable Options and/or the
Fixed Account as you have selected.
Accumulation Units
The value of the portion of your Contract allocated to the Variable Options will
go up or down based upon the investment performance of the Variable Option(s)
you choose. The value of your Contract will also depend on the expenses of the
Contract. In order to keep track of the value of your Contract, we use a
measurement called an Accumulation Unit (which is like a share of a mutual
fund). During the Payout Phase of the Contract we call it an Annuity Unit.
Every business day we determine the value of an Accumulation Unit for each
Variable Option by multiplying the Accumulation Unit value for the previous
period by a factor for the current period. The factor is determined by:
1. dividing the value of a Portfolio at the end of the current period by
the value of a Portfolio for the previous period; and
2. multiplying it by one minus the daily amount of the insurance charges
and any charges for taxes.
The value of an Accumulation Unit may go up or down from day to day.
When you make a Purchase Payment, we credit your Contract with Accumulation
Units for any portion of your Purchase Payment allocated to a Variable Option.
The number of Accumulation Units we credit your Contract with is determined by
dividing the amount of the Purchase Payment allocated to a Variable Option by
the value of the corresponding Accumulation Unit.
We calculate the value of each Accumulation Unit after the New York Stock
Exchange closes each day and then credit your Contract.
Example:
On Wednesday we receive an additional Purchase Payment of $3,000 from you. You
have told us you want this to go to the Growth and Income Fund. When the New
York Stock Exchange closes on that Wednesday, we determine that the value of an
Accumulation Unit based on an investment in the Growth and Income Fund is
$13.25. We then divide $3,000 by $13.25 and credit your Contract on Wednesday
night with 226.42 Accumulation Units.
INVESTMENT OPTIONS
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The Contract offers Variable Options. Each Variable Option invests in one Class
2 Portfolio of Franklin Templeton Variable Insurance Products Trust. The
Contract also offers a Fixed Account of Allianz Life. Additional Portfolios may
be available in the future.
You should read the Franklin Templeton Variable Insurance Products Trust
prospectus (which is attached to this prospectus) carefully before investing.
Franklin Templeton Variable Insurance Products Trust (Trust) (formerly Franklin
Valuemark Funds) is the mutual fund underlying your Contract. Each Portfolio has
its own investment objective. The Trust issues two classes of shares. Only Class
2 shares are available with your Contract. Class 2 shares have Rule 12b-1 plan
expenses. Investment managers for each Portfolio are listed in the table below
and are as follows:
Franklin Advisers, Inc. (FA)
Franklin Advisory Services, LLC (FAS)
Franklin Mutual Advisers, LLC (FMA)
Templeton Asset Management Ltd. (TAM)
Templeton Global Advisors Limited (TGA)
Templeton Investment Counsel, Inc. (TIC).
Certain managers have retained one or more affiliated subadvisers to help them
manage the Portfolios.
The following is a list of the Portfolios available under the Contract:
Investment
Available Portfolios Managers
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PORTFOLIO SEEKING
CAPITAL PRESERVATION AND INCOME
Money Market Fund FA
PORTFOLIOS SEEKING INCOME
High Income Fund FA
Templeton Global Income Securities Fund FA
U.S. Government Securities Fund FA
Zero Coupon Funds - 2005, 2010 FA
PORTFOLIOS SEEKING GROWTH AND INCOME
Global Utilities Securities Fund FA
Growth and Income Fund FA
Income Securities Fund FA
Mutual Shares Securities Fund FMA
Real Estate Securities Fund FA
Rising Dividends Fund FAS
Templeton Global Asset Allocation Fund TGA
Value Securities Fund FAS
PORTFOLIOS SEEKING CAPITAL GROWTH
Capital Growth Fund FA
Global Health Care Securities Fund FA
Mutual Discovery Securities Fund FMA
Natural Resources Securities Fund FA
Small Cap Fund FA
Templeton Developing Markets Equity Fund TAM
Templeton Global Growth Fund TGA
Templeton International Equity Fund FA
Templeton International Smaller Companies Fund TIC
Templeton Pacific Growth Fund FA
Franklin Templeton Variable Insurance Products Trust serves as the underlying
mutual fund for variable life insurance policies offered by Allianz Life and
other variable annuity contracts offered by Allianz Life and its affiliates.
Franklin Templeton Variable Insurance Products Trust believes that offering its
shares in this manner will not be disadvantageous to you.
Transfers
You can transfer money among the 24 Variable Options and/or the Fixed Account.
Transfers may be subject to a transfer fee. Allianz Life currently allows you to
make as many transfers as you want to each year. Allianz Life may change this
practice in the future. However, this product is not designed for professional
market timing organizations or other persons using programmed, large, or
frequent transfers. Such activity may be disruptive to a Portfolio. We reserve
the right to reject any specific Purchase Payment allocation or transfer request
from any person, if in the Portfolio manager's judgment, a Portfolio would be
unable to invest effectively in accordance with its investment objectives and
policies, or would otherwise potentially be adversely affected.
The following applies to any transfer:
1. The minimum amount which you can transfer is $1,000 or your entire
value in the Variable Option or Fixed Account, if less. This
requirement is waived if the transfer is in connection with the Dollar
Cost Averaging Program or Flexible Rebalancing (which are described
below).
2. We may not allow you to make transfers during the free look period.
3. Your request for a transfer must clearly state:
* which Variable Option(s) and/or the Fixed Account is involved in
the transfer; and
* how much the transfer is for.
4. You cannot make any transfers within 7 calendar days prior to the date
your first Annuity Payment is due.
5. After the Income Date, you may not make a transfer from a fixed
Annuity Option to a variable Annuity Option.
6. After the Income Date, you can make at least one transfer from a
variable Annuity Option to a fixed Annuity Option.
7. Your right to make transfers is subject to modification if we
determine in our sole opinion that the service of the right by one or
more Contract Owners is, or would be, to the disadvantage of other
Contract Owners. Restrictions may be applied in any manner reasonably
designed to prevent any use of the transfer right which we consider to
be to the disadvantage of other Contract Owners. A modification could
be applied to transfers to or from one or more of the Variable Options
and could include, but is not limited to:
* the requirement of a minimum time period between each transfer;
* not accepting a transfer request from an agent acting under a
power of attorney on behalf of more than one Contract Owner; or
* limiting the dollar amount that may be transferred between the
Variable Options by a Contract Owner at any one time.
Allianz Life has reserved the right at any time without prior notice to any
party to modify the transfer provisions subject to the guarantees described
above and subject to applicable state law.
Telephone Transfers. You can make transfers by telephone. We may allow you to
authorize someone else to make transfers by telephone on your behalf. If you own
the Contract with a Joint Owner, unless you instruct Allianz Life otherwise, we
will accept instructions from either one of you. Allianz Life will use
reasonable procedures to confirm that instructions given to us by telephone are
genuine. If we do not use such procedures, we may be liable for any losses due
to unauthorized or fraudulent instructions. Allianz Life tape records all
telephone instructions.
Dollar Cost Averaging Program
The Dollar Cost Averaging Program allows you to systematically transfer a set
amount of money each month or quarter from any one Variable Option or the Fixed
Account to up to eight of the other Variable Options. The Variable Option(s) you
transfer from may not be the Variable Option(s) you transfer to in this program.
By allocating amounts on a regularly scheduled basis, as opposed to allocating
the total amount at one particular time, you may be less susceptible to the
impact of market fluctuations. You may only participate in this program during
the Accumulation Phase.
There are two Dollar Cost Averaging options. The first option is the Dollar Cost
Averaging Fixed Option. It is available for new Contracts and additional
Purchase Payments to new and existing Contracts. You will receive a special
fixed rate guaranteed for one year by Allianz Life. The Dollar Cost Averaging
Fixed Option may not be available in your state.
The second option is the Standard Dollar Cost Averaging Option. It requires a
$3,000 minimum investment and participation for at least six months (or two
quarters).
All Dollar Cost Averaging transfers will be made on the 10th day of the month
unless that day is not a business day. If it is not, then the transfer will be
made the next business day. You may elect either program by properly completing
the Dollar Cost Averaging form provided by Allianz Life.
Your participation in the program will end when any of the following occurs:
* the number of desired transfers have been made;
* you do not have enough money in the Variable Option(s) or the Fixed
Account to make the transfer (if less money is available, that amount
will be dollar cost averaged and the program will end);
* you request to terminate the program (your request must be received by
us by the first of the month to terminate that month); or
* the Contract is terminated.
If you participate in the Dollar Cost Averaging Program, the transfers made
under the program are not taken into account in determining any transfer fee.
You may not participate in the Dollar Cost Averaging Program and Flexible
Rebalancing at the same time.
Flexible Rebalancing
Once your money has been invested, the performance of the Variable Options may
cause your chosen allocation to shift. Flexible Rebalancing is designed to help
you maintain your specified allocation mix among the different Variable Options.
The Fixed Account is not part of Flexible Rebalancing. You can direct us to
readjust your Contract value on a quarterly, semi-annual or annual basis to
return to your original Variable Option allocations. Flexible Rebalancing
transfers will be made on the 20th day of the month unless that day is not a
business day. If it is not, then the transfer will be made on the previous
business day. If you participate in Flexible Rebalancing, the transfers made
under the program are not taken into account in determining any transfer fee.
Financial Advisers - Asset Allocation Programs
Allianz Life understands the importance of advice from a financial adviser
regarding your investments in the Contract (asset allocation program). Certain
investment advisers have made arrangements with us to make their services
available to you. Allianz Life has not made any independent investigation of
these advisers and is not endorsing such programs. You may be required to enter
into an advisory agreement with your investment adviser to have the fees paid
out of your Contract during the Accumulation Phase.
Allianz Life will, pursuant to an agreement with you, make a partial withdrawal
from the value of your Contract to pay for the services of the investment
adviser. If the Contract is Non-Qualified, the withdrawal will be treated like
any other distribution and may be included in gross income for federal tax
purposes and, if you are under age 59 1/2, may be subject to a tax penalty. If
the Contract is Qualified, the withdrawal for the payment of fees may not be
treated as a taxable distribution if certain conditions are met. You should
consult a tax adviser regarding the tax treatment of the payment of investment
adviser fees from your Contract.
Voting Privileges
Allianz Life is the legal owner of the Trust's Class 2 Portfolio shares.
However, when a Portfolio solicits proxies in conjunction with a shareholder
vote which affects your investment, Allianz Life will obtain from you and other
affected Contract Owners instructions as to how to vote those shares. When we
receive those instructions, we will vote all of the shares we own in proportion
to those instructions. This will also include any shares that Allianz Life owns
on its own behalf. Should Allianz Life determine that it is no longer required
to comply with the above, we will vote the shares in our own right.
Substitution
Allianz Life may substitute one of the Variable Options you have selected with
another Variable Option. We would not do this without the prior approval of the
Securities and Exchange Commission. We will give you notice of our intention to
do this. We may also limit further investment in a Variable Option if we deem
the investment inappropriate.
EXPENSES
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There are charges and other expenses associated with the Contract that will
reduce your investment return. These charges and expenses are:
Insurance Charges
Each day, Allianz Life makes a deduction for its insurance charges. Allianz Life
does this as part of its calculation of the value of the Accumulation Units and
the Annuity Units. The insurance charge consists of:
1) the mortality and expense risk charge,
2) the administrative charge, and
3) the distribution expense charge.
Mortality and Expense Risk Charge. The amount of the mortality and expense risk
charge depends on whether you select the Traditional GMPB or the Enhanced GMPB.
* Traditional GMPB: During the Accumulation Phase, this charge is equal,
on an annual basis, to 1.10% of the average daily value of the
Contract invested in a Variable Option, after the deduction of
expenses. During the Payout Phase, the charge is equal, on an annual
basis, to 1.00% of the average daily value of the Contract invested in
a Variable Option.
* Enhanced GMPB: During the Accumulation Phase, this charge is equal, on
an annual basis, to 1.60% of the average daily value of the Contract
invested in a Variable Option, after the deduction of expenses. During
the Payout Phase, the charge is equal, on an annual basis, to 1.00% of
the average daily value of the Contract invested in a Variable Option.
This charge compensates us for all the insurance benefits provided by your
Contract (for example, our contractual obligation to make Annuity Payments, the
death benefits, certain expenses related to the Contract, and for assuming the
risk (expense risk) that the current charges will be insufficient in the future
to cover the cost of administering the Contract). The amount of the mortality
and expense risk charge is less during the Payout Phase because Allianz Life
does not pay a death benefit if you die during the Payout Phase.
Administrative Charge. This charge is equal, on an annual basis, to .15% of the
average daily value of the Contract invested in a Variable Option. This charge,
together with the contract maintenance charge (which is explained below), is for
all the expenses associated with the administration of the Contract. Some of
these expenses include: preparation of the Contract, confirmations, annual
statements, maintenance of Contract records, personnel costs, legal and
accounting fees, filing fees, and computer and systems costs.
Distribution Expense Charge. Currently, Allianz Life is compensated for its
costs associated with distributing the Contract from Franklin Templeton Variable
Insurance Products Trust through the Rule 12b-1 plan (see the Trust prospectus).
Allianz Life does not currently deduct a Distribution Expense Charge. In the
event that Allianz Life is no longer compensated for its distribution expenses
through the Rule 12b-1 plan of Franklin Templeton Variable Insurance Products
Trust, it may, in its sole discretion, charge a Distribution Expense Charge. The
charge is guaranteed not to exceed .30% of the average daily net asset value of
the Contract invested in a Variable Option.
Contract Maintenance Charge
Every year, at each Contract anniversary, Allianz Life deducts $40 from your
Contract as a contract maintenance charge. The fee is assessed on the last day
of each Contract year. The charge is deducted pro rata from the Variable Options
and the Fixed Account. The charge is for administrative expenses (see above).
However, during the Accumulation Phase, if the value of your Contract is at
least $100,000 when the deduction for the charge is to be made, Allianz Life
will not deduct this charge. If you own more than one Contract offered under
this prospectus, Allianz Life will determine the total value of all your
Contracts. If the total value of all Contracts registered under the same social
security number is at least $100,000, Allianz Life will not assess the contract
maintenance charge (except in New Jersey). Currently the charge is also waived
during the Payout Phase if the value of your Contract at the Income Date is
$100,000 (except in New Jersey). If the Contract is owned by a non-natural
person (e.g., a corporation), Allianz Life will look to the Annuitant to
determine if it will assess the charge.
If you make a complete withdrawal from your Contract other than on a Contract
anniversary, Allianz Life will deduct the contract maintenance charge. During
the Payout Phase, the charge will be collected monthly out of each Annuity
Payment.
Contingent Deferred Sales Charge
Withdrawals may be subject to a contingent deferred sales charge. During the
Accumulation Phase, you can make withdrawals from your Contract. Allianz Life
keeps track of each Purchase Payment you make. The amount of the contingent
deferred sales charge depends upon the length of time since you made your
Purchase Payment. The charge is:
Number of Complete Contract Years
Since Receipt of Purchase
Payment Charge
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0 6%
1 5%
2 4%
3 3%
4 2%
5 years or more 0%
However, after Allianz Life has had a Purchase Payment for 5 full years, there
is no charge when you withdraw that Purchase Payment. For purposes of the
contingent deferred sales charge, Allianz Life treats withdrawals as coming from
the oldest Purchase Payments first. Allianz Life does not assess the contingent
deferred sales charge on any payments paid out as Annuity Payments or as death
benefits.
NOTE: For tax purposes, withdrawals are considered to have come from the last
money you put into the Contract. Thus, for tax purposes, earnings are considered
to come out first.
Partial Withdrawal Privilege. Each Contract year, on a cumulative basis (minus
any previous withdrawals you have made which were not subject to the contingent
deferred sales charge) you can make multiple withdrawals up to 10% of Purchase
Payments and no contingent deferred sales charge will be deducted from the 10%
you take out. Cumulative means that if you do not use the 10% in a year, you may
carry it over to the next year. The 10% may be increased when the Contract is
issued to a charitable remainder trust.) If you make a withdrawal of more than
the free amount, it will be subject to the contingent deferred sales charge. If
you make a total withdrawal, Allianz Life will assess the contingent deferred
sales charge with no reductions for the Partial Withdrawal Privilege.
You may also elect to participate in the Systematic Withdrawal Program or the
Minimum Distribution Program. These programs allow you to make withdrawals
without the deduction of the contingent deferred sales charge under certain
circumstances. See "Access to Your Money" for a description of the Systematic
Withdrawal Program and the Minimum Distribution Program.
Waiver of Contingent Deferred Sales Charge Benefits. Under certain
circumstances, after the first Contract year, Allianz Life will permit you to
take your money out of the Contract without deducting a contingent deferred
sales charge:
1) if you become confined to a nursing home;
2) if you become terminally ill, which is defined as life expectancy of
12 months or less (a full withdrawal of the Contract will be
required); or
3) if you become totally disabled for at least 90 consecutive days.
The waiver will not apply if any of the above conditions existed on the date
your Contract was issued. Also, after the first year, if you become unemployed
for at least 90 consecutive days, you can take up to 50% of your money out of
the Contract without incurring a contingent deferred sales charge. This benefit
is available only once during the life of the Contract. You may not use both
this benefit and the 10% partial withdrawal privilege in the same Contract year.
These benefits vary from state to state or may not be available in your state.
(Check with your registered representative.)
Reduction or Elimination of the Contingent Deferred Sales Charge. Allianz Life
will reduce or eliminate the amount of the contingent deferred sales charge when
the Contract is sold under circumstances which reduce its sales expenses. Some
examples are: if there is a large group of individuals that will be purchasing
the Contract or a prospective purchaser already had a relationship with Allianz
Life. Allianz Life may not deduct a contingent deferred sales charge under a
Contract issued to an officer, director or employee of Allianz Life or any of
its affiliates. Also, Allianz Life may reduce or not deduct a contingent
deferred sales charge when a Contract is sold by an agent of Allianz Life to any
members of his or her immediate family and the commission is waived. We require
our prior approval for any reduction or elimination of the contingent deferred
sales charge.
Commutation Fee
If you elect Annuity Option 2, 4 or 6 and make a liquidation, a commutation fee
will be assessed. The commutation fee is a percentage of the amount liquidated
and is equal to:
Years Since Income Date Commutation Factor
- ----------------------- ------------------
0 - 1 5%
1 - 2 4%
2 - 3 3%
3 - 4 2%
Over 4 1%
Transfer Fee
You can make 12 free transfers every year. We measure a year from the day we
issue your Contract. If you make more than 12 transfers a year, we will deduct a
transfer fee of $25 for each additional transfer. The transfer fee will be
deducted from the account (Variable Option or Fixed Account) from which the
transfer is made. If the entire amount in the account is transferred, then the
transfer fee will be deducted from the amount transferred. If the transfer is
from multiple accounts, it will be treated as a single transfer. Any transfer
fee will be deducted proportionally from the source account if less than the
entire amount in the account is transferred. If the transfer is part of the
Dollar Cost Averaging Program or Flexible Rebalancing, it will not count in
determining the transfer fee.
Premium Taxes
Some states and other governmental entities (e.g., municipalities) charge
premium taxes or similar taxes. Allianz Life is responsible for the payment of
these taxes. We will make a deduction from the value of the Contract for them.
Some of these taxes are due when the Contract is issued, others are due when
Annuity Payments begin. It is Allianz Life's current practice to not charge you
for these taxes until you die, Annuity Payments begin or you make a complete
withdrawal. Allianz Life may discontinue this practice in the future and assess
the charge when the tax is due. Premium taxes generally range from 0% to 3.5% of
the Purchase Payment, depending on the state.
Income Taxes
Allianz Life reserves the right to deduct from the Contract for any income taxes
which it may incur because of the Contract. Currently, Allianz Life is not
making any such deductions.
Portfolio Expenses
There are deductions from the assets of the various Portfolios for operating
expenses (including management fees), which are described in the Fee Table in
this prospectus and the accompanying prospectus for Franklin Templeton Variable
Insurance Products Trust.
TAXES
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NOTE: Allianz Life has prepared the following information on taxes as a general
discussion of the subject. It is not intended as tax advice. You should consult
your own tax adviser about your own circumstances. Allianz Life has included
additional information regarding taxes in the Statement of Additional
Information.
Annuity Contracts in General
Annuity contracts are a means of setting aside money for future needs - usually
retirement. Congress recognized how important saving for retirement was and
provided special rules in the Internal Revenue Code (Code) for annuities.
Basically, these rules provide that you will not be taxed on any earnings on the
money held in your annuity Contract until you take the money out. This is
referred to as Tax Deferral. There are different rules regarding how you will be
taxed depending upon how you take the money out and the type of Contract -
Qualified or Non-Qualified (see following sections).
You, as the Contract Owner, will not be taxed on increases in the value of your
Contract until a distribution occurs either as a withdrawal or as Annuity
Payments. When you make a withdrawal you are taxed on the amount of the
withdrawal that is earnings. For Annuity Payments, different rules apply. A
portion of each Annuity Payment you receive will be treated as a partial return
of your Purchase Payments and will not be taxed. The remaining portion of the
Annuity Payment will be treated as ordinary income. How the Annuity Payment is
divided between taxable and non-taxable portions depends upon the period over
which the Annuity Payments are expected to be made. Annuity Payments received
after you have received all of your Purchase Payments are fully includible in
income.
When a Non-Qualified Contract is owned by a non-natural person (e.g., a
corporation or certain other entities other than a trust holding the Contract as
an agent for a natural person), the Contract will generally not be treated as an
annuity for tax purposes. This means that the Contract may not receive the
benefits of Tax Deferral. Income may be taxed as ordinary income every year.
Qualified and Non-Qualified Contracts
If you purchase the Contract under a Qualified plan, your Contract is referred
to as a Qualified Contract. Examples of Qualified plans are: Individual
Retirement Annuities (IRAs), Tax-Sheltered Annuities (sometimes referred to as
403(b) contracts), and pension and profit-sharing plans, which include 401(k)
plans and H.R. 10 plans. If you do not purchase the Contract under a Qualified
plan, your Contract is referred to as a Non-Qualified Contract.
Multiple Contracts
The Code provides that multiple Non-Qualified annuity contracts which are issued
within a calendar year period to the same Contract Owner by one company or its
affiliates are treated as one annuity contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences, including more rapid taxation of the distributed amounts from such
combination of contracts. For purposes of this rule, contracts received in a
Section 1035 exchange will be considered issued in the year of the exchange. You
should consult a tax adviser prior to purchasing more than one Non-Qualified
annuity contract in any calendar year period.
Withdrawals - Non-Qualified Contracts
If you make a withdrawal from your Contract, the Code treats such a withdrawal
as first coming from earnings and then from your Purchase Payments. In most
cases, such withdrawn earnings are includible in income.
The Code also provides that any amount received under an annuity contract which
is included in income may be subject to a tax penalty. The amount of the penalty
is equal to 10% of the amount that is includible in income. Some withdrawals
will be exempt from the penalty. They include any amounts:
(1) paid on or after the taxpayer reaches age 59 1/2;
(2) paid after you die;
(3) paid if the taxpayer becomes totally disabled (as that term is defined
in the Code);
(4) paid in a series of substantially equal payments made annually (or
more frequently) for life or a period not exceeding life expectancy;
(5) paid under an immediate annuity; or
(6) which come from purchase payments made prior to August 14, 1982.
With respect to (4) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first Annuity Payment, then the tax for the year of the
modification is increased by the penalty tax that would have been imposed
without the exception, plus interest for the tax years in which the exception
was used. A partial liquidation (withdrawal) during the Payout Phase may result
in the modification of the series of Annuity Payments made after such
liquidation and therefore could result in the imposition of the 10% penalty tax
and interest for the period as described above unless another exception to the
penalty tax applies. You should obtain competent tax advice before you make any
liquidations from your Contract.
Withdrawals - Qualified Contracts
The above information describing the taxation of Non-Qualified Contracts does
not apply to Qualified Contracts. There are special rules that govern Qualified
Contracts. A more complete discussion of withdrawals from Qualified Contracts is
contained in the Statement of Additional Information.
Withdrawals - Tax-Sheltered Annuities
The Code limits the withdrawal of amounts attributable to Purchase Payments made
pursuant to a salary reduction agreement by Contract Owners from Tax-Sheltered
Annuities. Withdrawals can only be made when a Contract Owner:
(1) reaches age 59 1/2;
(2) leaves his/her job;
(3) dies;
(4) becomes disabled (as that term is defined in the Code); or
(5) in the case of hardship. However, in the case of hardship, the
Contract Owner can only withdraw the Purchase Payments and not any
earnings.
Diversification
The Code provides that the underlying investments for a variable annuity must
satisfy certain diversification requirements in order to be treated as an
annuity contract. Allianz Life believes that the Portfolios are being managed so
as to comply with the requirements.
Neither the Code nor the Internal Revenue Service Regulations issued to date
provide guidance as to the circumstances under which you, because of the degree
of control you exercise over the underlying investments, and not Allianz Life,
would be considered the owner of the shares of the Portfolios. If you are
considered the owner of the shares, it will result in the loss of the favorable
tax treatment for the Contract. It is unknown to what extent under federal tax
law Contract Owners are permitted to select Portfolios, to make transfers among
the Portfolios or the number and type of Portfolios Contract Owners may select
from without being considered the owner of the shares. If any guidance is
provided which is considered a new position, then the guidance would generally
be applied prospectively. However, if such guidance is considered not to be a
new position, it may be applied retroactively. This would mean that you, as the
owner of the Contract, could be treated as the owner of the Portfolios.
Due to the uncertainty in this area, Allianz Life reserves the right to modify
the Contract in an attempt to maintain favorable tax treatment.
ACCESS TO YOUR MONEY
- --------------------------------------------------------------------------------
You can have access to the money in your Contract:
* by making a partial or total withdrawal;
* by receiving Annuity Payments; or
* when a death benefit is paid to your Beneficiary.
In general, withdrawals can only be made during the Accumulation Phase. Under
certain circumstances, you can take money out of the Contract during the Payout
Phase if you select Annuity Option 2, 4 or 6 (See "Annuity Payments (The Payout
Phase)").
When you make a complete withdrawal you will receive the value of the Contract
on the day the withdrawal request is received at the Service Center:
* less any applicable contingent deferred sales charge,
* less any premium tax, and
* less any contract maintenance charge.
(See "Expenses" for a discussion of the charges.)
Any partial withdrawal must be for at least $500. Unless you instruct Allianz
Life otherwise, the partial withdrawal will be made pro-rata from all the
Variable Options and the Fixed Account you selected. After you make a partial
withdrawal the value of your Contract must be at least $2,000.
We will pay the amount of any withdrawal from the Variable Options within seven
(7) days of when we receive your request in good order unless the Suspension of
Payments or Transfers provision is in effect (see below).
Income taxes, tax penalties and certain restrictions may apply to any withdrawal
you make.
There are limits to the amount you can withdraw from a Qualified plan referred
to as a 403(b) plan. For a more complete explanation see "Taxes" and the
discussion in the SAI.
Systematic Withdrawal Program
If the value of your Contract is at least $25,000, Allianz Life offers a program
which provides automatic monthly or quarterly payments to you each year. The
Systematic Withdrawal Program is subject to the Partial Withdrawal Privilege
which means that the total systematic withdrawals which you can make each year
without Allianz Life deducting a contingent deferred sales charge is limited to
10% of your Purchase Payments for that year. This is determined on the last
business day prior to the day your request is received. If the amount you take
out under the Systematic Withdrawal Program is less than the Partial Withdrawal
Privilege then the balance (in dollar value) is carried over to the following
year. All systematic withdrawals will be made on the 9th day of the month unless
that day is not a business day. If it is not, then the withdrawal will be made
the previous business day.
Income taxes, tax penalties and certain restrictions may apply to systematic
withdrawals.
Minimum Distribution Program
If you own a Contract that is an Individual Retirement Annuity (IRA), you may
select the Minimum Distribution Program. Under this program, Allianz Life will
make payments to you from your Contract that are designed to meet the applicable
minimum distribution requirements imposed by the Code for IRAs. If the value of
your Contract is at least $25,000, Allianz Life will make payments to you on a
monthly or quarterly basis. If the value of your Contract is less than $25,000
payments can only be made annually. The payments will not be subject to the
contingent deferred sales charge. However, they will be subject to the limits of
the 10% Partial Withdrawal Privilege.
You cannot participate in the Systematic Withdrawal Program and the Minimum
Distribution Program at the same time.
Suspension of Payments or Transfers
Allianz Life may be required to suspend or postpone payments for withdrawals or
transfers for any period when:
1. the New York Stock Exchange is closed (other than customary weekend
and holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of the Portfolio
shares is not reasonably practicable or Allianz Life cannot reasonably
value the Portfolio shares;
4. during any other period when the Securities and Exchange Commission,
by order, so permits for the protection of Contract Owners.
Allianz Life has reserved the right to defer payment for a withdrawal or
transfer from the Fixed Account for the period permitted by law but not for more
than six months.
PERFORMANCE
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Allianz Life periodically advertises performance of the Variable Options.
Allianz Life will calculate performance by determining the percentage change in
the value of an Accumulation Unit by dividing the increase (decrease) for that
unit by the value of the Accumulation Unit at the beginning of the period. This
performance number reflects the deduction of the insurance charges and the
Portfolio expenses. It may not reflect the deduction of any applicable
contingent deferred sales charge and contract maintenance charge. The deduction
of any applicable contract maintenance charge and contingent deferred sales
charges would reduce the percentage increase or make greater any percentage
decrease. Any advertisement will also include average annual total return
figures which reflect the deduction of the insurance charges, contract
maintenance charge, contingent deferred sales charges and the expenses of the
Portfolios.
Allianz Life may also advertise cumulative total return information. Cumulative
total return is determined the same way except that the results are not
annualized. Performance information for the underlying Portfolios may also be
advertised; see the Franklin Templeton Variable Insurance Products Trust
prospectus for more information.
Certain Portfolios have been in existence for some time and have investment
performance history. However, the Contracts are new. In order to demonstrate how
the actual investment experience of the Portfolios may affect your Accumulation
Unit values, Allianz Life has prepared performance information which can be
found in the SAI. There is performance shown which is based on the historical
performance of the Portfolios' Class 1 shares, modified to reflect the current
charges and expenses of your Contract as if the Contract had been invested in
the Portfolios for the time periods shown. The Portfolios' Class 2 shares which
commenced operations on January 6, 1999, except for the Zero Coupon 2005 and the
Zero Coupon 2010 which commenced operations as of the date of this prospectus,
currently have Rule 12b-1 plan expenses of .25% per year which will affect
future performance. The information is based upon the historical experience of
the Portfolios' Class 1 shares and does not represent past performance or
predict future performance.
Allianz Life may in the future also advertise yield information. If it does, it
will provide you with information regarding how yield is calculated. More
detailed information regarding how performance is calculated is found in the
SAI.
Any performance advertised will be based on historical data. It does not
guarantee future results of the Portfolios.
DEATH BENEFIT
- --------------------------------------------------------------------------------
Upon Your Death
If you die during the Accumulation Phase, Allianz Life will pay a death benefit
to your Beneficiary (see below). If you die during the Payout Phase any benefit
will be as provided for in the Annuity Option selected.
Guaranteed Minimum Protection Benefits (GMPB) - Death Benefit Protection
The annuity provides a guaranteed death benefit (in addition to the guaranteed
annuity income protection benefit). The amount of the death benefit depends upon
whether you select the Traditional GMPB or the Enhanced GMPB. The mortality and
expense risk charge is higher for Contracts with the Enhanced GMPB. The
Traditional and Enhanced GMPB only apply to Contracts owned for the benefit of
an individual.
The Traditional Guaranteed Minimum Protection Benefit. If you select the
Traditional GMPB, the death benefit, less any applicable premium tax, will be
the greater of:
* the value of your Contract at the end of the business day when all
claim proofs and payment election forms are received by Allianz Life
at the Valuemark Service Center; or
* the guaranteed minimum death benefit which is equal to the Purchase
Payments you have made, reduced by each withdrawal's percentage of the
Contract value withdrawn (including any contingent deferred sales
charges paid on the withdrawals).
The Enhanced Guaranteed Minimum Protection Benefit. If you select the Enhanced
GMPB, the death benefit will be the greater of 1 or 2 below, less any applicable
premium tax:
1. the value of your Contract at the end of the business day when all
claim proofs and payment election forms are received by Allianz Life
at the Valuemark Service Center; or
2. the enhanced guaranteed minimum death benefit (Enhanced GMDB) as
described below and determined as of the date of death.
The Enhanced GMDB is the greater of A or B below:
A. 5% Annual Increase Amount
On the date your Contract is issued: the 5% Annual Increase
Amount is equal to your initial Purchase Payment.
On each business day other than a Contract anniversary: the 5%
Annual Increase Amount is equal to its value on the immediately
preceding business day reduced by the percentage of any Contract
value you withdraw (including any contingent deferred sales
charge) and increased by any additional Purchase Payments you
make.
On every Contract Anniversary: the 5% Annual Increase Amount is
equal to its value on the immediately preceding business day
increased by 5% prior to your 81st birthday, reduced by the
percentage of any Contract value you withdraw (including any
contingent deferred sales charge), increased by any additional
Purchase Payments you make.
B. Greatest Anniversary Value.
The anniversary value is equal to the value of your Contract on a
Contract anniversary, reduced by the percentage of any Contract
value you withdraw (including any contingent deferred sales
charge) since that Contract anniversary. When determining this
benefit, Allianz Life will not take into consideration any
Contract anniversaries occurring on or after your 81st birthday
or date of death.
Please refer to the applicable endorsements to your Contract for the specific
terms and conditions of the death benefits.
The Appendix contains examples of how the guaranteed death benefits are
calculated. The amounts in the examples are purely hypothetical and are for
illustrative purposes only.
If you do not receive either the Traditional or the Enhanced GMPB, the death
benefit will be: the current value of your Contract, less any taxes owed. This
amount is determined as of the day that all claim proofs and payment election
forms are received at the Valuemark Service Center.
Any part of the death benefit amount that had been invested in the Variable
Options remains in the Variable Options until distribution begins. From the time
the death benefit is determined until we make a complete distribution, any
amount in the Variable Options will be subject to investment risk which will be
borne by the Beneficiary.
If you have a Joint Owner, the age of the oldest Contract Owner will be used to
determine the guaranteed minimum death benefit. If the Contract is owned by a
non- natural person, then all references to you mean the Annuitant.
In the case of Joint Owners, if a Joint Owner dies, the surviving Joint Owner
will be considered the Beneficiary. Any other Beneficiary designation on record
at the time of death will be treated as a contingent Beneficiary. Joint Owners
must be spouses (this requirement may not apply in certain states).
A Beneficiary must request that the death benefit be paid under one of the death
benefit options described below. If the Beneficiary is the spouse of the
Contract Owner, he/she can choose to continue the Contract in his/her own name
at the then current Contract value, or if greater, the death benefit value. If a
lump sum payment is elected and all the necessary requirements, including any
required tax consent from some states, are met, the payment will be made within
7 days. Payment of the death benefit may be delayed pending receipt of any
applicable tax consents and/or forms from a state.
Option A: lump sum payment of the death benefit. Allianz Life will not deduct
the contract maintenance charge at the time of a complete withdrawal if the
distribution is due to death.
Option B: the payment of the entire death benefit within 5 years of the date of
the Contract Owner's or any Joint Owner's death. Allianz Life will assess the
contract maintenance charge to each Beneficiary on each Contract anniversary.
Option C: payment of the death benefit under an Annuity Option over the lifetime
of the Beneficiary or over a period not extending beyond the life expectancy of
the Beneficiary. Distribution under this option must begin within one year of
the date of the Contract Owner's or any Joint Owner's death. The contract
maintenance charge will continue to be assessed to each Beneficiary's share pro
rata over the payments.
Any portion of the death benefit not applied under an Annuity Option within one
year of the date of the Contract Owner's death must be distributed within five
years of the date of death.
If the Beneficiary wants to receive the payment other than in a lump sum, he/she
may only make such an election during the 60 day period after the day that the
lump sum first became payable by Allianz Life.
If you (or any Joint Owner) die during the Payout Phase and you are not the
Annuitant, any payments which are remaining under the Annuity Option selected
will continue at least as rapidly as they were being paid at your death. If you
die during the Payout Phase, the Beneficiary becomes the Contract Owner.
Death of Annuitant
If the Annuitant, who is not a Contract Owner or Joint Owner, dies during the
Accumulation Phase, you can name a new Annuitant, subject to our underwriting
rules at that time. If you do not name a new Annuitant within 30 days of the
death of the Annuitant, you will become the Annuitant. However, if the Contract
Owner is a non-natural person (e.g., a corporation), then the death of the
Annuitant will be treated as the death of the Contract Owner, and a new
Annuitant may not be named.
If the Annuitant dies after Annuity Payments have begun, the remaining amounts
payable, if any, will be as provided for in the Annuity Option selected. The
remaining amounts payable will be paid to the Contract Owner at least as rapidly
as they were being paid at the Annuitant's death.
OTHER INFORMATION
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Allianz Life
Allianz Life Insurance Company of North America (Allianz Life), 1750 Hennepin
Avenue, Minneapolis, Minnesota 55403, was organized under the laws of the state
of Minnesota in 1896. Allianz Life offers fixed and variable life insurance and
annuities and group life, accident and health insurance. Allianz Life is
licensed to do business in 49 states and the District of Columbia. Allianz Life
is a wholly-owned subsidiary of Allianz Versicherungs-AG Holding.
Year 2000 Matters
Allianz Life has initiated programs to ensure that all of the computer systems
utilized to provide services and administer policies will function properly in
the year 2000. An assessment of the total expected costs specifically related to
the year 2000 conversion has been completed. These costs are expensed as
incurred and total costs are not expected to have a significant effect on
Allianz Life's financial position or results of operations. Allianz Life
believes it is taking steps that are reasonably designed to address the
potential failure of computer systems used by its service providers and to
ensure its year 2000 program is completed on a timely basis. There can be no
assurance, however, that the steps taken by Allianz Life will be adequate to
avoid any adverse impact.
The Separate Account
Allianz Life established a separate account named Allianz Life Variable Account
B (Separate Account) to hold the assets that underlie the Contracts, except
assets allocated to the Fixed Account. The Board of Directors of Allianz Life
adopted a resolution to establish the Separate Account under Minnesota insurance
law on May 31, 1985. Allianz Life has registered the Separate Account with the
Securities and Exchange Commission as a unit investment trust under the
Investment Company Act of 1940. The Separate Account is divided into Variable
Options (also known as sub-accounts). Each Variable Option invests in one
Portfolio.
The assets of the Separate Account are held in Allianz Life's name on behalf of
the Separate Account and legally belong to Allianz Life. However, those assets
that underlie the variable Contracts are not chargeable with liabilities arising
out of any other business Allianz Life may conduct. All the income, gains and
losses (realized or unrealized) resulting from these assets are credited to or
charged against the Contracts and not against any other contracts Allianz Life
may issue.
Distribution
NALAC Financial Plans, LLC (NFP), 1750 Hennepin Avenue, Minneapolis, MN 55403,
acts as the distributor of the Contracts. NFP is a wholly-owned subsidiary of
Allianz Life. NFP has subcontracted with Franklin Advisers, Inc. for it and/or
certain of its affiliates to provide certain marketing support services and NFP
compensates these entities for their services.
Commissions will be paid to broker-dealers who sell the Contracts.
Broker-dealers will be paid commissions up to 6% of Purchase Payments.
Sometimes, Allianz Life enters into an agreement with the broker-dealer to pay
the broker-dealer commissions as a combination of a certain amount of the
commission at the time of sale and a trail commission (which when totaled could
exceed 6% of Purchase Payments). In addition, Allianz Life and Franklin
Advisers, Inc. and/or its affiliates may pay certain sellers for other services
not directly related to the sale of the Contracts (such as special marketing
support allowances). Commissions may be recovered from a broker-dealer if a
withdrawal occurs within 12 months of a Purchase Payment.
Administration
Allianz Life has hired Delaware Valley Financial Services, Inc. (DVFS), 300
Berwyn Park, Berwyn, Pennsylvania, to perform certain administrative services
regarding the Contracts. The administrative services include issuance of the
Contracts and maintenance of Contract Owner's records.
Financial Statements
The consolidated financial statements of Allianz Life and the Separate Account
have been included in the Statement of Additional Information.
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
Insurance Company
Experts
Legal Opinions
Distributor
Reduction or Elimination of the
Contingent Deferred Sales Charge
Calculation of Performance Data
Federal Tax Status
Annuity Provisions
Mortality and Expense Risk Guarantee
Financial Statements
APPENDIX
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(TO BE FILED BY AMENDMENT)
PART B
STATEMENT OF ADDITIONAL INFORMATION
INDIVIDUAL FLEXIBLE PAYMENT
VARIABLE ANNUITY CONTRACTS
issued by
ALLIANZ LIFE VARIABLE ACCOUNT B
and
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
________________, 1999
THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE
READ IN CONJUNCTION WITH THE PROSPECTUS FOR THE INDIVIDUAL FLEXIBLE PAYMENT
VARIABLE ANNUITY CONTRACTS WHICH ARE REFERRED TO HEREIN.
THE PROSPECTUS CONCISELY SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR
OUGHT TO KNOW BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS, CALL OR WRITE THE
INSURANCE COMPANY AT: 1750 Hennepin Avenue, Minneapolis, MN 55403-2195, (800)
342-3863.
THIS STATEMENT OF ADDITIONAL INFORMATION AND THE PROSPECTUS ARE DATED
____________, 1999, AND AS MAY BE AMENDED FROM TIME TO TIME.
Table of Contents
Page
Insurance Company .........................................
Experts ...................................................
Legal Opinions ............................................
Distributor ...............................................
Reduction or Elimination of the
Contingent Deferred Sales Charge .........................
Calculation of Performance Data ...........................
Federal Tax Status ........................................
Annuity Provisions ........................................
Mortality and Expense Risk Guarantee.
Financial Statements ......................................
Insurance Company
Allianz Life Insurance Company of North America (the "Insurance Company") is a
stock life insurance company organized under the laws of the state of Minnesota
in 1896. The Insurance Company is a wholly-owned subsidiary of Allianz
Versicherungs-AG Holding ("Allianz"). Allianz is headquartered in Munich,
Germany, and has sales outlets throughout the world. The Insurance Company
offers fixed and variable life insurance and annuities, and group life, accident
and health insurance. On April 1, 1993, the Insurance Company changed its name
from North American Life and Casualty Company to its present name.
The Insurance Company is rated A+ (Superior) by A.M. BEST, an independent
analyst of the insurance industry. The financial strength of an insurance
company may be relevant insofar as the ability of a company to make fixed
annuity payments from its general account.
Experts
- --------------------------------------------------------------------------------
The financial statements of Allianz Life Variable Account B and the consolidated
financial statements of the Insurance Company as of and for the year ended
December 31, 1998 included in this Statement of Additional Information have been
audited by ________________________ independent auditors, as indicated in their
reports included in this Statement of Additional Information and are included
herein in reliance upon such reports and upon the authority of said firm as
experts in accounting and auditing.
Legal Opinions
- --------------------------------------------------------------------------------
Blazzard, Grodd & Hasenauer, P.C., Westport, Connecticut has provided advice on
certain matters relating to the federal securities and income tax laws in
connection with the Contracts.
Distributor
- --------------------------------------------------------------------------------
NALAC Financial Plans, LLC, a subsidiary of the Insurance Company, acts as the
distributor. The offering is on a continuous basis.
Reduction or Elimination of the Contingent Deferred Sales Charge
- --------------------------------------------------------------------------------
The amount of the Contingent Deferred Sales Charge on the Contracts may be
reduced or eliminated when sales of the Contracts are made to individuals or to
a group of individuals in a manner that results in savings of sales expenses.
The entitlement to a reduction of the Contingent Deferred Sales Charge will be
determined by the Insurance Company after examination of the following factors:
1) the size of the group; 2) the total amount of purchase payments expected to
be received from the group; 3) the nature of the group for which the Contracts
are purchased, and the persistency expected in that group; 4) the purpose for
which the Contracts are purchased and whether that purpose makes it likely that
expenses will be reduced; and 5) any other circumstances which the Insurance
Company believes to be relevant to determining whether reduced sales or
administrative expenses may be expected. None of the reductions in charges for
sales is contractually guaranteed.
The Contingent Deferred Sales Charge may be eliminated when the Contracts are
issued to an officer, director or employee of the Insurance Company or any of
its affiliates. The Contingent Deferred Sales Charge may be reduced or
eliminated when the Contract is sold by an agent of the Insurance Company to any
members of his or her immediate family and the commission is waived. In no event
will any reduction or elimination of the Contingent Deferred Sales Charge be
permitted where the reduction or elimination will be unfairly discriminatory to
any person.
Calculation of Performance Data
- --------------------------------------------------------------------------------
Total Return
From time to time, the Insurance Company may advertise the performance data for
the Variable Options in sales literature, advertisements, personalized
hypothetical illustrations, and Contract Owner communications. Such data will
show the percentage change in the value of an accumulation unit based on the
performance of a Portfolio over a stated period of time which is determined by
dividing the increase (or decrease) in value for that unit by the accumulation
unit value at the beginning of the period.
Any such performance data will include total return figures for the one, five,
and ten year (or since inception) time periods indicated. Such total return
figures will reflect the deduction of the Mortality and Expense Risk Charge, the
Administrative Charge, the operating expenses of the underlying Portfolios and
any applicable Contingent Deferred Sales Charge and Contract Maintenance Charge
("Standardized Total Return"). For periods before a Portfolio's Class 2 shares
commenced operations (January 6, 1999, except for the Zero Coupon Fund 2005 and
the Zero Coupon Fund 2010, which commenced operations as of the date of the
prospectus), the data will be based on historical results of Class 1 shares. For
periods after a Portfolio's Class 2 shares commenced operations, the data will
reflect the higher Class 2 annual fees and expenses resulting from its Rule
12b-1 plan fees, currently equal to 0.25% per year.
Prior to July 1, 1999, the Rule 12b-1 plan fees were equal to .30% per year. The
Contingent Deferred Sales Charge and Contract Maintenance Charge deductions are
calculated assuming a Contract is surrendered at the end of the reporting
period.
The hypothetical value of a Contract purchased for the time periods described
will be determined by using the actual accumulation unit values for an initial
$1,000 purchase payment, and deducting any applicable Contract Maintenance
Charges and any applicable Contingent Deferred Sales Charge to arrive at the
ending hypothetical value. The average annual total return is then determined by
computing the fixed interest rate that a $1,000 purchase payment would have to
earn annually, compounded annually, to grow to the hypothetical value at the end
of the time periods described. The formula used in these calculations is:
n
P(1+T) = ERV
where:
P = a hypothetical initial payment of $1,000;
T = average annual total return;
n = number of years;
ERV = ending redeemable value of a hypothetical $1,000 payment made
at the beginning of the time periods used at the end of such time
periods (or fractional portion thereof).
The Insurance Company may also advertise performance data which will be
calculated in the same manner as described above but which will not reflect the
deduction of the Contingent Deferred Sales Charge and the Contract Maintenance
Charge. The Insurance Company may also advertise cumulative and average total
return information over different periods of time. The Company may also present
performance information computed on a different basis ("Non-Standardized Total
Return").
Cumulative total return is calculated in a similar manner, except that the
results are not annualized. Each calculation assumes that no sales load is
deducted from the initial $1,000 payment at the time it is allocated to the
Portfolios and assumes that the income earned by the investment in the Portfolio
is reinvested.
Contract Owners should note that investment results will fluctuate over time,
and any presentation of total return for any period should not be considered as
a representation of what an investment may earn or what a Contract Owner's total
return may be in any future period.
Yield
The Money Market Fund. The Insurance Company may advertise yield information for
the Money Market Fund. The Money Market Fund's current yield may vary each day,
depending upon, among other things, the average maturity of the underlying
Portfolio's investment securities and changes in interest rates, operating
expenses, the deduction of the Mortality and Expense Risk Charge, the
Administrative Charge and the Contract Maintenance Charge and, in certain
instances, the value of the underlying Portfolio's investment securities. The
fact that the Portfolio's current yield will fluctuate and that the principal is
not guaranteed should be taken into consideration when using the Portfolio's
current yield as a basis for comparison with savings accounts or other
fixed-yield investments. The yield at any particular time is not indicative of
what the yield may be at any other time.
The Money Market Fund's current yield is computed on a base period return of a
hypothetical Contract having a beginning balance of one accumulation unit for a
particular period of time (generally seven days). The return is determined by
dividing the net change (exclusive of any capital changes) in such accumulation
unit by its beginning value, and then multiplying it by 365/7 to get the
annualized current yield. The calculation of net change reflects the value of
additional shares purchased with the dividends paid by the Portfolio, and the
deduction of the Mortality and Expense Risk Charge, the Administrative Charge
and Contract Maintenance Charge. The effective yield reflects the effects of
compounding and represents an annualization of the current return with all
dividends reinvested.
(Effective yield = [(Base Period Return + 1)365/7] - 1.)
For the seven-day period ending on __________, the Money Market Sub-Account had
a current yield of _____% and an effective yield of _____%. The yield
information assumes that the Contract Sub-Account was invested in the Money
Market Fund for the time period shown.
Other Portfolios. The Insurance Company may also quote yield in sales
literature, advertisements, personalized hypothetical illustrations, and
Contract Owner communications for the other Portfolios. Each Portfolio (other
than the Money Market Fund) will publish standardized total return information
with any quotation of current yield.
The yield computation is determined by dividing the net investment income per
accumulation unit earned during the period (minus the deduction for the
Mortality and Expense Risk Charge, Administrative Charge and Contract
Maintenance Charge) by the accumulation unit value on the last day of the period
and annualizing the resulting figure, according to the following formula:
6
Yield = 2 [((a-b) + 1) - 1]
---
cd
where:
a = net investment income earned during the period by the Portfolio
attributable to shares owned by the Sub-Account;
b = expenses accrued for the period (net of reimbursements);
c = the average daily number of accumulation units outstanding
during the period;
d = the maximum offering price per accumulation unit on the last
day of the period.
The above formula will be used in calculating quotations of yield, based on
specified 30-day periods (or one month) identified in the sales literature,
advertisement, or communication. Yield calculations assume no sales load. The
Insurance Company does not currently advertise yield information for any
Portfolio (other than the Money Market Fund).
Performance Ranking
Total return may be compared to relevant indices, including U.S. domestic and
international indices and data from Lipper Analytical Services, Inc., Standard &
Poor's Indices, or VARDS(R).
From time to time, evaluation of performance by independent sources may also be
used.
Performance Information
The Portfolios of Franklin Templeton Variable Insurance Products Trust have been
in existence for some time and have investment performance history. In order to
show how investment performance of the Portfolios affects accumulation unit
values, the following performance information was developed.
The charts below shows accumulation unit performance which assumes that the
accumulation units were invested in each of the Portfolios for the same periods.
The performance below is based on the historical performance of the Portfolios'
Class 1 shares. Class 2 shares have Rule 12b-1 plan expenses currently equal to
.25% per year, which will affect future performance. Chart A is for Contracts
with the Traditional
GMPB and Chart B is for Contracts with the Enhanced GMPB. The performance
figures in Column I represent performance figures for the accumulation units
which reflects the deduction of the Mortality and Expense Risk Charge,
Administrative Charge, and the operating expenses of the Portfolios. Column II
represents performance figures for the accumulation units which reflects the
Mortality and Expense Risk Charge, Administrative Charge, the Contract
Maintenance Charge, the operating expenses of the Portfolios and assumes that
you make a withdrawal at the end of the period (therefore the Contingent
Deferred Sales Charge is reflected). Past performance does not guarantee future
results.
<TABLE>
<CAPTION>
Chart A
Total Return for the periods ended __________________:
Column I Column II
- ------------------------------------------------------------------------------------------------------------------------------------
Inception One Three Five Since One Three Five Since
Portfolio Date Year Years Years Inception Year Years Years Inception
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Capital Growth 05/01/96
Global Health Care Securities 05/01/98
Global Utilities Securities 01/24/89
Growth and Income 01/24/89
High Income 01/24/89
Income Securities 01/24/89
Money Market+ 01/24/89
Mutual Discovery Securities 11/08/96
Mutual Shares Securities 11/08/96
Natural Resources Securities 01/24/89
Real Estate Securities 01/24/89
Rising Dividends 01/27/92
Small Cap 11/01/95
Templeton Developing Markets Equity 03/15/94
Templeton Global Asset Allocation 05/01/95
Templeton Global Growth 03/15/94
Templeton Global Income Securities 01/24/89
Templeton International Equity 01/27/92
Templeton International
Smaller Companies 05/01/96
Templeton Pacific Growth 01/27/92
U.S. Government Securities 03/14/89
Value Securities 05/01/98
Zero Coupon - 2005+ 03/14/89
Zero Coupon - 2010+ 03/14/89
<FN>
+ Calculated with waivers of fees.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Chart B
Total Return for the periods ended __________________:
Column I Column II
- ------------------------------------------------------------------------------------------------------------------------------------
Inception One Three Five Since One Three Five Since
Portfolio Date Year Years Years Inception Year Years Years Inception
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Capital Growth 05/01/96
Global Health Care Securities 05/01/98
Global Utilities Securities 01/24/89
Growth and Income 01/24/89
High Income 01/24/89
Income Securities 01/24/89
Money Market+ 01/24/89
Mutual Discovery Securities 11/08/96
Mutual Shares Securities 11/08/96
Natural Resources Securities 01/24/89
Real Estate Securities 01/24/89
Rising Dividends 01/27/92
Small Cap 11/01/95
Templeton Developing Markets Equity 03/15/94
Templeton Global Asset Allocation 05/01/95
Templeton Global Growth 03/15/94
Templeton Global Income Securities 01/24/89
Templeton International Equity 01/27/92
Templeton International
Smaller Companies 05/01/96
Templeton Pacific Growth 01/27/92
U.S. Government Securities 03/14/89
Value Securities 05/01/98
Zero Coupon - 2005+ 03/14/89
Zero Coupon - 2010+ 03/14/89
<FN>
+ Calculated with waivers of fees.
</FN>
</TABLE>
Federal Tax Status
- --------------------------------------------------------------------------------
Note: The following description is based upon the Insurance Company's
understanding of current federal income tax law applicable to annuities in
general. The Insurance Company cannot predict the probability that any changes
in such laws will be made. Purchasers are cautioned to seek competent tax advice
regarding the possibility of such changes. The Insurance Company does not
guarantee the tax status of the Contracts. Purchasers bear the complete risk
that the Contracts may not be treated as "annuity contracts" under federal
income tax laws. It should be further understood that the following discussion
is not exhaustive and that special rules not described herein may be applicable
in certain situations. Moreover, no attempt has been made to consider any
applicable state or other tax laws.
General
Section 72 of the Internal Revenue Code of 1986, as amended ("Code") governs
taxation of annuities in general. A Contract Owner is not taxed on increases in
the value of a Contract until distribution occurs, either in the form of a lump
sum payment or as annuity payments under the Annuity Option elected. For a lump
sum payment received as a total withdrawal (total redemption) or death benefit,
the recipient is taxed on the portion of the payment that exceeds the cost basis
of the Contract. For Non-Qualified Contracts, this cost basis is generally the
purchase payments, while for Qualified Contracts there may be no cost basis. The
taxable portion of the lump sum payment is taxed at ordinary income tax rates.
For annuity payments, a portion of each payment in excess of an exclusion amount
is includible in taxable income. The exclusion amount for payments based on a
fixed annuity option is determined by multiplying the payment by the ratio that
the cost basis of the Contract (adjusted for any period certain or refund
feature) bears to the expected return under the Contract. The exclusion amount
for payments based on a variable annuity option is determined by dividing the
cost basis of the Contract (adjusted for any period certain or refund guarantee)
by the number of years over which the annuity is expected to be paid. Payments
received after the investment in the Contract has been recovered (i.e. when the
total of the excludible amounts equal the investment in the Contract) are fully
taxable. The taxable portion is taxed at ordinary income rates. For certain
types of Qualified Plans there may be no cost basis in the Contract within the
meaning of Section 72 of the Code. Contract Owners, annuitants and beneficiaries
under the Contracts should seek competent financial advice about the tax
consequences of any distributions.
The Insurance Company is taxed as a life insurance company under the Code. For
federal income tax purposes, the Separate Account is not a separate entity from
the Insurance Company, and its operations form a part of the Insurance Company.
Diversification
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not adequately
diversified in accordance with regulations prescribed by the United States
Treasury Department ("Treasury Department"). Disqualification of the Contract as
an annuity contract would result in imposition of federal income tax to the
Contract Owner with respect to earnings allocable to the Contract prior to the
receipt of payments under the Contract. The Code contains a safe harbor
provision which provides that annuity contracts such as the Contracts meet the
diversification requirements if, as of the end of each quarter, the underlying
assets meet the diversification standards for a regulated investment company and
no more than fifty-five percent (55%) of the total assets consist of cash, cash
items, U.S. government securities and securities of other regulated investment
companies.
On March 2, 1989, the Treasury Department issued regulations (Treas. Reg.
1.817-5) which established diversification requirements for the investment
portfolios underlying variable contracts such as the Contracts. The regulations
amplify the diversification requirements for variable contracts set forth in the
Code and provide an alternative to the safe harbor provision described above.
Under the regulations, an investment portfolio will be deemed adequately
diversified if: (1) no more than 55% of the value of the total assets of the
portfolio is represented by any one investment; (2) no more than 70% of the
value of the total assets of the portfolio is represented by any two
investments; (3) no more than 80% of the value of the total assets of the
portfolio is represented by any three investments; and (4) no more than 90% of
the value of the total assets of the portfolio is represented by any four
investments.
The Code provides that for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable contracts
by Section 817(h) of the Code have been met, "each United States government
agency or instrumentality shall be treated as a separate issuer."
The Insurance Company intends that all Portfolios of Franklin Templeton Variable
Insurance Products Trust underlying the Contracts will be managed by the
investment managers for Franklin Templeton Variable Insurance Products in such a
manner as to comply with these diversification requirements.
The Treasury Department has indicated that the diversification Regulations do
not provide guidance regarding the circumstances in which Contract Owner control
of the investments of the Separate Account will cause the Contract Owner to be
treated as the owner of the assets of the Separate Account, thereby resulting in
the loss of favorable tax treatment for the Contract. At this time it cannot be
determined whether additional guidance will be provided and what standards may
be contained in such guidance.
The amount of Contract Owner control which may be exercised under the Contract
is different in some respects from the situations addressed in published rulings
issued by the Internal Revenue Service in which it was held that the policy
owner was not the owner of the assets of the separate account. It is unknown
whether these differences, such as the Contract Owner's ability to transfer
among investment choices or the number and type of investment choices available,
would cause the Contract Owner to be considered as the owner of the assets of
the Separate Account resulting in the imposition of federal income tax to the
Contract Owner with respect to earnings allocable to the Contract prior to
receipt of payments under the Contract.
In the event any forthcoming guidance or ruling is considered to set forth a new
position, such guidance or ruling will generally be applied only prospectively.
However, if such ruling or guidance was not considered to set forth a new
position, it may be applied retroactively resulting in the Contract Owner being
retroactively determined to be the owner of the assets of the Separate Account.
Due to the uncertainty in this area, the Insurance Company reserves the right to
modify the Contract in an attempt to maintain favorable tax treatment.
Multiple Contracts
The Code provides that multiple non-qualified annuity contracts which are issued
within a calendar year period to the same contract owner by one company or its
affiliates are treated as one annuity contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences, including more rapid taxation of the distributed amounts from such
combination of contracts. For purposes of this rule, contracts received in a
Section 1035 exchange will be considered issued in the year of the exchange.
Contract Owners should consult a tax adviser prior to purchasing more than one
non-qualified annuity contract in any calendar year period.
Contracts Owned by Other than Natural Persons
Under Section 72(u) of the Code, the investment earnings on purchase payments
for the Contracts will be taxed currently to the Contract Owner if the Owner is
a non-natural person, e.g., a corporation or certain other entities. Such
Contracts generally will not be treated as annuities for federal income tax
purposes. However, this treatment is not applied to Contracts held by a trust or
other entity as an agent for a natural person nor to Contracts held by qualified
plans. Purchasers should consult their own tax counsel or other tax adviser
before purchasing a Contract to be owned by a non-natural person.
Tax Treatment of Assignments
An assignment or pledge of a Contract may be a taxable event. Contract Owners
should therefore consult competent tax advisers should they wish to assign or
pledge their Contracts.
Death Benefits
Any death benefits paid under the Contract are taxable to the beneficiary. The
rules governing the taxation of payments from an annuity contract, as discussed
above, generally apply to the payment of death benefits and depend on whether
the death benefits are paid as a lump sum or as annuity payments. Estate taxes
may also apply.
Income Tax Withholding
All distributions or the portion thereof which is includible in the gross income
of the Contract Owner are subject to federal income tax withholding. Generally,
amounts are withheld from periodic payments at the same rate as wages and at the
rate of 10% from non-periodic payments. However, the Contract Owner, in most
cases, may elect not to have taxes withheld or to have withholding done at a
different rate.
Effective January 1, 1993, certain distributions from retirement plans qualified
under Section 401 or Section 403(b) of the Code, which are not directly rolled
over to another eligible retirement plan or individual retirement account or
individual retirement annuity, are subject to a mandatory 20% withholding for
federal income tax. The 20% withholding requirement generally does not apply to:
(a) a series of substantially equal payments made at least annually for the life
or life expectancy of the participant or joint and last survivor expectancy of
the participant and a designated beneficiary, or for a specified period of 10
years or more; or (b) distributions which are required minimum distributions; or
(c) the portion of the distributions not includible in gross income (i.e.
returns of after-tax contributions); or (d) hardship withdrawals. Participants
should consult their own tax counsel or other tax adviser regarding withholding
requirements.
Tax Treatment of Withdrawals - Non-Qualified Contracts
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the contract value exceeds the aggregate purchase
payments made, any amount withdrawn will be treated as coming first from the
earnings and then, only after the income portion is exhausted, as coming from
the principal. Withdrawn earnings are includable in gross income. It further
provides that a ten percent (10%) penalty will apply to the income portion of
any distribution. However, the penalty is not imposed on amounts received: (a)
after the taxpayer reaches age 59 1/2; (b) after the death of the Contract
Owner; (c) if the taxpayer is totally disabled (for this purpose disability is
as defined in Section 72(m)(7) of the Code); (d) in a series of substantially
equal periodic payments made not less frequently than annually for the life (or
life expectancy) of the taxpayer or for the joint lives (or joint life
expectancies) of the taxpayer and his beneficiary; (e) under an immediate
annuity; or (f) which are allocable to purchase payments made prior to August
14, 1982.
With respect to (d) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic payment, then the tax for the year of the
modification is increased by an amount equal to the tax which would have been
imposed (the 10% penalty tax) but for the exception, plus interest for the tax
years in which the exception was used.
A partial liquidation (withdrawal) during the Payout Phase may result in the
modification of the series of Annuity Payments made after such liquidation and
therefore could result in the imposition of the 10% penalty tax and interest for
the period as described above unless another exception to the penalty tax
applies. You should obtain competent tax advice before you make any liquidations
from your Contract.
The above information does not apply to Qualified Contracts. However, separate
tax withdrawal penalties and restrictions may apply to such Qualified Contracts.
(See "Tax Treatment of Withdrawals - Qualified Contracts.")
Qualified Plans
The Contracts offered by the Prospectus are designed to be suitable for use
under various types of Qualified Plans. Because of the minimum purchase payment
requirements, these Contracts may not be appropriate for some periodic payment
retirement plans. Taxation of participants in each Qualified Plan varies with
the type of plan and terms and conditions of each specific plan. Contract
Owners, Annuitants and beneficiaries are cautioned that benefits under a
Qualified Plan may be subject to the terms and conditions of the plan regardless
of the terms and conditions of the Contracts issued pursuant to the plan. Some
retirement plans are subject to distribution and other requirements that are not
incorporated into the Insurance Company's administrative procedures. Contract
Owners, participants and beneficiaries are responsible for determining that
contributions, distributions and other transactions with respect to the
Contracts comply with applicable law. Following are general descriptions of the
types of Qualified Plans with which the Contracts may be used. Such descriptions
are not exhaustive and are for general informational purposes only.
The tax rules regarding Qualified Plans are very complex and will have differing
applications, depending on individual facts and circumstances. Each purchaser
should obtain competent tax advice prior to purchasing a Contract issued under a
Qualified Plan.
On July 6, 1983, the Supreme Court decided in Arizona Governing Committee v.
Norris that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. The Contracts sold by the Insurance Company in
connection with Qualified Plans will utilize annuity tables which do not
differentiate on the basis of sex. Such annuity tables will also be available
for use in connection with certain non-qualified deferred compensation plans.
Contracts issued pursuant to Qualified Plans include special provisions
restricting Contract provisions that may otherwise be available and described in
this Statement of Additional Information. Generally, Contracts issued pursuant
to Qualified Plans are not transferable except upon withdrawal or annuitization.
Various penalty and excise taxes may apply to contributions or distributions
made in violation of applicable limitations. Furthermore, certain withdrawal
penalties and restrictions may apply to withdrawals from Qualified Contracts.
(See "Tax Treatment of Withdrawals - Qualified Contracts.")
a. Tax-Sheltered Annuities
Section 403(b) of the Code permits the purchase of "tax-sheltered annuities" by
public schools and certain charitable, educational and scientific organizations
described in Section 501(c)(3) of the Code. These qualifying employers may make
contributions to the Contracts for the benefit of their employees. Such
contributions are not includible in the gross income of the employee until the
employee receives distributions from the Contract. The amount of contributions
to the tax-sheltered annuity is limited to certain maximums imposed by the Code.
Furthermore, the Code sets forth additional restrictions governing such items as
transferability, distributions, nondiscrimination and withdrawals. (See "Tax
Treatment of Withdrawals - Qualified Contracts" and "Tax-Sheltered Annuities -
Withdrawal Limitations.") Employee loans are not allowed under these Contracts.
Any employee should obtain competent tax advice as to the tax treatment and
suitability of such an investment.
b. Individual Retirement Annuities
Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity"
("IRA"). Under applicable limitations, certain amounts may be contributed to an
IRA which may be deductible from the individual's taxable income. These IRAs are
subject to limitations on eligibility, contributions, transferability and
distributions. (See "Tax Treatment of Withdrawals - Qualified Contracts.") Under
certain conditions, distributions from other IRAs and other Qualified Plans may
be rolled over or transferred on a tax-deferred basis into an IRA. Sales of
Contracts for use with IRAs are subject to special requirements imposed by the
Code, including the requirement that certain informational disclosure be given
to persons desiring to establish an IRA. Purchasers of Contracts to be qualified
as Individual Retirement Annuities should obtain competent tax advice as to the
tax treatment and suitability of such an investment.
Roth IRAs
Section 408A of the Code provides that beginning in 1998, individuals may
purchase a new type of non-deductible IRA, known as a Roth IRA. Purchase
payments for a Roth IRA are limited to a maximum of $2,000 per year and are not
deductible from taxable income. Lower maximum limitations apply to individuals
with adjusted gross incomes between $95,000 and $110,000 in the case of single
taxpayers, between $150,000 and $160,000 in the case of married taxpayers filing
joint returns, and between $0 and $10,000 in the case of married taxpayers
filing separately. An overall $2,000 annual limitation continues to apply to all
of a taxpayer's IRA contributions, including Roth IRA and non-Roth IRAs.
Qualified distributions from Roth IRAs are free from federal income tax. A
qualified distribution requires that an individual has held the Roth IRA for at
least five years and, in addition, that the distribution is made either after
the individual reaches age 59 1/2, on the individual's death or disability, or
as a qualified first-time home purchase, subject to a $10,000 lifetime maximum,
for the individual, a spouse, child, grandchild, or ancestor. Any distribution
which is not a qualified distribution is taxable to the extent of earnings in
the distribution. Distributions are treated as made from contributions first and
therefore no distributions are taxable until distributions exceed the amount of
contributions to the Roth IRA. The 10% penalty tax and the regular IRA
exceptions to the 10% penalty tax apply to taxable distributions from a Roth
IRA.
Amounts may be rolled over from one Roth IRA to another Roth IRA. Furthermore,
an individual may make a rollover contribution from a non-Roth IRA to a Roth
IRA, unless the individual has adjusted gross income over $100,000 or the
individual is a married taxpayer filing a separate return. The individual must
pay tax on any portion of the IRA being rolled over that represents income or a
previously deductible IRA contribution. However, for rollovers in 1998, the
individual may pay that tax ratably over the four taxable year periods beginning
with tax year 1998. Purchasers of Contracts to be qualified as a Roth IRA should
obtain competent tax advice as to the tax treatment and suitability of such an
investment.
c. Pension and Profit-Sharing Plans
Sections 401(a) and 401(k) of the Code permit employers, including self-employed
individuals, to establish various types of retirement plans for employees. These
retirement plans may permit the purchase of the Contracts to provide benefits
under the Plan. Contributions to the Plan for the benefit of employees will not
be includible in the gross income of the employee until distributed from the
Plan. The tax consequences to participants may vary, depending upon the
particular Plan design. However, the Code places limitations and restrictions on
all Plans, including on such items as: amount of allowable contributions; form,
manner and timing of distributions; transferability of benefits; vesting and
nonforfeitability of interests; nondiscrimination in eligibility and
participation; and the tax treatment of distributions and withdrawals.
Participant loans are not allowed under the Contracts purchased in connection
with these Plans. (See "Tax Treatment of Withdrawals - Qualified Contracts.")
Purchasers of Contracts for use with Pension or Profit-Sharing Plans should
obtain competent tax advice as to the tax treatment and suitability of such an
investment.
Tax Treatment of Withdrawals - Qualified Contracts
In the case of a withdrawal under a Qualified Contract, a ratable portion of the
amount received is taxable, generally based on the ratio of the individual's
cost basis to the individual's total accrued benefit under the retirement plan.
Special tax rules may be available for certain distributions from a Qualified
Contract. Section 72(t) of the Code imposes a 10% penalty tax on the taxable
portion of any distribution from qualified retirement plans, including Contracts
issued and qualified under Code Sections 401 (Pension and Profit-Sharing Plans),
403(b) (Tax-Sheltered Annuities) and 408 and 408A (Individual Retirement
Annuities). To the extent amounts are not includible in gross income because
they have been properly rolled over to an IRA or to another eligible Qualified
Plan, no tax penalty will be imposed. The tax penalty will not apply to the
following distributions: (a) if distribution is made on or after the date on
which the Contract Owner or Annuitant (as applicable) reaches age 59 1/2; (b)
distributions following the death or disability of the Contract Owner or
Annuitant (as applicable) (for this purpose disability is as defined in Section
72(m)(7) of the Code); (c) after separation from service, distributions that are
part of substantially equal periodic payments made not less frequently than
annually for the life (or life expectancy) of the Contract Owner or Annuitant
(as applicable) or the joint lives (or joint life expectancies) of such Contract
Owner or Annuitant (as applicable) and his or her designated beneficiary; (d)
distributions to a Contract Owner or Annuitant (as applicable) who has separated
from service after he or she has attained age 55; (e) distributions made to the
Contract Owner or Annuitant (as applicable) to the extent such distributions do
not exceed the amount allowable as a deduction under Code Section 213 to the
Contract Owner or Annuitant (as applicable) for amounts paid during the taxable
year for medical care; (f) distributions made to an alternate payee pursuant to
a qualified domestic relations order; (g) distributions from an Individual
Retirement Annuity for the purchase of medical insurance (as described in
Section 213(d)(1)(D) of the Code) for the Contract Owner or Annuitant (as
applicable) and his or her spouse and dependents if the Contract Owner or
Annuitant (as applicable) has received unemployment compensation for at least 12
weeks (this exception no longer applies after the Contract Owner or Annuitant
(as applicable) has been re-employed for at least 60 days); (h) distributions
from an Individual Retirement Annuity made to the Owner or Annuitant (as
applicable) to the extent such distributions do not exceed the qualified higher
education expenses (as defined in Section 72(t)(7) of the Code) of the Owner or
Annuitant (as applicable) for the taxable year; and (I) distributions from an
Individual Retirement Annuity made to the Owner or Annuitant (as applicable)
which are qualified first-time home buyer distributions (as defined in Section
72(t)(8) of the Code). The exceptions stated in items (d) and (f) above do not
apply in the case of an Individual Retirement Annuity. The exception stated in
item (c) applies to an Individual Retirement Annuity without the requirement
that there be a separation from service.
With respect to (c) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic payment, then the tax for the year of the
modification is increased by an amount equal to the tax which would have been
imposed (the 10% penalty tax) but for the exception, plus interest for the tax
years in which the exception was used.
A partial liquidation (withdrawal) during the Payout Phase may result in the
modification of the series of Annuity Payments made after such liquidation and
therefore could result in the imposition of the 10% penalty tax and interest for
the period as described above unless another exception to the penalty tax
applies. You should obtain competent tax advice before you make any liquidations
from your Contract.
Generally, distributions from a Qualified Plan must commence no later than April
1 of the calendar year following the later of: (a) the year in which the
employee attains age 70 1/2, or (b) the calendar year in which the employee
retires. The date set forth in (b) does not apply to an Individual Retirement
Annuity. Required distributions must be over a period not exceeding the life
expectancy of the individual or the joint lives or life expectancies of the
individual and his or her designated beneficiary. If the required minimum
distributions are not made, a 50% penalty tax is imposed as to the amount not
distributed.
Tax-Sheltered Annuities - Withdrawal Limitations
The Code limits the withdrawal of amounts attributable to contributions made
pursuant to a salary reduction agreement (as defined in Section 403(b)(11) of
the Code) to circumstances only when the Contract Owner: (1) attains age 59 1/2;
(2) separates from service; (3) dies; (4) becomes disabled (within the meaning
of Section 72(m)(7) of the Code); or (5) in the case of hardship. However,
withdrawals for hardship are restricted to the portion of the Contract Owner's
Contract Value which represents contributions by the Contract Owner and does not
include any investment results. The limitations on withdrawals became effective
on January 1, 1989 and apply only to salary reduction contributions made after
December 31, 1988, and to income attributable to such contributions and to
income attributable to amounts held as of December 31, 1988. The limitations on
withdrawals do not affect rollovers and transfers between certain Qualified
Plans. Contract Owners should consult their own tax counsel or other tax adviser
regarding any distributions.
Annuity Provisions
- --------------------------------------------------------------------------------
Fixed Annuity Payout
A fixed annuity is an annuity with payments which are guaranteed as to dollar
amount by the Insurance Company and do not vary with the investment experience
of a Portfolio. The Fixed Account value on the day immediately preceding the
Income Date will be used to determine the Fixed Annuity monthly payment. The
monthly Annuity Payment will be based upon the Contract Value at the time of
annuitization, the Annuity Option selected, the age of the Annuitant and any
joint Annuitant and the sex of the Annuitant and joint Annuitant where allowed.
Variable Annuity Payout
A variable annuity is an annuity with payments which: (1) are not predetermined
as to dollar amount; and (2) will vary in amount with the net investment results
of the applicable Portfolio(s).
Annuity Unit Value
On the Income Date, a fixed number of Annuity Units will be purchased as
follows:
The first Annuity Payment is equal to the Adjusted Contract Value, divided first
by $1,000 and then multiplied by the appropriate Annuity Payment amount for each
$1,000 of value for the Annuity Option selected. In each Variable Option the
fixed number of Annuity Units is determined by dividing the amount of the
initial Annuity Payment determined for each Variable Option by the Annuity Unit
value on the Income Date. Thereafter, the number of Annuity Units in each
Variable Option remains unchanged unless the Contract Owner elects to transfer
between Variable Options. All calculations will appropriately reflect the
Annuity Payment frequency selected.
On each subsequent Annuity Payment date, the total Annuity Payment is the sum of
the Annuity Payments for each Variable Option. The Annuity Payment in each
Variable Option is determined by multiplying the number of Annuity Units then
allocated to such Variable Option by the Annuity Unit value for that Variable
Option. On each subsequent valuation date, the value of an Annuity Unit is
determined in the following way:
First: The Net Investment Factor is determined as described in the Prospectus
under "Purchase - Accumulation Units."
Second: The value of an Annuity Unit for a valuation period is equal to:
a. the value of the Annuity Unit for the immediately preceding valuation
period.
b. multiplied by the Net Investment Factor for the current valuation period;
c. divided by the Assumed Net Investment Factor (see below) for the valuation
period.
The Assumed Net Investment Factor is equal to one plus the Assumed Investment
Return which is used in determining the basis for the purchase of an Annuity,
adjusted to reflect the particular Valuation Period. The Assumed Investment
Return that the Insurance Company will use is 5%. However, the Insurance Company
may agree to use a different value which will not exceed 7%.
Mortality and Expense Risk Guarantee
- --------------------------------------------------------------------------------
The Insurance Company guarantees that the dollar amount of each annuity payment
after the first annuity payment will not be affected by variations in mortality
and expense experience.
Financial Statements
- --------------------------------------------------------------------------------
The audited consolidated financial statements of the Insurance Company as of and
for the year ended December 31, 1998, included herein should be considered only
as bearing upon the ability of the Insurance Company to meet its obligations
under the Contracts. The audited financial statements of the Separate Account as
of and for the year ended December 31, 1998 are also included herein.
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
Financial statements of the Company and the Separate Account will be
filed by Amendment.
b. Exhibits
1. Resolution of Board of Directors of the Company authorizing the
establishment of the Variable Account(1)
2. Not Applicable
3. Principal Underwriter's Agreement(2)
4. Individual Variable Annuity Contract
4.a. Waiver of Contingent Deferred Sales Charge Endorsement
4.b. Traditional Death Benefit Endorsement
4.c. Enhanced Death Benefit Endorsement
4.d. Traditional Income Benefit Endorsement
4.e. Enhanced Income Benefit Endorsement
4.f. Charitable Remainder Trust Endorsement
4.g. Group Pension Plan Death Benefit Endorsement
4.h. Unisex Endorsement
5. Application for Individual Variable Annuity Contract
6. (i) Copy of Articles of Incorporation of the Company(1)
(ii) Copy of the Bylaws of the Company(1)
7. Not Applicable
8. Form of Fund Participation Agreement(1)
9. Opinion and Consent of Counsel (to be filed by Amendment)
10. Independent Auditors' Consent (to be filed by Amendment)
11. Not Applicable
12. Not Applicable
13. Calculation of Performance Data (to be filed by Amendment)
14. Company Organizational Chart(2)
27. Not Applicable
(1) Incorporated by reference to Registrant's Form N-4 (File Nos. 333-06709 and
811-05618) electronically filed on June 24, 1996.
(2) Incorporated by reference to Pre-Effective Amendment No. 1 to Registrant's
Form N-4 (File Nos. 333-06709 and 811-05618) electronically filed on
December 13, 1996.
Item 25. Directors and Officers of the Depositor
The following are the Officers and Directors of the Insurance Company:
Name and Principal Positions and Offices
Business Address with Depositor
- - ---------------------------- ---------------------------------
Lowell C. Anderson Chairman, President, Chief
1750 Hennepin Avenue Executive Officer and Director
Minneapolis, MN 55403
Herbert F. Hansmeyer Director
777 San Marin Drive
Novato, CA 94998
Michael P. Sullivan Director
7505 Metro Boulevard
Minneapolis, MN 55439
Dr. Gerhard Rupprecht Director
Reinsburgstrasse 19
D-70178
Stuttgart, Germany
Edward J. Bonach Executive Vice President, Chief
1750 Hennepin Avenue Financial Officer and Treasurer
Minneapolis, MN 55403
Robert S. James President - Individual
1750 Hennepin Avenue Division
Minneapolis, MN 55403
Ronald L. Wobbeking President-Mass Marketing Division
1750 Hennepin Avenue
Minneapolis, MN 55403
Rev. Dennis Dease Director
c/o University of St. Thomas
215 Summit Avenue
St. Paul, MN 55105-1096
James R. Campbell Director
c/o Norwest Corp.
Norwest Center
Sixth & Marquette
Minneapolis, MN 55479-0116
Robert M. Kimmitt Director
Wilmer, Cutler & Pickering
2445 M Street NW
Washington, DC 20037-1420
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant
The Company organizational chart is incorporated herein by reference to
Pre-Effective Amendment No. 1 (File Nos. 333-06709 and 811-05618)
Item 27. Number of Contract Owners
Not Applicable.
Item 28. Indemnification
The Bylaws of the Insurance Company provide that:
Each person (and the heirs, executors, and administrators of such person) made
or threatened to be made a party to any action, civil or criminal, by reason of
being or having been a Director, officer, or employee of the corporation (or by
reason of serving any other organization at the request of the corporation)
shall be indemnified to the extent permitted by the laws of the State of
Minnesota, and in the manner prescribed therein.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted for directors and officers or controlling persons of the
Insurance Company pursuant to the foregoing, or otherwise, the Insurance Company
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Insurance Company of expenses
incurred or paid by a director, officer or controlling person of the Insurance
Company in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the
securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 29. Principal Underwriters
a. NALAC Financial Plans, LLC is the principal underwriter for the
Contracts. It also is the principal underwriter for:
Allianz Life Variable Account A
Preferred Life Variable Account C
b. The following are the officers(managers) and directors (Board of
Governors) of NALAC Financial Plans, LLC:
Positions and Offices
Business Address with Underwriter
- - ---------------------- ----------------------
James P. Kelso Governor
1750 Hennepin Avenue
Minneapolis, MN 55403
Thomas B. Clifford Chief Manager and Governor
1750 Hennepin Avenue
Minneapolis, MN 55403
Michael T. Westermeyer Secretary and Governor
1750 Hennepin Avenue
Minneapolis, MN 55403
Michael J. Yates Treasurer
1750 Hennepin Avenue
Minneapolis, MN 55403
Edward J. Bonach Governor
1750 Hennepin Avenue
Minneapolis, MN 55403
Catherine L. Mielke Compliance Officer
1750 Hennepin Avenue
Minneapolis, MN 55403
Item 30. Location of Accounts and Records
Thomas Clifford, whose address is 1750 Hennepin Avenue, Minneapolis, Minnesota,
maintains physical possession of the accounts, books or documents of the
Variable Account required to be maintained by Section 31(a) of the Investment
Company Act of 1940, as amended, and the rules promulgated thereunder.
Item 31. Management Services
Not Applicable
Item 32. Undertakings
a. Registrant hereby undertakes to file a post-effective amendment to this
registration statement as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never more than sixteen
(16) months old for so long as payment under the variable annuity contracts may
be accepted.
b. Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the Prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
postcard or similar written communication affixed to or included in the
Prospectus that the applicant can remove to send for a Statement of Additional
Information.
c. Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available under
this Form promptly upon written or oral request.
d. Allianz Life Insurance Company of North America ("Company") hereby
represents that the fees and charges deducted under the Contract described in
the Prospectus, in the aggregate, are reasonable in relation to the services
rendered, the expenses to be incurred and the risks assumed by the Company.
REPRESENTATIONS
The Insurance Company hereby represents that it is relying upon a No Action
Letter issued to the American Council of Life Insurance, dated November 28, 1988
(Commission ref. IP-6-88), and that the following provisions have been complied
with:
1. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in each registration statement, including the
prospectus, used in connection with the offer of the contract;
2. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in any sales literature used in connection with
the offer of the contract;
3. Instruct sales representatives who solicit participants to purchase the
contract specifically to bring the redemption restrictions imposed by Section
403(b)(11) to the attention of the potential participants;
4. Obtain from each plan participant who purchases a Section 403(b) annuity
contract, prior to or at the time of such purchase, a signed statement
acknowledging the participant's understanding of (1) the restrictions on
redemption imposed by Section 403(b)(11), and (2) other investment alternatives
available under the employer's Section 403(b) arrangement to which the
participant may elect to transfer his contract value.
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, as amended, the Registrant certifies that it has caused this Registration
Statement to be signed on its behalf in the City of Minneapolis and State of
Minnesota, on this 6th day of July, 1999.
ALLIANZ LIFE
VARIABLE ACCOUNT B
(Registrant)
By: ALLIANZ LIFE INSURANCE COMPANY
OF NORTH AMERICA
(Depositor)
By: /S/ MICHAEL T. WESTERMEYER
--------------------------------
Michael T. Westermeyer
ALLIANZ LIFE INSURANCE COMPANY
OF NORTH AMERICA
(Depositor)
By: /S/ MICHAEL T. WESTERMEYER
------------------------------
Michael T. Westermeyer
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
Signature and Title
Chairman of the Board, 7/6/99
Lowell C. Anderson* President ------
Lowell C. Anderson and Chief Executive Officer Date
Herbert F. Hansmeyer* Director 7/6/99
Herbert F. Hansmeyer ------
Date
Michael P. Sullivan* Director 7/6/99
Michael P. Sullivan ------
Date
Dr. Gerhard Rupprecht* Director 7/6/99
Dr. Gerhard Rupprecht ------
Date
Edward J. Bonach* Chief Financial Officer 7/6/99
Edward J. Bonach ------
Date
Rev. Dennis Dease* Director 7/6/99
Rev. Dennis Dease ------
Date
James R. Campbell* Director 7/6/99
James R. Campbell ------
Date
Robert M. Kimmitt* Director 7/6/99
Robert M. Kimmitt ------
Date
*By Power of Attorney
By: /S/ MICHAEL T. WESTERMEYER
--------------------------------
Michael T. Westermeyer
Attorney-in-Fact
EXHIBITS
TO
FORM N-4
ALLIANZ LIFE VARIABLE ACCOUNT B
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
INDEX TO EXHIBITS
EXHIBIT PAGE
EX-99.B4. Individual Variable Annuity Contract
EX-99.B4.a. Waiver of Contingent Deferred Sales Charge Endorsement
EX-99.B4.b. Traditional Death Benefit Endorsement
EX-99.B4.c. Enhanced Death Benefit Endorsement
EX-99.B4.d. Traditional Income Benefit Endorsement
EX-99.B4.e. Enhanced Income Benefit Endorsement
EX-99.B4.f. Charitable Remainder Trust Endorsement
EX-99.B4.g. Group Pension Plan Death Benefit Endorsement
EX-99.B4.h. Unisex Endorsement
EX-99.B5. Application for Variable Annuity Contract
Allianz Life Insurance Company of North America
1750 Hennepin Avenue
Minneapolis, MN 55403-2195
A Stock Company
This is a legal Contract between the Contract Owner (referred to in this
Contract as you and your) and Allianz Life Insurance Company of North America
(herein referred to as we, us and our). We will make Annuity Payments as set
forth in this Contract beginning on the Income Date.
This Contract is issued in consideration of the payment of the initial Purchase
Payment.
READ YOUR CONTRACT CAREFULLY
RIGHT TO EXAMINE: THIS CONTRACT MAY BE RETURNED WITHIN 10 DAYS AFTER YOU RECEIVE
IT. IT CAN BE MAILED OR DELIVERED TO EITHER US OR THE AGENT WHO SOLD IT. RETURN
OF THIS CONTRACT BY MAIL IS EFFECTIVE ON BEING POSTMARKED, PROPERLY ADDRESSED
AND POSTAGE PREPAID. THE RETURNED CONTRACT WILL BE TREATED AS IF WE HAD NEVER
ISSUED IT. WE WILL PROMPTLY REFUND THE CONTRACT VALUE IN STATES WHERE PERMITTED.
THIS MAY BE MORE OR LESS THAN THE PURCHASE PAYMENTS. WE HAVE THE RIGHT TO
ALLOCATE PAYMENTS TO THE MONEY MARKET FUND UNTIL THE EXPIRATION OF THE RIGHT TO
EXAMINE PERIOD. IF WE SO ALLOCATE PAYMENTS, WE WILL REFUND THE GREATER OF THE
PURCHASE PAYMENTS, LESS ANY WITHDRAWALS, OR THE CONTRACT VALUE.
Benefits available under this Contract are not less than those required by
statute of the state in which this Contract is delivered.
This is a Variable Annuity Contract with Annuity Payments and Contract Values
increasing or decreasing depending on the experience of the Variable Account
which is set forth in the Contract Schedule.
Signed for Allianz Life Insurance Company of North America by:
/s/ MICHAEL T. WESTERMEYER /s/ LOWELL C. ANDERSON
---------------------------- -----------------------------------------
Vice President and Secretary Chairman of the Board, President, and CEO
INDIVIDUAL FLEXIBLE PAYMENT VARIABLE ANNUITY
NON-PARTICIPATING
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
RIGHT TO EXAMINE..................................................................................................1
CONTRACT SCHEDULE.............................................................................................i -iv
DEFINITIONS.......................................................................................................2
PURCHASE PAYMENTS.................................................................................................4
PURCHASE PAYMENTS........................................................................................4
CHANGE IN PURCHASE PAYMENTS..............................................................................4
NO DEFAULT...............................................................................................4
ALLOCATION OF PURCHASE PAYMENTS..........................................................................4
VARIABLE ACCOUNT..................................................................................................4
THE VARIABLE ACCOUNT.....................................................................................4
VALUATION OF ASSETS......................................................................................5
ACCUMULATION UNITS.......................................................................................5
ACCUMULATION UNIT VALUE..................................................................................5
NET INVESTMENT FACTOR....................................................................................5
MORTALITY AND EXPENSE RISK CHARGE........................................................................6
ADMINISTRATIVE CHARGE....................................................................................6
DISTRIBUTION EXPENSE CHARGE..............................................................................6
MORTALITY AND EXPENSE GUARANTEE..........................................................................6
CONTRACT VALUE....................................................................................................6
CONTRACT MAINTENANCE CHARGE.......................................................................................6
TRANSFERS.........................................................................................................6
WITHDRAWAL PROVISIONS.............................................................................................8
WITHDRAWALS..............................................................................................8
CONTINGENT DEFERRED SALES CHARGE.........................................................................8
PROCEEDS PAYABLE ON DEATH.........................................................................................8
DEATH OF CONTRACT OWNER DURING THE ACCUMULATION PERIOD...................................................8
DEATH BENEFIT AMOUNT DURING THE ACCUMULATION PERIOD......................................................8
DEATH BENEFIT OPTIONS DURING THE ACCUMULATION PERIOD.....................................................8
DEATH OF CONTRACT OWNER DURING THE ANNUITY PERIOD........................................................9
DEATH OF ANNUITANT.......................................................................................9
PAYMENT OF DEATH BENEFIT.................................................................................9
BENEFICIARY.............................................................................................10
CHANGE OF BENEFICIARY...................................................................................10
SUSPENSION OR DEFERRAL OF PAYMENTS PROVISION.....................................................................10
CONTRACT OWNER, ANNUITANT, ASSIGNMENT PROVISIONS.................................................................11
CONTRACT OWNER...........................................................................................11
JOINT OWNER..............................................................................................11
ANNUITANT................................................................................................11
ASSIGNMENT OF A CONTRACT.................................................................................11
ANNUITY PROVISIONS...............................................................................................11
GENERAL.................................................................................................11
INCOME DATE.............................................................................................11
SELECTION OF AN ANNUITY OPTION..........................................................................12
ANNUITY OPTIONS.........................................................................................12
OPTION 1 - LIFE ANNUITY...........................................................................12
OPTION 2 - LIFE ANNUITY WITH MONTHLY PAYMENTS OVER 5, 10, 15,
OR 20 YEARS GUARANTEED............................................................................12
OPTION 3 - JOINT AND LAST SURVIVOR ANNUITY........................................................12
OPTION 4 - JOINT AND LAST SURVIVOR ANNUITY WITH MONTHLY
PAYMENTS OVER 5, 10, 15, OR 20 YEARS GUARANTEED..................................................13
OPTION 5 - REFUND LIFE ANNUITY...................................................................13
OPTION 6 - SPECIFIED PERIOD CERTAIN ANNUITY.............................................................14
ANNUITY..........................................................................................................14
FIXED ANNUITY...........................................................................................14
VARIABLE ANNUITY........................................................................................14
GENERAL PROVISIONS...............................................................................................15
THE CONTRACT............................................................................................15
NON-PARTICIPATING IN SURPLUS............................................................................15
MISSTATEMENT OF AGE OR SEX..............................................................................15
CONTRACT SETTLEMENT.....................................................................................16
REPORTS.................................................................................................16
TAXES...................................................................................................16
EVIDENCE OF SURVIVAL....................................................................................16
PROTECTION OF PROCEEDS..................................................................................16
MODIFICATION OF CONTRACT................................................................................16
</TABLE>
<TABLE>
<CAPTION>
CONTRACT SCHEDULE
<S> <C>
CONTRACT OWNER: [John Doe] CONTRACT NUMBER: [??687456]
JOINT OWNER: [Jane Doe] ISSUE DATE: [04/15/99]
ANNUITANT: [John Doe] INCOME DATE: [04/15/09]
PURCHASE PAYMENTS:
INITIAL PURCHASE PAYMENT: [Non-Qualified: $5,000 or
$2,000 if you have selected AIP;
Qualified: $2,000]
MINIMUM SUBSEQUENT
PURCHASE PAYMENT: [$250 or $100 if you have selected AIP]
MAXIMUM TOTAL
PURCHASE PAYMENTS: [$1 million; higher amounts may be accepted with our prior approval]
ALLOCATION GUIDELINES:
[1. Currently, you can select up to 10 of the Funds and the Fixed Account.
2. If allocations are made in percentages, whole numbers must be used.]
</TABLE>
VARIABLE ACCOUNT: [Allianz Life Variable Account B]
ELIGIBLE INVESTMENTS:
[Franklin Valuemark Funds ]
- ---------------------------
[CAPITAL GROWTH FUND]
[GLOBAL HEALTH CARE SECURITIES FUND]
[GLOBAL UTILITIES SECURITIES FUND]
[GROWTH AND INCOME FUND]
[HIGH INCOME FUND]
[INCOME SECURITIES FUND]
[MONEY MARKET FUND]
[MUTUAL DISCOVERY SECURITIES FUND]
[MUTUAL SHARES SECURITIES FUND]
[NATURAL RESOURCES SECURITIES FUND]
[REAL ESTATE SECURITIES FUND]
[RISING DIVIDENDS FUND]
[SMALL CAP FUND]
[TEMPLETON DEVELOPING MARKETS EQUITY FUND]
[TEMPLETON GLOBAL ASSET ALLOCATION FUND]
[TEMPLETON GLOBAL INCOME SECURITIES FUND]
[TEMPLETON GLOBAL GROWTH FUND]
[TEMPLETON INTERNATIONAL EQUITY FUND]
[TEMPLETON INTERNATIONAL SMALLER COMPANIES FUND]
[TEMPLETON PACIFIC GROWTH FUND]
[U.S. GOVERNMENT SECURITIES FUND]
[VALUE SECURITIES FUND]
[ZERO COUPON FUND 2005]
[ZERO COUPON FUND 2010]
[Allianz Life General Account]
- ------------------------------
[ALLIANZ LIFE FIXED ACCOUNT]
MORTALITY AND EXPENSE RISK CHARGE: During the Accumulation Period, the Mortality
and Expense Risk Charge is equal on an annual basis to [1.10%] of the average
daily net asset value of the Variable Account. During the Annuity Period, the
Mortality and Expense Risk Charge is equal on an annual basis to [1.00%] of the
average daily net asset value of the Variable Account. We may decrease this
charge, but we may not increase it.
ADMINISTRATIVE CHARGE: Equal on an annual basis to [.15%] of the average daily
net asset value of the Variable Account.
DISTRIBUTION EXPENSE CHARGE: Guaranteed not to exceed .30% of the Contract
Value. Currently the charge is [zero].
CONTRACT MAINTENANCE CHARGE: The Contract Maintenance Charge is currently
[$40.00] each Contract Year. The Contract Maintenance Charge will be deducted
from the Contract Value the day before each Contract Anniversary while this
Contract is in force. However, during the Accumulation Period, if your Contract
Value on a Contract Anniversary is at least [$100,000], then no Contract
Maintenance Charge is deducted. If a total withdrawal is made on a date other
than a Contract Anniversary and your Contract Value for the Valuation Period
during which the total withdrawal is made is less than [$100,000]; the full
Contract Maintenance Charge will be deducted at the time of the total
withdrawal. The Contract Maintenance Charge will be deducted from the Funds [and
the Fixed Account] in the same proportion that the amount of the Contract Value
in each Fund [and/or Fixed Account] bears to the total Contract Value. During
the Annuity Period, the Contract Maintenance Charge will be collected pro rata
from each Annuity Payment. In the event you own more than one Contract, we will
determine the total Contract Value for all of the Contracts. If the total
Contract Value is at least [$100,000], we will not assess the Contract
Maintenance Charge. If the Contract Owner is not a natural person, we will look
to the Annuitant in determining the foregoing.
COMMUTATION FEE APPLICABLE TO ANNUITY OPTIONS 2, 4 AND 6:
[Years Since Income Date Commutation Factor
------------------------------- -------------------------
0 - 1 5%
1 - 2 4%
2 - 3 3%
3 - 4 2%
Over 4 1%]
MAXIMUM CUMULATIVE PERCENTAGE FOR PARTIAL LIQUIDATION FOR ANNUITY OPTIONS 2 AND
4: [75%] of the Total Liquidation Value less any previously liquidated amounts.
TRANSFERS:
NUMBER OF FREE TRANSFERS PERMITTED: Currently, there are no limits on
the number of transfers that can be made. We reserve the right to
change this, but you will always be allowed at least 12 free transfers
in any Contract Year. Currently, you are allowed [12] free transfers
each Contract Year. This applies to transfers prior to and after the
Income Date.
TRANSFER FEE: For each transfer in excess of the free transfers
permitted, the Transfer Fee is [$25]. Transfers made at the end of the
Right to Examine period by us and any transfers made pursuant to a
regularly scheduled transfer will not be counted in determining the
application of the Transfer Fee.
MINIMUM AMOUNT TO BE TRANSFERRED: [$1,000 (from any Fund or the Fixed
Account) or your entire interest in the Fund or the Fixed Account, if
less.] This requirement is waived if the transfer is pursuant to a
pre-scheduled transfer.
WITHDRAWALS:
CONTINGENT DEFERRED SALES CHARGE: A Contingent Deferred Sales Charge
is assessed against Purchase Payments withdrawn. The charge is
calculated at the time of each withdrawal. For partial withdrawals,
the charge is deducted from the remaining Contract Value and is
deducted from the Funds [and the Fixed Account] in the same proportion
that the amount of withdrawal from the Fund [or Fixed Account] bears
to the total of the partial withdrawal. The Contingent Deferred Sales
Charge is based upon the length of the time from receipt of the
Purchase Payment. Withdrawals are deemed to have come from the oldest
Purchase Payments first. Each Purchase Payment is tracked as to its
date of receipt and the Contingent Deferred Sales Charges are
determined in accordance with the following.
[CONTINGENT DEFERRED SALES CHARGE
Number of Complete Contract
Years from Receipt Charge
------------------ ------
0 6%
1 5%
2 4%
3 3%
4 2%
5 years or more 0%]
PARTIAL WITHDRAWAL PRIVILEGE: [Each Contract Year, on a cumulative
basis, you can withdraw up to 10% of Purchase Payments (minus any
previous withdrawals taken which were not subject to a Contingent
Deferred Sales Charge) without incurring a Contingent Deferred Sales
Charge. Complete withdrawals are assessed a Contingent Deferred Sales
Charge on the full Contingent Deferred Sales Charge Basis Amount with
no reductions for the Partial Withdrawal Privilege.]
[If your Contract Value is $25,000 or more you can elect the
Systematic Withdrawal Option. The total of systematic withdrawals in a
Contract Year which can be made without incurring a Contingent
Deferred Sales Charge is limited to not more than 10% of Purchase
Payments. There is no limit to the amount or percentage of the
systematic withdrawal if all your Purchase Payments are no longer
subject to a Contingent Deferred Sales Charge. If you have elected the
Systematic Withdrawal Option, any additional withdrawals will be
subject to any applicable Contingent Deferred Sales Charge. We reserve
the right to modify the eligibility rules at any time, without
notice.]
[If you have a Qualified Contract, you can elect the Minimum
Distribution Program with respect to your Contract. Withdrawals will
not be subject to a Contingent Deferred Sales Charge. Such payments
will be designed to meet the applicable minimum distribution
requirements imposed by the Internal Revenue Code on Qualified
Contracts. Withdrawals from your Qualified Contract pursuant to the
Minimum Distribution Program are in lieu of the Free Withdrawal
Privilege described above. If you have elected the Minimum
Distribution Program, any additional withdrawals will be subject to
any applicable Contingent Deferred Sales Charge.]
MINIMUM PARTIAL WITHDRAWAL: [$500]
MINIMUM CONTRACT VALUE THAT MUST REMAIN IN THE CONTRACT AFTER A
PARTIAL WITHDRAWAL: [$2,000]
FIXED ACCOUNT INITIAL RATE: [3%]
We guarantee this rate for one year from the Issue Date.
RIDERS:
[Individual Retirement Annuity Endorsement]
[Roth Individual Retirement Annuity Endorsement]
[403 (b) Endorsement]
[Unisex Endorsement]
[Group Pension Plan Death Benefit Endorsement]
[Pension Plan and Profit Sharing Plan Endorsement]
[Declared Interest Rate Fixed Account Endorsement]
[Charitable Remainder Trust Endorsement]
[Waiver of Contingent Deferred Sales Charge Endorsement]
[Traditional Death Benefit Endorsement]
[Enhanced Death Benefit Endorsement]
[Traditional Income Benefit Endorsement]
[Enhanced Income Benefit Endorsement]
SERVICE OFFICE: [VALUEMARK SERVICE CENTER]
[300 Berwyn Park
P.O. Box 3031
Berwyn, PA 19312-0031
800-624-0197]
DEFINITIONS
ACCUMULATION UNIT: An accounting unit of measure used to calculate the Contract
Value prior to the Income Date.
ACCUMULATION PERIOD: The period prior to the Income Date during which you can
make Purchase Payments.
ADJUSTED CONTRACT VALUE: The Contract Value less any applicable Premium Tax.
This amount is used to determine the death benefit or the initial Annuity
Payment.
AGE: Age on last birthday unless otherwise specified.
ANNUITANT(S): The natural person upon whose continuation of life any Annuity
Payment involving life contingencies depends. You may change the Annuitant at
any time prior to the Income Date unless the Contract Owner is a non-individual.
ANNUITY CALCULATION DATE: The date on which the first Annuity Payment is
calculated which will be no more than ten (10) business days prior to the Income
Date.
ANNUITY OPTION: An arrangement under which Annuity Payments are made under this
Contract.
ANNUITY PAYMENTS: The series of payments made to you or any named payee after
the Income Date under the Annuity Option selected.
ANNUITY PERIOD: The period of time beginning on the Income Date during which
Annuity Payments are made.
ANNUITY RESERVE: The assets which support the Annuity Option you have selected
during the Annuity Period.
ANNUITY UNIT: An accounting unit of measure used to calculate Annuity Payments
after the Income Date.
ASSUMED INVESTMENT RETURN: The investment return upon which the Annuity Payments
in the Contract are based.
AUTHORIZED REQUEST: A request, in a form satisfactory to the Company, which is
received by the [Valuemark Service Center].
BENEFICIARY: The person(s) or entity(ies) who will receive any death benefit
payable under this Contract during the Accumulation Period.
COMMUTATION FEE: A fee assessed by the Company equal to the percentage of the
amount liquidated as shown on the Contract Schedule.
COMPANY: Allianz Life Insurance Company of North America.
CONTINGENT DEFERRED SALES CHARGE BASIS AMOUNT: The amount which may be subject
to Contingent Deferred Sales Charges upon withdrawal.
CONTRACT ANNIVERSARY: An anniversary of the Issue Date of this Contract.
CONTRACT OWNER: The person(s) or entity(ies) entitled to the ownership rights
stated in this Contract. If Joint Owners are named, all references to Contract
Owner shall mean the Joint Owners.
CONTRACT SURRENDER VALUE: The Contract Value less any applicable Premium Tax,
less any Contingent Deferred Sales Charge and less any applicable Contract
Maintenance Charge.
CONTRACT VALUE: The dollar value as of any Valuation Date of all amounts
accumulated under this Contract.
CONTRACT YEAR: Any period of twelve (12) months commencing with the Issue Date
and each Contract Anniversary thereafter.
ELIGIBLE INVESTMENT(S): Those investments available under the Contract. Current
Eligible Investments are shown on the Contract Schedule.
FUND: A segment of an Eligible Investment which constitutes a separate and
distinct class of interests under an Eligible Investment.
GENERAL ACCOUNT: Our general investment account which contains all the assets of
the Company with the exception of the Variable Account and other segregated
asset accounts.
INCOME DATE: The date on which Annuity Payments are to begin.
ISSUE DATE: The date shown on the Contract Schedule on which the first Contract
Year begins.
JOINT OWNER: If there is more than one Contract Owner, each Contract Owner shall
be a Joint Owner of the Contract. Joint Owners have equal ownership rights and
must both authorize any exercising of those ownership rights unless otherwise
allowed by us. Any Joint Owner must be the spouse of the other Contract Owner.
PREMIUM TAX: Any premium taxes owed to any governmental entity and assessed
against Purchase Payments or Contract Value.
PURCHASE PAYMENT: A payment made toward this Contract.
SUB-ACCOUNT: Variable Account assets are divided into Sub-Accounts. Assets of
each Sub-Account will be invested in shares of an Eligible Investment or Fund.
In this Contract, "Fund" may also refer to the Sub-Accounts from which the Fund
investment is made.
TOTAL LIQUIDATION VALUE: The present value of any remaining guaranteed variable
Annuity Payments after the Income Date.
VALUATION DATE: The Variable Account will be valued each day that the New York
Stock Exchange is open for trading.
VALUATION PERIOD: The period commencing at the close of business of the New York
Stock Exchange on each Valuation Date and ending at the close of business for
the next succeeding Valuation Date.
[VALUEMARK SERVICE CENTER]: The office indicated on the Contract Schedule of
this Contract to which notices, requests and Purchase Payments must be sent.
VARIABLE ACCOUNT: A separate account maintained by us in which a portion of our
assets has been allocated for this and certain other contracts. It has been
designated on the Contract Schedule.
PURCHASE PAYMENTS
PURCHASE PAYMENTS: Purchase Payments are payable according to the frequency and
in the amount selected by you. The initial Purchase Payment is due on the Issue
Date. We reserve the right to decline any Purchase Payment. The Minimum
Subsequent Purchase Payment and the Maximum Total Purchase Payments allowed are
shown on the Contract Schedule.
CHANGE IN PURCHASE PAYMENTS: You may elect to increase or decrease or to change
the frequency of Purchase Payments.
NO DEFAULT: Unless surrendered, this Contract remains in force and will not be
in default if no additional Purchase Payments are made.
ALLOCATION OF PURCHASE PAYMENTS: Purchase Payments are allocated to one or more
of the Funds of the Variable Account [or the Fixed Account] in accordance with
your selection. The allocation of the initial Purchase Payment is made in
accordance with your selection made at the Issue Date. Unless you inform us
otherwise, subsequent Purchase Payments are allocated in the same manner as the
initial Purchase Payment. However, the Company has reserved the right to
allocate the initial Purchase Payment to the Money Market Fund until the
expiration of the Right to Examine period. All allocations of Purchase Payments
are subject to the Allocation Guidelines shown on the Contract Schedule. We
guarantee that you will be allowed to select at least five Funds [or the Fixed
Account] for allocation of Purchase Payments.
VARIABLE ACCOUNT
THE VARIABLE ACCOUNT: The Variable Account is designated on the Contract
Schedule. It consists of assets we have set aside and have kept separate from
the rest of our assets and those of our other separate accounts. The assets of
the Variable Account, equal to reserves and other liabilities of your Contract
and those of other Contract Owners, will not be charged with liabilities arising
out of any other business we may conduct.
The Variable Account assets are divided into Funds. The Funds which are
available under this Contract are listed on the Contract Schedule. The assets of
the Fund are allocated to the Eligible Investments (and/or the Funds, if any,
within an Eligible Investment) shown on the Contract Schedule. We may add
additional Eligible Investments or Funds to those shown. You may be permitted to
transfer your Contract Value or allocate Purchase Payments to the additional
Fund(s). However, the right to make such transfers or allocations will be
limited by any terms and conditions we may impose.
Should the shares of any Eligible Investment(s), or any Fund(s) within an
Eligible Investment, become unavailable for investment by the Variable Account,
or our Board of Directors deems further investment in the shares inappropriate,
we may limit further purchase of such shares or substitute shares of another
Eligible Investment or Fund for shares already purchased.
VALUATION OF ASSETS: Assets of Eligible Investments within each Fund will be
valued at their net asset value on each Valuation Date.
ACCUMULATION UNITS: Accumulation Units shall be used to account for all amounts
allocated to or withdrawn from the Funds of the Variable Account as a result of
Purchase Payments, withdrawals, transfers, or fees and charges. We will
determine the number of Accumulation Units of a Sub-Account purchased or
canceled. This will be done by dividing the amount allocated to (or the amount
withdrawn from) the Sub-Account by the dollar value of one Accumulation Unit of
the Sub-Account as of the end of the Valuation Period during which the
transaction is processed at the [Valuemark Service Center].
ACCUMULATION UNIT VALUE: The Accumulation Unit Value for each Fund was
arbitrarily set initially at $10. Subsequent Accumulation Unit Values for each
Fund are determined by multiplying the Accumulation Unit Value for the
immediately preceding Valuation Period by the Net Investment Factor for the Fund
for the current period.
The Accumulation Unit value may increase or decrease from Valuation Period to
Valuation Period.
NET INVESTMENT FACTOR: The Net Investment Factor for each Fund is determined by
dividing A by B and multiplying by (1 - C) where:
A is (i) the net asset value per share of the Eligible Investment or the
Fund of an Eligible Investment held by the Fund at the end of the
current Valuation Period; plus
(ii) any dividend or capital gains per share declared on behalf of
such Eligible Investment or Fund that has an ex-dividend date
within the current Valuation Period.
B is the net asset value per share of the Eligible Investment or Fund
held by the Fund for the immediately preceding Valuation Period.
C is (i) the Valuation Period equivalent of the daily Mortality and
Expense Risk Charge, for the Administrative Charge and for the
Distribution Expense Charge, if any, which are shown on the Contract
Schedule; plus
(ii) a charge factor, if any, for any taxes or any tax reserve we have
established as a result of the operation or maintenance of the
Fund.
MORTALITY AND EXPENSE RISK CHARGE: Each Valuation Period, we deduct a Mortality
and Expense Risk Charge from the Variable Account which is equal, on an annual
basis, to the amount shown on the Contract Schedule. The Mortality and Expense
Risk Charge compensates us for assuming the mortality and expense risks under
this Contract.
ADMINISTRATIVE CHARGE: Each Valuation Period, we deduct an Administrative Charge
from the Variable Account which is equal, on an annual basis, to the amount
shown on the Contract Schedule. The Administrative Charge compensates us for the
costs associated with the administration of this Contract and the Variable
Account.
DISTRIBUTION EXPENSE CHARGE: Each Valuation Period, we deduct a Distribution
Expense Charge from the Separate Account which is equal, on an annual basis, to
the amount shown on the Contract Schedule. The Distribution Expense Charge
compensates the Company for costs associated with the distribution of Contracts.
MORTALITY AND EXPENSE GUARANTEE: We guarantee that the dollar amount of each
annuity payment after the first will not be affected by variations in mortality
or expense experience.
CONTRACT VALUE
The Contract Value for any Valuation Period is equal to the total dollar value
accumulated under this Contract in any of the Funds of the Variable Account or
the Fixed Account. The Contract Value in a Fund of the Variable Account is
determined by multiplying the number of Accumulation Units allocated to the
Contract Value for the Fund by the Accumulation Unit Value. Purchase Payments,
withdrawals and transfers from or to a Fund will result in the addition of or
the cancellation of Accumulation Units in a Fund.
CONTRACT MAINTENANCE CHARGE
We deduct an annual Contract Maintenance Charge shown on the Contract Schedule.
Prior to the Income Date, this will be deducted from the Contract Value. The
number of Accumulation Units to be canceled from each applicable Fund is in the
ratio that the value of each Fund bears to the total Contract Value.
TRANSFERS
You may transfer all or a part of your interest in an Eligible Investment to
another Eligible Investment. We reserve the right to charge for transfers if
there are more than the number of free transfers shown on the Contract Schedule.
All transfers are subject to the following:
1. The deduction of any Transfer Fee that may be imposed as shown on the
Contract Schedule. The Transfer Fee will be deducted from the Eligible
Investment from which the transfer is made. If the entire amount in the
Eligible Investment is transferred, then the Transfer Fee will be deducted
from the amount transferred. If there are multiple source Eligible
Investments, it will be treated as a single transfer. Any Transfer Fee will
be deducted proportionally from the source Eligible Investment if less than
the entire amount in the Eligible Investment is transferred.
2. We reserve the right to limit transfers until the expiration of the Right
to Examine period.
3. The minimum amount which can be transferred is shown on the Contract
Schedule.
4. No transfer will be effective within seven calendar days prior to the date
on which the first Annuity Payment is due.
5. Any transfer direction must clearly specify:
a. the amount which is to be transferred; and
b. the Eligible Investments which are to be affected.
6. After the Income Date, transfers may not be made from a fixed annuity
option to a variable annuity option.
7. After the Income Date, you can make at least one transfer from a variable
annuity option to a fixed annuity option. The number of Annuity Units
canceled from the variable annuity option will be equal in value to the
amount of the annuity reserve transferred out of the Variable Account. The
amount transferred will purchase fixed annuity payments under the Annuity
Option in effect and based on the age and sex of the Annuitant at the time
of the transfer where allowed.
8. Your right to make transfers is subject to modification if we determine in
our sole opinion, that the exercise of the right by one or more Contract
Owners is, or would be, to the disadvantage of other Contract Owners.
Restrictions may be applied in any manner reasonably designed to prevent
any use of the transfer right which we consider to be to the disadvantage
of other Contract Owners. A modification could be applied to transfers to
or from one or more of the Funds, and could include, but is not limited to:
a. the requirement of a minimum time period between each transfer;
b. not accepting a transfer request from an agent acting under a power of
attorney on behalf of more than one Contract Owner; or
c. limiting the dollar amount that may be transferred between the Funds
by a Contract Owner at any one time;
9. We reserve the right at any time and without prior notice to any party to
modify the transfer provisions described above. However, if we do modify
these provisions we guarantee that they will not be any more restrictive
than the above.
If you elect to use this transfer privilege, we will not be liable for transfers
made in accordance with your instructions. All amounts and Accumulation Units
will be determined as of the end of the Valuation Period during which the
request for transfer is received at the [Valuemark Service Center].
WITHDRAWAL PROVISIONS
WITHDRAWALS: During the Accumulation Period, you may, upon Authorized Request,
make a total or partial withdrawal of the Contract Surrender Value. Withdrawals
will result in the cancellation of Accumulation Units from each Eligible
Investment or a reduction in the Fixed Account Contract Value in the ratio that
the value of each Eligible Investment bears to the total Contract Value. You
must specify, by Authorized Request, which Accumulation Units are to be canceled
if other than the above mentioned method of cancellation is desired.
The Company will pay the amount of any withdrawal from the Variable Account
within seven (7) days of receipt of a request in good order unless the
Suspension or Deferral of Payments Provision is in effect.
Each partial withdrawal must be for an amount which is not less than the amount
shown on the Contract Schedule. The minimum Contract Value which must remain in
the Contract after a partial withdrawal is shown on the Contract Schedule.
CONTINGENT DEFERRED SALES CHARGE: Upon a withdrawal of Contract Value a
Contingent Deferred Sales Charge as set forth on the Contract Schedule may be
assessed. Under certain circumstances, we allow withdrawals without the
Contingent Deferred Sales Charge as set forth on the Contract Schedule.
PROCEEDS PAYABLE ON DEATH
DEATH OF CONTRACT OWNER DURING THE ACCUMULATION PERIOD: Upon the death of the
Contract Owner, or any Joint Owner, during the Accumulation Period, the death
benefit will be paid to the Beneficiary(ies) designated by the Contract Owner.
Upon the death of a Joint Owner, the surviving Joint Owner, if any, will be
treated as the primary Beneficiary. Any other Beneficiary designation on record
at the time of death will be treated as a contingent Beneficiary.
DEATH BENEFIT AMOUNT DURING THE ACCUMULATION PERIOD: The death benefit will be
the Adjusted Contract Value determined as of the end of the Valuation Period
during which the Company receives both due proof of death and an election for
the payment method.
Any part of the Death Benefit Amount that had been invested in the separate
account remains in the separate account until distribution begins. From the time
the Death Benefit is determined until complete distribution is made, any amount
in the separate account will be subject to investment risk which is borne by the
Beneficiary.
DEATH BENEFIT OPTIONS DURING THE ACCUMULATION PERIOD: If the Owner has not
previously designated a Death Benefit Option, a Beneficiary must request that
the death benefit be paid under one of the Death Benefit Options below. In
addition, if the Beneficiary is the spouse of the Contract Owner, he or she may
elect to continue the Contract in his or her own name and exercise all the
Contract Owner's rights under the Contract. In this event, the Contract Value
for the Valuation Period during which this election is implemented will be
adjusted to equal the death benefit. On each Contract Anniversary the full
Contract Maintenance Charge will be deducted.
Option A - lump sum payment of the death benefit. (The Contract Maintenance
Charge will not be deducted at the time of a complete withdrawal if the
distribution is due to death.); or
Option B - the payment of the entire death benefit within 5 years of the
date of the death of the Contract Owner or any Joint Owner. The Contract
Maintenance Charge is assessed to each Beneficiary on each Contract
Anniversary; or
Option C - payment of the death benefit under an Annuity Option over the
lifetime of the Beneficiary or over a period not extending beyond the life
expectancy of the Beneficiary with distribution beginning within one year
of the date of death of the Contract Owner or any Joint Owner. The Contract
Maintenance Charge will continue to be assessed to each Beneficiary's share
pro rata over the annual payment.
Any portion of the death benefit not applied under Option C within one year of
the date of the Contract Owner's death, must be distributed within five years of
the date of death.
If a lump sum payment is requested, the amount will be paid within seven (7)
days of receipt of proof of death and the election, unless the Suspension or
Deferral of Payments Provision is in effect.
Payment to the Beneficiary, other than in a lump sum, may only be elected during
the sixty-day period after the day on which such lump sum first became payable
by the Company.
DEATH OF CONTRACT OWNER DURING THE ANNUITY PERIOD: If you, or any Joint Owner,
dies during the Annuity Period, and you are not an Annuitant, any remaining
payments under the Annuity Option elected will continue at least as rapidly as
under the method of distribution in effect at such Contract Owner's death. Upon
your death during the Annuity Period, the Beneficiary becomes the Contract
Owner.
DEATH OF ANNUITANT: Upon the death of an Annuitant, who is not the Contract
Owner, during the Accumulation Period, you may designate a new Annuitant,
subject to our underwriting rules then in effect. If no designation is made
within 30 days of the death of the Annuitant, you will become the Annuitant. If
the Contract Owner is a non-individual, the death of the Annuitant will be
treated as the death of the Contract Owner and a new Annuitant may not be
designated.
Upon the death of the Annuitant during the Annuity Period, the death benefit, if
any, will be as specified in the Annuity Option elected. Death benefits will be
paid at least as rapidly as under the method of distribution in effect at the
Annuitant's death.
PAYMENT OF DEATH BENEFIT: The Company will require due proof of death and
payment election before any death benefit is paid. Due proof of death will be:
1. a certified death certificate; or
2. a certified decree of a court of competent jurisdiction as to the
finding of death; or
3. any other proof satisfactory to the Company.
All death benefits will be paid in accordance with applicable law or regulations
governing death benefit payments.
BENEFICIARY: The Beneficiary designation in effect on the Issue Date will remain
in effect until changed. The Beneficiary is entitled to receive the benefits to
be paid at your death.
Unless you provide otherwise, the death benefit will be paid in equal shares to
the survivor(s) as follows:
1. to the primary Beneficiary(ies) who survive you and/or the Annuitant's
death, as applicable; or if there are none;
2. to the contingent Beneficiary(ies) who survive you and/or the
Annuitant's death, as applicable; or if there are none;
3. to your estate.
CHANGE OF BENEFICIARY: Subject to the rights of any irrevocable
Beneficiary(ies), you may change the primary Beneficiary(ies) or contingent
Beneficiary(ies). A change may be made by Authorized Request. The change will
take effect as of the date the Authorized Request is signed. The Company will
not be liable for any payment made or action taken before it records the change.
SUSPENSION OR DEFERRAL OF PAYMENTS PROVISION
The Company reserves the right to suspend or postpone payments from the Variable
Account for a withdrawal or transfer for any period when:
1. the New York Stock Exchange is closed (other than customary weekend
and holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of securities held
in the Variable Account is not reasonably practicable or it is not
reasonably practicable to determine the value of the Variable
Account's net assets; or
4. during any other period when the Securities and Exchange Commission,
by order, so permits for the protection of Contract Owners;
provided that applicable rules and regulations of the Securities and Exchange
Commission will govern as to whether the conditions described in (2) and (3)
exist.
CONTRACT OWNER, ANNUITANT, ASSIGNMENT PROVISIONS
CONTRACT OWNER: As the Contract Owner you have all the interest and rights under
this Contract. The Contract Owner is the person designated as such on the Issue
Date, unless changed.
You may change owners of the Contract at any time by Authorized Request. A
change of Contract Owner will automatically revoke any prior designation of
Contract Owner. The change will become effective as of the date the Authorized
Request is signed. We will not be liable for any payment made or action taken
before the change is recorded.
JOINT OWNER: A Contract may be owned by Joint Owners. If Joint Owners are named,
any Joint Owner must be the spouse of the other Contract Owner. Upon the death
of either Contract Owner, the surviving spouse will be the primary Beneficiary.
Any other Beneficiary designation will be treated as a contingent Beneficiary
unless otherwise indicated in an Authorized Request.
ANNUITANT: The Annuitant is the person on whose life Annuity Payments are based.
The Annuitant is the person designated by you subject to our underwriting rules
then in effect. The Annuitant may not be changed in a Contract which is owned by
a non-individual.
ASSIGNMENT OF A CONTRACT: An Authorized Request specifying the terms of an
assignment of a Contract must be provided to the Valuemark Service Center. We
will not be liable for any payment made or action taken before we record the
assignment.
We will not be responsible for the validity or tax consequences of any
assignment. Any assignment made after the death benefit has become payable will
be valid only with our consent.
If the Contract is assigned, your rights may only be exercised with the consent
of the assignee of record.
ANNUITY PROVISIONS
GENERAL: On the Income Date, the Adjusted Contract Value will be applied under
the Annuity Option you have selected. You may elect to have the Adjusted
Contract Value applied to provide a Fixed Annuity, a Variable Annuity or a
combination Fixed and Variable Annuity. If a combination is elected, you must
specify what part of the Adjusted Contract Value is to be applied to the Fixed
and Variable Annuity Options.
INCOME DATE: You select an Income Date at the time of issue. The Income Date
must always be the first day of a calendar month. The earliest Income Date you
can select is two years after the Issue Date. The latest Income Date you can
select is the later of the first day of the first calendar month following the
Annuitant's 90th birthday or 10 years from the Issue Date, or the maximum date
permitted under state law. You may, at any time prior to the Income Date, change
the Income Date by Authorized Request 30 days in advance.
SELECTION OF AN ANNUITY OPTION: You can select an Annuity Option by Authorized
Request. If no Annuity Option is selected, Option 2, with 60 Monthly Payments
Guaranteed, will automatically be applied. You may, at any time prior to the
Income Date, by Authorized Request 30 days in advance, select and/or change the
Annuity Option.
ANNUITY OPTIONS: This Contract provides for Annuity Payments under one of the
Annuity Options described below. Any other Annuity Option acceptable to us may
be selected.
OPTION 1 - LIFE ANNUITY. We will make monthly Annuity Payments during the life
of the Annuitant and ceasing with the last Annuity Payment due prior to the
Annuitant's death.
OPTION 2 - LIFE ANNUITY WITH MONTHLY PAYMENTS OVER 5, 10, 15 OR 20 YEARS
GUARANTEED. We will make monthly Annuity Payments during the life of the
Annuitant with a guarantee that if at the Annuitant's death there have been less
than 60, 120, 180 or 240 monthly Annuity Payments made as selected, monthly
Annuity Payments will continue for the remainder of the guaranteed period.
Alternatively, the Contract Owner may elect to receive a lump-sum payment equal
to the present value of the guaranteed monthly Annuity Payments remaining, as of
the date the notice of the Annuitant's death is received at the [Valuemark
Service Center], commuted at an appropriate rate. Proof of the Annuitant's death
and return of the Contract are required prior to the payment of any commuted
values. For a fixed annuitization, the commutation rate will be the Statutory
Calendar Year Interest Rate based on the NAIC Standard Valuation Law for Single
Premium Immediate Annuities corresponding to the Income Date. For a variable
annuitization, the commutation rate will be the Assumed Investment Return.
During the lifetime of the Annuitant and while the number of Annuity Payments
made is less than the guaranteed number of payments elected, the Contract Owner
electing variable annuitization may request a withdrawal representing a partial
liquidation of up to the percentage shown on the Contract Schedule of the Total
Liquidation Value. The Total Liquidation Value is equal to the present value of
the remaining guaranteed Annuity Payments, to the end of the period certain,
commuted at the AIR, less a Commutation Fee. The Commutation Fee is a charge
collected by the Company equal to a percentage of the amount liquidated as shown
on the Contract Schedule. The Company guarantees to make this provision
available to the Contract Owner at least once per Contract Year. Partial
liquidations will be processed on the next Annuity Calculation Date following
your written request. The minimum allowable partial liquidation will be the
lesser of $500 or the remaining portion of the Total Liquidation Value
available.
After a partial liquidation, the subsequent monthly Annuity Payments during the
guaranteed period certain will be reduced by the percentage of the Total
Liquidation Value liquidated, including the Commutation Fee. After the
guaranteed number of payments has been made, the number of Annuity Units used in
calculating the monthly payments will be restored to their original values as if
no liquidations had taken place.
OPTION 3 - JOINT AND LAST SURVIVOR ANNUITY. We will make monthly Annuity
Payments during the joint lifetime of the Annuitant and the Joint Annuitant.
Upon the death of the Annuitant, if the Joint Annuitant is then living, Annuity
Payments will continue to be paid during the remaining lifetime of the Joint
Annuitant at a level of 100%, 75% or 50% of the previous level, as selected.
Monthly Annuity Payments cease with the final Annuity Payment due prior to the
last survivor's death.
OPTION 4 - JOINT AND LAST SURVIVOR ANNUITY WITH MONTHLY PAYMENTS OVER 5, 10, 15,
OR 20 YEARS GUARANTEED. We will make monthly Annuity Payments during the joint
lifetime of the Annuitant and the Joint Annuitant. Monthly Annuity Payments will
continue to be paid during the remaining lifetime of the Joint Annuitant at 100%
of the previous level, as selected. The Company guarantees that if at the last
death of the Annuitant and the Joint Annuitant, there have been less than 60,
120, 180, or 240 monthly Annuity Payments made as selected, monthly Annuity
Payments will continue to be made for the remainder of the guaranteed period.
Alternatively, the Contract Owner may elect to receive a lump-sum payment equal
to the present value of the guaranteed monthly Annuity Payments remaining, as of
the date the notice of the Annuitant's and Joint Annuitant's death is received
at the [Valuemark Service Center], commuted at an appropriate rate. Proof of
death of the Annuitant and Joint Annuitant and return of this Contract are
required prior to the payment of any commuted values. For a fixed annuitization,
the commutation rate will be the Statutory Calendar Year Interest Rate based on
the NAIC Standard Valuation Law for Single Premium Immediate Annuities
corresponding to the Income Date. For a variable annuitization, the commutation
rate will be the Assumed Investment Return.
During the lifetime of the Annuitant and Joint Annuitant and while the number of
Annuity Payments made is less than the guaranteed number of payments elected,
the Contract Owner electing variable annuitization may request a withdrawal
representing a partial liquidation of up to the percentage shown on the Contract
Schedule of the Total Liquidation Value. The Total Liquidation Value is equal to
the present value of the remaining guaranteed Annuity Payments, to the end of
the period certain, commuted at the AIR, less a Commutation Fee. The Commutation
Fee is a charge collected by the Company equal to a percentage of the amount
liquidated as shown on the Contract Schedule. The Company guarantees to make
this provision available to the Contract Owner at least once per Contract Year.
Partial liquidations will be processed on the next Annuity Calculation Date
following your written request. The minimum allowable partial liquidation will
be the lesser of $500 or the remaining portion of the Total Liquidation Value
available.
After a partial liquidation, the subsequent monthly Annuity Payments during the
guaranteed period certain will be reduced by the percentage of the Total
Liquidation Value liquidated, including the Commutation Fee. After the
guaranteed number of payments has been made, the number of Annuity Units used in
calculating the monthly payments will be restored to their original values as if
no liquidations had taken place.
OPTION 5 - REFUND LIFE ANNUITY. We will make monthly Annuity Payments during the
lifetime of the Annuitant ceasing with the last Annuity Payment due prior to the
Annuitant's death with a guarantee that at the Annuitant's death, you will
receive a refund. For a Fixed Annuity the amount of the refund will be any
excess of the amount of the Adjusted Contract Value applied under this Option
over the total of all Annuity Payments made under this Option. For a Variable
Annuity the amount of the refund will be the then dollar value of the number of
Annuity Units equal to (1) the Adjusted Contract Value applied to this Option
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
monthly Annuity Payment and the number of payments made. This calculation will
be based upon the assumption that the allocation of Annuity Units actually
in-force at the time of the Annuitant's death had been the allocation of Annuity
Units at issue and at all times thereafter. If the refund calculated above is
not greater than zero there will be no refund paid.
OPTION 6: SPECIFIED PERIOD CERTAIN ANNUITY: Monthly Annuity Payments are paid
for a specified period of time. The Specified Period Certain is elected by the
Contract Owner and must be specified as a whole number of years from 5 to 30. If
at the time of the last death of the Annuitant and any Joint Annuitant, the
Annuity Payments actually made have been for less than the Specified Period
Certain, then Annuity Payments will be continued thereafter to the Contract
Owner for the remainder of the Specified Period Certain. If you have selected a
variable payment option, a liquidation may be made at least once per Contract
Year up to 100% of the Total Liquidation Value in the Contract. The Total
Liquidation Value is equal to the present value of the remaining Annuity
Payments, to the end of the Specified Period Certain, commuted at the Assumed
Investment Return less a Commutation Fee. The Commutation Fee is a percentage of
the amount withdrawn as shown on the Contract Schedule. Partial liquidation will
be processed on the next Annuity Calculation Date following your written
request. The Company will require the return of the Contract prior to the
payment of the entire commuted value.
ANNUITY: If you select a Fixed Annuity, the Adjusted Contract Value is allocated
to the General Account and the Annuity is paid as a Fixed Annuity. If you select
a Variable Annuity, the Adjusted Contract Value will be allocated to the Funds
of the Variable Account in accordance with your selection, and the Annuity will
be paid as a Variable Annuity. Unless you designate another payee, you will be
the payee of the Annuity Payments. The Adjusted Contract Value will be applied
to the applicable annuity rate based upon the Annuity Option you have selected.
We may offer more favorable rates than those guaranteed here at the time your
first Annuity Payment is calculated. Where permitted, Annuity Payments will
depend on the Age and sex of the Annuitant.
FIXED ANNUITY: You may elect to have the Adjusted Contract Value applied to
provide a Fixed Annuity. The dollar amount of each Fixed Annuity Payment is
guaranteed to be at least an amount equal to the Adjusted Contract Value,
divided first by $1000 and then multiplied by the appropriate Annuity Payment
amount for each $1000 of value for the Annuity Option selected. The guaranteed
rates are based on an interest rate of 2 1/2% per year and the 1983(a)
Individual Annuity Mortality Table with mortality improvement projected 30 years
using Mortality Projection Scale G.
VARIABLE ANNUITY: You may elect to have the Adjusted Contract Value applied to
provide a Variable Annuity. Variable Annuity Payments reflect the investment
performance of the Variable Account in accordance with the allocation of the
Adjusted Contract Value to the Funds during the Annuity Period. Variable Annuity
Payments are not guaranteed as to dollar amount. On the Income Date a fixed
number of Annuity Units will be purchased as follows:
The first Annuity Payment is equal to the Adjusted Contract Value, divided first
by $1000 and then multiplied by the appropriate Annuity Payment amount for each
$1000 of value for the Annuity Option selected. In each Fund the fixed number of
Annuity Units is determined by dividing the amount of the initial Annuity
Payment determined for each Fund by the Annuity Unit value on the Income Date.
Thereafter, the number of Annuity Units in each Fund remains unchanged unless
you elect to transfer between Funds. All calculations will appropriately reflect
the Annuity Payment frequency selected.
On each subsequent Annuity Payment date, the total Annuity Payment is the sum of
the Annuity Payments for each Fund. The Annuity Payment in each Fund is
determined by multiplying the number of Annuity Units then allocated to such
Fund by the Annuity Unit value for that Fund.
On each subsequent Valuation Date, the value of an Annuity Unit is determined in
the following way:
First: The Net Investment Factor is determined as described under "Variable
Account - Net Investment Factor" above.
Second: The value of an Annuity Unit for a Valuation Period is equal to:
a. the value of the Annuity Unit for the immediately preceding Valuation
Period;
b. multiplied by the Net Investment Factor for the current Valuation
Period;
c. divided by the Assumed Net Investment Factor (see below) for the
Valuation Period.
The Assumed Net Investment Factor is equal to one plus the Assumed Investment
Return which is used in determining the basis for the purchase of an Annuity,
adjusted to reflect the particular Valuation Period. The Assumed Investment
Return that we will use is 5%. However, we may agree with you to use a different
value. The Assumed Investment Return will never exceed 7%.
GENERAL PROVISIONS
THE CONTRACT: The entire Contract consists of this Contract, and any attached
application, endorsements or riders. This Contract may be changed or altered
only by our President or Secretary. Any change, modification or waiver must be
made in writing.
NON-PARTICIPATING IN SURPLUS: This Contract does not share in any distribution
of our profits or surplus.
MISSTATEMENT OF AGE OR SEX: We may require proof of Age of the Annuitant before
making any life contingent Annuity Payment provided for by this Contract. If the
Age or sex of the Annuitant has been misstated the amount payable will be the
amount that the Contract Value would have provided at the true Age or sex.
Once Annuity Payments have begun, any underpayments will be made up in one sum
with the next Annuity Payment, and overpayments will be deducted from the future
Annuity Payments until the total is repaid.
CONTRACT SETTLEMENT: This Contract must be returned to us upon any settlement.
Prior to any settlement as a death claim, due proof of death must be submitted
to us. Any paid-up annuity, cash surrender or death benefits that may be
available are not less than the minimum benefits required by statute.
REPORTS: We will furnish you with a report showing the Contract Value at least
once each calendar year. This report will be sent to your last known address.
TAXES: Any taxes paid to any governmental entity will be charged against the
Contract Value. We will, in our sole discretion, determine when taxes have
resulted from: the investment experience of the Variable Account; receipt by us
of the Purchase Payment(s); or commencement of Annuity Payments. We may, at our
discretion, pay taxes when due and deduct that amount from the Contract Value at
a later date. Payment at an earlier date does not waive any right we may have to
deduct amounts at a later date. We reserve the right to establish a provision
for federal income taxes if we determine, in our sole discretion, that we will
incur a tax as a result of the operation of the Variable Account. We will deduct
for any income taxes incurred by it as a result of the operation of the Variable
Account whether or not there was a provision for taxes and whether or not it was
sufficient. We will deduct any withholding taxes required by applicable law.
EVIDENCE OF SURVIVAL: Where any benefits under this Contract are contingent upon
the recipient being alive on a given date, we may require proof satisfactory to
us that the condition has been met.
PROTECTION OF PROCEEDS: No Beneficiary may commute, encumber, alienate or assign
any payments under this Contract before they are due. To the extent permitted by
law, no payments will be subject to the debts, contracts or engagements of any
Beneficiary or to any judicial process to levy upon or attach the same for
payment thereof.
MODIFICATION OF CONTRACT: This Contract may be modified by us in order to
maintain compliance with state and federal law. This Contract may be changed or
altered only by our President or our Secretary. A change or alteration will be
made in writing.
INDIVIDUAL FLEXIBLE PAYMENT VARIABLE ANNUITY
NON-PARTICIPATING
Waiver of Contingent Deferred Sales Charge Endorsement
This Endorsement forms a part of the Contract to which it is attached and is
effective as of the Issue Date of the Contract. In the case of a conflict with
any provisions in the Contract, the provisions of this Endorsement will control.
The following provisions are hereby added to the Contract:
A. The Contingent Deferred Sales Charge will not apply under the following
conditions occurring after the first Contract Anniversary:
1) Nursing Home Benefit:
a) The Contract Owner or Joint Owner is confined to a Skilled
Nursing Facility or Hospital;
b) such confinement is for a period of at least 90 consecutive days;
and
c) a licensed physician certifies in writing that such continued
confinement is necessary.
A Skilled Nursing Facility is an institution which is licensed by
the state in which it is located to provide skilled nursing care,
intermediate nursing care or custodial nursing care. A Hospital
is an institution which is licensed as a hospital by the state in
which it is located, is supervised by a staff of licensed
physicians and operates primarily for the care and treatment of
sick and injured persons as inpatients for a charge.
This waiver will not apply if the Contract Owner or Joint Owner
were confined in a Skilled Nursing Facility or Hospital on the
Issue Date. Proof of confinement must be provided in a form
satisfactory to the Company.
2) Terminal Illness Benefit:
a) The Contract Owner or Joint Owner is diagnosed as having a
Terminal Illness; and
b) a licensed physician certifies in writing to such diagnosis.
Terminal Illness means an illness or physical condition which
results in the prognosis by a licensed physician that life
expectancy is 12 months or less. To utilize this benefit, you
must make a total surrender of the Contract. The Contract must be
returned to us before any proceeds will be paid.
This waiver will not apply if the Contract Owner or Joint Owner
is first diagnosed as having a Terminal Illness prior to the
Issue Date. Proof of diagnosis must be provided in a form
satisfactory to the Company.
3) Total Disability Benefit:
a) The Contract Owner or Joint Owner is disabled;
b) such disability lasts for a period of at least 90 consecutive
days; and
c) a licensed physician certifies to such disability.
Disability shall mean the inability to engage in any substantial
gainful activity by reason of any medically determinable physical
or mental impairment which can be expected to result in death or
to be of long-continued and indefinite duration. This waiver
shall not apply if the Contract Owner or Joint Owner was disabled
on the Issue Date. Proof of disability will be required in a form
satisfactory to the Company.
The proof required by the Company for any of the above benefits shall include,
but not be limited to, written certification from a licensed physician
performing within the scope of his or her license. The licensed physician must
not be the Contract Owner, Joint Owner, the Annuitant, or the spouse, parent or
child of the Contract Owner, Joint Owner or Annuitant.
B. Unemployment Benefit:
The amount of the Contract Value which can be withdrawn after the first Contract
Anniversary without incurring a Contingent Deferred Sales Charge will be
increased for one time only to 50% of the Contract Value under the following
condition:
The Contract Owner or Joint Owner is unemployed for a continuous period of at
least 90 days.
Proof of unemployment must be provided in a form satisfactory to the Company
which proof will include but not be limited to a written statement from the
applicable state unemployment agency indicating that the Contract Owner or Joint
Owner qualifies for and is receiving unemployment benefits.
Withdrawals of amounts under the Contract may be subject to a 10% tax penalty in
addition to any income taxes due. You should consult your tax advisor before
making a withdrawal.
If the Contract is owned by a non-natural person, then Contract Owner shall mean
Annuitant.
Allianz Life Insurance Company of North America
/s/ MICHAEL T. WESTERMEYER /s/ LOWELL C. ANDERSON
---------------------------- -----------------------------------------
Vice President and Secretary Chairman of the Board, President, and CEO
TRADITIONAL DEATH BENEFIT ENDORSEMENT
This Endorsement forms a part of the Contract to which it is attached and is
effective as of the Issue Date of the Contract. In the case of a conflict with
any provision in the Contract, the provisions of this Endorsement will control.
The following hereby amends and supersedes the section of the Contract entitled
"Proceeds Payable On Death - Death Benefit Amount During The Accumulation
Period."
PROCEEDS PAYABLE ON DEATH
DEATH BENEFIT AMOUNT DURING THE ACCUMULATION PERIOD: The death benefit, less any
applicable Premium Tax, is equal to the greater of:
1. The Contract Value determined as of the end of the Valuation Period during
which we received at the [Valuemark Service Center] both due proof of death
and an election of the payment method; or
2. The Guaranteed Minimum Death Benefit (GMDB) which is equal to Purchase
Payments reduced by each withdrawal's percentage of the Contract Value
withdrawn, including any Contingent Deferred Sales Charge.
If a non-natural person owns the Contract, then Contract Owner shall mean
Annuitant.
Any part of the death benefit amount that had been invested in the separate
account remains in the separate account until distribution begins. From the time
the death benefit is determined until complete distribution is made, any amount
in the separate account will be subject to investment risk, which is borne by
the Beneficiary.
Allianz Life Insurance Company of North America
/s/ MICHAEL T. WESTERMEYER /s/ LOWELL C. ANDERSON
---------------------------- -----------------------------------------
Vice President and Secretary Chairman of the Board, President, and CEO
ENHANCED DEATH BENEFIT ENDORSEMENT
This Endorsement forms a part of the Contract to which it is attached and is
effective as of the Issue Date of the Contract. In the case of a conflict with
any provision in the Contract, the provisions of this Endorsement will control.
The following hereby amends and supersedes the section of the Contract entitled
"Proceeds Payable On Death - Death Benefit Amount During The Accumulation
Period."
PROCEEDS PAYABLE ON DEATH
DEATH BENEFIT AMOUNT DURING THE ACCUMULATION PERIOD: The death benefit payable
will be the greater of 1 or 2, less any applicable Premium Tax.
1. The Contract Value, determined as of the end of the Valuation Period during
which we received at the [Valuemark Service Center] both due proof of death
and an election of the payment method.
2. The Guaranteed Minimum Death Benefit (GMDB) as defined below.
The GMDB is valued as of the date of the Contract Owner's death and is equal to
the greater of A or B.
A. 5%-Annual-Increase Amount.
On the Issue Date the 5%-Annual-Increase amount is set equal to the initial
Purchase Payment.
On every Valuation Date other than a Contract Anniversary the
5%-Annual-Increase amount is equal to the value on the Valuation Date
immediately preceding it adjusted as follows:
1) Reduced by the percentage of any Contract Value withdrawn, including
any Contingent Deferred Sales Charge.
2) Increased by any additional Purchase Payments.
On every Contract Anniversary the 5%-Annual-Increase amount is equal
to the value on the Valuation Date immediately preceding it adjusted
as follows:
1) Increased by a multiple of 1.05 if the Contract Owner's attained age
is less than 81.
2) Reduced by the percentage of any Contract Value withdrawn, including
any Contingent Deferred Sales Charge.
3) Increased by any additional Purchase Payments.
B. The greatest Anniversary Value. The Anniversary Value is equal to the
Contract Value on a Contract Anniversary, reduced by the percentage of any
Contract Value withdrawn, including any Contingent Deferred Sales Charge,
since that Contract Anniversary. Contract Anniversaries occurring on or
after the Contract Owner's 81st birthday or date of death will not be taken
into consideration in determining this benefit.
If Joint Owners are named, the Age of the oldest Contract Owner will be used to
determine the GMDB. If a non-natural person owns the Contract, then Contract
Owner shall mean Annuitant.
Any part of the death benefit amount that had been invested in the separate
account remains in the separate account until distribution begins. From the time
the death benefit is determined until complete distribution is made, any amount
in the separate account will be subject to investment risk, which is borne by
the Beneficiary.
Allianz Life Insurance Company of North America
/s/ MICHAEL T. WESTERMEYER /s/ LOWELL C. ANDERSON
---------------------------- -----------------------------------------
Vice President and Secretary Chairman of the Board, President, and CEO
TRADITIONAL INCOME BENEFIT ENDORSEMENT
This Endorsement forms a part of the Contract to which it is attached and is
effective as of the Issue Date of the Contract. In the case of a conflict with
any provision in the Contract, the provisions of this Endorsement will control.
The following hereby amends and supplements the section of the Contract entitled
"Annuity Provisions".
INCOME BENEFIT: The income benefit guarantees that the Contract Owner may
annuitize the Contract on any Contract Anniversary, beginning with the 7th
Contract Anniversary, with a payout to be determined by the greater of:
1. Current payout rates applied to the current Adjusted Contract Value; or
2. Guaranteed payout rates applied to the Guaranteed Minimum Income Benefit
(GMIB).
The GMIB is equal to Purchase Payments reduced by each withdrawal's percentage
of the Contract Value withdrawn, including any Contingent Deferred Sales Charge.
The GMIB is effective only when the Contract is annuitized within 30 days
following a Contract Anniversary.
Allianz Life Insurance Company of North America
/s/ MICHAEL T. WESTERMEYER /s/ LOWELL C. ANDERSON
---------------------------- -----------------------------------------
Vice President and Secretary Chairman of the Board, President, and CEO
ENHANCED INCOME BENEFIT ENDORSEMENT
This Endorsement forms a part of the Contract to which it is attached and is
effective as of the Issue Date of the Contract. In the case of a conflict with
any provision in the Contract, the provisions of this Endorsement will control.
The following hereby amends and supplements the section of the Contract entitled
"Annuity Provisions".
INCOME BENEFIT: The income benefit guarantees that the Contract Owner may
annuitize the Contract as of any Contract Anniversary, beginning with the 7th
Contract Anniversary, with a payout to be determined by the greater of 1 or 2.
1. Current payout rates applied to the current Adjusted Contract Value.
2. Guaranteed payout rates applied to the Guaranteed Minimum Income Benefit
(GMIB).
The GMIB is equal to the greater of A or B.
A. 5%-Annual-Increase Amount.
On the Issue Date the 5%-Annual-Increase amount is set equal to the initial
Purchase Payment.
On every Valuation Date other than a Contract Anniversary the
5%-Annual-Increase amount is equal to the value on the Valuation Date
immediately preceding it adjusted as follows:
1) Reduced by the percentage of any Contract Value withdrawn, including any
Contingent Deferred Sales Charge.
2) Increased by any additional Purchase Payments.
On every Contract Anniversary the 5%-Annual-Increase amount is equal to the
value on the Valuation Date immediately preceding it adjusted as follows:
1) Increased by a multiple of 1.05 if the Contract Owner's attained age is
less than 81.
2) Reduced by the percentage of any Contract Value withdrawn, including any
Contingent Deferred Sales Charge.
3) Increased by any additional Purchase Payments.
B. The greatest Anniversary Value. The Anniversary Value is equal to the
Contract Value on a Contract Anniversary, reduced by the percentage of any
Contract Value withdrawn, including any Contingent Deferred Sales Charge,
since that Contract Anniversary. Contract Anniversaries occurring on or
after the Contract Owner's 81st birthday or date of death will not be taken
into consideration in determining this benefit.
The GMIB is effective only when the Contract is annuitized within 30 days
following a Contract Anniversary.
If Joint Owners are named, the Age of the oldest Contract Owner will be
used to determine the GMIB. If a non-natural person owns the Contract, then
Contract Owner shall mean Annuitant.
Allianz Life Insurance Company of North America
/s/ MICHAEL T. WESTERMEYER /s/ LOWELL C. ANDERSON
---------------------------- -----------------------------------------
Vice President and Secretary Chairman of the Board, President, and CEO
CHARITABLE REMAINDER TRUST ENDORSEMENT
This Endorsement forms a part of the Contract and is effective as of the Issue
Date of the Contract. In the case of a conflict with any provision in the
Contract, the provisions of this Endorsement will control.
The following hereby amends and supersedes the section of the Contract captioned
"ANNUITY PROVISIONS - INCOME DATE".
ANNUITY PROVISIONS
INCOME DATE: You may select an Income Date at the time of issue. The Income Date
must always be the first day of a calendar month. The earliest Income Date you
can select is two years after the Issue Date. The latest Income Date you can
select is the earlier of the first day of the first calendar month following the
Annuitant's 100th birthday, or the maximum date permitted under law. You may, at
any time prior to the Income Date, change the Income Date by authorized request
30 days in advance.
The following hereby replaces the first paragraph of the section of the Contract
Schedule Page entitled "WITHDRAWALS: PARTIAL WITHDRAWAL PRIVILEGE".
WITHDRAWALS
FREE WITHDRAWAL AMOUNT: No Contingent Deferred Sales Charge will be assessed on
withdrawals not exceeding the greater of:
1) On a cumulative basis, 10% of the Purchase Payments, less any previous
Free Withdrawal Amount withdrawn during that Contract Year; or
2) Each Contract Year, any amount of the Contract Value in excess of the
total Net Purchase Payment(s) less withdrawals and any applicable
charges.
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
/s/ MICHAEL T. WESTERMEYER /s/ LOWELL C. ANDERSON
---------------------------- -----------------------------------------
Vice President and Secretary Chairman of the Board, President, and CEO
Group Pension Plan Death Benefit Endorsement
This Endorsement forms a part of the Contract to which it is attached and is
effective as of the Issue Date of the Contract. In the case of a conflict with
any provision in the Contract, the provisions of this Endorsement will control.
This Endorsement applies only to a Contract owned by a trust exempt from tax
under Section 501 of the Internal Revenue Code ("Code") on behalf of a group
pension or profit sharing plan qualified under Section 401(a) of the Code. In
such event, the trust may change the Annuitant at any time prior to the Income
Date and upon the death of the Annuitant may designate a new Annuitant and
continue the Contract in force.
Allianz Life Insurance Company of North America
/s/ MICHAEL T. WESTERMEYER /s/ LOWELL C. ANDERSON
---------------------------- -----------------------------------------
Vice President and Secretary Chairman of the Board, President, and CEO
UNISEX ENDORSEMENT
This Endorsement modifies the Contract to which it is attached for use in
connection with a retirement plan which receives favorable income tax treatment
under Sections 401, 403, 408 or 457 of the Internal Revenue Code, or where
required by state law. In the case of a conflict with any provision in the
Contract, the provisions of this Endorsement will control. The Company may
further amend the Contract from time to time to meet any requirements applicable
to such plans or laws. The effective date of this Endorsement is the Issue Date
shown on the Contract Schedule. The provisions of the Contract are modified as
follows:
1. Deleting any reference to sex; and
2. Deleting any Contract charges uniquely applicable to females. Male
Contract charge rates shall apply to both males and females; and
3. Deleting the settlement option rates applicable to males. Female
settlement option rates shall apply to both males and females.
Allianz Life Insurance Company of North America
/s/ MICHAEL T. WESTERMEYER /s/ LOWELL C. ANDERSON
---------------------------- -----------------------------------------
Vice President and Secretary Chairman of the Board, President, and CEO
Franklin Valuemark Classic
A Flexible Premium Variable Annuity
Issued by Allianz Life Insurance Company of North America DA__________
______________________________________________________________________________
1.CONTRACT OWNER Must be age 90 or younger
Name Last First Middle
________________________________________________________________________
(If the Contract Owner is a trust, please include Trust Name, Trust Date,
and the Trust Beneficial Owner(s))
Address Street Address Apartment Number
City State Zip Code
Social Security Number Date of Birth Sex ____Female
(If the Contract Owner is a ____Male
Daytime Telephone ( ) trust, list the date(s) of birth
for the beneficial owner(s))
______________________________________________________________________________
2.JOINT OWNER(Optional)
Must be age 90 or younger. Must be the Spouse of the Contract Owner.
Name Last First Middle
Social Security Number Date of Birth Sex ____Female
____Male
Daytime Telephone ( )
______________________________________________________________________________
3.ANNUITANT
Must be age 90 or younger. Must complete if different than Contract owner.
Name Last First Middle
Address Street Address Apartment Number
City State Zip Code
Social Security Number Date of Birth Sex ____Female
____Male
Daytime Telephone________________Relationship to Contract Owner____________
______________________________________________________________________________
4.BENEFICIARY(IES) DESIGNATION
Primary Beneficiary(ies): Contingent Beneficiary(ies)
(At the Contract Owner's
death, the surviving
Joint Owner becomes the
Primary Beneficiary.)
Name Name
Relationship to Contract Owner Relationship to Contract Owner
Name Name
Relationship to Contract Owner Relationship to Contract Owner
______________________________________________________________________________
5. REPLACEMENT
Is this Annuity intended to replace or change existing life insurance or
annuity? ___Yes - Please include appropriate form.
___ No
______________________________________________________________________________
6. TAX QUALIFIED PLANS
Is this annuity part of a Tax
Qualified Plan? ____ Yes ____No If yes, please select one of the following.
___IRA Transfer/Rollover ___403(b)TSA
___Regular Contribution
for Tax Year________
___Roth IRA ___401 (Corporate Plan)
___Other _______________
______________________________________________________________________________
7.PURCHASE PAYMENT
____Purchase Payment Enclosed with Application
Purchase Payment Amount $_____________________
____This contract will be funded by a 1035 Exchange, Tax Qualified
Transfer/Rollover, CD or Mutual Fund Redemption. (If checked, please
attach the appropriate forms).
______________________________________________________________________________
8.PURCHASE PAYMENT ALLOCATION
You may select up to 10 funds. Use whole percentages. The allocations
you indicate below will become your allocations on all future payments
until you notify us of a change.
CAPITAL GROWTH
___%Capital Growth Fund
___%Global Health Care
Securities Fund INCOME
___%Mutual Discovery Securities Fund ___%High Income Fund
___%Natural Resources Securities Fund ___%Templeton Global Income Securities
___%Small Cap Fund Fund
___%Templeton Developing Markets ___%U.S. Government Securities Fund
Equity Fund ___%Zero Coupon Fund 2005
___%Templeton Global Growth Fund ___%Zero Coupon Fund 2010
___%Templeton International Equity
Fund
___%Templeton International Smaller CAPITAL PRESERVATION AND INCOME
Companies Fund ___%Money Market Fund
___%Templeton Pacific Growth Fund
FIXED
GROWTH AND INCOME ___%Allianz Life Fixed Account
___%Global Utilities Securities Fund (select one of the options below)
___%Growth and Income Fund ___Dollar Cost Averaging Fixed Option
___%Income Securities Fund ___Standard Dollar Cost Averaging Option
___%Mutual Shares Securities Fund
___%Real Estate Securities Fund
___%Rising Dividends Fund
___%Templeton Global Asset Allocation ___TOTAL (Must Equal 100%)
Fund
___%Value Securities Fund
______________________________________________________________________________
9. Premier Protection Package Election
The Franklin Valuemark Classic automatically includes a basic Guaranteed Minimum
Protection Benefit that is applicable to contracts owned for the benefit of an
individual. This provides a death benefit and an income benefit (which provides
for guaranteed minimum payments during the Annuity Payment Period). This benefit
is equal to the greater of : 1)Contract Value or 2) Purchase Payments less
proportionate withdrawals. The income benefit is subject to a 7 year waiting
period.
Check the following box if you want to choose the "Premier Protection Package"
which provides both an enhanced death benefit and an enhanced income benefit. An
additional charge is assessed to the Contract Owner for this feature. Upon
making this selection, it cannot be changed. This selection can only be made at
the time of initial Purchase Payment. Refer to the Prospectus for additional
information.
___The Premier Protection Package includes both a death benefit and an income
benefit determined by the greater of: 1)Purchase Payments less proportionate
withdrawals accumulated at 5% interest on each Contract Anniversary up to the
Contract Owner's attained age of 81; or 2) The greatest Contract Anniversary
Value less proportionate withdrawals up to the Contract Owner's attained age of
81. The income benefit is subject to a 7 year waiting period.
If you do not check this box, you will NOT receive the Premier Protection
Package.
Note: Contracts that are not owned for the benefit of an individual are not
eligible for the Premier Protection Package.
______________________________________________________________________________
10. INCOME DATE
Selected Income Date ___- 01 -___ The Income Date (Annuitization Date) may be
no earlier than two years
after the Issue Date. The income date does
not take effect until at least 7 years
after the Issue Date.
______________________________________________________________________________
11.TELEPHONE AUTHORIZATION
___ I/We authorize Allianz Life Insurance Company of North America (Allianz
Life) to honor telephone instructions from the Contract Owner(s) to transfer
contract values among the funds and the fixed account and to disburse
partial surrenders.
___ I/We authorize Allianz Life Insurance Company of North America (Allianz
Life) to accept telephone instructions from the Registered Rep/Agent of Record
for this contract and/or the Representative's Assistant(s)to transfer contract
values among the funds and the fixed account.
If no selection is indicated, telephone access authorization will be permitted
for the Contract Owner only. This authorization is subject to the terms and
provisions in the contract and Prospectus. Allianz Life will employ reasonable
procedures to confirm that telephone instructions are genuine. If Allianz Life
does not, it may be liable for any losses due to unauthorized or fraudulent
transfers.
For partial withdrawals, Allianz Life's sole responsibility is to send a check
payable to the Contract Owner(s) address, or wire the proceeds to the Contract
Owner's account at a commercial bank (a savings bank may not be used) or to the
Contract Owner's account at a member firm of a national securities exchange.
______________________________________________________________________________
12. BY SIGNING BELOW, THE CONTRACT OWNER UNDERSTANDS THAT OR AGREES TO
I received a Prospectus and have determined that the variable annuity applied
for is not unsuitable for my insurance investment objectives, financial
situation, and financial needs. It is a long term commitment to meet
insurance needs and financial goals. I understand that the annuity value for
payments allocated to the variable sub-accounts may increase or decrease
depending on the contract's investment results, and that no minimum cash value
is guaranteed on the variable sub-accounts. To the best of my knowledge and
belief, all statements and answers in this application are complete and true.
It is further agreed that these statements and answers will become a part of
any contract to be issued. No representative is authorized to modify this
agreement or waive any of Allianz Life's rights or requirements.
___________________________________ ______________________________________
Contract Owner's Signature Joint Owner's Signature (or Trustee,
(or Trustee, if applicable) if applicable)
___________________________________ ______________________________________
Signed At (City, State) Date Signed
____Please send me a Statement of Additional Information
______________________________________________________________________________
13.BY SIGNING BELOW, THE REGISTERED REPRESENTATIVE/AGENT CERTIFIES THAT
- -I am NASD registered and state licensed for variable annuity contracts in the
state where this application is written and delivered; and
- -I provided the Contract Owner(s) with the most current Prospectus; and
- -To the best of my knowledge and belief, this application ___DOES___DOES NOT
involve replacement of existing life insurance or annuities. If replacement,
attach a copy of each disclosure statement and list of companies involved.
___________________________________ ______________________________________
Registered Representative Name (Print) Registered Representative Name (Print)
___________________________________ ______________________________________
Registered Representative Signature Registered Representative Signature
___________________________________ ______________________________________
Broker Dealer Name Authorized signature of Broker Dealer
if required
______________________________________________________________________________
Branch Address Branch Telephone Number
Comm: A B C D (circle one)
______________________________________________________________________________
14.MAIL APPLICATIONS TO
Allianz Life-Valuemark Service Center For Overnight Delivery:
c/o PNC Bank Allianz Life Valuemark Service Center
Box 824240 c/o PNC Bank
Philadelphia, PA 19182-4240 Attn: Box 4240
Route 38 and East Gate Drive
Moorestown, NJ 08057-4240
______________________________________________________________________________
15.HOME OFFICE USE ONLY (EXCEPT IN WV)
If Allianz Life Insurance Company of North America makes a change in this
space in order to correct any apparent errors or omissions, it will be
approved by acceptance of this contract by the Owner(s); however, any material
change must be accepted in writing by the Contract Owner(s).
