File Nos. 333-
811-05618
==============================================================================
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. 78 (X)
(Check appropriate box or boxes.)
ALLIANZ LIFE VARIABLE ACCOUNT B
-------------------------------
(Exact Name of Registrant)
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
-----------------------------------------------
(Name of Depositor)
1750 Hennepin Avenue, Minneapolis, MN 55403
------------------------------------------- -----
(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
-------------------------------------
Suzanne J. Pepin
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
================================================================================
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)
<TABLE>
<CAPTION>
<S> <C> <C>
Item No. Location
--------- -----------------------
PART A
Item 1. Cover Page . . . . . . . . . . . . . . . . . Cover Page
Item 2. Definitions . . . . . . . . . . . . . . . . Index of Terms
Item 3. Synopsis or Highlights. . . . . . . . . . . Highlights
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
</TABLE>
CROSS REFERENCE SHEET (cont'd)
(Required by Rule 495)
<TABLE>
<CAPTION>
<S> <C> <C>
Item No. Location
---------- --------------------
PART B
<PAGE>
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
</TABLE>
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.
<PAGE>
PART A
THE VARIABLE ANNUITY CONTRACT
issued by
ALLIANZ LIFE VARIABLE ACCOUNT B
and
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
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 37 Variable Options, each of which invests in one of the
Portfolios 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.
AIM VARIABLE INSURANCE FUNDS:
AIM V.I. Capital Appreciation Fund
AIM V.I. Growth Fund
AIM V.I. International Equity Fund
AIM V.I. Value Fund
THE ALGER AMERICAN FUND:
Alger American Growth Portfolio
Alger American Leveraged AllCap Portfolio
Alger American MidCap Growth Portfolio
Alger American Small Capitalization Portfolio
DAVIS VARIABLE ACCOUNT FUND, INC.:
Davis VA Financial Portfolio
Davis VA Real Estate Portfolio
Davis VA Value Portfolio
FRANKLIN TEMPLETON VARIABLE
INSURANCE PRODUCTS TRUST:
Franklin Growth and Income Securities Fund
Franklin Rising Dividends Securities Fund
Franklin Small Cap Fund
Franklin U.S. Government Fund
Mutual Discovery Securities Fund
Mutual Shares Securities Fund
Templeton Developing Markets Securities Fund
Templeton Growth Securities Fund
Templeton Pacific Growth Securities Fund
JP MORGAN SERIES TRUST II:
J.P. Morgan International Opportunities Portfolio
J.P. Morgan U.S. Disciplined Equity Portfolio
OPPENHEIMER VARIABLE ACCOUNT FUNDS:
Oppenheimer Global Securities Fund/VA
Oppenheimer High Income Fund/VA
Oppenheimer Main Street Growth & Income Fund/VA
PIMCO VARIABLE INSURANCE TRUST:
PIMCO VIT High Yield Bond Portfolio
PIMCO VIT StocksPLUS Growth and Income Portfolio
PIMCO VIT Total Return Bond Portfolio
SELIGMAN PORTFOLIOS, INC.:
Seligman Global Technology Portfolio
Seligman Small-Cap Value Portfolio
USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST:
USAllianz VIP Diversified Assets Fund
USAllianz VIP Fixed Income Fund
USAllianz VIP Global Opportunities Fund
USAllianz VIP Growth Fund
USAllianz VIP Money Market Fund
VAN KAMPEN LIFE INVESTMENT TRUST:
Van Kampen LIT Enterprise Portfolio
Van Kampen LIT Growth and Income Portfolio
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.
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 __________ __, 2000.
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 1-800-542-5427 or write us at: 1750 Hennepin Avenue, Minneapolis,
Minnesota 55403-2195.
The Variable Annuity Contracts:
o are not bank deposits
<PAGE>
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
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: _________ __, 2000.
<PAGE>
TABLE OF CONTENTS
Index of Terms 4
Summary 5
Fee Table 7
1. The Variable Annuity Contract 16
Ownership 16
Contract Owner 16
Joint Owner 16
Annuitant 16
Beneficiary 16
Assignment 17
2. Annuity Payments (The Payout Phase) 17
Income Date 17
Annuity Payments 17
Annuity Options 17
Idea(R)Benefit under Lifetime Annuity
Options
3. Purchase 20
Purchase Payments 20
Allocation of Purchase Payments 20
Free Look 20
Accumulation Units 21
<PAGE>
4. Investment Options 21
Transfers 23
Dollar Cost Averaging Program 24
Flexible Rebalancing 24
Financial Advisers - Asset
Allocation Programs 24
Voting Privileges 25
Substitution 25
5. Expenses 25
Mortality and Expense Risk Charge 25
Minimum Value Benefit Protection (MVBP)
Charge 25
Contract Maintenance Charge 25
Withdrawal Charge 26
Partial Withdrawal Privilege 26
Waiver of Withdrawal Charge Benefits 26
Reduction or Elimination of the
Withdrawal Charge 27
Commutation Fee 27
Transfer Fee 27
Premium Taxes 27
Income Taxes 27
Portfolio Expenses 27
6. Taxes 27
Annuity Contracts in General 27
Qualified and Non-Qualified Contracts 28
Multiple Contracts 28
Withdrawals-- Non-Qualified Contracts 28
Withdrawals-- Qualified Contracts 29
Withdrawals-- Tax-Sheltered Annuities 29
Diversification 29
7. Access to Your Money 30
Systematic Withdrawal Program 30
Minimum Distribution Program 30
Suspension of Payments or Transfers 30
8. Performance 31
9. Death Benefit 31
Upon Your Death 31
Guaranteed Minimum Death Benefits (GMDB)
Death Benefit Protection 31
The Return of Principal Guaranteed
Minimum Death Benefit 31
The Double Principal Guaranteed
Minimum Death Benefit 32
The Earnings Protection Guaranteed
Minimum Death Benefit
Death Benefit Options 32
<PAGE>
Death of Annuitant 33
10. Minimum Value Protection Benefit (MVPB)
Guaranteed Principal Protection Benefit
(GP Protection)
Enhanced Benefit: Guaranteed Performance
Protection Benefit (EGP Protection)
11. Other Information 33
Allianz Life 33
The Separate Account 33
Distribution 33
Administration 34
Financial Statements 34
Table of Contents of the Statement of
Additional Information 34
Appendix 35
<PAGE>
INDEX OF TERMS
-------------------------------------------------------------------------------
This prospectus is written in plain English to make it as understandable as
possible. However, there are some technical words or 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 16
Accumulation Unit 21
Annuitant 16
Annuity Options 17
Annuity Payments 17
Annuity Unit 21
Beneficiary 16
Contract 16
Contract Owner 16
Fixed Account 16
Income Date 17
Investment Class
Joint Owner 16
Minimum Value Protection Benefit (MVPB)
Asset Allocation Model
Net Adjusted Purchase Payments
Non-Qualified 28
Payout Phase 17
<PAGE>
Portfolios 21
Purchase Payment 20
Qualified 28
Target Value
Tax Deferral 28
Variable Option 21
<PAGE>
SUMMARY
--------------------------------------------------------------------------------
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 37 Variable Options
and the Allianz Life Fixed Account. The Contract is intended for retirement
savings or other long-term investment purposes.
The Contract includes a Return of Principal Guaranteed Minimum Death Benefit
(Return of Principal GMDB). Or if you prefer, you can choose one of two enhanced
death benefits:
o Double Principal Guaranteed Minimum Death Benefit (Double Principal GMDB)
o Earnings Protection Guaranteed Minimum Death Benefit (Earnings Protection
GMDB)
In addition, the Contract includes a Guaranteed Principal Protection Benefit (GP
Protection), or if you prefer, you can elect the Enhanced Benefit - Guaranteed
Performance Protection (EGP Protection).
The GMDB feature provides for a guaranteed death benefit. The GP Protection and
EGP Protection feature provides a guaranteed minimum value that you can access
after the fifth Contract year, regardless of your actual Contract value.
ANNUITY PAYMENTS: If you want to receive regular income from your annuity, you
can choose an Annuity Option at any time after the 5th Contract anniversary. You
can choose whether to have payments come from our Fixed 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. If you select a lifetime income
Annuity Option (Options 1 to 5), the amount available for Annuity Payments is
105% at least of the Contract value, less any premium tax and the pro-rata
Minimum Value Protection Benefit (MVPB) charge.
<PAGE>
PURCHASE: You can buy the Contract with $10,000 or more. Additional Purchase
Payments of $250 or more may be made at any time within the first 6 months from
the date the Contract is issued. The maximum total Purchase Payments you can put
in your Contract without our prior approval is $1,000,000 (including amounts you
have already invested in other Allianz Life variable annuities).
INVESTMENT OPTIONS: You can put your money in up to 10 of the Variable Options
and/or you can invest in the Allianz Life Fixed Account allocated as you choose
(referred to as self-directed asset allocation method). Or, if you prefer, you
may choose to participate in the MVPB Asset Allocation Model which will be
rebalanced quarterly. The investment returns on the Portfolios are not
guaranteed. You can lose money. You can make transfers between investment
options as permitted.
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. Allianz Life currently waives this charge if the value of your
Contract is at least $50,000.
Each year, Allianz Life also deducts a MVPB charge during the Accumulation Phase
as a percentage of your Contract value at the end of the Contract year. The
current percentage will not be greater than 2% if you use the MVPB Asset
Allocation Model. Otherwise, it will not be greater than 3%.
Allianz Life deducts a mortality and expense risk charge which varies depending
upon the GMDB and MVPB you choose. The table below shows the combinations
available to you and their charges during the Accumulation Phase, as a
percentage of the average daily value of the Contract value invested in the
Variable Options.
<TABLE>
<CAPTION>
------------------------------- ----------------------------- ----------------------------- --------------------------
Return of Principal GMDB Double Principal GMDB Earnings Protection GMDB
------------------------------- ----------------------------- ----------------------------- --------------------------
------------------------------- ----------------------------- ----------------------------- --------------------------
<S> <C> <C> <C>
GP Protection 1.50% 1.70% 1.70%
------------------------------- ----------------------------- ----------------------------- --------------------------
------------------------------- ----------------------------- ----------------------------- --------------------------
EGP Protection 1.80% 2.00% 2.00%
------------------------------- ----------------------------- ----------------------------- --------------------------
</TABLE>
If you take money out of the Contract, Allianz Life may assess a withdrawal
<PAGE>
charge. The withdrawal charge starts at 8.5% in the first Contract year and
declines to 0% after 8 complete Contract years. (A different withdrawal charge
applies to liquidations from Annuity Option 6 during the Payout Phase.)
You can currently 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
0.60% to 1.81% 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 withdrawal 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 on a variable
payout basis. Money you take out during the Payout Phase may be subject to a
commutation fee for Annuity Options 2 and 4 and a withdrawal charge for Annuity
Option 6.
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 Return of Principal GMDB, the Double
Principal GMDB or The Earnings Protection GMDB.
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.
INQUIRIES: If you have any questions about your Contract or need more
information, please contact us at:
USAllianz Service Center
300 Berwyn Park
P.O. Box 3031
Berwyn, PA 19312-0031
1-800-624-0197
<PAGE>
FEE TABLE
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
<TABLE>
<CAPTION>
Withdrawal Charge* - During Accumulation Phase Withdrawal Charge - During Payout
(as a percentage of total purchase payments) Phase
(as a percentage of
amount liquidated
under Annuity
Option 6, which can
begin no earlier
than 5 complete
Contract years from
Contract issue)
NUMBER OF COMPLETE NUMBER OF COMPLETE
CONTRACT YEARS CONTRACT YEARS
SINCE ISSUE DATE CHARGE SINCE ISSUE DATE CHARGE
-------------------------- ------------------------------------
<S> <C> <C> <C> <C>
0 8.5% 5 4.0%
1 8.0% 6 3.0%
2 7.0% 7 2.0%
3 6.0% 8 years or more 0.0%
4 5.0%
5 4.0%
6 3.0%
7 2.0%
8 years or more 0.0%
</TABLE>
Commutation Fee - During Payout Phase
(as a percentage of amount liquidated
under Annuity Option 2 or 4)
NUMBER OF COMPLETE
YEARS SINCE
INCOME DATE CHARGE
----------------------------
0 7%
1 6%
2 5%
3 4%
4 3%
5 2%
6 years or more 1%
Transfer Fee First 12 transfers in a Contract year are currently free.
Thereafter, the fee is $25. Dollar Cost Averaging transfers,
Flexible Rebalancing transfers and quarterly rebalancing
transfers are not currently counted.
CONTRACT MAINTENANCE CHARGE** $40 per Contract per year
Minimum Value Protection Benefit (MVPB) Charge (as a percentage of the end of
year Contract value charged annually during the Accumulation Phase on the last
day of each Contract year):
o If the MVPB Asset Allocation Model is used: Current charge is not more than
2%.
o If asset allocation is self directed: Current charge is not more than 3%.
<PAGE>
SEPARATE ACCOUNT ANNUAL EXPENSES
Mortality and Expense Risk Charge***
(collected as a percentage of average daily account value in the Variable
Options)
<TABLE>
<CAPTION>
------------------------------- ----------------------------- ----------------------------- --------------------------
Return of Principal GMDB Double Principal GMDB Earnings Protection GMDB
------------------------------- ----------------------------- ----------------------------- --------------------------
------------------------------- ----------------------------- ----------------------------- --------------------------
<S> <C> <C> <C>
GP Protection 1.50% 1.70% 1.70%
------------------------------- ----------------------------- ----------------------------- --------------------------
------------------------------- ----------------------------- ----------------------------- --------------------------
EGP Protection 1.80% 2.00% 2.00%
------------------------------- ----------------------------- ----------------------------- --------------------------
</TABLE>
* You may make partial withdrawals up to 10% of Purchase Payments in each of
the first 5 Contract years and 20% of Purchase Payments in any year after 5
Contract years and no withdrawal charge will be assessed. See "Access to
Your Money" for additional options.
** The charge is waived if the value of your Contract is at least $50,000. 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
$50,000, the charge is waived on all of your Contracts.
<PAGE>
*** The mortality and expense risk charge during the Payout Phase is charged
daily at an annual rate of 1.50% of average daily account value in the
Variable Options, regardless of which benefits you selected.
<TABLE>
<CAPTION>
FUND ANNUAL EXPENSES
------------------------------------------------------------------------------------------------------------------------------------
(as a percentage of a Portfolio's average daily net assets for the most recent
fiscal year). See the Portfolio prospectuses for more information.
TOTAL FUND
OTHER EXPENSES EXPENSES
(AFTER WAIVERS/ (AFTER WAIVERS/
MANAGEMENT 12B-1 REIMBURSEMENTS REIMBURSEMENTS
PORTFOLIO FEES FEES AS NOTED) AS NOTED)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AIM V.I. Capital Appreciation Fund .62% -- .11% .73%
AIM V.I. Growth Fund .63% -- .10% .73%
AIM V.I. International Equity Fund .75% -- .22% .97%
AIM V.I. Value Fund .61% -- .15% .76%
Alger American Growth Portfolio .75% -- .04% .79%
Alger American Leveraged AllCap Portfolio1 .85% -- .08% .93%
Alger American MidCap Growth Portfolio .80% -- .05% .85%
Alger American Small Capitalization Portfolio .85% -- .05% .90%
Davis VA Financial Portfolio2 .75% -- .25% 1.00%
Davis VA Real Estate Portfolio2 .75% -- .25% 1.00%
Davis VA Value Portfolio2 .75% -- .25% 1.00%
Franklin Growth and Income Securities Fund, Class 2 3 .47% .25% .02% .74%
Franklin Rising Dividends Securities Fund, Class 2 3 .73% .25% .02% 1.00%
Franklin Small Cap Fund, Class 2 3/4/5 .55% .25% .27% 1.07%
Franklin U.S. Government Fund, Class 2 3 .49% .25% .02% .76%
J.P. Morgan International Opportunities Portfolio6 .60% -- .60% 1.20%
J.P. Morgan U.S. Disciplined Equity Portfolio6 .35% -- .50% .85%
Mutual Discovery Securities Fund, Class 2 3/5 .80% .25% .21% 1.26%
Mutual Shares Securities Fund, Class 2 3/5/7 .60% .25% .19% 1.04%
Oppenheimer Global Securities Fund/VA .67% -- .02% .69%
Oppenheimer High Income Fund/VA .74% -- .01% .75%
Oppenheimer Main Street Growth & Income Fund/VA .73% -- .05% .78%
PIMCO VIT High Yield Bond Portfolio8 .25% -- .50% .75%
PIMCO VIT StocksPLUS Growth and Income Portfolio8 .40% -- .25% .65%
PIMCO VIT Total Return Bond Portfolio8 .25% -- .40% .65%
Seligman Global Technology Portfolio9 1.00% -- .40% 1.40%
Seligman Small-Cap Value Portfolio9 1.00% -- .00% 1.00%
<PAGE>
Templeton Developing Markets Securities Fund, Class 2 3/5/10 1.25% .25% .31% 1.81%
Templeton Growth Securities Fund, Class 2 3/11 .83% .25% .05% 1.13%
Templeton Pacific Growth Securities Fund, Class 2 3 1.00% .25% .08% 1.33%
USAllianz VIP Diversified Assets Fund12 .55% .25% .20% 1.00%
USAllianz VIP Fixed Income Fund12 .50% .25% .00% .75%
USAllianz VIP Global Opportunities Fund12 .95% .25% .31% 1.51%
USAllianz VIP Growth Fund12 .65% .25% .00% .90%
USAllianz VIP Money Market Fund12 .35% .25% .30% .90%
Van Kampen LIT Enterprise Portfolio13 .48% -- .12% .60%
Van Kampen LIT Growth & Income Portfolio13 .43% -- .32% .75%
</TABLE>
1. The Alger American Leveraged AllCap Portfolio's "Other Expenses" includes
.01% of interest expense.
2. Without reimbursement, other expenses and total operating expenses would have
been 3.49% and 4.24%, respectively for the Davis VA Financial Portfolio, 10.95%
and 11.7%, respectively for the Davis VA Real Estate Portfolio, and 1.54% and
2.29%, respectively for the Davis VA Value Portfolio.
3. For the Portfolios of Franklin Templeton Variable Insurance Products Trust,
Class 2 shares have a distribution plan which is referred to as a rule 12b-1
plan. While the maximum amount payable under the fund's Class 2 rule 12b-1 plan
is 0.35% per year of the fund's average daily net assets, the Board of Trustees
of Franklin Templeton Variable Insurance Products Trust has set the current rate
at 0.25% per year. See "Fund Account Policies" in the Franklin Templeton
Variable Insurance Products Trust prospectus for more information about the rule
12b-1 plan.
4. On 2/8/00, a merger and reorganization was approved that combined the assets
of the fund with a similar fund of the Templeton Variable Products Series Fund,
effective 5/1/00. On 2/8/00, fund shareholders approved new management fees,
which apply to the combined fund effective 5/1/00. The table shows restated
total expenses based on the new fees and assets of the fund as of 12/31/99, and
not the assets of the combined fund. However, if the table reflected both the
new fees and the combined assets, the fund's expenses after 5/1/00 would be
estimated as: Management Fees 0.55%, Distribution and Service Fees 0.25%, Other
Expenses 0.27%, and Total Fund Operating Expenses 1.07%.
5. The Franklin Small Cap Fund, the Mutual Discovery Securities Fund, the Mutual
Shares Securities Fund, and the Templeton Developing Markets Securities Fund
incur a portfolio administration fee as a direct expense of the portfolio. Other
Portfolios of Franklin Templeton Variable Insurance Products Trust pay for
similar services indirectly through the Management Fee.
6. Without reimbursement, other expenses and total operating expenses would
have been 1.38% and 1.98%, respectively for the J.P. Morgan International
Opportunities Portfolio and 0.52% and 0.87%, respectively for the J.P.
Morgan U.S. Disciplined Equity Portfolio.
7. On 2/8/00, a merger and reorganization was approved that combined the fund
with a similar fund of Templeton Variable Products Series Fund, effective
5/1/00. The table shows total expenses based on the fund's assets as of
12/31/99, and not the assets of the combined fund. However, if the table
reflected combined assets, the fund's expenses after 5/1/00 would be estimated
as: Management Fees 0.60%, Distribution and Service Fees 0.25%, Other Expenses
0.19%, and Total Fund Operating Expenses 1.04%.
8. "Other Expenses" reflect a 0.35% administrative fee for the PIMCO High Yield
Bond Portfolio, a 0.10% administrative fee for the PIMCO StocksPLUS Growth and
Income Portfolio, and a 0.25% administrative fee and 0.04% representing
organizational expenses and pro rata Trustees' fees for the Total Return Bond
Portfolio. PIMCO has contractually agreed to reduce total annual portfolio
operating expenses to the extent they would exceed, due to the payment of
organizational expenses and Trustees' fees, 0.75%, 0.65% and 0.65%,
respectively, of average daily net assets for the PIMCO High Yield, StocksPLUS
Growth and Income and Total Return Portfolios. Without such reductions, Total
Annual Expenses for the fiscal year ended December 31, 1999 would have been
0.75%, 0.65% and 0.69%, respectively. Under the Expense Limitation Agreement,
PIMCO may recoup these waivers and reimbursements in future periods, not
exceeding three years, provided total expenses, including such recoupment, do
not exceed the annual expense limit.
9. J. & W. Seligman & Co. Incorporated ("Seligman") voluntarily agreed to
reimburse expenses of Seligman Global Technology Portfolio, other than the
management fee, which exceed 0.40%, and to reimburse all expenses of Seligman
Small-Cap Value Portfolio, other than management fees, which exceed 1.00%.
Without reimbursement, other expenses and total operating expenses would have
been 0.41% and 1.41%, respectively, for Seligman Global Technology Portfolio,
and 0.41% and 1.41% respectively, for Seligman Small-Cap Value Portfolio. There
is no assurance that Seligman will continue this policy in the future.
10. On 2/8/00, shareholders approved a merger and reorganization that combined
the fund with the Templeton Developing Markets Equity Fund, effective 5/1/00.
The shareholders of that fund had approved new management fees, which apply to
the combined fund effective 5/1/00. The table shows restated total expenses
based on the new fees and the assets of the fund as of 12/31/99, and not the
assets of the combined fund. However, if the table reflected both the new fees
and the combined assets, the fund's expenses after 5/1/00 would be estimated as:
Management Fees 1.25%, Distribution and Service Fees 0.25%, Other Expenses
0.29%, and Total Fund Operating Expenses 1.79%.
11. On 2/8/00, a merger and reorganization was approved that combined the fund
with a similar fund of Templeton Variable Products Series Fund, effective
5/1/00. The table shows total expenses based on the fund's assets as of
12/31/99, and not the assets of the combined fund. However, if the table
reflected combined assets, the fund's expenses after 5/1/00 would be estimated
as: Management Fees 0.80%, Distribution and Service Fees 0.25%, Other Expenses
0.05%, and Total Fund Operating Expenses 1.10%.
12. Certain expenses of the USAllianz VIP Funds have been assumed by the
Adviser. Had those expenses no been assumed, total return would have been lower
and total fund expenses would have been 3.80% for the Diversified Assets Fund,
<PAGE>
3.77% for the Fixed Income Fund, 2.59% for the Global Opportunities Fund
(estimated for 2000), 3.90% for the Growth Fund, and 1.91% for the Money Market
Fund (estimated for 2000). The USAllianz VIP Diversified Assets Fund, USAllianz
VIP Fixed Income Fund and the USAllianz VIP Growth Fund commenced operations on
November 12, 1999, and the USAllianz VIP Global Opportunities Fund and the
USAllianz VIP Money Market Fund commenced operations on January 13, 2000. The
expenses shown for these portfolios are therefore estimated for the current
fiscal year.
13. If certain expenses had not been assumed by the Adviser, total return would
have been lower and total fund expenses would have been 0.62% for the Van Kampen
LIT Enterprise Portfolio and 0.92% for the Van Kampen LIT Growth and Income
Portfolio.
<PAGE>
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."
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on your money if you make a complete withdrawal at the end of each
time period for Contracts with:
(a) the Return of Principal GMDB and GP Protection (based on the lowest
mortality and expense risk charge of 1.50%)using the MVPB Asset Allocation
Model
(b) the Double Principal GMDB or Earnings Protection GMDB and the EGP
Protection (based on the highest mortality and expense risk charge of
2.00%) using a self-directed asset allocation method
<TABLE>
<CAPTION>
VARIABLE OPTION 1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------------------------------------------------------------------------------------------------------------
<S> <C>
AIM V.I. Capital Appreciation Fund (a)$ (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
AIM V.I. Growth Fund (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
AIM V.I. International Equity Fund (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
AIM V.I. Value Fund (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
Alger American Growth Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
Alger American Leveraged AllCap Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
Alger American MidCap Growth Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
Alger American Small Capitalization Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
Davis VA Financial Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
Davis VA Real Estate Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
--------------------------------------------------------------------------------------------------------------
Davis VA Value Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
--------------------------------------------------------------------------------------------------------------
Franklin Growth and Income Securities Fund (a) (a) (a) (a)
(b) (b) (b) (b)
--------------------------------------------------------------------------------------------------------------
Franklin Rising Dividends Securities Fund (a) (a) (a) (a)
(b) (b) (b) (b)
--------------------------------------------------------------------------------------------------------------
Franklin Small Cap Fund (a) (a) (a) (a)
(b) (b) (b) (b)
--------------------------------------------------------------------------------------------------------------
Franklin U.S. Government Fund (a) (a) (a) (a)
(b) (b) (b) (b)
--------------------------------------------------------------------------------------------------------------
J.P. Morgan International Opportunities Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
--------------------------------------------------------------------------------------------------------------
<PAGE>
J.P. Morgan U.S. Disciplined Equity Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
--------------------------------------------------------------------------------------------------------------
Mutual Discovery Securities Fund (a) (a) (a) (a)
(b) (b) (b) (b)
--------------------------------------------------------------------------------------------------------------
Mutual Shares Securities Fund (a) (a) (a) (a)
(b) (b) (b) (b)
--------------------------------------------------------------------------------------------------------------
Oppenheimer Global Securities Fund/VA (a) (a) (a) (a)
(b) (b) (b) (b)
--------------------------------------------------------------------------------------------------------------
Oppenheimer High Income Fund/VA (a) (a) (a) (a)
(b) (b) (b) (b)
--------------------------------------------------------------------------------------------------------------
Oppenheimer Main Street Growth & Income Fund/VA (a) (a) (a) (a)
(b) (b) (b) (b)
--------------------------------------------------------------------------------------------------------------
PIMCO VIT High Yield Bond Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
--------------------------------------------------------------------------------------------------------------
PIMCO VIT StocksPLUS Growth and Income Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
--------------------------------------------------------------------------------------------------------------
PIMCO VIT Total Return Bond Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
--------------------------------------------------------------------------------------------------------------
Seligman Global Technology Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
--------------------------------------------------------------------------------------------------------------
Seligman Small-Cap Value Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
--------------------------------------------------------------------------------------------------------------
Templeton Developing Markets Securities Fund (a) (a) (a) (a)
(b) (b) (b) (b)
--------------------------------------------------------------------------------------------------------------
Templeton Growth Securities Fund (a) (a) (a) (a)
(b) (b) (b) (b)
--------------------------------------------------------------------------------------------------------------
Templeton Pacific Growth Securities Fund (a) (a) (a) (a)
(b) (b) (b) (b)
--------------------------------------------------------------------------------------------------------------
USAllianz VIP Diversified Assets Fund (a) (a) (a) (a)
(b) (b) (b) (b)
--------------------------------------------------------------------------------------------------------------
USAllianz VIP Fixed Income Fund (a) (a) (a) (a)
(b) (b) (b) (b)
--------------------------------------------------------------------------------------------------------------
USAllianz VIP Global Opportunities Fund (a) (a) (a) (a)
(b) (b) (b) (b)
--------------------------------------------------------------------------------------------------------------
USAllianz VIP Growth Fund (a) (a) (a) (a)
(b) (b) (b) (b)
--------------------------------------------------------------------------------------------------------------
USAllianz VIP Money Market Fund (a) (a) (a) (a)
(b) (b) (b) (b)
--------------------------------------------------------------------------------------------------------------
Van Kampen LIT Enterprise Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
--------------------------------------------------------------------------------------------------------------
Van Kampen LIT Growth & Income Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
--------------------------------------------------------------------------------------------------------------
</TABLE>
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on your money if you do not make a complete withdrawal or if you
apply your Contract value to an Annuity Option for Contracts with:
(a) the Return of Principal GMDB and GP Protection (based on the lowest
mortality and expense risk charge of 1.50%) using the MVPB Asset
Allocation Model
(b) the Double Principal GMDB or Earnings Protection GMDB and the EGP
Protection (based on the highest mortality and expense risk charge of
2.00%) using a self-directed asset allocation method
<TABLE>
<CAPTION>
VARIABLE OPTION 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AIM V.I. Capital Appreciation Fund (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
AIM V.I. Growth Fund (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
AIM V.I. International Equity Fund (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
AIM V.I. Value Fund (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
Alger American Growth Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
Alger American Leveraged AllCap Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
Alger American MidCap Growth Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
Alger American Small Capitalization Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
Davis VA Financial Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
Davis VA Real Estate Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
Davis VA Value Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
Franklin Growth and Income Securities Fund (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
Franklin Rising Dividends Securities Fund (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
Franklin Small Cap Fund (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
Franklin U.S. Government Fund (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
J.P. Morgan International Opportunities Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
J.P. Morgan U.S. Disciplined Equity Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
Mutual Discovery Securities Fund (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
Mutual Shares Securities Fund (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
Oppenheimer Global Securities Fund/VA (a) (a) (a) (a)
(b) (b) (b) (b)
--------------------------------------------------------------------------------------------------------------
Oppenheimer High Income Fund/VA (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
Oppenheimer Main Street Growth and Income Fund/VA (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
PIMCO VIT High Yield Bond Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
PIMCO VIT StocksPLUS Growth & Income Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
PIMCO VIT Total Return Bond Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
Seligman Global Technology Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
Seligman Small-Cap Value Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
Templeton Developing Markets Securities Fund (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
Templeton Growth Securities Fund (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
Templeton Pacific Growth Securities Fund (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
USAllianz VIP Diversified Assets Fund (a) (a) (a) (a)
(b) (b) (b) (b)
--------------------------------------------------------------------------------------------------------------
USAllianz VIP Fixed Income Fund (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
USAllianz VIP Global Opportunities Fund (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
USAllianz VIP Growth Fund (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
USAllianz VIP Money Market Fund (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
Van Kampen LIT Enterprise Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
Van Kampen LIT Growth & Income Portfolio (a) (a) (a) (a)
(b) (b) (b) (b)
---------------------------------------------------------------------------------------------------------------
</TABLE>
1.THE VARIABLE ANNUITY CONTRACT
-------------------------------------------------------------------------------
This prospectus describes a variable deferred annuity Contract with a Fixed
Account offered by Allianz Life. All references in this prospectus to "we,"
"us," and "our" refer to Allianz Life.
o A deferred annuity Contract means that Annuity Payments do not begin until
a specified period of time in the future (usually when you retire) or until
you reach a certain age.
o A variable annuity is one in which Contract values and/or 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 five years after you
buy the Contract. Until you decide to begin receiving Annuity Payments, your
Contract 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 38 investment choices -- the 37 Variable Options, each of which invests
in one Portfolio, 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. The Portfolios are designed to offer a better
return than the Fixed Account. However, this is not guaranteed.
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 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.
Allianz Life 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 designated at the time the Contract is issued,
unless changed. You may change Contract Owners at any time unless you selected
the Double Principal GMDB or the Earnings Protection GMDB. If either of these
GMDB's are chosen, we have the right to accept the change subject to our
underwriting rules at that time. Any 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. Joint Owners can also be
changed under the same conditions as described for a Contract Owner.
ANNUITANT. The Annuitant is the natural person on whose life we base Annuity
Payments. You name the 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 as 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.
2.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 5 Contract years after you buy the Contract.
You can choose an Annuity Option and Income Date at any time after the 5th
<PAGE>
Contract anniversary. 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.
ANNUITY PAYMENTS
If you select a lifetime income Annuity Option (Options 1 to 5), the amount
available for Annuity Payments is 105% of the greater of the Contract value or
the GP Protection or EGP Protection account (as applicable) on the Income Date,
less any premium tax and pro-rata MVPB charge.
The amount available for Annuity Payments under Annuity Option 6 is the greater
of the Contract value or the GP Protection or EGP Protection account (as
applicable) on the Income Date, less any premium tax and pro-rata MVPB charge.
You may elect to receive your Annuity Payments as:
o a variable payout,
o a fixed payout, or
o 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. After the Income Date, you will not be able to make a transfer from
a Fixed Annuity Option to a Variable Annuity Option (but can do the reverse).
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 amount available and the Annuity Option selected for Annuity Payments
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 5% and 7% AIRs are not
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 can change your Annuity Option at
<PAGE>
any time before the Income Date with 30 days notice to us. After Annuity
Payments begin, you cannot change the Annuity Option.
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 proof
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). You will be allowed to make a partial liquidation at least once
per Contract year after the Income Date. The liquidation value is equal to the
present value of the remaining guaranteed number of Annuity Payments based on
the Annuity Payment's current value, to the end of the period certain, commuted
at the selected AIR. The total of all partial liquidations, measured as the sum
of the percentages of the total liquidation value at the time of each partial
liquidation, cannot exceed 75%. A commutation fee will be subtracted from the
amount liquidated before the proceeds are paid out. Partial liquidations will be
processed within seven days after your written request is received. The minimum
allowable partial liquidation will be the lesser of $500 or the remaining
portion of the liquidation value available.
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 can be equal
to 100%, 75% or 50% of the amount that was being paid when both Annuitants were
alive. You select the percentage at the time of annuitization. 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 proof of the
Annuitant's death, commuted as set forth in the Contract.
During the lifetime of the Annuitant or 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). You will be allowed to make a partial
liquidation at least once per Contract year after the Income Date. The
liquidation value is equal to the present value of the remaining guaranteed
number of Annuity Payments based on the Annuity Paymment's current value, to the
end of the period certain, commuted at the selected AIR. The total of all
partial liquidations, measured as the sum of the percentages of the total
liquidation value at the time of each partial liquidation, cannot exceed 75%. A
commutation fee will be subtracted from the amount liquidated before the
proceeds are paid out. Partial liquidations will be processed within seven days
after your written request is received. The minimum allowable partial
liquidation will be the lesser of $500 or the remaining portion of the
liquidation value available.
OPTION 5. REFUND LIFE ANNUITY. Under this option, we will make monthly Annuity
Payments during the Annuitant's lifetime. If the value of the Annuity Payments
made at the time proof of the Annuitant's death is received is less than the
value applied to the Annuity Option, then you will receive a refund.
For a fixed Annuity Option, the amount of the refund will be any excess of the
amount applied to this Annuity Option over the total of all payments made under
this option. For a variable Annuity Option, the amount of the refund will be the
then value of the number of Annuity Units equal to (1) the value applied to this
Annuity Option divided by the value of Annuity Units used to determine the first
Annuity Payment, minus (2) the product of the number of Annuity Units of each
Annuity Payment and the number of payments made.
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 later of the 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 within seven days after your
written request is received, reduced as set forth in the Contract.
IDEA(R)BENEFIT UNDER LIFETIME ANNUITY OPTIONS
If you choose a lifetime Annuity Option (Options 1 to 5) and you are also the
Annuitant, you may be eligible for increased Annuity Payments if you become
disabled. If the Contract is owned by Joint Owners, then one of the owners must
be the Annuitant in order to qualify for this benefit. If the Contract is owned
by Joint Owners or by a non-natural person, then all references to you mean the
Annuitant.
<PAGE>
This benefit may not be available or may be restricted in some states. (Check
with your registered representative).
To receive increased Annuity Payments, you must become disabled before your 81st
birthday and in most states, disability must occur at least two years after the
Income Date. Benefits will continue as long as the impairment lasts. The benefit
is a constant percentage of the basic Annuity Payment. If you elected to receive
payments on a fixed basis, the basic Annuity Payment is the current Annuity
Payment. If you elected to receive payments on a variable basis, the basic
Annuity Payment is the number of Annuity Units in the current Annuity Payment
multiplied by the value of the Annuity Unit on the Income Date.
The amount of the increased payment is 30% or 60%, depending on the level of
impairment, as described in the Contract. The levels are defined by the amount
of help you need to perform daily activities, as set forth in your Contract.
To request increased Annuity Payments, we must receive a completed request form
which details the level of impairment as explained in your Contract.
If a request is approved, benefits will begin with the first Annuity Payment
made 90 days after the request is filed.
3.PURCHASE
--------------------------------------------------------------------------------
PURCHASE PAYMENTS
A Purchase Payment is the money you invest in the Contract. The Purchase
Payment requirements are:
o the minimum initial payment Allianz Life will accept is $10,000.
o the maximum amount Allianz Life will accept without its prior approval is
$1 million (including amounts already invested in other Allianz Life
variable annuities).
o you can make additional Purchase Payments of $250 or more during the first
6 months after your Contract is issued. After the first 6 months, you may
no longer add money to your 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 cannot be older than 75 years old.
This product is not designed for professional market timing organizations, other
entities, or persons using programmed, large or frequent transfers.
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 may elect to allocate your Purchase Payments according to the MVPB Asset
Allocation Model (see Section 10 - Minimum Value Protection Benefit).
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 withdrawal
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 USAllianz VIP 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 charges 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:
<PAGE>
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 mortality and expense
risk charge and any charges for taxes.
The value of an Accumulation Unit may go up or down from business day to
business 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 Alger American Growth Portfolio. 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 Alger American
Growth Portfolio is $13.25. We then divide $3,000 by $13.25 and credit your
Contract on Wednesday night with 226.41509 Accumulation Units.
4.INVESTMENT OPTIONS
-------------------------------------------------------------------------------
The Contract offers Variable Options. Each Variable Option invests in one of the
Portfolios listed below. Each Portfolio has its own investment objective. The
Contract also offers a Fixed Account of Allianz Life. Additional Portfolios may
be available in the future.
YOU SHOULD READ THE FUND PROSPECTUSES CAREFULLY. Copies of these prospectuses
will be sent to you with your Contract. See the Appendix which contains a
summary of investment objectives for each Portfolio.
Investment advisers for each Portfolio are listed in the table below. Certain
advisers have retained one or more subadvisers to help them manage the
Portfolios.
The investment objectives and policies of certain Portfolios are similar to the
investment objectives and policies of other mutual funds that certain of the
same investment advisers manage. Although the objectives and policies may be
similar, the investment results of the Portfolios may be higher or lower than
the results of such other mutual funds. The investment advisers cannot
guarantee, and make no representation, that the investment results of similar
funds will be comparable even though the Portfolios have the same investment
advisers.
A Portfolio's performance may be affected by risks specific to certain types of
investments, such as foreign securities, derivative investments, non-investment
grade debt securities, initial public offerings (IPOs) or companies with
relatively small market capitalizations. IPOs and other investment techniques
may have a magnified performance impact on a Portfolio with a small asset base.
A Portfolio may not experience similar performance as its assets grow.
The following is a list of the Portfolios available under the Contract and the
investment advisers for each Portfolio:
<TABLE>
<CAPTION>
AVAILABLE PORTFOLIOS INVESTMENT ADVISERS
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AIM VARIABLE INSURANCE FUNDS:
AIM V.I. Capital Appreciation Fund A I M Advisors, Inc.
AIM V.I. Growth Fund A I M Advisors, Inc.
AIM V.I. International Equity Fund A I M Advisors, Inc.
AIM V.I. Value Fund A I M Advisors, Inc.
THE ALGER AMERICAN FUND:
Alger American Growth Portfolio Fred Alger Management, Inc.
Alger American Leveraged AllCap Portfolio Fred Alger Management, Inc.
(seeks long-term capital appreciation)
Alger American MidCap Growth Portfolio Fred Alger Management, Inc.
Alger American Small Capitalization Portfolio Fred Alger Management, Inc.
DAVIS VARIABLE ACCOUNT FUND, INC.:
Davis VA Financial Portfolio Davis Selected Advisers, LP
Davis VA Real Estate Portfolio Davis Selected Advisers, LP
Davis VA Value Portfolio Davis Selected Advisers, LP
FRANKLIN TEMPLETON VARIABLE INSURANCE
PRODUCTS TRUST:
Franklin Growth and Income Securities Fund Franklin Advisers, Inc.
Franklin Rising Dividends Securities Fund Franklin Advisory Services, LLC
Franklin Small Cap Fund Franklin Advisers, Inc.
Franklin U.S. Government Fund Franklin Advisers, Inc.
Mutual Discovery Securities Fund
(capital appreciation) Franklin Mutual Advisers, LLC
Mutual Shares Securities Fund Franklin Mutual Advisers, LLC
(capital appreciation with income
as a secondary goal)
Templeton Developing Markets Securities Fund Templeton Asset Management Ltd.
Templeton Growth Securities Fund Templeton Global Advisors Limited
Templeton Pacific Growth Securities Fund Franklin Advisers, Inc.
JP MORGAN SERIES TRUST II:
J.P. Morgan International Opportunities Portfolio J.P. Morgan Investment Management Inc.
J.P. Morgan U.S. Disciplined Equity Portfolio J.P. Morgan Investment Management Inc.
OPPENHEIMER VARIABLE ACCOUNT FUNDS:
Oppenheimer Global Securities Fund/VA OppenheimerFunds, Inc.
Oppenheimer High Income Fund/VA OppenheimerFunds, Inc.
Oppenheimer Main Street Growth & Income Fund/VA OppenheimerFunds, Inc.
PIMCO VARIABLE INSURANCE TRUST:
PIMCO VIT High Yield Bond Portfolio Pacific Investment Management Company
PIMCO VIT StocksPLUS Growth and Income Portfolio Pacific Investment Management Company
PIMCO VIT Total Return Bond Portfolio Pacific Investment Management Company
SELIGMAN PORTFOLIOS, INC.:
Seligman Global Technology Portfolio J. & W. Seligman & Co. Incorporated
Seligman Small-Cap Value Portfolio J. & W. Seligman & Co. Incorporated
USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST:
USAllianz VIP Diversified Assets Fund Allianz of America, Inc.
USAllianz VIP Fixed Income Fund Allianz of America, Inc.
USAllianz VIP Global Opportunities Fund Allianz of America, Inc.
USAllianz VIP Growth Fund Allianz of America, Inc.
USAllianz VIP Money Market Fund Allianz of America, Inc.
VAN KAMPEN LIFE INVESTMENT TRUST:
Van Kampen LIT Enterprise Portfolio
(seeks capital appreciation) Van Kampen Asset Management Inc.
Van Kampen LIT Growth and Income Portfolio Van Kampen Asset Management Inc.
</TABLE>
Shares of the Portfolios may be offered in connection with certain variable
annuity contracts and variable life insurance policies of various insurance
companies which may or may not be affiliated with Allianz Life. Certain
Portfolios may also be sold directly to qualified plans. The investment advisers
believe that offering their shares in this manner will not be disadvantageous to
you.
Allianz Life may enter into certain arrangements under which it is reimbursed by
the Portfolios' advisers, distributors and/or affiliates for the administrative
services which it provides to the Portfolios.
TRANSFERS
You can transfer money among the Variable Options and/or the Fixed Account. If
you are using an MVPB Asset Allocation Model, transfers are subject to
additional restrictions (see Section 10 - Minimum Value Protection Benefit).
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 investment adviser'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,
Flexible Rebalancing or quarterly rebalancing associated with the MVPB
Asset Allocation Model (which are described below and in Section 10 -
Minimum Value Protection Benefit).
2. We may not allow you to make transfers during the free look period.
3. Your request for a transfer must clearly state:
o which Variable Option(s) and/or the Fixed Account is involved in the
transfer; and
o 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 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 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 Variable Options and could include, but is not
limited to:
o the requirement of a minimum time period between each transfer;
o not accepting a transfer request from an agent acting under a power of
attorney on behalf of more than one Contract Owner; or
o 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 (available only if you do not use the MVPB
Asset Allocation Model or the Flexible Rebalancing 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. It requires a $6,000 minimum
investment and participation for at least twelve months. 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:
o the number of desired transfers have been made;
o 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);
o you request to terminate the program (your request must be received by us
by the first of the month to terminate that month); or
o 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
If you are not using the MVPB Asset Allocation Model and you are not
participating in the Dollar Cost Averaging Program, you may choose to have us
rebalance your account. 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 currently 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. This is a different program
from the MVPB Asset Allocation Model. You can not participate in both an asset
allocation program with your financial adviser and the MVPB Asset Allocation
Model. However, you may participate in the MVPB Asset Allocation Model under the
direction of your financial adviser.
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 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, it will vote the shares in its 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.
5.EXPENSES
-------------------------------------------------------------------------------
There are charges and other expenses associated with the Contract that will
reduce your investment return. These charges and expenses are:
MORTALITY AND EXPENSE RISK CHARGE. Each day, Allianz Life makes a deduction for
its mortality and expense risk. Allianz Life does this as part of its
calculation of the value of the Accumulation Units and the Annuity Units. The
amount of the mortality and expense risk charge depends on whether you select
the Return of Principal GMDB, the Double Principal GMDB, the Earnings Protection
GMDB, the GP Protection or the EGP Protection.
This charge is assessed as a percentage of the average daily value of the
Contract value invested in a Variable Option. The table below shows the annual
charge applicable to your Contract during the Accumulation Phase as determined
by the combination of benefits.
<TABLE>
<CAPTION>
------------------------------- ----------------------------- ----------------------------- --------------------------
Return of Principal GMDB Double Principal GMDB Earnings Protection GMDB
------------------------------- ----------------------------- ----------------------------- --------------------------
------------------------------- ----------------------------- ----------------------------- --------------------------
<S> <C> <C> <C>
GP Protection 1.50% 1.70% 1.70%
------------------------------- ----------------------------- ----------------------------- --------------------------
------------------------------- ----------------------------- ----------------------------- --------------------------
EGP Protection 1.80% 2.00% 2.00%
------------------------------- ----------------------------- ----------------------------- --------------------------
----------------------------------------------------------------------------------------------------------------------
</TABLE>
During the Payout Phase, the mortality and expense risk charge is equal to 1.50%
of the average daily value of the Contract invested in the Variable Options,
regardless of which benefits you selected.
This charge compensates us for the insurance benefits provided by your Contract
(for example, our contractual obligation to make Annuity Payments, the death
benefits, MVPB benefits, certain expenses including sales 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).
MINIMUM VALUE PROTECTION BENEFIT (MVPB) CHARGE
The charge is a percentage of your Contract value, assessed on the last day of
each Contract year during the Accumulation Phase. We will deduct the charge,
adjusted for the number of calendar days the MVPB coverage was in place
(referred to as pro-rata), if you surrender your Contract, when death benefits
are paid, when you begin to receive Annuity Payments or when your GP Protection
or EGP Protection account drops to zero or less. If your GP or EGP Protection
account is zero or less for the entire Contract year, the MVPB charge will be
zero. This charge is deducted from the Variable Options and the Fixed Account
proportionally based on the total Contract value.
This charge will differ, largely depending on your Target Value. Your Target
Value in the first Contract year is the accumulated value of your Purchase
Payments, less partial withdrawals, at an annual rate specified in the Contract.
In subsequent Contract years, the Target Value is the Contract value at the end
of the prior Contract year, less partial withdrawals made in the Contract Year,
accumulated at an annual rate of 10% to the end of the Contract year.
The annual rate is currently set at 10%, less the mortality and expense risk
charge. We may set a higher rate than 10% for new Contracts issued prior to May
1, 2001. If we raise the annual rate, the Target Value will be higher and the
charge is assessed in fewer instances. This rate is guaranteed for the first 10
Contract years. We can change this rate for new Contracts and for Contract years
after the tenth year. This rate will never be less than 5%. We can also change
the number of years for which the rate is guaranteed for new Contracts.
The charge is as follows:
If the following situation occurs Then your percentage charge is...
------------------------------------ ---------------------------------
If your Contract value is less than your 0%
Target Value
If you are using the MVPB Asset Allocation Model and
your Contract value is 100% to 102% of the percentage excess of your
your Target Value Contract value over your
Target Value (0 to 2%)
your Contract value is greater than 102% 2%
of your Target Value
If you are not using the MVPB Asset Allocation Model and
your Contract value is 100% to 103% of the percentage excess of your
your Target Value Contract value over your
Target Value (0 to 3%)
your Contract value is greater than 103% 3%
of your Target Value
This charge compensates us for the guarantee that a minimum value is available
to you, regardless of your actual Contract value (see Section 10 - MVPB Minimum
Value Protection Benefit).
The following examples are to help you understand how the MVPB charge is
determined. The facts assumed in the examples are purely hypothetical and are
for illustration purposes only.
Example
o You purchased a Contract with a $100,000 Purchase Payment on June 1, 2000
o Your Contract has the GP Protection benefit and the Return of Principal
GMDB (which means the mortality and expense risk charge is 1.50%)
o You are using an MVPB Asset Allocation Model
o Your Contract value increases to $110,000 on your first anniversary, June
1, 2001
We calculate your MVPB charge on June 1, 2001 as follows:
We first calculate your Target Value as
Purchase Payment accumulated at
the annual rate less the mortality and expense risk charge $108,500
Since your Contract value of $110,000
is 101.85% of your Target Value,
your MVPB percentage charge is 1.85%
Your MVPB charge is 110,000 x .0185 $2,035.
CONTRACT MAINTENANCE CHARGE
On each Contract anniversary, Allianz Life deducts $40 from your Contract as a
contract maintenance charge. The charge 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).
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, in most states, the charge will be collected monthly out of
each Annuity Payment.
However, if the value of your Contract is at least $50,000 when the deduction
for the charge is to be made during the Accumulation Phase, 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 $50,000, Allianz Life will not assess the contract
maintenance charge. Currently, the charge is also waived during the Payout Phase
if the value of your Contract at the Income Date is $50,000. 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.
WITHDRAWAL CHARGE
Withdrawals may be subject to a withdrawal charge.
<TABLE>
<CAPTION>
During the Accumulation Phase, you can During the Payout Phase under Annuity
make withdrawals from your Contract. Option 6, if you choose to make a
The charge is: withdrawal from Annuity Option 6, (which
can begin no earlier than 5
complete Contract years from
Contract issue), your withdrawal
charge is as follows:
NUMBER OF COMPLETE NUMBER OF COMPLETE
CONTRACT YEARS CONTRACT YEARS
SINCE ISSUE DATE CHARGE SINCE ISSUE DATE CHARGE
-------------------------- ------------------------------------
<S> <C> <C> <C> <C>
0 8.5% 5 4.0%
1 8.0% 6 3.0%
2 7.0% 7 2.0%
3 6.0% 8 years or more 0.0%
4 5.0%
5 4.0%
6 3.0%
7 2.0%
8 years or more 0.0%
</TABLE>
<PAGE>
However, there is no charge when you make a withdrawal from your Contract after
your 8th Contract anniversary. Allianz Life does not assess the withdrawal
charge on any payments paid out as Annuity Payments or as death benefits. The
withdrawal charge compensates Allianz Life for expenses associated with selling
the Contract.
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, you can make multiple
withdrawals up to 10% of Purchase Payments during the first five Contract years
and 20% of Purchase Payments after five complete Contract years and no
withdrawal charge will be deducted from this amount. If you make a withdrawal of
more than the amount described above, the excess amount will be subject to the
withdrawal charge. If you make a total withdrawal, Allianz Life will assess the
withdrawal 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 withdrawal charge under certain circumstances. See
"Access to Your Money" for a description of the Systematic Withdrawal Program
and the Minimum Distribution Program.
WAIVER OF WITHDRAWAL 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 withdrawal charge if you or the Joint Owner become
confined to a nursing home or hospital for 90 consecutive days.
The waiver will not apply if you were confined to a nursing home or hospital on
the date your Contract was issued.
This benefit may not be available in your state. (Check with your registered
representative.)
REDUCTION OR ELIMINATION OF THE WITHDRAWAL CHARGE. Allianz Life may reduce or
eliminate the amount of the withdrawal 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 withdrawal 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 withdrawal 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 withdrawal
charge.
COMMUTATION FEE
If you elect Annuity Option 2 or 4 and make a liquidation, a commutation fee
will be assessed. The fee is a percentage of the amount liquidated and is equal
to:
NUMBER OF COMPLETE
YEARS SINCE COMMUTATION
INCOME DATE FEE
----------------------------------------------
0 7%
1 6%
2 5%
3 4%
4 3%
5 2%
6 years or more 1%
TRANSFER FEE
You can currently 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 or to 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 or quarterly
rebalancing under the MVPB Asset Allocation Model, it will not currently 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 or Contract value, 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 prospectuses for the Funds.
<PAGE>
6.TAXES
-------------------------------------------------------------------------------
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).
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.
A Qualified Contract will not provide any necessary or additional Tax Deferral
if it is used to fund a Qualified plan that is Tax Deferred. However, the
Contract has features and benefits other than Tax Deferral that may make it an
appropriate investment for a Qualified plan. You should consult your tax adviser
regarding these features and benefits prior to purchasing a 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
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 from your Contract, the Code treats such a
withdrawal as first coming from earnings and then from your Purchase Payments.
You will be taxed on the amount of the withdrawal that is earnings. In most
cases, such withdrawn earnings are included in income. 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.
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 591/2 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
If you make a withdrawal from your Qualified Contract, a portion of the
<PAGE>
withdrawal is treated as taxable income. This portion depends on the ratio of
pre-tax Purchase Payments to the after-tax Purchase Payments in your Contract.
If all of your Purchase Payments were made with pre-tax money then the full
amount of any withdrawal is includible in taxable income. Special rules may
apply to withdrawals from certain types of Qualified Contracts.
The Code also provides that any amount received under a Qualified Contract,
which is included in income, may be subject to a 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 you reach age 59 1/2;
2) paid after you die;
3) paid if you become totally disabled (as that term is defined in the Code);
4) paid to you after leaving your employment in a series of substantially
equal periodic payments made annually (or more frequently) under a lifetime
annuity;
5) paid to you after you have attained age 55 and you have left your
employment;
6) paid for certain allowable medical expenses (as defined in the Code);
7) paid pursuant to a qualified domestic relations order;
8) paid on account of an IRS levy upon the Qualified Contract;
9) paid from an IRA for medical insurance (as defined in the Code);
10) paid from an IRA for qualified higher education expenses; or
11) paid from an IRA for up to $10,000 for qualified first-time homebuyer
expenses (as defined in the Code).
The exceptions in 5) and 7) above do not apply to IRAs. The exception in 4)
above applies to IRAs but without the requirement of leaving employment.
We have provided a more complete discussion 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.
DEATH BENEFITS/MINIMUM VALUE GUARANTEES
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.
Any amounts credited to the Contract value under a minimum value guarantee in
the Endorsement to the Contract will be treated for tax purposes as 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.
7.ACCESS TO YOUR MONEY
------------------------------------------------------------------------------
You can have access to the money in your Contract:
o by making a partial or total withdrawal;
o by receiving Annuity Payments; or
o 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 variable 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 USAllianz Service Center:
o less any applicable withdrawal charge;
o less any premium tax;
o less any contract maintenance charge; and
o less any pro-rated MVPB 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 withdrawal charge is limited to 10% of your
Purchase Payments during the first 5 Contract years and 20% of your Purchase
Payments after 5 complete Contract years. This is determined on the last
business day prior to the day your request is received. 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.
<PAGE>
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. Such withdrawals
will not be subject to a withdrawal charge. Payments may be made monthly,
quarterly, or annually unless your Contract is less than $25,000 in which case
the payments will only be made annually. If you have elected the Minimum
Distribution Program, any additional withdrawals in a Contract year which exceed
the Partial Withdrawal Privilege when combined with Minimum Distribution
withdrawals will be subject to any applicable withdrawal charge.
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.
8.PERFORMANCE
-------------------------------------------------------------------------------
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 mortality and expense risk
charges and the Portfolio expenses. It does not reflect the deduction of any
applicable withdrawal charge, MVPB charge and contract maintenance charge. The
deduction of any applicable contract maintenance charges, MVPB charges and
withdrawal 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 mortality and expense risk
charges, contract maintenance charges, MVPB charges, withdrawal 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 fund prospectuses 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.
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.
Allianz Life may advertise the MVPB with illustrations showing how the MVPB
works either with historical performance of specific Portfolios or with a
hypothetical return (which rate will not exceed 12%). These illustrations may
include hypothetical Contract values, full and partial withdrawal values, death
benefits, GP Protection or EGP Protection accounts. These values will be
calculated reflecting the deduction of Portfolio expenses for specific
Portfolios, mortality and expense risk charges, contract maintenance charges,
and MVPB charges. For withdrawal values, the withdrawal charges are also
reflected.
Any performance advertised will be based on historical data. It does not
guarantee future results of the Portfolios.
9.DEATH BENEFIT
-------------------------------------------------------------------------------
UPON YOUR DEATH
If you or your Joint Owner 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 DEATH BENEFITS (GMDB) - DEATH BENEFIT PROTECTION
At time of application, you must select one of the following death benefits:
o Return of Principal GMDB
o Double Principal GMDB
o Earnings Protection GMDB.
If the Contract is not owned by a natural person or a trust for the benefit of a
natural person, then the GMDB benefits are not available. In such case, the
death benefit will be the Contract value (less any taxes owed, less any
pro-rated MVPB charge) as of the day all claim proofs and payment election forms
are received at the USAllianz Service Center.
Once the Contract is issued, this selection cannot be changed. The mortality and
expense risk charges are higher for the Double Principal GMDB or the Earnings
Protection GMDB. Please refer to the Contract and applicable endorsements in
your Contract for specific terms and conditions of the death benefits. THE
DOUBLE PRINCIPAL GMDB OR THE EARNINGS PROTECTION GMDB MAY NOT BE AVAILABLE IN
YOUR STATE. CHECK WITH YOUR REGISTERED REPRESENTATIVE REGARDING AVAILABILITY.
THE RETURN OF PRINCIPAL GUARANTEED MINIMUM DEATH BENEFIT
If you select the Return of Principal GMDB, we will pay your Beneficiary the
greater of the following amounts, less any applicable premium tax and pro-rata
MVPB charge:
o The Contract value at the end of the business day when all claim proofs and
payment election forms are received by Allianz Life at the USAllianz
Service Center; or
o The Purchase Payments you made, reduced by "adjusted partial withdrawals".
In the first five Contract years, an "adjusted partial withdrawal" is the
partial withdrawal (including any withdrawal charges) multiplied by the ratio of
(a) to (b), where
(a) is the death benefit on the date of (but prior to) the partial withdrawal;
and
(b) is the Contract value on the date of (but prior to) the partial
withdrawal.
After the first five Contract years, an "adjusted partial withdrawal" is equal
to (a) plus (b), where
(a) is the partial withdrawal amount (including any withdrawal charges) without
adjustment, if total partial withdrawals (including any withdrawal charges) in
the Contract year do not exceed 20% of Net Adjusted Purchase Payment; and
(b) is the partial withdrawal amount in excess of (a), adjusted in the same
manner as described above for partial withdrawals in the first five Contract
years.
Net adjusted Purchase Payment is the sum of Purchase Payments less partial
withdrawals adjusted in the same manner as above except that the Net Adjusted
Purchase Payment is used in place of the death benefit in the calculation. The
Net Adjusted Purchase Payment does not change after the fifth Contract
anniversary.
The following examples are to help you understand how the Return of Principal
GMDB is determined. The facts assumed in the examples are purely hypothetical
and are for illustration purposes only.
<PAGE>
Examples:
o You purchased a Contract with a payment of $100,000 on January 1, 2001
o On March 1, 2008, your Contract value increases to $160,000.
<TABLE>
<CAPTION>
We calculate the death benefit on March 1, 2008 as
<S> <C> <C>
The greater of the Purchase Payments paid of $100,000
Or, the Contract value of $160,000 $160,000.
========
Example with partial withdrawal:
o On June 1, 2007, your Contract value grows to $150,000. Your death benefit
is $150,000. You take a partial withdrawal of $25,000 (including withdrawal
charges), leaving a Contract value of $125,000.
o On March 1, 2008, your Contract value increases to $130,000.
We calculate the death benefit on March 1, 2008 as follows:
We first calculate the Net Adjusted Purchase Payment on the fifth Contract anniversary as
the purchase payments paid $100,000
minus any "adjusted partial withdrawal" 0
for the Net Adjusted Purchase Payment $100,000
========
We calculate the death benefit on March 1, 2008, as
the purchase payments $100,000
minus any "adjusted partial withdrawals" in the first five
Contract years $ 0
minus any "adjusted partial withdrawals" after the first five years
calculated as (a) + (b), where
(a) the lesser of the partial withdrawal of $25,000
or 20% of 100,000 = 20,000
(b) the adjusted excess of the partial withdrawal over (a)
(25,000-20,000) x death benefit/Contract value
= $ 5,000 $ 25,000
for a Return of Principal GMDB of $ 75,000
========
Your death benefit is the greater of the Contract value of $130,000
or the Return of Principal GMDB $130,000.
========
</TABLE>
THE DOUBLE PRINCIPAL GUARANTEED MINIMUM DEATH BENEFIT
If you select the Double Principal GMDB, we will pay your Beneficiary the
greatest of the following amounts, less any applicable premium tax and pro-rata
MVPB charge:
o The Contract value at the end of the business day when all claim proofs and
payment election forms are received by Allianz Life at the USAllianz
Service Center; or
o The greatest Contract value at Contract issue and on each Contract
anniversary, reduced by subsequent "adjusted partial withdrawals"; or
o After the first 5 Contract years, twice the total amount of Purchase
Payments reduced by "adjusted partial withdrawals," on the date of death.
The following examples are to help you understand how the Double Principal GMDB
is determined. The facts assumed in the examples are purely hypothetical and are
for illustration purposes only.
Examples:
o You purchase a Contract with a payment of $100,000 on January 1, 2001.
o Your greatest Contract value on each Contract anniversary is $120,000.
o On March 1, 2008, your Contract value increases to $160,000.
We calculate your death benefit on March 1, 2008 as the greatest of:
<TABLE>
<CAPTION>
<S> <C> <C>
Your Contract value on March 1, 2008 or $160,000
Your greatest Contract value on each Contract anniversary or $120,000
2 x your Purchase Payments of $100,000 $200,000
For a death benefit of $200,000.
===============
</TABLE>
Example with partial withdrawal:
o You purchase a Contract with a payment of $100,000 on February 1, 2001.
o Your greatest Contract value on each Contract anniversary is $120,000.
o On June 1, 2007, your Contract value grows to $150,000. Your death benefit
is $200,000. You take a partial withdrawal (including withdrawal charges)
of $25,000, leaving a Contract value of $125,000.
o On March 1, 2008, your Contract value increases to $130,000.
We calculate your death benefit on March 1, 2008 as follows
<TABLE>
<S> <C> <C>
o Your Contract value on March 1, 2008 $130,000
o Your greatest Contract value on each Contract anniversary is $120,000
minus any "adjusted partial withdrawals" after the first five years
calculated as (a) + (b), where
(a) the lesser of the partial withdrawal of $25,000
or 20% of 100,000 = 20,000
(b) the adjusted excess of the partial withdrawal over (a)
= ( 25,000 - 20,000) x 200,000/150,000
= $6,666.67 $ 26,666.67
for the adjusted value to be $ 93,333.33
===========
o Your Purchase Payments $100,000
minus "adjusted partial withdrawals" after the 5th year
calculated as above $ 26,666.67
results in $ 73,333.33
times 2 $146,666.66
============
Your death benefit is $146,666.66
============
</TABLE>
THE EARNINGS PROTECTION GUARANTEED MINIMUM DEATH BENEFIT
If you select the Earnings Protection GMDB, we will pay your Beneficiary the
greater of the following amounts, less any applicable premium tax and pro-rata
MVPB charge:
o The total amount of Purchase Payments reduced by "adjusted partial
withdrawals"
o The result of (a) plus (b), where
(a)is the value of your Contract value at the end of the business day when
all claim proofs and payment election forms are received by Allianz
Life at the USAllianz Service Center; and
(b)is 40% of the excess of (i) over (ii), where
<PAGE>
(i) is the lesser of Contract value under (a) or the maximum assumed
accumulation value; and
(ii) is the total Purchase Payments.
Maximum assumed accumulation value is the accumulated value of all Purchase
Payments less partial withdrawals at an annual rate of 15% through the earlier
of your death or the anniversary after your 80th birthday. After that
anniversary, the maximum assumed accumulation value decreases by any subsequent
partial withdrawals.
The following examples are to help you understand how the Earnings Protection
GMDB is determined. The facts assumed in the examples are purely hypothetical
and are for illustration purposes only.
Examples:
--------
o You purchased a Contract with a payment of $100,000 on January 1, 2001
o You are 60 years old on January 1, 2001
o On March 1, 2008, your Contract value increases to $160,000.
<TABLE>
<CAPTION>
<S> <C>
We calculate your death benefit on March 1, 2008 as
The greater of your Purchase Payments $100,000
========
Or the result of the following calculation:
The lesser of the Contract value of $160,000 or
the maximum assumed accumulation value of $272,270.90 $160,000.00
Minus total Purchase Payments of $100,000 $100,000.00
The result times 40% = 60,000 x .4 $ 24,000
Plus your Contract value of $160,000 $184,000
========
For a death benefit of $184,000.
========
</TABLE>
Example with partial withdrawal:
o On June 1, 2007, your Contract value grows to $150,000. You take a partial
withdrawal (including any withdrawal charges) of $25,000, leaving a
Contract value of $125,000.
o On March 1, 2008, your Contract Value increases to $130,000.
<PAGE>
We calculate the death benefit on March 1, 2008 as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
We calculate the total amount of Purchase Payments less "adjusted
partial withdrawals" in the same manner as indicated in
the Return of Principal GMDB Example on March 1, 2008 $ 75,000
========
We calculate the maximum assumed accumulation value
as the accumulated purchase payments
minus the accumulated withdrawals $244,508.09.
We take the lesser of the maximum assumed accumulation
value of $244,508.09 and Contract value of $130,000 $130,000
minus Purchase Payments $100,000
the result times 40% = 30,000 x .4 $ 12,000
We add this amount to the Contract Value of $130,000 $142,000.
========
Your death benefit is the Earnings Protection GMDB, calculated as
the greater of $75,000 or $142,000 $142,000
========
</TABLE>
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 older 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.
DEATH BENEFIT OPTIONS:
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: 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 a 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.
10. MINIMUM VALUE PROTECTION BENEFIT (MVPB)
The Minimum Value Protection Benefit provides that a minimum value is available
to you after the fifth Contract year regardless of your Contract value. At time
of application, you must select one of the following:
o The Guaranteed Principal Protection Benefit (GP Protection), or
o The Enhanced Benefit: Guaranteed Performance Protection Benefit (EGP
Protection).
If the Contract is not owned by a natural person or a trust for the benefit of a
natural person, then the GP Protection and EGP Protection benefits are not
available.
You cannot change this selection after the Contract is issued. You can terminate
your MVPB within 30 days after the first Contract anniversary, the tenth
Contract anniversary and every ten years after that. If you do so, your MVPB
charge will no longer be assessed. If you had selected the EGP Protection, your
mortality and expense risk charge will decrease to 1.50% with the Return of
Principal GMDB or 1.70% with the Double Principal GMDB or Earnings Protection
GMDB.
Please refer to the endorsements to your Contract for the specific terms and
conditions of the GP Protection and EGP Protection.
You can elect to be in an asset allocation model (MVPB Asset Allocation Model).
This can be built to fit your investment profile. You can also choose the
Portfolios within the same Investment Class that best suit your needs. Quarterly
rebalancing automatically occurs on March 15, June 15, September 15 and December
15 to maintain your allocations within the model. If these days do not fall on a
business day, the rebalancing will take place on the next business day.
We can change the percentages within the MVPB Asset Allocation Model. You will
be notified of this change if your current model needs to be adjusted to fit the
new model.
Currently, there are six Investment Classes into one of which each Portfolio is
assigned. The number and description of these classes can be changed in the
future. These Investment Classes are as follows:
<TABLE>
<CAPTION>
Investment Class Portfolio
---------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Aggressive Growth AIM V.I. Capital Appreciation Fund
Alger American Leveraged AllCap Portfolio
Alger American Small Capitalization Portfolio
Franklin Small Cap Fund
Seligman Global Technology Portfolio
Seligman Small-Cap Value Portfolio
International Growth AIM V.I. International Equity Fund
J.P. Morgan International Opportunities Portfolio
Mutual Discovery Securities Fund
Oppenheimer Global Securities Fund/VA
Templeton Developing Markets Securities Fund
Templeton Growth Securities Fund
Templeton Pacific Growth Securities Fund
USAllianz VIP Global Opportunities Fund
Domestic Growth AIM V.I. Growth Fund
AIM V.I. Value Fund
Alger American Growth Portfolio
Alger American MidCap Growth Portfolio
Davis VA Financial Portfolio
Davis VA Value Portfolio
USAllianz VIP Growth Fund
Van Kampen LIT Enterprise Portfolio
Growth and Income Davis VA Real Estate Portfolio
Franklin Growth and Income Securities Fund
Franklin Rising Dividends Securities Fund
J.P. Morgan U.S. Disciplined Equity Portfolio
Mutual Shares Securities Fund
Oppenheimer Main Street Growth & Income Fund/VA
PIMCO VIT StocksPLUS Growth and Income Portfolio
USAliianz VIP Diversified Assets Fund
Van Kampen LIT Growth and Income Portfolio
Bonds Franklin U.S. Government Fund
Oppennheimer High Income Fund/VA
PIMCO VIT High Yield Bond Portfolio
PIMCO VIT Total Return Bond Portfolio
Conservative Fixed Income. USAllianz VIP Fixed Income Fund
USAllianz VIP Money Market Fund
Fixed Account
</TABLE>
You can change your MVPB Asset Allocation Model. You can also opt out of the
MVPB Asset Allocation Model. If you do so, you will not be able to opt into the
MVPB Asset Allocation Model again.
If you are using the MVPB Asset Allocation Model, you can make transfers among
the Portfolios within each Investment Class. If you make a transfer, rebalancing
will be done according to your original allocations unless you request a change
in asset allocation. If you transfer money from a Portfolio in an Investment
Class to a Portfolio in another Investment Class and your current asset
allocation no longer fits within the model, you will have moved out of the MVPB
Asset Allocation Model.
Your MVPB charges are lower if you are using the MVPB Asset Allocation Model. If
you move out of the MVPB Asset Allocation Model, you will be asked to confirm
the transaction and acknowledge the increase in the MVPB charge. The increased
charge will be effective on your next Contract anniversary.
<PAGE>
If you are using the MVPB Asset Allocation Model, you will not be able to
participate in the Dollar Cost Averaging Program or Flexible Rebalancing
Program.
Guaranteed Principal Protection Benefit (GP Protection)
The GP Protection provides the following benefits after the fifth Contract year:
(1) Each year, you may take up to 20% of your Net Adjusted Purchase Payment in
partial withdrawals (without any withdrawal charges), until your GP
Protection account is exhausted;
(2) You can choose to start receiving income from any of the Annuity Options,
with the amount available to purchase the option equal to at least your GP
Protection account (or 105% of your GP Protection account, if a lifetime
Annuity Option is selected), less applicable premium taxes and pro-rata
MVPB charges;
(3) On the tenth anniversary and every ten years after that, your Contract
value will be increased to the GP Protection account amount, if greater.
Your GP Protection account is established on the fifth Contract anniversary with
an amount equal to the Net Adjusted Purchase Payment at that time. This account
is then reduced by "GP Protection adjusted partial withdrawals", calculated in
the same manner as the "adjusted partial withdrawals" except that the greater of
the Contract value and the GP Protection account is used in place of the death
benefit in the calculation.
The following example is to help you understand how the GP Protection benefit is
determined. The facts assumed in the example are purely hypothetical and are for
illustration purposes only.
Example:
o You purchased a Contract with a payment of $100,000 on January 1, 2001
o On January 1, 2006, your Contract value increases to $150,000. You take a
partial withdrawal of $25,000, leaving a Contract value of $125,000.
o On January 1, 2011, your Contract value is $50,000.
On January 1, 2011, your GP Protection account is calculated as follows:
Your GP Protection account on the 5th Contract anniversary $100,000
Minus "GP Protection adjusted partial withdrawals"
As calculated in the Return of Principal GMDB Example: 25,000
Resulting in $ 75,000
=========
Because this value is greater than your Contract value, your Contract value is
increased to $75,000 on January 1, 2011.
<PAGE>
Enhanced Benefit: Guaranteed Performance Protection Benefit (EGP Protection)
The EGP Protection provides the following benefits after the fifth Contract
year:
(1) Each year, you may take up to 20% of your EGP Protection value in partial
withdrawals without any withdrawal charges, until your EGP Protection
account is exhausted;
(2) You can choose to start receiving income from any of the Annuity Options,
with the amount available to purchase the option equal to at least your EGP
Protection account (or 105% of your EGP Protection account, if a lifetime
Annuity Option is selected), less applicable premium taxes and pro-rata
MVPB charges.
(3) On the tenth anniversary and every 10 years after that, your Contract value
will be increased to the value of your EGP Protection account, if greater.
(4) If, however, your Contract value on the tenth anniversary is greater than
the EGP Protection account (prior to adjustment), your EGP Protection
account and your EGP Protection value will be increased to the Contract
value.
(5) On the twentieth anniversary (and every 10 year anniversary after that),
your EGP Protection account, your EGP Protection value and your Contract
value will be increased to twice the excess of your total Purchase Payments
over your "EGP Protection adjusted partial withdrawals", if this amount is
greater.
Your EGP Protection value and your EGP Protection account are established on the
fifth Contract anniversary with an amount equal to the Net Adjusted Purchase
Payments at that time. This account is then reduced by "EGP Protection adjusted
partial withdrawals" and increased as indicated in (4) and (5) above. The "EGP
Protection adjusted partial withdrawals" are calculated in the same manner as
the "adjusted partial withdrawals" except that the greater of the Contract Value
or the EGP Protection account is used in place of the death benefit in the
calculation.
The following example is to help you understand how the EGP Protection benefit
is determined. The facts assumed in the example are purely hypothetical and are
for illustration purposes only.
Example:
o You purchased a Contract with a payment of $100,000 on January 1, 2001.
o On January 1, 2011, your Contract value is $150,000.
o On January 1, 2012, January 1, 2013, and January 1, 2014, you take a
partial withdrawal of $30,000
o On January 1, 2021, your Contract value is $50,000.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Your EGP Protection account and your EGP Protection value on January 1, 2011 is
the greater of your
Purchase Payment or your Contract value at that time $150,000
Your EGP Protection account on January 1, 2021 is
Your EGP Protection account on January 1, 2011 $150,000
Minus "EGP Protection adjusted partial withdrawals" Calculated as 3 x
30,000 (unadjusted because each withdrawal
Is equal to 30,000 = 20% of the EGP Protection value) $ 90,000
Resulting in $ 60,000.
On January 1, 2021, we determine if we should increase your Contract value.
Your Purchase Payments $100,000
Minus "EGP Protection adjusted partial withdrawals" as above 90,000
Resulting in 10,000
Twice that result is 20,000
</TABLE>
Your Contract value on January 1, 2021 of 50,000 is increased to the greater of
$20,000 or the EGP Protection account of $60,000, resulting in a Contract value
of $60,000.
11.OTHER INFORMATION
-------------------------------------------------------------------------------
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 direct business in 49 states and the District of Columbia.
Allianz Life is a wholly-owned subsidiary of Allianz Versicherungs-AG Holding.
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 obligations under the Contracts are obligations of Allianz Life.
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
USAllianz Investor Services, LLC (formerly NALAC Financial Plans, LLC), 1750
Hennepin Avenue, Minneapolis, Minnesota 55403, acts as the distributor of the
Contracts. USAllianz Investor Services LLC, is a wholly-owned subsidiary of
Allianz Life.
Commissions will be paid to broker/dealers who sell the Contracts.
Broker/dealers will be paid commissions up to 7.75% 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 7.75% of Purchase Payments). In addition, Allianz Life 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 2
Experts 2
Legal Opinions 2
Distributor 2
Reduction or Elimination of the
Withdrawal Charge 2
Calculation of Performance Data 3
Federal Tax Status 9
Annuity Provisions 16
Mortality and Expense Risk Guarantee 17
Financial Statements 17
APPENDIX
To be filed by Amendment
PART B
STATEMENT OF ADDITIONAL INFORMATION
VARIABLE ANNUITY CONTRACTS
issued by
ALLIANZ LIFE VARIABLE ACCOUNT B
and
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
_____________, 2000
THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE
READ IN CONJUNCTION WITH THE PROSPECTUS FOR THE INDIVIDUAL 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)
542-5427.
THIS STATEMENT OF ADDITIONAL INFORMATION AND THE PROSPECTUS ARE DATED
___________, 2000, AND MAY BE AMENDED FROM TIME TO TIME.
Table of Contents
Page
Insurance Company ....................................2
Experts...............................................2
<PAGE>
Legal Opinions........................................2
Distributor ..........................................2
Reduction or Elimination of the
Withdrawal Charge ...................................2
Calculation of Performance Data ......................3
Federal Tax Status ...................................9
Annuity Provisions ..................................15
Mortality and Expense Risk Guarantee.................16
Financial Statements.................................16
<PAGE>
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.
The Insurance Company is rated A++g by A.M. BEST, an independent analyst of the
insurance industry. The financial strength of an insurance company may be
relevant in that it may be a reflection as to 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, 1999 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
USAllianz Investor Services, LLC (formerly NALAC Financial Plans, LLC), a
subsidiary of the Insurance Company, acts as the distributor. The offering is on
a continuous basis.
<PAGE>
Reduction or Elimination of the Withdrawal Charge
The amount of the withdrawal 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 withdrawal 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 (i.e., the expectation that the Contract
owners will continue to hold the Contracts for a certain period of time); 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 withdrawal 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 withdrawal 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 withdrawal 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
operating expenses of the underlying Portfolios and any applicable withdrawal
charge, contract maintenance charge and MVPB charge ("Standardized Total
Return"). The withdrawal charge, contract maintenance charge and MVPB charge
deductions are calculated assuming a Contract is fully withdrawn 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 MVPB charge and withdrawal 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
<PAGE>
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 withdrawal charge, the contract maintenance charge and the MVPB
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 USAllianz VIP Money Market Fund - The Insurance Company may advertise yield
information for the USAllianz VIP Money Market Fund. The USAllianz VIP 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 MVPB 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 USAllianz VIP Money Market Fund's current yield is computed on a base period
<PAGE>
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 MVPB 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.)
As of December 31, 1999, the USAllianz VIP Money Market Fund had not yet
commenced operations. Therefore, the current and effective yield for the
seven-day period ending on December 31, 1999 is not available.
Other Variable Options. The Insurance Company may also quote yield in sales
literature, advertisements, personalized hypothetical illustrations, and
Contract Owner communications for the other Variable Options. Each Variable
Option (other than the USAllianz VIP 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, MVPB 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:
Yield= 2 [((a-b) + 1)6 - 1] cd where:
a = net investment income earned during the period by the
Variable Option attributable to shares owned by the
Portfolio;
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
Variable Option (other than the USAllianz VIP 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
Certain Portfolios 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.
Effective May 1, 2000, the Templeton Developing Markets Securities Fund (a fund
of Templeton Variable Series Fund) merged into the Templeton Developing Markets
Equity Fund. The performance shown in the charts below reflects the historical
performance of the Templeton Developing Markets Equity Fund.
The charts below shows Accumulation Unit performance which assumes that the
Accumulation Units were invested in each of the Portfolios for the same periods.
o Chart A is for Contracts with the Return of Premium GMDB and the GP
Protection (based on the lowest mortality and expense risk charge of
1.50%) using the MVPB Asset Allocation Model.
o Chart B is for Contracts with the Double Principal GMDB or Earnings
Protection GMDB and the EGP Protection (based on the highest
mortality and expense risk charge of 2.00%) using a self-directed
asset allocation method
The performance figures in Column I represent performance figures for the
Accumulation Units which reflects the deduction of the mortality and expense
risk 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, the MVPB 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 withdrawal charge is reflected). Past
performance does not guarantee future results.
<PAGE>
Chart A
<TABLE>
<CAPTION>
Total Return for the periods ended_________________: HYPOTHETICAL
Column I Column II
-----------------------------------------------------------------------------------------------------------------------------------
Inception One Three Five Ten Since One Three Five Ten Since
Variable Option Date Year Year Year Year Inception Year Year Year Year Inception
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
AIM VI Capital Appreciation 5/5/1993
AIM VI Growth 5/5/1993
AIM VI International Equity 5/5/1993
AIM VI Value 5/5/1993
Alger American Growth 1/9/1989
Alger American Leveraged AllCap 1/25/1995
Alger American MidCap Growth 5/3/1993
Alger American Small
Capitalization 9/21/1988
Davis VA Financial* 7/1/1999
Davis VA Real Estate * 7/1/1999
Davis VA Value * 7/1/1999
Franklin Growth and Income
Securities 1/24/1989
Franklin Rising Dividends
Securities 1/27/1992
Franklin Small Cap 11/1/1995
Franklin U.S. Government 3/14/1989
JP Morgan International
Opportunities 1/3/1995
JP Morgan US Disciplined Equity 1/3/1995
Mutual Discovery Securities 11/8/1996
Mutual Shares Securities 11/8/1996
Oppenheimer Global
Securities/VA 11/12/1990
Oppenheimer High Income/VA 4/30/1986
Oppenheimer Main Street
Growth & Income/VA 7/5/1995
PIMCO VIT High Yield Bond 4/30/1998
PIMCO VIT Stocks PLUS Growth &
Income 12/31/1997
PIMCO VIT Total Return Bond 12/31/1997
Seligman Global Technology 5/1/1996
Seligman Small-Cap Value 5/1/1998
Templeton Developing Markets
Securities 3/15/1994
Templeton Growth Securities 3/15/1994
Templeton Pacific Growth
Securities 1/27/1992
USAllianz VIP Diversified
Assets 11/12/99
USAllianz VIP Fixed Income 11/12/99
USAllianz Growth 11/12/99
USAllianz VIP Global
Opportunities 1/13/00
USAllianz VIP Money Market 1/13/00
Van Kampen LIT Enterprise 4/7/1986
Van Kampen LIT Growth & Income12/23/1996
</TABLE>
Chart B
<TABLE>
<CAPTION>
Total Return for the periods ended _________________: HYPOTHETICAL
Column I Column II
------------------------------------------------------------------------------------------------------------------------
Inception One Three Five Ten Since One Three Five Ten Since
Variable Option Date Year Year Year Year Inception Year Year Year YearInception
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
AIM VI Capital Appreciation 5/5/1993
AIM VI Growth 5/5/1993
AIM VI International Equity 5/5/1993
AIM VI Value 5/5/1993
Alger American Growth 1/9/1989
Alger American Leveraged
AllCap 1/25/1995
Alger American MidCap Growth 5/3/1993
Alger American Small
Capitalization 9/21/1988
Davis VA Financial* 7/1/1999
Davis VA Real Estate* 7/1/1999
Davis VA Value* 7/1/1999
Franklin Growth and Income
Securities 1/24/1989
Franklin Rising Dividends
Securities 1/27/1992
Franklin Small Cap 11/1/1995
Franklin U.S. Government 3/14/1989
JP Morgan International
Opportunities 1/3/1995
JP Morgan US Disciplined Equity 1/3/1995
Mutual Discovery Securities 11/8/1996
Mutual Shares Securities 11/8/1996
Oppenheimer Global
Securities/VA 11/12/1990
Oppenheimer High Income/VA 4/30/1986
Oppenheimer Main Street
Growth & Income/VA 7/5/1995
PIMCO VIT High Yield Bond 4/30/1998
<PAGE>
PIMCO VIT Stocks PLUS Growth &
Income 12/31/1997
PIMCO VIT Total Return Bond 12/31/1997
Seligman Global Technology 5/1/1996
Seligman Small-Cap Value 5/1/1998
Templeton Developing Markets
Securities 3/15/1994
Templeton Growth Securities 3/15/1994
Templeton Pacific Growth
Securities 1/27/1992
USAllianz VIP Diversified
Assets 11/12/99
USAllianz VIP Fixed Income 11/12/99
USAllianz Growth 11/12/99
USAllianz VIP Global
Opportunities 1/13/00
USAllianz VIP Money Market 1/13/00
Van Kampen LIT Enterprise 4/7/1986
Van Kampen LIT Growth & Income12/23/1996
</TABLE>
Illustration of the MVPB
--------------------------------------------------------------------------------
The Insurance Company may advertise the Minimum Value Protection Benefit (MVPB)
through illustrations in sales literature, advertisements, personalized
illustrations, and Contract Owner communications. Such illustrations may show
the Contract value, full or partial withdrawal values, death benefits, GP
Protection or EGP Protection accounts, assuming the historical performance data
of specific Portfolios or using a hypothetical return (which return will not
exceed 12%).
Such values will include the deduction of mortality and expense risk charges,
the operating expenses of any specific Portfolio, and any applicable withdrawal
charges, MVPB charges and contract maintenance charges. The withdrawal charges,
the MVPB charges and contract maintenance charges are calculated assuming a
Contract is fully surrendered at the end of the Contract year.
The hypothetical values of a Contract purchased for time periods described will
be determined by using the Accumulation Unit values for a variable option
investing in a specific Portfolio for a stated purchase payment, and deducting
any applicable mortality and expense risk charge, contract maintenance charge,
MVPB charge and withdrawal charge to arrive at the ending hypothetical value. If
a hypothetical return is used unrelated to any specific Portfolio, mortality and
expense risk charges, contract maintenance charges, and MVPB charges will also
be deducted from the hypothetical return. Partial withdrawal charges, death
benefits, MVPB and GP Protection and EGP Protection accounts are calculated as
described in the Contract and Prospectus.
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 underlying the Contracts will
be managed by the investment managers 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/Minimum Value Guarantees
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.
Any amounts credited to the Contract value under a minimum value guarantee in
the Endorsements to the Contract will be treated for tax purposes as earnings.
<PAGE>
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.
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
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. The Company
is not bound by the terms and conditions of such plans to the extent such terms
conflict with the terms of a Contract, unless the Company specifically consents
to be bound. Contract Owners, participants and beneficiaries are responsible for
determining that contributions, distributions and other transactions with
respect to the Contracts comply with applicable law.
A Qualified Contract will not provide any necessary or additional tax deferral
if it is used to fund a Qualified plan that is tax deferred. However, the
contract has features and benefits other than tax deferral that may make it an
appropriate investment for a Qualified plan. 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 made on account of an
IRS levy on the Qualified Contract; (h) 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); (i) 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 (j) 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 either 3%, 5% or 7%, based on the
Contract Owner's selection and any applicable state laws.
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, 1999, 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, 1999 and the unaudited financial
statements of the Separate Account as of and for the period ended _____________,
2000 are also included herein.
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
a. Financial Statements
The 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.a. Principal Underwriter's Agreement(2)
<PAGE>
3.b. General Agency Agreement(5)
4. Individual Variable Annuity Contract (to be filed by amendment)
5. Application for Individual Variable Annuity Contract (to be filed by
amendment)
6. (i) Copy of Articles of Incorporation of the Company(1)
(ii) Copy of the Bylaws of the Company(1)
7. Not Applicable
8.a. Form of Fund Participation Agreement between North American
Life and Casualty Company and Franklin Valuemark Funds(1)
8.b. Form of Fund Participation Agreement between AIM Variable
Insurance Funds, Inc., Allianz Life Insurance Company of North
America and NALAC Financial Plans LLC(3)
8.c. Form of Fund Participation Agreement between The Alger American
Fund, Allianz Life Insurance Company of North America and Fred
Alger & Company, Incorporated(3)
8.d. Form of Fund Participation Agreement between USAllianz Variable
Insurance Products Trust, Allianz Life Insurance Company of
North America and BISYS Fund Services Limited Partnership(3)
8.e. Form of Fund Participation Agreement between Davis Variable
Account Fund, Inc., Davis Distributors, LLC and Allianz Life
Insurance Company of North America(4)
8.f. Form of Fund Participation Agreement between Van Kampen Life
Investment Trust, Van Kampen Funds, Inc., Van Kampen Asset
Management Inc. and Allianz Life Insurance Company of North
America(4)
8.g. Form of Fund Participation Agreement between Allianz Life
Insurance Company of North America and J.P. Morgan Series Trust
II(4)
8.h. Form of Fund Participation Agreement between Oppenheimer Variable
Account Funds, Oppenheimer Funds Inc. and Allianz Life Insurance
Company of North America(4)
8.i. Form of Fund Participation Agreement between Allianz Life Insurance
Company of North America, PIMCO Variable Insurance Trust, and PIMCO
Fund Distributors, LLC(4)
8.j. Form of Fund Participation Agreement between Seligman Portfolios,
Inc. and Allianz Life Insurance Company of North America(4)
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(5)
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.
(3) Incorporated by reference to Registrant's Form N-4 (File Nos. 333-06709 and
811-05618) electronically filed on November 12, 1999.
(4) Incorporated by reference to Registrant's Pre-Effective Amendment to Form
N-4 (File Nos. 333-82329 and 811-05618) electronically filed December 30,
1999.
(5) Incorporated by reference to Registrant's Post-Effective Amendment No. 8
to Form N-4 (File Nos. 333-06709 and 811-05618) electronically filed on
April 27, 2000.
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
- ---------------------------- ---------------------------------
Robert W. MacDonald Director,
300 S. Hwy 169 Chief Executive Officer
Minneapolis, MN 55426
Margery G. Hughes President,
300 S. Hwy 169 Chief Administrative Officer
Minneapolis, MN 55426
Mark A. Zesbaugh Senior Vice President,
300 S. Hwy 169 Chief Financial Officer
Minneapolis, MN 55426
Lowell C. Anderson Chairman of the Board
1750 Hennepin Avenue
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 President - Special
1750 Hennepin Avenue Markets Division
Minneapolis, MN 55403
Robert S. James Senior Vice President - Marketing
300 S. Hwy 169 Development
Minneapolis, MN 55426
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
Brad Barks Senior Vice President -
300 S. Hwy 169 Financial Analysis/M&A
Minneapolis, MN 55426
Chuck Kavitsky Senior Vice President -
300 S. Hwy 169 Chief Marketing Officer
Minneapolis, MN 55426
Item 26. Persons Controlled by or Under Common Control with the Depositor
or Registrant
The Insurance Company organizational chart was filed as Exhibit 14 (File
Nos. 333-06709 and 811-05618) in Post-Effective Amendment No. 8 filed
April 27, 2000 and is incorporated herein by reference.
Item 27. Number of Contract Owners
<PAGE>
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. USAllianz Investor Services, 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 USAllianz Investor Services, LLC:
Positions and Offices
Business Address with Underwriter
- ---------------------- ----------------------
Christopher H.Pinkerton President and Director
1750 Hennepin Avenue
Minneapolis, MN 55403
Thomas B. Clifford Vice President and Director
1750 Hennepin Avenue
Minneapolis, MN 55403
Catherine L. Mielke Compliance Officer
1750 Hennepin Avenue
Minneapolis, MN 55403
Michael M. Ahles Senior Vice President, Chief Financial
1750 Hennepin Avenue Officer & Treasurer
Minneapolis, MN 55403
Lawrance C. Skibo Executive Vice President
1750 Hennepin Avenue
Minneapolis, MN 55403
Catherine Q. Farley Senior Vice President & Chief Administrative
1750 Hennepin Avenue Officer
Minneapolis, MN 55403
Robert S. James Director
1750 Hennepin Avenue
Minneapolis, MN 55403
Cindy Robeck Assistant Vice President
1750 Hennepin Avenue
Minneapolis, MN 55403
Carol Shaw Senior Vice President
1750 Hennepin Avenue
Minneapolis, MN 55403
Gigi Wagner Vice President
1750 Hennepin Avenue
Minneapolis, MN 55403
c. Not Applicable
Item 30. Location of Accounts and Records
Thomas Clifford, whose address is 1750 Hennepin Avenue, Minneapolis, Minnesota,
55403 and Delaware Valley Financial Services, USAllianz Service Center, 300
Berwyn Park, Berwyn, Pennsylvania 19312, maintain 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.
<PAGE>
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;
<PAGE>
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 has caused this Registration Statement to be
signed on its behalf in the City of Minneapolis and State of Minnesota, on this
4th day of October, 2000.
ALLIANZ LIFE VARIABLE ACCOUNT B
(Registrant)
By: ALLIANZ LIFE INSURANCE COMPANY
OF NORTH AMERICA
(Depositor)
By: /S/ SUZANNE J. PEPIN
--------------------------------
Suzanne J. Pepin
ALLIANZ LIFE INSURANCE COMPANY
OF NORTH AMERICA
(Depositor)
By: /S/ SUZANNE J. PEPIN
------------------------------
Suzanne J. Pepin
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 Date
Lowell C. Anderson* Chairman of the Board 10/4/00
Lowell C. Anderson
Robert W. MacDonald* Director and 10/4/00
Robert W. MacDonald Chief Executive Officer
Margery G. Hughes* President and 10/4/00
Margery G. Hughes Chief Administrative Officer
Mark A. Zesbaugh* Chief Financial Officer 10/4/00
Mark A. Zesbaugh Senior Vice President
Herbert F. Hansmeyer* Director 10/4/00
Herbert F. Hansmeyer
Michael P. Sullivan* Director 10/4/00
Michael P. Sullivan
Dr. Gerhard Rupprecht* Director 10/4/00
Dr. Gerhard Rupprecht
Rev. Dennis Dease* Director 10/4/00
Rev. Dennis Dease
James R. Campbell* Director 10/4/00
James R. Campbell
Robert M. Kimmitt* Director 10/4/00
Robert M. Kimmitt
*By Power of Attorney
By: /S/ SUZANNE J. PEPIN
--------------------------------
Suzanne J. Pepin
Attorney-in-Fact