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. 62 (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
-------------------------------------------
Michael T. Westermeyer
Allianz Life Insurance Company of North America
1750 Hennepin Avenue
Minneapolis, MN 55403
Copies to:
Judith A. Hasenauer
Blazzard, Grodd & Hasenauer, P.C.
P.O. Box 5108
Westport, CT 06881
(203) 226-7866
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of this Filing.
Title of Securities Registered:
Individual Deferred Variable Annuity Contracts
================================================================================
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
CROSS REFERENCE SHEET
(Required by Rule 495)
Item No. Location
- -------- --------
PART A
Item 1. Cover Page . . . . . . . . . . . . . . . . . Cover Page
Item 2. Definitions . . . . . . . . . . . . . . . . Index of Terms
Item 3. Synopsis or Highlights. . . . . . . . . . . Summary
Item 4. Condensed Financial Information. . . . . . . Not Applicable
Item 5. General Description of Registrant, Depositor,
and Portfolio Companies. . . . . . . . . . . . Other Information-
The Separate Account,
Allianz Life,
Investment Options
Item 6. Deductions. . . . . . . . .. . . . . . . . . . Expenses
Item 7. General Description of Variable
Annuity Contracts . . . . . . . . . . . . . . .The Variable
Annuity Contract
Item 8. Annuity Period. . .. . . . . . . . . . . . . . Annuity Payments
(The Payout Phase)
Item 9. Death Benefit. . . . . . . . . . . . . . . . . Death Benefit
Item 10. Purchases and Contract Value. . . . . . . . . .Purchase
Item 11. Redemptions. . . . . . . . . . . . . . . . . . Access to Your Money
Item 12. Taxes. . . . . . . . . . . . . . . . . . . . . Taxes
Item 13. Legal Proceedings. . . . . . . . . . . . . . . None
Item 14. Table of Contents of the Statement of
Additional Information. . . . . . . . . . . Table of Contents
of the Statement of
Additional Information
CROSS REFERENCE SHEET (cont'd)
(Required by Rule 495)
Item No. Location
- -------- --------
PART B
Item 15. Cover Page. . . . . . . . .. . . . . . . . Cover Page
Item 16. Table of Contents. . . . . . . . . . . . . Table of Contents
Item 17. General Information and History. . . . . . Insurance Company
Item 18. Services. . . . . . . . . . . . .. . . . . Not Applicable
Item 19. Purchase of Securities Being Offered. . . . Not Applicable
Item 20. Underwriters. . . . . . . . . . . . . . . . Distributor
Item 21. Calculation of Performance Data. . . . . . Calculation of
Performance Data
Item 22. Annuity Payments. . . . . . . . . . . . . . Annuity Provisions
Item 23. Financial Statements. . . . . . . . . . . Financial Statements
PART C
Information required to be included in Part C is set forth under the appropriate
Item so numbered, in Part C to this Registration Statement.
PART A
THE VARIABLE ANNUITY CONTRACT
issued by
ALLIANZ LIFE VARIABLE ACCOUNT B
and
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
- --------------------------------------------------------------------------------
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 Sub-Accounts, 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 Options (which includes any of the Sub-Accounts and the
Fixed Account). The Fixed Account may not be available in your state.
AIM VARIABLE INSURANCE FUNDS, INC.:
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 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 Equity Fund
Templeton Global Growth Fund
Templeton Pacific Growth 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 VA Global Securities Fund
Oppenheimer VA High Income Fund
Oppenheimer VA Main Street Growth & Income Fund
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
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 (800) 542-5427 or write us at: 1750 Hennepin Avenue, Minneapolis,
Minnesota 55403-2195.
The Variable Annuity Contracts:
o are not bank deposits
o are not federally insured
o are not endorsed by any bank or government agency
o are not guaranteed and may be subject to loss of principal
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
This prospectus is not an offering of the securities in any state, country, or
jurisdiction in which we are not authorized to sell the Contracts. You should
rely only on the information contained in this prospectus or that we have
referred you to. We have not authorized anyone to provide you with information
that is different.
Dated: , 2000.
TABLE OF CONTENTS
Index of Terms
Summary
Fee Table
The Variable Annuity Contract
Ownership
Contract Owner
Joint Owner
Annuitant
Beneficiary
Assignment
Annuity Payments (The Payout Phase)
Income Date
Annuity Payments
Annuity Options
Purchase
Purchase Payments
Automatic Investment Plan
Allocation of Purchase Payments
Free Look
Accumulation Units
Investment Options
Transfers
Dollar Cost Averaging Program
Flexible Rebalancing
Financial Advisers - Asset Allocation Programs
Voting Privileges
Substitution
Expenses
Insurance Charges
Mortality and Expense Risk Charge
Administrative Charge
Distribution Expense Charge
Contract Maintenance Charge
Contingent Deferred Sales Charge
Waiver of Contingent Deferred
Sales Charge Benefits
Reduction or Elimination of the
Contingent Deferred Sales Charge
Commutation Fee
Transfer Fee
Premium Taxes
Income Taxes
Portfolio Expenses
Taxes
Annuity Contracts in General
Qualified and Non-Qualified Contracts
Multiple Contracts
Surrenders - Non-Qualified Contracts
Surrenders - Qualified Contracts
Surrenders - Tax-Sheltered Annuities
Diversification
Access to Your Money
Systematic Withdrawal Program
Minimum Distribution Program
Suspension of Payments or Transfers
Performance
Death Benefit
Upon Your Death
Death of Annuitant
Other Information
Allianz Life
The Separate Account
Distribution
Administration
Financial Statements
Table of Contents of the Statement of Additional Information
Appendix
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
Accumulation Unit
Annuitant
Annuity Options
Annuity Payments
Annuity Unit
Beneficiary
Contract
Contract Owner
Contract Value
Fixed Account
Income Date
Investment Option
Joint Owner
Non-Qualified
Payout Phase
Portfolio
Purchase Payment
Qualified
Rewards Value
Sub-Account
Tax Deferral
Underlying Mutual Fund
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 the Investment Options
which consist of 37 Sub-Accounts and the Allianz Life Fixed Account. The
Contract is intended for retirement savings or other long-term investment
purposes.
Annuity Payments: If you want to receive regular income from your annuity, you
can choose an Annuity Option. You can choose whether to have payments come from
our general account, the available Sub-Accounts or both. If you choose to have
any part of your payments come from the Sub-Accounts, the dollar amount of your
payments may go up or down based on the performance of the Portfolios the
Sub-Accounts invest in.
Purchase: You can buy the Contract with $15,000 or more. You can add $250 or
more (or $100 if you select our automatic investment plan) any time you like
during the Accumulation Phase.
Bonus: For all Purchase Payments you make prior to your 81st birthday, Allianz
Life will credit your Contract with a bonus at the time of contribution to the
Contract. The amount of the bonus will be based on the total amount of Purchase
Payments you have made at the time of the contribution, less any surrenders you
have made (and applicable contingent deferred sales charge.) Bonus amounts are
available for surrender only when the bonus becomes vested (which varies
depending upon how long Allianz Life has had your Purchase Payment).
Investment Options: You can put your money in the Sub-Accounts and/or you
can invest in the Allianz Life Fixed Account. The investment returns on the
Portfolios are not guaranteed. You can lose money. You can make transfers
between Investment Options.
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 Rewards Value of
your Contract is at least $75,000.
Allianz Life deducts a mortality and expense risk charge which varies depending
upon whether you select the traditional death benefit or the enhanced death
benefit. The charge is equal, on an annual basis, to 1.50% of the average daily
value of the Contract invested in a Sub-Account if you select the
traditional death benefit and 1.70% of the average daily value of the Contract
invested in a Sub-Account if you select the enhanced death benefit. Allianz
Life also deducts an administrative charge which is equal, on an annual basis,
to 0.15% of the value of the Contract invested in a Sub-Account.
There are also daily investment charges which range, on an annual basis, from
0.60% to 1.85% of the average daily value of the Portfolio, depending upon the
Portfolio.
You can make 12 free transfers each year. After that, Allianz Life deducts a $25
transfer fee for each additional transfer.
If you take money out of the Contract, Allianz Life may assess a contingent
deferred sales charge against each Purchase Payment withdrawn. The contingent
deferred sales charge starts at 8.5% in the first year and declines to 0% after
10 complete years.
Access to Your Money: You can take money out of your Contract during the
Accumulation Phase. Surrenders during the Accumulation Phase may be subject to
a contingent deferred sales charge. You may also have to pay income tax and a
tax penalty on any money you take out. Under certain circumstances, you can also
take money out during the Payout Phase if you select Annuity Option 2, 4 or 6.
Money you take out during the Payout Phase is subject to a commutation fee.
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
subject to a 10% federal tax penalty on the earnings withdrawn.
Death Benefit: If you die before moving to the Payout Phase, the person you have
chosen as a Beneficiary will receive a death benefit. The amount of the death
benefit depends on whether you select the traditional death benefit or the
enhanced death benefit.
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
Contract Value 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
(800) 624-0197
FEE TABLE
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The purpose of this Fee Table is to help you understand the costs of investing,
directly or indirectly, in the Contract. It reflects expenses of the Separate
Account as well as the Portfolios.
CONTRACT OWNER TRANSACTION FEES
Contingent Deferred Sales Charge*
(as a percentage of Purchase Payments)
Number of Complete Years
Since Receipt of Purchase
Payment Charge
---------------------------------------------------------
0-1 8.5%
1-2 8.5%
2-3 8.5%
3-4 8.5%
4-5 8.0%
5-6 7.0%
6-7 6.0%
7-8 5.0%
8-9 4.0%
9-10 3.0%
10 or more 0.0%
Commutation Fee
(as a percentage amount liquidated under Annuity Option 2,4 or 6)
Years Since Income Date Charge
- ----------------------- ------
0-1 7%
1-2 6%
2-3 5%
3-4 4%
4-5 3%
5-6 2%
over 6 1%
Transfer Fee
First 12 transfers in a Contract year are free. Thereafter,
the fee is $25 per transfer. Dollar Cost Averaging transfers
and Flexible Rebalancing transfers are not counted.
CONTRACT MAINTENANCE CHARGE** $40 per Contract per year
<TABLE>
<CAPTION>
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Traditional Enhanced
Death Benefit Death Benefit
------------- ----------------
<S> <C> <C>
Mortality and Expense Risk Charge 1.50% 1.70%
Administrative Charge .15% .15%
Distribution Expense Charge 0% 0%
----- -----
Total Separate Account Annual Expenses 1.65% 1.85%
<FN>
* Each year, on a non-cumulative basis (less any previous surrenders
you make in the current Contract year which are not subject to a
contingent deferred sales charge), you may make partial surrenders
of up to a total of 10% of Purchase Payments and no contingent
deferred sales charge will be assessed. See "Access to Your
Money" for additional options.
** The charge is waived if the Rewards Value of your Contract is at least
$75,000. If you own more than one Contract offered under this
Prospectus (registered with the same social security number), we will
determine the total Rewards Value of all your Contracts. If the total
Rewards Value of all your Contracts is at least $75,000, the charge
is waived on all your Contracts.
</FN>
</TABLE>
<TABLE>
<CAPTION>
1998 ANNUAL FUND EXPENSES (as a percentage of a Portfolio's average net assets)
Other Expenses Total Fund Expenses
(after waivers/ (after waivers/
Management 12b-1 reimbursements reimbursements
Portfolio Fees Fees as noted) as noted)
- --------- ---------- ----- --------------- -------------------
<S> <C> <C> <C> <C>
AIM V.I. Capital Appreciation Fund .62% .05% .67%
AIM V.I. Growth Fund .64% .08% .72%
AIM V.I. International Equity Fund .75% .16% .91%
AIM V.I. Value Fund .61% .05% .66%
Alger American Growth Portfolio .75% .04% .79%
Alger American Leveraged AllCap
Portfolio 1 .85% .11% .96%
Alger American MidCap Growth
Portfolio .80% .04% .84%
Alger American Small Capitalization
Portfolio .85% .04% .89%
Davis VA Financial Portfolio .75% .25% 1.00%
Davis VA Real Estate Portfolio .75% .25% 1.00%
Davis VA Value Portfolio .75% .25% 1.00%
Franklin Growth and Income Fund,
Class 2 5 .47% .25% .02% .74%
Franklin Rising Dividends Securities
Fund, Class 2 5 .70% .25% .02% .97%
Franklin Small Cap Fund, Class 2 5 .75% .25% .02% 1.02%
Franklin U.S. Government Fund,
Class 2 5 .48% .25% .02% .75%
J.P. Morgan International
Opportunities Portfolio 2 .60% .60% 1.20%
J.P. Morgan U.S. Disciplined Equity
Portfolio 3 .35% .52% .87%
Mutual Discovery Securities Fund,
Class 2 4/5 .95% .25% .05% 1.25%
Mutual Shares Securities Fund,
Class 2 4/5 .74% .25% .03% 1.02%
Oppenheimer VA Global Securities
Fund .68% .06% .74%
Oppenheimer VA High Income Fund .74% .04% .78%
Oppenheimer VA Main Street Growth &
Income Fund .74% .05% .79%
PIMCO VIT High Yield Bond Portfolio 6 .69% .06% .75%
PIMCO VIT StocksPLUS Growth &
Income Portfolio 6 .58% .07% .65%
PIMCO VIT Total Return Bond
Portfolio 6 .55% .10% .65%
Seligman Global Technology
Portfolio 1.00% .40% 1.40%
Seligman Small Cap Value Portfolio 1.00% .00% 1.00%
Templeton Developing Markets
Equity Fund, Class 2 5 1.25% .25% .16% 1.66%
Templeton Global Growth Fund,
Class 2 5 .83% .25% .05% 1.13%
Templeton Pacific Growth Fund,
Class 2 5 .99% .25% .11% 1.35%
USAllianz VIP Diversified Assets
Fund 7 .55% .25% .40% 1.20%
USAllianz VIP Fixed Income Fund 7 .50% .25% .30% 1.05%
USAllianz VIP Global Opportunities
Fund 7 .95% .25% .65% 1.85%
USAllianz VIP Growth Fund 7 .75% .25% .28% 1.28%
USAllianz VIP Money Market Fund 7 .35% .25% .28% .88%
Van Kampen LIT Enterprise
Portfolio 8 .46% .14% .60%
Van Kampen LIT Growth & Income
Portfolio 8 .26% .49% .75%
</TABLE>
1. The Alger American Leveraged AllCap Portfolio's "Other Expenses" includes
.03% of interest expense.
2. Without reimbursement, other expenses and total operating expenses would
have been 2.66% and 3.26%, respectively.
3. The expense information in this table has been restated to reflect
current fees. Effective 7/1/99, Morgan Guaranty Trust Company of New
York ("Morgan Guaranty"), an affiliate of J.P. Morgan, has agreed to
reimburse the Portfolio to the extent certain expenses exceed 0.85% of
the Portfolio's average daily net assets through 12/31/99. For the
period from 1/1/99 through 6/30/99, Morgan Guaranty agreed to reimburse
the Portfolio to the extent certain expenses exceed 0.90% of the
Portfolio's average daily net assets. Without reimbursement, other
expenses and total operating expenses would have been 1.08% and 1.43%.
4. The Mutual Discovery Securities Fund and the Mutual Shares 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.
5. For the Class 2 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. See "Fund Account Policies" in the accompanying
prospectus for Franklin Templeton Variable Insurance Products Trust for a
description of these fees and the rule 12b-1 plan. Because Class 2 shares
are relatively new (since January 6, 1999), the total fees and expenses
(other than 12b-1 fees) are based on the expenses of each Portfolio's
Class 1 shares for the 1998 fiscal year.
6. PIMCO, the investment adviser, has agreed to reduce its administrative
fee, subject to potential future reimbursements, to the extent that total
Portfolio operating expenses would exceed, due to organizational expenses
and the payment by each Portfolio of its pro rata portion of the Trust's
Trustees' fees, 0.75% with respect to the High Yield Bond Portfolio,
0.65% with respect to the StocksPLUS Growth and Income Portfolio, and
0.65% with respect to the Total Return Bond Portfolio. Without such
reductions, total annual Portfolio expenses would have been 0.81%, 0.72%
and 0.75% for High Yield Bond Portfolio, StocksPLUS Growth and Income
Portfolio and Total Return Bond Portfolio, respectively.
7. The USAllianz VIP Fixed Income Fund, USAllianz Diversified Assets Fund
and USAllianz VIP Growth Fund commenced operations on November 12, 1999
and the USAllianz VIP Global Opportunities and USAllianz VIP Money Market
Fund will commence operations February 1, 2000. The expenses shown for
these portfolios are therefore estimated for 1999.
8. If certain expenses had not been assumed by the Adviser, total return
would have been lower and total fund expenses would have been .64% for
the Van Kampen LIT Enterprise Portfolio and 1.09% for the Van Kampen LIT
Growth and Income Portfolio.
Examples
o The examples below should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than those shown.
o The $40 contract maintenance charge is included in the examples as a
prorated charge of $1. Since the average Contract size is greater than
$1,000, the contract maintenance charge is reduced accordingly.
o Premium taxes are not reflected in the tables. Premium taxes may apply.
o For additional information, see "Expenses."
<TABLE>
<CAPTION>
You would pay the following expenses on a $1,000 investment, assuming a 5% annual
return on your money if you surrender your Contract at the end of each time period for
Contracts with:
(a) the traditional death benefit
(b) the enhanced death benefit
Sub-Account 1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM V.I. Capital Appreciation Fund (a)$___ (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) ___
(b) ___ (b) ___ (b) ___
Davis VA Value Portfolio (a) ___ (a) ___ (a) ___ (a) ___
(b) ___ (b) ___ (b) ___ (b) ___
Franklin Growth and Income 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 VA Global Securities
Fund (a) ___ (a) ___ (a) ___ (a) ___
(b) ___ (b) ___ (b) ___ (b) ___
Oppenheimer VA High Income Fund (a) ___ (a) ___ (a) ___ (a) ___
(b) ___ (b) ___ (b) ___ (b) ___
Oppenheimer VA Main Street Growth &
Income Fund (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
Fund (a) ___ (a) ___ (a) ___ (a) ___
(b) ___ (b) ___ (b) ___ (b) ___
Seligman Small Cap Value Fund (a) ___ (a) ___ (a) ___ (a) ___
(b) ___ (b) ___ (b) ___ (b) ___
Templeton Developing Markets
Equity Fund (a) ___ (a) ___ (a) ___ (a) ___
(b) ___ (b) ___ (b) ___ (b) ___
Templeton Global Growth Fund (a) ___ (a) ___ (a) ___ (a) ___
(b) ___ (b) ___ (b) ___ (b) ___
Templeton Pacific Growth 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>
<TABLE>
<CAPTION>
You would pay the following expenses on a $1,000 investment, assuming a 5% annual
return on your money if your Contract is not surrendered or if you apply your Contract
value to an Annuity Option for Contracts with:
(a) the traditional death benefit
(b) the enhanced death benefit
Sub-Account 1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM V.I. Capital Appreciation Fund (a)$___ (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) ___
(b) ___ (b) ___ (b) ___
Davis VA Value Portfolio (a) ___ (a) ___ (a) ___ (a) ___
(b) ___ (b) ___ (b) ___ (b) ___
Franklin Growth and Income Fund (a) ___ (a) ___ (a) ___ (a) ___
(b) ___ (b) ___ (b) ___ (b) ___
(c) ___ (c) ___ (c) ___ (c) ___
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 VA Global Securities
Fund (a) ___ (a) ___ (a) ___ (a) ___
(b) ___ (b) ___ (b) ___ (b) ___
Oppenheimer VA High Income Fund (a) ___ (a) ___ (a) ___ (a) ___
(b) ___ (b) ___ (b) ___ (b) ___
Oppenheimer VA Main Street Growth &
Income Fund (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
Fund (a) ___ (a) ___ (a) ___ (a) ___
(b) ___ (b) ___ (b) ___ (b) ___
Seligman Small Cap Value Fund (a) ___ (a) ___ (a) ___ (a) ___
(b) ___ (b) ___ (b) ___ (b) ___
Templeton Developing Markets
Equity Fund (a) ___ (a) ___ (a) ___ (a) ___
(b) ___ (b) ___ (b) ___ (b) ___
Templeton Global Growth Fund (a) ___ (a) ___ (a) ___ (a) ___
(b) ___ (b) ___ (b) ___ (b) ___
Templeton Pacific Growth 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>
THE VARIABLE ANNUITY CONTRACT
- --------------------------------------------------------------------------------
This prospectus describes a flexible purchase payment variable deferred annuity
contract with a Fixed Account offered by Allianz Life. All references in this
prospectus to "we, us, our" refer to Allianz Life.
* Flexible Purchase Payments means that you may choose to make Purchase
Payments at any time during the Accumulation Phase, in whatever amount
you choose, subject to certain minimum and maximum requirements.
* A deferred annuity contract means that Annuity Payments do not begin
for a specified period of time in the future (usually when you retire)
or until you reach a certain age.
* A variable annuity is one in which Contract values and the variable
Annuity Payments vary depending on the performance of the
Portfolios of the Underlying Mutual Funds.
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 three years after we
issue the Contract. Until you decide to begin receiving Annuity Payments,
your annuity is in the Accumulation Phase. Once you begin receiving Annuity
Payments, your Contract switches to the Payout Phase.
The Contract benefits from Tax Deferral. Tax Deferral means that you are not
taxed on any earnings or appreciation on the assets in your Contract until you
take money out of your Contract.
You have 38 Investment Options- the 37 Sub-Accounts, each of which invests in
one Portfolio of an Underlying Mutual Fund, 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.
If you select the variable annuity portion of the Contract, the amount of money
you are able to accumulate in your Contract during the Accumulation Phase
depends in large part upon the investment performance of the Portfolio(s) you
select. The amount of the Annuity Payments you receive during the Payout Phase
from the variable annuity portion of the Contract also depends in large part
upon the investment performance of the Portfolios you select for the Payout
Phase.
The Contract also contains a Fixed Account. The Fixed Account offers an interest
rate that is guaranteed by Allianz Life for all deposits made within the 12
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 as designated at the time the Contract is
issued, unless changed. You may change Contract Owners at any time. The change
will become effective as of the date the request is signed. This may be a
taxable event. Allianz Life is not responsible for any tax consequences of any
such change. You should consult with your tax adviser before requesting a
change.
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 primary Beneficiary. Any other Beneficiary designation at the
time the Contract was issued or as may have been later changed will be treated
as a contingent Beneficiary unless otherwise indicated.
Annuitant. The Annuitant is the natural person on whose life we base Annuity
Payments. You name an Annuitant (subject to our underwriting rules then in
effect). You may change the Annuitant at any time before the Income Date unless
the Contract is owned by a non-individual (for example, a corporation).
Beneficiary. The Beneficiary is the person(s) or entity you name to receive any
death benefit. The Beneficiary is named at the time the Contract is issued
unless changed at a later date. Unless an irrevocable Beneficiary has been
named, you can change the Beneficiary or contingent Beneficiary.
Assignment. You can transfer ownership of (assign) the Contract at any time
during your lifetime. Allianz Life will not be liable for any payment or other
action we take in accordance with the Contract before we record the assignment.
Any assignment made after the death benefit has become payable can only be done
with our consent. An assignment may be a taxable event.
If the Contract is issued pursuant to a Qualified plan, you may be unable to
assign the Contract.
ANNUITY PAYMENTS (THE PAYOUT PHASE)
- --------------------------------------------------------------------------------
Income Date
You can receive regular monthly income payments under your Contract. You can
choose the month and year in which those payments begin. We call that date the
Income Date. Your Income Date must be the first day of a calendar month and must
be at least 3 years after we issue the Contract.
We ask you to choose your Income Date when you purchase the Contract. You can
change it at any time before the Income Date with 30 days notice to us. Your
Income Date must not be later than the Annuitant's 90th birthday or 10 years
from the date the Contract was issued, or the maximum date permitted under state
law.
Annuity Payments
You may elect to receive your Annuity Payments as:
* a variable payout,
* a fixed payout, or
* a combination of both.
Under a fixed payout, all of the Annuity Payments will be the same dollar amount
(equal installments). If you choose a variable payout, you can select from the
available Sub-Accounts. If you do not tell us otherwise, your Annuity
Payments will be based on the investment allocations that were in place on the
Income Date.
If you choose to have any portion of your Annuity Payments based on the
investment performance of the Sub-Account(s), the dollar amount of your
payments will depend upon three factors:
1) the value of your Contract in the Sub-Account(s) on the Income
Date,
2) the assumed investment rate used in the annuity table for the
Contract, and
3) the performance of the Sub-Account(s) you selected.
The assumed investment rate (AIR) is 5%. However, we may agree with you to use
a different value. The AIR will never exceed 7%. The 7% AIR is not available in
all states. If the actual performance exceeds the AIR, your Annuity
Payments will increase. Similarly, if the actual rate is less than the AIR,
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. Allianz Life may make available
other Annuity Options. You may, at any time prior to the Income Date, 30 days
in advance, select and/or change the Annuity Option. After Annuity Payments
begin, you cannot change the Annuity Option. If you do not choose an Annuity
Option prior to the Income Date, we will assume that you selected Option 2
which provides a life annuity with 10 years of monthly payments guaranteed.
Option 1. Life Annuity. Under this option, we will make monthly Annuity Payments
so long as the Annuitant is alive. After the Annuitant dies, we stop making
Annuity Payments.
Option 2. Life Annuity with Monthly Payments Over 10, 15 or 20 Years
Guaranteed. Under this option, we will make monthly Annuity Payments so long as
the Annuitant is alive. However, if the Annuitant dies before the end of the
selected guaranteed period, we will continue to make Annuity Payments to you or
any person you choose for the rest of the guaranteed period. Alternatively, if
you do not want to receive Annuity Payments after the Annuitant's death, you can
ask us for a single lump sum equal to the present value of the guaranteed
monthly Annuity Payments remaining, as of the date Allianz Life receives notice
of the Annuitant's death, commuted as set forth in the Contract.
During the lifetime of the Annuitant, and while the number of Annuity Payments
made is less than the guaranteed number of payments elected, and if you elected
to receive payments on a variable basis, you may request a surrender (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 Annuity Payments, to the end of the
period certain, commuted at the AIR. The total of all partial liquidations,
measured as a percentage of the liquidation value, cannot exceed 75% of the
liquidation value, less any previously liquidated amounts. A commutation fee
will be subtracted from the amount liquidated before the proceeds are paid out.
Partial liquidations will be processed on the next annuity payment date
following your written request. 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 to you can be
equal to 100%, 75% or 50% (as selected) of the amount that was being paid when
both Annuitants were alive. The monthly Annuity Payments will end when the last
surviving Annuitant dies.
Option 4. Joint and Last Survivor Annuity with Monthly Payments Over 10, 15 or
20 Years Guaranteed. Under this option, we will make monthly Annuity Payments
during the joint lifetime of the Annuitant and the joint Annuitant. When the
Annuitant dies, if the joint Annuitant is still alive, we will continue to make
Annuity Payments, so long as the surviving Annuitant continues to live, at 100%
of the amount that was being paid when both were alive. If, when the last death
occurs, we have made Annuity Payments for less than the selected guaranteed
period, we will continue to make Annuity Payments to you or any person you
choose for the rest of the guaranteed period. Alternatively, if you do not want
to receive Annuity Payments after the Annuitant's death, you can ask us for a
single lump sum equal to the present value of the guaranteed monthly Annuity
Payments remaining, as of the date Allianz Life receives notice of the
Annuitant's death, commuted as set forth in the Contract.
During the lifetime of the Annuitant 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
surrender (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
Annuity Payments, to the end of the period certain, commuted at the AIR. The
total of all partial liquidations, measured as a percentage of the liquidation
value, cannot exceed 75% of the liquidation value, less any previously
liquidated amounts. A commutation fee will be subtracted from the amount
liquidated before the proceeds are paid out. Partial liquidations will be
processed on the next annuity payment date following your written request. 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. The last Annuity Payment will be made
before the Annuitant dies and if the value of the Annuity Payments made is less
than the value applied to the Annuity Option, then you will receive a refund.
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 annuity 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 the Annuity Unit 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 10 to 30. If at the time of
the death of the last Annuitant and any joint Annuitant, Annuity Payments have
been made for less than the specified period certain, then we will continue to
make Annuity Payments to you for the rest of the period certain. If you have
selected to receive payments under a variable annuity option, you may make a
surrender representing a partial liquidation at least once each Contract year of
up to 100% of the Liquidation Value in the Contract. A commutation fee will be
subtracted from the amount liquidated before the proceeds are paid out. The
liquidation will be processed on the next annuity payment date after your
written request is received as set forth in the Contract.
PURCHASE
- --------------------------------------------------------------------------------
Purchase Payments
A Purchase Payment is the money you invest in the Contract. The Purchase Payment
requirements are:
* the minimum initial payment Allianz Life will accept to establish a
Contract is $15,000.
* the maximum amount we will accept without our prior approval is $1
million.
* you can make additional Purchase Payments of $250 (or as low as $100
if you have selected the Automatic Investment Plan) or more.
Allianz Life may, at its sole discretion, waive the minimum payment
requirements. We reserve the right to decline any Purchase Payments. At the time
you buy the Contract, you and the Annuitant cannot be older than 80 years old.
This product is not designed for professional market timing organizations, other
entities, or persons using programmed, large or frequent transfers.
Bonus
Allianz Life will credit each Purchase Payment you make prior to your and the
Joint Owner's 81st birthday with a bonus at the time it is made. The bonus
rate will be based on the total amount of Purchase Payments made at the time
of the contribution, less any surrenders you have made (and applicable
contingent deferred sales charges). The bonus rates are:
4% of the Purchase Payment with total Purchase Payments (less surrenders and
related contingent deferred sales charges) of under $25,000;
5% of the Purchase Payment with total Purchase Payments (less surrenders and
related contingent deferred sales charges) of $25,000 - $99,999;
6% of the Purchase Payment with total Purchase Payments (less surrenders and
related contingent deferred sales charges) of $100,000 - $999,999;
7% of the Purchase Payment with total Purchase Payments (less surrenders and
related contingent deferred sales charges) of $1,000,000 - $4,999,999;
8% of the Purchase Payment with total Purchase Payments (less surrenders and
related contingent deferred sales charges) of $5,000,000 or greater.
The bonus will be credited to your Contract subject to the following terms:
(1) Bonus amounts are available for surrender only when such amounts become
vested as follows:
0% - up through 12 completed months from the date of Purchase Payment;
35% - at least 12 and through 24 completed months from date of
Purchase Payment;
70% - at least 24 months and through 36 completed months from date of
Purchase Payment;
100% - at least 36 completed months from date of Purchase Payment.
(2) All bonus amounts and any gains or losses attributable to such amounts are
treated as earnings under the Contract.
(3) All gains and losses attributable to the bonus are part of your Contract
Value and are always 100% vested.
(4) If Joint Owners are named, the age of the older Joint Owner will be used
and if the Contract Owner is a non-natural person, then the age of the
Annuitant will be used to determine whether a bonus applies.
All bonus amounts are paid from the general account assets of Allianz Life.
Automatic Investment Plan
The Automatic Investment Plan (AIP) is a program which allows you to make
additional Purchase Payments to your Contract on a monthly or quarterly basis by
electronic transfer of monies from your savings, checking or brokerage account.
You may participate in this program by completing the appropriate form. We must
receive your form by the first of the month in order for AIP to begin that same
month. Investments will take place on the 20th of the month, or the next
business day. The minimum investment that can be made by AIP is $100. You may
stop AIP at any time you want. We need to be notified by the first of the month
in order to stop or change AIP that month. If AIP is used for a Qualified
Contract, you should consult your tax adviser for advice regarding maximum
contributions.
Allocation of Purchase Payments
When you purchase a Contract, we will allocate your Purchase Payment and
bonus amounts to the Fixed Account and/or one or more of the Sub-Accounts
you have selected. We ask that you allocate your money in either whole
percentages or round dollars. The Fixed Account may not be available in your
state (check with your registered representative). Transfers do not change
the allocation instructions for payments. You can instruct us how to
allocate additional Purchase Payments and bonus amounts. If you do not
instruct us, we will allocate them in the same way as your previous
instructions to us. You may change the allocation of future payments without
fee, penalty or other charge upon written notice or telephone
instructions to the USAllianz Service Center. A change will be effective for
payments received on or after we receive your notice or instructions.
Allianz Life reserves the right to limit the number of Sub-Accounts that you
may invest in at one time. Currently, you may invest in 10 Investment Options,
which include the Sub-Accounts 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 Sub-Accounts.
Once we receive your Purchase Payment and the necessary information, we will
issue your Contract and allocate your first Purchase Payment within 2 business
days. If you do not give us all of the information we need, we will contact you
or your registered representative to get it. If for some reason we are unable to
complete this process within 5 business days, we will either send back your
money or get your permission to keep it until we get all of the necessary
information. If you make additional Purchase Payments, we will credit these
amounts to your Contract within one business day. Our business day closes when
the New York Stock Exchange closes, which is usually at 4:00 p.m. Eastern time.
Free Look
If you change your mind about owning the Contract, you can cancel it within 10
days after receiving it (or the period required in your state). When you cancel
the Contract within this time period, Allianz Life will not assess a contingent
deferred sales charge. Allianz Life will refund your Contract Value as of 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
Sub-Accounts and/or the Fixed Account as you have selected.
Rewards Value and Contract Value
The Rewards Value of your Contract is the dollar value as of any business day
of all amounts accumulated under your Contract including all vested and
unvested bonus amounts and gains and losses attributable to all bonus amounts.
The Contract Value is the Rewards Value of your Contract as of any business
day less any unvested bonus.
Accumulation Units
The value of the portion of your Contract allocated to the Sub-Accounts will
go up or down based upon the investment performance of the Sub-Account(s)
you choose. The value of your Contract will also depend on the expenses of the
Contract. In order to keep track of the value of your Contract, we use a
measurement called an Accumulation Unit (which is like a share of a mutual
fund). During the Payout Phase of the Contract we call it an Annuity Unit.
Every business day we determine the value of an Accumulation Unit for each
Sub-Account by multiplying the Accumulation Unit value for the previous
period by a factor for the current period. The factor is determined by:
1. dividing the value of a Portfolio at the end of the current period by
the value of a Portfolio for the previous period; and
2. multiplying it by one minus the daily amount of the mortality and
expense risk charge, administrative charge and distribution expense
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 and bonus amount allocated to a
Sub-Account. The number of Accumulation Units we credit your Contract with
is determined by dividing the amount of the Purchase Payment and bonus amount
allocated to a Sub-Account 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 and
assume the bonus rate is 4%. 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
$3,120 ($3,000 Purchase Payment plus $120 bonus amount) by $13.25 and credit
your Contract on Wednesday night with 235.47 Accumulation Units.
INVESTMENT OPTIONS
The Contract offers Sub-Accounts. Each Sub-Account invests in one of the
Portfolios of the Underlying Mutual Funds listed below. Each Portfolio has its
own investment objective. Additional Portfolios may be available in the future.
The Contract also offers a Fixed Account of Allianz Life.
You should read the Fund prospectuses carefully before investing.
Franklin Templeton Variable Insurance Products Trust (formerly, Franklin
Valuemark Funds) issues two classes of shares. Only Class 2 shares are
available in connection with your Contract. Class 2 shares have Rule 12b-1
plan expenses.
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
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 funds have the same investment advisers.
The following is a list of the Portfolios available under the Contract
and investment advisers for each Portfolio:
<TABLE>
<CAPTION>
Investment
Available Portfolios Advisers
- -------------------------------------------------------------------------------
<S> <C>
AIM VARIABLE INSURANCE FUNDS, INC.:
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 (seeks long
term capital appreciation) Fred Alger Management, Inc.
Alger American MidCap Growth Portfolio Fred Alger Management, Inc.
Alger American Small Capitalization Portfolio Fred Alger Management, Inc.
DAVIS VARIABLE ACCOUNT FUND, INC.:
Davis Financial Portfolio Davis Selected Advisers, LP
Davis Real Estate Portfolio Davis Selected Advisers, LP
Davis Value Portfolio Davis Selected Advisers, LP
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST:
Franklin Growth and Income 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 (capital appreciation with
income as a secondary goal) Franklin Mutual Advisers, LLC
Templeton Developing Markets Equity Fund Templeton Asset Management Ltd.
Templeton Global Growth Fund Templeton Global Advisors Limited
Templeton Pacific Growth 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 VA Global Securities Fund OppenheimerFunds, Inc.
Oppenheimer VA High Income Fund OppenheimerFunds, Inc.
Oppenheimer VA Main Street Growth & Income Fund 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 Underlying Mutual Funds 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 Underlying Mutual Funds may also be sold directly
to qualified plans. The Underlying Mutual Funds 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 Underlying Mutual Funds' advisers, distributors
and/or affiliates for the administrative services which it provides to
the Portfolios.
Transfers
You can transfer money among the Investment Options. 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 manager's judgment, a Portfolio would be unable to
invest effectively in accordance with its investment objectives and policies,
or would otherwise potentially be adversely affected.
The following applies to any transfer:
1. We may not allow you to make transfers during the free look period.
2. Your request for a transfer must clearly state:
* which Sub-Account(s) and/or the Fixed Account is involved in
the transfer; and
* how much the transfer is for.
3. You cannot make any transfers within 7 calendar days prior to the date
your first Annuity Payment is due.
4. After the Income Date, you may not make a transfer from a fixed
Annuity Option to a variable Annuity Option.
5. After the Income Date, you can make transfers from a variable Annuity
Option to a fixed Annuity Option.
6. Your right to make transfers is subject to modification if we
determine in our sole opinion that the service of the right by one or
more Contract Owners is, or would be, to the disadvantage of other
Contract Owners. Restrictions may be applied in any manner reasonably
designed to prevent any use of the transfer right which we consider to
be to the disadvantage of other Contract Owners. A modification could
be applied to transfers to or from one or more of the Sub-Accounts
and could include, but is not limited to:
* the requirement of a minimum time period between each transfer;
* not accepting a transfer request from an agent acting under a
power of attorney on behalf of more than one Contract Owner; or
* limiting the dollar amount that may be transferred between the
Sub-Accounts by a Contract Owner at any one time.
Allianz Life has reserved the right at any time without prior notice to any
party to modify the transfer provisions subject to the guarantees described
above and subject to applicable state law.
Telephone Transfers. You can make transfers by telephone. We may allow you to
authorize someone else to make transfers by telephone on your behalf. If you own
the Contract with a Joint Owner, unless you instruct Allianz Life otherwise, we
will accept instructions from either one of you. Allianz Life will use
reasonable procedures to confirm that instructions given to us by telephone are
genuine. If we do not use such procedures, we may be liable for any losses due
to unauthorized or fraudulent instructions. Allianz Life tape records all
telephone instructions.
Dollar Cost Averaging Program
The Dollar Cost Averaging Program allows you to systematically transfer a set
amount of money each month or quarter from any one Sub-Account or the Fixed
Account to up to eight of the other Sub-Accounts. The Sub-Account(s) you
transfer from may not be the Sub-Account(s) you transfer to in this program.
You cannot dollar cost average to the Fixed Account. 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.
Generally, the Dollar Cost Averaging Program requires a minimum transfer of
$500 per month (or $1,500 per quarter). You must have a $3,000 minimum
allocation to participate in the program.
All Dollar Cost Averaging transfers will be made on the 10th day of the month
unless that day is not a business day. If it is not, then the transfer will
be made the next business day. You may elect either program by properly
completing the Dollar Cost Averaging form provided by Allianz Life.
Your participation in the program will end when any of the following occurs:
* the number of desired transfers have been made;
* you do not have enough money in the Sub-Account(s) or the Fixed
Account to make the transfer (if less money is available, that amount
will be dollar cost averaged and the program will end);
* you request to terminate the program (your request must be received by
us by the first of the month to terminate that month); or
* the Contract is terminated.
Allianz Life may, from time to time, offer special Dollar Cost Averaging
programs.
If you participate in the Dollar Cost Averaging Program, the transfers made
under the program are not taken into account in determining any transfer fee.
You may not participate in the Dollar Cost Averaging Program and Flexible
Rebalancing at the same time.
Flexible Rebalancing
Once your money has been invested, the performance of the Sub-Accounts may
cause your chosen allocation to shift. Flexible Rebalancing is designed to help
you maintain your specified allocation mix among the different Sub-Accounts.
The Fixed Account is not part of Flexible Rebalancing. You can direct us to
readjust your Rewards Value on a quarterly, semi-annual or annual basis to
return to your original Sub-Account allocations. Flexible Rebalancing
transfers will be made on the 20th day of the month unless that day is not a
business day. If it is not, then the transfer will be made on the previous
business day. If you participate in Flexible Rebalancing, the transfers made
under the program are not taken into account in determining any transfer fee.
Financial Advisers - Asset Allocation Programs
Allianz Life understands the importance of advice from a financial adviser
regarding your investments in the Contract (asset allocation program). Certain
investment advisers have made arrangements with us to make their services
available to you. Allianz Life has not made any independent investigation of
these advisers and is not endorsing such programs. You may be required to enter
into an advisory agreement with your investment adviser to have the fees paid
out of your Contract during the Accumulation Phase.
Allianz Life will, pursuant to an agreement with you, make a partial withdrawal
from the value of your Contract to pay for the services of the investment
adviser. If the Contract is Non-Qualified, the withdrawal will be treated like
any other distribution and may be included in gross income for federal tax
purposes and, if you are under age 59 1/2, may be subject to a tax penalty. If
the Contract is Qualified, the withdrawal for the payment of fees may not be
treated as a taxable distribution if certain conditions are met. You should
consult a tax adviser regarding the tax treatment of the payment of investment
adviser fees from your Contract.
Voting Privileges
Allianz Life is the legal owner of the Portfolio shares. However, when a
Portfolio solicits proxies in conjunction with a shareholder vote which
affects your investment, Allianz Life will obtain from you and other affected
Contract Owners instructions as to how to vote those shares. When we receive
those instructions, we will vote all of the shares we own in proportion to
those instructions. This will also include any shares that Allianz Life owns
on its own behalf. Should Allianz Life determine that it is no longer required
to comply with the above, we will vote the shares in our own right.
Substitution
Allianz Life may substitute one of the Sub-Accounts you have selected with
another Sub-Account. 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 Sub-Account if we deem
the investment inappropriate.
EXPENSES
- --------------------------------------------------------------------------------
There are charges and other expenses associated with the Contract that will
reduce your investment return. These charges and expenses are:
Insurance Charges
Each day, Allianz Life makes a deduction for its insurance charges. Allianz Life
does this as part of its calculation of the value of the Accumulation Units and
the Annuity Units. The insurance charge consists of:
1) the mortality and expense risk charge,
2) the administrative charge, and
3) the distribution expense charge.
Mortality and Expense Risk Charge. The amount of the mortality and expense risk
charge depends on whether you select the traditional death benefit or the
enhanced death benefit.
* Traditional Death Benefit. The charge is equal, on an annual basis, to
1.50% of the average daily value of the Contract invested in a Sub-
Account.
* Enhanced Death Benefit: The charge is equal, on an annual basis, to
1.70% of the average daily value of the Contract invested in a Sub-
Account.
This charge compensates us for all the insurance benefits provided by your
Contract (for example, our contractual obligation to make Annuity Payments, the
death benefits, certain expenses related to the Contract, and for assuming the
risk (expense risk) that the current charges will be insufficient in the future
to cover the cost of administering the Contract).
Administrative Charge. This charge is equal, on an annual basis, to .15% of the
average daily value of the Contract invested in a Sub-Account. This charge,
together with the contract maintenance charge (which is explained below), is for
all the expenses associated with the administration of the Contract. Some of
these expenses include: preparation of the Contract, confirmations, annual
statements, maintenance of Contract records, personnel costs, legal and
accounting fees, filing fees, and computer and systems costs.
Distribution Expense Charge. Currently, Allianz Life is compensated for certain
of its costs associated with distributing the Contract from certain Funds
through their Rule 12b-1 plans. Allianz Life does not currently deduct a
Distribution Expense Charge. In the event that Allianz Life is no longer
compensated for its distribution expenses through the Funds, it may, in its sole
discretion, charge a Distribution Expense Charge. The charge is guaranteed not
to exceed .30% of the average daily net asset value of the Contract invested in
a Sub-Account.
Contract Maintenance Charge
Every year, at each Contract anniversary, Allianz Life deducts $40 from the
Rewards Value of your Contract as a contract maintenance charge. The fee is
assessed on the last day of each Contract year. The charge is deducted pro rata
from the Sub-Accounts and the Fixed Account. The charge is for
administrative expenses (see above).
However, if the Rewards Value of your Contract is at least $75,000 when the
deduction for the charge is to be made, Allianz Life will not deduct this
charge. If you own more than one Contract offered under this prospectus,
Allianz Life will determine the total Rewards Value of all your Contracts.
If the total Rewards Value of all Contracts registered under the same social
security number is at least $75,000, Allianz Life will not assess the
contract maintenance charge (except in New Jersey). If the Contract is
owned by a non-natural person (e.g., a corporation), Allianz Life
will look to the Annuitant to determine if it will assess the charge.
If you make a complete surrender from your Contract other than on a Contract
anniversary and your Rewards Value is less than $75,000, Allianz Life will
deduct the full contract maintenance charge. During the Payout Phase, the
charge will be collected monthly out of each Annuity Payment.
Contingent Deferred Sales Charge
Surrenders may be subject to a contingent deferred sales charge. During the
Accumulation Phase, you can make surrenders from your Contract. Allianz Life
keeps track of each Purchase Payment you make. The amount of the contingent
deferred sales charge depends upon the length of time since you made your
Purchase Payment. The charge is:
Number of Complete Years
Since Receipt of Purchase
Payment Charge
- --------------------------------------------------------------
0-1 8.5%
1-2 8.5%
2-3 8.5%
3-4 8.5%
4-5 8.0%
5-6 7.0%
6-7 6.0%
7-8 5.0%
8-9 4.0%
9-10 3.0%
10 years or more 0.0%
However, after Allianz Life has had a Purchase Payment for 10 full years, there
is no charge when you surrender that Purchase Payment. The charge is
calculated at the time of each surrender. For partial surrenders, the charge
is deducted from the remaining Rewards Value and is deducted pro rata from the
Sub-Accounts and Fixed Account. For purposes of the contingent deferred
sales charge, Allianz Life treats surrenders as coming from the oldest
Purchase Payments first and from all Purchase Payments first. Allianz Life
does not assess the contingent deferred sales charge on any payments paid out
as Annuity Payments or as death benefits. The contingent deferred sales
charge compensates Allianz Life for expenses associated with selling the
Contract.
NOTE: For tax purposes, surrenders 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 Surrender Privilege. Each Contract year, on a non-cumulative basis
you can make multiple surrenders up to 10% of Purchase Payments (less any
previous surrenders taken in the current Contract year which were not subject
to a contingent deferred sales charge) and no contingent deferred sales
charge will be deducted from the 10% you take out. If you make a surrender of
more than the free amount, the amount over the 10% free amount will be subject
to the contingent deferred sales charge. Purchase Payment surrendered under the
Partial Surrender Privilege without a contingent deferred sales charge will be
subject to the applicable contingent deferred sales charge upon full surrender
of the Contract. The Partial Surrender Privilege is not available for full
surrenders. The 10% free available for each Purchase Payment taken by a partial
surrender will reduce the remaining free amount available.
You may also elect to participate in the Systematic Withdrawal Program or the
Minimum Distribution Program. These programs allow you to make surrenders
without the deduction of the contingent deferred sales charge under certain
circumstances. See "Access to Your Money" for a description of the Systematic
Withdrawal Program and the Minimum Distribution Program.
Waiver of Contingent Deferred Sales Charge Benefits. Under certain
circumstances, Allianz Life will permit you to take your money out of the
Contract without deducting a contingent deferred sales charge:
1) if after the third year of the Contract, you or the Joint Owner become
confined to a nursing home or hospital for 90 consecutive days; or
2) if after the first year of the Contract, you or the Joint Owner become
terminally ill, which is defined as life expectancy of 12 months or
less (a full withdrawal of the Contract will be required).
The waiver will not apply if any of the above conditions existed on the date
your Contract was issued.
Also, after the first year, if you or the Joint Owner become unemployed for at
least 90 consecutive days, you can take up to 50% of your money out of the
Contract without incurring a contingent deferred sales charge. Only one partial
surrender is available under this benefit during the life of the Contract. You
may not use both this benefit and the 10% Partial Surrender Privilege in the
same Contract year.
These benefits vary from state to state or may not be available in your state.
(Check with your registered representative.)
Surrenders may be subject to a 10% tax penalty in addition to any income taxes
due.
Reduction or Elimination of the Contingent Deferred Sales Charge. Allianz Life
may reduce or eliminate the amount of the contingent deferred sales charge when
the Contract is sold under circumstances which reduce its sales expenses. Some
examples are: if there is a large group of individuals that will be purchasing
the Contract or a prospective purchaser already had a relationship with Allianz
Life. Allianz Life may not deduct a contingent deferred sales charge under a
Contract issued to an officer, director or employee of Allianz Life or any of
its affiliates. Also, Allianz Life may reduce or not deduct a contingent
deferred sales charge when a Contract is sold by an agent of Allianz Life to any
members of his or her immediate family and the commission is waived. We require
our prior approval for any reduction or elimination of the contingent deferred
sales charge.
Commutation Fee
If you elect Annuity Option 2, 4 or 6 and make a liquidation, a commutation fee
will be assessed against the amount liquidated. The commutation fee is a
percentage of the amount liquidated and is equal to:
Years Since Income Date Commutation Factor
- ----------------------- ------------------
0 - 1 7%
1 - 2 6%
2 - 3 5%
3 - 4 4%
4 - 5 3%
5 - 6 2%
Over 6 1%
Transfer Fee
You can make 12 free transfers every year. We measure a year from the day we
issue your Contract. If you make more than 12 transfers a year, we will deduct a
transfer fee of $25 for each additional transfer. The transfer fee will be
deducted from the Investment Option (Sub-Account(s) 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, it will not count in
determining the transfer fee.
Premium Taxes
Some states and other governmental entities (e.g., municipalities) charge
premium taxes or similar taxes. Allianz Life is responsible for the payment of
these taxes. We will make a deduction from the value of the Contract for them.
Some of these taxes are due when the Contract is issued, others are due when
Annuity Payments begin. It is Allianz Life's current practice to not charge you
for these taxes until you die, Annuity Payments begin or you make a complete
withdrawal. Allianz Life may discontinue this practice in the future and assess
the charge when the tax is due. Premium taxes generally range from 0% to 3.5% of
the Purchase Payment, depending on the state.
Income Taxes
Allianz Life reserves the right to deduct from the Contract for any income taxes
which it may incur because of the Contract. Currently, Allianz Life is not
making any such deductions.
Portfolio Expenses
There are deductions from the assets of the various Portfolios for operating
expenses (including management fees), which are described in the Fee Table in
this prospectus and the prospectuses for the Funds.
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).
You, as the Contract Owner, will not be taxed on increases in the value of your
Contract until a distribution occurs either as a surrender or as Annuity
Payments. When you make a surrender you are taxed on the amount of the
surrender that is earnings. For Annuity Payments, different rules apply. A
portion of each Annuity Payment you receive will be treated as a partial return
of your Purchase Payments and will not be taxed. The remaining portion of the
Annuity Payment will be treated as ordinary income. How the Annuity Payment is
divided between taxable and non-taxable portions depends upon the period over
which the Annuity Payments are expected to be made. Annuity Payments received
after you have received all of your Purchase Payments are fully includible in
income.
When a Non-Qualified Contract is owned by a non-natural person (e.g., a
corporation or certain other entities other than a trust holding the Contract as
an agent for a natural person), the Contract will generally not be treated as an
annuity for tax purposes. This means that the Contract may not receive the
benefits of Tax Deferral. Income may be taxed as ordinary income every year.
Qualified and Non-Qualified Contracts
If you purchase the Contract under a Qualified plan, your Contract is referred
to as a Qualified Contract. Examples of Qualified plans are: Individual
Retirement Annuities including Roth IRAs (IRAs), Tax-Sheltered Annuities
(sometimes referred to as 403(b) contracts), and pension and profit-sharing
plans, which include 401(k) plans and H.R. 10 plans. If you do not purchase the
Contract under a Qualified plan, your Contract is referred to as a Non-Qualified
Contract.
Multiple Contracts
The Code provides that multiple Non-Qualified annuity contracts which are issued
within a calendar year period to the same Contract Owner by one company or its
affiliates are treated as one annuity contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences, including more rapid taxation of the distributed amounts from such
combination of contracts. For purposes of this rule, contracts received in a
Section 1035 exchange will be considered issued in the year of the exchange. You
should consult a tax adviser prior to purchasing more than one Non-Qualified
annuity contract in any calendar year period.
Surrenders - Non-Qualified Contracts
If you make a surrender from your Contract, the Code treats such a surrender
as first coming from earnings and then from your Purchase Payments. In most
cases, such surrendered earnings are includible in income.
The Code also provides that any amount received under an annuity contract which
is included in income may be subject to a tax penalty. The amount of the penalty
is equal to 10% of the amount that is includible in income. Some surrenders
will be exempt from the penalty. They include any amounts:
(1) paid on or after the taxpayer reaches age 59 1/2;
(2) paid after you die;
(3) paid if the taxpayer becomes totally disabled (as that term is defined
in the Code);
(4) paid in a series of substantially equal payments made annually (or
more frequently) for life or a period not exceeding life expectancy;
(5) paid under an immediate annuity; or
(6) which come from purchase payments made prior to August 14, 1982.
With respect to (4) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first Annuity Payment, then the tax for the year of the
modification is increased by the penalty tax that would have been imposed
without the exception, plus interest for the tax years in which the exception
was used. A partial liquidation (surrender) 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.
Surrenders - Qualified Contracts
The above information describing the taxation of Non-Qualified Contracts does
not apply to Qualified Contracts. There are special rules that govern Qualified
Contracts. A more complete discussion of surrenders from Qualified Contracts is
contained in the Statement of Additional Information.
Surrenders - Tax-Sheltered Annuities
The Code limits the surrender of amounts attributable to Purchase Payments made
pursuant to a salary reduction agreement by Contract Owners from Tax-Sheltered
Annuities. Surrenders 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 surrender the Purchase Payments and not any
earnings.
Diversification
The Code provides that the underlying investments for a variable annuity must
satisfy certain diversification requirements in order to be treated as an
annuity contract. Allianz Life believes that the Portfolios are being managed so
as to comply with the requirements.
Neither the Code nor the Internal Revenue Service Regulations issued to date
provide guidance as to the circumstances under which you, because of the degree
of control you exercise over the underlying investments, and not Allianz Life,
would be considered the owner of the shares of the Portfolios. If you are
considered the owner of the shares, it will result in the loss of the favorable
tax treatment for the Contract. It is unknown to what extent under federal tax
law Contract Owners are permitted to select Portfolios, to make transfers among
the Portfolios or the number and type of Portfolios Contract Owners may select
from without being considered the owner of the shares. If any guidance is
provided which is considered a new position, then the guidance would generally
be applied prospectively. However, if such guidance is considered not to be a
new position, it may be applied retroactively. This would mean that you, as the
owner of the Contract, could be treated as the owner of the Portfolios.
Due to the uncertainty in this area, Allianz Life reserves the right to modify
the Contract in an attempt to maintain favorable tax treatment.
ACCESS TO YOUR MONEY
- --------------------------------------------------------------------------------
You can have access to the money in your Contract:
* by making a partial or total surrender;
* by receiving Annuity Payments; or
* when a death benefit is paid to your Beneficiary.
In general, surrenders can only be made during the Accumulation Phase. Under
certain circumstances, you can take money out of the Contract during the Payout
Phase if you select Annuity Option 2, 4 or 6 (See "Annuity Payments (The Payout
Phase)").
When you make a complete surrender you will receive the value of the Contract
on the day the withdrawal request is received at the Service Center:
* less any applicable contingent deferred sales charge,
* less any premium tax, and
* less any contract maintenance charge.
(See "Expenses" for a discussion of the charges.)
Any partial surrender must be for at least $500. Unless you instruct Allianz
Life otherwise, the partial surrender will be made pro-rata from all the
Sub-Accounts and the Fixed Account you selected. After you make a partial
withdrawal the value of your Contract must be at least $10,000.
Partial surrenders in excess of the Partial Surrender Privilege will reduce
unvested bonus amounts by such excess amount's percentage of the Contract Value
at the time of the surrender. This percentage is determined by dividing the
amount of the partial surrender (including any contingent deferred sales charge)
in excess of the Partial Surrender Privilege amount by the Contract Value.
We will pay the amount of any surrender from the Sub-Accounts 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 surrender
you make.
There are limits to the amount you can surrender 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. The minimum
amount you can surrender under the program is $500. The Systematic Withdrawal
Program is subject to the Partial Surrender Privilege which means that the total
systematic surrenders which you can make each year without Allianz Life
deducting a contingent deferred sales charge is limited to 10% of your Purchase
Payments for that year. This is determined on the last business day prior to the
day your request is received. If a Purchase Payment is no longer subject to a
contingent deferred sales charge, there is no limit to the amount or percentage
which can be taken under this program. 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 surrender will be made the previous business day.
Income taxes, tax penalties and certain restrictions may apply to systematic
withdrawals.
Minimum Distribution Program
If you own a Qualified Contract, 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 Qualified Contracts. Such surrenders may
be subject to the contingent deferred sales charge. If the value of your
Contract is at least $25,000, Allianz Life will make payments to you on a
monthly or quarterly basis. If the value of your Contract is less than $25,000
payments can only be made annually. The payments will not be subject to the
contingent deferred sales charge. However, they will be subject to the limits of
the 10% Partial Surrender Privilege.
You cannot participate in the Systematic Withdrawal Program and the Minimum
Distribution Program at the same time.
Suspension of Payments or Transfers
Allianz Life may be required to suspend or postpone payments for withdrawals or
transfers for any period when:
1. the New York Stock Exchange is closed (other than customary weekend
and holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of the Portfolio
shares is not reasonably practicable or Allianz Life cannot reasonably
value the Portfolio shares;
4. during any other period when the Securities and Exchange Commission,
by order, so permits for the protection of Contract Owners.
Allianz Life has reserved the right to defer payment for a withdrawal or
transfer from the Fixed Account for the period permitted by law but not for more
than six months.
PERFORMANCE
- --------------------------------------------------------------------------------
Allianz Life periodically advertises performance of the Sub-Accounts.
Allianz Life will calculate performance by determining the percentage change in
the value of an Accumulation Unit by dividing the increase (decrease) for that
unit by the value of the Accumulation Unit at the beginning of the period. This
performance number reflects the deduction of the insurance charges and the
Portfolio expenses. It may not reflect the deduction of any applicable
contingent deferred sales charge and contract maintenance charge. The deduction
of any applicable contract maintenance charge and contingent deferred sales
charges would reduce the percentage increase or make greater any percentage
decrease. Any advertisement will also include average annual total return
figures which reflect the deduction of the insurance charges, contract
maintenance charge, contingent deferred sales charges and the expenses of the
Portfolios.
Allianz Life may also advertise cumulative total return information. Cumulative
total return is determined the same way except that the results are not
annualized. Performance information for the Portfolios of the Underlying
Mutual Funds 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.
Any performance advertised will be based on historical data. It does not
guarantee future results of the Portfolios.
DEATH BENEFIT
- --------------------------------------------------------------------------------
Upon Your Death
If you die during the Accumulation Phase, Allianz Life will pay a death benefit
to your Beneficiary (see below). If you die during the Payout Phase any benefit
will be as provided for in the Annuity Option selected.
Death Benefit Amount During the Accumulation Phase
At the time you purchase the Contract, you can select the traditional death
benefit or the enhanced death benefit. If you do not make a selection, the
traditional death benefit will apply to your Contract.
Traditional Death Benefit - If you select the traditional death benefit, the
amount of the death benefit will be the greater of 1 or 2, less any applicable
premium tax.
1. The Contract Value determined as of the end of the business day during which
Allianz Life receives at the USAllianz Service Center both due proof of death
and an election of the payment method;
2. The guaranteed minimum death benefit (GMDB) which is equal to the total of
all Purchase Payments you have made reduced proportionately by the percentage of
the Contract Value surrendered, including any contingent deferred sales charge
assessed.
Enhanced Death Benefit - If you select the enhanced death benefit, the amount of
the death benefit will be the greater of 1 or 2, less any applicable premium
tax.
1. The Contract Value determined as of the end of the business day during which
Allianz Life receives at the USAllianz Service Center both due proof of death
and an election of the payment method;
2. The guaranteed minimum death benefit (GMDB), as defined below, determined as
of the end of the business day during which Allianz Life receives at the
USAllianz Service Center both due proof of death and election of the payment
method.
The GMDB is equal to the greater of:
The total of all Purchase Payments you have made reduced proportionately by
the percentage of the Contract Value surrendered, including any contingent
deferred sales charge assessed.
The greatest anniversary value. The anniversary value is equal to the
Contract Value on a Contract anniversary, increased by additional Purchase
Payments and reduced proportionately by the percentage of the Contract
Value surrendered, including any contingent deferred sales charge assessed,
since that Contract anniversary. Contract anniversaries occurring on or
after your 81st birthday or date of death will not be taken into
consideration in determining this benefit.
The traditional death benefit and/or the enhanced death benefit may not be
approved in your state. If they are not available or if the Contract is owned by
a non-individual, the death benefit will be the Contract Value (less any premium
taxes) determined as of the end of the business day during which Allianz Life
receives both due proof of death and an election for the payment method.
Please refer to the applicable endorsements to your Contract for the specific
terms and conditions of the death benefits.
Any part of the death benefit amount that had been invested in the Sub-
Accounts remains in the Sub-Accounts until distribution begins. From the time
the death benefit is determined until we make a complete distribution, any
amount in the Sub-Accounts will be subject to investment risk which will be
borne by the Beneficiary.
If you have a Joint Owner, the age of the oldest Contract Owner will be used to
determine the guaranteed minimum death benefit. If the Contract is owned by a
non- natural person, then all references to you mean the Annuitant.
In the case of Joint Owners, if a Joint Owner dies, the surviving Joint Owner
will be considered the Beneficiary. Any other Beneficiary designation on record
at the time of death will be treated as a contingent Beneficiary. Joint Owners
must be spouses (this requirement may not apply in certain states).
If you have not previously designated a death benefit option, a Beneficiary
must request the death benefit be paid under one of the death benefit options
below. If the Beneficiary is the spouse of the Contract Owner, he/she can
choose to continue the Contract in his/her own name at the then current Contract
value, or if greater, the death benefit value. If a lump sum payment is elected
and all the necessary requirements, including any required tax consent from
some states, are met, the payment will be made within 7 days. Payment of the
death benefit may be delayed pending receipt of any applicable tax consents
and/or forms from a state.
Option A: lump sum payment of the death benefit.
Option B: the payment of the entire death benefit within 5 years of the date of
the Contract Owner's or any Joint Owner's death. Allianz Life will assess the
full 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 full
contract maintenance charge will continue to be assessed to each Beneficiary.
Any portion of the death benefit not applied under Option C within one year of
the date of the Contract Owner's death must be distributed within five years
of the date of death.
If 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 a lump sum payment is requested, the amount will be paid within 7 days of
receipt of proof of death and the valid election, including any required
governmental forms, unless the Suspension or Deferral of Payments Provision
is in effect.
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 will become the Annuitant unless you designate another
Annuitant. However, if the Contract Owner is a non-natural person (e.g., a
corporation), then the death of the Annuitant will be treated as the death
of the Contract Owner, and a new Annuitant may not be named.
If the Annuitant dies after Annuity Payments have begun, the remaining amounts
payable, if any, will be as provided for in the Annuity Option selected. The
remaining amounts payable will be paid to the Contract Owner at least as rapidly
as they were being paid at the Annuitant's death.
OTHER INFORMATION
- --------------------------------------------------------------------------------
Allianz Life
Allianz Life Insurance Company of North America (Allianz Life), 1750 Hennepin
Avenue, Minneapolis, Minnesota 55403, was organized under the laws of the state
of Minnesota in 1896. Allianz Life offers fixed and variable life insurance and
annuities and group life, accident and health insurance. Allianz Life is
licensed to do business in 49 states and the District of Columbia. Allianz Life
is a wholly-owned subsidiary of Allianz Versicherungs-AG Holding.
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 Sub-
Accounts. Each Sub-Account invests in one Portfolio of an Underlying Mutual
Fund. 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, MN 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 6% of Purchase Payments.
Sometimes, Allianz Life enters into an agreement with the broker-dealer to
pay the broker-dealer commissions as a combination of a certain amount of
the commission at the time of sale and a trail commission (which when totaled
could exceed 6% of Purchase Payments). In addition, Allianz Life may pay
certain sellers for other services not directly related to the sale of the
Contracts (such as special marketing support allowances). Commissions may
be recovered from a broker-dealer if a withdrawal occurs within 12 months
of a Purchase Payment.
Administration
Allianz Life has hired Delaware Valley Financial Services, Inc. (DVFS), 300
Berwyn Park, Berwyn, Pennsylvania, to perform certain administrative services
regarding the Contracts. The administrative services include issuance of the
Contracts and maintenance of Contract Owner's records.
Financial Statements
The consolidated financial statements of Allianz Life and the Separate Account
have been included in the Statement of Additional Information.
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
Insurance Company
Experts
Legal Opinions
Distributor
Reduction or Elimination of the
Contingent Deferred Sales Charge
Calculation of Performance Data
Federal Tax Status
Annuity Provisions
Financial Statements
PART B
STATEMENT OF ADDITIONAL INFORMATION
INDIVIDUAL FLEXIBLE PAYMENT
VARIABLE ANNUITY CONTRACTS
issued by
ALLIANZ LIFE VARIABLE ACCOUNT B
and
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
________________, 2000
THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE
READ IN CONJUNCTION WITH THE PROSPECTUS FOR THE INDIVIDUAL FLEXIBLE PAYMENT
VARIABLE ANNUITY CONTRACTS WHICH ARE REFERRED TO HEREIN.
THE PROSPECTUS CONCISELY SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR
OUGHT TO KNOW BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS, CALL OR WRITE THE
INSURANCE COMPANY AT: 1750 Hennepin Avenue, Minneapolis, MN 55403-2195, (800)
342-3863.
THIS STATEMENT OF ADDITIONAL INFORMATION AND THE PROSPECTUS ARE DATED
____________, AND AS MAY BE AMENDED FROM TIME TO TIME.
Table of Contents
Page
Insurance Company .........................................
Experts ...................................................
Legal Opinions ............................................
Distributor ...............................................
Reduction or Elimination of the
Contingent Deferred Sales Charge .........................
Calculation of Performance Data ...........................
Federal Tax Status ........................................
Annuity Provisions ........................................
Financial Statements ......................................
Insurance Company
Allianz Life Insurance Company of North America (the "Insurance Company") is a
stock life insurance company organized under the laws of the state of Minnesota
in 1896. The Insurance Company is a wholly-owned subsidiary of Allianz
Versicherungs-AG Holding ("Allianz"). Allianz is headquartered in Munich,
Germany, and has sales outlets throughout the world. The Insurance Company
offers fixed and variable life insurance and annuities, and group life, accident
and health insurance. On April 1, 1993, the Insurance Company changed its name
from North American Life and Casualty Company to its present name.
The Insurance Company is rated A+ (Superior) by A.M. BEST, an independent
analyst of the insurance industry. The financial strength of an insurance
company may be relevant insofar as the ability of a company to make fixed
annuity payments from its general account.
Experts
- --------------------------------------------------------------------------------
The financial statements of Allianz Life Variable Account B and the consolidated
financial statements of the Insurance Company as of and for the year ended
December 31, 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.
Reduction or Elimination of the Contingent Deferred Sales Charge
- --------------------------------------------------------------------------------
The amount of the Contingent Deferred Sales Charge on the Contracts may be
reduced or eliminated when sales of the Contracts are made to individuals or to
a group of individuals in a manner that results in savings of sales expenses.
The entitlement to a reduction of the Contingent Deferred Sales Charge will be
determined by the Insurance Company after examination of the following factors:
1) the size of the group; 2) the total amount of purchase payments expected to
be received from the group; 3) the nature of the group for which the Contracts
are purchased, and the persistency expected in that group (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 Contingent Deferred Sales Charge may be eliminated when the Contracts are
issued to an officer, director or employee of the Insurance Company or any of
its affiliates. The Contingent Deferred Sales Charge may be reduced or
eliminated when the Contract is sold by an agent of the Insurance Company to any
members of his or her immediate family and the commission is waived. In no event
will any reduction or elimination of the Contingent Deferred Sales Charge be
permitted where the reduction or elimination will be unfairly discriminatory to
any person.
Calculation of Performance Data
- --------------------------------------------------------------------------------
Total Return
From time to time, the Insurance Company may advertise the performance data for
the Sub-Accounts in sales literature, advertisements, personalized
hypothetical illustrations, and Contract Owner communications. Such data will
show the percentage change in the value of an accumulation unit based on the
performance of a Portfolio over a stated period of time which is determined by
dividing the increase (or decrease) in value for that unit by the accumulation
unit value at the beginning of the period.
Any such performance data will include total return figures for the one, five,
and ten year (or since inception) time periods indicated. Such total return
figures will reflect the deduction of the Mortality and Expense Risk Charge, the
Administrative Charge, the operating expenses of the underlying Portfolios and
any applicable Contingent Deferred Sales Charge and Contract Maintenance Charge
("Standardized Total Return"). The Contingent Deferred Sales Charge and
Contract Maintenance Charge deductions are calculated assuming a Contract is
surrendered at the end of the reporting period.
With respect to the performance shown for the Portfolios of Franklin Templeton
Variable Insurance Products Trust for periods before a Portfolio's Class 2
shares commenced operations, the data will be based on historical results of
Class 1 shares. For periods after a Portfolio's Class 2 shares commenced
operations, the data will reflect the additional Class 2 rule 12b-1 plan fees,
currently equal to 0.25% per year. Prior to July 1, 1999, the rule 12b-1 plan
fees were equal to .30% per year.
The hypothetical value of a Contract purchased for the time periods described
will be determined by using the actual accumulation unit values for an initial
$1,000 purchase payment, and deducting any applicable Contract Maintenance
Charges and any applicable Contingent Deferred Sales Charge to arrive at the
ending hypothetical value. The average annual total return is then determined by
computing the fixed interest rate that a $1,000 purchase payment would have to
earn annually, compounded annually, to grow to the hypothetical value at the end
of the time periods described. The formula used in these calculations is:
n
P(1+T) = ERV
where:
P = a hypothetical initial payment of $1,000;
T = average annual total return;
n = number of years;
ERV = ending redeemable value of a hypothetical $1,000 payment made
at the beginning of the time periods used at the end of such time
periods (or fractional portion thereof).
The Insurance Company may also advertise performance data which will be
calculated in the same manner as described above but which will not reflect the
deduction of the Contingent Deferred Sales Charge and the Contract Maintenance
Charge. The Insurance Company may also advertise cumulative and average total
return information over different periods of time. The Company may also present
performance information computed on a different basis ("Non-Standardized Total
Return").
Cumulative total return is calculated in a similar manner, except that the
results are not annualized. Each calculation assumes that no sales load is
deducted from the initial $1,000 payment at the time it is allocated to the
Portfolios and assumes that the income earned by the investment in the Portfolio
is reinvested.
Contract Owners should note that investment results will fluctuate over time,
and any presentation of total return for any period should not be considered as
a representation of what an investment may earn or what a Contract Owner's total
return may be in any future period.
Yield
The USAllianz VIP Money Market Fund ("Money Market Fund"). The Insurance Company
may advertise yield information for the Money Market Fund. The Money Market
Fund's current yield may vary each day, depending upon, among other things, the
average maturity of the underlying Portfolio's investment securities and changes
in interest rates, operating expenses, the deduction of the Mortality and
Expense Risk Charge, the Administrative Charge and the Contract Maintenance
Charge and, in certain instances, the value of the underlying Portfolio's
investment securities. The fact that the Portfolio's current yield will
fluctuate and that the principal is not guaranteed should be taken into
consideration when using the Portfolio's current yield as a basis for comparison
with savings accounts or other fixed-yield investments. The yield at any
particular time is not indicative of what the yield may be at any other time.
The Money Market Fund's current yield is computed on a base period return of a
hypothetical Contract having a beginning balance of one accumulation unit for a
particular period of time (generally seven days). The return is determined by
dividing the net change (exclusive of any capital changes) in such accumulation
unit by its beginning value, and then multiplying it by 365/7 to get the
annualized current yield. The calculation of net change reflects the value of
additional shares purchased with the dividends paid by the Portfolio, and the
deduction of the Mortality and Expense Risk Charge, the Administrative Charge
and Contract Maintenance Charge. The effective yield reflects the effects of
compounding and represents an annualization of the current return with all
dividends reinvested.
(Effective yield = [(Base Period Return + 1)365/7] - 1.)
Other Portfolios. The Insurance Company may also quote yield in sales
literature, advertisements, personalized hypothetical illustrations, and
Contract Owner communications for the other Portfolios. Each Portfolio (other
than the Money Market Fund) will publish standardized total return information
with any quotation of current yield.
The yield computation is determined by dividing the net investment income per
accumulation unit earned during the period (minus the deduction for the
Mortality and Expense Risk Charge, Administrative Charge and Contract
Maintenance Charge) by the accumulation unit value on the last day of the period
and annualizing the resulting figure, according to the following formula:
6
Yield = 2 [((a-b) + 1) - 1]
---
cd
where:
a = net investment income earned during the period by the Portfolio
attributable to shares owned by the Sub-Account;
b = expenses accrued for the period (net of reimbursements);
c = the average daily number of accumulation units outstanding
during the period;
d = the maximum offering price per accumulation unit on the last
day of the period.
The above formula will be used in calculating quotations of yield, based on
specified 30-day periods (or one month) identified in the sales literature,
advertisement, or communication. Yield calculations assume no sales load. The
Insurance Company does not currently advertise yield information for any
Portfolio (other than the Money Market Fund).
Performance Ranking
Total return may be compared to relevant indices, including U.S. domestic and
international indices and data from Lipper Analytical Services, Inc., Standard &
Poor's Indices, or VARDS(R).
From time to time, evaluation of performance by independent sources may also be
used.
Performance Information
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.
The charts below show accumulation unit performance which assumes that the
accumulation units were invested in each of the Portfolios for the same periods.
Chart A is for Contracts with the traditional death benefit and Chart B is for
Contracts with the enhanced death benefit. The performance figures in Column I
represent performance figures for the accumulation units which reflects the
deduction of the Mortality and Expense Risk Charge, Administrative Charge, and
the operating expenses of the Portfolios. Column II represents performance
figures for the accumulation units which reflects the Mortality and Expense Risk
Charge, Administrative Charge, the Contract Maintenance Charge, the operating
expenses of the Portfolios and assumes that you make a withdrawal at the end of
the period (therefore the Contingent Deferred Sales Charge is reflected). Past
performance does not guarantee future results.
<TABLE>
<CAPTION>
Chart A
Total Return for the periods ended _________________________:
Column I Column II
- -------------------------------------------------------------------------------------------------------------------------------
Inception 1999 One Three Five Ten Since 1999 One Three Five Ten
Date YTD Year Year Year Year Inception YTD Year Year Year Year
- - -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AIM VI Capital Appreciation Fund 5/5/1993 ____% _____% _____% _____% _____% ____% _____% _____% _____%
AIM VI Growth Fund 5/5/1993 ____% _____% _____% _____% _____% ____% _____% _____% _____%
AIM VI International Equity Fund 5/5/1993 ____% _____% _____% _____% _____% ____% _____% _____% _____%
AIM VI Value Fund 5/5/1993 ____% _____% _____% _____% _____% ____% _____% _____% _____%
Alger American Growth Portfolio 1/9/1989 ____% _____% _____% _____% _____% _____% ____% _____% _____% _____% _____%
Alger American Leveraged AllCap
Portfolio 1/25/1995 _____% _____% _____% _____% _____% _____% _____%
Alger American MidCap Growth
Portfolio 5/3/1993 _____% _____% _____% _____% _____% _____% _____% _____% _____%
Alger American Small
Capitalization Portfolio 9/21/1988 _____% _____% _____% _____% _____% _____% _____% _____% _____% _____% _____%
Davis VA Financial Portfolio* 7/1/1999 _____%
Davis VA Real Estate Portfolio* 7/1/1999 _____%
Davis VA Value Portfolio* 7/1/1999 _____%
Franklin Growth and Income Fund 1/24/1989 _____% _____% _____% _____% _____% _____% _____% _____% _____% _____% _____%
Franklin Rising Dividends
Securities Fund 1/27/1992 _____% _____% _____% _____% _____% _____% _____% _____% _____%
Franklin Small Cap Fund 11/1/1995 _____% _____% _____% _____% _____% _____% _____%
Franklin U.S. Government Fund 3/14/1989 _____% _____% _____% _____% _____% _____% _____% _____% _____% _____% _____%
JP Morgan International
Opportunities Portfolio 1/3/1995 _____% _____% _____% _____% _____% _____% _____%
JP Morgan US Disciplined Equity
Portfolio 1/3/1995 _____% _____% _____% _____% _____% _____% _____%
Mutual Discovery Securities Fund 11/8/1996 _____% _____% _____% _____% _____%
Mutual Shares Securities Fund 11/8/1996 _____% _____% _____% _____% _____%
Oppenheimer VA Global
Securities Fund 11/12/1990 _____% _____% _____% _____% _____% _____% _____% _____% _____%
Oppenheimer VA High Income
Fund 4/30/1986 _____% _____% _____% _____% _____% _____% _____% _____% _____% _____% _____%
Oppenheimer VA Main Street
Growth & Income Fund 7/5/1995 _____% _____% _____% _____% _____% _____% _____%
PIMCO VIT High Yield Bond
Portfolio 4/30/1998 _____% _____% _____% _____% _____%
PIMCO VIT Stocks PLUS Growth &
Income Portfolio 12/31/1997 _____% _____% _____% _____% _____%
PIMCO VIT Total Return Bond
Portfolio 12/31/1997 _____% _____% _____% _____% _____%
Seligman Global Technology
Fund 5/2/1996 _____% _____% _____% _____% _____% _____% _____%
Seligman Small Cap Value Fund 5/1/1998 _____% _____% _____% _____% _____%
Templeton Developing Markets
Equity Fund 3/15/1994 _____% _____% _____% _____% _____% _____% _____% _____% _____%
Templeton Global Growth Fund 3/15/1994 _____% _____% _____% _____% _____% _____% _____% _____% _____%
Templeton Pacific Growth Fund 1/27/1992 _____% _____% _____% _____% _____% _____% _____% _____% _____%
Van Kampen LIT Enterprise
Portfolio 4/7/1986 _____% _____% _____% _____% _____% _____% _____% _____% _____% _____% _____%
Van Kampen LIT Growth & Income
Portfolio 12/23/1996 _____% _____% _____% _____% _____%
* For funds which have existed less than one year, non-standard cumulative total returns since inception are shown.
</TABLE>
<TABLE>
<CAPTION>
- --------
Since
Inception
- --------
<S> <C>
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
</TABLE>
<TABLE>
<CAPTION>
Chart B
Total Return for the periods ended __________________________:
Column I Column II
- -------------------------------------------------------------------------------------------------------------------------------
Inception 1999 One Three Five Ten Since 1999 One Three Five Ten
Date YTD Year Year Year Year Inception YTD Year Year Year Year
- - -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AIM VI Capital Appreciation
Fund 5/5/1993 ____% _____% _____% _____% _____% _____% _____% _____% _____%
AIM VI Growth Fund 5/5/1993 ____% _____% _____% _____% _____% _____% _____% _____% _____%
AIM VI International Equity
Fund 5/5/1993 ____% _____% _____% _____% _____% _____% _____% _____% _____%
AIM VI Value Fund 5/5/1993 ____% _____% _____% _____% _____% _____% _____% _____% _____%
Alger American Growth
Portfolio 1/9/1989 _____% _____% _____% _____% _____% _____% _____% _____% _____% _____% _____%
Alger American Leveraged
AllCap Portfolio 1/25/1995 _____% _____% _____% _____% _____% _____% _____%
Alger American MidCap Growth
Portfolio 5/3/1993 _____% _____% _____% _____% _____% _____% _____% _____% _____%
Alger American Small
Capitalization Portfolio 9/21/1988 _____% _____% _____% _____% _____% _____% _____% _____% _____% _____% _____%
Davis VA Financial Portfolio* 7/1/1999 _____%
Davis VA Real Estate Portfolio* 7/1/1999 _____%
Davis VA Value Portfolio* 7/1/1999 _____%
Franklin Growth and Income
Fund 1/24/1989 _____% _____% _____% _____% _____% _____% _____% _____% _____% _____% _____%
Franklin Rising Dividends
Securities Fund 1/27/1992 _____% _____% _____% _____% _____% _____% _____% _____% _____% _____%
Franklin Small Cap Fund 11/1/1995 _____% _____% _____% _____% _____% _____% _____%
Franklin U.S. Government Fund 3/14/1989 _____% _____% _____% _____% _____% _____% _____% _____% _____% _____% _____%
JP Morgan International
Opportunities Portfolio 1/3/1995 _____% _____% _____% _____% _____% _____% _____%
JP Morgan US Disciplined Equity
Portfolio 1/3/1995 _____% _____% _____% _____% _____% _____% _____%
Mutual Discovery Securities
Fund 11/8/1996 _____% _____% _____% _____% _____%
Mutual Shares Securities Fund 11/8/1996 _____% _____% _____% _____% _____%
Oppenheimer VA Global Securities
Fund 11/12/1990 _____% _____% _____% _____% _____% _____% _____% _____% _____%
Oppenheimer VA High Income
Fund 4/30/1986 _____% _____% _____% _____% _____% _____% _____% _____% _____% _____% _____%
Oppenheimer VA Main Street
Growth & Income Fund 7/5/1995 _____% _____% _____% _____% _____% _____% _____%
PIMCO VIT High Yield Bond
Portfolio 4/30/1998 _____% _____% _____% _____% _____%
PIMCO VIT Stocks PLUS Growth &
Income Portfolio 12/31/1997 _____% _____% _____% _____% _____%
PIMCO VIT Total Return Bond
Portfolio 12/31/1997 _____% _____% _____% _____% _____%
Seligman Global Technology
Fund 5/2/1996 _____% _____% _____% _____% _____% _____% _____%
Seligman Small Cap Value Fund 5/1/1998 _____% _____% _____% _____% _____%
Templeton Developing Markets
Equity Fund 3/15/1994 _____% _____% _____% _____% _____% _____% _____% _____% _____%
Templeton Global Growth Fund 3/15/1994 _____% _____% _____% _____% _____% _____% _____% _____% _____%
Templeton Pacific Growth Fund 1/27/1992 _____% _____% _____% _____% _____% _____% _____% _____% _____%
Van Kampen LIT Enterprise
Portfolio 4/7/1986 _____% _____% _____% _____% _____% _____% _____% _____% _____% _____% _____%
Van Kampen LIT Growth & Income
Portfolio 12/23/1996 _____% _____% _____% _____% _____%
* For funds which have existed less than one year, non-standard cumulative total returns since inception are shown.
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
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_____%
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_____%
_____%
_____%
_____%
_____%
_____%
_____
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
_____%
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</TABLE>
Federal Tax Status
- --------------------------------------------------------------------------------
Note: The following description is based upon the Insurance Company's
understanding of current federal income tax law applicable to annuities in
general. The Insurance Company cannot predict the probability that any changes
in such laws will be made. Purchasers are cautioned to seek competent tax advice
regarding the possibility of such changes. The Insurance Company does not
guarantee the tax status of the Contracts. Purchasers bear the complete risk
that the Contracts may not be treated as "annuity contracts" under federal
income tax laws. It should be further understood that the following discussion
is not exhaustive and that special rules not described herein may be applicable
in certain situations. Moreover, no attempt has been made to consider any
applicable state or other tax laws.
General
Section 72 of the Internal Revenue Code of 1986, as amended ("Code") governs
taxation of annuities in general. A Contract Owner is not taxed on increases in
the value of a Contract until distribution occurs, either in the form of a lump
sum payment or as annuity payments under the Annuity Option elected. For a lump
sum payment received as a total withdrawal (total redemption) or death benefit,
the recipient is taxed on the portion of the payment that exceeds the cost basis
of the Contract. For Non-Qualified Contracts, this cost basis is generally the
purchase payments, while for Qualified Contracts there may be no cost basis. The
taxable portion of the lump sum payment is taxed at ordinary income tax rates.
For annuity payments, a portion of each payment in excess of an exclusion amount
is includible in taxable income. The exclusion amount for payments based on a
fixed annuity option is determined by multiplying the payment by the ratio that
the cost basis of the Contract (adjusted for any period certain or refund
feature) bears to the expected return under the Contract. The exclusion amount
for payments based on a variable annuity option is determined by dividing the
cost basis of the Contract (adjusted for any period certain or refund guarantee)
by the number of years over which the annuity is expected to be paid. Payments
received after the investment in the Contract has been recovered (i.e. when the
total of the excludible amounts equal the investment in the Contract) are fully
taxable. The taxable portion is taxed at ordinary income rates. For certain
types of Qualified Plans there may be no cost basis in the Contract within the
meaning of Section 72 of the Code. Contract Owners, annuitants and beneficiaries
under the Contracts should seek competent financial advice about the tax
consequences of any distributions.
The Insurance Company is taxed as a life insurance company under the Code. For
federal income tax purposes, the Separate Account is not a separate entity from
the Insurance Company, and its operations form a part of the Insurance Company.
Diversification
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not adequately
diversified in accordance with regulations prescribed by the United States
Treasury Department ("Treasury Department"). Disqualification of the Contract as
an annuity contract would result in imposition of federal income tax to the
Contract Owner with respect to earnings allocable to the Contract prior to the
receipt of payments under the Contract. The Code contains a safe harbor
provision which provides that annuity contracts such as the Contracts meet the
diversification requirements if, as of the end of each quarter, the underlying
assets meet the diversification standards for a regulated investment company and
no more than fifty-five percent (55%) of the total assets consist of cash, cash
items, U.S. government securities and securities of other regulated investment
companies.
On March 2, 1989, the Treasury Department issued regulations (Treas. Reg.
1.817-5) which established diversification requirements for the investment
portfolios underlying variable contracts such as the Contracts. The regulations
amplify the diversification requirements for variable contracts set forth in the
Code and provide an alternative to the safe harbor provision described above.
Under the regulations, an investment portfolio will be deemed adequately
diversified if: (1) no more than 55% of the value of the total assets of the
portfolio is represented by any one investment; (2) no more than 70% of the
value of the total assets of the portfolio is represented by any two
investments; (3) no more than 80% of the value of the total assets of the
portfolio is represented by any three investments; and (4) no more than 90% of
the value of the total assets of the portfolio is represented by any four
investments.
The Code provides that for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable contracts
by Section 817(h) of the Code have been met, "each United States government
agency or instrumentality shall be treated as a separate issuer."
The Insurance Company intends that all Portfolios of Franklin Templeton Variable
Insurance Products Trust underlying the Contracts will be managed by the
investment managers for Franklin Templeton Variable Insurance Products in such a
manner as to comply with these diversification requirements.
The Treasury Department has indicated that the diversification Regulations do
not provide guidance regarding the circumstances in which Contract Owner control
of the investments of the Separate Account will cause the Contract Owner to be
treated as the owner of the assets of the Separate Account, thereby resulting in
the loss of favorable tax treatment for the Contract. At this time it cannot be
determined whether additional guidance will be provided and what standards may
be contained in such guidance.
The amount of Contract Owner control which may be exercised under the Contract
is different in some respects from the situations addressed in published rulings
issued by the Internal Revenue Service in which it was held that the policy
owner was not the owner of the assets of the separate account. It is unknown
whether these differences, such as the Contract Owner's ability to transfer
among investment choices or the number and type of investment choices available,
would cause the Contract Owner to be considered as the owner of the assets of
the Separate Account resulting in the imposition of federal income tax to the
Contract Owner with respect to earnings allocable to the Contract prior to
receipt of payments under the Contract.
In the event any forthcoming guidance or ruling is considered to set forth a new
position, such guidance or ruling will generally be applied only prospectively.
However, if such ruling or guidance was not considered to set forth a new
position, it may be applied retroactively resulting in the Contract Owner being
retroactively determined to be the owner of the assets of the Separate Account.
Due to the uncertainty in this area, the Insurance Company reserves the right to
modify the Contract in an attempt to maintain favorable tax treatment.
Multiple Contracts
The Code provides that multiple non-qualified annuity contracts which are issued
within a calendar year period to the same contract owner by one company or its
affiliates are treated as one annuity contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences, including more rapid taxation of the distributed amounts from such
combination of contracts. For purposes of this rule, contracts received in a
Section 1035 exchange will be considered issued in the year of the exchange.
Contract Owners should consult a tax adviser prior to purchasing more than one
non-qualified annuity contract in any calendar year period.
Contracts Owned by Other than Natural Persons
Under Section 72(u) of the Code, the investment earnings on purchase payments
for the Contracts will be taxed currently to the Contract Owner if the Owner is
a non-natural person, e.g., a corporation or certain other entities. Such
Contracts generally will not be treated as annuities for federal income tax
purposes. However, this treatment is not applied to Contracts held by a trust or
other entity as an agent for a natural person nor to Contracts held by qualified
plans. Purchasers should consult their own tax counsel or other tax adviser
before purchasing a Contract to be owned by a non-natural person.
Tax Treatment of Assignments
An assignment or pledge of a Contract may be a taxable event. Contract Owners
should therefore consult competent tax advisers should they wish to assign or
pledge their Contracts.
Death Benefits
Any death benefits paid under the Contract are taxable to the beneficiary. The
rules governing the taxation of payments from an annuity contract, as discussed
above, generally apply to the payment of death benefits and depend on whether
the death benefits are paid as a lump sum or as annuity payments. Estate taxes
may also apply.
Income Tax Withholding
All distributions or the portion thereof which is includible in the gross income
of the Contract Owner are subject to federal income tax withholding. Generally,
amounts are withheld from periodic payments at the same rate as wages and at the
rate of 10% from non-periodic payments. However, the Contract Owner, in most
cases, may elect not to have taxes withheld or to have withholding done at a
different rate.
Effective January 1, 1993, certain distributions from retirement plans qualified
under Section 401 or Section 403(b) of the Code, which are not directly rolled
over to another eligible retirement plan or individual retirement account or
individual retirement annuity, are subject to a mandatory 20% withholding for
federal income tax. The 20% withholding requirement generally does not apply to:
(a) a series of substantially equal payments made at least annually for the life
or life expectancy of the participant or joint and last survivor expectancy of
the participant and a designated beneficiary, or for a specified period of 10
years or more; or (b) distributions which are required minimum distributions; or
(c) the portion of the distributions not includible in gross income (i.e.
returns of after-tax contributions); or (d) hardship withdrawals. Participants
should consult their own tax counsel or other tax adviser regarding withholding
requirements.
Tax Treatment of Surrenders - 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 surrendered will be treated as coming first from the
earnings and then, only after the income portion is exhausted, as coming from
the principal. Surrendered 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 Surrenders - Qualified Contracts.")
Qualified Plans
The Contracts offered by the Prospectus are designed to be suitable for use
under various types of Qualified Plans. Because of the minimum purchase payment
requirements, these Contracts may not be appropriate for some periodic payment
retirement plans. Taxation of participants in each Qualified Plan varies with
the type of plan and terms and conditions of each specific plan. Contract
Owners, Annuitants and beneficiaries are cautioned that benefits under a
Qualified Plan may be subject to the terms and conditions of the plan regardless
of the terms and conditions of the Contracts issued pursuant to the plan. Some
retirement plans are subject to distribution and other requirements that are not
incorporated into the Insurance Company's administrative procedures. Contract
Owners, participants and beneficiaries are responsible for determining that
contributions, distributions and other transactions with respect to the
Contracts comply with applicable law. Following are general descriptions of the
types of Qualified Plans with which the Contracts may be used. Such descriptions
are not exhaustive and are for general informational purposes only.
The tax rules regarding Qualified Plans are very complex and will have differing
applications, depending on individual facts and circumstances. Each purchaser
should obtain competent tax advice prior to purchasing a Contract issued under a
Qualified Plan.
On July 6, 1983, the Supreme Court decided in Arizona Governing Committee v.
Norris that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. The Contracts sold by the Insurance Company in
connection with Qualified Plans will utilize annuity tables which do not
differentiate on the basis of sex. Such annuity tables will also be available
for use in connection with certain non-qualified deferred compensation plans.
Contracts issued pursuant to Qualified Plans include special provisions
restricting Contract provisions that may otherwise be available and described in
this Statement of Additional Information. Generally, Contracts issued pursuant
to Qualified Plans are not transferable except upon withdrawal or annuitization.
Various penalty and excise taxes may apply to contributions or distributions
made in violation of applicable limitations. Furthermore, certain withdrawal
penalties and restrictions may apply to withdrawals from Qualified Contracts.
(See "Tax Treatment of Surrenders - 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 Surrenders - 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 Surrenders - Qualified Contracts
In the case of a surrender under a Qualified Contract, a ratable portion of the
amount received is taxable, generally based on the ratio of the individual's
cost basis to the individual's total accrued benefit under the retirement plan.
Special tax rules may be available for certain distributions from a Qualified
Contract. Section 72(t) of the Code imposes a 10% penalty tax on the taxable
portion of any distribution from qualified retirement plans, including Contracts
issued and qualified under Code Sections 401 (Pension and Profit-Sharing Plans),
403(b) (Tax-Sheltered Annuities) and 408 and 408A (Individual Retirement
Annuities). To the extent amounts are not includible in gross income because
they have been properly rolled over to an IRA or to another eligible Qualified
Plan, no tax penalty will be imposed. The tax penalty will not apply to the
following distributions: (a) if distribution is made on or after the date on
which the Contract Owner or Annuitant (as applicable) reaches age 59 1/2; (b)
distributions following the death or disability of the Contract Owner or
Annuitant (as applicable) (for this purpose disability is as defined in Section
72(m)(7) of the Code); (c) after separation from service, distributions that are
part of substantially equal periodic payments made not less frequently than
annually for the life (or life expectancy) of the Contract Owner or Annuitant
(as applicable) or the joint lives (or joint life expectancies) of such Contract
Owner or Annuitant (as applicable) and his or her designated beneficiary; (d)
distributions to a Contract Owner or Annuitant (as applicable) who has separated
from service after he or she has attained age 55; (e) distributions made to the
Contract Owner or Annuitant (as applicable) to the extent such distributions do
not exceed the amount allowable as a deduction under Code Section 213 to the
Contract Owner or Annuitant (as applicable) for amounts paid during the taxable
year for medical care; (f) distributions made to an alternate payee pursuant to
a qualified domestic relations order; (g) distributions from an Individual
Retirement Annuity for the purchase of medical insurance (as described in
Section 213(d)(1)(D) of the Code) for the Contract Owner or Annuitant (as
applicable) and his or her spouse and dependents if the Contract Owner or
Annuitant (as applicable) has received unemployment compensation for at least 12
weeks (this exception no longer applies after the Contract Owner or Annuitant
(as applicable) has been re-employed for at least 60 days); (h) distributions
from an Individual Retirement Annuity made to the Owner or Annuitant (as
applicable) to the extent such distributions do not exceed the qualified higher
education expenses (as defined in Section 72(t)(7) of the Code) of the Owner or
Annuitant (as applicable) for the taxable year; and (I) distributions from an
Individual Retirement Annuity made to the Owner or Annuitant (as applicable)
which are qualified first-time home buyer distributions (as defined in Section
72(t)(8) of the Code). The exceptions stated in items (d) and (f) above do not
apply in the case of an Individual Retirement Annuity. The exception stated in
item (c) applies to an Individual Retirement Annuity without the requirement
that there be a separation from service.
With respect to (c) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic payment, then the tax for the year of the
modification is increased by an amount equal to the tax which would have been
imposed (the 10% penalty tax) but for the exception, plus interest for the tax
years in which the exception was used.
A partial liquidation (withdrawal) during the Payout Phase may result in the
modification of the series of Annuity Payments made after such liquidation and
therefore could result in the imposition of the 10% penalty tax and interest for
the period as described above unless another exception to the penalty tax
applies. You should obtain competent tax advice before you make any liquidations
from your Contract.
Generally, distributions from a Qualified Plan must commence no later than April
1 of the calendar year following the later of: (a) the year in which the
employee attains age 70 1/2, or (b) the calendar year in which the employee
retires. The date set forth in (b) does not apply to an Individual Retirement
Annuity. Required distributions must be over a period not exceeding the life
expectancy of the individual or the joint lives or life expectancies of the
individual and his or her designated beneficiary. If the required minimum
distributions are not made, a 50% penalty tax is imposed as to the amount not
distributed.
Tax-Sheltered Annuities - Surrender Limitations
The Code limits the surrender 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 Sub-Account the
fixed number of Annuity Units is determined by dividing the amount of the
initial Annuity Payment determined for each Sub-Account by the Annuity Unit
value on the Income Date. Thereafter, the number of Annuity Units in each
Sub-Account remains unchanged unless the Contract Owner elects to transfer
between Sub-Accounts. 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 Sub-Account. The Annuity Payment in each
Sub-Account is determined by multiplying the number of Annuity Units then
allocated to such Sub-Acount by the Annuity Unit value for that Sub-Account.
On each subsequent valuation date, the value of an Annuity Unit is
determined in the following way:
First: The Net Investment Factor is determined as described in the Prospectus
under "Purchase - Accumulation Units."
Second: The value of an Annuity Unit for a valuation period is equal to:
a. the value of the Annuity Unit for the immediately preceding valuation
period.
b. multiplied by the Net Investment Factor for the current valuation period;
c. divided by the Assumed Net Investment Factor (see below) for the valuation
period.
The Assumed Net Investment Factor is equal to one plus the Assumed Investment
Return which is used in determining the basis for the purchase of an Annuity,
adjusted to reflect the particular Valuation Period. The Assumed Investment
Return that the Insurance Company will use is 5%. However, the Company may
agree to use a different rate (which will never exceed 7%).
Financial Statements
- --------------------------------------------------------------------------------
The audited consolidated financial statements of the Insurance Company as of and
for the year ended December 31, 199_, 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, 199_ are also included herein.
(Financial statements to be filed by amendment.)
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
The financial Statements of the Company and the Variable 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)
3.b. Selling Agreement (to be filed by amendment)
4. Individual Variable Annuity Contract
4.a. Waiver of Contingent Deferred Sales Charge Endorsement
4.b. Traditional Death Benefit Endorsement
4.c. Enhanced Death Benefit Endorsement
4.d. Individual Retirement Annuity Endorsement
4.e. Unisex Endorsement
4.f. Pension Plan and Profit Sharing Plan Endorsement
4.g. Group Pension Plan Death Benefit Endorsement
4.h. 403(b) Annuity Endorsement
4.i. Roth IRA Endorsement
5. Application for Individual Variable Annuity Contract
6. (i) Copy of Articles of Incorporation of the Company(1)
(ii) Copy of the Bylaws of the Company(1)
7. Not Applicable
8.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 Alger American
Fund, Allianz Life Insurance Company of North America and Fred
Alger and Company(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. Not Applicable
14. Company Organizational Chart(2)
(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.
Item 25. Directors and Officers of the Depositor
The following are the Officers and Directors of the Insurance Company:
Name and Principal Positions and Offices
Business Address with Depositor
- - ---------------------------- ---------------------------------
Lowell C. Anderson Chairman of the Board
1750 Hennepin Avenue
Minneapolis, MN 55403
Robert W. MacDonald Director and Chief
1750 Hennepin Avenue Executive Officer
Minneapolis, MN 55403
Margery G. Hughes President and Chief
1750 Hennepin Avenue Administrative Officer
Minneapolis, MN 55403
Mark A. Zesbaugh Senior Vice President and
1750 Hennepin Avenue Chief Financial Officer
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 Markets
1750 Hennepin Avenue Division
Minneapolis, MN 55403
Robert S. James President - Individual
1750 Hennepin Avenue Division
Minneapolis, MN 55403
Rev. Dennis Dease Director
c/o University of St. Thomas
215 Summit Avenue
St. Paul, MN 55105-1096
James R. Campbell Director
c/o Norwest Corp.
Norwest Center
Sixth & Marquette
Minneapolis, MN 55479-0116
Robert M. Kimmitt Director
Wilmer, Cutler & Pickering
2445 M Street NW
Washington, DC 20037-1420
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant
The Company organizational chart is incorporated herein by reference to
Pre-Effective Amendment No. 1 (File Nos. 333-06709 and 811-05618)
Item 27. Number of Contract Owners
Not Applicable.
Item 28. Indemnification
The Bylaws of the Insurance Company provide that:
Each person (and the heirs, executors, and administrators of such person) made
or threatened to be made a party to any action, civil or criminal, by reason of
being or having been a Director, officer, or employee of the corporation (or by
reason of serving any other organization at the request of the corporation)
shall be indemnified to the extent permitted by the laws of the State of
Minnesota, and in the manner prescribed therein.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted for directors and officers or controlling persons of the
Insurance Company pursuant to the foregoing, or otherwise, the Insurance Company
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Insurance Company of expenses
incurred or paid by a director, officer or controlling person of the Insurance
Company in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the
securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 29. Principal Underwriters
a. USAllianz Investor Services, LLC (formerly NALAC Financial Plans, LLC)
is the principal underwriter for the Contracts. It also is the principal
underwriter for:
Allianz Life Variable Account A
Preferred Life Variable Account C
b. The following are the officers(managers) and directors (Board of
Governors) of USAllianz Investor Services, LLC:
Positions and Offices
Business Address with Underwriter
- - ---------------------- ----------------------
Christopher H. Pinkerton Governor
1750 Hennepin Avenue
Minneapolis, MN 55403
Thomas B. Clifford Chief Manager and Governor
1750 Hennepin Avenue
Minneapolis, MN 55403
Michael T. Westermeyer Secretary and Governor
1750 Hennepin Avenue
Minneapolis, MN 55403
Michael J. Yates Treasurer
1750 Hennepin Avenue
Minneapolis, MN 55403
Edward J. Bonach Governor
1750 Hennepin Avenue
Minneapolis, MN 55403
Catherine L. Mielke Compliance Officer
1750 Hennepin Avenue
Minneapolis, MN 55403
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, Valuemark Service Center, 300
Berwyn Park, Berwyn, Pennsylvania 19312, maintains physical possession of the
accounts, books or documents of the Variable Account required to be maintained
by Section 31(a) of the Investment Company Act of 1940, as amended, and the
rules promulgated thereunder.
Item 31. Management Services
Not Applicable
Item 32. Undertakings
a. Registrant hereby undertakes to file a post-effective amendment to this
registration statement as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never more than sixteen
(16) months old for so long as payment under the variable annuity contracts may
be accepted.
b. Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the Prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
postcard or similar written communication affixed to or included in the
Prospectus that the applicant can remove to send for a Statement of Additional
Information.
c. Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available under
this Form promptly upon written or oral request.
d. Allianz Life Insurance Company of North America ("Company") hereby
represents that the fees and charges deducted under the Contract described in
the Prospectus, in the aggregate, are reasonable in relation to the services
rendered, the expenses to be incurred and the risks assumed by the Company.
REPRESENTATIONS
The Insurance Company hereby represents that it is relying upon a No Action
Letter issued to the American Council of Life Insurance, dated November 28, 1988
(Commission ref. IP-6-88), and that the following provisions have been complied
with:
1. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in each registration statement, including the
prospectus, used in connection with the offer of the contract;
2. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in any sales literature used in connection with
the offer of the contract;
3. Instruct sales representatives who solicit participants to purchase the
contract specifically to bring the redemption restrictions imposed by Section
403(b)(11) to the attention of the potential participants;
4. Obtain from each plan participant who purchases a Section 403(b) annuity
contract, prior to or at the time of such purchase, a signed statement
acknowledging the participant's understanding of (1) the restrictions on
redemption imposed by Section 403(b)(11), and (2) other investment alternatives
available under the employer's Section 403(b) arrangement to which the
participant may elect to transfer his contract value.
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, as amended, the Registrant certifies that it has caused this Registration
Statement to be signed on its behalf in the City of Minneapolis and State of
Minnesota, on this 24th day of January, 2000.
ALLIANZ LIFE
VARIABLE ACCOUNT B
(Registrant)
By: ALLIANZ LIFE INSURANCE COMPANY
OF NORTH AMERICA
(Depositor)
By: /S/ MICHAEL T. WESTERMEYER
--------------------------------
Michael T. Westermeyer
ALLIANZ LIFE INSURANCE COMPANY
OF NORTH AMERICA
(Depositor)
By: /S/ MICHAEL T. WESTERMEYER
------------------------------
Michael T. Westermeyer
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
Signature and Title
Chairman of the Board 1/24/2000
Lowell C. Anderson* ------
Lowell C. Anderson Date
1/24/2000
Director and Chief Executive ------
Robert W. MacDonald* Officer Date
Robert W. MacDonald
1/24/2000
Margery G. Hughes* President and Chief Administrative ------
Margery G. Hughes Officer Date
1/24/2000
Mark A. Zesbaugh* Chief Financial Officer and ------
Mark A. Zesbaugh Senior Vice President Date
Herbert F. Hansmeyer* Director 1/24/2000
Herbert F. Hansmeyer ------
Date
Michael P. Sullivan* Director 1/24/2000
Michael P. Sullivan ------
Date
Dr. Gerhard Rupprecht* Director 1/24/2000
Dr. Gerhard Rupprecht ------
Date
Rev. Dennis Dease* Director 1/24/2000
Rev. Dennis Dease ------
Date
James R. Campbell* Director 1/24/2000
James R. Campbell ------
Date
Robert M. Kimmitt* Director 1/24/2000
Robert M. Kimmitt ------
Date
*By Power of Attorney
By: /S/ MICHAEL T. WESTERMEYER
--------------------------------
Michael T. Westermeyer
Attorney-in-Fact
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, Lowell C. Anderson, Chairman of
the Board, President & Chief Executive Officer of Allianz Life Insurance Company
of North America (Allianz Life), a corporation duly organized under the laws of
Minnesota, do hereby appoint Michael T. Westermeyer, as my attorney and agent,
for me, and in my name as Chairman of the Board, President & Chief Executive
Officer on behalf of Allianz Life, with full power to execute, deliver and file
with the Securities and Exchange Commission all documents required for
registration of a security under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, and to do and perform each and every
act that said attorney may deem necessary or advisable to comply with the intent
of aforesaid Acts.
WITNESS my hand and seal this 3rd day of April 1998.
WITNESS
/s/ Mary Ann Lemke /s/ Lowell C. Anderson
___________________________ _____________________________
Lowell C. Anderson
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, Robert W. MacDonald, Chief
Executive Officer and a Director of Allianz Life Insurance Company of North
America (Allianz Life), a corporation duly organized under the laws of
Minnesota, do hereby appoint Michael T. Westermeyer, as my attorney and agent,
for me, and in my name as Chief Executive Officer and a Director of Allianz Life
on behalf of Allianz Life, with full power to execute, deliver and file with the
Securities and Exchange Commission all documents required for registration of a
security under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended, and to do and perform each and every act that
said attorney may deem necessary or advisable to comply with the intent of
aforesaid Acts.
WITNESS my hand and seal this 12th day of October 1999.
WITNESS
/s/ Stacey Thiele /s/ Robert W. MacDonald
___________________________ _____________________________
Robert W. MacDonald
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, Margery G. Hughes, President and
Chief Administrative Officer of Allianz Life Insurance Company of North America
(Allianz Life), a corporation duly organized under the laws of Minnesota, do
hereby appoint Robert W. MacDonald and Michael T. Westermeyer, each individually
as my attorney and agent, for me, and in my name as President and Chief
Administrative Officer on behalf of Allianz Life, with full power to execute,
deliver and file with the Securities and Exchange Commission all documents
required for registration of a security under the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and to do and
perform each and every act that said attorney may deem necessary or advisable to
comply with the intent of aforesaid Acts.
WITNESS my hand and seal this 7th day of October 1999.
WITNESS
/s/ illegible /s/ Margery G. Hughes
___________________________ _____________________________
Margery G. Hughes
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, Mark A. Zesbaugh, Senior Vice
President and Chief Financial Officer of Allianz Life Insurance Company of North
America (Allianz Life), a corporation duly organized under the laws of
Minnesota, do hereby appoint Robert W. MacDonald and Michael T. Westermeyer,
each individually as my attorney and agent, for me, and in my name as Senior
Vice President and Chief Financial Officer of Allianz Life on behalf of Allianz
Life, with full power to execute, deliver and file with the Securities and
Exchange Commission all documents required for registration of a security under
the Securities Act of 1933, as amended, and the Investment Company Act of 1940,
as amended, and to do and perform each and every act that said attorney may deem
necessary or advisable to comply with the intent of aforesaid Acts.
WITNESS my hand and seal this 6th day of October 1999.
WITNESS
/s/ Stacey Thiele /s/ Mark A. Zesbaugh
___________________________ _____________________________
Mark A. Zesbaugh
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, Herbert F. Hansmeyer, a Director
of Allianz Life Insurance Company of North America (Allianz Life), a corporation
duly organized under the laws of Minnesota, do hereby appoint Lowell C. Anderson
and Michael T. Westermeyer, each individually as my attorney and agent, for me,
and in my name as Director of Allianz Life on behalf of Allianz Life, with full
power to execute, deliver and file with the Securities and Exchange Commission
all documents required for registration of a security under the Securities Act
of 1933, as amended, and the Investment Company Act of 1940, as amended, and to
do and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of aforesaid Acts.
WITNESS my hand and seal this 29th day of September 1997.
WITNESS
/s/ Kathleen Doolwith /s/ Herbert Hansmeyer
___________________________ _____________________________
Herbert Hansmeyer
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, Michael P Sullivan, a Director
of Allianz Life Insurance Company of North America (Allianz Life), a corporation
duly organized under the laws of Minnesota, do hereby appoint Lowell C. Anderson
and Michael T. Westermeyer, each individually as my attorney and agent, for me,
and in my name as Director of Allianz Life on behalf of Allianz Life, with full
power to execute, deliver and file with the Securities and Exchange Commission
all documents required for registration of a security under the Securities Act
of 1933, as amended, and the Investment Company Act of 1940, as amended, and to
do and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of aforesaid Acts.
WITNESS my hand and seal this 5th day of September 1997.
WITNESS
/s/ Karen M Amundson /s/ Michael P. Sullivan
___________________________ _____________________________
Michael P. Sullivan
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, Gerhard G. Rupprecht, a Director
of Allianz Life Insurance Company of North America (Allianz Life), a corporation
duly organized under the laws of Minnesota, do hereby appoint Lowell C. Anderson
and Michael T. Westermeyer, each individually as my attorney and agent, for me,
and in my name as Director of Allianz Life on behalf of Allianz Life, with full
power to execute, deliver and file with the Securities and Exchange Commission
all documents required for registration of a security under the Securities Act
of 1933, as amended, and the Investment Company Act of 1940, as amended, and to
do and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of aforesaid Acts.
WITNESS my hand and seal this ____ day of ___________ 1997.
WITNESS
/s/ Gerhard G. Rupprecht
___________________________ _____________________________
Gerhard G Rupprecht
I hereby certify that the above is the true signature, acknowledged in my
presence of
Dr. Gerhard Rupprecht
Chairman of the Board of Management
Reinsburgstrabe 19, 70178 Stuttgart, Germany
personally known to me.
Stuttgart, den 17.09.1997
/s/ Dr. Kubler
Dr. Kubler
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, Dennis J. Dease, a Director
of Allianz Life Insurance Company of North America (Allianz Life), a corporation
duly organized under the laws of Minnesota, do hereby appoint Lowell C. Anderson
and Michael T. Westermeyer, each individually as my attorney and agent, for me,
and in my name as Director of Allianz Life on behalf of Allianz Life, with full
power to execute, deliver and file with the Securities and Exchange Commission
all documents required for registration of a security under the Securities Act
of 1933, as amended, and the Investment Company Act of 1940, as amended, and to
do and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of aforesaid Acts.
WITNESS my hand and seal this 5th day of September 1997.
WITNESS
/s/ Sandra J. Schwartz /s/ Dennis J. Dease
___________________________ _____________________________
Dennis J. Dease
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, James R. Campbell, a Director
of Allianz Life Insurance Company of North America (Allianz Life), a corporation
duly organized under the laws of Minnesota, do hereby appoint Lowell C. Anderson
and Michael T. Westermeyer, each individually as my attorney and agent, for me,
and in my name as Director of Allianz Life on behalf of Allianz Life, with full
power to execute, deliver and file with the Securities and Exchange Commission
all documents required for registration of a security under the Securities Act
of 1933, as amended, and the Investment Company Act of 1940, as amended, and to
do and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of aforesaid Acts.
WITNESS my hand and seal this 8th day of September 1997.
WITNESS
/s/ Carrie Knowles /s/ James R. Campbell
___________________________ _____________________________
James R. Campbell
LIMITED POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that I, Robert M. Kimmitt, a Director of
Allianz Life Insurance Company of North America (Allianz Life), a corporation
duly organized under the laws of Minnesota, do hereby appoint Lowell C. Anderson
and Michael T. Westermeyer, each individually, as my attorney and agent, for me,
and in my name as Director of Allianz Life on behalf of Allianz Life, with full
power to execute, deliver and file with the Securities and Exchange Commission
all documents required for registration of a security under the Securities Act
of 1933, as amended, and the Investment Company Act of 1940, as amended, and to
do and perform each and every act that said attorney may deem necessary or
advisable to comply with the intent of aforesaid Acts.
WITNESS my hand and seal this 6th day of April 1998.
WITNESS
/s/ Mary Ann Lemke /s/ Robert M. Kimmitt
___________________________ _____________________________
Robert M. Kimmitt
EXHIBITS
TO
FORM N-4
ALLIANZ LIFE VARIABLE ACCOUNT B
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
INDEX TO EXHIBITS
EXHIBIT PAGE
EX-99.B4. Individual Variable Annuity Contract
EX-99.B.4a. Waiver of Contingent Deferred Sales Charge Endorsement
EX-99.B.4b. Traditional Death Benefit Endorsement
EX-99.B4.c. Enhanced Death Benefit Endorsement
EX-99.B4.d. Individual Retirement Annuity Endorsement
EX-99.B4.e. Unisex Endorsement
EX-99.B4.f. Pension Plan and Profit Sharing Plan Endorsement
EX-99.B4.g. Group Pension Plan Death Benefit Endorsement
EX-99.B4.h. 403(b) Annuity Endorsement
EX-99.B4.i. Roth IRA Endorsement
EX-99.B5. Application for Individual Variable Annuity Contract
Allianz Life Insurance Company of North America
1750 Hennepin Avenue
Minneapolis, MN 55403-2195
A Stock Company
This is a legal Contract between the Contract Owner (referred to in this
Contract as you and your) and Allianz Life Insurance Company of North America
(herein referred to as we, us and our). We will make Annuity Payments as set
forth in this Contract beginning on the Income Date.
This Contract is issued in consideration of the payment of the initial Purchase
Payment.
READ YOUR CONTRACT CAREFULLY
RIGHT TO EXAMINE: This Contract may be returned within 10 days after you receive
it. It can be mailed or delivered to either us or the agent who sold it. Return
of this Contract by mail is effective on being postmarked, properly addressed
and postage prepaid. The returned Contract will be treated as if we had never
issued it. We will promptly refund the Contract Value in states where permitted.
This may be more or less than the Purchase Payments. We have the right to
allocate payments to the Money Market Sub-Account until the expiration of the
Right to Examine period. If we so allocate payments, we will refund the greater
of the Purchase Payments, less any surrenders, or the Contract Value.
Benefits available under this Contract are not less than those required by
statute of the state in which this Contract is delivered.
This is a Variable Annuity Contract with Annuity Payments and Contract Values
increasing or decreasing depending on the experience of the Variable Account
which is set forth in the Contract Schedule.
Signed for Allianz Life Insurance Company of North America by:
Secretary President
INDIVIDUAL FLEXIBLE PAYMENT VARIABLE ANNUITY
NON-PARTICIPATING
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
RIGHT TO EXAMINE..................................................................................................1
CONTRACT SCHEDULE..................................................................................;;;;;........i-v
DEFINITIONS.......................................................................................................4
PURCHASE PAYMENTS.................................................................................................6
PURCHASE PAYMENTS..............................................................................................6
CHANGE IN PURCHASE PAYMENTS....................................................................................6
NO DEFAULT.....................................................................................................6
BONUS......................................................................................................... 6
ALLOCATION OF PURCHASE PAYMENTS................................................................................6
VARIABLE ACCOUNT..................................................................................................7
THE VARIABLE ACCOUNT...........................................................................................7
VALUATION OF ASSETS............................................................................................7
ACCUMULATION UNITS.............................................................................................7
ACCUMULATION UNIT VALUE........................................................................................7
NET INVESTMENT FACTOR..........................................................................................7
MORTALITY AND EXPENSE RISK CHARGE..............................................................................8
ADMINISTRATIVE CHARGE..........................................................................................8
DISTRIBUTION EXPENSE CHARGE....................................................................................8
MORTALITY AND EXPENSE GUARANTEE................................................................................8
REWARDS VALUE.....................................................................................................8
CONTRACT MAINTENANCE CHARGE.......................................................................................9
TRANSFERS.........................................................................................................9
SURRENDER PROVISIONS.............................................................................................10
SURRENDERS....................................................................................................10
CONTINGENT DEFERRED SALES CHARGE..............................................................................10
PROCEEDS PAYABLE ON DEATH........................................................................................11
DEATH OF CONTRACT OWNER DURING THE ACCUMULATION PERIOD........................................................11
DEATH BENEFIT AMOUNT DURING THE ACCUMULATION PERIOD...........................................................11
DEATH BENEFIT OPTIONS DURING THE ACCUMULATION PERIOD..........................................................11
DEATH OF CONTRACT OWNER DURING THE ANNUITY PERIOD.............................................................11
DEATH OF ANNUITANT............................................................................................12
PAYMENT OF DEATH BENEFIT......................................................................................12
BENEFICIARY...................................................................................................12
CHANGE OF BENEFICIARY.........................................................................................12
SUSPENSION OR DEFERRAL OF PAYMENTS PROVISION.....................................................................13
CONTRACT OWNER, ANNUITANT, ASSIGNMENT PROVISIONS.................................................................13
CONTRACT OWNER................................................................................................13
JOINT CONTRACT OWNER..........................................................................................13
ANNUITANT.....................................................................................................13
ASSIGNMENT OF A CONTRACT......................................................................................13
ANNUITY PROVISIONS...............................................................................................14
GENERAL.......................................................................................................14
FIXED ANNUITY.................................................................................................14
VARIABLE ANNUITY..............................................................................................14
INCOME DATE...................................................................................................15
SELECTION OF AN ANNUITY OPTION................................................................................15
ANNUITY OPTIONS...............................................................................................15
OPTION 1 - LIFE ANNUITY.....................................................................................15
OPTION 2 - LIFE ANNUITY WITH MONTHLY PAYMENTS OVER 10, 15 OR 20 YEARS GUARANTEED...........................15
OPTION 3 - JOINT AND LAST SURVIVOR ANNUITY..................................................................16
OPTION 4 - JOINT AND LAST SURVIVOR WITH MONTHLY PAYMENTS OVER 10, 15 OR 20 YEARS GUARANTEED.................16
OPTION 5 - REFUND LIFE ANNUITY..............................................................................17
OPTION 6 - SPECIFIED PERIOD CERTAIN ANNUITY...........................................17
GENERAL PROVISIONS...............................................................................................18
THE CONTRACT..................................................................................................18
NON-PARTICIPATING IN SURPLUS..................................................................................18
MISSTATEMENT OF AGE OR SEX....................................................................................18
CONTRACT SETTLEMENT...........................................................................................18
REPORTS.......................................................................................................18
TAXES.........................................................................................................18
EVIDENCE OF SURVIVAL..........................................................................................18
PROTECTION OF PROCEEDS........................................................................................18
MODIFICATION OF CONTRACT......................................................................................19
</TABLE>
<TABLE>
<CAPTION>
CONTRACT SCHEDULE
<S> <C>
CONTRACT OWNER: [John Doe] CONTRACT NUMBER: [??687456]
JOINT OWNER: [Jane Doe] ISSUE DATE: [1//15/00]
ANNUITANT: [John Doe] INCOME DATE: [04/15/09]
PURCHASE PAYMENTS:
INITIAL PURCHASE PAYMENT: [$15,000]
MINIMUM SUBSEQUENT
PURCHASE PAYMENT: [$250 or $100 if you have selected AIP]
MAXIMUM TOTAL
PURCHASE PAYMENTS: [$1 million; higher amounts may be accepted with our prior
approval]
ALLOCATION GUIDELINES:
[1. Currently, you can select up to 10 of the Investment Options.
2. If allocations are made in percentages, whole numbers must be used.]
INVESTMENT OPTIONS:
Variable Account: [Allianz Life Variable Account B]
Sub-Accounts:
[AIM V.I. CAPITAL APPRECIATION]
[AIM V.I. GROWTH]
[AIM V.I. INTERNATIONAL EQUITY]
[AIM V.I. VALUE]
[ALGER AMERICAN GROWTH]
[ALGER AMERICAN LEVERAGED ALLCAP]
[ALGER AMERICAN MIDCAP GROWTH]
[ALGER AMERICAN SMALL CAPITALIZATION]
[DAVIS VA FINANCIAL]
[DAVIS VA REAL ESTATE]
[DAVIS VA VALUE]
[FRANKLIN GROWTH AND INCOME]
[FRANKLIN RISING DIVIDENDS SECURITIES]
[FRANKLIN SMALL CAP]
[FRANKLIN U.S. GOVERNMENT]
[J.P. MORGAN INTERNATIONAL OPPORTUNITIES]
[J.P. MORGAN U.S. DISCIPLINED EQUITY]
[MUTUAL DISCOVERY SECURITIES]
[MUTUAL SHARES SECURITIES]
[OPPENHEIMER VA GLOBAL SECURITIES]
[OPPENHEIMER VA HIGH INCOME]
[OPPENHEIMER VA MAIN STREET GROWTH & INCOME]
[PIMCO VIT HIGH YIELD BOND]
[PIMCO VIT STOCKSPLUS GROWTH AND INCOME]
[PIMCO VIT TOTAL RETURN BOND]
[SELIGMAN GLOBAL TECHNOLOGY]
[SELIGMAN SMALL-CAP VALUE]
[TEMPLETON DEVELOPING MARKETS EQUITY]
[TEMPLETON GLOBAL GROWTH]
[TEMPLETON PACIFIC GROWTH]
[USALLIANZ VIP DIVERSIFIED ASSETS]
[USALLIANZ VIP FIXED INCOME]
[USALLIANZ VIP GLOBAL OPPORTUNITIES]
[USALLIANZ VIP GROWTH]
[USALLIANZ VIP MONEY MARKET]
[VAN KAMPEN LIT ENTERPRISE]
[VAN KAMPEN LIT GROWTH & INCOME]
[Allianz Life General Account]
[ALLIANZ LIFE FIXED ACCOUNT]
BONUS RATE:
1. [4% of the Purchase Payment with total Purchase Payments (less surrenders and related contingent
deferred sales charges) of under $25,000;
2. 5% of the Purchase Payment with total Purchase Payments (less surrenders and related contingent deferred
sales charges) of $25,000 - $99,999;
3. 6% of the Purchase Payment with total Purchase Payments (less surrenders and related contingent deferred
sales charges) of $100,000 - $999,999;
4. 7% of the Purchase Payment with total Purchase Payments (less surrenders and related contingent deferred
sales charges) of $1,000,000 - $4,999,999;
5. 8% of the Purchase Payment with total Purchase Payments (less surrenders and related contingent deferred
sales charges) of $5,000,000 or greater.]
BONUS VESTING SCHEDULE:
1. [Up through 12 completed months from date of Purchase Payment - 0%;
2. At least 12 and through 24 completed months from date of Purchase Payment - 35%;
3. At least 24 and through 36 completed months from date of Purchase Payment - 70%
4. At least 36 completed months from date of Purchase Payment - 100%.]
MORTALITY AND EXPENSE RISK CHARGE: During the Accumulation Period, the mortality and expense risk charge is
equal on an annual basis to [1.50%] of the average daily net assets of the Variable Account. During the Annuity
Period, the mortality and expense risk charge is equal on an annual basis to [1.50%] of the average daily net
assets of the Variable Account. We may decrease this charge, but we may not increase it.
ADMINISTRATIVE CHARGE: Equal on an annual basis to [.15%] of the average daily net assets of the Variable
Account.
DISTRIBUTION EXPENSE CHARGE: [None]
CONTRACT MAINTENANCE CHARGE: The contract maintenance charge is currently [$40.00] each Contract Year.
During the Accumulation Period the contract maintenance charge will be deducted from the Rewards Value the day
before each Contract Anniversary while this Contract is in force. If a full surrender is made on a date other
than a Contract Anniversary and your Rewards Value is less than [$75,000], the full contract maintenance charge
will be deducted at the time of the full surrender. The contract maintenance charge will be deducted from the
Investment Options in the same proportion that the amount of the Rewards Value in each Investment Option bears to
the total Rewards Value.
During the Annuity Period, the contract maintenance charge will be collected pro rata from each Annuity Payment.
If the total Rewards Value is at least [$75,000], we will not assess the contract maintenance charge. In the
event you own more than one Contract of the same type issued by the Company, we will determine the total Rewards
Value for all of the Contracts. If the Contract Owner is not a natural person, we will look to the Annuitant in
determining the foregoing.
COMMUTATION FEE APPLICABLE TO ANNUITY OPTIONS 2, 4 AND 6:
------------------------------- -------------------------
[Years Since Income Date Commutation Factor
------------------------------- -------------------------
------------------------------- -------------------------
0 - 1 7%
------------------------------- -------------------------
------------------------------- -------------------------
1 - 2 6%
------------------------------- -------------------------
------------------------------- -------------------------
2 - 3 5%
------------------------------- -------------------------
------------------------------- -------------------------
3 - 4 4%
------------------------------- -------------------------
------------------------------- -------------------------
4 - 5 3%
------------------------------- -------------------------
------------------------------- -------------------------
5 - 6 2%
------------------------------- -------------------------
------------------------------- -------------------------
Over 6 1%]
------------------------------- -------------------------
MAXIMUM CUMULATIVE PERCENTAGE FOR PARTIAL LIQUIDATION FOR ANNUITY OPTIONS 2 AND 4: [75%]
ASSUMED INVESTMENT RETURN: [5%]
TRANSFERS:
NUMBER OF TRANSFERS PERMITTED: Currently, there are no limits on the number of transfers that can be
made. We reserve the right to change this, but you will always be allowed at least 12 transfers in any
Contract Year. Currently, you are allowed [12] free transfers each Contract Year. This applies to
transfers prior to and after the Income Date.
TRANSFER FEE: For each transfer in excess of the free transfers permitted, the transfer fee is [$25].
Any transfers made by us at the end of the Right to Examine period and any transfers made pursuant to a
regularly scheduled transfer will not be counted in determining the application of the transfer fee.
MINIMUM AMOUNT TO BE TRANSFERRED: [None]
SURRENDERS:
CONTINGENT DEFERRED SALES CHARGE: A contingent deferred sales charge is assessed when Purchase Payments
are surrendered. The charge is calculated at the time of each surrender. For partial surrenders, the
charge is deducted from the remaining Rewards Value and is deducted from the Investment Options in the
same proportion that the amount of the surrender from the Investment Options bears to the total Rewards
Value. The contingent deferred sales charge is based upon the length of the time from receipt of the
Purchase Payment. Surrenders are deemed to have come from the oldest Purchase Payments first, and from
all Purchase Payments prior to earnings. Each Purchase Payment is tracked as to its date of receipt
and the contingent deferred sales charge is determined in accordance with the following:
[CONTINGENT DEFERRED SALES CHARGE
Number of Completed
Years from Receipt Charge
0 8.5%
1 8.5%
2 8.5%
3 8.5%
4 8%
5 7%
6 6%
7 5%
8 4%
9 3%
10 years or more 0%]
PARTIAL SURRENDER PRIVILEGE: [Each Contract Year, on a non-cumulative basis, you can make partial
surrenders up to an amount equal to 10% of Purchase Payments (minus any previous surrenders taken in the
current Contract Year which were not subject to a contingent deferred sales charge) without incurring a
contingent deferred sales charge. Purchase Payments surrendered under the partial surrender privilege
are still subject to applicable contingent deferred sales charge upon full surrender of the Contract.]
[If you have a qualified contract and are age 70 1/2 or older, you can elect the minimum distribution
program with respect to your Contract. Such surrenders will not be subject to a contingent deferred
sales charge. Such payments will be designed to meet the applicable minimum distribution requirements
imposed by the Internal Revenue Code on qualified contracts. Payments may be made monthly or quarterly
unless your Contract Value is less than $25,000 in which case the payments shall be made annually. If
you have elected the minimum distribution program, any additional surrenders in a Contract Year which
exceed 10% of Purchase Payments when combined with minimum distribution surrenders will be subject to
any applicable contingent deferred sales charge.]
MINIMUM PARTIAL SURRENDER: [$500]
MINIMUM CONTRACT VALUE THAT MUST REMAIN IN THE CONTRACT AFTER A PARTIAL SURRENDER: [$10,000]
FIXED ACCOUNT INITIAL RATE: [3%]
We guarantee this rate for one year from the Issue Date.
RIDERS:
[Individual Retirement Annuity Endorsement]
[Roth Individual Retirement Annuity Endorsement]
[403 (b) Annuity Endorsement]
[Unisex Endorsement]
[Group Pension Plan Death Benefit Endorsement]
[Pension Plan and Profit Sharing Plan Endorsement]
[Declared Interest Rate Fixed Account Endorsement]
[Waiver of Contingent Deferred Sales Charge Endorsement]
[Traditional Death Benefit Endorsement]
[Enhanced Death Benefit Endorsement]
SERVICE CENTER: [USALLIANZ] SERVICE CENTER
[300 Berwyn Park
P.O. Box 3031
Berwyn, PA 19312-0031
800-624-0197]
</TABLE>
DEFINITIONS
ACCUMULATION PERIOD: The period prior to the Income Date during which you can
make Purchase Payments.
ACCUMULATION UNIT: An accounting unit of measure used to calculate the Rewards
Value prior to the Income Date.
ADJUSTED CONTRACT VALUE: The Contract Value less any applicable Premium Tax.
This amount is used to determine the death benefit or the initial Annuity
Payment.
AGE: Age on last birthday unless otherwise specified.
ANNUITANT(S): The natural person upon whose continuation of life any Annuity
Payment involving life contingencies depends. You may change the Annuitant at
any time prior to the Income Date unless the Contract Owner is a non-individual.
ANNUITY CALCULATION DATE: The date on which the first Annuity Payment is
calculated which will be no more than ten (10) business days prior to the Income
Date.
ANNUITY OPTION: An arrangement under which Annuity Payments are made under this
Contract.
ANNUITY PAYMENTS: The series of payments made to you or any named payee after
the Income Date under the Annuity Option selected.
ANNUITY PERIOD: The period of time beginning on the Income Date during which
Annuity Payments are made.
ANNUITY RESERVE: The assets which support the Annuity Option you have selected
during the Annuity Period.
ANNUITY UNIT: An accounting unit of measure used to calculate variable Annuity
Payments after the Income Date.
ASSUMED INVESTMENT RETURN: The investment return upon which the variable Annuity
Payments in the Contract are based.
AUTHORIZED REQUEST: A request, in a form satisfactory to the Company, which is
received by the Service Center.
BENEFICIARY: The person(s) or entity(ies) who will receive any death benefit
payable under this Contract.
COMMUTATION FEE: A fee assessed after the Income Date by the Company equal to
the percentage of the amount liquidated as shown on the Contract Schedule.
COMPANY: Allianz Life Insurance Company of North America.
CONTRACT ANNIVERSARY: An anniversary of the Issue Date of this Contract.
CONTRACT OWNER: The person(s) or entity(ies) entitled to the ownership rights
stated in this Contract. If Joint Owners are named, all references to Contract
Owner shall mean the Joint Owners.
CONTRACT SURRENDER VALUE: The Contract Value as of any Valuation Date less any
applicable Premium Tax, less any contingent deferred sales charge and less any
applicable contract maintenance charge.
CONTRACT VALUE: The Rewards Value as of any Valuation Date less any unvested
bonus.
CONTRACT YEAR: Any period of twelve (12) months commencing with the Issue Date
and each Contract Anniversary thereafter.
GENERAL ACCOUNT: Our general investment account which contains all the assets of
the Company with the exception of the Variable Account and other segregated
asset accounts.
INCOME DATE: The date on which Annuity Payments are to begin.
INVESTMENT OPTION(S): Those investments available under the Contract. Current
Investment Options are shown on the Contract Schedule.
ISSUE DATE: The date shown on the Contract Schedule on which the first Contract
Year begins.
JOINT OWNER: If there is more than one Contract Owner, each Contract Owner shall
be a Joint Owner of the Contract. Joint Owners have equal ownership rights and
must both authorize any exercising of those ownership rights unless otherwise
allowed by us. Any Joint Owner must be the spouse of the other Contract Owner,
unless limited by state law.
LIQUIDATION VALUE: The present value of any remaining guaranteed variable
Annuity Payments after the Income Date to the end of the period certain commuted
at the Assumed Investment Return.
NET ASSET VALUE: The total value of the shares of the underlying fund, less any
investment management and portfolio administration fees and liabilities of the
underlying fund, held by the Sub-Account, as of the close of trading on a
Valuation Date.
PREMIUM TAX: Any premium taxes owed to any governmental entity and assessed
against Purchase Payments or Contract Value.
PURCHASE PAYMENT: A payment made toward this Contract.
REWARDS VALUE: The dollar value as of any Valuation Date of all amounts
accumulated under this Contract including all vested and unvested bonus amounts
and gains and losses attributable to all bonus amounts.
SERVICE CENTER: The office indicated on the Contract Schedule of this Contract
to which notices, requests and Purchase Payments must be sent.
SUB-ACCOUNT: Variable Account assets are divided into Sub-Accounts. The current
Sub-Accounts are shown on the Contract Schedule.
VALUATION DATE: The Variable Account will be valued each day that the New York
Stock Exchange is open for trading.
VALUATION PERIOD: The period commencing at the close of business of the New York
Stock Exchange on each Valuation Date and ending at the close of business for
the next succeeding Valuation Date.
VARIABLE ACCOUNT: A separate account maintained by us in which a portion of our
assets has been allocated for this and certain other contracts. It has been
designated on the Contract Schedule.
PURCHASE PAYMENTS
PURCHASE PAYMENTS: Purchase Payments are payable according to the frequency and
in the amount selected by you. The initial Purchase Payment is due on the Issue
Date. We reserve the right to decline any Purchase Payment. The minimum
subsequent Purchase Payment and the maximum total Purchase Payments allowed are
shown on the Contract Schedule.
CHANGE IN PURCHASE PAYMENTS: You may elect to increase or decrease or to change
the frequency of Purchase Payments.
NO DEFAULT: Unless surrendered, this Contract remains in force and will not be
in default if no additional Purchase Payments are made.
BONUS: Each Purchase Payment made prior to the Contract Owner's 81st birthday
will be credited with a bonus at the time of contribution to the Contract. The
bonus rate will be based on the total amount of Purchase Payments made at the
time of the contribution, less any surrenders and applicable contingent deferred
sales charge, as shown on the Contract Schedule. The bonus will be credited to
the Contract under the following terms:
1. Bonus amounts will become available for surrender only when such amounts
become vested as shown on the Contract Schedule.
2. All bonus amounts and any gains and losses attributable to such amounts
shall be treated as earnings under the Contract.
3. All gains and losses attributable to bonus amounts are part of the Contract
Value and are always 100% vested.
4. If Joint Owners are named, the age of the older Joint Owner will be used
and if the Contract Owner is a non-natural person, then the age of the
Annuitant will be used to determine whether a bonus is applicable.
ALLOCATION OF PURCHASE PAYMENTS: Purchase Payments and bonus amounts are
allocated to one or more of the Investment Options in accordance with your
selection. The allocation of the initial Purchase Payment and bonus amount is
made in accordance with your selection made at the Issue Date. Unless you inform
us otherwise, subsequent Purchase Payments and bonus amounts are allocated in
the same manner as the initial Purchase Payment and bonus amount. However, the
Company has reserved the right to allocate the initial Purchase Payment and
bonus amount to the Money Market Sub-Account until the expiration of the Right
to Examine period. All allocations of Purchase Payments and bonus amounts are
subject to the Allocation Guidelines shown on the Contract Schedule. We
guarantee that you will be allowed to select at least five Investment Options
for such allocations.
VARIABLE ACCOUNT
THE VARIABLE ACCOUNT: The Variable Account is designated on the Contract
Schedule. It consists of assets we have set aside and have kept separate from
the rest of our assets and those of our other separate accounts. The assets of
the Variable Account, equal to reserves and other liabilities of your Contract
and those of other Contract Owners, will not be charged with liabilities arising
out of any other business we may conduct.
The Variable Account assets are divided into Sub-Accounts as shown on the
Contract Schedule. We may add additional Sub-Accounts to those shown. You may be
permitted to transfer your Rewards Value or allocate Purchase Payments or bonus
amounts to the additional Sub-Accounts. However, the right to make such
transfers or allocations will be limited by any terms and conditions we may
impose.
Should the shares of any Sub-Account become unavailable for investment by the
Variable Account, or our Board of Directors deems further investment in the
shares inappropriate, we may limit further purchase of such shares or substitute
shares of another Sub-Account for shares already purchased.
VALUATION OF ASSETS: Assets of the underlying fund of each Sub-Account will be
valued at their Net Asset Value on each Valuation Date.
ACCUMULATION UNITS: Accumulation Units shall be used to account for all amounts
allocated to or surrendered from the Sub-Accounts of the Variable Account as a
result of Purchase Payments, surrenders, transfers, bonus amounts, or fees and
charges. We will determine the number of Accumulation Units of a Sub-Account
purchased or canceled. This will be done by dividing the amount allocated to (or
the amount surrendered from) the Sub-Account by the dollar value of one
Accumulation Unit of the Sub-Account as of the end of the Valuation Period
during which the transaction is processed at the Service Center. Purchase
Payments, bonus amounts, surrenders and transfers from or to a Sub-Account will
result in the addition of or the cancellation of Accumulation Units in a
Sub-Account.
ACCUMULATION UNIT VALUE: The Accumulation Unit value for each Sub-Account was
initially arbitrarily set at $10. Subsequent Accumulation Unit values for each
Sub-Account are determined by multiplying the Accumulation Unit value for the
immediately preceding Valuation Period by the net investment factor for the
Sub-Account for the current period.
The Accumulation Unit value may increase or decrease from Valuation Period to
Valuation Period.
NET INVESTMENT FACTOR: The net investment factor for each Sub-Account is
determined by dividing A by B and multiplying by (1 - C) where:
A is (i) the Net Asset Value per share of the underlying fund held by
the Sub-Account at the end of the current Valuation Period; plus
(ii) any dividend or capital gains per share declared on behalf of
such underlying fund held by the Sub-Account that has an
ex-dividend date within the current Valuation Period.
B is the Net Asset Value per share of the underlying fund held by the
Sub-Account for the immediately preceding Valuation Period.
C is (i) the Valuation Period equivalent of the daily mortality and
expense risk charge, the administrative charge and the distribution
expense charge, if any, which are shown on the Contract Schedule; plus
(ii) a charge factor, if any, for any taxes or any tax reserve we have
established as a result of the operation or maintenance of the
Sub-Account.
MORTALITY AND EXPENSE RISK CHARGE: Each Valuation Period, we deduct a mortality
and expense risk charge from the Variable Account which is equal, on an annual
basis, to the amount shown on the Contract Schedule. The mortality and expense
risk charge compensates the Company for assuming the mortality and expense risks
under this Contract.
ADMINISTRATIVE CHARGE: Each Valuation Period, we deduct an administrative charge
from the Variable Account which is equal, on an annual basis, to the amount
shown on the Contract Schedule. The administrative charge compensates us for the
costs associated with the administration of this Contract and the Variable
Account.
DISTRIBUTION EXPENSE CHARGE: Each Valuation Period, we deduct a distribution
expense charge from the Variable Account which is equal, on an annual basis, to
the amount shown on the Contract Schedule. The distribution expense charge
compensates the Company for costs associated with the distribution of Contracts.
MORTALITY AND EXPENSE GUARANTEE: We guarantee that the dollar amount of each
annuity payment after the first will not be affected by variations in mortality
or expense experience.
REWARDS VALUE
The Rewards Value for any Valuation Period is equal to the total dollar value
accumulated under this Contract in all of the Investment Options. The Rewards
Value in a Sub-Account of the Variable Account is determined by multiplying the
number of Accumulation Units by the Accumulation Unit value.
CONTRACT MAINTENANCE CHARGE
We deduct an annual contract maintenance charge shown on the Contract Schedule.
Prior to the Income Date, this will be deducted from the Rewards Value. The
number of Accumulation Units to be canceled from each applicable Investment
Option is in the ratio that the value of each Investment Option bears to the
total Rewards Value. After the Income Date the contract maintenance charge is
deducted from the Annuity Payment.
TRANSFERS
You may transfer all or a part of your interest in an Investment Option to
another Investment Option. We reserve the right to charge for transfers if there
are more than the number of free transfers shown on the Contract Schedule. All
transfers are subject to the following:
1. The deduction of any transfer fee that may be imposed as shown on the
Contract Schedule. The transfer fee will be deducted from the Investment
Option from which the transfer is made. If the entire amount in the
Investment Option is transferred, then the transfer fee will be deducted
from the amount transferred. If there are multiple source Investment
Options, it will be treated as a single transfer. Any transfer fee will be
deducted proportionally from the source Investment Options if less than the
entire amount in the Investment Option is transferred.
2. We reserve the right to limit transfers until the expiration of the Right
to Examine period.
3. The minimum amount which can be transferred is shown on the Contract
Schedule.
4. No transfer will be effective within seven calendar days prior to the date
on which the first Annuity Payment is due.
5. Any transfer direction must clearly specify:
a. the amount which is to be transferred; and
b. the Investment Options which are to be affected.
6. After the Income Date, transfers may not be made from a fixed Annuity
Option to a variable Annuity Option.
7. After the Income Date, you can make transfers from a variable Annuity
Option to a fixed Annuity Option. The number of Annuity Units canceled from
the variable Annuity Option will be equal in value to the amount of the
Annuity Reserve transferred out of the Variable Account. The amount
transferred will purchase fixed Annuity Payments under the Annuity Option
in effect and based on the age and sex of the Annuitant at the time of the
transfer where allowed.
8. Your right to make transfers is subject to modification if we determine in
our sole opinion, that the exercise of the right by one or more Contract
Owners is, or would be, to the disadvantage of other Contract Owners.
Restrictions may be applied in any manner reasonably designed to prevent
any use of the transfer right which we consider to be to the disadvantage
of other Contract Owners. A modification could be applied to transfers to
or from one or more of the Investment Options, and could include, but is
not limited to:
a. the requirement of a minimum time period between each transfer;
b. not accepting a transfer request from an agent acting under a power of
attorney on behalf of more than one Contract Owner; or
c. limiting the dollar amount that may be transferred between the
Investment Options by a Contract Owner at any one time;
9. We reserve the right at any time and without prior notice to any party
to modify the transfer provisions described above. However, if we do
modify these provisions we guarantee that they will not be any more
restrictive than the above.
If you elect to use this transfer privilege, we will not be liable for transfers
made in accordance with your instructions. All amounts and Accumulation Units
will be determined as of the end of the Valuation Period during which the
request for transfer is received at the Service Center.
SURRENDER PROVISIONS
SURRENDERS: During the Accumulation Period, you may, upon Authorized Request,
make a full or partial surrender of the Contract Value. Surrenders will result
in the cancellation of Accumulation Units from each Investment Option in the
ratio that the value of each Investment Option bears to the total Rewards Value.
You must specify, by Authorized Request, which Accumulation Units are to be
canceled if other than the above mentioned method of cancellation is desired.
The Company will pay the amount of any surrender from the Variable Account
within seven (7) days of receipt of a request in good order unless the
Suspension or Deferral of Payments Provision is in effect.
Each partial surrender must be for an amount which is not less than the minimum
partial surrender amount shown on the Contract Schedule. The minimum Contract
Value which must remain in the Contract after a partial surrender is shown on
the Contract Schedule.
Partial surrenders in excess of the partial surrender privilege amount shown on
the Contract Schedule will reduce unvested bonus amounts by such excess amount's
percentage of the Contract Value at the time of the surrender. This percentage
is determined by dividing the amount of the partial surrender, including any
contingent deferred sales charge assessed, in excess of the partial surrender
privilege amount by the Contract Value.
CONTINGENT DEFERRED SALES CHARGE: Upon a full or partial surrender of this
Contract a contingent deferred sales charge as set forth on the Contract
Schedule may be assessed. Under certain circumstances, we allow surrenders
without the contingent deferred sales charge as set forth on the Contract
Schedule. Purchase Payments surrendered under the partial surrender privilege
are still subject to applicable contingent deferred sales charge upon full
surrender of the Contract.
PROCEEDS PAYABLE ON DEATH
DEATH OF CONTRACT OWNER DURING THE ACCUMULATION PERIOD: Upon the death of the
Contract Owner, or any Joint Owner, during the Accumulation Period, the death
benefit will be paid to the Beneficiary(ies) designated by the Contract Owner.
Upon the death of a Joint Owner, the surviving Joint Owner, if any, will be
treated as the primary Beneficiary. Any other Beneficiary designation on record
at the time of death will be treated as a contingent Beneficiary.
DEATH BENEFIT AMOUNT DURING THE ACCUMULATION PERIOD: The death benefit will be
the Adjusted Contract Value determined as of the end of the Valuation Period
during which the Company receives both due proof of death and an election for
the payment method.
Any part of the death benefit amount that had been invested in the Variable
Account remains in the Variable Account until distribution begins. From the time
the death benefit is determined until complete distribution is made, any amount
in the Variable Account will be subject to investment risk which is borne by the
Beneficiary.
DEATH BENEFIT OPTIONS DURING THE ACCUMULATION PERIOD: If the Owner has not
previously designated a death benefit option, a Beneficiary must request that
the death benefit be paid under one of the death benefit options below. In
addition, if the Beneficiary is the spouse of the Contract Owner, he or she may
elect to continue the Contract in his or her own name and exercise all the
Contract Owner's rights under the Contract.
Option A - lump sum payment of the death benefit; or
Option B - the payment of the entire death benefit within 5 years of
the date of the death of the Contract Owner or any Joint Owner. The
full contract maintenance charge is assessed each Beneficiary on each
Contract Anniversary; or
Option C - payment of the death benefit under an Annuity Option over
the lifetime of the Beneficiary or over a period not extending beyond
the life expectancy of the Beneficiary with distribution beginning
within one year of the date of death of the Contract Owner or any Joint
Owner. The full Contract Maintenance Charge will continue to be
assessed to each Beneficiary.
Any portion of the death benefit not applied under Option C within one year of
the date of the Contract Owner's death, must be distributed within five years of
the date of death.
If a lump sum payment is requested, the amount will be paid within seven (7)
days of receipt of proof of death and the valid election, including any required
governmental forms, unless the Suspension or Deferral of Payments Provision is
in effect.
Payment to the Beneficiary, other than in a lump sum, may only be elected during
the sixty-day period after the day on which such lump sum first became payable
by the Company.
DEATH OF CONTRACT OWNER DURING THE ANNUITY PERIOD: If you, or any Joint Owner,
dies during the Annuity Period, and you are not an Annuitant, any remaining
payments under the Annuity Option elected will continue at least as rapidly as
under the method of distribution in effect at such Contract Owner's death. Upon
your death during the Annuity Period, the Beneficiary becomes the Contract
Owner.
DEATH OF ANNUITANT: Upon the death of an Annuitant, who is not the Contract
Owner, during the Accumulation Period, you will become the Annuitant, unless you
designate another Annuitant. If the Contract Owner is a non-individual, the
death of the Annuitant will be treated as the death of the Contract Owner and a
new Annuitant may not be designated.
Upon the death of the Annuitant during the Annuity Period, the death benefit, if
any, will be as specified in the Annuity Option elected. Death benefits will be
paid at least as rapidly as under the method of distribution in effect at the
Annuitant's death.
PAYMENT OF DEATH BENEFIT: The Company will require due proof of death and
payment election and any required governmental forms before any death benefit is
paid. Due proof of death will be:
1. a certified death certificate; or
2. a certified decree of a court of competent jurisdiction as to the
finding of death; or
3. any other proof satisfactory to the Company.
All death benefits will be paid in accordance with applicable law or regulations
governing death benefit payments.
BENEFICIARY: The Beneficiary designation in effect on the Issue Date will remain
in effect until changed. The Beneficiary is entitled to receive the benefits to
be paid at your death.
Unless you provide otherwise, the death benefit will be paid in equal shares to
the survivor(s) as follows:
1. to the primary Beneficiary(ies) who survive you and/or the Annuitant's
death, as applicable; or if there are none;
2. to the contingent Beneficiary(ies) who survive you and/or the Annuitant's
death, as applicable; or if there are none;
3. to your estate.
CHANGE OF BENEFICIARY: Subject to the rights of any irrevocable
Beneficiary(ies), you may change the primary Beneficiary(ies) or contingent
Beneficiary(ies). A change may be made by Authorized Request. The change will
take effect as of the date the Authorized Request is signed. If the Authorized
Request reaches our Service Center after the Contract Owner dies but before any
payment is made, the change will be valid. The Company will not be liable for
any payment made or action taken before it records the change.
SUSPENSION OR DEFERRAL OF PAYMENTS PROVISION
The Company reserves the right to suspend or postpone payments from the Variable
Account for a surrender or transfer for any period when:
1. the New York Stock Exchange is closed (other than customary
weekend and holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of securities
held in the Variable Account is not reasonably practicable or it
is not reasonably practicable to determine the value of the
Variable Account's net assets; or
4. during any other period when the Securities and Exchange
Commission, by order, so permits for the protection of Contract
Owners;
provided that applicable rules and regulations of the Securities and Exchange
Commission will govern as to whether the conditions described in (2) and (3)
exist.
CONTRACT OWNER, ANNUITANT, ASSIGNMENT PROVISIONS
CONTRACT OWNER: As the Contract Owner you have all the interest and rights under
this Contract. The Contract Owner is the person designated as such on the Issue
Date, unless changed.
You may change owners of the Contract at any time by Authorized Request. A
change of Contract Owner will automatically revoke any prior designation of
Contract Owner. The change will become effective as of the date the Authorized
Request is signed. We will not be liable for any payment made or action taken
before the change is recorded. We will not be responsible for any tax
consequences of any such change.
JOINT OWNER: A Contract may be owned by Joint Owners. If Joint Owners are named,
any Joint Owner must be the spouse of the other Contract Owner, unless limited
by state law. Upon the death of either Contract Owner, the surviving Joint Owner
will be the primary Beneficiary. Any other Beneficiary designation will be
treated as a contingent Beneficiary unless otherwise indicated in an Authorized
Request.
ANNUITANT: The Annuitant is the person on whose life Annuity Payments are based.
The Annuitant is the person designated by you subject to our underwriting rules
then in effect. The Annuitant may not be changed in a Contract which is owned by
a non-individual.
ASSIGNMENT OF A CONTRACT: An Authorized Request specifying the terms of an
assignment of a Contract must be provided to the Service Center. We will not be
liable for any payment made or action taken before we record the assignment.
We will not be responsible for the validity or tax consequences of any
assignment. Any assignment made after the death benefit has become payable will
be valid only with our consent.
If the Contract is assigned, your rights may only be exercised with the consent
of the assignee of record.
ANNUITY PROVISIONS
GENERAL: On the Income Date, the Adjusted Contract Value will be applied under
the Annuity Option you have selected. You may elect to have the Adjusted
Contract Value applied to provide a fixed annuity, a variable annuity or a
combination fixed and variable annuity. If a combination is elected, you must
specify what part of the Adjusted Contract Value is to be applied to the fixed
and variable Annuity Options. If you select a fixed annuity, the Adjusted
Contract Value is allocated to the General Account and the annuity is paid as a
fixed annuity. If you select a variable annuity, the Adjusted Contract Value
will be allocated to the Sub-Accounts of the Variable Account in accordance with
your selection, and the annuity will be paid as a variable annuity. Unless you
designate another payee, you will be the payee of the Annuity Payments. The
Adjusted Contract Value will be applied to the applicable annuity rate based
upon the Annuity Option you have selected. We may offer more favorable rates
than those guaranteed here at the time your first Annuity Payment is calculated.
Annuity Payments will depend on the Age and, where permitted, sex of the
Annuitant.
FIXED ANNUITY: You may elect to have the Adjusted Contract Value applied to
provide a fixed annuity. The dollar amount of each fixed Annuity Payment is
guaranteed to be at least an amount equal to the Adjusted Contract Value,
divided first by $1000 and then multiplied by the appropriate Annuity Payment
amount for each $1000 of value for the Annuity Option selected. The guaranteed
rates are based on an interest rate of 2 1/2% per year and the 1983(a)
Individual Annuity Mortality Table with mortality improvement projected 30 years
using Mortality Projection Scale G.
VARIABLE ANNUITY: You may elect to have the Adjusted Contract Value applied to
provide a variable annuity. Variable Annuity Payments reflect the investment
performance of the Variable Account in accordance with the allocation of the
Adjusted Contract Value to the Sub-Accounts during the Annuity Period. Variable
Annuity Payments are not guaranteed as to dollar amount.
On the Income Date a fixed number of Annuity Units will be purchased as follows:
The first Annuity Payment is equal to the Adjusted Contract Value, divided first
by $1000 and then multiplied by the appropriate Annuity Payment amount for each
$1000 of value for the Annuity Option selected. In each Sub-Account the fixed
number of Annuity Units is determined by dividing the amount of the initial
Annuity Payment determined for each Sub-Account by the Annuity Unit value on the
Income Date. Thereafter, the number of Annuity Units in each Sub-Account remains
unchanged unless you elect to transfer between Sub-Accounts. 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 Sub-Account. The Annuity Payment in each
Sub-Account is determined by multiplying the number of Annuity Units then
allocated to such Sub-Account by the Annuity Unit value for that Sub-Account.
On each subsequent Valuation Date, the value of an Annuity Unit is determined in
the following way:
First: The net investment factor is determined as described under "Variable
Account - net investment factor" above.
Second: The value of an Annuity Unit for a Valuation Period is equal to:
a. the value of the Annuity Unit for the immediately preceding Valuation
Period;
b. multiplied by the net investment factor for the current Valuation Period;
c. divided by the assumed net investment factor (see below) for the Valuation
Period.
The assumed net investment factor is equal to one plus the Assumed Investment
Return which is used in determining the basis for the purchase of an Annuity,
adjusted to reflect the particular Valuation Period. The Assumed Investment
Return that we will use is shown on the Contract Schedule. However, we may agree
with you to use a different value. The Assumed Investment Return will never
exceed 7%.
INCOME DATE: You select an Income Date at the time of issue. The Income Date
must always be the first day of a calendar month. The earliest Income Date you
can select is three years after the Issue Date. The latest Income Date you can
select is the later of the first day of the first calendar month following the
Annuitant's 90th birthday or 10 years from the Issue Date, or the maximum date
permitted under state law. You may, at any time prior to the Income Date, change
the Income Date by Authorized Request 30 days in advance.
SELECTION OF AN ANNUITY OPTION: You can select an Annuity Option by Authorized
Request. If no Annuity Option is selected, Option 2, with 120 Monthly Payments
Guaranteed, will automatically be applied. You may, at any time prior to the
Income Date, by Authorized Request 30 days in advance, select and/or change the
Annuity Option.
ANNUITY OPTIONS: This Contract provides for Annuity Payments under one of the
Annuity Options described below. The Company may make available other annuity
options.
OPTION 1 - LIFE ANNUITY. We will make monthly Annuity Payments during the life
of the Annuitant and ceasing with the last Annuity Payment due prior to the
Annuitant's death.
OPTION 2 - LIFE ANNUITY WITH MONTHLY PAYMENTS OVER 10, 15 OR 20 YEARS
GUARANTEED. We will make monthly Annuity Payments during the life of the
Annuitant with a guarantee that if at the Annuitant's death there have been less
than 120, 180 or 240 monthly Annuity Payments made as selected, monthly Annuity
Payments will continue for the remainder of the guaranteed period.
Alternatively, the Contract Owner may elect to receive a lump-sum payment equal
to the present value of the guaranteed monthly Annuity Payments remaining, as of
the date the notice of the Annuitant's death is received at the Service Center,
commuted at an appropriate rate. Proof of the Annuitant's death and return of
the Contract are required prior to the payment of any commuted values. For a
fixed Annuity Option, the commutation rate will be the Statutory Calendar Year
Interest Rate based on the NAIC Standard Valuation Law for Single Premium
Immediate Annuities corresponding to the Income Date. For a variable Annuity
Option, the commutation rate will be the Assumed Investment Return as shown on
the Contract Schedule.
During the lifetime of the Annuitant and while the number of Annuity Payments
made is less than the guaranteed number of payments elected, the Contract Owner
electing a variable Annuity Option may request a surrender representing a
partial liquidation of the Liquidation Value. You will be allowed to make a
partial liquidation at least once per Contract Year after the Income Date. The
total of all partial liquidations, measured as a percentage of the Liquidation
Value, cannot exceed the amount shown on the Contract Schedule. A Commutation
Fee will be subtracted from the amount liquidated before the proceeds are paid
out. Partial liquidations will be processed on the next annuity payment date
following your written request. The minimum allowable partial liquidation will
be the lesser of $500 or the remaining portion of the Liquidation Value
available.
After a partial liquidation, the subsequent monthly Annuity Payments during the
guaranteed period certain will be reduced by the percentage of the Liquidation
Value liquidated, including the Commutation Fee. After the guaranteed number of
payments has been made, the number of Annuity Units used in calculating the
monthly payments will be restored to their original values as if no liquidations
had taken place.
OPTION 3 - JOINT AND LAST SURVIVOR ANNUITY. We will make monthly Annuity
Payments during the joint lifetime of the Annuitant and the Joint Annuitant.
Upon the death of the Annuitant, if the Joint Annuitant is then living, Annuity
Payments will continue to be paid during the remaining lifetime of the Joint
Annuitant at a level of 100%, 75% or 50% of the previous level, as selected.
Monthly Annuity Payments cease with the final Annuity Payment due prior to the
last survivor's death.
OPTION 4 - JOINT AND LAST SURVIVOR ANNUITY WITH MONTHLY PAYMENTS OVER 10, 15, OR
20 YEARS GUARANTEED. We will make monthly Annuity Payments during the joint
lifetime of the Annuitant and the Joint Annuitant. Monthly Annuity Payments will
continue to be paid during the remaining lifetime of the Joint Annuitant at 100%
of the previous level, as selected. The Company guarantees that if at the last
death of the Annuitant and the Joint Annuitant, there have been less than 120,
180, or 240 monthly Annuity Payments made as selected, monthly Annuity Payments
will continue to be made for the remainder of the guaranteed period.
Alternatively, the Contract Owner may elect to receive a lump-sum payment equal
to the present value of the guaranteed monthly Annuity Payments remaining, as of
the date the notice of the Annuitant's and Joint Annuitant's death is received
at the Service Center, commuted at an appropriate rate. Proof of death of the
Annuitant and Joint Annuitant and return of this Contract are required prior to
the payment of any commuted values. For a fixed Annuity Option, the commutation
rate will be the Statutory Calendar Year Interest Rate based on the NAIC
Standard Valuation Law for Single Premium Immediate Annuities corresponding to
the Income Date. For a variable Annuity Option, the commutation rate will be the
Assumed Investment Return as shown on the Contract Schedule.
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,
the Contract Owner electing a variable Annuity Option may request a surrender
representing a partial liquidation of the Liquidation Value. You will be allowed
to make a partial liquidation at least once per Contract Year after the Income
Date. The total of all partial liquidations, measured as a percentage of the
Liquidation Value, cannot exceed the amount shown on the Contract Schedule. A
Commutation Fee will be subtracted from the amount liquidated before the
proceeds are paid out. Partial liquidations will be processed on the next
annuity payment date following your written request. The minimum allowable
partial liquidation will be the lesser of $500 or the remaining portion of the
Liquidation Value available.
After a partial liquidation, the subsequent monthly Annuity Payments during the
guaranteed period certain will be reduced by the percentage of the Liquidation
Value liquidated, including the Commutation Fee. After the guaranteed number of
payments has been made, the number of Annuity Units used in calculating the
monthly payments will be restored to their original values as if no liquidations
had taken place.
OPTION 5 - REFUND LIFE ANNUITY. We will make monthly Annuity Payments during the
lifetime of the Annuitant ceasing with the last Annuity Payment due prior to the
Annuitant's death with a guarantee that at the Annuitant's death, you will
receive a refund. For a fixed Annuity Option the amount of the refund will be
any excess of the amount of the Adjusted Contract Value applied under this
Option over the total of all Annuity Payments made under this Option. For a
variable Annuity Option the amount of the refund will be the then dollar value
of the number of Annuity Units equal to (1) the Adjusted Contract Value applied
to this Option divided by the Annuity Unit value used to determine the first
Annuity Payment, minus (2) the product of the number of the Annuity Units
represented by each monthly Annuity Payment and the number of payments made.
This calculation will be based upon the assumption that the allocation of
Annuity Units actually in-force at the time of the Annuitant's death had been
the allocation of Annuity Units at issue and at all times thereafter. If the
refund calculated above is not greater than zero there will be no refund paid.
OPTION 6: SPECIFIED PERIOD CERTAIN ANNUITY: Monthly Annuity Payments are paid
for a specified period of time. The Specified Period Certain is elected by the
Contract Owner and must be specified as a whole number of years from 10 to 30.
If at the time of the last death of the Annuitant and any Joint Annuitant, the
Annuity Payments actually made have been for less than the Specified Period
Certain, then Annuity Payments will be continued thereafter to the Contract
Owner for the remainder of the Specified Period Certain. If you have selected a
variable Annuity Option, you may request a surrender representing a partial
liquidation of the Liquidation Value. You will be allowed to make a partial
liquidation at least once per Contract Year after the Income Date up to 100% of
the Liquidation Value. A Commutation Fee will be subtracted from the amount
liquidated before the proceeds are paid out. The Commutation Fee is a percentage
of the amount surrendered as shown on the Contract Schedule. Partial
liquidations will be processed on the next annuity payment date following your
written request. The Company will require the return of the Contract prior to
the payment of the entire commuted value.
GENERAL PROVISIONS
THE CONTRACT: The entire Contract consists of this Contract, and any attached
application, endorsements or riders. This Contract may be changed or altered
only by our President or Secretary. Any change, modification or waiver must be
made in writing.
NON-PARTICIPATING IN SURPLUS: This Contract does not share in any distribution
of our profits or surplus.
MISSTATEMENT OF AGE OR SEX: We may require proof of Age of the Annuitant before
making any life contingent Annuity Payment provided for by this Contract. If the
Age or sex of the Annuitant has been misstated the amount payable will be the
amount that the Adjusted Contract Value would have provided at the true Age or
sex.
Once Annuity Payments have begun, any underpayments will be made up in one sum
with the next Annuity Payment, and overpayments will be deducted from the future
Annuity Payments until the total is repaid.
CONTRACT SETTLEMENT: This Contract must be returned to us upon any settlement.
Prior to any settlement as a death claim, due proof of death must be submitted
to us. Any paid-up annuity, cash surrender or death benefits that may be
available are not less than the minimum benefits required by statute.
REPORTS: We will furnish you with a report showing the Contract Value at least
once each calendar year. This report will be sent to your last known address.
TAXES: Any taxes paid to any governmental entity will be charged against the
Contract Value. We will, in our sole discretion, determine when taxes have
resulted from: the investment experience of the Variable Account; receipt by us
of the Purchase Payment(s); or commencement of Annuity Payments. We may, at our
discretion, pay taxes when due and deduct that amount from the Contract Value at
a later date. Payment at an earlier date does not waive any right we may have to
deduct amounts at a later date. We reserve the right to establish a provision
for federal income taxes if we determine, in our sole discretion, that we will
incur a tax as a result of the operation of the Variable Account. We will deduct
for any income taxes incurred by it as a result of the operation of the Variable
Account whether or not there was a provision for taxes and whether or not it was
sufficient. We will deduct any withholding taxes required by applicable law.
EVIDENCE OF SURVIVAL: Where any benefits under this Contract are contingent upon
the recipient being alive on a given date, we may require proof satisfactory to
us that the condition has been met.
PROTECTION OF PROCEEDS: No Beneficiary may commute, encumber, alienate or assign
any payments under this Contract before they are due. To the extent permitted by
law, no payments will be subject to the debts, contracts or engagements of any
Beneficiary or to any judicial process to levy upon or attach the same for
payment thereof.
MODIFICATION OF CONTRACT: This Contract may be modified by us in order to
maintain compliance with state and federal law. This Contract may be changed or
altered only by our President or our Secretary. A change or alteration will be
made in writing.
<PAGE>
INDIVIDUAL FLEXIBLE PAYMENT VARIABLE ANNUITY
NON-PARTICIPATING
WAIVER OF CONTINGENT DEFERRED SALES CHARGE ENDORSEMENT
This Endorsement forms a part of the Contract to which it is attached. This
Endorsement is effective on the Issue Date of the Contract to which this
Endorsement is attached. In the case of a conflict with any provisions in the
Contract, the provisions of this Endorsement will control. The following
provisions are hereby added to the Contract:
A. Terminal Illness Benefit:
The Contingent Deferred Sales Charge will not apply when the following
conditions occur after the first Contract Anniversary:
a) The Contract Owner or Joint Owner is diagnosed as having a Terminal
Illness; and
b) a licensed physician certifies in writing to such diagnosis.
Terminal Illness means an illness or physical condition which results
in the prognosis by a licensed physician that life expectancy is 12
months or less. To utilize this benefit, you must make a full
surrender of the Contract. The Contract must be returned to us before
any proceeds will be paid.
This waiver will not apply if the Contract Owner or Joint Owner is
first diagnosed as having a Terminal Illness prior to the Issue Date.
Proof of diagnosis must be provided in a form satisfactory to the
Company.
B. Nursing Home Benefit:
The Contingent Deferred Sales Charge will not apply when the following
conditions, all occur after the third Contract Anniversary:
a) The Contract Owner or Joint Owner is confined to a Skilled Nursing
Facility or Hospital;
b) Such confinement is for a period of at least 90 consecutive days; and
c) A licensed physician certifies in writing that such continued
confinement is necessary.
A Skilled Nursing Facility is an institution which is licensed by the state in
which it is located to provide skilled nursing care, intermediate nursing care
or custodial nursing care. A Hospital is an institution which is licensed as a
hospital by the state in which it is located, is supervised by a staff of
licensed physicians and operates primarily for the care and treatment of sick
and injured persons as inpatients for a charge.
The proof required by the company for either of the above benefits shall include
but not be limited to, written certification from a licensed physician
performing within the scope of his or her license. The licensed physician must
not be the Contract Owner, Joint Owner, the Annuitant, or the spouse, parent or
child of the Contract Owner, Joint Owner, or Annuitant.
This waiver will not apply if the Contract Owner or Joint Owner was confined in
a Skilled Nursing Facility or Hospital on the Issue Date. Proof of confinement
must be provided in a form satisfactory to the Company.
C. Unemployment Benefit:
The amount of the Contract Value which can be surrendered after the first
Contract Anniversary without incurring a Contingent Deferred Sales Charge will
be increased for one time only to 50% of the Contract Value under the following
condition:
The Contract Owner or Joint Owner is unemployed for a continuous period of at
least 90 days.
Proof of unemployment must be provided in a form satisfactory to the Company
which proof will include but not be limited to a written statement from the
applicable state unemployment agency indicating that the Contract Owner or Joint
Owner qualifies for and is receiving unemployment benefits.
Surrenders of amounts under the Contract may be subject to a 10% tax penalty in
addition to any income taxes due. You should consult your tax advisor before
making a surrender.
Allianz Life Insurance Company of North America
Secretary President
TRADITIONAL DEATH BENEFIT ENDORSEMENT
This Endorsement forms a part of the Contract to which it is attached and is
effective as of the Issue Date of the Contract. In the case of a conflict with
any provision in the Contract, the provisions of this Endorsement will control.
The following hereby amends and supersedes the section of the Contract entitled
"Proceeds Payable On Death - Death Benefit Amount During The Accumulation
Period."
PROCEEDS PAYABLE ON DEATH
DEATH BENEFIT AMOUNT DURING THE ACCUMULATION PERIOD: The death benefit payable
will be the greater of 1 or 2, less any applicable Premium Tax.
1. The Contract Value determined as of the end of the Valuation Period during
which we received at the Service Center both due proof of death and an
election of the payment method; or
2. The Guaranteed Minimum Death Benefit (GMDB) which is equal to total
Purchase Payments reduced proportionately by the percentage of the Contract
Value surrendered, including any assessed contingent deferred sales charge.
If the Beneficiary is the spouse of the Contract Owner, he or she may elect to
continue the Contract in his or her own name and exercise all the Contract
Owner's rights under the Contract. In this event, the Contract Value for the
Valuation Period during which this election is implemented will be adjusted to
equal the death benefit.
If a non-natural person owns the Contract, then Contract Owner shall mean
Annuitant.
Any part of the death benefit amount that had been invested in the Variable
Account remains in the Variable Account until distribution begins. From the time
the death benefit is determined until complete distribution is made, any amount
in the Variable Account will be subject to investment risk, which is borne by
the Beneficiary.
Allianz Life Insurance Company of North America
Secretary President
ENHANCED DEATH BENEFIT ENDORSEMENT
This Endorsement forms a part of the Contract to which it is attached and is
effective as of the Issue Date of the Contract. In the case of a conflict with
any provision in the Contract, the provisions of this Endorsement will control.
The following hereby amends and supersedes the section of the Contract entitled
"Proceeds Payable On Death - Death Benefit Amount During The Accumulation
Period."
PROCEEDS PAYABLE ON DEATH
DEATH BENEFIT AMOUNT DURING THE ACCUMULATION PERIOD: The death benefit payable
will be the greater of 1or 2, less any applicable Premium Tax.
1. The Contract Value, determined as of the end of the Valuation Period during
which we received at the Service Center both due proof of death and an
election of the payment method; or
2. The Guaranteed Minimum Death Benefit (GMDB) as defined below, determined as
of the end of the Valuation Period during which we received at the Service
Center both due proof of death and an election of the payment method.
The Guaranteed Minimum Death Benefit is the greater of (a) and (b) below:
a) Total Purchase Payments reduced proportionately by the percentage of the
Contract Value surrendered, including any assessed contingent deferred
sales charge.
b) The greatest Anniversary Value. The Anniversary Value is equal to the
Contract Value on a Contract Anniversary, increased by additional Purchase
Payments and reduced proportionately by the percentage of the Contract
Value surrendered, including any assessed contingent deferred sales charge,
since that Contract Anniversary. Contract Anniversaries occurring on or
after the Contract Owner's 81st birthday or date of death will not be taken
into consideration in determining this benefit.
If the Beneficiary is the spouse of the Contract Owner, he or she may elect to
continue the Contract in his or her own name and exercise all the Contract
Owner's rights under the Contract. In this event, the Contract Value for the
Valuation Period during which this election is implemented will be adjusted to
equal the death benefit.
If Joint Owners are named, the Age of the older Contract Owner will be used to
determine the greatest Anniversary Value. If a non-natural person owns the
Contract, then Contract Owner shall mean Annuitant for purposes of this
Endorsement.
Any part of the death benefit amount that had been invested in the Variable
Account remains in the Variable Account until distribution begins. From the time
the death benefit is determined until complete distribution is made, any amount
in the Variable Account will be subject to investment risk, which is borne by
the Beneficiary.
Allianz Life Insurance Company of North America
Secretary President
INDIVIDUAL RETIREMENT ANNUITY ENDORSEMENT
This Endorsement forms a part of the Contract to which it is attached and is
effective as of the Issue Date of the Contract.
The following provisions apply to a Contract which is issued on a qualified
basis under Internal Revenue Code ("IRC") Section 408(b). In the case of a
conflict with any provision in the Contract, the provisions of this Endorsement
will control. The Contract is amended as follows:
1. This Contract Owner is the Annuitant. There shall be no Joint Owner.
2. This Contract is not transferable.
3. This Contract, and the benefits under it, cannot be sold, assigned or
pledged as collateral for a loan or as security for the performance of an
obligation or for any other purpose to any person other than to the issuer
of the Contract.
4. The Contract Owner's entire interest in this Contract is nonforfeitable.
5. This Contract is established for the exclusive benefit of the Annuitant and
the Annuitant's Beneficiary(ies).
6. Purchase Payments shall be flexible and not fixed. Except in the case of a
rollover contribution (as permitted by IRCss.402(c), 403(a)(4), 403(b)(8),
or 408(d)(3)) or a contribution made in accordance with the terms of a
Simplified Employee Pension (SEP) as described in IRCss.408(k), the total
of any contributions shall not exceed $2,000 for any taxable year. No
contribution will be accepted unless it is in cash.
No contribution will be accepted under a SIMPLE plan established by any
employer pursuant to Code section 408(p). No transfer or rollover of funds
attributable to contributions made by a particular employer under its
SIMPLE plan will be accepted from a SIMPLE IRA; that is, an IRA used in
conjunction with a SIMPLE plan, prior to the expiration of the 2-year
period beginning on the date the individual first participated in that
employer's SIMPLE plan.
7. Distributions under the Contract must commence to be distributed, no later
than the first day of April following the calendar year in which the
Annuitant attains age 70 1/2 (required beginning date), over (a) the life
of the Annuitant, or the lives of the Annuitant and his or her designated
Beneficiary, or (b) a period certain not extending beyond the life
expectancy of the Annuitant, or the joint and last survivor expectancy of
the Annuitant and his or her designated Beneficiary. Payments must be made
in periodic payments at intervals of no longer than one year. In addition,
payments must be either non-increasing or they may increase only as
provided in Q&A F-3 ofss.1.401(a)(9)-1 of the Proposed Income Tax
Regulations.
All distributions made hereunder shall be made in accordance with the
requirements of ss.401(a)(9) of the IRC, including the incidental death
benefit requirements of ss.401(a)(9)(G) of the IRC, and the regulations
thereunder, including the minimum distribution incidental benefit
requirement of ss.1.401(a)(9)-2 of the Proposed Income. Tax Regulations. If
Annuity Option 3, 4 or 6 is elected and the Joint Annuitant is not the
Annuitant's spouse, then the annuity payment to the survivor may not exceed
the percentage allowed under Section 1.401(a)(9)-2 of the Proposed Income
Tax Regulations
Life expectancy is computed by use of the expected return multiples in
Tables V and VI of ss.1.72-9 of the Income Tax Regulations. Life expectancy
for distributions under an Annuity Option may not be recalculated. The
Annuitant may satisfy the minimum distribution requirements of the Code by
receiving a distribution from one Individual Retirement Arrangement that is
equal to the amount required to satisfy the minimum distribution
requirements for two or more Individual Retirement Arrangements. For this
purpose, the owner of two or more Individual Retirement Arrangements may
use the alternative method described in Notice 83-38, 1988-1 C.B. 524 to
satisfy the minimum distribution requirements described above.
8. If required distributions are to be made in a form other than one of the
Annuity Options contained in the Contract, then the entire value of the
Contract will commence to be distributed no later than the first day of
April following the calendar year in which the Annuitant attains age 70 1/2
(required beginning date), over (a) the life of the Annuitant, or the lives
of the Annuitant and his or her designated Beneficiary, or (b) a period
certain not extending beyond the life expectancy of the Annuitant, or the
joint and last survivor expectancy of the Annuitant and his or her
designated Beneficiary.
The amount to be distributed each year, beginning with the first calendar
year for which distributions are required and then for each succeeding
calendar year, shall not be less than the quotient obtained by dividing the
Annuitant's benefit by the lesser of (1) the applicable life expectancy or
(2) if the Annuitant's spouse is not the designated beneficiary, the
applicable divisor determined from the table set forth in Q&A-4 or Q&A-5,
as applicable, of ss.1.401(a)(9)-2 of the Proposed Income Tax Regulations.
Distributions after the death of the Annuitant shall be distributed using
the applicable life expectancy as the relevant divisor without regard to
Proposed Income Tax Regulations ss.1.401(a)(9)-2.
Life expectancy is computed by use of the expected return multiples in
Tables V and VI of ss.1.72-9 of the Income Tax Regulations. Unless
otherwise elected by the Annuitant by the time distributions are required
to begin, life expectancies shall be recalculated annually. Such election
shall be irrevocable by the Annuitant and shall apply to all subsequent
years. The life expectancy of a non-spouse Beneficiary may not be
recalculated. Instead, life expectancy will be calculated using the
attained age of such Beneficiary during the calendar year in which the
Annuitant attains age 70 1/2, and payments for subsequent years shall be
calculated based on such life expectancy reduced by one for each calendar
year which has elapsed since the calendar year life expectancy was first
calculated.
9. The Contract Owner shall be permitted to withdraw the required distribution
in any year from another Individual Retirement Arrangement or annuity
maintained for the benefit of the Contract Owner in accordance with IRS
Notice 88-38. The Contract Owner shall be responsible for determining
whether the minimum distribution requirements are met and the Company shall
have no responsibility for such determination.
10. Upon the death of the Annuitant: (a) if the Annuitant dies after
distribution of benefits has commenced, the remaining portion of such
interest will continue to be distributed at least a rapidly as under the
method of distribution being used prior to the Annuitiant's death; (b) if
the Annuitant dies before distribution of benefits commences, the entire
amount payable to the Beneficiary will be distributed no later than
December 31 of the calendar year which contains the fifth anniversary of
the date of the Annuitant's death except to the extent that an election is
made to receive distributions in accordance with (I) (ii) or (iii) below:
(i) if any portion of the policy proceeds is payable to a designated
Beneficiary, distributions may be made in installments over the life
or over a period not extending beyond the life expectancy of the
designated Beneficiary commencing no later than December 31 of the
calendar year immediately following the calendar year in which the
Annuitant died;
(ii) if the designated Beneficiary is the Annuitant's surviving spouse, and
benefits are to be distributed in accordance with (i) above,
distributions must begin on or before the later of (a) December 31 of
the calendar year immediately following the calendar year in which the
Annuitant died, or (b) December 31 of the calendar year in which the
Annuitant would have attained age 70 1/2;
(iii)if the designated Beneficiary is the Annuitant's surviving spouse,
the spouse may treat the Contract as his or her own IRA. This election
will be deemed to have been made if such surviving spouse makes a
regular IRA contribution to the Contract, makes a rollover to or from
such Contract, or fails to elect any of the above provisions.
Life expectancy is computed by use of the expected return multiples in
Tables V and VI of ss.1.72-9 of the Income Tax Regulations. Life
expectancy for distributions under an Annuity Option may not be
recalculated.
Distributions under this section are considered to have begun if
distributions are made on account of the individual reaching his or
her required beginning date or if prior to the required beginning date
distributions irrevocably commence to an individual over a period
permitted and in an annuity form acceptable under ss.1.401(a)(9) of
the Income Tax Regulations.
11. Separate records will be maintained by the Company for the interest of each
Contract Owner and the Company shall furnish annual calendar year reports
concerning the status of the Contract.
12. The Company may at its option either accept additional future payments or
terminate the Contract by a lump sum payment of the then present value of
the paid up benefit if no premiums have been received for two full
consecutive policy years and the paid up annuity benefit at maturity would
be less than $20 per month.
Within ten (10) days of the date you receive your Contract, you may revoke
it and receive a refund of purchase payments less any withdrawals. If the
Company pursuant to the Right to Examine provision allocates payment to the
Money Market Sub-Account, then the refund will be the greater of the
purchase payments or the Contract Value. A refund period of greater than
ten (10) days will be allowed in those states where it is required.
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Secretary President
UNISEX ENDORSEMENT
This Endorsement modifies the Contract to which it is attached for use in
connection with a retirement plan which receives favorable income tax treatment
under Sections 401, 403, 408 or 457 of the Internal Revenue Code, or where
required by state law. In the case of a conflict with any provision in the
Contract, the provisions of this Endorsement will control. The Company may
further amend the Contract from time to time to meet any requirements applicable
to such plans or laws. The effective date of this Endorsement is the Issue Date
shown on the Contract Schedule. The provisions of the Contract are modified as
follows:
1. Deleting any reference to sex; and
2. Deleting any Contract charges uniquely applicable to females. Male Contract
charge rates shall apply to both males and females; and
3. Deleting the settlement option rates applicable to males. Female settlement
option rates shall apply to both males and females.
Allianz Life Insurance Company of North America
Secretary President
PENSION PLAN AND PROFIT SHARING PLAN ENDORSEMENT
This Endorsement forms a part of the Contract to which it is attached and is
effective as of the Issue Date of the Contract.
THE FOLLOWING PROVISIONS APPLY TO A CONTRACT WHICH IS ISSUED UNDER A PLAN
QUALIFIED UNDER INTERNAL REVENUE CODE ("IRC") SECTION 401. IN THE CASE OF A
CONFLICT WITH ANY PROVISION IN THE CONTRACT, THE PROVISIONS OF THIS ENDORSEMENT
WILL CONTROL.
1. The Annuitant of this Contract will be the applicable Participant under the
Plan and the Contract Owner of this Contract will be as designated in the
Plan.
2. This Contract, and the benefits under it, cannot be assigned, discounted,
pledged as collateral for a loan or as security for the performance of an
obligation or for any other purpose to any person other than the Company.
3. The terms of this Contract and Endorsement are subject to the provisions of
the Plan under which this Contract and Endorsement are issued.
4. The MISSTATEMENT OF AGE OR SEX section of the Contract is deleted and
replaced by the following section entitled "MISSTATEMENT OF AGE":
We may require proof of Age of the Annuitant before making any life
contingent annuity payment provided for by this Contract. If the Age of the
Annuitant has been misstated, the amount payable will be the amount that
the Purchase Payments would have provided at the true Age. Once Annuity
Payments have begun, any underpayments will be made up in one sum with the
next Annuity Payment and over payments will be deducted from the future
Annuity Payments until the total is repaid.
All other terms and conditions of the Contract remain unchanged.
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Signed for the Company
Secretary President
GROUP PENSION PLAN DEATH BENEFIT ENDORSEMENT
This Endorsement forms a part of the Contract to which it is attached and is
effective as of the Issue Date of the Contract. In the case of a conflict with
any provision in the Contract, the provisions of this Endorsement will control.
This Endorsement applies only to a Contract owned by a trust exempt from tax
under Section 501 of the Internal Revenue Code ("Code") on behalf of a group
pension or profit sharing plan qualified under Section 401(a) of the Code. In
such event, the trust may change the Annuitant at any time prior to the Income
Date and upon the death of the Annuitant may designate a new Annuitant and
continue the Contract in force.
Allianz Life Insurance Company of North America
Secretary President
403(b) ANNUITY ENDORSEMENT
This Endorsement forms a part of the Contract to which it is attached and is
effective as of the Issue Date of the Contract. The following provisions apply
to a Contract which is issued on a qualified basis under Internal Revenue Code
("Code") Section 403(b). In the case of a conflict with any provision in the
Contract, the provisions of this Endorsement will control. The Contract is
amended as follows:
1. Contract Owner. The Contract Owner must be either an organization described
in Section 403(b)(1)(A) of the Code or an individual employee of such an
organization. If the Contract Owner is an organization described in Section
403(b)(1)(A) of the Code, then the individual employee for whose benefit
the organization has established an annuity plan under section 403(b) of
the Code must be the Annuitant under the Contract. If the Contract Owner is
an employee of an organization described in Section 403(b)(1)(A) of the
Code, then such employee must be the Annuitant under the Contract. There
shall be no Joint Owner.
2. The interest of the Annuitant in the Contract is non-forfeitable.
3. Purchase Payments must be made by an organization described in Code Section
403(b)(1)(A), except in the case of a rollover contribution under Code
Sections 403(b)(8) or 408(d)(3), or a nontaxable transfer from another
contract qualifying under Code Section 403(b) or a custodial account
qualifying under Code Section 403(b)(7). All Purchase Payments must be made
in cash.
If Purchase Payments are made pursuant to a salary reduction agreement, the
maximum contribution when combined with all other plans, contracts or
arrangements may not exceed the amount of the limitation provided for in
Code Section 402(g). Purchase Payments must not exceed the amount allowed
by Code Sections 403(b) and 415.
4. The interest of the Annuitant under this Contract is nontransferable and
may not be sold, assigned, discounted or pledged as collateral for a loan
or as security for the performance of an obligation or for any other
purpose, to any person other than the issuer of this Contract. This
restriction shall not apply to a "qualified domestic relations order" as
defined in Code Section 414(p).
5. Distributions During Annuitant's Life. Distributions under this Contract
must commence no later than the later of April 1 following: (a) the
calendar year during which the Annuitant attains age 70 1/2; or (b) the
calendar year in which the Annuitant retires (the required beginning date)
over (i) the life of the Annuitant or the lives of the Annuitant and his or
her designated Beneficiary (within the meaning of Section 401(a)(9) of the
Code), or (ii) a period certain not extending beyond the life expectancy of
the Annuitant or the joint and last survivor expectancy of the Annuitant
and his or her designated Beneficiary.
If distributions under an Annuity Option in the Contract are to be made for
a definite or fixed period, said period cannot, at the time payments are to
commence, exceed the life expectancy of the Annuitant or, if applicable,
the joint and last survivor expectancy of the Annuitant and a designated
Beneficiary, nor may it exceed the applicable maximum period under Section
1.401(a)(9)-2 of the Proposed Income Tax Regulations.
Distributions must be made in periodic payments at intervals of no longer
than one year. In addition, distributions must either be non-increasing or
may increase only as provided in Q&A F-3 of Section 1.401(a)(9)-1 of the
Proposed Income Tax Regulations.
All distributions under this Contract are subject to the distribution
requirements of Code Section 403(b)(10) and will be made in accordance with
the requirements of Section 401(a)(9) of the Code, including the incidental
death benefit requirements of Section 401(a)(9)G) of the Code, and the
regulations thereunder, including the minimum distribution incidental
benefit requirement of Section 1.401(a)(9)-2 of the Proposed Income Tax
Regulations.
6. Minimum Distribution Requirements - After Death. If the Annuitant dies
after required distributions under this Contract are deemed to have begun,
all amounts payable under this Contract must be distributed to the
Beneficiary or to such other person entitled to receive them at least as
rapidly as under the method of distribution in effect prior to the
Annuitant's death.
If the Annuitant dies before distribution has begun, the entire interest
will be distributed by December 31 of the calendar year containing the
fifth anniversary of the Annuitant's death, except that:
(a) if the interest is payable to an individual who is the Annuitant's
designated Beneficiary, the designated Beneficiary may elect to
receive the entire interest over the life of the designated
Beneficiary or over a period not extending beyond the life expectancy
of the designated Beneficiary, commencing on or before December 31 of
the calendar year immediately following the calendar year in which the
Annuitant dies; or
(b) if the designated Beneficiary is the Annuitant's surviving spouse, the
surviving spouse may elect to receive the entire interest over the
life of the surviving spouse or over a period not extending beyond the
life expectancy of the surviving spouse, commencing at any date on or
before the later of:
(i) December 31 of the calendar year immediately following the
calendar year in which the Annuitant died; or
(ii) December 31 of the calendar year in which the Annuitant would
have attained age 70 1/2.
If the surviving spouse dies before distributions begin, the
limitations of this Section 6 (without regard to this paragraph
(b)) will be applied as if the surviving spouse were the
Annuitant.
An irrevocable election of the method of distribution by a designated
Beneficiary who is the surviving spouse must be made no later than the
earlier of December 31 of the calendar year containing the fifth
anniversary of the Annuitant's death or the date distributions are required
to begin pursuant to this paragraph (b). If no election is made, the entire
interest will be distributed in accordance with the method of distribution
in this paragraph (b).
An irrevocable election of the method of distribution by a designated
Beneficiary who is not the surviving spouse must be made within one year of
the Annuitant's death. If no such election is made, the entire interest
will be distributed by December 31 of the calendar year containing the
fifth anniversary of the Annuitant's death.
Distributions under this section are considered to have begun if
distributions are made on account of the Annuitant reaching his or her
required beginning date or if prior to the required beginning date
distributions irrevocably commence to the Annuitant over a period permitted
and in an annuity form acceptable under Section 1.401(a)(9) of the Proposed
Income Tax Regulations.
7. Life Expectancy Calculations. Life expectancy is computed by use of the
expected return multiples in Tables V and VI of Section 1.72-9 of the
Income Tax Regulations. If benefits under the Contract are payable in
accordance with the Annuity Options contained in the Contract, life
expectancy will not be recalculated. If required distributions are payable
in a form other than under such Annuity Option, life expectancy will not be
recalculated unless permitted by the Company and annual recalculation is
elected at the time distributions are required to begin (a) by the
Annuitant, or (b) for purposes of distributions beginning after the
Annuitant's death, by the surviving spouse. Such an election will be
irrevocable as to the Annuitant and the surviving spouse, and will apply to
all subsequent years.
The life expectancy of a non-spouse designated Beneficiary (a) may not be
recalculated, and (b) will be calculated using the attained age of such
designated Beneficiary during the calendar year in which distributions are
required to begin pursuant to this Endorsement. Payments for any subsequent
calendar year will be calculated based on such life expectancy reduced by
one for each calendar year which has elapsed since the calendar year in
which life expectancy was first calculated.
8. Annuity Options. Except to the extent Treasury regulations allow the
Company to offer different Annuity Options that are agreed to by the
Company, only Annuity Options offered in the Contract will be available to
the Annuitant. Under Annuity Options 3 and 4 any Joint Annuitant must
either be the Annuitant's spouse or if a non-spouse, then the level of
payment to the survivor cannot exceed the applicable limitations set forth
under Section 1.401(a)(9)-2 of the Proposed Income Tax Regulations
9. Premature Distribution Restrictions. Any amounts in the Contract
attributable to contributions made pursuant to a salary reduction agreement
after December 31, 1988, and the earnings on such contributions and on
amounts held on December 31, 1988, may not be distributed unless the
Annuitant has reached age 59 1/2, separated from service, died, become
disabled (within the meaning of Code Section 72(m)(7)) or incurred
hardship; provided, that amounts permitted to be distributed in the event
of hardship shall be limited to actual salary deferral contributions
(excluding earnings thereon); and provided further, that amounts may be
distributed pursuant to a qualified domestic relations order to the extent
permitted by section 414(p) of the Code.
Purchase Payments made by a nontaxable transfer from a custodial account
qualifying under Code Section 403(b)(7), and earnings on such amounts, will
not be paid or made available before the Annuitant dies, attains age 59
1/2, separates from service, becomes disabled (within the meaning of Code
Section 72(m)(7)), or in the case of such amounts attributable to
contributions made under the custodial account pursuant to a salary
reduction agreement, encounters financial hardship; provided, that amounts
permitted to be paid or made available in the event of hardship will be
limited to actual salary deferral contributions made under the custodial
account (excluding earnings thereon); and provided further, that amounts
may be distributed pursuant to a qualified domestic relations order to the
extent permitted by Section 414(p) of the Code.
10. Direct Rollovers. The Annuitant subject to the terms of the Contract, may
elect to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the Annuitant. An
eligible rollover distribution is any distribution of all or any portion of
the balance to the credit of the Annuitant, except that an eligible
rollover distribution does not include: any distribution that is one of a
series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the Annuitant or the
joint lives (or joint life expectancies) of the Annuitant and the
Annuitant's Beneficiary or for a specified period of ten years or more; any
distribution required under Code Section 401(a)(9), hardship distributions,
and the portion of any distribution that is not includable in gross income.
An eligible retirement plan is an individual retirement account described
in Code Section 408(a), an individual retirement annuity described in Code
Section 408(b), or another Code Section 403(b) tax-sheltered annuity, that
accepts the Annuitant's eligible rollover distribution. However, in the
case of an eligible rollover distribution to the surviving spouse, an
eligible retirement plan is only an individual retirement account or
individual retirement annuity. A direct rollover is a payment by the
Company to the eligible retirement plan specified by the Annuitant.
11. If this Contract is part of a plan which is subject to Title 1 of the
Employees Retirement Income Security Act of 1974 ("ERISA"), any payments
and distributions under this Contract (whether as income, as proceeds
payable at the Annuitant's death, upon partial redemption or full surrender
or otherwise), and any Beneficiary designation, shall be subject to the
joint and survivor annuity and preretirement survivor annuity requirements
of ERISA Section 205.
12. The Company will furnish annual calendar year reports concerning the status
of the Contract.
13. Amendments. The Company may further amend this Contract from time to time
in order to meet any requirements which apply to it under Code Section
403(b) or ERISA.
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Secretary President
<TABLE>
<CAPTION>
<S> <C> <C>
Form 5305-RB ALLIANZ LIFE INSURANCE COMPANY OF
NORTH AMERICA
(May 1998) Roth Individual Retirement Annuity Endorsement
Department of Treasury (Under section 408A of the Internal Revenue Code) DO NOT File
Internal Revenue Service with the Internal
Revenue Service
Name of issuer Check if this endorsement supersedes a prior Roth
Allianz Life Insurance Company of North America IRA endorsement _ _ _ _ _ _ _ _ _ _ _ _
Check if Roth Conversion IRA _ _ _ _ _ _ _ _
</TABLE>
This endorsement is made a part of the annuity contract to which it is attached,
and the following provisions apply in lieu of any provisions in the contract to
the contrary.
The annuitant is establishing a Roth individual retirement annuity (Roth IRA)
under section 408A to provide for his or her retirement and for the support of
his or her beneficiaries after death.
Article I
1. If this Roth IRA is not designated as a Roth Conversion IRA, then, except
in the case of a rollover contribution described in section 408A(e), the
issuer will accept only cash contributions and only up to a maximum amount
of $2,000 for any tax year of the annuitant.
2. If this Roth IRA is designated as a Roth Conversion IRA, no contributions
other than IRA Conversion Contributions made during the same tax year will
be accepted.
Article II
The $2,000 limit described in Article I is gradually reduced to $0 between
certain levels of adjusted gross income (AGI). For a single annuitant, the
$2,000 annual contribution is phased out between AGI of $95,000 and $110,000;
for a married annuitant who files jointly, between AGI of $150,000 and $160,000;
and for a married annuitant who files separately, between $0 and $10,000. In the
case of a conversion, the issuer will not accept IRA Conversion Contributions in
a tax year if the annuitant's AGI for that tax year exceeds $100,000 or if the
annuitant is married and files a separate return. Adjusted gross income is
defined in section 408A(c)(3) and does not include IRA Conversion Contributions.
Article III
The annuitant's interest in the contract is nonforfeitable and nontransferable.
Article IV
1. The contract does not require fixed contributions.
2. Any dividends (refund of contributions other than those attributable to
excess contributions) arising under the contract will be applied before the
close of the calendar year following the year of the dividend as
contributions toward the contract.
Article V
1. If the annuitant dies before his or her entire interest in the contract is
distributed to him or her and the annuitant's surviving spouse is not the
sole beneficiary, the entire remaining interest will, at the election of
the annuitant or, if the annuitant has not so elected, at the election of
the beneficiary, either:
(a) Be distributed by December 31 of the calendar year containing the
fifth anniversary of the annuitant's death, or
(b) Be distributed over the life, or a period not longer than the life
expectancy, of the designated beneficiary starting no later than
December 31 of the calendar year following the calendar year of the
annuitant's death. Life expectancy is computed using the expected
return multiples in Table V of section 1.72-9 of the Income Tax
Regulations.
If distributions do not begin by the date described in (b), distribution
method (a) will apply.
2. If the annuitant's spouse is the sole beneficiary on the annuitant's date
of death, such spouse will then be treated as the annuitant.
Article VI
1. The annuitant agrees to provide the issuer with information necessary for
the issuer to prepare any reports required under sections 408(i) and
408A(d)(3)(E), and Regulations section 1.408-5 and 1.408-6, and under
guidance published by the Internal Revenue Service.
2. The issuer agrees to submit reports to the Internal Revenue Service and the
annuitant as prescribed by the Internal Revenue Service.
Article VII
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through IV and this sentence will be controlling. Any
additional articles that are not consistent with section 408A, the related
regulations, and other published guidance will be invalid.
Article VIII
This endorsement will be amended from time to time to comply with the provisions
of the Code, related regulations, and other published guidance. Other amendments
may be made with the consent of the persons whose signatures appear on the
contract.
Form 5305-RB (5-98)
Note: The following space (Article IX) may be used for any other provisions the
annuitant and the issuer want to add. If no other provisions will be added, draw
a line through this space. If provisions are added, they must comply with
applicable requirements of state law and the Internal Revenue Code.
Article IX
Within ten (10) days of the date you receive your Contract, you may revoke
it and receive a refund of Purchase Payments less any withdrawals. If the
Company pursuant to the Right to Examine provision allocates payment to the
Money Market Sub-Account, then the refund will be the greater of the Purchase
Payments or the Contract Value. A refund period of greater than ten (10) days
will be allowed in those states where it is required.
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
/s/ Michael T. Westermeyer /s/ Margery G. Hughes
Secretary President
General Instructions (Section references are to the Internal Revenue Code unless
otherwise noted.)
Purpose of Form Form 5305-RB is a model annuity endorsement that meets the
requirements of section 408A and has been automatically approved by the IRS. A
Roth individual retirement annuity (Roth IRA) is established after the contract,
which includes this endorsement, is fully executed by both the individual
(annuitant) and the issuer. The contract must be for the exclusive benefit of
the annuitant or his or her beneficiaries.
Do not file Form 5305-RB with the IRS. Instead, keep it for records purposes.
Unlike contributions to traditional individual retirement arrangements,
contributions to a Roth IRA are not deductible from the annuitant's gross
income; and distributions after 5 years that are made when the annuitant is 59
1/2 years of age or older or on account of death, disability, or the purchase of
a home by a first-time homebuyer (limited to $10,000), are not includible in
gross income. For more information on Roth IRAs, including the required
disclosure the annuitant can get from the issuer, get Pub. 590, Individual
Retirement Arrangements (IRAs).
This Roth IRA can be used by an annuitant to hold: (1) IRA Conversion
Contributions, amounts rolled over or transferred from another Roth IRA, and
annual cash contributions of up to $2,000 from the annuitant; or (2) if
designated as a Roth Conversion IRA (by checking the box on page 1), only IRA
Conversion Contributions for the same tax year.
To simplify the identification of funds distributed from Roth IRAs, annuitants
are encouraged to maintain IRA Conversion Contributions for each tax year in a
separate Roth IRA.
Definitions
Roth Conversion IRA. A Roth Conversion IRA is a Roth IRA that accepts only IRA
Conversion Contributions made during the same tax year.
IRA Conversion Contributions. IRA Conversion Contributions are amounts rolled
over, transferred, or considered transferred from a nonRoth IRA to a Roth IRA. A
nonRoth IRA is an individual retirement account or annuity described in section
408(a) or 408(b), other than a Roth IRA.
Issuer. The issuer is the insurance company providing the annuity contract. The
insurance company may use other terms besides "issuer" to refer to itself, such
as, "company," "insurer," or "us."
Annuitant. The annuitant is the person who establishes the annuity contract. The
insurance company may use other terms besides "annuitant" to refer to the person
who establishes the annuity contract, such as, "owner," "applicant," "insured,"
or "you."
Specific Instructions
Article I. The annuitant may be subject to a 6-percent tax on excess
contributions if (1) contributions to other individual retirement arrangements
of the annuitant have been made for the same tax year, (2) the annuitant's
adjusted gross income exceeds the applicable limits in Article II for the tax
year, or (3) the annuitant's and spouse's compensation does not exceed the
amount contributed for them for the tax year. The annuitant should see the
disclosure statement or Pub. 590 for more information.
Article IX. Article IX and any that follow it may incorporate additional
provisions that are agreed to by the annuitant and issuer to complete the
contract. They may include, for example, definitions, investment powers, voting
rights, exculpatory provisions, amendment and termination, removal of the
issuer, issuer's fees, state law requirements, beginning date of distributions,
accepting only cash, treatment of excess contributions, prohibited transactions
with the annuitant, etc. Use additional pages if necessary and attach them to
this form.
Note: Form 5305-RB may be reproduced and reduced in size for adaption to
passbook purposes.
USAllianz Rewards
A Flexible Premium Variable Annuity
Issued by Allianz Life Insurance Company of North America DA__________
______________________________________________________________________________
1.CONTRACT OWNER Must be age 80 or younger
Name Last First Middle
________________________________________________________________________
(If the Contract Owner is a trust, please include Trust Name, Trust Date,
and the Trust Beneficial Owner(s))
Address Street Address Apartment Number
City State Zip Code
Social Security Number Date of Birth Sex ____Female
(If the Contract Owner is a ____Male
Daytime Telephone ( ) trust, list the date(s) of birth
for the beneficial owner(s))
______________________________________________________________________________
2.JOINT OWNER(Optional)
Must be age 80 or younger. Must be the Spouse of the Contract Owner.
Name Last First Middle
Social Security Number Date of Birth Sex ____Female
____Male
Daytime Telephone ( )
______________________________________________________________________________
3.ANNUITANT
Must be age 80 or younger. Must complete if different than Contract owner.
Name Last First Middle
Address Street Address Apartment Number
City State Zip Code
Social Security Number Date of Birth Sex ____Female
____Male
Daytime Telephone________________Relationship to Contract Owner____________
______________________________________________________________________________
4.BENEFICIARY(IES) DESIGNATION
Primary Beneficiary(ies): Contingent Beneficiary(ies)
(At the Contract Owner's
death, the surviving
Joint Owner becomes the
Primary Beneficiary.)
Name Name
Relationship to Contract Owner Relationship to Contract Owner
Name Name
Relationship to Contract Owner Relationship to Contract Owner
______________________________________________________________________________
5. REPLACEMENT
Is this Annuity intended to replace or change existing life insurance or
annuity? ___Yes - Please include appropriate forms.
___ No
______________________________________________________________________________
6. TAX QUALIFIED PLANS
Is this annuity part of a Tax
Qualified Plan? ____ Yes ____No If yes, please select one of the following.
___IRA Transfer/Rollover ___403(b)TSA
___Regular Contribution
for Tax Year________
___Roth IRA ___401 (Corporate Plan)
___Roth IRA Conversion ___Other _______________
______________________________________________________________________________
7.PURCHASE PAYMENT
____Purchase Payment Enclosed with Application
Purchase Payment Amount $_____________________
____This contract will be funded by a 1035 Exchange, Tax Qualified
Transfer/Rollover, CD or Mutual Fund Redemption. (If checked, please
include the appropriate forms).
______________________________________________________________________________
8.PURCHASE PAYMENT ALLOCATION
You may elect to have 100% of your bonus amount allocated to the USAllianz
VIP Money Market Investment Option.
____ USAllianz VIP Money Market (If you do not check this box, your bonus
amount will be allocated as indicated below on all future payments until you
notify us of a change.
You may select up to 10 Investment Options. Use whole percentages. The
allocations you indicate below will become your allocations on all future
payments until you notify us of a change.
___%AIM V.I. Capital Appreciation ___%PIMCO VIT High Yield Bond
___%AIM V.I. Growth ___%PIMCO VIT Stocks PLUS Growth
___%AIM V.I. International Equity and Income
___%AIM V.I. Value ___% PIMCO VIT Total Return Bond
___%Alger American Growth ___%Seligman Global Technology
___%Alger American Leveraged All Cap ___%Seligman Small-Cap Value
___%Alger American Midcap Growth
___%Alger American Small Capitalization ___%Templeton Developing Markets
Equity
___%Templeton Global Growth
___%Davis VA Financial ___%Templeton Pacific Growth
___%Davis VA Real Estate
___%Davis VA Value ___%USAllianz VIP Diversified Assets
___%USAllianz VIP Fixed Income
___%Franklin Growth and Income ___%USAllianz VIP Global Opportunities
___%Franklin Rising Dividends Securities___%USAllianz VIP Growth
___%Franklin Small Cap ___%USAllianz VIP Money Market
___%Franklin U.S. Government
___%Van Kampen LIT Enterprise
___%J.P. Morgan International ___%Van Kampen LIT Growth and Income
Opportunities
___%J.P. Morgan U.S. Disciplined Equity ___%Allianz Life Fixed Account
___%Mutual Discovery Securities ___TOTAL (Must equal 100%)
___%Mutual Shares Securities
___%Oppenheimer VA Global Securities
___%Oppenheimer VA High Income
___%Oppenheimer VA Main Street Growth &
Income
You will be given any gains or losses on the bonus amounts allocated to this
Contract. The bonus amounts will be allocated the same as your Purchase
Payments.
______________________________________________________________________________
9. Guaranteed Minimum Protection Benefit Election
Traditional Guaranteed Minimum Protection Benefit
USAllianz Rewards automatically includes a basic Guaranteed Minimum
Death Benefit that is applicable to contracts owned for the benefit of an
individual.
The Traditional Guaranteed Minimum Death Benefit provides a death benefit
equal to the greater of: 1) Contract Value;
2) Purchase Payments less proportionate surrenders
This is the Contract default option. If you do not choose the option below,
this will be the Protection Benefit on the Contract.
________________________________________________________________________________
Enhanced Guaranteed Minimum Protection Benefit (Optional)
You can choose the Enhanced Guaranteed Minimum Death Benefit. An additional
charge is assessed to the Contract Owner for this option. Upon making your
selection, it cannot be changed. This selection can only be made at
the time of initial Purchase Payment. Refer to the Prospectus for additional
information.
___The Enhanced Guaranteed Minimum Death Benefit provides a death benefit equal
to the greater of:
1)Contract Value;
2)Purchase Payments less proportionate surrenders;
3)The greatest Contract Anniversary adjusted by subsequent premiums less
proportionate surrenders up to the Contract Owner's 81st birthday.
______________________________________________________________________________
10. INCOME DATE
Selected Income Date ___- 01 -___ The Income Date (Annuitization Date) may be
no earlier than three years
after the Issue Date.
______________________________________________________________________________
11.TELEPHONE AUTHORIZATION
___ I/We authorize Allianz Life Insurance Company of North America (Allianz
Life) to honor telephone instructions from the Contract Owner(s) to transfer
contract values among the Investment Options and to disburse partial surrenders.
For partial surrenders Allianz Life's sole responsibility is to send a check to
the Contract Owner's address or wire the proceeds to the Contract Owner's
account at a commercial bank (a savings bank may not be used) or to the Contract
Owner's account at a member firm of a national securities exchange.
___ I/We authorize Allianz Life Insurance Company of North America (Allianz
Life) to accept telephone instructions from the Registered Rep/Agent of Record
for this contract and/or the Representative's Assistant(s)to transfer contract
values among the Investment Options. If no selection is indicated, telephone
access authorization will be permitted for the Contract Owner only. This
authorization is subject to the terms and provisions in the contract and
Prospectus. Allianz Life will employ reasonable procedures to confirm that
telephone instructions are genuine. If Allianz Life does not, it may be liable
for any losses due to unauthorized or fraudulent transfers.
______________________________________________________________________________
12. BY SIGNING BELOW, THE CONTRACT OWNER UNDERSTANDS THAT OR AGREES TO
I received a Prospectus and have determined that the variable annuity applied
for is not unsuitable for my insurance investment objectives, financial
situation, and financial needs. It is a long term commitment to meet insurance
needs and financial goals. I understand that the annuity value for payments
allocated to the variable Investment Options may increase or decrease depending
on the contract's investment results, and that no minimum cash value is
guaranteed on the variable Investment Options. To the best of my knowledge and
belief, all statements and answers in this application are complete and true. It
is further agreed that these statements and answers will become a part of any
contract to be issued. No representative is authorized to modify this agreement
or waive any of Allianz Life's rights or requirements.
___________________________________ ______________________________________
Contract Owner's Signature Joint Owner's Signature (or Trustee,
(or Trustee, if applicable) if applicable)
___________________________________ ______________________________________
Signed At (City, State) Date Signed
____Please send me a Statement of Additional Information
______________________________________________________________________________
13.BY SIGNING BELOW, THE REGISTERED REPRESENTATIVE/AGENT CERTIFIES THAT
- - -I am NASD registered and state licensed for variable annuity contracts in the
state where this application is written and delivered; and
- - -I provided the Contract Owner(s) with the most current Prospectus; and
- - -To the best of my knowledge and belief, this application ___DOES___DOES NOT
involve replacement of existing life insurance or annuities. If replacement,
attach a copy of each disclosure statement and list of companies involved.
___________________________________ ______________________________________
Registered Representative Name (Please Registered Representative Name (Please
Print) Print)
___________________________________ ______________________________________
Registered Representative Signature Registered Representative Signature
___________________________________ ______________________________________
Broker Dealer Name Authorized signature of Broker Dealer
(if required)
______________________________________________________________________________
Branch Address Branch Telephone Number
Comm: A B C (circle one)
______________________________________________________________________________
14.MAIL APPLICATIONS TO
For Regular Mail For Overnight Delivery
Allianz Life-USAllianz Service Center Allianz Life-USAllianz Service Center
c/o PNC Bank c/o PNC Bank
Box 824240 Attn: Box 4240
Philadelphia, PA 19182-4240 Route 38 and East Gate Drive
Moorestown, NJ 08057-4240
______________________________________________________________________________
15.HOME OFFICE USE ONLY (EXCEPT IN WV)
If Allianz Life Insurance Company of North America makes a change in this space
in order to correct any apparent errors or omissions, it will be approved by
acceptance of this contract by the Owner(s); however, any material change must
be accepted in writing by the Contract Owner(s).
F40327