THE VARIABLE ANNUITY CONTRACT
issued by
ALLIANZ LIFE VARIABLE ACCOUNT B
and
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
This prospectus describes the variable annuity contract with a Fixed Account
offered by Allianz Life Insurance Company of North America (Allianz Life).
The annuity has 37 Variable Options, each of which invests in one of the
Portfolios listed below, and a Fixed Account of Allianz Life. You can select up
to 10 investment choices (which includes any of the Variable Options and the
Fixed Account). The Fixed Account may not be available in your state.
AIM VARIABLE INSURANCE FUNDS, 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 Henderson Global Technology Portfolio
Seligman Small-Cap Value Portfolio
USALLIANZ VARIABLE INSURANCE PRODUCTS TRUST:
USAllianz VIP Diversified Assets Fund
USAllianz VIP Fixed Income Fund
USAllianz VIP Global Opportunities Fund
USAllianz VIP Growth Fund
USAllianz VIP Money Market Fund
VAN KAMPEN LIFE INVESTMENT TRUST:
Van Kampen LIT Enterprise Portfolio
Van Kampen LIT Growth and Income Portfolio
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
Please read this prospectus before investing and keep it for future reference.
It contains important information about the variable annuity contract with a
Fixed Account.
To learn more about the annuity offered by this prospectus, you can obtain a
copy of the Statement of Additional Information (SAI) dated January 13, 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
34 of this prospectus. The SEC maintains a Web site (http://www.sec.gov) that
contains the SAI, material incorporated by reference and other information about
companies that file electronically with the SEC. For a free copy of the SAI,
call us at 1-800-542-5427 or write us at: 1750 Hennepin Avenue, Minneapolis,
Minnesota 55403-2195.
The Variable Annuity Contracts:
o are not bank deposits
o are not federally insured
o are not endorsed by any bank
or government agency
o are not guaranteed and may be subject
to loss of principal
This prospectus is not an offering of the securities in any state, country, or
jurisdiction in which we are not authorized to sell the Contracts. You should
rely only on the information contained in this prospectus or that we have
referred you to. We have not authorized anyone to provide you with information
that is different.
Dated: January 13, 2000
TABLE OF CONTENTS
Index of Terms 4
Summary 5
Fee Table 7
The Variable Annuity Contract 14
Ownership 15
Contract Owner 15
Joint Owner 15
Annuitant 15
Beneficiary 15
Assignment 15
Annuity Payments (The Payout Phase) 15
Income Date 15
Annuity Payments 15
Annuity Options 16
Guaranteed Minimum Protection Benefits-
Annuity Income Protection 17
Purchase 18
Purchase Payments 18
Automatic Investment Plan 18
Allocation of Purchase Payments 18
Free Look 19
Accumulation Units 19
Investment Options 19
Transfers 21
Dollar Cost Averaging Program 22
Flexible Rebalancing 22
Financial Advisers - Asset
Allocation Programs 22
Voting Privileges 22
Substitution 23
Expenses 23
Insurance Charges 23
Mortality and Expense Risk Charge 23
Administrative Charge 23
Distribution Expense Charge 23
Contract Maintenance Charge 23
Contingent Deferred Sales Charge 24
Waiver of Contingent Deferred
Sales Charge Benefits 24
Reduction or Elimination of the
Contingent Deferred Sales Charge 24
Commutation Fee 24
Transfer Fee 25
Premium Taxes 25
Income Taxes 25
Portfolio Expenses 25
Taxes 25
Annuity Contracts in General 25
Qualified and Non-Qualified Contracts 25
Multiple Contracts 25
Withdrawals - Non-Qualified Contracts 26
Withdrawals - Qualified Contracts 26
Withdrawals - Tax-Sheltered Annuities 26
Diversification 26
Access to Your Money 27
Systematic Withdrawal Program 27
Minimum Distribution Program 27
Suspension of Payments or Transfers 27
Performance 28
Death Benefit 28
Upon Your Death
Guaranteed Minimum Protection
Benefits (GMPB) Death Benefit Protection 28
The Traditional Guaranteed Minimum
Protection Benefit 28
The Enhanced Guaranteed Minimum
Protection Benefit 28
Death of Annuitant 29
Other Information 30
Allianz Life 30
The Separate Account 30
Distribution 30
Administration 30
Financial Statements 30
Table of Contents of the Statement of
Additional Information 30
Appendix 31
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.................................14
Accumulation Unit..................................19
Annuitant..........................................15
Annuity Options....................................16
Annuity Payments...................................15
Annuity Unit.......................................16
Beneficiary........................................15
Contract...........................................14
Contract Owner.....................................15
Fixed Account......................................14
Page
Income Date........................................15
Joint Owner........................................15
Non-Qualified......................................25
Payout Phase.......................................14
Portfolios.........................................19
Purchase Payment...................................18
Qualified..........................................25
Tax Deferral.......................................14
Variable Option....................................19
SUMMARY
The sections in this summary correspond to sections in this prospectus which
discuss the topics in more detail.
The Variable Annuity Contract: The annuity contract offered by Allianz Life
provides a means for investing on a tax-deferred basis in 37 Variable Options
and the Allianz Life Fixed Account. The Contract is intended for retirement
savings or other long-term investment purposes. The Contract provides a
Traditional Guaranteed Minimum Protection Benefit (Traditional GMPB). You can
elect the Enhanced Guaranteed Minimum Death Benefit (Enhanced GMDB), the
Enhanced Guaranteed Income Benefit (Enhanced GMIB) or both (together, Enhanced
Guaranteed Minimum Protection Benefit (Enhanced GMPB)). These features provide
for a guaranteed death benefit and a guaranteed annuity income benefit (which
provides for guaranteed minimum payments during the Payout Phase). The GMIB may
not be available in your state. Check with your registered representative
regarding availability.
Annuity Payments: If you want to receive regular income from your annuity, you
can choose an Annuity Option. You can choose whether to have payments come from
our general account, the available Variable Options or both. If you choose to
have any part of your payments come from the Variable Options, the dollar amount
of your payments may go up or down based on the performance of the Portfolios.
This product offers guaranteed income protection through either the Traditional
GMPB or the Enhanced GMPB. To receive the GMPB annuity income benefit: 1. your
Income Date must be within 30 days following a Contract anniversary beginning
with the seventh Contract anniversary;
2. you must elect to receive payments from Allianz Life's general account
(fixed annuity payments); and
3. if you select an Annuity Option which provides for a period certain, the
period must be for at least 10 years.
Purchase: You can buy the Contract with $5,000 or more. You can add $250 or more
any time you like during the Accumulation Phase.
Investment Options: You can put your money in the Variable Options and/or you
can invest in the Allianz Life Fixed Account. The investment returns on the
Portfolios are not guaranteed. You can lose money. You can make transfers
between investment choices.
Expenses: The contract has insurance features and investment features, and there
are costs related to each.
Each year, Allianz Life deducts a $40 contract maintenance charge from your
Contract. During the Accumulation Phase, Allianz Life currently waives this
charge if the value of your Contract is at least $100,000.
Allianz Life deducts a mortality and expense risk charge which varies depending
upon whether you select the Traditional GMPB, the Enhanced Guaranteed Minimum
Death Benefit (Enhanced GMDB), the Enhanced Guaranteed Minimum Income Benefit
(Enhanced GMIB) or both, the Enhanced GMDB and the Enhanced GMIB. The charge is
equal, on an annual basis, to 1.25% of the average daily value of the Contract
invested in a Variable Option if you select the Traditional GMPB, 1.55% of the
average daily value of the Contract invested in a Variable Option if you select
either the Enhanced GMDB or the Enhanced GMIB, and 1.75% of the average daily
value of the Contract invested in a Variable Option if you select both the
Enhanced GMDB and the Enhanced GMIB. 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 Variable Option.
If you take money out of the Contract, Allianz Life may assess a contingent
deferred sales charge against each Purchase Payment withdrawn. The contingent
deferred sales charge starts at 7% in the first year and declines to 0% after 5
years.
You can make 12 free transfers each year. After that, Allianz Life deducts a $25
transfer fee for each additional transfer.
There are also daily investment charges which range, on an annual basis, from
.60% to 1.85% of the average daily value of the Portfolio, depending upon the
Portfolio.
Taxes: Your earnings are not taxed until you take them out. If you take money
out during the Accumulation Phase, earnings come out first and are taxed as
income. If you are younger than 591/2 when you take money out, you may be
charged a 10% federal tax penalty.
Access to Your Money: You can take money out of your Contract during the
Accumulation Phase. Withdrawals during the Accumulation Phase may be subject to
a contingent deferred sales charge. You may also have to pay income tax and a
tax penalty on any money you take out. Under certain circumstances, you can also
take money out during the Payout Phase if you select Annuity Option 2, 4 or 6.
Money you take out during the Payout Phase is subject to a commutation fee.
Death Benefit: If you die before moving to the Payout Phase, the person you have
chosen as a Beneficiary will receive a death benefit. The amount of the death
benefit depends on whether you select the Traditional GMPB or the Enhanced GMPB.
Free-Look: You can cancel the contract within 10 days after receiving it (or
whatever period is required in your state). Allianz Life will refund the value
of your Contract on the day it receives your request to cancel the Contract.
This may be more or less than your original payment. In certain states, or if
you have purchased the Contract as an individual retirement annuity, Allianz
Life will refund the Purchase Payment.
Inquiries: If you have any questions about your Contract or need more
information, please contact us at:
USAllianz Service Center
300 Berwyn Park
P.O. Box 3031
Berwyn, PA 19312-0031
1-800-624-0197
<PAGE>
FEE TABLE
The purpose of this Fee Table is to help you understand the costs of investing,
directly or indirectly, in the Contract. It reflects expenses of the Separate
Account as well as the Portfolios.
CONTRACT OWNER TRANSACTION FEES
Contingent Deferred Sales Charge* (as a percentage of Purchase Payments)
Number of Complete Contract Years
Since Receipt of Purchase
Payment Charge
0 7%
1 6%
2 5%
3 4%
4 3%
5 years or more 0%
Commutation Fee (as a percentage amount liquidated under Annuity Option 2, 4 or
6)
Years Since Charge
Income Date
0-1 5%
1-2 4%
2-3 3%
3-4 2%
over 4 1%
Transfer Fee -First 12 transfers in a Contract year are free. Thereafter, the
fee is _$25. Dollar Cost Averaging transfers and Flexible Rebalancing transfers
are not counted.
CONTRACT MAINTENANCE CHARGE** $40 per Contract per year
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Traditional Enhanced GMDB or Enhanced GMDB
GMPB Enhanced GMIB and Enhanced GMIB
Mortality and Expense Risk Charge 1.25% 1.55% 1.75%
Administrative Charge .15% .15% .15%
Distribution Expense Charge 0.00% 0.00% 0.00%
Total Separate Account
Annual Expenses 1.40% 1.70% 1.90%
1.70% 1.90%
*Each year, on a cumulative basis (minus any previous withdrawals you make which
are not subject to a contingent deferred sales charge), you may make partial
withdrawals of up to a total of 10% of Purchase Payments and no contingent
deferred sales charge will be assessed. See "Access to Your Money" for
additional options.
** During the Accumulation Phase, the charge is waived if the value of your
Contract is at least $100,000. If you own more than one Contract offered
under this Prospectus (registered with the same social security number), we
will determine the total value of all your Contracts. If the total value of
all your Contracts is at least $100,000, the charge is waived on all your
Contracts.
<PAGE>
<TABLE>
<CAPTION>
1998 ANNUAL FUND EXPENSES
- ---------------------------------------------------------------------------------------------------------------------------
(as a percentage of a Portfolio's average net assets)
TOTAL FUND
OTHER EXPENSES EXPENSES
(AFTER WAIVERS/(AFTER WAIVERS/
MANAGEMENT 12B-1 REIMBURSEMENTSREIMBURSEMENTS
PORTFOLIO FEES FEES AS NOTED) AS NOTED)
<S> <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 and Income
Portfolio 6 .58% .07% .65%
PIMCO VIT Total Return Bond Portfolio 6 .55% .10% .65%
Seligman Henderson 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%
<FN>
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 VIP Global Opportunities Fund, USAllianz VIP Growth Fund and the USAllianz VIP
Money Market Fund commenced operations on November 12, 1999, and the USAllianz VIP Diversified Assets Fund commenced operations on
November 8, 1999. 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.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Examples
o The examples below should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.
o The $40 contract maintenance charge is included in the examples as a prorated
charge of $1. Since the average Contract size is greater than $1,000, the
contract maintenance charge is reduced accordingly.
o Premium taxes are not reflected in the tables. Premium taxes may apply.
o For additional information, see "Expenses."
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on your money if you surrender your Contract at the end of each
time period for Contracts with:
(a) the Traditional GMPB
(b) the Enhanced GMDB or Enhanced GMIB
(c) the Enhanced GMPB (Enhanced GMDB and Enhanced GMIB)
VARIABLE OPTION 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM V.I. Capital Appreciation Fund (a) $85 (a) $103 (a)$131 (a) $250
(b) 88 (b) 112 (b) 147 (b) 281
(c) 90 (c) 118 (c) 157 (c) 300
- ---------------------------------------------------------------------------------------------------------------------------
AIM V.I. Growth Fund (a) 86 (a) 104 (a) 134 (a) 255
(b) 89 (b) 113 (b) 149 (b) 286
(c) 91 (c) 119 (c) 159 (c) 305
- ---------------------------------------------------------------------------------------------------------------------------
AIM V.I. International Equity Fund (a) 87 (a) 110 (a) 144 (a) 275
(b) 90 (b) 119 (b) 159 (b) 304
(c) 92 (c) 125 (c) 168 (c) 324
- ---------------------------------------------------------------------------------------------------------------------------
AIM V.I. Value Fund (a) 85 (a) 103 (a) 131 (a) 249
(b) 88 (b) 112 (b) 146 (b) 280
(c) 90 (c) 118 (c) 156 (c) 300
- ---------------------------------------------------------------------------------------------------------------------------
Alger American Growth Portfolio (a) 86 (a) 107 (a) 137 (a) 262
(b) 89 (b) 116 (b) 153 (b) 293
(c) 91 (c) 122 (c) 162 (c) 312
- ---------------------------------------------------------------------------------------------------------------------------
Alger American Leveraged AllCap Portfolio (a) 88 (a) 112 (a) 146 (a) 280
(b) 91 (b) 121 (b) 161 (b) 309
(c) 93 (c) 127 (c) 171 (c) 329
- ---------------------------------------------------------------------------------------------------------------------------
Alger American MidCap Growth Portfolio (a) 87 (a) 108 (a) 140 (a) 267
(b) 90 (b) 117 (b) 155 (b) 298
(c) 92 (c) 123 (c) 165 (c) 317
VARIABLE OPTION 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------------------------------
Alger American Small Capitalization Portfolio (a) 87 (a) 110 (a) 143 (a) 273
(b) 90 (b) 119 (b) 158 (b) 302
(c) 92 (c) 125 (c) 167 (c) 322
- ---------------------------------------------------------------------------------------------------------------------------
Davis VA Financial Portfolio (a) 88 (a) 113 (a) 148 (a) 284
(b) 91 (b) 122 (b) 163 (b) 313
(c) 93 (c) 128 (c) 173 (c) 332
- ---------------------------------------------------------------------------------------------------------------------------
Davis VA Real Estate Portfolio (a) 88 (a) 113 (a) 148 (a) 284
(b) 91 (b) 122 (b) 163 (b) 313
(c) 93 (c) 128 (c) 173 (c) 332
- ---------------------------------------------------------------------------------------------------------------------------
Davis VA Value Portfolio (a) 88 (a) 113 (a) 148 (a) 284
(b) 91 (b) 122 (b) 163 (b) 313
(c) 93 (c) 128 (c) 173 (c) 332
- ---------------------------------------------------------------------------------------------------------------------------
Franklin Growth and Income Fund (a) 86 (a) 105 (a) 135 (a) 257
(b) 89 (b) 114 (b) 150 (b) 288
(c) 91 (c) 120 (c) 160 (c) 307
- ---------------------------------------------------------------------------------------------------------------------------
Franklin Rising Dividends Securities Fund (a) 88 (a) 112 (a) 147 (a) 281
(b) 91 (b) 121 (b) 161 (b) 310
(c) 93 (c) 127 (c) 171 (c) 329
- ---------------------------------------------------------------------------------------------------------------------------
Franklin Small Cap Fund (a) 89 (a) 113 (a) 149 (a) 286
(b) 92 (b) 122 (b) 164 (b) 315
(c) 94 (c) 128 (c) 174 (c) 334
- ---------------------------------------------------------------------------------------------------------------------------
Franklin U.S. Government Fund (a) 86 (a) 105 (a) 135 (a) 258
(b) 89 (b) 114 (b) 151 (b) 289
(c) 91 (c) 120 (c) 161 (c) 308
- ---------------------------------------------------------------------------------------------------------------------------
J.P. Morgan International
Opportunities Portfolio (a) 90 (a) 119 (a) 158 (a) 303
(b) 93 (b) 128 (b) 173 (b) 332
(c) 95 (c) 134 (c) 183 (c) 351
- ---------------------------------------------------------------------------------------------------------------------------
J.P. Morgan U.S. Disciplined Equity Portfolio (a) 87 (a) 109 (a) 142 (a) 271
(b) 90 (b) 118 (b) 157 (b) 300
(c) 92 (c) 124 (c) 166 (c) 320
- ---------------------------------------------------------------------------------------------------------------------------
Mutual Discovery Securities Fund (a) 91 (a) 120 (a) 161 (a) 308
(b) 94 (b) 129 (b) 175 (b) 337
(c) 96 (c) 135 (c) 185 (c) 356
- ---------------------------------------------------------------------------------------------------------------------------
Mutual Shares Securities Fund (a) 89 (a) 113 (a) 149 (a) 286
(b) 92 (b) 122 (b) 164 (b) 315
(c) 94 (c) 128 (c) 174 (c) 334
- ---------------------------------------------------------------------------------------------------------------------------
Oppenheimer VA Global Securities Fund (a) 86 (a) 105 (a) 135 (a) 257
(b) 89 (b) 114 (b) 150 (b) 288
(c) 91 (c) 120 (c) 160 (c) 307
- ---------------------------------------------------------------------------------------------------------------------------
Oppenheimer VA High Income Fund (a) 86 (a) 106 (a) 137 (a) 261
(b) 89 (b) 115 (b) 152 (b) 292
(c) 91 (c) 121 (c) 162 (c) 311
- ---------------------------------------------------------------------------------------------------------------------------
Oppenheimer VA Main Street Growth & Income Fund (a) 86 (a) 107 (a) 137 (a) 262
(b) 89 (b) 116 (b) 153 (b) 293
(c) 91 (c) 122 (c) 162 (c) 312
- ---------------------------------------------------------------------------------------------------------------------------
PIMCO VIT High Yield Bond Portfolio (a) 86 (a) 105 (a) 135 (a) 258
(b) 89 (b) 114 (b) 151 (b) 289
(c) 91 (c) 120 (c) 161 (c) 308
- ---------------------------------------------------------------------------------------------------------------------------
VARIABLE OPTION 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------------------------------
PIMCO VIT StocksPLUS Growth
and Income Portfolio (a) 85 (a) 102 (a) 130 (a) 248
(b) 88 (b) 111 (b) 146 (b) 279
(c) 90 (c) 117 (c) 156 (c) 299
- ---------------------------------------------------------------------------------------------------------------------------
PIMCO VIT Total Return Bond Portfolio (a) 85 (a) 102 (a) 130 (a) 248
(b) 88 (b) 111 (b) 146 (b) 279
(c) 90 (c) 117 (c) 156 (c) 299
- ---------------------------------------------------------------------------------------------------------------------------
Seligman Henderson Global Technology Fund (a) 88 (a) 113 (a) 148 (a) 284
(b) 91 (b) 122 (b) 163 (b) 313
(c) 93 (c) 128 (c) 173 (c) 332
- ---------------------------------------------------------------------------------------------------------------------------
Seligman Small Cap Value Fund (a) 88 (a) 113 (a) 148 (a) 284
(b) 91 (b) 122 (b) 163 (b) 313
(c) 93 (c) 128 (c) 173 (c) 332
- ---------------------------------------------------------------------------------------------------------------------------
Templeton Developing Markets Equity Fund (a) 95 (a) 133 (a) 181 (a) 347
(b) 98 (b) 141 (b) 195 (b) 375
(c) 100 (c) 147 (c) 205 (c) 393
- ---------------------------------------------------------------------------------------------------------------------------
Templeton Global Growth Fund (a) 90 (a) 117 (a) 155 (a) 297
(b) 93 (b) 126 (b) 169 (b) 326
(c) 95 (c) 132 (c) 179 (c) 345
- ---------------------------------------------------------------------------------------------------------------------------
Templeton Pacific Growth Fund (a) 92 (a) 123 (a) 165 (a) 318
(b) 95 (b) 132 (b) 180 (b) 346
(c) 97 (c) 138 (c) 190 (c) 365
- ---------------------------------------------------------------------------------------------------------------------------
USAllianz VIP Diversified Assets Fund (a) 90 (a) 119 (a) 158 (a) 303
(b) 93 (b) 128 (b) 173 (b) 332
(c) 95 (c) 134 (c) 183 (c) 351
- ---------------------------------------------------------------------------------------------------------------------------
USAllianz VIP Fixed Income Fund (a) 89 (a) 114 (a) 151 (a) 289
(b) 92 (b) 123 (b) 165 (b) 318
(c) 94 (c) 129 (c) 175 (c) 337
- ---------------------------------------------------------------------------------------------------------------------------
USAllianz VIP Global Opportunities Fund (a) 97 (a) 138 (a) 190 (a) 365
(b) 100 (b) 147 (b) 204 (b) 392
(c) 102 (c) 153 (c) 213 (c) 409
- ---------------------------------------------------------------------------------------------------------------------------
USAllianz VIP Growth Fund (a) 91 (a) 121 (a) 162 (a) 311
(b) 94 (b) 130 (b) 177 (b) 340
(c) 96 (c) 136 (c) 186 (c) 358
- ---------------------------------------------------------------------------------------------------------------------------
USAllianz VIP Money Market Fund (a) 87 (a) 109 (a) 142 (a) 272
(b) 90 (b) 118 (b) 157 (b) 301
(c) 92 (c) 124 (c) 167 (c) 321
- ---------------------------------------------------------------------------------------------------------------------------
Van Kampen LIT Enterprise Portfolio (a) 84 (a) 101 (a) 128 (a) 243
(b) 87 (b) 110 (b) 143 (b) 274
(c) 89 (c) 116 (c) 153 (c) 294
- ---------------------------------------------------------------------------------------------------------------------------
Van Kampen LIT Growth & Income Portfolio (a) 86 (a) 105 (a) 135 (a) 258
(b) 89 (b) 114 (b) 151 (b) 289
(c) 91 (c) 120 (c) 161 (c) 308
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on your money if your Contract is not surrendered or if you apply
your Contract value to an Annuity Option for Contracts with:
(a) the Traditional GMPB
(b) the Enhanced GMDB or Enhanced GMIB
(c) the Enhanced GMPB (Enhanced GMDB and Enhanced GMIB)
VARIABLE OPTION 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM V.I. Capital Appreciation Fund (a) $ 22 (a) $ 68 (a)$116 (a) $250
(b) 25 (b) 77 (b) 132 (b) 281
(c) 27 (c) 83 (c) 142 (c) 300
- ---------------------------------------------------------------------------------------------------------------------------
AIM V.I. Growth Fund (a) 23 (a) 69 (a) 119 (a) 255
(b) 26 (b) 78 (b) 134 (b) 286
(c) 28 (c) 84 (c) 144 (c) 305
- ---------------------------------------------------------------------------------------------------------------------------
AIM V.I. International Equity Fund (a) 24 (a) 75 (a) 129 (a) 275
(b) 27 (b) 84 (b) 144 (b) 304
(c) 29 (c) 90 (c) 153 (c) 324
- ---------------------------------------------------------------------------------------------------------------------------
AIM V.I. Value Fund (a) 22 (a) 68 (a) 116 (a) 249
(b) 25 (b) 77 (b) 131 (b) 280
(c) 27 (c) 83 (c) 141 (c) 300
- ---------------------------------------------------------------------------------------------------------------------------
Alger American Growth Portfolio (a) 23 (a) 72 (a) 122 (a) 262
(b) 26 (b) 81 (b) 138 (b) 293
(c) 28 (c) 87 (c) 147 (c) 312
- ---------------------------------------------------------------------------------------------------------------------------
Alger American Leveraged AllCap Portfolio (a) 25 (a) 77 (a) 131 (a) 280
(b) 28 (b) 86 (b) 146 (b) 309
(c) 30 (c) 92 (c) 156 (c) 329
- ---------------------------------------------------------------------------------------------------------------------------
Alger American MidCap Growth Portfolio (a) 24 (a) 73 (a) 125 (a) 267
(b) 27 (b) 82 (b) 140 (b) 298
(c) 29 (c) 88 (c) 150 (c) 317
- ---------------------------------------------------------------------------------------------------------------------------
Alger American Small Capitalization Portfolio (a) 24 (a) 75 (a) 128 (a) 273
(b) 27 (b) 84 (b) 143 (b) 302
(c) 29 (c) 90 (c) 152 (c) 322
- ---------------------------------------------------------------------------------------------------------------------------
Davis VA Financial Portfolio (a) 25 (a) 78 (a) 133 (a) 284
(b) 28 (b) 87 (b) 148 (b) 313
(c) 30 (c) 93 (c) 158 (c) 332
- ---------------------------------------------------------------------------------------------------------------------------
Davis VA Real Estate Portfolio (a) 25 (a) 78 (a) 133 (a) 284
(b) 28 (b) 87 (b) 148 (b) 313
(c) 30 (c) 93 (c) 158 (c) 332
- ---------------------------------------------------------------------------------------------------------------------------
Davis VA Value Portfolio (a) 25 (a) 78 (a) 133 (a) 284
(b) 28 (b) 87 (b) 148 (b) 313
(c) 30 (c) 93 (c) 158 (c) 332
- ---------------------------------------------------------------------------------------------------------------------------
Franklin Growth and Income Fund (a) 23 (a) 70 (a) 120 (a) 257
(b) 26 (b) 79 (b) 135 (b) 288
(c) 28 (c) 85 (c) 145 (c) 307
- ---------------------------------------------------------------------------------------------------------------------------
Franklin Rising Dividends Securities Fund (a) 25 (a) 77 (a) 132 (a) 281
(b) 28 (b) 86 (b) 146 (b) 310
(c) 30 (c) 92 (c) 156 (c) 329
- ---------------------------------------------------------------------------------------------------------------------------
Franklin Small Cap Fund (a) 26 (a ) 78 (a) 134 (a) 286
(b) 29 (b) 87 (b) 149 (b) 315
(c) 31 (c) 93 (c) 159 (c) 334
- ---------------------------------------------------------------------------------------------------------------------------
Franklin U.S. Government Fund (a) 23 (a) 70 (a) 120 (a) 258
(b) 26 (b) 79 (b) 136 (b) 289
(c) 28 (c) 85 (c) 146 (c) 308
- ---------------------------------------------------------------------------------------------------------------------------
VARIABLE OPTION 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------------------------------
J.P. Morgan International
Opportunities Portfolio (a) 27 (a) 84 (a) 143 (a) 303
(b) 30 (b) 93 (b) 158 (b) 332
(c) 32 (c) 99 (c) 168 (c) 351
- ---------------------------------------------------------------------------------------------------------------------------
J.P. Morgan U.S. Disciplined Equity Portfolio (a) 24 (a) 74 (a) 127 (a) 271
(b) 27 (b) 83 (b) 142 (b) 300
(c) 29 (c) 89 (c) 151 (c) 320
- ---------------------------------------------------------------------------------------------------------------------------
Mutual Discovery Securities Fund (a) 28 (a) 85 (a) 146 (a) 308
(b) 31 (b) 94 (b) 160 (b) 337
(c) 33 (c) 100 (c) 170 (c) 356
- ---------------------------------------------------------------------------------------------------------------------------
Mutual Shares Securities Fund (a) 26 (a) 78 (a) 134 (a) 286
(b) 29 (b) 87 (b) 149 (b) 315
(c) 31 (c) 93 (c) 159 (c) 334
- ---------------------------------------------------------------------------------------------------------------------------
Oppenheimer VA Global Securities Fund (a) 23 (a) 70 (a) 120 (a) 257
(b) 26 (b) 79 (b) 135 (b) 288
(c) 28 (c) 85 (c) 145 (c) 307
- ---------------------------------------------------------------------------------------------------------------------------
Oppenheimer VA High Income Fund (a) 23 (a) 71 (a) 122 (a) 261
(b) 26 (b) 80 (b) 137 (b) 292
(c) 28 (c) 86 (c) 147 (c) 311
- ---------------------------------------------------------------------------------------------------------------------------
Oppenheimer VA Main Street Growth
and Income Fund (a) 23 (a) 72 (a) 122 (a) 262
(b) 26 (b) 81 (b) 138 (b) 293
(c) 28 (c) 87 (c) 147 (c) 312
- ---------------------------------------------------------------------------------------------------------------------------
PIMCO VIT High Yield Bond Portfolio (a) 23 (a) 70 (a) 120 (a) 258
(b) 26 (b) 79 (b) 136 (b) 289
(c) 28 (c) 85 (c) 146 (c) 308
- ---------------------------------------------------------------------------------------------------------------------------
PIMCO VIT StocksPLUS Growth & Income Portfolio (a) 22 (a) 67 (a) 115 (a) 248
(b) 25 (b) 76 (b) 131 (b) 279
(c) 27 (c) 82 (c) 141 (c) 299
- ---------------------------------------------------------------------------------------------------------------------------
PIMCO VIT Total Return Bond Portfolio (a) 22 (a) 67 (a) 115 (a) 248
(b) 25 (b) 76 (b) 131 (b) 279
(c) 27 (c) 82 (c) 141 (c) 299
- ---------------------------------------------------------------------------------------------------------------------------
Seligman Henderson Global Technology Fund (a) 25 (a) 78 (a) 133 (a) 284
(b) 28 (b) 87 (b) 148 (b) 313
(c) 30 (c) 93 (c) 158 (c) 332
- ---------------------------------------------------------------------------------------------------------------------------
Seligman Small Cap Value Fund (a) 25 (a) 78 (a) 133 (a) 284
(b) 28 (b) 87 (b) 148 (b) 313
(c) 30 (c) 93 (c) 158 (c) 332
- ---------------------------------------------------------------------------------------------------------------------------
Templeton Developing Markets Equity Fund (a) 32 (a) 98 (a) 166 (a) 347
(b) 35 (b) 106 (b) 180 (b) 375
(c) 37 (c) 112 (c) 190 (c) 393
- ---------------------------------------------------------------------------------------------------------------------------
Templeton Global Growth Fund (a) 27 (a) 82 (a) 140 (a) 297
(b) 30 (b) 91 (b) 154 (b) 326
(c) 32 (c) 97 (c) 164 (c) 345
- ---------------------------------------------------------------------------------------------------------------------------
Templeton Pacific Growth Fund (a) 29 (a) 88 (a) 150 (a) 318
(b) 32 (b) 97 (b) 165 (b) 346
(c) 34 (c) 103 (c) 175 (c) 365
- ---------------------------------------------------------------------------------------------------------------------------
USAllianz VIP Diversified Assets Fund (a) 27 (a) 84 (a) 143 (a) 303
(b) 30 (b) 93 (b) 158 (b) 332
(c) 32 (c) 99 (c) 168 (c) 351
- ---------------------------------------------------------------------------------------------------------------------------
USAllianz VIP Fixed Income Fund (a) 26 (a) 79 (a) 136 (a) 289
(b) 29 (b) 88 (b) 150 (b) 318
(c) 31 (c) 94 (c) 160 (c) 337
- ---------------------------------------------------------------------------------------------------------------------------
VARIABLE OPTION 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------------------------------------------------
USAllianz VIP Global Opportunities Fund (a) 34 (a) 103 (a) 175 (a) 365
(b) 37 (b) 112 (b) 189 (b) 392
(c) 39 (c) 118 (c) 198 (c) 409
- ---------------------------------------------------------------------------------------------------------------------------
USAllianz VIP Growth Fund (a) 28 (a) 86 (a) 147 (a) 311
(b) 31 (b) 95 (b) 162 (b) 340
(c) 33 (c) 101 (c) 171 (c) 358
- ---------------------------------------------------------------------------------------------------------------------------
USAllianz VIP Money Market Fund (a) 24 (a) 74 (a) 127 (a) 272
(b) 27 (b) 83 (b) 142 (b) 301
(c) 29 (c) 89 (c) 152 (c) 321
- ---------------------------------------------------------------------------------------------------------------------------
Van Kampen LIT Enterprise Portfolio (a) 21 (a) 66 (a) 113 (a) 243
(b) 24 (b) 75 (b) 128 (b) 274
(c) 26 (c) 81 (c) 138 (c) 294
- ---------------------------------------------------------------------------------------------------------------------------
Van Kampen LIT Growth & Income Portfolio (a) 23 (a) 70 (a) 120 (a) 258
(b) 26 (b) 79 (b) 136 (b) 289
(c) 28 (c) 85 (c) 146 (c) 308
</TABLE>
<PAGE>
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.
o 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.
o 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.
o A variable annuity is one in which Contract values and the Annuity Payments
vary depending on the performance of the underlying Portfolios.
An annuity is a contract between you, the owner, and an insurance company (in
this case Allianz Life), where the insurance company promises to pay you (or
someone else you choose) an income, in the form of Annuity Payments. The Annuity
Payments must begin on a designated date that is at least two years after you
buy the Contract. Until you decide to begin receiving Annuity Payments, your
annuity is in the Accumulation Phase. Once you begin receiving Annuity Payments,
your Contract switches to the Payout Phase.
The Contract benefits from Tax Deferral. Tax Deferral means that you are not
taxed on any earnings or appreciation on the assets in your Contract until you
take money out of your Contract.
You have 38 investment choices -- the 37 Variable Options, each of which invests
in one Portfolio, and the Fixed Account of Allianz Life. Depending upon market
conditions, you can make or lose money in the Contract based on the investment
performance of the Portfolios. The Portfolios are designed to offer a better
return than the Fixed Account. However, this is not guaranteed.
If you select the variable annuity portion of the Contract, the amount of money
you are able to accumulate in your Contract during the Accumulation Phase
depends in large part upon the investment performance of the Portfolio(s) you
select. The amount of the Annuity Payments you receive during the Payout Phase
from the variable annuity portion of the Contract also depends in large part
upon the investment performance of the Portfolios you select for the Payout
Phase.
The Contract also contains a Fixed Account. The Fixed Account offers an interest
rate that is guaranteed by Allianz Life for all deposits made within the twelve
month period. Your initial interest rate is set on the date when your money is
invested in the Fixed Account and remains effective for one year. Initial
interest rates are declared monthly. Allianz Life guarantees that the interest
credited to the Fixed Account will not be less than 3% per year. If you select
the Fixed Account, your money will be placed with the other general assets of
Allianz Life. Allianz Life may change the terms of the Fixed Account in the
future - please contact Allianz Life for the most current terms.
If you select the Fixed Account, the amount of money you are able to accumulate
in your Contract during the Accumulation Phase depends upon the total interest
credited to your Contract.
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. You should consult with your tax adviser before doing this.
Joint Owner. The Contract can be owned by Joint Owners. Any Joint Owner must be
the spouse of the other Contract Owner (this requirement may not apply in
certain states). Upon the death of either Joint Owner, the surviving Joint Owner
will be the designated Beneficiary. Any other Beneficiary designation at the
time the Contract was issued or as may have been later changed will be treated
as a contingent Beneficiary unless otherwise indicated.
Annuitant. The Annuitant is the natural person on whose life we base Annuity
Payments. You name an Annuitant. You may change the Annuitant at any time before
the Income Date unless the Contract is owned by a non-individual (for example, a
corporation).
Beneficiary. The Beneficiary is the person(s) or entity
you name to receive any death benefit. The Beneficiary is named at the time the
Contract is issued unless changed at a later date. Unless an irrevocable
Beneficiary has been named, you can change the Beneficiary or contingent
Beneficiary.
Assignment. You can transfer ownership of (assign) the Contract at any time
during your lifetime. Allianz Life will not be bound by the assignment until it
records the assignment. Allianz Life will not be liable for any payment or other
action we take in accordance with the Contract before we receive notice of the
assignment. Any assignment made after the death benefit has become payable can
only be done with our consent. An assignment may be a taxable event.
If the Contract is issued pursuant to a Qualified plan, you may be unable to
assign the Contract.
ANNUITY PAYMENTS (THE PAYOUT PHASE)
Income Date
You can receive regular monthly income payments under your Contract. You can
choose the month and year in which those payments begin. We call that date the
Income Date. Your Income Date must be the first day of a calendar month and must
be at least 2 years after you buy the Contract. To receive the annuity income
protection of the Guaranteed Minimum Income Benefit, your Income Date must be
within 30 days following a Contract anniversary beginning with the 7th Contract
anniversary (and certain other conditions must be met).
We ask you to choose your Income Date when you purchase the Contract. You can
change it at any time before the Income Date with 30 days notice to us. Your
Income Date must not be later than the Annuitant's 90th birthday or 10 years
from the date the Contract was issued, or the maximum date permitted under state
law. This limitation may not apply when the Contract is issued to a charitable
remainder trust.
Annuity Payments
The Contract provides for guaranteed minimum Annuity Payments under certain
circumstances. The amount of the guaranteed minimum payment depends on whether
you select the Traditional GMPB or the Enhanced GMIB (see below). The GMIB may
not be available in your state. Check with your registered representative
regarding availability.
You may elect to receive your Annuity Payments as: o a variable payout, o a
fixed payout, or o a combination of both.
Under a fixed payout, all of the Annuity Payments will be the same dollar amount
(equal installments). If you choose a variable payout, you can select from the
available Variable Options. If you do not tell us otherwise, your Annuity
Payments will be based on the investment allocations that were in place on the
Income Date.
If you choose to have any portion of your Annuity Payments based on the
investment performance of the Variable Option(s), the dollar amount of your
payments will depend upon three factors:
1. the value of your Contract in the Variable Option(s)
on the Income Date,
2. the assumed investment rate used in the annuity table for the Contract, and
3. the performance of the Variable Option(s) you selected.
You can choose a 3%, 5% or 7% assumed investment rate (AIR). The 7% AIR is not
available in all states. If the actual performance exceeds the AIR you selected,
your Annuity Payments will increase. Similarly, if the actual rate is less than
the AIR you selected, your Annuity Payments will decrease.
You (or someone you designate) will receive the Annuity Payments. You will
receive tax reporting on those payments.
Annuity Options
You can choose among income plans. We call those Annuity Options. You can choose
one of the Annuity Options described below or any other Annuity Option you want
and that Allianz Life agrees to provide. You may, at any time prior to the
Income Date, 30 days in advance, select and/or change the Annuity Option. After
Annuity Payments begin, you cannot change the Annuity Option. If you do not
choose an Annuity Option prior to the Income Date, we will assume that you
selected Option 2 which provides a life annuity with 5 years of monthly payments
guaranteed.
Option 1. Life Annuity. Under this option, we will make monthly Annuity Payments
so long as the Annuitant is alive. After the Annuitant dies, we stop making
Annuity Payments.
Option 2. Life Annuity with Monthly Payments Over 5, 10, 15 or 20 Years
Guaranteed. Under this option, we will make monthly Annuity Payments so long as
the Annuitant is alive. However, if the Annuitant dies before the end of the
selected guaranteed period, we will continue to make Annuity Payments to you or
any person you choose for the rest of the guaranteed period. Alternatively, if
you do not want to receive Annuity Payments after the Annuitant's death, you can
ask us for a single lump sum equal to the present value of the guaranteed
monthly Annuity Payments remaining, as of the date Allianz Life receives notice
of the Annuitant's death, commuted as set forth in the Contract.
During the lifetime of the Annuitant, and while the number of Annuity Payments
made is less than the guaranteed number of payments elected, and if you elected
to receive payments on a variable basis, you may request a withdrawal (partial
liquidation) of an amount up to 75% of the Total Liquidation Value, less any
previously liquidated amounts. The Total Liquidation Value is equal to the
present value of the remaining guaranteed Annuity Payments, to the end of the
period certain, commuted at the AIR, less a commutation fee. The minimum amount
that you can liquidate is the lesser of $500 or the remaining portion of the
Total Liquidation Value available. The partial liquidation will be processed on
the next annuity calculation date after your written request is received. The
liquidation feature allows any portion of the 75% that you do not use in a
Contract year to carry over from year to year. It will be based on the Total
Liquidation Value for the year that you make a liquidation.
Option 3. Joint and Last Survivor Annuity. Under this option, we will make
monthly Annuity Payments during the joint lifetime of the Annuitant and the
joint Annuitant. When the Annuitant dies, if the joint Annuitant is still alive,
we will continue to make Annuity Payments so long as the joint Annuitant
continues to live. The amount of the Annuity Payments we will make to you can be
equal to 100%, 75% or 50% of the amount that was being paid when both Annuitants
were alive. The monthly Annuity Payments will end when the last surviving
Annuitant dies.
Option 4. Joint and Last Survivor Annuity with Monthly Payments Over 5, 10, 15
or 20 Years Guaranteed. Under this option, we will make monthly Annuity Payments
during the joint lifetime of the Annuitant and the joint Annuitant. When the
Annuitant dies, if the joint Annuitant is still alive, we will continue to make
Annuity Payments, so long as the surviving Annuitant continues to live, at 100%
of the amount that was being paid when both were alive. If, when the last death
occurs, we have made Annuity Payments for less than the selected guaranteed
period, we will continue to make Annuity Payments to you or any person you
choose for the rest of the guaranteed period. Alternatively, if you do not want
to receive Annuity Payments after the Annuitant's death, you can ask us for a
single lump sum equal to the present value of the guaranteed monthly Annuity
Payments remaining, as of the date Allianz Life receives notice of the
Annuitant's death, commuted as set forth in the Contract.
During the lifetime of the Annuitant and joint Annuitant, and while the number
of Annuity Payments made is less than the guaranteed number of payments elected,
and if you elected to receive payments on a variable basis, you may request a
withdrawal (partial liquidation) of an amount up to 75% of the Total Liquidation
Value, less any previously liquidated amounts. The minimum amount that you can
liquidate is the lesser of $500 or the remaining portion of the Total
Liquidation Value available. The partial liquidation will be processed on the
next annuity calculation date after your written request. The liquidation
feature allows any portion of the 75% that you do not use in a Contract year to
carry over from year to year. It will be based on the Total Liquidation Value
for the year that you make a liquidation.
Option 5. Refund Life Annuity. Under this option, we will make monthly Annuity
Payments during the Annuitant's lifetime. The last Annuity Payment will be made
before the Annuitant dies and if the value of the Annuity Payments made is less
than the value applied to the Annuity Option, then you will receive a refund.
For a fixed annuity payout, the amount of the refund will be any excess of the
amount applied to this Annuity Option over the total of all payments made under
this option. For a variable annuity payment, the amount of the refund will be
the then value of the number of Annuity Units equal to (1) the value applied to
this Annuity Option divided by the value of Annuity Units used to determine the
first Annuity Payment, minus (2) the product of the number of Annuity Units of
each Annuity Payment and the number of payments made.
Option 6. Specified Period Certain Annuity. Under this option, we will make
monthly Annuity Payments for a specified period of time. You elect the specified
period which must be a whole number of years from 5 to 30. If at the time of the
death of the last Annuitant and any joint Annuitant, Annuity Payments have been
made for less than the specified period certain, then we will continue to make
Annuity Payments to you for the rest of the period certain. If you have selected
to receive payments on a variable basis, you may make a liquidation at least
once each Contract year of up to 100% of the Total Liquidation Value in the
Contract. The liquidation will be processed on the next annuity calculation date
after your written request is received commuted as set forth in the Contract.
Guaranteed Minimum Protection Benefits (GMPB) -- Annuity Income Protection
The annuity contract automatically includes a basic Guaranteed Minimum
Protection Benefit (Traditional GMPB). At the time you buy the Contract, you can
elect the Enhanced Guaranteed Minimum Death Benefit (Enhanced GMDB), the
Enhanced Guaranteed Minimum Income Benefit (Enhanced GMIB) or both the Enhanced
GMDB and the Enhanced GMIB (together, the Enhanced Minimum Protection Benefit)
instead of the Traditional GMPB. Once selected, you cannot change it. If you do
not make an election, you will receive the Traditional GMPB. The Traditional and
Enhanced GMPB provide a death benefit protection benefit and an annuity income
protection benefit. The death benefit protection benefit is described in the
"Death Benefit" section of this prospectus. Please refer to the applicable
endorsements to your Contract for the specific terms and conditions of these
benefits. The mortality and expense risk charge is higher for Contracts with the
Enhanced GMDB, Enhanced GMIB and Enhanced GMPB. If the Contract is owned by a
non-natural person, then the GMPB only applies if the Contract is owned for the
benefit of an individual. The GMIB may not be available in your state. Check
with your registered representative regarding availability.
The annuity income benefits provided are described below and are used in
determining the amount of each Annuity Payment you receive during the Payout
Phase. The GMPB can be used with any Annuity Option provided for in the Contract
and provides for guaranteed minimum Annuity Payments during the Payout Phase.
The guaranteed minimum income benefit protection will apply only under the
following circumstances:
1. Your Income date must be within 30 days following a Contract anniversary
beginning with the 7th Contract anniversary;
2. Annuity Payments can only be made under a fixed annuity payout (regardless of
the Annuity Option you select); and
3. If you choose an Annuity Option involving a period certain, the period
certain must be for at least 10 years.
The Traditional Guaranteed Minimum Income Benefit
guarantees that your Annuity Payments will be equal to
the greater of:
o current fixed payout rates applied to the current Contract value (less any
premium tax); or
o guaranteed fixed payout rates applied to the guaranteed minimum income benefit
(GMIB) value.
The GMIB value is equal to Purchase Payments reduced by each withdrawal's
percentage of Contract value withdrawn (including any contingent deferred sales
charges paid on the withdrawals).
The Enhanced Guaranteed Minimum Income Benefit
guarantees that your Annuity Payments will be equal to the greater of:
o current fixed payout rates applied to the current Contract value (less any
premium tax); or
o guaranteed fixed payout rates applied to the enhanced guaranteed minimum
income benefit (Enhanced GMIB) value;
The Enhanced GMIB value is equal to the greater of A or B below:
A. 5% Annual Increase Amount
On the date your Contract is issued: the 5% Annual Increase Amount is equal to
your initial Purchase Payment.
On each business day other than a Contract anniversary: the 5% Annual Increase
Amount is equal to its value on the immediately preceding business day reduced
by the percentage of any Contract value you withdraw (including any contingent
deferred sales charge) and increased by any additional Purchase Payments you
make.
On every Contract Anniversary: the 5% Annual Increase Amount is equal to its
value on the immediately preceding business day increased by 5% prior to your
81st birthday, reduced by the percentage of any Contract value you withdraw
(including any contingent deferred sales charge), increased by any additional
Purchase Payments you make.
B. Greatest Anniversary Value
The anniversary value is equal to the value of your Contract on a Contract
anniversary, reduced by the percentage of any Contract value you withdraw
(including any contingent deferred sales charge) since that Contract
anniversary. When determining this benefit, Allianz Life will not take into
consideration any Contract anniversaries occurring on or after your 81st
birthday or date of death.
If Joint Owners are named, Allianz Life will use the age of the oldest Joint
Owner to determine the GMIB. If a non- natural person owns the Contract, then
for purposes of these benefits, you means the Annuitant.
If your Income Date is before the 7th Contract anniversary or on any date other
than 30 days following a Contract anniversary after the 7th Contract
anniversary, or if you want to receive a variable annuity payout, or if you
select an Annuity Option involving a period certain and the period is for less
than 10 years, or if the GMIB is not available in your state, then the annuity
payout for your Contract will be determined by applying the current payout rates
to the current Contract value.
The Appendix contains examples of how the Guaranteed Minimum Protection Benefits
are calculated. The amounts used in the examples are purely hypothetical and are
for illustrative purposes only.
- -------------------------------------------------------------------------------
PURCHASE
Purchase Payments
A Purchase Payment is the money you invest in the Contract. The Purchase Payment
requirements are:
o the minimum payment Allianz Life will accept is $5,000.
o the maximum amount we will accept without our prior approval is $1 million.
o 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 90 years old.
This product is not designed for professional market timing organizations, other
entities, or persons using programmed, large or frequent transfers.
Automatic Investment Plan
The Automatic Investment Plan (AIP) is a program which allows you to make
additional Purchase Payments to your Contract on a monthly or quarterly basis by
electronic transfer of monies from your savings or checking account. You may
participate in this program by completing the appropriate form. We must receive
your form by the first of the month in order for AIP to begin that same month.
Investments will take place on the 20th of the month, or the next business day.
The minimum investment that can be made by AIP is $100. You may stop AIP at any
time you want. We need to be notified by the first of the month in order to stop
or change AIP that month. If AIP is used for a Qualified Contract, you should
consult your tax adviser for advice regarding maximum contributions.
Allocation of Purchase Payments
When you purchase a Contract, we will allocate your Purchase Payment to the
Fixed Account and/or one or more of the Variable Options you have selected. We
ask that you allocate your money in either whole percentages or round dollars.
The Fixed Account may not be available in your state (check with your registered
representative). Transfers do not change the allocation instructions for
payments. You can instruct us how to allocate additional Purchase Payments you
make. If you do not instruct us, we will allocate them in the same way as your
previous instructions to us. You may change the allocation of future payments
without fee, penalty or other charge upon written notice or telephone
instructions to the 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 Variable Options that you
may invest in at one time. Currently, you may invest in 10 Variable Options and
the Allianz Life Fixed Account. We may change this in the future. However, we
will always allow you to invest in at least five Variable Options.
Once we receive your Purchase Payment and the necessary information, we will
issue your Contract and allocate your first Purchase Payment within 2 business
days. If you do not give us all of the information we need, we will contact you
or your registered representative to get it. If for some reason we are unable to
complete this process within 5 business days, we will either send back your
money or get your permission to keep it until we get all of the necessary
information. If you make additional Purchase Payments, we will credit these
amounts to your Contract within one business day. Our business day closes when
the New York Stock Exchange closes, which is usually at 4:00 p.m. Eastern time.
Free Look
If you change your mind about owning the Contract, you can cancel it within 10
days after receiving it (or the period required in your state). When you cancel
the Contract within this time period, Allianz Life will not assess a contingent
deferred sales charge. You will receive back whatever your Contract is worth on
the day we receive your request. In certain states, or if you have purchased the
Contract as an IRA, we may be required to give you back your Purchase Payment if
you decide to cancel your Contract within 10 days after receiving it (or
whatever period is required in your state). If that is the case, we reserve the
right to allocate your initial Purchase Payment to the USAllianz VIP Money
Market Fund for 15 days after we receive it. (In some states, the period may be
longer.) At the end of that period, we will re-allocate your money as you
selected. Currently, however, we will directly allocate your money to the
Variable Options and/or the Fixed Account as you have selected.
Accumulation Units
The value of the portion of your Contract allocated to the Variable Options will
go up or down based upon the investment performance of the Variable Option(s)
you choose. The value of your Contract will also depend on the expenses of the
Contract. In order to keep track of the value of your Contract, we use a
measurement called an Accumulation Unit (which is like a share of a mutual
fund). During the Payout Phase of the Contract we call it an Annuity Unit.
Every business day we determine the value of an Accumulation Unit for each
Variable Option by multiplying the Accumulation Unit value for the previous
period by a factor for the current period. The factor is determined by:
1. dividing the value of a Portfolio at the end of the current period by the
value of a Portfolio for the previous period; and
2. multiplying it by one minus the daily amount of the insurance charges and any
charges for taxes.
The value of an Accumulation Unit may go up or down from business day to
business day.
When you make a Purchase Payment, we credit your Contract with Accumulation
Units for any portion of your Purchase Payment allocated to a Variable Option.
The number of Accumulation Units we credit your Contract with is determined by
dividing the amount of the Purchase Payment allocated to a Variable Option by
the value of the corresponding Accumulation Unit.
We calculate the value of each Accumulation Unit after the New York Stock
Exchange closes each day and then credit your Contract.
Example
On Wednesday we receive an additional Purchase Payment of $3,000 from you. You
have told us you want this to go to the Alger American Growth Portfolio. When
the New York Stock Exchange closes on that Wednesday, we determine that the
value of an Accumulation Unit based on an investment in the Alger American
Growth Portfolio is $13.25. We then divide $3,000 by $13.25 and credit your
Contract on Wednesday night with $226.42 Accumulation Units.
INVESTMENT OPTIONS
The Contract offers Variable Options. Each Variable Option invests in one of the
Portfolios of the mutual funds listed below. Each portfolio has its own
investment objective. The Contract also offers a Fixed Account of Allianz Life.
Additional Portfolios may be available in the future.
You should read the fund prospectuses carefully 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>
Available Portfolios investment 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 VA Financial Portfolio Davis Selected Advisers, LP
Davis VA Real Estate Portfolio Davis Selected Advisers, LP
Davis VA Value Portfolio Davis Selected Advisers, LP
FRANKLIN TEMPLETON VARIABLE INSURANCE
PRODUCTS TRUST:
Franklin Growth and Income 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 Henderson Global Technology Portfolio J & W Seligman & Co. Incorporated
Seligman Small-Cap Value Portfolio J & W Seligman & Co. Incorporated
- ------------------------------------------------------------------------------------------------------------------
Available Portfolios investment Advisers
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 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 Funds may also be
sold directly to qualified plans. The 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 Funds' advisers, distributors and/or affiliates for the administrative
services which it provides to the Portfolios.
Transfers
You can transfer money among the Variable Options and/or the Fixed Account.
Transfers may be subject to a transfer fee. Allianz Life currently allows you to
make as many transfers as you want to each year. Allianz Life may change this
practice in the future. However, this product is not designed for professional
market timing organizations or other persons using programmed, large, or
frequent transfers. Such activity may be disruptive to a Portfolio. We reserve
the right to reject any specific Purchase Payment allocation or transfer request
from any person, if in the Portfolio investment adviser's judgment, a Portfolio
would be unable to invest effectively in accordance with its investment
objectives and policies, or would otherwise potentially be adversely affected.
The following applies to any transfer:
1. The minimum amount which you can transfer is $1,000 or your entire value in
the Variable Option or Fixed Account, if less. This requirement is waived if the
transfer is in connection with the Dollar Cost Averaging Program or Flexible
Rebalancing (which are described below).
2. We may not allow you to make transfers during the free look period.
3. Your request for a transfer must clearly state:
o which Variable Option(s) and/or the Fixed Account is involved in the transfer;
and
o how much the transfer is for.
4. You cannot make any transfers within 7 calendar days prior to the date your
first Annuity Payment is due.
5. After the Income Date, you may not make a transfer from a fixed Annuity
Option to a variable Annuity Option.
6. After the Income Date, you can transfer from a variable Annuity Option to a
fixed Annuity Option.
7. Your right to make transfers is subject to modification if we determine in
our sole opinion that the exercise of the right by one or more Contract Owners
is, or would be, to the disadvantage of other Contract Owners. Restrictions may
be applied in any manner reasonably designed to prevent any use of the transfer
right which we consider to be to the disadvantage of other Contract Owners. A
modification could be applied to transfers to or from one or more of the
Variable Options and could include, but is not limited to:
o the requirement of a minimum time period between each transfer;
o not accepting a transfer request from an agent acting under a power of
attorney on behalf of more than one Contract Owner; or
o limiting the dollar amount that may be transferred between the Variable
Options by a Contract Owner at any one time.
Allianz Life has reserved the right at any time without prior notice to any
party to modify the transfer provisions subject to the guarantees described
above and subject to applicable state law.
Telephone Transfers. You can make transfers by telephone. We may allow you to
authorize someone else to make transfers by telephone on your behalf. If you own
the Contract with a Joint Owner, unless you instruct Allianz Life otherwise, we
will accept instructions from either one of you. Allianz Life will use
reasonable procedures to confirm that instructions given to us by telephone are
genuine. If we do not use such procedures, we may be liable for any losses due
to unauthorized or fraudulent instructions. Allianz Life tape records all
telephone instructions.
Dollar Cost Averaging Program
The Dollar Cost Averaging Program allows you to systematically transfer a set
amount of money each month or quarter from any one Variable Option or the Fixed
Account to up to eight of the other Variable Options. The Variable Option(s) you
transfer from may not be the Variable Option(s) you transfer to in this program.
By allocating amounts on a regularly scheduled basis, as opposed to allocating
the total amount at one particular time, you may be less susceptible to the
impact of market fluctuations. You may only participate in this program during
the Accumulation Phase.
There are two Dollar Cost Averaging options. The first option is the Dollar Cost
Averaging Fixed Option. It is available for new Contracts and additional
Purchase Payments to new and existing Contracts. You will receive a special
fixed rate guaranteed for one year by Allianz Life. The Dollar Cost Averaging
Fixed Option may not be available in your state.
The second option is the Standard Dollar Cost Averaging Option. It requires a
$3,000 minimum investment and participation for at least six months (or two
quarters).
All Dollar Cost Averaging transfers will be made on the 10th day of the month
unless that day is not a business day. If it is not, then the transfer will be
made the next business day. You may elect either program by properly completing
the Dollar Cost Averaging form provided by Allianz Life.
Your participation in the program will end when any of the following occurs:
o the number of desired transfers have been made;
o you do not have enough money in the Variable Option(s) or the Fixed Account to
make the transfer (if less money is available, that amount will be dollar cost
averaged and the program will end);
o you request to terminate the program (your request must be received by us by
the first of the month to terminate that month); or
o the Contract is terminated.
If you participate in the Dollar Cost Averaging Program,
the transfers made under the program are not taken into account in determining
any transfer fee. You may not participate in the Dollar Cost Averaging Program
and Flexible Rebalancing at the same time.
Flexible Rebalancing
Once your money has been invested, the performance of the Variable Options may
cause your chosen allocation to shift. Flexible Rebalancing is designed to help
you maintain your specified allocation mix among the different Variable Options.
The Fixed Account is not part of Flexible Rebalancing. You can direct us to
readjust your Contract value on a quarterly, semi-annual or annual basis to
return to your original Variable Option allocations. Flexible Rebalancing
transfers will be made on the 20th day of the month unless that day is not a
business day. If it is not, then the transfer will be made on the previous
business day. If you participate in Flexible Rebalancing, the transfers made
under the program are not taken into account in determining any transfer fee.
Financial Advisers -- Asset Allocation
Programs
Allianz Life understands the importance of advice from a financial adviser
regarding your investments in the Contract (asset allocation program). Certain
investment advisers have made arrangements with us to make their services
available to you. Allianz Life has not made any independent investigation of
these advisers and is not endorsing such programs. You may be required to enter
into an advisory agreement with your investment adviser to have the fees paid
out of your Contract during the Accumulation Phase.
Allianz Life will, pursuant to an agreement with you, make a partial withdrawal
from the value of your Contract to pay for the services of the investment
adviser. If the Contract is Non-Qualified, the withdrawal will be treated like
any other distribution and may be included in gross income for federal tax
purposes and, if you are under age 591/2, 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 Variable Options you have selected with
another Variable Option. We would not do this without the prior approval of the
Securities and Exchange Commission. We will give you notice of our intention to
do this. We may also limit further investment in a Variable Option if we deem
the investment inappropriate.
EXPENSES
There are charges and other expenses associated with the Contract that will
reduce your investment return. These charges and expenses are:
Insurance Charges
Each day, Allianz Life makes a deduction for its insurance charges. Allianz Life
does this as part of its calculation of the value of the Accumulation Units and
the Annuity Units. The insurance charge consists of:
1. the mortality and expense risk charge,
2. the administrative charge, and
3. the distribution expense charge.
Mortality and Expense Risk Charge. The amount of the mortality and expense risk
charge depends on whether you select the Traditional GMPB, the Enhanced GMDB,
the Enhanced GMIB or the Enhanced GMDB and Enhanced GMIB.
o Traditional GMPB: The charge is equal, on an annual basis, to 1.25% of the
average daily value of the Contract invested in a Variable Option.
o Enhanced GMDB or Enhanced GMIB: The charge is equal, on an annual basis, to
1.55% of the average daily value of the Contract invested in a Variable Option.
o Enhanced GMDB and Enhanced GMIB: The charge is equal, on an annual basis, to
1.75% of the average daily value of the Contract invested in a variable option.
This charge compensates us for all the insurance benefits provided by your
Contract (for example, our contractual obligation to make Annuity Payments, the
death benefits, certain expenses related to the Contract, and for assuming the
risk (expense risk) that the current charges will be insufficient in the future
to cover the cost of administering the Contract).
Administrative Charge. This charge is equal, on an annual basis, to .15% of the
average daily value of the Contract invested in a Variable Option. This charge,
together with the contract maintenance charge (which is explained below), is for
all the expenses associated with the administration of the Contract. Some of
these expenses include: preparation of the Contract, confirmations, annual
statements, maintenance of Contract records, personnel costs, legal and
accounting fees, filing fees, and computer and systems costs.
Distribution Expense Charge. Currently, Allianz Life is compensated for 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 Variable Option.
Contract Maintenance Charge
Every year, at each Contract anniversary, Allianz Life deducts $40 from your
Contract as a contract maintenance charge. The fee is assessed on the last day
of each Contract year. The charge is deducted pro rata from the Variable Options
and the Fixed Account. The charge is for administrative expenses (see above).
However, during the Accumulation Phase, if the value of your Contract is at
least $100,000 when the deduction for the charge is to be made, Allianz Life
will not deduct this charge. If you own more than one Contract offered under
this prospectus, Allianz Life will determine the total value of all your
Contracts. If the total value of all Contracts registered under the same social
security number is at least $100,000, Allianz Life will not assess the contract
maintenance charge (except in New Jersey). Currently the charge is also waived
during the Payout Phase if the value of your Contract at the Income Date is
$100,000 (except in New Jersey). If the Contract is owned by a non-natural
person (e.g., a corporation), Allianz Life will look to the Annuitant to
determine if it will assess the charge.
If you make a complete withdrawal from your Contract other than on a Contract
anniversary, Allianz Life will deduct the contract maintenance charge. During
the Payout Phase, the charge will be collected monthly out of each Annuity
Payment.
Contingent Deferred Sales Charge
Withdrawals may be subject to a contingent deferred sales charge. During the
Accumulation Phase, you can make withdrawals from your Contract. Allianz Life
keeps track of each Purchase Payment you make. The amount of the contingent
deferred sales charge depends upon the length of time since you made your
Purchase Payment. The charge is:
Number of Complete Contract
Years Since Receipt
of Purchase Payment Charge
0 7%
1 6%
2 5%
3 4%
4 3%
5 years or more 0%
However, after Allianz Life has had a Purchase Payment for 5 full years, there
is no charge when you withdraw that Purchase Payment. For purposes of the
contingent deferred sales charge, Allianz Life treats withdrawals as coming from
the oldest Purchase Payments first. Allianz Life does not assess the contingent
deferred sales charge on any payments paid out as Annuity Payments or as death
benefits. The contingent deferred sales charge compensates Allianz Life for
expenses associated with selling the Contract.
NOTE: For tax purposes, withdrawals are considered to have come from the last
money you put into the Contract. Thus, for
tax purposes, earnings are considered to come out first.
Partial Withdrawal Privilege. Each Contract year, on a cumulative basis (minus
any previous withdrawals you have made which were not subject to the contingent
deferred sales charge) you can make multiple withdrawals up to 10% of Purchase
Payments and no contingent deferred sales charge will be deducted from the 10%
you take out. Cumulative means that if you do not use the 10% in a year, you may
carry it over to the next year. (The 10% may be increased when the Contract is
issued to a charitable remainder trust). If you make a withdrawal of more than
the free amount, the amount over the 10% free amount will be subject to the
contingent deferred sales charge. If you make a total withdrawal, Allianz Life
will assess the contingent deferred sales charge with no reductions for the
Partial Withdrawal Privilege.
You may also elect to participate in the Systematic Withdrawal Program or the
Minimum Distribution Program. These programs allow you to make withdrawals
without the deduction of the contingent deferred sales charge under certain
circumstances. See "Access to Your Money" for a description of the Systematic
Withdrawal Program and the Minimum Distribution Program.
Waiver of Contingent Deferred Sales Charge Benefits. Under certain
circumstances, after the first Contract year, Allianz Life will permit you to
take your money out of the Contract without deducting a contingent deferred
sales charge:
1. if you become confined to a nursing home;
2. if you become terminally ill, which is defined as life expectancy of 12
months or less (a full withdrawal of the Contract will be required); or
3. if you become totally disabled for at least 90 consecutive days.
The waiver will not apply if any of the above conditions existed on the date
your Contract was issued. Also, after the first year, if you become unemployed
for at least 90 consecutive days, you can take up to 50% of your money out of
the Contract without incurring a contingent deferred sales charge. This benefit
is available only once during the life of the Contract. You may not use both
this benefit and the 10% Partial Withdrawal Privilege in the same Contract year.
These benefits vary from state to state or may not be available in your state.
(Check with your registered representative.)
Reduction or Elimination of the Contingent Deferred Sales Charge. Allianz Life
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. The commutation fee is a percentage of the amount liquidated
and is equal to:
Years Since Commutation
Income Date Factor
0 - 1 5%
1 - 2 4%
2 - 3 3%
3 - 4 2%
Over 4 1%
Transfer Fee
You can make 12 free transfers every year. We measure a year from the day we
issue your Contract. If you make more than 12 transfers a year, we will deduct a
transfer fee of $25 for each additional transfer. The transfer fee will be
deducted from the account (Variable Option or Fixed Account) from which the
transfer is made. If the entire amount in the account is transferred, then the
transfer fee will be deducted from the amount transferred. If the transfer is
from 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 withdrawal or as Annuity
Payments. When you make a withdrawal you are taxed on the amount of the
withdrawal that is earnings. For Annuity Payments, different rules apply. A
portion of each Annuity Payment you receive will be treated as a partial return
of your Purchase Payments and will not be taxed. The remaining portion of the
Annuity Payment will be treated as ordinary income. How the Annuity Payment is
divided between taxable and non-taxable portions depends upon the period over
which the Annuity Payments are expected to be made. Annuity Payments received
after you have received all of your Purchase Payments are fully includible in
income.
When a Non-Qualified Contract is owned by a non-natural person (e.g., a
corporation or certain other entities other than a trust holding the Contract as
an agent for a natural person), the Contract will generally not be treated as an
annuity for tax purposes. This means that the Contract may not receive the
benefits of Tax Deferral. Income may be taxed as ordinary income every year.
Qualified and Non-Qualified Contracts
If you purchase the Contract under a Qualified plan, your Contract is referred
to as a Qualified Contract. Examples of Qualified plans are: Individual
Retirement Annuities (IRAs), Tax-Sheltered Annuities (sometimes referred to as
403(b) contracts), and pension and profit-sharing plans, which include 401(k)
plans and H.R. 10 plans. If you do not purchase the Contract under a Qualified
plan, your Contract is referred to as a Non-Qualified Contract.
Multiple Contracts
The Code provides that multiple Non-Qualified annuity contracts which are issued
within a calendar year period to the same Contract Owner by one company or its
affiliates are treated as one annuity contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences, including more rapid taxation of the distributed amounts from such
combination of contracts. For purposes of this rule, contracts received in a
Section 1035 exchange will be considered issued in the year of the exchange. You
should consult a tax adviser prior to purchasing more than one Non-Qualified
annuity contract in any calendar year period.
Withdrawals - Non-Qualified Contracts
If you make a withdrawal from your Contract, the Code treats such a withdrawal
as first coming from earnings and then from your Purchase Payments. In most
cases, such withdrawn earnings are includible in income.
The Code also provides that any amount received under an annuity contract which
is included in income may be subject to a tax penalty. The amount of the penalty
is equal to 10% of the amount that is includible in income. Some withdrawals
will be exempt from the penalty. They include any amounts:
1. paid on or after the taxpayer reaches age 591/2;
2. paid after you die;
3. paid if the taxpayer becomes totally disabled (as that term is defined in the
Code);
4. paid in a series of substantially equal payments made annually (or more
frequently) for life or a period not exceeding life expectancy;
5. paid under an immediate annuity; or
6. which come from purchase payments made prior to August 14, 1982.
With respect to (4) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 591/2 or 5 years
from the date of the first Annuity Payment, then the tax for the year of the
modification is increased by the penalty tax that would have been imposed
without the exception, plus interest for the tax years in which the exception
was used. A partial liquidation (withdrawal) during the Payout Phase may result
in the modification of the series of Annuity Payments made after such
liquidation and therefore could result in the imposition of the 10% penalty tax
and interest for the period as described above unless another exception to the
penalty tax applies. You should obtain competent tax advice before you make any
liquidations from your Contract.
Withdrawals -- Qualified Contracts
The above information describing the taxation of Non-
Qualified Contracts does not apply to Qualified Contracts. There are special
rules that govern Qualified Contracts. A more complete discussion of withdrawals
from Qualified Contracts is contained in the Statement of Additional
Information.
Withdrawals -- Tax-Sheltered Annuities
The Code limits the withdrawal of amounts attributable to Purchase Payments made
pursuant to a salary reduction agreement by Contract Owners from Tax-Sheltered
Annuities. Withdrawals can only be made when a
Contract Owner:
1. reaches age 591/2;
2. leaves his/her job;
3. dies;
4. becomes disabled (as that term is defined in the Code); or
5. in the case of hardship. However, in the case of hardship, the Contract Owner
can only withdraw the Purchase Payments and not any earnings.
Diversification
The Code provides that the underlying investments for a variable annuity must
satisfy certain diversification requirements in order to be treated as an
annuity contract. Allianz Life believes that the Portfolios are being managed so
as to comply with the requirements.
Neither the Code nor the Internal Revenue Service
Regulations issued to date provide guidance as to the
circumstances under which you, because of the degree of control you exercise
over the underlying investments, and not Allianz Life, would be considered the
owner of the shares of the Portfolios. If you are considered the owner of the
shares, it will result in the loss of the favorable tax treatment for the
Contract. It is unknown to what extent under federal tax law Contract Owners are
permitted to select Portfolios, to make transfers among the Portfolios or the
number and type of Portfolios Contract Owners may select from without being
considered the owner of the shares. If any guidance is provided which is
considered a new position, then the guidance would generally be applied
prospectively. However, if such guidance is considered not to be a new position,
it may be applied retroactively. This would mean that you, as the owner of the
Contract, could be treated as the owner of the Portfolios.
Due to the uncertainty in this area, Allianz Life reserves the right to modify
the Contract in an attempt to maintain favorable tax treatment.
ACCESS TO YOUR MONEY
You can have access to the money in your Contract:
o by making a partial or total withdrawal;
o by receiving Annuity Payments; or
o when a death benefit is paid to your Beneficiary.
In general, withdrawals can only be made during the
Accumulation Phase. Under certain circumstances, you can take money out of the
Contract during the Payout Phase if you select Annuity Option 2, 4 or 6 (See
"Annuity Payments (The Payout Phase)").
When you make a complete withdrawal you will receive the value of the Contract
on the day the withdrawal request is received at the USAllianz Service Center:
o less any applicable contingent deferred sales charge,
o less any premium tax, and
o less any contract maintenance charge.
o (See "Expenses" for a discussion of the charges.)
Any partial withdrawal must be for at least $500. Unless you instruct Allianz
Life otherwise, the partial withdrawal will be made pro-rata from all the
Variable Options and the Fixed Account you selected. After you make a partial
withdrawal the value of your Contract must be at least $2,000.
We will pay the amount of any withdrawal from the Variable Options within seven
(7) days of when we receive your request in good order unless the Suspension of
Payments or Transfers provision is in effect (see below).
Income taxes, tax penalties and certain restrictions may apply to any withdrawal
you make.
There are limits to the amount you can withdraw from a Qualified plan referred
to as a 403(b) plan. For a more complete explanation see "Taxes" and the
discussion in the SAI.
Systematic Withdrawal Program
If the value of your Contract is at least $25,000, Allianz Life offers a program
which provides automatic monthly or quarterly payments to you each year. The
Systematic Withdrawal Program is subject to the Partial Withdrawal Privilege
which means that the total systematic withdrawals which you can make each year
without Allianz Life deducting a contingent deferred sales charge is limited to
10% of your Purchase Payments for that year. This is determined on the last
business day prior to the day your request is received. If the amount you take
out under the Systematic Withdrawal Program is less than the Partial Withdrawal
Privilege then the balance (in dollar value) is carried over to the following
year. All systematic withdrawals will be made on the 9th day of the month unless
that day is not a business day. If it is not, then the withdrawal will be made
the previous business day.
Income taxes, tax penalties and certain restrictions may apply to systematic
withdrawals.
Minimum Distribution Program
If you own a Contract that is an Individual Retirement Annuity (IRA), you may
select the Minimum Distribution Program. Under this program, Allianz Life will
make payments to you from your Contract that are designed to meet the applicable
minimum distribution requirements imposed by the Code for IRAs. If the value of
your Contract is at least $25,000, Allianz Life will make payments to you on a
monthly or quarterly basis. If the value of your Contract is less than $25,000
payments can only be made annually. The payments will not be subject to the
contingent deferred sales charge. However, they will be subject to the limits of
the 10% Partial Withdrawal Privilege.
You cannot participate in the Systematic Withdrawal Program and the Minimum
Distribution Program at the same time.
Suspension of Payments or Transfers
Allianz Life may be required to suspend or postpone payments for withdrawals or
transfers for any period when:
1. the New York Stock Exchange is closed (other than
customary weekend and holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of the Portfolio shares is
not reasonably practicable or Allianz Life cannot reasonably value the Portfolio
shares;
4. during any other period when the Securities and Exchange Commission, by
order, so permits for the protection of Contract Owners.
Allianz Life has reserved the right to defer payment for a withdrawal or
transfer from the Fixed Account for the period permitted by law but not for more
than six months.
PERFORMANCE
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Allianz Life periodically advertises performance of the
Variable Options. Allianz Life will calculate performance by determining the
percentage change in the value of an Accumulation Unit by dividing the increase
(decrease) for that unit by the value of the Accumulation Unit at the beginning
of the period. This performance number reflects the deduction of the insurance
charges and the Portfolio expenses. It may not reflect the deduction of any
applicable contingent deferred sales charge and contract maintenance charge. The
deduction of any applicable contract maintenance charge and contingent deferred
sales charges would reduce the percentage increase or make greater any
percentage decrease. Any advertisement will also include average annual total
return figures which reflect the deduction of the insurance charges, contract
maintenance charge, contingent deferred sales charges and the expenses of the
Portfolios.
Allianz Life may also advertise cumulative total return information. Cumulative
total return is determined the same way except that the results are not
annualized. Performance information for the underlying Portfolios may also be
advertised; see the 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.
Guaranteed Minimum Protection Benefits (GMPB) -- Death Benefit Protection
The annuity provides a guaranteed death benefit (in addition to the guaranteed
annuity income protection benefit). The amount of the death benefit depends upon
whether you select the Traditional GMPB or the Enhanced GMPB. The mortality and
expense risk charge is higher for Contracts with the Enhanced GMPB. The
Traditional and Enhanced GMPB only apply to Contracts owned for the benefit of
an individual.
The Traditional Guaranteed Minimum
Protection Benefit
If you select the Traditional GMPB, the death benefit, less any applicable
premium tax, will be the greater of:
o the value of your Contract at the end of the business day when all claim
proofs and payment election forms are received by Allianz Life at the USAllianz
Service Center; or
o the guaranteed minimum death benefit which is equal to the Purchase Payments
you have made, reduced by each withdrawal's percentage of the Contract value
withdrawn (including any contingent deferred sales charges paid on the
withdrawals).
The Enhanced Guaranteed Minimum
Protection Benefit
If you select the Enhanced GMPB, the death benefit will be the greater of 1 or 2
below, less any applicable premium tax:
1. the value of your Contract at the end of the business day when all claim
proofs and payment election forms are received by Allianz Life at the USAllianz
Service Center; or
2. the enhanced guaranteed minimum death benefit (Enhanced GMDB) as described
below and determined as of the date of death.
The Enhanced GMDB is the greater of A or B below:
A. 5% Annual Increase Amount
On the date your Contract is issued: the 5% Annual Increase Amount is equal to
your initial Purchase Payment.
On each business day other than a Contract anniversary: the 5% Annual Increase
Amount is equal to its value on the immediately preceding business day reduced
by the percentage of any Contract value you withdraw (including any contingent
deferred sales charge) and increased by any additional Purchase Payments you
make.
On every Contract Anniversary: the 5% Annual Increase Amount is equal to its
value on the immediately preceding business day increased by 5% prior to your
81st birthday, reduced by the percentage of any Contract value you withdraw
(including any contingent deferred sales charge), increased by any additional
Purchase Payments you make.
B. Greatest Anniversary Value. The anniversary value is equal to the value of
your Contract on a Contract anniversary, reduced by the percentage of any
Contract value you withdraw
(including any contingent deferred sales charge) since that Contract
anniversary. When determining this benefit, Allianz Life will not take into
consideration any Contract anniversaries occurring on or after your 81st
birthday or date of death.
The Enhanced GMDB may not be available in your state. Check with your registered
representative regarding availability.
Please refer to the applicable endorsements to your Contract for the specific
terms and conditions of the death benefits.
The Appendix contains examples of how the guaranteed death benefits are
calculated. The amounts in the examples are purely hypothetical and are for
illustrative purposes only.
If you do not receive either the Traditional or the Enhanced GMDB (either alone
or with the Enhanced GMIB), the death benefit will be: the current value of your
Contract, less any taxes owed. This amount is determined as of the day that all
claim proofs and payment election forms are received at the USAllianz Service
Center.
Any part of the death benefit amount that had been invested in the Variable
Options remains in the Variable Options until distribution begins. From the time
the death benefit is determined until we make a complete distribution, any
amount in the Variable Options will be subject to investment risk which will be
borne by the Beneficiary.
If you have a Joint Owner, the age of the oldest Contract Owner will be used to
determine the guaranteed minimum death benefit. If the Contract is owned by a
non-natural person, then all references to you mean the Annuitant.
In the case of Joint Owners, if a Joint Owner dies, the surviving Joint Owner
will be considered the Beneficiary. Any other Beneficiary designation on record
at the time of death will be treated as a contingent Beneficiary. Joint Owners
must be spouses (this requirement may not apply in certain states).
A Beneficiary must request that the death benefit be paid under one of the death
benefit options described below. If the Beneficiary is the spouse of the
Contract Owner, he/she can choose to continue the Contract in his/her own name
at the then current Contract value, or if greater, the death benefit value. If a
lump sum payment is elected and all the necessary requirements, including any
required tax consent from some states, are met, the payment will be made within
7 days. Payment of the death benefit may be delayed pending receipt of any
applicable tax consents and/or forms from a state.
Option A: lump sum payment of the death benefit. Allianz Life will not deduct
the contract maintenance charge at the time of a complete withdrawal if the
distribution is due to death.
Option B: the payment of the entire death benefit within
5 years of the date of the Contract Owner's or any Joint Owner's death. Allianz
Life will assess the contract maintenance charge to each Beneficiary on each
Contract anniversary.
Option C: payment of the death benefit under an Annuity Option over the lifetime
of the Beneficiary or over a period not extending beyond the life expectancy of
the Beneficiary. Distribution under this option must begin within one year of
the date of the Contract Owner's or any Joint Owner's death. The contract
maintenance charge will continue to be assessed to each Beneficiary's share pro
rata over the payments.
Any portion of the death benefit not applied under an Annuity Option within one
year of the date of the Contract Owner's death must be distributed within five
years of the date of death.
If the Beneficiary wants to receive the payment other than in a lump sum, he/she
may only make such an election during the 60 day period after the day that the
lump sum first became payable by Allianz Life.
If you (or any Joint Owner) die during the Payout Phase and you are not the
Annuitant, any payments which are remaining under the Annuity Option selected
will continue at least as rapidly as they were being paid at your death. If you
die during the Payout Phase, the Beneficiary becomes the Contract Owner.
Death of Annuitant
If the Annuitant, who is not a Contract Owner or Joint Owner, dies during the
Accumulation Phase, you can name a new Annuitant, subject to our underwriting
rules at that time. If you do not name a new Annuitant within 30 days of the
death of the Annuitant, you will become the Annuitant. However, if the Contract
Owner is a non-natural person (e.g., a corporation), then the death of the
Annuitant will be treated as the death of the Contract Owner, and a new
Annuitant may not be named.
If the Annuitant dies after Annuity Payments have begun, the remaining amounts
payable, if any, will be as provided for in the Annuity Option selected. The
remaining amounts payable will be paid to the Contract Owner at least as rapidly
as they were being paid at the Annuitant's death.
OTHER INFORMATION
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Allianz Lif
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 Variable
Options (also known as sub-accounts). Each Variable Option invests in one
Portfolio. The obligations under the Contracts are obligations of Allianz Life.
The assets of the Separate Account are held in Allianz Life's name on behalf of
the Separate Account and legally belong to Allianz Life. However, those assets
that underlie the variable Contracts are not chargeable with liabilities arising
out of any other business Allianz Life may conduct. All the income, gains and
losses (realized or unrealized) resulting from these assets are credited to or
charged against the Contracts and not against any other contracts Allianz Life
may issue.
Distribution
USAllianz Investor Services, LLC (formerly NALAC Financial Plans, LLC), 1750
Hennepin Avenue, Minneapolis, Minnesota 55403, acts as the distributor of the
Contracts. USAllianz Investor Services LLC, is a wholly-owned subsidiary of
Allianz Life.
Commissions will be paid to broker/dealers who sell the Contracts.
Broker/dealers will be paid commissions up to 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....................................2
Experts..............................................2
Legal Opinions.......................................2
Distributor..........................................2
Reduction or Elimination of the
Contingent Deferred Sales Charge...................2
Calculation of Performance Data......................3
Federal Tax Status...................................7
Annuity Provisions..................................12
Mortality and Expense Risk Guarantee................13
Financial Statements 13
Appendix
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Traditional Guaranteed Minimum Protection Benefit -- Examples
EXAMPLE 1
Assume you make one Purchase Payment of $100,000 on January 1, 2000, and you do
not make any withdrawals during the first seven years. Furthermore, assume that
your Contract value history unfolds as follows:
1/1/2001 $106,500 1/1/2005 $105,000
1/1/2002 $102,000 1/1/2006 $106,300
1/1/2003 $ 98,600 1/1/2007 $109,100
1/1/2004 $101,700
In this case your Traditional Guaranteed Minimum Protection Benefit (GMPB) would
be calculated on the following dates as follows:
On January 1, 2003:
1) Purchase Payments Paid
Purchase Payment made on
January 1, 2000 $100,000
2) Contract value
Equals: $ 98,600
Traditional GMPB equals: MAX [$100,000.00, $98,600.00]
= $100,000.00
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DEATH BENEFIT
o Your Beneficiary would be guaranteed a death benefit payment of at least
$100,000.00 for death occurring between January 1, 2003, and December 31, 2003.
ANNUITY INCOME BENEFIT
o If you applied your Contract value to an Annuity Option on January 1, 2003,
the payment would be based on a Contract value of $ 98,600.00 applied to current
rates since the Traditional GMPB does not apply before the 7th Contract
anniversary. On January 1, 2007:
1) Purchase Payment Paid
Purchase Payment made
on January 1, 2000 $100,000
2) Contract Value
Equals: $109,100
Traditional GMPB equals: MAX [$100,000.00, $109,100]
= $109,100.00
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DEATH BENEFIT
o Your Beneficiary would receive a death benefit payment of $109,100.00 if it
occurred on January 1, 2007, and at least $100,000 for death occurring between
January 2, 2007, and December 31, 2007, regardless of fund performance.
ANNUITY INCOME BENEFIT
o If you applied your Contract value to an Annuity Option on January 1, 2007,
the guaranteed fixed payment would be based on $109,100.00 applied to guaranteed
rates. The current Contract value applied to current rates will result in a
greater initial payment.
EXAMPLE 2
Same assumptions as Example 1 except you make a partial withdrawal of $6,000 on
January 1, 2006, which altered the anniversary Contract value history as
follows:
1/1/2006 $100,300
1/1/2007 $102,942
On January 1, 2003: Same calculations as Example 1.
On January 1, 2007:
1) Purchase Payments Paid
Purchase Payment made
on January 1, 2000 $100,000
Partial withdrawal adjustment x [1 - (6,000/106,300)]
Equals: $ 94,355.60
2) Contract Value
Equals: $102,942
Traditional GMPB equals: MAX [$94,355.60, $102,942.00]
= $102,942.00
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DEATH BENEFIT
o Your Beneficiary would receive a death benefit payment of $102,942.00 if it
occurred on January 1, 2007 and at least $94,355.60 for death occurring between
January 2, 2007 and December 31, 2007 regardless of fund performance.
ANNUITY INCOME BENEFIT
o If you applied your Contract value to an Annuity Option on January 1, 2007,
the guaranteed fixed payment would be based on $102,942.00 applied to guaranteed
rates. The current Contract value applied to current rates will result in a
greater initial payment.
Enhanced Guaranteed Minimum Protection Benefit -- Examples
EXAMPLE 1
Assume you make one Purchase Payment of $100,000 on January 1, 2000, and you did
not make a withdrawal during the first seven years. Furthermore, assume that
your Contract value history (occurring prior to age 81) unfolds as follows:
1/1/2001 $106,500 1/1/2005 $144,800
1/1/2002 $114,000 1/1/2006 $142,900
1/1/2003 $110,100 1/1/2007 $138,300
1/1/2004 $125,500
In this case your Enhanced Guaranteed Minimum Protection Benefit (GMPB) would be
calculated on the following dates as follows:
On January 1, 2003:
1) 5% Annual - Increase Amount
Purchase Payment made on
January 1, 2000 $100,000
5% interest accumulation factor x [(1.05)(1.05)(1.05)]
Equals: $115,762.50
2) Greatest Anniversary Value
Maximum of MAX [$106,500, $114,000, $110,100]
Equals: $114,000.00
Traditional GMPB equals: MAX [$115,762.50, $114,000.00]
= $115,762.50
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DEATH BENEFIT
o If you elected the optional Enhanced GMPB, your Beneficiary would be
guaranteed a death benefit payment of at least $115,762.50 for death occurring
between January 1, 2003, and December 31, 2003.
ANNUITY INCOME BENEFIT
o If you applied your Contract value to an Annuity Option on January 1, 2003,
the payment would be based on a Contract value of $110,100.00 applied to current
rates since the Enhanced GMPB does not apply before the 7th Contract
anniversary. On January 1, 2007:
1) 5% Annual - Increase Amount
Purchase Payment made on January 1, 2000 $100,000
5% interest accumulation factor x [(1.05)(1.05)(1.05)(1.05)(1.05)
(1.05)(1.05)]
Equals: $140,710.04
2) Greatest Anniversary Value
Maximum of MAX [$106,500, $114,000, $110,100,
$125,500, $144,800, $142,900, $138,300]
Equals $144,800.00
Enhanced GMPB equals: MAX [$140,710,04, $144,800.00]
= $144,800.00
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DEATH BENEFIT
If you elected the optional Enhanced GMPB, your Beneficiary would be guaranteed
a death benefit payment of at least $144,800.00 for death occurring between
January 1, 2007, and December 31, 2007.
ANNUITY INCOME BENEFIT
If you applied your Contract value to an Annuity Option on January 1, 2007, the
guaranteed fixed payment would be based on $144,800.00 applied to guaranteed
rates. You would receive the greater of this guaranteed fixed payment or the
current fixed payment based on $138,300.00 applied to current rates.
EXAMPLE 2
Same assumptions as Example 1 except you make a partial withdrawal of $12,000 on
January 1, 2006, which altered the anniversary Contract value history as
follows:
1/1/2006 $130,900
1/1/2007 $126,686
On January 1, 2003:
Same calculations as Example 1 On January 1, 2007:
1) 5% Annual - Increase Amount
Purchase Payment made on January 1, 2000 $100,000
5% accumulation factor to 1/1/2006 x[(1.05)(1.05)(1.05)(1.05)(1.05)(1.05)]
Equals: $134,009.56
Partial withdrawal adjustment x[1 - (12,000/142,900)]
Equals: $122,756.13
5% accumulation factor to 1/1/2007 x 1.05
Equals: $128,893.94
2) Greatest Anniversary Value
Maximum to 1/1/2006 MAX [$106,500, $114,000, $110,100,
$125,500, $144,800, $142,900]
Equals: $144,800
Partial withdrawal adjustment x [1 - (12,000/142,900)]
Equals: $132,640.45
Maximum to 1/1/2007 MAX [$132,640.45, $126,686.00]
Equals: $132,640.45
Enhanced GMPB equals: MAX [$128,893.94, $132,640.45]
= $132,640.45
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DEATH BENEFIT
o If you elected the optional Enhanced GMPB, your Beneficiary would be
guaranteed a death benefit payment of at least $132,640.45 for death occurring
between January 1, 2007, and December 31, 2007.
ANNUITY INCOME BENEFIT
o If you applied your Contract value to an Annuity Option on January 1, 2007,
the guaranteed fixed payment would be based on $132,640.45 applied to guaranteed
rates. You would receive the greater of this guaranteed fixed payment or the
current fixed payment based on $126,686.00 applied to current rates.
