Prospectus Supplement Dated January 2, 1996 for
Lincoln National Variable Annuity Account H
(American Legacy II)
This document is a Supplement to the Prospectus dated April 1, 1995.
PAGE ONE (1), PARAGRAPH SIX (4); PAGE FOUR (4) UNDER THE TEXT LABELED,
"WHAT ARE MY INVESTMENT CHOICES"; AND PAGE SEVEN (7) UNDER THE
TEXT LABELED, "DESCRIPTION OF THE SERIES", OF THE CURRENT PROSPECTUS:
These sections are hereby amended to add the bond Fund to the listing of
portfolios within the American Variable Insurance Series (AVIS). As a
result, the number of investment options (and subaccounts) within AVIS has
increased from seven to eight.
TO BE INSERTED ON PAGE THREE (3) OF THE PROSPECTUS AFTER THE TEXT
LABELED, "Variable Account H Annual Expenses":
BA
Mortality and Expense Risk Fees 1.25%
Account Fees and Expenses 0.10
TOTAL ACCOUNT H ANNUAL EXPENSES 1.35%
BA = Bond Sub-Account
TO BE INSERTED ON PAGE THREE (3) OF THE CURRENT PROSPECTUS AFTER
THE TEXT LABELED, "Annual Expenses of the Funds":
BF*
Management Fees 0.60%
Other Expenses 0.05
TOTAL FUND ANNUAL EXPENSES 0.65%
BF = Bond Fund
* These expenses are estimated amounts for the current fiscal year
ended November 30,
1995.
TO BE INSERTED ON PAGE FOUR (4) OF THE CURRENT PROSPECTUS AFTER
THE TEXT LABELED, "Examples (reflecting expenses of both the Variable Account
and ofthe Funds)":
A. If you surrender your contract at the end of the applicable time
period, you would pay the following expenses (1) on a $1,000
investment, assuming a 5% annual return (2)
on assets:
1 Year* 3 Years*
Bond Fund $80 $113
B. If you do not surrender your contract (or if you annuitize) at the
end of the applicable time period, you would pay the following
expenses (1) on a $1,000 investment,
assuming a 5% annual return (2) on assets:
1 Year* 3 Years*
Bond Fund $20 $63
* These expenses are estimated amounts for the fiscal year ended
November 30, 1995.
TO BE INSERTED ON PAGE EIGHT (8) OF THE CURRENT PROSPECTUS AFTER
THE PARAGRAPH WHICH BEGINS WITH "High-Yield Bond Fund":
The Bond Fund seeks a high level of current income as is consistent with the
preservation of capital by investing in a broad variety of fixed income
securities including: marketable corporate debt securities, loan
participations, U.S. Government Securities, mortgage-related securities, other
asset-backed securities and cash or money market instruments.
PLEASE NOTE: AS OF THE DATE OF THIS PROSPECTUS, THIS FUND WILL NOT
BE AVAILABLE IN CALIFORNIA, CONNECTICUT, DISTRICT OF COLUMBIA,
MASSACHUSETTS, MONTANA, NEW HAMPSHIRE, NORTH DAKOTA, SOUTH
CAROLINA, AND VERMONT UNTIL NECESSARY REGULATORY APPROVALS
ARE OBTAINED IN THOSE STATES. PLEASE CONSULT YOUR INVESTMENT
DEALER FOR CURRENT INFORMATION ABOUT THE BOND FUND'S
AVAILABILITY.
PLEASE KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS FOR FUTURE
REFERENCE.<PAGE>
THE AMERICAN LEGACY
LINCOLN NATIONAL
VARIABLE ANNUITY ACCOUNT H
INDIVIDUAL VARIABLE ANNUITY CONTRACTS ISSUED BY
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
1300 South Clinton Street, Fort Wayne, Indiana 46802
Telephone: 1-800-942-5500
The individual flexible premium deferred variable annuity contract described in
this Prospectus (Contract or Variable Annuity Contract) is designed and
offered by The Lincoln National Life Insurance Company (Lincoln Life). The
Contract can be used in both qualified and non-qualified plans. It is
offered for use in connection with the following retirement plans qualified
for special tax treatment under the Internal Revenue Code of 1986 as amended
(Code): (1) public school systems and certain tax-exempt organizations
[403(b)]; (2) qualified corporate employee pension and profit-sharing trusts
and qualified annuity plans; (3) corresponding plans of self-employed
individuals (H.R. 10 or Keogh); (4) individual retirement annuities (IRA);
(5) deferred compensation plans (457); and (6) simplified employee pension
plans. The Contract is also offered for use in connection with plans
established by persons who are not entitled to participate in one of the
aforementioned plans (non-qualified plans).
Type of contract being offered--this Prospectus offers an individual
flexible premium deferred variable annuity contract.
The Contract provides for the accumulation of Contract Value and payment of
annuity benefits on a variable or fixed basis, or a combination variable and
fixed basis. Payment of annuity benefits commences at a future date no later
than the first day of the next month after the Annuitant's 85th birthday as
selected by the Contract Owner (the Annuity Commencement Date). In the event
of the death of the Annuitant prior to the Annuity Commencement Date,
the greater of the value of the Contract Owner's account or the Guaranteed
Minimum Death Benefit (GMDB) will be paid to the Contract Owner's designated
Beneficiary. (See "Death Benefit Prior to Annuity Commencement Date.")
MINIMUM INITIAL PURCHASE PAYMENT: $1,500 for Non-Qualified Contract
or 403(b) transfers/rollover
$ 300 for Qualified Contract
MINIMUM SUBSEQUENT PURCHASE PAYMENTS: $ 25 per payment, subject to a
$ 300 annual minimum
All investments (Purchase Payments) for benefits on a variable basis will be
allocated to Lincoln National Variable Annuity Account H (the Variable
Account), a unit investment trust, which is divided into seven separate
sub-accounts. The Variable Account will invest the Purchase Payments (at
net asset value) in shares of one or more specified Funds: the Growth
Fund, the International Fund, the Growth-Income Fund, the Asset Allocation
Fund, the High-Yield Bond Fund, the U.S. Government/AAA-Rated Securities
Fund, and the Cash Management Fund of American Variable Insurance Series,
referred to as "the Fund(s)," as directed by the Contract Owner. The value
of a Contract prior to the Annuity Commencement Date, and the amount of the
variable annuity payments thereafter, will depend upon the investment results
of the Fund(s) selected. Investments in these Funds are neither insured nor
guaranteed by the U.S. Government or any other entity or person.
Purchase Payments for benefits on a fixed basis will be allocated to the
fixed portion of the Contract, part of the general account of Lincoln Life.
This Prospectus describes only the elements of the Contracts pertaining to
the Variable Account except where reference to the fixed portion of the
Contract is specifically made.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS SETS FORTH CONCISELY THE INFORMATION ABOUT THE
VARIABLE ACCOUNT THAT A PROSPECTIVE INVESTOR OUGHT TO KNOW
BEFORE INVESTING. PLEASE READ IT CAREFULLY AND RETAIN IT FOR
FUTURE REFERENCE.
ADDITIONAL INFORMATION ABOUT THE VARIABLE ACCOUNT HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THAT
STATEMENT OF ADDITIONAL INFORMATION (SAI), DATED APRIL 1, 1994, HAS
BEEN INCORPORATED BY REFERENCE INTO THIS PROSPECTUS AND WILL BE
PROVIDED ON REQUEST AND WITHOUT CHARGE.
FOR A COPY, COMPLETE AND MAIL THE ENCLOSED CARD, OR CALL
1-800-942-5500, EXTENSION 4912. A TABLE OF CONTENTS FOR THE SAI
APPEARS ON THE LAST PAGE OF THIS PROSPECTUS.
THIS PROSPECTUS MUST BE ACCOMPANIED OR PRECEDED BY A CURRENT
PROSPECTUS OF THE AMERICAN VARIABLE INSURANCE SERIES, WHICH
SHOULD ALSO BE READ CAREFULLY BEFORE INVESTING AND RETAINED FOR
FUTURE REFERENCE.
THIS PROSPECTUS IS DATED APRIL 1, 1995
TABLE OF CONTENTS
PAGE PAGE
SPECIAL TERMS 3 FEDERAL TAX STATUS 27
EXPENSE TABLE 5 VOTING RIGHTS 29
SYNOPSIS 7 DISTRIBUTION OF CONTRACTS 30
CONDENSED FINANCIAL RETURN PRIVILEGE 30
INFORMATION 10 RESTRICTIONS UNDER THE TEXAS
INVESTMENT RESULTS 11 OPTIONAL RETIREMENT PROGRAM 31
FINANCIAL STATEMENTS STATE REGULATION 31
THE LINCOLN NATIONAL LIFE RECORDS AND REPORTS 31
INSURANCE COMPANY 12 LEGAL PROCEEDINGS 31
VARIABLE ACCOUNT 12 OTHER INFORMATION 31
INVESTMENTS OF THE TABLE OF CONTENTS OF THE
VARIABLE ACCOUNT 12 STATEMENT OF ADDITIONAL
CHARGES AND OTHER INFORMATION (SAI)
DEDUCTIONS 15
THE CONTRACTS 18
ANNUITY PAYMENTS 25
SPECIAL TERMS
As used in this Prospectus, the following terms have the indicated meanings:
ACCOUNT OR VARIABLE ACCOUNT: The segregated investment account in which The
Lincoln National Life Insurance Company sets aside and invests the assets
attributable to the Variable Annuity Contract offered by this Prospectus.
ACCUMULATION UNIT: A unit of measurement used to calculate the Contract
Value prior to the Annuity Commencement Date. See "Allocation of Purchase
Payments" below.
ADVISER OR INVESTMENT ADVISER: Capital Research and Management Company,
which provides investment management services to the Series. See "Investment
Adviser" below.
ANNUITANT: The person on whose life or life expectancy the payments are based.
ANNUITY COMMENCEMENT DATE: The date which the Contract Owner has designated
for commencement of annuity payments.
ANNUITY OPTION: An optional form of payment of the annuity provided for under
the Contract. See "Annuity Payments" below.
ANNUITY UNIT: A unit of measurement used after the Annuity Commencement Date to
calculate
the amount of annuity payments. See "Annuity Payments" below.
BENEFICIARY: The person designated by the Contract Owner to receive the Death
Benefit, if any, payable upon death of the Annuitant.
CASH SURRENDER VALUE: Upon surrender, the Contract Value less any applicable
charges, fees and taxes.
CODE: The Internal Revenue Code of 1986, as amended.
CONTRACT: The agreement between Lincoln Life and the Contract Owner providing
a variable annuity for an Annuitant who is named in the Contract (also
referred to in this Prospectus as the Variable Annuity Contract).
CONTRACT OWNER: The Annuitant (or other designated person), except in cases
where a Contract is issued to the trustee of a trust or to a custodian of a
qualified pension or profit-sharing plan under Section 401(a) of the Code or
of an Individual Retirement Annuity under Section 408 of the Code, or where
a Contract is issued in connection with a deferred compensation plan pursuant to
Section 457 of the Code. In cases where the Contract is issued to such a
trustee or custodian, as defined above, the Contract Owner is the trustee or
custodian.
CONTRACT VALUE: The sum of the values of all the Accumulation Units and all
monies held in the general account attributable to a Contract at a given time.
CONTRACT YEAR: Each year commencing with the date of issue of the Contract and
with each Contract anniversary thereafter.
DEATH BENEFIT: The amount payable to the Contract Owner's designated
Beneficiary upon death of the Annuitant prior to the Annuity Commencement
Date. See "Death Benefit Prior to Annuity Commencement Date" below.
DEPOSITOR: The Lincoln National Life Insurance Company.
HOME OFFICE: The principal office of Lincoln Life, located at 1300 South
Clinton Street, Fort Wayne, Indiana 46802.
FUND(S): The underlying investment options available in the American Variable
Insurance Series.
Lincoln Life: The Lincoln National Life Insurance Company.
PURCHASE PAYMENTS: Amounts paid to purchase an annuity by or on behalf of an
Annuitant.
SERIES: American Variable Insurance Series (the "Series"), the fund in which
Purchase Payments are invested.
SUB-ACCOUNT: That portion of the Variable Account which pertains to
investments in accumulation Units of a particular Fund.
VALUATION DATE: Each day that the New York Stock Exchange is open for
business. See "The Contracts--Valuation Date" below.
VALUATION PERIOD: The period commencing at the close of business on a
particular Valuation Date and ending at the close of business on the next
succeeding Valuation Date.
EXPENSE TABLE
CONTRACT OWNER TRANSACTION EXPENSES:
Contingent Deferred Sales Charge
(as a percentage of Purchase Payments): 6%
(Note: This charge may be waived in certain cases. See "Contingent Deferred
Sales Charges" below.)
Reduced Contingent Deferred Sales Charges Over Time
The contingent deferred sales charge percentage listed above is the
MAXIMUM percentage charged as a percentage of Purchase Payments withdrawn.
The later a redemption occurs, the lower the contingent deferred sales
charge with respect to those withdrawals. (See the table under "Contingent
Deferred Sales Charges," below.)
___________________________________________________________________________
ANNUAL CONTRACT FEE: $35*
*This is a single charge assessed against Contract Value on the last
Valuation Date of each Contract Year and upon full surrender, it is NOT a
separate charge for each sub-account.
___________________________________________________________________________
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
VARIABLE ACCOUNT H ANNUAL EXPENSES
(as a percentage of average
account value for each
sub-account): GA* IA GIA AAA HBA G/A CMA
Mortality and Expense Risk Fees 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25%
Account Fees and Expenses .10 .10 .10 .10 .10 .10 .10
TOTAL ACCOUNT H ANNUAL EXPENSES 1.35% 1.35% 1.35% 1.35% 1.35% 1.35% 1.35%
*The symbols shown represent these sub-accounts: GA=Growth Sub-Account;
IA=International Sub-Account; GIA=Growth-Income Sub-Account; AAA=Asset Allocation Sub-Account;
HBA=High-Yield Bond Sub-Account; G/A=U.S. Government/AAA-Rated Sub-Account;
CMA=Cash Management Sub-Account
</TABLE>
_________________________________________________________________________
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ANNUAL EXPENSES OF THE FUNDS
(as a percentage of each Fund's
average net assets): GF* IF GIF AAF HBF GAF CMF
Management Fees .46% .69% .44% .50% .51% .51% .46%
Other Expenses .03% .11% .03% .03% .03% .03% .03%
.49% .80% .47% .53% .54% .54% .49%
*The symbols shown represent these Funds: GF=Growth Fund; IF=International
Fund; GIF=Growth-Income Fund; AAF=Asset Allocation Fund; HBF=High-Yield Bond
Fund; GAF=U.S. Government/AAA-Rated Securities Fund; CMF=Cash Management Fund.
</TABLE>
EXAMPLES (reflecting expenses both of the Variable Account and of the Funds):
A. If you surrender your contract at the end of the applicable time period,
you would pay the following expenses(1) on a $1,000 investment, assuming 5%
annual return(2) on assets:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS(4)
GF(3) $79 $108 $129 $215
IF 82 117 145 247
GIF 79 107 128 213
AAF 79 109 131 219
HBF 79 109 132 220
GAF 79 109 132 220
CMF 79 108 129 215
</TABLE>
B. If you do not surrender your contract (or if you annuitize), you would
pay the following expenses(1) on a $1,000 investment, assuming 5% annual
return(2) on assets:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS(4)
GF(3) $19 $58 $ 99 $215
IF(4) 22 67 115 247
GIF 18 57 98 213
AAF(4) 19 59 101 219
HBF 19 59 102 220
GAF 19 59 102 220
CMF 19 58 99 215
</TABLE>
(1) These expenses, calculated as mandated by the Securities and Exchange
Commission, reflect the Annual Contract Fee as the ratio of the total contract
fees collected in the most recent fiscal year to the total average net assets
of the Account.
(2) Use of this assumed return is mandated by the Securities and Exchange
Commission and is not intended to be an illustration of past or future
investment results.
(3) Key: GF=Growth Fund; IF=International Fund; GIF=Growth-Income Fund;
AAF=Asset Allocation Fund; HBF=High-Yield Bond Fund; GAF=U.S.
Government/AAA-Rated Securities Fund; CMF=Cash Management Fund
(4) The average expenses paid over a 10-year period would be approximately
$22-$25 per year per Contract.
All of the figures provided under the sub-heading "Annual Expenses of the
Funds" and part of the data used to produce the figures in the "Examples"
were supplied by the underlying portfolio company (American Variable
Insurance Series) through the Variable Account's principal underwriter,
American Funds Distributors, Inc.
This table is provided to assist the Contract Owner in understanding the
various costs and expenses that he or she will bear directly or indirectly.
The table reflects expenses both of the Variable Account and of the seven
Funds. For more complete descriptions of the various costs and expenses
involved, see "Charges and Other Deductions" in this Prospectus, and "Fund
Organization and Management" in the Prospectus for the Funds. Premium taxes
may also be applicable, although they do not appear in the table. THE
"Examples" SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES; ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN. This
table is unaudited.
SYNOPSIS
WHAT TYPE OF CONTRACT AM I BUYING?--It is an annuity contract issued by Lincoln
Life. It may provide for a fixed annuity and/or a variable annuity. This
Prospectus is intended to provide disclosure only about the variable portion
of the Contract. (See "The Contracts," below.)
WHAT IS THE VARIABLE ACCOUNT?--It is a segregated asset account established
under Indiana insurance law, and registered with the Securities and Exchange
Commission as a unit investment trust. The assets in the Variable Account
are allocated to one or more Sub-Accounts, according to the investment
preference of the Contract Owner, and those assets are not chargeable with
liabilities arising out of any other business which Lincoln Life may conduct.
(See "Variable Account," below.)
WHAT ARE MY INVESTMENT CHOICES?--Through its various Sub-Accounts, the
Variable Account uses your Purchase Payments to purchase Series shares, at
your direction, in one or more of the following investment funds of the
American Variable Insurance Series (Series): Growth Fund, International Fund,
Growth-Income Fund, Asset Allocation Fund, High-Yield Bond Fund, U.S.
Government/AAA-Rated Securities Fund, and Cash Management Fund. In turn,
each fund holds a portfolio of securities consistent with its own particular
investment policy. (See "Investments of the Variable Account--Description of
the Series," below.)
WHO INVESTS MY MONEY?--The investment adviser for the Series is Capital Research
and Management Company (CRMC), Los Angeles, California. CRMC is a
long-established investment management organization, and is registered as an
investment adviser with the Securities and Exchange Commission. (See
"Investments of the Variable Account--Investment Adviser," below.)
HOW DOES THE CONTRACT WORK?--Once your application is approved by Lincoln
Life, you will be issued an individual annuity Contract. During the
Accumulation Period, your Purchase Payments will buy Accumulation Units under
the Contract. Should you decide to annuitize (that is, change your contract
to a payout mode rather than an accumulation mode), your Accumulation Units
will be converted to Annuity Units. Your annuity check will be based upon
the number of Annuity Units to which you became entitled at the time you
decided to annuitize, and the value of each unit on the Valuation Date.
(See "The Contracts," below.)
WHAT CHARGES ARE ASSOCIATED WITH THIS CONTRACT?--At the end of each
contract year and at time of surrender, Lincoln Life will deduct $35 from
your Contract Value as a maintenance charge.
Should you decide to withdraw Contract Value before your Purchase Payments
have been in your account for a certain minimum period, you will incur a
contingent deferred sales charge of anywhere from 1% to 6%, depending upon
how many years those payments have been on deposit. (Note: This sales charge
is not assessed upon annuitization, or upon the death or total and permanent
disability occurs subsequent to the Contract effective date prior to the
65th birthday, of the annuitant.)
If your state assesses a premium tax with respect to your Contract, then at the
time the tax is incurred (or at such other time as Lincoln Life may choose),
Lincoln Life will deduct those amounts from Purchase Payments or Contract
Value, as applicable. (See "Charges and Other Deductions--Deductions for
Premium Taxes" below.)
Lincoln assesses a charge of .10% against the daily net asset value of the
Variable Account as a whole - including that portion of the Account
attributable to your Purchase Payments. In addition, an annual charge of
.80% of net asset value is made for the mortality risk guarantees given in the
Contract, and .45% is made for administrative expense risks assumed by Lincoln
Life. (For a complete discussion of the charges associated with the
Contract, see "Charges and Other Deductions," below.)
American Variable Insurance Series pays a fee to its investment adviser,
CRMC, based upon the average daily net asset value of each fund in the
Series. (See "Investments of the Variable Account--Investment Adviser,"
below.) In addition, there are other expenses associated with the daily
operation of the Series. These are more fully described in the Prospectus
for the Series.
HOW MUCH MUST I PAY, AND HOW OFTEN?--Subject to the minimum and maximum
payments stated on the first page of this Prospectus, the amount and
frequency of payments is completely flexible. (See "The Contracts--Purchase
Payments," below.)
HOW WILL MY ANNUITY PAYMENTS BE CALCULATED?--If you decide to annuitize,
you elect an annuity payment option. Once you have done so, your monthly
payment will be based upon a number of factors. For a Contract Owner
participating in the Variable Account, the changing values of the Series
Funds in which you have invested will be one such factor. (See "Annuity
Payments," below.) Remember that participants in the Variable Account take the
risk of any drop, and benefit from any gain, in the value of the securities
in the Funds' portfolios.
WHAT HAPPENS IF I DIE BEFORE I ANNUITIZE?--If you are the Annuitant and also the
Contract Owner, then the Beneficiary whom you designate will receive either
the sum of all Purchase Payments minus prior withdrawals/partial surrenders, or
the then current value of the Contract, whichever is greater. Your
Beneficiary will have certain options for how the money is to be paid out.
A Contract Owner who is not also an Annuitant is subject to certain special
rules. (See "The Contracts--Death Benefit Prior to Annuity Commencement
Date/Death of Contract Owner," below.)
MAY I TRANSFER CONTRACT VALUE BETWEEN FUNDS IN THE SERIES?--Yes; however,
there are limits on how often you may do so. (See "The Contracts--Transfers of
Accumulation Units Between Sub-Accounts" and "Transfers on or Following the
Annuity Commencement Date," below.)
MAY I TRANSFER CONTRACT VALUE FROM THE FIXED TO THE VARIABLE SIDE OF
THE ACCOUNT, AND VICE-VERSA? Yes, subject once again to specific
restrictions in the Contract. (See "The Contracts--Transfers of Accumulation
Units to and From the General Account," below.)
MAY I SURRENDER THE CONTRACT OR MAKE A PARTIAL WITHDRAWAL?--Yes, subject
to any contract requirements and to any restrictions imposed under certain
retirement plans. (Contract Owners under a public school system or
tax-exempt institution qualifying under Section 403(b) of the Code are
subject to special restrictions upon surrender and withdrawal.) If you
surrender the Contract or make a partial withdrawal, certain charges may be
assessed, as discussed above and under "Charges and Other Deductions," below.
In addition, the IRS may assess a 10% premature withdrawal penalty tax. A
surrender may be subject to 20% withholding. (See "Federal Tax
Status--Withholding, below.)
DO I GET A 'FREE LOOK' AT THIS CONTRACT?--Yes. If within 10 days (or a longer
period, if required by law) of the date you first receive the Contract you
return it, postage pre-paid, to the Home Office of Lincoln Life, it will be
cancelled. However, except in a very few states, you assume the risk of a
market drop with respect to Purchase Payments which you allocated to the
variable side of the Contract. (See "Return Privilege," below.)
LINCOLN NATIONAL VARIABLE ANNUITY ACCOUNT H
CONDENSED FINANCIAL INFORMATION
(For an accumulation unit outstanding throughout the period)
This information comes from financial statements for the various sub-accounts.
It should be read together with the financial statements and related notes for
the Variable Account, which appear in the Statement of Additional Information.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31
1989* 1990 1991 1992 1993 1994
GROWTH SUB-ACCOUNT
Accumulation Unit Value
--Beginning of Period $1.000 $1.009 $ .952 $1.252 $1.369 $1.571
--End of Period 1.009 .952 1.252 1.369 1.571 1.558
Number of Accumulation Units
--End of Period (000's) 48,888 198,367 486,812 752,797 980,310 1,133,151
GROWTH-INCOME SUB-ACCOUNT
Accumulation Unit Value
--Beginning of Period $1.000 $1.021 $ .982 $1.202 $1.280 $1.418
--End of Period 1.021 .982 1.202 1.280 1.418 1.428
Number of Accumulation Units
--End of Period (000's) 88,723 340,270 703,495 1,122,418 1,500,824 1,680,732
INTERNATIONAL SUB-ACCOUNT**
Accumulation Unit Value
--Beginning of Period N/A $1.000 .947 $1.044 $1.021 $1.354
--End of Period N/A .947 1.044 1.021 1.354 1.361
Number of Accumulation Units
--End of Period (000's) N/A 78,763 200,309 360,734 697,520 984,460
ASSET ALLOCATION SUB-ACCOUNT
Accumulation Unit Value
--Beginning of Period $1.000 $1.022 $ .998 $1.200 $1.284 $1.399
--End of Period 1.022 .998 1.200 1.284 1.399 1.377
Number of Accumulation Units
--End of Period (000's) 41,276 110,929 174,468 285,119 410,464 448,248
HIGH-YIELD BOND SUB-ACCOUNT
Accumulation Unit Value
--Beginning of Period $1.000 $1.006 $1.031 $1.287 $1.429 $1.641
--End of Period 1.006 1.031 1.287 1.429 1.641 1.513
Number of Accumulation Units
--End of Period (000's) 5,671 17,624 47,739 101,884 191,433 216,546
U.S. GOVERNMENT/AAA-RATED SUB-ACCOUNT
Accumulation Unit Value
--Beginning of Period $1.000 $1.018 $1.089 $1.246 $1.323 $1.451
--End of Period 1.018 1.089 1.246 1.323 1.451 1.369
Number of Accumulation Units
--End of Period (000's) 13,695 59,506 139,710 212,716 282,851 282,879
CASH MANAGEMENT SUB-ACCOUNT
Accumulation Unit Value
--Beginning of Period $1.000 $1.029 $1.095 $1.140 $1.161 $1.177
--End of Period 1.029 1.095 1.140 1.161 1.177 1.206
Number of Accumulation Units
--End of Period (000's) 23,046 96,578 106,259 133,763 106,323 141,512
*The Variable Account commenced operations on August 1, 1989. Therefore, the
figures for 1989 represent experience of less than one year.
**The International Sub-Account commenced operations on May 1, 1990.
Therefore, the figures for 1990 represent experience of less than one year.
</TABLE>
INVESTMENT RESULTS
The Variable Account may from time to time compare its investment results to
various unmanaged indices or other variable annuities in reports to
shareholders, sales literature and advertisements. The results will be
calculated on a total return basis for various periods, with or without
contingent deferred sales charges and contract fees. Results calculated
without contingent deferred sales charges or contract fees will be higher.
Total returns include the reinvestment of all distributions, which are
reflected in changes in unit value. See the SAI for further information.
FINANCIAL STATEMENTS
The financial statements for the Variable Account and for Lincoln Life are
located in the SAI. See the cover page of this Prospectus for information on
how to obtain a copy.
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
The Lincoln National Life Insurance Company (Lincoln Life), P.O. Box 2348,
1300 South Clinton Street, Fort Wayne, Indiana 46802, is a stock life
insurance company organized in 1905 under the laws of the State of Indiana,
is wholly owned by Lincoln National Corporation, a publicly-held holding
company organized under Indiana law. Lincoln National Corporation, through
subsidiaries, engages primarily in the issuance of annuities, life insurance,
property-casualty insurance, and reinsurance. The obligations under the
Contracts are those of Lincoln Life.
VARIABLE ACCOUNT
The Variable Account was established by Lincoln Life (its Depositor) under
Indiana law on February 7, 1989. The Variable Account has been registered with
the Securities and Exchange Commission as a unit investment trust pursuant to
the provisions of the Investment Company Act of 1940 (the 1940 Act). Such
registration does not involve supervision of the management of the Variable
Account or Lincoln Life by the Securities and Exchange Commission. The
Variable Account is a segregated investment account, and as such meets the
definition of "separate account" under the federal securities laws. Thus,
the Variable Account is not chargeable with liabilities arising out of any other
business that Lincoln Life may conduct. Income, gains, and losses, whether
or not realized, from assets allocated to the Variable Account, are, in
accordance with the applicable Contracts, credited to or charged against the
Variable Account without regard to other income, gains, or losses of the
Depositor. The investment results of the Variable Account will fluctuate, and
are not guaranteed. The Contract's value and the amount of variable annuity
payments depend on the investment results of the underlying Series' Fund(s).
Thus, THE CONTRACT OWNER BEARS THE FULL INVESTMENT RISK FOR ALL AMOUNTS
ALLOCATED TO THE VARIABLE ACCOUNT.
INVESTMENTS OF THE VARIABLE ACCOUNT
Purchase Payments to be invested in the Variable Account will be allocated
among one or more sub-accounts, each of which invests solely in shares of
one of the Series' Funds, according to the instructions contained in the
Contract Owner's application. Contract Owners may change their
allocation of Purchase Payments without penalty or other charge, subject to
restrictions set forth in this Prospectus. Shares of the Funds will be sold
at net asset value (no sales charge) to the Variable Account for the purpose
of funding the Contracts, and the Series is required to redeem the shares of
all Funds at net asset value at Lincoln Life's request.
INVESTMENT ADVISER
The Series has retained, as its investment adviser, Capital Research and
Management Company, 333 South Hope Street, Los Angeles, California 90071, one
of the nation's largest and oldest investment management organizations. As
compensation for its services to the Series, the Investment Adviser receives
from the Series a fee, accrued daily and paid monthly, based on the net assets
of each Fund, as described in the prospectus for the Series.
DESCRIPTION OF THE SERIES
The Series was organized as a Massachusetts business trust in 1983 and is
registered as a diversified, open-end management investment company under the
1940 Act. The Series consists of seven Funds: the Growth Fund, the
International Fund, the Growth-Income Fund, the Asset Allocation Fund, the
High-Yield Bond Fund, the U.S. Government/AAA-Rated Securities Fund and the
Cash Management Fund. The Series' Board of Trustees may at any time establish
additional Funds, which may or may not be available to the Variable Account.
The Series offers its shares to insurance company separate accounts only.
Fund assets are segregated and a shareholder's interest is limited to those
Funds in which the shareholder owns shares.
The seven Funds have, and are subject to, certain investment policies and
restrictions which may not be changed without a majority vote of shareholders
of the respective Funds. A summary of the investment objectives of each Fund
of the Series is given below. More detailed information may be found in the
current Prospectus for the American Variable Insurance Series, which must
accompany or precede this Prospectus and which should be read carefully.
THERE IS NO ASSURANCE THAT ANY OF THE FUNDS WILL ACHIEVE THEIR STATED
OBJECTIVES.
GROWTH FUND--The Growth Fund seeks to provide growth of capital. Whatever
current income is generated by the Fund is likely to be incidental to the
objective of capital growth. Ordinarily, accomplishment of the Fund's
objective of capital growth will be sought by investing primarily in
common stocks or securities with common stock characteristics.
INTERNATIONAL FUND--The International Fund seeks long-term growth of capital
by investing primarily in securities of issuers domiciled outside the United
States.
GROWTH-INCOME FUND--The Growth-Income Fund seeks growth of capital and income.
In the selection of securities for investment, the possibilities of
appreciation and potential dividends are given more weight than current
yield. Ordinarily, the assets of the Growth-Income Fund consist principally
of a diversified group of common stocks, but other types of securities may be
held when deemed advisable including preferred stocks and corporate bonds,
including convertible bonds.
ASSET ALLOCATION FUND--The Asset Allocation Fund seeks total return (including
income and capital gains) and preservation of capital over the long-term by
investing in a diversified portfolio of securities that can include common
stocks and other equity-type securities (such as convertible bonds and
preferred stocks), bond and other intermediate and long-term fixed-income
securities, and money market instruments (debt securities maturing in one
year or less).
HIGH-YIELD BOND FUND--The High-Yield Bond Fund is a fully managed, diversified
bond portfolio. It seeks high current income and secondarily seeks capital
appreciation. The High-Yield Bond Fund will generally be invested
substantially in intermediate-and long-term corporate obligations, with
emphasis on higher yielding, higher risk, lower rated or unrated securities.
U.S. GOVERNMENT/AAA-RATED SECURITIES FUND--The U.S. Government/AAA-Rated
Securities Fund seeks a high level of current income consistent with prudent
investment risk and preservation of capital by investing primarily in a
combination of securities guaranteed by the U.S. Government and other debt
securities rated AAA or Aaa.
CASH MANAGEMENT FUND--The Cash Management Fund seeks high current yield while
preserving capital by investing in a diversified selection of money market
instruments.
SALE OF FUND SHARES BY THE SERIES
Lincoln Life will purchase shares of the Funds at net asset value and allocate
them to the appropriate sub-accounts of the Variable Account. Lincoln Life
will redeem sufficient shares of the appropriate Fund to pay annuity
payments, Death Benefits or surrender or withdrawal proceeds, or for other
purposes contemplated by the Contract. In addition, if a Contract Owner
elects to transfer all or part of his/her investment in one Fund to another
Fund, Lincoln Life may redeem shares held in the first Fund and purchase
shares of the other Fund.
Shares of the Funds are not sold directly to the general public. They are
sold only to Lincoln Life, and may be sold to other insurance companies, for
investment of the assets of the sub-accounts established by those insurance
companies to fund variable annuity and variable life insurance contracts.
When the Series sells shares in any of its Funds both to variable annuity and to
insurance separate accounts, it is said to engage in "mixed funding." When
the Series sells shares in any of its Funds to separate accounts of
unaffiliated life insurance companies, it is said to engage in "shared
funding."
The Series currently engages in mixed and shared funding. Therefore, due to
differences in redemption rates or tax treatment, or other considerations,
the interests of various Contract Owners participating in a Fund could
conflict. The Series' Board of Trustees will monitor for the existence of
any material conflicts, and determine what action, if any, should be taken.
(See the Prospectus for the Series.)
REINVESTMENT
All dividend and capital gain distributions of the Funds will be automatically
reinvested in shares of the distributing Funds at their net asset value on the
record date.
ADDITION, DELETION, OR SUBSTITUTION OF INVESTMENTS
Lincoln Life reserves the right, subject to compliance with the law as
currently applicable or subsequently changed, to make additions to, deletions
from, or substitutions for the Series and/or any Funds within the Series in
which the Variable Account participates. Thus, if shares of any of the
above Funds should no longer be available for investment, or if in the
judgement of Lincoln Life's management further investment in any Fund should
become inappropriate in view of the purposes of the Contract, then Lincoln
Life may substitute shares of another Series, or of other Funds, for
shares already purchased, or to be purchased in the future, under the
Contract. No substitution of securities in any Contract Owner's account may
take place without notice to Contract Owners and prior approval of the
Securities and Exchange Commission, in accordance with the 1940 Act.
CHARGES AND OTHER DEDUCTIONS
ADMINISTRATIVE AND MAINTENANCE CHARGE
Lincoln Life will deduct a Contract maintenance charge of $35 per Contract
Year. This charge will be deducted from the Contract Value on the last
Valuation Date of each Contract Year to compensate Lincoln Life for
administrative services provided to Contract Owners. In addition, the
Contract maintenance charge will be deducted from the Contract Value as of
the Valuation Date immediately following receipt of a written request by the
Contract Owner for surrender, irrespective of when during the Contract Year
the surrender occurs. Lincoln Life also deducts from the Variable Account
an amount, computed daily, which is equal to an annual rate of .10% of the
daily net asset value of the Variable Account, to compensate it for its
administrative services. Lincoln Life does not intend to profit from these
charges.
Among the administrative services which Lincoln Life provides to Contract Owners
are: processing applications for and issuing the Contracts; processing
purchases and redemptions of Fund shares as required (including automatic
withdrawal services); maintaining records; administering annuity payments;
furnishing accounting and valuation services (including the calculation and
monitoring of daily sub-account values); reconciling and depositing cash
receipts; providing Contract confirmations; providing toll-free inquiry
services; and furnishing telephonic fund transfer services.
CONTINGENT DEFERRED SALES CHARGES
No Contingent Deferred Sales Charge applies to a surrender or withdrawal of
Purchase Payments that have been invested at least seven full Contract years.
A Contingent Deferred Sales Charge does apply (except as described below) to
surrenders or withdrawals of other Purchase Payments that have been invested
for the periods indicated as follows:
NUMBER OF COMPLETE CONTRACT CONTINGENT DEFERRED SALES CHARGE
YEARS THAT PURCHASE PAYMENTS AS A PERCENTAGE OF THE SURRENDERED
HAVE BEEN INVESTED OR WITHDRAWN PURCHASE PAYMENTS
Less than 2 years 6%
At least 2 years but less than 3 years 5%
At least 3 years but less than 4 years 4%
At least 4 years but less than 5 years 3%
At least 5 years but less than 6 years 2%
At least 6 years but less than 7 years 1%
At least 7 years 0%
A Contingent Deferred Sales Charge does not apply to (1) the first withdrawal of
Contract Value during a Contract Year to the extent such withdrawal does not
exceed 10% of the Purchase Payments (this 10% withdrawal exception does not
apply to a surrender of a Contract), (2) automatic withdrawals not in excess
of 10% of the Purchase Payments during a Contract Year made by Contract
Owners who are at least age 59 1/2, (3) a surrender of a Contract as a result
of the "permanent and total disability" [as defined in section 22(e)(3) of
the Code], subsequent to the effective date of the Contract and prior to the
65th birthday of the annuitant, (4) a surrender of a Contract or withdrawal
of Contract Value of a Contract issued to employees and registered
representatives of any member of the selling group and their spouses and
minor children; or to officers, directors, trustees or bona-fide full-time
employees of Lincoln National Corporation or The Capital Group, Inc. or
their affiliated or managed companies (based upon the Contract Owner's status
at the time the Contract was purchased), and (5) a surrender of the Contract
as a result of the death of the Annuitant. (These charges are not waived in
connection with withdrawals or a surrender of the Contract as a result of the
death of a Contract Owner who is not the annuitant.) The contingent
deferred sales charge is calculated separately for each Contract Year's
Purchase Payments to which a charge applies. Lincoln Life assumes that
Purchase Payments are withdrawn on a "first in-first out (FIFO) basis," and
that all Purchase Payments are withdrawn before any earnings are withdrawn.
The Contingent Deferred Sales Charges associated with surrender or
withdrawal are paid to Lincoln Life to compensate it for the loss it
experiences on Contract distribution costs when Contract Owners surrender or
withdraw before distribution costs have been recovered.
Participants in the Texas Optional Retirement Program should refer to
"Restrictions Under the Texas Optional Retirement Program" below.
The administrative and contingent deferred sales charges described above may be
reduced or eliminated for any particular Contract but only to the extent
that Lincoln Life estimates that it will incur lower administrative and/or
distribution expenses or perform fewer administrative or sales services than
those originally contemplated in establishing the level of those charges.
Lower administrative and distribution expenses may be the result of economies
associated with (1) the use of mass enrollment procedures, (2) the
performance of administrative or sales functions by an employer, (3) the use
by an employer of automated techniques in submitting deposits or information
related to deposits on behalf of its employees or (4) any other circumstances
which reduce administrative or distribution expenses. The exact amount for
administrative and contingent deferred sales charges applicable to a
particular Contract will be stated in that Contract.
DEDUCTIONS FROM THE VARIABLE ACCOUNT FOR ASSUMPTION
OF DISTRIBUTION, MORTALITY AND EXPENSE RISKS
Lincoln Life deducts from the Variable Account an amount, computed daily, which
is equal to an annual rate of 1.25% of the daily net asset value of the
Variable Account, to compensate Lincoln Life for its assumption of certain
risks described below. This charge is allocable .80% to Lincoln Life's
assumption of mortality risks and .45% to its assumption of administrative
expense risks. The level of this charge is guaranteed and will not change.
Lincoln Life's assumption of mortality risks guarantees that the variable
annuity payments made to Contract Owners will not be affected by the
mortality experience (life span) of persons receiving such payments or of
the general population. Lincoln Life assumes this mortality risk by virtue of
annuity rates incorporated in the Contract which cannot be changed. Lincoln
Life also assumes the mortality risk inherent in the Death Benefit prior to the
Annuity Commencement Date.
Lincoln Life's expense risk is that the amounts derived from the administration
charges will be insufficient to cover administration expenses. Lincoln Life
anticipates that the charges for administrative expenses, which cannot be
increased by Lincoln Life, will cover administrative costs; however, Lincoln
Life assumes the risk that those charges will be insufficient to cover those
costs. (See "Maintenance and Administrative Charge" above, for information
about the administrative services provided.) As stated in that section,
Lincoln Life does not intend to profit from those charges. If the charges
prove to be insufficient, the excess costs will be borne by Lincoln Life.
Lincoln Life expects to profit from the daily deduction for mortality and
expense risks. Any such profit, as well as any other profit realized by
Lincoln Life and held in the general account (which supports insurance and
annuity obligations), would be available for any proper corporate purpose,
including, but not limited to, payment of sales and distribution expenses.
(Based on its actuarial determination, Lincoln Life does not anticipate that
the contingent deferred sales charge will cover all sales expenses which
Lincoln Life will incur in connection with the Contract.)
DEDUCTIONS FOR PREMIUM TAXES
Any premium tax or other tax (herein collectively referred to as premium
taxes) levied by any governmental entity as a result of the existence of the
Contracts or the Variable Account may be deducted from Contract Values when
incurred (or at such other time as Lincoln Life may choose).
The applicable premium tax rates that states and other governmental entities
impose on the purchase of an annuity are subject to change by legislation,
by administrative interpretation, or by judicial acts. Such premium taxes
will depend on the insurance tax laws of the relevant state. The tax
ranges from 0.5% to 4.0%.
OTHER CHARGES AND DEDUCTIONS
There are deductions from and expenses paid out of the assets of the
underlying Series.
THE CONTRACTS
PURCHASE OF CONTRACTS
A person wishing to purchase a Contract must apply for it through an
authorized sales representative of Lincoln Life. The completed application is
then forwarded to Lincoln Life for acceptance or rejection. If the
application is accepted, a Contract is prepared and executed by duly
authorized officers of Lincoln Life, and then delivered to the Contract
Owner. See "Distribution of Contracts" below. Lincoln Life reserves the
right to reject applications in its sole discretion.
An initial Purchase Payment will be priced not later than two business days
after receipt of an order to purchase, if the application and all information
necessary for processing the purchase order are complete upon receipt.
Lincoln Life may retain the Purchase Payment for up to five business
days while attempting to complete an incomplete application. If the
application cannot be made complete within five days, the applicant will be
informed of the reasons for the delay and the Purchase Payment will be
returned immediately unless the applicant specifically consents to Lincoln
Life retaining the Purchase Payment until the application is made complete.
Thereafter, the Purchase Payment must be priced within two business days.
WHO CAN INVEST
Any individual of legal age in the states where the Contracts may be lawfully
sold who is eligible to participate in any of the qualified or nonqualified
plans for which the Contracts are designed, who fits Lincoln Life's
underwriting guidelines and where the annuitant does not have an attained age
of more than 85, may apply for a Contract.
PURCHASE PAYMENTS
Purchase Payments are payable to Lincoln Life at the frequency and in the
amount selected by the Contract Owner in the Application. The minimum
initial Purchase Payment is $1,500 for Non-Qualified Contracts and Section
403(b) transfers/rollovers; and $300 for Qualified Contracts. The
minimum annual amount for subsequent Purchase Payments is $300 for
Non-Qualified and Qualified Contracts, with a minimum of $25 per payment.
Purchase Payments in the aggregate may not exceed $1,000,000 for each
Contract issued. In the event that a Contract Owner ceases to make
Purchase Payments, the Contract will remain in force as a paid-up Contract
as long as the total Contract Value is at least $300, and payments may be
resumed at any time until the earliest of the Annuity Commencement Date,
surrender of the Contract, or death of the Annuitant.
VALUATION DATE
Accumulation and Annuity Units will be valued once daily at the close of
trading (currently 4:00 p.m., New York time) on each day the New York Stock
Exchange is open (Valuation Date). On any date other than a Valuation Date,
the Accumulation and Annuity Unit value will be the same as that on the
next following Valuation Date.
ALLOCATION OF PURCHASE PAYMENTS
Purchase Payments are normally allocated to sub-accounts within the Variable
Account, each of which invests in one of the designated Funds of the Series,
according to the instructions of the Contract Owner. The minimum amount of
any Purchase Payment which can be allocated to any one sub-account is $20
under the Contract. Upon allocation to the appropriate sub-account,
Purchase Payments are converted into Accumulation Units. The number of
Accumulation Units credited is determined by dividing the amount allocated
to each sub-account by the value of an Accumulation Unit for that sub-account
on the Valuation Date on which the Purchase Payment is received, if received
prior to 4:00 p.m., E.S.T. on that date, and by the value computed on the
next Valuation Date, if received at or after 4:00 p.m. EST. The number of
Accumulation Units so determined shall not be changed by any subsequent
change in the value of an Accumulation Unit, but the dollar value of an
Accumulation Unit will vary in amount depending upon the investment experience,
expenses, and other deductions of the underlying Fund.
VALUATION OF ACCUMULATION UNITS
Accumulation Units for each sub-account are valued separately. Initially, the
value of each Accumulation Unit was arbitrarily set at $1.00. Thereafter,
the value of an Accumulation Unit in any sub-account on any Valuation Date
equals the value of an Accumulation Unit in that sub-account as of the
immediately preceding Valuation Date, multiplied by the "net investment factor"
of that sub-account for the current Valuation Period. In order to arrive at
the net investment factor, a "gross investment rate" is first determined for
each Fund Valuation Period. Such rate is equal to: (a) the investment
income of the Fund for the Valuation Period (plus capital gains and minus
capital losses for the period, whether realized or unrealized) minus (b) a
daily charge against net assets for investment advisory services and other
expenses accrued by the Fund for each day of the Valuation Period, divided by
(c) the net asset value of the Fund as of the beginning of the Valuation
Period. The gross investment rate may be positive or negative.
The net investment rate with respect to each sub-account is then determined.
Such rate is equal to the gross investment rate for the Fund minus a daily
charge at an annual rate of 1.35% for each day of the Valuation Period.
TRANSFERS OF ACCUMULATION UNITS BETWEEN SUB-ACCOUNTS
Prior to the Annuity Commencement Date, a Contract Owner may transfer all or a
portion of his/her investment in one sub-account to another sub-account. A
transfer will result in the purchase of Accumulation Units in one sub-account,
and the redemption of Accumulation Units in the other sub-account. Such a
transfer will be accomplished at relative Accumulation Unit values as of the
Valuation Date immediately following receipt of the transfer request.
A transfer between sub-accounts cannot be elected more than six times every
Contract Year. Lincoln Life reserves the right to waive this six-time limit.
The minimum amount which may be transferred between sub-accounts is $300 or
the amount in the sub-account, if less. If a transfer from a sub-account
would leave the Contract Owner with less than $300 in the sub-account, Lincoln
Life may transfer the total amount credited to such sub-account. A transfer
may be made by writing to Lincoln Life's Home Office or, if a telephone
exchange authorization form is on file with Lincoln Life, by toll-free
telephone call.
TRANSFERS OF ACCUMULATION UNITS TO AND FROM THE GENERAL
ACCOUNT
Prior to the Annuity Commencement Date, a Contract Owner may transfer all or
any part of the Contract Value from the sub-account(s) to the fixed side
(general account) of the Contract. Such transfers cannot be elected more than
six times every Contract Year. Lincoln Life reserves the right
to waive this six-time limit. The minimum amount which can be transferred
to the general account is $300 or the amount in the sub-account, if less.
However, if a transfer from a sub-account would leave the Contract Owner
with less than $300 in the sub-account, Lincoln Life may transfer the total
amount to the general account.
A Contract Owner may also transfer all or part of the Contract Value from the
general account to any of the sub-accounts, subject to the following
restrictions: (a) no more than 25% of the value of the general account may
be transferred to the sub-accounts in any twelve month period; and (b)
the minimum amount which can be transferred is $300 or the amount in the
general account, if less; and (c) this transfer cannot be made during the
first 30 days after the issue date of the Contract and cannot be elected
more than six times every Contract Year. Lincoln Life reserves the right to
waive any of these restrictions.
A Contract Owner who contemplates the transfer of Contract Value should
consider the risk inherent when he or she shifts from one sub-account to
another or to the general account. In general, frequent transfers based on
short-term expectations will tend to accentuate the danger that a transfer
will be made at an inopportune time.
TRANSFERS ON OR FOLLOWING THE ANNUITY COMMENCEMENT DATE
On or after the Annuity Commencement Date, a Contract Owner may direct a
transfer of assets from one sub-account to another sub-account or to the
general account. Such transfer will be limited to three times per Contract
Year. On or after the annuity commencement date, no assets may be
transferred from the general account to the sub-accounts.
DEATH BENEFIT PRIOR TO ANNUITY COMMENCEMENT DATE
The Contract Owner may designate a Beneficiary during the life of the
Annuitant and change the Beneficiary by filing a written request with
Lincoln Life at its Home Office. Each change of Beneficiary revokes any
previous designation. Lincoln Life reserves the right to require
presentation of the Contract for endorsement of a change of Beneficiary.
If the Annuitant dies prior to the Annuity Commencement Date, a Death
Benefit equal to the greater of: (a) the Guaranteed Minimum Death Benefit
(GMDB); or (b) the current value of the Contract, will be paid to the
Beneficiary designated by the Contract Owner upon receipt of: (1) proof,
satisfactory to Lincoln Life, of the death of the Annuitant; (2) written
authorization for payment; and (3) receipt by Lincoln Life of all required
claim forms, fully completed.
The GMDB is equal to the sum of all Purchase Payments plus any Attributable
Gain (AG), minus any Withdrawals, partial annuitizations, and premium taxes
incurred. Lincoln Life determines the AG separately for each Contract Year on
its seventh anniversary (once its surrender charge period has expired). The
AG consiss of the earnings on a Contract Year's Net Purchase Payment(s)
[Purchase Payment(s) minus any Withdrawals and partial annuitizations,
applied on a First-in-First-Out basis] as of the Valuation Date just before
its seventh anniversary. This amount will then be included in the GMDB
calculation.
If Contract conditions are met, the GMDB will be increased automatically by
Lincoln Life according to the prescribed formula based upon the Contract's
internal rate of return. For this to occur the Annuitant, as of the seventh
anniversary of each eligible Contract Year, must still be living and must
be less than 81 years of age. For more information about GMDB calculations,
please refer to the SAI.
The value of the Death Benefit will be determined as of the date on which the
death claim is approved for payment. At any time during a 60-day period
commencing with the date of death of the Annuitant, the Beneficiary may
elect to receive payment either in the form of a single sum settlement
or an Annuity Option. If a single sum settlement is requested, the proceeds
will be mailed within seven days of receipt of such election and due proof of
death in accordance with any applicable laws and regulations governing
payment of Death Benefits. Any single sum payment may be postponed as
permitted by the 1940 Act. If an election has not been made by the end of
such 60-day period, a single sum settlement will be made to the Beneficiary.
If an Annuity Option is elected, the Annuity Commencement Date shall be the
date specified in the election but not later than 60 days after receipt
by Lincoln Life of notification of death. Payment will be made in
accordance with any applicable laws and regulations governing payment of
Death Benefits.
Unless otherwise provided in the Beneficiary designation, one of the following
procedures will take place on the death of a Beneficiary: (1) If any
Beneficiary dies before the Annuitant, that Beneficiary's interest will pass
to any other Beneficiaries named according to their respective interests; (2)
If no Beneficiary survives the Annuitant, the proceeds will be paid to the
Contract Owner if living; otherwise to the Contract Owner's estate.
DEATH OF CONTRACT OWNER
If the owner of a Non-Qualified Contract dies before annuity payments have
begun, then in accordance with the provisions of the Code, the Cash Surrender
Value (proceeds) of the Contract will be paid as follows: (1) Upon the death
of a non-annuitant owner, the proceeds shall be paid to any surviving joint
or contingent owner(s); (2) If no joint or contingent owner has been named,
then the proceeds shall be paid to the Annuitant named in the Contract.
If the decedent owner or joint owner is also the Annuitant, then the death
will be treated as death of the Annuitant subject to the provisions of this
Contract regarding death of Annuitant. If the recipient of the proceeds is
the surviving spouse of the Contract Owner, the Contract may be continued
in the name of such spouse as Contract Owner.
Any distribution must be paid within 5 years of the death of the Contract
Owner unless the Beneficiary begins receiving, within one year of the Contract
Owner's death, the distribution in the form of a life annuity or an annuity
for a period certain not exceeding the Beneficiary's life expectancy.
JOINT/CONTINGENT OWNERSHIP
If a joint owner is named in the application such joint owners shall be
treated as having equal undivided interests in the Contract. Either owner,
independent of the other, may exercise any ownership rights in this Contract.
A contingent owner cannot exercise any ownership rights in this Contract
while the Contract Owner is alive.
SURRENDERS AND WITHDRAWALS
No surrender of the Contract or withdrawal of Contract Value may be made
subsequent to the Annuity Commencement Date. With respect to such Contracts,
Lincoln Life will, upon the written request of the Contract Owner prior to the
Annuity Commencement Date, allow the surrender of the Contract in its
entirety or the withdrawal of a portion of the Contract Value. [Note: Special
restrictions on surrenders and withdrawals now apply if your Contract was
purchased as part of a retirement plan of a public school system or
tax-exempt institution under Section 403(b) of the Code. Beginning
January 1, 1989, in order for a Contract to retain its tax-qualified status,
the Code prohibits the withdrawal of post-1988 contributions pursuant to a
salary reduction agreement and earnings thereon, from a 403(b) contract except
in the event the participant: 1) attains age 59 1/2; 2)
separates from service; 3) dies; 4) becomes totally and permanently disabled;
or 5) experiences financial hardship (in which event the income attributable
to such contributions may not be withdrawn). Pre-1989 contributions and
earnings through December 31, 1988, are not subject to the above
restrictions. Funds transferred to the Contract from a 403(b)(7) custodial
account will be subject to these restrictions.]
The amount available upon surrender or withdrawal is the Cash Surrender
Value of the Contract at the end of the Valuation Period during which the
written request for surrender is received at the Home Office of Lincoln Life.
Unless a request for withdrawal shall specify otherwise, withdrawals will be
made from all sub-accounts within the Variable Account and from the general
account in the same proportion that the amount of withdrawal bears to the
total Contract Value. The minimum amount which can be withdrawn is $300, and
the remaining Contract Value must be at least $300. Where permitted by the
Contract, surrender or withdrawal payments will be mailed within seven days
after Lincoln Life receives a written request at its Home Office. However,
the payment may be postponed as permitted by the 1940 Act.
There are certain charges associated with surrender of a Contract or
withdrawal of Contract Value prior to the Annuity Commencement Date. See
"Charges and Other Deductions" above.
The tax consequences of surrender or withdrawal of Contract Value are
discussed later. See "Federal Tax Status" below. If the total Contract
Value is less than $300, and if no Purchase Payments have been made for at
least two years, Lincoln Life may surrender the Contract.
REINVESTMENT PRIVILEGE
The Contract Owner may elect to make a reinvestment purchase with any part
of the proceeds of a total or partial liquidation of the Contract and Lincoln
Life will recredit the surrender or withdrawal charges previously deducted.
Such election must be made within 30 days of the date of such liquidation and
the repurchase must be of a Contract covered by this Prospectus. A
representation must be made that the proceeds being used to make the
purchase have retained their tax favored status under an arrangement for
which the Contracts offered by this Prospectus are designed. The
number of Accumulation Units which will be credited upon reinvesting the
funds will be based on the value of the Accumulation Unit(s) the next time
such value is computed following receipt of the proceeds and request for
reinvestment at the Home Office of Lincoln Life. This reinvestment
privilege may be utilized only once with respect to any Contract Owner. For
tax reporting purposes, a liquidation and subsequent reinvestment purchase
will be treated by Lincoln Life as separate transactions. Prior to a
liquidation or subsequent reinvestment purchase, a tax adviser should
be consulted by the Contract Owner.
AMENDMENT OF CONTRACT
Lincoln Life reserves the right to amend the Contracts to meet the
requirements of the 1940 Act or other applicable federal or state laws or
regulations. Any changes, modifications or waivers must be in writing and
Contract Owners notified.
COMMISSIONS
The maximum commission which will be paid to dealers is equal to 4.70% (5.6%
during certain special promotional periods) of each Purchase Payment; plus an
annual continuing commission equal to .25% of the value of Contract Purchase
Payments invested for at least one year; plus an annual persistency bonus
equal to .50% of each Contract Year's increased GMDB, paid over a period
of seven years. From time to time, additional sales incentives (up to .25%
of Purchase Payments) may be provided to dealers maintaining certain sales
volume levels. The equivalent of 4.7% of Contract Value can be paid to
dealers upon annuitizations. These commissions are not deducted from
Purchase Payments or Contract Value; they are paid by Lincoln Life.
OWNERSHIP
The contract owner has all rights under the contract. Under Indiana law, the
assets of the variable account are held for the exclusive benefit of the
Contract Owners and their designated beneficiaries and are not chargeable
with liabilities arising out of any other business that Lincoln Life may
conduct. Qualified Contracts may not be assigned or transferred except as
permitted by the Employee Retirement Income Security Act of 1974 and upon
written notification to Lincoln Life. Lincoln Life assumes no responsibility
for the validity or effect of any assignment. Contract Owners should
consult their tax advisers regarding the tax consequences of an assignment.
CONTRACT OWNER INQUIRIES
The obligations to purchasers under the Contracts are the obligations of
Lincoln Life. Inquiries from Contract Owners should be directed to Lincoln
Life at 1-800-942-5500.
ANNUITY PAYMENTS
A Contract Owner may select, prior to issuance of the Contract, an Annuity
Commencement Date of any time permitted by law and not later than the
Annuitant's 85th birthday, except that Contracts issued in connection with
qualified employee pension and profit-sharing trusts (described in Section
401(a) and tax-exempt under Section 501(a) of the Code) and qualified
annuity plans (described in Section 403(a) of the Code), including H.R. 10
trusts and plans covering self-employed individuals and their employees,
provide for annuity payments to commence at the date and under the
option specified in the plan.
The Contract provides the optional forms of payment of annuities (Annuity
Options) described below, each of which is payable on a variable basis, as
well as such other Annuity Options as Lincoln Life may choose to make
available in the future. The Contract also provides for fixed annuity
payments or annuity payments that are on a combination fixed and variable
basis. The Contract provides that all or part of the Contract Value may be
used to purchase an annuity.
The Contract Owner may postpone or accelerate the Annuity Commencement Date,
change his/her selection of an Annuity Option, or alter the allocation of
his/her investment among sub-accounts up to 30 days prior to the date annuity
payments are to commence, upon written notice to Lincoln Life at its Home
Office. THE CONTRACT OWNER MUST GIVE Lincoln Life AT LEAST 30 DAYS
NOTICE BEFORE EFFECTING THE COMMENCEMENT OF ANNUITY PAYMENTS.
If proceeds become available to a Beneficiary, the Beneficiary may choose or
change any payment option if proceeds are available to the Beneficiary in
one sum.
If a Contract Owner does not elect otherwise, the Contract automatically
provides for a life annuity (on a fixed, variable, or combination fixed and
variable basis, in proportion to the account allocations at time of
annuitization) with 120 monthly payments certain, except in those cases in
which a joint and survivor annuity payout is required by law. Under any
option providing for guaranteed payments, the number of such payments which
remain unpaid at the date of the Annuitant's death will be paid to
the Contract Owner's Beneficiary as such payments become due.
The Contract contains no provision under which an Annuitant or a Beneficiary
may surrender his/her Contract or make a partial withdrawal and receive a
lump-sum settlement in lieu thereof once annuity payments have commenced.
See "Surrenders and Withdrawals" above. Options are only available to
the extent they are consistent with the requirements of Code Section 72(s), if
applicable.
OPTION NO. 1: LIFE ANNUITY. This option provides an annuity payable monthly
during the lifetime of the Annuitant and terminating with the last payment
preceding the death of the Annuitant. This option offers the maximum level
of periodic payments since there is no guarantee of a minimum number of
payments or provision for a Death Benefit for Beneficiaries. It would be
possible under this option for the Annuitant to receive no annuity payment if
he or she died prior to the due date of the first annuity payment, one annuity
payment if the Annuitant died before the second annuity payment date, etc.
OPTION NO. 2: LIFE INCOME WITH PAYMENTS GUARANTEED FOR
DESIGNATED
PERIOD. This option provides for periodic payments during a designated
period and thereafter throughout the lifetime of the payee. The designated
period may be selected by the Annuitant.
OPTION NO. 3: JOINT AND SURVIVOR ANNUITY. This option provides an annuity
payable periodic during the joint lifetime of the Annuitant and a designated
second person, and thereafter during the remaining lifetime of the survivor.
OPTION NO. 4: JOINT AND TWO-THIRDS TO SURVIVOR ANNUITY. This option
provides an annuity payable monthly during the joint lifetime of the
Annuitant and designated second person, with two-thirds of the amount payable
during the remaining lifetime of the survivor.
OPTION NO. 5: UNIT REFUND LIFE ANNUITY. This option provides an annuity payable
periodically during the lifetime of the Annuitant with the guarantee that upon
death a payment will be made of the value of the number of Annuity Units equal
to the excess, if any, of: (a) the total amount applied under this option d
ivided by the Annuity Unit value for the date annuity payments commence
over (b) the Annuity Units represented by each payment to the Annuitant
multiplied by the number of payments paid prior to death. See "Variable
Annuity Payments: below. The value of the number of Annuity Units is computed
on the date the Home Office receives written notice of the Annuitant's
death provided that if notice is not received prior to the close of trading
at the New York Stock Exchange on such date computation shall be made on the
first Valuation Date thereafter.
Other options may be made available, as agreed upon by Lincoln Life. The
mortality and expense risk charge and the charge for administrative services
will be assessed on all annuity options, including those that do not have a
life contingency and thus no mortality risk.
VARIABLE ANNUITY PAYMENTS
Variable annuity payments will be determined on the basis of: (1) the value of
the Contract prior to the Annuity Commencement Date; (2) the annuity tables
contained in the Contract; (3) the type of Annuity Option selected; and (4) the
investment results of the Funds selected. In order to determine the amount
of variable annuity payments, Lincoln Life makes the following calculation:
first, it determines the dollar amount of the first payment; second, it
credits the Annuitant with a fixed number of Annuity Units based on the amount
of the first payment and the Annuity Unit Value for that Valuation Date; and
third, it calculates the value of the Annuity units each month thereafter. In
making this calculation, Lincoln Life assumes an investment return of 4% per
year, as applied to the applicable mortality table. The amount of each
payment after the initial payment will depend upon how the underlying Funds
perform, relative to the 4% assumed rate. There is a more complete
explanation of this calculation in the SAI.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS
Annuity payments may be paid as monthly, quarterly, semi-annual or annual
installments as the Annuitant requests. However, if the payments from any
sub-account would be or become less than $50, Lincoln Life shall have the
right to change the frequency of payments to such intervals as will result
in payments of at least $50.
FEDERAL TAX STATUS
The following is a general discussion of the federal income tax rules
applicable to the Contracts as of the date of this Prospectus. Further
information is provided in the Statement of Additional Information (SAI).
NEITHER THESE DISCUSSIONS NOR THOSE IN THE SAI ARE INTENDED AS TAX ADVICE.
This Section does not discuss the federal tax consequences resulting from
every possible situation. Moreover, no attempt has been made to consider any
applicable state, local or foreign tax law, other than the imposition of
state premium taxes. See "Deductions for Premium Taxes" above.
Any person concerned about the tax implications with respect to the
Contracts should consult a competent tax adviser. The following discussion
is based upon Lincoln Life's understanding of the present federal tax laws
as they are currently interpreted by the Internal Revenue Service. No
representation is made as to the likelihood of continuation of the present
federal income tax laws or of their current interpretations by the Internal
Revenue Service.
TAXATION OF NON-QUALIFIED CONTRACTS
An annuity Contract Owner generally is not taxed on increases in the value of
a Contract until distribution occurs, either in the form of a lump sum
payment received by withdrawing all or part of the cash value (i.e.,
"surrenders") or as the annuity payments under the Annuity Option
elected. For this purpose, the assignment or pledge of, or the agreement to
assign or pledge, any portion of the value of a Contract will be treated as
a distribution. A transfer of ownership of a Contract, or designation of an
annuitant or other beneficiary who is not also the Contract Owner, may also
have tax consequences. The taxable portion of a distribution (in the form of
a lump sum payment or an annuity) is taxed as ordinary income. However, for
Purchase Payments made by a Contract Owner who is a non-natural person
(subject to limited exceptions) there will be tax on any increase in
the Contract's cash value over the "investment in the contract" during the
taxable year, even if no distribution occurs. The following discussion applies
to Contracts owned by natural persons.
In the case of a surrender under a Contract or withdrawal of Contract Value,
generally amounts received are first treated as taxable income to the extent
that the cash value of the Contract immediately before the surrender exceeds
the "investment in the Contract" at that time. Any additional amount
withdrawn is not taxable. The "investment in the Contract" generally equals
the portion, if any, of any premium paid by or on behalf of an individual
under a Contract which is not excluded from the individual's gross income.
Although the tax consequences may vary depending on the form of the annuity
selected under the Contract, the recipient of an annuity payment under a
Contract generally is taxed on the portion of such payment that exceeds the
"investment in the Contract." For variable annuity payments, the
taxable portion is determined by a formula that establishes a specific dollar
amount of each payment that is not taxed. The dollar amount is determined by
dividing the "investment in the Contract" by the total number of expected
periodic payments. For fixed annuity payments, there generally is no
tax on the portion of each payment that represents the same ratio that the
"investment in the Contract" bears to the total expected value of payments for
the term of the annuity; the remainder of each payment is taxable. However,
all distributions (whether fixed or variable) will be fully taxable once the
recipient is deemed to have recovered the dollar amount of his "investment
in the Contract."
There may be imposed a penalty tax on distributions, equal to 10% of the
amount treated as taxable income. In general, there is no penalty tax on
distributions (1) made on or after age 59 1/2, (2) made as a result of death
or disability, (3) received in substantially equal periodic payment such as a
life annuity (subject to special "recapture" rules if the series of payments
is subsequently modified), (4) under a "qualified funding asset" in a
structured settlement; (5) under an "immediate annuity contract" as defined
in the Code, or (6) under a contract purchased in connection with the
termination of certain retirement plans.
QUALIFIED CONTRACTS
The Contracts may be purchased in connection with the following types of
tax-favored retirement plans: (1) annuity contracts purchased for employees
by public school systems and Code Section 501(c)(3) organizations, qualified
under Section 403(b) of the Code (normally for transfers or rollovers only);
(2) pension and profit-sharing plans of self-employed individuals ("H.R. 10" or
"Keogh" plans) or corporations, qualified under Section 401(a) or 403(a) of
the Code; (3) individual retirement annuities (IRA); (4) deferred
compensation plans of state or local governments and tax-exempt
organizations (457); and (5) simplified employee pension plans (SEP). The tax
rules applicable to these plans, including restrictions on contributions and
benefits, taxation of distributions, and any tax penalties, vary according to
the type of plan and its terms and conditions. Participants under such
plans, as well as Contract Owners, Annuitants and Beneficiaries, should be aware
that the rights of any person to any benefits under such plans may be
subject to the terms and conditions of the plans themselves, regardless of
the terms and conditions of the Contracts. Purchasers of Contracts for use
with any qualified plan, as well as plan participants and Beneficiaries, should
consult counsel and other competent advisers as to the suitability of the
Contracts to their specific needs, and as to applicable Code limitations and
tax consequences.
MULTIPLE CONTRACTS
All Non-Qualified Contracts entered into after October 21, 1988, and issued
by the same insurance company (or its affiliates) to the same Contract Owner
during any calendar year will be treated as a single Contract, for tax purposes.
WITHHOLDING
Pension and annuity distributions generally are subject to withholding for the
recipient's federal income tax liability at rates that vary according to the
type of distribution and the recipient's tax status. Recipients may be
provided the opportunity to elect not to have tax withheld from
distributions. Distributions from governmental or not-for-profit deferred
compensation plans are subject to the general wage withholding rules.
Under the Unemployment Compensation Amendments of 1992 ("UCA"), twenty (20%)
percent income tax withholding may apply to "eligible rollover distributions."
All taxable distributions from qualified plans and Section 403(b) annuities
are "eligible rollover distributions," except (1) annuities paid out over
life or life expectancy, (2) installments paid for a period spanning ten
years or more, and (3) required minimum distributions. The UCA imposes a
mandatory twenty (20%) percent income tax withholding on any eligible rollover
distribution that the holder does not elect to have paid in a direct
rollover to another qualified plan, Section 403(b) annuity, or individual
retirement account.
INVESTOR CONTROL
The Treasury Department has indicated that guidelines may be forthcoming under
which a variable annuity contract will not be treated as an annuity contract
for tax purposes if the owner of the contract has excessive control over the
investments underlying the contract. The issuance of such guidelines may
require the Company to impose limitations on a Contract Owner's right to
control the investment. It is not known whether any such guidelines would have
a retroactive effect.
VOTING RIGHTS
To the extent required by law, Lincoln Life will vote the Series shares held in
the Variable Account at meetings of shareholders of the Series in accordance
with instructions received from Contract Owners having interests in the Funds
of the Series due to their investment in the sub-accounts of the Variable
Account. However, if the 1940 Act or any regulation thereunder should be
amended or if the present interpretation thereof should change, and as a result
Lincoln Life determines that it is permitted to vote the Series shares in
its own right, it may elect to do so.
The number of votes which a Contract Owner has the right to cast will be
determined by applying his/her percentage interest in a sub-account to the
total number of votes attributable to the sub-account. In determining the
number of votes, fractional shares will be recognized.
Fund shares held in a sub-account as to which no timely instructions are
received will be voted by Lincoln Life in proportion to the voting instructions
which are received with respect to all Contracts participating in that
sub-account. Voting instructions to abstain on any item to be voted upon
will be applied on a pro rata basis to reduce the votes eligible to be cast.
Each person having a voting interest in a sub-account will receive proxy
material, reports and other materials relating to the American Variable
Insurance Series. Since the Series engages in shared funding, other persons
or entities besides Lincoln Life Contract Owners may vote Series shares. See
"Sale of Fund Shares by the Series" above.
DISTRIBUTION OF CONTRACTS
American Funds Distributors, Inc. (AFD), 333 South Hope Street, Los Angeles,
CA 90071, is the distributor and Principal Underwriter of the Contracts.
The Contracts will be sold by properly licensed registered representatives of
independent broker-dealers which in turn have been licensed by state
insurance departments to represent Lincoln Life and which have selling
agreements with AFD. AFD is registered with the Securities and Exchange
Commission under the Securities Exchange Act of 1934 as a broker-dealer and
is a member of the National Association of Securities Dealers, Inc.
Lincoln Life will offer the Contracts in all states where it is licensed to
do business.
RETURN PRIVILEGE
Within 20 days (or a longer period, if required by law) after the Contract
is first received (the "free-look period"), it may be cancelled for any
reason by delivering or mailing it postage pre-paid, to the Home Office of
Lincoln Life at the address set out under The Lincoln National Life Insurance
Company, above. A Contract cancelled under this provision will be deemed
void. With respect to the fixed portion of a Contract, Lincoln Life will
return Purchase Payments. With respect to the Variable Account (except as
provided just below), Lincoln Life will return the Contract Value as of
the date of receipt of the cancellation, plus any contract maintenance and
administrative fees and any premium taxes which had been deducted, and no
contingent deferred sales charge will be made. A PURCHASER WHO PARTICIPATES
IN THE VARIABLE ACCOUNT IS SUBJECT TO THE RISK OF A MARKET LOSS DURING THE
FREE-LOOK PERIOD.
For Contracts written in those states whose laws require that Lincoln Life
assume this market risk, a Contract may be cancelled, subject to the
conditions set out above, except that Lincoln Life will
return only the Purchase Payment(s).
RESTRICTIONS UNDER THE TEXAS OPTIONAL RETIREMENT PROGRAM
Title 8, Section 830.105 of the Texas Government Code, consistent with prior
interpretations of the Attorney General of the State of Texas, permits
participants in the Texas Optional Retirement Program (ORP) to redeem their
interest in a variable annuity contract issued under the ORP only
upon (1) termination of employment in all institutions of higher education
as defined in Texas law, (2) retirement, or (3) death. Accordingly, a
participant in ORP will be required to obtain a certificate of
termination from his/her employer before he/she can redeem his/her account.
STATE REGULATION
As a life insurance company organized and operated under Indian law, Lincoln
Life is subject to provisions governing such companies and to regulation by
the Indiana Commissioner of Insurance. Lincoln Life's books and accounts are
subject to review and examination by the Indiana Department of Insurance
(Department) at all times and a full examination of its operation is normally
conducted by the Department at least once every five years.
RECORDS AND REPORTS
Lincoln Life will maintain all records and accounts relating to the Variable
Account. As presently required by the 1940 Act and regulations promulgated
thereunder, Lincoln Life will mail to the Contract Owners at the last known
address of record at Lincoln Life's Home Office, at least semi-annually,
reports containing such information as may be required under the 1940 Act or
by any other applicable law or regulation.
OTHER INFORMATION
A registration statement has been filed with the Seucrities and Exchange
Commission, under the Securities Act of 1933 as amended, with respect to the
Contracts offered hereby. THis Prospectus does not contain all the
information set forth in the registration statement and amendments
thereto and exhibits filed as a part thereof, to all of which reference is made
for further information concerning the Variable Account, Lincoln Life and
the Contracts offered hereby. Statements contained in this Prospectus as to the
content of Contracts and otehr legal instruments are summaries. For a
complete statement of the terms thereof reference is made to such
instruments as filed.
Lincoln National Variable Annuity Account E and Lincoln National Flexible
Premium Variable Life Accounts F, G, and J (all registered as investment
companies under the 1940 Act), and Lincoln National Flexible Premium Group
Variable Annuity Accounts 50 and 51 are all segregated investment accounts
of The Lincoln National Life Insurance Company (Lincoln Life) which also
invest in the American Variable Insurance Series. American Variable
Insurance Series also offers shares of the Funds to other segregated investment
accounts.
Table of Contents
of the
Statement of Additional Information (SAI)
for Lincoln National Variable Annuity Account H
Item Page
General Information and History of Lincoln Life B-2
Special Terms B-2
Services B-2
Purchase of Securities Being Offered B-2
Underwriters B-2
Calculation of Investment Results B-3
Annuity Payments B-4
Federal Tax Status B-5
Automatic Increase in the Guaranteed Minimum
Death Benefit B-7
Advertising and Sales Literature B-7
Financial Statements B-9
NOTE: To obtain a copy of the Statement of Additional Information,
see page one.
