File Nos. 333-
811-8890
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. [ ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [ ]
Amendment No. 9 [X]
(Check appropriate box or boxes.)
LPLA Separate Account One
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(Exact Name of Registrant)
London Pacific Life & Annuity Company
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(Name of Depositor)
3109 Poplarwood Court, Raleigh, North Carolina 27604
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(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (919) 790-2243
Name and Address of Agent for Service
George C. Nicholson
London Pacific Life & Annuity Company
3109 Poplarwood Court
Raleigh, North Carolina 27604
Copies to:
Judith A. Hasenauer
Blazzard, Grodd & Hasenauer, P.C.
P.O. Box 5108
Westport, CT 06881
(203) 226-7866
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of this Filing.
Title of Securities Registered:
Individual Immediate Variable Annuity Contracts
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The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<TABLE>
<CAPTION>
CROSS REFERENCE SHEET
(required by Rule 495)
<S> <C> <C>
Item No. Location
- -------- --------
PART A
Item 1. Cover Page Cover Page
Item 2. Definitions Definitions of Terms used in
this Prospectus
Item 3. Synopsis Summary
Item 4. Condensed Financial Information Not Applicable
Item 5. General Description of Registrant, Other Information-London
Depositor, and Portfolio Companies Pacific, The Separate Account;
Investment Options
Item 6. Deductions and Expenses Expenses
Item 7. General Description of Variable The London Pacific Immediate
Annuity Contracts Variable Annuity Contracts
Item 8. Annuity Period Annuity Payments (The Annuity
Period)
Item 9. Death Benefit Death Benefit
Item 10. Purchases and Contract Value How to Purchase the Contracts
Item 11. Redemptions Surrenders
Item 12. Taxes Taxes
Item 13. Legal Proceedings Not Applicable
Item 14. Table of Contents of the Statement Table of Contents of the
of Additional Information Statement of Additional
Information
PART B
Item 15. Cover Page Cover Page
Item 16. Table of Contents Table of Contents
Item 17. General Information and History London Pacific
Item 18. Services Not Applicable
Item 19. Purchase of Securities Being Not Applicable
Offered
Item 20. Underwriters Distributor
Item 21. Calculation of Performance Data Performance Information
Item 22. Annuity Payments Annuity Provisions
Item 23. Financial Statements Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the appropriate
Item so numbered in Part C to this Registration Statement.
Part A
LONDON PACIFIC LIFE & ANNUITY COMPANY
INDIVIDUAL SINGLE CONTRIBUTION IMMEDIATE VARIABLE ANNUITY CONTRACTS
issued by
LPLA SEPARATE ACCOUNT ONE
and
LONDON PACIFIC LIFE & ANNUITY INSURANCE COMPANY
_____, 1998
This prospectus describes two Individual Single Contribution Immediate Variable
Annuity Contracts issued by London Pacific Life & Annuity Company (London
Pacific) - one is the guaranteed version (Guaranteed Contract) and the other is
the non-guaranteed version (Non-Guaranteed Contract). When discussed together,
they are referred to as the Contracts in this prospectus.
If you buy the Guaranteed Contract, your Contribution will initially be
allocated to London Pacific's Fixed Account. Thirty days after we issue your
Contract, your Contribution, with interest, will be allocated to the one
available Investment Option: the BT Equity 500 Index Fund of BT Insurance Funds
Trust.
If you buy the Non-Guaranteed Contract, you can invest in the following eleven
Investment Options:
LPT VARIABLE INSURANCE SERIES TRUST:
Harris Associates Value Portfolio
MFS Total Return Portfolio
Berkeley U.S. Quality Bond Portfolio
Berkeley Money Market Portfolio
Robertson Stephens Diversified Growth Portfolio
Lexington Corporate Leaders Portfolio(R)
Strong Growth Portfolio
MORGAN STANLEY UNIVERSAL FUNDS, INC.:
Morgan Stanley U.F. High Yield Portfolio
Morgan Stanley U.F. International Magnum Portfolio
Morgan Stanley U.F. Emerging Markets Equity Portfolio
BT INSURANCE FUNDS TRUST:
BT Equity 500 Index Fund
Please read this prospectus carefully before investing and keep it on file for
future reference. It contains important information about the London Pacific
Immediate Variable Annuity Contracts.
To learn more about the London Pacific Immediate Variable Annuity Contracts, you
can request a copy of the Statement of Additional Information (SAI) dated
______, 1998. The SAI has been filed with the Securities and Exchange Commission
(SEC) and is legally a part of this prospectus. The SEC maintains a Web site
(http://www.sec.gov) that contains the SAI, material incorporated by reference
and other information regarding registrants that file electronically with the
SEC. The Table of Contents of the SAI can be found on page __ of this
prospectus. For a free copy of the SAI, call us at: (800) 852-3152 or write to
us at our Annuity Service Center: P.O. Box 29564, Raleigh, North Carolina 27626.
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.
THE CONTRACTS:
* ARE NOT BANK DEPOSITS
* ARE NOT FEDERALLY INSURED
* ARE NOT ENDORSED BY ANY BANK OR GOVERNMENT AGENCY
* ARE NOT GUARANTEED AND MAY BE SUBJECT TO POSSIBLE LOSS OF PRINCIPAL
INQUIRIES: If you have any questions about your Contract or need more
information, please contact us at:
Annuity Service Center
P.O. Box 29564
Raleigh, North Carolina 27626
(800) 852-3152
TABLE OF CONTENTS
DEFINITIONS OF TERMS USED IN THIS PROSPECTUS....................................
SUMMARY .......................................................................
FEE TABLE.......................................................................
THE LONDON PACIFIC IMMEDIATE VARIABLE ANNUITY CONTRACT..........................
ANNUITY PAYMENTS (THE ANNUITY PERIOD)...........................................
HOW TO PURCHASE THE CONTRACTS...................................................
Contribution...........................................................
Allocation of Contribution.............................................
Accumulation Units - Non-Guaranteed Contract Only......................
INVESTMENT OPTIONS..............................................................
LPT Variable Insurance Series Trust....................................
Morgan Stanley Universal Funds, Inc....................................
BT Insurance Funds Trust...............................................
Dollar Cost Averaging Program - Non-Guaranteed Contract Only...........
Rebalancing Program - Non-Guaranteed Contract Only.....................
Substitution...........................................................
Exchange Program.......................................................
PERFORMANCE.....................................................................
EXPENSES .......................................................................
Separate Account Charge................................................
Guaranteed Minimum Annuity Payment Charge (Guaranteed Contract Only)...
Commutation Fee (Non-Guaranteed Contract Only).........................
Transfer Fee (Non-Guaranteed Contract Only)............................
Premium Taxes..........................................................
Income Taxes...........................................................
Investment Option Expenses.............................................
TAXES .......................................................................
SURRENDERS......................................................................
DEATH BENEFIT...................................................................
OTHER INFORMATION...............................................................
London Pacific.........................................................
The Separate Account...................................................
Distribution...........................................................
TABLE OF CONTENTS OF THE SAI....................................................
APPENDIX - ILLUSTRATIONS OF ANNUITY PAYMENTS....................................
DEFINITIONS OF TERMS USED IN THIS PROSPECTUS
Accumulation Unit - The unit of measurement used to determine the value of your
interest in a Non-Guaranteed Contract prior to the Annuity Date.
Annuitant - The natural person on whose life Annuity Payments are based. On or
after the Annuity Date, the Annuitant also includes any Joint Annuitant.
Annuity Date - The date on which Annuity Payments begin.
Annuity Calculation Date - The date on which first Annuity Payment will be
calculated. It will not be more than 5 days before the Annuity Date.
Annuity Payments - The series of payments made to the Payee after the Annuity
Date.
Annuity Period - The period of time beginning with the Annuity Date during which
Annuity Payments are made.
Annuity Service Center - The office indicated under Inquiries on the first page
of this prospectus to which notices, requests and the Contribution must be sent.
Annuity Unit - The unit of measurement used in the calculation of Annuity
Payments.
Assumed Investment Return (AIR) - The investment return upon which Annuity
Payments are based.
Beneficiary - The person entitled to receive benefits under the Contract in the
case of the death of the Owner, Joint Owner, Annuitant or Joint Annuitant, as
applicable.
Business Day - Any day the New York Stock Exchange (NYSE) and we are open for
business.
Contract Value - The value of your Non-Guaranteed Contract prior to the Annuity
Date.
Contribution - The money you invest in the Contract.
Due Proof of Death - A certified copy of the death certificate, an order of a
court of competent jurisdiction, a statement from a physician who attended the
deceased or any other proof acceptable to London Pacific.
Fixed Account - A segment of our general account which contains all of our
assets with the exception of segregated separate account assets.
Guaranteed Minimum Annuity Payment (Guaranteed Contract Only) - The amount which
is guaranteed as the minimum annuity payment amount. This amount is shown in
your Contract. This amount is payable regardless of the performance of the
Investment Option.
Investment Option(s) - Those investments available under the Contracts.
Issue Date - The date on which your Contract became effective. Contract years
are measured from the Issue Date.
Joint Annuitant - The person, other than the Annuitant, on whose continuation of
life Annuity Payments may be made. The Joint Annuitant may not be changed.
Non-Qualified Contract - If you purchase the Contract as an individual and not
under any pension plan, specially sponsored program or an individual retirement
annuity, it is referred to as a Non-Qualified Contract.
Owner/Joint Owner - The person(s) or entity(ies) entitled to ownership rights
under the Contract.
Payee - The person you designate to receive Annuity Payments.
Qualified Contract - If you purchase the Contract under a pension plan,
specially sponsored program, or an individual retirement annuity, it is referred
to as a Qualified Contract.
Separate Account - A segregated asset account maintained by us to support the
London Pacific Immediate Variable Annuity contracts and certain other contracts.
The Separate Account is LPLA Separate Account One.
Written Request - A request in writing, in a form satisfactory to us, which is
received by the Annuity Service Center.
SUMMARY
The sections in this Summary are explained in more detail later in this
prospectus.
The London Pacific Immediate Variable Annuity Contracts
This prospectus describes two Individual Single Contribution Immediate Variable
Annuity Contracts - one is a guaranteed version (Guaranteed Contract) and the
other is a non-guaranteed version (Non-Guaranteed Contract) (collectively, the
Contracts). The Contracts are offered by London Pacific Life & Annuity Company
(London Pacific). The Contracts provide for income to the Payee under a payment
plan you select.
For Guaranteed Contracts, your Contribution will initially be allocated to
London Pacific's Fixed Account. Thirty days after we issue your Contract, your
Contribution, with interest, will be allocated to the BT Equity 500 Index Fund
of BT Insurance Funds Trust. The BT Equity 500 Index Fund is the only available
Investment Option for the Guaranteed Contract.
The Non-Guaranteed Contract has eleven Investment Options which are listed below
under Investment Options.
Under the Contract, you are the Owner. You can name a Joint Owner. You must name
a Payee and an Annuitant. You can also name a Joint Annuitant. You select an
Annuity Date when you buy the Contract. For the Guaranteed Contract, the Annuity
Date will be 30th day after the Issue Date of your Contract. For a
Non-Guaranteed Contract, your Annuity Date may not be earlier than the end of
the free-look period and no later than one year from the date your Contribution
was received
Annuity Payments
You can receive Annuity Payments from your Contract by selecting one of the
available Annuity Options. The dollar amount of your Annuity Payments may go up
or down depending on the investment performance of the Investment Option(s).
You can protect your investment by purchasing a Guaranteed Contract. If you buy
the Guaranteed Contract, the amount of your Annuity Payments are guaranteed to
be at least equal to 100% of the Guaranteed Minimum Annuity Payment shown in
your Contract.
How to Purchase the Contract
The Contract requires a single Contribution of at least $20,000. You cannot add
to your Contract. Your registered representative can help you fill out the
proper forms.
Investment Options
You can invest in the following Investment Options if you own a Non-Guaranteed
Contract:
LPT Variable Insurance Series Trust:
Harris Associates Value Portfolio
MFS Total Return Portfolio
Berkeley U.S. Quality Bond Portfolio
Berkeley Money Market Portfolio
Robertson Stephens Diversified Growth Portfolio
Lexington Corporate Leaders Portfolio(R)
Strong Growth Portfolio
Morgan Stanley Universal Funds, Inc.:
Morgan Stanley U.F. High Yield Portfolio
Morgan Stanley U.F. International Magnum Portfolio
Morgan Stanley U.F. Emerging Markets Equity Portfolio
BT Insurance Funds Trust:
BT Equity 500 Index Fund
If you own a Guaranteed Contract, you can only invest in the BT Insurance Funds
Trust during the Annuity Period.
Depending on market conditions, you can make or lose money in any of these
Investment Options.
Expenses
The Contracts have insurance features and investment features and there are
costs related to each.
London Pacific deducts for its insurance charges which total 1.25% annually of
the value of your Contract allocated to Investment Options (Separate Account
Charge).
If you own a Non-Guaranteed Contract, you can make 12 free transfers each year.
After that, we charge a $20 transfer fee for each transfer.
For the Guaranteed Contract, London Pacific deducts a Guaranteed Minimum Annuity
Payment Charge which may range from 1.75% to 2.10% annually of your Contract
allocated to the Investment Option. The Guaranteed Minimum Annuity Payment
Charge is set forth in your Contract. The charge will lock in at the time you
purchase the Contract and will not change for the life of your Contract.
There are also investment charges which range from .30% to 1.75% of the average
daily value of the Investment Option, depending upon the Investment Option.
Taxes
Annuity Payments will be treated for federal income tax purposes as partly a
return of your original investment. That part of each payment is not taxable as
income. If you own a Qualified Contract, the entire payment may be taxable.
Surrenders
You cannot make any surrenders from a Guaranteed Contract.
For Non-Guaranteed Contracts, after the first Contract year, you may make a
total surrender after the Annuity Date if you have chosen Annuity Option 3
(Payment for a Period Certain). No partial surrenders are permitted.
Death Benefit
If you, the Joint Owner (if any), the Annuitant or the Joint Annuitant (if any)
dies, a death benefit may be paid to the Beneficiary.
Exchange Program
London Pacific offers an exchange program (the Exchange Program) which is
available only to purchasers who exchange a contract issued by another insurance
company not affiliated with London Pacific or other financial investment for a
Contract offered by this Prospectus. The Exchange Program is not available to
purchasers who own another immediate variable annuity contract and want to
exchange it for the Contracts described in this prospectus. Under the Exchange
Program, London Pacific adds certain amounts to the Contract as exchange credits
(Exchange Credits). Subject to specific limits, the Exchange Credits equal the
surrender charge paid, if any, to the other insurance company or the charges and
penalties paid to a financial institution.
Free-Look
Guaranteed Contract: If you cancel the Contract within 10 days after receiving
it (or the period required in your state), we will refund your Contribution.
Non-Guaranteed Contract: If you cancel the Contract within 10 days after
receiving it (or the period required in your state), we will send your money
back. You will receive whatever your Contract is worth on the day we receive
your request. This may be more or less than your Contribution. If we are
required by law to return your Contribution, we reserve the right to put your
money in the Berkeley Money Market Portfolio during the free-look period.
FEE TABLE
OWNER TRANSACTION EXPENSES - NON-GUARANTEED CONTRACT ONLY
Commutation Fee * 1.00%
Transfer Fee
No charge for first 12 transfers in a Contract year, thereafter the fee
is $20 for each subsequent transfer.
* Only applies to surrenders under Annuity Option 3 or lump sum payments to
Beneficiaries under Annuity Options 2 and 3 under a Non-Guaranteed Contract.
SEPARATE ACCOUNT ANNUAL EXPENSES FOR GUARANTEED CONTRACT
(as a percentage of average account value)
Mortality and Expense Risk Fees and Account Fees and Expenses ** 1.25%
Guaranteed Minimum Annuity Payment Charge (maximum charge)*** 2.10%
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Total Separate Account Annual Expenses 3.35%
SEPARATE ACCOUNT ANNUAL EXPENSES FOR NON-GUARANTEED CONTRACT
(as a percentage of average account value)
Mortality and Expense Risk Fees and Account Fees and Expenses ** 1.25%
-----
Total Separate Account Annual Expenses 1.25%
** This charge is referred to as a Separate Account Charge in your Contract and
throughout this prospectus.
*** The Guaranteed Minimum Annuity Payment Charge ranges from 1.75% to 2.10%
depending upon when you buy the Contract. The charge may be changed quarterly.
However, once you buy the Contract, the charge is locked in and will not change
for the life of your Contract. The amount of the charge is shown in your
Contract.
<TABLE>
<CAPTION>
LPT VARIABLE INSURANCE SERIES TRUST'S ANNUAL EXPENSES (as a percentage of the
average daily net assets of a Portfolio)
Other Expenses
Management (after expense Total Annual
Portfolio Fees reimbursement)* Expenses *
- --------- ---- --------------- ----------
<S> <C> <C> <C> <C>
Harris Associates Value (1) 1.00% .29% 1.29%
MFS Total Return .75% .54% 1.29%
Berkeley U.S. Quality Bond .55% .44% .99%
Berkeley Money Market .45% .44% .89%
Robertson Stephens Diversified
Growth (2) .95% .44% 1.39%
Lexington Corporate Leaders(R) .65% .64% 1.29%
Strong Growth .75% .54% 1.29%
</TABLE>
(1) Prior to May 1, 1997, the Management Fee was .875% of the average daily net
assets of the Portfolio.
(2)Prior to May 1, 1997, the Management Fee was 1.00% of the average daily net
assets of the Portfolio.
* The Company has voluntarily agreed through December 31, 1998 to reimburse each
Portfolio for certain expenses (excluding brokerage commissions) in excess of
approximately the amounts set forth above under "Total Annual Expenses" for each
Portfolio. Absent this expense reimbursement arrangement, for the year ending
December 31, 1997, the "Total Annual Expenses" (on an annualized basis) were:
4.22% for the Harris Associates Value Portfolio; 3.88% for the MFS Total Return
Portfolio; 5.09% for the Berkeley U.S. Quality Bond Portfolio; 4.30% for the
Berkeley Money Market Portfolio; 4.44% for the Strong Growth Portfolio; 4.53%
for the Robertson Stephens Diversified Growth Portfolio; and 4.08% for the
Lexington Corporate Leaders Portfolio. The examples following are calculated
based upon such expense reimbursement arrangements.
<TABLE>
<CAPTION>
MORGAN STANLEY UNIVERSAL FUNDS, INC.'S ANNUAL EXPENSES (as a percentage of the
average daily net assets of a Portfolio)
Other Expenses
Management (after expense Total Annual
Portfolio Fees reimbursement)* Expenses *
- --------- ---- --------------- ----------
<S> <C> <C> <C>
Morgan Stanley U.F. High Yield 0.0% .80% .80%
Morgan Stanley U.F. International
Magnum 0.0% 1.15% 1.15%
Morgan Stanley U.F. Emerging
Markets Equity 0.0% 1.75% 1.75%
</TABLE>
* The advisers have voluntarily waived receipt of their management fees and
agreed to reimburse the Portfolio, if necessary, if such fees would cause the
total annual operating expenses of the Portfolio to exceed the percentages set
forth above under "Total Annual Portfolio Expenses." Absent this expense
reimbursement, for the year ending December 31, 1997, "Management Fees," "Other
Expenses," and "Total Annual Expenses would have been: 0.50%, 1.18% and 1.68%
for the Morgan Stanley U.F. High Yield Portfolio; 0.80%, 1.98%, and 2.78% for
the Morgan Stanley U.F. International Magnum Portfolio; and 1.25%, 2.87% and
4.12% for the Morgan Stanley U.F. Emerging Markets Portfolio.
<TABLE>
<CAPTION>
BT INSURANCE FUNDS TRUST'S ANNUAL EXPENSES (as a percentage of the average daily
net assets of a Portfolio)
Other Expenses
Management Administ- (after expense Total
Portfolio Fees rative Fee reimbursement)* Annual
Expenses *
<S> <C> <C> <C> <C> <C> <C>
BT Equity 500 Index (1) .20% .02% .08% .30%
</TABLE>
(1) Without expense waivers and reimbursements for the period from October 1,
1997 (commencement of operations) to December 31, 1997, the total operating
expense for the BT Equity 500 Index Fund would have been 2.78%.
EXAMPLES
The examples assume a $1,000 investment with payments based on an annuity with a
25 year period certain Annuity Option and a 3% AIR. The examples below for the
Guaranteed Contract assume the deduction of the maximum Guaranteed Minimum
Annuity Payment Charge. Your expenses will be less than those shown below if the
Guaranteed Minimum Annuity Payment Charge for your Contract is less than the
maximum amount.
Guaranteed Contract:
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on assets:
Time Periods
1 Year 3 Years
---------------------------
BT INSURANCE FUNDS TRUST:
BT Equity 500 Index
Non-Guaranteed Contract:
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on assets: (a) if you surrender your Contract and have chosen
Annuity Option 3; or (b) if you do not surrender your Contract.
Time Periods
1 Year 3 Years 5 Years 10 Years
-------------------------------------
LPT VARIABLE INSURANCE SERIES TRUST
Harris Associates Value
MFS Total Return
Berkeley U.S. Quality Bond
Berkeley Money Market
Robertson Stephens Diversified Growth
Lexington Corporate Leaders(R)
Strong Growth
MORGAN STANLEY UNIVERSAL FUNDS, INC.:
Morgan Stanley U.F. High Yield
Morgan Stanley U.F. International Magnum
Morgan Stanley U.F. Emerging Markets Equity
BT INSURANCE FUNDS TRUST:
BT Equity 500 Index
Notes to Fee Table and Examples
1. The purpose of the fee table is to show you the various expenses you will
incur directly or indirectly with the Contract. The Fee Table reflects expenses
of the Separate Account as well as the Investment Options.
2. Premium taxes are not reflected. Premium taxes may apply depending on the
state where you live.
3. THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
THE LONDON PACIFIC IMMEDIATE VARIABLE ANNUITY CONTRACT
This prospectus describes two Individual Single Contribution Immediate Variable
Annuity Contracts issued by London Pacific - one is the Guaranteed Contract and
the other is the Non-Guaranteed Contract. Together, they are referred to as the
Contracts.
An annuity is a contract between you (the Owner) and us (an insurance company)
where we promise to pay you an income, in the form of Annuity Payments.
Depending on market conditions, your Annuity Payments may go up or down and you
may make or lose money, based on the investment performance of the Investment
Option(s) you choose. For the Non-Guaranteed Contract, no minimum Annuity
Payment is guaranteed. For the Guaranteed Contract, there is a Guaranteed
Minimum Annuity Payment.
Ownership
Owner - Under the Contracts you are the Owner. You may name an Annuitant and a
Joint Annuitant. You may change Owners of the Contract at any time prior to the
Annuity Date by Written Request. A change of Owner will automatically revoke any
prior designation. The change will become effective as of the date the Written
Request is signed. A new designation of Owner will not apply to any payment made
or action taken by us prior to the time it was received. Any change in Owner is
subject to our underwriting rules then in effect.
The Contract may be owned by Joint Owners. The Owners must jointly exercise all
rights of the Contract except for transfers (for Non-Guaranteed Contracts),
which can be exercised individually.
Annuitant - The Annuitant and Joint Annuitant is the person or persons on whose
life Annuity Payments are based. You designate the Annuitant and Joint
Annuitant, if any, at the Issue Date.
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 late. Unless an irrevocable Beneficiary has been
named, the Owner and the Joint Owner, if any, may change the Primary
Beneficiary(ies) or Contingent Beneficiary(ies). A change may be made by Written
Request. The change will take effect as of the date the Written Request is
signed. London Pacific will not be liable for any payment made or action it
takes before the change is recorded.
Assignment
You can assign the Contract at any time during your lifetime. You must send a
Written Request to our Annuity Service Center specifying the terms of the
assignment. London Pacific will not be liable for any payment or other action we
take in accordance with the Contract until we receive notice of the assignment.
Any assignment made after the death benefit has become payable will only be
valid with our consent. AN ASSIGNMENT MAY BE A TAXABLE EVENT.
If the Contract is issued pursuant to a Qualified plan, there may be limitations
on your ability to assign the Contract.
Modification of the Contracts
The Contracts may be modified in order to comply with applicable state and
federal law.
ANNUITY PAYMENTS (THE ANNUITY PERIOD)
You can receive regular income payments from your Contract. The Payee will
receive the Annuity Payments. The day on which those payments begin is called
the Annuity Date. For the Guaranteed Contract, the Annuity Date will be 30th day
after the Issue Date of your Contract. For a Non-Guaranteed Contract, your
Annuity Date may not be earlier than the end of the free-look period and no
later than one year from the date your Contribution was received. You can choose
among income plans. We call them Annuity Options.
We ask you to choose your Annuity Date (with respect to the Non-Guaranteed
Contract) and an Annuity Option when you buy the Contract.
During the Annuity Period, payments will come from the Investment Options you
have selected (meaning they are variable annuity payments). We do not currently
offer any fixed income options. Annuity Payments can be made monthly or
annually. Once selected, the frequency of the payments cannot be changed. If you
own a Non-Guaranteed Contract and if the Annuity Payment would be or becomes
less than $100, we will reduce the frequency of the Annuity Payments to an
interval which will result in each payment being at least $100.
The first Annuity Payment will be calculated on the Annuity Calculation Date
which will be no more than 5 days before the Annuity Date. Annuity Payments will
reflect the investment performance of the Investment Options during the Annuity
Period. On the Annuity Calculation Date, a fixed number of Annuity Units will be
purchased.
The dollar amount of your subsequent payments will depend on 3 things: (1) the
value of your Contract in the Investment Option on the Annuity Date; (2) the
Assumed Investment Return (AIR) used in the Contract; and (3) the performance of
the Investment Option(s). For Guaranteed Contracts, the AIR is 3%. For
Non-Guaranteed Contracts, you can choose a 3%, 5% or 7% AIR. We ask you to
choose an AIR at the time you buy the Contract. Once selected, you may not
change the AIR. Choosing a higher AIR will result in a higher initial amount of
income (Annuity Payment), but income will increase more slowly during periods of
good investment performance of the Investment Options and decrease more rapidly
during periods of poor investment performance. The SAI contains a more detailed
description of how Annuity Payments and Annuity Unit values are calculated.
GUARANTEED MINIMUM ANNUITY PAYMENT - GUARANTEED CONTRACT ONLY: You can choose to
protect your investment by purchasing a Guaranteed Contract. If you purchase a
Guaranteed Contract, London Pacific guarantees that your Annuity Payment will be
at least equal to 100% of the Guaranteed Minimum Annuity Payment shown in your
Contract. Each Annuity Payment will vary upwards or downwards based on the
performance of the Investment Option, unless the Annuity Payment would be less
than the Guaranteed Minimum Annuity Payment. Under the terms of the Contract's
guarantee, London Pacific will pay the Payee the greater of: (a) the Annuity
Payment amount determined by multiplying the number of Annuity Units times the
Annuity Unit value; or (b) the Guaranteed Minimum Annuity Payment.
You can choose one of the following Annuity Options. After Annuity Payments
begin, you cannot change the Annuity Option.
OPTION 1. LIFE ANNUITY. Under this option, we will make Annuity Payments at a
frequency that you choose so long as the Annuitant is alive. After the
Annuitant dies, we stop making Annuity Payments.
OPTION 2. LIFE ANNUITY WITH PERIOD CERTAIN. Under this option, we will make
Annuity Payments at a frequency you choose so long as the Annuitant is alive.
For a Non-Guaranteed Contract, if, when the Annuitant dies, we have made Annuity
Payments for less than the number of years selected (period certain), the
Beneficiary has the option of receiving the remaining Annuity Payments for the
rest of the period certain or taking the death benefit in a single lump sum. The
lump sum payment will be equal to the present value of the remaining payments
discounted at a rate equal to the sum of the AIR plus 1.00% (commutation fee)
using the Annuity Unit values as of the date London Pacific receives written
notification of Due Proof of Death. For a Guaranteed Contract, if, when the
Annuitant dies, we have made Annuity Payments for less than the period certain,
the remaining payments will continue to the Beneficiary for the remainder of the
period certain.
OPTION 3. PAYMENT FOR A PERIOD CERTAIN. Under this option, we will make Annuity
Payments at a frequency you choose for a fixed period of years. For a Guaranteed
Contract, the minimum period is 25 years. For the Non-Guaranteed Contract, if,
at the death of the Annuitant, Annuity Payments have been made for less than the
fixed period of years, the Beneficiary will have the option of receiving the
remaining payments for the rest of the period or taking the death benefit in a
single lump sum. The lump sum payment will be equal to the present value of the
remaining payments discounted at a rate equal to the sum of the AIR plus 1.00%
(commutation fee) using the Annuity Unit values as of the date London Pacific
receives written notification of Due Proof of Death. For the Guaranteed
Contract, if, at the death of the Annuitant, payments have been made for less
than the fixed period of years, the remaining payments will continue to the
Beneficiary for the remainder of the period.
OPTION 4. JOINT & SURVIVOR LIFE ANNUITY. Under this option, we will make Annuity
Payments at a frequency you choose so long as the Annuitant and the Joint
Annuitant are alive. After the first Annuitant dies and during the lifetime of
the surviving Annuitant, we will continue making Annuity Payments. After the
surviving Annuitant dies, we will stop making Annuity Payments.
HOW TO PURCHASE THE CONTRACTS
Contribution
The Contribution is the money you give us to buy the Contract. The Contracts
require the payment of a single Contribution of at least $20,000. You cannot
make additional Contributions to your Contract.
Allocation of Contribution
When you purchase a Non-Guaranteed Contract, we will allocate your Contribution
to the Investment Options you have selected. We have reserved the right, under
certain circumstances, to allocate the Contribution to the Berkeley Money Market
Portfolio until the end of the free-look period.
When you purchase a Guaranteed Contract, we will allocate your Contribution to
the Fixed Account. Your Contribution will earn interest in the Fixed Account.
The Contribution, with interest earned in the Fixed Account, will be allocated
to the BT Equity 500 Index Fund 30 days after the Issue Date of your Contract.
Once we receive your Contribution and the necessary information and they are
deemed to be in good order, we will issue you a Contract. We will allocate your
Contribution within 2 business days. If the information is not in good order, we
will contact you to get the necessary information. If for some reason we are
unable to complete this process within 5 business days, we will either sent back
your money or get your permission to keep it until we get all of the necessary
information.
Free-Look
Guaranteed Contract: 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), and we will refund your Contribution.
Non-Guaranteed Contract: 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), and we will send your money back. You will receive whatever your
Contract is worth on the day we receive your request. This may be more or less
than your Contribution. If you have purchased the Contract as an individual
retirement annuity or in certain states, we are required to return your
Contribution. If that is the case, we reserve the right to put your money in the
Berkeley Money Market Portfolio for 15 days after we allocate your Contribution
(or whatever period is required in your state).
Accumulation Units - Non-Guaranteed Contract Only
The value of a Contract will go up or down depending upon the investment
performance of the Investment Option(s) you choose. In order to keep track of
the value of your Contract, we use a unit of measure we call an Accumulation
Unit. During the Annuity Period, we call it an Annuity Unit.
Every Business Day we determine the value of an Accumulation Unit for each
Investment Option. We do this by:
1. determining the total amount of money invested in the particular
Investment Option;
2. subtracting from that amount the Separate Account Charge; and
3. dividing this amount by the number of outstanding Accumulation Units.
The value of an Accumulation Unit may go up or down from day to day.
When you make your Contribution to a Non-Guaranteed Contract, London Pacific
will credit your Contract with Accumulation Units. The number of Accumulation
Units credited is determined by dividing the amount of the Contribution
allocated to an Investment Option by the value of the Accumulation Unit for that
Investment Option.
London Pacific calculates that value of an Accumulation Unit for each Investment
Option after the New York Stock Exchange (NYSE) closes each day and then credits
your Contract. There may be days when the NYSE is open for business and we are
closed. The day after Thanksgiving is the only such date. On such date, you will
not have access to your account and therefore no transactions will be processed
for the Separate Account.
When you make your Contribution to a Guaranteed Contract, we will credit your
Contract with interest in our Fixed Account up to the Annuity Date.
Transfers - Non-Guaranteed Contract Only:
If you own a Non-Guaranteed Contract, you can make transfers, by Written
Request, between Investment Options before the Annuity Calculation Date and
after the Annuity Date. During the Annuity Period, after a transfer, your next
Annuity Payment will reflect changes in the value of the new Annuity Units.
The minimum amount which you can transfer is $500 from one or more Investment
Options or your entire interest in the Investment Option, if less. The minimum
amount which must remain in an Investment Option after a transfer is $500 for
each Investment Option or $0 if the entire interest in the Investment Option is
transferred.
If you make more than 12 transfers each year, a $20 transfer fee will be
assessed for each transfer after the first free 12.
Telephone transfers can be made pursuant to Written Request. London Pacific will
use reasonable procedures to confirm that instructions given us by telephone are
genuine. If we fail to use such procedures, we may be liable for losses due to
fraudulent or unauthorized instructions. London Pacific tape records all
telephone instructions.
London Pacific reserves the right, at any time and without prior notice to any
party, to terminate, suspend or modify the transfer privilege described above.
The Contracts are not designed for professional market timing organizations.
Repeated patterns of frequent transfers are disruptive to the operations of the
Investment Options. When London Pacific becomes aware of such disruptive
transactions, we may modify the transfer provisions of the Contract.
IF YOU OWN A GUARANTEED CONTRACT, YOU MAY NOT MAKE TRANSFERS.
INVESTMENT OPTIONS
For Non-Guaranteed Contracts, the following eleven Investment Options are
available. Additional Investment Options may be available in the future.
YOU SHOULD READ THE PROSPECTUSES FOR THESE FUNDS CAREFULLY BEFORE INVESTING.
COPIES OF THESE PROSPECTUSES ARE ATTACHED TO THIS PROSPECTUS.
Shares of the Funds may be offered in connection with certain variable annuity
contracts and variable life insurance policies of various life insurance
companies which may or may not be affiliated with London Pacific. Certain
portfolios may also be sold directly to qualified plans. The funds do not
believe that offering their shares in this manner will be disadvantageous to
you.
LPT VARIABLE INSURANCE SERIES TRUST
LPT Variable Insurance Series Trust (Trust) is a mutual fund with multiple
portfolios. LPIMC Insurance Marketing Services Adviser, a subsidiary of London
Pacific and a registered investment adviser under the Investment Advisers Act of
1940, serves as investment adviser to the Trust. The Adviser has entered into
sub-advisory agreements with professional money managers for investment of the
assets of each portfolio of the Trust. The Sub-Adviser for each portfolio is
listed under each portfolio below.
The following Investment Options are available under the Contracts:
Harris Associates Value Portfolio
The Sub-Adviser for this Portfolio is Harris Associates L.P.
MFS Total Return Portfolio
The Sub-Adviser for this Portfolio is Massachusetts Financial Services
Company.
Berkeley U.S. Quality Bond Portfolio
The Sub-Adviser for this Portfolio is Berkeley Capital Management. Prior to
November 3, 1997, the Portfolio had a different Sub-Adviser.
Berkeley Money Market Portfolio
The Sub-Adviser for this Portfolio is Berkeley Capital Management. Prior to
November 3, 1997, the Portfolio had a different Sub-Adviser.
Robertson Stephens Diversified Growth Portfolio
The Sub-Adviser for this Portfolio is Robertson, Stephens & Company Investment
Management, L.P.
Lexington Corporate Leaders Portfolio(R)
The Sub-Adviser for this Portfolio is Lexington Management Corporation.
Strong Growth Portfolio
The Sub-Adviser for this Portfolio is Strong Capital Management, Inc.
MORGAN STANLEY UNIVERSAL FUNDS, INC.
Morgan Stanley Universal Funds, Inc. is a mutual fund with eighteen portfolios,
three of which are available under the Contracts. Miller Anderson & Sherrerd,
LLP is the investment adviser to the High Yield Portfolio. Morgan Stanley Asset
Management Inc. is the investment adviser for the International Magnum and
Emerging Markets Equity Portfolios. The following Investment Options are
available under the Contracts:
High Yield Portfolio
International Magnum Portfolio
Emerging Markets Equity Portfolio
BT INSURANCE FUNDS TRUST
BT Insurance Funds Trust (Fund) is a series fund with six series, one of which
is available under the Contracts. Bankers Trust Company is the investment
manager of the Fund. The following Portfolio is available under the Contracts:
BT Equity 500 Index Fund
Under a Guaranteed Contract, the BT Equity 500 Index Fund of BT Insurance Funds
Trust is the only available Investment Option.
Dollar Cost Averaging Program - Non-Guaranteed Contract Only
The Dollar Cost Averaging Program is a program, which if elected, permits you to
systematically transfer amounts monthly, quarterly, semi-annually or annually
from the Berkeley Money Market Portfolio or the Berkeley U.S. Quality Bond
Portfolio to one or more of the other Investment Options. To participate in the
program, the value of your Contract must be at least $20,000. By allocating
amounts on a regular schedule as opposed to allocating the total amount at one
particular time, you may be less susceptible to the impact of market
fluctuations.
You must participate in Dollar Cost Averaging for at least 12 months. There is
no current charge for Dollar Cost Averaging. However, we reserve the right to
charge for it in the future. Transfers under this program will take place on the
date you request to participate in the program and anniversaries of that date.
Transfers made pursuant to the Dollar Cost Averaging Program are not taken into
account in determining the transfer fee.
We reserve the right at any time and without prior notice to any party, to
terminate, suspend or modify the Dollar Cost Averaging Program.
Rebalancing Program - Non-Guaranteed Contract Only
You may use an asset allocation model know as the Asset Equalizer to help you
establish your initial investment allocations. If you do, you may rebalance your
investments monthly to maintain the allocation in the Asset Equalizer model.
Rebalancing provides for periodic automatic transfers among the Investment
Options.
Transfers made pursuant to the Rebalancing Program are not taken into account in
determining the transfer fee.
Voting Rights
London Pacific is the legal owner of the Investment Option shares. However,
London Pacific believes that when an Investment Option solicits proxies in
conjunction with a vote of shareholders, it is required to obtain from you and
other 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 London Pacific owns on its
own behalf. Should London Pacific determine that it is no longer required to
comply with the above, we will vote the shares in our own right.
Substitution
London Pacific may be required to substitute one of the Investment Options you
have selected with another portfolio. 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.
Exchange Program
London Pacific currently offers an exchange program (Exchange Program) which is
available only to purchasers who exchange a contract issued by another insurance
company not affiliated with London Pacific or other financial institution
(Exchange Investment) for a Contract offered by this prospectus. The Exchange
Program is not available to purchasers who own another immediate variable
annuity contract and want to exchange it for the Contracts described in this
prospectus. We reserve the right to modify, suspend, or terminate the Exchange
Program at any time or from time to time without notice. If the Exchange Program
is in effect, it will apply to all exchanges which qualify for the program for a
Contract offered by this prospectus. The Exchange Program is available only
where permitted by law.
A currently owned variable deferred annuity contract or life insurance policy
may be exchanged for a Contract pursuant to Section 1035 of the Internal Revenue
Code (Code), or where applicable, may qualify for a "rollover" or transfer to a
Contract pursuant to other sections of the Code.
You should carefully evaluate whether the Exchange Program offers benefits which
are more favorable than if you continued to hold your Exchange Investment.
Factors to consider include, but are not limited to: (a) the amount, if any, of
surrender charges or other charges and penalties incurred in surrendering a
contract which can be obtained from the insurance company or financial
institution which issued the contract or instrument; (b) the time remaining
under your Exchange Investment during which surrender charges or other charges
and penalties apply; (c) the on-going charges, if any, under the Exchange
Investment versus the on-going charges under the Contracts described in this
prospectus; (d) the amount and timing of any benefits under the Exchange
Program; and (e) the potentially greater cost to you if the charges under a
Contract or the surrender charge or charges and penalties on the Exchange
Investment exceeds the benefits under the Exchange Program. While we know of no
adverse federal income tax consequences, you should consult with your own tax
adviser regarding the tax consequences of an exchange.
Under the currently available Exchange Program, London Pacific adds certain
amounts to the Contract as exchange credits (Exchange Credits). The Exchange
Credits are credited by London Pacific on behalf of Owners of an Exchange
Investment from our general account. Subject to a specified limit (Exchange
Credit Limit) discussed below, Exchange Credits equal the surrender charge paid,
if any, to the other insurance company or the charges and penalties paid to the
other financial institution. The Exchange Program is subject to the following
rules:
1. London Pacific does not add Exchange Credits unless we receive in
writing, not later than 30 days after the issue of the Contract,
evidence satisfactory to us:
a. of the surrender charge or other charges and penalties, if any,
paid by you to surrender the Exchange Investment and the amount
of any such charge; and
b. you acknowledge that you are aware that the commutation fee under
the Contract will be assessed in full against a subsequent
surrender to the extent applicable.
2. London Pacific allocates the Exchange Credits to the Contract 25 days
after a Contract is issued (and for Non-Guaranteed Contracts, 35 days
after a Contract is issued in California if the purchaser is 60 years
of age or older). In no event will Exchange Credits be added after the
Annuity Date. The Exchange Credits will be allocated prorata among the
Investment Options based on the ratio of the values in the Investment
Option.
3. The value of the Exchange Credits as of the date of the allocation to
the Investment Option equals the lesser of the Exchange Credit Limit
or the surrender charge paid or other charges and penalties to
surrender the Exchange Investment. The Exchange Credit Limit currently
is 5% of the net amount payable upon surrender of the Exchange
Investment. We reserve the right at any time and from time to time to
increase or decrease the Exchange Credit Limit. However, the Exchange
Credit Limit in effect at any time will apply to all purchases
qualifying for the Exchange Program.
4. London Pacific does not consider additional amounts credited to your
Contract under the Exchange Program to be an increase in your
investment in the Contract.
PERFORMANCE
London Pacific may advertise performance of the various Investment Options.
Performance information of an Investment Option is based on the Separate
Account's past performance only and is no indication of future performance.
London Pacific will calculate performance by determining the percentage change
in an Investment Option by dividing the increase (decrease) for the Option by
the value of the Investment Option at the beginning of the period. The
performance number will reflect the deduction of the Separate Account Charge,
and with respect to the Guaranteed Contract, the Guaranteed Minimum Annuity
Payment Charge.
EXPENSES
There are charges and other expenses associated with the Contracts that reduce
the return on your investment in the Contracts. These charges and expenses are:
SEPARATE ACCOUNT CHARGE
This charge is equal, on an annual basis, to 1.25% of the daily value of the
Contracts invested in an Investment Option, after expenses have been deducted.
This charge compensates London Pacific for assuming the mortality and expense
risks under the Contracts and the costs associated with the administration of
the Contracts and the Separate Account.
GUARANTEED MINIMUM ANNUITY PAYMENT CHARGE (GUARANTEED CONTRACT ONLY)
This charge ranges from 1.75% to 2.10% of the daily value of the Guaranteed
Contract invested in the Investment Option, after expenses have been deducted.
The charge will be set quarterly and will lock in at the time you purchase the
Contract. The amount of the Guaranteed Minimum Annuity Payment charge is set
forth in your Contract. This charge compensates London Pacific for the costs
associated with providing the Guaranteed Minimum Annuity Payment.
COMMUTATION FEE (NON-GUARANTEED CONTRACT ONLY)
If you surrender your Contract under Annuity Option 3 or if the Beneficiary
elects to receive a lump sum payment under Annuity Options 2 or 3 after the
Annuitant dies, the amount received will be reduced by a minus b, where:
a = the remaining guaranteed Annuity Payments discounted at the AIR; and
b = the remaining guaranteed Annuity Payments discounted at a rate equal to
the sum of the AIR plus 1.00%.
TRANSFER FEE (NON-GUARANTEED CONTRACT ONLY)
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 $20 for each transfer thereafter.
The transfer fee will be deducted from the Investment Option from which the
transfer is made. If your entire interest in the Investment Option is being
transferred, the transfer fee will be deducted from the amount which is
transferred. If the transfer is made from more than one Investment Option, the
transfer fee will be deducted pro-rata from each Investment Option from which a
transfer is made.
Any transfers made pursuant to the Dollar Cost Averaging or Rebalancing Programs
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. London Pacific is responsible for the payment of
these taxes and will make a deduction from the value of the Contracts for them.
Some of these taxes are due when the Contract is issued, other are due when
Annuity Payments begin. It is London Pacific's current practice to deduct for
any premium taxes from the Contribution when it is made. Premium taxes generally
range from 0% to 4%, depending on the state.
INCOME TAXES
London Pacific will deduct from the Contracts for any income taxes which it
incurs because of the Contracts. At the present time, we are not making any such
deductions.
INVESTMENT OPTION EXPENSES
There are deductions from and expenses paid out of the assets of the various
Investment Options, which are described in the attached fund prospectuses.
TAXES
NOTE: LONDON PACIFIC HAS PREPARED THE FOLLOWING INFORMATION ON TAXES AS A
GENERAL DISCUSSION OF THE SUBJECT. IT IS NOT INTENDED AS TAX ADVICE TO ANY
INDIVIDUAL. YOU SHOULD CONSULT YOUR OWN TAX ADVISER ABOUT YOUR OWN
CIRCUMSTANCES. LONDON PACIFIC HAS INCLUDED IN THE STATEMENT OF ADDITIONAL
INFORMATION AN ADDITIONAL DISCUSSION REGARDING TAXES.
ANNUITY CONTRACTS IN GENERAL
Annuity contracts are a means of setting aside money for future needs and for
providing a series of periodic payments for life or a fixed number of years.
Congress recognized how important saving for retirement was and provided special
rules in the Internal Revenue Code (Code) for annuities.
Simply stated these rules provide that you will not be taxed on the 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 as to how you will be
taxed depending on how you take the money out and the type of
Contract--Qualified or Non-Qualified (see following sections).
You, as the Owner, will not be taxed on increases in the value of your Contract
until a distribution occurs--either as a surrender or as Annuity Payments. When
you make a surrender you are taxed on the amount of the surrender that is
earnings. For Annuity Payments, different rules apply. A portion of each Annuity
Payment is treated as a partial return of your Contribution 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
Contribution are fully includible in income.
QUALIFIED AND NON-QUALIFIED CONTRACTS
If you purchase the Contract as an individual and not under any pension plan,
specially sponsored program or an individual retirement annuity, your Contract
is referred to as a Non-Qualified Contract.
If you purchase the Contract under a pension plan, specially sponsored program,
or an individual retirement annuity, your Contract is referred to as a qualified
contract. Examples of qualified plans are: Individual Retirement Annuities
(IRAs) and pension and profit-sharing plans, which include 401(k) plans.
SURRENDERS--NON-QUALIFIED CONTRACTS
If you surrender your Contract, the earnings portion of the Contract 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 penalty. The
amount of the penalty is equal to 10% of the amount that is includible in
income. Some distributions will be exempt from the penalty. They include any
amounts: (1) paid on or after you reach age 59 1/2; (2) paid after you die; (3)
paid if you become totally disabled (as that term is defined in the Code); (4)
paid in a series of substantially equal payments made annually (or more
frequently) under a lifetime annuity; (5) paid as annuity payments under an
immediate annuity; or (6) which come from purchase payments made prior to August
14, 1982.
SURRENDERS--QUALIFIED CONTRACTS
The above information describing the taxation of non-qualified contracts does
not apply to Qualified Contracts. There are special rules that govern with
respect to Qualified Contracts. We have provided a more complete discussion in
the Statement of Additional Information.
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. London Pacific believes that the Investment Options 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 London Pacific would be considered the
owner of the shares of the Investment Options. If this occurs, it will result in
the loss of the favorable tax treatment for the Contract. It is unknown to what
extent Owners are permitted to select Investment Options, to make transfers
among the Investment Options or the number and type of Investment Options Owners
may select from. 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 Investment Options.
Due to the uncertainty in this area, London Pacific reserves the right to modify
the Contracts in an attempt to maintain favorable tax treatment.
SURRENDERS
YOU CANNOT MAKE ANY SURRENDERS FROM A GUARANTEED CONTRACT AFTER THE FREE-LOOK
PERIOD.
If you own a Non-Guaranteed Contract and have chosen Annuity Option 3, you may
make a total surrender of your Contract after the Annuity Date by submitting
a Written Request to the Annuity Service Center. Surrenders are not permitted
during the first Contract year. Partial surrenders are not permitted. The amount
available to surrender is the present value of the remaining guaranteed Annuity
Payments, discounted at a rate equal to the sum of the AIR plus 1.00%
(commutation fee).
INCOME TAXES AND TAX PENALTIES MAY APPLY TO ANY SURRENDER YOU MAKE.
Suspension of Payments or Transfers
London Pacific may be required to suspend or postpone payments for surrenders 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 shares of the
Investment Options is not reasonably practicable or London Pacific cannot
reasonably value the shares of the Investment Options; or
4. during any other period when the Securities and Exchange Commission, by
order, so permits for the protection of owners.
DEATH BENEFIT
If you, the Joint Owner, the Annuitant or the Joint Annuitant die before the
Annuity Date, London Pacific will pay your Beneficiary a death benefit. The
death benefit is calculated as of the day we receive written notification of Due
Proof of Death. For a Guaranteed Contract, the death benefit is equal to the
Contribution plus interest. For a Non-Guaranteed Contract, the death benefit is
equal to the Contract value.
The death benefit will be paid after the death of the Owner, the Joint Owner, if
any, the Annuitant or the Joint Annuitant, if any, whichever death occurs first.
The entire death benefit must be paid within 5 years of the date of death unless
the Beneficiary elects to have the death benefit payable under an Annuity
Option. The death benefit payable under an Annuity Option must be paid over the
Beneficiary's lifetime or for a period not extending beyond the Beneficiary's
life expectancy. Payment must begin within one year of the date of death. In the
event of the death of the Owner who is not an Annuitant, if the Beneficiary is
the spouse of the Owner, he or she may elect to continue the Contract in his/her
own name.
Payment to the Beneficiary, other than a single lump sum, can only be elected
during the 60 day period beginning with the date of receipt of Due Proof of
Death.
If you or a Joint Owner die on or after the Annuity Date, any remaining Annuity
Payments will continue at least as rapidly as under the method of distribution
in effect at the Owner's death. Upon the death of the Owner on or after the
Annuity Date, the Beneficiary becomes the Owner.
Under a Guaranteed Contract, upon the death of the Annuitant on or after the
Annuity Date, any remaining payments will continue at least as rapidly as under
the method of distribution in effect at the Annuitant's death.
Under a Non-Guaranteed Contract, upon the death of the Annuitant on or after the
Annuity Date, the Beneficiary will have the option under Annuity Options 2 and 3
of having payments continue to the Beneficiary for the remainder of the period
or taking the death benefit in a single lump sum. The lump sum will be equal to
the present value of the guaranteed Annuity Payments, discounted at a rate equal
to the sum of the AIR plus 1.00% using the Annuity Unit values as of the date we
receive written notification of Due Proof of Death. Death benefits will be paid
at least as rapidly as under the method of distribution in effect at the
Annuitant's death.
If the Contract is owned by a non-individual (e.g., a corporation), then the
death of the Annuitant will be treated as the death of the Owner for purposes of
the distribution of the death benefit.
OTHER INFORMATION
LONDON PACIFIC
London Pacific Life & Annuity Company (London Pacific) was organized in 1927 in
North Carolina as a stock life insurance company. London Pacific was acquired
from Liberty Life in 1989. London Pacific is authorized to sell life insurance
and annuities in 40 states and the District of Columbia. London Pacific's
ultimate parent is London Pacific Group Limited, an international fund
management firm chartered in Jersey, Channel Islands.
London Pacific's financial statements appear in the SAI and should be considered
only as bearing upon London Pacific's ability to meet its obligations under the
Contracts.
THE SEPARATE ACCOUNT
London Pacific established a separate account known as LPLA Separate Account One
(Separate Account) to hold the assets that underlie the Contracts. The Board of
Directors of London Pacific adopted a resolution to establish the Separate
Account under North Carolina insurance law on November 21, 1994. We have
registered the Separate Account with the SEC as a unit investment trust under
the Investment Company Act of 1940.
The assets of the Separate Account are held in London Pacific's name on behalf
of the Separate Account and legally belong to London Pacific. However, those
assets that underlie the Contracts, are not chargeable with liabilities arising
out of any other business London Pacific 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 gains any other contracts we may issue.
DISTRIBUTION
London Pacific Financial and Insurance Services, 1755 Creekside Oaks Drive,
Sacramento, California 96833 acts as the principal underwriter of the Contracts.
London Pacific Financial and Insurance Services is registered as a broker-dealer
with the SEC and is a member of the National Association of Securities Dealers,
Inc. London Pacific Financial and Insurance Services is an affiliate of London
Pacific. Commissions will paid to broker-dealers who sell the Contracts.
Broker-dealers will be paid commission, up to an amount currently equal to ___%
of Contributions for promotional or distribution expenses.
TABLE OF CONTENTS OF THE SAI
London Pacific
Experts
Legal Opinions
Distributor
Calculation of Performance Information
Federal Tax Status
Annuity Provisions
Financial Statements
APPENDIX - ILLUSTRATIONS OF ANNUITY PAYMENTS
[ILLUSTRATIONS WILL BE FILED BY AMENDMENT]
PART B
STATEMENT OF ADDITIONAL INFORMATION
INDIVIDUAL VARIABLE SINGLE CONTRIBUTION IMMEDIATE
ANNUITY CONTRACTS
ISSUED BY
LPLA SEPARATE ACCOUNT ONE
AND
LONDON PACIFIC LIFE & ANNUITY COMPANY
THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE
READ IN CONJUNCTION WITH THE PROSPECTUS DATED _________, 1998 FOR THE INDIVIDUAL
VARIABLE SINGLE CONTRIBUTION IMMEDIATE ANNUITY CONTRACTS WHICH ARE REFERRED TO
HEREIN.
THE PROSPECTUS CONCISELY SETS FORTH INFORMATION FOR A PROSPECTIVE INVESTOR. FOR
A COPY OF THE PROSPECTUS CALL OR WRITE THE COMPANY AT: P.O. BOX 29564, RALEIGH,
NORTH CAROLINA 27626; (800) 852-3152.
THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED __________, 1998.
TABLE OF CONTENTS
PAGE
London Pacific...........................................................
Experts..................................................................
Legal Opinions...................... ...................................
Distributor........................... ..................................
Calculation of Performance Information...................................
Federal Tax Status.......................................................
Annuity Provisions......................................................
Financial Statements....................................................
LONDON PACIFIC
Information regarding London Pacific Life & Annuity Company ("London Pacific" or
the "Company") and its ownership is contained in the Prospectus.
London Pacific contributed the initial capital to the Separate Account. As of
April 1, 1998, the initial capital contributed by London Pacific represented
approximately 6.03% of the total assets of the Separate Account. London Pacific
currently intends to retain these funds in the Separate Account.
EXPERTS
The financial statements of the Company as of December 31, 1997 and 1996 and for
each of the three years in the period ended December 31, 1997, and the financial
statements of the Separate Account for the year ended December 31, 1997 and the
period from January 31, 1996 (commencement of operations) to December 31, 1996,
included in this Statement of Additional Information have been so included in
reliance on the reports of ______________________, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
LEGAL OPINIONS
Blazzard, Grodd & Hasenauer, P.C., Westport, Connecticut has provided advice on
certain matters relating to the federal securities and income tax laws in
connection with the Contracts.
DISTRIBUTOR
London Pacific Financial and Insurance Services acts as the distributor. London
Pacific Financial and Insurance Services is an affiliate of the Company. The
offering is on a continuous basis.
CALCULATION OF PERFORMANCE INFORMATION
YIELD CALCULATION FOR THE BERKELEY MONEY MARKET SUB-ACCOUNT
The Berkeley Money Market Sub-Account of the Separate Account will calculate its
current yield based upon the seven days ended on the date of calculation. The
Company does not currently advertise any yield information for the Berkeley
Money Market Sub-Account.
The current yield of the Berkeley Money Market Sub-Account is computed daily by
determining the net change (exclusive of capital changes) in the value of a
hypothetical pre-existing Owner account having a balance of one Accumulation
Unit of the Sub-Account at the beginning of the period, subtracting the Separate
Account Charge, and with respect to the Guaranteed Contract, the Guaranteed
Minimum Annuity Payment Charge, dividing the difference by the value of the
Owner account at the beginning of the same period to obtain the base period
return and multiplying the result by (365/7).
The Berkeley Money Market Sub-Account computes its effective compound yield by
determining the net changes (exclusive of capital change)in the value of a
hypothetical pre-existing Owner account having a balance of one Accumulation
Unit of the Sub-Account at the beginning of the period, subtracting the Separate
Account Charge, and with respect to the Guaranteed Contract, the Guaranteed
Minimum Annuity Payment Charge and dividing the difference by the value of the
Owner account at the beginning of the base period to obtain the base period
return, and then compounding the base period return by adding 1, raising the sum
to a power equal to 365 divided by 7, and subtracting 1 from the result,
according to the following formula: Effective Yield = ((Base Period Return
+1)365/7)-1. The current and the effective yields reflect the reinvestment of
net income earned daily on the Berkeley Money Market Sub-Account's assets.
Net investment income for yield quotation purposes will not include either
realized capital gains and losses or unrealized appreciation and depreciation,
whether reinvested or not.
The yields quoted should not be considered a representation of the yield of the
Berkeley Money Market Sub-Account in the future since the yield is not fixed.
Actual yields will depend not only on the type, quality and maturities of the
investments held by the Berkeley Money Market Sub-Account and changes in the
interest rates on such investments, but also on changes in the Berkeley Money
Market Sub-Account's expenses during the period.
Yield information may be useful in reviewing the performance of the Berkeley
Money Market Sub-Account and for providing a basis for comparison with other
investment alternatives. However, the Berkeley Money Market Sub-Account's yield
fluctuates, unlike bank deposits or other investments which typically pay a
fixed yield for a stated period of time.
PERFORMANCE INFORMATION
From time to time, the Company may advertise performance data as described in
the Prospectus. Any such advertisement will include standardized average annual
total return figures for the time periods indicated in the advertisement. Such
total return figures will reflect the deduction of the Separate Account Charge
and, with respect to the Guaranteed Contract, the Guaranteed Minimum Annuity
Payment Charge.
The hypothetical value of a Contract purchased for the time periods described in
the advertisement will be determined by using the actual Accumulation Unit
values for an initial $1,000 Contribution. The average annual total return is
then determined by computing the fixed interest rate that a $1,000 Contribution
would have to earn annually, compounded annually, to grow to the hypothetical
value at the end of the time periods described. The formula used in these
calculations is:
n
P (1+T) = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the time periods used (or
fractional portion thereof) of a hypothetical $1,000 payment made at
the beginning of the time periods used.
The Contracts are new and therefore have no performance history. However, the
Separate Account has invested in certain Investment Options for some time and
has an investment performance history. In order to show how the historical
performance of the funds underlying the Separate Account affect the Contract's
values, London Pacific may develop performance information. The information will
be based upon the historical experience of the Separate Account and the
underlying funds for the periods shown.
In addition to total return data, the Company may include yield information in
its advertisements. For each Sub-Account (other than the Berkeley Money Market
Sub-Account) for which the Company will advertise yield, it will show a yield
quotation based on a 30 day (or one month) period ended on the date of the most
recent balance sheet of the Separate Account included in the registration
statement, computed by dividing the net investment income per Accumulation Unit
earned during the period by the maximum offering price per Unit on the last day
of the period, according to the following formula:
6
Yield = 2 [( a-b + 1) - 1]
----
cd
Where:
a = Net investment income earned during the period by the Portfolio
attributable to shares owned by the Sub-Account.
b = Expenses accrued for the period (net of reimbursements).
c = The average daily number of Accumulation Units outstanding during
the period.
d = The maximum offering price per Accumulation Unit on the last day of
the period.
London Pacific may also advertise performance data which may be computed on a
different basis which may not include certain charges. If such charges were
deducted, the performance would be lower.
You should note that the investment results of each Sub-Account will fluctuate
over time, and any presentation of the Sub-Account's total return or yield for
any period should not be considered as a representation of what an investment
may earn or what your total return or yield may be in any future period.
FEDERAL TAX STATUS
Note: The following description is based upon the Company's understanding of
current federal income tax law applicable to annuities in general. The Company
cannot predict the probability that any changes in such laws will be made.
Purchasers are cautioned to seek competent tax advice regarding the possibility
of such changes. The Company does not guarantee the tax status of the Contracts.
Purchasers bear the complete risk that the Contracts may not be treated as
"annuity contracts" under federal income tax laws. It should be further
understood that the following discussion is not exhaustive and that special
rules not described in this Prospectus may be applicable in certain situations.
Moreover, no attempt has been made to consider any applicable state or other tax
laws.
GENERAL
Section 72 of the Internal Revenue Code of 1986, as amended (the "Code") governs
taxation of annuities in general. An Owner is not taxed on increases in the
value of a Contract until distribution occurs, either in the form of a lump sum
payment or as annuity payments under the Annuity Option elected.
For annuity payments, the portion of a payment includible in income equals the
excess of the payment over the exclusion amount. The exclusion amount for
payments based on a variable annuity option is determined by dividing the
investment in the Contract (adjusted for any period certain or refund guarantee)
by the number of years over which the annuity is expected to be paid (determined
by Treasury Regulations). Payments received after the investment in the Contract
has been recovered (i.e. the total of the excludable amounts equal the
investment in the Contract) are fully taxable. The taxable portion of an annuity
payment is taxed at ordinary income rates. For certain types of Qualified Plans
there may be no cost basis in the Contract within the meaning of Section 72 of
the Code, resulting in the whole payment being fully taxable. Contract Owners,
Annuitants and Beneficiaries under the Contracts should seek competent financial
advice about the tax consequences of any distributions.
The Company is taxed as a life insurance company under the Code. For federal
income tax purposes, the Separate Account is not a separate entity from the
Company, and its operations form a part of the Company.
DIVERSIFICATION
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not adequately
diversified in accordance with regulations prescribed by the United States
Treasury Department ("Treasury Department"). Disqualification of the Contract as
an annuity contract would result in the imposition of federal income tax on the
Owner with respect to earnings allocable to the Contract prior to the receipt of
payments under the Contract. The Code contains a safe harbor provision which
provides that annuity contracts such as the Contracts meet the diversification
requirements if, as of the end of each quarter, the underlying assets meet the
diversification standards for a regulated investment company and no more than
fifty-five percent (55%) of the total assets consist of cash, cash items, U.S.
government securities and securities of other regulated investment companies.
On March 2, 1989, the Treasury Department issued regulations (Treas. Reg.
1.817-5) which established diversification requirements for the investment
portfolios underlying variable contracts such as the Contracts. The regulations
amplify the diversification requirements for variable contracts set forth in the
Code and provide an alternative to the safe harbor provision described above.
Under the regulations, an investment portfolio will be deemed adequately
diversified if: (1) no more than 55% of the value of the total assets of the
portfolio is represented by any one investment; (2) no more than 70% of the
value of the total assets of the portfolio is represented by any two
investments; (3) no more than 80% of the value of the total assets of the
portfolio is represented by any three investments; and (4) no more than 90% of
the value of the total assets of the portfolio is represented by any four
investments.
The Code provides that for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable contracts
by Section 817(h) of the Code have been met, "each United States government
agency or instrumentality shall be treated as a separate issuer."
The Company intends that all portfolios of the funds underlying the Contracts
will be managed in such a manner as to comply with these diversification
requirements.
The Treasury Department has indicated that the diversification Regulations do
not provide guidance regarding the circumstances in which Owner control of the
investments of the Separate Account will cause the Owner to be treated as the
owner of the assets of the Separate Account, thereby resulting in the loss of
favorable tax treatment for the Contract. At this time it cannot be determined
whether additional guidance will be provided and what standards may be contained
in such guidance.
The amount of Owner control which may be exercised under the Contract is
different in some respects from the situations addressed in published rulings
issued by the Internal Revenue Service in which it was held that the policy
owner was not the owner of the assets of the separate account. It is unknown
whether these differences, such as the Owner's ability to transfer among
investment choices or the number and type of investment choices available, would
cause the Owner to be considered as the owner of the assets of the Separate
Account resulting in the imposition of federal income tax to the Owner with
respect to earnings allocable to the Contract prior to receipt of payments under
the Contract.
In the event any forthcoming guidance or ruling is considered to set forth a new
position, such guidance or ruling will generally be applied only prospectively.
However, if such ruling or guidance was not considered to set forth a new
position, it may be applied retroactively resulting in the Owner being
retroactively determined to be the owner of the assets of the Separate Account.
Due to the uncertainty in this area, the Company reserves the right to modify
the Contract in an attempt to maintain favorable tax treatment.
MULTIPLE CONTRACTS
Section 72(e)(11) of 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. The legislative history
of Section 72(e)(11) indicates that it was not intended to apply to immediate
annuities. However, the legislative history also states that no inference is
intended as to whether the Treasury Department, under its authority to prescribe
rules to enforce the tax laws, may treat the combination purchase of a deferred
annuity contract with an immediate annuity contract as a single contract for
purposes of determining the tax consequences of any distribution.
TAX TREATMENT OF DISTRIBUTIONS--NON-QUALIFIED CONTRACTS
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the Contract Value exceeds the aggregate purchase
payments made, any amount withdrawn will be treated as coming first from the
earnings and then, only after the income portion is exhausted, as coming from
the principal. Withdrawn earnings are includable in gross income. It further
provides that a ten percent (10%) penalty will apply to the income portion of
any distribution. However, the penalty is not imposed on amounts received: (a)
after the taxpayer reaches age 59 1/2; (b) after the death of the Owner; (c) if
the taxpayer is totally disabled (for this purpose disability is as defined in
Section 72(m)(7) of the Code); (d) in a series of substantially equal periodic
payments made not less frequently than annually for the life (or life
expectancy) of the taxpayer and his Beneficiary; (e) as an annuity payment under
an immediate annuity; or (f) which are allocable to purchase payments made prior
to August 14, 1982.
The above information does not apply to Qualified Contracts. However, separate
tax withdrawal penalties and restrictions may apply to such Qualified Contracts.
(See "Tax Treatment of Distributions - Qualified Contracts.")
QUALIFIED PLANS
The Contracts offered herein are designed to be suitable for use under various
types of Qualified Plans. Taxation of participants in each Qualified Plan varies
with the type of plan and terms and conditions of each specific plan. Owners,
Annuitants and Beneficiaries are cautioned that benefits under a Qualified Plan
may be subject to the terms and conditions of the plan regardless of the terms
and conditions of the Contracts issued pursuant to the plan. Some retirement
plans are subject to distribution and other requirements that are not
incorporated into the Company's administrative procedures. Owners, participants
and Beneficiaries are responsible for determining that contributions,
distributions and other transactions with respect to the Contracts comply with
applicable law. Following are general descriptions of the types of Qualified
Plans with which the Contracts may be used. Such descriptions are not exhaustive
and are for general informational purposes only. The tax rules regarding
Qualified Plans are very complex and will have differing applications depending
on individual facts and circumstances. Each purchaser should obtain competent
tax advice prior to purchasing a Contract issued under a Qualified Plan.
Contracts issued pursuant to Qualified Plans include special provisions
restricting Contract provisions that may otherwise be available as described
herein. Generally, Contracts issued pursuant to Qualified Plans are not
transferable except upon surrender or annuitization. Various penalty and excise
taxes may apply to contributions or distributions made in violation of
applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from Qualified Contracts. (See "Tax
Treatment of Distributions - Qualified Contracts" below.)
On July 6, 1983, the Supreme Court decided in Arizona Governing Committee v.
Norris that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. The Contracts sold by the Company in connection with
employer sponsored Qualified Plans will utilize annuity tables which do not
differentiate on the basis of sex. Such annuity tables will also be available
for use in connection with certain non-qualified deferred compensation plans.
a. Individual Retirement Annuities
Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity"
("IRA"). Under applicable limitations, certain amounts may be contributed to an
IRA which will be deductible from the individual's gross income. These IRAs are
subject to limitations on eligibility, contributions, transferability and
distributions. (See "Tax Treatment of Distributions - Qualified Contracts"
below.) Under certain conditions, distributions from other IRAs and other
Qualified Plans may be rolled over or transferred on a tax-deferred basis into
an IRA. Sales of Contracts for use with IRAs are subject to special requirements
imposed by the Code, including the requirement that certain informational
disclosure be given to persons desiring to establish an IRA. Purchasers of
Contracts to be qualified as Individual Retirement Annuities should obtain
competent tax advice as to the tax treatment and suitability of such an
investment.
Roth IRAs
Beginning in 1998, individuals may purchase a new type of non-deductible IRA,
known as a Roth IRA. Purchase payments for a Roth IRA are limited to a maximum
of $2,000 per year. Lower maximum limitations apply to individuals with adjusted
gross incomes between $95,000 and $110,000 in the case of single taxpayers,
between $150,000 and $160,000 in the case of married taxpayers filing joint
returns, and between $0 and $10,000 in the case of married taxpayers filing
separately. An overall $2,000 annual limitation continues to apply to all of a
taxpayer's IRA contributions, including Roth IRA and non-Roth IRAs.
Qualified distributions from Roth IRAs are free from federal income tax. A
qualified distribution requires that an individual has held the Roth IRA for at
least five years and, in addition, that the distribution is made either after
the individual reaches age 59 1/2, on the individual's death or disability, or
as a qualified first-time home purchase, subject to a $10,000 lifetime maximum,
for the individual, a spouse, child, grandchild, or ancestor. Any distribution
which is not a qualified distribution is taxable to the extent of earnings in
the distribution. Distributions are treated as made from contributions first and
therefore no distributions are taxable until distributions exceed the amount of
contributions to the Roth IRA. The 10% penalty tax and the regular IRA
exceptions to the 10% penalty tax apply to taxable distributions from a Roth
IRA.
Amounts may be rolled over from one Roth IRA to another Roth IRA. Furthermore,
an individual may make a rollover contribution from a non-Roth IRA to a Roth
IRA, unless the individual has adjusted gross income over $100,000 or the
individual is a married taxpayer filing a separate return. The individual must
pay tax on any portion of the IRA being rolled over that represents income or a
previously deductible IRA contribution. However, for rollovers in 1998, the
individual may pay that tax ratably over the four taxable year period beginning
with tax year 1998.
Purchasers of Contracts to be qualified as a Roth IRA should obtain competent
tax advice as to the tax treatment and suitability of such an investment.
b. Corporate Pension and Profit-Sharing Plans
Sections 401(a) and 401(k) of the Code permit corporate employers to establish
various types of retirement plans for employees. These retirement plans may
permit the purchase of the Contracts to provide benefits under the Plan.
Contributions to the Plan for the benefit of employees will not be includible in
the gross income of the employees until distributed from the Plan. The tax
consequences to participants may vary depending upon the particular plan design.
However, the Code places limitations and restrictions on all Plans including on
such items as: amount of allowable contributions; form, manner and timing of
distributions; transferability of benefits; vesting and nonforfeitability of
interests; nondiscrimination in eligibility and participation; and the tax
treatment of distributions, withdrawals and surrenders. (See "Tax Treatment of
Distributions - Qualified Contracts" below.) Purchasers of Contracts for use
with Corporate Pension or Profit Sharing Plans should obtain competent tax
advice as to the tax treatment and suitability of such an investment.
TAX TREATMENT OF DISTRIBUTIONS - QUALIFIED CONTRACTS
In the case of a surrender under a Qualified Contract, the earnings portion of
the amount surrendered will be includible in taxable income. Special tax rules
may be available for certain distributions from a Qualified Contract. Section
72(t) of the Code imposes a 10% penalty tax on the taxable portion of any
distribution from qualified retirement plans, including Contracts issued and
qualified under Code Sections 401 (Pension and Profit-Sharing Plans including
401(k) plans) and 408 and 408A (Individual Retirement Annuities including Roth
IRAs). To the extent amounts are not includible in gross income because they
have been rolled over to an IRA or to another eligible Qualified Plan, no tax
penalty will be imposed. The tax penalty will not apply to the following
distributions: (a) if distribution is made on or after the date on which the
Owner or Annuitant (as applicable) reaches age 59 1/2; (b) distributions
following the death or disability of the Owner or Annuitant (as applicable) (for
this purpose disability is as defined in Section 72(m) (7) of the Code); (c)
after separation from service, distributions that are part of substantially
equal periodic payments made not less frequently than annually for the life (or
life expectancy) of the Owner or Annuitant (as applicable) or the joint lives
(or joint life expectancies) of such Owner or Annuitant (as applicable) and his
or her designated Beneficiary; (d) distributions to an Owner or Annuitant (as
applicable) who has separated from service after he has attained age 55; (e)
distributions made to the Owner or Annuitant (as applicable) to the extent such
distributions do not exceed the amount allowable as a deduction under Code
Section 213 to the Owner or Annuitant (as applicable) for amounts paid during
the taxable year for medical care; (f) distributions made to an alternate payee
pursuant to a qualified domestic relations order; (g) distributions from an
Individual Retirement Annuity for the purchase of medical insurance (as
described in Section 213(d)(1)(D) of the Code) for the Owner or Annuitant (as
applicable) and his or her spouse and dependents if the Owner or Annuitant (as
applicable) has received unemployment compensation for at least 12 weeks (this
exception will no longer apply after the Owner or Annuitant (as applicable) has
been re-employed for at least 60 days); (h) distributions from an Individual
Retirement Annuity made to the Owner or Annuitant(as applicable) to the extent
such distributions do not exceed the qualified higher education expenses (as
defined in Section 72(t)(7) of the Code) of the Owner or Annuitant (as
applicable) for the taxable year; and (i) distributions from an Individual
Retirement Annuity made to the Owner or Annuitant (as applicable) which are
qualified first-time home buyer distributions (as defined in Section 72(t)(8) of
the Code.) The exceptions stated in (d) and (f) above do not apply in the case
of an Individual Retirement Annuity. The exception stated in (c) above applies
to an Individual Retirement Annuity without the requirement that there be a
separation from service.
Generally, distributions from a qualified plan must begin no later than April
1st of the calendar year following the later of (a) the year in which the
employee attains age 70 1/2 or (b) the calendar year in which the employee
retires. The date set forth in (b) does not apply to an Individual Retirement
Annuity. There are no required distributions from a Roth IRA prior to death of
the Owner. Required distributions must be over a period not exceeding the life
expectancy of the individual or the joint lives or life expectancies of the
individual and his or her designated beneficiary. If the required minimum
distributions are not made, a 50% penalty tax is imposed as to the amount not
distributed.
TAX TREATMENT OF ASSIGNMENTS
An assignment or pledge of a Contract may be a taxable event. Owners should
therefore consult competent tax advisers should they wish to assign their
Contracts.
INCOME TAX WITHHOLDING
All distributions or the portion thereof which is includible in the gross income
of the Owner are subject to federal income tax withholding. Generally, amounts
are withheld from periodic payments at the same rate as wages and at the rate of
10% from non-periodic payments. However, the Owner, in most cases, may elect not
to have taxes withheld or to have withholding done at a different rate.
Effective January 1, 1993, certain distributions from retirement plans qualified
under Section 401 or Section 403(b) of the Code, which are not directly rolled
over to another eligible retirement plan or individual retirement account or
individual retirement annuity, are subject to a mandatory 20% withholding for
federal income tax. The 20% withholding requirement generally does not apply to:
a) a series of substantially equal payments made at least annually for the life
or life expectancy of the participant or joint and last survivor expectancy of
the participant and a designated beneficiary or for a specified period of 10
years or more; or b) distributions which are required minimum distributions; or
c) the portion of the distributions not includible in gross income (i.e. returns
of after-tax contributions). Participants should consult their own tax counsel
or other tax adviser regarding withholding requirements.
ANNUITY PROVISIONS
DETERMINATION OF ANNUITY PAYMENTS
The first annuity payment will be calculated on the annuity calculation date.
Annuity payments will reflect the investment performance of the Sub-Accounts of
the Separate Account during the annuity period. On the annuity calculation date,
a fixed number of annuity units will be purchased, determined as follows:
The first annuity payment is equal to the Contribution, with interest with
respect to the Guaranteed Contract and the Contract value with respect to the
Non-Guaranteed Contract, divided by $1,000 and then multiplied by the payment
factor shown in your Contract. In each Sub-Account, the fixed number of annuity
units is determined by dividing the amount of the initial annuity payment
determined for the Sub-Account by the annuity unit value on the annuity
calculation date. Thereafter, the number of annuity units in the Sub-Account
remains unchanged (or unless you choose to make a transfer if you own a
Non-Guaranteed Contract). All calculations will appropriately reflect the
payment frequency you selected.
The dollar amount of annuity payments for each Sub-Account after the first
annuity payment is determined as follows:
1. The dollar amount of the first annuity payment is divided by the value of an
annuity unit for each applicable Sub-Account as of the annuity calculation date.
This sets the number of annuity units for each monthly payment for the
applicable Sub-Account. The number of annuity units for each applicable
Sub-Account remains fixed after the annuity calculation date.
2. The fixed number of annuity units in each Sub-Account is multiplied by the
annuity unit value for that Sub-Account for the last valuation period. This
results in the dollar amount of the payment for each applicable Sub-Account.
ANNUITY UNIT VALUES
The value of an annuity unit for each Sub-Account of the Separate Account will
vary to reflect the investment experience of the eligible funds and will be
determined by multiplying the value of the annuity unit for that Sub-Account on
the preceding day by the product of: (a) the net investment factor (see below)
for that Sub-Account for the day for which the annuity unit value is being
calculated, and (b) the annuity unit factor which neutralizes the assumed
investment return (AIR). Both the annuity unit factor and the AIR are set forth
in your Contract.
Net Investment Factor: The net investment factor for each Sub-Account is equal
to:
(a) the value of a share of the corresponding eligible fund at the end of
the valuation period (plus the per share amount of any unpaid dividends or
capital gains by that eligible fund); divided by
(b) the value of the share of the corresponding eligible fund at the
beginning of the valuation period; and
(c) subtracting from that amount the daily Separate Account Charge, and
with respect to the Guaranteed Contract, the Guaranteed Minimum Annuity Payment
Charge.
Valuation period means the period of time beginning at the close of business of
the New York Stock Exchange on each business day and ending at the close of
business for the next succeeding business day.
(See "Annuity Payments (The Annuity Period)" in the Prospectus.)
FINANCIAL STATEMENTS
The financial statements of the Company included herein should be considered
only as bearing upon the ability of the Company to meet its obligations under
the Contracts.
(Financial statements will be filed by Amendment.)
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
A. FINANCIAL STATEMENTS
The financial statements of the Separate Account and the Company will be filed
by Amendment.
B. EXHIBITS
1. Resolution of Board of Directors of the Company authorizing the
establishment of the Separate Account.*
2. Not Applicable.
3(a). Form of Principal Underwriter's Agreement (to be filed by Amendment).
3(b). Form of Selling Agreement (to be filed by Amendment).
4(a). Form of Individual Variable Single Contribution Immediate Annuity
Contract - Guaranteed Version.
4(b). Form of Individual Variable Single Contribution Immediate Annuity
Contract - Non-Guaranteed Version.
5. Application Form (to be filed by Amendment).
6. (i) Copy of Articles of Incorporation of the Company.**
(ii) Copy of the Bylaws of the Company.*
7. Not Applicable.
8. Form of Fund Participation Agreement by and among London
Pacific Life & Annuity Company, Morgan Stanley Universal Funds,
Inc., Morgan Stanley Asset Management Inc. and Miller Anderson &
Sherrerd, LLP. ***
9. Opinion and Consent of Counsel (to be filed by Amendment).
10. Consent of Independent Accountants (to be filed by Amendment).
11. Not Applicable.
12. Not Applicable.
13. Not Applicable.
14. Not Applicable.
15. Company Organizational Chart.*
27. Not Applicable.
* Incorporated by reference to Registrant's Form N-4 (File Nos. 333-1779
and 811-8890) as electronically filed on March 18, 1996.
** Incorporated by reference to Pre-Effective Amendment No. 1 to Form N-4
(File Nos. 333-1779 and 811-8890) as electronically filed on May 23, 1996.
*** Incorporated by reference to Registrant's Amendment No. 8 to Form N-4
(File Nos. 333-1779 and 811-8890) as electronically filed on April 27, 1998.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
The following are the Executive Officers and Directors of the Company:
<TABLE>
<CAPTION>
<S> <C>
Name and Principal Position and Offices
Business Address with Depositor
- ------------------------- ---------------------------------------
Ian K. Whitehead President, Chief Executive Officer
1755 Creekside Oaks Drive and Director
Sacramento, CA 95833
Arthur I. Trueger Chairman of the Board and Director
650 California Street
San Francisco, CA 94108
George C. Nicholson Chief Financial Officer, Secretary and
3109 Poplarwood Court Director
Raleigh, NC 27604
Mark E. Prillaman Chief Marketing Officer and Director
1755 Creekside Oaks Drive
Sacramento, CA 95833
Susan Y. Gressel Vice President and Treasurer
3109 Poplarwood Court
Raleigh, NC 27604
Charles M. King Vice President and Controller
3109 Poplarwood Court
Raleigh, NC 27604
William J. McCarthy Vice President and Chief Actuary
3109 Poplarwood Court
Raleigh, NC 27604
Charlotte M. Stott Vice President, National Sales Manager
1755 Creekside Oaks Drive
Sacramento, CA 95833
Jerry T. Tamura Vice President, Administrative Services
1755 Creekside Oaks Drive
Sacramento, CA 95833
Randolph N. Vance Vice President, Financial Actuary
3109 Poplarwood Court
Raleigh, NC 27604
Jerry S. Waters Vice President, Technology Services
1755 Creekside Oaks Drive
Sacramento, CA 95833
</TABLE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
The Company organizational chart was included as Exhibit 15 in Registrant's Form
N-4 (File No. 333-1779) filed on March 18, 1996 and is incorporated herein by
reference.
ITEM 27. NUMBER OF CONTRACT OWNERS
Not Applicable
ITEM 28. INDEMNIFICATION
The Bylaws (Article V) of the Company provide that:
Subject to the laws of the State of North Carolina, any present or former
director, officer or employee of the Company, or any person who, at the request
of the Company, express or implied, may have served as a director or officer of
another Company in which this Company owns shares or of which this Company is a
creditor, shall be entitled to reimbursement of expenses and other liabilities,
including attorney's fees actually and reasonably incurred by him and any amount
paid by him in discharge of a judgment, fine, penalty of costs against him or
paid by him in a settlement approved by a court of competent jurisdiction, in
any action or proceeding, including any civil, criminal or administrative
action, suit, hearing or proceeding, to which he is a party by reason of being
or having been a director, officer or employee of this or such other Company.
This section is not intended to extend or to limit in any way the rights and
remedies provided with respect to indemnification of directors, officers,
employees and other persons provided by the laws of the State of North Carolina
but is intended to express the desire of the stockholders of this Company that
indemnification be granted to such directors, officers, employees and other
persons to the fullest extent allowable by such laws.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted directors and officers or controlling persons of the
Company pursuant to the foregoing, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Not Applicable.
(b) London Pacific Financial and Insurance Services is the principal
underwriter for the Contracts. The following persons are the officers and
directors of London Pacific Financial and Insurance Services.
<TABLE>
<CAPTION>
Name and Principal Position and Offices
Business Address with Underwriter
- ------------------------- -----------------------------------------------
<S> <C>
Ian K. Whitehead Director
1755 Creekside Oaks Drive
Sacramento, CA 95833
Jerry T. Tamura Chairman, President and Chief Executive Officer
1755 Creekside Oaks Drive
Sacramento, CA 95833
George C. Nicholson Treasurer and Director
3109 Poplarwood Court
Raleigh, NC 27604
Bonnie J. Bridge Secretary
1755 Creekside Oaks Drive
Sacramento, CA 95833
</TABLE>
(c) Not Applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Charles King, whose address is 3109 Poplarwood Court, Raleigh, NC 27604,
maintains physical possession of the accounts, books or documents of the
Separate Account required to be maintained by Section 31(a) of the Investment
Company Act of 1940 and the rules promulgated thereunder.
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
ITEM 32. UNDERTAKINGS
a. Registrant hereby undertakes to file a post-effective amendment to this
registration statement as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never more than sixteen
(16) months old for so long as payment under the variable annuity contracts may
be accepted.
b. Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the Prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
postcard or similar written communication affixed to or included in the
Prospectus that the applicant can remove to send for a Statement of Additional
Information.
c. Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statement required to be made available under this
Form promptly upon written or oral request.
d. London Pacific Life & Annuity Company ("Company") hereby represents
that the fees and charges deducted under the Contracts described in the
Prospectus, in the aggregate, are reasonable in relation to the services
rendered, the expenses to be incurred and the risks assumed by the Company.
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that has caused this Registration Statement to be
signed on its behalf, in the City of Raleigh, and State of North Carolina on
this 8th day of June, 1998.
LPLA SEPARATE ACCOUNT ONE
--------------------------------------------
Registrant
By: LONDON PACIFIC LIFE & ANNUITY COMPANY
--------------------------------------------
By: /S/ GEORGE NICHOLSON
--------------------------------------------
By: LONDON PACIFIC LIFE & ANNUITY COMPANY
--------------------------------------------
Depositor
By: /S/ GEORGE NICHOLSON
---------------------------------------------
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
Chairman of the Board and Director
- ----------------------- ------
Arthur I. Trueger Date
/S/ IAN K. WHITEHEAD President, Chief Executive Officer 6/8/98
- ----------------------- ------
Ian K. Whitehead and Director Date
/S/ GEORGE NICHOLSON Chief Financial Officer, Secretary 6/8/98
- ----------------------- ------
George Nicholson and Director Date
/S/ MARK E. PRILLAMAN Chief Marketing Officer 6/8/98
- ----------------------- ------
Mark E. Prillaman and Director Date
</TABLE>
EXHIBITS
TO
FORM N-4
FOR
LPLA SEPARATE ACCOUNT ONE
OF
LONDON PACIFIC LIFE & ANNUITY COMPANY
INDEX TO EXHIBITS
EXHIBIT
EX-99.B4(a) Form of Individual Variable Single Contribution Immediate
Annuity Contract - Guaranteed Version
EX-99.B4(b) Form of Individual Variable Single Contribution Immediate
Annuity Contract - Non-Guaranteed Version
[LOGO]
Mailing Address: Post Office Box 29564, Raleigh, North Carolina 27626-0564
Home Office: 3109 Poplarwood Court, Raleigh, North Carolina 27604
(800) 852-3152
LONDON PACIFIC LIFE & ANNUITY COMPANY (the "Company") in consideration of the
payment of the Contribution issued this Contract.
The Company will pay the benefits of this Contract, subject to all of its
provisions, terms and conditions.
RIGHT TO EXAMINE CONTRACT: Within 10 days of the date of receipt of this
Contract by the Owner, it may be returned by delivering or mailing it to the
Company at its Annuity Service Center. When this Contract is received by the
Company, it will be voided as if it had never been in force. A written request
for cancellation must accompany the contract. In such event, the Company will
refund the Contribution
THIS IS A LEGAL CONTRACT BETWEEN THE OWNER AND THE COMPANY
READ YOUR CONTRACT CAREFULLY
George C. Nicholson, Ian K. Whitehead,
SECRETARY PRESIDENT
INDIVIDUAL FIXED AND VARIABLE SINGLE CONTRIBUTION IMMEDIATE ANNUITY CONTRACT
NONPARTICIPATING
ANNUITY PAYMENTS PROVIDED BY THIS CONTRACT ARE BASED ON THE INVESTMENT
EXPERIENCE OF A SUB-ACCOUNT AND WILL VARY IN ACCORDANCE WITH THE PERFORMANCE OF
THE SUB-ACCOUNT, EXCEPT TO THE EXTENT LIMITED BY THE GUARANTEED MINIMUM ANNUITY
PAYMENT FEATURE. DETAILS OF THE GUARANTEED MINIMUM ANNUITY PAYMENT FEATURE ARE
DESCRIBED UNDER ANNUITY PROVISIONS ON PAGE ____.
{policy #}
TABLE OF CONTENTS
PAGE
CONTRACT SCHEDULE
DEFINITIONS
CONTRIBUTION PROVISIONS
Contribution
Allocation of Contribution
SEPARATE ACCOUNT PROVISIONS
The Separate Account
Separate Account Charge
Guaranteed Minimum Annuity Payment Charge
Valuation of Assets
VALUATION PROVISIONS
Annuity Unit Value
Net Investment Factor
ANNUITY PROVISIONS
Annuity Date
Determination of Annuity Payments
Guaranteed Minimum Annuity Payments
SUSPENSION OR DEFERRAL OF PAYMENT PROVISIONS
OWNER, ANNUITANT, OWNERSHIP, ASSIGNMENT PROVISIONS
Owner
Annuitant
Assignment Of The Contract
PROCEEDS PAYABLE ON DEATH
Death Before Annuity Date
Distribution Requirements Before the Annuity Date
Death of Owner On or After the Annuity Date
Death of Annuitant On or After the Annuity Date
Non-Individual Owner
Beneficiary
Change Of Beneficiary
GENERAL PROVISIONS
The Contract
Misstatement of Age and Sex
Incontestability
Modification
Non-Participating
Evidence Of Survival
Proof Of Age
Protection Of Proceeds
Reports
Taxes
Regulatory Requirements
Substitution
Change in the Operation of the Separate Account
<TABLE>
<CAPTION>
CONTRACT SCHEDULE
<S> <C> <C>
OWNER: [John Smith]
ANNUITANT: [John Smith] AGE AND SEX: [50 Male]
PAYEE: [John Smith] BENEFICIARY: [Mary Smith]
CONTRACT NUMBER: [12345] ISSUE DATE: [July 1, 1998]
CONTRIBUTION: [$100,000] ANNUITY DATE: [August 1,1998]
ASSUMED INVESTMENT RETURN: [3%] ANNUITY UNIT FACTOR [.999866]
ANNUITY PAYMENT FREQUENCY: [Monthly] PAYMENT FACTOR [5.5257]]
GUARANTEED MINIMUM ANNUITY FIXED ACCOUNT INTEREST RATE [4%]
PAYMENT [$552.57]
</TABLE>
- --------------------------------------------------------------------------------
PORTFOLIO OPTIONS:
- ------------------
THE CONTRIBUTION, WITH INTEREST, WILL BE ALLOCATED TO THE EQUITY 500 INDEX
SUB-ACCOUNT SPECIFIED BELOW 30 DAYS AFTER THE ISSUE DATE SPECIFIED ABOVE.
SEPARATE ACCOUNT:
- -----------------
LPLA SEPARATE ACCOUNT ONE
SUB-ACCOUNT: BASED ON:
- ------------ ---------
Equity 500 Index BT Equity 500 Index Fund
SEPARATE ACCOUNT CHARGE
- -----------------------
A daily charge at an annual rate of [1.25%] (0.0000347693 daily) of the assets
held in the Separate Account.
GUARANTEED MINIMUM ANNUITY PAYMENT CHARGE
- -----------------------------------------
A daily charge at an annual rate of [1.75%] (0.0000486771 daily) of the assets
held in the Separate Account.
<TABLE>
<CAPTION>
ANNUITY SERVICE CENTER:
- -----------------------
<S> <C>
LONDON PACIFIC LIFE & ANNUITY COMPANY OR LONDON PACIFIC LIFE & ANNUITY COMPANY
ANNUITY SERVICE CENTER ANNUITY SERVICE CENTER
P.O. BOX 29596 3109 POPLARWOOD COURT
RALEIGH, NORTH CAROLINA 27626 RALEIGH, NORTH CAROLINA 27604
(800) 852-3152
(919) 790-2243
</TABLE>
DESCRIPTION OF ANNUITY BENEFIT:
- -------------------------------
LIFE ANNUITY
AN ANNUITY PAYABLE ACCORDING TO THE ANNUITY PAYMENT FREQUENCY SELECTED DURING
THE LIFETIME OF THE ANNUITANT, CEASING WITH THE LAST PAYMENT DUE PRIOR TO THE
DEATH OF THE ANNUITANT. THE FIRST ANNUITY PAYMENT IS BASED ON THE ASSUMED
INVESTMENT RETURN, THE AGE AND SEX OF THE ANNUITANT, AND {TBD} PROJECTED TO YEAR
[__].
LIFE ANNUITY WITH PERIOD CERTAIN
AN ANNUITY PAYABLE ACCORDING TO THE ANNUITY PAYMENT FREQUENCY SELECTED DURING
THE LIFETIME OF THE ANNUITANT, CEASING WITH THE LAST PAYMENT DUE PRIOR TO THE
DEATH OF THE ANNUITANT. THE FIRST ANNUITY PAYMENT IS BASED ON THE ASSUMED
INVESTMENT RETURN, THE AGE AND SEX OF THE ANNUITANT, AND {TBD} PROJECTED TO YEAR
[__]. IF, AT THE DEATH OF THE ANNUITANT, PAYMENTS HAVE BEEN MADE FOR LESS THAN
THE [ ] YEAR PERIOD, THE REMAINING PAYMENTS WILL CONTINUE TO THE BENEFICIARY FOR
THE REMAINDER OF THE PERIOD.
CONTRACT SCHEDULE(CONTINUED)
PAYMENT FOR [25] YEARS CERTAIN
AN ANNUITY PAYABLE ACCORDING TO THE ANNUITY PAYMENT FREQUENCY SELECTED FOR A
FIXED PERIOD OF [25] YEARS. IF, AT THE DEATH OF THE ANNUITANT, PAYMENTS HAVE
BEEN MADE FOR LESS THAN THE [25] YEAR PERIOD, THE REMAINING PAYMENTS WILL
CONTINUE TO THE BENEFICIARY FOR THE REMAINDER OF THE PERIOD.
JOINT AND SURVIVOR LIFE ANNUITY
AN ANNUITY PAYABLE ACCORDING TO THE ANNUITY PAYMENT FREQUENCY SELECTED DURING
THE JOINT LIFETIME OF THE ANNUITANT AND THE JOINT ANNUITANT, CEASING WITH THE
LAST PAYMENT DUE PRIOR TO THE DEATH OF THE ANNUITANT OR JOINT ANNUITANT,
WHICHEVER DEATH IS LAST. THE FIRST ANNUITY PAYMENT IS BASED ON THE ASSUMED
INVESTMENT RETURN, THE AGES AND SEXES OF THE ANNUITANT AND JOINT ANNUITANT AND
{TBD} PROJECTED TO YEAR [___].
CONTRACT SURRENDERS:
- --------------------
THE OWNER MAY NOT SURRENDER THE CONTRACT AFTER THE EXPIRATION OF THE RIGHT TO
EXAMINE PERIOD DESCRIBED ON THE FACE OF THIS CONTRACT.
DEFINITIONS
AGE: The age of any Owner or Annuitant on his/her last birthday as of the
Annuity Date
ANNUITANT: The natural person on whose life annuity payments are based. On or
after the Annuity Date, the Annuitant shall also include any Joint Annuitant.
ANNUITY DATE: The date on which annuity payments begin. The Annuity Date is
shown on the Contract Schedule.
ANNUITY CALCULATION DATE: The date on which the first annuity payment will be
calculated. It will be no more than 5 days prior to the Annuity Date.
ANNUITY PAYMENT FREQUENCY: The frequency with which annuity payments will be
made. The frequencies available are monthly and annually. Once selected, the
Annuity Payment Frequency may not be changed.
ANNUITY PERIOD The period of time beginning with the Annuity Date during which
annuity payments are made.
ANNUITY SERVICE CENTER: The office indicated on the Contract Schedule of this
Contract to which notices, requests and the Contribution must be sent. All sums
payable to the Company under this Contract are payable only at the Annuity
Service Center.
ANNUITY UNIT An accounting unit of measure used in the calculation of annuity
payments.
ANNUITY UNIT FACTOR: The factor applied daily to neutralize the effect of the
Assumed Investment Return.
ASSUMED INVESTMENT RETURN: The investment return upon which the annuity payments
in the contract are based.
BENEFICIARY: The person entitled to receive benefits as per the terms of the
contract in case of the death of the Owner or the later death of the Annuitant
or Joint Annuitant, as applicable.
COMPANY: London Pacific Life & Annuity Company.
CONTRIBUTION: A payment made by or on behalf of an Owner with respect to this
Contract.
DUE PROOF OF DEATH: A certified copy of the death certificate, an order of a
court of competent jurisdiction, a statement from a physician who attended the
deceased or any other proof acceptable to the Company.
ELIGIBLE FUND(S): Currently the investment entity(ies) shown on the Contract
Schedule.
DEFINITIONS (CONTINUED)
FIXED ACCOUNT: An investment option within the General Account where the
Contribution is invested prior to the Annuity Date. The Fixed Account Interest
Rate is shown on the Contract Schedule.
GENERAL ACCOUNT: The Company's general investment account which contains all the
assets of Company with the exception of the Separate Account and other
segregated asset accounts.
GUARANTEED MINIMUM ANNUITY PAYMENT: The amount which is guaranteed as the
minimum annuity payment amount. This amount is payable regardless of the
performance of the Sub-Account.
ISSUE DATE: The date on which the Contract became effective. Similarly, Contract
years are measured from the Issue Date.
JOINT ANNUITANT: A person other than the Annuitant on whose continuation of life
annuity payments may be made. The contract will have a Joint Annuitant only if
the Description of Annuity Benefit on the Contract Schedule provides for a
survivor. The Joint Annuitant may not be changed.
OWNER: The person(s) or entity(ies) entitled to the ownership rights stated in
this Contract.
PAYEE: The person, designated by the Owner, to whom annuity payments will be
made.
PAYMENT FACTOR: The factor shown on the Contract Schedule which is used on the
Annuity Calculation Date to calculate the first annuity payment.
PORTFOLIO: A segment of an Eligible Fund which constitutes a separate and
distinct class of shares.
PREMIUM TAX: Any premium taxes paid to any governmental entity and assessed
against the Contribution. The Company will deduct the tax on the Issue Date.
SEPARATE ACCOUNT: An account established by the Company to separate the assets
funding the variable benefits for the class of Contracts to which this contract
belongs from the Company's other assets. The assets in the Separate Account are
not chargeable with liabilities arising out of any other business the Company
may conduct. The Separate Account and the Sub-Accounts are listed on the
Contract Schedule.
SUB-ACCOUNT: The subdivision of the Separate Account as shown on the Contract
Schedule.
VALUATION DATE: Each day on which the Company and the New York Stock Exchange
("NYSE") are open for business.
DEFINITIONS (CONTINUED)
VALUATION PERIOD: The period of time beginning at the close of business of the
NYSE on each Valuation Date and ending at the close of business for the next
succeeding Valuation Date.
WRITTEN REQUEST: A request in writing, in a form satisfactory to the Company,
which is received by the Annuity Service Center.
CONTRIBUTION PROVISIONS
CONTRIBUTION: The Contribution is shown on the Contract Schedule. This is a
single Contribution Contract. The Company reserves the right to reject any
Application or Contribution.
ALLOCATION OF CONTRIBUTION: The Contribution initially will be allocated to the
Fixed Account. The Contribution, with interest, will be allocated to the Equity
500 Index Sub-Account of the Separate Account shown on the Contract Schedule 30
days after the Issue Date shown on the Contract Schedule. Allocation of the
Contribution is subject to the terms and conditions imposed by the Company.
SEPARATE ACCOUNT PROVISIONS
THE SEPARATE ACCOUNT: The Separate Account is designated on the Contract
Schedule and consists of assets set aside by the Company, which are kept
separate from that of the general assets and all other separate account assets
of the Company. The assets of the Separate Account equal to reserves and other
liabilities will not be charged with liabilities arising out of any other
business the Company may conduct. The Separate Account assets are divided into
Sub-Accounts. The Sub-Account currently available under this Contract is listed
on the Contract Schedule. The assets of the Sub-Account are allocated to the
Eligible Fund(s) and Portfolio(s), if any, within an Eligible Fund shown on the
Contract Schedule.
Should the shares of the Eligible Fund become unavailable for investment by the
Separate Account, or the Company's Board of Directors deems further investment
in these shares inappropriate, the Company may limit further purchase of such
shares or substitute shares of another Eligible Fund or Portfolio for shares
already purchased under this Contract.
SEPARATE ACCOUNT CHARGE: Each Valuation Period, the Company deducts a Separate
Account Charge from the Sub-Account of the Separate Account which is equal, on
an annual basis, to the amounts shown on the Contract Schedule. The Separate
Account Charge compensates the Company for assuming the mortality and expense
risks under this Contract and the costs associated with the administration of
this Contract and the Separate Account.
GUARANTEED MINIMUM ANNUITY PAYMENT CHARGE: Each Valuation Period, the Company
deducts a Guaranteed Minimum Annuity Payment Charge from the Sub-Account of the
Separate Account which is equal, on an annual basis, to the amount shown on the
Contract Schedule. The Guaranteed Minimum Annuity Payment Charge compensates the
Company for the costs associated with providing the Guaranteed Minimum Annuity
Payment shown on the Contract Schedule.
VALUATION OF ASSETS: The assets of the Separate Account are valued at their fair
market value in accordance with procedures of the Company.
VALUATION PROVISIONS
ANNUITY UNIT VALUE: The value of an Annuity Unit for the Sub-Account of the
Separate Account will vary to reflect the investment experience of the
applicable Eligible Fund and will be determined by multiplying the value of the
Annuity Unit for the Sub-Account on the preceding day by the product of (a) the
Net Investment Factor for the Sub-Account for the day for which the Annuity Unit
Value is being calculated, and (b) the Annuity Unit Factor which neutralizes the
Assumed Investment Return. Both the Annuity Unit Factor and the Assumed
Investment Return appear on the Contract Schedule.
NET INVESTMENT FACTOR: The Net Investment Factor for the Sub-Account is equal
to:
(a) the value of a share of the corresponding Eligible Fund at the end of
the Valuation Period (plus the per share amount of any unpaid
dividends or capital gains by that Eligible Fund ); divided by
(b) the value of a share of the corresponding Eligible Fund at the
beginning of the Valuation Period: and
(c ) subtracting from that amount the daily Separate Account Charge and
the daily Guaranteed Minimum Annuity Payment Charge which are shown on
the Contract Schedule.
ANNUITY PROVISIONS
ANNUITY DATE: The Annuity Date must be the thirtieth (30th) day after the Issue
Date shown on the Contract Schedule. The Annuity Date is shown on the Contract
Schedule.
DETERMINATION OF ANNUITY PAYMENTS: The first annuity payment will be calculated
on the Annuity Calculation Date which will be no more than 5 days prior to the
Annuity Date. Annuity payments reflect the investment performance of the
Sub-Account of the Separate Account during the Annuity Period. On the Annuity
Calculation Date, a fixed number of Annuity Units will be purchased, determined
as follows:
The first annuity payment is equal to the Contribution, with interest, divided
first by $1,000 and then multiplied by the Payment Factor shown on the Contract
Schedule. In the Sub-Account the fixed number of Annuity Units is determined by
dividing the amount of the initial annuity payment determined for the
Sub-Account by the Annuity Unit Value on the Annuity Calculation Date.
Thereafter, the number of Annuity Units in the Sub-Account remains unchanged.
All calculations shall appropriately reflect the Annuity Payment Frequency
selected.
Once annuity payments have begun, the number of Annuity Units remains fixed. The
method of calculating the Annuity Unit Value is described under Valuation
Provisions.
The dollar amount of annuity payments for the Sub-Account after the first
annuity payment determined as follows:
1. The dollar amount of the first annuity payment is divided by the value
of an Annuity Unit for the Sub-Account as of the Annuity Date. This
sets the number of Annuity Units for each monthly payment for the
Sub-Account. The number of Annuity Units for the Sub-Account remains
fixed after the Annuity Calculation Date;
2. The fixed number of Annuity Units in the Sub-Account is multiplied by
the Annuity Unit Value for the Sub-Account for the last Valuation
Period. This result is the dollar amount of the payment for the
Sub-Account.
The Company guarantees that the dollar amount of annuity payments will not be
adversely affected by variations in the expense results and in the actual
mortality experience of Annuitants from the mortality assumptions, including any
age adjustment, used in determining the first monthly payment.
ANNUITY PROVISIONS (CONTINUED)
GUARANTEED MINIMUM ANNUITY PAYMENT : The Company will guarantee that the annuity
payment will be at least equal to 100% of the Guaranteed Minimum Annuity Payment
shown on the Contract Schedule. Each annuity payment will vary upwards or
downwards in accordance with the performance of the Sub-Account, unless the
annuity payment would be less than the Guaranteed Minimum Annuity Payment. Under
the terms of the Contract's guarantee, the Company will pay the Payee the
greater of; (a) the annuity payment amount determined by multiplying the number
of annuity units times the annuity unit value; or (b) the Guaranteed Minimum
Annuity Payment .
SUSPENSION OR DEFERRAL OF PAYMENT PROVISIONS
The Company reserves the right to suspend or postpone payments from the Separate
Account for a benefit payment or transfer:
(a) for any period during which the New York Stock Exchange is closed or
during which trading on the New York Stock Exchange is restricted;
(b) for any period during which an emergency exists as a result of which
(i) disposal of the securities held in the Sub-Account is not
reasonably practicable, or (ii) it is not reasonably practicable for
the value of the net assets of the Separate Account to be fairly
determined;
(c) for such other periods as the Securities and Exchange Commission may,
by order, permit for the protection of the contract owners. The
conditions under which trading shall be deemed to be restricted or any
emergency shall be deemed to exist shall be determined by rules and
regulations of the Securities and Exchange Commission.
OWNER, ANNUITANT, OWNERSHIP, ASSIGNMENT PROVISIONS
OWNER: The Owner has all interest and right to amounts held in his or her
Contract. The Owner is the person designated as such on the Issue Date, unless
changed.
The Owner may change owners of the Contract at any time prior to the Annuity
Date by Written Request. A Change of Owner will automatically revoke any prior
designation of Owner. The change will become effective as of the date the
Written Request is signed. A new designation of Owner will not apply to any
payment made or action taken by the Company prior to the time it was received.
Any change to the Owner of the Contract will be subject to the Company's
underwriting rules then in effect.
This Contract may be owned by Joint Owners. The Owners must jointly exercise all
of the rights contained in the Contract.
ANNUITANT: The Annuitant and Joint Annuitant is the person or persons on whose
life annuity payments are based. The Annuitant and Joint Annuitant is the person
or persons designated by the Owner at the Issue Date.
ASSIGNMENT OF THE CONTRACT: A Written Request specifying the terms of an
assignment of the Contract must be provided to the Annuity Service Center. Until
the Written Request is received, the Company will not be required to take notice
of or be responsible for any transfer of interest in the Contract by assignment,
agreement, or otherwise.
The Company will not be responsible for the validity or tax consequences of any
assignment. Any assignment made after the death benefit has become payable will
be valid only with the Company's consent.
If the Contract is assigned, the Owner's rights may only be exercised with the
consent of the assignee of record.
PROCEEDS PAYABLE ON DEATH
DEATH BEFORE ANNUITY DATE: If an Owner or an Annuitant dies before the Annuity
Date, the Company will pay the Beneficiary the death benefit described below.
The death benefit is calculated as of the date the Company receives written
notification of Due Proof of Death. The death benefit is equal to the
Contribution, with interest.
DISTRIBUTION REQUIREMENTS BEFORE THE ANNUITY DATE: The Beneficiary must elect
the death benefit to be paid under one of the options below:
(a) The entire interest in the Contract will be distributed within 5 years
of the date of death, or
(b) The Beneficiary elects to have the death benefit distributed over a
period that does not extend beyond such Beneficiary's life or life
expectancy and payments start within 1 year after the date of death,
or
(c) In the event of death of an Owner who is not an Annuitant, if the
designated Beneficiary is the spouse of the deceased owner, he or she
may elect to continue the Contract.
The death benefit will be paid after the death of the Owner, the Joint Owner, if
any, the Annuitant, or the Joint Annuitant, if any, whichever death is first.
Payment to the Beneficiary, other than in a single lump sum, may only be elected
during the sixty-day period beginning with the date of receipt of Due Proof of
Death.
DEATH OF OWNER ON OR AFTER THE ANNUITY DATE: If the Owner, or any Joint Owner,
dies on or after the Annuity Date any remaining payments as described on the
Contract Schedule will continue at least as rapidly as under the method of
distribution in effect at such Owner's death. Upon the Owner's death on or after
the Annuity Date the Beneficiary becomes the Owner.
DEATH OF ANNUITANT ON OR AFTER THE ANNUITY DATE: Upon the death of the Annuitant
on or after the Annuity Date, any remaining payments as described on the
Contract Schedule will continue at least as rapidly as under the method of
distribution in effect at such Annuitant's death.
NON-INDIVIDUAL OWNER: If the Owner is a non-individual then the death of an
Annuitant shall be treated as the death of the Owner for purposes of the
distribution of the death benefit.
BENEFICIARY: The Beneficiary designation in effect on the Issue Date will remain
in effect until changed. The Beneficiary is entitled to receive the benefits to
be paid at the death of the Owner, the Joint Owner, the Annuitant or the Joint
Annuitant.
Unless the Owner provided otherwise, the death benefit will be paid in equal
shares to the survivor(s) as follows:
1. to the Primary Beneficiary(ies) who survive the Owner's, the Joint
Owner's, the Annuitant's or the Joint Annuitant's, death, as
applicable; or if there are none
2. to the Contingent Beneficiary(ies) who survive the Owner's, the Joint
Owner's, the Annuitant's or the Joint Annuitant's death, as
applicable; or if there are none
3. to the Owner, or if deceased, to the estate of the Owner.
CHANGE OF BENEFICIARY: Subject to the rights of any irrevocable
Beneficiary(ies), the Owner and the Joint Owner, if any, may change the Primary
Beneficiary(ies) or Contingent Beneficiary(ies). A change may be made by Written
Request. The change will take effect as of the date the Written Request is
signed. The Company will not be liable for any payment made or action taken
before it records the change.
GENERAL PROVISIONS
THE CONTRACT: The entire Contract consists of this Contract, the Application, if
any, and any riders or endorsements attached to this Contract. It is intended to
qualify as an annuity contract for Federal Tax purposes. To that end, the
provisions of the Contract are interpreted and administered to ensure and
maintain such tax qualifications. This Contract may be changed or altered only
by the President and the Secretary of the Company. A change or alteration must
be made in writing. No modification will affect the amount or term of any
annuity begun prior to the modification unless it is required to conform the
contract to any Federal or State statute. No modification of the contract will
affect the method by which the Contract Value will be determined.
MISSTATEMENT OF AGE AND SEX: If the Age or sex of any Annuitant has been
misstated, any Annuity benefits payable will be the Annuity benefits provided by
the correct information. After Annuity Payments have begun, any underpayments
will be made up in one sum with the next Annuity Payment. Any overpayments will
be deducted from future Annuity Payments until the total is repaid.
INCONTESTABILITY: This Contract will not be contestable after it has been in
force for a period of two years from the Issue Date.
MODIFICATION: This Contract may be modified in order to maintain compliance with
applicable state and federal law.
NON-PARTICIPATING: This Contract will not share in any distribution of
dividends.
EVIDENCE OF SURVIVAL: The Company may require satisfactory evidence of the
continued survival of any person(s) on whose life Annuity Payments are based.
PROOF OF AGE: The Company may require evidence of Age of any Annuitant.
PROTECTION OF PROCEEDS: To the extent permitted by law, death benefits and
Annuity Payments shall be free from legal process and the claim of any creditor
if the person is entitled to them under this Contract. No payment and no amount
under this Contract can be taken or assigned in advance of its payment date
unless the Company receives the Owner's written consent.
REPORTS: The Company will furnish an annual report of the Portfolios or Funds
and any other notices, reports or documents required by law to be delivered to
the Owner and Joint Owner, if any. Reports will be sent to the last known
address of the Owner and Joint Owner, if any.
TAXES: Any taxes paid to any governmental entity relating to this Contract will
be deducted as incurred . The Company will, in its sole discretion, determine
when taxes have resulted from: the investment experience of the Separate
Account; receipt by Company of the Contribution; or commencement of Annuity
Payments. The Company will deduct any withholding taxes required by applicable
law.
The Company reserves the right to establish a provision for federal income taxes
if it determines, in its sole discretion, that it will incur a tax as a result
of the operation of the Separate Account. The Company will deduct for any income
taxes incurred by it as a result of the operation of the Separate Account
whether or not there was a provision for taxes and whether or not it was
sufficient.
REGULATORY REQUIREMENTS: All values payable under this Contract will not be less
than the minimum benefits required by the laws and regulations of the states in
which this Contract is delivered.
SUBSTITUTION: The Company reserves the right to substitute the shares of any
other registered investment company for the shares of any Portfolio already
purchased or to be purchased in the future by the Separate Account in accordance
with applicable law.
CHANGE IN THE OPERATION OF THE SEPARATE ACCOUNT: At the Company's election, in
accordance with applicable law, the Separate Account may be operated as a
management company under the Investment Company Act of 1940 or it may be
deregistered under the Investment Company Act of 1940 in the event registration
is no longer required. Deregistration of the Separate Account requires an order
by the Securities and Exchange Commission.
[LOGO]
Mailing Address: Post Office Box 29564, Raleigh, North Carolina 27626-0564
Home Office: 3109 Poplarwood Court, Raleigh, North Carolina 27604
(800) 852-3152
LONDON PACIFIC LIFE & ANNUITY COMPANY (the "Company") in consideration of the
payment of the Contribution issued this Contract.
The Company will pay the benefits of this Contract, subject to all of its
provisions, terms and conditions.
RIGHT TO EXAMINE CONTRACT: Within 10 days of the date of receipt of this
Contract by the Owner, it may be returned by delivering or mailing it to the
Company at its Annuity Service Center. When this Contract is received by the
Company, it will be voided as if it had never been in force. A written request
for cancellation must accompany the contract. In such event, the Company will
refund the Contract Value, computed at the end of the Valuation Period during
which this Contract is received by the Company at its Annuity Service Center.
The Company has reserved the right to allocate the Contribution to the Money
Market Sub-Account until the expiration of the Right to Examine Contract period.
THIS IS A LEGAL CONTRACT BETWEEN THE OWNER AND THE COMPANY
READ YOUR CONTRACT CAREFULLY
George C. Nicholson, Ian K. Whitehead,
SECRETARY PRESIDENT
INDIVIDUAL VARIABLE SINGLE CONTRIBUTION IMMEDIATE ANNUITY CONTRACT
NONPARTICIPATING
ANNUITY PAYMENTS PROVIDED BY THIS CONTRACT ARE BASED ON THE INVESTMENT
EXPERIENCE OF A SUB-ACCOUNT AND WILL VARY IN ACCORDANCE WITH THE PERFORMANCE OF
THE SUB-ACCOUNT. DETAILS OF THE VARIABLE PROVISIONS ARE DESCRIBED UNDER
VALUATION PROVISIONS ON PAGE ____.
{policy #}
TABLE OF CONTENTS
PAGE
CONTRACT SCHEDULE
DEFINITIONS
CONTRIBUTION PROVISIONS
Contribution
Allocation of Contribution
SEPARATE ACCOUNT PROVISIONS
The Separate Account
Separate Account Charge
Valuation of Assets
VALUATION PROVISIONS
Accumulation Units
Accumulation Unit Value
Annuity Unit Value
Net Investment Factor
CONTRACT VALUE
TRANSFERS
Transfers Before the Annuity Date
Transfers After the Annuity Date
ANNUITY PROVISIONS
Annuity Date
Determination of Annuity Payments
Frequency and Amount of Annuity Payments
SUSPENSION OR DEFERRAL OF PAYMENT PROVISIONS
OWNER, ANNUITANT, OWNERSHIP, ASSIGNMENT PROVISIONS
Owner
Annuitant
Assignment Of The Contract
PROCEEDS PAYABLE ON DEATH
Death Before Annuity Date
Distribution Requirements Before the Annuity Date
Death of Owner On or After the Annuity Date
Death of Annuitant On or After the Annuity Date
Non-Individual Owner
Beneficiary
Change Of Beneficiary
TABLE OF CONTENTS (CONTINUED)
GENERAL PROVISIONS
The Contract
Misstatement of Age and Sex
Incontestability
Modification
Non-Participating
Evidence Of Survival
Proof Of Age
Protection Of Proceeds
Reports
Taxes
Regulatory Requirements
Substitution
Change in the Operation of the Separate Account
<TABLE>
<CAPTION>
CONTRACT SCHEDULE
<S> <C> <C> <C>
OWNER: [John Smith]
ANNUITANT: [John Smith] AGE AND SEX: [50 Male]
PAYEE: [John Smith] BENEFICIARY: [Mary Smith]
CONTRACT NUMBER: [12345] ISSUE DATE: [July 1, 1998]
CONTRIBUTION: [$100,000] ANNUITY DATE: [August 1,1998]
ASSUMED INVESTMENT RETURN: [3%] ANNUITY UNIT FACTOR [.999866]
ANNUITY PAYMENT FREQUENCY: [Monthly] PAYMENT FACTOR [7.0]
</TABLE>
- --------------------------------------------------------------------------------
PORTFOLIO OPTIONS:
- ------------------
THE CONTRIBUTION WILL BE ALLOCATED AS SPECIFIED BY THE CONTRACT OWNER.
SEPARATE ACCOUNT:
- -----------------
LPLA SEPARATE ACCOUNT ONE
<TABLE>
<CAPTION>
SUB-ACCOUNT: BASED ON:
- ------------ ---------
<S> <C>
Value LPT Harris Associates Value Portfolio
Total Return LPT MFS Total Return Portfolio
U.S. Quality Bond LPT Berkeley U.S. Quality Bond Portfolio
Money Market LPT Berkeley Money Management Portfolio
Growth LPT Strong Growth Portfolio
Diversified Growth LPT Robertson Stephens Diversified Growth Portfolio
Corporate Leaders LPT Lexington Corporate Leaders Portfolio
Emerging Markets Morgan Stanley U. F. Emerging Markets Equity Portfolio
International Morgan Stanley U. F. International Magnum Portfolio
High Yield Morgan Stanley U. F. High Yield Portfolio
Equity 500 Index BT Equity 500 Index Fund
</TABLE>
SEPARATE ACCOUNT CHARGE
- -----------------------
A daily charge at an annual rate of [1.25%] (0.0000347693 daily) of the assets
held in the Separate Account.
<TABLE>
<CAPTION>
ANNUITY SERVICE CENTER:
- -----------------------
<S> <C>
LONDON PACIFIC LIFE & ANNUITY COMPANY OR LONDON PACIFIC LIFE & ANNUITY COMPANY
ANNUITY SERVICE CENTER ANNUITY SERVICE CENTER
P.O. BOX 29596 3109 POPLARWOOD COURT
RALEIGH, NORTH CAROLINA 27626 RALEIGH, NORTH CAROLINA 27604
(800) 852-3152
(919) 790-2243
</TABLE>
TRANSFER PROVISIONS AND CHARGES
- -------------------------------
NUMBER OF TRANSFERS: SUBJECT TO ANY RESTRICTIONS IMPOSED BY THE COMPANY, THERE
ARE CURRENTLY NO RESTRICTIONS ON THE NUMBER OF TRANSFERS THAT CAN BE MADE. THE
COMPANY RESERVES THE RIGHT TO FURTHER LIMIT THE NUMBER OF
TRANSFERS IN THE FUTURE.
TRANSFER FEE: THE TRANSFER FEE IS CURRENTLY $20.00. CURRENTLY, THE COMPANY DOES
NOT ASSESS A TRANSFER FEE ON THE FIRST 12 TRANSFERS IN A CONTRACT YEAR.
TRANSFERS MADE AT THE END OF THE RIGHT TO EXAMINE CONTRACT PERIOD BY THE COMPANY
AND ANY TRANSFERS MADE PURSUANT TO AN APPROVED DOLLAR COST AVERAGING PROGRAM OR
PURSUANT TO AN APPROVED ASSET ALLOCATION PROGRAM WILL NOT BE COUNTED IN
DETERMINING THE APPLICATION OF THE TRANSFER FEE.
CONTRACT SCHEDULE (CONTINUED)
MINIMUM AMOUNT TO BE TRANSFERRED: $500 FROM ONE OR MULTIPLE SUB-ACCOUNTS OR THE
OWNER'S ENTIRE INTEREST IN THE SUB-ACCOUNT IF LESS. TRANSFERS MADE PURSUANT TO
AN APPROVED DOLLAR COST AVERAGING PROGRAM OR PURSUANT TO AN APPROVED ASSET
ALLOCATION PROGRAM WILL NOT BE SUBJECT TO THESE LIMITATIONS.
MINIMUM AMOUNT WHICH MUST REMAIN IN A SUB-ACCOUNT AFTER A TRANSFER: $500 OR $0
IF THE ENTIRE AMOUNT IN THE SUB-ACCOUNT IS TRANSFERRED. TRANSFERS MADE PURSUANT
TO AN APPROVED DOLLAR COST AVERAGING PROGRAM OR PURSUANT TO AN APPROVED ASSET
ALLOCATION PROGRAM WILL NOT BE SUBJECT TO THIS LIMITATION
DESCRIPTION OF ANNUITY BENEFIT:
- -------------------------------
PAYMENT FOR [25] YEARS CERTAIN
AN ANNUITY PAYABLE ACCORDING TO THE ANNUITY PAYMENT FREQUENCY SELECTED FOR A
FIXED PERIOD OF [25] YEARS. IF, AT THE DEATH OF THE ANNUITANT, PAYMENTS HAVE
BEEN MADE FOR LESS THAN THE [25 ] YEAR PERIOD, THE BENEFICIARY WILL HAVE THE
OPTION OF RECEIVING THE REMAINING PAYMENTS FOR THE REMAINDER OF THE PERIOD OR
TAKING THE DEATH BENEFIT IN A LUMP SUM. THE LUMP SUM PAYMENT WILL BE EQUAL TO
THE PRESENT VALUE OF THE REMAINING PAYMENTS DISCOUNTED AT THE ASSUMED INVESTMENT
RETURN SHOWN ON THE CONTRACT SCHEDULE PLUS 1.00% USING THE ANNUITY UNIT VALUES
AS OF THE DATE THE COMPANY RECEIVES WRITTEN NOTIFICATION OF DUE PROOF OF DEATH
JOINT AND SURVIVOR LIFE ANNUITY
AN ANNUITY PAYABLE ACCORDING TO THE ANNUITY PAYMENT FREQUENCY SELECTED DURING
THE JOINT LIFETIME OF THE ANNUITANT AND THE JOINT ANNUITANT, CEASING WITH THE
LAST PAYMENT DUE PRIOR TO THE DEATH OF THE ANNUITANT OR JOINT ANNUITANT,
WHICHEVER DEATH IS LAST. THE FIRST ANNUITY PAYMENT IS BASED ON THE ASSUMED
INVESTMENT RETURN, THE AGES AND SEXES OF THE ANNUITANT AND JOINT ANNUITANT AND
{TBD} PROJECTED TO YEAR [___].
LIFE ANNUITY
AN ANNUITY PAYABLE ACCORDING TO THE ANNUITY PAYMENT FREQUENCY SELECTED DURING
THE LIFETIME OF THE ANNUITANT, CEASING WITH THE LAST PAYMENT DUE PRIOR TO THE
DEATH OF THE ANNUITANT. THE FIRST ANNUITY PAYMENT IS BASED ON THE ASSUMED
INVESTMENT RETURN, THE AGE AND SEX OF THE ANNUITANT, AND THE {TBD TABLE}
PROJECTED TO YEAR [ ] .
LIFE ANNUITY WITH PERIOD CERTAIN
AN ANNUITY PAYABLE ACCORDING TO THE ANNUITY PAYMENT FREQUENCY SELECTED DURING
THE LIFETIME OF THE ANNUITANT, CEASING WITH THE LAST PAYMENT DUE PRIOR TO THE
DEATH OF THE ANNUITANT. THE FIRST ANNUITY PAYMENT IS BASED ON THE ASSUMED
INVESTMENT RETURN, THE AGE AND SEX OF THE ANNUITANT, AND THE {TBD TABLE}
PROJECTED TO YEAR [ ]. IF, AT THE DEATH OF THE ANNUITANT, PAYMENTS HAVE BEEN
MADE FOR LESS THAN THE [ ] YEAR PERIOD, THE BENEFICIARY WILL HAVE THE OPTION OF
RECEIVING THE REMAINING PAYMENTS FOR THE REMAINDER OF THE PERIOD OR TAKING THE
DEATH BENEFIT IN A LUMP SUM. THE LUMP SUM PAYMENT WILL BE EQUAL TO THE PRESENT
VALUE OF THE REMAINING PAYMENTS DISCOUNTED AT THE ASSUMED INVESTMENT RETURN
SHOWN ON THE CONTRACT SCHEDULE PLUS 1.00% USING THE ANNUITY UNIT VALUES AS OF
THE DATE THE COMPANY RECEIVES WRITTEN NOTIFICATION OF DUE PROOF OF DEATH.
SURRENDER AFTER THE ANNUITY DATE (TERM CERTAIN ONLY) THE OWNER MAY SURRENDER
THIS CONTRACT AFTER THE ANNUITY DATE BY SUBMITTING A WRITTEN REQUEST TO THE
ANNUITY SERVICE CENTER. SURRENDERS ARE NOT ALLOWED DURING THE FIRST CONTRACT
YEAR. THE AMOUNT AVAILABLE TO THE OWNER IS THE PRESENT VALUE OF THE REMAINING
GUARANTEED ANNUITY PAYMENTS, DISCOUNTED AT THE ASSUMED INVESTMENT RETURN SHOWN
ON THE CONTRACT SCHEDULE PLUS 1.00% USING THE ANNUITY UNIT VALUES AS OF THE DATE
THE COMPANY RECEIVES THE SURRENDER REQUEST. NO PARTIAL SURRENDERS ARE ALLOWED.
DEFINITIONS
ACCUMULATION UNIT: A unit of measure used to calculate the value of an Owner's
interest in a Sub-Account of the Separate Account prior to the Annuity Date.
AGE: The age of any Owner or Annuitant on his/her last birthday as of the
Annuity Date
ANNUITANT: The natural person on whose life annuity payments are based. On or
after the Annuity Date, the Annuitant shall also include any Joint Annuitant.
ANNUITY DATE: The date on which annuity payments begin. The Annuity Date is
shown on the Contract Schedule.
ANNUITY CALCULATION DATE: The date on which the first annuity payment will be
calculated. It will be no more than 5 days prior to the Annuity Date.
ANNUITY PAYMENT FREQUENCY: The frequency with which annuity payments will be
made. The frequencies available are monthly and annually. Once selected, the
Annuity Payment Frequency may not be changed.
ANNUITY PERIOD The period of time beginning with the Annuity Date during which
annuity payments are made.
ANNUITY SERVICE CENTER: The office indicated on the Contract Schedule of this
Contract to which notices, requests and the Contribution must be sent. All sums
payable to the Company under this Contract are payable only at the Annuity
Service Center.
ANNUITY UNIT An accounting unit of measure used in the calculation of annuity
payments.
ANNUITY UNIT FACTOR: The factor applied daily to neutralize the effect of the
Assumed Investment Return.
ASSUMED INVESTMENT RETURN: The investment return upon which the annuity payments
in the contract are based.
BENEFICIARY: The person entitled to receive benefits as per the terms of the
contract in case of the death of the Owner or the later death of the Annuitant
or Joint Annuitant, as applicable.
COMPANY: London Pacific Life & Annuity Company.
CONTRACT VALUE: The value of the Sub-Accounts prior to the Annuity Date.
CONTRIBUTION: A payment made by or on behalf of an Owner with respect to this
Contract.
DUE PROOF OF DEATH: A certified copy of the death certificate, an order of a
court of competent jurisdiction, a statement from a physician who attended the
deceased or any other proof acceptable to the Company.
DEFINITIONS (CONTINUED)
ELIGIBLE FUND(S): Currently the investment entities shown on the Contract
Schedule or any other investment entities that may be added by the Company.
ISSUE DATE: The date on which the Contract became effective. Similarly, Contract
years are measured from the Issue Date.
JOINT ANNUITANT: A person other than the Annuitant on whose continuation of life
annuity payments may be made. The contract will have a Joint Annuitant only if
the Description of Annuity Benefit on the Contract Schedule provides for a
survivor. The Joint Annuitant may not be changed.
OWNER/JOINT OWNER: The person(s) or entity(ies) entitled to the ownership rights
stated in this Contract.
PAYEE: The person, designated by the Owner, to whom annuity payments will be
made.
PAYMENT FACTOR: The factor shown on the Contract Schedule which is used on the
Annuity Calculation Date to calculate the first annuity payment.
PORTFOLIO: A segment of an Eligible Fund which constitutes a separate and
distinct class of shares.
PREMIUM TAX: Any premium taxes paid to any governmental entity and assessed
against the Contribution . The Company will deduct the tax on the Issue Date.
SEPARATE ACCOUNT: An account established by the Company to separate the assets
funding the variable benefits for the class of Contracts to which this contract
belongs from the Company's other assets. The assets in the Separate Account are
not chargeable with liabilities arising out of any other business the Company
may conduct. The Separate Account and the Sub-Accounts are listed on the
Contract Schedule.
SUB-ACCOUNT: The subdivisions of the Separate Account. They are shown on the
Contract Schedule.
VALUATION DATE: Each day on which the Company and the New York Stock Exchange
("NYSE") are open for business.
VALUATION PERIOD: The period of time beginning at the close of business of the
NYSE on each Valuation Date and ending at the close of business for the next
succeeding Valuation Date.
DEFINITIONS (CONTINUED)
WRITTEN REQUEST: A request in writing, in a form satisfactory to the Company,
which is received by the Annuity Service Center.
CONTRIBUTION PROVISIONS
CONTRIBUTIONS: The Contribution is shown on the Contract Schedule. This is a
single Contribution Contract. The Company reserves the right to reject any
Application or Contribution.
ALLOCATION OF CONTRIBUTIONS: The Contribution is allocated to one or more
Sub-Accounts of the Separate Account in accordance with the selections made by
the Owner. The allocation of the Contribution is made in accordance with the
selection made by the Owner at the Issue Date and must be in accordance with the
Allocation Guidelines set forth on the Contract Schedule. Allocation of the
Contributions is subject to the terms and conditions imposed by the Company. The
Company has reserved the right to allocate the Contribution to the Money Market
Sub-Account until the expiration of the Right to Examine Contract period.
SEPARATE ACCOUNT PROVISIONS
THE SEPARATE ACCOUNT: The Separate Account is designated on the Contract
Schedule and consists of assets set aside by the Company, which are kept
separate from that of the general assets and all other separate account assets
of the Company. The assets of the Separate Account equal to reserves and other
liabilities will not be charged with liabilities arising out of any other
business the Company may conduct. The Separate Account assets are divided into
Sub-Accounts. The Sub-Accounts which are available under this Contract are
listed on the Contract Schedule. The assets of the Sub-Accounts are allocated to
the Eligible Fund(s) and the Portfolio(s), if any, within an eligible Fund,
shown on the Contract Schedule. The Company may, from time to time, add an
additional Eligible Fund(s) or Portfolio(s) to those shown on the Contract
Schedule. The Owner may be permitted to transfer Contract Values to the
additional Sub-Account(s) within the Separate Account. However, the right to
make such transfers or allocations will be limited by the terms and conditions
imposed by the Company.
Should the shares of any such Eligible Fund(s) or any Portfolio(s) within an
Eligible Fund become unavailable for investment by the Separate Account, or the
Company's Board of Directors deems further investment in these shares
inappropriate, the Company may limit further purchase of such shares or
substitute shares of another Eligible Fund or Portfolio for shares already
purchased under this Contract.
SEPARATE ACCOUNT CHARGE: Each Valuation Period, the Company deducts a Separate
Account Charge from each Sub-Account of the Separate Account which are equal, on
an annual basis, to the amounts shown on the Contract Schedule. The Separate
Account Charge compensates the Company for assuming the mortality and expense
risks under this Contract and the costs associated with the administration of
this Contract and the Separate Account.
VALUATION OF ASSETS: The assets of the Separate Account are valued at their fair
market value in accordance with procedures of the Company.
VALUATION PROVISIONS
ACCUMULATION UNITS: Prior to the Annuity Date, Accumulation Units shall be used
to account for all amounts allocated to or withdrawn from the Sub-Accounts of
the Separate Account as a result of the Contribution, transfers, or fees and
charges. The Company will determine the number of Accumulation Units of a
Sub-Account purchased or cancelled. This will be done by dividing the amount
allocated to (or the amount withdrawn from) the Sub-Account by the dollar value
of one Accumulation Unit of the Sub-Account as of the end of the Valuation
Period during which the request for the transaction is received at the Annuity
Service Center.
ACCUMULATION UNIT VALUE: The Accumulation Unit Value for each Sub-Account for
any Valuation Period is determined by subtracting (2) from (1) and dividing the
result by (3) where:
1. is the result of:
a. the assets of the Sub-Account attributable to Accumulation Units;
plus or minus
b. the cumulative charge or credit for taxes reserved which is
determined by the Company to have resulted from the operation of
the Sub-Account.
2. is the cumulative unpaid charge for the Separate Account Charge, which
is shown on the Contract Schedule; and
3. is the number of Accumulation Unit outstanding at the end of the
Valuation Period.
The Accumulation Unit Values may increase or decrease from Valuation Period to
Valuation Period.
ANNUITY UNIT VALUE: The value of an Annuity Unit for each Sub-Account of the
Separate Account will vary to reflect the investment experience of the
applicable Eligible Funds and will be determined by multiplying the value of the
Annuity Unit for that Sub-Account on the preceding day by the product of (a) the
Net Investment Factor for that Sub-Account for the day for which the Annuity
Unit Value is being calculated, and (b) the Annuity Unit Factor which
neutralizes the Assumed Investment Return. Both the Annuity Unit Factor and the
Assumed Investment Return appear on the Contract Schedule.
NET INVESTMENT FACTOR: The Net Investment Factor for each Sub-Account is equal
to:
(a) the value of a share of the corresponding Eligible Fund at the end of
the Valuation Period (plus the per share amount of any unpaid
dividends or capital gains by that Eligible Fund ); divided by
(b) the value of a share of the corresponding Eligible Fund at the
beginning of the Valuation Period: and
(c) subtracting from that amount the daily Separate Account Charge shown
on the Contract Schedule.
CONTRACT VALUE
The Contract Value for any Valuation Period is the sum of the Contract Value in
each of the Sub-Accounts of the Separate Account.
The Contract Value in a Sub-Account of the Separate Account prior to the Annuity
Date is determined by multiplying the number of Accumulation Units allocated to
the Sub-Account by the Accumulation Unit Value.
There is no Contract Value after the Annuity Date.
TRANSFERS
TRANSFERS BEFORE THE ANNUITY DATE: Prior to the Annuity Calculation Date, the
Owner may transfer all or part of the Contract Values held in the Sub-Accounts
into other Sub-Accounts by Written Request without the imposition of any fee or
charge. Owners can elect to make transfers by telephone. To do so Owners must
complete a Written Request. Subsequent transfers will be subject to the Transfer
Provisions and Charges described on the Contract Schedule.
The Company reserves the right, at any time and without prior notice to any
party, to terminate, suspend or modify the transfer privilege described above.
If the Owner elects to use this transfer privilege, the Company will not be
liable for transfers made in accordance with the Owner's instructions. All
amounts and Accumulation Units will be determined as of the end of the Valuation
Period during which the request for transfer is received at the Annuity Service
Center.
TRANSFERS AFTER THE ANNUITY DATE: After the Annuity Date the Owner may make
transfers, by Written Request, as follows:
1. The Owner may make transfers between Sub-Accounts, subject to the
Transfer Provisions and Charges described on the Contract Schedule.
2. Transfers between Sub-Accounts will be made by converting the number
of Annuity Units being transferred to the number of Annuity Units of
the Sub-Account to which the transfer is made, so that the next
Annuity Payment if it were made at the time would be the same amount
that it would have been without the transfer. Thereafter, annuity
payments will reflect changes in the value of the new Annuity Units.
The Company reserves the right, at any time and without prior notice to any
party, to terminate, suspend or modify the transfer privilege described above.
If the Owner elects to use this transfer privilege, the Company will not be
liable for transfers made in accordance with the Owner's instructions. All
amounts and Annuity Unit Values will be determined as of the end of the
Valuation Period during which the request for transfer is received at the
Annuity Service Center.
ANNUITY PROVISIONS
ANNUITY DATE: The Annuity Date is selected by the Owner at the Issue Date. The
Annuity Date is shown on the Contract Schedule. The Annuity Date may be no
earlier than the end of the Right to Examine Contract period described on the
cover of this Contact and no later than one year from the date the Contribution
was received.
DETERMINATION OF ANNUITY PAYMENTS: The first annuity payment will be calculated
on the Annuity Calculation Date which will be no more than 5 days prior to the
Annuity Date. Annuity payments reflect the investment performance of the
Separate Account in accordance with the allocation of the Contract Value to the
Sub-Accounts during the Annuity Period. On the Annuity Calculation Date, a fixed
number of Annuity Units will be purchased, determined as follows:
ANNUITY PROVISIONS (CONTINUED)
The first annuity payment is equal to the Contract Value, divided first by
$1,000 and then multiplied by the Payment Factor shown on the Contract Schedule.
In each Sub-Account the fixed number of Annuity Units is determined by dividing
the amount of the initial annuity payment determined for each Sub-Account by the
Annuity Unit Value on the Annuity Calculation Date. Thereafter, the number of
Annuity Units in each Sub-Account remains unchanged unless the Owner elects to
transfer between Sub-Accounts. All calculations shall appropriately reflect the
Annuity Payment Frequency selected.
Once annuity payments have begun, the number of Annuity Units remains fixed with
respect to a particular Sub-Account. If the Owner elects that continuing annuity
payments be based on a different Sub-Account, the number will change effective
with that election but will remain fixed in number following such election. The
method of calculating the Annuity Unit Value is described under Valuation
Provisions.
The dollar amount of annuity payments for each Sub-Account after the first
annuity payment is determined as follows:
1. The dollar amount of the first annuity payment is divided by the value
of an Annuity Unit for each applicable Sub-Account as of the Annuity
Date. This sets the number of Annuity Units for each monthly payment
for the applicable Sub-Account. The number of Annuity Units for each
applicable Sub-Account remains fixed after the Annuity Calculation
Date;
2. The fixed number of Annuity Units in each Sub-Account is multiplied by
the Annuity Unit Value for that Sub-Account for the last Valuation
Period . This result is the dollar amount of the payment for each
applicable Sub-Account.
The Company guarantees that the dollar amount of annuity payments will not be
adversely affected by variations in the expense results and in the actual
mortality experience of Annuitants from the mortality assumptions, including any
age adjustment, used in determining the first monthly payment.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS: If the annuity payment would be or
becomes less than $100, the Company will reduce the frequency of the annuity
payment to an interval which will result in each payment being at least $100.
SUSPENSION OR DEFERRAL OF PAYMENT PROVISIONS
The Company reserves the right to suspend or postpone payments from the Separate
Account for a benefit payment or transfer:
(a) for any period during which the New York Stock Exchange is closed or
during which trading on the New York Stock Exchange is restricted;
(b) for any period during which an emergency exists as a result of which
(i) disposal of the securities held in the Sub-Accounts is not
reasonably practicable, or (ii) it is not reasonably practicable for
the value of the net assets of the Separate Account to be fairly
determined; and
(c) for such other periods as the Securities and Exchange Commission may,
by order, permit for the protection of the contract owners. The
conditions under which trading shall be deemed to be restricted or any
emergency shall be deemed to exist shall be determined by rules and
regulations of the Securities and Exchange Commission.
OWNER, ANNUITANT, OWNERSHIP, ASSIGNMENT PROVISIONS
OWNER: The Owner has all interest and right to amounts held in his or her
Contract. The Owner/Joint Owner is the person designated as such on the Issue
Date, unless changed.
The Owner may change owners of the Contract at any time prior to the Annuity
Date by Written Request. A Change of Owner will automatically revoke any prior
designation the Owner. The change will become effective as of the date the
Written Request is signed. A new designation of Owner will not apply to any
payment made or action taken by the Company prior to the time it was received.
Any change to the Owner of the Contract will be subject to the Company's
underwriting rules then in effect.
This Contract may be owned by Joint Owners. The Owners must jointly exercise all
of the rights contained in this contract except for transfers, which may be
exercised individually.
ANNUITANT: The Annuitant and Joint Annuitant, if any, is the person or persons
on whose life annuity payments are based. The Annuitant and Joint Annuitant, if
any, is the person or persons designated by the Owner at the Issue Date.
ASSIGNMENT OF THE CONTRACT: A Written Request specifying the terms of an
assignment of the Contract must be provided to the Annuity Service Center. Until
the Written Request is received, the Company will not be required to take notice
of or be responsible for any transfer of interest in the Contract by assignment,
agreement, or otherwise.
The Company will not be responsible for the validity or tax consequences of any
assignment. Any assignment made after the death benefit has become payable will
be valid only with the Company's consent.
If the Contract is assigned, the Owner's rights may only be exercised with the
consent of the assignee of record.
PROCEEDS PAYABLE ON DEATH
DEATH BEFORE ANNUITY DATE: If an Owner or an Annuitant dies before the Annuity
Date, the Company will pay the Beneficiary the death benefit described below.
The death benefit is calculated as of the date the Company receives written
notification of Due Proof of Death. The death benefit is equal to the Contract
Value.
DISTRIBUTION REQUIREMENTS BEFORE THE ANNUITY DATE: The Beneficiary must elect
the death benefit to be paid under one of the options below:
(a) The entire interest in the Contract will be distributed within 5 years
of the date of death, or
(b) The Beneficiary elects to have the death benefit distributed over a
period that does not extend beyond such Beneficiary's life or life
expectancy and payments start within 1 year after the date of death,
or
(c) In the event of death of an Owner who is not an Annuitant, if the
designated Beneficiary is the spouse of the deceased owner, he or she
may elect to continue the Contract.
The death benefit will be paid after the death of the Owner, the Joint Owner, if
any, the Annuitant, or the Joint Annuitant, if any, whichever death is first.
Payment to the Beneficiary, other than in a single lump sum, may only be elected
during the sixty-day period beginning with the date of receipt of Due Proof of
Death.
PROCEEDS PAYABLE ON DEATH (CONTINUED)
DEATH OF OWNER ON OR AFTER THE ANNUITY DATE: If the Owner, or any Joint Owner,
dies on or after the Annuity Date any remaining payments as described on the
Contract Schedule will continue at least as rapidly as under the method of
distribution in effect at such Owner's death. Upon the Owner's death on or after
the Annuity Date the Beneficiary becomes the Owner.
DEATH OF ANNUITANT ON OR AFTER THE ANNUITY DATE: Upon the death of the Annuitant
on or after the Annuity Date, the Beneficiary will have the option of having
payments, if any, continue to the Beneficiary for the remainder of the period or
taking the death benefit in a lump sum as provided on the Contract Schedule.
Death benefits will be paid at least as rapidly as under the method of
distribution in effect at the Annuitant's death.
NON-INDIVIDUAL OWNER: If the Owner is a non-individual then the death of an
Annuitant shall be treated as the death of the Owner for purposes of the
distribution of the death benefit.
BENEFICIARY: The Beneficiary designation in effect on the Issue Date will remain
in effect until changed. The Beneficiary is entitled to receive the benefits to
be paid at the death of the Owner, the Joint Owner, or the Annuitant or the
Joint Annuitant.
Unless the Owner provided otherwise, the death benefit will be paid in equal
shares to the survivor(s) as follows:
1. to the Primary Beneficiary(ies) who survive the Owner's, the Joint
Owner's, the Annuitant's or the Joint Annuitant's death, as
applicable; or if there are none
2. to the Contingent Beneficiary(ies) who survive the Owner's, the Joint
Owner's, the Annuitant's or the Joint Annuitant's death, as
applicable; or if there are none
3. to the Owner, or if deceased, to the estate of the Owner.
CHANGE OF BENEFICIARY: Subject to the rights of any irrevocable
Beneficiary(ies), the Owner and the Joint Owner, if any, may change the Primary
Beneficiary(ies) or Contingent Beneficiary(ies). A change may be made by Written
Request. The change will take effect as of the date the Written Request is
signed. The Company will not be liable for any payment made or action taken
before it records the change
GENERAL PROVISIONS
THE CONTRACT: The entire Contract consists of this Contract, the Application, if
any, and any riders or endorsements attached to this Contract. It is intended to
qualify as an annuity contract for Federal Tax purposes. To that end, the
provisions of the Contract are interpreted and administered to ensure and
maintain such tax qualifications. This Contract may be changed or altered only
by the President and the Secretary of the Company. A change or alteration must
be made in writing. No modification will affect the amount or term of any
annuity begun prior to the modification unless it is required to conform the
contract to any Federal or State statute. No modification of the contract will
affect the method by which the Contract Value will be determined.
MISSTATEMENT OF AGE AND SEX: If the Age or sex of any Annuitant has been
misstated, any Annuity benefits payable will be the Annuity benefits provided by
the correct information. After Annuity Payments have begun, any underpayments
will be made up in one sum with the next Annuity Payment. Any overpayments will
be deducted from future Annuity Payments until the total is repaid.
GENERAL PROVISIONS (CONTINUED)
INCONTESTABILITY: This Contract will not be contestable after it has been in
force for a period of two years from the Issue Date.
MODIFICATION: This Contract may be modified in order to maintain compliance with
applicable state and federal law.
NON-PARTICIPATING: This Contract will not share in any distribution of
dividends.
EVIDENCE OF SURVIVAL: The Company may require satisfactory evidence of the
continued survival of any person(s) on whose life Annuity Payments are based.
PROOF OF AGE: The Company may require evidence of Age of any Annuitant .
PROTECTION OF PROCEEDS: To the extent permitted by law, death benefits and
Annuity Payments shall be free from legal process and the claim of any creditor
if the person is entitled to them under this Contract. No payment and no amount
under this Contract can be taken or assigned in advance of its payment date
unless the Company receives the Owner's written consent.
REPORTS: The Company will furnish an annual report of the Portfolios or Funds
and any other notices, reports or documents required by law to be delivered to
the Owner and Joint Owner, if any. Reports will be sent to the last known
address of the Owner and Joint Owner, if any.
TAXES: Any taxes paid to any governmental entity relating to this Contract will
be deducted as incurred. The Company will, in its sole discretion, determine
when taxes have resulted from: the investment experience of the Separate
Account; receipt by Company of the Contribution; or commencement of Annuity
Payments. The Company will deduct any withholding taxes required by applicable
law.
The Company reserves the right to establish a provision for federal income taxes
if it determines, in its sole discretion, that it will incur a tax as a result
of the operation of the Separate Account. The Company will deduct for any income
taxes incurred by it as a result of the operation of the Separate Account
whether or not there was a provision for taxes and whether or not it was
sufficient.
REGULATORY REQUIREMENTS: All values payable under this Contract will not be less
than the minimum benefits required by the laws and regulations of the states in
which this Contract is delivered.
SUBSTITUTION: The Company reserves the right to substitute the shares of any
other registered investment company for the shares of any Portfolio already
purchased or to be purchased in the future by the Separate Account provided that
the substitution has been approved in accordance with applicable law.
CHANGE IN THE OPERATION OF THE SEPARATE ACCOUNT: At the Company's election, in
accordance with applicable law, the Separate Account may be operated as a
management company under the Investment Company Act of 1940 or it may be
deregistered under the Investment Company Act of 1940 in the event registration
is no longer required. Deregistration of the Separate Account requires an order
by the Securities and Exchange Commission.
