<PAGE>
As filed with the Securities and Exchange Commission on November 8, 1995
File No. 33-39861
File No. 811-07299
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ( )
Pre-effective Amendment No. 2 ( X )
Post-effective Amendment No. _______ ( )
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 ( )
Pre-effective Amendment No. 2 ( X )
(Check appropriate box or boxes)
------------------------------------
ANNUITY INVESTORS(SERVICEMARK) VARIABLE ACCOUNT A
(Exact Name of Registrant)
ANNUITY INVESTORS(SERVICEMARK) LIFE INSURANCE COMPANY
(Name of Depositor)
P.O. Box 5423
Cincinnati, Ohio 45201-5423
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code:
(800) 789-6771
--------------------------------------------
Mark F. Muething, Esq.
Senior Vice President, Secretary and
General Counsel
Annuity Investors Life Insurance Company
P.O. Box 5423
Cincinnati, Ohio 45201-5423
(Name and Address of Agent for Service)
Copy to:
Catherine S. Bardsley, Esq.
Kirkpatrick & Lockhart LLP
1800 M Street, N.W.
South Lobby - Suite 900
Washington, D.C. 20036
--------------------------------------------
Approximate Date of Proposed Public Offering: As soon as practicable
after the effective date of the Registration Statement
DECLARATION REQUIRED BY RULE 24f-2 (a) (1)
Pursuant to Rule 24f-2 under the Investment Company Act of 1940,
the Registrant declares that an indefinite number of its securities is
being registered under the Securities Act of 1933. Fee $500.00
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.
<PAGE>
CROSS REFERENCE SHEET
Pursuant to Rule 495
Showing Location in Part A (Prospectus),
Part B (Statement of Additional Information) and Part C
of Registration Statement Information Required by Form N-4
<TABLE>
<CAPTION> PART A
------
Item of Form N-4 Prospectus Caption
----------------- ------------------
<S> <C> <C>
1. Cover Page . . . . . . . . . . . . . Cover Page
2. Definitions . . . . . . . . . . . . . Definitions
3. Synopsis . . . . . . . . . . . . . . Highlights
4. Condensed Financial Information
(a) Accumulation Unit Values . . Not Applicable
(b) Performance Data . . . . . . Not Applicable
(c) Financial Statements . . . . Financial Statements for the Company
5. General Description of Registrant,
Depositor and Portfolio Companies
(a) Depositor . . . . . . . . . Annuity Investors Life Insurance
Company
(b) Registrant . . . . . . . . . The Separate Account
(c) Portfolio Company . . . . . The Funds
(d) Fund Prospectus . . . . . . The Funds
(e) Voting Rights . . . . . . . Voting Rights
6. Deductions and Expenses
(a) General . . . . . . . . . . Charges and Deductions
(b) Sales Load % . . . . . . . . Contingent Deferred Sales Charge
(c) Special Purchase Plan . . . Contingent Deferred Sales Charge;
Reduction or Elimination of Contract
and Certificate Charges
(d) Commissions . . . . . . . . Distribution of the Contract
(e) Fund Expenses . . . . . . . The Funds
(f) Operating Expenses . . . . . Summary of Expenses
7. Contracts
(a) Persons with Rights . . . . The Contract; Surrenders; Contract
Loans; Death Benefit; Voting Rights
(b) (i) Allocation of Premium Enrollment and Purchase Payments
Payments . . . . . . . . . .
(ii) Transfers . . . . . . . . . Transfers
(iii) Exchanges . . . . . . . . . Additions, Deletions or
Substitutions
<PAGE>
(c) Changes . . . . . . . . . . Not Applicable
(d) Inquiries . . . . . Contacting the Company
8. Annuity Period . . . . . . . . . . . Settlement Options
9. Death Benefit . . . . . . . . . . . . Death Benefit
10. Purchases and Contract Values
(a) Purchases . . . . . . . . . Enrollment and Purchase Payments
(b) Valuation . . . . . . . . . Fixed Account Value; Variable
Account Value
(c) Daily Calculation . . . . . Accumulation Unit Value; Net
Investment Factor
(d) Underwriter . . . . . . . . Distribution of the Contract
11. Redemptions
(a) By Contract Owners . . . . . Surrender Value; Systematic
Withdrawal Option
By Annuitant . . . . . . . . Not Applicable
(b) Texas ORP . . . . . . . . . Texas Optional Retirement Program
(c) Check Delay . . . . . . . . Suspension or Delay in Payment of
Surrender Value
(d) Free Look . . . . . . . . . Not Applicable
12. Taxes . . . . . . . . . . . . . . . . Federal Tax Matters
13. Legal Proceedings . . . . . . . . . . Legal Proceedings
14. Table of Contents for the Statement Statement of Additional Information
of Additional Information . . . . . .
PART B
------
Statement of Additional Information
Item of Form N-4 Caption
---------------- -----------------------
15. Cover Page . . . . . . . . . . . . . Cover Page
16. Table of Contents . . . . . . . . . . Table of Contents
17. General Information and General Information and History
History . . . . . . . . . . . . . . .
18. Services
(a) Fees and Expenses of (Prospectus) Summary of Expenses
Registrant . . . . . . . . .
(b) Management Contracts . . . . Not Applicable
(c) Custodian . . . . . . . . . Not Applicable
Independent Auditors . . . . Experts
(d) Assets of Registrant . . . . Not Applicable
(e) Affiliated Person . . . . . Not Applicable
(f) Principal Underwriter . . . Not Applicable
<PAGE>
19. Purchase of Securities Being Offered (Prospectus) Distribution of the
Contract
Offering Sales Load . . . . . . . . . (Prospectus) Contingent Deferred
Sales Charge
20. Underwriters . . . . . . . . . . . . Distribution of the Contract
21. Calculation of Performance Data
(a) Money Market Funded Sub Money Market Sub-Account Yield
Accounts . . . . . . . . . . Calculation
(b) Other Sub-Accounts . . . . . Other Sub-Account Yield Calculation
22. Annuity Payments . . . . . . . . . . (Prospectus) Fixed Dollar Annuity
Benefit; Variable Dollar Annuity
Benefit
23. Financial Statements . . . . . . . . Financial Statements
PART C - Other Information
--------------------------
Item of Form N-4 Part C Caption
---------------- --------------
24. Financial Statements and Exhibits . . Financial Statements and Exhibits
(a) Financial Statements . . . . Financial Statements
(b) Exhibits . . . . . . . . . . Exhibits
25. Directors and Officers of the Directors and Officers of Annuity
Depositor . . . . . . . . . . . . . . Investors Life Insurance Company
26. Persons Controlled By or Under Common Persons Controlled By Or Under
Control With the Registrant . . . . . Common Control With the Depositor or
Registrant
27. Number of Contract Owners . . . . . . Number of Certificate Owners
28. Indemnification . . . . . . . . . . . Indemnification
29. Principal Underwriters . . . . . . . Principal Underwriter
30. Location of Accounts and Location of Accounts and Records
Records . . . . . . . . . . . . . . .
31. Management Services . . . . . . . . . Management Services
32. Undertakings . . . . . . . . . . . . Undertakings
Signature Page . . . . . . . . . . . Signature Page
</TABLE>
<PAGE>
SUBJECT TO COMPLETION: DATED , 1995
ANNUITY INVESTORS VARIABLE ACCOUNT A
of
ANNUITY INVESTORS LIFE INSURANCE COMPANY
PROSPECTUS
for the
Commodore Nauticus
Group Flexible Premium Deferred Annuity
Issued by
ANNUITY INVESTORS LIFE INSURANCE COMPANY
P.O. Box 5423, Cincinnati, Ohio 45201-5423,
(800) 789-6771
This Prospectus describes the Commodore Nauticus, a Group
Flexible Premium Deferred Annuity Contract (the "Contract") issued
by Annuity Investors Life Insurance Company (the "Company") and the
Certificates of Participation under the Contract ("Certificates").
A Certificate provides for the accumulation of an Account Value
on a fixed or variable basis, or a combination of both. The Certificate
also provides for the payment of periodic annuity payments on a fixed or
variable basis, or a combination of both. If the variable basis is
chosen, annuity values will be held in Annuity Investors Variable Account
A (the "Separate Account") and will vary according to the investment
performance of the mutual funds in which the Sub-Accounts of the Separate
Account invest. If the fixed basis is chosen, periodic annuity payments
from the Company's general account will be fixed and will not vary.
The Separate Account is divided into Sub-Accounts. Each Sub-
Account uses its assets to purchase, at their net asset value, shares of a
designated registered investment company or portfolio thereof (each, a
"Fund"). The Funds available for investment in the Separate Account under
the Contract are as follows: from Janus Aspen Series, (1) the Aggressive
Growth Portfolio, (2) the Worldwide Growth Portfolio, (3) the Balanced
Portfolio, and (4) the Short-Term Bond Portfolio; (5) Dreyfus Variable
Investment Fund's Capital Appreciation Portfolio; (6) Dreyfus Socially
Responsible Growth Fund; (7) Dreyfus Stock Index Fund; and from Merrill
Lynch Variable Series Funds, Inc., (8) the Basic Value Focus Fund, (9) the
Global Strategy Focus Fund, (10) the High Current Income Fund and (11) the
Domestic Money Market Fund.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE.
THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR
TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS
SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO
BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH
SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION
OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
This Prospectus sets forth the basic information that a
prospective investor should know before investing. A "Statement of
Additional Information" containing more detailed information about the
Contract is available free of charge by writing to the Company's
Administrative Office at P.O. Box 5423, Cincinnati, Ohio 45201-5423. The
Statement of Additional Information, which has the same date as this
Prospectus, as it may be supplemented from time to time, has been filed
with the Securities and Exchange Commission and is incorporated herein by
reference. The table of contents of the Statement of Additional
Information is included at the end of this Prospectus.
* * *
THESE SECURITIES HAVE NOT BEEN
APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES
REGULATORY AUTHORITIES NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Please Read this Prospectus Carefully and
Retain It for Future Reference.
The Date of this Prospectus is _____, 1995.
--------------------------------------------
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN
WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO DEALER, SALESMAN, OR
OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.
--------------------------------------------
VARIABLE ANNUITY CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED
OR GUARANTEED BY, ANY FINANCIAL INSTITUTION, NOR ARE THEY FEDERALLY
INSURED OR OTHERWISE PROTECTED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY; THEY ARE
SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL
INVESTMENT.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUS
FOR EACH UNDERLYING FUND. BOTH THIS PROSPECTUS AND THE UNDERLYING FUND
PROSPECTUSES SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
2
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
The Contract and Certificates . . . . . . . . . . . . . . . 6
The Separate Account . . . . . . . . . . . . . . . . . . . . 6
The Fixed Account . . . . . . . . . . . . . . . . . . . . . 7
Transfers Before the Annuity Commencement Date . . . . . . . 7
Surrenders . . . . . . . . . . . . . . . . . . . . . . . . . 7
Contingent Deferred Sales Charge ("CDSC") . . . . . . . . . 8
Other Charges and Deductions . . . . . . . . . . . . . . . . 8
Annuity Benefits . . . . . . . . . . . . . . . . . . . . . . 8
Death Benefit . . . . . . . . . . . . . . . . . . . . . . . 9
Federal Income Tax Consequences . . . . . . . . . . . . . . 9
Contacting the Company . . . . . . . . . . . . . . . . . . . 9
SUMMARY OF EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . 10
Examples . . . . . . . . . . . . . . . . . . . . . . . . . . 13
FINANCIAL STATEMENTS FOR THE COMPANY . . . . . . . . . . . . . . . . . 14
THE FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Janus Aspen Series . . . . . . . . . . . . . . . . . . . . . 15
Aggressive Growth Portfolio . . . . . . . . . . . . . 15
Worldwide Growth Portfolio . . . . . . . . . . . . . 15
Balanced Portfolio . . . . . . . . . . . . . . . . . 15
Short-Term Bond Portfolio . . . . . . . . . . . . . . 15
Dreyfus Funds . . . . . . . . . . . . . . . . . . . . . . . . 16
Capital Appreciation Portfolio (Dreyfus Variable
Investment Fund) . . . . . . . . . . . . . . . . . 16
Socially Responsible Growth Fund . . . . . . . . . . 16
Stock Index Fund . . . . . . . . . . . . . . . . . . 16
Merrill Lynch Variable Series Funds, Inc. . . . . . . . . . . 16
Basic Value Focus Fund . . . . . . . . . . . . . . . 16
Global Strategy Focus Fund . . . . . . . . . . . . . 17
High Current Income Fund . . . . . . . . . . . . . . 17
Domestic Money Market Fund . . . . . . . . . . . . . 17
Additions, Deletions, or Substitutions . . . . . . . . . . . 18
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 19
Yield Data . . . . . . . . . . . . . . . . . . . . . . . . . 19
Total Return Data . . . . . . . . . . . . . . . . . . . . . . 19
ANNUITY INVESTORS(SERVICEMARK) LIFE INSURANCE COMPANY AND THE SEPARATE
ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
i
<PAGE>
Annuity Investors Life Insurance Company . . . . . . . . . . 20
Published Ratings . . . . . . . . . . . . . . . . . . . . . . 20
The Separate Account . . . . . . . . . . . . . . . . . . . . 21
THE FIXED ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Fixed Account Options . . . . . . . . . . . . . . . . . . . . 22
Renewal of Fixed Account Options . . . . . . . . . . . . . . 23
THE CONTRACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ENROLLMENT AND PURCHASE PAYMENTS . . . . . . . . . . . . . . . . . . . 24
Purchase Payments . . . . . . . . . . . . . . . . . . . . . . 24
Allocation of Purchase Payments . . . . . . . . . . . . . . . 24
ACCOUNT VALUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Fixed Account Value . . . . . . . . . . . . . . . . . . . . . 24
Variable Account Value . . . . . . . . . . . . . . . . . . . 25
Accumulation Unit Value . . . . . . . . . . . . . . . . . . . 26
Net Investment Factor . . . . . . . . . . . . . . . . . . . . 26
TRANSFERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Telephone Transfers . . . . . . . . . . . . . . . . . . . . . 27
Dollar Cost Averaging . . . . . . . . . . . . . . . . . . . . 28
Portfolio Rebalancing . . . . . . . . . . . . . . . . . . . . 29
Interest Sweep . . . . . . . . . . . . . . . . . . . . . . . 29
SURRENDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Surrender Value . . . . . . . . . . . . . . . . . . . . . . . 30
Suspension or Delay in Payment of Surrender Value . . . . . . 31
Systematic Withdrawal Option . . . . . . . . . . . . . . . . 32
CONTRACT LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
DEATH BENEFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Death of Participant . . . . . . . . . . . . . . . . . . . . 33
Death Benefit . . . . . . . . . . . . . . . . . . . . . . . . 33
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . 34
CHARGES AND DEDUCTIONS . . . . . . . . . . . . . . . . . . . . . . . . 34
Contingent Deferred Sales Charge . . . . . . . . . . . . . . 35
Maintenance and Administrative Charges . . . . . . . . . . . 37
Mortality and Expense Risk Charge . . . . . . . . . . . . . . 38
Premium Taxes . . . . . . . . . . . . . . . . . . . . . . . . 39
Transfer Fee . . . . . . . . . . . . . . . . . . . . . . . . 39
Fund Expenses . . . . . . . . . . . . . . . . . . . . . . . . 40
Reduction or Elimination of Contract and Certificate Charges 40
SETTLEMENT OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Annuity Commencement Date . . . . . . . . . . . . . . . . . . 40
Election of Settlement Option . . . . . . . . . . . . . . . . 40
ii
<PAGE>
Annuity Benefit . . . . . . . . . . . . . . . . . . . . . . . 41
Fixed Dollar Annuity Benefit . . . . . . . . . . . . . . . . 41
Variable Dollar Annuity Benefit . . . . . . . . . . . . . . . 41
Transfers After the Annuity Commencement Date . . . . . . . . 42
Annuity Transfer Formula . . . . . . . . . . . . . . . . . . 43
Settlement Options . . . . . . . . . . . . . . . . . . . . . 44
Minimum Amounts . . . . . . . . . . . . . . . . . . . . . . . 45
Settlement Option Tables . . . . . . . . . . . . . . . . . . 45
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Non-participating . . . . . . . . . . . . . . . . . . . . . . 45
Misstatement of Age . . . . . . . . . . . . . . . . . . . . . 45
Proof of Existence and Age . . . . . . . . . . . . . . . . . 46
Facility of Payment . . . . . . . . . . . . . . . . . . . . . 46
Transfer and Assignment . . . . . . . . . . . . . . . . . . . 46
Annuity Data . . . . . . . . . . . . . . . . . . . . . . . . 46
Annual Report . . . . . . . . . . . . . . . . . . . . . . . . 46
Incontestability . . . . . . . . . . . . . . . . . . . . . . 46
Entire Contract . . . . . . . . . . . . . . . . . . . . . . . 47
Changes in the Contract . . . . . . . . . . . . . . . . . . . 47
Waiver of the Certificate Maintenance Fee . . . . . . . . . . 47
Notices and Directions . . . . . . . . . . . . . . . . . . . 48
FEDERAL TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . 48
Introduction . . . . . . . . . . . . . . . . . . . . . . . . 48
Taxation of Annuities In General . . . . . . . . . . . . . . 49
Surrenders . . . . . . . . . . . . . . . . . . . . . . . . . 49
Annuity Payments . . . . . . . . . . . . . . . . . . . . . . 49
Penalty Tax . . . . . . . . . . . . . . . . . . . . . . . . . 50
Taxation of Death Benefit Proceeds . . . . . . . . . . . . . 50
Transfers, Assignments, or Exchanges of the Contract . . . . 50
Texas Optional Retirement Program . . . . . . . . . . . . . . 51
Qualified Pension and Profit Sharing Plans and H.R. 10 Plans 51
Withholding . . . . . . . . . . . . . . . . . . . . . . . . . 51
Possible Changes in Taxation . . . . . . . . . . . . . . . . 51
Other Tax Consequences . . . . . . . . . . . . . . . . . . . 52
General . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
DISTRIBUTION OF THE CONTRACT . . . . . . . . . . . . . . . . . . . . . 52
LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . 53
VOTING RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . 54
STATEMENT OF ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . 55
APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
iii
<PAGE>
DEFINITIONS
Account(s): The Sub-Account(s) and/or the Fixed Account options.
Account Value: The aggregate value of the Participant's interest in the
Sub-Account(s) and the Fixed Account options as of the end of any
Valuation Period.
Accumulation Period: The period prior to the Annuity Commencement Date
during which the Participant is eligible for benefits under the Contract.
Accumulation Unit: The unit of measurement used to calculate the value of
the Sub-Account(s) prior to the Annuity Commencement Date.
Administrative Office: The home office of the Company or any other office
the Company may designate for administration.
Age: Age as of most recent birthday.
Annuitant: The Annuitant is the Participant and is the person on whose
life Annuity Benefit payments are based.
Annuity Benefit: Periodic payments made by the Company under a Settlement
Option, which payments commence after the Annuity Commencement Date and
continue during the Annuity Payment Period, for the life of a person or
for a specific period. A Variable Dollar Annuity Benefit will provide
payments that vary in amount. Fixed Dollar Annuity Benefit payments
remain constant.
Annuity Commencement Date: The date on which Annuity Benefits are to
begin.
Annuity Payment Period: The period commencing with the Annuity
Commencement Date, during which Annuity Benefits are payable under the
Contract with respect to a Participant's participation interest.
Annuity Unit: The unit of measurement used to determine the value of any
Variable Dollar Annuity Benefit payments after the first Annuity Benefit
payment is made by the Company.
Beneficiary: The person or persons entitled to receive the Death Benefit
if the Participant dies prior to the Annuity Commencement Date.
Certificate Anniversary: An annual anniversary of the Certificate
Effective Date.
Certificate Effective Date: The date shown on the Certificate
Specifications page.
Certificate Year: Any period of twelve months commencing on the
Certificate Effective Date and on each Certificate Anniversary thereafter.
3
<PAGE>
Code: The Internal Revenue Code of 1986, as amended, and the rules and
regulations issued thereunder.
Contract Owner: The person or company identified as such in the
application for the Contract or other such form as may be designated by
the Company.
Due Proof of Death: Any of (1) a certified copy of a death certificate;
(2) a certified copy of a decree of a court of competent jurisdiction as
to the finding of death; (3) a written statement by a medical doctor who
attended the deceased; or (4) any other proof satisfactory to the Company.
Fixed Account: An account which is part of the Company's general account,
the values of which are not dependent upon the investment performance of
the Sub-Accounts.
Fixed Account Value: The value of a Participant's interest in all Fixed
Account options.
Fund: A management investment company or a portfolio thereof, registered
under the Investment Company Act of 1940, in which a Sub-Account of the
Separate Account invests.
Net Asset Value: The amount computed by an investment company, no less
frequently than each Valuation Period, as the price at which its shares or
units, as the case may be, are redeemed in accordance with the rules of
the Securities and Exchange Commission.
Participant: The person identified on the Certificate Specifications
page, who participates in the benefits of the Contract.
Purchase Payment: A contribution after the deduction of premium tax, if
any, made to the Company in consideration for the Participant's
participation under the Contract.
Separate Account: Annuity Investors(SERVICEMARK) Variable Account A (also
referred to as the "Variable Account") which has been established by the
Company pursuant to the laws of the State of Ohio.
Settlement Option: The option elected by the Participant for the payment
of Annuity Benefits.
Sub-Account: The Separate Account is divided into Sub-Accounts, each of
which invests in the shares of a designated Fund.
Surrender Value: The amount payable under a Certificate if the
Certificate is surrendered.
Valuation Period: The period commencing at the close of regular trading
on the New York Stock Exchange on any Valuation Date and ending at the
close of trading on the next succeeding Valuation Date. "Valuation Date"
means each day on which the New York Stock Exchange is open for business.
4
<PAGE>
Variable Account Value: The value of a Participant's interest in all Sub-
Accounts.
Written Request: Information provided, or a request made, that is
complete and satisfactory to the Company and in writing, that is sent to
the Company on the Company's form or in a form satisfactory to the
Company, and that is received by the Company at the Administrative Office.
A Written Request is subject to any payment made or any action the Company
takes before the Written Request is acknowledged by the Company. A
Participant may be required to return his or her Certificate to the
Company in connection with a Written Request.
5
<PAGE>
HIGHLIGHTS
The Contract and Certificates
The Group Flexible Premium Deferred Annuity Contract described in this
Prospectus is designed for use in connection with certain retirement
arrangements that qualify for favorable tax treatment under Sections 401,
403, or 457 of the Code.
The Contract Owner is the employer or the trustee for the employer's
retirement plan, as shown on the Application for the Contract, the
Participant Enrollment Form and Certificate Specifications page. The
Contract is held by the Contract Owner for the benefit of Participants and
Beneficiaries. Each participant for whom Purchase Payment(s) are made
will participate in the Contract as a Participant. A Participant account
will be established for each Participant. Subject to the terms of a
Certificate, the Account Value, after certain adjustments, will be applied
to the payment of an Annuity Benefit under the Settlement Option elected
by the Participant.
The Account Value will depend on the investment experience of the amounts
allocated to each Sub-Account of the Separate Account elected by the
Participant and/or interest credited on amounts allocated to the Fixed
Account option(s) elected. All Annuity Benefits and other values provided
under the Certificate when based on the investment experience of the
Separate Account are variable and are not guaranteed as to dollar amount.
Therefore, prior to the Annuity Commencement Date the Participant bears
the entire investment risk with respect to amounts allocated to the
Separate Account under the Certificate.
There is no guaranteed or minimum Surrender Value with respect to amounts
allocated to the Separate Account, so the proceeds of a surrender could be
less than the total Purchase Payments.
The Separate Account
Annuity Investors(SERVICEMARK) Variable Account A is a separate account of
the Company that is divided into Sub-Accounts (See "The Separate Account,"
page ___.) Each Sub-Account uses its assets to purchase, at their Net
Asset Value, shares of a Fund. The Funds available for investment in the
Separate Account under the Contract are as follows: from Janus Aspen
Series, (1) the Aggressive Growth Portfolio, (2) the Worldwide Growth
Portfolio, (3) the Balanced Portfolio, and (4) the Short-Term Bond
Portfolio; (5) Dreyfus Variable Investment Fund's Capital Appreciation
Portfolio; (6) Dreyfus Socially Responsible Growth Fund; (7) Dreyfus Stock
Index Fund; and from Merrill Lynch Variable Series Funds Inc., (8) the
Basic Value Focus Fund, (9) the Global Strategy Focus Fund, (10) the High
Current Income Fund and (11) the Domestic Money Market Fund. Each Fund
has distinct investment objectives and policies which are described in the
accompanying prospectus for the Fund.
6
<PAGE>
Each Fund pays its investment adviser and other service providers certain
fees charged against the assets of the Fund. The Account Value of a
Certificate and the amount of any Annuity Benefits will vary to reflect
the investment performance of all the Sub-Accounts elected by the
Participant and the deduction of the charges described under "Charges and
Deductions," page ___. For more information about the Funds, see "The
Funds," page __, and the accompanying Funds' prospectuses.
The Fixed Account
The Fixed Account is an account within the Company's general account.
There are currently four Fixed Account options available under the Fixed
Account: a Fixed Accumulation Account option and three fixed-term
options. Purchase Payments allocated or amounts transferred to the Fixed
Account options are credited with interest at a rate declared by the
Company's Board of Directors, but in any event at a minimum guaranteed
annual rate of 3.0% corresponding to a daily rate of 0.0081%. (See "The
Fixed Account," page ___.)
Transfers Before the Annuity Commencement Date
Prior to the Annuity Commencement Date, the Participant may transfer
values between the Separate Account and the Fixed Account, within the
Fixed Account and between the Sub-Accounts, by Written Request to the
Company or by telephone in accordance with the Company's telephone
transfer rules. (See "Transfers," page___.)
The Company currently charges a fee of $25 for each transfer ("Transfer
Fee") in excess of twelve made during the same Certificate Year. (See
"Transfers," page __.)
For transfers after the Annuity Commencement Date, see "After the Annuity
Commencement Date," page __.
Surrenders
All or part of the Surrender Value of a Certificate may be surrendered by
the Participant on or before the Annuity Commencement Date by Written
Request to the Company. Amounts surrendered may be subject to a
Contingent Deferred Sales Charge ("CDSC") depending upon how long the
Purchase Payments to be withdrawn have been held under the Certificate.
Amounts withdrawn also may be subject to a premium tax or similar tax,
depending upon the jurisdiction in which the Participant lives.
Surrenders may be subject to a 10% premature distribution penalty tax if
made before the Participant reaches age 59 1/2. Surrenders may further be
subject to federal, state or local income tax. (See "Federal Tax Matters,"
page ___.)
Contingent Deferred Sales Charge ("CDSC")
A CDSC may be imposed on surrenders. The maximum CDSC is 7% of Purchase
Payments withdrawn during the first year after that Purchase Payment is
7
<PAGE>
received, decreasing by 1% annually to 0% after year seven. The CDSC may
be waived under certain circumstances. (See "Charges and Deductions,"
page ___.)
Other Charges and Deductions
The Company deducts a daily charge ("Mortality and Expense Risk Charge")
at an effective annual rate of 1.25% of the daily Net Asset Value of each
Sub-Account. In connection with certain Contracts that allow the Company
to reduce administrative expenses, the Company will offer an Enhanced
Contract with a Mortality and Expense Risk Charge at an effective annual
rate of 0.95% of the daily Net Asset Value of each Sub-Account.
The Company deducts a Certificate maintenance charge each year
("Certificate Maintenance Fee"). This Fee is currently $25 and is
deducted from a Participant's Variable Account Value on each Certificate
Anniversary. The Certificate Maintenance Fee may be waived under certain
circumstances, at the Company's discretion.
The Company does not currently intend to deduct a charge to help cover the
costs of administering the Contract, the Certificates and the Separate
Account ("Administration Charge"); however, the Company reserves the right
to impose an Administration Charge at a future date. Any such
Administration Charge is guaranteed not to exceed a maximum effective
annual rate of .20% of the daily Net Asset Value of each Sub-Account.
Charges for premium taxes may be imposed in some jurisdictions. Depending
on the applicability of such taxes, the charges may be deducted from
Purchase Payments, from surrenders, and from other payments made under the
Certificate. (See "Charges and Deductions," page ___.)
Annuity Benefits
Annuity Benefits are paid on a fixed or variable basis, or a combination
of both. (See "Annuity Benefits," page __.)
Death Benefit
The Certificate provides for the payment of a death benefit if the
Participant dies prior to the Annuity Commencement Date. The death
benefit may be paid as either a lump sum or pursuant to one of the
Settlement Options offered under the Certificate. (See "Death Benefit,"
page ___.)
Federal Income Tax Consequences
A Participant generally should not be taxed on increases in the Account
Value until a distribution under the Certificate occurs (e.g., a surrender
or Annuity Benefit) or is deemed to occur (e.g., a loan). Generally, a
portion (up to 100%) of any distribution or deemed distribution is taxable
as ordinary income. The taxable portion of distributions is generally
subject to income tax withholding unless the recipient elects otherwise.
8
<PAGE>
In addition, a federal penalty tax may apply to certain distributions.
(See "Federal Tax Matters," page __.)
Contacting the Company
All Written Requests and any questions or inquiries should be directed to
the Company's Administrative Office, P.O. Box 5423, Cincinnati, Ohio
45201-5423, (800) 789-6771. All inquiries should include the Certificate
Number and the Participant's name.
Note: The foregoing summary is qualified in its entirety by the detailed
information in the remainder of this Prospectus and in the accompanying
prospectuses for the Funds which should be referred to for more detailed
information. The requirements of a particular retirement plan, an
endorsement to the Contract or Certificate, or limitations or penalties
imposed by the Code or the Employee Retirement Income Security Act of
1974, as amended, may impose additional limits or restrictions on Purchase
Payments, surrenders, distributions, or benefits, or on other provisions
of the Contract or the Certificates thereunder. This Prospectus does not
describe such limitations or restrictions. (See "Federal Tax Matters,"
page ____.)
9
<PAGE>
SUMMARY OF EXPENSES
Participant Transaction Expenses
Sales Load Imposed on Purchase Payments None
Contingent Deferred Sales Charge (as a
percentage of Purchase Payments withdrawn)
Certificate Years since Purchase
Payment Receipt
less than 1 year 7%
1 year but less than 2 years 6%
2 years but less than 3 years 5%
3 years but less than 4 years 4%
4 years but less than 5 years 3%
5 years but less than 6 years 2%
6 years but less than 7 years 1%
7 years or more 0%
Surrender Fees None
Transfer Fee 1/ $25
Annual Certificate Maintenance Fee $25
___________________
1/ The first twelve transfers in a Certificate Year are free.
Thereafter, a $25 fee will be charged on each subsequent transfer.
10
<PAGE>
<TABLE>
<CAPTION>
Dreyfus
V.I.F.
Janus A.S. Janus A.S. Janus A.S. Capital
Separate Account Annual Expenses2/ Aggressive Worldwide Janus A.S. Short-Term Appre-
(as a percentage of average Separate Growth Growth Balanced Bond ciation
Account assets) ---------- ---------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C>
Mortality and Expense 1.25% 1.25% 1.25% 1.25% 1.25%
Risk Charge
Administration Charge 0.00% 0.00% 0.00% 0.00% 0.00%
Other Fees and 0.00% 0.00% 0.00% 0.00% 0.00%
Expenses of the
Separate Account
Total Separate Account 1.25% 1.25% 1.25% 1.25% 1.25%
Annual Expenses
Fund Annual Expenses3/
(as a percentage of Fund average net
assets after fee waiver and/or
expense reimbursement)
Management Fees 0.77% 0.69% 0.83% 0.00% 0.75%
Other Expenses 0.28% 0.49% 0.74% 0.65% 0.36%
Total Fund Annual 1.05% 1.18% 1.57% 0.65% 1.11%
Expenses
</TABLE>
__________________
2/Annual expenses are anticipated to be the same for each Sub-Account.
These expenses are based on estimated amounts for the current fiscal year.
3/Information regarding each underlying Fund has been provided to the
Company by each Fund, and the Company has not independently verified such
information. Data for each Fund are for its fiscal year ended December
31, 1994. Actual expenses in future years may be higher or lower.
Fund expenses are net of management fees and other expenses waived and/or
reimbursed (except those shown for the Dreyfus V.I.F. Capital Appreciation
Portfolio and the Dreyfus Socially Responsible Growth Fund as noted
below). In the absence of such fee waivers and/or expense reimbursements,
Management Fees, Other Expenses and Total Portfolio Expenses would have
been as follows for the fiscal year ended December 31, 1994: 1.00%, 0.28%
and 1.28%, respectively, for the Janus A.S. Aggressive Growth Portfolio;
1.00%, 0.49% and 1.49%, respectively, for the Janus A.S. Worldwide Growth
11
<PAGE>
Portfolio; 1.00%, 0.74% and 1.74%, respectively, for the Janus A.S.
Balanced Portfolio; and 0.65%, 0.75% and 1.40%, respectively, for the
Janus A.S. Short-Term Bond Portfolio; 0.15%, 0.41% and 0.56%,
respectively, for the Dreyfus Stock Index Fund; and 0.50%, 0.07% and
0.57%, respectively, for the Merrill Lynch V.S.F. Domestic Money Market
Fund.
Fees and expenses for the Dreyfus V.I.F. Capital Appreciation Portfolio
and the Dreyfus Socially Responsible Growth Fund are based on 1994 fees
and expenses but do not take into account management fee waivers and
expense reimbursements that were in effect during that year because they
are no longer in effect.
<TABLE>
<CAPTION>
Merrill
Merrill Merrill Lynch Merrill
Dreyfus Lynch Lynch V.S.F. V.S.F. Lynch V.S.F.
Separate Account Annual Socially Dreyfus V.S.F. Global High Domestic
Expenses Responsible Stock Basic Value Strategy Current Money Market
(as a percentage of average Growth Index Focus Focus Income
Separate Account assets) ----------- ------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Mortality and 1.25% 1.25% 1.25% 1.25% 1.25% 1.25%
Expense Risk
Charge
Administration 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Charge
Other Fees and 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Expenses of the
Separate Account
Total Separate 1.25% 1.25% 1.25% 1.25% 1.25% 1.25%
Account Annual
Expenses
Fund Annual Expenses (as a
percentage of Fund average
net assets after fee waiver
and/or expense reimburse-
ment)
Management Fees 0.75% 0.14% 0.60% 0.65% 0.52% 0.50%
Other Expenses 2.10% 0.26% 0.12% 0.12% 0.09% 0.00%
Total Fund Annual 2.85% 0.40% 0.72% 0.77% 0.61% 0.50%
Expenses
</TABLE>
12
<PAGE>
The purpose of this table is to assist a Participant in understanding the
various costs and expenses that the Participant will bear directly and
indirectly with respect to investment in the Separate Account. The table
reflects expenses of each Sub-Account as well as of the Fund in which the
Sub-Account invests. See "Charges and Deductions" on page _____ of this
Prospectus and the accompanying prospectus for the applicable Fund for a
more complete description of the various costs and expenses. In addition
to the expenses listed above, premium taxes may be applicable. The dollar
figures should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown. The
$25 Contract Maintenance Charge is included in the Examples as $1.
Examples
If you surrender your Certificate at the end of the applicable time
period, you would pay the following expenses on a $1,000 investment,
assuming a 5% annual return on assets:
Sub-Account 1 Year 3 Years
-----------
Janus A.S. Aggressive Growth $95 $128
Janus A.S. Worldwide Growth 96 132
Janus A.S. Balanced 100 144
Janus A.S. Short-Term Bond 91 115
Dreyfus V.I.F. Capital Appreciation 95 130
Dreyfus Socially Responsible Growth 113 184
Dreyfus Stock Index 88 107
Merrill Lynch V.S.F. Basic Value 91 117
Focus
Merrill Lynch V.S.F. Global Strategy 92 119
Focus
Merrill Lynch V.S.F. High Current 90 114
Income
Merrill Lynch V.S.F. Money Market 89 110
-------------------
4/The examples assume the reinvestment of all dividends and distributions,
no transfers among Sub-Accounts or between Accounts, and a 5% annual rate
of return as mandated by Securities and Exchange Commission regulations.
13
<PAGE>
Annual Certificate Maintenance Fees are based on an estimated amount for
the Separate Account's current fiscal year.
If you do not surrender your Certificate, or if you annuitize it, you
would pay the following expenses on a $1,000 investment at the end of the
applicable time period, assuming a 5% annual return on assets:
Sub-Account 1 Year 3 Years
----------- ------ -------
Janus A.S. Aggressive Growth $25 $78
Janus A.S. Worldwide Growth 26 82
Janus A.S. Balanced 30 94
Janus A.S. Short-Term Bond 21 67
Dreyfus V.I.F. Capital Appreciation 25 80
Dreyfus Socially Responsible Growth 43 134
Dreyfus Stock Index 18 57
Merrill Lynch V.S.F. Basic Value 21 65
Focus
Merrill Lynch V.S.F. Global Strategy 22 69
Focus
Merrill Lynch V.S.F. High Current 20 64
Income Focus
Merrill Lynch V.S.F. Money Market 19 60
The examples should not be considered a representation of past or future
expenses or annual rates of return of any Fund. Actual expenses and
annual rates of return may be more or less than those assumed for the
purpose of the examples.
The fee table and examples do not include charges to Participants for
premium taxes.
FINANCIAL STATEMENTS FOR THE COMPANY
The financial statements and report of independent public accountants for
the Company are contained in the Statement of Additional Information.
Because the Contracts and Certificates registered by this Prospectus have
not yet been issued, no financial information for the Separate Account is
provided.
14
<PAGE>
THE FUNDS
The Separate Account currently has eleven Funds that are available for
investment under a Certificate. Each Fund has separate investment
objectives and policies. As a result, each Fund operates as a separate
investment portfolio and the investment performance of one Fund has no
effect on the investment performance of any other Fund. There is no
assurance that any of these Funds will achieve their stated objectives.
The Securities and Exchange Commission does not supervise the management
or the investment practices and/or policies of any of the Funds.
The Separate Account invests exclusively in shares of the Funds listed
below (followed by a brief overview of each Fund's investment objective(s)
and policies):
Janus Aspen Series:
Aggressive Growth Portfolio. A nondiversified portfolio that seeks long-
term growth of capital by investing primarily in common stocks. The
common stocks held by this Fund will normally have an average market
capitalization between $1 billion and $5 billion. The Portfolio may
invest in debt securities, including junk bonds.
Worldwide Growth Portfolio. A diversified portfolio that seeks long-term
growth of capital by investing primarily in common stocks of foreign and
domestic companies. The Portfolio may invest in debt securities,
including junk bonds.
Balanced Portfolio. A diversified portfolio that seeks long-term growth
of capital balanced by current income. The Fund normally invests 40-60%
of its assets in equity securities selected for their growth potential and
40-60% in fixed-income securities. The Portfolio may invest in junk
bonds.
Short-Term Bond Portfolio. A diversified portfolio that seeks a high
level of current income while minimizing interest rate risk by investing
in shorter term fixed-income securities. Its average-weighted maturity is
normally less than three years. The Portfolio may invest in junk bonds.
Janus Capital Corporation serves as the investment adviser to each of
these Funds.
Dreyfus Funds:
Capital Appreciation Portfolio (Dreyfus Variable Investment Fund). The
Capital Appreciation Portfolio's primary investment objective is to
provide long-term capital growth consistent with the preservation of
15
<PAGE>
capital, current income is a secondary goal. It seeks to achieve its
goals by investing in common stocks of domestic and foreign issuers.
The Dreyfus Corporation serves as the investment adviser and Fayez Sarofim
& Company serves as the investment sub-adviser to this Fund.
Socially Responsible Growth Fund. The Socially Responsible Fund's primary
goal is to provide capital growth. It seeks to achieve this goal by
investing principally in common stocks, or securities convertible into
common stock, of companies which, in the opinion of the Fund's management,
not only meet traditional investments standards, but also show evidence
that they conduct their business in a manner that contributes to the
enhancement of the quality of life in America. Current income is a
secondary goal.
The Dreyfus Corporation serves as the investment adviser and NCM Capital
Management Group, Inc. serves as the investment sub-adviser to this Fund.
Stock Index Fund. The Stock Index Fund's investment objective is to
provide investment results that correspond to the price and yield
performance of publicly traded common stocks in the aggregate, as
represented by the Standard & Poor's 500 Composite Stock Price Index. The
Stock Index Fund is neither sponsored by nor affiliated with Standard &
Poor's Corporation.
Wells Fargo Nikko Investment Advisors serves as this Fund's investment
adviser.
Merrill Lynch Variable Series Funds, Inc.:
Basic Value Focus Fund. The investment objective of the Fund is to seek
capital appreciation and, secondarily, income by investing in securities,
primarily equities, that management of the Fund believes are undervalued.
The Fund seeks special opportunities in securities that are selling at a
discount, either from book value or historical price-earnings ratios, or
seem capable of recovering from temporarily out-of-favor considerations.
Particular emphasis is placed on securities that provide an above-average
dividend return and sell at a below-average price-earnings ratio.
Global Strategy Focus Fund. The investment objective of the Fund is to
seek high total investment return by investing primarily in a portfolio of
equity and fixed income securities, including convertible securities, of
U.S. and foreign issuers. The Fund seeks to achieve its objective by
investing primarily in securities of issuers located in the U.S., Canada,
Western Europe and the Far East. The Fund may allocate investments
without prescribed limits among capital markets and types and maturities
of securities on the basis of various considerations which may affect
total anticipated return from investments.
High Current Income Fund. The investment objective of the Fund is to
obtain as high a level of current income as is consistent with prudent
16
<PAGE>
investment management, and capital appreciation to the extent consistent
with the foregoing objective, by investing principally in fixed-income
securities that are rated in the lower rating categories of the
established rating services or in unrated securities of comparable
quality, including junk bonds.
Domestic Money Market Fund. The investment objectives of the Fund are to
seek preservation of capital, maintain liquidity and achieve the highest
possible current income consistent with the foregoing objectives by
investing in short-term money market securities.
Merrill Lynch Asset Management, L.P. serves as the investment adviser to
these Funds.
Meeting Fund objectives depends on various factors including, but not
limited to, how well portfolio managers anticipate changing economic and
market conditions.
THERE IS NO ASSURANCE THAT ANY OF THESE FUNDS WILL ACHIEVE THEIR STATED
OBJECTIVES.
Investments in these Funds are neither insured nor guaranteed by the U.S.
Government or any other entity or person.
Since each of the Funds is available to separate accounts offering
variable annuity and variable life products of other insurance companies
and certain Funds may be available to qualified pension and retirement
plans, there is a possibility that a material conflict may arise between
the interests of the Separate Account and one or more other separate
accounts or plans investing in the Fund. In the event of a material
conflict, the affected insurance companies will take any necessary steps
to resolve the matter, including stopping their separate accounts from
investing in the particular Fund. See the Funds' prospectuses for greater
detail.
Additional information concerning the investment objectives and policies
of each Fund, the investment advisory services and administrative services
and charges can be found in the current prospectus for the Fund which
accompanies this Prospectus. The appropriate Funds' prospectuses should
be read carefully before any decision is made concerning the allocation of
Purchase Payments to, or transfers among, the Sub-Accounts.
Additions, Deletions, or Substitutions
The Company does not control the Funds and cannot guarantee that any of
the Sub-Accounts or any of the Funds will always be available for
allocation of Purchase Payments or transfers. The Company retains the
right to make changes in the Separate Account and its investments.
The Company reserves the right to eliminate the shares of any Fund held by
a Sub-Account and to substitute shares of another investment company for
the shares of any Fund, if the shares of that Fund are no longer available
17
<PAGE>
for investment or if, in the Company's judgment, investment in any Fund
would be inappropriate in view of the purposes of the Separate Account.
To the extent required by the Investment Company Act of 1940, as amended
("1940 Act"), or other applicable law, a substitution of shares
attributable to the Participant's interest in a Sub-Account will not be
made without prior notice to the Participant and the prior approval of the
Securities and Exchange Commission. Nothing contained herein shall
prevent the Separate Account from purchasing other securities for other
series or classes of variable annuity policies, or from effecting an
exchange between series or classes of variable policies on the basis of
requests made by Participants.
New Sub-Accounts may be established when, in the sole discretion of the
Company, marketing, tax, investment or other conditions so warrant. Any
new Sub-Accounts will be made available to existing Participants on a
basis to be determined by the Company. Each additional Sub-Account will
purchase shares in a Fund or in another mutual fund or investment vehicle.
The Company may also eliminate one or more Sub-Accounts, if in its sole
discretion, marketing, tax, investment or other conditions so warrant. In
the event any Sub-Account is eliminated, the Company will notify
Participants and request a re-allocation of the amounts invested in the
eliminated Sub-Account.
In the event of any substitution or change, the Company may make such
changes in the Contract and Certificate as may be necessary or appropriate
to reflect such substitution or change. Furthermore, if deemed to be in
the best interests of persons having voting rights under the Certificates,
the Separate Account may be operated as a management company under the
1940 Act or any other form permitted by law, may be de-registered under
such Act in the event such registration is no longer required, or may be
combined with one or more separate accounts.
PERFORMANCE INFORMATION
From time to time, the Company may advertise yields and/or total returns
for the Sub-Accounts. These figures are based on historical information
and are not intended to indicate future performance. For a description of
the methods used to determine yield and total return, see the Statement of
Additional Information.
Yield Data
The yield of the Money Market Sub-Account refers to the annualized income
generated by an investment in that Sub-Account over a specified seven-day
period. The Company may also advertise the effective yield of the Money
Market Sub-Account which is calculated similarly but, when annualized, the
income earned by an investment in that Sub-Account is assumed to be
reinvested. The effective yield will be slightly higher than the yield
because of the compounding effect of this assumed reinvestment.
18
<PAGE>
The yield of a Sub-Account other than the Money Market Sub-Account refers
to the annualized income generated by an investment in the Sub-Account
over a specified 30-day period.
The yield calculations do not reflect the effect of any CDSC or premium
taxes that may be applicable to a particular Certificate which would
reduce the yield of that Certificate.
Total Return Data
The average annual total return of a Sub-Account refers to return
quotations assuming an investment has been held in the Sub-Account for
various periods of time including, but not limited to, a period measured
from the date the Sub-Account commenced operations. When a Sub-Account
has been in operation for one, five and ten years, respectively, the
average annual total return presented will be presented for these periods,
although other periods may also be provided. The average annual total
return quotations reflect the deduction of all applicable charges except
for premium taxes. In addition to average annual total return for a Sub-
Account, the Company may provide cumulative total return and/or other non-
standardized total return for the Sub-Account.
Reports and promotional literature may contain the ranking of any Sub-
Account derived from rankings of variable annuity separate accounts or
their investment products tracked by Lipper Analytical Services, Inc.,
VARDS, IBC/Donoghue's Money Fund Report, Financial Planning Magazine,
Money Magazine, Bank Rate Monitor, Standard & Poor's Indices, Dow Jones
Industrial Average, and other rating services, companies, publications, or
other persons who rank separate accounts or other investment products on
overall performance or other criteria. The Company may compare the
performance of a Sub-Account with applicable indices and/or industry
averages. Performance information may present the effects of tax-deferred
compounding on Sub-Account investment returns, or returns in general,
which may be illustrated by graphs, charts, or otherwise, and which may
include comparisons of investment return on a tax-deferred basis with
currently taxable investment return.
The Company may also advertise performance figures for the Sub-Accounts
based on the performance of a Fund prior to the time the Separate Account
commenced operations.
ANNUITY INVESTORS(SERVICEMARK) LIFE INSURANCE COMPANY AND THE SEPARATE
ACCOUNT
Annuity Investors Life Insurance Company
Annuity Investors Life Insurance Company (the "Company"), formerly known
as Carillon Life Insurance Company, is a stock life insurance company
incorporated under the laws of the State of Ohio in 1981. The Company is
principally engaged in the sale of fixed and variable annuity policies.
19
<PAGE>
The Company is a wholly-owned subsidiary of American Annuity Group, Inc.,
a publicly traded insurance holding company, which in turn is indirectly
controlled by American Financial Group, Inc., a publicly traded holding
company.
The home office of the Company is located at 250 East Fifth Street,
Cincinnati, Ohio 45202.
Published Ratings
The Company may from time to time publish in advertisements, sales
literature and reports to Contract Owners and Participants, the ratings
and other information assigned to it by one or more independent rating
organizations such as A.M. Best Company, Standard & Poor's, and Duff &
Phelps. The purpose of the ratings is to reflect the financial strength
and/or claims-paying ability of the Company and should not be considered
as reflecting on the investment performance of assets held in the Separate
Account. Each year the A.M. Best Company reviews the financial status of
thousands of insurers, culminating in the assignment of Best's Ratings.
These ratings reflect their current opinion of the relative financial
strength and operating performance of an insurance company in comparison
to the norms of the life/health insurance industry. In addition, the
claims-paying ability of the Company as measured by Standard & Poor's or
Duff & Phelps may be referred to in advertisements or sales literature or
in reports to Contract Owners and Participants. These ratings are
opinions of those agencies as to an operating insurance company's
financial capacity to meet the obligations of its insurance and annuity
policies in accordance with their terms. Such ratings do not reflect the
investment performance of the Separate Account or the degree of risk
associated with an investment in the Separate Account.
The Separate Account
Annuity Investors(SERVICEMARK) Variable Account A was established by the
Company as an insurance company separate account under the laws of the
State of Ohio on May 26, 1995, pursuant to resolutions of the Company's
Board of Directors. The Separate Account is registered with the
Securities and Exchange Commission under the 1940 Act as a unit investment
trust. However, the Securities and Exchange Commission does not supervise
the management or the investment practices or policies of the Separate
Account.
The assets of the Separate Account are owned by the Company but they are
held separately from the other assets of the Company. The Ohio Revised
Code provides that the assets of a separate account are not chargeable
with liabilities incurred in any other business operation of the Company.
Income, gains and losses incurred on the assets in the Separate Account,
whether or not realized, are credited to or charged against the Separate
Account, without regard to other income, gains or losses of the Company.
Therefore, the investment performance of the Separate Account is entirely
independent of the investment performance of the Company's general account
assets or any other separate account maintained by the Company.
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<PAGE>
Under Ohio law, the assets of the Separate Account will be held for the
exclusive benefit of Contract Owners and Participants under the Contracts
offered by this Prospectus and under all other contracts which provide for
accumulated values or dollar amount payments to reflect investment results
of the Separate Account. The obligations arising under the Contract and
Certificates are obligations of the Company.
The Separate Account has eleven Sub-Accounts, each of which invests solely
in a specific corresponding Fund. (See "The Funds," page ____.) Changes
to the Sub-Accounts may be made at the discretion of the Company. (See
"Additions, Deletions, or Substitutions," page ____.)
THE FIXED ACCOUNT
The Fixed Account is a part of the Company's general account. Because of
exemptive and exclusionary provisions, interests in the general account
have not been registered under the Securities Act of 1933, nor is the
general account registered as an investment company under the 1940 Act.
Accordingly, neither the general account nor any interest therein is
generally subject to the provisions of these Acts, and the staff of the
Securities and Exchange Commission does not generally review the
disclosures in the prospectus relating to the Fixed Account. Disclosures
regarding the Fixed Account and the general account may, however, be
subject to certain generally applicable provisions of the federal
securities laws relating to the accuracy and completeness of statements
made in the prospectus.
The Company has sole discretion to invest the assets of the Fixed Account,
subject to applicable law. Allocation of any amounts to the Fixed Account
does not entitle Participants to share directly in the investment
experience of these assets. The Company assumes the risk of investment
gain or loss on the portion of the Account Value allocated to the Fixed
Account. All assets held in the general account are subject to the
Company's general liabilities from business operations.
Fixed Account Options
There are currently four options under the Fixed Account: the Fixed
Accumulation Account option; and the guarantee period options referred to
in the Certificate as the Fixed Account options One-Year, Three-Year and
Five-Year Fixed, respectively. Additional Fixed Account options may be
offered by the Company at any time. Purchase Payments allocated and
amounts transferred to the Fixed Account options accumulate interest at
the applicable current interest rate declared by the Company's Board of
Directors, and if applicable, for the duration of the guarantee period
selected.
The Company guarantees a minimum rate of interest for the Fixed Account
options. The guaranteed rate is 3% per year. For any Fixed Account
option, the Company's Board of Directors may declare and pay current
interest higher than the guaranteed rate at any time. Once declared, such
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rate will be paid until changed by the Company for new allocations to that
Fixed Account option, but such change will not be applicable with respect
to amounts previously allocated to such Fixed Account option.
Renewal of Fixed Account Options
The following provisions apply to all Fixed Account Options except the
Fixed Accumulation Account option.
At the end of a guarantee period, and for the thirty days immediately
preceding the end of such guarantee period, the Participant may elect a
new option to replace the Fixed Account option that is then expiring. The
entire amount maturing may be reallocated to any of the then current
options under the Certificate (including the various Sub-Accounts within
the Separate Account), except that a Fixed Account option with a guarantee
period that would extend past the Annuity Commencement Date may not be
selected. In particular, in the case of renewals occurring within one
year of the Annuity Commencement Date, the only Fixed Account option
available is the Fixed Accumulation Account.
If the Participant does not specify a new option in accordance with the
preceding paragraph, the Participant will be deemed to have elected the
same Fixed Account option, so long as the guarantee period of such option
does not extend beyond the Annuity Commencement Date. In the event that
such a period would extend beyond the Annuity Commencement Date, the
Participant will be deemed to have selected the Fixed Account option with
the longest available guarantee period that expires prior to the Annuity
Commencement Date.
THE CONTRACT
The Contract is a group flexible premium deferred annuity. The rights and
benefits are described below and in the Certificate and the Contract. The
Company reserves the right to make any modification to conform the
Contract and Certificates thereunder to, or give the Participant the
benefit of, any applicable law. The obligations under the Contract and
Certificates are obligations of the Company.
For each Certificate, a different Account will be established and Fixed
Account Values, Variable Account Values, and benefits and charges will be
calculated separately. The various administrative rules described below
will apply separately to each Certificate, unless otherwise noted. The
Company reserves the right to terminate any Certificate for which the
Account Value is less than $500 and no Purchase Payment has been received
for at least two years.
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ENROLLMENT AND PURCHASE PAYMENTS
Purchase Payments
All Purchase Payments must be received at the Administrative Office.
Each Purchase Payment will be applied by the Company to the credit of a
Participant's Account. If the Participant Enrollment Form is in good
order, the Company will apply the initial Purchase Payment to an account
for the Participant within two business days of receipt of the Purchase
Payment at the Administrative Office. If the Enrollment Form is not in
good order, the Company will attempt to get the Enrollment Form in good
order within five business days. If the Enrollment Form is not in good
order at the end of this period, the Company will inform the Contract
Owner of the reason for the delay and that the Purchase Payment will be
returned immediately unless he or she specifically consents to the Company
keeping the Purchase Payment until the Enrollment Form is in good order.
Once the Enrollment Form is in good order, the Purchase Payment will be
applied to the Participant's Account within two business days.
Additional Purchase Payments may be made at any time prior to the Annuity
Commencement Date, as long as the Participant is living. Each additional
Purchase Payment is credited to a Certificate as of the next valuation
following the receipt of such additional Purchase Payment.
No Purchase Payment for any Certificate may exceed $500,000 without prior
approval of the Company.
Allocation of Purchase Payments
Purchase Payments will be allocated to the Fixed Account and/or to the
Sub-Accounts according to the instructions in the Participant Enrollment
Form or subsequent Written Request. Allocations are made in percentages,
and whole percentages must be used.
ACCOUNT VALUE
Before the Annuity Commencement Date, the Account Value is equal to the
Fixed Account Value plus the Variable Account Value.
Fixed Account Value
The Fixed Account Value at any time is equal to (a) the Purchase
Payment(s) allocated to the Fixed Account; plus (b) amounts transferred to
the Fixed Account; plus (c) interest credited to the Fixed Account; less
(d) any charges, surrenders, deductions, amounts transferred from the
Fixed Account or other adjustments made in accordance with the provisions
of the Contract.
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Variable Account Value
The Variable Account Value for the Certificate at any time is the sum of
the value of each Sub-Account ("Sub-Account Value") selected by the
Participant for the Certificate on the Valuation Date most recently
completed.
Purchase Payments may be allocated among, and Account Values may be
transferred to, the various Sub-Accounts within the Separate Account,
subject to the provisions of the Contract governing transfers. For each
Sub-Account, the Purchase Payment(s) or amounts transferred are converted
into Accumulation Units. The number of Accumulation Units credited is
determined by dividing the dollar amount directed to each Sub-Account by
the Accumulation Unit Value for that Sub-Account at the end of the
Valuation Period on which the Purchase Payment(s) or transferred amount is
received.
The following events will result in the cancellation of an appropriate
number of Accumulation Units of a Sub-Account:
(1) transfer from a Sub-Account;
(2) full or partial surrender of a Participant's Variable Account
Value;
(3) payment of a Death Benefit;
(4) application of a Participant's Variable Account Value to a
Settlement Option;
(5) deduction of the Certificate Maintenance Fee; or
(6) deduction of a Transfer Fee.
Accumulation Units will be canceled as of the end of the Valuation Period
during which the Company received a Written Request regarding the event
giving rise to such cancellation, or Due Proof of Death and a Written
Request regarding payment of the Death Benefit, or the Valuation Period on
which the Certificate Maintenance Fee is due, as the case may be.
The Variable Account Value for a Certificate at any time is equal to the
sum of the number of Accumulation Units attributable to that Certificate
for each Sub-Account multiplied by the Accumulation Unit value
("Accumulation Unit Value") for each Sub-Account at the end of the
Valuation Period.
Accumulation Unit Value
The initial Accumulation Unit Value for each Sub-Account, with the
exception of the Money Market Sub-Account, was set at $10 when the Sub-
Account was created. The initial Accumulation Unit Value for the Money
Market Sub-Account was set at $1.00. Thereafter, the Accumulation Unit
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Value at the end of each Valuation Period is the Accumulation Unit Value
at the end of the previous Valuation Period multiplied by the Net
Investment Factor, as described below.
Net Investment Factor
The Accumulation Unit Value for each Sub-Account for any Valuation Period
is determined by the Net Investment Factor. The Net Investment Factor is
a factor applied to measure the investment performance of a Sub-Account
from one Valuation Period to the next. Each Sub-Account has a Net
Investment Factor for each Valuation Period which may be greater or less
than one. Therefore, the value of an Accumulation Unit may increase or
decrease. The Net Investment Factor for any Sub-Account for any Valuation
Period is determined by dividing (1) by (2) and subtracting (3) from the
result, where:
(1) is equal to:
a. the Net Asset Value per share of the Fund held in the
Sub-Account, determined at the end of the current
Valuation Period; plus
b. the per share amount of any dividend or net capital gain
distributions made by the Fund held in the Sub-Account,
if the "ex-dividend" date occurs during the current
Valuation Period; plus or minus
c. a per share charge or credit for any taxes reserved for,
which is determined by the Company to have resulted from
the investment operations of the Sub-Account;
(2) is the Net Asset Value per share of the Fund held in the Sub-
Account, determined at the end of the most recent Valuation
Period; and
(3) is the factor representing the Mortality and Expense Risk Charge
and the Administration Charge deducted from the Sub-Account for
the number of days in the Valuation Period.
TRANSFERS
By Written Request prior to the Annuity Commencement Date, the Participant
may transfer amounts in a Sub-Account to a different Sub-Account and/or
one or more of the Fixed Account options. The minimum transfer amount is
$500. If the Sub-Account balance is less than $500 at the time of the
transfer, the entire amount of the Sub-Account balance must be
transferred. The Participant may also transfer amounts from any Fixed
Account options to any different Fixed Account option and/or one or more
of the Sub-Accounts. If a transfer is being made from a Fixed Account
option pursuant to the "Renewal" provision of the "FIXED ACCOUNT" section
of this Prospectus, then the entire amount of that Fixed Account option
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may be transferred to any one or more of the Sub-Accounts. In any other
case, transfers from any Fixed Account options are subject to a cumulative
limit during each Certificate Year of 20% of the most recent Certificate
Year-end values of that Fixed Account option, and are not permitted during
the first Certificate Year. However, if the Account Value of the Fixed
Account option being transferred is less than $500 at the time of the
transfer, then the entire balance will be transferred. The Company may
from time to time change the amount available for transfer from the Fixed
Accumulation Account. Amounts previously transferred from Fixed Account
options to the Sub-Accounts may not be transferred back to the Fixed
Account options for a period of at least six months from the date of
transfer.
The Company charges a Transfer Fee of $25 for each transfer in excess of
twelve during the same Certificate Year.
The Company reserves the right, in the Company's sole discretion and at
any time without prior notice, to terminate, suspend or modify the
transfer privileges described above.
See "Transfers After the Annuity Commencement Date," page ____.
Telephone Transfers
A Participant also may place a request for all or part of the Account
Value to be transferred by telephone. All transfers must be in accordance
with the terms of the Certificate. Transfer instructions are currently
accepted on each Valuation Date between 9:30 a.m. and 4:00 p.m. Eastern
Time at (800) 789-6771. Once instructions have been accepted, they may
not be rescinded; however, new telephone instructions may be given the
following day.
The Company will not be liable for complying with telephone instructions
the Company reasonably believes to be genuine or for any loss, damage,
cost or expense in acting on such telephone instructions. The Participant
will bear the risk of such loss. The Company will employ reasonable
procedures to determine that telephone instructions are genuine. If the
Company does not employ such procedures, the Company may be liable for
losses due to unauthorized or fraudulent instructions. These procedures
may include, among others, tape recording telephone instructions.
Dollar Cost Averaging
Prior to the Annuity Commencement Date, the Participant may establish
automatic transfers from the Money Market Sub-Account to any of the other
Sub-Accounts, on a monthly or quarterly basis, by submitting to the
Administrative Office a Dollar Cost Averaging Enrollment Form. No Dollar
Cost Averaging transfers may be made to any of the Fixed Account options.
The transfers will begin within 30 days of the receipt of such Enrollment
Form.
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In order to be eligible for Dollar Cost Averaging the value of the Money
Market Sub-Account must be at least $10,000 and the minimum amount that
can be transferred is $500 per month.
Dollar Cost Averaging will automatically terminate if any Dollar Cost
Averaging transfer would cause the balance of the Money Market Sub-Account
to fall below $500. At that time, the Company will then transfer the
balance of the Money Market Sub-Account to the other Sub-Accounts in the
same percentage distribution as directed in the Dollar Cost Averaging
Enrollment Form.
Dollar Cost Averaging transfers will not count toward the twelve transfers
permitted under the Certificate without charge.
Before electing Dollar Cost Averaging, a Participant should consider the
risks involved in switching between investments available under the
Certificate. Dollar Cost Averaging requires regular investments
regardless of fluctuating price levels and does not guarantee profits or
prevent losses in a declining market. A Participant should consider his
or her financial ability to continue Dollar Cost Averaging transfers
through periods of changing price levels.
The Participant may terminate Dollar Cost Averaging services, at any time,
by Written Request to the Company. In addition, the Company reserves the
right to terminate, modify or suspend the Dollar Cost Averaging option at
any time. Currently, the Company does not charge a fee for Dollar Cost
Averaging services. However, the Company reserves the right to impose an
annual fee not to exceed $25 for each Dollar Cost Averaging service
performed by the Company.
Portfolio Rebalancing
In connection with the allocation of Purchase Payments to the Sub-Accounts
and/or the Fixed Accumulation Account, the Participant may elect to have
the Company perform Portfolio Rebalancing services. The election of
Portfolio Rebalancing instructs the Company to automatically transfer
amounts between the Sub-Accounts and the Fixed Accumulation Account in
percentage allocations selected by the Participant.
The Participant may elect Portfolio Rebalancing in the Participant
Enrollment Form or by subsequent Written Request. In order to elect
Portfolio Rebalancing after the Certificate has been issued, the
Participant must submit a Written Request for Portfolio Rebalancing to the
Company and the Participant must have a minimum Account Value of $10,000.
Portfolio Rebalancing will be performed on a quarterly basis.
The Participant may terminate Portfolio Rebalancing services, at any time,
by Written Request to the Company. In addition, the Company reserves the
right to terminate, modify or suspend the Portfolio Rebalancing option at
any time. Currently, the Company does not charge a fee for Portfolio
Rebalancing services. However, the Company reserves the right to impose
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an annual fee not to exceed $25 for each Portfolio Rebalancing service
performed by the Company.
Interest Sweep
Prior to the Annuity Commencement Date, the Participant may establish
automatic transfers of the income from each Fixed Account option selected
on the Interest Sweep Enrollment Form to the Sub-Accounts, on a quarterly
basis. Transfers will begin on the next quarterly Interest Sweep date
that is at least 30 days after receipt of such Enrollment Form at the
Administrative Office. The Company may, at its sole discretion, set the
quarterly interest Sweep date.
In order to be eligible for the Interest Sweep option the value of each
Fixed Account option selected on the Interest Sweep Enrollment Form must
be at least $5,000 and the maximum amount that can be transferred from
each Fixed Account option so selected is 20% of such Fixed Account
option's value per year.
Interest Sweep transfers will not count toward the twelve transfers
permitted under the Certificate without charge.
The Participant may terminate participation in the Interest Sweep option,
at any time, by Written Request to the Company. In addition, the Company
reserves the right to terminate, modify or suspend the Interest Sweep
option at any time. Currently, the Company does not charge a fee for
Interest Sweep services. However, the Company reserves the right to
impose an annual fee not to exceed $25 for each Interest Sweep service
performed by the Company.
The Company reserves the right, at any time, to terminate, suspend or
modify the transfer privileges described above without prior notice to
Participants, as permitted by applicable law.
SURRENDERS
Surrender Value
The Participant may surrender all or part of the Surrender Value of a
Certificate. Full or partial surrenders of the Surrender Value may be
made by Written Request at any time prior to the Annuity Commencement
Date; the Surrender Value will be the Surrender Value at the end of the
Valuation Period in which the Written Request is received. The Surrender
Value at any time is equal to the Account Value as of that Valuation
Period less any applicable Contingent Deferred Sales Charge ("CDSC"), less
any outstanding loans and less any applicable premium tax not previously
deducted. On full surrender, an annual Certificate Maintenance Fee also
will be deducted as part of the calculation of the Surrender Value. A
full or partial surrender prior to the Annuity Commencement Date may be
subject to a CDSC as set forth in this prospectus, except that such charge
will not apply to: (1) any portion of the Account Value in excess of total
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Purchase Payments; (2) any portion of the Account Value attributable to
Purchase Payment(s) that are no longer subject to the charge; or (3)
payment of the Death Benefit.
The CDSC is calculated separately for each Purchase Payment. Surrenders
will be deemed to be withdrawn first from the portion of the Account Value
in excess of total Purchase Payments and then from Purchase Payments. For
this purpose, Purchase Payment(s) are deemed to be withdrawn on a "first-
in, first-out" (FIFO) basis. Surrenders will result in the cancellation
of Accumulation Units from each applicable Sub-Account(s) and/or a
reduction of the Participant's Fixed Account Value. In the case of a full
surrender, the Participant's participation interest under the Contract and
the Certificate will be canceled. The CDSC may be waived in whole or in
part under certain circumstances.
The Company reserves the right to terminate a Certificate if a partial
surrender would reduce a Participant's Account Value to less than the $500
minimum balance and no Purchase Payments have been received by the Company
for at least two years.
The Certificate Maintenance Fee, unless waived, will be deducted from a
full surrender before the application of any CDSC. (See "Charges and
Deductions," page __.)
Surrenders may be subject to a 10% premature distribution penalty tax if
made before the Participant reaches age 59 1/2, and may further be subject
to federal, state or local income tax. (See "Federal Tax Matters,"
page___.)
Suspension or Delay in Payment of Surrender Value
The Company may suspend or delay the date of payment of a partial or full
surrender of the Variable Account Value for any period if:
(1) the New York Stock Exchange ("NYSE") is closed or trading on the
NYSE is restricted;
(2) an emergency exists (as determined by the Securities and Exchange
Commission) as a result of which (a) the disposal of securities
in the Separate Account is not reasonably practicable; or (b) it
is not reasonably practicable to determine fairly the value of
the net assets in the Separate Account; or
(3) the Securities and Exchange Commission so permits for the
protection of security holders.
The Company further reserves the right to delay payment of any partial or
full surrender of the Fixed Account Value for up to six months.
A surrender request will be effective when all appropriate surrender
request forms are received. Payments of any amounts derived from a
Purchase Payment paid by check may be delayed until the check has cleared.
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SINCE THE PARTICIPANT ASSUMES THE INVESTMENT RISK AND BECAUSE CERTAIN
SURRENDERS ARE SUBJECT TO A CDSC, THE TOTAL AMOUNT PAID UPON SURRENDER OF
THE CERTIFICATE (TAKING INTO ACCOUNT ANY PRIOR SURRENDERS) MAY BE MORE OR
LESS THAN THE TOTAL PURCHASE PAYMENTS.
Since the qualified contracts offered by this Prospectus will be issued in
connection with retirement plans which meet the requirements of Sections
401, 403 or 457 of the Code, as applicable, reference should be made to
the terms of the particular plans for any additional limitations or
restrictions on surrenders.
Systematic Withdrawal Option
Prior to the Annuity Commencement Date, the Participant, by Written
Request to the Administrative Office, may elect to automatically withdraw
money from the Fixed Account and/or the Sub-Accounts. To be eligible for
the Systematic Withdrawal Option, the Account Value must be at least
$10,000 at the time of election. The minimum monthly amount that can be
withdrawn is $100. Systematic withdrawals will be subject to the CDSC to
the extent the amount withdrawn exceeds the Free Withdrawal Allowance (See
"Charges and Deductions," page __.) The Company reserves the right to
discontinue offering systematic withdrawals or to assess a processing fee
not to exceed $25 per service performed upon 30 days' written notice to
Contract Owners and Participants. The Participant may begin or
discontinue systematic withdrawals at any time by Written Request to the
Company, but at least 30 days' notice must be given to change any
systematic withdrawal instructions that are currently in place.
Systematic withdrawals may have tax consequences. (See "Federal Tax
Matters," page ___.)
CONTRACT LOANS
Certain Contracts may contain a loan provision issued in connection with
certain qualified plans. Participants under such Contracts may obtain
loans using their interest under such Contract as the only security for
the loan. Loans are subject to provisions of the Code and to applicable
retirement program rules. Tax advisers and retirement plan fiduciaries
should be consulted prior to exercising loan privileges. Loan provisions
are described in the loan endorsement.
The amount of any loan will be deducted from the minimum death benefit.
In addition, a loan, whether or not repaid, will have a permanent effect
on the Account Value because the investment results of the investment
options will only apply to the unborrowed portion of the Account Value.
The longer the loan is outstanding, the greater the effect is likely to
be. The effect could be favorable or unfavorable. If the investment
results are greater than the rate being credited on amounts held in the
loan account while the loan is outstanding, the Account Value will not
increase as rapidly as it would if no loan were outstanding. If
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investment results are below that rate, the Account Value will be higher
than it would have been if no loan had been outstanding.
DEATH BENEFIT
Death of Participant
If a Participant dies before the Annuity Commencement Date, a death
benefit will be paid to the primary Beneficiary(ies) then living at the
time of the Participant's death. If no primary Beneficiary is living at
the time of the Participant's death or if the primary Beneficiary dies
within 30 days after the Participant's death and no death benefit has been
paid, the death benefit will be paid to the person(s) named as contingent
Beneficiary(ies). If no primary or contingent Beneficiary is living at
the time of the Participant's death, the death benefit will be paid to the
Participant's estate. No death benefit is payable on or after the Annuity
Commencement Date. Only one death benefit is payable with respect to a
Participant's participation interest under the Contract.
Death Benefit
The Death Benefit will be determined as of the Death Benefit Valuation
Date. The Death Benefit Valuation Date is the Valuation Period during
which the Company receives both Due Proof of Death of the Participant and
a Written Request regarding payment of the Death Benefit. If both
documents are not received at the same time, the Death Benefit Valuation
Date is the Valuation Period during which the Company receives the latter
of Due Proof of Death or a Written Request regarding payment of the Death
Benefit.
If a Participant dies before attaining age 75 and before the Annuity
Commencement Date, the death benefit is an amount equal to the greatest
of:
(1) the Account Value on the Death Benefit Valuation Date, less any
applicable premium tax not previously deducted, and less any
outstanding loans;
(2) the total Purchase Payments, less any applicable premium tax not
previously deducted, less any partial surrenders, and less any
outstanding loans; or
(3) the largest death benefit amount on any Certificate Anniversary
prior to death that is an exact multiple of five and occurs prior
to the Death Benefit Valuation Date, less any applicable premium
tax not previously deducted, less any partial surrenders after
such death benefit was determined and less any outstanding loans.
If the Participant dies after attaining age 75 and before the Annuity
Commencement Date, the death benefit is an amount equal to the greatest
of:
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(1) the Account Value on the Death Benefit Valuation Date, less any
applicable premium tax not previously deducted, and less any
outstanding loans;
(2) the total Purchase Payments, less any applicable premium tax not
previously deducted, less any partial surrenders, and less any
outstanding loans; or
(3) the largest death benefit amount on any Certificate Anniversary
prior to death that is both an exact multiple of five and occurs
prior to the date on which the Participant attained age 75, less
any applicable premium tax not previously deducted, less any
partial surrenders after such death benefit was determined and
less any outstanding loans.
Payment of the death benefit is not subject to a CDSC.
Beneficiary
The primary Beneficiary(ies) and contingent Beneficiary(ies) are named on
the Participant Enrollment Form. The Beneficiaries may be changed at any
time prior to the Participant's death. The Company must receive a Written
Request to change a Beneficiary. Any such change will relate back to and
take effect on the date the Written Request was signed. The Company will
not be liable for any payment it makes before such Written Request has
been received and acknowledged at the Administrative Office.
In determining the identity or non-existence of any Beneficiary not
identified by name, the Company may rely on an affidavit by any person
whom the Company reasonably believes to be a reliable source for that
information.
CHARGES AND DEDUCTIONS
There are two types of charges and deductions. First, there are charges
assessed under the Certificate. These charges include the CDSC, the
Administration Charge, the Mortality and Expense Risk Charge, Premium
Taxes and Transfer Fees. All of these charges are described below and
some may not be applicable to every Certificate. Second, there are Fund
expenses for fund management fees and administration expenses. These fees
are described in the prospectus and statement of additional information
for each Fund.
Contingent Deferred Sales Charge ("CDSC")
No deduction for front-end sales charges is made from Purchase Payments.
However, the Company may deduct a CDSC of up to 7% of Purchase Payments on
certain surrenders to partially cover certain expenses incurred by the
Company relating to the sale of the Contract, including commissions paid,
the costs of preparation of sales literature and other promotional costs
and acquisition expenses.
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The CDSC percentage varies according to the number of full years elapsed
between the date of receipt of a Purchase Payment and the date a Written
Request for surrender is made. The amount of the CDSC is determined by
multiplying the amount withdrawn subject to the CDSC by the CDSC
percentage in accordance with the following table. Surrenders will be
applied first to accumulated earnings (which may be surrendered without
charge) and then to Purchase Payments on a first-in, first-out basis;
surrenders will be made from the oldest Purchase Payment first.
Number of Full Years
Elapsed Between Date Contingent Deferred
of Receipt of Purchase Sales Charge as a
Payment and Date Percentage of
Written Request for Associated Purchase
Surrender Received Payment Surrendered
---------------------- -------------------
0 7%
1 6%
2 5%
3 4%
4 3%
5 2%
6 1%
7 0%
In no event shall the CDSC assessed against the Certificate exceed 7% of
the aggregate Purchase Payment(s).
Any Purchase Payments that have been held by the Company for at least
seven years may be surrendered free of any CDSC. In addition, during any
Certificate Year after the first Certificate Year for Certificates
qualified under Section 403(b) of the Code, the CDSC will not be imposed
on the surrender of up to 10% of the Account Value as of the last day of
the previous Certificate Year ("Free Withdrawal Allowance"). If the Free
Withdrawal Allowance is not withdrawn during a Certificate Year, it does
not carry over to the next Certificate Year.
No CDSC is assessed upon payment of the death benefit. Any applicable
CDSC will be deducted from the amount requested for partial and full
surrenders.
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The CDSC arising from a surrender of the Certificate will be waived in all
cases if: (i) all or part of the Account Value is applied to the purchase
of an annuity from the Company for life or for a non-commutable period of
five years or more; or (ii) the Participant is "disabled" as that term is
defined in the Social Security Act of 1935, as amended.
The CDSC arising from a surrender of the Certificate will be waived for
Certificates held by Participants in plans qualified under Section 403(b)
of the Code that are subject to the Employee Retirement Income Security
Act of 1974, as amended, and regulations thereunder ("ERISA"), or
qualified under Section 401 of the Code, if the Participant incurs a
separation from service.
The CDSC arising from a surrender of the Certificate will be waived for
Certificates held by Participants in plans qualified under Section 403(b)
of the Code that are not subject to ERISA if: (i) the Participant incurs a
separation from service, has attained age 55 and has held the Certificate
for at least seven years, provided the Account Value is not transferred on
a tax-free basis to another insurance carrier; or (ii) the Participant has
held the Certificate for fifteen years or more.
The CDSC also will be waived in all cases if the Participant is confined
in a licensed Hospital or Long-Term Care Facility, as those terms are
defined in the Long Term-Care Waiver Rider, for at least 90 days beginning
on or after the first Certificate Anniversary. This Rider may not be
available in all jurisdictions.
The Company may reduce or eliminate the CDSC under the Contract and
Certificates when certain sales of the Contract and Certificates result in
savings or reduction of sales expenses. The entitlement to such a
reduction in the CDSC will be based on: (i) the size and type of the
group to which sales are to be made; (ii) the anticipated total amount of
Purchase Payments to be received; and/or (iii) any prior or existing
relationship with the Company. There may be other circumstances, of which
the Company is not presently aware, which could result in reduced sales
expenses. In no event will reduction or elimination of the CDSC be
permitted where such reduction or elimination will be unfairly
discriminatory to any purchaser.
The Company reserves the right to terminate, suspend or modify waivers of
the CDSC, without prior notice to Participants, as permitted by applicable
law.
Maintenance and Administrative Charges
On each Certificate Anniversary, the Company deducts an annual Certificate
Maintenance Fee as partial compensation for expenses relating to the issue
and maintenance of the Certificate, and the Separate Account. The annual
Certificate Maintenance Fee is $25. The Company reserves the right to
increase the Certificate Maintenance Fee and guarantees that the
Certificate Maintenance Fee will not exceed $40. Any increase in the
Certificate Maintenance Fee will apply only to deductions after the
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effective date of the change. If the Certificate is surrendered on any
day other than on the Certificate Anniversary, the Certificate Maintenance
Fee will be deducted in full at the time of such surrender. Before the
Annuity Commencement Date and after the Annuity Commencement Date, if a
Variable Annuity Benefit is elected, the Certificate Maintenance Fee will
be deducted on a pro rata basis from each Sub-Account in which the
Participant's Account is invested.
The Certificate Maintenance Fee may be waived for sales of Contracts to a
trustee, employer or similar entity representing a group where the Company
determines that such sales result in savings of sales and/or
administrative expenses.
Currently, the Company imposes no Administration Charge to reimburse the
Company for those administrative expenses attributable to the Certificate
and the Separate Account which exceed the revenues received from the
Certificate Maintenance Fee and any Transfer Fee. However, the Company
reserves the right to impose an Administration Charge to be deducted at
the end of each Valuation Period (both before and after the Annuity
Commencement Date) from the Net Asset Value of each Sub-Account of the
Separate Account at an effective annual rate guaranteed not to exceed
0.20%. There will be no Administration Charge imposed unless
administrative expenses exceed revenues received from the Certificate
Maintenance Fee and any Transfer Fee.
The Company will provide 30 days written notice in advance of any change
in fees. The Company has not imposed an Administration Charge and has set
the Certificate Maintenance Fee at a level such that the Company will
recover no more than the anticipated and estimated costs associated with
administering the Certificate and Separate Account. The Company does not
expect to make a profit from the actual administrative costs of a
particular Certificate. The Company does not expect to make a profit from
the Certificate Maintenance Fee.
Mortality and Expense Risk Charge
The Company imposes a Mortality and Expense Risk Charge as compensation
for bearing certain mortality and expense risks under the Certificate.
For assuming these risks, the Company makes a daily charge equal to
.003403% corresponding to an effective annual rate of 1.25% of the daily
Net Asset Value of each Sub-Account in the Separate Account. The
approximate portion of this charge estimated to be attributable to
mortality risks is 0.75%; the approximate portion of this charge
attributable to expense risks is 0.50%. In connection with certain
Contracts that allow the Company to reduce administrative expenses, the
Company will issue an Enhanced Contract with a Mortality and Expense Risk
Charge equal to an effective annual rate of 0.95%. This is equal to a
daily charge of 0.002590%. The Company estimates that 0.20% is for
administrative expenses and 0.75% is for mortality and expense risks. The
Company's decision to offer an Enhanced Contract to a particular group
will be based primarily on whether the Company is designated as a
preferred variable annuity contract provider by the employer or by the
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trustee of the employee benefit plan. Where the Company is so designated,
the Company anticipates that it will recognize administrative expense
savings from various economies of scale and routine operations. This
charge is imposed before the Annuity Commencement Date and after the
Annuity Commencement Date if a Variable Annuity Benefit is selected. The
Company guarantees that the applicable charge will never increase for a
Contract. The Mortality and Expense Risk Charge is reflected in the
Accumulation Unit values for each Sub-Account.
The mortality risks assumed by the Company arise from its contractual
obligations to make annuity payments (determined in accordance with the
annuity tables and other provisions contained in the Certificate) and to
pay death benefits prior to the Annuity Commencement Date.
The Company also bears substantial risk in connection with the Death
Benefit before the Annuity Commencement Date, since in connection with the
death of a Participant who dies prior to attaining age 75, the Company
will pay a Death Benefit at least equal to the greatest of: (i) the
Account Value on the Death Benefit Valuation Date, less any applicable
premium tax not previously deducted, and less any outstanding loans; (ii)
the total Purchase Payments, less any applicable premium tax not
previously deducted, less any partial surrenders, and less any outstanding
loans; or (iii) the largest Death Benefit on any Certificate Anniversary
prior to death that is an exact multiple of five and occurs prior to the
Death Benefit Valuation Date, less any applicable premium tax not
previously deducted, less any partial surrenders after the Death Benefit
was determined, and less any outstanding loans. In connection with the
death of a Participant who dies after attaining age 75, the Company will
pay a Death Benefit at least equal to the greatest of: (i) the Account
Value on the Death Benefit Valuation Date, less any applicable premium tax
not previously deducted, and less any outstanding loans; (ii) the total
Purchase Payments, less any applicable premium tax not previously
deducted, less any partial surrenders, and less any outstanding loans; or
(iii) the largest Death Benefit on any Certificate Anniversary prior to
death that is both an exact multiple of five and occurs prior to the date
on which the Participant attained age 75, less any applicable premium tax
not previously deducted, less any partial surrenders after the Death
Benefit was determined, and less any outstanding loans.
The expense risk assumed by the Company is the risk that the Company's
actual expenses in administering the Certificates and the Separate Account
will exceed the amount recovered through the Certificate Maintenance Fees
and Transfer Fees.
If the Mortality and Expense Risk Charge is insufficient to cover actual
costs and risks assumed, the loss will fall on the Company. Conversely,
if this charge is more than sufficient, any excess will be profit to the
Company. Currently, the Company expects a profit from this charge.
The Company recognizes that the CDSC may not generate sufficient funds to
pay the cost of distributing the Contracts and Certificates thereunder.
To the extent that the CDSC is insufficient to cover the actual cost of
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Contract and Certificate distribution, the deficiency will be met from the
Company's general corporate assets which may include amounts, if any,
derived from the Mortality and Expense Risk Charge.
Premium Taxes
Certain state and local governments impose premium taxes. These taxes
currently range up to 5.0% depending upon the jurisdiction. The Company,
in its sole discretion and in compliance with any applicable state law,
will determine the method used to recover premium tax expenses incurred.
The Company will deduct any applicable premium taxes from the Account
Value either upon death, surrender, annuitization, or at the time Purchase
Payments are made to the Certificate, but no earlier than when the Company
has a tax liability under state law.
Transfer Fee
The Company currently imposes a $25 fee for each transfer in excess of
twelve in a single Certificate Year. The Company will deduct the charge
from the amount transferred.
Fund Expenses
The value of the assets in the Separate Account reflects the value of Fund
shares and therefore the fees and expenses paid by each Fund. A complete
description of the fees, expenses, and deductions from the Funds are found
in the respective prospectuses for the Funds. (See "The Funds" page __.)
Reduction or Elimination of Contract and Certificate Charges
The CDSC and the administrative charges under the Contract and
Certificates may be reduced or eliminated when certain sales of the
Contract and Certificates result in savings or reduction of sales
expenses. The entitlement to such a reduction in the CDSC or the
administrative charges will be based on the following: (1) the size and
type of the group to which sales are to be made; (2) the total amount of
Purchase Payments to be received; and (3) any prior or existing
relationship with the Company. There may be other circumstances, of which
the Company is not presently aware, which could result in fewer sales
expenses. In no event will reduction or elimination of the CDSC or the
administrative charge be permitted where such reduction or elimination
will be unfairly discriminatory to any person.
SETTLEMENT OPTIONS
Annuity Commencement Date
Unless otherwise specified, the Annuity Commencement Date will be the
Participant's 70th birthday. The Annuity Commencement Date may be changed
by the Participant or by the Contract Owner by Written Request at least 30
days prior to the then-current Annuity Commencement Date. The Annuity
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Commencement Date may be changed to any date not later than such date as
may be required or permitted by law or by any applicable retirement plan.
Election of Settlement Option
If the Participant is alive on the Annuity Commencement Date and unless
otherwise directed, the Company will apply the Account Value, less premium
taxes, if any, according to the Settlement Option elected.
If no election has been made on the Annuity Commencement Date and if the
Participant is living and has a spouse, the Company will begin payments
based on the life of the Participant as primary payee and the spouse as
secondary payee, in accordance with Settlement Option 3 (Joint and One
Half Survivor Annuity) described below. If no election has been made on
the Annuity Commencement Date and if the Participant is living and does
not have a spouse, the Company will begin payments based on the life of
the Participant in accordance with Settlement Option 1 (Life Annuity with
Payments for at Least a Fixed Period), described below, with a fixed
period of 120 monthly payments assured.
Annuity Benefit
The Annuity Benefit may be calculated and paid: (1) as a Fixed Dollar
Annuity Benefit; (2) as a Variable Dollar Annuity Benefit; or (3) as a
combination of both.
If a Fixed Dollar Annuity Benefit only is elected, the Company will
transfer all of the Separate Account Value to the Fixed Account prior to
the Annuity Commencement Date. Similarly, if a Variable Dollar Annuity
Benefit only is elected, the Company will transfer all of the Fixed
Account Value to the Sub-Accounts prior to the Annuity Commencement Date.
The Company will allocate the amount transferred among the Sub-Accounts in
accordance with a Written Request. No transfers between the Fixed Dollar
Annuity Benefit and the Variable Dollar Annuity Benefit will be allowed
after the Annuity Commencement Date. However, after the Variable Dollar
Annuity Benefit has been paid for at least twelve months, the Participant
may, no more than once each twelve months, transfer all or part of the
Annuity Units upon which the Variable Dollar Annuity Benefit is based from
the Sub-Account(s) held to Annuity Units in different Sub-Accounts.
If a Variable Dollar Annuity Benefit is elected, the amount applied under
that benefit is the Variable Account Value as of the end of the Valuation
Period immediately preceding the Annuity Commencement Date. If a Fixed
Dollar Annuity Benefit is elected, the amount applied under that benefit
is the Fixed Account Value as of the Annuity Commencement Date.
Fixed Dollar Annuity Benefit
Fixed Dollar Annuity Benefits are determined by multiplying the Fixed
Account Value (expressed in thousands of dollars and after deduction of
any premium taxes not previously deducted) by the amount of the monthly
payment per $1,000 of value obtained from the Settlement Option Table for
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the Annuity Benefit elected. The Fixed Dollar Annuity Benefit will remain
level for the duration of the Annuity.
Variable Dollar Annuity Benefit
The first monthly Variable Dollar Annuity Benefit payment is equal to the
Variable Account Value as of the end of the Valuation Period immediately
preceding the Annuity Commencement Date (expressed in thousands of dollars
and after deduction of any premium taxes not previously deducted)
multiplied by the amount of the monthly payment per $1,000 of value
obtained from the Settlement Option Table for the Annuity Benefit elected
less the pro rata portion of the Certificate Maintenance Fee. The dollar
amount of the first monthly Variable Dollar Annuity Benefit from each Sub-
Account is determined in the same manner.
The dollar amount of the second and subsequent monthly Variable Dollar
Annuity Benefit payments is equal to the sum of the number of Annuity
Units for each Sub-Account in which amounts are held by the Participant,
multiplied by the value of an Annuity Unit ("Annuity Unit Value") for that
Sub-Account as of the fifth Valuation Date preceding the due date of the
payment. A pro rata portion of the Certificate Maintenance Fee is
deducted from the total to arrive at the actual payment.
The number of Annuity Units in each Sub-Account held by a Participant is
determined by dividing the dollar amount of the first monthly Variable
Dollar Annuity Benefit from each Sub-Account by the Annuity Unit Value for
that Sub-Account as of the Participant's Annuity Commencement Date. The
number of Annuity Units remains fixed during the Annuity Payment Period,
except as a result of any transfers among Sub-Accounts after the Annuity
Commencement Date.
The Annuity Unit Value for each Sub-Account was originally established in
the same manner as Accumulation Unit values. Thereafter, the Annuity Unit
Value for a Sub-Account is determined by multiplying the Annuity Unit
Value as of the end of the preceding Valuation Period by the Net
Investment Factor, determined as set forth above under "Accumulation Unit
Value," for the Valuation Period just ended. The product is then
multiplied by the assumed daily investment factor (0.99991781), for the
number of days in the Valuation Period. The factor is based on the
assumed net investment rate of three percent (3%) that is reflected in the
Settlement Option Tables.
The Annuitant receives an amount equal to the value of a fixed number of
Annuity Units each month. Such value will reflect the investment
performance of the Sub-Accounts selected and the amount of each annuity
payment will vary accordingly.
Transfers After the Annuity Commencement Date
After the Annuity Commencement Date, no transfers between the Fixed
Account and the Separate Account are permitted. However, after a Variable
Dollar Annuity Benefit has been paid for at least twelve months, the
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Participant may, by Written Request to the Administrative Office, transfer
Annuity Units between Sub-Accounts no more than once during a twelve month
period.
Annuity Transfer Formula
Transfers after the Annuity Commencement Date are implemented according to
the following formulas:
(1) Determine the number of units to be transferred from the Sub-
Account as follows:
= AT/AUV1
(2) Determine the number of Variable Annuity Units remaining in such
Sub-Account (after the transfer):
= UNIT1 - AT/AUV1
(3) Determine the number of Variable Annuity Units in the transferee
Sub-Account (after the transfer):
= UNIT2 + AT/AUV2
(4) Subsequent Variable Dollar Annuity Benefit payments will reflect
the changes in Variable Annuity Units in each Sub-Account as of
the next Variable Dollar Annuity Benefit payment's due date.
Where:
(AUV1) is the value of a Variable Annuity Unit ("Variable Annuity Unit
Value") of the Sub-Account that the transfer is being made from as of the
end of the Valuation Period in which the transfer request was received.
(AUV2) is the Variable Annuity Unit Value of the Sub-Account that the
transfer is being made to as of the end of the Valuation Period in which
the transfer request was received.
(UNIT1) is the number of Variable Annuity Units in the Sub-Account that
the transfer is being made from, before the transfer.
(UNIT2) is the number of Variable Annuity Units in the Sub-Account that
the transfer is being made to, before the transfer.
(AT) is the dollar amount being transferred from the Sub-Account.
Settlement Options
Option 1: Life Annuity with Payments for at Least a Fixed Period. The
Company will make a monthly payment for at least a fixed period. If the
Annuitant lives longer than the fixed period, then the Company will make
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payments until the Annuitant's death. The fixed periods available are
reflected in Annuity Table 1.
If, at the death of the Annuitant, payments have been made for less than
the fixed period elected, the Company will continue to make payments:
(i) to the contingent payee designated on the Settlement Option election
form; and (ii) during the remainder of the fixed period.
Option 2: Life Annuity. The Company will make annuity payments until the
Annuitant's death. Annuity Table 2 applies to this Option.
Option 3: Joint and One-Half Survivor Annuity. The Company will provide
a monthly payment to an Annuitant during his/her lifetime; thereafter,
upon the death of the Annuitant and receipt by the Company of Due Proof of
Death, one-half of the monthly payments will continue to a designated
survivor, if living, and until his/her death. Annuity Table 3 applies to
this Option.
Option 4: Income for a Fixed Period. The Company will make payments for
a fixed period. Payment intervals and amounts are shown in Annuity Table
4 and are based on a 3% guaranteed interest rate.
If, at the death of the Annuitant, payments have been made for less than
the fixed period elected, the Company will continue to make payments:
(i) to the contingent payee designated on the Settlement Option election
form; and (ii) during the remainder of the fixed period.
Option 5: Any Other Form. The Company will make payments in the form of
any other annuity which is acceptable to the Company.
Minimum Amounts
If the Participant's Account Value is less than $5,000 on the Annuity
Commencement Date, the Company reserves the right to pay that amount in
one lump sum. If monthly payments under a Settlement Option would be less
than $100, the Company may make payments quarterly, semi-annually or
annually at its discretion.
All elected Settlement Options must comply with current applicable laws,
regulations and rulings issued by any governmental agency. If at the time
a Fixed Dollar Annuity Benefit is elected, the Company has available
options or rates on a more favorable basis than those guaranteed, the
higher benefits shall be applied and guaranteed for as long as that
election remains in force.
To the extent applicable, all factors, values, benefits and reserves will
not be less than those required by the law of the state in which the
Contract is delivered.
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Settlement Option Tables
The Settlement Option Tables in Appendix A reflect the dollar amount of
the monthly payments for each $1,000 applied.
Rates for monthly payments for ages or fixed periods not shown in the
Settlement Option Tables will be calculated on the same basis as those
shown and may be obtained from the Company. Fixed periods shorter than
five years are not available.
GENERAL PROVISIONS
Non-participating
The Contract and the Certificates thereunder are non-participating.
Neither the Contract nor the Certificates thereunder are eligible to share
in the profits or surplus earnings of the Company's general account and
will not receive dividends from the general account.
Misstatement of Age
If the age of the Participant has been misstated in the Certificate
Application, Annuity Benefit payments under the Certificate will be
whatever the Account Value on the Annuity Commencement Date would purchase
on the basis of the correct age of the Participant. If the Company has
made underpayments based on any misstatement, the Company shall promptly
pay the amount of any underpayment, with interest, in one lump sum. Any
overpayments made shall be charged, with interest, against the next
Annuity Benefit payment or succeeding Annuity Benefit payments due under
the Certificate. The interest rate used will not be less than 3% per
year.
Proof of Existence and Age
The Company may require proof of age of the Annuitant and, if applicable,
any joint payee, before any Annuity Benefit involving lifetime payments
will be made.
Facility of Payment
If any person receiving payments under a Certificate is incapable of
giving valid receipt of payment, the Company may make such payment to the
person who has legally assumed responsibility for his or her care and
principal support. Any such payment shall fully discharge the Company to
the extent of that payment.
Transfer and Assignment
Neither any one Participant nor the Contract Owner may transfer, sell,
assign, pledge, charge, encumber or in any way alienate his or her
interest under a Certificate or the Contract, respectively. To the extent
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permitted by law, no benefits payable under the Contract or a Certificate
will be subject to the claims of creditors.
Annuity Data
The Company will not be liable for obligations which depend on the Company
receiving information from a Participant until such information is
received by the Company in a satisfactory form.
Annual Report
At least once each Certificate Year prior to the Annuity Commencement
Date, the Participant will be given a report of the current Account Value
allocated to each Sub-Account, and each Fixed Account option. This report
will also include any other information required by law or regulation,
including all transactions which have occurred during the accounting
period shown in the report.
Incontestability
Each Certificate shall not be contestable by the Company.
Entire Contract
The Company issues the Certificate in consideration and acceptance of the
payment of the initial Purchase Payment and, where state law requires, the
Participant Enrollment Form. In those states that require a written
application, a copy of the Enrollment Form will be attached to and become
part of the Certificate and along with the Certificate constitutes the
entire Certificate. All statements made by the Participant will be
considered representations and not warranties. The Company will not use
any statement in defense of a claim unless it is made in the Participant
Enrollment Form (or other application form) and a copy of the Participant
Enrollment Form (or other application form) is attached to the Certificate
when issued.
Changes in the Contract
Only the Company's President, Vice President and Secretary have the
authority to bind the Company or to make any change in the Contract or the
Certificates thereunder and then only in writing. The Company will not be
bound by any promise or representation made by any other persons.
The Company may not change or amend the Contract or Certificates
thereunder, except as expressly provided therein, without the
Participant's consent. However, the Company may change or amend the
Contract or Certificates thereunder if such change or amendment is
necessary for the Contract or Certificates thereunder to comply with any
state or federal law, rule or regulation.
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Waiver of the Certificate Maintenance Fee
The Company may waive the Certificate Maintenance Fee in certain
situations where the Company expects to realize significant economies of
scale with respect to sales of Contracts and Certificates. This is
possible because sales costs do not increase in proportion to the Purchase
Payments under the Contracts and Certificates sold; for example, the per
dollar transaction cost for a sale of a Contract and Certificates with
$500,000 of Purchase Payments is generally much higher than the per dollar
cost for a sale of a Contract and Certificates with $1,000,000 of Purchase
Payments. Thus, the applicable sales costs decline as a percentage of the
Purchase Payments as the amount of Purchase Payments increases. In such a
situation, the Company may be designated as a preferred variable annuity
contract provider by the employer or trustee or the employee benefit plan.
Notices and Directions
The Company will not be bound by any authorization, election or notice
which is not in writing and received at the Company's Administrative
Office.
Any written notice requirement by the Company to the Participant will be
satisfied by the mailing of any such required written notice, by first-
class mail, to the Participant's last known address as shown on the
Company's records.
FEDERAL TAX MATTERS
Introduction
The following discussion is a general description of federal tax
considerations relating to the Contract and is not intended as tax advice.
This discussion is not intended to address the tax consequences resulting
from all of the situations in which a person may be entitled to or may
receive a distribution under the Contract. Any person concerned about tax
implications should consult a competent tax adviser before initiating any
transaction. This discussion is based upon the Company's understanding of
the present federal income tax laws as they are currently interpreted by
the Internal Revenue Service. No representation is made as to the
likelihood of the continuation of the present federal income tax laws or
of the current interpretation by the Internal Revenue Service. Moreover,
no attempt has been made to consider any applicable state or other tax
laws.
The ultimate effect of federal income taxes on the amounts held under a
Contract, on Annuity Payments, and on the economic benefit to the
Participant or the Beneficiary may depend on the type of retirement plan,
and on the tax status of the individual concerned. Certain requirements
must be satisfied in purchasing a Contract for a qualified plan and
receiving distributions from such a Contract in order to continue to
receive favorable tax treatment. The Company makes no attempt to provide
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more than general information about use of the Contracts with the various
types of retirement plans. Participants under retirement plans and
Beneficiaries are cautioned that the rights of any person to any benefits
may be subject to the terms and conditions of the plans themselves,
regardless of the terms and conditions of the Contract issued in
connection with such a plan. Some retirement plans are subject to
distribution and other requirements that are not incorporated in the
administration of the Contracts. Participants are responsible for
determining that contributions, distributions and other transactions with
respect to the Contracts satisfy applicable law. Therefore, purchasers of
Contracts should seek competent legal and tax advice regarding the
suitability of the Contract for their situation, the applicable
requirements, and the tax treatment of the rights and benefits of the
Contract. The following discussion assumes that a Contract is purchased
with proceeds from and/or contributions under retirement plans that
qualify for the intended special federal income tax treatment ("Qualified
Contracts").
The following discussion also is based on the assumption that the Contract
qualifies as an annuity contract for federal income tax purposes. The
Statement of Additional Information discusses the requirements for
qualifying as an annuity.
Taxation of Annuities In General
Section 72 of the Code governs taxation of annuities in general. The
Company believes that the Participant who is a natural person generally is
not taxed on increases in the value of an Account until distribution
occurs by withdrawing all or part of the Account Value (e.g., surrenders
or annuity payments under the Settlement Option elected). For this
purpose, the assignment, pledge, or agreement to assign or pledge any
portion of the Account Value or any portion of an interest in the
qualified plan generally will be treated as a distribution. The taxable
portion of a distribution (in the form of a single sum payment or an
annuity) is generally taxable as ordinary income.
The following discussion generally applies to a Certificate owned by a
natural person under a group Contract.
Surrenders
In the case of a surrender under a Qualified Contract, including
withdrawals under the Systematic Withdrawal Option, a ratable portion of
the amount received is taxable, generally based on the ratio of the
"investment in the contract" to the individual's total accrued benefit
under the retirement plan. The "investment in the contract" generally
equals the amount of any non-deductible Purchase Payments paid by or on
behalf of any individual. For a Contract issued in connection with
qualified plans, the "investment in the contract" is often zero. Special
tax rules may be available for certain distributions from a Qualified
Contract.
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Annuity Payments
Although the tax consequences may vary depending on the Annuity Payment
and Settlement Option elected under the Contract, in general, only the
portion of the Annuity Payment that represents the amount by which the
Account Value exceeds the "investment in the contract" will be taxed;
after the "investment in the contract" is recovered, the full amount of
any additional Annuity Payments is taxable. For Variable Dollar Annuity
Payments, the taxable portion is generally determined by an equation that
establishes a specific dollar amount of each payment that is not taxed.
The dollar amount is determined by dividing the "investment in the
contract" by the total number of expected periodic payments. However, the
entire distribution will be taxable once the recipient has recovered the
dollar amount of his or her "investment in the contract." For Fixed
Dollar Annuity Payments, in general there is no tax on the portion of each
payment which represents the same ratio that the "investment in the
contract" bears to the total expected value of the Annuity Payments for
the term of the payments; however, the remainder of each Annuity Payment
is taxable. Once the "investment in the contract" has been fully
recovered, the full amount of any additional Annuity Payments is taxable.
If Annuity Payments cease as a result of a Participant's death before full
recovery of the "investment in the contract," consult a competent tax
adviser regarding deductibility of the unrecovered amount.
Penalty Tax
In general, a 10% premature distribution penalty tax applies to
distributions unless: (1) made on or after the date on which the
Participant attains age 59 1/2; (2) made as a result of death or
disability of the Participant; (3) received in substantially equal
periodic payments as a life annuity or a joint and one-half survivor
annuity for the lives or life expectancies of the Participant and a
"designated beneficiary;" (4) made to the Participant after separation
from service and attainment of age 55; (5) made under a qualified domestic
relations order; or (6) to the extent they do not exceed the Participant's
allowable deduction for medical care for that year. Other tax penalties
may apply to certain distributions under a qualified plan.
Taxation of Death Benefit Proceeds
Amounts may be distributed from the Account because of the death of a
Participant. Generally such amounts are includible in the income of the
recipient as follows: (1) if distributed in a lump sum, they are taxed in
the same manner as a full surrender as described above, or (2) if
distributed under a Settlement Option, they are taxed in the same manner
as Annuity Payments, as described above.
Transfers, Assignments, or Exchanges of the Contract
A transfer of ownership of a Contract, the designation of a Beneficiary
who is not also the Participant, or the exchange of a Contract may result
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in certain tax consequences to the Participant that are not discussed
herein.
Texas Optional Retirement Program
Section 36.105 of the Texas Educational Code permits participants in the
Texas Optional Retirement Program ("ORP") to withdraw their interests in a
variable annuity policy issued under the ORP only upon: (1) termination of
employment in the Texas public institutions of higher education; (2)
retirement; or (3) death. Accordingly, a participant in the ORP (or the
participant's estate if the participant has died) will be required to
obtain a certificate of termination from the employer or a certificate of
death before all or part of the Account Value can be withdrawn.
Qualified Pension and Profit Sharing Plans and H.R. 10 Plans
Code section 401(a) permits employers to establish various types of
retirement plans for employees, and permit self-employed individuals to
establish retirement plans for themselves and their employees. These
retirement plans may permit the purchase of the Contracts to accumulate
retirement savings under the plans.
Purchasers of a Contract for use with such plans should seek competent
advice regarding the suitability of the proposed plan documents and the
Contract to their specific needs.
Withholding
Pension and annuity distributions generally are subject to withholding for
the recipient's federal income tax liability at rates that vary according
to the type of distribution and the recipient's tax status. Federal
withholding at a flat 20% of the taxable part of the distribution is
required if the distribution is eligible for rollover and the distribution
is not paid as a direct rollover. In other cases, recipients generally
are provided the opportunity to elect not to have tax withheld from
distributions.
Possible Changes in Taxation
Although as of the date of this prospectus, Congress is not actively
considering any legislation regarding the taxation of annuities issued in
connection with a qualified plan, there is always the possibility that the
tax treatment of such annuities could change by legislation or other means
(such as IRS regulations, revenue rulings, judicial decisions, etc.).
Moreover, it is also possible that any change could be retroactive (that
is, effective prior to the date of the change).
Other Tax Consequences
As noted above, the foregoing discussion of the federal income tax
consequences is not exhaustive and special rules are provided with respect
to other tax situations not discussed in this Prospectus. Further, the
47
<PAGE>
federal income tax consequences discussed herein reflect the Company's
understanding of current law and the law may change. Federal estate tax
consequences and state and local estate, inheritance, and other tax
consequences of ownership or receipt of distributions under the Contract
depend on the individual circumstances of each Participant or recipient of
the distribution. A competent tax adviser should be consulted for further
information.
General
At the time the initial Purchase Payment is paid, a prospective purchaser
must specify whether the purchase is a Qualified Contract. If the initial
purchase payment is derived from an exchange or surrender of another
annuity contract, the Company may require that the prospective purchaser
provide information with regard to the federal income tax status of the
previous annuity contract. The Company will require that persons purchase
separate Contracts if they desire to invest monies qualifying for
different annuity tax treatment under the Code. Each such separate
Contract would require the minimum initial Purchase Payment stated above.
Additional Purchase Payments under a Contract must qualify for the same
federal income tax treatment as the Initial Purchase Payment under the
Contract; the Company will not accept an additional Purchase Payment under
a Contract if the federal income tax treatment of such Purchase Payment
would be different from that of the Initial Purchase Payment.
DISTRIBUTION OF THE CONTRACT
AAG Securities, Inc. ("AAG Securities") is the principal underwriter and
distributor of the Contracts. AAG Securities may also serve as an
underwriter and distributor of other contracts issued through the Separate
Account and certain other Separate Accounts of the Company and any
affiliates of the Company. AAG Securities is a wholly-owned subsidiary of
American Annuity Group, Inc., a publicly-traded company which is an
indirect subsidiary of American Financial Group, Inc. AAG Securities is
registered with the Securities and Exchange Commission as a broker-dealer
and is a member of the National Association of Securities Dealers, Inc.
("NASD"). Its principal offices are located at 250 East Fifth Street,
Cincinnati, Ohio 45202. The Company pays AAG Securities for acting as
underwriter under a distribution agreement.
AAG Securities has entered into sales agreements with other broker-dealers
to solicit applications for the Contracts through registered
representatives who are licensed to sell securities and variable insurance
products. These agreements provide that applications for the Contracts
may be solicited by registered representatives of the broker-dealers
appointed by the Company to sell its variable life insurance and variable
annuities. These broker-dealers are registered with the Securities and
Exchange Commission and are members of the NASD. The registered
representatives are authorized under applicable state regulations to sell
variable annuities.
48
<PAGE>
Under the agreements, Contracts will be sold by registered representatives
which will receive commissions from AAG Securities of up to 8% of any
Purchase Payments. From time to time the Company may pay or permit other
promotional incentives, in cash or credit or other compensation.
LEGAL PROCEEDINGS
There are no pending legal proceedings affecting the Separate Account or
AAG Securities. The Company is involved in various kinds of routine
litigation which, in management's judgment, are not of material importance
to the Company's assets or the Separate Account.
VOTING RIGHTS
To the extent required by applicable law, all Fund shares held in the
Separate Account will be voted by the Company at regular and special
shareholder meetings of the respective Funds in accordance with
instructions received from persons having voting interests in the
corresponding Sub-Account. If, however, the 1940 Act or any regulation
thereunder should be amended, or if the present interpretation thereof
should change, or if the Company determines that it is allowed to vote all
shares in its own right, the Company may elect to do so.
The person with the voting interest is the Participant. The number of
votes which are available to a Participant will be calculated separately
for each Sub-Account. Before the Annuity Commencement Date, that number
will be determined by applying his or her percentage interest, if any, in
a particular Sub-Account to the total number of votes attributable to that
Sub-Account. The Participant holds a voting interest in each Sub-Account
to which the Account Value is allocated. After the Annuity Commencement
Date, the number of votes decreases as Annuity Payments are made and as
the number of Accumulation Units for a Certificate decreases.
The number of votes of a Fund will be determined as of the date coincident
with the date established by that Fund for shareholders eligible to vote
at the meeting of the Fund. Voting instructions will be solicited by
written communication prior to such meeting in accordance with procedures
established by the respective Funds.
Shares as to which no timely instructions are received and shares held by
the Company as to which Participants have no beneficial interest will be
voted in proportion to the voting instructions which are received with
respect to all Certificates participating in the Sub-Account. Voting
instructions to abstain on any item will be applied on a pro rata basis to
reduce the votes eligible to be cast.
Each person or entity having a voting interest in a Sub-Account will
receive proxy material, reports and other material relating to the
appropriate Fund.
49
<PAGE>
It should be noted that the Funds are not required to hold annual or other
regular meetings of shareholders.
AVAILABLE INFORMATION
The Company has filed a registration statement (the Registration
Statement) with the Securities and Exchange Commission under the
Securities Act of 1933 relating to the Contract and Certificates
thereunder offered by this Prospectus. This Prospectus has been filed as
a part of the Registration Statement and does not contain all of the
information set forth in the Registration Statement and exhibits thereto,
and reference is hereby made to such Registration Statement and exhibits
for further information relating to the Company, the Contract and the
Certificates. Statements contained in this Prospectus, as to the content
of the Contract, the Certificates and other legal instruments, are
summaries. For a complete statement of the terms thereof, reference is
made to the instruments filed as exhibits to the Registration Statement.
The Registration Statement and the exhibits thereto may be inspected and
copied at the office of the Commission, located at 450 Fifth Street, N.W.,
Washington, D.C.
50
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
A Statement of Additional Information is available which contains more
details concerning the subjects discussed in this Prospectus. The
following is the Table of Contents for that Statement:
Page
----
ANNUITY INVESTORS(SERVICEMARK) LIFE INSURANCE COMPANY . . . . . . . . 1
General Information and History . . . . . . . . . . . . . . 1
State Regulation . . . . . . . . . . . . . . . . . . . . . . 1
SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Safekeeping of Separate Account Assets . . . . . . . . . . . 1
Records and Reports . . . . . . . . . . . . . . . . . . . . 2
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . 2
DISTRIBUTION OF THE CONTRACTS . . . . . . . . . . . . . . . . . . . . 2
CALCULATION OF PERFORMANCE INFORMATION . . . . . . . . . . . . . . . 2
Money Market Sub-Account Yield Calculation . . . . . . . . . 2
Other Sub-Account Yield Calculation . . . . . . . . . . . . 3
Standardized Total Return Calculation . . . . . . . . . . . 4
Hypothetical Performance Data . . . . . . . . . . . . . . . 5
Other Performance Data . . . . . . . . . . . . . . . . . . . 5
FEDERAL TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . 7
Taxation of the Company . . . . . . . . . . . . . . . . . . 8
Tax Status of the Contract . . . . . . . . . . . . . . . . . 8
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . 9
51
<PAGE>
--------------------------------------------
Copies of the Statement of Additional Information dated
__________________, 1995 are available without charge. To request a copy,
please clip this coupon on the dotted line above, enter your name and
address in the spaces provided below, and mail to: Annuity
Investors(SERVICEMARK) Life Insurance Company, P.O. Box 5423, Cincinnati,
Ohio 45201-5423.
Name: _____________________________
Address:_____________________________
City:_____________________________
State:_____________________________
Zip Code:_____________________________
52
<PAGE>
APPENDIX A
----------
Settlement Option Tables
The Settlement Option Tables show the guaranteed dollar amount, based on
unisex rates, of the monthly payments under various Settlement options for
each $1,000 applied.
<TABLE>
<CAPTION>
OPTION 1 TABLES -- LIFE ANNUITY
With Payments For At Least A Fixed Period
60 Months 120 Months 180 Months 240 Months
Age
<S> <C> <C> <C> <C>
55 $4.55 $4.51 $4.44 $4.33
56 4.65 4.61 4.52 4.39
57 4.76 4.71 4.61 4.46
58 4.87 4.81 4.70 4.53
59 4.99 4.92 4.79 4.60
60 5.12 5.04 4.89 4.67
61 5.25 5.16 4.99 4.74
62 5.40 5.29 5.09 4.81
63 5.55 5.42 5.19 4.87
64 5.72 5.56 5.30 4.94
65 5.89 5.71 5.40 5.00
66 6.08 5.86 5.51 5.06
67 6.27 6.02 5.62 5.11
68 6.48 6.19 5.72 5.17
69 6.71 6.36 5.83 5.22
70 6.95 6.54 5.93 5.26
71 7.20 6.72 6.03 5.30
72 7.46 6.90 6.12 5.34
73 7.75 7.08 6.21 5.37
74 8.04 7.27 6.30 5.40
53
<PAGE>
OPTION 2 TABLE - LIFE ANNUITY
60 Months 120 Months 180 Months 240 Months
Age Age Age Age
<S> <C> <C> <C> <C> <C> <C> <C>
55 $4.65 60 $5.14 65 $5.95 70 $7.08
56 4.67 61 5.28 66 6.14 71 7.36
57 4.77 62 5.43 67 6.35 72 7.66
58 4.89 63 5.59 68 6.58 73 7.98
59 5.01 64 5.76 69 6.82 74 8.33
OPTION 3 TABLE - JOINT AND
ONE-HALF SURVIVOR ANNUITY
Monthly payments for each $1,000 of proceeds
by ages of persons named.*
Secondary Age
Primary
Age 60 61 62 63 64 65 66 67 68 69 70
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
60 $4.73 $4.75 $4.78 $4.80 $4.83 $4.85 $4.87 $4.89 $4.92 $4.93 $4.95
61 4.81 4.84 4.87 4.90 4.92 4.95 4.97 5.00 5.02 5.04 5.06
62 4.90 4.93 4.96 4.99 5.02 5.05 5.08 5.11 5.13 5.16 5.18
63 4.99 5.03 5.06 5.09 5.13 5.16 5.19 5.22 5.25 5.28 5.30
64 5.09 5.12 5.16 5.20 5.23 5.27 5.30 5.34 5.37 5.40 5.43
65 5.18 5.22 5.26 5.31 5.35 5.38 5.42 5.46 5.49 5.53 5.56
66 5.28 5.33 5.37 5.42 5.46 5.50 5.54 5.58 5.62 5.66 5.70
67 5.38 5.43 5.48 5.53 5.58 5.62 5.67 5.72 5.76 5.80 5.84
68 5.49 5.54 5.59 5.65 5.70 5.75 5.80 5.85 5.90 5.95 5.99
69 5.60 5.65 5.71 5.77 5.82 5.88 5.93 5.99 6.04 6.10 6.15
70 5.71 5.77 5.83 5.89 5.95 6.01 6.07 6.13 6.19 6.25 6.31
*Payments after the death of the Primary Payee will be one-half of the amount shown.
54
<PAGE>
OPTION 4 TABLE - INCOME FOR A FIXED PERIOD
Payments for fixed number of years
for each $1,000 applied.
Terms of Terms of
Payments Annual Semi-Annual Quarterly Monthly Payments Annual
Years Years
<S> <C> <C> <C> <C> <C> <C>
6 183.42 92.61 46.53 15.56 11 $109.76
7 160.20 80.89 40.64 13.59 12 102.45
8 142.82 72.11 36.23 12.12 13 96.29
9 129.32 65.29 32.81 10.97 14 91.03
10 118.55 59.86 30.07 10.06 15 86.48
Semi- Terms of
Annual Quarterly Monthly Payments Annual Semi-Annual Quarterly Monthly
Years
<C> <C> <C> <C> <C> <C> <C> <C>
$55.42 $27.84 $9.31 16 $82.52 $41.66 $20.93 $7.00
51.73 25.99 8.69 17 79.04 39.91 20.05 6.71
48.62 24.43 8.17 18 75.96 38.35 19.27 6.44
45.96 23.09 7.72 19 73.21 36.95 18.57 6.21
43.66 21.94 7.34 20 70.75 35.72 17.95 6.00
</TABLE>
Rates for monthly payments for ages or fixed periods not shown in the
above tables will be calculated on the same basis as those shown and may
be obtained from the Company. Fixed periods shorter than five years are
not available.
55
<PAGE>
SUBJECT TO COMPLETION: DATED , 1995
ANNUITY INVESTORS(SERVICEMARK) VARIABLE ACCOUNT A
of
ANNUITY INVESTORS(SERVICEMARK) LIFE INSURANCE COMPANY
STATEMENT OF ADDITIONAL INFORMATION
for the
Commodore Nauticus
Group Flexible Premium Deferred Annuity
Issued by
ANNUITY INVESTORS(SERVICEMARK) LIFE INSURANCE COMPANY
P.O. Box 5423, Cincinnati, Ohio 45201-5423, (800) 789-6771
The Statement of Additional Information expands upon subjects
discussed in the current Prospectus for the Commodore Nauticus, a Group
Flexible Premium Deferred Annuity Contract ("Contract") offered by Annuity
Investors(SERVICEMARK) Life Insurance Company and the Certificates of
Participation under the Contract ("Certificates"). A copy of the
Prospectus dated _________________, 1995, as supplemented from time to
time, may be obtained free of charge by writing to Annuity
Investors(SERVICEMARK) Life Insurance Company, Administrative Office,
P.O. Box 5423, Cincinnati, Ohio 45201-5423. Terms used in the current
Prospectus for the Contract are incorporated in this Statement of
Additional Information.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE
READ ONLY IN CONJUNCTION WITH THE PROSPECTUS FOR THE CONTRACT.
______________, 1995
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE.
THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR
TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS STATEMENT
OF ADDITIONAL INFORMATION SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
<PAGE>
TABLE OF CONTENTS
Page
----
ANNUITY INVESTORS(SERVICEMARK) LIFE INSURANCE COMPANY . . . . . . . . 1
ANNUITY INVESTORS(SERVICEMARK) LIFE INSURANCE COMPANY . . . . . . . . 1
General Information and History . . . . . . . . . . . . . . 1
State Regulation . . . . . . . . . . . . . . . . . . . . . . 1
SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Safekeeping of Separate Account Assets . . . . . . . . . . . 1
Records and Reports . . . . . . . . . . . . . . . . . . . . 2
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . 2
DISTRIBUTION OF THE CONTRACTS . . . . . . . . . . . . . . . . . . . . 2
CALCULATION OF PERFORMANCE INFORMATION . . . . . . . . . . . . . . . 2
Money Market Sub-Account Yield Calculation . . . . . . . . . 2
Other Sub-Account Yield Calculation . . . . . . . . . . . . 3
Standardized Total Return Calculation . . . . . . . . . . . 4
Hypothetical Performance Data . . . . . . . . . . . . . . . 5
Other Performance Data . . . . . . . . . . . . . . . . . . . 5
FEDERAL TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . 7
Taxation of the Company . . . . . . . . . . . . . . . . . . 8
Tax Status of the Contract . . . . . . . . . . . . . . . . . 8
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 9
i
<PAGE>
The following information supplements the information in the
Prospectus about the Contract and Certificates. Terms used in this
Statement of Additional Information have the same meaning as in the
Prospectus.
ANNUITY INVESTORS(SERVICEMARK) LIFE INSURANCE COMPANY
General Information and History
Annuity Investors(SERVICEMARK) Life Insurance Company (the
"Company"), formerly known as Carillon Life Insurance Company, is a stock
life insurance company incorporated under the laws of the State of Ohio in
1981. The name change occurred in the state of domicile on April 12,
1995. The Company is principally engaged in the sale of fixed and
variable annuity policies.
The Company was acquired in November, 1994, by American Annuity
Group, Inc. ("AAG") a Delaware corporation that is a publicly traded
insurance holding company. Great American Insurance Company ("GAIC"), an
Ohio corporation, owns 80% of the common stock of AAG. GAIC is a multi-
line insurance carrier and a wholly-owned subsidiary of Great American
Holding Company ("GAHC"), an Ohio corporation. GAHC is a wholly-owned
subsidiary of American Financial Corporation ("AFC"), an Ohio corporation.
AFC is a wholly-owned subsidiary of American Financial Group, Inc.
("AFG"), an Ohio corporation. AFG is a publicly traded holding company
which is engaged, through its subsidiaries, in financial businesses that
include annuities, insurance and portfolio investing, and non-financial
businesses that include food products and television and radio operations.
State Regulation
The Company is subject to the insurance laws and regulations of
all the jurisdictions where it is licensed to operate. The availability
of certain Contract rights and provisions depends on state approval and/or
filing and review processes in each such jurisdiction. Where required by
law or regulation, the Contract will be modified accordingly.
SERVICES
Safekeeping of Separate Account Assets
Title to assets of the Separate Account is held by the Company.
The Separate Account assets are kept separate and apart from the Company's
general account assets. Records are maintained of all purchases and
redemptions of Fund shares held by each of the Sub-Accounts.
Title to assets of the Fixed Account is held by the Company
together with the Company's general account assets.
<PAGE>
Records and Reports
All records and accounts relating to the Fixed Account and the
Separate Account will be maintained by the Company. As presently required
by the provisions of the Investment Company Act of 1940, as amended ("1940
Act"), and rules and regulations promulgated thereunder which pertain to
the Separate Account, reports containing such information as may be
required under the 1940 Act or by other applicable law or regulation will
be sent to each Participant semi-annually at the Participant's last known
address of record.
Experts
The statutory-basis financial statements of the Company included
in this Statement of Additional Information have been audited by Ernst &
Young LLP, independent auditors, to the extent indicated in their report
thereon also appearing elsewhere herein. Such statutory-basis financial
statements have been included herein in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.
DISTRIBUTION OF THE CONTRACTS
The offering of the Contracts is expected to be continuous, and
the Company does not anticipate discontinuing the offering of the
Contracts. However, the Company reserves the right to discontinue the
offering of the Contracts.
CALCULATION OF PERFORMANCE INFORMATION
Money Market Sub-Account Yield Calculation
In accordance with rules and regulations adopted by the
Securities and Exchange Commission, the Company computes the Money Market
Sub-Account's current annualized yield for a seven-day period in a manner
which does not take into consideration any realized or unrealized gains or
losses on shares of the Money Market Fund or on its portfolio securities.
This current annualized yield is computed by determining the net change
(exclusive of realized gains and losses on the sale of securities and
unrealized appreciation and depreciation) in the value of a hypothetical
account having a balance of one unit of the Money Market Sub-Account at
the beginning of such seven-day period, dividing such net change in the
value of the hypothetical account by the value of the hypothetical account
at the beginning of the period to determine the base period return and
annualizing this quotient on a 365-day basis. The net change in the value
of the hypothetical account reflects the deductions for the Mortality and
Expense Risk and Administration Charges and income and expenses accrued
during the period. Because of these deductions, the yield for the Money
Market Sub-Account of the Separate Account will be lower than the yield
for the Money Market Fund or any comparable substitute funding vehicle.
2
<PAGE>
The Securities and Exchange Commission also permits the Company
to disclose the effective yield of the Money Market Sub-Account for the
same seven-day period, determined on a compounded basis. The effective
yield is calculated according to the following formula:
365/7
EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1) ] - 1
The yield on amounts held in the Money Market Sub-Account
normally will fluctuate on a daily basis. Therefore, the disclosed yield
for any given past period is not an indication or representation of future
yields. The Money Market Sub-Account's actual yield is affected by
changes in interest rates on money market securities, average portfolio
maturity of the Money Market Fund or substitute funding vehicle, the types
and quality of portfolio securities held by the Money Market Fund or
substitute funding vehicle, and operating expenses. IN ADDITION, THE
YIELD FIGURES DO NOT REFLECT THE EFFECT OF ANY CONTINGENT DEFERRED SALES
CHARGE ("CDSC") (OF UP TO 7% OF PURCHASE PAYMENTS) THAT MAY BE APPLICABLE
ON SURRENDER.
Other Sub-Account Yield Calculation
The Company may from time to time disclose the current annualized
yield of one or more of the Sub-Accounts (other than the Money Market Sub-
Account) for 30-day periods. The annualized yield of a Sub-Account refers
to the income generated by the Sub-Account over a specified 30-day period.
Because this yield is annualized, the yield generated by a Sub-Account
during the 30-day period is assumed to be generated each 30-day period.
The yield is computed by dividing the net investment income per
Accumulation Unit earned during the period by the 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 the shares owned by the Sub-
Account.
b = expenses for the Sub-Account 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.
Net investment income will be determined in accordance with rules
and regulations established by the Securities and Exchange Commission.
3
<PAGE>
Accrued expenses will include all recurring fees that are charged to all
Contracts. The yield calculations do not reflect the effect of any CDSC
that may be applicable to a particular Contract. CDSCs range from 7% to
0% of the Purchase Payments withdrawn depending on the elapsed time since
the receipt of such Purchase Payments.
Because of the charges and deductions imposed by the Separate
Account, the yield for a Sub-Account will be lower than the yield for the
corresponding Fund. The yield on amounts held in a Sub-Account normally
will fluctuate over time. Therefore, the disclosed yield for any given
period is not an indication or representation of future yields or rates of
return. The Sub-Account's actual yield will be affected by the types and
quality of portfolio securities held by the Fund and its operating
expenses.
Standardized Total Return Calculation
The Company may from time to time also disclose average annual
total returns for one or more of the Sub-Accounts for various periods of
time. Average annual total return quotations are computed by finding the
average annual compounded rates of return over one, five and ten year
periods that would equal the initial amount invested to the ending
redeemable value, according to the following formula:
n
P(1 + T) = ERV
Where:
P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = "ending redeemable value" of a hypothetical $1,000
payment made at the beginning of the one, five or ten-
year period at the end of the one, five, or ten-year
period (or fractional portion thereof).
All recurring fees that are charged to all Contracts are
recognized in the ending redeemable value. The average annual total
return calculations will reflect the effect of any CDSCs that may be
applicable to a particular period.
Hypothetical Performance Data
The Company may also disclose "hypothetical" performance data for
a Sub-Account, for periods BEFORE the Sub-Account commenced operations.
Such performance information for the Sub-Account will be calculated based
on the performance of the corresponding Fund and the assumption that the
Sub-Account was in existence for the same periods as those indicated for
the Fund, with a level of Contract charges currently in effect. The Fund
4
<PAGE>
used for these calculations will be the actual Fund in which the Sub-
Account invests.
This type of hypothetical performance data may be disclosed on
both an average annual total return and a cumulative total return basis.
Moreover, it may be disclosed assuming that the Contract is not
surrendered (i.e., with no deduction for a CDSC) or assuming that the
Contract is surrendered at the end of the applicable period (i.e.,
reflecting a deduction for any applicable CDSC).
Other Performance Data
The Company may from time to time disclose non-standardized total
return in conjunction with the standardized performance data described
above. Non-standardized data may reflect no CDSC or present performance
data for a period other than that required by the standardized format.
The Company may from time to time also disclose cumulative total
return calculated using the following formula assuming that the CDSC
percentage is 0%.
CTR = (ERV/P) - 1
Where:
CTR = the cumulative total return net of Sub-Account recurring
charges for the period.
ERV = ending redeemable value of a hypothetical $1,000 payment
at the beginning of the one, five or ten-year period at
the end of the one, five or ten-year period (or
fractional portion thereof).
P = a hypothetical initial payment of $1,000.
All non-standardized performance data will be advertised only if
the requisite standardized performance data is also disclosed.
The Contracts may be compared in advertising materials to
Certificates of Deposit ("CDs") or other investments issued by banks or
other depository institutions. Variable annuities differ from bank
investments in several respects. For example, variable annuities may
offer higher potential returns than Cds. However, unless you have elected
to invest in only the Fixed Account Options, the Company does not
guarantee your return. Also, none of your investments under the Contract,
whether allocated to the Fixed Account or a Sub-Account, are FDIC-insured.
Advertising materials for the Contracts may, from time to time,
address retirement needs and investing for retirement, the usefulness of a
tax-qualified retirement plan, saving for college, or other investment
goals. Advertising materials for the Contracts may discuss, generally,
the advantages of investing in a variable annuity and the Contract's
5
<PAGE>
particular features and their desirability and may compare Contract
features with those of other variable annuities and investment products of
other issuers. Advertising materials may also include a discussion of the
balancing of risk and return in connection with the selection of
investment options under the Contract and investment alternatives
generally, as well as a discussion of the risks and attributes associated
with the investment options under the Contract. A description of the tax
advantages associated with the Contract, including the effects of tax-
deferral under a variable annuity or retirement plan generally, may be
included as well. Advertising materials for the Contracts may quote or
reprint financial or business publications and periodicals, including
model portfolios or allocations, as they relate to current economic and
political conditions, management and composition of the underlying Funds,
investment philosophy, investment techniques, the desirability of owning
the Contract and other products and services offered by the Company or AAG
Securities, Inc. ("AAG Securities").
The Company or AAG Securities may provide information designed to
help individuals understand their investment goals and explore various
financial strategies. Such information may include: information about
current economic, market and political conditions; materials that describe
general principles of investing, such as asset allocation,
diversification, risk tolerance and goal setting; questionnaires designed
to help create a personal financial profile; worksheets used to project
savings needs based on assumed rates of inflation and hypothetical rates
of return; and alternative investment strategies and plans.
Ibbotson Associates of Chicago, Illinois ("Ibbotson") provides
historical returns of the capital markets in the United States, including
common stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the Consumer Price Index), and
combinations of various capital markets. The performance of these capital
markets is based on the returns of different indices.
Advertising materials for the Contracts may use the performance
of these capital markets in order to demonstrate general risk-versus-
reward investment scenarios. Performance comparisons may also include the
value of a hypothetical investment in any of these capital markets. The
risk associated with the security types in any capital market may or may
not correspond directly to those of the Sub-Accounts and the Funds.
Advertising materials may also compare performance to that of other
compilations or indices that may be developed and made available in the
future.
In addition, advertising materials may quote various measures of
volatility and benchmark correlations for the Sub-Accounts and the
respective Funds and compare these volatility measures and correlations
with those of other separate accounts and their underlying funds.
Measures of volatility seek to compare a sub-account's, or its underlying
fund's, historical share price fluctuations or total returns to those of a
benchmark. Measures of benchmark correlation indicate how valid a
6
<PAGE>
comparative benchmark may be. All measures of volatility and correlation
are calculated using averages of historical data.
FEDERAL TAX MATTERS
The Contract and Certificates thereunder are designed for use by
individuals in retirement plans which qualify for special tax treatment
under Sections 401, 403, or 457 of the Internal Revenue Code of 1986, as
amended (the "Code"). The ultimate effect of federal taxes on the Account
Value, on Annuity Benefits, and on the economic benefit to the Participant
or the Beneficiary may depend on the type of retirement plan for which the
Contract is purchased, on the tax and employment status of the individual
concerned and on the Company's tax status. THE FOLLOWING DISCUSSION IS
GENERAL AND IS NOT INTENDED AS TAX ADVICE. Any person concerned about tax
implications should consult a competent tax adviser. This discussion is
based upon the Company's understanding of the present federal income tax
laws as they are currently interpreted by the Internal Revenue Service.
No representation is made as to the likelihood of continuation of present
federal income tax laws or of the current interpretations by the Internal
Revenue Service. Moreover, no attempt has been made to consider any
applicable state or other tax laws.
Taxation of the Company
The Company is taxed as a life insurance company under Part I of
Subchapter L of the Code. Since the Separate Account is not an entity
separate from the Company, and its operations form a part of the Company,
it will not be taxed separately as a "regulated investment company" under
Subchapter M of the Code. Investment income and realized capital gains
are automatically applied to increase reserves under the Contracts. Under
existing federal income tax law, the Company believes that the Separate
Account investment income and realized net capital gains will not be taxed
to the extent that such income and gains are applied to increase the
reserves under the Contracts.
Accordingly, the Company does not anticipate that it will incur
any federal income tax liability attributable to the Separate Account and,
therefore, the Company does not intend to make provisions for any such
taxes. However, if changes in the federal tax laws or interpretations
thereof result in the Company being taxed on income or gains attributable
to the Separate Account, then the Company may impose a charge against the
Separate Account (with respect to some or all Contracts) in order to set
aside provisions to pay such taxes.
Tax Status of the Contract
In certain circumstances, participants under group variable
annuity contracts may be considered the owners, for federal income tax
purposes, of the assets of the separate accounts used to support their
contracts. In those circumstances, income and gains from the separate
account assets would be includible in the variable contract owner's gross
7
<PAGE>
income. The Internal Revenue Service has stated in published rulings that
a variable contract owner will be considered the owner of separate account
assets if the contract owner possesses incidents of ownership in those
assets, such as the ability to exercise investment control over the
assets. The Treasury Department has also announced, in connection with
the issuance of regulations concerning diversification, that those
regulations "do not provide guidance concerning the circumstances in which
investor control of the investments of a segregated asset account may
cause the investor (i.e., the participant), rather than the insurance
company, to be treated as the owner of the assets in the account." This
announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which policyholders may direct
their investments to particular subaccounts without being treated as
owners of the underlying assets." As of the date of this Statement of
Additional Information, no guidance has been issued.
The ownership rights under the Contract are similar to, but
different in certain respects from, those described by the Internal
Revenue Service in rulings in which it was determined that contract owners
were not owners of separate account assets. For example, the Participant
has additional flexibility in allocating Purchase Payments and Account
Value. These differences could result in a Participant's being treated as
the owner of a pro rata portion(s) of the assets of the Separate Account
and/or Fixed Account. In addition, the Company does not know what
standards will be set forth, if any, in the regulations or rulings which
the Treasury Department has stated it expects to issue. The Company
therefore reserves the right to modify the Contract as necessary to
attempt to prevent a Participant from being considered the owner of a pro
rata share of the assets of the Separate Account.
FINANCIAL STATEMENTS
The Company's interim unaudited financial statements as of June
30, 1995 and audited financial statements as of December 31, 1993 and
December 31, 1994 are included herein.
The financial statements of the Company included in this
Statement of Additional Information should be considered only as bearing
on the ability of the Company to meet its obligations under the Contract.
They should not be considered as bearing on the investment performance of
the assets held in the Separate Account.
8
<PAGE>
Statutory Financial Statements
ANNUITY INVESTORS LIFE INSURANCE COMPANY
(formerly Carillon Life Insurance Company)
Years ended December 31, 1994 and 1993
9
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Annuity Investors Life Insurance Company
We have audited the accompanying statutory-basis balance sheets of Annuity
Investors Life Insurance Company (formerly Carillon Life Insurance
Company) as of December 31, 1994 and 1993, and the related statutory-basis
statements of operations, changes in capital and surplus, and cash flows
for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
The Company presents its financial statements in conformity with the
accounting practices prescribed or permitted by the Insurance Department
of the State of Ohio. The variances between such practices and generally
accepted accounting principles and the effects on the accompanying
financial statements are described in Notes A and I.
In our opinion, because of the materiality of the effects of the variances
between generally accepted accounting principles and the accounting
practices referred to in the preceding paragraph, the financial statements
referred to above are not intended to and do not present fairly, in
conformity with generally accepted accounting principles, the financial
position of Annuity Investors Life Insurance Company at December 31, 1994
and 1993, or the results of its operations or its cash flows for the years
then ended. However, in our opinion, the supplementary information
included in Note I presents fairly, in all material respects, capital and
surplus at December 31, 1994 and 1993 and net income for the years then
ended in conformity with generally accepted accounting principles.
Also, in our opinion, the statutory-basis financial statements referred to
above present fairly, in all material respects, the financial position of
Annuity Investors Life Insurance Company at December 31, 1994 and 1993,
and the results of its operations and its cash flows for the years then
ended, in conformity with accounting practices prescribed or permitted by
the Insurance Department of the State of Ohio.
Ernst & Young LLP
March 13, 1995
10
<PAGE>
<TABLE>
<CAPTION>
ANNUITY INVESTORS LIFE INSURANCE COMPANY
BALANCE SHEETS
STATUTORY BASIS
December 31,
------------
1994 1993
---- ----
<S> <C> <C>
ASSETS
Cash and investments:
Bonds - principally at amortized cost
(market value: $7,545,390 and $5,702,563) $8,291,079 $5,679,807
Certificate of deposit due 4/4/95 25,000 25,000
Dreyfus cash management fund 400,660 2,987,908
Cash 79,862 10,909
---------- ----------
Total cash and investments 8,796,601 8,703,624
Investment income due and accrued 150,193 88,464
Federal income tax recoverable 23,181 15,698
---------- ----------
Total assets $8,969,975 $8,807,786
========== ==========
LIABILITIES, CAPITAL AND SURPLUS
Annuity reserves $2,684,376 $2,622,749
Payable to affiliate 11,264 41,101
General expenses due and accrued 3,445 2,538
---------- ----------
Total liabilities 2,699,085 2,666,388
Common stock, $100 par value:
- 25,000 shares authorized
- 20,000 shares issued and outstanding 2,000,000 2,000,000
Gross paid in and contributed surplus 3,350,000 3,350,000
Unassigned surplus 920,890 791,398
---------- ----------
Total capital and surplus 6,270,890 6,141,398
---------- ----------
Total liabilities, capital and surplus $8,969,975 $8,807,786
========== ==========
</TABLE>
See notes to statutory financial statements.
11
<PAGE>
<TABLE>
<CAPTION>
ANNUITY INVESTORS LIFE INSURANCE COMPANY
SUMMARY OF OPERATIONS
STATUTORY BASIS
Year ended December 31,
---------------------
1994 1993
---- ----
<S> <C> <C>
Revenues:
Premiums and annuity considerations $219,308 $111,136
Net investment income 432,932 264,694
------- -------
652,240 375,830
Benefits and expenses:
Increase in aggregate reserves 61,627 1,658,903
Policyholders' benefits 280,517 689,472
Operating expenses and commissions 72,653 68,518
Taxes, licenses and fees 38,951 31,447
Reserve adjustments on reinsurance assumed - (2,281,572)
------- -----------
453,748 166,768
------- -----------
Income from operations before federal income taxes 198,492 209,062
Provision for federal income taxes 69,000 16,781
Net income after federal income taxes
before net realized capital gains 129,492 192,281
Net realized capital gains:
Pretax - 112,990
Capital gains tax - (40,000)
Interest maintenance reserve transfer (net of tax) - 46,737
-------- -------
- 119,727
-------- --------
Net income $129,492 $312,008
======== ========
</TABLE>
See notes to statutory financial statements.
12
<PAGE>
ANNUITY INVESTORS LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
STATUTORY BASIS
Year ended December 31,
-----------------------
1994 1993
---- ----
Common stock:
Balance at beginning and end of period $2,000,000 $2,000,000
========== ==========
Gross paid-in and contributed surplus:
Balance at beginning of year $3,350,000 $3,350,000
========== ==========
Unassigned funds:
Balance at beginning of year $791,398 $376,418
Net income 129,492 312,008
Change in asset valuation reserve - 102,972
----------- -------
Balance at end of year $ 920,890 $ 791,398
=========== ===========
Total capital and surplus $6,270,890 $6,141,398
========== ==========
See notes to statutory financial statements.
13
<PAGE>
<TABLE>
<CAPTION>
ANNUITY INVESTORS LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
STATUTORY BASIS
Year ended December 31,
---------------------
1994 1993
----
<S> <C> <C>
Operating activities:
Premiums and annuity considerations $219,308 $111,136
Funds received for assumption of reserves - 2,663,850
Net investment income 398,729 274,075
Life claims paid - (25,000)
Surrender benefits paid (280,517) (711,857)
Other benefits to policyholders paid - (6,615)
Commissions, expenses and premium and other taxes paid (111,604) (100,385)
Federal income tax paid (76,483) (32,706)
Payments to affiliate (29,837) -
Other expenses paid - (294,169)
-------- ---------
119,596 1,878,329
Investing activities:
Sale, maturity or repayment of bonds - 5,380,219
Sale of stocks - 492,100
Purchase of bonds (2,637,891) (4,866,659)
Purchase of stocks - (439)
----------- -----------
(2,637,891) 1,005,221
----------- -----------
Net increase (decrease) in cash and short-term investments (2,518,295) 2,883,550
Cash and short-term investments at beginning of year 3,023,817 140,267
---------- -------
Cash and short-term investments at end of year $ 505,522 $3,023,817
========== ==========
</TABLE>
See notes to statutory financial statements.
14
<PAGE>
ANNUITY INVESTORS LIFE INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
A. ACCOUNTING POLICIES
-------------------
BASIS OF PRESENTATION Annuity Investors Life Insurance Company ("Annuity
Investors"), formerly Carillon Life Insurance Company, a life insurance
company domiciled in the State of Ohio, is a wholly owned subsidiary of
American Annuity Group, Inc., a publicly traded financial services holding
company of which American Financial Corporation ("AFC") owns 80%. On
November 29, 1994, Annuity Investors was purchased from Great American
Insurance Company, a wholly-owned subsidiary of AFC.
The accompanying financial statements have been prepared in conformity
with accounting practices prescribed or permitted by the National
Association of Insurance Commissioners ("NAIC") and the Insurance
Department of the State of Ohio, which vary in some respects from
generally accepted accounting principles ("GAAP"). The more significant
of these differences are as follows: (a) annuity receipts are accounted
for as revenues versus liabilities; (b) an Interest Maintenance Reserve
("IMR") is provided whereby interest related realized gains and losses are
deferred and amortized into investment income over the life of the
security sold; (c) Asset Valuation Reserves are provided which reclassify
a portion of surplus to liabilities; and (d) investments in bonds
considered "available for sale" (as defined under GAAP) are generally
recorded at amortized cost versus market.
Certain reclassifications have been made to the prior year to conform to
the current year's presentation.
INVESTMENTS Asset values are generally stated as follows: bonds not
backed by loans, at amortized cost using the interest method; short-term
investments are carried at cost which approximates market.
As prescribed by the NAIC, the market value for investments in bonds is
determined by the values included in the Valuations of Securities manual
published by the NAIC's Security Valuation Office. Those values generally
represent quoted market value prices for securities traded in the public
marketplace or analytically determined values of the Securities Valuation
Office.
ANNUITY RESERVES Annuity reserves are developed by actuarial methods and
are determined based on published tables using statutorily specified
interest rates and valuation methods that will provide, in the aggregate,
reserves that are greater than or equal to the minimum amounts required by
law.
REINSURANCE Reinsurance premiums, benefits and expenses are accounted for
on a basis consistent with those used in accounting for the original
policies issued and the terms of the reinsurance contracts.
B. INVESTMENTS
-----------
Bonds at December 31, 1994 and 1993, consisted entirely of publicly traded
U.S. Treasury bonds.
15
<PAGE>
Gross unrealized gains and gross unrealized (losses) on bonds were
approximately $1,000 and ($746,000) in 1994 and $86,000 and ($63,000) in
1993.
There were no realized gains or losses in 1994. Gross realized gains and
gross realized (losses) on bonds were $272,700 and ($177,200) for 1993.
Securities (primarily U.S. Treasury Notes) with a carrying value of $2.1
million at December 31, 1994, were on deposit as required by the insurance
departments of various states.
C. FEDERAL INCOME TAXES
--------------------
Annuity Investors' 1994 federal income tax expense was equal to the
enacted tax rate. In 1993, Annuity Investors' effective tax rate was
different from the enacted rate due principally to the exclusion of tax
exempt interest on federal income tax refunds received and interest
maintenance reserve adjustment.
Annuity Investors' amount of federal income taxes incurred for recoupment
in the event of future losses are approximately $69,000 in 1994, $57,000
in 1993 and $233,000 in 1992.
D. RELATED PARTY TRANSACTIONS
--------------------------
Certain investment, administrative, management, accounting and data
processing services are provided to Annuity Investors through the use of
shared facilities and personnel or under agreements between Annuity
Investors and affiliates.
On December 30, 1993, Annuity Investors entered into a reinsurance
agreement with Great American Life Insurance Company ("GALIC"), an
affiliated Ohio domiciled life and accident and health insurance company.
As a result of the transaction, Annuity Investors assumed $2.6 million in
deferred annuity reserves and received an equivalent amount of assets.
All premium income received in 1994 was assumed reinsurance from GALIC in
accordance with the agreement.
E. DIVIDEND RESTRICTIONS
---------------------
The amount of dividends which can be paid by Annuity Investors without
prior approval of regulatory authorities is subject to restrictions
relating to capital and surplus and net income. Annuity Investors may pay
approximately $627,000 in dividends in 1995, based on capital and surplus,
without prior approval.
F. ANNUITY RESERVES
----------------
At December 31, 1994, all of Annuity Investors' annuity reserves were
subject to discretionary withdrawal without adjustment.
G. CONTINGENT LIABILITIES
----------------------
The increase in the number of insurance companies that are under
regulatory supervision has resulted, and is expected to continue to
16
<PAGE>
result, in increased assessments by state guaranty funds to cover losses
to policyholders of insolvent or rehabilitated insurance companies. Those
mandatory assessments may be partially recovered through a reduction in
future premium taxes in certain states. GALIC is responsible for payment
of all assessments relating to premiums earned in accordance with the
reinsurance agreement discussed in Note D.
H. SELECTED FINANCIAL DATA
-----------------------
The following tables present selected statutory-basis financial data as of
December 31, 1994 and 1993 and for the years then ended for purposes of
complying with paragraph 9 of the Annual Audited Financial Reports in the
General section of the National Association of Insurance Commissioners'
Annual Statement Instructions and agrees to or is included in the amounts
reported in Annuity Investors' 1994 and 1993 Statutory Annual Statements
as filed with the insurance department of the State of Ohio:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Gross investment income earned:
Bonds $ 431,170 $ 244,280
Stocks - 8,165
Short-term investments 18,168 21,998
Aggregate write-ins for investment income 106 27,019
---------- -----------
$ 449,444 $ 301,462
========== ===========
Bonds by class--statement value (A) $8,291,079 $ 5,679,807
========== ===========
Total bonds publicly traded $8,291,079 $ 5,679,807
========== ===========
Short-term investments (book value) $ 425,660 $ 3,012,908
========== ===========
Cash on deposit $ 79,862 $ 10,909
========== ============
Group annuities not fully paid--account balance $2,684,376 $ 2,622,749
========== ============
</TABLE>
(A) All bonds were rated NAIC "1" at December 31, 1994 and 1993.
17
<PAGE>
December 31, 1994
Carrying Market
Value Value
-------- --------
Bonds by maturity:
Due within 1 year or less $1,159,723 $1,157,100
Over 1 year through 5 years 2,229,938 2,071,249
Over 5 years through 10 years 4,901,418 4,317,041
---------- ----------
$8,291,079 $7,545,390
========== ==========
I. VARIANCES FROM GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
-------------------------------------------------------
These financial statements have been presented in conformity with the
accounting practices prescribed or permitted by the insurance department
of the State of Ohio. The following table summarizes the principal
differences between net income and surplus as determined in accordance
with statutory accounting practices and GAAP for the years ended December
31, 1994 and 1993:
<TABLE>
<CAPTION>
Net Income Capital and Surplus
------------------ -------------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
As reported on a statutory basis $129,492 $312,008 $6,270,890 $6,141,398
IMR adjustment - (46,737) - -
Unrealized gain (loss) adjustment - - (485,000) 15,000
--------- -------- ---------- ----------
GAAP basis $129,492 $265,271 $5,785,890 $6,156,398
========= ======== ========== ==========
</TABLE>
J. SUBSEQUENT EVENT (UNAUDITED)
----------------------------
On April 3, 1995, American Premier Group, Inc. ("New American Premier")
acquired 100% of the common stock (79% of the voting stock) of American
Financial Corporation ("AFC"). In the transaction, shareholders of AFC
common stock received approximately 55% of New American Premier voting
common stock.
18
<PAGE>
PART C
Other Information
Item 24. Financial Statements and Exhibits
(a) Financial Statements
All required financial statements are included in Parts A or B of this
Registration Statement.
(b) Exhibits
(1) Resolution of the Board of Directors of Annuity
Investors(SERVICEMARK) Life Insurance Company authorizing
establishment of Annuity Investors(SERVICEMARK) Variable
Account A.
(2) Not Applicable.
(3) (a) Master Agreement among Annuity Investors Life
Insurance Company, AAG Securities, Inc. and _____.
[To Be Supplied.]
(b) Principal Agency Agreement between Annuity Investors
Life Insurance Company and ___________. [To Be
Supplied.]
(c) Distribution Agreement between Annuity Investors Life
Insurance Company and AAG Securities, Inc. [To Be
Supplied.]
(d) Form of Sales Agreement between AAG Securities, Inc.
and another Broker-Dealer. [To Be Supplied.]
(4) Group Contract Form, Certificate Form, and Endorsements.
(a) Group Contract Forms and Endorsements.
(i) Form of Group Flexible Premium Deferred
Annuity Contract.
(ii) Form of Enhanced Group Flexible Premium
Deferred Annuity Contract.
(iii) Form of Loan Endorsement to Group Contract.
(iv) Form of Employer Plan Endorsement to Group
Contract.
(v) Form of Tax Sheltered Annuity Endorsement to
Group Contract.
(vi) Form of Qualified Pension, Profit Sharing and
Annuity Plan Endorsement to Group Contract.
19
<PAGE>
(vii) Form of Long-Term Care Waiver Rider to Group
Contract.
(b) Certificate of Participation Form and Endorsements.
(i) Form of Certificate of Participation.
(ii) Form of Certificate of Participation under
Enhanced Contract.
(iii) Form of Loan Endorsement to Certificate.
(iv) Form of Employer Plan Endorsement to
Certificate.
(v) Form of Tax Sheltered Annuity Endorsement to
Certificate.
(vi) Form of Qualified Pension, Profit Sharing and
Annuity Plan Endorsement to Certificate.
(vii) Form of Long-Term Care Waiver Rider to
Certificate.
(5) (a) Form of Application for Group Flexible Premium
Deferred Annuity Contract.
(b) Form of Participant Enrollment Form under Group
Flexible Premium Deferred Annuity Contract (ERISA).
(c) Form of Participant Enrollment Form under Group
Flexible Premium Deferred Annuity Contract (Non-
ERISA).
(6) (a) Articles of Incorporation of Annuity
Investors(SERVICEMARK) Life Insurance Company.*
(b) Code of Regulations of Annuity Investors(SERVICEMARK)
Life Insurance Company.*
(7) Not Applicable.
(8) (a) Participation Agreement between Annuity Investors Life
Insurance Company and Dreyfus Variable Investment
Fund. [To Be Supplied.]
(b) Participation Agreement between Annuity Investors Life
Insurance Company and Dreyfus Stock Index Fund. [To
Be Supplied.]
(c) Participation Agreement between Annuity Investors Life
Insurance Company and Dreyfus Socially Responsible
Fund. [To Be Supplied.]
20
<PAGE>
(d) Participation Agreement between Annuity Investors Life
Insurance Company and Janus Aspen Series. [To Be
Supplied.]
(e) Participation Agreement between Annuity Investors Life
Insurance Company and Merrill Lynch Variable Series
Funds, Inc. [To Be Supplied.]
(f) Administrative Services Agreement between Annuity
Investors Life Insurance Company and Great American
Life Insurance Company. [To Be Supplied.]
(9) Opinion and Consent of Counsel.
(10) (a) Report of Independent Auditors. [To Be Supplied.]
(b) Consent of Independent Auditors. [To Be Supplied.]
(11) Interim unaudited financial statements of Annuity
Investors(SERVICEMARK) Life Insurance Company as of June 30,
1995. [To Be Supplied.]
(12) Not Applicable.
(13) Not Applicable.
(14) Not Applicable.
------------------
* Filed with Form N-4 on June 2, 1995.
21
<PAGE>
Item 25. Directors and Officers of Annuity Investors(SERVICEMARK) Life
Insurance Company
<TABLE>
<CAPTION>
Principal Positions and Offices
Name Business Address With the Company
---- ---------------- ---------------------
<S> <C> <C>
Robert Allen Adams (1) President, Director
Stephen Craig Lindner (1) Director
William Jack Maney, II (1) Assistant Treasurer and Director
James Michael Mortensen (1) Executive Vice President, Assistant
Secretary and Director
Mark Francis Muething (1) Senior Vice President, Secretary, General
Counsel and Director
Jeffrey Scott Tate (1) Director
Thomas Kevin Liguzinski (1) Senior Vice President
Charles Kent McManus (1) Senior Vice President
Robert Eugene Allen (1) Vice President and Treasurer
Arthur Ronald Greene, III (1) Vice President
Betty Marie Kasprowicz (1) Vice President and Assistant Secretary
Michael Joseph O'Connor (1) Vice President and Chief Actuary
Lynn Edward Laswell (1) Assistant Vice President and Assistant
Treasurer
</TABLE>
___________________________
(1) P.O. Box 5423, Cincinnati, Ohio 45201-5423.
Item 26. Persons Controlled by or Under Common Control With the Depositor
or Registrant.
The Depositor, Annuity Investors(SERVICEMARK) Life Insurance Company,
is wholly owned by American Annuity Group, Inc. The Registrant, Annuity
Investors Separate Account A, is a segregated asset account of Annuity
Investors Life Insurance Company.
The following chart indicates the persons controlled by or under
common control with the Company.
22
<PAGE>
<TABLE>
<CAPTION>
% OF STOCK OWNED
BY IMMEDIATE
STATE OF DATE OF PARENT
AMERICAN FINANCIAL GROUP, INC. DOMICILE INCORP. COMPANY(1) NATURE OF BUSINESS
------------------------------ ---------- -------- --------------- --------------------
<S> <C> <C> <C> <C>
American Financial Corporation Ohio 11/15/55 100 Holding Company
American Barge & Towing Company Ohio 03/25/82 100 Inactive
Spartan Transportation Corporation Ohio 07/19/83 100 Mgmt-River Transportation
Equipment
American Financial Corporation Ohio 08/27/63 100 Inactive
American Money Management Corporation Ohio 03/01/73 100 Investment Management
American Money Management International, N.V.Netherland 05/10/85 100 Securities Management
Antilles
Chiquita Brands International, Inc. (and New Jersey 03/30/99 44.90(2) Production/Processing/
subsidiaries) Distribution of Food Products
Citicasters Inc. Florida 06/18/80 37.49(2) Holding Company
FMI Pennsylvania, Inc. Pennsylvania 11/19/75 100 Holding Company
GACC-340, Inc. Delaware 06/09/88 100 Co-Owner Corporate Aircraft
GACC-N26LB, Inc. Delaware 02/02/88 100 Co-Owner Corporate Aircraft
Citicasters Corp. Delaware 12/18/90 100 Holding Company
Citicasters Co. Ohio 12/22/83 100 Operation of Television/Radio
Stations
Taft-TCI Satellite Services, Inc. Colorado 12/17/81 100 Satellite Communications
Great American Television California 03/19/81 100 Television Program
Productions, Inc. Development
Cine Films, Inc. California 05/15/75 100 Prod./Motion
Picture/Television Films
Cine Guarantors, Inc. California 01/06/71 100 Financial Bonding
Cine Guarantors II, Inc. California 09/04/75 100 Inactive
Great American Merchandising Group, New York 09/04/81 100 Inactive
Inc.
Location Productions, Inc. California 08/07/68 100 Prod./Motion
Picture/Television Films
Location Productions II, Inc. California 05/15/75 100 Prod./Motion
Picture/Television Films
The Sy Fisher Company Agency, Inc. California 07/31/72 100 Inactive
VTTV Productions California 01/30/78 100 Inactive
Dixie Terminal Corporation Ohio 04/23/70 100 Commercial Leasing
Fairmont Holdings, Inc. Ohio 12/15/83 100 Holding Company
Fairmont Pa. Holdings, Inc. Pennsylvania 08/18/83 100 Holding Company
FWC Corporation Ohio 03/16/83 100 Financial Services
Great American Holding Corporation Ohio 11/30/77 100 Holding Company
Great American Insurance Company Ohio 3/7/1872 100 Property/Casualty Insurance
A B I Group, Inc. Minnesota 07/27/78 100 Inactive
American Business Risk Services, Inc. Minnesota 04/19/78 100 Inactive
American Insurance Management Agency, Minnesota 11/16/82 100 Inactive
Inc.
Consolidated Underwriters, Inc. Texas 10/14/80 100 Inactive
Agricultural Excess and Surplus Delaware 02/28/79 100 Excess & Surplus Lines
Insurance Company Insurance
Agricultural Insurance Company Ohio 03/23/05 100 Property/Casualty Insurance
American Alliance Insurance Company Arizona 09/11/45 100 Property/Casualty Insurance
23
<PAGE>
% OF STOCK OWNED
BY IMMEDIATE
STATE OF DATE OF PARENT
AMERICAN FINANCIAL GROUP, INC. DOMICILE INCORP. COMPANY(1) NATURE OF BUSINESS
------------------------------ ---------- -------- --------------- --------------------
American Annuity Group, Inc. Delaware 05/15/8781.42(2) Holding Company
AAG Insurance Agency, Inc. Kentucky 12/06/94 100 Life Insurance Agency
AAG Securities, Inc. Ohio 12/10/93 100 Broker-Dealer
Annuity Investors Life Insurance Ohio 11/31/81 100 Life Insurance Company
Company
GALIC Disbursing Company Ohio 05/31/94 100 Payroll Servicer
Great American Life Insurance Company Ohio 12/15/59 100 Life Insurance
CHATBAR, Inc. Massachusetts 11/02/93 100 Hotel Operator
GALIC Brothers, Inc. Ohio 11/12/93 80 Real Estate Management
Western Pacific Life Insurance California 08/10/67 100 Life Insurance Company
Company
Lifestyle Financial Investments, Inc. Ohio 12/29/93 100 Marketing Services
Lifestyle Financial Investments Ohio 03/07/94 beneficial Life Insurance Agency
Agency of Ohio, Inc. interest
Lifestyle Financial Investments of Indiana 02/24/94 100 Life Insurance Agency
Indiana, Inc.
Lifestyle Financial Investments of Kentucky 10/03/94 100 Insurance Agency
Kentucky, Inc.
Lifestyle Financial Investments of Minnesota 06/10/85 100 Insurance Agency
the Northwest, Inc.
Lifestyle Financial Investments of North 07/13/94 100 Insurance Agency
the Southeast, Inc. Carolina
Retirement Resources Group, Inc. Indiana 02/07/95 100 Insurance Agency
SPELCO (UK) Ltd. United 00/00/00 99 Inactive
Kingdom
SWTC, Inc. Delaware 00/00/00 100 Inactive
Electromag N.V. Belgium 00/00/00 100 Manf. & Sells Electronic
Components
SWTC Hong Kong Ltd. Hong Kong 00/00/00 100 Inactive
Technomil Ltd. Delaware 00/00/00 100 Inactive
American Custom Insurance Services Ohio 07/27/83 100 Management Holding Company
Holding Company
American Custom Insurance Services California 05/18/92 100 Insurance Agency & Brokerage
California, Inc.
Eden Park Insurance Brokers, Inc. California 02/13/90 100 Wholesale Brokerage for
Surplus Lines
Professional Risk Brokers, Inc. Illinois 03/01/90 100 Insurance Agency
Professional Risk Brokers insurance, Massachusetts 04/19/94 100 Surplus Lines Brokerage
Inc.
Professional Risk Brokers of Connecticut 07/09/92 100 Insurance Agency & Brokerage
Connecticut, Inc.
Professional Risk Brokers of Ohio, Ohio 12/17/86 100 Insurance Agency & Brokerage
Inc.
Utility Insurance Services, Inc. Texas 04/06/95 100 (2) Texas Local Recording Agency
Utility Management Services, Inc. Texas 09/07/65 100 Texas Managing General Agency
American Custom Insurance Services Illinois 07/08/92 100 Underwriting Office
Illinois, Inc.
American Empire Surplus Lines Insurance Delaware 07/15/77 100 Excess & Surplus Lines
Company Insurance
American Empire Insurance Company Ohio 11/26/79 100 Property/Casualty Insurance
24
<PAGE>
% OF STOCK OWNED
BY IMMEDIATE
STATE OF DATE OF PARENT
AMERICAN FINANCIAL GROUP, INC. DOMICILE INCORP. COMPANY(1) NATURE OF BUSINESS
------------------------------ ---------- -------- --------------- --------------------
Stonewall Underwriters, Inc. Texas 05/19/75 100 Insurance Agency
Fidelity Excess and Surplus Insurance New Jersey 06/30/87 100 Property/Casualty Insurance
Company
American Financial Enterprises, Inc. Connecticut 1871 82.62(2) Closed End Investment Company
American Insurance Agency, Inc. Kentucky 07/27/67 100 Insurance Agency
American National Fire Insurance Company New York 08/22/47 100 Property/Casualty Insurance
American Special Risk, Inc. Illinois 12/29/81 100 Insurance Broker/Managing
General Agency
ABI Special Risk of Arizona, Inc. Arizona 02/06/90 100 Inactive
American Spirit Insurance Company Indiana 04/05/88 100 Property/Casualty Insurance
OBGC Corporation Florida 11/23/77 80 Real Estate Development
Brothers Property Corporation Ohio 09/08/87 80 Real Estate Investment
Brothers Barrington Corporation Oklahoma 03/18/94 100 Real Estate Holding
Corporation
Brothers Cincinnatian Corporation Ohio 01/25/94 100 Hotel Manager
Brothers Columbine Corporation Oklahoma 03/18/94 100 Real Estate Holding
Corporation
Brothers Landing Corporation Louisiana 02/24/94 100 Real Estate Holding
Corporation
Brothers Pennsylvanian Corporation Pennsylvania 12/23/94 100 Real Estate Holding
Corporation
Brothers Port Richey Corporation Florida 12/06/93 100 Apartment Manager
Brothers Property Management Ohio 09/25/87 100 Real Estate Management
Corporation
Brothers Railyard Corporation Texas 12/14/93 100 Apartment Manager
Crop Managers Insurance Agency, Inc. Kansas 08/09/89 100 Insurance Agency
Dempsey & Siders Agency, Inc. Ohio 05/09/56 100 Insurance Agency
Eagle American Insurance Company Ohio 07/01/87 100 Property/Casualty Insurance
Eden Park Insurance Company Indiana 01/08/90 100 Special Risk Surplus Lines
FCIA Management Company, Inc. New York 09/17/91 79 Servicing Agent
GAI-340, Inc. Delaware 06/09/88 100 Co-Owner Corporate Aircraft
GAI-N26LB, Inc. Delaware 02/02/88 100 Co-Owner Corporate Aircraft
The Gains Group, Inc. Ohio 01/26/82 100 Marketing of Advertising
Great American Lloyd's, Inc. Texas 08/02/83 100 Attorney-in-Fact--Texas
Lloyd's Company
Great American Lloyd's Insurance Company Texas 10/09/79 beneficial Lloyd's Plan Insurer
interest
Great American Management Services, Inc. Ohio 12/05/74 100 Data Processing and Equipment
Leasing
American Payroll Services, Inc. Ohio 02/20/87 100 Payroll Services
Great American Re Inc. Delaware 05/14/71 100 Reinsurance Intermediary
Great American Risk Management, Inc. Ohio 04/21/80 100 Insurance Risk Management
Great Texas County Mutual Insurance Texas 04/29/54 beneficial Property/Casualty Insurance
Company interest
Grizzly Golf Center, Inc. Ohio 11/08/93 100 Operate Golf Courses
Homestead Snacks Inc. California 03/02/79 100 (2) Meat Snack Distribution
Giant Snacks, Inc. Delaware 07/06/89 100 Meat Snack Distribution
Key Largo Group, Inc. Florida 07/28/81 100 Land Developer & Resort
Operator
25
<PAGE>
% OF STOCK OWNED
BY IMMEDIATE
STATE OF DATE OF PARENT
AMERICAN FINANCIAL GROUP, INC. DOMICILE INCORP. COMPANY(1) NATURE OF BUSINESS
------------------------------ ---------- -------- --------------- --------------------
The Real Estate, Ltd. Company at Florida 08/20/85 100 Property Sales
Ocean Reef
Key Largo Group Solid Waste, Inc. Florida 12/01/86 100 Trash Removal
Key Largo Group Utility Company Florida 11/26/84 100 Water & Sewer Utility
Mid-Continent Casualty Company Oklahoma 02/26/47 100 Property/Casualty Insurance
Mid-Continent Insurance Company Oklahoma 08/13/92 100 Property/Casualty Insurance
Oklahoma Surety Company Oklahoma 08/05/68 100 Property/Casualty Insurance
National Interstate Corporation Ohio 01/26/89 51 Holding Company
American Highways Insurance Agency California 05/05/94 100 Insurance Agency
National Interstate Insurance Agency Texas 06/07/89 beneficial Insurance Agency
of Texas, Inc. interest
National Interstate Insurance Agency, Ohio 02/13/89 100 Insurance Agency
Inc.
National Interstate Insurance Company Ohio 02/10/89 100 Property/Casualty Insurance
North America Livestock, Inc. Florida 12/03/82 100 Managing General Agency
Penn Central Reinsurance Company Ohio 12/22/88 100 Property/Casualty Reinsurance
Pointe Apartments, Inc. Minnesota 06/24/93 100 Real Estate Holding
Corporation
Seven Hills Insurance Company New York 06/30/32 100 Property/Casualty Reinsurance
Stonewall Insurance Company Alabama 02/18/66 100 Property/Casualty Insurance
Stonewall Surplus Lines Insurance Delaware 01/12/82 100 Excess & Surplus Lines
Company Insurance
Tamarack American, Inc. Delaware 06/10/86 100 Management Holding Company
Transport Insurance Company Ohio 05/25/76 100 Property/Casualty Insurance
American Commonwealth Development Texas 07/23/63 100 Real Estate Development
Company
ACDC Holdings Corporation Texas 05/04/81 100 Real Estate Development
Spring Park Development Company Texas 03/31/71 50 Real Estate Holding Co. (Jt.
Venture)
Instech Corporation Texas 09/02/75 100 Claim & Claim Adjustment
Services
TICO Insurance Company Ohio 06/03/80 100 Property/Casualty Insurance
Transport Managing General Agency, Texas 05/19/89 100 Managing General Agency
Inc.
Transport Insurance Agency, Inc. Texas 08/21/89 beneficial Insurance Agency
interest
Transport Underwriters Association California 05/11/45 100 Holding Company/Agency
One East Fourth, Inc. Ohio 02/03/64 100 Commercial Leasing
Pioneer Carpet Mills, Inc. Ohio 04/29/76 100 Carpet Manufacturing
Provident Travel Corporation Ohio 07/09/84 100 Travel Agency
TEJ Holdings, Inc. Ohio 12/04/84 100 Real Estate Holdings
TEJ II, Inc. Delaware 10/28/94 100 General Partner
American Financial Warrant Holding Limited Delaware 10/28/94 partnership Securities Holder
Partnership interest
Three East Fourth, Inc. Ohio 08/10/66 100 Commercial Leasing
American Premier Underwriters, Inc. Pennsylvania 1846 100 Diversified
Pennsylvania Company Delaware 12/05/58 100 Holding Company
Atlanta Casualty Company Illinois 06/13/72 100 (2) Property/Casualty Insurance
American Premier Insurance Company Indiana 11/30/89 100 Property/Casualty Insurance
Atlanta Specialty Insurance Company Iowa 02/06/74 100 Property/Casualty Insurance
26
<PAGE>
% OF STOCK OWNED
BY IMMEDIATE
STATE OF DATE OF PARENT
AMERICAN FINANCIAL GROUP, INC. DOMICILE INCORP. COMPANY(1) NATURE OF BUSINESS
------------------------------ ---------- -------- --------------- --------------------
Mr. Agency of Georgia, Inc. Georgia 04/01/77 100 Insurance Agency
Atlanta Casualty General Agency, Inc. Texas 03/15/61 100 Managing General Agency
Atlanta Insurance Brokers, Inc. Georgia 02/06/71 100 Insurance Agency
Treaty House, Ltd. (d/b/a Mr. Budget) Nevada 11/02/71 100 Insurance Premium Finance
Buckeye Management Company Delaware 09/18/86 100 General Partner/Manager of
Pipeline l.p.
Buckeye Pipe Line Company Delaware 09/19/86 100 Pipeline Manager
Great Southwest Corporation Delaware 10/25/78 100 Real Estate Developer
World Houston, Inc. Delaware 08/17/77 100 Real Estate Developer
Infinity Insurance Company Florida 07/09/55 100 Property/Casualty Insurance
Infinity Agency of Texas, Inc. Texas 07/15/92 100 Managing General Agency
The Infinity Group, Inc. Indiana 07/22/92 100 Insurance Holding Company
Infinity Select Insurance Company Indiana 06/11/91 100 Property/Casualty Insurance
Infinity Southern Insurance Corporation Alabama 08/05/92 100 Property/Casualty Insurance
Leader National Insurance Company Ohio 03/20/63 100 Property/Casualty Insurance
Budget Insurance Premiums, Inc. Ohio 02/14/64 100 Premium Finance Company
Leader National Agency, Inc. Ohio 04/05/63 100 Brokering Agent
Leader National Agency of Texas, Inc. Texas 01/25/94 100 Managing General Agency
Leader National Insurance Agency of Arizona 12/05/73 100 Brokering Agent
Arizona
Leader Preferred Insurance Company Ohio 11/07/94 100 Property/Casualty Insurance
Leader Specialty Insurance Company Indiana 03/10/94 100 Property/Casualty Insurance
PCC Hotel, Inc. Delaware 07/22/83 100 Inactive
PCC-N26LB, Inc. Delaware 02/02/88 100 Co-Owner Corporate Aircraft
PCC Technical Industries, Inc. California 03/07/55 100 Holding Company
ESC, Inc. California 11/02/62 100 Connector Accessories
Marathon Manufacturing Companies, Inc. Delaware 11/18/83 100 Holding Company
Marathon Battery Company Delaware 08/18/69 100 Inactive
Marathon Manufacturing Company Delaware 12/07/79 100 Inactive
Marathon Flite-Tronics Company Delaware 06/01/81 100 Inactive
Old MPT Company Delaware 11/18/83 100 Inactive
PCC Maryland Realty Corp. Maryland 08/18/93 100 Real Estate Holding Company
Penn Camarillo Realty Corp. California 11/24/92 100 Real Estate Holding Company
PCC-340, Inc. Delaware 06/09/88 100 Co-Owner Corporate Aircraft
Penn Central UK Limited United 10/28/92 100 Insurance Holding Company
Kingdom
Insurance (GB) Limited United 05/13/92 100 Property/Casualty Insurance
Kingdom
Putnam Holdings, Inc. Delaware 06/06/84 100 Inactive
Putnam Sub, Inc. Delaware 01/03/72 100 Inactive
Republic Indemnity Company of America California 12/05/72 100 Workers' Compensation
Insurance
Republic Indemnity Company of California California 10/13/82 100 Workers' Compensation
Insurance
Risico Management Corporation Delaware 01/10/89 100 Risk Management
Telsta Network Services, Inc. Delaware 10/12/84 100 Inactive
Windsor Insurance Company Indiana 11/05/87 100 (2) Property/Casualty Insurance
American Deposit Insurance Company Oklahoma 12/28/66 100 Property/Casualty Insurance
Granite Finance Co., Inc. Texas 11/09/65 100 Premium Financing
Coventry Insurance Company Ohio 09/05/89 100 Property/Casualty Insurance
27
<PAGE>
% OF STOCK OWNED
BY IMMEDIATE
STATE OF DATE OF PARENT
AMERICAN FINANCIAL GROUP, INC. DOMICILE INCORP. COMPANY(1) NATURE OF BUSINESS
------------------------------ ---------- -------- --------------- --------------------
El Aguila Compania de Seguros, S.A. de Mexico 11/24/94 100 (2) Property/Casualty Insurance
C.V.
Moore Group Inc. Georgia 12/19/62 100 Insurance Holding
Company/Agency
Casualty Underwriters, Inc. Georgia 10/01/54 51 Insurance Agency
Dudley L. Moore Insurance, Inc. Louisiana 03/30/78 beneficial Insurance Agency
interest
Hallmark General Insurance Agency, Oklahoma 06/16/72 beneficial Insurance Agency
Inc. interest
Middle Tennessee Underwriters, Inc. Tennessee 11/14/69 100 Insurance Agency
Insurance Finance Company Tennessee 01/03/62 100 Premium Financing
Windsor Group, Inc. Georgia 05/23/91 100 Insurance Holding Company
Regal Insurance Company Indiana 11/05/87 100 Property/Casualty Insurance
Texas Windsor Group, Inc. Texas 06/23/88 100 Insurance Agency
PCC Real Estate, Inc. New York 12/15/86 100 Holding Company
PCC Billboard Realty Corp. New York 12/15/86 100 Real Estate Developer
PCC Chicago Realty Corp. New York 12/23/86 100 Real Estate Developer
PCC Fordham Realty Corp. New York 10/16/86 100 Real Estate Developer
PCC Gun Hill Realty Corp. New York 12/18/85 100 Real Estate Developer
PCC Irvington Realty Corp. New York 10/15/85 100 Real Estate Developer
PCC Michigan Realty, Inc. Michigan 11/09/87 100 Real Estate Developer
PCC Scarsdale Realty Corp. New York 06/01/86 100 Real Estate Developer
Scarsdale Depot Associates, L.P. Delaware 05/05/89 80 Real Estate Developer
PCC Tuckahoe Realty Corp. New York 02/24/86 100 Real Estate Developer
Penn Central Energy Management Company Delaware 05/11/87 100 Energy Operations Manager
The Ann Arbor Railroad Company Michigan 1895 99 Inactive
The Associates of the Jersey Company New Jersey 1804 100 Inactive
Delbay Corporation Delaware 12/27/62 100 Inactive
The Indianapolis Union Railway Company Indiana 1872 100 Inactive
Lehigh Valley Railroad Company Pennsylvania 1846 100 Inactive
The New York and Harlem Railroad Company New York 1831 97 Inactive
The Owasco River Railway, Inc. New York 1881 100 Inactive
Penn Central Properties, Inc. Pennsylvania 12/27/82 100 Pennsylvania Real Estate
Penn Towers, Inc. Pennsylvania 04/27/59 100 Inactive
Terminal Realty Penn Co. District of 09/23/68 100 Inactive
Timberglen Limited United 10/28/92 100 Investments
Kingdom
United Railroad Corp. Delaware 11/25/81 100 Inactive
Waynesburg Southern Railroad Company Pennsylvania 09/01/66 100 Inactive
The Michigan Central Railroad Company Michigan 12/30/01 100 Inactive
Detroit Manufacturers Railroad Company Michigan 01/30/02 82 Inactive
Pennsylvania-Reading Seashore Line New Jersey 06/14/01 66.67 Inactive
Pittsburgh and Cross Creek Railroad Company Pennsylvania 08/14/70 83 Inactive
(1) Except Director's Qualifying Shares.
(2) Total percentage owned by parent shown and by other affiliated company(ies).
</TABLE>
28
<PAGE>
Item 27. Number of Certificate Owners
Not Applicable.
Item 28. Indemnification
(a) The Code of Regulations of Annuity Investors Life Insurance
Company provide in Article V follows:
The Corporations shall, to the full extent permitted by the General
Corporation Law of Ohio, indemnify any person who is or was a
director or officer of the Corporation and whom it may indemnify
pursuant thereto. The Corporation may, within the sole discretion of
the Board of Directors, indemnify in whole or in part any other
persons whom it may indemnify pursuant thereto.
Insofar as indemnification for liability arising under the Securities
Act of 1933 ("1933 Act") may be permitted to directors, officers and
controlling person of the Depositor pursuant to the foregoing provisions,
or otherwise, the Depositor has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the 1933 Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by the Depositor of expenses incurred or paid by the
director, officer or controlling person of the registrant 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 Depositor 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 1933 Act and will be governed
by the final adjudication of such issue.
(b) The directors and officers of Annuity Investors(SERVICEMARK) Life
Insurance Company are covered under a Directors and Officers Reimbursement
Policy. Under the Reimbursement Policy, directors and officers are
indemnified for loss arising from any covered claim by reason of any
Wrongful Act in their capacities as directors or officers, except to the
extent the Company has indemnified them. In general, the term "loss"
means any amount which the directors or officers are legally obligated to
pay for a claim for Wrongful Acts. In general, the term "Wrongful Acts"
means any breach of duty, neglect, error, misstatement, misleading
statement, omission or act by a director or officer while acting
individually or collectively in their capacity as such claimed against
them solely by reason of their being directors and officers. The limit of
liability under the program is $20,000,000 for the policy year ending
September 1, 1995. The primary policy under the program is with National
Union Fire Insurance Company of Pittsburgh, PA. in the name of American
Premier Underwriters, Inc.
Item 29. Principal Underwriter
AAG Securities, Inc. is the underwriter and distributor of the
Contracts as defined in the Investment Company Act of 1940 ("1940 Act").
29
<PAGE>
(a) AAG Securities, Inc. does not act as a principal underwriter,
depositor, sponsor or investment adviser for any investment company other
than Annuity Investors Variable Account A.
(b) Directors and Officers of AAG Securities, Inc.
Name and Principal Position with
Business Address AAG Securities, Inc.
------------------ --------------------
Thomas Kevin Liguzinski (1) Chief Executive Officer and
Director
Mark Francis Muething (1) Vice President, Secretary and
Director
William Jack Maney, II (1) Director
Jeffrey Scott Tate (1) Director
James Medford Tarkington (1) President
Andrew Conrad Bambeck, III (1) Vice President
William Claire Bair, Jr. (1) Treasurer
__________________________
(1) 250 East Fifth Street, Cincinnati, Ohio 45202
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts and records required to be maintained by Section 31(a) of
the 1940 Act and the rules under it are maintained by Lynn E. Laswell,
Assistant Vice President, of the Company at the Administrative Office.
Item 31. Management Services
Not applicable.
Items 32. Undertakings
(a) Registrant undertakes that it will file a post-effective amendment
to this registration statement as frequently as necessary to ensure
that the audited financial statements in the registration statement
are never more than 16 months old for so long as payments under the
variable annuity contracts may be accepted.
(b) Registrant undertakes that it will include either (1) as part of
any application to purchase a Certificate offered by the
Prospectus, a space that an applicant can check to request a
Statement of Additional Information, or (2) a post card or similar
written communication affixed to or included in the Prospectus that
30
<PAGE>
the applicant can remove to send for a Statement of Additional
Information.
(c) Registrant undertakes to deliver any Prospectus and Statement of
Additional Information and any financial statements required to be
made available under this Form promptly upon written or oral
request to the Company at the address or phone number listed in the
Prospectus.
31
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Registrant certifies that it has caused this Pre-
Effective Amendment No. 2 to its Registration Statement to be signed on
its behalf by the undersigned in the City of Cincinnati, State of Ohio on
the 8th day of November, 1995.
ANNUITY INVESTORS(SERVICEMARK) VARIABLE ACCOUNT A
(REGISTRANT)
By: /s/ Robert Allen Adams
-----------------------------------------------
Robert Allen Adams
Chairman of the Board, President
and Director, Annuity Investors
Life Insurance Company
ANNUITY INVESTORS(SERVICEMARK) LIFE INSURANCE COMPANY
(DEPOSITOR)
By: /s/ Robert Allen Adams
-----------------------------------------------
Robert Allen Adams
Chairman of the Board, President
and Director
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>
/s/ Robert Allen Adams Principal Executive November 8, 1995
------------------------- Officer, Director
Robert Allen Adams
/s/ Robert Eugene Allen Principal Financial November 8, 1995
------------------------- Officer
Robert Eugene Allen
/s/ Lynn Edward Laswell Principal Accounting November 8, 1995
------------------------- Officer
Lynn Edward Laswell
/s/ Stephen Craig Lindner Director November 8, 1995
-------------------------
Stephen Craig Lindner
32
<PAGE>
Director
-------------------------
William Jack Maney, II
/s/ James Michael Mortenson Director November 8, 1995
---------------------------
James Michael Mortenson
/s/ Mark Francis Muething Director November 8, 1995
--------------------------
Mark Francis Muething
Director
--------------------------
Jeffrey Scott Tate
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
-------------
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C>
(1) Resolution of the Board of Directors of Annuity
Investors(SERVICEMARK) Life Insurance Company authorizing
establishment of Annuity Investors(SERVICEMARK) Variable
Account A
(4)(a)(i) Form of Group Flexible Premium Deferred Annuity Contract
(4)(a)(ii) Form of Enhanced Group Flexible Premium Deferred Annuity
Contract
(4)(a)(iii) Form of Loan Endorsement to Group Contract
(4)(a)(iv) Form of Employer Plan Endorsement to Group Contract
(4)(a)(v) Form of Tax Sheltered Annuity Endorsement to Group Contract
(4)(a)(vi) Form of Qualified Pension, Profit Sharing and Annuity Plan
Endorsement to Group Contract
(4)(a)(vii) Form of Long-Term Care Waiver Rider to Group Contract
(4)(b)(i) Form of Certificate of Participation
(4)(b)(ii) Form of Certificate of Participation under Enhanced Contract
(4)(b)(iii) Form of Loan Endorsement to Certificate
(4)(b)(iv) Form of Employer Plan Endorsement to Certificate
(4)(b)(v) Form of Tax Sheltered Annuity Endorsement to Certificate
(4)(b)(vi) Form of Qualified Pension, Profit Sharing and Annuity Plan
Endorsement to Certificate
(4)(b)(vii) Form of Long-Term Care Waiver Rider to Certificate
(5)(a) Form of Application for Group Flexible Premium Deferred Annuity
Contract
(5)(b) Form of Participant Enrollment Form under Group Flexible
Premium Deferred Annuity Contract (ERISA)
<PAGE>
Exhibit No. Description of Exhibit
----------- ----------------------
(5)(c) Form of Participant Enrollment Form under Group Flexible
Premium Deferred Annuity Contract (Non-ERISA)
(6)(a) Articles of Incorporation of Annuity Investors(SERVICEMARK)
Life Insurance Company*
(6)(b) Code of Regulations of Annuity Investors(SERVICEMARK) Life
Insurance Company*
(9) Opinion and Consent of Counsel
________________
</TABLE>
* Filed with Form N-4 on June 2, 1995.
<PAGE>
<PAGE>
EXHIBIT (1)
ACTION TAKEN IN WRITING BY ALL MEMBERS OF THE
BOARD OF DIRECTORS OF
ANNUITY INVESTORS LIFE INSURANCE COMPANY
PURSUANT TO SECTION 1701.54 OF THE OHIO REVISED CODE
----------------------------------------------------
The undersigned, being all of the Directors of Annuity Investors
Life Insurance Company, an Ohio corporation (the "Corporation"), do hereby
adopt the following resolutions by unanimous written consent pursuant to
Section 1701.54 of the Ohio Revised Code on May 26, 1995.
WHEREAS, Section 3907.15 of the Ohio Revised Code permits the
establishment of one or more separate accounts;
WHEREAS, It is desired that the Corporation have a funding
vehicle for its variable annuity contracts;
NOW, THEREFORE BE IT
RESOLVED, That pursuant to Section 3907.15 of the Ohio Revised
Code, a separate account referred to herein as "Annuity Investors Variable
Account A" ("Variable Account A") is hereby established and empowered to:
a. to the extent required by the Investment Company Act of
1940, register under such Act and make applications for
such exemptions or orders under such provisions thereof
as may appear to be necessary or desirable;
b. to the extent required by the Securities Act of 1933,
effect one or more registrations thereunder and, in
connection with such registrations, file one or more
registration statements thereunder, or amendments
thereto, including any documents or exhibits required as
a part thereof;
c. provide for the sale of contracts issued by the Corpora-
tion as the officers of the Corporation may deem neces-
sary and appropriate, to the extent such contracts
provide for allocation of amounts to Variable Account A;
d. provide for custodial or depository arrangements for
assets allocated to Variable Account A as the officers of
the Corporation may deem necessary and appropriate
including self-custodianship and safekeeping arrangements
by the Corporation;
e. select an independent public accountant to audit the
books and records of Variable Account A;
<PAGE>
- 2 -
f. invest or reinvest the assets of Variable Account A in
securities issued by one or more investment companies
registered under the Investment Company Act of 1940 or
other appropriate securities, as the officers of the
Corporation may designate;
g. divide Variable Account A into divisions and subdivisions
with each division or subdivision investing in shares of
designated investment companies or portfolios or classes
thereof or other appropriate securities; and
h. perform such additional functions and take such addi-
tional action as may be necessary or desirable to carry
out the foregoing and the intent and purpose thereof;
FURTHER RESOLVED, That the assets of Variable Account A shall be
derived solely from (a) sale of variable annuity products; (b) funds
corresponding to dividend accumulation with respect to investment of such
assets, and (c) advances made by the Corporation in connection with the
operation of Variable Account A;
FURTHER RESOLVED, That pursuant to Section 3907.15 of the Ohio
Revised Code the assets of Variable Account A shall be legally segregated
and that part of the assets of Variable Account A with a value equal to
the reserves and other variable annuity contract liabilities shall not be
chargeable with the liabilities arising out of any other business of the
Corporation;
FURTHER RESOLVED, That this Corporation shall maintain in
Variable Account A assets with a fair market value at least equal to the
statutory valuation reserves for the variable annuity contracts;
FURTHER RESOLVED, That the officers of the Corporation be, and
each of them hereby is, authorized in their discretion as they may deem
appropriate from time to time in accordance with applicable laws and
regulations (a) to modify or eliminate any such divisions or subdivisions,
(b) to change the designation of Variable Account A to another
designation, and (c) to designate further any division or subdivision
thereof, and (d) to deregister Variable Account A under the Investment
Company Act of 1940 and to deregister the contracts or units of interest
thereunder under the Securities Act of 1933;
FURTHER RESOLVED, That the officers of the Corporation be, and
each of them hereby is, authorized to invest cash from the Corporation's
general account in Variable Account A or in any division thereof as may be
deemed necessary or appropriate to facilitate the commencement of Variable
Account A's operations or to meet any minimum capital requirements under
the Investment Company Act of 1940, and to transfer cash or securities
from time to time between the Corporation's general account and Variable
Account A as deemed necessary or appropriate so long as such transfers are
not prohibited by law and are consistent with the terms of the variable
<PAGE>
- 3 -
annuity contracts issued by the Corporation providing for allocations to
Variable Account A;
FURTHER RESOLVED, That the income, gains, and losses (whether or
not realized) from assets allocated to Variable Account A shall, in
accordance with any variable annuity contracts issued by the Corporation
providing for allocations to Variable Account A, be credited to or charged
against such Separate Account without regard to the other income, gains,
or losses of the Corporation;
FURTHER RESOLVED, That authority is hereby delegated to the Chief
Executive Officer or the President of the Corporation to adopt procedures
providing for, among other things, criteria by which the Corporation shall
institute procedures to provide for a pass-through of voting rights to the
owners of variable annuity contracts issued by the Corporation providing
for allocation to Variable Account A with respect to the shares of any
investment companies which are held in Variable Account A;
FURTHER RESOLVED, That the officers of the Corporation are
authorized and directed, with the assistance of accountants, legal
counsel, and other consultants, to prepare and execute any necessary
agreements to enable Variable Account A to invest or reinvest the assets
of Variable Account A in securities issued by any investment companies
registered under the Investment Company Act of 1940, or other appropriate
securities as the officers of the Corporation may designate pursuant to
the provisions of the variable annuity contracts issued by the Corporation
providing for allocations to Variable Account A.
FURTHER RESOLVED, The fiscal year of Variable Account A shall end
on the 31st day of December each year;
FURTHER RESOLVED, That the officers of the Corporation, with the
assistance of accountants, legal counsel, and other consultants, are
authorized to prepare, execute, and file all periodic reports required
under the Investment Company Act of 1940 and the Securities Exchange Act
of 1934;
FURTHER RESOLVED, That the Corporation may register under the
Securities Act of 1933 variable annuity contracts, or units of interest
thereunder, under which amounts will be allocated by the Corporation to
Variable Account A to support reserves for such contracts and, in
connection therewith, that the officers of the Corporation be, and each of
them hereby is, authorized, with the assistance of accountants, legal
counsel, and other consultants, to prepare, execute, and file with the
Securities and Exchange Commission, in the name and on behalf of the
Corporation, registration statements under the Securities Act of 1933,
including prospectuses, supplements, exhibits, and other documents
relating thereto, and amendments to the foregoing, in such form as the
officer executing the same may deem necessary or appropriate;
<PAGE>
- 4 -
FURTHER RESOLVED, That the officers of the Corporation be, and
each of them hereby is, authorized, with the assistance of accountants,
legal counsel, and other consultants, to take all actions necessary to
register Variable Account A as a unit investment trust under the
Investment Company Act of 1940 and to take such related actions as they
deem necessary and appropriate to carry out the foregoing;
FURTHER RESOLVED, That the officers of the Corporation be, and
each of them hereby is, authorized to prepare, execute, and file, with the
assistance of accountants, legal counsel, and other consultants, with the
Securities and Exchange Commission applications and amendments thereto for
such exemptions from or orders under the Investment Company Act of 1940,
and to request from the Securities and Exchange Commission no action and
interpretative letters as they may from time to time deem necessary or
desirable;
FURTHER RESOLVED, That the General Counsel of the Corporation is
hereby appointed as agent for service under any such registration
statement and is duly authorized to receive communications and notices
from the Securities and Exchange Commission with respect thereto and to
exercise powers given to such agent by the Securities Act of 1933 and the
rules thereunder, and any other necessary acts;
FURTHER RESOLVED, That the officers of the Corporation be, and
each of them hereby is, authorized, with the assistance of accountants,
legal counsel, and other consultants, to effect in the name of and on
behalf of the Corporation all such registrations, filings, and
qualifications under blue sky or other applicable securities laws and
regulations and under insurance securities laws and insurance laws and
regulations of such states and other jurisdictions, as they may deem
necessary or appropriate with respect to the Corporation and with respect
to any variable annuity contracts under which amounts will be allocated by
the Corporation to Variable Account A to support reserves for such
contracts; such authorization shall include registration, filing, and
qualification of the Corporation and of said contracts, as well as
registration, filing, and qualification of officers, employees, and agents
of the Corporation as brokers, dealers, agents, salesmen, or otherwise;
and such authorization shall also include, in connection therewith,
authority to prepare, execute, acknowledge, and file all such
applications, applications for exemptions, certificates, affidavits,
covenants, consents to service of process, and other instruments and to
take all such action as the officer executing the same or taking such
action may deem necessary or desirable;
FURTHER RESOLVED, That the officers of the Corporation be, and
each of them hereby is, authorized to execute and deliver all such
documents and papers and to do or cause to be done all such acts and
things as they may deem necessary or desirable to carry out the foregoing
resolutions and the intent and purpose thereof.
<PAGE>
- 5 -
Signed at Cincinnati, Ohio this 26th day of May, 1995.
/s/ Robert A. Adams
-------------------------------
/s/ S. Craig Lindner
-------------------------------
/s/ William J. Maney
-------------------------------
/s/ James M. Mortensen
-------------------------------
/s/ Mark F. Muething
-------------------------------
/s/ Jeffrey S. Tate
-------------------------------
<PAGE>
<PAGE>
Exhibit (4)(a)(i)
Group Flexible Premium Deferred Annuity Contract
In consideration of the application, the enrollment forms of participants
hereunder ("Participants"), and the payment of Purchase Payments for the
benefit of Participants, we have issued this Group Flexible Premium
Deferred Annuity Contract ("Contract") to the Contract Owner identified on
the Contract Specifications page, effective as of the Contract Effective
Date and subject to all of the terms and conditions set out on the
following pages. As you read through this Contract, please note that the
words "we", "us", "our", and "Company" refer to Annuity Investors Life
Insurance Company. The words "you" and "your" refer to the Contract
Owner.
/s/ Betty Kasprowicz /s/ James M. Mortenson
-------------------- --------------------------
Assistant Secretary Executive Vice President
ANNUITY INVESTORS LIFE INSURANCE COMPANY
(A Stock Insurance Company)
Nonparticipating
ANNUITY BENEFITS AND OTHER VALUES DESCRIBED IN THIS CONTRACT, WHEN BASED
ON THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT, MAY INCREASE OR
DECREASE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNTS. NO MINIMUM
CONTRACT VALUE IS GUARANTEED, EXCEPT FOR AMOUNTS IN THE FIXED ACCOUNT.
<PAGE>
CONTRACT SPECIFICATIONS
CONTRACT OWNER
CONTRACT NUMBER
CONTRACT EFFECTIVE DATE
--------------------------------------------------------------------
SEPARATE ACCOUNT: Annuity Investors Variable Account A
----------------
Following is a list of the Funds in which the currently available Sub-
Accounts invest:
[Janus Aspen Series Aggressive Growth Portfolio]
[Janus Aspen Series Worldwide Growth Portfolio]
[Janus Aspen Series Balanced Portfolio]
[Janus Aspen Series Short-term Bond Portfolio]
[Dreyfus Variable Investment Fund's Capital Appreciation Portfolio]
[Dreyfus Socially Responsible Growth Fund]
[Dreyfus Stock Index Fund]
[Merrill Lynch Variable Series Basic Value Focus Fund]
[Merrill Lynch Variable Series Global Strategy Focus Fund]
[Merrill Lynch Variable Series High Current Income Fund]
[Merrill Lynch Variable Series Domestic Money Market Fund]
FIXED ACCOUNT:
-------------
Following is a list of the currently available Fixed Account options, with
guarantee periods as may be applicable:
Fixed Accumulation Account Option
[Fixed Account Option One-Year Guarantee Period]
[Fixed Account Option Three-Year Guarantee Period]
[Fixed Account Option Five-Year Guarantee Period]
Minimum guaranteed interest rate credited to the Fixed Account: Three
percent (3 %) effective annual rate.
TRANSFER FEE: [$25] per transfer in excess of 12 in any Certificate Year.
------------
2
<PAGE>
CONTINGENT DEFERRED SALES CHARGE: An amount deducted on each partial or
full surrender of a Purchase Payment, as follows:
Number of full years elapsed
between
the date of receipt of a Contingent Deferred Sales Charge as
Purchase Payment a percentage of the associated
and date Written Request for Purchase Payment
surrender is received surrendered
------------------------------- ------------------------------------
0 7%
1 6%
2 5%
3 4%
4 3%
5 2%
6 1%
7+ 0%
CERTIFICATE MAINTENANCE FEE: [$25]
---------------------------
MORTALITY AND EXPENSE RISK CHARGE: A charge equal to an effective annual
rate of [1.25 %] of the daily Net Asset Value of the Sub-Accounts.
ADMINISTRATION CHARGE: A charge equal to an effective annual rate of
[0.00%] of the daily Net Asset Value of the Sub-Accounts.
TERMINATION: We reserve the right to terminate any Participant's interest
under this Contract, if at any time the Account Value of his/her
Certificate is less than $500 and no Purchase Payment has been received by
us for at least two years.
[We reserve the right to terminate this Contract, if _____________]
INQUIRIES: For information, write to:
--------- -------------------------
Variable Annuity Services
Annuity Investors Life Insurance Company
Post Office Box 5423
Cincinnati, Ohio 45201-5423
3
<PAGE>
INDEX Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Entire Contract . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Participant Cerificate . . . . . . . . . . . . . . . . . . . . . . 8
Changes -- Waivers . . . . . . . . . . . . . . . . . . . . . . . . 8
Nonparticipating . . . . . . . . . . . . . . . . . . . . . . . . . 8
Misstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Facility of Payment . . . . . . . . . . . . . . . . . . . . . . . . 8
Required Proof . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Reqired Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Incontestability . . . . . . . . . . . . . . . . . . . . . . . . . 9
Discharge of Liability . . . . . . . . . . . . . . . . . . . . . . 9
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
PURCHASE PAYMENT(S) . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Allocation of Purchase Payment(s) . . . . . . . . . . . . . . . . . 9
No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
FIXED ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Fixed Account . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Fixed Account Value . . . . . . . . . . . . . . . . . . . . . . . . 10
SEPARATE ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
General Description . . . . . . . . . . . . . . . . . . . . . . . . 11
Sub-Accounts of the Separate Account . . . . . . . . . . . . . . . 11
Valuation of Assets . . . . . . . . . . . . . . . . . . . . . . . . 11
Variable Account Value . . . . . . . . . . . . . . . . . . . . . . 11
Accumulation Unit Value . . . . . . . . . . . . . . . . . . . . . . 12
TRANSFERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
FEES AND CHARGES . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Mortality and Expense Risk Charge . . . . . . . . . . . . . . . . . 13
Administration Charge . . . . . . . . . . . . . . . . . . . . . . . 13
Certificate Maintenance Fee . . . . . . . . . . . . . . . . . . . . 13
SURRENDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Surrender Value . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Suspension or Delay in Payment of Surrender . . . . . . . . . . . . 14
OWNER AND BENEFICIARY PROVISIONS . . . . . . . . . . . . . . . . . . . 14
Ownership of Separate Account . . . . . . . . . . . . . . . . . . . 14
Ownership of Group Contract and Particpant Account . . . . . . . . 14
Transfer and Assignment . . . . . . . . . . . . . . . . . . . . . 14
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
DEATH BENEFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4
<PAGE>
Death of Participant . . . . . . . . . . . . . . . . . . . . . . . 15
Death Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SETTLEMENT OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Annuity Commencement Date . . . . . . . . . . . . . . . . . . . . . 16
Election of Settlement Option . . . . . . . . . . . . . . . . . . . 16
Annuity Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Fixed Dollar Annuity Benefit . . . . . . . . . . . . . . . . . . . 16
Variable Dollar Annuity Benefit . . . . . . . . . . . . . . . . . . 16
Settlement Options . . . . . . . . . . . . . . . . . . . . . . . . 17
Minimum Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Settlement Option Tables . . . . . . . . . . . . . . . . . . . . . 18
5
<PAGE>
DEFINITIONS
Account(s): The Sub-Account(s) and/or the Fixed Account options.
Account Value: The aggregate value of a Participant's interest in the
Sub-Account(s) and the Fixed Account options as of the end of any
Valuation Period. The value of a Participant's interest in all Sub-
Accounts is his or her "Variable Account Value," and the value of a
Participant's interest in all Fixed Account options is his or her "Fixed
Account Value."
Accumulation Period: The period prior to the Annuity Commencement Date of
a Participant, during which he or she is eligible for benefits under this
Contract.
Accumulation Unit: A unit of measurement used to calculate the values of
the Sub-Account(s) prior to the Annuity Commencement Date.
Administrative Office: The home office of the Company or any other office
which we may designate for administration.
Age: Age as of most recent birthday.
Annuitant: For each participation interest under this Contract, the
Annuitant is the Participant, and is the person on whose life Annuity
Benefit payments are based.
Annuity Benefit: Periodic payments made by the Company under a Settlement
Option, which payments commence on or after the Annuity Commencement Date
and continue during the Annuity Payment Period, for the life of a person
or for a specific period. A Variable Dollar Annuity Benefit will provide
payments that vary in amount. Fixed Dollar Annuity Benefit payments
remain constant.
Annuity Commencement Date: For each Participant, the date on which
Annuity Benefits are to begin.
Annuity Payment Period: The period commencing with the Annuity
Commencement Date, during which Annuity Benefits are payable under this
Contract with respect to a Participant's participation interest, as
evidenced by his/her Certificate.
Annuity Unit: A unit of measurement used to determine the dollar value of
any Variable Dollar Annuity Benefit payments after the first Annuity
Benefit payment is made by us.
Beneficiary: The person or persons entitled to receive a Death Benefit
under a Participant's participation interest, if the Participant dies
prior to his/her Annuity Commencement Date. The following rules apply to
the determination of Beneficiary:
6
<PAGE>
Primary: Where a Primary Beneficiary is living and has survived the
Participant by at least 30 days, such person is a Beneficiary.
Contingent: Where no Primary Beneficiary is living, a Contingent
Beneficiary is the Beneficiary.
Certificate Anniversary: An annual anniversary of a Participant's
Certificate Effective Date.
Certificate Effective Date: The date shown on a Participant's Certificate
Specifications page.
Certificate Year: For a Participant's Certificate, any period of twelve
months commencing on the Certificate Effective Date and on each
Certificate Anniversary thereafter.
Code: The Internal Revenue Code of 1986, as amended, and the rules and
regulations thereunder.
Due Proof of Death: Any of (1) a certified copy of a death certificate;
(2) a certified copy of a decree of a court of competent jurisdiction as
to the finding of death; or (3) any other proof of death satisfactory to
us.
Fixed Account: An account which is part of the Company's general account
and the values of which are not dependent upon the investment performance
of the Sub-Account(s).
Fund: A management investment company or portfolio thereof, registered
under the Investment Company Act of 1940, in which a Sub-Account of the
Separate Account invests.
Net Asset Value: The amount computed by an investment company, no less
frequently than each Valuation Period, as the price at which its shares or
units, as the case may be, are redeemed in accordance with the rules of
the Securities and Exchange Commission.
Participant: A person who participates in the benefits of this Contract
pursuant to the enrollment form for such person, and as evidenced by a
Certificate.
Purchase Payment: A contribution after the deduction of premium tax, if
any, made to us in consideration for a Participant's participation under
this Contract.
Separate Account: An account, which may be an investment company, which
is established and maintained by the Company pursuant to the laws of the
State of Ohio.
Sub-Account: The Separate Account is divided into Sub-Accounts, each of
which invests in the shares of a designated Fund.
7
<PAGE>
Valuation Period: The period commencing at the close of regular trading
on the New York Stock Exchange on any Valuation Date, and ending at the
close of trading on the next succeeding Valuation Date. "Valuation Date"
means each day on which the New York Stock Exchange is open for business.
Written Request: Information provided, or a request made, that is
complete and satisfactory to us and in writing, that is sent to us on our
form or in a form satisfactory to us, and that is received by us at our
Administrative Office. A Written Request is subject to any payment made
or any action we take before we acknowledge it. A Participant may be
required to return his or her Certificate to us in connection with a
Written Request.
GENERAL PROVISIONS
Entire Contract
We have issued this Contract to the Contract Owner identified on the
Contract Specifications page. This Contract is a group flexible premium
deferred annuity contract. This Contract is restricted by endorsement as
required by the Code, and is not valid without the requisite
endorsement(s) being attached. This Contract and the endorsement(s)
hereto, the application for it, and the enrollment forms of all
participants under it, form the entire contract between you and us.
Certificates are not contracts and are not a part of this Contract.
Only statements made in the application for this Contract or in a
Participant's enrollment form will be used to void a Participant's
participation interest hereunder, or to defend a claim based on it. Such
statements are representations and not warranties.
Participant Certificate
A Certificate is evidence of a Participant's participation interest under
this Contract.
Changes -- Waivers
No changes or waivers of the terms of this Contract are valid unless made
in writing by our President, Vice President, or Secretary. We reserve the
right both to administer and to change the provisions of this Contract to
conform to any applicable laws, regulations or rulings issued by a
governmental agency.
In any event, the Company reserves the right to add or delete Sub-
Accounts, to substitute shares of a different Fund or different class or
series of a Fund for shares held in a Sub-Account, to merge or combine
Sub-Accounts, to merge or combine the Separate Account with any other
separate account of the Company, to transfer the assets of the Separate
Account to another life insurance company by means of a merger or
reinsurance, to convert the Separate Account into a managed separate
account, and to de-register the Separate Account under the Investment
Company Act of 1940. Any such change will be made in accordance with
applicable insurance and securities laws and after obtaining any necessary
8
<PAGE>
approvals, including those of the Ohio Department of Insurance and the
Securities and Exchange Commission.
Nonparticipating
This Contract is nonparticipating. It is not eligible to share in the
Company's divisible surplus.
Misstatement
If the age of an Annuitant is misstated, Annuity Benefit payments shall be
adjusted to the amount which would have been payable based on the correct
age. If we make any underpayments based on any misstatement, the amount
of any underpayment with interest shall be immediately paid in one sum.
Any overpayments made, with interest, shall be deducted from the next or
succeeding Annuity Benefit payments. The interest rate used will not be
less than three percent (3 %) per year.
Settlement
Any payment by us will be made from our Administrative Office.
Facility of Payment
If any person receiving payments under this Contract is incapable of
giving a valid receipt, we may make such payment to whomever has legally
assumed his or her care and principal support. Any such payment shall
fully discharge us to the extent of that payment.
Required Proof
We may require proof of the age of the Annuitant and, if applicable, any
joint payee, before any Annuity Benefit involving lifetime payments will
be made.
Required Reports
We will provide a report for each Certificate, prior to the Annuity
Commencement Date, at least once each Certificate Year showing the Account
Value and any other information required by law.
Voting Rights
To the extent required by law, we will vote all shares of the Funds held
in the Separate Account, at regular and special shareholder meetings of
the Funds, in accordance with instructions received from you and from
owners of other contracts participating in the Separate Account, and/or
those received from Participants, Annuitants or beneficiaries hereunder.
If there is a change in the law which permits us to vote the shares of the
Funds without instructions from you or from the others identified above,
then we reserve the right to do so.
Incontestability
This Contract, and the participation interest of Participants under it,
shall not be contestable by us.
9
<PAGE>
Discharge of Liability
Upon payment of any partial or full surrender, Death Benefit, or any
Annuity Benefit payments, we shall be discharged from all liability to the
extent of each such payment.
We shall not be bound by any instrument or other action taken by you, nor
shall we be responsible for any failure by you to perform your duties, or
for the application or disposition by you of any money properly paid to
you by us.
Termination
Either we or you may terminate this Contract by giving sixty days advance
notice in writing. Refer to the Contract Specifications page for
information regarding the benefits and charges, if any, in the event of
termination of this Contract. If this Contract is terminated, a
Participant may continue his or her participation under it on a deferred
paid-up basis, subject to all of the terms and conditions of this
Contract, unless he or she surrenders his or her participation as a whole.
Termination of this Contract will not affect Annuity Benefit payments
being made by us.
PURCHASE PAYMENTS
Allocation of Purchase Payment(s)
Purchase Payment(s) for a Participant must be received by us at our
Administrative Office prior to the Annuity Commencement Date for that
Participant. They will then be allocated to the Fixed Account options
and/or to the Sub-Accounts according to the instructions in the
Participant's enrollment form or subsequent Written Request. Allocations
must be made in whole percentages.
You shall be responsible to collect Purchase Payment(s) by payroll
deduction or otherwise and to remit Purchase Payment(s) to us in the
proper amount, together with all information necessary to apply such
amounts properly under the terms of this Contract and with respect to the
participation interests of Participants hereunder.
No Default
Except as stated elsewhere in this Contract, neither this Contract nor the
participation of a Participant under it shall be in default if additional
Purchase Payments are not made.
FIXED ACCOUNT
Fixed Account
Purchase Payment(s) allocated to the Fixed Account and any transfers made
to the Fixed Account will become part of the general account of the
Company.
10
<PAGE>
Fixed Account Options. The Fixed Account options available as of the
Contract Effective Date are listed on the Contract Specifications page.
Additional Fixed Account options may be offered by us at any time.
Interest Credited. We guarantee a minimum rate of interest for the Fixed
Account options of three percent (3%) per year. We may, at any time,
declare and pay a current interest rate for each of the Fixed Account
options that is higher than the guaranteed rate.
The interest rate initially credited to Purchase Payment(s) allocated to
the Fixed Accumulation Account Option will not be changed any sooner than
twelve months following the date of receipt. Thereafter, and in any other
case, the interest rate credited to amounts allocated to the Fixed
Accumulation Account option will not be changed more frequently than once
per calendar quarter.
The interest rate credited to amounts allocated to the Fixed Account
options other than the Fixed Accumulation Account Option will not be
changed during the duration of the applicable guarantee period.
Renewal. The following Renewal provisions apply to all Fixed Account
options except the Fixed Accumulation Account Option.
At the end of a guarantee period, and for the thirty days immediately
preceding the end of such guarantee period, a Participant may elect a new
option to replace the Fixed Account option that is then expiring. The
entire amount maturing may be re-allocated to any of the then-current
options under the Contract (including the various Sub-Accounts within the
Separate Account), except that a Fixed Account option with a guarantee
period that would extend past the Participant's Annuity Commencement Date
may not be selected. In particular, in the case of renewals occurring
within one year of such Annuity Commencement Date, the only Fixed Account
option available to the Participant is the Fixed Accumulation Account.
If a new Fixed Account option is not specified in accordance with the
preceding paragraph, the Participant will be deemed to have selected the
same Fixed Account option as is expiring, so long as the guarantee period
of such option does not extend beyond the Annuity Commencement Date of the
Participant. In the event that such a period would extend beyond that
date, the Participant will be deemed to have selected the Fixed Account
option with the longest available guarantee period that expires prior to
that date.
Any renewal of a Fixed Account option under this provision will be
effective on the day after the expiration of the guarantee period that is
then expiring.
Fixed Account Value
A Participant's Fixed Account Value at any time is equal to:
(a) Purchase Payment(s) received by us for him or her which are
allocated to the Fixed Account; plus
11
<PAGE>
(b) amounts that relate to his or her participation which are
transferred to the Fixed Account; plus
(c) interest credited to the Fixed Account; less
(d) any charges, surrenders, deductions, amounts transferred
from the Fixed Account or other adjustments made as
described elsewhere in this Contract, which relate to his or
her participation.
SEPARATE ACCOUNT
General Description
The variable benefits under this Contract are provided through the
Separate Account. The Separate Account is registered with the Securities
and Exchange Commission as a unit investment trust under the Investment
Company Act of 1940.
The income, if any, and any gains or losses, realized or unrealized, on
the Separate Account will be credited to or charged against the amounts
allocated to such account without regard to other income, gains, or losses
of the Company. The amounts allocated to the Separate Account and the
accumulations thereon remain the property of the Company, but that portion
of the assets of the Separate Account that is equal to the reserves and
other contractual liabilities under all policies, annuities, and other
contracts identified with the Separate Account, is not chargeable with
liabilities arising out of any other business of the Company. The Company
is not, and does not hold itself out to be, a trustee in respect of such
amounts.
We have the right to transfer to our general account, in our sole
discretion and at any time without prior written notice, any assets of the
Separate Account which are in excess of the required reserves and other
contractual liabilities.
Sub-Accounts of the Separate Account
The assets of the Separate Account are divided into Sub-Accounts. The
Sub-Accounts available as of the Contract Effective Date are listed on the
Contract Specifications page. Each Sub-Account invests exclusively in
shares of an underlying Fund as shown on the Contract Specifications page.
Any amounts of income and any gains on the shares of a Fund will be
reinvested in additional shares of that Fund at its Net Asset Value.
Valuation of Assets
Shares of Funds held by each Sub-Account will be valued at their Net Asset
Value at the end of each Valuation Period, as reported by each such Fund.
Variable Account Value
Purchase Payment(s) may be allocated among and, as described elsewhere in
this Contract, Account Values may be transferred to the various Sub-
Accounts within the Separate Account. For each Sub-Account, the Purchase
Payment(s) or amounts transferred are converted into Accumulation Units.
12
<PAGE>
The number of Accumulation Units credited is determined by dividing the
dollar amount directed to each Sub-Account by the value of the
Accumulation Unit for that Sub-Account at the end of the Valuation Period
on which the Purchase Payment(s) or transferred amount is received.
The following events will result in the cancellation of an appropriate
number of Accumulation Units of a Sub-Account:
(1) transfer from a Sub-Account;
(2) full or partial surrender of a Participant's Variable Account
Value;
(3) payment of a Death Benefit;
(4) application of a Participant's Variable Account Value to a
Settlement Option;
(5) deduction of a Certificate Maintenance Fee; or
(6) deduction of a Transfer Fee.
Accumulation Units will be canceled as of the end of the Valuation Period
during which the Company receives a Written Request regarding the event
giving rise to such cancellation, or Due Proof of Death and a Written
Request regarding payment of the Death Benefit, or the end of the
Valuation Period on which a Certificate Maintenance Fee or Transfer Fee is
due, as the case may be.
A Participant's Variable Account Value at any time is equal to the sum of
the number of Accumulation Units for each Sub-Account attributable to his
or her participation interest, multiplied by the Accumulation Unit Value
for each Sub-Account at the end of the preceding Valuation Period.
Accumulation Unit Value
The initial Accumulation Unit Value for each Sub-Account, with the
exception of the money market sub-account, was set at $10.00 when the
Separate Account was created. The initial Accumulation Unit Value for the
money market sub-account was set at $1.00. Thereafter, the Accumulation
Unit Value at the end of each Valuation Period is the Accumulation Unit
Value at the end of the previous Valuation Period multiplied by the Net
Investment Factor, as described below.
The Net Investment Factor is a factor applied to measure the investment
performance of a Sub-Account from one Valuation Period to the next. Each
Sub-Account has a Net Investment Factor for each Valuation Period which
may be greater or less than one. Therefore, the value of an Accumulation
Unit value for each Sub-Account may increase or decrease. The Net
Investment Factor for any Sub-Account for any Valuation Period is
determined by dividing (1) by (2) and subtracting (3) from the result,
where:
(1) is equal to:
a. the Net Asset Value per share of the Fund held in the Sub-
Account, determined at the end of the applicable Valuation
Period; plus
b. the per share amount of any dividend or net capital gain
distributions made by the Fund held in the Sub-Account, if the
13
<PAGE>
"ex-dividend" date occurs during the applicable Valuation
Period; plus or minus
c. a per share charge or credit for any taxes reserved for, which
is determined by the Company to have resulted from the
investment operations of the Sub-Account;
(2) is the Net Asset Value per share of the Fund held in the Sub-
Account, determined at the end of the immediately preceding
Valuation Period; and
(3) is the factor representing the Mortality and Expense Risk Charge
and the Administration Charge deducted from the Sub-Account for the
number of days in the applicable Valuation Period.
TRANSFERS
By Written Request prior to his or her Annuity Commencement Date, a
Participant may transfer amounts in a Sub-Account to a different Sub-
Account and/or one or more of the Fixed Account options. The minimum
transfer amount is $500. If the Sub-Account balance is less than $500 at
the time of the transfer, the entire amount of the Sub-Account balance
must be transferred. A Participant may also transfer amounts from any
Fixed Account option to any different Fixed Account option and/or one or
more of the Sub-Accounts. If a transfer is being made from a Fixed
Account option pursuant to the Renewal provision of the "FIXED ACCOUNT"
section above, then the entire amount of that Fixed Account may be
transferred to any one or more of the Sub-Accounts. In any other case,
transfers from any Fixed Account option are subject to a cumulative limit
for each Participant during each Certificate Year of 20% of his or her
account value for that option as of the most recent Certificate
Anniversary. In any event, i) Fixed Account transfers are not permitted
for a Participant during his or her first Certificate Year, and ii) if the
account value for the Fixed Account option being transferred by the
Participant is less than $500 at the time of the transfer, then the entire
balance must be transferred. Amounts previously transferred from Fixed
Account options to the Sub-Accounts may not be transferred back to the
Fixed Account options for a period of six months from the date of
transfer.
The number of transfers per year permitted for each Participant, over
which we will charge a Transfer Fee on each additional transfer, and the
amount of the Transfer Fee, are shown on the Contract Specifications page.
We reserve the right, in our sole discretion and at any time without prior
notice, to terminate, suspend or modify the transfer privileges described
above.
14
<PAGE>
FEES AND CHARGES
Mortality and Expense Risk Charge
The Mortality and Expense Risk Charge is shown on the Contract
Specifications page and is deducted daily from each Sub-Account. This
deduction is made to compensate the Company for assuming the mortality and
expense risks under this Contract.
Administration Charge
The Administration Charge is shown on the Contract Specifications page and
is deducted daily from each Sub-Account. This deduction is made to
reimburse the Company for expenses incurred in the administration of this
Contract, the participation interests of Participants, and the Separate
Account.
Certificate Maintenance Fee
The Certificate Maintenance Fee is shown on the Contract Specifications
page and is deducted for each Participant on the Certificate Anniversary
prior to the Annuity Commencement Date. In addition, the full annual
Certificate Maintenance Fee will be charged at the time of a Participant's
full surrender. The Certificate Maintenance Fee will be allocated to the
Sub-Accounts in the same proportion as the Sub-Account Values on such
Valuation Period. The Certificate Maintenance Fee does not apply to the
Fixed Account. The Certificate Maintenance Fee may be waived in whole or
in part in our sole discretion.
After his or her Annuity Commencement Date, if a Variable Dollar Annuity
Benefit is elected by a Participant, the Certificate Maintenance Fee will
be deducted pro-rata on a monthly basis and will result in a reduction of
the monthly annuity payments.
SURRENDERS
Surrender Value
A surrender in full may be made for a Participant's Surrender Value, or
partial surrenders may be made, by Written Request at any time prior to
the Participant's Annuity Commencement Date. The amount of a surrender
will be based on the Participant's Surrender Value at the end of the
Valuation Period in which the Written Request is received. The Surrender
Value of a Participant's participation interest at any time is equal to
his or her Account Value as of that Valuation Period less any applicable
Contingent Deferred Sales Charge, less any outstanding loans and less any
applicable premium tax not previously deducted. On full surrender, an
annual Certificate Maintenance Fee also will be deducted as part of the
calculation of the Surrender Value.
A full or partial surrender of a Participant's participation interest may
be subject to a Contingent Deferred Sales Charge as set forth on the
Certificate Specifications page, except that such charge will not apply
15
<PAGE>
to: (1) any portion of his or her Account Value in excess of the total
accumulated Purchase Payment(s); (2) any portion of his or her Account
Value attributable to Purchase Payment(s) that are no longer subject to
the charge; or (3) payment of a Death Benefit upon his or her death. The
Contingent Deferred Sales Charge is calculated separately for each
Purchase Payment. Surrenders will be deemed to be withdrawn first from
the portion of the Account Value in excess of total Purchase Payment(s)
and then from Purchase Payment(s). For this purpose, Purchase Payment(s)
are deemed to be withdrawn on a "first-in, first-out" (FIFO) basis.
Surrenders will result in the cancellation of Accumulation Units from each
applicable Sub-Account(s) and/or a reduction of the Participant's Fixed
Account Value. In the case of a full surrender, a Participant's
participation interest under this Contract will be canceled. The
Contingent Deferred Sales Charge may be waived in whole or in part in our
sole discretion.
Suspension or Delay in Payment of Surrender
The Company has the right to suspend or delay the date of payment of a
partial or full surrender of the Variable Account Value for any period:
1) when the New York Stock Exchange is closed, or when trading on
the New York Stock Exchange is restricted; or
2) when an emergency exists (as determined by the Securities and
Exchange Commission) as a result of which (a) the disposal of
securities in the Separate Account is not reasonably practicable;
or (b) it is not reasonably practicable to determine fairly the
value of the net assets in the Separate Account; or
3) when the Securities and Exchange Commission, by order, so permits
for the protection of security holders.
The Company further reserves the right to delay payment of a partial or
full surrender of the Fixed Account Value for up to six months.
OWNER AND BENEFICIARY PROVISIONS
Ownership of Separate Account
The Company has absolute ownership of the assets in the Separate Account.
However, the Company is not, and does not hold itself out to be, a trustee
in respect of any amounts under the Separate Account.
Ownership of Group Contract and Participant Account
The Contract Owner must be an employer or the trustee for an employer's
retirement plan. The Contract Owner is shown on the Contract
Specifications page. This Contract is held by the Contract Owner for the
benefit of the Participants and beneficiaries.
Each participant for whom Purchase Payment(s) are made will participate in
this Contract as a Participant. A participant account will be established
for each Participant.
16
<PAGE>
Transfer and Assignment
Neither you nor a Participant may transfer, sell, assign, pledge, charge,
encumber or in any way alienate an interest under this Contract. To the
extent permitted by law, the interests of Participants and all benefits
payable under this Contract are not subject to the claims of your or their
creditors or to legal process.
Beneficiary
A Participant's Beneficiary is named on his or her enrollment form. The
Beneficiary may be changed at any time prior to the death of the
Participant. We must receive a Written Request to change the Beneficiary.
Any such change will relate back to and take effect on the date the
Written Request was signed. We will not be liable for any payment we make
before such Written Request has been received and acknowledged at our
Administrative Office.
DEATH BENEFIT
Death of Participant
If a Participant dies before his or her Annuity Commencement Date, a Death
Benefit will be paid to his or her Primary Beneficiary, if any Primary
Beneficiary is then living. If no Primary Beneficiary is living at the
time of the Participant's death, or if the Primary Beneficiary dies within
30 days after the death of the Participant and no Death Benefit has been
paid, the Death Benefit will be paid to the person or persons named as the
Participant's Contingent Beneficiary. If no Primary or Contingent
Beneficiary is living at the time of the Participant's death, the Death
Benefit will be paid to the estate of the Participant. No Death Benefit
is payable if the Participant dies on or after his or her Annuity
Commencement Date. Only one Death Benefit is payable with respect to a
Participant's participation interest under this Contract.
Death Benefit
The Death Benefit will be determined as of the Death Benefit Valuation
Date. The "Death Benefit Valuation Date" is the Valuation Period on which
we receive both Due Proof of Death of the Participant and a Written
Request regarding payment of the Death Benefit.
If the Participant dies before attaining Age 75 and before his or her
Annuity Commencement Date, the Death Benefit is an amount equal to the
greatest of:
(1) the Participant's Account Value on the Death Benefit Valuation
Date, less any applicable premium tax not previously deducted,
and less any outstanding loans;
(2) the total Purchase Payment(s) received by us for him or her, less
any applicable premium tax not previously deducted, less any
partial surrenders, and less any outstanding loans; or
17
<PAGE>
(3) the largest Death Benefit amount for the Participant on any
Certificate Anniversary prior to death that is both an exact
multiple of five and occurs prior to the Death Benefit Valuation
Date, less any applicable premium tax not previously deducted,
less any partial surrenders after such Death Benefit was
determined, and less any outstanding loans.
If the Participant dies after attaining Age 75 and before his or her
Annuity Commencement Date, the Death Benefit is an amount equal to the
greatest of:
(1) the Participant's Account Value on the Death Benefit Valuation
Date, less any applicable premium tax not previously deducted,
and less any outstanding loans;
(2) the total Purchase Payment(s) received by us for him or her, less
any applicable premium tax not previously deducted, less any
partial surrenders, and less any outstanding loans; or
(3) the largest Death Benefit amount for the Participant on any
Certificate Anniversary prior to death that is both an exact
multiple of five and occurs prior to the date on which the
Participant attained Age 75, less any applicable premium tax not
previously deducted, less any partial surrenders after such Death
Benefit was determined, and less any outstanding loans.
SETTLEMENT OPTIONS
Annuity Commencement Date
The Annuity Commencement Date for a Participant is the date on which we
will begin to make payments in accordance with the Settlement Option
selected by him or her. This date may be changed by Written Request at
least 30 days prior to the then applicable Annuity Commencement Date being
replaced. However, in no event may the Annuity Commencement Date be later
than the Certificate Anniversary nearest the Participant's 85th birthday,
or five years after his or her Certificate Effective Date, whichever is
later.
Election of Settlement Option
If a Participant is alive on his or her Annuity Commencement Date and
unless otherwise directed, the Company will apply the Participant's
Account Value, less any premium tax not previously deducted, and less any
outstanding loans, according to the Settlement Option elected.
If no Settlement Option election has been made or is in effect on the
Annuity Commencement Date, we will begin payments in accordance with
Settlement Option 1 with a fixed period of 120 monthly payments assured.
Annuity Benefit
18
<PAGE>
The Annuity Benefit may be calculated and paid: (1) as a Fixed Dollar
Annuity Benefit; (2) as a Variable Dollar Annuity Benefit; or (3) as a
combination of both.
If a Fixed Dollar Annuity Benefit only is elected, we will transfer all of
the Participant's Account Value to the Company's general account on the
Annuity Commencement Date. Similarly, if a Variable Dollar Annuity
Benefit only is elected, we will transfer all of the Participant's Account
Value to the Sub-Accounts as of the end of the Valuation Period
immediately prior to the Annuity Commencement Date; we will allocate the
amount transferred among the Sub-Accounts in accordance with a Written
Request. No transfers between the Fixed Dollar Annuity Benefit and the
Variable Dollar Annuity Benefit will be allowed after the Annuity
Commencement Date. However, after the Variable Dollar Annuity Benefit has
been paid for at least twelve months, the Annuitant may, no more than once
each twelve months thereafter, transfer all or part of the Annuity Units
upon which the Variable Dollar Annuity Benefit is based from the Sub-
Account(s) then held, to Annuity Units in different Sub-Account(s).
If a Variable Dollar Annuity Benefit is elected, the amount to be applied
under that benefit is the Participant's Variable Account Value as of the
end of the Valuation Period immediatley preceding the Annuity Commencement
Date. If a Fixed Dollar Annuity Benefit is elected, the amount to be
applied under that benefit is the Participant's Fixed Account Value as of
the Annuity Commencement Date.
Fixed Dollar Annuity Benefit
Fixed Dollar Annuity Benefits are determined by multiplying the
Participant's Fixed Account Value (expressed in thousands of dollars and
after deduction of any premium taxes not previously deducted) by the
amount of the monthly payment per $1,000 of value obtained from the
Settlement Option Table for the Annuity Benefit elected. The Fixed Dollar
Annuity Benefit will remain level for the duration of the Annuity.
Variable Dollar Annuity Benefit
The first monthly Variable Dollar Annuity Benefit payment is equal to the
Participant's Variable Account Value as of the end of the Valuation Period
immediately preceding the Annuity Commencement Date (expressed in
thousands of dollars and after deduction of any premium taxes not
previously deducted) multiplied by the amount of the monthly payment per
$1,000 of value obtained from the Settlement Option Table for the Annuity
Benefit elected less the pro-rata portion of the Certificate Maintenance
Fee. The dollar amount of the first monthly Variable Dollar Annuity
Benefit from each Sub-Account is determined in the same manner.
The dollar amount of the second and subsequent monthly Variable Dollar
Annuity Benefit payments is equal to the sum of the number of Annuity
Units for each Sub-Account in which amounts are held by the Participant,
multiplied by the Annuity Unit Value for that Sub-Account as of the fifth
Valuation Date preceding the due date of the payment. A pro-rata portion
of the Certificate Maintenance Fee is deducted from the total to arrive at
the actual payment.
19
<PAGE>
The number of Annuity Units in each Sub-Account held by the Participant is
determined by dividing the dollar amount of the first monthly Variable
Dollar Annuity Benefit payment from each Sub-Account by the Annuity Unit
Value for that Sub-Account as of the Participant's Annuity Commencement
Date. The number of Annuity Units remains fixed during the Annuity Payment
Period, except as a result of any transfers among Sub-Accounts after the
Annuity Commencement Date.
The Annuity Unit Value for each Sub-Account was originally established in
the same manner as Accumulation Unit values. Thereafter, the value of an
Annuity Unit for a Sub-Account is determined by multiplying the Annuity
Unit Value as of the end of the preceding Valuation Period by the Net
Investment Factor, determined as set forth above under "Accumulation Unit
Value", for the Valuation Period just ended. The product is then
multiplied by the assumed daily investment factor (0.99991781), for the
number of days in the Valuation Period. The factor is based on the
assumed net investment rate of three percent (3%) that is reflected in the
Settlement Option Tables.
The Annuitant receives an amount equal the value of the fixed number of
Annuity Units each month. Such value will reflect the investment
performance of the Sub-Accounts selected and the amount of each annuity
payment will vary accordingly.
Settlement Options
Option 1 Life Annuity with Payments for at Least a Fixed Period
We will make a monthly payment for at least a fixed period. If the
Annuitant lives longer than the fixed period, then we will make
payments until his or her death. The fixed periods available are
shown in the Option 1 Table.
If at the death of the Annuitant payments have been made for less than
the fixed period elected, we will continue to make payments:
1) to the contingent payee designated on the Settlement Option
election form;
2) during the remainder of the fixed period.
Option 2 Life Annuity
We will make a monthly payment until the Annuitant's death. The
Option 2 Table applies to this Option.
Option 3 Joint and One-half Survivor Annuity
We will make a monthly payment to the Annuitant until the Annuitant's
death; thereafter, and upon receipt by the Company of Due Proof of
Death of the Annuitant, one-half of the monthly payment will continue
20
<PAGE>
to a designated survivor, if living, until his or her death. The
Option 3 Table applies to this Option.
Option 4 Income for a Fixed Period
We will make payments for a fixed period. Payment intervals and
amounts are shown in the Option 4 Table and are based on a three
percent (3 %) guaranteed interest rate.
If at the death of the Annuitant payments have been made for less than
the fixed period elected, we will continue to make payments:
1) to the contingent payee designated on the Settlement Option
election form;
2) during the remainder of the fixed period.
Option 5 Any Other Form
We will make payments in any other form of annuity which is acceptable
to us.
Minimum Amounts
If a Participant's Account Value is less than $5,000 on his or her Annuity
Commencement Date, we reserve the right to pay that amount in one lump
sum. If monthly payments under a Settlement Option would be less than
$100, we may make payments quarterly, semi-annually, or annually in our
sole discretion.
All elected Settlement Options must comply with current applicable laws,
regulations and rulings issued by any governmental agency. If at the time
a Fixed Dollar Annuity Benefit is elected, we have available options or
rates on a more favorable basis than those guaranteed, the higher benefits
shall be applied and guaranteed for as long as that election remains in
force.
To the extent applicable, all factors, values, benefits and reserves will
not be less than those required by the law of the state in which this
Contract is delivered.
Settlement Option Tables
The Settlement Option Tables show the guaranteed dollar amount, based on
unisex rates, of the monthly payments under various Settlement options for
each $1,000 applied.
OPTION 1 TABLES - LIFE ANNUITY
With Payments For At Least A Fixed Period
-----------------------------------------
60 120 180 240
Months Months Months Months
------ ------ ------ ------
21
<PAGE>
Age
---
55 $4.55 $4.51 $4.44 $4.33
56 4.65 4.61 4.52 4.39
57 4.76 4.71 4.61 4.46
58 4.87 4.81 4.70 4.53
59 4.99 4.92 4.79 4.60
60 5.12 5.04 4.89 4.67
61 5.25 5.16 4.99 4.74
62 5.40 5.29 5.09 4.81
63 5.55 5.42 5.19 4.87
64 5.72 5.56 5.30 4.94
65 5.89 5.71 5.40 5.00
66 6.08 5.86 5.51 5.06
67 6.27 6.02 5.62 5.11
68 6.48 6.19 5.72 5.17
69 6.71 6.36 5.83 5.22
70 6.95 6.54 5.93 5.26
71 7.20 6.72 6.03 5.30
72 7.46 6.90 6.12 5.34
73 7.75 7.08 6.21 5.37
74 8.04 7.27 6.30 5.40
OPTION 2 TABLE - LIFE ANNUITY
-------------------------------------------------------
60 120 180 240
Months Months Months Months
------ ------ ------ ------
Age Age Age Age
--- --- --- ---
55 $4.65 60 $5.14 65 $5.95 70 $7.08
56 4.67 61 5.28 66 6.14 71 7.36
57 4.77 62 5.43 67 6.35 72 7.66
58 4.89 63 5.59 68 6.58 73 7.98
59 5.01 64 5.76 69 6.82 74 8.33
22
<PAGE>
<TABLE>
<CAPTION>
OPTION 3 TABLE - JOINT AND ONE-HALF SURVIVOR ANNUITY
Monthly payments for each $1,000 of proceeds by ages of persons named*.
----------------------------------------------------------------------------------------------------
Secondary Age
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Primary 60 61 62 63 64 65 66 67 68 69 70
Age
60 $4.73 $4.75 $4.78 $4.80 $4.83 $4.85 $4.87 $4.89 $4.92 $4.93 $4.95
61 4.81 4.84 4.87 4.90 4.92 4.95 4.97 5.00 5.02 5.04 5.06
62 4.90 4.93 4.96 4.99 5.02 5.05 5.08 5.11 5.13 5.16 5.18
63 4.99 5.03 5.06 5.09 5.13 5.16 5.19 5.22 5.25 5.28 5.30
64 5.09 5.12 5.16 5.20 5.23 5.27 5.30 5.34 5.37 5.40 5.43
65 5.18 5.22 5.26 5.31 5.35 5.38 5.42 5.46 5.49 5.53 5.56
66 5.28 5.33 5.37 5.42 5.46 5.50 5.54 5.58 5.62 5.66 5.70
67 5.38 5.43 5.48 5.53 5.58 5.62 5.67 5.72 5.76 5.80 5.84
68 5.49 5.54 5.59 5.65 5.70 5.75 5.80 5.85 5.90 5.95 5.99
69 5.60 5.65 5.71 5.77 5.82 5.88 5.93 5.99 6.04 6.10 6.15
70 5.71 5.77 5.83 5.89 5.95 6.01 6.07 6.13 6.19 6.25 6.31
</TABLE>
*Payments after the death of the Primary Payee will be one-half of the
amount shown.
<TABLE>
<CAPTION>
OPTION 4 TABLE - INCOME FOR A FIXED PERIOD
Payments for fixed number of years for each $1,000 applied.
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Terms of Semi- Terms of Semi- Terms of Semi-
Payments Annual Annual QuarterlyMonthly Payments Annual AnnualQuarterly Monthly PaymentsAnnual Annual QuarterlyMonthly
-------- ------ ------ ---------------- -------- ------ --------------- ------- -------------- ------ ----------------
Years Years Years
6 183.42 92.61 46.53 15.56 11 $109.76 $55.42 $27.84 $9.31 16 $82.52 $41.66 $20.93 $7.00
7 160.20 80.89 40.64 13.59 12 102.45 51.73 25.99 8.69 17 79.04 39.91 20.05 6.71
8 142.82 72.11 36.23 12.12 13 96.29 48.62 24.43 8.17 18 75.96 38.35 19.27 6.44
9 129.32 65.29 32.81 10.97 14 91.03 45.96 23.09 7.72 19 73.21 36.96 18.57 6.21
10 118.55 59.86 30.07 10.06 15 86.48 43.66 21.94 7.34 20 70.75 35.72 17.95 6.00
</TABLE>
Rates for monthly payments for ages or fixed periods not shown in the
above tables will be calculated on the same basis as those shown and may
be obtained from us. Fixed periods shorter than five years are not
available.
23
<PAGE>
Accumulation Unit Value, 12
Administration Charge, 13
Allocation of Purchase Payment(s), 9
Annuity Benefit, 16
Annuity Commencement Date, 16
Beneficiary, 15
Certificate Maintenance Fee, 13
Changes -- Waivers, 8
Death Benefit, 15
Death of Participant, 15
Discharge of Liability, 9
Election of Settlement Option, 16
Entire Contract, 8
Facility of Payment, 8
FEES AND CHARGES, 13
Fixed Account, 10
Fixed Account Value, 10
Fixed Dollar Annuity Benefit, 16
General Description, 11
Incontestability, 9
Minimum Amounts, 18
Misstatement, 8
Mortality and Expense Risk Charge, 13
No Default, 9
Nonparticipating, 8
Ownership of Group Contract and Participant Account, 14
Ownership of Separate Account, 14
Participant Certificate, 8
Required Proof, 9
Required Reports, 9
Settlement, 8
Settlement Option Tables, 18
Settlement Options, 17
Sub-Accounts of the Separate Account, 11
Surrender Value, 13
SURRENDERS, 13
Suspension or Delay in Payment of Surrender, 14
Termination, 9
Transfer and Assignment, 14
Transfers, 12
Valuation of Assets, 11
Variable Account Value, 11
Variable Dollar Annuity Benefit, 16
Voting Rights, 9
24
<PAGE>
<PAGE>
Exhibit (4)(a)(ii)
Group Flexible Premium Deferred Annuity Contract
In consideration of the application, the enrollment forms of participants
hereunder ("Participants"), and the payment of Purchase Payments for the
benefit of Participants, we have issued this Group Flexible Premium
Deferred Annuity Contract ("Contract") to the Contract Owner identified on
the Contract Specifications page, effective as of the Contract Effective
Date and subject to all of the terms and conditions set out on the
following pages. As you read through this Contract, please note that the
words "we", "us", "our", and "Company" refer to Annuity Investors Life
Insurance Company. The words "you" and "your" refer to the Contract
Owner.
/s/ Betty Kasprowicz /s/ James M. Mortenson
-------------------- --------------------------
Assistant Secretary Executive Vice President
ANNUITY INVESTORS LIFE INSURANCE COMPANY
(A Stock Insurance Company)
Nonparticipating
ANNUITY BENEFITS AND OTHER VALUES DESCRIBED IN THIS CONTRACT, WHEN BASED
ON THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT, MAY INCREASE OR
DECREASE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNTS. NO MINIMUM
CONTRACT VALUE IS GUARANTEED, EXCEPT FOR AMOUNTS IN THE FIXED ACCOUNT.
<PAGE>
CONTRACT SPECIFICATIONS
CONTRACT OWNER
CONTRACT NUMBER
CONTRACT EFFECTIVE DATE
--------------------------------------------------------------------
SEPARATE ACCOUNT: Annuity Investors Variable Account A
----------------
Following is a list of the Funds in which the currently available Sub-
Accounts invest:
[Janus Aspen Series Aggressive Growth Portfolio]
[Janus Aspen Series Worldwide Growth Portfolio]
[Janus Aspen Series Balanced Portfolio]
[Janus Aspen Series Short-term Bond Portfolio]
[Dreyfus Variable Investment Fund's Capital Appreciation Portfolio]
[Dreyfus Socially Responsible Growth Fund]
[Dreyfus Stock Index Fund]
[Merrill Lynch Variable Series Basic Value Focus Fund]
[Merrill Lynch Variable Series Global Strategy Focus Fund]
[Merrill Lynch Variable Series High Current Income Fund]
[Merrill Lynch Variable Series Domestic Money Market Fund]
FIXED ACCOUNT:
-------------
Following is a list of the currently available Fixed Account options, with
guarantee periods as may be applicable:
Fixed Accumulation Account Option
[Fixed Account Option One-Year Guarantee Period]
[Fixed Account Option Three-Year Guarantee Period]
[Fixed Account Option Five-Year Guarantee Period]
Minimum guaranteed interest rate credited to the Fixed Account: Three
percent (3 %) effective annual rate.
TRANSFER FEE: [$25] per transfer in excess of 12 in any Certificate Year.
------------
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CONTINGENT DEFERRED SALES CHARGE: An amount deducted on each partial or
full surrender of a Purchase Payment, as follows:
Number of full years elapsed
between
the date of receipt of a Contingent Deferred Sales Charge as
Purchase Payment a percentage of the associated
and date Written Request for Purchase Payment
surrender is received surrendered
------------------------------- ------------------------------------
0 7%
1 6%
2 5%
3 4%
4 3%
5 2%
6 1%
7+ 0%
CERTIFICATE MAINTENANCE FEE: [$25]
---------------------------
MORTALITY AND EXPENSE RISK CHARGE: A charge equal to an effective annual
rate of [0.95 %] of the daily Net Asset Value of the Sub-Accounts.
ADMINISTRATION CHARGE: A charge equal to an effective annual rate of
[0.00%] of the daily Net Asset Value of the Sub-Accounts.
TERMINATION: We reserve the right to terminate any Participant's interest
under this Contract, if at any time the Account Value of his/her
Certificate is less than $500 and no Purchase Payment has been received by
us for at least two years.
[We reserve the right to terminate this Contract, if _____________]
INQUIRIES: For information, write to:
--------- -------------------------
Variable Annuity Services
Annuity Investors Life Insurance Company
Post Office Box 5423
Cincinnati, Ohio 45201-5423
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INDEX Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Entire Contract . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Participant Cerificate . . . . . . . . . . . . . . . . . . . . . . 8
Changes -- Waivers . . . . . . . . . . . . . . . . . . . . . . . . 8
Nonparticipating . . . . . . . . . . . . . . . . . . . . . . . . . 8
Misstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Facility of Payment . . . . . . . . . . . . . . . . . . . . . . . . 8
Required Proof . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Reqired Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Incontestability . . . . . . . . . . . . . . . . . . . . . . . . . 9
Discharge of Liability . . . . . . . . . . . . . . . . . . . . . . 9
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
PURCHASE PAYMENT(S) . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Allocation of Purchase Payment(s) . . . . . . . . . . . . . . . . . 9
No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
FIXED ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Fixed Account . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Fixed Account Value . . . . . . . . . . . . . . . . . . . . . . . . 10
SEPARATE ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
General Description . . . . . . . . . . . . . . . . . . . . . . . . 11
Sub-Accounts of the Separate Account . . . . . . . . . . . . . . . 11
Valuation of Assets . . . . . . . . . . . . . . . . . . . . . . . . 11
Variable Account Value . . . . . . . . . . . . . . . . . . . . . . 11
Accumulation Unit Value . . . . . . . . . . . . . . . . . . . . . . 12
TRANSFERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
FEES AND CHARGES . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Mortality and Expense Risk Charge . . . . . . . . . . . . . . . . . 13
Administration Charge . . . . . . . . . . . . . . . . . . . . . . . 13
Certificate Maintenance Fee . . . . . . . . . . . . . . . . . . . . 13
SURRENDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Surrender Value . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Suspension or Delay in Payment of Surrender . . . . . . . . . . . . 14
OWNER AND BENEFICIARY PROVISIONS . . . . . . . . . . . . . . . . . . . 14
Ownership of Separate Account . . . . . . . . . . . . . . . . . . . 14
Ownership of Group Contract and Particpant Account . . . . . . . . 14
Transfer and Assignment . . . . . . . . . . . . . . . . . . . . . 14
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
DEATH BENEFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4
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Death of Participant . . . . . . . . . . . . . . . . . . . . . . . 15
Death Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SETTLEMENT OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Annuity Commencement Date . . . . . . . . . . . . . . . . . . . . . 16
Election of Settlement Option . . . . . . . . . . . . . . . . . . . 16
Annuity Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Fixed Dollar Annuity Benefit . . . . . . . . . . . . . . . . . . . 16
Variable Dollar Annuity Benefit . . . . . . . . . . . . . . . . . . 16
Settlement Options . . . . . . . . . . . . . . . . . . . . . . . . 17
Minimum Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Settlement Option Tables . . . . . . . . . . . . . . . . . . . . . 18
5
<PAGE>
DEFINITIONS
Account(s): The Sub-Account(s) and/or the Fixed Account options.
Account Value: The aggregate value of a Participant's interest in the
Sub-Account(s) and the Fixed Account options as of the end of any
Valuation Period. The value of a Participant's interest in all Sub-
Accounts is his or her "Variable Account Value," and the value of a
Participant's interest in all Fixed Account options is his or her "Fixed
Account Value."
Accumulation Period: The period prior to the Annuity Commencement Date of
a Participant, during which he or she is eligible for benefits under this
Contract.
Accumulation Unit: A unit of measurement used to calculate the values of
the Sub-Account(s) prior to the Annuity Commencement Date.
Administrative Office: The home office of the Company or any other office
which we may designate for administration.
Age: Age as of most recent birthday.
Annuitant: For each participation interest under this Contract, the
Annuitant is the Participant, and is the person on whose life Annuity
Benefit payments are based.
Annuity Benefit: Periodic payments made by the Company under a Settlement
Option, which payments commence on or after the Annuity Commencement Date
and continue during the Annuity Payment Period, for the life of a person
or for a specific period. A Variable Dollar Annuity Benefit will provide
payments that vary in amount. Fixed Dollar Annuity Benefit payments
remain constant.
Annuity Commencement Date: For each Participant, the date on which
Annuity Benefits are to begin.
Annuity Payment Period: The period commencing with the Annuity
Commencement Date, during which Annuity Benefits are payable under this
Contract with respect to a Participant's participation interest, as
evidenced by his/her Certificate.
Annuity Unit: A unit of measurement used to determine the dollar value of
any Variable Dollar Annuity Benefit payments after the first Annuity
Benefit payment is made by us.
Beneficiary: The person or persons entitled to receive a Death Benefit
under a Participant's participation interest, if the Participant dies
prior to his/her Annuity Commencement Date. The following rules apply to
the determination of Beneficiary:
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<PAGE>
Primary: Where a Primary Beneficiary is living and has survived the
Participant by at least 30 days, such person is a Beneficiary.
Contingent: Where no Primary Beneficiary is living, a Contingent
Beneficiary is the Beneficiary.
Certificate Anniversary: An annual anniversary of a Participant's
Certificate Effective Date.
Certificate Effective Date: The date shown on a Participant's Certificate
Specifications page.
Certificate Year: For a Participant's Certificate, any period of twelve
months commencing on the Certificate Effective Date and on each
Certificate Anniversary thereafter.
Code: The Internal Revenue Code of 1986, as amended, and the rules and
regulations thereunder.
Due Proof of Death: Any of (1) a certified copy of a death certificate;
(2) a certified copy of a decree of a court of competent jurisdiction as
to the finding of death; or (3) any other proof of death satisfactory to
us.
Fixed Account: An account which is part of the Company's general account
and the values of which are not dependent upon the investment performance
of the Sub-Account(s).
Fund: A management investment company or portfolio thereof, registered
under the Investment Company Act of 1940, in which a Sub-Account of the
Separate Account invests.
Net Asset Value: The amount computed by an investment company, no less
frequently than each Valuation Period, as the price at which its shares or
units, as the case may be, are redeemed in accordance with the rules of
the Securities and Exchange Commission.
Participant: A person who participates in the benefits of this Contract
pursuant to the enrollment form for such person, and as evidenced by a
Certificate.
Purchase Payment: A contribution after the deduction of premium tax, if
any, made to us in consideration for a Participant's participation under
this Contract.
Separate Account: An account, which may be an investment company, which
is established and maintained by the Company pursuant to the laws of the
State of Ohio.
Sub-Account: The Separate Account is divided into Sub-Accounts, each of
which invests in the shares of a designated Fund.
7
<PAGE>
Valuation Period: The period commencing at the close of regular trading
on the New York Stock Exchange on any Valuation Date, and ending at the
close of trading on the next succeeding Valuation Date. "Valuation Date"
means each day on which the New York Stock Exchange is open for business.
Written Request: Information provided, or a request made, that is
complete and satisfactory to us and in writing, that is sent to us on our
form or in a form satisfactory to us, and that is received by us at our
Administrative Office. A Written Request is subject to any payment made
or any action we take before we acknowledge it. A Participant may be
required to return his or her Certificate to us in connection with a
Written Request.
GENERAL PROVISIONS
Entire Contract
We have issued this Contract to the Contract Owner identified on the
Contract Specifications page. This Contract is a group flexible premium
deferred annuity contract. This Contract is restricted by endorsement as
required by the Code, and is not valid without the requisite
endorsement(s) being attached. This Contract and the endorsement(s)
hereto, the application for it, and the enrollment forms of all
participants under it, form the entire contract between you and us.
Certificates are not contracts and are not a part of this Contract.
Only statements made in the application for this Contract or in a
Participant's enrollment form will be used to void a Participant's
participation interest hereunder, or to defend a claim based on it. Such
statements are representations and not warranties.
Participant Certificate
A Certificate is evidence of a Participant's participation interest under
this Contract.
Changes -- Waivers
No changes or waivers of the terms of this Contract are valid unless made
in writing by our President, Vice President, or Secretary. We reserve the
right both to administer and to change the provisions of this Contract to
conform to any applicable laws, regulations or rulings issued by a
governmental agency.
In any event, the Company reserves the right to add or delete Sub-
Accounts, to substitute shares of a different Fund or different class or
series of a Fund for shares held in a Sub-Account, to merge or combine
Sub-Accounts, to merge or combine the Separate Account with any other
separate account of the Company, to transfer the assets of the Separate
Account to another life insurance company by means of a merger or
reinsurance, to convert the Separate Account into a managed separate
account, and to de-register the Separate Account under the Investment
Company Act of 1940. Any such change will be made in accordance with
applicable insurance and securities laws and after obtaining any necessary
8
<PAGE>
approvals, including those of the Ohio Department of Insurance and the
Securities and Exchange Commission.
Nonparticipating
This Contract is nonparticipating. It is not eligible to share in the
Company's divisible surplus.
Misstatement
If the age of an Annuitant is misstated, Annuity Benefit payments shall be
adjusted to the amount which would have been payable based on the correct
age. If we make any underpayments based on any misstatement, the amount
of any underpayment with interest shall be immediately paid in one sum.
Any overpayments made, with interest, shall be deducted from the next or
succeeding Annuity Benefit payments. The interest rate used will not be
less than three percent (3 %) per year.
Settlement
Any payment by us will be made from our Administrative Office.
Facility of Payment
If any person receiving payments under this Contract is incapable of
giving a valid receipt, we may make such payment to whomever has legally
assumed his or her care and principal support. Any such payment shall
fully discharge us to the extent of that payment.
Required Proof
We may require proof of the age of the Annuitant and, if applicable, any
joint payee, before any Annuity Benefit involving lifetime payments will
be made.
Required Reports
We will provide a report for each Certificate, prior to the Annuity
Commencement Date, at least once each Certificate Year showing the Account
Value and any other information required by law.
Voting Rights
To the extent required by law, we will vote all shares of the Funds held
in the Separate Account, at regular and special shareholder meetings of
the Funds, in accordance with instructions received from you and from
owners of other contracts participating in the Separate Account, and/or
those received from Participants, Annuitants or beneficiaries hereunder.
If there is a change in the law which permits us to vote the shares of the
Funds without instructions from you or from the others identified above,
then we reserve the right to do so.
Incontestability
This Contract, and the participation interest of Participants under it,
shall not be contestable by us.
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Discharge of Liability
Upon payment of any partial or full surrender, Death Benefit, or any
Annuity Benefit payments, we shall be discharged from all liability to the
extent of each such payment.
We shall not be bound by any instrument or other action taken by you, nor
shall we be responsible for any failure by you to perform your duties, or
for the application or disposition by you of any money properly paid to
you by us.
Termination
Either we or you may terminate this Contract by giving sixty days advance
notice in writing. Refer to the Contract Specifications page for
information regarding the benefits and charges, if any, in the event of
termination of this Contract. If this Contract is terminated, a
Participant may continue his or her participation under it on a deferred
paid-up basis, subject to all of the terms and conditions of this
Contract, unless he or she surrenders his or her participation as a whole.
Termination of this Contract will not affect Annuity Benefit payments
being made by us.
PURCHASE PAYMENTS
Allocation of Purchase Payment(s)
Purchase Payment(s) for a Participant must be received by us at our
Administrative Office prior to the Annuity Commencement Date for that
Participant. They will then be allocated to the Fixed Account options
and/or to the Sub-Accounts according to the instructions in the
Participant's enrollment form or subsequent Written Request. Allocations
must be made in whole percentages.
You shall be responsible to collect Purchase Payment(s) by payroll
deduction or otherwise and to remit Purchase Payment(s) to us in the
proper amount, together with all information necessary to apply such
amounts properly under the terms of this Contract and with respect to the
participation interests of Participants hereunder.
No Default
Except as stated elsewhere in this Contract, neither this Contract nor the
participation of a Participant under it shall be in default if additional
Purchase Payments are not made.
FIXED ACCOUNT
Fixed Account
Purchase Payment(s) allocated to the Fixed Account and any transfers made
to the Fixed Account will become part of the general account of the
Company.
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<PAGE>
Fixed Account Options. The Fixed Account options available as of the
Contract Effective Date are listed on the Contract Specifications page.
Additional Fixed Account options may be offered by us at any time.
Interest Credited. We guarantee a minimum rate of interest for the Fixed
Account options of three percent (3%) per year. We may, at any time,
declare and pay a current interest rate for each of the Fixed Account
options that is higher than the guaranteed rate.
The interest rate initially credited to Purchase Payment(s) allocated to
the Fixed Accumulation Account Option will not be changed any sooner than
twelve months following the date of receipt. Thereafter, and in any other
case, the interest rate credited to amounts allocated to the Fixed
Accumulation Account option will not be changed more frequently than once
per calendar quarter.
The interest rate credited to amounts allocated to the Fixed Account
options other than the Fixed Accumulation Account Option will not be
changed during the duration of the applicable guarantee period.
Renewal. The following Renewal provisions apply to all Fixed Account
options except the Fixed Accumulation Account Option.
At the end of a guarantee period, and for the thirty days immediately
preceding the end of such guarantee period, a Participant may elect a new
option to replace the Fixed Account option that is then expiring. The
entire amount maturing may be re-allocated to any of the then-current
options under the Contract (including the various Sub-Accounts within the
Separate Account), except that a Fixed Account option with a guarantee
period that would extend past the Participant's Annuity Commencement Date
may not be selected. In particular, in the case of renewals occurring
within one year of such Annuity Commencement Date, the only Fixed Account
option available to the Participant is the Fixed Accumulation Account.
If a new Fixed Account option is not specified in accordance with the
preceding paragraph, the Participant will be deemed to have selected the
same Fixed Account option as is expiring, so long as the guarantee period
of such option does not extend beyond the Annuity Commencement Date of the
Participant. In the event that such a period would extend beyond that
date, the Participant will be deemed to have selected the Fixed Account
option with the longest available guarantee period that expires prior to
that date.
Any renewal of a Fixed Account option under this provision will be
effective on the day after the expiration of the guarantee period that is
then expiring.
Fixed Account Value
A Participant's Fixed Account Value at any time is equal to:
(a) Purchase Payment(s) received by us for him or her which are
allocated to the Fixed Account; plus
11
<PAGE>
(b) amounts that relate to his or her participation which are
transferred to the Fixed Account; plus
(c) interest credited to the Fixed Account; less
(d) any charges, surrenders, deductions, amounts transferred
from the Fixed Account or other adjustments made as
described elsewhere in this Contract, which relate to his or
her participation.
SEPARATE ACCOUNT
General Description
The variable benefits under this Contract are provided through the
Separate Account. The Separate Account is registered with the Securities
and Exchange Commission as a unit investment trust under the Investment
Company Act of 1940.
The income, if any, and any gains or losses, realized or unrealized, on
the Separate Account will be credited to or charged against the amounts
allocated to such account without regard to other income, gains, or losses
of the Company. The amounts allocated to the Separate Account and the
accumulations thereon remain the property of the Company, but that portion
of the assets of the Separate Account that is equal to the reserves and
other contractual liabilities under all policies, annuities, and other
contracts identified with the Separate Account, is not chargeable with
liabilities arising out of any other business of the Company. The Company
is not, and does not hold itself out to be, a trustee in respect of such
amounts.
We have the right to transfer to our general account, in our sole
discretion and at any time without prior written notice, any assets of the
Separate Account which are in excess of the required reserves and other
contractual liabilities.
Sub-Accounts of the Separate Account
The assets of the Separate Account are divided into Sub-Accounts. The
Sub-Accounts available as of the Contract Effective Date are listed on the
Contract Specifications page. Each Sub-Account invests exclusively in
shares of an underlying Fund as shown on the Contract Specifications page.
Any amounts of income and any gains on the shares of a Fund will be
reinvested in additional shares of that Fund at its Net Asset Value.
Valuation of Assets
Shares of Funds held by each Sub-Account will be valued at their Net Asset
Value at the end of each Valuation Period, as reported by each such Fund.
Variable Account Value
Purchase Payment(s) may be allocated among and, as described elsewhere in
this Contract, Account Values may be transferred to the various Sub-
Accounts within the Separate Account. For each Sub-Account, the Purchase
Payment(s) or amounts transferred are converted into Accumulation Units.
12
<PAGE>
The number of Accumulation Units credited is determined by dividing the
dollar amount directed to each Sub-Account by the value of the
Accumulation Unit for that Sub-Account at the end of the Valuation Period
on which the Purchase Payment(s) or transferred amount is received.
The following events will result in the cancellation of an appropriate
number of Accumulation Units of a Sub-Account:
(1) transfer from a Sub-Account;
(2) full or partial surrender of a Participant's Variable Account
Value;
(3) payment of a Death Benefit;
(4) application of a Participant's Variable Account Value to a
Settlement Option;
(5) deduction of a Certificate Maintenance Fee; or
(6) deduction of a Transfer Fee.
Accumulation Units will be canceled as of the end of the Valuation Period
during which the Company receives a Written Request regarding the event
giving rise to such cancellation, or Due Proof of Death and a Written
Request regarding payment of the Death Benefit, or the end of the
Valuation Period on which a Certificate Maintenance Fee or Transfer Fee is
due, as the case may be.
A Participant's Variable Account Value at any time is equal to the sum of
the number of Accumulation Units for each Sub-Account attributable to his
or her participation interest, multiplied by the Accumulation Unit Value
for each Sub-Account at the end of the preceding Valuation Period.
Accumulation Unit Value
The initial Accumulation Unit Value for each Sub-Account, with the
exception of the money market sub-account, was set at $10.00 when the
Separate Account was created. The initial Accumulation Unit Value for the
money market sub-account was set at $1.00. Thereafter, the Accumulation
Unit Value at the end of each Valuation Period is the Accumulation Unit
Value at the end of the previous Valuation Period multiplied by the Net
Investment Factor, as described below.
The Net Investment Factor is a factor applied to measure the investment
performance of a Sub-Account from one Valuation Period to the next. Each
Sub-Account has a Net Investment Factor for each Valuation Period which
may be greater or less than one. Therefore, the value of an Accumulation
Unit value for each Sub-Account may increase or decrease. The Net
Investment Factor for any Sub-Account for any Valuation Period is
determined by dividing (1) by (2) and subtracting (3) from the result,
where:
(1) is equal to:
a. the Net Asset Value per share of the Fund held in the Sub-
Account, determined at the end of the applicable Valuation
Period; plus
b. the per share amount of any dividend or net capital gain
distributions made by the Fund held in the Sub-Account, if the
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"ex-dividend" date occurs during the applicable Valuation
Period; plus or minus
c. a per share charge or credit for any taxes reserved for, which
is determined by the Company to have resulted from the
investment operations of the Sub-Account;
(2) is the Net Asset Value per share of the Fund held in the Sub-
Account, determined at the end of the immediately preceding
Valuation Period; and
(3) is the factor representing the Mortality and Expense Risk Charge
and the Administration Charge deducted from the Sub-Account for the
number of days in the applicable Valuation Period.
TRANSFERS
By Written Request prior to his or her Annuity Commencement Date, a
Participant may transfer amounts in a Sub-Account to a different Sub-
Account and/or one or more of the Fixed Account options. The minimum
transfer amount is $500. If the Sub-Account balance is less than $500 at
the time of the transfer, the entire amount of the Sub-Account balance
must be transferred. A Participant may also transfer amounts from any
Fixed Account option to any different Fixed Account option and/or one or
more of the Sub-Accounts. If a transfer is being made from a Fixed
Account option pursuant to the Renewal provision of the "FIXED ACCOUNT"
section above, then the entire amount of that Fixed Account may be
transferred to any one or more of the Sub-Accounts. In any other case,
transfers from any Fixed Account option are subject to a cumulative limit
for each Participant during each Certificate Year of 20% of his or her
account value for that option as of the most recent Certificate
Anniversary. In any event, i) Fixed Account transfers are not permitted
for a Participant during his or her first Certificate Year, and ii) if the
account value for the Fixed Account option being transferred by the
Participant is less than $500 at the time of the transfer, then the entire
balance must be transferred. Amounts previously transferred from Fixed
Account options to the Sub-Accounts may not be transferred back to the
Fixed Account options for a period of six months from the date of
transfer.
The number of transfers per year permitted for each Participant, over
which we will charge a Transfer Fee on each additional transfer, and the
amount of the Transfer Fee, are shown on the Contract Specifications page.
We reserve the right, in our sole discretion and at any time without prior
notice, to terminate, suspend or modify the transfer privileges described
above.
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FEES AND CHARGES
Mortality and Expense Risk Charge
The Mortality and Expense Risk Charge is shown on the Contract
Specifications page and is deducted daily from each Sub-Account. This
deduction is made to compensate the Company for assuming the mortality and
expense risks under this Contract.
Administration Charge
The Administration Charge is shown on the Contract Specifications page and
is deducted daily from each Sub-Account. This deduction is made to
reimburse the Company for expenses incurred in the administration of this
Contract, the participation interests of Participants, and the Separate
Account.
Certificate Maintenance Fee
The Certificate Maintenance Fee is shown on the Contract Specifications
page and is deducted for each Participant on the Certificate Anniversary
prior to the Annuity Commencement Date. In addition, the full annual
Certificate Maintenance Fee will be charged at the time of a Participant's
full surrender. The Certificate Maintenance Fee will be allocated to the
Sub-Accounts in the same proportion as the Sub-Account Values on such
Valuation Period. The Certificate Maintenance Fee does not apply to the
Fixed Account. The Certificate Maintenance Fee may be waived in whole or
in part in our sole discretion.
After his or her Annuity Commencement Date, if a Variable Dollar Annuity
Benefit is elected by a Participant, the Certificate Maintenance Fee will
be deducted pro-rata on a monthly basis and will result in a reduction of
the monthly annuity payments.
SURRENDERS
Surrender Value
A surrender in full may be made for a Participant's Surrender Value, or
partial surrenders may be made, by Written Request at any time prior to
the Participant's Annuity Commencement Date. The amount of a surrender
will be based on the Participant's Surrender Value at the end of the
Valuation Period in which the Written Request is received. The Surrender
Value of a Participant's participation interest at any time is equal to
his or her Account Value as of that Valuation Period less any applicable
Contingent Deferred Sales Charge, less any outstanding loans and less any
applicable premium tax not previously deducted. On full surrender, an
annual Certificate Maintenance Fee also will be deducted as part of the
calculation of the Surrender Value.
A full or partial surrender of a Participant's participation interest may
be subject to a Contingent Deferred Sales Charge as set forth on the
Certificate Specifications page, except that such charge will not apply
15
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to: (1) any portion of his or her Account Value in excess of the total
accumulated Purchase Payment(s); (2) any portion of his or her Account
Value attributable to Purchase Payment(s) that are no longer subject to
the charge; or (3) payment of a Death Benefit upon his or her death. The
Contingent Deferred Sales Charge is calculated separately for each
Purchase Payment. Surrenders will be deemed to be withdrawn first from
the portion of the Account Value in excess of total Purchase Payment(s)
and then from Purchase Payment(s). For this purpose, Purchase Payment(s)
are deemed to be withdrawn on a "first-in, first-out" (FIFO) basis.
Surrenders will result in the cancellation of Accumulation Units from each
applicable Sub-Account(s) and/or a reduction of the Participant's Fixed
Account Value. In the case of a full surrender, a Participant's
participation interest under this Contract will be canceled. The
Contingent Deferred Sales Charge may be waived in whole or in part in our
sole discretion.
Suspension or Delay in Payment of Surrender
The Company has the right to suspend or delay the date of payment of a
partial or full surrender of the Variable Account Value for any period:
1) when the New York Stock Exchange is closed, or when trading on
the New York Stock Exchange is restricted; or
2) when an emergency exists (as determined by the Securities and
Exchange Commission) as a result of which (a) the disposal of
securities in the Separate Account is not reasonably practicable;
or (b) it is not reasonably practicable to determine fairly the
value of the net assets in the Separate Account; or
3) when the Securities and Exchange Commission, by order, so permits
for the protection of security holders.
The Company further reserves the right to delay payment of a partial or
full surrender of the Fixed Account Value for up to six months.
OWNER AND BENEFICIARY PROVISIONS
Ownership of Separate Account
The Company has absolute ownership of the assets in the Separate Account.
However, the Company is not, and does not hold itself out to be, a trustee
in respect of any amounts under the Separate Account.
Ownership of Group Contract and Participant Account
The Contract Owner must be an employer or the trustee for an employer's
retirement plan. The Contract Owner is shown on the Contract
Specifications page. This Contract is held by the Contract Owner for the
benefit of the Participants and beneficiaries.
Each participant for whom Purchase Payment(s) are made will participate in
this Contract as a Participant. A participant account will be established
for each Participant.
16
<PAGE>
Transfer and Assignment
Neither you nor a Participant may transfer, sell, assign, pledge, charge,
encumber or in any way alienate an interest under this Contract. To the
extent permitted by law, the interests of Participants and all benefits
payable under this Contract are not subject to the claims of your or their
creditors or to legal process.
Beneficiary
A Participant's Beneficiary is named on his or her enrollment form. The
Beneficiary may be changed at any time prior to the death of the
Participant. We must receive a Written Request to change the Beneficiary.
Any such change will relate back to and take effect on the date the
Written Request was signed. We will not be liable for any payment we make
before such Written Request has been received and acknowledged at our
Administrative Office.
DEATH BENEFIT
Death of Participant
If a Participant dies before his or her Annuity Commencement Date, a Death
Benefit will be paid to his or her Primary Beneficiary, if any Primary
Beneficiary is then living. If no Primary Beneficiary is living at the
time of the Participant's death, or if the Primary Beneficiary dies within
30 days after the death of the Participant and no Death Benefit has been
paid, the Death Benefit will be paid to the person or persons named as the
Participant's Contingent Beneficiary. If no Primary or Contingent
Beneficiary is living at the time of the Participant's death, the Death
Benefit will be paid to the estate of the Participant. No Death Benefit
is payable if the Participant dies on or after his or her Annuity
Commencement Date. Only one Death Benefit is payable with respect to a
Participant's participation interest under this Contract.
Death Benefit
The Death Benefit will be determined as of the Death Benefit Valuation
Date. The "Death Benefit Valuation Date" is the Valuation Period on which
we receive both Due Proof of Death of the Participant and a Written
Request regarding payment of the Death Benefit.
If the Participant dies before attaining Age 75 and before his or her
Annuity Commencement Date, the Death Benefit is an amount equal to the
greatest of:
(1) the Participant's Account Value on the Death Benefit Valuation
Date, less any applicable premium tax not previously deducted,
and less any outstanding loans;
(2) the total Purchase Payment(s) received by us for him or her, less
any applicable premium tax not previously deducted, less any
partial surrenders, and less any outstanding loans; or
17
<PAGE>
(3) the largest Death Benefit amount for the Participant on any
Certificate Anniversary prior to death that is both an exact
multiple of five and occurs prior to the Death Benefit Valuation
Date, less any applicable premium tax not previously deducted,
less any partial surrenders after such Death Benefit was
determined, and less any outstanding loans.
If the Participant dies after attaining Age 75 and before his or her
Annuity Commencement Date, the Death Benefit is an amount equal to the
greatest of:
(1) the Participant's Account Value on the Death Benefit Valuation
Date, less any applicable premium tax not previously deducted,
and less any outstanding loans;
(2) the total Purchase Payment(s) received by us for him or her, less
any applicable premium tax not previously deducted, less any
partial surrenders, and less any outstanding loans; or
(3) the largest Death Benefit amount for the Participant on any
Certificate Anniversary prior to death that is both an exact
multiple of five and occurs prior to the date on which the
Participant attained Age 75, less any applicable premium tax not
previously deducted, less any partial surrenders after such Death
Benefit was determined, and less any outstanding loans.
SETTLEMENT OPTIONS
Annuity Commencement Date
The Annuity Commencement Date for a Participant is the date on which we
will begin to make payments in accordance with the Settlement Option
selected by him or her. This date may be changed by Written Request at
least 30 days prior to the then applicable Annuity Commencement Date being
replaced. However, in no event may the Annuity Commencement Date be later
than the Certificate Anniversary nearest the Participant's 85th birthday,
or five years after his or her Certificate Effective Date, whichever is
later.
Election of Settlement Option
If a Participant is alive on his or her Annuity Commencement Date and
unless otherwise directed, the Company will apply the Participant's
Account Value, less any premium tax not previously deducted, and less any
outstanding loans, according to the Settlement Option elected.
If no Settlement Option election has been made or is in effect on the
Annuity Commencement Date, we will begin payments in accordance with
Settlement Option 1 with a fixed period of 120 monthly payments assured.
Annuity Benefit
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The Annuity Benefit may be calculated and paid: (1) as a Fixed Dollar
Annuity Benefit; (2) as a Variable Dollar Annuity Benefit; or (3) as a
combination of both.
If a Fixed Dollar Annuity Benefit only is elected, we will transfer all of
the Participant's Account Value to the Company's general account on the
Annuity Commencement Date. Similarly, if a Variable Dollar Annuity
Benefit only is elected, we will transfer all of the Participant's Account
Value to the Sub-Accounts as of the end of the Valuation Period
immediately prior to the Annuity Commencement Date; we will allocate the
amount transferred among the Sub-Accounts in accordance with a Written
Request. No transfers between the Fixed Dollar Annuity Benefit and the
Variable Dollar Annuity Benefit will be allowed after the Annuity
Commencement Date. However, after the Variable Dollar Annuity Benefit has
been paid for at least twelve months, the Annuitant may, no more than once
each twelve months thereafter, transfer all or part of the Annuity Units
upon which the Variable Dollar Annuity Benefit is based from the Sub-
Account(s) then held, to Annuity Units in different Sub-Account(s).
If a Variable Dollar Annuity Benefit is elected, the amount to be applied
under that benefit is the Participant's Variable Account Value as of the
end of the Valuation Period immediatley preceding the Annuity Commencement
Date. If a Fixed Dollar Annuity Benefit is elected, the amount to be
applied under that benefit is the Participant's Fixed Account Value as of
the Annuity Commencement Date.
Fixed Dollar Annuity Benefit
Fixed Dollar Annuity Benefits are determined by multiplying the
Participant's Fixed Account Value (expressed in thousands of dollars and
after deduction of any premium taxes not previously deducted) by the
amount of the monthly payment per $1,000 of value obtained from the
Settlement Option Table for the Annuity Benefit elected. The Fixed Dollar
Annuity Benefit will remain level for the duration of the Annuity.
Variable Dollar Annuity Benefit
The first monthly Variable Dollar Annuity Benefit payment is equal to the
Participant's Variable Account Value as of the end of the Valuation Period
immediately preceding the Annuity Commencement Date (expressed in
thousands of dollars and after deduction of any premium taxes not
previously deducted) multiplied by the amount of the monthly payment per
$1,000 of value obtained from the Settlement Option Table for the Annuity
Benefit elected less the pro-rata portion of the Certificate Maintenance
Fee. The dollar amount of the first monthly Variable Dollar Annuity
Benefit from each Sub-Account is determined in the same manner.
The dollar amount of the second and subsequent monthly Variable Dollar
Annuity Benefit payments is equal to the sum of the number of Annuity
Units for each Sub-Account in which amounts are held by the Participant,
multiplied by the Annuity Unit Value for that Sub-Account as of the fifth
Valuation Date preceding the due date of the payment. A pro-rata portion
of the Certificate Maintenance Fee is deducted from the total to arrive at
the actual payment.
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<PAGE>
The number of Annuity Units in each Sub-Account held by the Participant is
determined by dividing the dollar amount of the first monthly Variable
Dollar Annuity Benefit payment from each Sub-Account by the Annuity Unit
Value for that Sub-Account as of the Participant's Annuity Commencement
Date. The number of Annuity Units remains fixed during the Annuity Payment
Period, except as a result of any transfers among Sub-Accounts after the
Annuity Commencement Date.
The Annuity Unit Value for each Sub-Account was originally established in
the same manner as Accumulation Unit values. Thereafter, the value of an
Annuity Unit for a Sub-Account is determined by multiplying the Annuity
Unit Value as of the end of the preceding Valuation Period by the Net
Investment Factor, determined as set forth above under "Accumulation Unit
Value", for the Valuation Period just ended. The product is then
multiplied by the assumed daily investment factor (0.99991781), for the
number of days in the Valuation Period. The factor is based on the
assumed net investment rate of three percent (3%) that is reflected in the
Settlement Option Tables.
The Annuitant receives an amount equal the value of the fixed number of
Annuity Units each month. Such value will reflect the investment
performance of the Sub-Accounts selected and the amount of each annuity
payment will vary accordingly.
Settlement Options
Option 1 Life Annuity with Payments for at Least a Fixed Period
We will make a monthly payment for at least a fixed period. If the
Annuitant lives longer than the fixed period, then we will make
payments until his or her death. The fixed periods available are
shown in the Option 1 Table.
If at the death of the Annuitant payments have been made for less than
the fixed period elected, we will continue to make payments:
1) to the contingent payee designated on the Settlement Option
election form;
2) during the remainder of the fixed period.
Option 2 Life Annuity
We will make a monthly payment until the Annuitant's death. The
Option 2 Table applies to this Option.
Option 3 Joint and One-half Survivor Annuity
We will make a monthly payment to the Annuitant until the Annuitant's
death; thereafter, and upon receipt by the Company of Due Proof of
Death of the Annuitant, one-half of the monthly payment will continue
20
<PAGE>
to a designated survivor, if living, until his or her death. The
Option 3 Table applies to this Option.
Option 4 Income for a Fixed Period
We will make payments for a fixed period. Payment intervals and
amounts are shown in the Option 4 Table and are based on a three
percent (3 %) guaranteed interest rate.
If at the death of the Annuitant payments have been made for less than
the fixed period elected, we will continue to make payments:
1) to the contingent payee designated on the Settlement Option
election form;
2) during the remainder of the fixed period.
Option 5 Any Other Form
We will make payments in any other form of annuity which is acceptable
to us.
Minimum Amounts
If a Participant's Account Value is less than $5,000 on his or her Annuity
Commencement Date, we reserve the right to pay that amount in one lump
sum. If monthly payments under a Settlement Option would be less than
$100, we may make payments quarterly, semi-annually, or annually in our
sole discretion.
All elected Settlement Options must comply with current applicable laws,
regulations and rulings issued by any governmental agency. If at the time
a Fixed Dollar Annuity Benefit is elected, we have available options or
rates on a more favorable basis than those guaranteed, the higher benefits
shall be applied and guaranteed for as long as that election remains in
force.
To the extent applicable, all factors, values, benefits and reserves will
not be less than those required by the law of the state in which this
Contract is delivered.
Settlement Option Tables
The Settlement Option Tables show the guaranteed dollar amount, based on
unisex rates, of the monthly payments under various Settlement options for
each $1,000 applied.
OPTION 1 TABLES - LIFE ANNUITY
With Payments For At Least A Fixed Period
-----------------------------------------
60 120 180 240
Months Months Months Months
------ ------ ------ ------
21
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Age
---
55 $4.55 $4.51 $4.44 $4.33
56 4.65 4.61 4.52 4.39
57 4.76 4.71 4.61 4.46
58 4.87 4.81 4.70 4.53
59 4.99 4.92 4.79 4.60
60 5.12 5.04 4.89 4.67
61 5.25 5.16 4.99 4.74
62 5.40 5.29 5.09 4.81
63 5.55 5.42 5.19 4.87
64 5.72 5.56 5.30 4.94
65 5.89 5.71 5.40 5.00
66 6.08 5.86 5.51 5.06
67 6.27 6.02 5.62 5.11
68 6.48 6.19 5.72 5.17
69 6.71 6.36 5.83 5.22
70 6.95 6.54 5.93 5.26
71 7.20 6.72 6.03 5.30
72 7.46 6.90 6.12 5.34
73 7.75 7.08 6.21 5.37
74 8.04 7.27 6.30 5.40
OPTION 2 TABLE - LIFE ANNUITY
-------------------------------------------------------
60 120 180 240
Months Months Months Months
------ ------ ------ ------
Age Age Age Age
--- --- --- ---
55 $4.65 60 $5.14 65 $5.95 70 $7.08
56 4.67 61 5.28 66 6.14 71 7.36
57 4.77 62 5.43 67 6.35 72 7.66
58 4.89 63 5.59 68 6.58 73 7.98
59 5.01 64 5.76 69 6.82 74 8.33
22
<PAGE>
<TABLE>
<CAPTION>
OPTION 3 TABLE - JOINT AND ONE-HALF SURVIVOR ANNUITY
Monthly payments for each $1,000 of proceeds by ages of persons named*.
----------------------------------------------------------------------------------------------------
Secondary Age
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Primary 60 61 62 63 64 65 66 67 68 69 70
Age
60 $4.73 $4.75 $4.78 $4.80 $4.83 $4.85 $4.87 $4.89 $4.92 $4.93 $4.95
61 4.81 4.84 4.87 4.90 4.92 4.95 4.97 5.00 5.02 5.04 5.06
62 4.90 4.93 4.96 4.99 5.02 5.05 5.08 5.11 5.13 5.16 5.18
63 4.99 5.03 5.06 5.09 5.13 5.16 5.19 5.22 5.25 5.28 5.30
64 5.09 5.12 5.16 5.20 5.23 5.27 5.30 5.34 5.37 5.40 5.43
65 5.18 5.22 5.26 5.31 5.35 5.38 5.42 5.46 5.49 5.53 5.56
66 5.28 5.33 5.37 5.42 5.46 5.50 5.54 5.58 5.62 5.66 5.70
67 5.38 5.43 5.48 5.53 5.58 5.62 5.67 5.72 5.76 5.80 5.84
68 5.49 5.54 5.59 5.65 5.70 5.75 5.80 5.85 5.90 5.95 5.99
69 5.60 5.65 5.71 5.77 5.82 5.88 5.93 5.99 6.04 6.10 6.15
70 5.71 5.77 5.83 5.89 5.95 6.01 6.07 6.13 6.19 6.25 6.31
</TABLE>
*Payments after the death of the Primary Payee will be one-half of the
amount shown.
<TABLE>
<CAPTION>
OPTION 4 TABLE - INCOME FOR A FIXED PERIOD
Payments for fixed number of years for each $1,000 applied.
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Terms of Semi- Terms of Semi- Terms of Semi-
Payments Annual Annual QuarterlyMonthly Payments Annual AnnualQuarterly Monthly PaymentsAnnual Annual QuarterlyMonthly
-------- ------ ------ ---------------- -------- ------ --------------- ------- -------------- ------ ----------------
Years Years Years
6 183.42 92.61 46.53 15.56 11 $109.76 $55.42 $27.84 $9.31 16 $82.52 $41.66 $20.93 $7.00
7 160.20 80.89 40.64 13.59 12 102.45 51.73 25.99 8.69 17 79.04 39.91 20.05 6.71
8 142.82 72.11 36.23 12.12 13 96.29 48.62 24.43 8.17 18 75.96 38.35 19.27 6.44
9 129.32 65.29 32.81 10.97 14 91.03 45.96 23.09 7.72 19 73.21 36.96 18.57 6.21
10 118.55 59.86 30.07 10.06 15 86.48 43.66 21.94 7.34 20 70.75 35.72 17.95 6.00
</TABLE>
Rates for monthly payments for ages or fixed periods not shown in the
above tables will be calculated on the same basis as those shown and may
be obtained from us. Fixed periods shorter than five years are not
available.
23
<PAGE>
Accumulation Unit Value, 12
Administration Charge, 13
Allocation of Purchase Payment(s), 9
Annuity Benefit, 16
Annuity Commencement Date, 16
Beneficiary, 15
Certificate Maintenance Fee, 13
Changes -- Waivers, 8
Death Benefit, 15
Death of Participant, 15
Discharge of Liability, 9
Election of Settlement Option, 16
Entire Contract, 8
Facility of Payment, 8
FEES AND CHARGES, 13
Fixed Account, 10
Fixed Account Value, 10
Fixed Dollar Annuity Benefit, 16
General Description, 11
Incontestability, 9
Minimum Amounts, 18
Misstatement, 8
Mortality and Expense Risk Charge, 13
No Default, 9
Nonparticipating, 8
Ownership of Group Contract and Participant Account, 14
Ownership of Separate Account, 14
Participant Certificate, 8
Required Proof, 9
Required Reports, 9
Settlement, 8
Settlement Option Tables, 18
Settlement Options, 17
Sub-Accounts of the Separate Account, 11
Surrender Value, 13
SURRENDERS, 13
Suspension or Delay in Payment of Surrender, 14
Termination, 9
Transfer and Assignment, 14
Transfers, 12
Valuation of Assets, 11
Variable Account Value, 11
Variable Dollar Annuity Benefit, 16
Voting Rights, 9
24
<PAGE>
<PAGE>
Exhibit (4)(a)(iii)
Box 5423, Cincinnati, Ohio 45201-5423 . (800) 789-6771
LOAN ENDORSEMENT
The policy is changed as set out below to permit loans:
LOAN AMOUNT AND CONDITIONS. So long as a participant has not
commenced distributions of his or her interest under a payment option
(or any other systematic payment program), we may allow the
participant to borrow an amount (the "new policy loan") if all of the
following requirements are met:
1. the sum of the participant's new policy loan plus the highest
balance of each other policy loan, if any, of the participant
at any time during the one-year period ending on the date of
the new policy loan, cannot exceed $50,000; and
2. the sum of the participant's new policy loan plus the current
balance of each other policy loan, if any, of the
participant, cannot exceed the greater of (i) $10,000, or
(ii) one-half of the net amount payable to the participant
upon a full surrender of his or her interest in the policy;
and
3. the net amount payable to the participant upon a full
surrender of his or her interest in the policy, less the sum
of the participant's new policy loan and the current balance
of each other policy loan, if any, of the participant, cannot
be less than the minimum amount required to avoid an
involuntary surrender under the other provisions of the
policy.
An application for a loan must be made on our form. We may delay
granting the loan for up to six months after we receive a
participant's request for it. We may also limit the frequency at
which loans may be made, the minimum amount of a loan, and the minimum
amount of loan payments to be made to us.
TERM; REPAYMENT. The principal and interest of each loan must be
repaid to us within five years of the date such loan is made. This
five year limit will not apply to any loan used to acquire a dwelling
unit that is to be used as a principal residence by the participant.
Regular substantially equal periodic payments must be made at least
quarterly over the term of a loan until fully paid.
1
<PAGE>
LIEN -- DEEMED SURRENDER AND DISTRIBUTION. A policy loan is a first
lien on the participant's interest in the policy. The participant's
interest in the policy will be the sole security for a loan. We may
pay off the loan (by treating a portion of the interest equal to the
balance of a loan as surrendered, and applying it to pay off the loan)
if:
1. the participant's interest in the policy is fully
surrendered; or
2. distributions of the participant's interest begin under a
payment option (or any other systematic payment program); or
3. the participant dies and his or her spouse is not the sole
person entitled to the participant's interest in the policy.
If there is a default on repayment, then we may also pay off the loan
(as described above), unless a distribution to the participant is
prohibited by the other provisions of the policy.
INTEREST. The interest rate on a policy loan will not be more than 8%
per year, unless otherwise provided under any other provision of the
policy covering employee benefit plan loans. Any unpaid interest will
be added to a loan; in effect, then, it will be compounded and will be
part of the loan.
This is part of the policy. It is not a separate contract. It changes
the policy only as and to the extent stated. In all cases of conflict
with the other terms of the policy, the provisions of this Endorsement
shall control.
Signed for us at our office as of the date of issue.
/s/ Betty Kasprowicz /s/ James M. Mortenson
Betty Kasprowicz James M. Mortenson
Assistant Secretary Executive Vice President
2
<PAGE>
<PAGE>
Exhibit (4)(a)(iv)
Box 5423, Cincinnati, Ohio 45201-5423 . (800) 789-6771
EMPLOYER PLAN ENDORSEMENT
The policy is changed as set out below to adapt it for use with an
employee benefit plan:
PLAN. "Plan" means the employee benefit plan named on the group
policy application or any successor plan.
EMPLOYER. "Employer" means the employer sponsoring the Plan and
named on the group policy application, or any other employer
which succeeds to its rights under the Plan.
PLAN ADMINISTRATOR. "Plan Administrator" means the person
designated as such to us in writing by the Employer. If no
person has been designated, "Plan Administrator" means the
Employer.
PLAN INTERPRETATION. For purposes of this policy, the Plan
Administrator shall interpret the Plan and decide all questions
about what is allowed or required by the Plan. We have no duty
to review or interpret the Plan, or to review or approve any
decision of the Plan Administrator. We are entitled to rely on
the written directions of the Plan Administrator on such matters.
APPLICABLE RESTRICTIONS. This policy may be restricted by
federal and/or state laws related to employee benefit plans. We
may change the terms of this policy or administer this policy at
any time as needed to comply with such laws.
PLAN DISTRIBUTION PROVISIONS. Distributions of a participant's
interest allowed under this policy may be made only at a time
allowed by the Plan or required by this policy. The form of any
distribution shall be determined under the Plan from among those
forms of distribution available under this policy. No
distribution may be made without the written direction of the
Plan Administrator unless required by this policy. Distributions
of a participant's interest in the policy may be made without the
participant's consent when required by the Plan.
FORFEITURE OF NON-VESTED AMOUNTS. Any amount under this policy
attributable to contributions by the Employer (excluding any
contributions made under a salary reduction agreement with an
employer) is subject to the vesting provisions of the Plan. If
at any time the Plan provides for a forfeiture of an amount that
1
<PAGE>
is not vested, then such amount may be withdrawn and paid as
directed by the Plan Administrator.
RETURN OF EXCESS CONTRIBUTIONS. Contributions made to this
policy are subject to any limits on contributions and
nondiscrimination provisions of the Plan. If the Plan
Administrator determines that excess or discriminatory
contributions were made, then amounts attributable to such
contributions may be withdrawn and paid as directed by the Plan
Administrator.
INVOLUNTARY CASH OUT. If at any time the Plan provides for an
involuntary cash out of a participant's benefits, then the
participant's interest in this policy may be surrendered as a
whole as directed by the Plan Administrator. No amounts may be
withdrawn under this provision or any other involuntary surrender
provision if any total policy value of the participant's interest
has ever exceeded $3,500 (not counting any amount paid under the
RETURN OF EXCESS CONTRIBUTIONS provision).
ENTITLEMENT TO DEATH BENEFITS. The person or persons entitled to
any portion of a participant's interest in this policy remaining
payable after the participant's death shall be determined under
the Plan. No distribution of any such amount shall be made
without the written direction of the Plan Administrator.
INVESTMENT ALLOCATIONS AND TRANSFERS. If this policy provides
that amounts held under it are allocated among separate
investment funds or fixed accounts, then any such allocations
and/or subsequent transfers shall be made only as required or
allowed by the Plan, or as required by this policy to secure a
loan. No such allocation or transfer shall be made without the
written direction of the Plan Administrator unless required by
this policy to secure a loan. Allocations or transfers with
respect to a participant's interest in this policy may be made
without the participant's consent when required by the Plan or
the policy.
PLAN LOAN PROVISIONS. If loans are allowed under this policy, no
such loan may be made unless also allowed by the Plan. Any such
loan will be subject to any additional limits and conditions
which apply under the Plan. No loan may be made without the
written direction of the Plan Administrator. The rate of
interest to be paid by a participant on any such loan will be
fixed by the Plan Administrator, but will be at least three
percentage points higher than the minimum guaranteed rate of
interest, if any, that applies to that portion of a participant's
interest in this policy used as security for the loan.
QUALIFIED JOINT AND 50% SURVIVOR ANNUITY OPTION. In addition to
the other payment options available under this policy, payments
of a participant's interest may be made in the form of a
2
<PAGE>
Qualified Joint and 50% Survivor Annuity. Under this payment
option, we will make equal payments to the participant for life
at least once per year. If the person who is the participant's
spouse at the time payments commence survives the participant,
then after the participant's death we will make payments to such
spouse at the same intervals equal to one-half of the amount of
the prior payments, with such payments continuing to such spouse
until his or her death. The first payment under this payment
option will be made on the effective date of the payment option.
The amount of the payments we will make under this payment option
is based on the intervals for payments, which are subject to our
approval. Amounts vary with the ages, as of the first payment
date, of the participant and his or her spouse. We will require
proof of the ages of the participant and his or her spouse.
Monthly payments that we will make under this payment option for
each $1,000 of proceeds applied will be furnished upon request.
Once payments begin under this payment option, the value of
future payments may not be withdrawn as a commutation of
benefits.
This is a part of the policy. It is not a separate contract. It changes
the policy only as and to the extent stated. In all cases of conflict
with the other terms of the policy, the provisions of this endorsement
shall control.
Signed for us at our office as of the date of issue.
/s/Betty Kasprowicz /s/James M. Mortenson
Betty Kasprowicz James M. Mortenson
Assistant Secretary Executive Vice President
3
<PAGE>
<PAGE>
Exhibit (4)(a)(v)
TAX SHELTERED ANNUITY ENDORSEMENT
The policy is changed as set out below to add provisions for a Tax
Sheltered Annuity.
APPLICABLE TAX LAW RESTRICTIONS. This policy is intended to
receive contributions that qualify for deferred tax treatment
under Internal Revenue Code ("IRC") Section 403(b). It is
restricted as required by federal tax law. We may change the
terms of this policy or administer this policy at any time as
needed to comply with that law. Any such change may be applied
retroactively.
NO ASSIGNMENT OR TRANSFER. A participant cannot assign, sell, or
transfer his or her interest in this policy. A participant
cannot pledge it to secure a loan or the performance of an
obligation, or for any other purpose. The only exceptions to
these rules are:
1) an interest in this policy may secure a loan made under
any loan provisions of this policy;
2) an interest in this policy may be transferred under a
Qualified Domestic Relations Order as defined in IRC
Section 414(p); and
3) a participant may designate another person to receive
payments with the participant based on joint lives or
joint life expectancies, but any such designation shall
not give that other person any present rights under the
policy during the participant's lifetime.
LIMITS ON CONTRIBUTIONS. We may refuse to accept any
contribution to this policy that does not qualify for deferred
tax treatment under IRC Section 403(b) and Section 415.
Contributions made for a participant to this policy and any other
plan, contract, or arrangement under salary reduction
agreement(s) with his or her employer(s) cannot exceed the limits
of IRC Section 402(g). A participant cannot make more than one
new salary reduction agreement with his or her current employer
for contributions to this policy in any single calendar year.
The participant and his or her employer shall ensure compliance
with these limits.
DISTRIBUTION RESTRICTIONS ON SALARY REDUCTION CONTRIBUTIONS AND
CUSTODIAL ACCOUNTS TRANSFERS. To comply with federal tax law,
distribution restrictions apply to amounts under this policy that
represent:
1) contributions made after December 31, 1988 under any
salary reduction agreement with an employer;
<PAGE>
2) income earned after December 31, 1988 on salary reduction
contributions whenever made; or
3) transfers from a custodial account described in IRC
Section 403(b)(7) and all income attributable to the
amount transferred.
Any such amount cannot be distributed from this policy unless the
participant has:
1) reached age 59-1/2; or
2) separated from service with his or her employer; or
3) become disabled (as defined in IRC Section 72(m)(7)); or
4) in the case of salary reduction contributions (including
salary reduction contributions to a custodial account),
incurred a hardship as defined under the IRC.
A withdrawal made by reason of a hardship cannot include any
income earned after December 31, 1988 attributable to salary
reduction contributions.
IRC Section 72(m)(7) states that: "An individual shall be
considered to be disabled if he is unable to engage in any
substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected
to result in death or to be of long-continued and indefinite
duration. An individual shall not be considered to be disabled
unless he furnishes proof of the existence thereof in such form
and manner as the Secretary [of the Treasury] may require."
DIRECT ROLLOVERS. To the extent required under IRC Section
401(a)(31), a participant or his or her surviving spouse may
elect to have any portion of an eligible rollover distribution
(as defined in IRC Section 403(b)(8)) paid directly to another
Individual Retirement Annuity or Individual Retirement Account
(as defined in IRC Section 408) or, if allowed, to another Tax
Sheltered Annuity (as defined in IRC Section 403(b)), specified
by the participant or surviving spouse and which accepts such
distribution. Any direct rollover election must be made on our
form, and must be received at our office before the date of
payment.
REQUIRED MINIMUM DISTRIBUTIONS. No later than April 1 following
the calendar year in which a participant reaches age 70-1/2:
1) the participant's interest in this policy must be paid in
full; or
2) distribution of the participant's interest must begin in
the form of substantially equal payments made at least
once per year (i) for the participant's life or as joint
<PAGE>
and survivor payments to the participant and one other
person, or (ii) over a period certain not to exceed the
participant's life expectancy or the joint and last
survivor life expectancy of the participant and one other
person named to receive any remaining payments after his
or her death.
If distributions are to be made under clause 2) of this
provision, the present value of the payments likely to be made to
the participant during his or her expected life must be more than
half of the present value of all payments expected to be made
with respect to his or her interest. For this purpose, the
present value of payments is determined as of the date payments
begin.
DEATH BEFORE REQUIRED MINIMUM DISTRIBUTIONS. If a participant
dies before distributions commence under the REQUIRED MINIMUM
DISTRIBUTIONS provision, any amount remaining payable with
respect to his or her interest must be paid either:
1) in full by December 31 of the fifth calendar year after
the participant's death; or
2) over the life of the person entitled to such amount, or
over a period certain not to exceed his or her life
expectancy, with substantially equal payments made at
least once per year starting by December 31 of the first
calendar year after the participant's death.
However, if the participant's spouse is the sole person entitled
to such amount, then during such spouse's lifetime the starting
date for payments under clause 2) of this provision may be
delayed to a date not later than December 31 of the calendar year
in which the participant would have reached age 70-1/2. If such
spouse dies before payments commence, then this provision will
apply upon the death of the spouse, with the spouse being treated
as the participant for purposes of this provision.
DEATH AFTER REQUIRED MINIMUM DISTRIBUTIONS. If a participant
dies on or after distributions commence under the REQUIRED
MINIMUM DISTRIBUTIONS provision, any amount remaining payable
with respect to his or her interest must be paid as follows:
1) if the participant dies before April 1 following the year
in which the participant reaches or would have reached
age 70-1/2 and the participant could have slowed or
suspended payments before death, then such amount must be
paid under the DEATH BEFORE REQUIRED MINIMUM
DISTRIBUTIONS provision as if the participant died before
such distributions commenced; or
2) in all other cases, such amount must be paid at least as
rapidly as payments were being made at the time of the
participant's death.
<PAGE>
LIFE EXPECTANCIES. For the REQUIRED MINIMUM DISTRIBUTIONS
provision and the DEATH BEFORE REQUIRED MINIMUM DISTRIBUTIONS
provision, life expectancies will be determined under Section
1.72-9 of the Federal Income Tax Regulations. The life
expectancy of a participant and his or her spouse may be
recalculated not more often than once each year. The life
expectancy of any other person cannot be recalculated.
CONTROLLING TAX RULES. The REQUIRED MINIMUM DISTRIBUTIONS
provision, DEATH BEFORE REQUIRED MINIMUM DISTRIBUTIONS provision,
and DEATH AFTER REQUIRED MINIMUM DISTRIBUTIONS provision shall be
applied in accordance with IRC Section 401(a)(9), including the
incidental death benefit rules of IRC Section 401(a)(9)(G), and
the related Federal Income Tax Regulations, including the minimum
distribution incidental death benefit rules of Section
1.401(a)(9)-2 of the Proposed Federal Income Tax Regulations.
This is part of the policy. It is not a separate contract. It changes
the policy only as and to the extent stated. In all cases of conflict
with the other terms of the policy, the provisions of this Endorsement
shall control.
Signed for us at our office as of the date of issue.
/s/Betty Kasprowicz /s/ James M. Mortenson
Betty Kasprowicz James M. Mortenson
Assistant Secretary Executive Vice President
<PAGE>
<PAGE>
Exhibit (4)(a)(vi)
QUALIFIED PENSION, PROFIT SHARING, AND ANNUITY PLAN
ENDORSEMENT
The policy is changed as set out below to add provisions for a qualified
pension, profit sharing, or annuity plan. This endorsement and the policy
to which it is attached are not valid without additional endorsement(s)
defining the Plan and Plan Administrator.
APPLICABLE TAX LAW RESTRICTIONS. This policy is intended to
receive contributions pursuant to a pension, profit sharing, or
annuity plan qualified under Internal Revenue Code ("IRC")
Section 401(a) or 403(a). It is restricted as required by
federal tax law. We may change the terms of this policy or
administer this policy at any time as needed to comply with that
law. Any such change may be applied retroactively.
EXCLUSIVE BENEFIT. This policy is for the exclusive benefit of
the participants and their beneficiaries. No amounts held under
this policy may be used for or diverted to any other purpose (by
distribution or otherwise) except as and to the extent that the
Plan Administrator shall determine that such is allowed both by
applicable law and by the Plan.
NO ASSIGNMENT OR TRANSFER. A participant cannot assign, sell, or
transfer his or her interest in this policy. A participant
cannot pledge his or her interest to secure a loan or the
performance of an obligation, or for any other purpose. The only
exceptions to these rules are:
1) an interest in this policy may secure a loan made under
any loan provisions of this policy;
2) an interest in this policy may be transferred under a
Qualified Domestic Relations Order as defined in IRC
Section 414(p); and
3) a participant may designate another person to receive
payments with the participant based on joint lives or
joint life expectancies, but any such designation shall
not give that other person any present rights under this
policy during the participant's lifetime.
LIMITS ON CONTRIBUTIONS. Contributions made to this policy must
not exceed the limits set forth in IRC Section 415.
Contributions made to this policy for a participant under salary
reduction agreement(s) with his or her employer(s) cannot exceed
the limits of IRC Section 402(g). Additional limits may apply
under the terms of the Plan. The Plan Administrator shall ensure
compliance with these IRC limits and any Plan limits.
<PAGE>
DISTRIBUTION RESTRICTIONS ON 401(k) EMPLOYEE ELECTIVE
CONTRIBUTIONS. Any amounts under this policy which represent
employee elective contributions made pursuant to salary reduction
agreement(s) under IRC Section 401(k) and any income earned on
such amounts, cannot be distributed any earlier than allowed
under IRC Section 401(k)(2)(B). Additional limits may apply under
the terms of the Plan. The Plan Administrator shall determine
when a distribution is allowed under this IRC section and the
Plan.
DISTRIBUTION RESTRICTIONS ON PENSION CONTRIBUTIONS. Any amounts
under this policy which represent contributions to a money
purchase pension plan or a defined benefit pension plan, and any
income earned on such amounts, cannot be distributed any earlier
than allowed under Treasury Regulations Section 1.401-1(b)(1)(i).
Additional limits may apply under the terms of the Plan. The
Plan Administrator shall determine when a distribution is allowed
under this regulation and the Plan.
DIRECT ROLLOVERS. To the extent required under IRC Section
401(a)(31), a participant or his or her surviving spouse may
elect to have any portion of an eligible rollover distribution
(as defined in IRC Section 402(c)(4)) paid directly to another
Individual Retirement Annuity or Individual Retirement Account
(as defined in IRC Section 408) or, if allowed, to another
qualified pension, profit sharing, or annuity plan (as defined in
IRC Section 401(a) or 403(a)), specified by the participant or
surviving spouse and which accepts such distribution. Any direct
rollover election must be made on our form, and must be received
at our office before the date of payment.
DATE BENEFITS TO BEGIN. Unless a participant elects to delay the
payment of his or her benefits, a distribution of the
participant's interest in this policy shall begin no later than
60 days after the end of the Plan year in which the last of the
following occurs:
1) the participant has reached the earlier of age 65 or the
normal retirement age stated in the Plan;
2) the 10th anniversary of the date the participant joined
the Plan; or
3) the participant's separation from service with the
employer.
The Plan Administrator shall make any determination required
under this provision.
In no event can the payment of a participant's benefits be
delayed beyond the date stated in the REQUIRED MINIMUM
DISTRIBUTIONS provision, below.
2
<PAGE>
REQUIRED MINIMUM DISTRIBUTIONS. No later than April 1 following
the calendar year in which a participant reaches age 70-1/2:
1) the participant's interest in this policy must be paid
in full; or
2) distribution of the participant's interest must begin in
the form of substantially equal payments made at least
once per year (i) for the participant's life or as joint
and survivor payments to the participant and one other
person, or (ii) over a period certain not to exceed the
participant's life expectancy or the joint and last
survivor life expectancy of the participant and one
other person named to receive any remaining payments
after his or her death.
If distributions are to be made under clause 2) of this
provision, the present value of the payments likely to be made to
the participant during his or her expected life must be more than
half of the present value of all payments expected to be made
with respect to his or her interest. For this purpose, the
present value of payments is determined as of the date payments
begin.
DEATH BEFORE REQUIRED MINIMUM DISTRIBUTIONS. If a participant
dies before distributions commence under the REQUIRED MINIMUM
DISTRIBUTIONS provision, any amount remaining payable with
respect to his or her interest must be paid either:
1) in full by December 31 of the fifth calendar year after
the participant's death; or
2) over the life of the person entitled to such amount, or
over a period certain not to exceed his or her life
expectancy, with substantially equal payments made at
least once per year starting by December 31 of the first
calendar year after the participant's death.
However, if the participant's spouse is the sole person entitled
to such amount, then during such spouse's lifetime, the starting
date for payments under clause 2) of this provision may be
delayed to a date not later than December 31 of the calendar year
in which the participant would have reached age 70-1/2. If such
spouse dies before payments commence, then this provision will
apply upon the death of the spouse, with the spouse being treated
as the participant for purposes of this provision.
DEATH AFTER REQUIRED MINIMUM DISTRIBUTIONS. If a participant
dies on or after distributions commence under the REQUIRED
MINIMUM DISTRIBUTIONS provision, any amount remaining payable
with respect to his or her interest must be paid as follows:
3
<PAGE>
1) if the participant dies before April 1 following the
year in which the participant reaches or would have
reached age 70-1/2 and the participant could have slowed
or suspended payments before death, then such amount
must be paid under the DEATH BEFORE REQUIRED MINIMUM
DISTRIBUTIONS provision as if the participant died
before such distributions commenced; or
2) in all other cases, such amount must be paid at least as
rapidly as payments were being made at the time of the
participant's death.
LIFE EXPECTANCIES. For the REQUIRED MINIMUM DISTRIBUTIONS
provision and the DEATH BEFORE REQUIRED MINIMUM DISTRIBUTIONS
provision, life expectancies will be determined under Section
1.72-9 of the Federal Income Tax Regulations. The life
expectancy of a participant and his or her spouse may be
recalculated not more often than once each year. The life
expectancy of any other person cannot be recalculated.
CONTROLLING TAX RULES. The REQUIRED MINIMUM DISTRIBUTIONS
provision, DEATH BEFORE REQUIRED MINIMUM DISTRIBUTIONS provision,
and DEATH AFTER REQUIRED MINIMUM DISTRIBUTIONS provision shall be
applied in accordance with IRC Section 401(a)(9), including the
incidental death benefit rules of IRC Section 401(a)(9)(G), and
the related Federal Income Tax Regulations, including the minimum
distribution incidental death benefit rules of Section
1.401(a)(9)-2 of the Proposed Federal Income Tax Regulations.
This is part of the policy. It is not a separate contract. It changes
the policy only as and to the extent stated. In all cases of conflict
with the other terms of the policy, the provisions of this Endorsement
shall control.
Signed for us at our office as of the date of issue.
/s/Betty Kasprowicz /s/James M. Mortenson
Betty Kasprowicz James M. Mortenson
Assistant Secretary Executive Vice President
4
<PAGE>
<PAGE>
Exhibit (4)(a)(vii)
LONG-TERM CARE WAIVER RIDER
This rider is made part of the policy to which it is attached.
THE BENEFIT. Prior to the date distributions commence under a
payment option (or any other systematic payment program) under a
Participant's participation, we will waive any charge imposed on
surrenders in part or as a whole or on the commencement of
distributions under a payment option (or any other systematic
payment program) according to policy provisions, if:
1. The Annuitant becomes confined to a Long-Term Care
Facility or Hospital for at least 90 consecutive days;
2. The initial date of confinement is one or more years
after the date of issue of the Participant's
participation;
3. A surrender request and adequate proof of confinement
are received by us either while the Annuitant is
confined or within 90 days of the Annuitant's discharge
from the Long-Term Care Facility or Hospital; and
4. Confinement in a Long-Term Care Facility is prescribed
by a Physician and is Medically Necessary.
DEFINITIONS
"Long-Term Care Facility" means a Skilled Nursing Facility or an
Intermediate Care Facility. Long-Term Care Facility does not
mean:
1. A place that primarily treats drug addicts or
alcoholics;
2. A home for the aged or mentally ill, a community living
center, or a place that primarily provides domiciliary,
residency or retirement care; or
3. A place owned or operated by a member of the Annuitant's
immediate family (including any spouse, children,
parents, grandparents, grandchildren, siblings, or
in-laws of the Annuitant).
"Skilled Nursing Facility" is a facility which:
1. Is located in the United States or its territories;
1
<PAGE>
2. Is licensed and operated as a Skilled Nursing Facility
according to the laws of the jurisdiction in which it is
located;
3. Provides skilled nursing care under the supervision of a
licensed physician;
4. Provides continuous 24 hours a day nursing services by,
or under the supervision of, a registered graduate
professional nurse (R.N.); and
5. Maintains a daily medical record of each patient.
"Intermediate Care Facility" is a facility which:
1. Is located in the United States or its territories;
2. Is licensed and operated as an Intermediate Care
Facility according to the laws of the jurisdiction in
which it is located;
3. Provides continuous 24 hours a day nursing service by,
or under the supervision of, a registered graduate
professional nurse (R.N.) or a licensed practical nurse
(L.P.N.); and
4. Maintains a daily medical record of each patient.
"Hospital" is a facility which:
1. Is located in the United States or its territories;
2. Is licensed as a hospital by the jurisdiction in which
it is located;
3. Is supervised by a staff of licensed physicians;
4. Provides nursing services 24 hours a day by, or under
the supervision of, a registered nurse (R.N.);
5. Operates primarily for the care and treatment of sick
and injured persons as inpatients for a charge; and
6. Has access to medical, diagnostic and major surgical
facilities.
"Physician" is a licensed medical doctor (M.D.) or a licensed doctor
of osteopathy (D.O.) practicing within the scope of his or her
license. The term "physician" does not include the Annuitant, or
a member of the Annuitant's immediate family (including any
spouse, children, parents, grandparents, grandchildren, siblings
or in-laws of the Annuitant).
2
<PAGE>
"Medically Necessary" means appropriate and consistent with the
diagnosis in accord with accepted standards of practice, and which
could not have been omitted without adversely affecting the
individual's condition.
TERMINATION. This rider will terminate without value when the charge
imposed under a Participant's participation on surrenders in part or as a
whole or on the commencement of distributions under a payment option (or
any other systematic payment program) according to policy provisions,
equals 0%, or upon the date distributions commence under a payment option
(or any other systematic payment program), or upon termination of the
policy, or upon termination of his or her participation, whichever comes
first.
Signed for us at our office as of the date of issue.
/s/Betty Kasprowicz /s/James M. Mortenson
Betty Kasprowicz James M. Mortenson
Assistant Secretary Executive Vice President
3
<PAGE>
<PAGE>
Exhibit (4)(b)(i)
Certificate of Participation
Under a Group Flexible Premium Deferred Annuity Contract
This is your Certificate of Participation ("Certificate"). It is evidence
of your participation interest in the Group Flexible Premium Deferred
Annuity Contract ("the Group Contract"), as identified on the Certificate
Specifications page, which has been issued by Annuity Investors Life
Insurance Company to the Group Contract Owner. As you read through this
Certificate, please note that the words "we", "us", "our", and "Company"
refer to Annuity Investors Life Insurance Company. The words "you" and
"your" refer to the Participant.
/s/Betty Kasprowicz /s/James M. Mortenson
Betty Kasprowicz James M. Mortenson
Assistant Secretary Executive Vice President
ANNUITY INVESTORS LIFE INSURANCE COMPANY
(A Stock Insurance Company)
Nonparticipating
ANNUITY BENEFITS AND OTHER VALUES DESCRIBED IN THIS CERTIFICATE, WHEN
BASED ON THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT, MAY INCREASE
OR DECREASE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNTS. NO MINIMUM
CONTRACT VALUE IS GUARANTEED, EXCEPT FOR AMOUNTS IN THE FIXED ACCOUNT.
<PAGE>
CERTIFICATE SPECIFICATIONS
---------------------------
PARTICIPANT: JOHN DOE
AGE OF PARTICIPANT AS OF CERTIFICATE EFFECTIVE DATE: 35
GROUP CONTRACT OWNER: ANYTOWN TRUCKING COMPANY
GROUP CONTRACT NUMBER: 000000000
CERTIFICATE NUMBER: 000000000
CERTIFICATE EFFECTIVE DATE: JUNE 01, 1995
ANNUITY COMMENCEMENT DATE: JUNE 01, 2030
----------------------------------------------------------------------
SEPARATE ACCOUNT: Annuity Investors Variable Account A
----------------
Following is a list of the Funds in which the currently available Sub-
Accounts invest:
[Janus Aspen Series Aggressive Growth Portfolio]
[Janus Aspen Series Worldwide Growth Portfolio]
[Janus Aspen Series Balanced Portfolio]
[Janus Aspen Series Short-term Bond Portfolio]
[Dreyfus Variable Investment Fund's Capital Appreciation Portfolio]
[Dreyfus Socially Responsible Growth Fund]
[Dreyfus Stock Index Fund]
[Merrill Lynch Variable Series Basic Value Focus Fund]
[Merrill Lynch Variable Series Global Strategy Focus Fund]
[Merrill Lynch Variable Series High Current Income Fund]
[Merrill Lynch Variable Series Domestic Money Market Fund]
FIXED ACCOUNT:
-------------
Following is a list of the currently available Fixed Account options, with
guarantee periods as may be applicable:
Fixed Accumulation Account Option
[Fixed Account Option One-Year Guarantee Period]
[Fixed Account Option Three-Year Guarantee Period]
[Fixed Account Option Five-Year Guarantee Period]
Minimum guaranteed interest rate credited to the Fixed Account: Three
percent (3 %) effective annual rate.
TRANSFER FEE: [$25] per transfer in excess of 12 in any Certificate Year.
------------
2
<PAGE>
CONTINGENT DEFERRED SALES CHARGE: An amount deducted on each partial or
full surrender of a Purchase Payment, as follows:
Number of full years elapsed between Contingent Deferred Sales Charge
the date of receipt of a Purchase as a percentage of the
Payment and date Written Request for associated Purchase Payment
surrender is received surrendered
---------------------------------- ----------------------------
0 7%
1 6%
2 5%
3 4%
4 3%
5 2%
6 1%
7+ 0%
CERTIFICATE MAINTENANCE FEE: [$25]
---------------------------
MORTALITY AND EXPENSE RISK CHARGE: A charge equal to an effective annual
rate of [1.25 %] of the daily Net Asset Value of the Sub-Accounts.
ADMINISTRATION CHARGE: A charge equal to an effective annual rate of
[0.00%] of the daily Net Asset Value of the Sub-Accounts.
TERMINATION: We reserve the right to terminate your participation
interest in the Group Contract, and this Certificate, at any time the
Account Value is less than $500 and no Purchase Payment has been received
by us for at least two years.
INQUIRIES: For information, write to:
--------- -------------------------
Variable Annuity Services
Annuity Investors Life Insurance Company
Post Office Box 5423
Cincinnati, Ohio 45201-5423
3
<PAGE>
INDEX
--------------------------------------------------------------------------
PAGE
Accumulation Unit Value . . . . . . . . . . . . . . . . . . . 10
Administration Charge . . . . . . . . . . . . . . . . . . . . 12
Allocation of Purchase Payment(s) . . . . . . . . . . . . . . 8
Annuity Benefit . . . . . . . . . . . . . . . . . . . . . . . 15
Annuity Commencement Date . . . . . . . . . . . . . . . . . . 14
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . 13
Certificate Maintenance Fee . . . . . . . . . . . . . . . . . 12
Certificate of Participation . . . . . . . . . . . . . . . . . 1
Changes -- Waivers . . . . . . . . . . . . . . . . . . . . . . 7
Death Benefit . . . . . . . . . . . . . . . . . . . . . . . . 14
Death of Participant . . . . . . . . . . . . . . . . . . . . . 14
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 5
Discharge of Liability . . . . . . . . . . . . . . . . . . . . 8
Election of Settlement Option . . . . . . . . . . . . . . . . 15
Entire Contract . . . . . . . . . . . . . . . . . . . . . . . 7
Facility of Payment . . . . . . . . . . . . . . . . . . . . . 7
Fixed Account . . . . . . . . . . . . . . . . . . . . . . . . 8
Fixed Account Value . . . . . . . . . . . . . . . . . . . . . 9
Fixed Dollar Annuity Benefit . . . . . . . . . . . . . . . . . 15
General Description . . . . . . . . . . . . . . . . . . . . . 9
Incontestability . . . . . . . . . . . . . . . . . . . . . . . 8
Minimum Amounts . . . . . . . . . . . . . . . . . . . . . . . 17
Misstatement . . . . . . . . . . . . . . . . . . . . . . . . . 7
Mortality and Expense Risk Charge . . . . . . . . . . . . . . 12
Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . 6
No Default . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Nonparticipating . . . . . . . . . . . . . . . . . . . . . . . 7
Ownership of Group Contract and Participant Account . . . . . 13
Ownership of Separate Account . . . . . . . . . . . . . . . . 13
Required Proof . . . . . . . . . . . . . . . . . . . . . . . . 8
Required Reports . . . . . . . . . . . . . . . . . . . . . . . 8
Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Settlement Option Tables . . . . . . . . . . . . . . . . . . . 17
Settlement Options . . . . . . . . . . . . . . . . . . . . . . 16
Sub-Account of the Separate Account . . . . . . . . . . . . . 6
Surrender Value . . . . . . . . . . . . . . . . . . . . . . . 12
Suspension or Delay in Payment of Surrender . . . . . . . . . 13
Termination . . . . . . . . . . . . . . . . . . . . . . . . . 8
Transfer and Assignment . . . . . . . . . . . . . . . . . . . 13
Variable Account Value . . . . . . . . . . . . . . . . . . . . 10
Variable Dollar Annuity Benefit . . . . . . . . . . . . . . . 15
4
<PAGE>
DEFINITIONS
Account(s): The Sub-Account(s) and/or the Fixed Account options.
Account Value: The aggregate value of the Participant's interest in the
Sub-Account(s) and the Fixed Account options as of the end of any
Valuation Period. The value of the Participant's interest in all Sub-
Accounts is the "Variable Account Value," and the value of the
Participant's interest in all Fixed Account options is the "Fixed Account
Value."
Accumulation Period: The period prior to the Annuity Commencement Date
during which the Participant is eligible for benefits under the Group
Contract.
Accumulation Unit: A unit of measurement used to calculate the values of
the Sub-Account(s) prior to the Annuity Commencement Date.
Administrative Office: The home office of the Company or any other office
which we may designate for administration.
Age: Age as of most recent birthday.
Annuitant: The Annuitant is the Participant and is the person on whose
life Annuity Benefit payments are based.
Annuity Benefit: Periodic payments made by the Company under a Settlement
Option, which payments commence on or after the Annuity Commencement Date
and continue during the Annuity Payment Period, for the life of a person
or for a specific period. A Variable Dollar Annuity Benefit will provide
payments that vary in amount. Fixed Dollar Annuity Benefit payments
remain constant.
Annuity Commencement Date: The date on which Annuity Benefits are to
begin.
Annuity Payment Period: The period commencing with the Annuity
Commencement Date, during which Annuity Benefits are payable under the
Group Contract as evidenced by this Certificate.
Annuity Unit: A unit of measurement used to determine the dollar value of
any Variable Dollar Annuity Benefit payments after the first Annuity
Benefit payment is made by us.
Beneficiary: The person or persons entitled to receive the Death Benefit
if you die prior to the Annuity Commencement Date. The following rules
apply to the determination of Beneficiary:
Primary: Where a Primary Beneficiary is living and has
survived you by at least 30 days, such person is a
Beneficiary.
5
<PAGE>
Contingent: Where no Primary Beneficiary is living, a Contingent
Beneficiary is the Beneficiary.
Certificate Anniversary: An annual anniversary of the Certificate
Effective Date.
Certificate Effective Date: The date shown on the Certificate
Specifications page.
Certificate Year: Any period of twelve months, commencing on the
Certificate Effective Date and on each Certificate Anniversary thereafter.
Code: The Internal Revenue Code of 1986, as amended, and the rules and
regulations thereunder.
Due Proof of Death: Any of (1) a certified copy of a death certificate;
(2) a certified copy of a decree of a court of competent jurisdiction as
to the finding of death; or (3) any other proof satisfactory to us.
Fixed Account: An account which is part of the Company's general account
and the values of which are not dependent upon the investment performance
of the Sub-Accounts.
Fund: A management investment company or portfolio thereof, registered
under the Investment Company Act of 1940, in which a Sub-Account of the
Separate Account invests.
Net Asset Value: The amount computed by an investment company, no less
frequently than each Valuation Period, as the price at which its shares or
units, as the case may be, are redeemed in accordance with the rules of
the Securities and Exchange Commission.
Participant: The person identified on the Certificate Specifications page
who participates in the benefits of the Group Contract as evidenced by
this Certificate.
Purchase Payment: A contribution after the deduction of premium tax, if
any, made to us in consideration for the Participant's participation under
the Group Contract.
Separate Account: An account, which may be an investment company, which
is established and maintained by the Company pursuant to the laws of the
State of Ohio.
Sub-Account: The Separate Account is divided into Sub-Accounts, each of
which invests in the shares of a designated Fund.
Valuation Period: The period commencing at the close of regular trading
on the New York Stock Exchange on any Valuation Date, and ending at the
close of trading on the next succeeding Valuation Date. "Valuation Date"
means each day on which the New York Stock Exchange is open for business.
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Written Request: Information provided, or a request made, that is
complete and satisfactory to us and in writing, that is sent to us on our
form or in a form satisfactory to us, and that is received by us at our
Administrative Office. A Written Request is subject to any payment made
or any action we take before we acknowledge it. You may be required to
return this Certificate to us in connection with a Written Request.
GENERAL PROVISIONS
Entire Contract
We have issued the Group Contract to the Group Contract Owner identified
on the Certificate Specifications page. The Group Contract is a group
flexible premium deferred annuity contract. The Group Contract and this
Certificate are restricted by endorsement as required by the Code, and
neither is valid without the requisite endorsement(s) being attached. The
Group Contract and the endorsement(s) thereto, the application for it, and
the Participant Enrollment Forms of all participants under it, form the
entire contract between the Group Contract Owner and us. This Certificate
is not a contract and is not a part of the Group Contract.
Only statements in the application for the Group Contract or your
Participant Enrollment Form will be used to void your participation
interest under the Group Contract, or to defend a claim based on it. Such
statements are representations and not warranties.
Participant Certificate
This Certificate is evidence of your participation interest under the
Group Contract.
Changes -- Waivers
No changes or waivers of the terms of the Group Contract or this
Certificate, are valid unless made in writing by our President, Vice
President, or Secretary. We reserve the right both to administer and to
change the provisions of the Group Contract to conform to any applicable
laws, regulations or rulings issued by a governmental agency.
In any event, the Company reserves the right to add or delete Sub-
Accounts, to substitute shares of a different Fund or different class or
series of a Fund for shares held in a Sub-Account, to merge or combine
Sub-Accounts, to merge or combine the Separate Account with any other
separate account of the Company, to transfer the assets of the Separate
Account to another life insurance company by means of a merger or
reinsurance, to convert the Separate Account into a managed separate
account, and to de-register the Separate Account under the Investment
Company Act of 1940. Any such change will be made in accordance with
applicable insurance and securities laws and after obtaining any necessary
approvals, including those of the Ohio Department of Insurance and the
Securities and Exchange Commission.
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Nonparticipating
The Group Contract is nonparticipating. It is not eligible to share in
the Company's divisible surplus.
Misstatement
If the age of the Annuitant is misstated, the Annuity Benefit payments
under this Certificate shall be adjusted to the amount which would have
been payable based on the correct age. If we made any underpayments based
on any misstatement, the amount of any underpayment with interest shall be
immediately paid in one sum. Any overpayments made, with interest, shall
be deducted from the next or succeeding Annuity Benefit payments due under
this Certificate. The interest rate used will not be less than three
percent (3 %) per year.
Settlement
Any payment by us under this Certificate will be made from our
Administrative Office.
Facility of Payment
If any person receiving payments under this Certificate is incapable of
giving a valid receipt, we may make such payment to whomever has legally
assumed his or her care and principal support. Any such payment shall
fully discharge us to the extent of that payment.
Required Proof
We may require proof of the age of the Annuitant and, if applicable, any
joint payee, before any Annuity Benefit involving lifetime payments will
be made.
Required Reports
We will provide a report at least once each Certificate Year showing the
Account Value and any other information required by law.
Incontestability
This Certificate shall not be contestable by us.
Discharge of Liability
Upon payment of any partial or full surrender, Death Benefit, or any
Annuity Benefit payments, we shall be discharged from all liability to the
extent of each such payment.
Termination
Either we or the Group Contract Owner may terminate the Group Contract by
giving advance notice in writing. The Group Contract describes the
benefits and charges, if any, in the event of termination of the Group
Contract. Refer to the Group Contract for information regarding these
benefits and charges. If the Group Contract is terminated, this
Certificate and your participation interest under the Group Contract may
be continued on a deferred paid-up basis, subject to all of the terms and
conditions of the Group Contract, unless you surrender as a whole.
Termination of the Group Contract will not affect Annuity Benefit payments
being made by us.
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PURCHASE PAYMENTS
Allocation of Purchase Payment(s)
Purchase Payment(s) must be received by us at our Administrative Office
prior to the Annuity Commencement Date. They will then be allocated to
the Fixed Account options and/or to the Sub-Accounts according to the
instructions in your Participant Enrollment Form or subsequent Written
Request. Allocations must be made in whole percentages.
No Default
Except as stated elsewhere in this Certificate, this Certificate will not
be in default due to failure to make additional Purchase Payment(s).
FIXED ACCOUNT
Fixed Account
Purchase Payment(s) allocated to the Fixed Account and any transfers made
to the Fixed Account will become part of the general account of the
Company.
Fixed Account Options. The Fixed Account options available as of the
Certificate Effective Date are listed on the Certificate Specifications
page. Additional Fixed Account options may be offered by us at any time.
Interest Credited. We guarantee a minimum rate of interest for the Fixed
Account options of three percent (3%) per year. We may, at any time,
declare and pay a current interest rate for each of the Fixed Account
options that is higher than the guaranteed rate.
The interest rate initially credited to Purchase Payment(s) allocated to
the Fixed Accumulation Account Option will not be changed any sooner than
twelve months following the date of receipt. Thereafter, and in any other
case, the interest rate credited to amounts allocated to the Fixed
Accumulation Account Option will not be changed more frequently than once
per calendar quarter.
The interest rate credited to amounts allocated to the Fixed Account
options other than the Fixed Accumulation Account Option will not be
changed during the duration of the applicable guarantee period.
Renewal. The following Renewal provisions apply to all Fixed Account
options except the Fixed Accumulation Account Option.
At the end of a guarantee period, and for the thirty days immediately
preceding the end of such guarantee period, you may elect a new option to
replace the Fixed Account option that is then expiring. The entire amount
maturing may be re-allocated to any of the then-current options under the
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Certificate (including the various Sub-Accounts within the Separate
Account), except that a Fixed Account option with a guarantee period that
would extend past the Annuity Commencement Date may not be selected. In
particular, in the case of renewals occurring within one year of the
Annuity Commencement Date, the only Fixed Account option available is the
Fixed Accumulation Account.
If you do not specify a new Fixed Account option in accordance with the
preceding paragraph, you will be deemed to have selected the same Fixed
Account option as is expiring, so long as the guarantee period of such
option does not extend beyond the Annuity Commencement Date. In the event
that such a period would extend beyond the Annuity Commencement Date, you
will be deemed to have selected the Fixed Account option with the longest
available guarantee period that expires prior to the Annuity Commencement
Date.
Any renewal of a Fixed Account option under this provision will be
effective on the day after the expiration of the guarantee period that is
then expiring.
Fixed Account Value
The value of a Fixed Account at any time is equal to:
(a) the Purchase Payment(s) allocated to the Fixed Account; plus
(b) amounts transferred to the Fixed Account; plus
(c) interest credited to the Fixed Account; less
(d) any charges, surrenders, deductions, amounts transferred from the
Fixed Account or other adjustments made as described elsewhere in
this Certificate.
SEPARATE ACCOUNT
General Description
The variable benefits under this Certificate are provided through the
Separate Account. The Separate Account is registered with the Securities
and Exchange Commission as a unit investment trust under the Investment
Company Act of 1940.
The income, if any, and any gains or losses, realized or unrealized, on
the Separate Account will be credited to or charged against the amounts
allocated to such account without regard to other income, gains, or losses
of the Company. The amounts allocated to the Separate Account and the
accumulations thereon remain the property of the Company, but that portion
of the assets of the Separate Account that is equal to the reserves and
other contractual liabilities under all policies, annuities, and other
contracts identified with the Separate Account, is not chargeable with
liabilities arising out of any other business of the Company. The Company
is not, and does not hold itself out to be, a trustee in respect of such
amounts.
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We have the right to transfer to our general account, in our sole
discretion and at any time without prior written notice, any assets of the
Separate Account which are in excess of the required reserves and other
contractual liabilities.
Sub-Accounts of the Separate Account
The assets of the Separate Account are divided into Sub-Accounts. The
Sub-Accounts available as of the Certificate Effective Date are listed on
the Certificate Specifications page. Each Sub-Account invests exclusively
in shares of an underlying Fund as shown on the Certificate Specifications
page. Any amounts of income and any gains on the shares of a Fund will be
reinvested in additional shares of that Fund at its Net Asset Value.
Valuation of Assets
Shares of Funds held by each Sub-Account will be valued at their Net Asset
Value at the end of each Valuation Period, as reported by each such Fund.
Variable Account Value
Purchase Payment(s) may be allocated among and, as described elsewhere in
this Certificate, Account Values may be transferred to the various Sub-
Accounts within the Separate Account. For each Sub-Account, the Purchase
Payment(s) or amounts transferred are converted into Accumulation Units.
The number of Accumulation Units credited is determined by dividing the
dollar amount directed to each Sub-Account by the value of the
Accumulation Unit for that Sub-Account at the end of the Valuation Period
on which the Purchase Payment(s) or transferred amount is received.
The following events will result in the cancellation of an appropriate
number of Accumulation Units of a Sub-Account:
(1) transfer from a Sub-Account;
(2) full or partial surrender;
(3) payment of a Death Benefit;
(4) application of the Account Value to a Settlement Option;
(5) deduction of the Certificate Maintenance Fee; or
(6) deduction of any Transfer Fee.
Accumulation Units will be canceled as of the end of the Valuation Period
during which the Company receives a Written Request regarding the event
giving rise to such cancellation, or Due Proof of Death and instructions
regarding payment of the Death Benefit, or the end of the Valuation Period
on which the Certificate Maintenance Fee or Transfer Fee is due, as the
case may be.
The Variable Account Value for this Certificate at any time is equal to
the sum of the number of Accumulation Units for each Sub-Account
attributable to this Certificate multiplied by the Accumulation Unit Value
for each Sub-Account at the end of the preceding Valuation Period.
Accumulation Unit Value
The initial Accumulation Unit Value for each Sub-Account, with the
exception of the Money Market Sub-Account, was set at $10.00 when the
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Separate Account was created. The initial Accumulation Unit Value for the
Money Market Sub-Account was set at $1.00. Thereafter, the Accumulation
Unit Value at the end of each Valuation Period is the Accumulation Unit
Value at the end of the previous Valuation Period multiplied by the Net
Investment Factor, as described below.
The Net Investment Factor is a factor applied to measure the investment
performance of a Sub-Account from one Valuation Period to the next. Each
Sub-Account has a Net Investment Factor for each Valuation Period which
may be greater or less than one. Therefore, the value of an Accumulation
Unit value for each Sub-Account may increase or decrease. The Net
Investment Factor for any Sub-Account for any Valuation Period is
determined by dividing (1) by (2) and subtracting (3) from the result,
where:
(1) is equal to:
a. the Net Asset Value per share of the Fund held in the
Sub-Account, determined at the end of the applicable
Valuation Period; plus
b. the per share amount of any dividend or net capital gain
distributions made by the Fund held in the Sub-Account,
if the "ex-dividend" date occurs during the applicable
Valuation Period; plus or minus
c. a per share charge or credit for any taxes reserved for,
which is determined by the Company to have resulted from
the investment operations of the Sub-Account;
(2) is the Net Asset Value per share of the Fund held in the Sub-
Account, determined at the end of the immediately preceding
Valuation Period; and
(3) is the factor representing the Mortality and Expense Risk Charge
and the Administration Charge deducted from the Sub-Account for
the number of days in the applicable Valuation Period.
TRANSFERS
By Written Request prior to the Annuity Commencement Date, you may
transfer amounts in a Sub-Account to a different Sub-Account and/or one or
more of the Fixed Account options. The minimum transfer amount is $500.
If the Sub-Account balance is less than $500 at the time of the transfer,
the entire amount of the Sub-Account balance must be transferred. You may
also transfer amounts from any Fixed Account option to any different Fixed
Account option and/or one or more of the Sub-Accounts. If a transfer is
being made from a Fixed Account option pursuant to the Renewal provision
of the "FIXED ACCOUNT" section above, then the entire amount of that Fixed
Account may be transferred to any one or more of the Sub-Accounts. In any
other case, transfers from any Fixed Account option are subject to a
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cumulative limit during each Certificate Year of 20% of the Fixed Account
option's value as of the most recent Certificate Anniversary. In any
event, i) Fixed Account transfers are not permitted during the first
Certificate Year, and ii) if the account value of the Fixed Account option
being transferred is less than $500 at the time of the transfer, then the
entire balance must be transferred. Amounts previously transferred from
Fixed Account options to the Sub-Accounts may not be transferred back to
the Fixed Account options for a period of six months from the date of
transfer.
The number of Transfers per year over which we will charge a Transfer Fee
on each additional transfer, and the amount of the Transfer Fee, are shown
on the Certificate Specifications page.
We reserve the right, in our sole discretion and at any time without prior
notice, to terminate, suspend or modify the transfer privileges described
above.
FEES AND CHARGES
Mortality and Expense Risk Charge
The Mortality and Expense Risk Charge is shown on the Certificate
Specifications page and is deducted daily from each Sub-Account. This
deduction is made to compensate the Company for assuming the mortality and
expense risks under the Group Contract.
Administration Charge
The Administration Charge is shown on the Certificate Specifications page
and is deducted daily from each Sub-Account. This deduction is made to
reimburse the Company for expenses incurred in the administration of the
Group Contract, the Certificates thereunder, and the Separate Account.
Certificate Maintenance Fee
The Certificate Maintenance Fee is shown on the Certificate Specifications
page and is deducted on each Certificate Anniversary prior to the Annuity
Commencement Date. In addition, the full annual Certificate Maintenance
Fee will be charged at the time of a full surrender. The Certificate
Maintenance Fee will be allocated to the Sub-Accounts in the same
proportion as the Sub-Account Values on such Valuation Period. The
Certificate Maintenance Fee does not apply to the Fixed Account. The
Certificate Maintenance Fee may be waived in whole or in part in our sole
discretion.
After the Annuity Commencement Date, if a Variable Dollar Annuity Benefit
is elected, the Certificate Maintenance Fee will be deducted pro-rata on a
monthly basis and will result in a reduction of the monthly annuity
payments.
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SURRENDERS
Surrender Value
A surrender in full may be made for the Surrender Value, or partial
surrenders may be made, by Written Request at any time prior to the
Annuity Commencement Date. The amount of a surrender will be based on the
Surrender Value at the end of the Valuation Period in which the Written
Request is received. The Surrender Value at any time is equal to the
Account Value as of that Valuation Period less any applicable Contingent
Deferred Sales Charge, less any outstanding loans and less any applicable
premium tax not previously deducted. On full surrender, an annual
Certificate Maintenance Fee also will be deducted as part of the
calculation of the Surrender Value.
A full or partial surrender may be subject to a Contingent Deferred Sales
Charge as set forth on the Certificate Specifications page, except that
such charge will not apply to: (1) any portion of the Account Value in
excess of total accumulated Purchase Payment(s); (2) any portion of the
Account Value attributable to Purchase Payment(s) that are no longer
subject to the charge; or (3) payment of the Death Benefit.
The Contingent Deferred Sales Charge is calculated separately for each
Purchase Payment. Surrenders will be deemed to be withdrawn first from
the portion of the Account Value in excess of total Purchase Payment(s)
and then from Purchase Payment(s). For this purpose, Purchase Payment(s)
are deemed to be withdrawn on a "first-in, first-out" (FIFO) basis.
Surrenders will result in the cancellation of Accumulation Units from each
applicable Sub-Account(s) and/or a reduction of your Fixed Account Value.
In the case of a full surrender, your participation interest under the
Group Contract and this Certificate will be canceled. The Contingent
Deferred Sales Charge may be waived in whole or in part in our sole
discretion.
Suspension or Delay in Payment of Surrender
The Company has the right to suspend or delay the date of payment of a
partial or full surrender of the Variable Account Value for any period:
1) when the New York Stock Exchange is closed, or when
trading on the New York Stock Exchange is restricted; or
2) when an emergency exists (as determined by the Securities
and Exchange Commission) as a result of which (a) the
disposal of securities in the Separate Account is not
reasonably practicable; or (b) it is not reasonably
practicable to determine fairly the value of the net
assets in the Separate Account; or
3) when the Securities and Exchange Commission, by order, so
permits for the protection of security holders.
The Company further reserves the right to delay payment of a partial or
full surrender of the Fixed Account Value for up to six months.
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OWNER AND BENEFICIARY PROVISIONS
Ownership of Separate Account
The Company has absolute ownership of the assets in the Separate Account.
However, the Company is not, and does not hold itself out to be, a trustee
in respect of any amounts under the Separate Account.
Ownership of Group Contract and Participant Account
The owner of the Group Contract ("the Group Contract Owner") is your
employer or the trustee for your employer's retirement plan, as shown on
your Participant Enrollment Form and on the Certificate Specifications
page. The Group Contract is held by the Group Contract Owner for the
benefit of the participants and beneficiaries.
Each participant for whom Purchase Payment(s) are made will participate in
the Group Contract as a Participant. A participant account will be
established for each Participant.
Transfer and Assignment
Neither the Participant nor the Group Contract Owner may transfer, sell,
assign, pledge, charge, encumber or in any way alienate his or her
interest under this Certificate or the Group Contract, respectively. To
the extent permitted by law, no benefits payable under the Group Contract
or this Certificate will be subject to the claims of creditors.
Beneficiary
The Beneficiary is named on your Participant Enrollment Form. The
Beneficiary may be changed at any time prior to your death. We must
receive a Written Request to change the Beneficiary. Any such change will
relate back to and take effect on the date the Written Request was signed.
We will not be liable for any payment we make before such Written Request
has been received and acknowledged at our Administrative Office.
DEATH BENEFIT
Death of Participant
If you die before the Annuity Commencement Date, a Death Benefit will be
paid to the Primary Beneficiary, if any Primary Beneficiary is then
living. If no Primary Beneficiary is living at the time of your death, or
if the Primary Beneficiary dies within 30 days after your death and no
Death Benefit has been paid, the Death Benefit will be paid to the person
or persons named as Contingent Beneficiary. If no Primary or Contingent
Beneficiary is living at the time of your death, the Death Benefit will be
paid to your estate. No Death Benefit is payable if you die on or after
the Annuity Commencement Date. Only one Death Benefit is payable.
Death Benefit
The Death Benefit will be determined as of the Death Benefit Valuation
Date. The Death Benefit Valuation Date is the Valuation Period on which
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we receive both Due Proof of Death and a Written Request regarding payment
of the Death Benefit.
If you die before attaining Age 75 and before the Annuity Commencement
Date, the Death Benefit is an amount equal to the greatest of:
(1) the Account Value on the Death Benefit Valuation Date,
less any applicable premium tax not previously deducted,
and less any outstanding loans;
(2) the total Purchase Payment(s), less any applicable
premium tax not previously deducted, less any partial
surrenders, and less any outstanding loans; or
(3) the largest Death Benefit amount on any Certificate
Anniversary prior to death that is an exact multiple of
five and occurs prior to the Death Benefit Valuation
Date, less any applicable premium tax not previously
deducted, less any partial surrenders after such Death
Benefit was determined, and less any outstanding loans.
If you die after attaining Age 75 and before the Annuity Commencement
Date, the Death Benefit is an amount equal to the greatest of:
(1) the Account Value on the Death Benefit Valuation Date,
less any applicable premium tax not previously deducted,
and less any outstanding loans;
(2) the total Purchase Payment(s), less any applicable
premium tax not previously deducted, less any partial
surrenders, and less any outstanding loans; or
(3) the largest Death Benefit amount on any Certificate
Anniversary prior to death that is both an exact multiple
of five and occurs prior to the date on which you
attained Age 75, less any applicable premium tax not
previously deducted, less any partial surrenders after
such Death Benefit was determined, and less any
outstanding loans.
SETTLEMENT OPTIONS
Annuity Commencement Date
The Annuity Commencement Date is shown on the Certificate Specifications
page. This is the date on which we will begin to make payments in
accordance with the Settlement Option selected by you. This date may be
changed by Written Request at least 30 days prior to the then applicable
Annuity Commencement Date being replaced. However, in no event may the
Annuity Commencement Date be later than the Certificate Anniversary
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nearest your 85th birthday, or five years after the Certificate Effective
Date, whichever is later.
Election of Settlement Option
If you are alive on the Annuity Commencement Date and unless otherwise
directed, the Company will apply the Account Value, less any premium tax
not previously deducted, and less any outstanding loans, according to the
Settlement Option elected.
If no Settlement Option election has been made or is in effect on the
Annuity Commencement Date, we will begin payments in accordance with
Settlement Option 1 with a fixed period of 120 monthly payments assured.
Annuity Benefit
The Annuity Benefit may be calculated and paid: (1) as a Fixed Dollar
Annuity Benefit; (2) as a Variable Dollar Annuity Benefit; or (3) as a
combination of both.
If a Fixed Dollar Annuity Benefit only is elected, we will transfer all of
the Account Value to the Company's general account on the Annuity
Commencement Date. Similarly, if a Variable Dollar Annuity Benefit only
is elected, we will transfer all of the Account Value to the Sub-Accounts
as of the end of the Valuation Period immediately prior to the Annuity
Commencement Date; we will allocate the amount transferred among the Sub-
Accounts in accordance with a Written Request. No transfers between the
Fixed Dollar Annuity Benefit and the Variable Dollar Annuity Benefit will
be allowed after the Annuity Commencement Date. However, after the
Variable Dollar Annuity Benefit has been paid for at least twelve months,
you may, no more than once each twelve months thereafter, transfer all or
part of the Annuity Units upon which the Variable Dollar Annuity Benefit
is based from the Sub-Account(s) then held, to Annuity Units in different
Sub-Account(s).
If a Variable Dollar Annuity Benefit is elected, the amount to be applied
under that benefit is the Variable Account Value as of the end of the
Valuation Period immediately preceding the Annuity Commencement Date. If
a Fixed Dollar Annuity Benefit is elected, the amount to be applied under
that benefit is the Fixed Account Value as of the Annuity Commencement
Date.
Fixed Dollar Annuity Benefit
Fixed Dollar Annuity Benefits are determined by multiplying the Fixed
Account Value (expressed in thousands of dollars and after deduction of
any premium taxes not previously deducted) by the amount of the monthly
payment per $1,000 of value obtained from the Settlement Option Table for
the Annuity Benefit elected. The Fixed Dollar Annuity Benefit will remain
level for the duration of the Annuity.
Variable Dollar Annuity Benefit
The first monthly Variable Dollar Annuity Benefit payment is equal to the
your Variable Account Value as of the end of the Valuation Period
immediately preceding the Annuity Commencement Date (expressed in
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thousands of dollars and after deduction of any premium taxes not
previously deducted) multiplied by the amount of the monthly payment per
$1,000 of value obtained from the Settlement Option Table for the Annuity
Benefit elected less the pro-rata portion of the Certificate Maintenance
Fee. The dollar amount of the first monthly Variable Dollar Annuity
Benefit from each Sub-Account is determined in the same manner.
The dollar amount of the second and subsequent monthly Variable Dollar
Annuity Benefit payments is equal to the sum of the number of Annuity
Units for each Sub-Account in which amounts are held by you, multiplied by
the Annuity Unit Value for that Sub-Account as of the fifth Valuation Date
preceding the due date of the payment. A pro-rata portion of the
Certificate Maintenance Fee is deducted from the total to arrive at the
actual payment.
The number of Annuity Units in each Sub-Account held by you is determined
by dividing the dollar amount of the first monthly Variable Dollar Annuity
Benefit payment from each Sub-Account by the Annuity Unit Value for that
Sub-Account as of the Participant s Annuity Commencement Date. The number
of Annuity Units remains fixed during the Annuity Payment Period, except
as a result of any transfers among Sub-Accounts after the Annuity
Commencement Date.
The Annuity Unit Value for each Sub-Account was originally established in
the same manner as Accumulation Unit values. Thereafter, the value of an
Annuity Unit for a Sub-Account is determined by multiplying the Annuity
Unit Value as of the end of the preceding Valuation Period by the Net
Investment Factor, determined as set forth above under "Accumulation Unit
Value", for the Valuation Period just ended. The product is then
multiplied by the assumed daily investment factor (0.99991781), for the
number of days in the Valuation Period. The factor is based on the
assumed net investment rate of three percent (3%) that is reflected in the
Settlement Option Tables.
The Annuitant receives an amount equal the value of the fixed number of
Annuity Units each month. Such value will reflect the investment
performance of the Sub-Accounts selected and the amount of each annuity
payment will vary accordingly.
Settlement Options
Option 1 Life Annuity with Payments for at Least a Fixed Period
We will make a monthly payment for at least a fixed period. If
the Annuitant lives longer than the fixed period, then we will
make payments until his or her death. The fixed periods
available are shown in the Option 1 Table.
If at the death of the Annuitant payments have been made for less
than the fixed period elected, we will continue to make payments:
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1) to the contingent payee designated on the Settlement
Option election form;
2) during the remainder of the fixed period.
Option 2 Life Annuity
We will make a monthly payment until the Annuitant's death. The
Option 2 Table applies to this Option.
Option 3 Joint and One-half Survivor Annuity
We will make a monthly payment to the Annuitant until the
Annuitant's death; thereafter, and upon receipt by the Company of
Due Proof of Death of the Annuitant, one-half of the monthly
payment will continue to a designated survivor, if living, until
his or her death. The Option 3 Table applies to this Option.
Option 4 Income for a Fixed Period
We will make payments for a fixed period. Payment intervals and
amounts are shown in the Option 4 Table and are based on a three
percent (3 %) guaranteed interest rate.
If at the death of the Annuitant payments have been made for less
than the fixed period elected, we will continue to make payments:
1) to the contingent payee designated on the Settlement
Option election form;
2) during the remainder of the fixed period.
Option 5 Any Other Form
We will make payments in any other form of annuity which is
acceptable to us.
Minimum Amounts
If your Account Value is less than $5,000 on the Annuity Commencement
Date, we reserve the right to pay that amount in one lump sum. If monthly
payments under a Settlement Option would be less than $100, we may make
payments quarterly, semi-annually, or annually in our sole discretion.
All elected Settlement Options must comply with current applicable laws,
regulations and rulings issued by any governmental agency. If at the time
a Fixed Dollar Annuity Benefit is elected, we have available options or
rates on a more favorable basis than those guaranteed, the higher benefits
shall be applied and guaranteed for as long as that election remains in
force.
To the extent applicable, all factors, values, benefits and reserves will
not be less than those required by the law of the state in which the Group
Contract is delivered.
19
<PAGE>
Settlement Option Tables
The Settlement Option Tables show the guaranteed dollar amount, based on
unisex rates, of the monthly payments under various Settlement options for
each $1,000 applied.
<TABLE>
<CAPTION>
OPTION 1 TABLES - LIFE ANNUITY
With Payments For At Least A Fixed Period
-----------------------------------------
60 Months 120 Months 180 Months 240 Months
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Age
---
55 $4.55 $4.51 $4.44 $4.33
56 4.65 4.61 4.52 4.39
57 4.76 4.71 4.61 4.46
58 4.87 4.81 4.70 4.53
59 4.99 4.92 4.79 4.60
60 5.12 5.04 4.89 4.67
61 5.25 5.16 4.99 4.74
62 5.40 5.29 5.09 4.81
63 5.55 5.42 5.19 4.87
64 5.72 5.56 5.30 4.94
65 5.89 5.71 5.40 5.00
66 6.08 5.86 5.51 5.06
67 6.27 6.02 5.62 5.11
68 6.48 6.19 5.72 5.17
69 6.71 6.36 5.83 5.22
70 6.95 6.54 5.93 5.26
71 7.20 6.72 6.03 5.30
72 7.46 6.90 6.12 5.34
73 7.75 7.08 6.21 5.37
74 8.04 7.27 6.30 5.40
OPTION 2 TABLE - LIFE ANNUITY
-----------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
60 Months 120 Months 180 Months 240 Months
--------- ---------- ------- --------
Age Age Age Age
--- --- --- ---
55 $4.65 60 $5.14 65 $5.95 70 $7.08
56 4.67 61 5.28 66 6.14 71 7.36
57 4.77 62 5.43 67 6.35 72 7.66
58 4.89 63 5.59 68 6.58 73 7.98
59 5.01 64 5.76 69 6.82 74 8.33
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION
OPTION 3 TABLE - JOINT AND ONE-HALF SURVIVOR ANNUITY
Monthly payments for each $1,000 of proceeds by ages of persons named*.
----------------------------------------------------------------------
Secondary Age
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Primary
Age 60 61 62 63 64 65 66 67 68 69 70
------ -- -- -- -- -- -- -- -- -- -- --
60 $4.73 $4.75 $4.78 $4.80 $4.83 $4.85 $4.87 $4.89 $4.92 $4.93 $4.95
61 4.81 4.84 4.87 4.90 4.92 4.95 4.97 5.00 5.02 5.04 5.06
62 4.90 4.93 4.96 4.99 5.02 5.05 5.08 5.11 5.13 5.16 5.18
63 4.99 5.03 5.06 5.09 5.13 5.16 5.19 5.22 5.25 5.28 5.30
64 5.09 5.12 5.16 5.20 5.23 5.27 5.30 5.34 5.37 5.40 5.43
65 5.18 5.22 5.26 5.31 5.35 5.38 5.42 5.46 5.49 5.53 5.56
66 5.28 5.33 5.37 5.42 5.46 5.50 5.54 5.58 5.62 5.66 5.70
67 5.38 5.43 5.48 5.53 5.58 5.62 5.67 5.72 5.76 5.80 5.84
68 5.49 5.54 5.59 5.65 5.70 5.75 5.80 5.85 5.90 5.95 5.99
69 5.60 5.65 5.71 5.77 5.82 5.88 5.93 5.99 6.04 6.10 6.15
70 5.71 5.77 5.83 5.89 5.95 6.01 6.07 6.13 6.19 6.25 6.31
</TABLE>
*Payments after the death of the Primary Payee will be one-half of the
amount shown.
21
<PAGE>
<TABLE>
<CAPTION>
OPTION 4 TABLE - INCOME FOR A FIXED PERIOD
Payments for fixed number of years for each $1,000 applied.
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Terms of Semi- Terms of Semi- Terms of Semi-
Payments Annual Annual Quarterly Monthly Payments Annual Annual QuarterlyMonthly PaymentsAnnual Annual QuarterlyMonthly
-------- ------ ------ --------- ------- -------- ------ ------ ---------------- -------------- ------ ----------------
Years Years Years
6 183.42 92.61 46.53 15.56 11 $109.76 $55.42 $27.84 $9.31 16 $82.52 $41.66 $20.93 $7.00
7 160.20 80.89 40.64 13.59 12 102.45 51.73 25.99 8.69 17 79.04 39.91 20.05 6.71
8 142.82 72.11 36.23 12.12 13 96.29 48.62 24.43 8.17 18 75.96 38.35 19.27 6.44
9 129.32 65.29 32.81 10.97 14 91.03 45.96 23.09 7.72 19 73.21 36.96 18.57 6.21
10 118.55 59.86 30.07 10.06 15 86.48 43.66 21.94 7.34 20 70.75 35.72 17.95 6.00
</TABLE>
Rates for monthly payments for ages or fixed periods not shown in the
above tables will be calculated on the same basis as those shown and may
be obtained from us. Fixed periods shorter than five years are not
available.
22
<PAGE>
<PAGE>
Exhibit (4)(b)(ii)
Certificate of Participation
Under a Group Flexible Premium Deferred Annuity Contract
This is your Certificate of Participation ("Certificate"). It is evidence
of your participation interest in the Group Flexible Premium Deferred
Annuity Contract ("the Group Contract"), as identified on the Certificate
Specifications page, which has been issued by Annuity Investors Life
Insurance Company to the Group Contract Owner. As you read through this
Certificate, please note that the words "we", "us", "our", and "Company"
refer to Annuity Investors Life Insurance Company. The words "you" and
"your" refer to the Participant.
/s/Betty Kasprowicz /s/James M. Mortenson
Betty Kasprowicz James M. Mortenson
Assistant Secretary Executive Vice President
ANNUITY INVESTORS LIFE INSURANCE COMPANY
(A Stock Insurance Company)
Nonparticipating
ANNUITY BENEFITS AND OTHER VALUES DESCRIBED IN THIS CERTIFICATE, WHEN
BASED ON THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT, MAY INCREASE
OR DECREASE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNTS. NO MINIMUM
CONTRACT VALUE IS GUARANTEED, EXCEPT FOR AMOUNTS IN THE FIXED ACCOUNT.
<PAGE>
CERTIFICATE SPECIFICATIONS
---------------------------
PARTICIPANT: JOHN DOE
AGE OF PARTICIPANT AS OF CERTIFICATE EFFECTIVE DATE: 35
GROUP CONTRACT OWNER: ANYTOWN TRUCKING COMPANY
GROUP CONTRACT NUMBER: 000000000
CERTIFICATE NUMBER: 000000000
CERTIFICATE EFFECTIVE DATE: JUNE 01, 1995
ANNUITY COMMENCEMENT DATE: JUNE 01, 2030
----------------------------------------------------------------------
SEPARATE ACCOUNT: Annuity Investors Variable Account A
----------------
Following is a list of the Funds in which the currently available Sub-
Accounts invest:
[Janus Aspen Series Aggressive Growth Portfolio]
[Janus Aspen Series Worldwide Growth Portfolio]
[Janus Aspen Series Balanced Portfolio]
[Janus Aspen Series Short-term Bond Portfolio]
[Dreyfus Variable Investment Fund's Capital Appreciation Portfolio]
[Dreyfus Socially Responsible Growth Fund]
[Dreyfus Stock Index Fund]
[Merrill Lynch Variable Series Basic Value Focus Fund]
[Merrill Lynch Variable Series Global Strategy Focus Fund]
[Merrill Lynch Variable Series High Current Income Fund]
[Merrill Lynch Variable Series Domestic Money Market Fund]
FIXED ACCOUNT:
-------------
Following is a list of the currently available Fixed Account options, with
guarantee periods as may be applicable:
Fixed Accumulation Account Option
[Fixed Account Option One-Year Guarantee Period]
[Fixed Account Option Three-Year Guarantee Period]
[Fixed Account Option Five-Year Guarantee Period]
Minimum guaranteed interest rate credited to the Fixed Account: Three
percent (3 %) effective annual rate.
TRANSFER FEE: [$25] per transfer in excess of 12 in any Certificate Year.
------------
2
<PAGE>
CONTINGENT DEFERRED SALES CHARGE: An amount deducted on each partial or
full surrender of a Purchase Payment, as follows:
Number of full years elapsed between Contingent Deferred Sales Charge
the date of receipt of a Purchase as a percentage of the
Payment and date Written Request for associated Purchase Payment
surrender is received surrendered
---------------------------------- ----------------------------
0 7%
1 6%
2 5%
3 4%
4 3%
5 2%
6 1%
7+ 0%
CERTIFICATE MAINTENANCE FEE: [$25] Annually
---------------------------
MORTALITY AND EXPENSE RISK CHARGE: A charge equal to an effective annual
rate of [0.95 %] of the daily Net Asset Value of the Sub-Accounts.
ADMINISTRATION CHARGE: A charge equal to an effective annual rate of
[0.00%] of the daily Net Asset Value of the Sub-Accounts.
TERMINATION: We reserve the right to terminate your participation
interest in the Group Contract, and this Certificate, at any time the
Account Value is less than $500 and no Purchase Payment has been received
by us for at least two years.
INQUIRIES: For information, write to:
--------- -------------------------
Variable Annuity Services
Annuity Investors Life Insurance Company
Post Office Box 5423
Cincinnati, Ohio 45201-5423
3
<PAGE>
INDEX
--------------------------------------------------------------------------
PAGE
Accumulation Unit Value . . . . . . . . . . . . . . . . . . . 10
Administration Charge . . . . . . . . . . . . . . . . . . . . 12
Allocation of Purchase Payment(s) . . . . . . . . . . . . . . 8
Annuity Benefit . . . . . . . . . . . . . . . . . . . . . . . 15
Annuity Commencement Date . . . . . . . . . . . . . . . . . . 14
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . 13
Certificate Maintenance Fee . . . . . . . . . . . . . . . . . 12
Certificate of Participation . . . . . . . . . . . . . . . . . 1
Changes -- Waivers . . . . . . . . . . . . . . . . . . . . . . 7
Death Benefit . . . . . . . . . . . . . . . . . . . . . . . . 14
Death of Participant . . . . . . . . . . . . . . . . . . . . . 14
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 5
Discharge of Liability . . . . . . . . . . . . . . . . . . . . 8
Election of Settlement Option . . . . . . . . . . . . . . . . 15
Entire Contract . . . . . . . . . . . . . . . . . . . . . . . 7
Facility of Payment . . . . . . . . . . . . . . . . . . . . . 7
Fixed Account . . . . . . . . . . . . . . . . . . . . . . . . 8
Fixed Account Value . . . . . . . . . . . . . . . . . . . . . 9
Fixed Dollar Annuity Benefit . . . . . . . . . . . . . . . . . 15
General Description . . . . . . . . . . . . . . . . . . . . . 9
Incontestability . . . . . . . . . . . . . . . . . . . . . . . 8
Minimum Amounts . . . . . . . . . . . . . . . . . . . . . . . 17
Misstatement . . . . . . . . . . . . . . . . . . . . . . . . . 7
Mortality and Expense Risk Charge . . . . . . . . . . . . . . 12
Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . 6
No Default . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Nonparticipating . . . . . . . . . . . . . . . . . . . . . . . 7
Ownership of Group Contract and Participant Account . . . . . 13
Ownership of Separate Account . . . . . . . . . . . . . . . . 13
Required Proof . . . . . . . . . . . . . . . . . . . . . . . . 8
Required Reports . . . . . . . . . . . . . . . . . . . . . . . 8
Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Settlement Option Tables . . . . . . . . . . . . . . . . . . . 17
Settlement Options . . . . . . . . . . . . . . . . . . . . . . 16
Sub-Account of the Separate Account . . . . . . . . . . . . . 6
Surrender Value . . . . . . . . . . . . . . . . . . . . . . . 12
Suspension or Delay in Payment of Surrender . . . . . . . . . 13
Termination . . . . . . . . . . . . . . . . . . . . . . . . . 8
Transfer and Assignment . . . . . . . . . . . . . . . . . . . 13
Variable Account Value . . . . . . . . . . . . . . . . . . . . 10
Variable Dollar Annuity Benefit . . . . . . . . . . . . . . . 15
4
<PAGE>
DEFINITIONS
Account(s): The Sub-Account(s) and/or the Fixed Account options.
Account Value: The aggregate value of the Participant's interest in the
Sub-Account(s) and the Fixed Account options as of the end of any
Valuation Period. The value of the Participant's interest in all Sub-
Accounts is the "Variable Account Value," and the value of the
Participant's interest in all Fixed Account options is the "Fixed Account
Value."
Accumulation Period: The period prior to the Annuity Commencement Date
during which the Participant is eligible for benefits under the Group
Contract.
Accumulation Unit: A unit of measurement used to calculate the values of
the Sub-Account(s) prior to the Annuity Commencement Date.
Administrative Office: The home office of the Company or any other office
which we may designate for administration.
Age: Age as of most recent birthday.
Annuitant: The Annuitant is the Participant and is the person on whose
life Annuity Benefit payments are based.
Annuity Benefit: Periodic payments made by the Company under a Settlement
Option, which payments commence on or after the Annuity Commencement Date
and continue during the Annuity Payment Period, for the life of a person
or for a specific period. A Variable Dollar Annuity Benefit will provide
payments that vary in amount. Fixed Dollar Annuity Benefit payments
remain constant.
Annuity Commencement Date: The date on which Annuity Benefits are to
begin.
Annuity Payment Period: The period commencing with the Annuity
Commencement Date, during which Annuity Benefits are payable under the
Group Contract as evidenced by this Certificate.
Annuity Unit: A unit of measurement used to determine the dollar value of
any Variable Dollar Annuity Benefit payments after the first Annuity
Benefit payment is made by us.
Beneficiary: The person or persons entitled to receive the Death Benefit
if you die prior to the Annuity Commencement Date. The following rules
apply to the determination of Beneficiary:
Primary: Where a Primary Beneficiary is living and has
survived you by at least 30 days, such person is a
Beneficiary.
5
<PAGE>
Contingent: Where no Primary Beneficiary is living, a Contingent
Beneficiary is the Beneficiary.
Certificate Anniversary: An annual anniversary of the Certificate
Effective Date.
Certificate Effective Date: The date shown on the Certificate
Specifications page.
Certificate Year: Any period of twelve months, commencing on the
Certificate Effective Date and on each Certificate Anniversary thereafter.
Code: The Internal Revenue Code of 1986, as amended, and the rules and
regulations thereunder.
Due Proof of Death: Any of (1) a certified copy of a death certificate;
(2) a certified copy of a decree of a court of competent jurisdiction as
to the finding of death; or (3) any other proof satisfactory to us.
Fixed Account: An account which is part of the Company's general account
and the values of which are not dependent upon the investment performance
of the Sub-Accounts.
Fund: A management investment company or portfolio thereof, registered
under the Investment Company Act of 1940, in which a Sub-Account of the
Separate Account invests.
Net Asset Value: The amount computed by an investment company, no less
frequently than each Valuation Period, as the price at which its shares or
units, as the case may be, are redeemed in accordance with the rules of
the Securities and Exchange Commission.
Participant: The person identified on the Certificate Specifications page
who participates in the benefits of the Group Contract as evidenced by
this Certificate.
Purchase Payment: A contribution after the deduction of premium tax, if
any, made to us in consideration for the Participant's participation under
the Group Contract.
Separate Account: An account, which may be an investment company, which
is established and maintained by the Company pursuant to the laws of the
State of Ohio.
Sub-Account: The Separate Account is divided into Sub-Accounts, each of
which invests in the shares of a designated Fund.
Valuation Period: The period commencing at the close of regular trading
on the New York Stock Exchange on any Valuation Date, and ending at the
close of trading on the next succeeding Valuation Date. "Valuation Date"
means each day on which the New York Stock Exchange is open for business.
6
<PAGE>
Written Request: Information provided, or a request made, that is
complete and satisfactory to us and in writing, that is sent to us on our
form or in a form satisfactory to us, and that is received by us at our
Administrative Office. A Written Request is subject to any payment made
or any action we take before we acknowledge it. You may be required to
return this Certificate to us in connection with a Written Request.
GENERAL PROVISIONS
Entire Contract
We have issued the Group Contract to the Group Contract Owner identified
on the Certificate Specifications page. The Group Contract is a group
flexible premium deferred annuity contract. The Group Contract and this
Certificate are restricted by endorsement as required by the Code, and
neither is valid without the requisite endorsement(s) being attached. The
Group Contract and the endorsement(s) thereto, the application for it, and
the Participant Enrollment Forms of all participants under it, form the
entire contract between the Group Contract Owner and us. This Certificate
is not a contract and is not a part of the Group Contract.
Only statements in the application for the Group Contract or your
Participant Enrollment Form will be used to void your participation
interest under the Group Contract, or to defend a claim based on it. Such
statements are representations and not warranties.
Participant Certificate
This Certificate is evidence of your participation interest under the
Group Contract.
Changes -- Waivers
No changes or waivers of the terms of the Group Contract or this
Certificate, are valid unless made in writing by our President, Vice
President, or Secretary. We reserve the right both to administer and to
change the provisions of the Group Contract to conform to any applicable
laws, regulations or rulings issued by a governmental agency.
In any event, the Company reserves the right to add or delete Sub-
Accounts, to substitute shares of a different Fund or different class or
series of a Fund for shares held in a Sub-Account, to merge or combine
Sub-Accounts, to merge or combine the Separate Account with any other
separate account of the Company, to transfer the assets of the Separate
Account to another life insurance company by means of a merger or
reinsurance, to convert the Separate Account into a managed separate
account, and to de-register the Separate Account under the Investment
Company Act of 1940. Any such change will be made in accordance with
applicable insurance and securities laws and after obtaining any necessary
approvals, including those of the Ohio Department of Insurance and the
Securities and Exchange Commission.
7
<PAGE>
Nonparticipating
The Group Contract is nonparticipating. It is not eligible to share in
the Company's divisible surplus.
Misstatement
If the age of the Annuitant is misstated, the Annuity Benefit payments
under this Certificate shall be adjusted to the amount which would have
been payable based on the correct age. If we made any underpayments based
on any misstatement, the amount of any underpayment with interest shall be
immediately paid in one sum. Any overpayments made, with interest, shall
be deducted from the next or succeeding Annuity Benefit payments due under
this Certificate. The interest rate used will not be less than three
percent (3 %) per year.
Settlement
Any payment by us under this Certificate will be made from our
Administrative Office.
Facility of Payment
If any person receiving payments under this Certificate is incapable of
giving a valid receipt, we may make such payment to whomever has legally
assumed his or her care and principal support. Any such payment shall
fully discharge us to the extent of that payment.
Required Proof
We may require proof of the age of the Annuitant and, if applicable, any
joint payee, before any Annuity Benefit involving lifetime payments will
be made.
Required Reports
We will provide a report at least once each Certificate Year showing the
Account Value and any other information required by law.
Incontestability
This Certificate shall not be contestable by us.
Discharge of Liability
Upon payment of any partial or full surrender, Death Benefit, or any
Annuity Benefit payments, we shall be discharged from all liability to the
extent of each such payment.
Termination
Either we or the Group Contract Owner may terminate the Group Contract by
giving advance notice in writing. The Group Contract describes the
benefits and charges, if any, in the event of termination of the Group
Contract. Refer to the Group Contract for information regarding these
benefits and charges. If the Group Contract is terminated, this
Certificate and your participation interest under the Group Contract may
be continued on a deferred paid-up basis, subject to all of the terms and
conditions of the Group Contract, unless you surrender as a whole.
Termination of the Group Contract will not affect Annuity Benefit payments
being made by us.
8
<PAGE>
PURCHASE PAYMENTS
Allocation of Purchase Payment(s)
Purchase Payment(s) must be received by us at our Administrative Office
prior to the Annuity Commencement Date. They will then be allocated to
the Fixed Account options and/or to the Sub-Accounts according to the
instructions in your Participant Enrollment Form or subsequent Written
Request. Allocations must be made in whole percentages.
No Default
Except as stated elsewhere in this Certificate, this Certificate will not
be in default due to failure to make additional Purchase Payment(s).
FIXED ACCOUNT
Fixed Account
Purchase Payment(s) allocated to the Fixed Account and any transfers made
to the Fixed Account will become part of the general account of the
Company.
Fixed Account Options. The Fixed Account options available as of the
Certificate Effective Date are listed on the Certificate Specifications
page. Additional Fixed Account options may be offered by us at any time.
Interest Credited. We guarantee a minimum rate of interest for the Fixed
Account options of three percent (3%) per year. We may, at any time,
declare and pay a current interest rate for each of the Fixed Account
options that is higher than the guaranteed rate.
The interest rate initially credited to Purchase Payment(s) allocated to
the Fixed Accumulation Account Option will not be changed any sooner than
twelve months following the date of receipt. Thereafter, and in any other
case, the interest rate credited to amounts allocated to the Fixed
Accumulation Account Option will not be changed more frequently than once
per calendar quarter.
The interest rate credited to amounts allocated to the Fixed Account
options other than the Fixed Accumulation Account Option will not be
changed during the duration of the applicable guarantee period.
Renewal. The following Renewal provisions apply to all Fixed Account
options except the Fixed Accumulation Account Option.
At the end of a guarantee period, and for the thirty days immediately
preceding the end of such guarantee period, you may elect a new option to
replace the Fixed Account option that is then expiring. The entire amount
maturing may be re-allocated to any of the then-current options under the
9
<PAGE>
Certificate (including the various Sub-Accounts within the Separate
Account), except that a Fixed Account option with a guarantee period that
would extend past the Annuity Commencement Date may not be selected. In
particular, in the case of renewals occurring within one year of the
Annuity Commencement Date, the only Fixed Account option available is the
Fixed Accumulation Account.
If you do not specify a new Fixed Account option in accordance with the
preceding paragraph, you will be deemed to have selected the same Fixed
Account option as is expiring, so long as the guarantee period of such
option does not extend beyond the Annuity Commencement Date. In the event
that such a period would extend beyond the Annuity Commencement Date, you
will be deemed to have selected the Fixed Account option with the longest
available guarantee period that expires prior to the Annuity Commencement
Date.
Any renewal of a Fixed Account option under this provision will be
effective on the day after the expiration of the guarantee period that is
then expiring.
Fixed Account Value
The value of a Fixed Account at any time is equal to:
(a) the Purchase Payment(s) allocated to the Fixed Account; plus
(b) amounts transferred to the Fixed Account; plus
(c) interest credited to the Fixed Account; less
(d) any charges, surrenders, deductions, amounts transferred from the
Fixed Account or other adjustments made as described elsewhere in
this Certificate.
SEPARATE ACCOUNT
General Description
The variable benefits under this Certificate are provided through the
Separate Account. The Separate Account is registered with the Securities
and Exchange Commission as a unit investment trust under the Investment
Company Act of 1940.
The income, if any, and any gains or losses, realized or unrealized, on
the Separate Account will be credited to or charged against the amounts
allocated to such account without regard to other income, gains, or losses
of the Company. The amounts allocated to the Separate Account and the
accumulations thereon remain the property of the Company, but that portion
of the assets of the Separate Account that is equal to the reserves and
other contractual liabilities under all policies, annuities, and other
contracts identified with the Separate Account, is not chargeable with
liabilities arising out of any other business of the Company. The Company
is not, and does not hold itself out to be, a trustee in respect of such
amounts.
10
<PAGE>
We have the right to transfer to our general account, in our sole
discretion and at any time without prior written notice, any assets of the
Separate Account which are in excess of the required reserves and other
contractual liabilities.
Sub-Accounts of the Separate Account
The assets of the Separate Account are divided into Sub-Accounts. The
Sub-Accounts available as of the Certificate Effective Date are listed on
the Certificate Specifications page. Each Sub-Account invests exclusively
in shares of an underlying Fund as shown on the Certificate Specifications
page. Any amounts of income and any gains on the shares of a Fund will be
reinvested in additional shares of that Fund at its Net Asset Value.
Valuation of Assets
Shares of Funds held by each Sub-Account will be valued at their Net Asset
Value at the end of each Valuation Period, as reported by each such Fund.
Variable Account Value
Purchase Payment(s) may be allocated among and, as described elsewhere in
this Certificate, Account Values may be transferred to the various Sub-
Accounts within the Separate Account. For each Sub-Account, the Purchase
Payment(s) or amounts transferred are converted into Accumulation Units.
The number of Accumulation Units credited is determined by dividing the
dollar amount directed to each Sub-Account by the value of the
Accumulation Unit for that Sub-Account at the end of the Valuation Period
on which the Purchase Payment(s) or transferred amount is received.
The following events will result in the cancellation of an appropriate
number of Accumulation Units of a Sub-Account:
(1) transfer from a Sub-Account;
(2) full or partial surrender;
(3) payment of a Death Benefit;
(4) application of the Account Value to a Settlement Option;
(5) deduction of the Certificate Maintenance Fee; or
(6) deduction of any Transfer Fee.
Accumulation Units will be canceled as of the end of the Valuation Period
during which the Company receives a Written Request regarding the event
giving rise to such cancellation, or Due Proof of Death and instructions
regarding payment of the Death Benefit, or the end of the Valuation Period
on which the Certificate Maintenance Fee or Transfer Fee is due, as the
case may be.
The Variable Account Value for this Certificate at any time is equal to
the sum of the number of Accumulation Units for each Sub-Account
attributable to this Certificate multiplied by the Accumulation Unit Value
for each Sub-Account at the end of the preceding Valuation Period.
Accumulation Unit Value
The initial Accumulation Unit Value for each Sub-Account, with the
exception of the Money Market Sub-Account, was set at $10.00 when the
11
<PAGE>
Separate Account was created. The initial Accumulation Unit Value for the
Money Market Sub-Account was set at $1.00. Thereafter, the Accumulation
Unit Value at the end of each Valuation Period is the Accumulation Unit
Value at the end of the previous Valuation Period multiplied by the Net
Investment Factor, as described below.
The Net Investment Factor is a factor applied to measure the investment
performance of a Sub-Account from one Valuation Period to the next. Each
Sub-Account has a Net Investment Factor for each Valuation Period which
may be greater or less than one. Therefore, the value of an Accumulation
Unit value for each Sub-Account may increase or decrease. The Net
Investment Factor for any Sub-Account for any Valuation Period is
determined by dividing (1) by (2) and subtracting (3) from the result,
where:
(1) is equal to:
a. the Net Asset Value per share of the Fund held in the
Sub-Account, determined at the end of the applicable
Valuation Period; plus
b. the per share amount of any dividend or net capital gain
distributions made by the Fund held in the Sub-Account,
if the "ex-dividend" date occurs during the applicable
Valuation Period; plus or minus
c. a per share charge or credit for any taxes reserved for,
which is determined by the Company to have resulted from
the investment operations of the Sub-Account;
(2) is the Net Asset Value per share of the Fund held in the Sub-
Account, determined at the end of the immediately preceding
Valuation Period; and
(3) is the factor representing the Mortality and Expense Risk Charge
and the Administration Charge deducted from the Sub-Account for
the number of days in the applicable Valuation Period.
TRANSFERS
By Written Request prior to the Annuity Commencement Date, you may
transfer amounts in a Sub-Account to a different Sub-Account and/or one or
more of the Fixed Account options. The minimum transfer amount is $500.
If the Sub-Account balance is less than $500 at the time of the transfer,
the entire amount of the Sub-Account balance must be transferred. You may
also transfer amounts from any Fixed Account option to any different Fixed
Account option and/or one or more of the Sub-Accounts. If a transfer is
being made from a Fixed Account option pursuant to the Renewal provision
of the "FIXED ACCOUNT" section above, then the entire amount of that Fixed
Account may be transferred to any one or more of the Sub-Accounts. In any
other case, transfers from any Fixed Account option are subject to a
12
<PAGE>
cumulative limit during each Certificate Year of 20% of the Fixed Account
option's value as of the most recent Certificate Anniversary. In any
event, i) Fixed Account transfers are not permitted during the first
Certificate Year, and ii) if the account value of the Fixed Account option
being transferred is less than $500 at the time of the transfer, then the
entire balance must be transferred. Amounts previously transferred from
Fixed Account options to the Sub-Accounts may not be transferred back to
the Fixed Account options for a period of six months from the date of
transfer.
The number of Transfers per year over which we will charge a Transfer Fee
on each additional transfer, and the amount of the Transfer Fee, are shown
on the Certificate Specifications page.
We reserve the right, in our sole discretion and at any time without prior
notice, to terminate, suspend or modify the transfer privileges described
above.
FEES AND CHARGES
Mortality and Expense Risk Charge
The Mortality and Expense Risk Charge is shown on the Certificate
Specifications page and is deducted daily from each Sub-Account. This
deduction is made to compensate the Company for assuming the mortality and
expense risks under the Group Contract.
Administration Charge
The Administration Charge is shown on the Certificate Specifications page
and is deducted daily from each Sub-Account. This deduction is made to
reimburse the Company for expenses incurred in the administration of the
Group Contract, the Certificates thereunder, and the Separate Account.
Certificate Maintenance Fee
The Certificate Maintenance Fee is shown on the Certificate Specifications
page and is deducted on each Certificate Anniversary prior to the Annuity
Commencement Date. In addition, the full annual Certificate Maintenance
Fee will be charged at the time of a full surrender. The Certificate
Maintenance Fee will be allocated to the Sub-Accounts in the same
proportion as the Sub-Account Values on such Valuation Period. The
Certificate Maintenance Fee does not apply to the Fixed Account. The
Certificate Maintenance Fee may be waived in whole or in part in our sole
discretion.
After the Annuity Commencement Date, if a Variable Dollar Annuity Benefit
is elected, the Certificate Maintenance Fee will be deducted pro-rata on a
monthly basis and will result in a reduction of the monthly annuity
payments.
13
<PAGE>
SURRENDERS
Surrender Value
A surrender in full may be made for the Surrender Value, or partial
surrenders may be made, by Written Request at any time prior to the
Annuity Commencement Date. The amount of a surrender will be based on the
Surrender Value at the end of the Valuation Period in which the Written
Request is received. The Surrender Value at any time is equal to the
Account Value as of that Valuation Period less any applicable Contingent
Deferred Sales Charge, less any outstanding loans and less any applicable
premium tax not previously deducted. On full surrender, an annual
Certificate Maintenance Fee also will be deducted as part of the
calculation of the Surrender Value.
A full or partial surrender may be subject to a Contingent Deferred Sales
Charge as set forth on the Certificate Specifications page, except that
such charge will not apply to: (1) any portion of the Account Value in
excess of total accumulated Purchase Payment(s); (2) any portion of the
Account Value attributable to Purchase Payment(s) that are no longer
subject to the charge; or (3) payment of the Death Benefit.
The Contingent Deferred Sales Charge is calculated separately for each
Purchase Payment. Surrenders will be deemed to be withdrawn first from
the portion of the Account Value in excess of total Purchase Payment(s)
and then from Purchase Payment(s). For this purpose, Purchase Payment(s)
are deemed to be withdrawn on a "first-in, first-out" (FIFO) basis.
Surrenders will result in the cancellation of Accumulation Units from each
applicable Sub-Account(s) and/or a reduction of your Fixed Account Value.
In the case of a full surrender, your participation interest under the
Group Contract and this Certificate will be canceled. The Contingent
Deferred Sales Charge may be waived in whole or in part in our sole
discretion.
Suspension or Delay in Payment of Surrender
The Company has the right to suspend or delay the date of payment of a
partial or full surrender of the Variable Account Value for any period:
1) when the New York Stock Exchange is closed, or when
trading on the New York Stock Exchange is restricted; or
2) when an emergency exists (as determined by the Securities
and Exchange Commission) as a result of which (a) the
disposal of securities in the Separate Account is not
reasonably practicable; or (b) it is not reasonably
practicable to determine fairly the value of the net
assets in the Separate Account; or
3) when the Securities and Exchange Commission, by order, so
permits for the protection of security holders.
The Company further reserves the right to delay payment of a partial or
full surrender of the Fixed Account Value for up to six months.
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<PAGE>
OWNER AND BENEFICIARY PROVISIONS
Ownership of Separate Account
The Company has absolute ownership of the assets in the Separate Account.
However, the Company is not, and does not hold itself out to be, a trustee
in respect of any amounts under the Separate Account.
Ownership of Group Contract and Participant Account
The owner of the Group Contract ("the Group Contract Owner") is your
employer or the trustee for your employer's retirement plan, as shown on
your Participant Enrollment Form and on the Certificate Specifications
page. The Group Contract is held by the Group Contract Owner for the
benefit of the participants and beneficiaries.
Each participant for whom Purchase Payment(s) are made will participate in
the Group Contract as a Participant. A participant account will be
established for each Participant.
Transfer and Assignment
Neither the Participant nor the Group Contract Owner may transfer, sell,
assign, pledge, charge, encumber or in any way alienate his or her
interest under this Certificate or the Group Contract, respectively. To
the extent permitted by law, no benefits payable under the Group Contract
or this Certificate will be subject to the claims of creditors.
Beneficiary
The Beneficiary is named on your Participant Enrollment Form. The
Beneficiary may be changed at any time prior to your death. We must
receive a Written Request to change the Beneficiary. Any such change will
relate back to and take effect on the date the Written Request was signed.
We will not be liable for any payment we make before such Written Request
has been received and acknowledged at our Administrative Office.
DEATH BENEFIT
Death of Participant
If you die before the Annuity Commencement Date, a Death Benefit will be
paid to the Primary Beneficiary, if any Primary Beneficiary is then
living. If no Primary Beneficiary is living at the time of your death, or
if the Primary Beneficiary dies within 30 days after your death and no
Death Benefit has been paid, the Death Benefit will be paid to the person
or persons named as Contingent Beneficiary. If no Primary or Contingent
Beneficiary is living at the time of your death, the Death Benefit will be
paid to your estate. No Death Benefit is payable if you die on or after
the Annuity Commencement Date. Only one Death Benefit is payable.
Death Benefit
The Death Benefit will be determined as of the Death Benefit Valuation
Date. The Death Benefit Valuation Date is the Valuation Period on which
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<PAGE>
we receive both Due Proof of Death and a Written Request regarding payment
of the Death Benefit.
If you die before attaining Age 75 and before the Annuity Commencement
Date, the Death Benefit is an amount equal to the greatest of:
(1) the Account Value on the Death Benefit Valuation Date,
less any applicable premium tax not previously deducted,
and less any outstanding loans;
(2) the total Purchase Payment(s), less any applicable
premium tax not previously deducted, less any partial
surrenders, and less any outstanding loans; or
(3) the largest Death Benefit amount on any Certificate
Anniversary prior to death that is an exact multiple of
five and occurs prior to the Death Benefit Valuation
Date, less any applicable premium tax not previously
deducted, less any partial surrenders after such Death
Benefit was determined, and less any outstanding loans.
If you die after attaining Age 75 and before the Annuity Commencement
Date, the Death Benefit is an amount equal to the greatest of:
(1) the Account Value on the Death Benefit Valuation Date,
less any applicable premium tax not previously deducted,
and less any outstanding loans;
(2) the total Purchase Payment(s), less any applicable
premium tax not previously deducted, less any partial
surrenders, and less any outstanding loans; or
(3) the largest Death Benefit amount on any Certificate
Anniversary prior to death that is both an exact multiple
of five and occurs prior to the date on which you
attained Age 75, less any applicable premium tax not
previously deducted, less any partial surrenders after
such Death Benefit was determined, and less any
outstanding loans.
SETTLEMENT OPTIONS
Annuity Commencement Date
The Annuity Commencement Date is shown on the Certificate Specifications
page. This is the date on which we will begin to make payments in
accordance with the Settlement Option selected by you. This date may be
changed by Written Request at least 30 days prior to the then applicable
Annuity Commencement Date being replaced. However, in no event may the
Annuity Commencement Date be later than the Certificate Anniversary
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<PAGE>
nearest your 85th birthday, or five years after the Certificate Effective
Date, whichever is later.
Election of Settlement Option
If you are alive on the Annuity Commencement Date and unless otherwise
directed, the Company will apply the Account Value, less any premium tax
not previously deducted, and less any outstanding loans, according to the
Settlement Option elected.
If no Settlement Option election has been made or is in effect on the
Annuity Commencement Date, we will begin payments in accordance with
Settlement Option 1 with a fixed period of 120 monthly payments assured.
Annuity Benefit
The Annuity Benefit may be calculated and paid: (1) as a Fixed Dollar
Annuity Benefit; (2) as a Variable Dollar Annuity Benefit; or (3) as a
combination of both.
If a Fixed Dollar Annuity Benefit only is elected, we will transfer all of
the Account Value to the Company's general account on the Annuity
Commencement Date. Similarly, if a Variable Dollar Annuity Benefit only
is elected, we will transfer all of the Account Value to the Sub-Accounts
as of the end of the Valuation Period immediately prior to the Annuity
Commencement Date; we will allocate the amount transferred among the Sub-
Accounts in accordance with a Written Request. No transfers between the
Fixed Dollar Annuity Benefit and the Variable Dollar Annuity Benefit will
be allowed after the Annuity Commencement Date. However, after the
Variable Dollar Annuity Benefit has been paid for at least twelve months,
you may, no more than once each twelve months thereafter, transfer all or
part of the Annuity Units upon which the Variable Dollar Annuity Benefit
is based from the Sub-Account(s) then held, to Annuity Units in different
Sub-Account(s).
If a Variable Dollar Annuity Benefit is elected, the amount to be applied
under that benefit is the Variable Account Value as of the end of the
Valuation Period immediately preceding the Annuity Commencement Date. If
a Fixed Dollar Annuity Benefit is elected, the amount to be applied under
that benefit is the Fixed Account Value as of the Annuity Commencement
Date.
Fixed Dollar Annuity Benefit
Fixed Dollar Annuity Benefits are determined by multiplying the Fixed
Account Value (expressed in thousands of dollars and after deduction of
any premium taxes not previously deducted) by the amount of the monthly
payment per $1,000 of value obtained from the Settlement Option Table for
the Annuity Benefit elected. The Fixed Dollar Annuity Benefit will remain
level for the duration of the Annuity.
Variable Dollar Annuity Benefit
The first monthly Variable Dollar Annuity Benefit payment is equal to the
your Variable Account Value as of the end of the Valuation Period
immediately preceding the Annuity Commencement Date (expressed in
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<PAGE>
thousands of dollars and after deduction of any premium taxes not
previously deducted) multiplied by the amount of the monthly payment per
$1,000 of value obtained from the Settlement Option Table for the Annuity
Benefit elected less the pro-rata portion of the Certificate Maintenance
Fee. The dollar amount of the first monthly Variable Dollar Annuity
Benefit from each Sub-Account is determined in the same manner.
The dollar amount of the second and subsequent monthly Variable Dollar
Annuity Benefit payments is equal to the sum of the number of Annuity
Units for each Sub-Account in which amounts are held by you, multiplied by
the Annuity Unit Value for that Sub-Account as of the fifth Valuation Date
preceding the due date of the payment. A pro-rata portion of the
Certificate Maintenance Fee is deducted from the total to arrive at the
actual payment.
The number of Annuity Units in each Sub-Account held by you is determined
by dividing the dollar amount of the first monthly Variable Dollar Annuity
Benefit payment from each Sub-Account by the Annuity Unit Value for that
Sub-Account as of the Participant s Annuity Commencement Date. The number
of Annuity Units remains fixed during the Annuity Payment Period, except
as a result of any transfers among Sub-Accounts after the Annuity
Commencement Date.
The Annuity Unit Value for each Sub-Account was originally established in
the same manner as Accumulation Unit values. Thereafter, the value of an
Annuity Unit for a Sub-Account is determined by multiplying the Annuity
Unit Value as of the end of the preceding Valuation Period by the Net
Investment Factor, determined as set forth above under "Accumulation Unit
Value", for the Valuation Period just ended. The product is then
multiplied by the assumed daily investment factor (0.99991781), for the
number of days in the Valuation Period. The factor is based on the
assumed net investment rate of three percent (3%) that is reflected in the
Settlement Option Tables.
The Annuitant receives an amount equal the value of the fixed number of
Annuity Units each month. Such value will reflect the investment
performance of the Sub-Accounts selected and the amount of each annuity
payment will vary accordingly.
Settlement Options
Option 1 Life Annuity with Payments for at Least a Fixed Period
We will make a monthly payment for at least a fixed period. If
the Annuitant lives longer than the fixed period, then we will
make payments until his or her death. The fixed periods
available are shown in the Option 1 Table.
If at the death of the Annuitant payments have been made for less
than the fixed period elected, we will continue to make payments:
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<PAGE>
1) to the contingent payee designated on the Settlement
Option election form;
2) during the remainder of the fixed period.
Option 2 Life Annuity
We will make a monthly payment until the Annuitant's death. The
Option 2 Table applies to this Option.
Option 3 Joint and One-half Survivor Annuity
We will make a monthly payment to the Annuitant until the
Annuitant's death; thereafter, and upon receipt by the Company of
Due Proof of Death of the Annuitant, one-half of the monthly
payment will continue to a designated survivor, if living, until
his or her death. The Option 3 Table applies to this Option.
Option 4 Income for a Fixed Period
We will make payments for a fixed period. Payment intervals and
amounts are shown in the Option 4 Table and are based on a three
percent (3 %) guaranteed interest rate.
If at the death of the Annuitant payments have been made for less
than the fixed period elected, we will continue to make payments:
1) to the contingent payee designated on the Settlement
Option election form;
2) during the remainder of the fixed period.
Option 5 Any Other Form
We will make payments in any other form of annuity which is
acceptable to us.
Minimum Amounts
If your Account Value is less than $5,000 on the Annuity Commencement
Date, we reserve the right to pay that amount in one lump sum. If monthly
payments under a Settlement Option would be less than $100, we may make
payments quarterly, semi-annually, or annually in our sole discretion.
All elected Settlement Options must comply with current applicable laws,
regulations and rulings issued by any governmental agency. If at the time
a Fixed Dollar Annuity Benefit is elected, we have available options or
rates on a more favorable basis than those guaranteed, the higher benefits
shall be applied and guaranteed for as long as that election remains in
force.
To the extent applicable, all factors, values, benefits and reserves will
not be less than those required by the law of the state in which the Group
Contract is delivered.
19
<PAGE>
Settlement Option Tables
The Settlement Option Tables show the guaranteed dollar amount, based on
unisex rates, of the monthly payments under various Settlement options for
each $1,000 applied.
<TABLE>
<CAPTION>
OPTION 1 TABLES - LIFE ANNUITY
With Payments For At Least A Fixed Period
-----------------------------------------
60 Months 120 Months 180 Months 240 Months
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Age
---
55 $4.55 $4.51 $4.44 $4.33
56 4.65 4.61 4.52 4.39
57 4.76 4.71 4.61 4.46
58 4.87 4.81 4.70 4.53
59 4.99 4.92 4.79 4.60
60 5.12 5.04 4.89 4.67
61 5.25 5.16 4.99 4.74
62 5.40 5.29 5.09 4.81
63 5.55 5.42 5.19 4.87
64 5.72 5.56 5.30 4.94
65 5.89 5.71 5.40 5.00
66 6.08 5.86 5.51 5.06
67 6.27 6.02 5.62 5.11
68 6.48 6.19 5.72 5.17
69 6.71 6.36 5.83 5.22
70 6.95 6.54 5.93 5.26
71 7.20 6.72 6.03 5.30
72 7.46 6.90 6.12 5.34
73 7.75 7.08 6.21 5.37
74 8.04 7.27 6.30 5.40
OPTION 2 TABLE - LIFE ANNUITY
-----------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
60 Months 120 Months 180 Months 240 Months
--------- ---------- ------- --------
Age Age Age Age
--- --- --- ---
55 $4.65 60 $5.14 65 $5.95 70 $7.08
56 4.67 61 5.28 66 6.14 71 7.36
57 4.77 62 5.43 67 6.35 72 7.66
58 4.89 63 5.59 68 6.58 73 7.98
59 5.01 64 5.76 69 6.82 74 8.33
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION
OPTION 3 TABLE - JOINT AND ONE-HALF SURVIVOR ANNUITY
Monthly payments for each $1,000 of proceeds by ages of persons named*.
----------------------------------------------------------------------
Secondary Age
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Primary
Age 60 61 62 63 64 65 66 67 68 69 70
------ -- -- -- -- -- -- -- -- -- -- --
60 $4.73 $4.75 $4.78 $4.80 $4.83 $4.85 $4.87 $4.89 $4.92 $4.93 $4.95
61 4.81 4.84 4.87 4.90 4.92 4.95 4.97 5.00 5.02 5.04 5.06
62 4.90 4.93 4.96 4.99 5.02 5.05 5.08 5.11 5.13 5.16 5.18
63 4.99 5.03 5.06 5.09 5.13 5.16 5.19 5.22 5.25 5.28 5.30
64 5.09 5.12 5.16 5.20 5.23 5.27 5.30 5.34 5.37 5.40 5.43
65 5.18 5.22 5.26 5.31 5.35 5.38 5.42 5.46 5.49 5.53 5.56
66 5.28 5.33 5.37 5.42 5.46 5.50 5.54 5.58 5.62 5.66 5.70
67 5.38 5.43 5.48 5.53 5.58 5.62 5.67 5.72 5.76 5.80 5.84
68 5.49 5.54 5.59 5.65 5.70 5.75 5.80 5.85 5.90 5.95 5.99
69 5.60 5.65 5.71 5.77 5.82 5.88 5.93 5.99 6.04 6.10 6.15
70 5.71 5.77 5.83 5.89 5.95 6.01 6.07 6.13 6.19 6.25 6.31
</TABLE>
*Payments after the death of the Primary Payee will be one-half of the
amount shown.
21
<PAGE>
<TABLE>
<CAPTION>
OPTION 4 TABLE - INCOME FOR A FIXED PERIOD
Payments for fixed number of years for each $1,000 applied.
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Terms of Semi- Terms of Semi- Terms of Semi-
Payments Annual Annual Quarterly Monthly Payments Annual Annual QuarterlyMonthly PaymentsAnnual Annual QuarterlyMonthly
-------- ------ ------ --------- ------- -------- ------ ------ ---------------- -------------- ------ ----------------
Years Years Years
6 183.42 92.61 46.53 15.56 11 $109.76 $55.42 $27.84 $9.31 16 $82.52 $41.66 $20.93 $7.00
7 160.20 80.89 40.64 13.59 12 102.45 51.73 25.99 8.69 17 79.04 39.91 20.05 6.71
8 142.82 72.11 36.23 12.12 13 96.29 48.62 24.43 8.17 18 75.96 38.35 19.27 6.44
9 129.32 65.29 32.81 10.97 14 91.03 45.96 23.09 7.72 19 73.21 36.96 18.57 6.21
10 118.55 59.86 30.07 10.06 15 86.48 43.66 21.94 7.34 20 70.75 35.72 17.95 6.00
</TABLE>
Rates for monthly payments for ages or fixed periods not shown in the
above tables will be calculated on the same basis as those shown and may
be obtained from us. Fixed periods shorter than five years are not
available.
22
<PAGE>
<PAGE>
Exhibit (4)(b)(iii)
Box 5423, Cincinnati, Ohio 45201-5423 . (800) 789-6771
LOAN ENDORSEMENT
Your Certificate of Participation under the policy (your "Certificate") is
changed as set out below to add provisions for policy loans:
LOAN AMOUNT AND CONDITIONS. So long as you have not commenced
distributions of your interest under a payment option (or any other
systematic payment program), we may allow you to borrow an amount
(the "new policy loan") if all of the following requirements are met:
1. the sum of your new policy loan plus the highest balance of
each other policy loan of yours, if any, at any time during
the one-year period ending on the date of the new policy
loan, cannot exceed $50,000; and
2. the sum of your new policy loan plus the current balance of
each other policy loan of yours, if any, cannot exceed the
greater of (i) $10,000, or (ii) one-half of the net amount
payable to you upon a full surrender of your interest in
the policy; and
3. the net amount payable to you upon a full surrender of your
interest in the policy, less the sum of your new policy
loan and the current balance of each other policy loan of
yours, if any, cannot be less than the minimum amount
required to avoid an involuntary surrender under the other
provisions of the policy.
An application for a loan must be made on our form. We may delay
granting the loan for up to six months after we receive your request
for it. We may also limit the frequency at which loans may be made,
the minimum amount of a loan, and the minimum amount of loan payments
to be made to us.
TERM; REPAYMENT. The principal and interest of each loan must be
repaid to us within five years of the date such loan is made. This
five year limit will not apply to any loan used to acquire a dwelling
unit that is to be used as a principal residence by you. Regular
substantially equal periodic payments must be made at least quarterly
over the term of a loan until fully paid.
LIEN -- DEEMED SURRENDER AND DISTRIBUTION. A policy loan is a first
lien on your interest in the policy. Your interest in the policy
will be the sole security for a loan. We may pay off the loan (by
treating a portion of your interest equal to the balance of a loan as
surrendered, and applying it to pay off the loan) if:
<PAGE>
1. your interest in the policy is fully surrendered; or
2. distributions of your interest begin under a payment option
(or any other systematic payment program); or
3. you die and your spouse is not the sole person entitled to
your interest in the policy.
If there is a default on repayment, then we may also pay off the loan
(as described above), unless a distribution to you is prohibited by
the other provisions of the policy.
INTEREST. The interest rate on a policy loan will not be more than
8% per year, unless otherwise provided under any other provision of
the policy covering employee benefit plan loans. Any unpaid interest
will be added to a loan; in effect, then, it will be compounded and
will be part of the loan.
This is part of your Certificate. It is not a contract. It changes your
Certificate only as and to the extent stated. In all cases of conflict
with the other terms of your Certificate, the provisions of this
Endorsement shall control.
Signed for us at our office as of the date of issue.
/s/Betty Kasprowicz /s/James M. Mortenson
Betty Kasprowicz James M. Mortenson
Assistant Secretary Executive Vice President
2
<PAGE>
<PAGE>
Exhibit (4)(b)(iv)
Box 5423, Cincinnati, Ohio 45201-5423 . (800) 789-6771
EMPLOYER PLAN ENDORSEMENT
Your Certificate of Participation under the policy (your "Certificate") is
changed as set out below to adapt it for use with an employee benefit
plan:
PLAN. "Plan" means the employee benefit plan named on your
application or any successor plan.
EMPLOYER. "Employer" means the employer sponsoring the Plan and
named on your application, or any other employer which succeeds
to its rights under the Plan.
PLAN ADMINISTRATOR. "Plan Administrator" means the person
designated as such to us in writing by the Employer. If no
person has been designated, "Plan Administrator" means the
Employer.
PLAN INTERPRETATION. For purposes of the policy, the Plan
Administrator shall interpret the Plan and decide all questions
about what is allowed or required by the Plan. We have no duty
to review or interpret the Plan, or to review or approve any
decision of the Plan Administrator. We are entitled to rely on
the written directions of the Plan Administrator on such matters.
APPLICABLE RESTRICTIONS. The policy may be restricted by federal
and/or state laws related to employee benefit plans. We may
change the terms of the policy and your Certificate, or
administer the policy and your Certificate, at any time as needed
to comply with such laws.
PLAN DISTRIBUTION PROVISIONS. Distributions of your interest
allowed under the policy and your Certificate may be made only at
a time allowed by the Plan or required by the policy. The form
of any distribution shall be determined under the Plan from among
those forms of distribution available under the policy. No
distribution of your interest may be made without the written
direction of the Plan Administrator unless required by the
policy. Distributions of your interest may be made without your
consent when required by the Plan.
FORFEITURE OF NON-VESTED AMOUNTS. Any portion of your interest
in the policy attributable to contributions by the Employer
(excluding any contributions made under a salary reduction
agreement with your employer) is subject to the vesting
provisions of the Plan. If at any time the Plan provides for a
<PAGE>
forfeiture of an amount that is not vested, then such amount may
be withdrawn and paid as directed by the Plan Administrator.
RETURN OF EXCESS CONTRIBUTIONS. Contributions made to the policy
for you are subject to any limits on contributions and
nondiscrimination provisions of the Plan. If the Plan
Administrator determines that excess or discriminatory
contributions were made, then amounts attributable to such
contributions may be withdrawn and paid as directed by the Plan
Administrator.
INVOLUNTARY CASH OUT. If at any time the Plan provides for an
involuntary cash out of your benefits, then your interest in the
policy may be surrendered as a whole as directed by the Plan
Administrator. No amounts may be withdrawn under this provision
or any other involuntary surrender provision if any total policy
value for your interest in the policy has ever exceeded $3,500
(not counting any amount paid under the RETURN OF EXCESS
CONTRIBUTIONS provision).
ENTITLEMENT TO DEATH BENEFITS. The person or persons entitled to
any portion of your interest in the policy remaining payable
after your death shall be determined under the Plan. No
distribution of any such amount shall be made without the written
direction of the Plan Administrator.
INVESTMENT ALLOCATIONS AND TRANSFERS. If the policy provides
that amounts held under it are allocated among separate
investment funds or fixed accounts, then any such allocations
and/or subsequent transfers shall be made only as required or
allowed by the Plan, or as required by the policy to secure a
loan. No such allocation or transfer shall be made without the
written direction of the Plan Administrator unless required by
the policy to secure a loan. Allocation or transfers with
respect to your interest in the policy may be made without your
consent when required by the plan or the policy.
PLAN LOAN PROVISIONS. If loans are allowed under the policy, no
such loan may be made unless also allowed by the Plan. Any such
loan will be subject to any additional limits and conditions
which apply under the Plan. No loan may be made without the
written direction of the Plan Administrator. The rate of
interest to be paid by you on any such loan will be fixed by the
Plan Administrator, but will be at least three percentage points
higher than the minimum guaranteed rate of interest, if any, that
applies to that portion of your interest in the policy used as
security for the loan.
QUALIFIED JOINT AND 50% SURVIVOR ANNUITY OPTION. In addition to
the other payment options available under the policy, payments of
your interest may be made in the form of a Qualified Joint and
50% Survivor Annuity. Under this payment option, we will make
2
<PAGE>
equal payments to you for life at least once per year. If the
person who is your spouse at the time payments commence survives
you, then after your death we will make payments to such spouse
at the same intervals equal to one-half of the amount of the
prior payments, with such payments continuing to such spouse
until his or her death. The first payment under this payment
option will be made on the effective date of the payment option.
The amount of the payments we will make under this payment option
is based on the intervals for payments, which are subject to our
approval. Amounts vary with the ages, as of the first payment
date, of you and your spouse. We will require proof of the ages
of you and your spouse. Monthly payments that we will make under
this payment option for each $1,000 of proceeds applied will be
furnished at your request. Once payments begin under this
payment option, the value of future payments may not be withdrawn
as a commutation of benefits.
This is a part of your Certificate. It is not a contract. It changes
your Certificate only as and to the extent stated. In all cases of
conflict with the other terms of your Certificate, the provisions of this
endorsement shall control.
Signed for us at our office as of the date of issue.
/s/Betty Kasprowicz /s/James M. Mortenson
Betty Kasprowicz James M. Mortenson
Assistant Secretary Executive Vice President
3
<PAGE>
<PAGE>
Exhibit (4)(b)(v)
TAX SHELTERED ANNUITY ENDORSEMENT
Your Certificate of Participation under the policy (your "Certificate") is
changed as set out below to add provisions for a Tax Sheltered Annuity.
APPLICABLE TAX LAW RESTRICTIONS. The policy is intended to
receive contributions that qualify for deferred tax treatment
under Internal Revenue Code ("IRC") Section 403(b). It is
restricted as required by federal tax law. We may change the
terms of the policy and your Certificate, or administer the
policy and your interest in it, at any time as needed to comply
with that law. Any such change may be applied retroactively.
NO ASSIGNMENT OR TRANSFER. You cannot assign, sell, or transfer
your interest in the policy. You cannot pledge it to secure a
loan or the performance of an obligation, or for any other
purpose. The only exceptions to these rules are:
1) you may use your interest in the policy to secure a loan
made under any loan provisions of the policy;
2) all or part of your interest in the policy may be
transferred under a Qualified Domestic Relations Order
as defined in IRC Section 414(p); and
3) you may designate another person to receive payments
with you based on joint lives or joint life
expectancies, but any such designation shall not give
that other person any present rights under the policy
during your lifetime.
LIMITS ON CONTRIBUTIONS. We may refuse to accept any
contribution to the policy that does not qualify for deferred tax
treatment under IRC Section 403(b) and Section 415.
Contributions made for you to the policy and any other plan,
contract, or arrangement under salary reduction agreement(s) with
your employer(s) cannot exceed the limits of IRC Section 402(g).
You cannot make more than one new salary reduction agreement with
your current employer for contributions to the policy in any
single calendar year. You and your employer shall ensure
compliance with these limits.
DISTRIBUTION RESTRICTIONS ON SALARY REDUCTION CONTRIBUTIONS AND
CUSTODIAL ACCOUNTS TRANSFERS. To comply with federal tax law,
distribution restrictions apply to amounts under the policy that
represent:
1) contributions made after December 31, 1988 under any
salary reduction agreement with an employer;
<PAGE>
2) income earned after December 31, 1988 on salary
reduction contributions whenever made; or
3) transfers from a custodial account described in IRC
Section 403(b)(7) and all income attributable to the
amount transferred.
Any such amount cannot be distributed with respect to your
interest in the policy unless you have:
1) reached age 59-1/2; or
2) separated from service with your employer; or
3) become disabled (as defined in IRC Section 72(m)(7)); or
4) in the case of salary reduction contributions (including
salary reduction contributions to a custodial account),
incurred a hardship as defined under the IRC.
A withdrawal made by reason of a hardship cannot include any
income earned after December 31, 1988 attributable to salary
reduction contributions.
IRC Section 72(m)(7) states that: "An individual shall be
considered to be disabled if he is unable to engage in any
substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected
to result in death or to be of long-continued and indefinite
duration. An individual shall not be considered to be disabled
unless he furnishes proof of the existence thereof in such form
and manner as the Secretary [of the Treasury] may require."
DIRECT ROLLOVERS. To the extent required under IRC Section
401(a)(31), you or your surviving spouse may elect to have any
portion of an eligible rollover distribution (as defined in IRC
Section 403(b)(8)) made with respect to your interest in the
policy paid directly to another Individual Retirement Annuity or
Individual Retirement Account (as defined in IRC Section 408) or,
if allowed, to another Tax Sheltered Annuity (as defined in IRC
Section 403(b)), specified by you or your surviving spouse and
which accepts such distribution. Any direct rollover election
must be made on our form, and must be received at our office
before the date of payment.
REQUIRED MINIMUM DISTRIBUTIONS. No later than April 1 following
the calendar year in which you reach age 70-1/2:
1) your interest in the policy must be paid to you in full;
or
2
<PAGE>
2) distribution of your interest in the policy must begin
in the form of substantially equal payments made at
least once per year (i) for your life or as joint and
survivor payments to you and one other person, or (ii)
over a period certain not to exceed your life expectancy
or the joint and last survivor life expectancy of you
and one other person named to receive any remaining
payments after your death.
If distributions are to be made under clause 2) of this
provision, the present value of the payments likely to be made to
you during your expected life must be more than half of the
present value of all payments expected to be made with respect to
your interest. For this purpose, the present value of payments
is determined as of the date payments begin.
DEATH BEFORE REQUIRED MINIMUM DISTRIBUTIONS. If you die before
distributions commence with respect to your interest under the
REQUIRED MINIMUM DISTRIBUTIONS provision, any amount remaining
payable with respect to your interest must be paid either:
1) in full by December 31 of the fifth calendar year after
your death; or
2) over the life of the person entitled to such amount, or
over a period certain not to exceed his or her life
expectancy, with substantially equal payments made at
least once per year starting by December 31 of the first
calendar year after your death.
However, if your spouse is the sole person entitled to such
amount, then during your spouse's lifetime the starting date for
payments under clause 2) of this provision may be delayed to a
date not later than December 31 of the calendar year in which you
would have reached age 70-1/2. If your spouse dies before
payments commence, then this provision will apply upon the death
of your spouse, with your spouse being treated as the owner of
your interest in the policy for purposes of this provision.
DEATH AFTER REQUIRED MINIMUM DISTRIBUTIONS. If you die on or
after distributions with respect to your interest commence under
the REQUIRED MINIMUM DISTRIBUTIONS provision, any amount
remaining payable with respect to your interest must be paid as
follows:
1) if you die before April 1 following the year in which
you reach or would have reached age 70-1/2 and you could
have slowed or suspended payments before death, then
such amount must be paid under the DEATH BEFORE REQUIRED
MINIMUM DISTRIBUTIONS provision as if you died before
such distributions commenced; or
3
<PAGE>
2) in all other cases, such amount must be paid at least as
rapidly as payments were being made at the time of your
death.
LIFE EXPECTANCIES. For the REQUIRED MINIMUM DISTRIBUTIONS
provision and the DEATH BEFORE REQUIRED MINIMUM DISTRIBUTIONS
provision, life expectancies will be determined under Section
1.72-9 of the Federal Income Tax Regulations. The life
expectancy of you and your spouse may be recalculated not more
often than once each year. The life expectancy of any other
person cannot be recalculated.
CONTROLLING TAX RULES. The REQUIRED MINIMUM DISTRIBUTIONS
provision, DEATH BEFORE REQUIRED MINIMUM DISTRIBUTIONS provision,
and DEATH AFTER REQUIRED MINIMUM DISTRIBUTIONS provision shall be
applied in accordance with IRC Section 401(a)(9), including the
incidental death benefit rules of IRC Section 401(a)(9)(G), and
the related Federal Income Tax Regulations, including the minimum
distribution incidental death benefit rules of Section
1.401(a)(9)-2 of the Proposed Federal Income Tax Regulations.
This is part of your Certificate. It is not a contract. It changes your
Certificate only as and to the extent stated. In all cases of conflict
with the other terms of your Certificate, the provisions of this
Endorsement shall control.
Signed for us at our office as of the date of issue.
/s/Betty Kasprowicz /s/James M. Mortenson
Betty Kasprowicz James M. Mortenson
Assistant Secretary Executive Vice President
4
<PAGE>
<PAGE>
Exhibit (4)(b)(vi)
QUALIFIED PENSION, PROFIT SHARING, AND ANNUITY PLAN
ENDORSEMENT
Your Certificate of Participation under the policy (your "Certificate") is
changed as set out below to add provisions for a qualified pension, profit
sharing, or annuity plan. This endorsement and the Certificate to which
it is attached are not valid without additional endorsement(s) defining
the Plan and Plan Administrator.
APPLICABLE TAX LAW RESTRICTIONS. The policy is intended to receive
contributions pursuant to a pension, profit sharing, or annuity plan
qualified under Internal Revenue Code ("IRC") Section 401(a) or
403(a). It is restricted as required by federal tax law. We may
change the terms of the policy and your Certificate, or administer
the policy and your interest in it, at any time as needed to comply
with that law. Any such change may be applied retroactively.
EXCLUSIVE BENEFIT. Your interest in the policy is for the exclusive
benefit of you and your beneficiaries. No portion of your interest
may be used for or diverted to any other purpose (by distribution or
otherwise) except as and to the extent that the Plan Administrator
shall determine that such is allowed both by applicable law and by
the Plan.
NO ASSIGNMENT OR TRANSFER. You cannot assign, sell, or transfer your
interest in the policy. You cannot pledge it to secure a loan or
the performance of an obligation, or for any other purpose. The only
exceptions to these rules are:
1) you may use your interest in the policy to secure a loan
made under any loan provisions of the policy;
2) all or part of your interest in the policy may be
transferred under a Qualified Domestic Relations Order as
defined in IRC Section 414(p); and
3) you may designate another person to receive payments with
you based on joint lives or joint life expectancies, but
any such designation shall not give that other person any
present rights under the policy during your lifetime.
LIMITS ON CONTRIBUTIONS. Contributions made to the policy for you
must not exceed the limits set forth in IRC Section 415.
Contributions made to the policy for you under salary reduction
agreement(s) with your employer(s) cannot exceed the limits of IRC
Section 402(g). Additional limits may apply under the terms of the
Plan. The Plan Administrator shall ensure compliance with these IRC
limits and any Plan limits.
<PAGE>
DISTRIBUTION RESTRICTIONS ON 401(k) EMPLOYEE ELECTIVE CONTRIBUTIONS.
Any amounts under the policy which represent employee elective
contributions made pursuant to salary reduction agreement(s) under
IRC Section 401(k) and any income earned on such amounts, cannot be
distributed any earlier than allowed under IRC Section 401(k)(2)(B).
Additional limits may apply under the terms of the Plan. The Plan
Administrator shall determine when a distribution is allowed under
this IRC section and the Plan.
DISTRIBUTION RESTRICTIONS ON PENSION CONTRIBUTIONS. Any amounts
under the policy which represent contributions to a money purchase
pension plan or a defined benefit pension plan, and any income earned
on such amounts, cannot be distributed any earlier than allowed under
Treasury Regulations Section 1.401-1(b)(1)(i). Additional limits may
apply under the terms of the Plan. The Plan Administrator shall
determine when a distribution is allowed under this regulation and
the Plan.
DIRECT ROLLOVERS. To the extent required under IRC Section
401(a)(31), you or your surviving spouse may elect to have any
portion of an eligible rollover distribution (as defined in IRC
Section 402(c)(4)) made with respect to your interest in the policy
paid directly to another Individual Retirement Annuity or Individual
Retirement Account (as defined in IRC Section 408) or, if allowed, to
another qualified pension, profit sharing, or annuity plan (as
defined in IRC Section 401(a) or 403(a)), specified by you or your
surviving spouse and which accepts such distribution. Any direct
rollover election must be made on our form, and must be received at
our office before the date of payment.
DATE BENEFITS TO BEGIN. Unless you elect to delay the payment of
your benefits, a distribution of your interest in the policy shall
begin no later than 60 days after the end of the Plan year in which
the last of the following occurs:
1) you have reached the earlier of age 65 or the normal
retirement age stated in the Plan;
2) the 10th anniversary of the date you joined the Plan; or
3) your separation from service with the employer.
The Plan Administrator shall make any determination required under
this provision.
In no event can the payment of your benefits be delayed beyond the
date stated in the REQUIRED MINIMUM DISTRIBUTIONS provision, below.
REQUIRED MINIMUM DISTRIBUTIONS. No later than April 1 following the
calendar year in which you reach age 70-1/2:
2
<PAGE>
1) your interest in the policy must be paid to you in full; or
2) distribution of your interest in the policy must begin in
the form of substantially equal payments made at least once
per year (i) for your life or as joint and survivor
payments to you and one other person, or (ii) over a period
certain not to exceed your life expectancy or the joint and
last survivor life expectancy of you and one other person
named to receive any remaining payments after your death.
If distributions are to be made under clause 2) of this provision,
the present value of the payments likely to be made to you during
your expected life must be more than half of the present value of all
payments expected to be made with respect to your interest. For this
purpose, the present value of payments is determined as of the date
payments begin.
DEATH BEFORE REQUIRED MINIMUM DISTRIBUTIONS. If you die before
distributions commence with respect to your interest under the
REQUIRED MINIMUM DISTRIBUTIONS provision, any amount remaining
payable with respect to your interest must be paid either:
1) in full by December 31 of the fifth calendar year after
your death; or
2) over the life of the person entitled to such amount, or
over a period certain not to exceed his or her life
expectancy, with substantially equal payments made at least
once per year starting by December 31 of the first calendar
year after your death.
However, if your spouse is the sole person entitled to such amount,
then during your spouse's lifetime, the starting date for payments
under clause 2) of this provision may be delayed to a date not later
than December 31 of the calendar year in which you would have reached
age 70-1/2. If your spouse dies before payments commence, then this
provision will apply upon the death of your spouse, with your spouse
being treated as the owner of your interest in the policy for
purposes of this provision.
DEATH AFTER REQUIRED MINIMUM DISTRIBUTIONS. If you die on or after
distributions commence with respect to your interest under the
REQUIRED MINIMUM DISTRIBUTIONS provision, any amount remaining
payable with respect to your interest must be paid as follows:
1) if you die before April 1 following the year in which you
reach or would have reached age 70-1/2 and you could have
slowed or suspended payments before death, then such amount
must be paid under the DEATH BEFORE REQUIRED MINIMUM
DISTRIBUTIONS provision as if you died before such
distributions commenced; or
3
<PAGE>
2) in all other cases, such amount must be paid at least as
rapidly as payments were being made at the time of your
death.
LIFE EXPECTANCIES. For the REQUIRED MINIMUM DISTRIBUTIONS provision
and the DEATH BEFORE REQUIRED MINIMUM DISTRIBUTIONS provision, life
expectancies will be determined under Section 1.72-9 of the Federal
Income Tax Regulations. The life expectancy of you and your spouse
may be recalculated not more often than once each year. The life
expectancy of any other person cannot be recalculated.
CONTROLLING TAX RULES. The REQUIRED MINIMUM DISTRIBUTIONS provision,
DEATH BEFORE REQUIRED MINIMUM DISTRIBUTIONS provision, and DEATH
AFTER REQUIRED MINIMUM DISTRIBUTIONS provision shall be applied in
accordance with IRC Section 401(a)(9), including the incidental death
benefit rules of IRC Section 401(a)(9)(G), and the related Federal
Income Tax Regulations, including the minimum distribution incidental
death benefit rules of Section 1.401(a)(9)-2 of the Proposed Federal
Income Tax Regulations.
This is part of your Certificate. It is not a contract. It changes your
Certificate only as and to the extent stated. In all cases of conflict
with the other terms of your Certificate, the provisions of this
Endorsement shall control.
Signed for us at our office as of the date of issue.
/s/Betty Kasprowicz /s/James M. Mortenson
Betty Kasprowicz James M. Mortenson
Assistant Secretary Executive Vice President
4
<PAGE>
<PAGE>
Exhibit (4)(b)(vii)
LONG-TERM CARE WAIVER RIDER
This rider is made part of the Certificate of Participation to which it is
attached.
THE BENEFIT. Prior to the date distributions commence under a payment
option (or any other systematic payment program) under your annuity, we
will waive any charge imposed on surrenders in part or as a whole or on
the commencement of distributions under a payment option (or any other
systematic payment program) according to the provisions of the Policy, if:
1. The Annuitant becomes confined to a Long-Term Care Facility or
Hospital for at least 90 consecutive days;
2. The initial date of confinement is one or more years after the
date of issue of your participation;
3. A surrender request and adequate proof of confinement are
received by us either while the Annuitant is confined or
within 90 days of the Annuitant's discharge from the Long-Term
Care Facility or Hospital; and
4. Confinement in a Long-Term Care Facility is prescribed by a
Physician and is Medically Necessary.
DEFINITIONS
"Long-Term Care Facility" means a Skilled Nursing Facility or an
Intermediate Care Facility. Long-Term Care Facility does not
mean:
1. A place that primarily treats drug addicts or alcoholics;
2. A home for the aged or mentally ill, a community living
center, or a place that primarily provides domiciliary,
residency or retirement care; or
3. A place owned or operated by a member of the Annuitant's
immediate family (including any spouse, children, parents,
grandparents, grandchildren, siblings, or in-laws of the
Annuitant).
"Skilled Nursing Facility" is a facility which:
1. Is located in the United States or its territories;
2. Is licensed and operated as a Skilled Nursing Facility
according to the laws of the jurisdiction in which it is
located;
<PAGE>
3. Provides skilled nursing care under the supervision of a
licensed physician;
4. Provides continuous 24 hours a day nursing services by, or
under the supervision of, a registered graduate professional
nurse (R.N.); and
5. Maintains a daily medical record of each patient.
"Intermediate Care Facility" is a facility which:
1. Is located in the United States or its territories;
2. Is licensed and operated as an Intermediate Care Facility
according to the laws of the jurisdiction in which it is
located;
3. Provides continuous 24 hours a day nursing service by, or
under the supervision of, a registered graduate professional
nurse (R.N.) or a licensed practical nurse (L.P.N.); and
4. Maintains a daily medical record of each patient.
"Hospital" is a facility which:
1. Is located in the United States or its territories;
2. Is licensed as a hospital by the jurisdiction in which it is
located;
3. Is supervised by a staff of licensed physicians;
4. Provides nursing services 24 hours a day by, or under the
supervision of, a registered nurse (R.N.);
5. Operates primarily for the care and treatment of sick and
injured persons as inpatients for a charge; and
6. Has access to medical, diagnostic and major surgical
facilities.
"Physician" is a licensed medical doctor (M.D.) or a licensed doctor
of osteopathy (D.O.) practicing within the scope of his or her
license. The term "physician" does not include the Annuitant, or
a member of the Annuitant's immediate family (including any
spouse, children, parents, grandparents, grandchildren, siblings
or in-laws of the Annuitant).
"Medically Necessary" means appropriate and consistent with the
diagnosis in accord with accepted standards of practice, and which
could not have been omitted without adversely affecting the
individual's condition.
<PAGE>
TERMINATION. This rider will terminate without value when the charge
imposed under your annuity on surrenders in part or as a whole or on the
commencement of distributions under a payment option (or any other
systematic payment program) according to the provisions of the Policy,
equals 0%, or upon the date distributions commence under a payment option
(or any other systematic payment program), or upon termination of the
Policy, or upon termination of your annuity, whichever comes first.
Signed for us at our office as of the date of issue.
/s/Betty Kasprowicz /s/James M. Mortenson
Betty Kasprowicz James M. Mortenson
Assistant Secretary Executive Vice President
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit 5(a)
ANNUITY INVESTORS(SERVICEMARK)
Life Insurance Company
PO Box 5423, Cincinnati, Ohio 45201-5423 (800) 789-6771
APPLICATION FOR GROUP FLEXIBLE PREMIUM DEFERRED ANNUITY CONTRACT
OWNER INFORMATION
==========================================================================================================================
<S> <C>
PROPOSED CONTRACT OWNER: Anytown Trucking Company
-------------------------------------------------------------------------------------------------
MAILING ADDRESS: C/O XYZ Street
-------------------------------------------------------------------------------------------------
Anytown USA 99999
-------------------------------------------------------------------------------------------------
BILLING CONTACT: Ann Trustee, Trust Division
-------------------------------------------------------------------------------------------------
Telephone Number: (800) 555-1212 FAX Number: (800) 555-1211
-------------------------- ----------------
Mail Billing Statement to (if other than above): Third Party Administrator (if applicable):
Name: N/A Firm: N/A
--------------------------------------------- ---------------------------------------------------------------
Address: N/A Address: N/A
------------------------------------------- -------------------------------------------------------
City, State Zip: N/A City, State Zip: N/A
--------------------------------- ----------------------------------------------
Contact: N/A
------------------------------------------------------
Telephone Number: ( ) N/A
---------------------------------------------
PLAN INFORMATION
==========================================================================================================================
Plan Name: Plan Number: [ ] [ ] [ ]
-----------------------------------------
Tax ID Number: 000-00-0000 Plan Year End: Month 06 Day 01
---------------- --------
Plan Type: [ ] 401(a) [ ] 401(k) [ ] ERISA 403(b) [X] NonERISA 403(b) [ ] 457 [ ] Other (Specify):
-------
Plan Administrator/Trustee: Ann Trustee, Trust Officer
---------------------------------------------------------------------------------------------
Telephone Number: ( 800 ) 555-1212
-------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
AGREEMENT
========================================================================
Application is hereby made for a Group Flexible Premium Deferred Annuity
Contract. The Owner acknowledges that Annuity Investors Life Insurance
Company will provide the investment vehicle for, but will not be
responsible for the administration of, the plan. The Owner hereby agrees
that the Contract shall not take effect and be in force unless and until
the first premium is received by the Company. The Owner has read and
understands this entire application. The Owner has also received a
current copy of the prospectuses for Annuity Investors Variable Account A
and the Funds.
IT IS FURTHER UNDERSTOOD THAT PAYMENTS AND VALUES PROVIDED UNDER EACH
CERTIFICATE, WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE SEPARATE
ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT.
The information provided herein is true, correct, and complete to the best
of my knowledge and belief.
<TABLE>
<CAPTION>
<S> <C> <C>
Signed at Anytown, USA this 1st day of June 1995
----------------------------------- ------------- -------------------------, --------------------
City, State
Signature for Owner Anytown Trucking Company Title Ann Trustee
------------------------------------------- ------------------------------------------------
Signature of Agent Agent #:
----------------------------------------- -----------------------------------------------
FOR HOME OFFICE USE ONLY
===============================================================================================================================
------------------------------------------------------------------------------------------------------------------------------
/ /
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit (5)(b)
Annuity Investors(SERVICE MARK)
Life Insurance Company
PO Box 5423, Cincinnati, Ohio 45201-5423 (800) 789-6771
PARTICIPANT ENROLLMENT FORM
OWNER/PARTICIPANT INFORMATION
=====================================================================================================
<S> <C>
CONTRACT OWNER: Anytown Trucking Company GROUP CONTRACT #: 000-000
------------------------ --------------------------
PARTICIPANT
Name: John Doe Social Security Number: 000-00-0000
------------------------------------- -------------------
Address: 123 Any Street Sex: /X/ Male /_/ Female
----------------------------------
City, State Zip: Anytown, USA 99999 Date of Birth: Month 07 Day 13 Year 63
-------------------------- ---- ---- ---
Home Telephone Number: ( 513 ) 555-1212 Work Telephone Number: ( 513 ) 555-3333
-------------------- -------------
CONTRIBUTIONS
======================================================================================================
Periodic/Lump Sum Beginning Mo./Year Amount Changes to Beginning Payment
Payment Amount Mo./Year Frequency*
<S> <C> <C> <C> <C> <C>
Employee Voluntary $_________________ M____Y____ $________________ M____Y____ ______________
Employee Rollover $_________________ M____Y____ N/A N/A N/A
Employee Mandatory $_________________ M____Y____ $________________ M____Y____ ______________
Employer Matching $_________________ M____Y____ $________________ M____Y____ ______________
Employer Rollover $_________________ M____Y____ N/A N/A N/A
Employer Discretionary $_________________ M____Y____ N/A N/A N/A
Qualified Non-Elective $_________________ M____Y____ N/A N/A N/A
* A=Annual, SA=Semi-Annual, Q=Quarterly, M=Monthly, SM=Semi-Monthly, BW=Bi-Weekly
Months in which Payments will not be received:
/_/ Jan. /_/ Feb. /_/ Mar. /_/ Apr. /_/ May /X/ June /X/ July /X/ Aug. /_/ Sep. /_/ Oct. /_/ Nov. /_/ Dec.
Payment Information: Annualized Recurring Payment $_____________
<PAGE>
PURCHASE PAYMENT ALLOCATION: (WHOLE PERCENTAGES MUST BE USED)
==============================================================================================================================
Employee Employee Employee Employer Employer Employer Qualified
Voluntary Rollover Mandatory Matching Rollover Discretionary Non-Elective
--------- -------- --------- -------- -------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
VARIABLE ACCOUNTS:
______% ______% ______% ______% ______% ______% ______%
[Dreyfus] ______% ______% ______% ______% ______% ______% ______%
[VIF Capital Appreciation] ______% ______% ______% ______% ______% ______% ______%
[Socially Responsible Growth]
[Stock Index]
[Janus/Aspen Series]
[Aggressive Growth] ______% ______% ______% ______% ______% ______% ______%
[Worldwide Growth] ______% ______% ______% ______% ______% ______% ______%
[Balanced] ______% ______% ______% ______% ______% ______% ______%
[Short-Term Bond] ______% ______% ______% ______% ______% ______% ______%
[Merrill Lynch/VSF]
[Basic Value Focus] ______% ______% ______% ______% ______% ______% ______%
[Global Strategy Focus] ______% ______% ______% ______% ______% ______% ______%
[High Current Income] ______% ______% ______% ______% ______% ______% ______%
[Domestic Money Market Fund] ______% ______% ______% ______% ______% ______% ______%
FIXED ACCOUNTS:
[Fixed Accumulation Account] ______% ______% ______% ______% ______% ______% ______%
[Fixed Account Option One-Year] ______% ______% ______% ______% ______% ______% ______%
[Fixed Account Option Three-Year] ______% ______% ______% ______% ______% ______% ______%
[Fixed Account Option Five-Year] ______% ______% ______% ______% ______% ______% ______%
TOTAL ALLOCATION 100% 100% 100% 100% 100% 100% 100%
------- ------ -------- ------- ------ ------- -------
<PAGE>
SUITABILITY REVIEW (TO BE COMPLETED BY PARTICIPANT)
========================================================================================================
SEC/NASD rules require that all registered representatives have reasonable grounds for believing that an
investment is suitable for you. This decision is made upon the facts disclosed by you. If you are not
certain of a particular value, please make a reasonable estimate.
Marital Status: /X/ Single /_/ Married /_/ Separated /_/ Divorced Tax Bracket: __________%
Investment Risk Tolerance: /_/ Low /X/ Moderate /_/ High
Investment Objectives: /_/ Growth /_/ Income /X/ Growth and Income /_/ Capital Preservation
Purpose of Investment: /X/ Retirement /_/ Diversification /_/ Other (Specify) __________________________
Annual Family Income $100,000.00 Aggregate Family Net Worth (Excluding Real Estate and Furnishings) $250,000.00
I understand the representative has requested suitability information as required by the SEC/NASD, but I
choose not to provide it.
Signature of Participant: __________________________________
The information as stated above is true to the best of my knowledge.
Signature of Agent: _________________________________________
SIGNATURE
===========================================================================================================
I have read and understand each of the statements and answers on this form. I HAVE RECEIVED A CURRENT COPY
OF THE PROSPECTUSES FOR ANNUITY INVESTORS VARIABLE ACCOUNT A AND THE FUNDS. I UNDERSTAND THAT ANNUITY PAYMENTS
OR SURRENDER VALUES, WHEN BASED UPON THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND NOT
GUARANTEED AS TO DOLLAR AMOUNT.
SIGNED AT: Anytown USA this 1st day of June 19 95
------------------------------------, --------- -------------, -----------
City State
________________________________________________
Signature of Participant
<PAGE>
AGENT'S STATEMENT
===========================================================================================================
I certify that an appropriate exclusion allowance was calculated (if applicable) for the named Participant,
in accordance with current tax laws and regulations.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Signature of Agent: ____________________________ Date: June 1, 1995
-------------------------------------
Agent Name (Please Print): dummy agent Billing Group #: 00000
---------------------- ----------------------------
Agent Number: 01-00000 Division Group #: 00000
-------------------------------- --------------------------
(if applicable)
Agent Phone Number: (513) 555-3131
---------------------------
Signature of Principal: ________________________
FOR HOME OFFICE USE ONLY:
===========================================================================================================
-----------------------------------------------------------------------------------------------------------
/ /
-----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit (5)(c)
ANNUITY INVESTORS(SERVICEMARK)
Life Insurance Company
P.O. Box 5423, Cincinnati, Ohio 45201-5423 (800) 789-6771
PARTICIPANT ENROLLMENT FORM
OWNER/PARTICIPANT INFORMATION
==========================================================================================================================
<S> <C>
CONTRACT OWNER: Anytown Trucking Company GROUP CONTRACT #: 000-000
------------------------ ----------------------------------------
PARTICIPANT
Name: John Doe Social Security Number: 000-00-0000
----------------------------------------------- -----------------------------------
Address: 123 Any Street Sex: [X] Male [ ] Female
---------------------------------------------
City, State Zip: Anytown, USA 99999 Date of Birth: Month 07 Day 13 Year 63
------------------------------------ -- -- --
Home Telephone Number: (800) 555-1212 Work Telephone Number: (800) 555-3333
-------------------------------- --------------------------------------
Primary Beneficiary Contingent Beneficiary
Name: Jane Doe Name: Jim Doe
----------------------------------------------- ------------------------------------------------------
Address: 472 Any Street Address: 472 Any Street
--------------------------------------------- ----------------------------------------------------
City, State Zip: Anytown, USA 99999 City, State Zip: Anytown, USA 99999
------------------------------------- --------------------------------------------
Social Security Number: ###-##-#### Social Security Number: ###-##-####
------------------------------ -------------------------------------
Relationship to Participant: wife Relationship to Participant: son
-------------------------- ---------------------------------
REPLACEMENT
=============================================================================================================================
Will the proposed Certificate replace any existing individual annuity or insurance contract? [ ] Yes [ ] No
CONTRIBUTIONS
=============================================================================================================================
Periodic/Lump Sum Beginning Amount Changes to Beginning Payment
Payment Amount Mo./Year Mo./Year Frequency*
Employee Voluntary $________________ M __ Y __ $________________ M __ Y__ __________
Employee Rollover $________________ M __ Y __ N/A N/A N/A
*A=Annual, SA=Semi-Annual, Q=Quarterly, M=Monthly, SM=Semi-Monthly, BW=Bi-Weekly
<PAGE>
Months in which Payments will not be received:
[ ] Jan. [ ] Feb. [ ] Mar. [ ] Apr. [ ] May [X] June [X] July [X] Aug. [ ] Sep. [ ] Oct. [ ] Nov. [ ] Dec.
Payment Information: Annualized Recurring Payment $ ____________________
PURCHASE PAYMENT ALLOCATION: (WHOLE PERCENTAGES MUST BE USED)
=============================================================================================================
Employee Employee
Voluntary Rollover
VARIABLE ACCOUNTS:
[Dreyfus] [VIF Capital Appreciation] _____% _____%
[Socially Responsible Growth] _____% _____%
[Stock Index] _____% _____%
[Janus/Aspen Series] [Aggressive Growth] _____% _____%
[Worldwide Growth] _____% _____%
[Balanced] _____% _____%
[Short-Term Bond] _____% _____%
[Merrill Lynch/VSF] [Basic Value Focus] _____% _____%
[Global Strategy Focus] _____% _____%
[High Current Income] _____% _____%
[Domestic Money Market Fund] _____% _____%
FIXED ACCOUNTS: [Fixed Accumulation Account] _____% _____%
[Fixed Account Option One-Year] _____% _____%
[Fixed Account Option Three-Year] _____% _____%
[Fixed Account Option Five-Year] _____% _____%
TOTAL ALLOCATION: 100% 100%
----- ------
SUITABILITY REVIEW (TO BE COMPLETED BY PARTICIPANT)
===============================================================================================================================
SEC/NASD rules require that all registered representatives have reasonable grounds for believing that an investment is suitable
for you. This decision is made upon the facts disclosed by you. If you are not certain of a particular value, please make a
reasonable estimate.
Marital Status: [ ] Single [X] Married [ ] Separated [ ] Divorced Tax Bracket: _________ %
Investment Risk Tolerance: [ ] Low [X] Moderate [ ] High
Investment Objectives: [ ] Growth [X] Growth and Income [ ] Capital Preservation
Purpose of Investment: [X] Retirement [ ] Diversification [ ] Other (Specify)
---------------------------
Annual Family Income $100,000.00 Aggregate Family Net Worth (Excluding Real Estate and Furnishings) $250,000.00
----------- -----------
I understand the representative has requested suitability as required by the SEC/NASD, but I choose not to provide it.
Signature of Participant:
---------------------------------------------
The information as stated above is true to the best of my knowledge.
Signature of Agent:
---------------------------------------------------
</TABLE>
<PAGE>
SIGNATURE
==========================================================================
I have read and understand each of the statements and answers of this
form. I HAVE RECEIVED A CURRENT COPY OF THE PROSPECTUSES FOR ANNUITY
INVESTORS VARIABLE ACCOUNT A AND THE FUNDS. I UNDERSTAND THAT ANNUITY
PAYMENTS OR SURRENDER VALUES, WHEN BASED UPON THE INVESTMENT EXPERIENCE OF
THE SEPARATE ACCOUNT, ARE VARIABLE AND NOT GUARANTEED AS TO DOLLAR AMOUNT.
SIGNED AT: Anytown Ohio this 1st day of June 19 95
--------------------, ------------ -------, ------
City State
------------------------------------
Signature of Participant
AGENT'S STATEMENT
=========================================================================
To the best of my knowledge and belief, the annuity applied for [ ] is
[X] is not intended to replace insurance or an annuity on the proposed
Participant with this or any other company. I also certify that an
appropriate exclusion allowance was calculated (if applicable) for the
named Participant, in accordance with current tax laws and regulations.
<TABLE>
<CAPTION>
<S> <C>
Signature of Agent: Date: June 1, 1995
------------------------------------------- ----------------------------------------------------
Agent Name (Please Print): dummy agent Billing Group #: 00000
------------------------------------ -----------------------------------
Agent Number: 01-00000 Division Group #: 00000
------------------------------------------------- ----------------------------------
(if applicable)
Agent Phone Number: (513) 555-3131
-------------------------------------------
Signature of Participant:
--------------------------------------
FOR HOME OFFICE USE ONLY:
-----------------------------------------------------------------------------------------------------------------------------
/ /
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
Exhibit (9)
American Annuity Group, Inc.
--------------------------------------------------------------------------
P.O. Box 120
Cincinnati, Ohio 45201
(513) 333-5515
Fax (513) 357-3397
Mark F. Muething
Senior Vice President,
General Counsel and Secretary
September 25, 1995
Annuity Investors Life Insurance Company
250 East Fifth Street
Cincinnati, Ohio 45202
Gentlemen:
This opinion is provided in connection with the Registration
Statement on Form N-4 for the Annuity Investors Variable Account A of
which Annuity Investors Life Insurance Company ("AILIC") is the Depositor.
The Registration Statement has been filed with the Securities and Exchange
Commission for the purpose of registering variable annuity contracts
issued by AILIC and interests in the Annuity Investors Variable Account A
under such variable annuity contracts.
I have examined the Articles of Incorporation and bylaws of
AILIC, minutes of meetings of its Board of Directors and other records,
and pertinent provisions of the Ohio insurance laws, together with such
other documents as I have deemed appropriate. Based on the foregoing it
is my opinion that:
1. AILIC is duly organized and validly existing as an
insurance company under the laws of the State of Ohio.
2. Annuity Investors Variable Account A has been validly
created as a Separate Account in accordance with the laws
of the State of Ohio.
3. AILIC has the legal power and authority to create and
issue the variable annuity contracts which are
administered within and by means of the Annuity Investors
Variable Account A.
4. The variable annuity contracts to be sold pursuant to the
Registration Statement, when issued, will represent
binding obligations of AILIC in accordance with their
terms, provided such contracts are issued for the
consideration set forth therein and evidenced by
appropriate policies and certificates.
<PAGE>
I hereby consent to the filing of this opinion as an exhibit to
the Registration Statement.
Very truly yours,
/s/ Mark F. Muething
------------------------
Mark F. Muething
MFM/lcr
<PAGE>
