<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 24, 2000
1933 ACT REGISTRATION NO.
1940 ACT REGISTRATION NO. 811-07325
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. ___ [ ]
POST-EFFECTIVE AMENDMENT NO. ___ [ ]
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
POST-EFFECTIVE AMENDMENT NO. 11 [X]
(CHECK APPROPRIATE BOX OR BOXES)
PRUCO LIFE FLEXIBLE PREMIUM
VARIABLE ANNUITY ACCOUNT
(Exact Name of Registrant)
PRUCO LIFE INSURANCE COMPANY
(Name of Depositor)
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(973) 802-5740
(Address and telephone number of depositor's principal executive offices)
THOMAS C. CASTANO
ASSISTANT SECRETARY
PRUCO LIFE INSURANCE COMPANY
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(973) 802-4708
(Name and address of agent for service)
Copies to:
CHRISTOPHER E. PALMER LEE D. AUGSBURGER
MICHAEL K. ISENMAN ASSISTANT GENERAL COUNSEL
SHEA & GARDNER THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
1800 MASSACHUSETTS AVENUE, N.W. 100 MULBERRY STREET
WASHINGTON, D.C. 20036 NEWARK, NEW JERSEY 07102-4077
(202) 828-2093 (973) 367-1388
It is proposed that this filing will become effective (check appropriate space):
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[ ] on pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] on __________pursuant to paragraph (a)(1) of Rule 485
If appropriate, check the following box:
[ ] on __________pursuant to paragraph (a)(1) of Rule 485
Title of Securities Being Registered:
Interests in Individual Variable Annuity Contracts
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission may determine.
<PAGE> 2
STRATEGIC PARTNERS (SM)
VARIABLE ANNUITY
PROSPECTUS: ____ , 2000
[PHOTO]
Strategic Partners(SM) Variable Annuity is issued by Pruco Life Insurance
Company, distributed by Prudential Investment Management Services LLC, and
offered through Pruco Securities Corporation and Prudential Securities
Incorporated. All are subsidiaries of The Prudential Insurance Company of
America.
[PRUDENTIAL LOGO]
<PAGE> 3
STRATEGIC PARTNERS(SM)
VARIABLE ANNUITY
PROSPECTUS: , 2000
THIS PROSPECTUS DESCRIBES AN INDIVIDUAL VARIABLE ANNUITY CONTRACT OFFERED BY
PRUCO LIFE INSURANCE COMPANY (PRUCO LIFE). PRUCO LIFE IS A WHOLLY-OWNED
SUBSIDIARY OF THE PRUDENTIAL INSURANCE COMPANY OF AMERICA.
THE FUNDS
Strategic Partners offers a wide variety of investment choices, including 25
variable investment options that invest in mutual funds managed by these leading
asset managers:
PRUDENTIAL INVESTMENTS
JENNISON ASSOCIATES
AIM ADVISORS
ALLIANCE CAPITAL MANAGEMENT
BANKERS TRUST, PART OF DEUTSCHE ASSET MANAGEMENT
DAVIS SELECT ADVISERS
FIDELITY MANAGEMENT AND RESEARCH
INVESCO
JANUS CAPITAL
MFS
PIMCO
PLEASE READ THIS PROSPECTUS
Please read this prospectus before purchasing a Strategic Partners variable
annuity contract, and keep it for future reference. Current prospectuses for the
underlying mutual funds accompany this prospectus. These prospectuses contain
important information about the mutual funds. Please read these prospectuses and
keep them for reference as well.
TO LEARN MORE ABOUT STRATEGIC PARTNERS
To learn more about the Strategic Partners variable annuity, you can request a
copy of the Statement of Additional Information (SAI) dated ______ , 2000. The
SAI has been filed with the Securities and Exchange Commission (SEC) and is
legally a part of this prospectus. The SEC maintains a Web site
(http://www.sec.gov) that contains the Strategic Partners SAI, material
incorporated by reference, and other information regarding registrants that file
electronically with the SEC. The Table of Contents of the SAI is on Page __ of
this prospectus.
FOR A FREE COPY OF THE SAI CALL US AT:
- - (888) PRU-2888
2
<PAGE> 4
OR WRITE TO US AT:
- - Prudential Annuity Service Center
P.O. Box 7960
Philadelphia, PA 19101
- --------------------------------------------------------------------------------
THE SEC HAS NOT DETERMINED THAT THIS CONTRACT IS A GOOD INVESTMENT, NOR HAS THE
SEC DETERMINED THAT THIS PROSPECTUS IS COMPLETE OR ACCURATE. IT IS A CRIMINAL
OFFENSE TO STATE OTHERWISE. INVESTMENT IN A VARIABLE ANNUITY CONTRACT IS SUBJECT
TO RISK, INCLUDING THE POSSIBLE LOSS OF YOUR MONEY. AN INVESTMENT IN STRATEGIC
PARTNERS IS NOT A BANK DEPOSIT AND IS NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
3
<PAGE> 5
<TABLE>
<CAPTION>
<S> <C>
CONTENTS
PART I: STRATEGIC PARTNERS PROSPECTUS
-------------------------------------
SUMMARY
-------
Glossary....................................................
Summary.....................................................
Summary of Contract Expenses................................
Expense Examples............................................
PART II: STRATEGIC PARTNERS PROSPECTUS
--------------------------------------
SECTIONS 1-9
------------
Section 1: What Is The Strategic Partners Variable Annuity?.......
Short Term Cancellation Right or "Free Look"................
Section 2: What Investment Options Can I Choose?..................
Variable Investment Options.................................
Fixed Interest Rate Options ................................
Transfers Among Options.....................................
Dollar Cost Averaging.......................................
Asset Allocation Program....................................
Auto-Rebalancing............................................
Voting Rights...............................................
Substitution................................................
Section 3: What Kind Of Payments Will I Receive During The Income
Phase?
(Annuitization).................................................
Payment Provisions Without the Guaranteed Minimum Income
Benefit.....................................................
Option 1: Annuity Payments for a Fixed Period.........
Option 2: Life Annuity with 120 Payments (10 Years)
Certain...............................................
Option 3: Interest Payment Option.....................
Other Annuity Options.................................
Guaranteed Minimum Income Benefit ..........................
GMIB Option 1 - Single Life Payout Option.............
GMIB Option 2 - Joint Life Payout Option..............
Section 4: What is the Death Benefit?.............................
Beneficiary.................................................
Calculation of the Death Benefit............................
Payout Options..............................................
Section 5: How Can I Purchase A Strategic Partners Contract?......
Purchase Payments...........................................
Allocation of Purchase Payments.............................
Credits.....................................................
Calculating Contract Value..................................
Section 6: What Are The Expenses Associated With The Discovery
Select Contract?..................................................
Insurance Charges...........................................
Guaranteed Minimum Income Benefit Charge....................
Annual Contract Fee.........................................
Withdrawal Charge...........................................
Premium Taxes...............................................
Transfer Fee................................................
Company Taxes...............................................
Section 7: How Can I Access My Money?.............................
Withdrawals During the Accumulation Phase...................
Automated Withdrawals.......................................
Suspension of Payments or Transfers.........................
</TABLE>
4
<PAGE> 6
<TABLE>
<CAPTION>
<S> <C>
Section 8: What Are The Tax Considerations Associated With
The Strategic Partners Contract?................................
Contracts Owned by Individuals (Not Associated with Tax
Favored Retirement Plans...................................
Taxes Payable by You...................................
Taxes on Withdrawals and Surrender.....................
Taxes on Annuity Payments..............................
Penalty Taxes on Withdrawals and Annuity Payments......
Taxes Payable by Beneficiaries.........................
Withholding of Tax from Distributions..................
Annuity Qualification..................................
Additional Information.................................
Contracts Held by Tax-Favored Plans.........................
Types of Tax Favored Plans.............................
Minimum Distribution Option............................
Withholding
ERISA Disclosure/Requirements..........................
Additional Information.................................
Section 9: Other Information......................................
Pruco Life Insurance Company................................
The Separate Account........................................
Sale and Distribution of the Contract.......................
Assignment..................................................
Financial Statements........................................
Statement of Additional Information.........................
IRA Disclosure Statement
PART III: VARIABLE INVESTMENT OPTIONS' PROSPECTUSES
----------------------------------------------------
THE PRUDENTIAL SERIES FUND, INC.
Prudential Global Portfolio
Prudential Jennison Portfolio
Prudential Money Market Portfolio
Prudential Stock Index Portfolio
SP Aggressive Growth Asset Allocation Portfolio
SP AIM Aggressive Growth Portfolio
SP AIM Growth and Income Portfolio
SP Alliance Large Cap Growth Portfolio
SP Alliance Technology Portfolio
SP Balanced Asset Allocation Portfolio
SP Conservative Asset Allocation Portfolio
SP Davis Value Portfolio
SP Deutsche International Equity Portfolio
SP Growth Asset Allocation Portfolio
SP INVESCO Small Company Growth Portfolio
SP Jennison International Growth Portfolio
SP Large Cap Value Portfolio
SP MFS Capital Opportunities Portfolio
SP MFS Mid Cap Growth Portfolio
SP PIMCO High Yield Portfolio
SP PIMCO Total Return Portfolio
SP Prudential U.S. Emerging Growth Portfolio
SP Small/Mid Cap Value Portfolio
SP Strategic Partners Focused Growth Portfolio
JANUS ASPEN SERIES
Growth Portfolio - Service Shares
</TABLE>
5
<PAGE> 7
THIS PAGE INTENTIONALLY LEFT BLANK
6
<PAGE> 8
PART I SUMMARY
STRATEGIC PARTNERS PROSPECTUS
[PHOTO]
7
<PAGE> 9
THIS PAGE INTENTIONALLY LEFT BLANK
8
<PAGE> 10
GLOSSARY
WE HAVE TRIED TO MAKE THIS PROSPECTUS AS EASY TO READ AND UNDERSTAND AS
POSSIBLE. BY THE NATURE OF THE CONTRACT, HOWEVER, CERTAIN TECHNICAL WORDS OR
TERMS ARE UNAVOIDABLE. WE HAVE IDENTIFIED THE FOLLOWING AS SOME OF THESE WORDS
OR TERMS.
ACCUMULATION PHASE
The period that begins with the contract date (which we define below) and ends
when you start receiving income payments, or earlier if the contract is
terminated through a full withdrawal or payment of a death benefit.
ADJUSTED CONTRACT VALUE
When you begin receiving income payments, the value of your contract minus (i)
any charge we impose for premium taxes and (ii) if you have chosen the Contract
With Credit, any credit that has not yet vested.
ANNUITANT
The person whose life determines the amount of income payments that we will
pay.
ANNUITY DATE
The date when income payments are scheduled to begin.
BENEFICIARY
The person(s) or entity you have chosen to receive a death benefit.
CONTRACT DATE
The date on which we credit your initial purchase payment. We will credit the
initial purchase payment to your contract within two business days from the day
on which we receive your payment and all necessary paperwork in good order at
the Prudential Annuity Service Center. Contract anniversaries are measured from
the contract date. A contract year starts on the contract date or on a contract
anniversary.
CONTRACT OWNER, OWNER, OR YOU
The person entitled to the ownership rights under the contract.
CONTRACT VALUE
This is the total value of your contract, equal to the sum of the values of your
investment in each investment option you have chosen. Your contract value will
go up or down based on the performance of the investment options you choose.
CONTRACT WITH CREDIT
A version of the annuity contract that provides for a bonus credit with each
purchase payment that you make, has a longer surrender charge period, and has no
fixed rate investment options available.
CONTRACT WITHOUT CREDIT
A version of the annuity contract that does not provide a credit, has a shorter
surrender charge period, and offers two fixed rate investment options: a
one-year fixed rate option and a dollar cost averaging fixed rate option.
9
<PAGE> 11
CREDIT
If you choose the Contract With Credit (which we previously defined), this is
the bonus amount that we allocate to your account each time you make a purchase
payment. The amount of the credit is a percentage of the purchase payment. The
credit is subject to a vesting schedule, which means that if you withdraw all or
part of a purchase payment within a certain period, or you begin the income
phase or we pay a death benefit during that period, we may take back all or part
of the credit. See "How Can I Purchase A Strategic Partners Contract" on page
__.
DEATH BENEFIT
If the sole or last surviving owner dies, the beneficiary you designate will
receive, at a minimum, the total amount invested or a potentially greater amount
related to market appreciation. A guaranteed minimum death benefit is available
for an additional charge.
FIXED INTEREST RATE OPTIONS
Under the Contract Without Credit (which we previously defined), these are
investment options that offer a fixed rate of interest for either a one-year
period (fixed rate option) or a selected period during which periodic transfers
are made to selected variable investment options (dollar cost averaging fixed
rate option). The fixed interest rate options are available only with the
Contract Without Credit.
GUARANTEED MINIMUM DEATH BENEFIT
An optional feature available for an additional charge that guarantees that the
death benefit that the beneficiary receives will be no less than a certain
"protected value". Depending upon the terms of your contract, the protected
value for the guaranteed minimum death benefit may equal the "roll-up value,"
the "step-up value," or the larger of the two. We define these terms below.
GUARANTEED MINIMUM INCOME BENEFIT
An optional feature that may be available for an additional charge that
guarantees that the income payments you receive during the income phase will be
no less than a certain "protected value". Currently, the protected value for the
guaranteed minimum income benefit is equal to the "roll-up value," which we
define below.
INCOME OPTIONS
Options under the contract that define the frequency and duration of income
payments. In your contract, we also refer to these as payout or annuity options.
INCOME PHASE
The period in which you receive income payments under the contract.
INVESTED PURCHASE PAYMENTS
Your purchase payments (which we define below) less any deduction we make for
any premium or other tax charge.
JOINT OWNER
The person named as the joint owner, who shares ownership rights with the owner
as defined in the contract.
NET PURCHASE PAYMENTS
Your total purchase payments (which we define below) less any withdrawals you
have made.
PROTECTED VALUE
10
<PAGE> 12
If you choose a guaranteed minimum death benefit and/or guaranteed minimum
income benefit, the guaranteed amount of the benefit. If both the guaranteed
minimum death benefit and the guaranteed minimum income benefit are available to
you and you choose both of these options, the protected value of each may be
different. Depending upon the terms of your contract, the protected value of the
guaranteed minimum death benefit may equal the "roll-up value," the "step-up
value," or the greater of the two. The protected value of the guaranteed minimum
income benefit, if available, will equal the "roll-up value."
PRUDENTIAL ANNUITY SERVICE CENTER
For general correspondence: P.O. Box 7960, Philadelphia, PA 19101. For express
overnight mail: 2101 Welsh Road, Dresher, PA 19025. The telephone number is
800-PRU-2888.
PURCHASE PAYMENTS
The amount of money you pay us to purchase the contract. With some restrictions,
you can make additional purchase payments at any time during the accumulation
phase.
ROLL-UP VALUE
The total of all invested purchase payments compounded daily at an effective
annual rate of 5.0%, subject to a cap of 200% of all invested purchase payments
and to certain age restrictions. Both the roll-up and the cap are reduced
proportionally by withdrawals. Depending upon the terms of your contract and
what options you choose, we may use the roll-up value to compute the protected
value of the guaranteed minimum death benefit and/or the guaranteed minimum
income benefit.
SEPARATE ACCOUNT
We hold your purchase payments allocated to the variable investment options in a
separate account called the Pruco Life Flexible Premium Variable Annuity
Account. The separate account is set apart from all of the general assets of
Pruco Life.
STEP-UP VALUE
The highest value of the contract on any contract anniversary date, subject to
certain age restrictions. Between anniversary dates, the step-up value is only
increased by additional purchase payments and reduced proportionally by
withdrawals. Depending upon the terms of your contract and what options you
choose, we may use the step-up value to compute the protected value of the
guaranteed minimum death benefit.
TAX DEFERRAL
This is a way to increase your assets without currently being taxed. Generally,
you do not pay taxes on your contract earnings until you take money out of your
contract. You should be aware that tax favored plans (such as IRAs) already
provide tax deferral regardless whether they invest in annuity contracts. See
"What Are the Tax Considerations Associated with the Strategic Partners
Contract," page __.
VARIABLE INVESTMENT OPTION
When you choose a variable investment option, we purchase shares of the mutual
fund which are held as an investment for that option. We hold these shares in
the separate account. The division of the separate account of Pruco Life that
invests in a particular mutual fund is referred to in your contract as a
subaccount.
11
<PAGE> 13
SUMMARY FOR SECTIONS 1-9
FOR A MORE COMPLETE DISCUSSION OF THE FOLLOWING TOPICS, SEE THE CORRESPONDING
SECTION IN PART II OF THE PROSPECTUS.
SECTION 1
WHAT IS THE STRATEGIC PARTNERS VARIABLE ANNUITY?
The Strategic Partners Variable Annuity is a contract between you, the owner,
and us, the insurance company, Pruco Life Insurance Company (Pruco Life, we or
us). The contract allows you to invest on a tax-deferred basis in one or more of
25 variable investment options. The contract is intended for retirement savings
or other long-term investment purposes and provides for a death benefit.
There are two versions of the Strategic Partners Variable Annuity.
- - Contract With Credit. One version of the contract:
- provides for a bonus credit that we add to each purchase payment
that you make,
- has a longer surrender charge period, and
- has no fixed rate investment options available.
We call this version the "Contract With Credit."
- - Contract Without Credit. The other version of the contract:
- does not provide a credit,
- has a shorter surrender charge period, and
- offers two fixed rate investment options: a one-year fixed rate
option and a dollar cost averaging fixed rate option.
We call this version the "Contract Without Credit".
Unless we state otherwise, when we use the word contract, it applies to both
versions.
The variable investment options available under the contract offer the
opportunity for a favorable return. However, this is NOT guaranteed. It is
possible, due to market changes, that your investments may decrease in value.
The fixed interest rate options available under the Contract Without Credit
offer a guaranteed interest rate. While your money is allocated to one of these
options, your principal amount will not decrease and we guarantee that your
money will earn at least 3% in interest annually. Payments you allocate to the
fixed interest rate options become part of Pruco Life's general assets.
You can invest your money in any or all of the variable investment options and
(under the Contract Without Credit) the fixed interest rate options. You may
make up to 12 free transfers each contract year among the variable investment
options. For the Contract Without Credit, certain restrictions apply to
transfers involving the fixed interest rate options.
The contract, like all deferred annuity contracts, has two phases: the
accumulation phase and the income phase.
- - During the accumulation phase, any earnings grow on a tax-deferred basis
and are generally only taxed as income when you make a withdrawal.
- - The income phase starts when you begin receiving regular payments from
your contract.
The amount of money you are able to accumulate in your contract during the
accumulation phase will help determine the amount you
12
<PAGE> 14
will receive during the income phase. Other factors will affect the amount of
your payments, such as age, gender, and the payout option you select.
The contract offers a choice of death benefit options. A guaranteed minimum
income benefit may also be available to you.
If you change your mind about owning Strategic Partners, you may cancel your
contract within 10 days after receiving it (or whatever period is required
under applicable state law). We call this the "Free Look" period.
SECTION 2
WHAT INVESTMENT OPTIONS CAN I CHOOSE?
You can invest your money in any or all of the following variable investment
options:
The Prudential Series Fund
Prudential Global Portfolio
Prudential Jennison Portfolio
Prudential Money Market Portfolio
Prudential Stock Index Portfolio
SP Aggressive Growth Asset Allocation Portfolio
SP AIM Aggressive Growth Portfolio
SP AIM Growth and Income Portfolio
SP Alliance Large Cap Growth Portfolio
SP Alliance Technology Portfolio
SP Balanced Asset Allocation Portfolio
SP Conservative Asset Allocation Portfolio
SP Davis Value Portfolio
SP Deutsche International Equity Portfolio
SP Growth Asset Allocation Portfolio
SP INVESCO Small Company Growth Portfolio
SP Jennison International Growth Portfolio
SP Large Cap Value Portfolio
SP MFS Capital Opportunities Portfolio
SP MFS Mid Cap Growth Portfolio
SP PIMCO High Yield Portfolio
SP PIMCO Total Return Portfolio
SP Prudential U.S. Emerging Growth Portfolio
SP Small/Mid Cap Value Portfolio
SP Strategic Partners Focused Growth Portfolio
Janus Aspen Series
Growth Portfolio - Service Shares
Depending upon market conditions, you may earn or lose money in any of these
options. The value of your contract will fluctuate depending upon the
performance of the mutual fund portfolios used by the variable investment
options that you choose. Performance information for the variable investment
options appears in the Statement of Additional Information (SAI). Past
performance is not a guarantee of future results.
If you choose the Contract Without Credit, two guaranteed fixed interest rate
options are also available:
- - The one-year fixed rate option offers an interest rate that is guaranteed
by us for one year and will always be at least 3% per year.
- - The dollar cost averaging fixed rate option offers an interest rate that is
guaranteed by us for a selected period during which we make periodic
transfers from this option to the variable investment options you select.
We guarantee that the interest rate for dollar cost averaging fixed rate
option will always be at least 3% per year.
13
<PAGE> 15
SECTION 3
WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE INCOME PHASE? (ANNUITIZATION)
If you want to receive regular income from your annuity, you can choose one of
several options, including guaranteed payments for the annuitant's lifetime.
Generally, once you begin receiving regular payments, you cannot change your
payment plan.
For an additional fee, you may also choose, if it is available under your
contract, the guaranteed minimum income benefit. See "What Kind Of Payments
Will I Receive During the Income Phase" on page __.
SECTION 4
WHAT IS THE DEATH BENEFIT?
If the sole owner, or last surviving of the owner and joint owner, dies before
the income phase of the contract begins, the person(s) or entity that you have
chosen as your beneficiary will receive, at a minimum, the greater of (i) the
contract value, (ii) either the base death benefit or, for a higher insurance
charge, a potentially larger guaranteed minimum death benefit. The base death
benefit equals the total amount invested adjusted for withdrawals. The
guaranteed minimum death benefit is equal to a "protected value" that depends
upon which of the following guaranteed minimum death benefit options you choose:
- - the highest value of the contract on any contract anniversary, which we
call the "step-up value";
- - the total amount you invest increased by a guaranteed rate of return,
which we call the "roll-up value"; or
- - the greater of the step-up value or roll-up value.
Depending upon the terms of your contract, not all guaranteed death benefit
options may be available. See "What is the Death Benefit" on page __.
SECTION 5
HOW CAN I PURCHASE A STRATEGIC PARTNERS ANNUITY CONTRACT?
Under most circumstances, you can purchase this contract with a minimum initial
purchase payment of $10,000. Generally, you can make additional purchase
payments of $1,000 or more at any time during the accumulation phase of the
contract. Your representative can help you fill out the proper forms. The
Contract With Credit provides for the allocation of a credit with each purchase
payment.
SECTION 6
WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC PARTNERS CONTRACT?
The contract has insurance features and investment features, both of which have
related cost and charges.
- - Each year we may deduct a contract maintenance charge. Currently, if your
contract value is $50,000 or more, we do not deduct such a charge. If your
contract value is less than $50,000, we deduct a charge equal to $30 or, if
your contract value is less than $1500, equal to 2% of your contract value.
- - For insurance and administrative costs, we also deduct a daily charge based
on the average daily value of all assets allocated to the variable
investment options, depending on the death benefit option that you choose.
The daily charge is equivalent to an annual charge of:
- 1.40% if you do not choose the guaranteed minimum death benefit,
14
<PAGE> 16
- 1.60% if you choose the roll-up or step-up guaranteed minimum death
benefit option, and
- 1.70% if you choose the guaranteed minimum death benefit option of
the greater of the roll-up or step-up.
- - We will make an additional charge if you choose the guaranteed minimum
income benefit. We deduct this annual charge from your contract value on
the contract anniversary and upon certain other events. Currently, only the
roll-up guaranteed minimum income benefit option is available. The charge
for this benefit is equal to 0.25% of the roll-up value. In the future, we
may also offer other options, for which different charges may apply.
- - A few states and jurisdictions assess a premium tax when you begin
receiving regular income payments from your annuity. In those states, we
will assess the required premium tax charge, which can range up to 5% of
your contract value.
- - The mutual funds in which the variable investment options invest also
incur fees and expenses. These daily charges currently range on an annual
basis from 0.39% to 1.34% of a fund's average daily net assets.
- - If, after making a purchase payment, you withdraw money (or you begin the
income phase) less than:
- nine years later, if you purchase the Contract With Credit, or
- seven years later, if you purchase the Contract Without Credit,
then you may have to pay a withdrawal charge on all or part of the
withdrawal. This charge ranges from 1-7%.
For more information, including details about other possible charges under the
contract, see "Summary of Contract Expenses" on page __ and "What Are The
Expenses Associated With The Strategic Partners Contract?" on page __.
SECTION 7
HOW CAN I ACCESS MY MONEY?
You may withdraw money at any time during the accumulation phase. If you do so,
however, you may be subject to income tax and, if you make a withdrawal prior to
age 59 1/2, an additional tax penalty as well. If you withdraw money less than
nine years (for the Contract With Credit) or seven years (for the Contract
Without Credit) after making a purchase payment, we may impose a withdrawal
charge. In addition, if you purchase a Contract With Credit, we may take back
any credit that has not vested that corresponds to the purchase payment(s) you
withdraw.
SECTION 8
WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS CONTRACT?
Your earnings are generally not taxed until you withdraw them. If you take money
out during the accumulation phase, the tax laws treat the withdrawal as first a
withdrawal of earnings, which are taxed as income. If you are younger than age
59 1/2 when you take money out, you may be charged a 10% federal tax penalty on
the earnings in addition to ordinary taxation. A portion of the payments you
receive during the income phase is considered a return of your original
investment and therefore will not be taxable as income. Generally, all amounts
withdrawn from an Individual Retirement Annuity (IRA) contracts prior to age 59
1/2 are taxable and subject to the 10% penalty.
SECTION 9
OTHER INFORMATION
This contract is issued by Pruco Life, a subsidiary of the Prudential Insurance
Company of America, and sold by registered representatives.
15
<PAGE> 17
16
<PAGE> 18
SUMMARY OF CONTRACT EXPENSES
THE PURPOSE OF THIS SUMMARY IS TO HELP YOU TO UNDERSTAND THE CURRENT COSTS YOU
WILL PAY FOR STRATEGIC PARTNERS. THIS SUMMARY INCLUDES THE 1999 EXPENSES OF THE
MUTUAL FUNDS USED BY THE VARIABLE INVESTMENT OPTIONS (OR FOR THOSE FUNDS THAT
DID NOT BEGIN OPERATING UNTIL AFTER 1999, ESTIMATED EXPENSES) BUT DOES NOT
INCLUDE ANY CHARGE FOR PREMIUM TAXES THAT MIGHT BE APPLICABLE IN YOUR STATE.
The chart below summarizes current charges. For more detailed information,
including information about maximum charges, see "What Are The Expenses
Associated With The Strategic Partners Variable Annuity?" on page __. For more
detailed expense information about the mutual funds, please refer to the
individual fund prospectuses, which you will find at the back of this
prospectus.
<TABLE>
<CAPTION>
TRANSACTION EXPENSES
--------------------
Contract Contract
With Without
Credit Credit
Withdrawal Charge (See Note 1 below) ------ ------
-----------------------------------
Number of contract anniversaries since purchase payment
-------------------------------------------------------
<S> <C> <C>
0 7% 7%
1 7% 6%
2 7% 5%
3 6% 4%
4 5% 3%
5 4% 2%
6 3% 1%
7 2% 0%
8 1% 0%
9 0% 0%
-- --
All Contracts
-------------
Transfer Fee (see Note 2 below)
------------------------------
first 12 transfers per contract year $0
each transfer after the first 12 in a contract year $25
Annual Contract Fee And Contract Charge Upon Full Withdrawal
------------------------------------------------------------
For Contract Value of at Least $50,000 $0
For Contract Values Less Than $50,000 (see Note 3 below) $30
Annual Guaranteed Minimum Income Benefit Charge
-----------------------------------------------
And Charge Upon Certain Withdrawals (see Note 4 below)
------------------------------------
ANNUAL ACCOUNT EXPENSES
-----------------------
AS A PERCENTAGE OF THE AVERAGE ACCOUNT VALUE
Base Death Benefit Insurance Charge: 1.40%
Guaranteed Minimum Death Benefit Option - Roll-Up or Step-Up
Insurance Charge: 1.60%
Guaranteed Minimum Death Benefit Option - Greater of Roll-Up and
Step-Up Insurance Charge: 1.70%
</TABLE>
NOTE 1: Each contract year, you may withdraw up to 10% of your net purchase
payments without paying a withdrawal charge. We will waive the withdrawal fee
if we pay a death benefit or certain other circumstances. See "Withdrawal
Charge" on page __.
NOTE 2: We will not charge you for transfers made in connection with Dollar
Cost Averaging and Auto-Rebalancing and do not count them toward the limit of
12 free transfers per year.
NOTE 3: We assess this fee annually and at the time of a full withdrawal, if
the value of your contract is less than $50,000. If the value of your contract
is less than $1500, then we will assess a lower fee, equal to 2% of your
contract value.
NOTE 4: This charge is equal to 0.25% of the "roll-up value." Subject to
certain age restriction, the roll-up value is the total of all invested
purchase payments compounded daily at an effective annual rate of 5.0%, subject
to a 200% cap. Both the roll-up value and
17
<PAGE> 19
the cap are reduced proportionally by withdrawals. We assess this fee annually
and, if the remaining contract value is less than the applicable fee, pro-rata
at the time of a full or partial withdrawal.
NOTES FOR ANNUAL MUTUAL FUND EXPENSES (APPEARING ON PAGE __)
These are the historical fund expenses for the year ended December 31, 1999,
except as indicated. Fund expenses are not fixed or guaranteed by the Strategic
Partners contract and will vary from year to year.
(1) THE PRUDENTIAL SERIES FUND: Because this is the first year of operation for
all "SP" Portfolios, Other Expenses are estimated based on management's
projection of non-management fee expenses. Each "SP" portfolio has expense
reimbursements in effect. These expense reimbursements are voluntary and may be
terminated at any time.
(2) JANUS ASPEN SERIES GROWTH PORTFOLIO-SERVICE SHARES: Expenses are based on
the estimated expenses that the new Service Shares Class of the Growth
Portfolio expects to incur in its first fiscal year. Janus Aspen Series
maintains a distribution plan, or "12b-1 Plan," for this class of shares under
which an annual fee of 0.25% of the class's average daily net assets is paid to
the class's distributor. This fee is included in "other expenses" and is
discussed in the Janus Aspen Series prospectus.
18
<PAGE> 20
ANNUAL MUTUAL FUND EXPENSES (AFTER REIMBURSEMENT, IF ANY):
- ----------------------------------------------------------
AS A PERCENTAGE OF EACH FUND'S AVERAGE DAILY NET
- ------------------------------------------------
ASSETS
- ------
<TABLE>
<CAPTION>
TOTAL ACTUAL
INVESTMENT TOTAL EXPENSES AFTER
MANAGEMENT OTHER CONTRACTUAL EXPENSE
FEES EXPENSES EXPENSES REIMBURSEMENT*
THE PRUDENTIAL SERIES FUND(1)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Prudential Global Portfolio 0.75% 0.09% 0.84% 0.84%
Prudential Jennison Portfolio 0.60% 0.03% 0.63% 0.63%
Prudential Money Market Portfolio 0.40% 0.02% 0.42% 0.42%
Prudential Stock Index Portfolio 0.35% 0.04% 0.39% 0.39%
SP Aggressive Growth Asset Allocation Portfolio 0.89% 0.63% 1.52% 1.08%
SP AIM Aggressive Growth Portfolio 0.95% 0.50% 1.45% 1.07%
SP AIM Growth and Income Portfolio 0.85% 0.38% 1.23% 1.00%
SP Alliance Large Cap Growth Portfolio 0.90% 0.30% 1.20% 1.10%
SP Alliance Technology Portfolio 1.15% 0.47% 1.62% 1.30%
SP Balanced Asset Allocation Portfolio 0.78% 0.50% 1.28% 0.94%
SP Conservative Asset Allocation Portfolio 0.72% 0.59% 1.32% 0.88%
SP Davis Value Portfolio 0.75% 0.31% 1.06% 0.83%
SP Deutsche International Equity Portfolio 0.90% 0.77% 1.67% 1.10%
SP Growth Asset Allocation Portfolio 0.82% 0.51% 1.33% 0.99%
SP INVESCO Small Company Growth Portfolio 0.95% 0.59% 1.54% 1.15%
SP Jennison International Growth Portfolio 0.95% 0.99% 1.94% 1.34%
SP Large Cap Value Portfolio 0.80% 0.34% 1.14% 0.90%
SP MFS Capital Opportunities Portfolio 0.75% 0.39% 1.14% 1.00%
SP MFS Mid Cap Growth Portfolio 0.80% 0.52% 1.32% 1.00%
SP PIMCO High Yield 0.60% 0.77% 1.37% 0.82%
SP PIMCO Total Return Portfolio 0.60% 0.57% 1.17% 0.76%
SP Prudential U.S. Emerging Growth Portfolio 0.85% 0.52% 1.37% 1.05%
SP Small/Mid Cap Value Portfolio 0.90% 0.68% 1.58% 1.05%
SP Strategic Partners Focused Growth Portfolio 0.90% 0.42% 1.32% 1.01%
JANUS ASPEN SERIES(2)
- ----------------------------------------------------
Growth Portfolio - Service Shares 0.65% 0.27% 0.92% 0.92%
</TABLE>
* Reflects fee waivers and reimbursement of expenses, if any. See notes on page
__.
The "Expense Examples" on the following pages are calculated using the figures
in the "Total Actual Expenses After Expense Reimbursement" column in the above
table.
19
<PAGE> 21
EXPENSE EXAMPLES
THESE EXAMPLES WILL HELP YOU COMPARE THE FEES AND EXPENSES OF THE DIFFERENT
VARIABLE INVESTMENT OPTIONS OFFERED BY STRATEGIC PARTNERS. YOU CAN ALSO USE THE
EXAMPLES TO COMPARE THE COST OF STRATEGIC PARTNERS WITH OTHER VARIABLE ANNUITY
CONTRACTS.
Example 1a: Base Death Benefit and You Withdraw All Your Assets
This example assumes that you:
- - Invest $10,000 in Strategic Partners;
- - Do not choose a Guaranteed Minimum Death Benefit Option or Guaranteed
Minimum Income Benefit Option;
- - Allocate all of your assets to only one of the variable investment options;
- - That investment has a 5% return each year;
- - The mutual fund's operating expenses remain the same each year; and
- - You withdraw all your assets at the end of the indicated period.
Example 1b: Base Death Benefit and You Do Not Withdraw Your Assets
This example makes exactly the same assumptions as Example 1a except that it
assumes that you do not withdraw any of your assets at the end of the indicated
period.
Example 2a: Greater of Roll-up or Step-up Guaranteed Minimum Death Benefit
Option And Guaranteed Minimum Income Benefit and You Withdraw All Your Assets
This example assumes that you:
- - Invest $10,000 in Strategic Partners;
- - Choose Guaranteed Minimum Death Benefit Option that provides the greater of
the step-up or roll-up death benefit;
- - Choose the Guaranteed Minimum Income Benefit Option;
- - Allocate all of your assets to only one of the variable investment options;
- - That investment has a 5% return each year;
- - The mutual fund's operating expenses remain the same each year; and
- - You withdraw all your assets at the end of the indicated period.
Example 2b: Greater of Roll-up or Step-up Guaranteed Minimum Death Benefit
Option and Guaranteed Minimum Income Benefit and You Do Not Withdraw Your Assets
This example makes exactly the same assumptions as Example 2a except that it
assumes that you do not withdraw any of your assets at the end of the indicated
period.
Your actual costs may be higher or lower, but examples of what your costs would
be based on these assumptions appear on the following page.
NOTES FOR EXPENSE EXAMPLES:
THESE EXAMPLES DO NOT SHOW PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE
HIGHER OR LOWER.
If your contract value is less than $50,000 on your contract anniversary (or
upon a full withdrawal), we deduct $30 or, if your contract value is less than
$1500, a lower amount equal to 2% of your contract value. The examples use an
average annual contract fee, which we calculated based on our estimate of the
total contract fees we expect to collect in the initial year of this contract.
Based on these estimates, the annual contract fee is included as an annual
charge of 0.05% of contract value. Your actual fees will vary based on the
amount of your contract and your specific allocation among the investment
options.
The examples do not reflect premium taxes. We may apply a charge for premium
taxes depending on what state you live in.
20
<PAGE> 22
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
EXPENSE EXAMPLE WITH THE BASE DEATH BENEFIT; NO GUARANTEED MINIMUM
INCOME BENEFIT
EXAMPLE 1a:
IF YOU WITHDRAW YOUR ASSETS
1 YR 3 YRS 5 YRS 10 YRS
THE PRUDENTIAL SERIES FUND
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Prudential Global Portfolio $ 871 $ 1234 $ 1524 $ 2731
Prudential Jennison Portfolio $ 849 $ 1168 $ 1413 $ 2507
Prudential Money Market Portfolio $ 828 $ 1101 $ 1301 $ 2278
Prudential Stock Index Portfolio $ 824 $ 1092 $ 1285 $ 2245
SP Aggressive Growth Asset Allocation
Portfolio $ 896 $ 1309 $ 1649 $ 2980
SP AIM Aggressive Growth Portfolio $ 895 $ 1306 $ 1644 $ 2970
SP AIM Growth and Income Portfolio $ 888 $ 1284 $ 1608 $ 2898
SP Alliance Large Cap Growth Portfolio $ 898 $ 1315 $ 1660 $ 3001
SP Alliance Technology Portfolio $ 919 $ 1377 $ 1763 $ 3203
SP Balanced Asset Allocation Portfolio $ 882 $ 1265 $ 1576 $ 2835
SP Conservative Asset Allocation Portfolio $ 882 $ 1266 $ 1578 $ 2844
SP Davis Value Portfolio $ 870 $ 1231 $ 1519 $ 2720
SP Deutsche International Equity Portfolio $ 898 $ 1315 $ 1660 $ 3001
SP Growth Asset Allocation Portfolio $ 887 $ 1281 $ 1603 $ 2887
SP INVESCO Small Company Growth Portfolio $ 904 $ 1331 $ 1685 $ 3052
SP Jennison International Growth Portfolio $ 923 $ 1390 $ 1783 $ 3243
SP Large Cap Value Portfolio $ 878 $ 1253 $ 1556 $ 2794
SP MFS Capital Opportunities Portfolio $ 888 $ 1284 $ 1608 $ 2898
SP MFS Mid Cap Growth Portfolio $ 888 $ 1284 $ 1608 $ 2898
SP PIMCO High Yield $ 869 $ 1228 $ 1514 $ 2709
SP PIMCO Total Return Portfolio $ 863 $ 1209 $ 1482 $ 2646
SP Prudential U.S. Emerging Growth Portfolio $ 893 $ 1300 $ 1634 $ 2949
SP Small/Mid Cap Value Portfolio $ 893 $ 1300 $ 1634 $ 2949
SP Strategic Partners Focused Growth Portfolio $ 889 $ 1287 $ 1613 $ 2908
JANUS ASPEN SERIES
Growth Portfolio - Service Shares $ 880 $ 1259 $ 1566 $ 2814
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE 1b:
IF YOU DO NOT WITHDRAW YOUR ASSETS
1 YR 3 YRS 5 YRS 10 YRS
THE PRUDENTIAL SERIES FUND
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Prudential Global Portfolio $ 241 $ 744 $ 1274 $ 2731
Prudential Jennison Portfolio $ 219 $ 678 $ 1163 $ 2507
Prudential Money Market Portfolio $ 198 $ 611 $ 1051 $ 2278
Prudential Stock Index Portfolio $ 194 $ 602 $ 1035 $ 2245
SP Aggressive Growth Asset Allocation Portfolio $ 266 $ 819 $ 1399 $ 2980
SP AIM Aggressive Growth Portfolio $ 265 $ 816 $ 1394 $ 2970
SP AIM Growth and Income Portfolio $ 258 $ 794 $ 1358 $ 2898
SP Alliance Large Cap Growth Portfolio $ 268 $ 825 $ 1410 $ 3001
SP Alliance Technology Portfolio $ 289 $ 887 $ 1513 $ 3203
SP Balanced Asset Allocation Portfolio $ 252 $ 775 $ 1326 $ 2835
SP Conservative Asset Allocation Portfolio $ 252 $ 776 $ 1328 $ 2844
SP Davis Value Portfolio $ 240 $ 741 $ 1269 $ 2720
SP Deutsche International Equity Portfolio $ 268 $ 825 $ 1410 $ 3001
SP Growth Asset Allocation Portfolio $ 257 $ 791 $ 1353 $ 2887
SP INVESCO Small Company Growth Portfolio $ 274 $ 841 $ 1435 $ 3052
SP Jennison International Growth Portfolio $ 293 $ 900 $ 1533 $ 3243
SP Large Cap Value Portfolio $ 248 $ 763 $ 1306 $ 2794
SP MFS Capital Opportunities Portfolio $ 258 $ 794 $ 1358 $ 2898
SP MFS Mid Cap Growth Portfolio $ 258 $ 794 $ 1358 $ 2898
SP PIMCO High Yield $ 239 $ 738 $ 1264 $ 2709
SP PIMCO Total Return Portfolio $ 233 $ 719 $ 1232 $ 2646
SP Prudential U.S. Emerging Growth Portfolio $ 263 $ 810 $ 1384 $ 2949
SP Small/Mid Cap Value Portfolio $ 263 $ 810 $ 1384 $ 2949
SP Strategic Partners Focused Growth Portfolio $ 259 $ 797 $ 1363 $ 2908
JANUS ASPEN SERIES
- ----------------------------------------------------------------------------------------------------------
Growth Portfolio - Service Shares $ 250 $ 769 $ 1316 $ 2814
</TABLE>
These examples do not show past or future expenses. Actual expenses may be
higher or lower.
21
<PAGE> 23
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
GREATER OF ROLL-UP OR STEP-UP GUARANTEED MINIMUM DEATH BENEFIT OPTION AND
GUARANTEED MINIMUM INCOME BENEFIT
EXAMPLE 2a: IF YOU WITHDRAW YOUR ASSETS
1 YR 3 YRS 5 YRS 10 YRS
THE PRUDENTIAL SERIES FUND
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Prudential Global Portfolio $ 929 $ 1405 $ 1809 $ 3293
Prudential Jennison Portfolio $ 907 $ 1340 $ 1701 $ 3082
Prudential Money Market Portfolio $ 885 $ 1275 $ 1592 $ 2867
Prudential Stock Index Portfolio $ 882 $ 1265 $ 1576 $ 2835
SP Aggressive Growth Asset Allocation
Portfolio $ 953 $ 1479 $ 1930 $ 3528
SP AIM Aggressive Growth Portfolio $ 952 $ 1476 $ 1925 $ 3518
SP AIM Growth and Income Portfolio $ 945 $ 1454 $ 1890 $ 3450
SP Alliance Large Cap Growth Portfolio $ 955 $ 1485 $ 1940 $ 3547
SP Alliance Technology Portfolio $ 976 $ 1546 $ 2040 $ 3738
SP Balanced Asset Allocation Portfolio $ 939 $ 1436 $ 1860 $ 3392
SP Conservative Asset Allocation Portfolio $ 939 $ 1437 $ 1862 $ 3402
SP Davis Value Portfolio $ 928 $ 1402 $ 1804 $ 3283
SP Deutsche International Equity Portfolio $ 955 $ 1485 $ 1940 $ 3547
SP Growth Asset Allocation Portfolio $ 944 $ 1451 $ 1885 $ 3441
SP INVESCO Small Company Growth Portfolio $ 961 $ 1500 $ 1965 $ 3596
SP Jennison International Growth Portfolio $ 980 $ 1558 $ 2060 $ 3776
SP Large Cap Value Portfolio $ 935 $ 1424 $ 1839 $ 3352
SP MFS Capital Opportunities Portfolio $ 945 $ 1454 $ 1890 $ 3450
SP MFS Mid Cap Growth Portfolio $ 945 $ 1454 $ 1890 $ 3450
SP PIMCO High Yield $ 926 $ 1399 $ 1798 $ 3273
SP PIMCO Total Return Portfolio $ 920 $ 1380 $ 1768 $ 3213
SP Prudential U.S. Emerging Growth Portfolio $ 950 $ 1470 $ 1915 $ 3499
SP Small/Mid Cap Value Portfolio $ 950 $ 1470 $ 1915 $ 3499
SP Strategic Partners Focused Growth Portfolio $ 946 $ 1457 $ 1895 $ 3460
JANUS ASPEN SERIES
Growth Portfolio - Service Shares $ 937 $ 1430 $ 1849 $ 3372
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE 2b:
IF YOU DO NOT WITHDRAW YOUR ASSETS
1 YR 3 YRS 5 YRS 10 YRS
THE PRUDENTIAL SERIES FUND
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Prudential Global Portfolio $ 299 $ 915 $ 1559 $ 3293
Prudential Jennison Portfolio $ 277 $ 850 $ 1451 $ 3082
Prudential Money Market Portfolio $ 255 $ 785 $ 1342 $ 2867
Prudential Stock Index Portfolio $ 252 $ 775 $ 1326 $ 2835
SP Aggressive Growth Asset Allocation Portfolio $ 323 $ 989 $ 1680 $ 3528
SP AIM Aggressive Growth Portfolio $ 322 $ 986 $ 1675 $ 3518
SP AIM Growth and Income Portfolio $ 315 $ 964 $ 1640 $ 3450
SP Alliance Large Cap Growth Portfolio $ 325 $ 995 $ 1690 $ 3547
SP Alliance Technology Portfolio $ 346 $ 1056 $ 1790 $ 3738
SP Balanced Asset Allocation Portfolio $ 309 $ 946 $ 1610 $ 3392
SP Conservative Asset Allocation Portfolio $ 309 $ 947 $ 1612 $ 3402
SP Davis Value Portfolio $ 298 $ 912 $ 1554 $ 3283
SP Deutsche International Equity Portfolio $ 325 $ 995 $ 1690 $ 3547
SP Growth Asset Allocation Portfolio $ 314 $ 961 $ 1635 $ 3441
SP INVESCO Small Company Growth Portfolio $ 331 $ 1010 $ 1715 $ 3596
SP Jennison International Growth Portfolio $ 350 $ 1068 $ 1810 $ 3776
SP Large Cap Value Portfolio $ 305 $ 934 $ 1589 $ 3352
SP MFS Capital Opportunities Portfolio $ 315 $ 964 $ 1640 $ 3450
SP MFS Mid Cap Growth Portfolio $ 315 $ 964 $ 1640 $ 3450
SP PIMCO High Yield $ 296 $ 909 $ 1548 $ 3273
SP PIMCO Total Return Portfolio $ 290 $ 890 $ 1518 $ 3213
SP Prudential U.S. Emerging Growth Portfolio $ 320 $ 980 $ 1665 $ 3499
SP Small/Mid Cap Value Portfolio $ 320 $ 980 $ 1665 $ 3499
SP Strategic Partners Focused Growth Portfolio $ 316 $ 967 $ 1645 $ 3460
JANUS ASPEN SERIES
- ----------------------------------------------------------------------------------------------------------
Growth Portfolio - Service Shares $ 307 $ 940 $ 1599 $ 3372
</TABLE>
These examples do not show past or future expenses. Actual expenses may be
higher or lower.
22
<PAGE> 24
PART II SECTIONS 1-9
STRATEGIC PARTNERS PROSPECTUS
[PHOTO]
23
<PAGE> 25
1:
WHAT IS THE STRATEGIC PARTNERS
VARIABLE ANNUITY?
The Strategic Partners Variable Annuity is a contract between you, the owner,
and us, Pruco Life Insurance Company (Pruco Life, we or us).
Under our contract, in exchange for your payment to us, we promise to pay you a
guaranteed income stream that can begin any time on or after the third contract
anniversary. Your annuity is in the accumulation phase until you decide to begin
receiving annuity payments. The date you begin receiving annuity payments is the
annuity date. On the annuity date, your contract switches to the income phase.
This annuity contract benefits from tax deferral. Tax deferral means that you
are not taxed on earnings or appreciation on the assets in your contract until
you withdraw money from your contract. (If you hold the annuity contract in a
tax-favored plan such as an IRA, that plan generally provides tax deferral even
without investing in an annuity contact.)
Strategic Partners is a variable annuity contract. This means that during the
accumulation phase, you can allocate your assets among 25 variable investment
options and, if you choose the Contract Without Credit, two guaranteed fixed
interest rate options as well. If you select variable investment options, the
amount of money you are able to accumulate in your contract during the
accumulation phase depends upon the investment performance of the mutual funds
associated with those variable investment options. Because the mutual funds'
portfolios fluctuate in value depending upon market conditions, your contract
value can either increase or decrease. This is important, since the amount of
the annuity payments you receive during the income phase depends upon the value
of your contract at the time you begin receiving payments.
As mentioned above, if you choose the Contract Without Credit, two guaranteed
fixed interest rate options are available:
- - The one-year fixed rate option offers an interest rate that is guaranteed
by us for one year and will always be at least 3% per year.
- - The dollar cost averaging fixed rate option offers an interest rate that is
guaranteed by us for a selected period during which periodic transfers are
made to selected variable investment options.
As the owner of the contract, you have all of the decision-making rights under
the contract. You will also be the annuitant unless you designate someone else.
The annuitant is the person whose life is used to determine how much and how
long the annuity payments will continue once the annuity phase begins. On and
after the annuity date, the annuitant is the owner and may not be changed.
The beneficiary is the person(s) or entity you designate to receive any death
benefit. You may change the beneficiary any time prior to the annuity date by
making a written request to us. Your request becomes effective when we approve
it. The beneficiary becomes the owner when a death benefit is payable.
SHORT TERM CANCELLATION RIGHT OR "FREE LOOK"
If you change your mind about owning Strategic Partners, you may cancel your
contract within 10 days after receiving it (or whatever period is required by
applicable state law). You can request a refund by returning the contract either
to the representative who sold it to you, or to the Prudential Annuity Service
Center at the address shown on the first page of this prospectus. You will
receive, depending on applicable state law:
- - Your full purchase payment; or
- - The amount your contract is worth as of the day we receive your request.
This amount may be more or less than your original payment. If you have
purchased the Contract With Credit, we will deduct any credit we had added
to your contract value.
24
<PAGE> 26
2:
WHAT INVESTMENT OPTIONS
CAN I CHOOSE?
THE CONTRACT GIVES YOU THE CHOICE OF ALLOCATING YOUR PURCHASE PAYMENTS TO ANY
ONE OR MORE OF 25 VARIABLE INVESTMENT OPTIONS.
The 25 variable investment options invest in mutual funds managed by leading
investment advisers. Separate prospectuses for these funds are attached to this
prospectus. You should read a mutual fund's prospectus before you decide to
allocate your assets to the variable investment option using that fund.
VARIABLE INVESTMENT OPTIONS
Listed below are the mutual funds in which the variable investment options
invest. Each variable investment option has a different investment objective.
The Prudential Series Fund
- - Prudential Global Portfolio
- - Prudential Jennison Portfolio (domestic equity)
- - Prudential Money Market Portfolio
- - Prudential Stock Index Portfolio
- - SP Aggressive Growth Asset Allocation Portfolio
- - SP AIM Aggressive Growth Portfolio
- - SP AIM Growth and Income Portfolio
- - SP Alliance Large Cap Growth Portfolio
- - SP Alliance Technology Portfolio
- - SP Balanced Asset Allocation Portfolio
- - SP Conservative Asset Allocation Portfolio
- - SP Davis Value Portfolio
- - SP Deutsche International Equity Portfolio
- - SP Growth Asset Allocation Portfolio
- - SP INVESCO Small Company Growth Portfolio
- - SP Jennison International Growth Portfolio
- - SP Large Cap Value Portfolio
- - SP MFS Capital Opportunities Portfolio
- - SP MFS Mid Cap Growth Portfolio
- - SP PIMCO High Yield Portfolio
- - SP PIMCO Total Return Portfolio
- - SP Prudential U.S. Emerging Growth Portfolio
- - SP Small/Mid Cap Value Portfolio
- - SP Strategic Partners Focused Growth Portfolio
The Prudential Series Fund, Inc. is managed by Prudential through another
company it owns called the Prudential Investment Corporation. The Prudential
Investment Corporation manages some of the of the portfolios of The Prudential
Series Fund directly, and for the portfolios listed below, it oversees the
indicated subadviser, which has day-to-day responsibility for managing the
portfolio:
- - Prudential Jennison Portfolio, SP Jennison International Growth Portfolio,
and SP Prudential U.S. Focused Growth Portfolio: Jennison Associates LLC
- - SP Strategic Partners Focused Growth Portfolio: Jennison Associates LLC.
and Alliance Capital Management L.P.
- - SP AIM Aggressive Growth Portfolio and SP AIM Growth and Income Portfolio:
AIM Advisors, Inc.
- - SP Alliance Large Cap Growth Portfolio and SP Alliance Technology
Portfolio: Alliance Capital Management L.P.
- - SP Davis Value Portfolio: Davis Select Advisers, LP
- - SP Deutsche International Equity Portfolio: Bankers Trust Company, part
of Deutsche Asset Management and a wholly-owned subsidiary of Deutsche
International Bank A.G.
- - SP INVESCO Small Company Growth Portfolio: INVESCO
25
<PAGE> 27
- - SP Large Cap Value Portfolio and SP Small/Mid Cap Value Portfolio:
Fidelity Management and Research Company
- - SP MFS Capital Opportunities Portfolio and SP MFS Mid Cap Growth
Portfolio: Massachusetts Financial Services Company
- - SP PIMCO High Yield Portfolio and PIMCO Total Return Portfolio: Pacific
Investment Management Company
Janus Aspen Series
- - Growth Portfolio - Service Shares
Janus Capital Corporation serves as investment adviser to the Growth Portfolio
- - Service Shares of Janus Aspen Series.
FIXED INTEREST RATE OPTIONS
If you choose the Contract Without Credit, we offer two fixed interest rate
options:
- - a one-year fixed rate option, and
- - a dollar cost averaging fixed rate option ("DCA Fixed Rate Option").
We set a one year guaranteed annual interest rate that is always available for
the one-year fixed rate option. For the DCA Fixed Rate Option, the interest
rate is guaranteed for the applicable period of time for which transfers are
made. Neither fixed interest rate option is available if you choose the
Contract With Credit.
When you select one of these options, your payment will earn interest at the
established rate for the applicable interest rate period. A new interest rate
period is established every time you allocate or transfer money into a fixed
interest rate option. (You may not transfer amounts from other investment
options into the DCA Fixed Rate Option.) You may have money allocated in more
than one interest rate period at the same time. This could result in your money
earning interest at different rates and each interest rate period maturing at a
different time. While these interest rates may change from time to time, the
minimum rate will never be less than 3%.
DCA Fixed Rate Option. With the Contract Without Credit, you may allocate all
or part of any purchase payment to the DCA Fixed Rate Option. Under this
option, you automatically transfer amounts over a stated period (currently, six
or twelve months) from the DCA Fixed Rate Option to the variable investment
options you select. We will invest the assets you allocate to the DCA Fixed
Rate Option in our general account until they are transferred. You may not
transfer from other investment options to the DCA Fixed Rate Option.
If you choose the DCA Fixed Rate Option, you must allocate a minimum of $5,000
to it. The first periodic transfer will occur on the date you allocate your
purchase payment to the DCA Fixed Rate Option. Subsequent transfers will occur
on the monthly anniversary of the first transfer. Currently, you may choose to
have the purchase payment allocated to the DCA Fixed Rate Option transfer to
the selected variable investment options in either six or twelve monthly
installments, and you may not change that number of monthly installments after
you have chosen the DCA Fixed Rate Option. (In the future, we may make
available other numbers of transfers and other transfer schedules - for
example, quarterly as well as monthly.) If you choose a six-payment transfer
schedule, each transfer generally will equal 1/6th of the amount you allocated
to the DCA Fixed Rate Option, and if you choose a twelve-payment transfer
schedule, each transfer generally will equal 1/12th of the amount you allocated
to the DCA Fixed Rate Option. In either case, the final transfer amount
generally will also include the credited interest. You may change at any time
the variable investment options into which the DCA Fixed Rate Option assets are
transferred. Transfers from the DCA Fixed Rate Option do not count toward the
maximum number of free transfers allowed under the contract.
If you make a withdrawal or have a fee assessed from your contract, and all or
part of that withdrawal or fee comes out of the DCA Fixed Rate Option, we will
recalculate the periodic transfer amount to reflect the change. This
recalculation may include some or all of the interest credited to the date of
the next scheduled transfer. If a withdrawal or fee assessment reduces the
monthly transfer amount below $100, we will transfer the remaining balance in
the DCA Fixed Rate Option on the next scheduled transfer date.
By investing amounts on a regular basis instead of investing the total amount
at one time, the DCA Fixed Rate Option may decrease the effect of market
fluctuation on the investment of your purchase payment. Of course, dollar cost
averaging cannot ensure a profit or protect against loss in a declining market.
26
<PAGE> 28
TRANSFERS AMONG OPTIONS
You can transfer money among the variable investment options and, if you have
chosen the Contract Without Credit, the fixed interest rate options as well.
You may make your transfer request by telephone or in writing to the Prudential
Annuity Service Center. You may make up to two telephone transfer requests per
month. You must make any additional transfer requests during that month in
writing with an original signature. We have procedures in place to confirm that
instructions received by telephone are genuine. We will not be liable for
following telephone instructions that we reasonably believe to be genuine. Your
transfer request will take effect at the end of the business day on which we
receive it. Our business day generally closes at 4:00 p.m. Eastern time, and
requests received after that time will take effect at the end of the next
business day.
During the contract accumulation phase, you can make up to12 transfers each
contract year without charge. We will charge you up to $30 for each transfer
after the twelfth in a contract year. Currently that charge is $25 for each
additional transfer. (Dollar Cost Averaging and Auto-Rebalancing transfers are
always free, and do not count toward the 12 free transfers per year.)
DOLLAR COST AVERAGING
The dollar cost averaging (DCA) feature (which is distinct from the DCA Fixed
Rate Option) allows you to systematically transfer either a fixed dollar amount
or a percentage out of the Money Market Portfolio and into one or more variable
investment options. You can have these automatic transfers made from the Money
Market Portfolio monthly, quarterly, semiannually or annually. By investing
amounts on a regular basis instead of investing the total amount at one time,
dollar cost averaging may decrease the effect of market fluctuation on the
investment of your purchase payment. Of course, dollar cost averaging cannot
ensure a profit or protect against loss in a declining market.
Each dollar cost averaging transfer must be at least $100. Transfers will be
made automatically on the schedule you choose until the entire amount you chose
to have transferred has been transferred or until you tell us to discontinue
the transfers. If the remaining amount to be transferred drops below $100, the
entire remaining balance will be transferred on the next transfer date. You can
allocate additional amounts to be transferred at any time.
Your transfers will occur on the last calendar day of each transfer period you
have selected, provided that the New York Stock Exchange is open on that date.
If the New York Stock Exchange is not open on a particular transfer date, the
transfer will take effect on the next business day.
Any dollar cost averaging transfers you make do not count toward the 12 free
transfers you are allowed each contract year. The dollar cost averaging feature
is available only during the contract accumulation phase.
ASSET ALLOCATION PROGRAM
We recognize the value of having advice when deciding how to allocate your
purchase payments among the investment options. If you choose to participate in
the Asset Allocation Program, your representative will give you a questionnaire
to complete that will help determine a program that is appropriate for you. We
will prepare your asset allocation based on your answers to the questionnaire.
We will not charge you for this service and you are not obligated to
participate or to invest according to program recommendations.
AUTO-REBALANCING
Once you have allocated your money among the variable investment options, the
actual performance of the investment options may cause your allocation to
shift. For example, an investment option that initially holds only a small
percentage of your assets could perform much better than another investment
option. Over time, this option could increase to a larger percentage of your
assets than you desire. You can direct us to automatically rebalance your
assets to return to your original allocation or to change allocations by
selecting the Auto-Rebalancing feature. If you also participate in the DCA
feature, then the Money Market Portfolio will not be rebalanced.
You may choose to have your rebalancing occur monthly, quarterly, semiannually,
or annually. The rebalancing will occur on the last calendar day of the period
you have chosen, provided that the New York Stock Exchange is open on that
date. If the New York Stock
27
<PAGE> 29
Exchange is not open on that date, the rebalancing will take effect on the next
business day.
Any transfers that occur as a result of the Auto-Rebalancing feature do not
count toward the 12 free transfers you are allowed per year. The
auto-rebalancing feature is available only during the contract accumulation
phase.
VOTING RIGHTS
We are the legal owner of the shares in the mutual funds available as variable
investment options. However, we currently vote the shares of the mutual funds
according to voting instructions we receive from contract owners. When a vote
is required, we will mail you a form that you can complete and return to us to
tell us how you wish us to vote. When we receive those instructions, we will
vote all of the shares we own on your behalf in accordance with those
instructions. We will vote fund shares for which we do not receive
instructions, and any other shares that we own, in the same proportion as
shares for which we do receive instructions from contract owners. We may change
the way your voting instructions are calculated if federal law requires or
permits it.
SUBSTITUTION
We may substitute one or more of the mutual funds used by the variable
investment options. We would not do this without the approval of the Securities
and Exchange Commission and applicable state insurance departments. We would
give you specific notice in advance of any substitution we intended to make. We
may also stop allowing investments in existing funds.
28
<PAGE> 30
3:
WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE INCOME PHASE? (ANNUITIZATION)
The annuitant can begin receiving annuity payments any time after the third
contract anniversary (or as required by state law if different). Annuity
payments must begin no later than the contract anniversary that coincides with
or follows the annuitant's 90th birthday (unless we agree to another date).
The Strategic Partners variable annuity contract offers an optional guaranteed
minimum income benefit, which we describe below. Your annuity options vary
depending upon whether you choose this benefit.
PAYMENT PROVISIONS WITHOUT THE GUARANTEED MINIMUM INCOME BENEFIT
You may choose among the income plans described below at any time before the
annuity date. We call these plans "annuity options" or "settlement options."
During the income phase, all of the annuity options under this contract are
fixed annuity options. This means that you no longer invest in the variable
investment options - that is, in the underlying mutual funds - on or after the
annuity date. If you have not selected another annuity option by the annuity
date, you will automatically select the Life Income Annuity Option (Option 2,
described below) unless prohibited by applicable law. Generally, once the
annuity payments begin, you cannot change the annuity option.
- - Option 1 - Annuity Payments For A Fixed Period. Under this option, we will
make equal payments for a period you choose, up to 25 years. We will make
these payments monthly, quarterly, semiannually, or annually, as you
choose, for the fixed period. If the annuitant dies during the income
phase, we will continue payments to the beneficiary for the remainder of
the fixed period or, if the beneficiary so chooses, we will make a single
lump-sum payment. We calculate the amount of the lump sum payment as
present value of the unpaid future payments based upon the interest rate
used to compute the actual payments. That interest rate will always be at
least 3% a year.
Option 2 - Life Income Annuity Option. Under this option, we will make annuity
payments to the annuitant monthly, quarterly, semiannually, or annually as
long as the annuitant is alive. If the annuitant dies before we have made
10 years' worth of payments, we will pay the beneficiary the present value
of the remaining annuity payments in one lump sum, unless the annuitant
has specifically instructed us to continue to pay the remaining monthly
annuity payments. We calculate the present value of the remaining annuity
payments using the interest rate used to compute the amount of the
original 120 payments. That interest rate will always be at least 3% a
year. If you have not selected an annuity option by the annuity date, you
will automatically select this option, unless prohibited by applicable
law.
- - Option 3 - Interest Payment Option. Under this option, you can choose to
have us hold all or a portion of your contract value in order to
accumulate interest. You can receive interest payments on a monthly,
quarterly, semiannual, or annual basis or you can allow the interest to
accrue on your contract assets. Under this option, we will pay you
interest at an effective rate of at least 3% a year. This option is not
available if you hold your contract in an IRA.
- - Other Annuity Options. We currently offer a variety of other annuity
options. At the time you choose to receive your annuity payments, we may
make available to you any of the fixed annuity options then offered.
Depending upon the annuity option you choose, you may incur a withdrawal charge
when the income phase begins. Currently, we deduct any applicable withdrawal
charge if you choose Option 1 for a period shorter than five years, Option 3,
or certain other annuity options that we may make available. We do not deduct a
withdrawal charge if you choose Option 1 for a period of five years or longer
or Option 2. For information about withdrawal charges, see "What are the
expenses associated with the Strategic Partners contract," page __. In
addition, if you have purchased the Contract With Credit, we will take back any
credits that has not vested when you begin the income phase. See "Credits," on
page __.
GUARANTEED MINIMUM INCOME BENEFIT
29
<PAGE> 31
The guaranteed minimum income benefit, or "GMIB," is an optional feature that,
if you choose it, guarantees that once the income period begins, your income
payments will be no less than a certain "protected value." Depending on
applicable state law, the GMIB is not available under all contracts. In
addition, the GMIB is subject to certain age restrictions described below.
- - If you want the guaranteed minimum income benefit, you must choose this
option when you make your initial purchase payment, and you must also
participate in the "guaranteed minimum death benefit," which we describe
later in this prospectus. See "What is the death benefit," page __.
- - If you do choose the guaranteed minimum income benefit, you must continue
to participate in this feature until at least the end of the seventh
contract year. If, after the seventh contract year, you decide to stop
participating in the GMIB, you may do so but will not be able to reinstate
it.
- - If you choose the guaranteed minimum income benefit, we will impose an
annual charge equal to 0.25% of the "roll-up value" described below. (In
some states, we may calculate this fee on a different basis, but it will
not be higher than 0.25% of the roll-up value.) See "What are the expenses
associated with the Strategic Partners Contract?" on page __.
- - To take advantage of the guaranteed minimum income benefit, you must wait
a certain amount of time before you begin the income phase. That length of
that waiting period depends upon the age of the annuitant (or, if there is
a co-annuitant as well, the age of the older of the two) as shown in the
following chart:
<TABLE>
<CAPTION>
Contract Anniversary
Age at Issue of When GMIB Becomes
Contract Available
-------- ---------
<S> <C> <C>
0-45 15
46 14
47 13
48 12
49 11
50-80 10
</TABLE>
Once that period has elapsed, you will have a thirty-day period each year,
beginning on the contract anniversary, during which you may begin the
income phase with the guaranteed minimum income benefit by submitting the
necessary forms in good order to the Annuity Service Center.
Payout Amount. The guaranteed minimum income benefit payout amount is based on
the age and sex of the annuitant (and, if there is one, the co-annuitant as
well). After we first deduct a charge for any applicable premium taxes, the
payout amount will equal the greater of:
- - the "protected value" as of the date you exercise the guaranteed minimum
income benefit payout option, applied to the guaranteed annuity purchase
rates and based on the period certain as described below. Currently, the
protected value is equal to the "roll-up value," which is the total of all
invested purchase payments compounded daily at an effective annual rate of
5.0%, subject to a cap of 200% of all invested purchase payments. Both the
roll-up and the cap are reduced proportionally by withdrawals.
- - the adjusted contract value - that is, the contract value minus (i) any
charge we impose for premium taxes and (ii), if you have chosen the
Contract With Credit, any credit that has not vested - as of the date the
exercise of the GMIB payout option applied to the current annuity purchase
rates then in use and based on the "period certain," as described below.
The guaranteed annuity purchase rates are attached to your contract.
After the contract anniversary on or after the sole or older owner's 80th
birthday, we stop increasing the protected value. This means that we do not
increase the roll-up by the effective annual interest rate. But when you make a
withdrawal on or after that contract anniversary, we still reduce the roll-up
value proportionally by the effect of the withdrawal.
30
<PAGE> 32
GMIB Annuity Payout Options. We currently offer two guaranteed minimum income
benefit annuity payout options. Each involves payment for at least a "period
certain," which we define below.
- - GMIB Option 1 - Single Life Payout Option. We will make monthly payments
for as long as the annuitant lives, with payments for a period certain. We
will stop making payments after the later of the death of the annuitant or
the end of the period certain.
- - GMIB Option 2 - Joint Life Payout Option. In the case of an annuitant and
co-annuitant, we will make monthly payments for the joint lifetime of the
annuitant and co-annuitant, with payments for a period certain. If the
co-annuitant dies first, we will continue to make payments until the later
of the death of the annuitant and the end of the period certain. If the
annuitant dies first, we will continue to make payments until the later of
the death of the co-annuitant and the end of the period certain, but if
the period certain ends first, we will reduce the amount of each payment
to 50% of the original amount.
The annuitant (or co-annuitant) has no right to withdraw amounts early under
either GMIB payout option. We may make other payout frequencies available, such
as quarterly, semi-annually or annually.
The "period certain" for the guaranteed minimum income benefit depends upon the
annuitant's age on the date you exercise the GMIB payout option:
<TABLE>
<CAPTION>
Age Period Certain
--- --------------
<S> <C>
80 or less 10 years
81 9 years
82 8 years
83 7 years
84 6 years
85-90 5 years
</TABLE>
Because we do not impose a new waiting period for each subsequent purchase
payment, if you choose the GMIB, we reserve the right to limit subsequent
purchase payments if we discover that by the timing of your purchase payments
and withdrawals, your protected value is increasing in ways we did not intend.
In determining whether to limit purchase payments, we will look at purchase
payments which are disproportionately larger than your initial purchase payment
and other actions that may artificially increase the GMIB protected value.
31
<PAGE> 33
4: WHAT IS THE DEATH BENEFIT?
THE DEATH BENEFIT FEATURE PROTECTS THE VALUE OF THE CONTRACT FOR THE
BENEFICIARY.
BENEFICIARY
The beneficiary is the person(s) or entity you name to receive any death
benefit. You name the beneficiary at the time the contract is issued, unless
you change it at a later date. Unless you name an irrevocable beneficiary,
during the accumulation period you can change the beneficiary at any time
before the owner (or, there is a joint owner, the last surviving of the owner
and joint owner) dies.
CALCULATION OF THE DEATH BENEFIT
If the owner (or the last surviving of the owner and joint owner, if there is a
joint owner) dies during the accumulation phase, we will, upon receiving
appropriate proof of death, pay a death benefit to the beneficiary designated
by the owner. If death is prior to age 80, the beneficiary will receive the
greater of the following:
- - The current value of your contract (as of the time we receive appropriate
proof of death). If you have purchased the Contract With Credit, we will
first deduct any credit that has not yet vested.
- - Either the base death benefit, which equals the total premium payments you
have made less any withdrawals, or, if you have chosen a guaranteed
minimum death benefit, the "protected value" of that death benefit.
The protected value of the guaranteed minimum death benefit, which depends upon
which option you have chosen, may equal the "step-up value," the "roll-up
value," or the greater of the two:
- - Step-up Guaranteed Minimum Death Benefit - The step-up value equals the
highest value of the contract on any contract anniversary date - that is,
on each contract anniversary, the new step-up value becomes the higher of
the previous step-up value and the current contract value. Between
anniversary dates, the step-up value is only increased by additional
purchase payments and reduced proportionally by withdrawals. If an owner
who has purchased a Contract With Credit makes any purchase payment later
than one year prior to death, the death benefit will be adjusted to
recapture any credit corresponding to that purchase payment.
- - Roll-up Guaranteed Minimum Death Benefit - The roll-up value equals the
total of all invested purchase payments compounded daily at an effective
annual rate of 5.0%, subject to a cap of 200% of all invested purchase
payments. Both the roll-up and the cap are reduced proportionally by
withdrawals.
- - Greater of Step-up and Roll-up Guaranteed Minimum Death Benefit - Under
this option, the protected value is equal to the greater of the step-up
value and the roll-up value.
If you have chosen a guaranteed minimum death benefit option and death occurs
on or after age 80, the beneficiary will receive the greater of: 1) the current
contract value as of the date that due proof of death is received, and 2) the
death benefit as of age 80, reduced proportionally by any withdrawals. For this
purpose, an owner is deemed to reach age 80 on the contract anniversary on or
following the owner's actual 80th birthday.
Here is an example of a proportional reduction:
If an owner withdrew 50% of a contract valued at $100,000 and if the protected
value was $80,000, the new protected value following the withdrawal would be
$40,000 or 50% of what it had been prior to the withdrawal.
Special rules apply if the beneficiary is the spouse of the owner, and the
contract does not have a joint owner. In that case, upon the death of the
owner, the spouse will have the choice of the following:
32
<PAGE> 34
- - The contract can continue, and the spouse will become the new owner of the
contract; or
- - The spouse can receive the death benefit. If the spouse does wish to
receive the death benefit, he or she must make that choice within the
first 60 days following our receipt of proof of death. Otherwise, the
contract will continue with the spouse as owner.
Special rules also apply if the contract has an owner and a joint owner and
they are spouses at the time that one dies. If that occurs, the surviving
spouse has the choice of the following:
- - The contract can continue, with the surviving spouse as the sole owner of
the contract; or
- - The surviving spouse can receive the adjusted contract value and the
contract will end. If the surviving spouse does wish to receive the
adjusted contract value, he or she must make that choice within the first
60 days following our receipt of proof of death. Otherwise, the contract
will continue with the surviving spouse as the sole owner.
Finally, special rules apply if the contract has an owner and a joint owner,
and they are not spouses at the time that one dies. In that situation, the
contract will not continue. Instead, the beneficiary will receive the adjusted
contract value.
If ownership of the contract changes as a result of the owner assigning it to
someone else, we will reset the value of the death benefit to equal the
contract value on the date the change of ownership occurs, and for purposes of
computing the future death benefit, we will treat that contract value as a
purchase payment occurring on that date.
Depending on applicable state law, some death benefit options may not be
available or may be subject to certain restrictions under your contract.
PAYOUT OPTIONS
The beneficiary may, within 60 days of providing proof of death, choose to take
the death benefit under one of several death benefit payout options listed
below.
The death benefit payout options are:
- - Choice 1. Lump sum payment of the death benefit. If the beneficiary does
not choose a payout option within sixty days, the beneficiary will receive
this payout option.
- - Choice 2. The payment of the entire death benefit within 5 years of the
date of death of the last to survive of the owner or joint owner.
- - Choice 3. Payment of the death benefit under an annuity or annuity
settlement option over the lifetime of the beneficiary or over a period
not extending beyond the life expectancy of the beneficiary with
distribution beginning within one year of the date of death of the last to
survive of the owner or joint owner.
If the contract has an owner and joint owner, any portion of the death benefit
not applied under Choice 3 within one year of the date of death of the survivor
must be distributed within five years of the survivor's date of death.
33
<PAGE> 35
5:
HOW CAN I PURCHASE A
STRATEGIC PARTNERS CONTRACT?
PURCHASE PAYMENTS
The initial purchase payment is the amount of money you first pay us to
purchase the contract. The minimum initial purchase payment is $10,000. With
some restrictions, you can make additional purchase payments of at least $1,000
or more at any time during the accumulation phase. However, no purchase
payments may be made on or after the earliest of 80th birthday of (i) the
owner, (ii) the joint owner, or (iii) the annuitant.
Currently, the maximum aggregate purchase payments you may make is $20 million.
We limit the maximum total purchase payments in any contract year other than
the first to $2 million. Depending on applicable state law, lower limits may
apply.
ALLOCATION OF PURCHASE PAYMENTS
- - When you purchase a contract, we will allocate your invested purchase
payment among the variable investment options based on the percentages you
choose. The percentage of your allocation to a particular investment
option can range in whole percentages from 1% to 100%.
- - You may change your allocation of future invested purchase payments at any
time. Contact the Annuity Service Center for details.
- - If you make an additional purchase payment without allocation
instructions, we will allocate the invested purchase payment in the same
proportion as your most recent purchase payment, unless you directed us in
connection with that purchase payment to make that allocation on a
one-time-only basis.
- - If you purchase the Contract Without Credit and you allocated all or part
of your initial purchase payment to the DCA Fixed Rate Option, we will
treat your transfer allocation instructions for the DCA Fixed Rate Option
as part of your allocation instructions for subsequent purchase payments
until you direct us otherwise.
We will credit the initial purchase payment to your contract within two
business days from the day on which we receive your payment at the Prudential
Annuity Service Center. If, however, your first payment is made without enough
information for us to set up your contract, we may need to contact you to
obtain the required information. If we are not able to obtain this information
within five business days, we will either return your purchase payment or
obtain your consent to continue holding it until we receive the necessary
information. We will generally credit each subsequent purchase payment as of
the business day we receive it in good order. Our business day generally closes
at 4:00 p.m. Eastern time. We will generally credit subsequent purchase
payments received in good order after the close of a business day on the
following business day.
CREDITS
If you purchase the Contract With Credit, we will add a credit amount to your
contract value with each purchase payment you make. The credit is allocated to
the variable investment options in the same percentages as the purchase
payment.
The credit percentage depends upon the amount of the purchase payment. The
credit percentage for your initial purchase payment appears on the contract
data pages. The credit percentage on subsequent purchase payments will vary,
but we guarantee it to be at least 3%.
Each credit is subject to its own vesting schedule, which is shown below. If
you make a withdrawal of all or part of a purchase payment, or you begin the
income phase of the contract, we will take back the non-vested portion of the
credit attributable to that purchase payment. Withdrawals of purchase payments
occur on a first-in first-out basis. This credit recapture is in addition to
any
34
<PAGE> 36
withdrawal charges that may apply.
<TABLE>
<CAPTION>
Number of Contract Anniversaries
Since Date of Each Purchase Payment Vested Percentage
----------------------------------- ----------------
<S> <C>
0 0%
1 10%
2 20%
3 30%
4 40%
5 50%
6 60%
7 70%
8 80%
9 100%
</TABLE>
If you exercise your right to cancel the contract, we will take back the entire
credit. If we pay a death benefit under the contract, we will take back the
unvested portion of any credit we applied one year prior to the date of death
or later.
CALCULATING CONTRACT VALUE
The value of your contract will go up or down depending on the investment
performance of the variable investment options you choose. To determine the
value of your contract, we use a unit of measure called an accumulation unit.
An accumulation unit works like a share of a mutual fund.
Every day we determine the value of an accumulation unit for each of the
variable investment options. We do this by:
1) adding up the total amount of money allocated to a specific investment
option;
2) subtracting from that amount insurance charges and any other applicable
charges such as for taxes; and
3) dividing this amount by the number of outstanding accumulation units.
When you make a purchase payment, we credit your contract with accumulation
units of the subaccount or subaccounts for the investment options you choose.
We determine the number of accumulation units credited to your contract by
dividing the amount of the purchase payment, plus (if you have purchased the
Contract With Credit) any applicable credit, allocated to an investment option
by the unit price of the accumulation unit for that investment option. We
calculate the unit price for each investment option after the New York Stock
Exchange closes each day and then credit your contract. The value of the
accumulation units can increase, decrease, or remain the same from day to day.
We cannot guarantee that your contract value will increase or that it will not
fall below the amount of your total purchase payments.
35
<PAGE> 37
6:
WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC PARTNERS CONTRACT?
THERE ARE CHARGES AND OTHER EXPENSES ASSOCIATED WITH THE CONTRACT THAT REDUCE
THE RETURN ON YOUR INVESTMENT. WE DESCRIBE THESE CHARGES AND EXPENSES BELOW.
INSURANCE CHARGES
Each day, we make a deduction for the insurance charge. The insurance charge
covers our expenses for mortality and expense risk, administration, marketing
and distribution. The mortality risk portion of the charge is for our
assumption of the risk that the annuitant(s) will live longer than expected
based on our life expectancy tables. When this happens, we pay a greater number
of annuity payments. The expense risk portion of the charge is for our
assumption of the risk that the current charges will be insufficient in the
future to cover the cost of administering the contract. The administrative
expense portion of the charge compensates us for the expenses associated with
the administration of the contract. This includes preparing and issuing the
contract; establishing and maintaining contract records; preparation of
confirmations and annual reports; personnel costs; legal and accounting fees;
filing fees; and systems costs.
If the insurance charge is not sufficient to cover our expenses, then we will
bear the loss. We do, however, expect to profit from this charge. The insurance
risk charge for your contract cannot be increased. We may use any profits from
this charge to pay for the costs of distributing the contracts.
We calculate the insurance charge based on the average daily value of all
assets allocated to the variable investment options. The amount of the charge
depends on the death benefit option that you choose. The charge is 1.40% if you
choose the base death benefit, 1.60% if you choose either the roll-up or
step-up guaranteed minimum death benefit option, and 1.70% if you choose the
guaranteed minimum death benefit option of the greater of the roll-up and
step-up.
GUARANTEED MINIMUM INCOME BENEFIT CHARGE
We will impose an additional charge if you choose the guaranteed minimum income
benefit. This is an annual charge equal to 0.25% of the roll-up value of your
contract, which we deduct from your contract value on each of the following
events:
- - each contract anniversary;
- - when you begin the income phase of the contract;
- - when you decide no longer to participate in the guaranteed minimum income
benefit;
- - upon a full withdrawal; and
- - upon a partial withdrawal if the remaining contract value remaining would
not be enough to cover the then applicable GMIB charge.
If we impose this fee other than on a contract anniversary, then we will
pro-rate it based on the portion of the contract year for which the GMIB was in
effect. We withdraw the fee from each investment option in the same proportion
that your contract value is allocated to that investment option. Upon a full
withdrawal or if the contract value remaining after a partial withdrawal is not
enough to cover the applicable GMIB charge, we will deduct the GMIB Charge from
the amount we pay you.
In some states, we may calculate the charge for the guaranteed minimum income
benefit in a different manner, but that charge will not exceed 0.25% of the
roll-up value. Consult your contract for details.
We will not impose the GMIB charge after the income phase begins, after you
revoke the GMIB option, or after you choose your
36
<PAGE> 38
GMIB payout option.
Currently, only the roll-up guaranteed minimum income benefit option is
available. In the future, we may also offer a step-up option or the greater of
the step-up or roll-up option, for which different charges will apply.
ANNUAL CONTRACT FEE
Currently, we do not deduct an annual contract fee for administrative expenses
while your contract value is $50,000 or more. If your contract value is less
than $50,000 on a contract anniversary during the accumulation phase or when
you make a full withdrawal, we will deduct $30 (or if your contract value is
less than $1500, then a lower amount equal to 2% of your contract value) for
administrative expenses. (This fee may differ in certain states). We may
increase this charge up to a maximum of $60 per year. Also, we may raise the
level of the contract value at which we waive this fee. We will deduct this
charge proportionately from each of your contract's investment options.
WITHDRAWAL CHARGE
A withdrawal charge may apply if you make a full or partial withdrawal during
the withdrawal charge period for a purchase payment. The withdrawal charge may
also apply if you begin the income phase during the withdrawal charge period,
depending upon the annuity option you choose. The amount and duration of the
withdrawal charge depends on whether you choose the Contract With Credit or the
Contract Without Credit. The withdrawal charge varies with the number of
contract anniversaries that have elapsed since each purchase payment was made,
and is a percentage, shown below, of the amount withdrawn.
<TABLE>
<CAPTION>
Number of Contract Anniversaries Since the Contract With Credit Contract Without Credit
Date of Each Purchase Payment Withdrawal Charge Withdrawal Charge
----------------------------- ----------------- -----------------
<S> <C> <C>
0 7% 7%
1 7% 6%
2 7% 5%
3 6% 4%
4 5% 3%
5 4% 2%
6 3% 1%
7 2% 0%
8 1% 0%
9 0% 0%
</TABLE>
If a withdrawal is effective on the day before a contract anniversary, the
withdrawal charge percentage as of the following contract anniversary will
apply.
If you request a withdrawal, we will:
- - deduct an amount from the contract value that is sufficient to pay the
withdrawal charge,
- - if you have chosen the Contract With Credit, take back any credit subject
to recapture under the vesting schedule, and
- - provide you with the amount requested.
If you request a full withdrawal, we will provide you with the full amount of
the contract value after making these deductions.
Each contract year, you may withdraw up to 10% of your net purchase payments
without paying a withdrawal charge. For purposes of determining the withdrawal
charge, withdrawals of this 10% "charge-free" amount will come first from
purchase payments, on a first-in first-out basis. Withdrawals in excess of the
charge-free amount will come first from purchase payments, also on a first-in
first-out basis, and will be subject to withdrawal charges, if applicable, even
if earnings are available on that date. Once you have withdrawn all purchase
payments, further withdrawals will come from any remaining earnings. Earnings
are not subject to withdrawal charges.
37
<PAGE> 39
We will waive all withdrawal charges upon receipt of proof that the owner or a
joint owner is terminally ill, or has been confined to an eligible nursing home
or eligible hospital continuously for at least three months after the contract
date. This waiver is not available if the owner has assigned ownership of the
contract to someone else. Regardless whether we waive withdrawal charges, we
will take back any credits subject to recapture under the vesting schedule.
Withdrawal charges will never be greater than permitted by applicable law.
PREMIUM TAXES
Some states and municipalities charge premium taxes or similar taxes. We are
responsible for the payment of these taxes and will make a deduction from the
value of the contract to pay them. Some of these taxes are due when the
contract is issued, while others are due when annuity payments begin. It is our
current practice not to deduct a charge for these taxes until annuity payments
begin. In the few states that impose a tax, the current rates range up to 5% of
the contract value. If, in the future, we are charged for additional taxes that
are based on purchase payments, we will pass that charge on to contract owners.
TRANSFER FEE
You can make 12 free transfers every contract year. We measure a contract year
from the date we issue your contract, which is the contract date. If you make
more than 12 transfers in a contract year (excluding Dollar Cost Averaging and
Auto-Rebalancing), we will deduct a transfer fee of $25 for each additional
transfer. In the future we could raise that charge up to $30 per additional
transfer, although we have no current plans to do so. We will deduct the
transfer fee proportionately from all the investment options involved in the
transfer.
COMPANY TAXES
We will pay the taxes on the earnings of the separate account. We do not
currently charge you for these taxes. We will periodically review the issue of
charging for these taxes and may impose a charge in the future.
38
<PAGE> 40
7:
HOW CAN I
ACCESS MY MONEY?
YOU CAN ACCESS YOUR MONEY BY:
- - MAKING A WITHDRAWAL (EITHER PARTIAL OR FULL); OR
- - CHOOSING TO RECEIVE ANNUITY PAYMENTS DURING THE INCOME PHASE.
WITHDRAWALS DURING THE ACCUMULATION PHASE
When you make a full withdrawal, you will receive the value of your contract on
the day you made the withdrawal, minus any applicable fees and, if you have
purchased the Contract With Credit, after we have taken back any credits that
have not yet vested. We will calculate the value of your contract and charges,
if any, as of the date we receive your request in good order at the Prudential
Annuity Service Center.
Unless you tell us otherwise, we will take any partial withdrawal
proportionately from all of the variable investment options in which you have
invested. For a partial withdrawal, we will deduct any applicable fees and, if
you have purchased the Contract With Credit, take back any credit corresponding
to the purchase payments you are withdrawing, from the assets in your contract.
The minimum amount you may withdraw is $250. If, after a withdrawal, your
contract value is less than $2,000, we have the right to end your contract.
We will generally pay the withdrawal amount, less any required tax withholding,
within seven days after we receive a withdrawal request in good order.
INCOME TAXES, TAX PENALTIES, AND CERTAIN RESTRICTIONS MAY APPLY TO ANY
WITHDRAWAL YOU MAKE. FOR MORE INFORMATION, SEE SECTION 8, "WHAT ARE THE TAX
CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS CONTRACT," ON PAGE __ OF
THIS PROSPECTUS.
AUTOMATED WITHDRAWALS
We offer an automated withdrawal feature. This feature enables you to receive
periodic withdrawals in monthly, quarterly, semiannual, or annual intervals. We
will process your withdrawals at the end of the business day at the intervals
you specify. We will continue at these intervals until you tell us otherwise.
You can make withdrawals from any designated investment option or
proportionally from all investment options. The minimum automated withdrawal
amount you can make is $100.
INCOME TAXES AND A 10% PENALTY TAX ON EARNINGS MAY APPLY TO AUTOMATED
WITHDRAWALS AS WELL AS ANY OTHER WITHDRAWALS MADE FROM YOUR CONTRACT.
SUSPENSION OF PAYMENTS OR TRANSFERS
We may be required to suspend or postpone payments made in connection with
withdrawals or transfers for any period when:
- - The New York Stock Exchange is closed (other than customary weekend and
holiday closings);
- - Trading on the New York Stock Exchange is restricted;
- - An emergency exists during which sales and redemptions of shares of the
mutual funds are not reasonable or we cannot reasonably value the
accumulation units; or
The Securities and Exchange Commission, by order, permits suspension or
postponement of payments for the protection of owners.
39
<PAGE> 41
8:
WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS
CONTRACT?
The tax considerations associated with the Strategic Partners contract vary
depending on whether the contract is (i) owned by an individual and not
associated with a tax-favored retirement plan, or (ii) held under a tax-favored
retirement plan. We discuss the tax considerations for these categories of
contracts below. The discussion is general in nature and describes only federal
income tax law (not state or other tax laws). It is based on current law and
interpretations, which may change. It is not intended as tax advice. You should
consult with a qualified tax adviser for complete information and advice.
CONTRACTS OWNED BY INDIVIDUALS (NOT ASSOCIATED WITH TAX-FAVORED RETIREMENT
PLANS)
TAXES PAYABLE BY YOU
We believe the contract is an annuity contract for tax purposes. Accordingly,
as a general rule, you should not pay any tax until you receive money under the
contract.
Generally, annuity contracts issued by the same company (and affiliates) to you
during the same calendar year must be treated as one annuity contract for
purposes of determining the amount subject to tax under the rules described
below.
TAXES ON WITHDRAWALS AND SURRENDER
If you make a withdrawal from your contract or surrender it before annuity
payments begin, the amount you receive will be taxed as ordinary income, rather
than as return of purchase payments, until all gain has been withdrawn.
If you assign all or part of your contract as collateral for a loan, the part
assigned will be treated as a withdrawal. Also, if you elect the interest
payment option, that election will be treated, for tax purposes, as
surrendering your contract.
If you transfer your contract for less than full consideration, such as by
gift, you will trigger tax on the gain in the contract. This rule does not
apply if you transfer the contract to your spouse or you transfer the contract
incident to divorce.
It is our position that the guaranteed minimum death benefit is an integral
part of the annuity contract and accordingly that the charges made against the
annuity contract's cash value for the benefit should not be treated as
distributions subject to income tax. It is possible, however, that the Internal
Revenue Service could take the position that such charges should be treated as
distributions.
TAXES ON ANNUITY PAYMENTS
A portion of each annuity payment you receive will be treated as a partial
return of your purchase payments and will not be taxed. The remaining portion
will be taxed as ordinary income. Generally, the nontaxable portion is
determined by multiplying the annuity payment you receive by a fraction, the
numerator of which is your purchase payments (less any amounts previously
received tax-free) and the denominator of which is the total expected payments
under the contract.
After the full amount of your purchase payments have been recovered tax-free,
the full amount of the annuity payments will be taxable. If annuity payments
stop due to the death of the annuitant before the full amount of your purchase
payments have been recovered, a tax deduction is allowed for the unrecovered
amount.
PENALTY TAXES ON WITHDRAWALS AND ANNUITY PAYMENTS
Any taxable amount you receive under your contract may be subject to a 10%
penalty tax. Amounts are not subject to this penalty tax if:
40
<PAGE> 42
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled;
- - the amount paid or received is in the form of level annuity payments not
less frequently than annually under a lifetime annuity;
TAXES PAYABLE BY BENEFICIARIES
Generally, the same tax rules described above would also apply to amounts
received by your beneficiary. Choosing an annuity payment option instead of a
lump sum death benefit may defer taxes. Certain minimum distribution
requirements apply upon your death, as discussed further below.
WITHHOLDING OF TAX FROM DISTRIBUTIONS
Taxable amounts distributed from your annuity contracts are subject to tax
withholding. You may generally choose not to have tax withheld from your
payments. You must make that choice on the appropriate forms that we provide.
ANNUITY QUALIFICATION
Diversification And Investor Control. In order to qualify for the tax rules
applicable to annuity contracts described above, the contract must be an
annuity contract for tax purposes. This means that the assets underlying the
annuity contract must be diversified, according to certain rules. It also means
that we, and not you as the contract-owner, must have sufficient control over
the underlying assets to be treated as the owner of the underlying assets for
tax purposes. We believe these rules, which are further discussed in the
Statement of Additional Information, will be met.
Required Distributions Upon Your Death. Upon your death (or the death of a
joint owner, if earlier), certain distributions must be made under the
contract. The required distributions depend on whether you die before you start
taking annuity payments under the contract or after you start taking annuity
payments under the contract.
If you die on or after the annuity date, the remaining portion of the interest
in the contract must be distributed at least as rapidly as under the method of
distribution being used as of the date of death.
If you die before the annuity date, the entire interest in the contract must be
distributed within 5 years after the date of death. However, if an annuity
payment option is selected by your designated beneficiary and if annuity
payments begin within 1 year of your death, the value of the contract may be
distributed over the beneficiary's life or a period not exceeding the
beneficiary's life expectancy. Your designated beneficiary is the person to
whom ownership of the contract passes by reason of death, and must be a natural
person.
If any portion of the contract is payable to (or for the benefit of) your
surviving spouse, that portion of the contract may be continued with your
spouse as the owner.
Changes In The Contract. We reserve the right to make any changes we deem
necessary to assure that the contract qualifies as an annuity contract for tax
purposes. Any such changes will apply to all contract owners and you will be
given notice to the extent feasible under the circumstances.
ADDITIONAL INFORMATION
You should refer to the Statement of Additional Information if:
- - The contract is held by a corporation or other entity instead of by an
individual or as agent for an individual.
- - Your contract was issued in exchange for a contract containing purchase
payments made before August 14, 1982.
- - You are a nonresident alien.
- - You transfer your contract to, or designate, a beneficiary who is either 37
1/2 years younger than you or a grandchild.
- - You wish additional information on withholding taxes.
41
<PAGE> 43
42
<PAGE> 44
CONTRACTS HELD BY TAX FAVORED PLANS
The following discussion covers annuity contracts held under tax-favored
retirement plans. Currently, the contract may be purchased for use in
connection with individual retirement accounts and annuities ("IRAs") which are
subject to Sections 408(a), 408(b) and 408A of the Tax Code. This description
assumes that you have satisfied the requirements for eligibility for these
products.
You should be aware that tax favored plans such as IRAs generally provide tax
deferral regardless whether they invest in annuity contracts. This means that
when a tax favored plan invests in an annuity contract, it generally does not
result in any additional tax deferral benefits.
TYPES OF TAX FAVORED PLANS
IRAs. If you buy a contract for use as an IRA, we will provide you a copy of
the prospectus and contract. The "IRA Disclosure Statement" on page __ contains
information about eligibility, contribution limits, tax particulars, and other
IRA information. In addition to this information (some of which is summarized
below), the IRS requires that you have a "free look" after making an initial
contribution to the contract. During this time, you can cancel the contract by
notifying us in writing, and we will refund all of the purchase payments under
the contract (or, if provided by applicable state law, the amount credited
under the contract, calculated as of the date that we receive this cancellation
notice, if greater).
Contributions Limits/Rollovers: Because of the way the contract is designed,
you may only purchase a contract for an IRA in connection with a "rollover" of
amounts from a qualified retirement plan. You must make a minimum initial
payment of $10,000 to purchase a contract. This minimum is greater than the
maximum amount of any annual contribution you may make to an IRA (which is
generally $2,000/year). The "rollover" rules under the Tax Code are fairly
technical; however, an individual (or his or her surviving spouse) may
generally "roll over" certain distributions from tax favored retirement plans
(either directly or within 60 days from the date of these distributions) if he
or she meets the requirements for distribution. Once you buy the contract, you
can make regular IRA contributions under the contract (to the extent permitted
by law). However, if you make such regular IRA contributions, you should note
that you will not be able to treat the contract as a "conduit IRA," which means
that you will not be able subsequently to "roll over" the contract funds into
another Section 401(a) plan or TDA (although you may be able to transfer the
funds to another IRA).
Required Provisions: Contracts that are IRAs (or endorsements that are part of
the contract) must contain certain provisions:
- - You, as owner of the contract, must be the "annuitant" under the contract
(except in certain cases involving the division of property under a decree
of divorce);
- - Your rights as owner are non-forfeitable;
- - You cannot sell, assign or pledge the contract, other than to Pruco Life;
- - The annual premium you pay cannot be greater than $2,000 (which does not
include any rollover amounts);
- - The date on which annuity payments must begin cannot be later than the
April 1st of the calendar year after the calendar year you turn age 70 1/2;
and
- - Death and annuity payments must meet "minimum distribution requirements"
(described below).
Usually, the full amount of any distribution from an IRA (including a
distribution from this contract) which is not a rollover is taxable. As taxable
income, these distributions are subject to the general tax withholding rules
described earlier. In addition to this normal tax liability, you may also be
liable for the following, depending on your actions:
- - A 10% "early distribution penalty" (described below);
- - Liability for "prohibited transactions" if you, for example, borrow
against the value of an IRA; or
- - Failure to take a minimum distribution (also generally described below).
43
<PAGE> 45
ROTH IRAs. Congress amended the Tax Code in 1997 to add a new Section 408A,
creating the "Roth IRA" as a new type of individual retirement plan. Like
standard IRAs, income within a Roth IRA accumulates tax-free, and contributions
are subject to specific limits. Roth IRAs have, however, the following
differences:
- - Contributions to a Roth IRA cannot be deducted from your gross income;
- - "Qualified distributions" (generally, held for 5 years and payable on
account of death, disability, attainment of age 59 1/2, or first
time-homebuyer) from Roth IRAs are excludable from your gross income; and
- - If eligible, you may make contributions to a Roth IRA after attaining age
70 1/2, and distributions are not required to begin upon attaining such age
or at any time thereafter.
Because the contract's minimum initial payment of $10,000 is greater than the
maximum annual contribution permitted to be made to a Roth IRA (generally,
$2,000 less any contributions to a traditional IRA), you may purchase a
contract as a Roth IRA only in connection with a "rollover" or "conversion" of
the proceeds of another traditional IRA, conduit IRA, SEP, SIMPLE-IRA, or Roth
IRA. The Tax Code permits persons who meet certain income limitations
(generally, adjusted gross income under $100,000), and who receive certain
qualifying distributions from such non-Roth IRAs, to directly rollover or make,
within 60 days, a "rollover" of all or any part of the amount of such
distribution to a Roth IRA which they establish. This conversion triggers
current taxation (but is not subject to a 10% early distribution penalty). Once
the contract has been purchased, regular Roth IRA contributions will be
accepted to the extent permitted by law.
MINIMUM DISTRIBUTION OPTION
If you hold the contract under an IRA or other tax favored plan, you can
satisfy the IRS minimum distribution requirements described above (generally,
distribution after age 70 1/2) under the contract without either beginning
annuity payments or making a withdrawal of a portion of the contract. You, as
owner of the contract, can select either a "calculation" or "recalculation"
method to determine the minimum distribution. We will send you a check for the
minimum distribution amount, less any other partial withdrawals that you made
during the year. More information on the mechanics of this calculation is
available on request.
PENALTY FOR EARLY WITHDRAWALS
You may owe a 10% penalty tax to the taxable part of distributions received
from an IRA, SEP, SIMPLE-IRA (which may increase to 25%), Roth IRA, TDA or
qualified retirement plan before you attain age 59 1/2. There are only limited
exceptions to this tax, and you should consult your tax adviser for further
details.
WITHHOLDING
The Tax Code requires a mandatory 20% federal income tax withholding for
certain distributions from a TDA or qualified retirement plan, unless the
distribution is an eligible rollover contribution that is "directly" rolled
into another qualified plan, IRA (including the IRA variations described above)
or TDA. For all other distributions, unless you elect otherwise, we will
withhold federal income tax from the taxable portion of such distribution at an
appropriate percentage. The rate of withholding on annuity payments where no
mandatory withholding is required is determined on the basis of the withholding
certificate that you file with us. If you do not file a certificate, we will
automatically withhold federal taxes on the following basis:
- - For any annuity payments not subject to mandatory withholding, you will
have taxes withheld by us as if you are a married individual, with 3
exemptions; and
- - For all other distributions, you will be withheld at a 10% rate.
44
<PAGE> 46
We will provide you with forms and instructions concerning the right to elect
that no amount be withheld from payments in the ordinary course. However, you
should know that, in any event, you are liable for payment of federal income
taxes on the taxable portion of the distributions, and you should consult with
your tax advisor to find out more information on your potential liability if
you fail to pay such taxes.
ERISA DISCLOSURE/REQUIREMENTS
ERISA (the "Employee Retirement Income Security Act of 1974") and the Tax Code
prevents a fiduciary and other "parties in interest" with respect to a plan
(and, for these purposes, an IRA would also constitute a "plan") from receiving
any benefit from any party dealing with the plan, as a result of the sale of
the contract Administrative exemptions under ERISA generally permit the sale of
insurance/annuity products to plans, provided that certain information is
disclosed to the person purchasing the contract. This information has to do
primarily with the fees, charges, discounts and other costs related to the
contract, as well as any commissions paid to any agent selling the contract.
Information about any applicable fees, charges, discounts, penalties or
adjustments may be found under "What Are the Expenses Associated with the
Strategic Partners Contract" starting on page 25.
Information about sales representatives and commissions may be found under
"Other Information" and "Sale and Distribution of the Contract on page __.
In addition, other relevant information required by the exemptions is contained
in the contract and accompanying documentation. Please consult your tax advisor
if you have any additional questions.
ADDITIONAL INFORMATION
For additional information about federal tax law requirements applicable to tax
favored plans, see the "IRA Disclosure Statement" on page __.
45
<PAGE> 47
9:
OTHER
INFORMATION
PRUCO LIFE INSURANCE COMPANY
Pruco Life Insurance Company is a stock life insurance company organized in
1971 under the laws of the State of Arizona. Pruco Life is licensed to sell
life insurance and annuities in the District of Columbia, Guam and in all
states except New York and is subject to the insurance laws and regulations of
all the jurisdictions where it is licensed to do business. Pruco Life is a
wholly-owned subsidiary of The Prudential Insurance Company of America
("Prudential"), a mutual insurance company founded in 1875 under the laws of
the State of New Jersey.
Prudential is currently considering reorganizing itself into a publicly traded
stock company through a process known as "demutualization." On February 10,
1998, the Company's Board of Directors authorized management to take the
preliminary steps necessary to allow the Company to demutualize. On July 1,
1998, legislation was enacted in New Jersey that would permit this conversion
to occur and that specified the process for conversion. Demutualization is a
complex process involving development of a plan of reorganization, adoption of
a plan by the Company's Board of Directors, a public hearing, voting by
qualified policyholders and regulatory approval. Prudential is working toward
completing this process in 2001 and currently expects adoption by the Board of
Directors to take place in the latter part of 2000. However, there is no
certainty that the demutualization will be completed in this timeframe or that
the necessary approvals will be obtained. Also, it is possible that after
careful review, Prudential could decide not to demutualize or could decide to
delay its plans.
The plan of reorganization, which hasn't been fully developed and approved,
would provide the criteria for determining eligibility and the methodology for
allocating shares or other consideration to those who would be eligible.
Generally, the amount of shares or other consideration eligible customers would
receive would be based on a number of factors, including the types, amounts and
issue years of their policies. As a general rule, owners of Prudential-issued
insurance policies and annuity contracts would be eligible, provided that their
policies were in force on the date Prudential's Board of Directors adopted a
plan of reorganization, while mutual fund customers and customers of the
Company's subsidiaries (such as the Pruco Life insurance companies, would not
be. It has not yet been determined whether any exceptions to that general rule
will be made with respect to policyholders and contract owners of Prudential's
subsidiaries. This does not constitute a proposal, offer, solicitation or
recommendation regarding any plan of reorganization that may be proposed or a
recommendation regarding the ownership of any stock that could be issued in
connection with any such demutualization.
THE SEPARATE ACCOUNT
We have established a separate account, the Pruco Life Flexible Premium
Variable Annuity Account (the "separate account"), to hold the assets that are
associated with the contracts. The separate account was established under
Arizona law on June 16, 1995, and is registered with the U.S. Securities and
Exchange Commission under the Investment Company Act of 1940 as a unit
investment trust, which is a type of investment company. The assets of the
separate account are held in the name of Pruco Life and legally belong to us.
These assets are kept separate from all of our other assets and may not be
charged with liabilities arising out of any other business we may conduct. More
detailed information about Pruco Life, including its audited financial
statements, appears in the Statement of Additional Information.
SALE AND DISTRIBUTION OF THE CONTRACT
Prudential Investment Management Services LLC ("PIMS"), 751 Broad Street,
Newark, New Jersey 07102-3777, acts as the distributor of the contracts. PIMS
is a wholly-owned subsidiary of Prudential and is a limited liability
corporation organized under Delaware law in 1996. It is a registered
broker-dealer under the Securities Exchange Act of 1934 and a member of the
National Association of Securities Dealers, Inc. Commissions for the sales of
contracts are paid to Prudential representatives and to other independent
broker-dealers who sell the contracts. Registered representatives of
independent broker-dealers may be paid on a different basis than those
affiliated with PIMS. The maximum commission that will be paid to the
broker-dealer to cover both the
46
<PAGE> 48
individual representative's commission and other distribution expenses will not
be more than 1.25% of the purchase payment.
ASSIGNMENT
You can assign the contract at any time during your lifetime. If you do so, we
will reset the death benefit to equal the contract value on the date the
assignment occurs. For details, see "What is the Death Benefit," on page __. We
will not be bound by the assignment until we receive written notice. We will
not be liable for any payment or other action we take in accordance with the
contract if that action occurs before we receive notice of the assignment. An
assignment, like any other change in ownership, may trigger a taxable event.
If the contract is issued under a qualified plan, there may be limitations on
your ability to assign the contract. For further information please speak to
your representative.
FINANCIAL STATEMENTS
The financial statements of the separate account associated with Strategic
Partners are included in the Statement of Additional Information.
STATEMENT OF ADDITIONAL INFORMATION
CONTENTS:
- - Company
- - Experts
- - Litigation
- - Legal Opinions
- - Principal Underwriter
- - Determination of Accumulation Unit Values
- - Performance Information
- - Comparative Performance Information
- - Federal Tax Status
- - Financial Information
47
<PAGE> 49
IRA DISCLOSURE STATEMENT
This statement is designed to help you understand the requirements of federal
tax law which apply to your individual retirement annuity (IRA), your Roth IRA,
your simplified employee pension IRA (SEP) for employer contributions, your
Savings Incentive Match Plan for Employees (SIMPLE) IRA, or to one you purchase
for your spouse. You can obtain more information regarding your IRA either from
your sales representative or from any district office of the Internal Revenue
Service. Those are federal tax law rules; state tax laws may vary.
FREE LOOK PERIOD
The annuity contract offered by this prospectus gives you the opportunity to
return the contract for a full refund within 10 days (or whatever period is
required by applicable state law) after it is delivered. This is a more liberal
provision than is required in connection with IRAs. To exercise this
"free-look" provision, return the contract to the representative who sold it
you or to the Prudential Annuity Service Center at the address shown on the
first page of this prospectus.
ELIGIBILITY REQUIREMENTS
IRAs are intended for all persons with earned compensation whether or not they
are covered under other retirement programs. Additionally, if you have a
non-working spouse (and you file a joint tax return), you may establish an IRA
on behalf of your non-working spouse. A working spouse may establish his or her
own IRA. A divorced spouse receiving taxable alimony (and no other income) may
also establish an IRA.
CONTRIBUTIONS AND DEDUCTIONS
Contributions to your IRA will be deductible if you are not an "active
participant" in an employer maintained qualified retirement plan or you have
"Adjusted Gross Income" (as defined under Federal tax laws) which does not
exceed the "applicable dollar limit." IRA (or SEP) contributions must be made
by no later than the time you file your income tax return for that year. For a
single taxpayer, the applicable dollar limitation is $30,000, with the amount
of IRA contribution which may be deducted reduced proportionately for Adjusted
Gross Income between $30,000 - $40,000. For married couples filing jointly, the
applicable dollar limitation is $50,000, with the amount of IRA contribution
which may be deducted reduced proportionately for Adjusted Gross Income between
$50,000-$60,000. There is no deduction allowed for IRA contributions when
Adjusted Gross Income reaches $40,000 for individuals and $60,000 for married
couples filing jointly.
Contributions made by your employer to your SEP are excludable from your gross
income for tax purposes in the calendar year for which the amount is
contributed. Certain employees who participate in a SEP will be entitled to
elect to have their employer make contributions to their SEP on their behalf or
to receive the contributions in cash. If the employee elects to have
contributions made on the employee's behalf to the SEP, those funds are not
treated as current taxable income to the employee. Elective deferrals under a
SEP are subject to an inflation-adjusted limit, which is $10,500 in 2000.
Salary-reduction SEPs (also called "SARSEPs") are available only if at least
50% of the employees elect to have amounts contributed to the SARSEP and if the
employer has 25 or fewer employees at all times during the preceding year. New
SARSEPs may not be established after 1996.
The IRA maximum annual contribution and your tax deduction is limited to the
lesser of: (1) $2,000 or (2) 100% of your earned compensation. Contributions
in excess of the deduction limits may be subject to penalty. See below.
Under a SEP agreement, the maximum annual contribution which your employer may
make on your behalf to a SEP contract that is excludable from your income is
the lesser of 15% of your salary or $24,000. An employee who is a participant
in a SEP agreement may make after-tax contributions to the SEP contract,
subject to the contribution limits applicable to IRAs in general. Those
employee contributions will be deductible subject to the deductibility rules
described above.
The maximum tax deductible annual contribution that a divorced spouse with no
other income may make to an IRA is the lesser of (1) $2,000 or (2) 100% of
taxable alimony.
If you or your employer should contribute more than the maximum contribution
amount to your IRA or SEP, the excess amount will be considered an "excess
contribution." You are permitted to withdraw an excess contribution from your
IRA or SEP before your tax
48
<PAGE> 50
filing date without adverse tax consequences. If, however, you fail to withdraw
any such excess contribution before your tax filing date, a 6% excise tax will
be imposed on the excess for the tax year of contribution.
Once the 6% excise tax has been imposed, an additional 6% penalty for the
following tax year can be avoided if the excess is (1) withdrawn before the end
of the following year, or (2) treated as a current contribution for the
following year. (See Premature Distributions below for penalties imposed on
withdrawal when the contribution exceeds $2,000.)
IRA FOR NON-WORKING SPOUSE
If you establish an IRA for yourself, you may also be eligible to establish an
IRA for your "non-working" spouse. In order to be eligible to establish such a
spousal IRA, you must file a joint tax return with your spouse and, if your
non-working spouse has compensation, his/her compensation must be less than
your compensation for the year. Contributions of up to $2,000 each may be made
to your IRA and the spousal IRA if the combined compensation of you and your
spouse is at least equal to the amount contributed. If requirements for
deductibility (including income levels) are met, you will be able to deduct an
amount equal to the least of (i) the amount contributed to the IRAs; (ii)
$4,000; or (iii) 100% of your combined gross income.
Contributions in excess of the contribution limits may be subject to penalty.
See above under "Contributions and Deductions." If you contribute more than the
allowable amount, the excess portion will be considered an excess contribution.
The rules for correcting it are the same as discussed above for regular IRAs.
Other than the items mentioned in this section, all of the requirement
generally applicable to IRAs are also applicable to IRAs established for
non-working spouses.
ROLLOVER CONTRIBUTION
Once every year, you are permitted to withdraw any portion of the value of your
IRA or SEP and reinvest it in another IRA or bond. Withdrawals may also be made
from other IRAs and contributed to this contract. This transfer of funds from
one IRA to another is called a "rollover" IRA. To qualify as a rollover
contribution, the entire portion of the withdrawal must be reinvested in
another IRA within 60 days after the date it is received. You will not be
allowed a tax-deduction for the amount of any rollover contribution.
A similar type of rollover to an IRA can be made with the proceeds of a
qualified distribution from a qualified retirement plan or tax-sheltered
annuity. Properly made, such a distribution will not be taxable until you
receive payments from the IRA created with it. Unless you were a self-employed
participant in the distributing plan, you may later roll over such a
contribution to another qualified retirement plan as long as you have not mixed
it with IRA (or SEP) contributions you have deducted from your income. (You may
roll less than all of a qualified distribution into an IRA, but any part of it
not rolled over will be currently includable in your income without any capital
gains treatment.)
DISTRIBUTIONS
(a) PREMATURE DISTRIBUTIONS
At no time can your interest in your IRA or SEP be forfeited. To insure that
your contributions will be used for retirement, the federal tax law does not
permit you to use your IRA or SEP as security for a loan. Furthermore, as a
general rule, you may not sell or assign your interest in your IRA or SEP to
anyone. Use of an IRA (or SEP) as security or assignment of it to another will
invalidate the entire annuity. It then will be includable in your income in the
year it is invalidated and will be subject to a 10% penalty tax if you are not
at least age 59 1/2 or totally disabled. (You may, however, assign your IRA or
SEP without penalty to your former spouse in accordance with the terms of a
divorce decree.)
You may surrender any portion of the value of your IRA (or SEP). In the case of
a partial surrender which does not qualify as a rollover, the amount withdrawn
will be includable in your income and subject to the 10% penalty if you are not
at least age 59 1/2 or totally disabled unless you comply with special rules
requiring distributions to be made at least annually over your life expectancy.
The 10% penalty tax does not apply to the withdrawal of an excess contribution
as long as the excess is withdrawn before the due date of your tax return.
Withdrawals of excess contributions after the due date of your tax return will
generally be subject to the 10%
49
<PAGE> 51
penalty unless the excess contribution results from erroneous information from
a plan trustee making an excess rollover contribution or unless you are over
age 59 1/2 or are disabled.
(b) DISTRIBUTION AT AFTER AGE 59 1/2
Once you have attained age 59 1/2 (or have become totally disabled), you may
elect to receive a distribution of your IRA (or SEP) regardless of when you
actually retire. In addition, you must commence distributions from your IRA by
April 1 following the year you attain age 70 1/2. You may elect to receive the
distribution under any one of the periodic payment options available under the
contract. The distributions from your IRA under any one of the period payment
options or in one sum will be treated as ordinary income as you receive them to
the degree that you have made deductible contributions. If you have made both
deductible and nondeductible contributions, a portion of the distribution
attributable to the nondeductible contribution will be tax-free.
(c) INADEQUATE DISTRIBUTIONS -- 50% TAX
Your IRA or SEP is intended to provide retirement benefits over your lifetime.
Thus, federal tax law requires that you either (1) receive a lump-sum
distribution of your IRA by April 1 of the year following the year in which you
attain age 70 1/2 or (2) start to receive periodic payments by that date. If
you elect to receive periodic payments, those payments must be sufficient to
pay out the entire value of your IRA during your life expectancy (or over the
joint life expectancies of you and your spouse). If the payments are not
sufficient to meet these requirements, an excise tax of 50% will be imposed on
the amount of any underpayment.
(d) DEATH BENEFITS
If you, (or your surviving spouse) die before receiving the entire value of
your IRA (or SEP), the remaining interest must be distributed to your
beneficiary (or your surviving spouse's beneficiary) in one lump-sum within 5
years of death, or applied to purchase an immediate annuity for the
beneficiary. This annuity must be payable over the life expectancy of the
beneficiary beginning within one year after your or your spouse's death. If
your spouse is the designated beneficiary, he or she is treated as the owner of
the IRA. If minimum required distributions have begun, the entire amount must
be distributed at least as rapidly as if the owner had survived. A distribution
of the balance of your IRA upon your death will not be considered a gift for
federal tax purposes, but will be included in your gross estate for purposes of
federal estate taxes.
ROTH IRAS
Section 408A of the Tax Code permits eligible individuals to contribute to a
type of IRA known as a "Roth IRA." Contributions may be made to a Roth IRA by
taxpayers with adjusted gross incomes of less than $160,000 for married
individuals filing jointly and less than $100,000 for single individuals.
Married individuals filing separately are not eligible to contribute to a Roth
IRA. The maximum amount of contributions allowable for any taxable year to all
Roth IRAs maintained by an individual is generally the lesser of $2,000 and
100% of compensation for that year (the $2,000 limit is phased out for incomes
between $150,000 and $160,000 for married and between $95,000 and $110,000 for
singles). The contribution limit is reduced by the amount of any contributions
made to a non-Roth IRA. Contributions to a Roth IRA are not deductible.
For taxpayers with adjusted gross income of $100,000 or less, all or part of
amounts in a non-Roth IRA may be converted, transferred or rolled over to a
Roth IRA. Some or all of the IRA value will typically be includable in the
taxpayer's gross income. If such a rollover, transfer or conversion occurred
before January 1, 1999, the portion of the amount includable in gross income
must be included in income ratably over the next four years beginning with the
year in which the transaction occurred. Provided a rollover contribution meets
the requirements of IRAs under Section 408(d)(3) of the Code, a rollover may be
made from a Roth IRA to another Roth IRA.
UNDER SOME CIRCUMSTANCES, IT MAY NOT BE ADVISABLE TO ROLL OVER, TRANSFER OR
CONVERT ALL OR PART OF A NON-ROTH IRA TO A ROTH IRA. PERSONS CONSIDERING A
ROLLOVER, TRANSFER OR CONVERSION SHOULD CONSULT THEIR OWN TAX ADVISOR.
"Qualified distributions" from a Roth IRA are excludable from gross income. A
"qualified distribution" is a distribution that satisfies two requirements: (1)
the distribution must be made (a) after the owner of the IRA attains age 59
1/2; (b) after the owner's death; (c) due to the owner's disability; or (d) for
a qualified first time homebuyer distribution within the meaning of Section
72(t)(2)(F) of the Code; and (2) the distribution must be made in the year that
is at least five years after the first year for which a contribution was made
50
<PAGE> 52
to any Roth IRA established for the owner or five years after a rollover,
transfer, or conversion was made from a non-Roth IRA to a Roth IRA.
Distributions from a Roth IRA that are not qualified distributions will be
treated as made first from contributions and then from earnings, and taxed
generally in the same manner as distributions from a non-Roth IRA.
Distributions from a Roth IRA need not commence at age 70 1/2. However, if the
owner dies before the entire interest in a Roth IRA is distributed, any
remaining interest in the contract must be distributed by December 31 of the
calendar year containing the fifth anniversary of the owner's death subject to
certain exceptions.
REPORTING TO THE IRS
Whenever you are liable for one of the penalty taxes discussed above (6% for
excess contributions, 10% for premature distributions or 50% for
underpayments), you must file Form 5329 with the Internal Revenue Service. The
form is to be attached to your federal income tax return for the tax year in
which the penalty applies. Normal contributions and distributions must be shown
on your income tax return for the year to which they relate.
51
<PAGE> 53
THIS PAGE INTENTIONALLY LEFT BLANK
52
<PAGE> 54
PART III PROSPECTUSES
VARIABLE INVESTMENT OPTIONS
[PHOTO]
53
<PAGE> 55
THIS PAGE INTENTIONALLY LEFT BLANK
54
<PAGE> 56
Strategic Partners(SM) Variable Annuity is issued by Pruco Life Insurance
Company. Strategic Partners(SM) is distributed by Prudential Investment
Management Services LLC and offered through Pruco Securities Corporation and
Prudential Securities Incorporated. All are subsidiaries of The Prudential
Insurance Company of America.
Pruco Life Insurance Company
213 Washington Street
Newark, NJ 07102-2992
Prudential Securities Incorporated
199 Water Street
New York, NY 10292
Pruco Securities Corporation
751 Broad Street
Newark, NJ 07102-3777
Prudential Investment Management Services, LLC
100 Mulberry Street
Gateway Center 3
Newark, NJ 07102-3777
ORD ED. /2000
----- --
[PRUDENTIAL LOGO]
55
<PAGE> 57
STATEMENT OF ADDITIONAL INFORMATION
_____, 2000
PRUCO LIFE FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
VARIABLE ANNUITY CONTRACTS
The Strategic Partners(R) Annuity Contract* (the "contract") is an individual
variable annuity contract issued by the Pruco Life Insurance Company ("Pruco
Life"), a stock life insurance company that is a wholly-owned subsidiary of The
Prudential Insurance Company of America ("Prudential") and is funded through
the Pruco Life Flexible Premium Variable Annuity Account (the "Account"). The
contract is purchased by making an initial purchase payment of $10,000 or more;
subsequent payments must be $1,000 or more.
This statement of additional information is not a prospectus and should be read
in conjunction with the Strategic Partners prospectus, dated ___ __, 2000. To
obtain a copy of the prospectus, without charge, you can write to the
Prudential Annuity Service Center, P.O. Box 7960, Philadelphia, Pennsylvania
19101, or by telephoning (888) PRU-2888.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
COMPANY............................................ 1
EXPERTS............................................ 1
LITIGATION......................................... 2
LEGAL OPINIONS..................................... 2
PRINCIPAL UNDERWRITER.............................. 2
DETERMINATION OF SUBACCOUNT UNIT VALUES............ 3
PERFORMANCE INFORMATION............................ 3
COMPARATIVE PERFORMANCE INFORMATION................ 3
FEDERAL TAX STATUS................................. 4
FINANCIAL STATEMENTS............................... 6
ADDITIONAL FINANCIAL INFORMATION................... A1
</TABLE>
<TABLE>
<S> <C>
PRUCO LIFE INSURANCE COMPANY PRUDENTIAL ANNUITY SERVICE CENTER
213 WASHINGTON STREET P.O. BOX 7960
NEWARK, NEW JERSEY 07102-2992 PHILADELPHIA, PENNSYLVANIA 19101
TELEPHONE: (888) PRU-2888
</TABLE>
* STRATEGIC PARTNERS is a service mark of Prudential. ORD[_______]
COMPANY
Pruco Life Insurance Company ("Pruco Life") is a stock life insurance company
organized in 1971 under the laws of the State of Arizona. Pruco Life is
licensed to sell life insurance and annuities in the District of Columbia, Guam
and all states except New York.
Pruco Life is a wholly-owned subsidiary of The Prudential Insurance Company of
America ("Prudential"), a mutual life insurance company founded in 1875 under
the laws of the State of New Jersey.
EXPERTS
The consolidated financial statements of Pruco Life and its subsidiaries as of
December 31, 1999 and 1998 and for each of the three years in the period ended
December 31, 1999 and the financial statements of the Pruco Life Flexible
Premium Variable Annuity Account as of December 31, 1999 and for each of the
two years in the period then ended included in this Statement of Additional
Information have been so included in reliance on the report of
, independent accountants given on the authority of
said firm as experts in auditing and accounting.
principal business address is
.
1
<PAGE> 58
LITIGATION
We are subject to legal and regulatory actions in the ordinary course of our
businesses, including class actions. Pending legal regulatory actions include
proceedings specific to our practices and proceedings generally applicable to
business practices in the industries in which we operate. As an example of such
litigation, in March 2000, plaintiffs filed a purported class action against us
titled Olmsted v. Pruco Life Insurance Company of New Jersey and The Prudential
Insurance Company of America, alleging that certain fees and expenses charged
to the plaintiffs in connection with the sale of variable annuities since March
1, 1997 were excessive and unreasonable. In certain of these lawsuits, large
and/or indeterminate amounts are sought, including punitive or exemplary
damages.
In particular, Pruco Life and Prudential have been subject to substantial
regulatory actions and civil litigation involving individual life insurance
sales practices. In 1996, Prudential, on behalf of itself and many of its life
insurance subsidiaries including Pruco Life, entered into settlement agreements
with relevant insurance regulatory authorities and plaintiffs in the principal
life insurance sales practices class action lawsuit covering policyholders of
individual permanent life insurance policies issued in the United States from
1982 to 1995. Pursuant to the settlements, the companies agreed to various
changes to their sales and business practices controls and a series of fines,
and are in the process of distributing final remediation relief to eligible
class members. In many instances, claimants have the right to "appeal" the
decision to an independent reviewer. The bulk of such appeals were resolved in
1999, and the balance is expected to be addressed in 2000. As of January 31,
2000, Prudential and/or Pruco Life remained a party to two putative class
actions and approximately 158 individual actions relating to permanent life
insurance policies issued in the United States between 1982 and 1995.
Additional suits may be filed by individuals who opted out of the settlements.
While the approval of the class action settlement is now final, Prudential and
Pruco Life remain subject to oversight and review by insurance regulators and
other regulatory authorities with respect to their sales practices and the
conduct of the remediation program. The U.S. District Court has also retained
jurisdiction as to all matters relating to the administration, consummation,
enforcement and interpretation of the settlements.
Prudential has indemnified Pruco Life for any liabilities incurred in
connection with sales practices litigation covering policyholders of individual
permanent life insurance policies issued in the United States from 1982 to
1995.
In 1999, 1998, 1997 and 1996, Prudential recorded provision in its Consolidated
Statements of Operation of $100 million, $1,150 million, $2,030 million and
$1,125 million, respectively, to provide for estimated remediation costs, and
additional sales practices costs including related administrative costs,
regulatory fines, penalties and related payments, litigation costs and
settlements, including settlements associated with the resolution of claims of
deceptive sales practices asserted by policyholders who elected to "opt-out" of
the class action settlement and litigate their claims against Prudential
separately, and other fees and expenses associated with the resolution of sales
practices issues.
LEGAL OPINIONS
Shea & Gardner of Washington, D.C., has provided advice on certain matters
relating to the federal securities laws in connection with the contracts.
PRINCIPAL UNDERWRITER
Prudential Investment Management Services LLC ("PIMS"), a subsidiary of
Prudential, offers the contracts on a continuous basis through corporate office
and regional home office employees in those states in which contracts may be
lawfully sold. It may also offer the contract through licensed insurance
brokers and agents, or through appropriately registered direct or indirect
subsidiary(ies) of Prudential, provided clearances to do so are obtained in any
jurisdiction where such clearances may be necessary.
Prudential may pay trail commissions to registered representatives who maintain
an ongoing relationship with a contractholder. Typically, a trail commission is
a compensation that is paid periodically to a representative, the amount of
which is linked to the value of the contract and the amount of time that the
contract has been in effect.
2
<PAGE> 59
DETERMINATION OF ACCUMULATION UNIT VALUES
The value for each accumulation unit is computed as of the end of each business
day. On any given business day the value of a Unit in each subaccount will be
determined by multiplying the value of a Unit of that subaccount for the
preceding business day by the net investment factor for that subaccount for the
current business day. The net investment factor for any business day is
determined by dividing the value of the assets of the subaccount for that day
by the value of the assets of the subaccount for the preceding business day
(ignoring, for this purpose, changes resulting from new purchase payments and
withdrawals), and subtracting from the result the daily equivalent of the
annual charge for administrative expenses and mortality and expense risks. (See
WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC PARTNERS CONTRACT and
CALCULATING CONTRACT VALUE in the prospectus.) The value of the assets of a
subaccount is determined by multiplying the number of shares of The Prudential
Series Fund, Inc. (the "Series Fund") or other Fund held by that subaccount by
the net asset value of each share and adding the value of dividends declared by
the Series Fund or other Fund but not yet paid.
PERFORMANCE INFORMATION
AVERAGE ANNUAL TOTAL RETURN
The Account may advertise average annual total return information calculated
according to a formula prescribed by the U.S. Securities and Exchange
Commission ("SEC"). Average annual total return shows the average annual
percentage increase, or decrease, in the value of a hypothetical contribution
allocated to a Subaccount from the beginning to the end of each specified
period of time. The SEC standardized version of this performance information is
based on an assumed contribution of $1,000 allocated to a Subaccount at the
beginning of each period and full withdrawal of the value of that amount at the
end of each specified period. This method of calculating performance further
assumes that (i) a $1,000 contribution was allocated to a Subaccount and (ii)
no transfers or additional payments were made. Premium taxes are not included
in the term "charges" for purposes of this calculation. Average annual total
return is calculated by finding the average annual compounded rates of return
of a hypothetical contribution that would compare the Unit Value on the first
day of the specified period to the ending redeemable value at the end of the
period according to the following formula:
P(1 + T)n = ERV
Where T equals average annual total return, where ERV (the ending redeemable
value) is the value at the end of the applicable period of a hypothetical
contribution of $1,000 made at the beginning of the applicable period, where P
equals a hypothetical contribution of $1,000, and where n equals the number of
years.
NON-STANDARD TOTAL RETURN
In addition to the standardized average annual total return information
described above, we may present total return information computed on bases
different from that standardized method. The Account may also present aggregate
total return figures for various periods, reflecting the cumulative change in
value of an investment in the Account for the specified period.
The tables below provide performance information for specified periods ending
December 31, 1999 for each Subaccount that invests in a Fund that had a
performance history as of December 31, 1999. No standard total return table is
included because the Subaccounts are only commencing operations on or after the
date of this Statement of Additional Information. For the periods prior to the
date the Subaccounts commenced operations, non-standard performance information
for the Contracts will be calculated based on the performance of the Funds and
the assumption that the Subaccounts were in existence for the same periods as
those indicated for the Funds, with the level of Contract charges that were in
effect at the inception of the Subaccounts (this is referred to as
"hypothetical performance data"). Standard and non-standard average annual
return calculations include all of the fees under the Contract (i.e., the
mortality and expense risk charge and the administrative fee). This information
does not indicate or represent future performance.
[NONSTANDARDIZED PERFORMANCE INFORMATION TABLES TO BE ADDED BY AMENDMENT.]
COMPARATIVE PERFORMANCE INFORMATION
3
<PAGE> 60
Reports or advertising may include comparative performance information,
including, but not limited to: (1) comparisons to market indices such as the
Dow Jones Industrial Average, the Standard & Poor's 500 Index, the Value Line
Composite Index, the Russell 2000 Index, the Morgan Stanley World Index, the
Lehman Brothers bond indices; (2) comparisons to other investments, such as
certificates of deposit; (3) performance rankings assigned by services such as
Morningstar, Inc. and Variable Annuity Research and Data Services (VARDS), and
Lipper Analytical Services, Inc.; (4) data presented by analysts such as Dow
Jones, A.M. Best, The Bank Rate Monitor National Index; and (5) data in
publications such as The Wall Street Journal, Times, Forbes, Barrons, Fortune,
Money Magazine, and Financial World.
FEDERAL TAX STATUS
X. OTHER TAX RULES.
1. DIVERSIFICATION.
The Internal Revenue Code provides that the underlying investments for a
variable annuity must satisfy certain diversification requirements. Each
Portfolio is required to diversify its investments each quarter so that no more
than 55% of the value of its assets is represented by any one investment, no
more than 70% is represented by any two investments, no more than 80% is
represented by any three investments, and no more than 90% is represented by
any four investments. Generally, securities of a single issuer are treated as
one investment and obligations of each U.S. Government agency and
instrumentality (such as the Government National Mortgage Association) are
treated as issued by separate issuers. In addition, any security issued,
guaranteed or insured (to the extent so guaranteed or insured) by the United
States or an instrumentality of the U.S. will be treated as a security issued
by the U.S. Government or its instrumentality, whichever is applicable. Pruco
Life believes the underlying variable investment options for the Contract meet
these diversification requirements.
2. INVESTOR CONTROL.
Treasury Department regulations do not provide guidance concerning the
extent to which you may direct your investment in the particular investment
options without causing you, instead of Pruco Life, to be considered the owner
of the underlying assets. Because of this uncertainty, Pruco Life reserves the
right to make such changes as it deems necessary to assure that the contract
qualifies as an annuity for tax purposes. Any such changes will apply uniformly
to affected contractowners and will be made with such notice to affected
contractowners as is feasible under the circumstances.
3. ENTITY OWNERS.
Where a contract is held by a non-natural person (e.g., a corporation),
other than as an agent or nominee for a natural person (or in other limited
circumstances), the contract will not be taxed as an annuity and increases in
the value of the contract will be subject to tax.
4. PURCHASE PAYMENTS MADE BEFORE AUGUST 14, 1982.
If your contract was issued in exchange for a contract containing purchase
payments made before August 14, 1982, favorable tax rules may apply to certain
withdrawals from the contract. Generally, withdrawals are treated as a recovery
of your investment in the contract first until purchase payments made before
August 14, 1982 are withdrawn. Moreover, any income allocable to purchase
payments made before August 14, 1982, is not subject to the 10% penalty tax.
5. WITHHOLDING OF TAX FROM DISTRIBUTIONS.
4
<PAGE> 61
Taxable amounts distributed from annuity contracts are subject to tax
withholding. You may generally elect not to have tax withheld from your
payments. The rate of withholding on annuity payments will be determined on the
basis of the withholding certificate you file with Pruco Life. These elections
must be made on the appropriate Pruco Life forms. Absent these elections, Pruco
Life will withhold the tax amounts required by the applicable tax regulations.
You may be subject to penalties under the estimated tax payment rules if your
withholding and estimated tax payments are not sufficient.
6. NONRESIDENT ALIENS. Special tax withholding rules apply to nonresident
aliens.
7. TRANSFERS TO YOUNGER PERSONS. If you transfer your contract to a person
either 37 1/2 years younger than you, or a grndchild, or designate such
younger person as a beneficiary, there may be Generation Skipping Transfer
Tax consequences.
5
<PAGE> 62
FINANCIAL STATEMENTS
[To be added by amendment]
STRATEGIC PARTNERS(R) VARIABLE ANNUITY
6
<PAGE> 63
DIRECTORS AND OFFICERS
The directors and major officers of Pruco Life, listed with their principal
occupations during the past 5 years, are shown below.
DIRECTORS OF PRUCO LIFE
JAMES J. AVERY, JR., Chairman and Director - President, Prudential Individual
Life Insurance since 1998; 1997 to 1998: Senior Vice President, Chief Actuary
and CFO, Prudential Individual Insurance Group; 1995 to 1997: President,
Prudential Select. Age 48.
IRA J. KLEINMAN, Director - Executive Vice President, Prudential International
Insurance Group since 1997; 1995 to 1997: Chief Marketing and Product
Development Officer, Prudential Individual Insurance Group. Age 53.
ESTHER H. MILNES, President and Director - Vice President and Chief Actuary,
Prudential Individual Life Insurance since 1999; prior to 1999: Vice President
and Actuary, Prudential Individual Insurance Group. Age 49.
DAVID R. ODENATH, JR., Director - President, Prudential Investments since 1999;
prior to 1999; Senior Vice President and Director of Sales, Investment
Consulting Group, Paine Webber. Age 43.
I. EDWARD PRICE, Vice Chairman and Director - Senior Vice President and
Actuary, Prudential Individual Life Insurance since 1998; 1995 to 1998: Senior
Vice President and Actuary, Prudential Individual Insurance Group. Age 57.
KIYOFUMI SAKAGUCHI, Director - President and CEO, Prudential International
Insurance Group since 1995. Age 57.
OFFICERS WHO ARE NOT DIRECTORS
C. EDWARD CHAPLIN, Treasurer - Vice President and Treasurer, Prudential since
1995. Age 43.
JAMES C. DROZANOWSKI, Senior Vice President - Vice President, Operations and
Systems, Prudential Individual Financial Services since 1998; 1996 to 1998:
Vice President and Operations Executive, Prudential Individual Insurance Group;
1995 to 1996: President, Credit Card Division, Chase Manhattan Bank. Age 57.
CLIFFORD E. KIRSCH, Chief Legal Officer and Secretary - Chief Counsel, Variable
Products, Prudential Law Department since 1995. Age 40.
HIROSHI NAKAJIMA, Senior Vice President - President and CEO, Pruco Life
Insurance Company Taiwan Branch since 1997; prior to 1997: Senior Managing
Director, Prudential Life Insurance Co., Ltd. Age 56.
SHIRLEY H. SHAO, Senior Vice President and Chief Actuary - Vice President and
Associate Actuary, Prudential since 1996; prior to 1996: Vice President and
Assistant Actuary, Prudential Corporate Risk Management. Age 45.
DENNIS G. SULLIVAN, Vice President and Chief Accounting Officer - Vice
President and Deputy Controller, Prudential since 1998; 1997 to 1998: Vice
President and Controller, ContiFinancial Corporation; prior to 1997: Director,
Salomon Brothers. Age 44.
The business address of all directors and officers of Pruco Life is 213
Washington Street, Newark, New Jersey 07102-2992. Pruco Life directors and
officers are elected annually.
7
<PAGE> 64
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS
(1) Financial Statements of the Discovery Select Variable Annuity Subaccounts of
Pruco Life Flexible Premium Variable Annuity Account (Registrant) consisting
of the Statements of Net Assets as of December 31, 1999; the Statements of
Operations for the period ended December 31, 1999; the Statements of Changes
in Net Assets for the periods ended December 31, 1999 and December 31, 1998;
and the Notes relating thereto will appear in the statement of additional
information. (Part B of the Registration Statement) (Note 13)
(2) Consolidated Statements of Pruco Life Insurance Company (Depositor) and its
subsidiaries consisting of the Consolidated Statements of Financial Position
as of December 31, 1999 and 1998; and the related Consolidated Statements of
Operations, Changes in Stockholder's Equity and Cash Flows for the years
ended December 31, 1999, 1998 and 1997; and the Notes to the Consolidated
Financial Statements will appear in the statement of additional information
(Part B of the Registration Statement) (Note 13).
(b) EXHIBITS
(1) Resolution of the Board of Directors of Pruco Life Insurance Company
establishing the Pruco Life Flexible Premium Variable Annuity Account.
(Note 2)
(2) Agreements for custody of securities and similar investments--Not
Applicable.
(3) (a) Form of Distribution Agreement between Prudential Investment
Management Services, Inc. "PIMS" (Underwriter) and Pruco Life
Insurance Company (Depositor) (Note 3)
(b) Form of Selected Broker Agreement used by PIMS (Note 3)
(4) (a) The Strategic Partners Variable Annuity Contract VBON-2000.
(Note 1)
(b) The Strategic Partners Variable Annuity Contract VDCA-2000.
(Note 1)
(5) (a) Application form for the Contract. (Note 1)
(6) (a) Articles of Incorporation of Pruco Life Insurance Company, as amended
through October 19, 1993. (Note 5)
(b) By-laws of Pruco Life Insurance Company, as amended through May 6, 1997.
(Note 6)
(7) Contract of reinsurance in connection with variable annuity contract--Not
Applicable.
(8) Other material contracts performed in whole or in part after the date the
registration statement is filed:
(a) Form of Fund Participation Agreement. (Note 7)
(9) Opinion of Counsel as to legality of the securities being registered.
(Note 13)
(10) Written consent of PricewaterhouseCoopers LLP independent accountants.
(Note 13)
(11) All financial statements omitted from Item 23, Financial Statements --
Not Applicable.
(12) Agreements in consideration for providing initial capital between or among
Registrant, Depositor, Underwriter, or initial Contract owners--Not
Applicable.
1
<PAGE> 65
(13) Schedule of Performance Computations. (Note 13)
(14) Powers of Attorney.
(a) Ira J. Kleinman, Esther H. Milnes and I. Edward Price (Note 8)
(b) Dennis G. Sullivan (Note 9)
(c) Kiyofumi Sakaguchi (Note 10)
(d) James J. Avery, Jr (Note 11)
(e) David R. Odenath, Jr.(Note 12)
(Note 1) Filed herewith
(Note 2) Incorporated by reference to Form N-4, Registration
No. 33-61125, filed July 19, 1995 on behalf of the Pruco Life
Flexible Premium Variable Annuity Account.
(Note 3) Incorporated by reference to Post-Effective Amendment No. 6 to
Form N-4, Registration No.333-06701, filed April 15, 1999 on behalf
of the Pruco Life Flexible Premium Variable Annuity Account.
(Note 4) Incorporated by reference to Pre-Effective Amendment No. 1 to
Form N-4, Registration No. 333-79201, filed August 17, 1999 on
behalf of the Pruco Life Flexible Premium Variable Annuity Account.
(Note 5) Incorporated by reference to the initial registration on Form
S-6, Registration No. 333-07451, filed July 2, 1996, on behalf of
the Pruco Life Variable Appreciable Account.
(Note 6) Incorporated by reference to Form 10-Q as filed August 15, 1997,
on behalf of the Pruco Life Insurance Company.
(Note 7) Incorporated by reference to Form N-4, Registration No. 333-06701,
filed June 24, 1996 on behalf of the Pruco Life Flexible Premium
Variable Annuity Account.
(Note 8) Incorporated by reference to Form 10-K, Registration No. 33-08698,
filed March 31, 1997 on behalf of the Pruco Life Variable Contract
Real Property Account.
(Note 9) Incorporated by reference to Post-Effective Amendment No. 6 to
Form S-1, Registration No. 33-86780, filed April 16, 1999 on behalf
of the Pruco Life Variable Contract Real Property Account.
(Note 10) Incorporated by reference to Post Effective Amendment No. 8 to
Form S-6, Registration No.33-49994, filed April 28, 1997, on behalf
of the Pruco Life PRUvider Variable Appreciable Account.
(Note 11) Incorporated by reference to Post-Effective Amendment No. 2 to
Form S-6, Registration No. 333-07451, filed June 25, 1997 on behalf
of the Pruco Life Variable Appreciable Account.
(Note 12) Incorporated by reference to Post-Effective Amendment No.7 to
Form S-1, Registration No. 33-86780, filed April 12, 2000 on behalf
of the Pruco Life Variable Contract Real Property Account.
(Note 13) To be filed by pre-effective amendment.
2
<PAGE> 66
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
See Part B: Directors and Officers.
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR
OR REGISTRANT
Pruco Life Insurance Company ("Pruco Life"), a corporation organized under the
laws of Arizona, is a direct, wholly-owned subsidiary of The Prudential
Insurance Company of America, ("Prudential"), a mutual life insurance company
organized under the laws of New Jersey. The subsidiaries of Prudential and short
descriptions of each are set forth on the following pages.
Pruco Life may be deemed to control its two wholly-owned subsidiaries, Pruco
Life Insurance Company of New Jersey ("Pruco Life of New Jersey") and The
Prudential Life Insurance Company of Arizona ("PLICA"). Pruco Life may also be
deemed to control the following separate accounts which are registered as unit
investment trusts under the Investment Company Act of 1940: the Pruco Life
Variable Appreciable Account, the Pruco Life Variable Insurance Account, the
Pruco Life Single Premium Variable Life Account, the Pruco Life Variable
Universal Account, the Pruco Life PRUvider Variable Appreciable Account, the
Pruco Life Single Premium Variable Annuity Account, the Pruco Life Flexible
Premium Variable Annuity Account (Registrant) (separate accounts of Pruco Life),
the Pruco Life of New Jersey Variable Appreciable Account, the Pruco Life of New
Jersey Variable Insurance Account, the Pruco Life of New Jersey Single Premium
Variable Life Account, and the Pruco Life of New Jersey Single Premium Variable
Annuity Account (separate accounts of Pruco Life of New Jersey).
The above-referenced separate accounts, along with Prudential and certain of
Prudential's separate accounts, hold the majority of the shares of The
Prudential Series Fund, Inc., a Maryland corporation. In addition, The
Prudential holds all the shares of Prudential's Gibraltar Fund, a Maryland
Corporation, in three of its separate accounts. The Prudential Series Fund, Inc.
and Prudential's Gibraltar Fund are registered as open-end diversified,
management investment companies under the Investment Company Act of 1940.
Additionally, the aforementioned separate accounts of Prudential are registered
as unit investment trusts under the Investment Company Act of 1940.
In addition, Pruco Life may also be deemed to be under common control with The
Prudential Variable Contract Account-2, The Prudential Variable Contract
Account-10, and The Prudential Variable Contract Account-11, separate accounts
of Prudential, all of which are registered as open-end, diversified, management
investment companies under the Investment Company Act of 1940 and with the
Prudential Variable Contract Account-24, a registered unit investment trust.
The subsidiaries of Prudential and short descriptions of each are listed under
Item 25 of Post-Effective Amendment No. 32 to the Form N-1A Registration
Statement for The Prudential Series Fund, Inc., Registration No. 2-80896, filed
February 28, 1997, the text of which is hereby incorporated.
ITEM 27. NUMBER OF CONTRACT OWNERS
Not Applicable.
ITEM 28. INDEMNIFICATION
The Registrant, in conjunction with certain affiliates, maintains insurance on
behalf of any person who is or was a trustee, director, officer, employee, or
agent of the Registrant, or who is or was serving at the request of the
Registrant as a trustee, director, officer, employee or agent of such other
affiliated trust or corporation, against any liability asserted against and
incurred by him or her arising out of his or her position with such trust or
corporation.
Arizona, being the state of organization of Pruco Life Insurance Company
("Pruco"), permits entities organized under its jurisdiction to indemnify
directors and officers with certain limitations. The relevant provisions of
Arizona law permitting indemnification can be found in Section 10-850 et. seq.
of the Arizona Statutes Annotated. The text of Pruco's By-law, Article VIII,
which relates to indemnification of officers and directors, is incorporated by
reference to Exhibit 3(ii) to its form 10-Q filed August 15, 1997.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that in the
3
<PAGE> 67
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a 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 Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Prudential Investment Management Services LLC (PIMS)
PIMS is distributor for the following open-end management companies: Cash
Accumulation Trust, COMMAND Money Fund, COMMAND Government Fund, COMMAND
Tax-Free Fund, Global Utility Fund, Inc., Nicholas-Applegate Fund, Inc.
(Nicholas-Applegate Growth Equity Fund), Prudential Balanced Fund, Prudential
California Municipal Fund, Prudential Diversified Bond Fund, Inc., Prudential
Diversified Funds, Prudential Emerging Growth Fund, Inc., Prudential Equity
Fund. Inc., Prudential Equity Income Fund, Prudential Europe Growth Fund, Inc.,
Prudential Global Genesis Fund, Inc., Prudential Global Total Return Fund, Inc.,
Prudential Government Income Fund, Inc., Prudential Government Securities Trust,
Prudential High Yield Fund, Inc., Prudential High Yield Total Return Fund, Inc.,
Prudential Index Series Fund, Prudential Institutional Liquidity Portfolio,
Inc., Prudential International Bond Fund, Inc., Prudential Mid-Cap Value Fund,
Prudential MoneyMart Assets, Inc., Prudential Municipal Bond Fund, Prudential
Municipal Series Fund, Prudential National Municipals Fund, Inc., Prudential
Natural Resources Fund, Inc., Prudential Pacific Growth Fund, Inc., Prudential
Real Estate Securities Fund, Prudential Sector Funds, Inc., Prudential Small-Cap
Quantum Fund, Inc., Prudential Small Company Value Fund, Inc., Prudential
Special Money Market Fund, Inc., Prudential Structured Maturity Fund, Inc.,
Prudential Tax-Free Money Fund, Inc., Prudential Tax-Mananged Funds, Prudential
20/20 Focus Fund, Prudential World Fund, Inc., The Prudential Investment
Portfolios, Inc., Strategic Partners Series, Target Funds and The Target
Portfolio Trust.
PIMS is also distributor of the following unit investment trusts: Separate
Accounts: Prudential's Gibraltar Fund, Inc., The Prudential Variable Contract
Account-2, The Prudential Variable Contract Account-10. The Prudential Variable
Contract Account-11, The Prudential Variable Contract Account-24, The Prudential
Variable Contract GI-2, The Prudential Discovery Select Group Variable Contract
Account, The Pruco Life Flexible Premium Variable Annuity Account, The Pruco
Life of New Jersey Flexible Premium Variable Annuity Account, The Prudential
Individual Variable Contract Account and The Prudential Qualified Individual
Variable Contract Account.
(b) Information concerning the officers and directors of PIMS is set forth
below.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME (1) WITH UNDERWRITER WITH REGISTRANT
- --------------- --------------------- ---------------------
<S> <C> <C>
Robert F. Gunia...... President None
Jean D. Hamilton.... Executive Vice President None
John R. Strangfeld... Executive Vice President None
Kevin B. Frawley..... Senior Vice President and Chief None
Compliance Officer
Francis O. Odubekun.. Senior Vice President and Chief None
Operating Officer
William V. Healey.... Senior Vice President, Secretary
and Chief Legal Officer None
Margaret M. Deverell. Senior Vice President,
Comptroller and None
Chief Financial Officer
C. Edward Chaplin.... Treasurer None
</TABLE>
4
<PAGE> 68
- ---------
(1) The address of each person named is Prudential Plaza, 751 Broad Street,
Newark, New Jersey 07102 unless otherwise noted.
(c) Not applicable
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books or other documents required to be maintained by Section 31
(a) of the 1940 Act and the rules promulgated thereunder are maintained by the
Registrant through The Prudential Insurance Company of America, 751 Broad
Street, Newark, New Jersey 07102-3777.
ITEM 31. MANAGEMENT SERVICES
Summary of any contract not discussed in Part A or Part B of the registration
statement under which management-related services are provided to the
Registrant--Not Applicable.
ITEM 32. UNDERTAKINGS
(a) Registrant undertakes to file a post-effective amendment to this Registrant
Statement as frequently as is 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 to include either (1) as part of any application to
purchase a contract offered by the prospectus, a space that an applicant can
check to request a statement of additional information, or (2) a postcard or
similar written communication affixed to or included in the prospectus that
the applicant can remove to send for a statement of additional information.
(c) Registrant undertakes to deliver any statement of additional information and
any financial statements required to be made available under this Form
promptly upon written or oral request.
(d) Restrictions on withdrawal under Section 403(b) Contracts are imposed in
reliance upon, and in compliance with, a no-action letter issued by the
Chief of the Office of Insurance Products and Legal Compliance of the U.S.
Securities and Exchange Commission to the American Council of Life Insurance
on November 28, 1988.
(e) Pruco Life hereby represents that the fees and charges deducted under the
Contract, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred and the risks assumed by
Pruco Life.
5
<PAGE> 69
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has caused this Registration
Statement, to be signed on its behalf by the undersigned thereunto duly
authorized, and its seal hereunto affixed and attested, all in the City of
Newark and the State of New Jersey, on this 24th day of May, 2000.
THE PRUCO LIFE FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
(Registrant)
BY: PRUCO LIFE INSURANCE COMPANY
(Depositor)
<TABLE>
<CAPTION>
<S> <C> <C>
Attest: /s/ CLIFFORD E. KIRSCH /s/ ESTHER H. MILNES
- ------------- ------------------------------------------- -------------------------
CLIFFORD E. KIRSCH ESTHER H. MILNES
CHIEF LEGAL OFFICER AND SECRETARY PRESIDENT
</TABLE>
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities and on the date
indicated:
<TABLE>
<CAPTION>
SIGNATURE AND TITLE
- -------------------------------------------------
<S> <C>
*
- --------------------------------
ESTHER H. MILNES Date: May 24, 2000
PRESIDENT AND DIRECTOR
*
- --------------------------------
JAMES J. AVERY JR
CHAIRMAN OF THE BOARD AND DIRECTOR
* *By: CLIFFORD E. KIRSCH
- -------------------------------- ----------------------------------
DENNIS G. SULLIVAN CLIFFORD E. KIRSCH
VICE PRESIDENT AND CHIEF ACCOUNTING OFFICER (ATTORNEY-IN-FACT)
(PRINCIPAL FINANCIAL OFFICER AND CHIEF
ACCOUNTING OFFICER)
*
- --------------------------------
IRA J. KLEINMAN
DIRECTOR
*
- --------------------------------
I. EDWARD PRICE
DIRECTOR
*
- --------------------------------
KIYOFUMI SAKAGUCHI
DIRECTOR
*
- --------------------------------
DAVID R. ODENATH, JR.
DIRECTOR
</TABLE>
6
<PAGE> 70
EXHIBIT INDEX
EXHIBITS
(4) (a) The Strategic Partners Variable Annuity Contract VBON-2000.
(Note 1)
(b) The Strategic Partners Variable Annuity Contract VDCA-2000.
(Note 1)
(5) (a) Application form for the Contract. (Note 1)
<PAGE> 1
Pruco Life Insurance Company
Phoenix, Arizona 85014
A Stock Company Subsidiary of
The Prudential Insurance Company of America
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE
ANNUITY CONTRACT
Nonparticipating
ANNUITY PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT
GUARANTEED AS TO DOLLAR AMOUNT.
This is an annuity contract. Subject to the provisions of the Contract, and in
consideration of any Purchase Payments you make and we accept, we will make
Annuity Payments starting on the Annuity Date shown on the Contract Data pages.
Please read the Contract carefully; it is a legal contract between you and Pruco
Life Insurance Company. Expense charges applicable to the Contract are shown on
the Contract Data pages. If you have a question about the Contract, or a claim,
see your representative or contact the Annuity Service Center.
Right to Cancel Contract
This Contract may be returned within [10] days after you receive it. It can be
mailed or delivered to either us, at the Annuity Service Center, or the
representative who sold it to you. Return of this Contract by mail is effective
on being postmarked, properly addressed and postage prepaid. The returned
Contract will be canceled upon our receipt, and we will return your money in
accordance with applicable law. Under certain circumstances, we have the right
to allocate Purchase Payment(s) to the Money Market Subaccount until the
expiration of the Right to Cancel period. If we so allocate Purchase Payment(s),
we will refund the Purchase Payment(s), less any withdrawals, in the event of
cancellation under the terms of this paragraph.
READ YOUR CONTRACT CAREFULLY
TABLE OF CONTENTS
CONTRACT DATA PAGES
DEFINITIONS
PURCHASE PAYMENTS
CREDITS
<PAGE> 2
CONTRACT VALUE
VARIABLE SEPARATE ACCOUNT
CONTRACT MAINTENANCE CHARGE
TRANSFERS
WITHDRAWALS
PROTECTED VALUE
GUARANTEED MINIMUM INCOME BENEFIT
GUARANTEED MINIMUM DEATH BENEFIT
ANNUITY AND SETTLEMENT OPTIONS
BENEFICIARY
SUSPENSION OR DEFERRAL OF PAYMENTS OR TRANSFERS FROM THE
SEPARATE ACCOUNT
GENERAL PROVISIONS
VALUES AND BENEFITS
ANNUITY SETTLEMENT TABLES
PURCHASE PAYMENTS:
Initial Purchase Payment:
Minimum Subsequent Purchase Payment: $1,000. For IRA
contracts, the Minimum Subsequent Purchase Payment is $1,000. The
Minimum Subsequent Purchase Payment for automatic purchase plans, if available,
is $100.
Annual Purchase Payment Limits: The total of all Purchase Payments made into
this Contract in the first Contract Year may not exceed [$20,000,000]. The total
of all Purchase Payments made into this Contract in any Contract Year after the
first Contract Year may not exceed [$2,000,000]. Purchase Payments of greater
value may be allowed with our prior approval.
Aggregate Purchase Payment Limit: The total of all Purchase Payments made into
this Contract may not exceed [$20,000,000]. Purchase Payments of greater value
may be allowed with our prior approval.
CREDIT PAYMENT:
<PAGE> 3
[4%] of Initial Purchase Payment.
CREDIT VESTING SCHEDULE:
Number of Contract Anniversaries
Since Date of Each Purchase Payment
Vested Percentage
0
1
2
3
4
5
6
7
8
9
0%
10%
20%
<PAGE> 4
30%
40%
50%
60%
70%
80%
100%]
BENEFICIARY:
As designated by Owner at Contract Date unless changed in accordance with the
Contract provisions.
CONTRACT MAINTENANCE CHARGE:
If your Contract Value is less than $50,000, we will charge a Contract
Maintenance Charge of the lesser of $30 or 2% of the Contract Value. This charge
is deducted on the Contract Anniversary and when a surrender of the Contract
occurs, if the Contract Value at the time is then less than $50,000. The
Contract Maintenance Charge will be deducted on a pro-rata basis from all
Allocation Options to which your Contract Value is allocated. During the Annuity
Period, we reserve the right to assess an annual Contract Maintenance Charge of
$30. The decision to assess this charge may depend on the Annuity or Settlement
Option selected. We reserve the right to increase the Contract Maintenance
Charge, but it will not exceed $60 per Contract Year, and to raise the Contract
Value amount over which we will waive the Contract Maintenance Charge.
INSURANCE CHARGE:
This charge depends on whether you have elected the Guaranteed
Minimum Death Benefit ("GMDB") feature and on the GMDB Protected Value option
that you have elected. This charge is deducted daily from the assets in each of
the Subaccounts. If you do not elect the GMDB feature, you do not elect a GMDB
Protected Value option, and your death benefit is equal to the base death
benefit as described in the Guaranteed Minimum Death Benefit section of the
Contract.
<PAGE> 5
[ ] You have not elected the GMDB
feature. Therefore, the daily rate is [0.00380909%], which is equivalent to an
annual rate of [1.40%].
[ ] You have elected the GMDB feature and the GMDB
Protected Value option of the Roll-Up. Therefore, the daily rate is
[0.00434896%], which is equivalent to an annual rate of [1.60%].
[ ] You have elected the GMDB feature and the GMDB
Protected Value option of the Step-Up. Therefore, the daily rate is
[0.00434896%], which is equivalent to an annual rate of [1.60%].
[ ] You have elected the GMDB feature and the GMDB
Protected Value option of the greater of the Roll-Up and Step-Up. Therefore, the
daily rate is [0.00461849%], which is equivalent to an annual rate of [1.70%].
GUARANTEED MINIMUM INCOME BENEFIT ("GMIB") CHARGE:
If you elect the GMIB, the charge
depends on the GMIB Protected Value option that you have elected. The charge is
calculated daily and deducted on each Contract Anniversary and upon a full and
certain partial withdrawals. The charge is deducted pro-rata from all Allocation
Options to which your Contract Value is allocated.
[ ] You have elected the GMIB and the GMIB Protected
Value option of the Roll-Up. Therefore, the daily rate is [0.00068408%], which
is equivalent to an annual rate of [0.25%].
[[ ] You have elected the GMIB and the GMIB Protected
Value option of the Step-Up. Therefore, the daily rate is [0.00068408%], which
is equivalent to an annual rate of [0.25%].
[ ] You have elected the GMIB and the GMIB Protected
Value option of the greater of the Roll-Up and Step-Up. Therefore, the daily
rate is [0.00095723%], which is equivalent to an annual rate of [0.35%].]
[ ] You have not elected the GMIB, and, therefore, there is no charge.
ALLOCATION OPTIONS:
VARIABLE INVESTMENT OPTIONS:
The following variable investment options are available through allocation to
subaccounts of the Pruco Life Flexible Premium Variable Annuity Account. We
reserve the right to limit the availability of the below options, if necessary,
in order to comply with federal, state or local law.
[The Prudential Series Fund
Davis Venture Value
Fidelity Large Cap Value
Prudential Large Cap Value Index
<PAGE> 6
Wellington Growth and Income
MFS Capital Opportunities
Prudential Stock Index
Alliance Premier Growth
Jennison Growth
Marsico Large Cap Growth
Prudential Large Cap Growth Index
Fidelity Small/Mid Cap Value
Prudential Small Cap Value Index
Prudential Emerging Growth
Wellington Capital Appreciation
MFS Mid Cap Growth
MFS New Discovery
Prudential Small Cap Growth Index
PIMCO Total Return
PIMCO High Yield
Strategic Partners Focused Growth Fund
Prudential Money Market
Alliance Technology
Conservative Lifestyle Portfolio
Moderate Lifestyle Portfolio
Moderately Aggressive Lifestyle Portfolio
Aggressive Lifestyle Portfolio
Jennison International
Prudential Global
Deutsche International Equity
Prudential International Index]
<PAGE> 7
ALLOCATION GUIDELINES:
Currently, you may select any Allocation Option which is available at the time
the Purchase Payment or transfer is made. However, an amount of at least 1% of
the Invested Purchase Payment must be allocated to any Allocation Option.
Allocations made pursuant to automatic rebalancing or dollar cost-averaging are
not subject to these limitations. We reserve the right to limit the availability
of the above Allocation Options, if necessary, in order to comply with federal,
state or local law.
TRANSFERS:
Number of Transfers Permitted: Currently, there are no limits on the number of
transfers that can be made among Subaccounts. We reserve the right to change
this, but the Owner will always be allowed at least 12 transfers among
Subaccounts in a Contract Year.
Transfer Charge: The Transfer Charge for each transfer after the first 12 in a
Contract Year is $25. The charge is taken pro-rata from the Allocation Options
from which the transfer is made. Transfers made due to automatic rebalancing or
dollar cost-averaging will not be counted for purposes of the Transfer Charge.
We reserve the right to increase this charge, but it will not exceed $30.
Minimum Amount to be Transferred: Subject to the restrictions contained in the
Contract on transfers, the minimum transfer amount is $250 or your entire
interest in any Allocation Option, if less. This requirement is waived if the
transfer is pursuant to automatic rebalancing or dollar cost-averaging.
WITHDRAWALS:
Withdrawal Charge: The Withdrawal Charge is a percentage of the amount withdrawn
that is subject to a charge, and depends on the number of Contract Anniversaries
that have elapsed since a Purchase Payment was made.
Number of Contract
Anniversaries Since Date
of Each Purchase
Payment
Withdrawal
<PAGE> 8
Charge
[0
1
2
3
4
5
6
7
8
9
8%
8%
7%
6%
5%
4%
<PAGE> 9
3%
2%
1%
0%]
Charge-Free Amount: A certain amount (the Charge-Free Amount) may be withdrawn
without incurring a Withdrawal Charge. The Charge-Free Amount available in any
current Contract Year is calculated as of the Contract Anniversary date and is
equal to 10% of the sum of all Purchase Payments received in excess of all
Purchase Payments withdrawn and is applied on a first-in, first-out basis.
Minimum Amount Which May Be Withdrawn: The minimum amount which may be withdrawn
is [$250]. The minimum amount which may be withdrawn under a systematic
withdrawal plan is [$100].
Minimum Contract Value Which Must Remain in the Contract After a Withdrawal: The
minimum Contract Value which must remain in the Contract in order to keep the
Contract inforce after a withdrawal is $2,000.
ENDORSEMENTS:
[Individual Retirement Annuity Endorsement]
ANNUITY SERVICE CENTER:
[Annuity Service Center
P.O. Box 14215
New Brunswick, NJ 08906-4215]
DEFINITIONS
ACCUMULATION PERIOD: The period from, and
including, the Contract Date to, but excluding, the Annuity Date.
ADJUSTED CONTRACT VALUE: The Contract Value as
of the Annuity Date less any applicable Premium Tax Charge and less any Credit
subject to recapture under the vesting schedule shown on the Contract Data
pages. The applicable Annuity Table is applied to this amount to determine the
initial Annuity Payment.
<PAGE> 10
ALLOCATION OPTIONS: Those investment options available under the Contract as of
any given time to which Contract Value may be allocated. Allocation Options as
of the Contract Date are shown on the Contract Data pages.
ANNUITANT: The person named on the first page upon whose continuation of life
any Annuity Payment involving life contingencies depends. If the Annuitant dies
before the Annuity Date, the Co-Annuitant, if applicable, becomes the Annuitant,
if the requirements for changing Annuity Date are met (see definition of Annuity
Date). If there is no surviving or eligible Co-Annuitant, and the Annuitant was
not the Owner, the Owner becomes the Annuitant. You then have 60 days from the
date we receive due proof of death of the Annuitant or Co-Annuitant to name a
new Annuitant. If no new Annuitant is named during that 60 day period, the Owner
will remain the Annuitant. You may not change an Annuitant or Co-Annuitant and
may add or remove an Annuitant or Co-Annuitant only with our prior approval.
ANNUITY DATE: The date the first Annuity or Settlement Payment to the Payee is
due. The Annuity Date is shown on the original Contract Data pages. You must
have our permission to change the Annuity Date. If there is a new Annuitant due
to the death of the Annuitant, and the new Annuitant is older than the prior
Annuitant, the Annuity Date will be based on the age of the new Annuitant;
however any such changed Annuity Date must be at least three years after the
Contract Date, must be earlier than the date shown on the Contract Data pages,
cannot be later than the Contract Anniversary next following the new Annuitant's
90th birthday and must be consistent with applicable law at the time.
ANNUITY OR SETTLEMENT PAYMENTS: The series of payments made to you or any named
payee after the Annuity Date as described under the Annuity or Settlement Option
selected.
ANNUITY PERIOD: The period of time, beginning on the Annuity Date, during which
Annuity or Settlement Payments are made.
ANNUITY SERVICE CENTER: The office indicated on the Contract Data pages to
which notices, requests and Purchase Payments must be sent. All sums payable to
us under the Contract must be sent to the Annuity Service Center. The Annuity
Service Center address may be changed at any time. You will be notified in
advance and in writing of any change in address.
BENEFICIARY: The person(s) or entity(ies) who has the right to receive the
death benefit when the last survivor of the Owner or Joint Owner dies (or the
first to die of the Owner or Joint Owner if the Owner and Joint Owner are not
spouses at the time of the Owner's or Joint Owner's death). The Owner must be
the primary Beneficiary of the Joint Owner, and the Joint Owner must be the
primary Beneficiary of the Owner.
BUSINESS DAY: Any day the New York Stock Exchange
<PAGE> 11
and the Company are open for business.
CHARGE-FREE AMOUNT: The Charge-Free Amount is a
portion of the Contract Value that may be withdrawn without incurring a
Withdrawal Charge.
CO-ANNUITANT: The person shown on the Contract Data
pages who becomes the Annuitant upon the death of the Annuitant before the
Annuity Date. No Co-Annuitant may be designated if the Owner is a non-natural
person.
COMPANY: Pruco Life Insurance Company, an Arizona
corporation.
CONTRACT ANNIVERSARY: The same day and month as
the Contract Date in each later year.
CONTRACT DATE: The date shown on the Contract
Data pages on which the first Contract Year begins.
CONTRACT SURRENDER VALUE: The Contract Value
less any applicable Premium Tax Charge, Withdrawal Charge, Credit recapture,
GMIB Charge or Contract Maintenance Charge.
CONTRACT VALUE: The dollar value as of any Business Day prior to the Annuity
Date of all amounts accumulated under this Contract.
CONTRACT YEAR: A year which starts on the Contract Date or on a Contract
Anniversary.
CREDIT: An amount we add to your Contract Value at
the time an Invested Purchase Payment is credited to the Contract Value.
EARNINGS: The excess of the Contract Value over the
sum of all Purchase Payments made and not yet withdrawn and non-vested Credits
not yet recaptured.
ELIGIBLE HOSPITAL: An institution that meets either
of the following requirements:
It is accredited as a hospital under the Hospital Accreditation Program of the
Joint Commission on Accreditation of Healthcare Organizations; or
It is legally operated, has 24-hour a day supervision by a staff
of doctors, has 24-hour a day nursing service by registered graduate nurses, and
either:
It mainly provides general inpatient medical care and treatment of sick and
injured persons by the use of medical, diagnostic and major surgical facilities.
All such facilities are located in it or are under its control; or
It mainly provides specialized inpatient medical care and treatment of sick or
injured persons by the use of medical and diagnostic facilities (including x-ray
and laboratory). All such facilities are located in it, are under its control,
or are available to it under a written agreement with a hospital (as defined
above) or with a specialized provider of these facilities.
<PAGE> 12
An eligible hospital is not an institution, or part of one, that: (a) furnishes
mainly homelike or custodial care, or training in the routines of daily living;
or (b) is mainly a school.
ELIGIBLE NURSING HOME: An institution or special nursing
unit of a hospital that meets at least one of the following requirements:
It is Medicare approved as a provider of skilled nursing care services;
It is licensed as a skilled nursing home or as an intermediate
care facility by the state it is located in; or
It meets all the following requirements:
It is licensed as a nursing home by the state it is located in;
Its main function is to provide skilled, intermediate, or
custodial nursing care;
It is engaged in providing continuous room and board accommodations
to 3 or more persons;
It is under the supervision of a registered nurse (RN) or licensed
practical nurse (LPN);
It maintains a daily medical record of each patient; and
It maintains control and records for all medications dispensed.
GOOD ORDER: An instruction received at the Annuity
Service Center, utilizing such forms, signatures and datings as we require, that
is sufficiently complete and clear that we do not need to exercise any
discretion to follow such instructions. We will notify you if an instruction is
not in Good Order.
INVESTED PURCHASE PAYMENTS: The balance of each
Purchase Payment after we make any applicable deduction for: (1) Premium Tax
Charge; and (2) charge for any other type of tax (or component thereof) measured
by or based upon the amount of the Purchase Payment we receive.
JOINT OWNER: The spouse of the Owner, if named on
the Contract Data pages as the Joint Owner, who shares ownership rights with the
Owner as defined under this Contract. You may add, change or remove a Joint
Owner, subject to our underwriting rules. The Contract may never have more than
one Joint Owner. No Joint Owner is permitted for IRAs or other qualified
contracts.
OWNER: The person or entity named on the Contract
Data pages who has ownership rights as defined under the Contract provided that,
if a Joint Owner is named, the Owner shares ownership rights with the Joint
Owner. You may change the Owner subject to our underwriting rules. Any change of
an Owner will be effective when we process the request.
<PAGE> 13
PAYEE: The person who has a right to receive Annuity
or Settlement Payments under the Annuity and Settlement Options provision of
this Contract. The Payee can be designated as revocable or irrevocable at your
discretion. If you do not designate a Payee at least 5 Business Days before the
Annuity Date, the Owner will become the Payee.
PREMIUM TAX CHARGE: A charge which may be deducted
from Purchase Payments or Contract Value for premium taxes owed by us to any
governmental entity.
PURCHASE PAYMENT: A payment you make to this
Contract.
SUBACCOUNT: Variable Separate Account assets are
divided into Subaccounts. Assets of each Subaccount will be invested in shares
of a Variable Investment Option.
TERMINALLY ILL: We consider someone terminally
ill who has a life expectancy of six months or less. Proof of Terminal Illness
must include a certification by a licensed physician.
VARIABLE INVESTMENT OPTION: Those investment
options available under the Contract through the Subaccounts as of any given
time. Variable Investment Options as of the Contract Date are shown on the
Contract Data pages.
VARIABLE SEPARATE ACCOUNT: A segregated asset
account maintained by us to support this and certain other contracts. The
segregated asset account(s) available as of the Contract Date is shown on the
Contract Data pages.
WE, OUR AND US: Pruco Life Insurance Company.
WITHDRAWAL CHARGES: A charge assessed on partial
or full withdrawals or upon settlement (depending on the payout option chosen)
during the Withdrawal Charge Period. The Withdrawal Charge equals a percentage,
shown on the Contract Data pages, of the amount subject to the charge.
WITHDRAWAL CHARGE PERIOD: The number of Contract
Anniversaries since each Purchase Payment during which Withdrawal Charges are
applied to withdrawals of amounts in the Contract. The Withdrawal Charge Period
is shown on the Contract Data pages.
YOU AND YOUR: The Owner of the Contract if
there is no Joint Owner; if there is a Joint Owner, the Owner and Joint Owner
acting jointly. If we receive written authorization from both the Owner and
Joint Owner in Good Order, then, upon our consent, we will allow either to
represent the entire ownership interest in the Contract, until that
authorization has been revoked by either party. This Contract will treat the
Owner as having contributed 100% of the Purchase Payments. Therefore, we will
treat the Owner as the taxpayer with respect to all distributions made under the
Contract while he or she is the Owner, whether or not a Joint Owner is also
named.
<PAGE> 14
PURCHASE PAYMENTS
PURCHASE PAYMENTS: The initial Purchase Payment
must be paid on the Contract Date. In general, subsequent Purchase Payments may
be made at any time before the Annuity Date. However, no Purchase Payments may
be made on or after the sole or older of the Owner's or Joint Owner's, or
Annuitant's 80th birthday, and we reserve the right to decline any Purchase
Payment. The Minimum Subsequent Purchase Payment, Annual Purchase Payment Limits
and Aggregate Purchase Payment Limit are shown on the Contract Data pages.
ALLOCATION OF PURCHASE PAYMENTS: Invested
Purchase Payments are allocated to one or more of the Allocation Options in
accordance with your selection. The allocation of the initial Invested Purchase
Payment is made in accordance with your selection made on the Contract Date. You
may change the allocation of future Invested Purchase Payments at any time. If,
after the Initial Purchase Payment, we receive a Purchase Payment without
allocation instructions, we will allocate the corresponding Invested Purchase
Payment in the same proportion as the most recent Purchase Payment you made
(unless that was a Purchase Payment you directed us to allocate on a
one-time-only basis.) Assuming that all other requirements are received in Good
Order, we reserve the right to allocate your initial Invested Purchase Payment
to the Money Market Subaccount until we receive your allocation selection. In
addition, the Company has reserved the right to allocate the initial Invested
Purchase Payment to the Money Market Subaccount under the Right to Cancel
Contract provision set forth on the face page of this Contract. All allocations
of Invested Purchase Payments are subject to the Allocation Guidelines shown on
the Contract Data pages.
Currently, you may select as many of the available Allocation Options as you
wish. However, we reserve the right to limit this in the future. If the Purchase
Payment and forms required to issue a Contract are in Good Order, the initial
Invested Purchase Payment will be credited to your Contract within two (2)
Business Days after receipt at the Annuity Service Center. Additional Invested
Purchase Payments will be credited to your Contract as of the Business Day they
are received.
CREDITS
We add a Credit amount to your Contract Value with each Invested Purchase
Payment. Each Credit amount is allocated to the Contract Value when the
applicable Invested Purchase Payment is credited to your Contract Value. The
Credit is allocated to the Variable Investment Options in the same percentages
as the Invested Purchase Payment to which it relates.
The Credit percentage may be determined
by the amount of the Purchase Payment. The Credit percentage for your initial
Purchase Payment is shown on the Contract Data pages. The Credit percentage on
subsequent Purchase Payments will vary, but is guaranteed to be at least 3% of
the Purchase Payment.
Each Credit is subject to its own vesting schedule which is shown on the
Contract Data pages. If you make a withdrawal of all or part of a Purchase
<PAGE> 15
Payment, the non-vested portion of the Credit attributable to that Purchase
Payment will be recaptured in accordance with the vesting schedule. Withdrawals
of Purchase Payments are taken on a first-in, first-out basis. The Credit
recapture is in addition to any Withdrawal Charges that may be applicable.
If you exercise your Right to Cancel the Contract, the entire Credit will be
recaptured.
CONTRACT VALUE
Your Contract Value is the total of all amounts credited to your Contract as of
any Business Day as a result of your initial Invested Purchase Payment and the
increases and decreases described below.
On the Contract Date, the Contract Value is equal to the initial Invested
Purchase Payment and the Credit amount. After that, the Contract Value as of any
Business Day is determined by starting with the Contract Value at the end of the
previous day and adjusting it for items that increase it or decrease it.
Items that increase the Contract Value are: Invested Purchase Payments, Credit
amounts and positive investment performance in a Subaccount.
Items that decrease the Contract Value are: withdrawals and the charges and
Credit recaptures associated with them; negative investment performance in a
Subaccount; Insurance Charge; Contract Maintenance Charge, if applicable; GMIB
Charge, if applicable; Transfer Charge; and any Premium Tax Charge or other tax
charge.
Investment results are credited daily and the Insurance Charge is deducted
daily. The Contract Maintenance Charge is deducted annually as of the Contract
Anniversary and upon a total withdrawal. The GMIB Charge is deducted annually as
of the Contract Anniversary and pro-rata upon a total and certain partial
withdrawals. Other charges are assessed only if the appropriate event occurs.
VARIABLE SEPARATE ACCOUNT
THE VARIABLE SEPARATE ACCOUNT: The Variable
Separate Account is designated on the Contract Data pages. It consists of assets
we have set aside and have kept separate from the rest of our assets and those
of our other separate accounts. The assets of the Variable Separate Account,
equal to reserves and other liabilities of your Contract and those of other
owners, will not be charged with liabilities arising out of any other business
we may conduct.
The Variable Separate Account assets are divided into Subaccounts. The assets of
the Subaccount are allocated to the Variable Investment Option(s) shown on the
Contract Data pages. We may restructure, eliminate or combine Subaccounts or add
to or eliminate Variable Investment Option(s) from those shown. You may be
permitted to transfer your Contract Value or allocate Invested Purchase Payments
to the additional Subaccount(s). However, the right to make such transfers or
allocations will be limited by any terms and conditions we may impose.
<PAGE> 16
Should the shares of any Variable Investment Option(s) become unavailable for
investment by the Variable Separate Account, we deem further investment in the
shares inappropriate, or if required for tax reasons, we may limit further
purchase of such shares or substitute shares of another Variable Investment
Option for shares already purchased.
VALUATION OF ASSETS: The value of the shares
held by the Subaccounts in the Variable Investment Options will be based on the
net asset value of the Investment Option on each Business Day.
INSURANCE CHARGE: Each Business Day, we deduct
an Insurance Charge from the Subaccounts of the Variable Separate Account which
is equivalent, on an annual basis, to the amount shown on the Contract Data
pages. The amount of the Insurance Charge is based on whether you have elected
the GMDB and on the GMDB Protected Value option that you elect, if any.
CONTRACT MAINTENANCE CHARGE
We deduct an annual Contract Maintenance Charge shown on the Contract Data
pages. We determine your Contract Value as of your Contract Anniversary and make
any deductions required on a pro-rata basis from all Allocation Options to which
your Contract Value is allocated. If a total withdrawal is made on other than a
Contract Anniversary, we will determine your Contract Value and make a deduction
for the Contract Maintenance Charge the same as we would if it were a Contract
Anniversary.
TRANSFERS DURING THE ACCUMULATION PERIOD: A
transfer is subject to the following:
the maximum number of transfers which may be made, the maximum number of
transfers which are not subject to a Transfer Charge and the minimum amount
which may be transferred are shown on the Contract Data pages;
a Transfer Charge is deducted if a transfer exceeds the maximum number of free
transfers. The Transfer Charge is shown on the Contract Data pages. The Transfer
Charge is deducted from the amount which is transferred;
a transfer will be effected as of the end of the Business Day when we receive a
request in Good Order;
we are not responsible for the consequences resulting from a
transfer made in accordance with your instructions;
your right to make transfers is subject to modification if we
determine, in our sole opinion, that the exercise of the right by one or
more Owners is, or would be, to the disadvantage of other Owners or if
required to do so by applicable laws or regulations. Restrictions may
be applied in any manner reasonably designed to prevent any use of the
transfer right which is considered by us to be to the disadvantage of
other Owners or to ensure compliance with such laws or regulations.
<PAGE> 17
A modification could be applied to transfers to or from one or more
of the Subaccounts and could include, but not be limited to:
the requirement of a minimum time period between each transfer;
not accepting a transfer request of an agent acting under
a power of attorney on behalf of more than one Owner;
limiting the dollar amount that may be transferred among
the Subaccounts by an Owner at any one time; or
restricting the number of transfers per year.
[No transfers are permitted after the Annuity Date.]
WITHDRAWALS
WITHDRAWALS: During the Accumulation Period, you
may, upon a request in Good Order, make a total or partial withdrawal of the
Contract Surrender Value. You may specify the Allocation Option(s) from which a
withdrawal will be taken. If you do not so specify, we will take the withdrawal
on a pro-rata basis from all Allocation Option(s) to which your Contract Value
is allocated.
We will pay the amount of any withdrawal within seven (7) days of receipt of
request in Good Order unless the "Suspension or Deferral of Payments Provision"
is in effect.
Each partial withdrawal must be for an amount which is not less than the amount
shown on the Contract Data pages. The minimum Contract Value which must remain
in the Contract after a partial withdrawal in order to keep the Contract inforce
is shown on the Contract Data pages. If the amount of the withdrawal requested
would reduce the Contract Value below this minimum, we will give you the maximum
amount available that, with the Withdrawal Charge, would not reduce the Contract
Value below such minimum. Special rules may apply for IRAs.
WITHDRAWAL CHARGE: A Withdrawal Charge may apply
if you make a withdrawal during the Withdrawal Charge Period for a Purchase
Payment. The amount of the Withdrawal Charge varies with the number of Contract
Anniversaries that have elapsed since each Purchase Payment was made, and is a
percentage, shown on the Contract Data pages, of the amount withdrawn that is
subject to the charge. If a withdrawal is effective on the day before a Contract
Anniversary, the Withdrawal Charge percentage used will be the one as of the
following Contract Anniversary. If you request a partial withdrawal, we will
deduct an amount from the Contract Value that is sufficient to pay the
Withdrawal Charge, and recapture any Credit subject to recapture under the
vesting schedule, and provide you the amount requested.
For purposes of determining the Withdrawal Charge, withdrawals of the
Charge-Free Amount will be taken first from Purchase Payments, on a first-in,
first-out basis. Withdrawals in excess of the Charge-Free Amount will come first
from Purchase Payments, also on a first-in, first-out basis, and will be subject
to Withdrawal Charges, if applicable, even if Earnings are available on that
date. Once all Purchase Payments have been withdrawn, further
<PAGE> 18
withdrawals will be taken from any remaining Earnings. Earnings are not
subject to Withdrawal Charges.
We will waive all Withdrawal Charges upon receipt of due proof that the Owner or
Joint Owner is Terminally Ill, or has been confined to an Eligible Nursing Home
or Eligible Hospital continuously for at least three months from the Contract
Date. This waiver is not available if the Contract has been assigned. In
addition, any Credits subject to recapture under the vesting schedule will be
recaptured.
Withdrawal Charges will never be greater than that permitted by any applicable
law or regulation. Withdrawal Charges may be assessed upon settlement.
PROTECTED VALUE
The Protected Value is the amount which is:
applied to the guaranteed annuity purchase rates to produce the
Guaranteed Minimum Income Benefit ("GMIB"); or
applied to provide a Guaranteed Minimum Death Benefit ("GMDB")
for your beneficiaries.
If you elect the GMIB or GMDB features, you must elect, as
applicable, a Protected Value option for the GMIB ("GMIB Protected Value
option") and for the GMDB ("GMDB Protected Value option"). Certain Protected
Value options may not be available. The Protected Value is calculated daily and,
subject to the Protected Value option that you elect, if any, as shown on the
Contract Data pages, and the restrictions described below, can be equal to (1)
or (2) or to the greater of (1) and (2), where:
is the "Roll-Up." The Roll-Up is equal to the total
Invested Purchase Payments made increased daily at an effective annual
interest rate of 5% starting on the date that each Invested Purchase Payment is
made, until the cap is reached ("Roll-Up Cap"), and is proportionally reduced by
the effect of withdrawals. The Roll-Up Cap is equal to the sum of two times each
Invested Purchase Payment and is proportionally reduced by the effect of
withdrawals. Once the Roll-Up Cap is reached, the Roll-Up will be increased by
subsequent Invested Purchase Payments and proportionally reduced by the effect
of withdrawals; and
is the "Step-Up." Before the first Contract Anniversary, the
Step-Up is the initial Invested Purchase Payment increased by subsequent
Invested Purchase Payments and proportionally reduced by the effect of
withdrawals. The Step-Up on each Contract Anniversary will be reset to the
greater of the previous Step-Up and the Contract Value as of such Contract
Anniversary. Between Contract Anniversaries, the Step-Up will be increased by
Invested Purchase Payments and proportionally reduced by the effect of
withdrawals. If the calculation of the GMIB is to be done at a time when any
Credit applied to a Purchase Payment is still within the vesting period for that
Purchase Payment, as shown on the Contract Data pages, the Step-Up will first be
adjusted to recapture the applicable percentage of the Credit. If the
calculation of the GMDB is to be done at a time when any
<PAGE> 19
Credit applied to a Purchase Payment has been applied either within one year
prior to the date of death or after the date of death, the Step-Up will first be
adjusted to recapture the portion of that Credit that is not vested. If the
calculation of the GMDB is to be done at a time when any Credit applied to a
Purchase Payment has been applied one year or more before the date of death, the
Step-Up will not be adjusted to recapture that Credit.
After the Contract Anniversary coinciding with or next following the sole or
older Owner's 80th birthday, we stop increasing the Protected Value, except by
subsequent Invested Purchase Payments made on or after such Contract
Anniversary. This means that, as applicable, we do not increase the Roll-Up by
the effective annual interest rate, and we do not increase the Step-Up by any
appreciation in the Contract Value. But when you make a withdrawal on or after
such Contract Anniversary, we still reduce the Protected Value proportionally by
the effect of that withdrawal.
Where the words "proportionally reduced by the effect of withdrawals" are used,
the withdrawal reduces those values in the same proportion as it reduces the
Contract Value. We calculate the proportion by dividing the Contract Value after
the withdrawal (including Withdrawal Charges) by the Contract Value immediately
prior to the withdrawal. The resulting percentage is multiplied by the
applicable values (before the withdrawal) in determining the Protected Value.
GUARANTEED MINIMUM INCOME BENEFIT
The GMIB is a feature providing for the option to receive a guaranteed minimum
income benefit with payments for life with a period certain. The GMIB is only
available if you elect the GMDB. If available at that time, the GMIB feature
must be elected when you purchase your Contract. Once elected, this election is
not revocable until the end of the seventh Contract Year. Once the GMIB election
is revoked, it cannot be reinstated. The amount of the GMIB Charge is based on
the available GMIB Protected Value option that you elect. The calculation of the
GMIB payout amount is described below. You may exercise the GMIB payout option
after the Waiting Period. The Exercise Periods run for 30 days and begin on each
Contract Anniversary after the Waiting Period ends.
GMIB Payout Amount: The GMIB Payout Amount
is based on the age and sex of the Annuitant and Co-Annuitant, if applicable.
After first deducting charges for any applicable taxes attributable to premiums,
the GMIB payout amount will equal the greater of:
the GMIB Protected Value as of the date the exercise of the GMIB payout option
is effective applied to the guaranteed annuity purchase rates and based on the
period certain as described below; and
the Adjusted Contract Value as of the date the exercise of the GMIB payout
option is effective applied to the current annuity purchase rates then in use
and based on the period certain as described below.
Guaranteed Annuity Purchase Rates: The guaranteed annuity purchase
rates are attached to this Contract and are based on 1. and 2., below:
<PAGE> 20
the Guaranteed Interest Rate
The guaranteed interest rate used to calculate the guaranteed annuity purchase
rates is based on the Contract Anniversary coinciding with or immediately
preceding the date the exercise of the GMIB payout option is effective:
Contract Anniversary
Guaranteed Interest Rate
10-14
15 +
3.0%
3.5%
the Guaranteed Mortality Rate
The guaranteed mortality rate used to calculate the guaranteed annuity purchase
rates is based on the Annuity 2000 valuation mortality table, with two-year age
setbacks, ten-year generational setback and projected mortality improvements
(modified Scale G), shown in the tables on page 20.
GMIB Annuity Payout Options:
There are two GMIB annuity payout options available:
GMIB Option 1: Single Life Payout Option: We
will make monthly payments for as long as the Annuitant lives, with payments for
a period certain. No payments are due after the death of the Annuitant or, if
later, the end of the period certain.
GMIB Option 2: Joint Life Payout Option: In
the case of an Annuitant and Co-Annuitant, we will make monthly payments for the
joint lifetime of the Annuitant and Co-Annuitant, with payments for a period
certain. Upon the death of the Annuitant or Co-Annuitant, payments will continue
during the remaining lifetime of the survivor at 100% of the original monthly
payment if the survivor is the Annuitant and, upon expiration of the period
certain, will be reduced to 50% of the original monthly payment if the survivor
is the Co-Annuitant. No payments are due after the death of the survivor of the
Annuitant and Co-Annuitant or, if later, the end of the period certain.
<PAGE> 21
There is no right of withdrawal under either payout option. Other payout
frequencies may be available such as quarterly, semi-annually and annually.
The period certain for the GMIB is based on the Annuitant's age on the date the
exercise of the GMIB payout option is effective, as follows:
Age
Period Certain
80 or less
81
82
83
84
85-90
10
9
8
7
6
5
Exercise of the GMIB Payout Option: You may exercise the GMIB payout option by
contacting us at the Annuity Service Center. We will
<PAGE> 22
provide you with the necessary forms and inform you of any other information
that we require for you to exercise this option. The exercise of the GMIB payout
option will be effective when we receive all documentation and other information
that we need at the Annuity Service Center during the Exercise Period. The
Exercise Period for the GMIB payout option begins on any Contract Anniversary
Date after the end of the applicable Waiting Period, shown below. Such Exercise
Period ends 30 days after that Contract Anniversary Date, but no later than the
Contract Anniversary following the Annuitant's age 90.
Waiting Period: The Waiting Period is based on the age
of the sole or older of the Annuitant and Co-Annuitant at issue. The Waiting
Period is as follows:
Age
At Issue
Contract Anniversary on which
Waiting Period Ends
0-45
46
47
48
49
50-80
15
14
13
<PAGE> 23
12
11
10
GMIB Charge: To compensate us for
assuming the risks associated with the GMIB, we charge an annual GMIB Charge.
The fee is equal to a percentage of the average daily GMIB Protected Value and
is deducted: 1) on each Contract Anniversary; 2) upon choice of an option under
the Annuity and Settlement Options section of the contract; 3) upon revocation
of the GMIB election; 4) upon a full withdrawal; and 5) upon a partial
withdrawal if the Contract Value remaining after such partial withdrawal is not
enough to cover the then applicable GMIB Charge. The fee is pro-rated based on
the portion of the Contract Year for which the GMIB was in effect. The amount of
the fee is based on the GMIB Protected Value option that you elect. The GMIB
Charge based on your election is shown on the Contract Data pages.
The fee is withdrawn from each investment option in the same proportion that the
value of the Contract Value allocated to an investment option bears to the total
Contract Value. Upon a full withdrawal or if the Contract Value remaining after
a partial withdrawal is not enough to cover the then applicable GMIB Charge, the
GMIB Charge is deducted from the amount paid.
No GMIB Charge is charged after the Annuity Date, after revocation of the GMIB
option, or after exercise of the GMIB payout option. Because we do not impose a
new Waiting Period for each subsequent Purchase Payment, if you elect the GMIB,
we reserve the right to limit subsequent Purchase Payments if we discover that
by the timing of your Purchase Payments and withdrawals, your GMIB Protected
Value is increasing in ways that are not intended. In determining whether to
limit Purchase Payments, we will look at Purchase Payments which are
disproportionately larger than the initial Purchase Payment and other actions
that may artificially increase the GMIB Protected Value.
GUARANTEED MINIMUM DEATH BENEFIT
The GMDB is a feature providing for the option to receive an enhanced death
benefit upon the death of the sole or last surviving Owner during the
Accumulation Period. If available at that time, the GMDB feature must be elected
when you purchase your Contract. The amount of the GMDB is based on the GMDB
Protected Value option that you elect (see Protected Value section above). If
the calculation of the death benefit is to be done at a time when any Credit
applied to a Purchase Payment has been applied within one year of the date of
death, the Contract Value will first be adjusted to
<PAGE> 24
recapture the portion of that Credit that is not vested. If the calculation
of the death benefit is to be done at a time when any Credit applied to a
Purchase Payment has been applied one year or more from the date of death, the
Contract Value will not be adjusted to recapture that Credit.
If you have elected the GMDB feature, and if a sole or last surviving Owner dies
before the Annuity Date, the death benefit payable to your beneficiary will be
as described below:
Upon receipt of due proof of death and any other documentation we need, the
beneficiary is entitled to receive a death benefit equal to the greater of:
the Contract Value, adjusted as described above, as of the date
we receive due proof of death and any other documentation we need; and
the GMDB Protected Value as of the date we receive due proof of death and any
other documentation we need.
If you do not elect the GMDB feature, upon receipt of due proof of death and any
other documentation we need, the beneficiary is entitled to receive a base death
benefit equal to the greater of:
the Contract Value, adjusted as described above, as of the date
we receive due proof of death and any other documentation we need; and
the initial Invested Purchase Payment increased by subsequent Invested Purchase
Payments and reduced by the effect of withdrawals.
If the ownership of the Contract changes as a result of an assignment, the value
of the death benefit will be reset to the Contract Value as of the date of the
assignment. Such value will be treated as a Purchase Payment made on that date
for purposes of computing the death benefit.
The Beneficiary may, within 60 days of providing proof of death, elect to take
the death benefit under one of the death benefit payout options listed below,
provided that any payout option shall not include a period certain that exceeds
the life expectancy of the Beneficiary. The Beneficiary will be the sole
measuring life in determining the amount of any such payout option. If no payout
option is selected within the 60 days, the death benefit will be payable as a
lump sum.
If the primary Beneficiary of the Owner is the spouse of the Owner at the time
of the Owner's death, the Contract will continue and the spouse will become the
Owner. If the primary Beneficiary of the Joint Owner is the spouse of the Joint
Owner at the time of the Joint Owner's death, the Contract will continue. In
either case, the spouse may, within 60 calendar days of providing proof of
death, elect to take the Adjusted Contract Value under any of the payout options
available under this Contract. If the Contract continues, and the new Annuitant
is older than the prior
<PAGE> 25
Annuitant, the Annuity Date will be based on the age of
the new Annuitant.
If the Owner and Joint Owner are not spouses at the time of the Owner or Joint
Owner's death, the Contract will not continue, the amount payable will equal the
Adjusted Contract Value, and the Beneficiary will be required to choose one of
the death benefit payout options described below. In that event, the payout
described in Choice 2 and the beginning of the distribution described in Choice
3 will be based on the date of death of the first to die of the Owner or Joint
Owner.
The death benefit payout options are:
Choice 1 lump sum payment of
the death benefit; or
Choice 2 the payment of the
entire death benefit within 5 years of the date of death of the last to survive
of the
Owner or Joint Owner; or
Choice 3 payment of the death
benefit under an Annuity or Settlement Option over the lifetime of the
Beneficiary or over a period not extending beyond the life expectancy of the
Beneficiary with distribution beginning within one year of the date of death of
the last to survive of the Owner or Joint Owner.
If the Owner and Joint Owner are spouses at the death of the first to die of the
Owner and Joint Owner, any portion of the death benefit not applied under Choice
3 within one year of the date of death of the survivor must be distributed
within 5 years of the survivor's date of death. If the Owner and Joint Owner are
not spouses at the death of the first to die of the Owner and Joint Owner, any
portion of the death benefit, which is equal to the Adjusted Contract Value, not
applied under Choice 3 within one year of the date of death of the first to die
must be distributed within 5 years of the date of death of the first to die.
Once a death benefit becomes payable, the Payee's interest in any Annuity
Benefit under the Contract will cease.
If a lump sum payment is requested, the amount will be paid within seven (7)
days of receipt of proof of death and the election, unless the Suspension or
Deferral of Payments Provision is in effect.
DEATH OF ANNUITANT DURING THE ACCUMULATION PERIOD: If
the Annuitant dies before the Annuity Date, the Co-Annuitant, if applicable,
becomes the Annuitant. If there is no surviving Co-Annuitant, and the Annuitant
was not the
<PAGE> 26
Owner, the Owner becomes the Annuitant. You have the right to name a
new Annuitant within 60 days. If the Owner is a non-natural person, the death of
the Annuitant will be treated as the death of the Owner, a new Annuitant may not
be designated, and the Annuitant will be deemed to be the Owner for purposes of
determining the death benefit.
DEATH OF ANNUITANT DURING THE ANNUITY PERIOD: If the
Annuitant dies on or after the Annuity Date, the Settlement Option then in
effect will govern whether or not we will continue to make any payments. The
death of a non-Annuitant Owner or Joint Owner has no effect on the payout during
the Annuity Period.
PAYMENT OF DEATH BENEFIT: We will require due
proof of death and any other documentation we request in Good Order before any
death benefit is paid. All death benefits will be paid in accordance with
applicable law or regulations governing death benefit payments.
SPECIAL TAX CONSIDERATIONS: There are special
tax rules that apply to IRA and other qualified contracts during both the
Accumulation Period and Annuity Period governing distributions upon the death of
the Owner. These rules are contained in provisions in the attached endorsements
and supersede any other distribution rules contained in the Contract.
The preceding provisions regarding the death of the Owner are intended to
satisfy the distribution at death requirements of section 72(s) of the Internal
Revenue Code of 1986, as amended. We reserve the right to amend this Contract by
subsequent endorsement as necessary to comply with applicable tax requirements,
if any, which are subject to change from time to time. Such additional
endorsements, if necessary to comply with amended tax requirements, will be
mailed to you and become effective within 30 days of mailing, unless you notify
us in writing, within that time frame, that you reject the endorsement.
ANNUITY AND SETTLEMENT OPTIONS
GENERAL: On the Annuity Date, the Adjusted
Contract Value will be applied under the Annuity or Settlement Option you have
selected. If the payment under any option selected would be less than $20 per
month, we reserve the right to pay out the Adjusted Contract Value in a lump
sum. We guarantee that the dollar amount of each payment, once determined, will
not be affected by variations in mortality or expense experience.
SELECTION OF AN ANNUITY OR SETTLEMENT OPTION: You
may select an Annuity or Settlement Option by notifying us of the selected
option in Good Order. If no Annuity or Settlement Option is selected, or if the
chosen Option is not received in Good Order, Option 2, Life Income Annuity
Option, will automatically be applied. You may, at any time prior to the Annuity
Date, by a request in Good Order 30 days in advance, select and/or change the
Annuity or Settlement Option.
ANNUITY AND SETTLEMENT OPTIONS: This Contract
provides for payments under one of the Annuity or Settlement Options described
below. Any other Annuity or Settlement Option acceptable to us may be selected.
<PAGE> 27
OPTION 1 - FIXED PERIOD ANNUITY OPTION. We will
make equal payments for a period you choose up to 25 years. At your choice, we
will make such payments annually, semi-annually, quarterly or monthly. Table 1
shows the minimum amounts we will pay.
OPTION 2 - LIFE INCOME ANNUITY OPTION. We will
make payments for as long as the Annuitant lives, with payments certain for 120
months. At your choice, we will make such payments annually, semi-annually,
quarterly or monthly. Table 2 shows the minimum amounts we will pay.
OPTION 3 - INTEREST PAYMENT SETTLEMENT OPTION. We will
credit interest on the Adjusted Contract Value at the rate of at least 3% until
you request payment of all or part of the Adjusted Contract Value. At your
choice, we will pay interest on the Adjusted Contract Value not yet withdrawn
annually, semi-annually, quarterly or monthly. You may request full or partial
payment of the Adjusted Contract Value provided, however, that if a partial
payment is requested, the amount of any Adjusted Contract Value remaining after
such requested amount is paid must be at least $1,000. This option is not
available for qualified contracts.
OTHER ANNUITY OR SETTLEMENT OPTIONS: We may offer
or consent to other settlement options, including life income annuity options
with payments certain for a period of other than 120 months. Contact the
representative who sold you the Contract or call the toll-free number listed on
your quarterly statement for information.
ANNUITY: Unless you designate another Payee, you will
be the Payee of the Annuity Payments. The Adjusted Contract Value will be
applied to the applicable Annuity Table contained in this Contract based upon
the Annuity Option you have selected. The amount of the first payment for each
$1,000 of Adjusted Contract Value is shown in the Annuity Tables. If when
Annuity Payments begin we are using tables of annuity rates for these Contracts
which result in larger Annuity Payments, we will use those tables instead.
Annuity Payments will depend on the age and sex of the Annuitant, where
permitted.
WITHDRAWAL CHARGES: If you choose Option 1 for a
period of fewer than 5 years or Option 3, the Adjusted Contract Value will be
subject to a Withdrawal Charge which will be applied in the same way as if you
had made a full withdrawal on the Annuity Date. Any amount used to provide
income under Option 1 for a period of 5 years or more or under Option 2 will be
applied without charge. If you choose any other method of payment not described
in this Contract, we will tell you if it is subject to a Withdrawal Charge.
BENEFICIARY
BENEFICIARY: The Beneficiary designation in effect
on the Contract Date will remain in effect until changed. The Beneficiary is
entitled to receive the benefits to be paid at the death of the last to die of
the Owner or Joint Owner (or the first to die of the Owner or Joint Owner if the
Owner and Joint Owner are not spouses at the time of the Owner's or Joint
Owner's death) during the Accumulation Period. The Owner must be the primary
Beneficiary of the Joint Owner, and the Joint Owner must be the primary
Beneficiary of the
<PAGE> 28
Owner. Other than primary Beneficiaries, Beneficiaries must
be the same for both the Owner and Joint Owner.
When a Beneficiary is designated, any relationship shown is to the Owner unless
otherwise specified.
To show priority among Beneficiaries, we will label the classes, so that the
class with first priority is called the primary class, the class with next
priority is called the secondary class, and so on. The following statements
apply to Beneficiaries unless the Contract Data pages, Contract endorsement or
any change request that we have processed specifies otherwise:
One who survives the last to die of the Owner and Joint Owner will have the
right to be paid only if no one in a prior class survives the last to die of the
Owner and Joint Owner.
One who has the right to be paid will be the only one paid if no one else in the
same class survives the last to die of the Owner and Joint Owner.
Two or more in the same class who have the right to be paid will be paid in
equal shares.
If no one survives the sole Owner, we will pay in one sum to the Owner's estate.
When there is insufficient evidence to determine the order of death then, unless
state law prohibits, we will deem the Owner to be the last survivor and make
payment to the Owner's Beneficiary.
Before we make a payment, we have the right to decide what proof we need of the
identity, age or any other facts about any persons designated as Beneficiaries.
If Beneficiaries are not designated by name and we make payment(s) based on that
proof, we will not have to make the payment(s) again.
CHANGE OF BENEFICIARY: To initiate a change
of Beneficiary, call the toll-free number listed on your statement or contact
the representative who sold you the Contract. We may also ask you to send us the
Contract. The change will take effect only when we process the request. Then,
any previous Beneficiary's interest will end as of the date we receive the
request in Good Order, even if the Owner or Joint Owner is not living when we
process the request. We will not be liable for any payment made or action taken
before we record the change.
SUSPENSION OR DEFERRAL OF PAYMENTS OR TRANSFERS
FROM THE SEPARATE ACCOUNT
We reserve the right to suspend or postpone payments from the Separate Account
for a withdrawal or transfer for any period when:
the New York Stock Exchange is closed (other than customary
weekend and holiday closings);
<PAGE> 29
trading on the New York Stock Exchange is restricted;
an emergency exists as a result of which disposal of shares of the Investment
Options held in the Separate Account is not reasonably practicable or it is not
reasonably practicable to determine the value of such shares; or
during any other period when the Securities and Exchange
Commission, by order, so permits for the protection of Owners;
provided that applicable rules and regulations of the Securities and Exchange
Commission will govern as to whether the conditions described in (2) and (3)
exist.
GENERAL PROVISIONS
THE CONTRACT: The entire Contract consists of
this Contract, and any attached application, endorsements or riders. This
Contract may be changed or altered only by our President or Secretary. Any
change, modification or waiver must be made in writing. This Contract may not be
modified by us without your consent except as may be required by applicable law,
including changes necessary to comply with IRS requirements for annuity
contracts, or as set forth in this Contract.
ASSIGNMENT OF A CONTRACT: A request in Good
Order specifying the terms of an assignment of a Contract must be provided to
the Annuity Service Center. We are under no obligation to verify the
assignment's validity or sufficiency. We will not be liable for any payment made
or action taken before we record the assignment. If any Owner is living on the
Annuity Date and an assignment is in effect on that date, we have the right to
pay the Contract Surrender Value in one lump sum to the assignee where notice in
Good Order is received. Partial assignments, collateral or otherwise, are not
allowed without our approval. We reserve the right to restrict or refuse any
assignment.
An assignment which results in a change of ownership will affect the value of
the death benefit. Please see the section of the Contract entitled, "Guaranteed
Minimum Death Benefit," for more information.
We will not be responsible for the validity or tax consequences of any
assignment. Any assignment made after the death benefit has become payable will
be valid only with our consent.
If the Contract is assigned, your rights may only be exercised with the consent
of the assignee of record.
NON-PARTICIPATING IN SURPLUS: This Contract
does not share in any distribution of our profits or surplus.
INCONTESTABILITY: We will not contest this
Contract. We consider all statements made in the application for this
Contract to be representations, not warranties.
<PAGE> 30
MISSTATEMENT OF AGE OR SEX: We may require
proof of age of the Annuitant before making any life contingent Annuity Payment
provided for by this Contract. If the age or sex of the Annuitant has been
misstated, the amount payable will be the amount that the Contract Value would
have provided at the true age or sex.
Once Annuity Payments have begun, any underpayments, with interest at 5%, will
be made up in one sum with the next Annuity Payment, and overpayments, with
interest at 5%, will be deducted from the future Annuity Payments until the
total is repaid.
CONTRACT SETTLEMENT: This Contract
must be returned to us upon any settlement.
REPORTS: We will send you a report four
times each calendar year until the Annuity Date showing your Contract Value and
other relevant information about your Contract. We will also furnish an annual
report of the Separate Account. These reports will be sent to your last known
address.
TAXES: Any taxes, including any Premium
Taxes and any other type of tax (or component thereof) measured by or based upon
any portion of the Purchase Payment we receive, paid to any governmental entity
will be charged against the Contract Value, unless a deduction was made for this
tax in calculating the Invested Purchase Payment amount. We will, in our sole
discretion, determine when taxes have resulted from: the investment experience
of the Separate Account; receipt by us of the Purchase Payment(s); or
commencement of Annuity Payments. We may, at our discretion, pay taxes when due
and deduct that amount from the Contract Value at a later date. Payment at an
earlier date does not waive any right we may have to deduct amounts at a later
date. We reserve the right to establish a provision for federal income taxes if
we determine, in our sole discretion, that we will incur a tax as a result of
the operation of the Separate Account. We will deduct for any income taxes
incurred by it as a result of the operation of the Separate Account whether or
not there was a provision for taxes and whether or not it was sufficient. We
will deduct any withholding taxes required by applicable law.
EVIDENCE OF SURVIVAL: Before we make a
payment, we have the right to require proof of continued life and any other
documentation we need to make a payment. We can require this proof for any
person whose life or death determines whether or to whom we must make the
payment.
PROTECTION OF PROCEEDS: No Beneficiary
may commute, encumber, alienate or assign any payments under this Contract
before they are due. To the extent permitted by law, no payments will be subject
to the debts, contracts or engagements of any Beneficiary or to any judicial
process to levy upon or attach the same for payment thereof.
VALUES AND BENEFITS
<PAGE> 31
Any cash values, paid up annuities and death benefits that may be available
under this Contract are not less than the minimum benefits required by the law
of any state in which this Contract is delivered.
ANNUITY SETTLEMENT TABLES
Tables 1 and 2 below are applied to the Adjusted Contract Value to compute the
minimum amount of the annuity payment. Table 1 is used to compute the minimum
annuity payment under Option 1 (Fixed Period Annuity Option). Table 2 is used to
compute the minimum annuity payment under Option 2 (Life Income Annuity Option).
If the GMIB was elected, Table 2 or Table 3, as applicable, is applied to the
GMIB Protected Value to compute the GMIB payout amount. Table 2 is used to
compute the GMIB payout amount when annuitization occurs on or immediately after
Contract Anniversaries 10 through 14, with 120 payments certain. Table 3 is used
to compute the GMIB payout amount when annuitization occurs on or immediately
after Contract Anniversaries 15 or later, with 120 payments certain. For
annuitants of attained age 81 or more, the certain period is less than 10 years.
The rates in Tables 1, 2 and 3 are applied per $1000 of Adjusted Contract Value
or GMIB Protected Value, as applicable.
The annuity payments in Tables 2 and 3 are based on the Annuitant's Adjusted Age
and sex. The Adjusted Age is the Annuitant's age last birthday prior to the date
on which the first Annuity payment is due, adjusted as shown in the "Translation
of Adjusted Age" Table.
When we computed the amounts shown in Tables 2 and 3, we adjusted the Annuity
2000 Mortality Table to an age last birthday basis, less two years, with
projected mortality improvements (modified Scale G). We used an interest rate of
3% per year in preparing Table 2; we used an interest rate of 3 1/2% in
preparing Table 3.
We will calculate annuities for other certain periods using the same interest
and mortality assumptions as in Tables 2 and 3.
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY
CONTRACT. NON-PARTICIPATING. ANNUITY PAYMENTS AND VALUES PROVIDED BY THIS
CONTRACT, WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE SEPARATE
ACCOUNT, ARE
VARIABLE AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT.
<PAGE> 1
Pruco Life Insurance Company
Phoenix, Arizona 85014
A Stock Company Subsidiary of
The Prudential Insurance Company of America
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE
ANNUITY CONTRACT
Nonparticipating
ANNUITY PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT
GUARANTEED AS TO DOLLAR AMOUNT.
This is an annuity contract. Subject to the provisions of the Contract, and in
consideration of any Purchase Payments you make and we accept, we will make
Annuity Payments starting on the Annuity Date shown on the Contract Data pages.
Please read the Contract carefully; it is a legal contract between you and Pruco
Life Insurance Company. Expense charges applicable to the Contract are shown on
the Contract Data pages. If you have a question about the Contract, or a claim,
see your representative or contact the Annuity Service Center.
Right to Cancel Contract
This Contract may be returned within [10] days after you receive it. It can be
mailed or delivered to either us, at the Annuity Service Center, or the
representative who sold it to you. Return of this Contract by mail is effective
on being postmarked, properly addressed and postage prepaid. The returned
Contract will be canceled upon our receipt, and we will return your money in
accordance with applicable law. Under certain circumstances, we have the right
to allocate Purchase Payment(s) to the Money Market Subaccount until the
expiration of the Right to Cancel period. If we so allocate Purchase Payment(s),
we will refund the Purchase Payment(s), less any withdrawals, in the event of
cancellation under the terms of this paragraph.
READ YOUR CONTRACT CAREFULLY
TABLE OF CONTENTS
CONTRACT DATA PAGES
DEFINITIONS
PURCHASE PAYMENTS
CONTRACT VALUE
<PAGE> 2
VARIABLE SEPARATE ACCOUNT
DCA FIXED RATE INVESTMENT OPTION
FIXED RATE INVESTMENT OPTION
CONTRACT MAINTENANCE CHARGE
TRANSFERS
WITHDRAWALS
PROTECTED VALUE
GUARANTEED MINIMUM INCOME BENEFIT
GUARANTEED MINIMUM DEATH BENEFIT
ANNUITY AND SETTLEMENT OPTIONS
BENEFICIARY
SUSPENSION OR DEFERRAL OF PAYMENTS OR TRANSFERS FROM THE
SEPARATE ACCOUNT
GENERAL PROVISIONS
VALUES AND BENEFITS
ANNUITY SETTLEMENT TABLES
PURCHASE PAYMENTS:
Initial Purchase Payment:
Minimum Subsequent Purchase Payment: $1,000. For IRA contracts, the
Minimum Subsequent Purchase Payment is $1,000. The Minimum Subsequent Purchase
Payment for automatic purchase plans, if available, is $100.
Annual Purchase Payment Limits: The total of all Purchase Payments made into
this Contract in the first Contract Year may not exceed [$20,000,000]. The total
of all Purchase Payments made into this Contract in any Contract Year after the
first Contract Year may not exceed [$2,000,000]. Purchase Payments of greater
value may be allowed with our prior approval.
Aggregate Purchase Payment Limit: The total of all Purchase Payments made into
this Contract may not exceed [$20,000,000]. Purchase Payments of greater value
may be allowed with our prior approval.
BENEFICIARY:
<PAGE> 3
As designated by Owner at Contract Date unless changed in accordance with the
Contract provisions.
CONTRACT MAINTENANCE CHARGE:
If your Contract Value is less than $50,000, we will charge a Contract
Maintenance Charge of the lesser of $30 or 2% of the Contract Value. This charge
is deducted on the Contract Anniversary and when a surrender of the Contract
occurs, if the Contract Value at the time is then less than $50,000. The
Contract Maintenance Charge will be deducted on a pro-rata basis from all
Allocation Options to which your Contract Value is allocated. During the Annuity
Period, we reserve the right to assess an annual Contract Maintenance Charge of
$30. The decision to assess this charge may depend on the Annuity or Settlement
Option selected. We reserve the right to increase the Contract Maintenance
Charge, but it will not exceed $60 per Contract Year, and to raise the Contract
Value amount over which we will waive the Contract Maintenance Charge.
INSURANCE CHARGE:
This charge depends on whether you have elected the Guaranteed Minimum
Death Benefit ("GMDB") feature and on the GMDB Protected Value option that you
have elected. This charge is deducted daily from the assets in each of the
Subaccounts. If you do not elect the GMDB feature, you do not elect a GMDB
Protected Value option, and your death benefit is equal to the base death
benefit as described in the GMDB section of the Contract.
[ ] You have not elected the GMDB
feature. Therefore, the daily rate is [0.00380909%], which is equivalent to
an annual rate of [1.40%].
[ ] You have elected the GMDB feature
and the GMDB Protected Value option of the Roll-Up. Therefore, the daily rate is
[0.00434896%], which is equivalent to an annual rate of [1.60%].
[ ] You have elected the GMDB feature
and the GMDB Protected Value option of the Step-Up. Therefore, the daily rate is
[0.00434896%], which is equivalent to an annual rate of [1.60%].
[ ] You have elected the GMDB feature
and the GMDB Protected Value option of the greater of the Roll-Up and Step-Up.
Therefore, the daily rate is [0.00461849%], which is equivalent to an annual
rate of [1.70%].
GUARANTEED MINIMUM INCOME BENEFIT ("GMIB") CHARGE:
If you elect the GMIB, the charge depends on
the GMIB Protected Value option that you have elected. The charge is calculated
daily and deducted on each Contract Anniversary and pro-rata upon a full and
certain partial withdrawals. The charge is deducted pro-rata from all Allocation
Options to which your Contract Value is allocated.
<PAGE> 4
[ ] You have elected the GMIB and the GMIB
Protected Value option of the Roll-Up. Therefore, the daily rate is
[0.00068408%], which is equivalent to an annual rate of [0.25%].
[[ ] You have elected the GMIB and the GMIB Protected
Value option of the Step-Up. Therefore, the daily rate is [0.00068408%], which
is equivalent to an annual rate of [0.25%].
[ ] You have elected the GMIB and the GMIB Protected
Value option of the greater of the Roll-Up and Step-Up. Therefore, the daily
rate is [0.00095723%], which is equivalent to an annual rate of [0.35%].]
[ ] You have not elected the GMIB, and, therefore, there
is no charge.
ALLOCATION OPTIONS:
VARIABLE INVESTMENT OPTIONS:
The following variable investment options are available through allocation to
subaccounts of the Pruco Life Flexible Premium Variable Annuity Account. We
reserve the right to limit the availability of the below options, if necessary,
in order to comply with federal, state or local law.
[The Prudential Series Fund
Davis Venture Value
Fidelity Large Cap Value
Prudential Large Cap Value Index
Wellington Growth and Income
MFS Capital Opportunities
Prudential Stock Index
Alliance Premier Growth
Jennison Growth
Marsico Large Cap Growth
Prudential Large Cap Growth Index
Fidelity Small/Mid Cap Value
Prudential Small Cap Value Index
Prudential Emerging Growth
Wellington Capital Appreciation
MFS Mid Cap Growth
<PAGE> 5
MFS New Discovery
Prudential Small Cap Growth Index
PIMCO Total Return
PIMCO High Yield
Strategic Partners Focused Growth Fund
Prudential Money Market
Alliance Technology
Conservative Lifestyle Portfolio
Moderate Lifestyle Portfolio
Moderately Aggressive Lifestyle Portfolio
Aggressive Lifestyle Portfolio
Jennison International
Prudential Global
Deutsche International Equity
Prudential International Index]
INTEREST RATE INVESTMENT OPTIONS:
The following interest rate investment options are currently available.
We may add other options in the future.
[DCA FIXED RATE INVESTMENT OPTION
FIXED RATE INVESTMENT OPTION]
ALLOCATION GUIDELINES:
Currently, you may select any Allocation Option which is available at the time
the Purchase Payment or transfer is made, with the exception of the DCA Fixed
Rate Investment Option for which there may be certain limitations. An amount of
at least $5,000 must be allocated to the DCA Fixed Rate Investment Option, and
at least 1% of the Invested Purchase Payment must be allocated to any other
Allocation Option. Allocations made pursuant to automatic rebalancing or dollar
cost-averaging (not part of a DCA Program) are not subject to these limitations.
We reserve the right to limit the availability of the above Allocation Options,
if necessary, in order to comply with federal, state or local law.
TRANSFERS:
Number of Transfers Permitted: Currently, there are no limits on the number
<PAGE> 6
of transfers that can be made among Subaccounts. We reserve the right to change
this, but the Owner will always be allowed at least 12 transfers among
Subaccounts in a Contract Year.
Transfer Charge: The Transfer Charge for each transfer after the first 12 in a
Contract Year is $25. The charge is taken pro-rata from the Allocation Options
from which the transfer is made. Transfers made due to automatic rebalancing or
dollar cost-averaging (whether or not part of a DCA Program) will not be counted
for purposes of the Transfer Charge. We reserve the right to increase this
charge, but it will not exceed $30.
Minimum Amount to be Transferred: Subject to the restrictions contained in the
Contract on transfers, the minimum transfer amount is $250 or your entire
interest in any Allocation Option, if less. This requirement is waived if the
transfer is pursuant to automatic rebalancing. The minimum periodic transfer
amount for amounts transferred pursuant to the dollar cost averaging feature or
from the DCA Fixed Rate Investment Option under a DCA Program is $100.
WITHDRAWALS:
Withdrawal Charge: The Withdrawal Charge is a percentage of the amount withdrawn
that is subject to a charge, and depends on the number of Contract Anniversaries
that have elapsed since a Purchase Payment was made.
Number of Contract
Anniversaries Since Date
of Each Purchase
Payment
Withdrawal
Charge
[0
1
2
<PAGE> 7
3
4
5
6
7
8
9
8%
8%
7%
6%
5%
4%
3%
2%
1%
0%]
<PAGE> 8
Charge-Free Amount: A certain amount (the Charge-Free Amount) may be withdrawn
without incurring a Withdrawal Charge. The Charge-Free Amount available in any
current Contract Year is calculated as of the Contract Anniversary date and is
equal to 10% of the sum of all Purchase Payments received in excess of all
Purchase Payments withdrawn and is applied on a first-in, first-out basis.
Minimum Amount Which May Be Withdrawn: The minimum amount which may be withdrawn
is [$250]. The minimum amount which may be withdrawn under a systematic
withdrawal plan is [$100].
Minimum Contract Value Which Must Remain in the Contract After a Withdrawal: The
minimum Contract Value which must remain in the Contract in order to keep the
Contract inforce after a withdrawal is $2,000.
DCA FIXED RATE INVESTMENT OPTION:
Minimum Guaranteed Interest Rate: 3%
Initial Interest Segment Interest Rate: [7%]
FIXED RATE INVESTMENT OPTION:
Minimum Interest Crediting Rate: 3%
Initial Interest Segment Interest Rate: [5%]
ENDORSEMENTS:
[Individual Retirement Annuity Endorsement]
ANNUITY SERVICE CENTER:
[Annuity Service Center
P.O. Box 14215
New Brunswick, NJ 08906-4215]
DEFINITIONS
ACCUMULATION PERIOD: The period from, and
including, the Contract Date to, but excluding, the Annuity Date.
ADJUSTED CONTRACT VALUE: The Contract Value
as of the Annuity Date less any applicable Premium Tax Charge. The applicable
<PAGE> 9
Annuity Table is applied to this amount to determine the initial Annuity
Payment.
ALLOCATION OPTIONS: Those investment options
available under the Contract as of any given time to which Contract Value may be
allocated. Allocation Options as of the Contract Date are shown on the Contract
Data pages.
ANNUITANT: The person named on the first
page upon whose continuation of life any Annuity Payment involving life
contingencies depends. If the Annuitant dies before the Annuity Date, the
Co-Annuitant, if applicable, becomes the Annuitant, if the requirements for
changing Annuity Date are met (see definition of Annuity Date). If there is no
surviving or eligible Co-Annuitant, and the Annuitant was not the Owner, the
Owner becomes the Annuitant. You then have 60 days from the date we receive due
proof of death of the Annuitant or Co-Annuitant to name a new Annuitant. If no
new Annuitant is named during that 60 day period, the Owner will remain the
Annuitant. You may not change an Annuitant or Co-Annuitant and may add or remove
an Annuitant or Co-Annuitant only with our prior approval.
ANNUITY DATE: The date the first Annuity or
Settlement Payment to the Payee is due. The Annuity Date is shown on the
original Contract Data pages. You must have our permission to change the Annuity
Date. If there is a new Annuitant due to the death of the Annuitant, and the new
Annuitant is older than the prior Annuitant, the Annuity Date will be based on
the age of the new Annuitant; however any such changed Annuity Date must be at
least three years after the Contract Date, must be earlier than the date shown
on the Contract Data pages, cannot be later than the Contract Anniversary next
following the new Annuitant's 90th birthday and must be consistent with
applicable law at the time.
ANNUITY OR SETTLEMENT PAYMENTS: The series
of payments made to you or any named payee after the Annuity Date as described
under the Annuity or Settlement Option selected.
ANNUITY PERIOD: The period of time, beginning
on the Annuity Date, during which Annuity or Settlement Payments are made.
ANNUITY SERVICE CENTER: The office indicated
on the Contract Data pages to which notices, requests and Purchase Payments must
be sent. All sums payable to us under the Contract must be sent to the Annuity
Service Center. The Annuity Service Center address may be changed at any time.
You will be notified in advance and in writing of any change in address.
BENEFICIARY: The person(s) or entity(ies) who
has the right to receive the death benefit when the last survivor of the Owner
or Joint Owner dies (or the first to die of the Owner or Joint Owner if the
Owner and Joint Owner are not spouses at the time of the Owner's or Joint
Owner's death). The Owner must be the primary Beneficiary of the Joint Owner,
and the Joint Owner must be the primary Beneficiary of the Owner.
BUSINESS DAY: Any day the New York Stock
Exchange and the Company are open for business.
<PAGE> 10
CHARGE-FREE AMOUNT: The Charge-Free Amount
is a portion of the Contract Value that may be withdrawn without incurring
a Withdrawal Charge.
CO-ANNUITANT: The person shown on the Contract
Data pages who becomes the Annuitant upon the death of the Annuitant before the
Annuity Date. No Co-Annuitant may be designated if the Owner is a non-natural
person.
COMPANY: Pruco Life Insurance Company, an Arizona
corporation.
CONTRACT ANNIVERSARY: The same day and month
as the Contract Date in each later year.
CONTRACT DATE: The date shown on the Contract
Data pages on which the first Contract Year begins.
CONTRACT SURRENDER VALUE: The Contract Value less
any applicable Premium Tax Charge, Withdrawal Charge, GMIB Charge or Contract
Maintenance Charge.
CONTRACT VALUE: The dollar value as of any
Business Day prior to the Annuity Date of all amounts accumulated under this
Contract.
CONTRACT YEAR: A year which starts on the Contract
Date or on a Contract Anniversary.
DCA Fixed Rate Investment Option: A portion of the
General Account into which you may allocate Invested Purchase Payments. It does
not share in the investment experience of any Subaccount of the Variable
Separate Account.
DCA Interest Segment: A DCA Interest Segment is a
portion of the DCA Option that is created whenever you allocate all or part of
an Invested Purchase Payment to the DCA Option.
DCA Program: A DCA Program permits you to allocate
all or part of an Invested Purchase Payment to the DCA Option and automatically
transfer amounts on a periodic basis from the DCA Option to selected Variable
Investment Options for a given period of time.
EARNINGS: The excess of the Contract Value over
the sum of all Purchase Payments made and not yet withdrawn.
ELIGIBLE HOSPITAL: An institution that meets either
of the following requirements:
It is accredited as a hospital under the Hospital Accreditation Program of the
Joint Commission on Accreditation of Healthcare Organizations; or
It is legally operated, has 24-hour a day supervision by a staff
of doctors, has 24-hour a day nursing service by registered graduate nurses, and
either:
<PAGE> 11
It mainly provides general inpatient medical care and treatment of sick and
injured persons by the use of medical, diagnostic and major surgical facilities.
All such facilities are located in it or are under its control; or
It mainly provides specialized inpatient medical care and treatment of sick or
injured persons by the use of medical and diagnostic facilities (including x-ray
and laboratory). All such facilities are located in it, are under its control,
or are available to it under a written agreement with a hospital (as defined
above) or with a specialized provider of these facilities.
An eligible hospital is not an institution, or part of one, that: (a) furnishes
mainly homelike or custodial care, or training in the routines of daily living;
or (b) is mainly a school.
ELIGIBLE NURSING HOME: An institution or special
nursing unit of a hospital that meets at least one of the following
requirements:
It is Medicare approved as a provider of skilled nursing care services;
It is licensed as a skilled nursing home or as an intermediate care
facility by the state it is located in; or
It meets all the following requirements:
It is licensed as a nursing home by the state it is located in;
Its main function is to provide skilled, intermediate, or custodial
nursing care;
It is engaged in providing continuous room and board accommodations
to 3 or more persons;
It is under the supervision of a registered nurse (RN) or licensed
practical nurse (LPN);
It maintains a daily medical record of each patient; and
It maintains control and records for all medications dispensed.
GOOD ORDER: An instruction received at the Annuity
Service Center, utilizing such forms, signatures and datings as we require, that
is sufficiently complete and clear that we do not need to exercise any
discretion to follow such instructions. We will notify you if an instruction is
not in Good Order.
INTEREST RATE INVESTMENT OPTION(S): Those interest rate option(s)
available under the Contract as of any given time. Interest Rate Investment
Option(s) as of the Contract Date are shown on the Contract Data pages.
INVESTED PURCHASE PAYMENTS: The balance of each
Purchase Payment after we make any applicable deduction for: (1) Premium Tax
Charge; and (2) charge for any other type of tax (or component thereof) measured
by or based upon the amount of the Purchase Payment we receive.
<PAGE> 12
JOINT OWNER: The spouse of the Owner, if named
on the Contract Data pages as the Joint Owner, who shares ownership rights with
the Owner as defined under this Contract. You may add, change or remove a Joint
Owner, subject to our underwriting rules. The Contract may never have more than
one Joint Owner. No Joint Owner is permitted for IRAs or other qualified
contracts.
OWNER: The person or entity named on the Contract
Data pages who has ownership rights as defined under the Contract provided that,
if a Joint Owner is named, the Owner shares ownership rights with the Joint
Owner. You may change the Owner subject to our underwriting rules. Any change of
an Owner will be effective when we process the request.
PAYEE: The person who has a right to receive Annuity
or Settlement Payments under the Annuity and Settlement Options provision of
this Contract. The Payee can be designated as revocable or irrevocable at your
discretion. If you do not designate a Payee at least 5 Business Days before the
Annuity Date, the Owner will become the Payee.
PREMIUM TAX CHARGE: A charge which may be
deducted from Purchase Payments or Contract Value for premium taxes owed by us
to any governmental entity.
PURCHASE PAYMENT: A payment you make to
this Contract.
SUBACCOUNT: Variable Separate Account assets
are divided into Subaccounts. Assets of each Subaccount will be invested in
shares of a Variable Investment Option.
TERMINALLY ILL: We consider someone terminally
ill who has a life expectancy of six months or less. Proof of Terminal Illness
must include a certification by a licensed physician.
VARIABLE INVESTMENT OPTION: Those investment
options available under the Contract through the Subaccounts as of any given
time. Variable Investment Options as of the Contract Date are shown on the
Contract Data pages.
VARIABLE SEPARATE ACCOUNT: A segregated asset
account maintained by us to support this and certain other contracts. The
segregated asset account(s) available as of the Contract Date is shown on the
Contract Data pages.
WE, OUR AND US: Pruco Life Insurance Company.
WITHDRAWAL CHARGES: A charge assessed on partial
or full withdrawals or upon settlement (depending on the payout option chosen)
during the Withdrawal Charge Period. The Withdrawal Charge equals a percentage,
shown on the Contract Data pages, of the amount subject to the charge.
WITHDRAWAL CHARGE PERIOD: The number of Contract
<PAGE> 13
Anniversaries since each Purchase Payment during which Withdrawal Charges are
applied to withdrawals of amounts in the Contract. The Withdrawal Charge Period
is shown on the Contract Data pages.
YOU AND YOUR: The Owner of the Contract if there
is no Joint Owner; if there is a Joint Owner, the Owner and Joint Owner acting
jointly. If we receive written authorization from both the Owner and Joint Owner
in Good Order, then, upon our consent, we will allow either to represent the
entire ownership interest in the Contract, until that authorization has been
revoked by either party. This Contract will treat the Owner as having
contributed 100% of the Purchase Payments. Therefore, we will treat the Owner as
the taxpayer with respect to all distributions made under the Contract while he
or she is the Owner, whether or not a Joint Owner is also named.
PURCHASE PAYMENTS
PURCHASE PAYMENTS: The initial Purchase Payment
must be paid on the Contract Date. In general, subsequent Purchase Payments may
be made at any time before the Annuity Date. However, no Purchase Payments may
be made on or after the sole or older of the Owner's or Joint Owner's, or
Annuitant's 80th birthday, and we reserve the right to decline any Purchase
Payment. The Minimum Subsequent Purchase Payment, Annual Purchase Payment Limits
and Aggregate Purchase Payment Limit are shown on the Contract Data pages.
ALLOCATION OF PURCHASE PAYMENTS: Invested Purchase
Payments are allocated to one or more of the Allocation Options in accordance
with your selection. The allocation of the initial Invested Purchase Payment is
made in accordance with your selection made on the Contract Date. You may change
the allocation of future Invested Purchase Payments at any time. If, after the
Initial Invested Purchase Payment, we receive a Purchase Payment without
allocation instructions, we will allocate the corresponding Invested Purchase
Payment in the same proportion as the most recent Purchase Payment you made
(unless that was a Purchase Payment you directed us to allocate on a
one-time-only basis.) Assuming that all other requirements are received in Good
Order, we reserve the right to allocate your initial Invested Purchase Payment
to the Money Market Subaccount until we receive your allocation selection. In
addition, the Company has reserved the right to allocate the initial Invested
Purchase Payment to the Money Market Subaccount under the Right to Cancel
Contract provision set forth on the face page of this Contract. All allocations
of Invested Purchase Payments are subject to the Allocation Guidelines shown on
the Contract Data pages.
Currently, you may select any Allocation Option which is available at the time
the Purchase Payment or transfer is made, with the exception of the DCA Option
for which there may be certain limitations. However, we reserve the right to
limit this in the future. If the Purchase Payment and forms required to issue a
Contract are in Good Order, the initial Invested Purchase Payment will be
credited to your Contract within two (2) Business Days after receipt at the
Annuity Service Center. Additional Invested Purchase Payments will be credited
to your Contract as of the Business Day they are received.
CONTRACT VALUE
Your Contract Value is the total of all amounts credited to your Contract
<PAGE> 14
as of any Business Day as a result of your initial Invested Purchase Payment and
the increases and decreases described below.
On the Contract Date, the Contract Value is equal to the initial Invested
Purchase Payment. After that, the Contract Value as of any Business Day is
determined by starting with the Contract Value at the end of the previous day
and adjusting it for items that increase it or decrease it.
Items that increase the Contract Value are: Invested Purchase Payments, positive
investment performance in a Subaccount and interest credited to an Interest Rate
Investment Option.
Items that decrease the Contract Value are: withdrawals and the charges
associated with them; negative investment performance in a Subaccount; Insurance
Charge; Contract Maintenance Charge, if applicable; GMIB Charge, if applicable;
Transfer Charge; and any Premium Tax Charge or other tax charge.
Investment results and interest are credited daily and the Insurance Charge is
deducted daily. The Contract Maintenance Charge is deducted annually as of the
Contract Anniversary and upon a total withdrawal. The GMIB Charge is deducted
annually as of the Contract Anniversary and pro-rata upon a total and certain
partial withdrawals. Other charges are assessed only if the appropriate event
occurs.
VARIABLE SEPARATE ACCOUNT
THE VARIABLE SEPARATE ACCOUNT: The Variable Separate
Account is designated on the Contract Data pages. It consists of assets we have
set aside and have kept separate from the rest of our assets and those of our
other separate accounts. The assets of the Variable Separate Account, equal to
reserves and other liabilities of your Contract and those of other owners, will
not be charged with liabilities arising out of any other business we may
conduct.
The Variable Separate Account assets are divided into Subaccounts. The assets of
the Subaccount are allocated to the Variable Investment Option(s) shown on the
Contract Data pages. We may restructure, eliminate or combine Subaccounts or add
to or eliminate Variable Investment Option(s) from those shown. You may be
permitted to transfer your Contract Value or allocate Invested Purchase Payments
to the additional Subaccount(s). However, the right to make such transfers or
allocations will be limited by any terms and conditions we may impose.
Should the shares of any Variable Investment Option(s) become unavailable for
investment by the Variable Separate Account, we deem further investment in the
shares inappropriate, or if required for tax reasons, we may limit further
purchase of such shares or substitute shares of another Variable Investment
Option for shares already purchased.
VALUATION OF ASSETS: The value of the shares
held by the Subaccounts in the Variable Investment Options will be based on the
net asset value of the Investment Option on each Business Day.
INSURANCE CHARGE: Each Business Day, we deduct
an Insurance Charge from the Subaccounts of the Variable Separate Account which
is equivalent, on an annual basis, to the amount shown on the Contract Data
pages.
<PAGE> 15
The amount of the Insurance Charge is based on whether you have elected
the GMDB and on the GMDB Protected Value option that you elect, if any.
DCA FIXED RATE INVESTMENT OPTION
DCA PROGRAM: If a DCA Program is elected, you may
allocate all or part of your Invested Purchase Payments to the DCA Fixed Rate
Investment Option ("DCA Option"). The DCA Program provides for a systematic
transfer of the funds allocated to the DCA option on a periodic basis from the
DCA Option to selected
Variable
Investment Options for a given number of payments. However, you may not
transfer any Contract Value to the DCA Option from the other Allocation Options.
INTEREST TO BE CREDITED: A DCA Interest Segment
is a portion of the DCA Option that is created when you allocate all or part of
an Invested Purchase Payment to the DCA Option. We credit interest to the amount
in each DCA Interest Segment daily at the daily equivalent of a specific rate
declared for that DCA Interest Segment until the earliest of: 1) the date the
amount in the DCA Interest Segment is transferred out of the DCA Interest
Segment; 2) the date the amount in the DCA Interest Segment is withdrawn; 3) the
date as of which any death benefit payable is determined, and 4) the Annuity
Date. The initial Interest Segment Interest Rate applicable for Invested
Purchase Payments allocated to the DCA Option on the Contract Date is shown on
the Contract Data pages. Interest rates for future allocations to the DCA Option
will be declared on or before the date when those allocations are made. The
declared rates will never be less than the Minimum Guaranteed Interest Rate
shown on the Contract Data pages. The current effective interest rates can be
found by contacting the representative who sold you this Contract or by calling
the Annuity Service Center.
TRANSFERS: Invested Purchase Payments allocated
to the DCA Option are transferred systematically on a periodic basis to the
Variable Investment Options which you have specified. We will transfer the
amount allocated in a series of equal payments on each transfer date such that
the amount of each payment corresponds to the number of payments for the period
selected for the transfers. The final transfer includes the interest credited
during the period (but see below for the effect of withdrawals). The first
periodic transfer from the DCA Option is made as of the date of the allocation
of the applicable Invested Purchase Payment. Subsequent transfers are made on
the periodic anniversary of the first transfer (for example, monthly or
quarterly). The final transfer amount includes the interest credited during the
elected period. Once the initial transfer has been processed, the transfer
period may not be changed. The Variable Investment Options to which the
transfers are being made may be changed. Transfers from the DCA Option do not
count toward the maximum number of free transfers permissible under the
Contract.
EFFECT OF WITHDRAWALS ON TRANSFERS: Withdrawals from
the DCA Option are permitted. We will recalculate the periodic transfer amount
to reflect the reduction in the DCA Option caused by the withdrawal. This
recalculation may include some or all of the interest credited to the date of
the next scheduled transfer. Any interest that is not included in the
recalculated transfer amount
<PAGE> 16
will be paid with the final transfer amount, unless there is another subsequent
withdrawal. Deductions of the Contract Maintenance Charge, Insurance Charge and
GMIB Charge are treated as withdrawals for this purpose. If a withdrawal reduces
the periodic transfer amount to below $100, the remaining balance in the DCA
Option will be transferred to the Variable Investment Options that you had most
recently selected for the DCA program on the next scheduled transfer date. If a
withdrawal request does not specify the Allocation Options from which the
withdrawal is to be made, we will take the withdrawal on a pro-rata basis from
all Allocation Options to which your Contract Value is then allocated.
Systematic withdrawals from the DCA Option are permitted.
DEFERRAL OF PAYMENTS OR TRANSFERS FROM THE
GENERAL ACCOUNT: We reserve the right to defer
payment for a withdrawal or transfer from the DCA Option for the period
permitted by law, but for not more than six months after a request in Good Order
is received by us at the Annuity Service Center.
FIXED RATE INVESTMENT OPTION
INTEREST RATE: The initial Interest Segment
Interest Rate applicable to the Fixed Rate Investment Option on the Contract
Date is shown on the Contract Data page. We will credit interest to amounts
allocated to the Fixed Rate Investment Option at the daily equivalent of the
rate shown for this Option. Interest rates for future allocations or transfers
to this Option will be declared when those allocations or transfers are made.
The declared rates will never be less than the Minimum Interest Crediting Rate
shown on the Contract Data page.
INTEREST SEGMENT: An interest segment is created
whenever you allocate or transfer an amount to the Fixed Rate Investment Option.
We credit interest to the amount in each interest segment daily at a specific
rate declared for that interest segment until the earliest of: the date it is
withdrawn; the date it is transferred to another Allocation Option; the maturity
date of the segment; and the date as of which a death benefit is determined.
TRANSFERS: At the maturity date of an interest
segment, you have 30 days during which you may elect to transfer the amount in
that interest segment into any of the Allocation Options available on that date,
other than a DCA Option. Once you have made an election, and we have received
it, it may not be reversed. Amounts that are transferred to another interest
segment, if available at that time, during the 30 day period will receive the
rate that is effective as of the maturity date for that interest segment.
Amounts that you withdraw or transfer into another Allocation Option during the
30 day period will receive interest from the maturity date to the date of
withdrawal or transfer at the rate that would have applied to those amounts had
you taken no action within the 30 day period. If you do not make an election to
transfer within 30 days following the maturity date of the segment, we will
transfer the amount in the interest segment on the maturity date to an interest
segment with the same duration to maturity as the maturing interest segment.
CONTRACT MAINTENANCE CHARGE
<PAGE> 17
We deduct an annual Contract Maintenance Charge shown on the Contract Data page.
We determine your Contract Value as of your Contract Anniversary and make any
deductions required on a pro-rata basis from all Allocation Options to which
your Contract Value is allocated. If a total withdrawal is made on other than a
Contract Anniversary, we will determine your Contract Value and make a deduction
for the Contract Maintenance Charge the same as we would if it were a Contract
Anniversary.
TRANSFERS
TRANSFERS DURING THE ACCUMULATION PERIOD: A transfer
is subject to the following:
the maximum number of transfers which may be made, the maximum number of
transfers which are not subject to a Transfer Charge and the minimum amount
which may be transferred are shown on the Contract Data pages;
a Transfer Charge is deducted if a transfer exceeds the maximum number of free
transfers. The Transfer Charge is shown on the Contract Data pages. The Transfer
Charge is deducted from the amount which is transferred;
a transfer will be effected as of the end of the Business Day when we receive a
request in Good Order;
we are not responsible for the consequences resulting from a transfer
made in accordance with your instructions;
your right to make transfers is subject to modification if we determine, in our
sole opinion, that the exercise of the right by one or more Owners is, or would
be, to the disadvantage of other Owners or if required to do so by applicable
laws or regulations. Restrictions may be applied in any manner reasonably
designed to prevent any use of the transfer right which is considered by us to
be to the disadvantage of other Owners or to ensure compliance with such laws or
regulations. A modification could be applied to transfers to or from one or more
of the Subaccounts and could include, but not be limited to:
the requirement of a minimum time period between each transfer;
not accepting a transfer request of an agent acting under a power of
attorney on behalf of more than one Owner;
limiting the dollar amount that may be transferred among the
Subaccounts by an Owner at any one time; or
restricting the number of transfers per year.
[No transfers are permitted after the Annuity Date.]
WITHDRAWALS
WITHDRAWALS: During the Accumulation Period, you
may, upon a request in Good Order, make a total or partial withdrawal of the
<PAGE> 18
Contract Surrender Value. You may specify the Allocation Option(s) from which a
withdrawal will be taken. If you do not so specify, we will take the withdrawal
on a pro-rata basis from all Allocation Option(s) to which your Contract Value
is allocated.
We will pay the amount of any withdrawal within seven (7) days of receipt of
request in Good Order unless the "Suspension or Deferral of Payments Provision"
is in effect.
Each partial withdrawal must be for an amount which is not less than the amount
shown on the Contract Data pages. The minimum Contract Value which must remain
in the Contract after a partial withdrawal in order to keep the Contract inforce
is shown on the Contract Data pages. If the amount of the withdrawal requested
would reduce the Contract Value below this minimum, we will give you the maximum
amount available that, with the Withdrawal Charge, would not reduce the Contract
Value below such minimum. Special rules may apply for IRAs.
WITHDRAWAL CHARGE: A Withdrawal Charge may apply
if you make a withdrawal during the Withdrawal Charge Period for a Purchase
Payment. The amount of the Withdrawal Charge varies with the number of Contract
Anniversaries that have elapsed since a Purchase Payment was made, and is a
percentage, shown on the Contract Data pages, of the amount withdrawn that is
subject to the charge. If a withdrawal is effective on the day before a Contract
Anniversary, the Withdrawal Charge percentage used will be the one as of the
following Contract Anniversary. If you request a partial withdrawal, we will
deduct an amount from the Contract Value that is sufficient to pay the
Withdrawal Charge and provide you the amount requested.
For purposes of determining the Withdrawal Charge, withdrawals of the
Charge-Free Amount will be taken first from Purchase Payments, on a first-in,
first-out basis. Withdrawals in excess of the Charge-Free Amount will come first
from Purchase Payments, also on a first-in, first-out basis, and will be subject
to Withdrawal Charges, if applicable, even if Earnings are available on that
date. Once all Purchase Payments have been withdrawn, further withdrawals will
be taken from any remaining Earnings. Earnings are not subject to Withdrawal
Charges.
We will waive all Withdrawal Charges upon receipt of due proof that the Owner or
Joint Owner is Terminally Ill, or has been confined to an Eligible Nursing Home
or Eligible Hospital continuously for at least three months from the Contract
Date. This waiver is not available if the Contract has been assigned.
Withdrawal Charges will never be greater than that permitted by any applicable
law or regulation. Withdrawal Charges may be assessed upon settlement.
PROTECTED VALUE
The Protected Value is the amount which is:
applied to the guaranteed annuity purchase rates to produce
the Guaranteed Minimum Income Benefit ("GMIB"); or
applied to provide a Guaranteed Minimum Death Benefit ("GMDB")
for your beneficiaries.
<PAGE> 19
If you elect the GMIB or GMDB features, you must elect, as
applicable, a Protected Value option for the GMIB ("GMIB Protected Value
option") and for the GMDB ("GMDB Protected Value option"). Certain Protected
Value options may not be available. The Protected Value is calculated daily and,
subject to the Protected Value option that you elect, if any, as shown on the
Contract Data pages, and the restrictions described below, can be equal to (1)
or (2) or to the greater of (1) and (2), where:
is the "Roll-Up". The Roll-Up is equal to the total Invested
Purchase Payments made increased daily at an effective annual interest rate of
5% starting on the date that each Invested Purchase Payment is made, until the
cap is reached ("Roll-Up Cap"), and is proportionally reduced by the effect of
withdrawals. The Roll-Up Cap is equal to the sum of two times each Invested
Purchase Payment and is proportionally reduced by the effect of withdrawals.
Once the Roll-Up Cap is reached, the Roll-Up will be increased by subsequent
Invested Purchase Payments and proportionally reduced by the effect of
withdrawals; and
is the "Step-Up". Before the first Contract Anniversary, the Step-Up is the
initial Invested Purchase Payment increased by subsequent Invested Purchase
Payments and proportionally reduced by the effect of withdrawals. The Step-Up on
each Contract Anniversary will be reset to the greater of the previous Step-Up
and the Contract Value as of such Contract Anniversary. Between Contract
Anniversaries, the Step-Up will be increased by Invested Purchase Payments and
proportionally reduced by the effect of withdrawals.
After the Contract Anniversary coinciding with or next following
the sole or older Owner's 80th birthday, we stop increasing the Protected Value,
except by subsequent Invested Purchase Payments made on or after such Contract
Anniversary. This means that, as applicable, we do not increase the Roll-Up by
the effective annual interest rate, and we do not increase the Step-Up by any
appreciation in the Contract Value. But when you make a withdrawal on or after
such Contract Anniversary, we still reduce the Protected Value proportionally by
the effect of that withdrawal.
Where the words "proportionally reduced by the effect of
withdrawals" are used, the withdrawal reduces those values in the same
proportion as it reduces the Contract Value. We calculate the proportion by
dividing the Contract Value after the withdrawal (including Withdrawal Charges)
by the Contract Value immediately prior to the withdrawal. The resulting
percentage is multiplied by the applicable values (before the withdrawal) in
determining the Protected Value.
GUARANTEED MINIMUM INCOME BENEFIT
The GMIB is a feature providing for the option to receive a guaranteed minimum
income benefit with payments for life with a period certain. The GMIB is
available only if you elect the GMDB. If available at that time, the GMIB
feature must be elected when you purchase your Contract. Once elected, this
election is not revocable until the end of the seventh Contract Year. Once the
GMIB election is revoked, it cannot be reinstated. The amount of the
GMIB Charge is based on the available GMIB Protected Value
<PAGE> 20
option that you elect. The calculation of the GMIB payout amount is described
below. You may exercise the GMIB payout option after the Waiting Period. The
Exercise Periods run for 30 days and begin on each Contract Anniversary after
the Waiting Period ends.
GMIB Payout Amount: The GMIB Payout Amount
is based on the age and sex of the Annuitant and Co-Annuitant, if applicable.
After first deducting charges for any applicable taxes attributable to premiums,
the GMIB payout amount will equal the greater of:
the GMIB Protected Value as of the date the exercise of the GMIB payout option
is effective applied to the guaranteed annuity purchase rates and based on the
period certain as described below; and
the Contract Value as of the date the exercise of the GMIB payout option is
effective applied to the current annuity purchase rates then in use and based on
the period certain as described below.
Guaranteed Annuity Purchase Rates: The guaranteed
annuity purchase rates are attached to this Contract and are based on 1. and 2.,
below:
the Guaranteed Interest Rate
The guaranteed interest rate used to calculate the guaranteed annuity purchase
rates is based on the Contract Anniversary coinciding with or immediately
preceding the date the exercise of the GMIB payout option is effective:
Contract Anniversary
Guaranteed Interest Rate
10-14
15 +
3.0%
3.5%
the Guaranteed Mortality Rate
The guaranteed mortality rate used to calculate the guaranteed annuity purchase
rates is based on the Annuity 2000 valuation mortality table, with
<PAGE> 21
two-year age setbacks, ten-year generational setback and projected mortality
improvements (modified Scale G), shown in the tables on page 20.
GMIB Annuity Payout Options:
There are two GMIB annuity payout options available:
GMIB Option 1: Single Life Payout Option: We will
make monthly payments for as long as the Annuitant lives, with payments for a
period certain. No payments are due after the death of the Annuitant or, if
later, the end of the period certain.
GMIB Option 2: Joint Life Payout Option: In the case
of an Annuitant and Co-Annuitant, we will make monthly payments for the joint
lifetime of the Annuitant and Co-Annuitant, with payments for a period certain.
Upon the death of the Annuitant or Co-Annuitant, payments will continue during
the remaining lifetime of the survivor at 100% of the original monthly payment
if the survivor is the Annuitant and, upon expiration of the period certain,
will be reduced to 50% of the original monthly payment if the survivor is the
Co-Annuitant. No payments are due after the death of the survivor of the
Annuitant and Co-Annuitant or, if later, the end of the period certain.
There is no right of withdrawal under either payout option. Other payout
frequencies may be available such as quarterly, semi-annually and annually.
The period certain for the GMIB is based on the Annuitant's age on the date the
exercise of the GMIB payout option is effective, as follows:
Age
Period Certain
80 or less
81
82
83
84
85-90
<PAGE> 22
10
9
8
7
6
5
Exercise of the GMIB Payout Option: You may exercise
the GMIB payout option by contacting us at the Annuity Service Center. We will
provide you with the necessary forms and inform you of any other information
that we require for you to exercise this option. The exercise of the GMIB payout
option will be effective when we receive all documentation and other information
that we need at the Annuity Service Center during the Exercise Period. The
Exercise Period for the GMIB payout option begins on any Contract Anniversary
Date after the end of the applicable Waiting Period, shown below. Such Exercise
Period ends 30 days after that Contract Anniversary Date, but no later than the
Contract Anniversary following the Annuitant's age 90.
Waiting Period: The Waiting Period is based on the
age of the sole or older of the Annuitant and Co-Annuitant at issue. The Waiting
Period is as follows:
Age
At Issue
Contract Anniversary on which
Waiting Period Ends
0-45
46
<PAGE> 23
47
48
49
50-80
15
14
13
12
11
10
GMIB Charge: To compensate us for assuming the
risks associated with the GMIB, we charge an annual GMIB Charge. The fee is
equal to a percentage of the average daily GMIB Protected Value and is deducted:
1) on each Contract Anniversary; 2) upon choice of an option under the Annuity
and Settlement Options section of the contract; 3) upon revocation of the GMIB
election; 4) upon a full withdrawal; and 5) upon a partial withdrawal if the
Contract Value remaining after such partial withdrawal is not enough to cover
the then applicable GMIB Charge. The fee is pro-rated based on the portion of
the Contract Year for which the GMIB was in effect. The amount of the fee is
based on the GMIB Protected Value option that you elect. The GMIB Charge based
on your election is shown on the Contract Data pages.
The fee is withdrawn from each investment option in the same proportion that the
value of the Contract Value allocated to an investment option bears to the total
Contract Value. Upon a full withdrawal or if the Contract Value remaining after
a partial withdrawal is not enough to cover the then applicable GMIB Charge, the
GMIB Charge is deducted from the amount paid.
No GMIB Charge is charged after the Annuity Date, after revocation of the GMIB
option, or after exercise of the GMIB payout option. Because we do not impose a
new Waiting Period for each subsequent Purchase Payment, if you elect the GMIB,
we reserve the right to limit
<PAGE> 24
subsequent Purchase Payments if we discover that by the timing of your Purchase
Payments and withdrawals, your GMIB Protected Value is increasing in ways that
are not intended. In determining whether to limit Purchase Payments, we will
look at Purchase Payments which are disproportionately larger than the initial
Purchase Payment and other actions that may artificially increase the GMIB
Protected Value.
GUARANTEED MINIMUM DEATH BENEFIT
The GMDB is a feature providing for the option to receive an enhanced death
benefit upon the death of the sole or last surviving Owner during the
Accumulation Period. If available at that time, the GMDB feature must be elected
when you purchase your Contract. The amount of the GMDB is based on the GMDB
Protected Value option that you elect (see Protected Value section).
If you have elected the GMDB feature, and if a sole or last surviving Owner dies
before the Annuity Date, the death benefit payable to your beneficiary will be
as described below:
Upon receipt of due proof of death and any other documentation we need, the
beneficiary is entitled to receive a death benefit equal to the greater of:
the Contract Value as of the date we receive due proof of death
and any other documentation we need; and
the GMDB Protected Value as of the date we receive due proof of death and any
other documentation we need.
If you do not elect the GMDB feature, upon receipt
of due proof of death and any other documentation we need, the beneficiary is
entitled to receive a base death benefit equal to the greater of:
the Contract Value as of the date we receive due proof of death and any
other documentation we need; and
the initial Invested Purchase Payment increased by subsequent Invested Purchase
Payments and reduced by the effect of withdrawals.
If the ownership of the Contract changes as a result of an assignment, the value
of the death benefit will be reset to the Contract Value as of the date of the
assignment. Such value will be treated as a Purchase Payment made on that date
for purposes of computing the death benefit.
The Beneficiary may, within 60 days of providing proof of death, elect to take
the death benefit under one of the death benefit payout options listed below,
provided that any payout option shall not include a period certain that exceeds
the life expectancy of the Beneficiary. The Beneficiary will be the sole
measuring life in determining the amount of any such payout option. If no payout
option is selected within the 60 days, the death benefit will be payable as a
lump sum.
<PAGE> 25
If the primary Beneficiary of the Owner is the spouse of the Owner at the time
of the Owner's death, the Contract will continue and the spouse will become the
Owner. If the primary Beneficiary of the Joint Owner is the spouse of the Joint
Owner at the time of the Joint Owner's death, the Contract will continue. In
either case, the spouse may, within 60 calendar days of providing proof of
death, elect to take the Adjusted Contract Value under any of the payout options
available under this Contract. If the Contract continues, and the new Annuitant
is older than the prior Annuitant, the Annuity Date will be based on the age of
the new Annuitant.
If the Owner and Joint Owner are not spouses at the time of the Owner or Joint
Owner's death, the Contract will not continue, the amount payable will equal the
Adjusted Contract Value, and the Beneficiary will be required to choose one of
the death benefit payout options described below. In that event, the payout
described in Choice 2 and the beginning of the distribution described in Choice
3 will be based on the date of death of the first to die of the Owner or Joint
Owner.
The death benefit payout options are:
Choice 1 lump sum payment of the death
benefit; or
Choice 2 the payment of the entire
death benefit within 5 years of the date of death of the last to survive of the
Owner or Joint Owner; or
Choice 3 payment of the death benefit under an Annuity or Settlement Option
over the lifetime of the
Beneficiary or over a period not extending beyond the life expectancy of the
Beneficiary with distribution beginning within one year of the date of death of
the last to survive of the Owner or Joint Owner.
If the Owner and Joint Owner are spouses at the death of the first to die of the
Owner and Joint Owner, any portion of the death benefit not applied under Choice
3 within one year of the date of death of the survivor must be distributed
within 5 years of the survivor's date of death. If the Owner and Joint Owner are
not spouses at the death of the first to die of the Owner and Joint Owner, any
portion of the death benefit, which is equal to the Adjusted Contract Value, not
applied under Choice 3 within one year of the date of death of the first to die
must be distributed within 5 years of the date of death of the first to die.
Once a death benefit becomes payable, the Payee's interest in any Annuity
Benefit under the Contract will cease.
If a lump sum payment is requested, the amount will be paid within seven (7)
days of receipt of proof of death and the election, unless the Suspension or
Deferral of Payments
<PAGE> 26
Provision is in effect.
DEATH OF ANNUITANT DURING THE ACCUMULATION PERIOD: If
the Annuitant dies before the Annuity Date, the Co-Annuitant, if applicable,
becomes the Annuitant. If there is no surviving Co-Annuitant, and the Annuitant
was not the Owner, the Owner becomes the Annuitant. You have the right to name a
new Annuitant within 60 days. If the Owner is a non-natural person, the death of
the Annuitant will be treated as the death of the Owner, a new Annuitant may not
be designated, and the Annuitant will be deemed to be the Owner for purposes of
determining the death benefit.
DEATH OF ANNUITANT DURING THE ANNUITY PERIOD: If the
Annuitant dies on or after the Annuity Date, the Settlement Option then in
effect will govern whether or not we will continue to make any payments. The
death of a non-Annuitant Owner or Joint Owner has no effect on the payout during
the Annuity Period.
PAYMENT OF DEATH BENEFIT: We will require due proof
of death and any other documentation we request in Good Order before any death
benefit is paid. All death benefits will be paid in accordance with applicable
law or regulations governing death benefit payments.
SPECIAL TAX CONSIDERATIONS: There are special tax
rules that apply to IRA and other qualified contracts during both the
Accumulation Period and Annuity Period governing distributions upon the death of
the Owner. These rules are contained in provisions in the attached endorsements
and supersede any other distribution rules contained in the Contract.
The preceding provisions regarding the death of the Owner are intended to
satisfy the distribution at death requirements of section 72(s) of the Internal
Revenue Code of 1986, as amended. We reserve the right to amend this Contract by
subsequent endorsement as necessary to comply with applicable tax requirements,
if any, which are subject to change from time to time. Such additional
endorsements, if necessary to comply with amended tax requirements, will be
mailed to you and become effective within 30 days of mailing, unless you notify
us in writing, within that time frame, that you reject the endorsement.
ANNUITY AND SETTLEMENT OPTIONS
GENERAL: On the Annuity Date, the Adjusted Contract
Value will be applied under the Annuity or Settlement Option you have selected.
If the payment under any option selected would be less than $20 per month, we
reserve the right to pay out the Adjusted Contract Value in a lump sum. We
guarantee that the dollar amount of each payment, once determined, will not be
affected by variations in mortality or expense experience.
SELECTION OF AN ANNUITY OR SETTLEMENT OPTION: You may
select an Annuity or Settlement Option by notifying us of the selected option in
Good Order. If no Annuity or Settlement Option is selected, or if the chosen
Option is not received in Good Order, Option 2, Life Income Annuity Option, will
automatically be applied. You may, at any time prior to the Annuity Date, by a
request in Good Order 30 days in advance, select and/or change the Annuity or
Settlement Option.
<PAGE> 27
ANNUITY AND SETTLEMENT OPTIONS: This Contract provides
for payments under one of the Annuity or Settlement Options described below. Any
other Annuity or Settlement Option acceptable to us may be selected.
OPTION 1 - FIXED PERIOD ANNUITY OPTION. We will make
equal payments for a period you choose up to 25 years. At your choice, we will
make such payments annually, semi-annually, quarterly or monthly. Table 1 shows
the minimum amounts we will pay.
OPTION 2 - LIFE INCOME ANNUITY OPTION. We will make
payments for as long as the Annuitant lives, with payments certain for 120
months. At your choice, we will make such payments annually, semi-annually,
quarterly or monthly.
Table 2 shows the minimum amounts we will pay.
OPTION 3 - INTEREST PAYMENT SETTLEMENT OPTION. We will
credit interest on the Adjusted Contract Value at the rate of at least 3% until
you request payment of all or part of the Adjusted Contract Value. At your
choice, we will pay interest on the Adjusted Contract Value not yet withdrawn
annually, semi-annually, quarterly or monthly. You may request full or partial
payment of the Adjusted Contract Value provided, however, that if a partial
payment is requested, the amount of any Adjusted Contract Value remaining after
such requested amount is paid must be at least $1,000. This option is not
available for qualified contracts.
OTHER ANNUITY OR SETTLEMENT OPTIONS: We may offer or
consent to other settlement options, including life income annuity options with
payments certain for a period of other than 120 months. Contact the
representative who sold you the Contract or call the toll-free number listed on
your quarterly statement for information.
ANNUITY: Unless you designate another Payee, you will
be the Payee of the Annuity Payments. The Adjusted Contract Value will be
applied to the applicable Annuity Table contained in this Contract based upon
the Annuity Option you have selected. The amount of the first payment for each
$1,000 of Adjusted Contract Value is shown in the Annuity Tables. If when
Annuity Payments begin we are using tables of annuity rates for these Contracts
which result in larger Annuity Payments, we will use those tables instead.
Annuity Payments will depend on the age and sex of the Annuitant, where
permitted.
WITHDRAWAL CHARGES: If you choose Option 1 for a period
of fewer than 5 years or Option 3, the Adjusted Contract Value will be subject
to a Withdrawal Charge which will be applied in the same way as if you had made
a full withdrawal on the Annuity Date. Any amount used to provide income under
Option 1 for a period of 5 years or more or under Option 2 will be applied
without charge. If you choose any other method of payment not described in this
Contract, we will tell you if it is subject to a Withdrawal Charge.
BENEFICIARY
BENEFICIARY: The Beneficiary designation in effect
on the Contract Date will remain in effect until changed. The Beneficiary is
entitled to receive the benefits to be paid at the death of the last to die of
the Owner or Joint Owner (or the first to die of the Owner or Joint Owner if the
Owner and Joint Owner are
<PAGE> 28
not spouses at the time of the Owner's or Joint Owner's death) during the
Accumulation Period. The Owner must be the primary Beneficiary of the Joint
Owner, and the Joint Owner must be the primary Beneficiary of the Owner. Other
than primary Beneficiaries, Beneficiaries must be the same for both the Owner
and Joint Owner.
When a Beneficiary is designated, any relationship shown is to the Owner unless
otherwise specified.
To show priority among Beneficiaries, we will label the classes, so that the
class with first priority is called the primary class, the class with next
priority is called the secondary class, and so on. The following statements
apply to Beneficiaries unless the Contract Data pages, Contract endorsement or
any change request that we have processed specifies otherwise:
One who survives the last to die of the Owner and Joint Owner will have the
right to be paid only if no one in a prior class survives the last to die of the
Owner and Joint Owner.
One who has the right to be paid will be the only one paid if no one else in the
same class survives the last to die of the Owner and Joint Owner.
Two or more in the same class who have the right to be paid will be paid in
equal shares.
If no one survives the sole Owner, we will pay in one sum to the Owner's estate.
When there is insufficient evidence to determine the order of death then, unless
state law prohibits, we will deem the Owner to be the last survivor and make
payment to the Owner's Beneficiary.
Before we make a payment, we have the right to decide what proof we need of the
identity, age or any other facts about any persons designated as Beneficiaries.
If Beneficiaries are not designated by name and we make payment(s) based on that
proof, we will not have to make the payment(s) again.
CHANGE OF BENEFICIARY: To initiate a change of
Beneficiary, call the toll-free number listed on your statement or contact the
representative who sold you the Contract. We may also ask you to send us the
Contract. The change will take effect only when we process the request. Then,
any previous Beneficiary's interest will end as of the date we receive the
request in Good Order, even if the Owner or Joint Owner is not living when we
process the request. We will not be liable for any payment made or action taken
before we record the change.
SUSPENSION OR DEFERRAL OF PAYMENTS OR TRANSFERS
FROM THE SEPARATE ACCOUNT
We reserve the right to suspend or postpone payments from the Separate Account
for a withdrawal or transfer for any period when:
the New York Stock Exchange is closed (other than customary weekend and
<PAGE> 29
holiday closings);
trading on the New York Stock Exchange is restricted;
an emergency exists as a result of which disposal of shares of the Investment
Options held in the Separate Account is not reasonably practicable or it is not
reasonably practicable to determine the value of such shares; or
during any other period when the Securities and Exchange Commission, by
order, so permits for the protection of Owners;
provided that applicable rules and regulations of the Securities and Exchange
Commission will govern as to whether the conditions described in (2) and (3)
exist.
GENERAL PROVISIONS
THE CONTRACT: The entire Contract consists of this
Contract, and any attached application, endorsements or riders. This Contract
may be changed or altered only by our President or Secretary. Any change,
modification or waiver must be made in writing. This Contract may not be
modified by us without your consent except as may be required by applicable law,
including changes necessary to comply with IRS requirements for annuity
contracts, or as set forth in this Contract.
ASSIGNMENT OF A CONTRACT: A request in Good Order
specifying the terms of an assignment of a Contract must be provided to the
Annuity Service Center. We are under no obligation to verify the assignment's
validity or sufficiency. We will not be liable for any payment made or action
taken before we record the assignment. If any Owner is living on the Annuity
Date and an assignment is in effect on that date, we have the right to pay the
Contract Surrender Value in one lump sum to the assignee where notice in Good
Order is received. Partial assignments, collateral or otherwise, are not allowed
without our approval. We reserve the right to restrict or refuse any assignment.
An assignment which results in a change of ownership will affect the
value of the death benefit. Please see the section of the Contract entitled,
"Guaranteed Minimum Death Benefit", for more information.
We will not be responsible for the validity or tax consequences of any
assignment. Any assignment made after the death benefit has become payable will
be valid only with our consent.
If the Contract is assigned, your rights may only be exercised with the consent
of the assignee of record.
NON-PARTICIPATING IN SURPLUS: This Contract does not
share in any distribution of our profits or surplus.
INCONTESTABILITY: We will not contest this Contract. We
consider all statements made in the application for this Contract to be
representations, not warranties.
<PAGE> 30
MISSTATEMENT OF AGE OR SEX: We may require proof of
age of the Annuitant before making any life contingent Annuity Payment provided
for by this Contract. If the age or sex of the Annuitant has been misstated, the
amount payable will be the amount that the Contract Value would have provided at
the true age or sex.
Once Annuity Payments have begun, any underpayments, with interest at 5%, will
be made up in one sum with the next Annuity Payment, and overpayments, with
interest at 5%, will be deducted from the future Annuity Payments until the
total is repaid.
CONTRACT SETTLEMENT: This Contract must be returned to
us upon any settlement.
REPORTS: We will send you a report four times each
calendar year until the Annuity Date showing your Contract Value and other
relevant information about your Contract. We will also furnish an annual report
of the Separate Account. These reports will be sent to your last known address.
TAXES: Any taxes, including any Premium Taxes and any
other type of tax (or component thereof) measured by or based upon any portion
of the Purchase Payment we receive, paid to any governmental entity will be
charged against the Contract Value, unless a deduction was made for this tax in
calculating the Invested Purchase Payment amount. We will, in our sole
discretion, determine when taxes have resulted from: the investment experience
of the Separate Account; receipt by us of the Purchase Payment(s); or
commencement of Annuity Payments. We may, at our discretion, pay taxes when due
and deduct that amount from the Contract Value at a later date. Payment at an
earlier date does not waive any right we may have to deduct amounts at a later
date. We reserve the right to establish a provision for federal income taxes if
we determine, in our sole discretion, that we will incur a tax as a result of
the operation of the Separate Account. We will deduct for any income taxes
incurred by it as a result of the operation of the Separate Account whether or
not there was a provision for taxes and whether or not it was sufficient. We
will deduct any withholding taxes required by applicable law.
EVIDENCE OF SURVIVAL: Before we make a payment, we have
the right to require proof of continued life and any other documentation we need
to make a payment. We can require this proof for any person whose life or death
determines whether or to whom we must make the payment.
PROTECTION OF PROCEEDS: No Beneficiary may
commute, encumber, alienate or assign any payments under this Contract before
they are due. To the extent permitted by law, no payments will be subject to the
debts, contracts or engagements of any Beneficiary or to any judicial process to
levy upon or attach the same for payment thereof.
VALUES AND BENEFITS
Any cash values, paid up annuities and death benefits that may be available
under this Contract are not less than the minimum benefits required by the law
of any state in which this Contract is delivered.
ANNUITY SETTLEMENT TABLES
<PAGE> 31
Tables 1 and 2 below are applied to the Adjusted Contract Value to compute the
minimum amount of the annuity payment. Table 1 is used to compute the minimum
annuity payment under Option 1 (Fixed Period Annuity Option). Table 2 is used to
compute the minimum annuity payment under Option 2 (Life Income Annuity Option).
If the GMIB was elected, Table 2 or Table 3, as applicable, is applied to the
GMIB Protected Value to compute the GMIB payout amount. Table 2 is used to
compute the GMIB payout amount when annuitization occurs on or immediately after
Contract Anniversaries 10 through 14, with 120 payments certain. Table 3 is used
to compute the GMIB payout amount when annuitization occurs on or immediately
after Contract Anniversaries 15 or later, with 120 payments certain. For
annuitants of attained age 81 or more, the certain period is less than 10 years.
The rates in Tables 1, 2 and 3 are applied per $1000 of Adjusted Contract Value
or GMIB Protected Value, as applicable.
The annuity payments in Tables 2 and 3 are based on the Annuitant's Adjusted Age
and sex. The Adjusted Age is the Annuitant's age last birthday prior to the date
on which the first Annuity payment is due, adjusted as shown in the "Translation
of Adjusted Age" Table.
When we computed the amounts shown in Tables 2 and 3, we adjusted the Annuity
2000 Mortality Table to an age last birthday basis, less two years, with
projected mortality improvements (modified Scale G). We used an interest rate of
3% per year in preparing Table 2; we used an interest rate of 3 1/2% in
preparing Table 3.
We will calculate annuities for other certain periods using the same interest
and mortality assumptions as in Tables 2 and 3.
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY
CONTRACT. NON-PARTICIPATING. ANNUITY PAYMENTS AND VALUES PROVIDED BY THIS
CONTRACT, WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT, ARE
VARIABLE AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT.
<PAGE> 1
<TABLE>
<CAPTION>
[PRUDENTIAL LOGO] STRATEGIC PARTNERS VARIABLE ANNUITY APPLICATION
Pruco Life Insurance Company, a subsidiary of Flexible Payment Variable Deferred Annuity
The Prudential Insurance Company of America
====================================================================================================================================
On these pages, I, you, and your refer to the contract owner. We, us, and our refer to the Prudential
Insurance Company of America ("Prudential") or to the Prudential subsidiary that issued your annuity.
====================================================================================================================================
<S> <C>
1 CONTRACT Contract number (if any)_______________________________________
OWNER
INFORMATION [ ] Individual [ ] Corporation [ ] UGMA/UTMA [ ] Other TRUST: [ ] Grantor [ ] Revocable [ ] Irrevocable
Owner's first name MI Last name
__________________________________ __ _______________________________________________________
Name of Trust/Corporation/Other (if applicable) Trust date (mo., day, year)
__________________________________________________________ ____ _____ __________
Street Apt.
____________________________________________________ __________________
City State ZIP code
________________________________________________ _____ __________________ - ______________
Social Security number/TIN Date of birth (mo., day, year) Telephone number
__________________________ ____ ______ ______________ _______ ________ - __________________
[ ] Female [ ] U.S. citizen [ ] I am not a U.S. citizen or resident alien. I am a citizen of
[ ] Male [ ] Resident alien ____________________________________________________________
If a corporation or trust is indicated above, please check the following as it applies.
[ ] Tax-exempt entity under IRS Code 501 [ ] Trust acting as agent for an individual under IRS Code 72(u)
====================================================================================================================================
2 JOINT OWNER The joint owner can only be the owner's spouse and must be listed as the primary beneficiary.
INFORMATION
(if any) Joint owner's first name MI Last name
Do not __________________________________ ___ ______________________________________________
complete if
you are Street (Leave address blank if same as owner.) Apt.
opening ________________________________________________________ __________________
an IRA.
City State ZIP code
________________________________________ _____ ________________ - __________________
Social Security number/TIN Date of birth (mo., day, year) Telephone number
___________________________ _____ ________ ____________ ______ ________ - _________
[ ] Female [ ] U.S. citizen [ ] I am not a U.S. citizen or resident alien. I am a citizen of
[ ] Male [ ] Resident alien _____________________________________________________________
====================================================================================================================================
3 ANNUITANT This section must be completed only if the annuitant is not the contract owner, or if the contract owner is
INFORMATION a trust or a corporation.
(if different
than the Annuitant's first name MI Last name
owner) ___________________________________ ____ ___________________________________________
Street (Leave address blank if same as owner.) Apt.
_____________________________________________________________ _____________
City State ZIP code
________________________________________________ _____ _______________ - _________________
Social Security number/TIN Date of birth (mo., day, year) Telephone number
____________________________________ _____ ________ ____________ ______ _______ - _________
[ ] Female [ ] U.S. citizen [ ] I am not a U.S. citizen or resident alien. I am a citizen of
[ ] Male [ ] Resident alien _____________________________________________________________
====================================================================================================================================
</TABLE>
Pruco Corporate Office: Pruco Life Insurance Company, Phoenix, AZ 85014
[ORD 99537] Ed. 4/2000
Page 1 of 6
<PAGE> 2
<TABLE>
<S> <C>
====================================================================================================================================
4 CO-ANNUITANT Co-Annuitant's first name MI Last name
INFORMATION __________________________________________ ____ __________________________________________
(if any)
Do not Social Security number/TIN Date of birth (mo., day, year) Telephone number
complete if ______________________________________ _____ _______ ______________ ________ ________ - ___________
you are
opening [ ] Female [ ] U.S. citizen [ ] I am not a U.S. citizen or resident alien. I am a citizen of
an IRA. [ ] Male [ ] Resident alien ____________________________________________________________________
====================================================================================================================================
5 BENEFICIARY Beneficiary's name (First, MI, Last), if trust, include name of trust and trustee's name [X] PRIMARY CLASS
INFORMATION _____________________________________________________________________________________________________________
(Please add
additional TRUST: [ ] Revocable [ ] Irrevocable Trust date (mo., day, year) _____ _____ ____________
beneficiaries Beneficiary's relationship to annuitant ________________________________________________
in section 19.)
CHECK ONLY ONE: [ ] Primary class
Beneficiary's name (First, MI, Last), if trust, include name of trust and trustee's name [ ] Secondary class
____________________________________________________________________________________________________________
TRUST: [ ] Revocable [ ] Irrevocable Trust date (mo., day, year) ____ ______ _________________
Beneficiary's relationship to annuitant _________________________________________________
====================================================================================================================================
6 ELECTION OF Complete this section if you want to elect Credit. See section 16 for additional information.
CREDIT [ ] Yes, I want Credit.
====================================================================================================================================
7 DEATH Check only one option:
BENEFIT [ ] Basic Death Benefit
[ ] Guaranteed Minimum Death Benefit (GMDB) with a Roll-Up option.
[ ] Guaranteed Minimum Death Benefit with an annual Step-Up option.
[ ] Guaranteed Minimum Death Benefit with a Roll-Up and an annual Step-Up option.
====================================================================================================================================
8 GUARANTEED This is only available if you selected one of the three Guaranteed Minimum Death Benefit options in section 7.
MINIMUM [ ] Yes, I would like to elect a Guaranteed Minimum Income Benefit (GMIB).
INCOME
BENEFIT
====================================================================================================================================
9 TYPE OF PLAN PLAN TYPE
AND SOURCE Check all that apply: [ ] Non-qualified [ ] Traditional IRA [ ] Roth IRA/Custodial [ ] Custodial Acct (PSI
OF FUNDS only)
(minimum of --------------------------------------------------------------------------------------------------------------
$10,000) SOURCE OF FUNDS:
Check all that apply:
[ ] Total amount of the check(s) included with this $____, ______,______.____
application. (Make checks payable to Prudential.)
[ ] IRA Rollover $____, ______,______.____
If Traditional IRA or Roth IRA new contribution(s) for the current and/or previous year, complete the
following:
$____, ______.____ Year __________________ $____, ______.____ Year ____________
[ ] 1035 Exchange (non-qualified only), estimated amount: $____, ______,______.____
[ ] IRA Transfer (qualified), estimated amount: $____, ______,______.____
[ ] Direct Rollover (qualified), estimated amount: $____, ______,______.____
[ ] Roth Conversion IRA, establishment date:* ____ ______ ___________
month day year
* This is the date you originally converted from a traditional IRA to a Roth Conversion IRA. (If omitted,
the current tax year will be used). This is required for the IRA five tax year, holding period requirement.
A CONVERSION FROM A TRADITIONAL IRA TO A ROTH CONVERSION IRA WILL RESULT IN A TAXABLE EVENT WHICH WILL BE
REPORTED TO THE INTERNAL REVENUE SERVICE.
====================================================================================================================================
</TABLE>
[ORD 99537] Ed. 4/2000
Page 2 of 6
<PAGE> 3
<TABLE>
<S> <C>
====================================================================================================================================
10 PURCHASE Please write in the percentage of your payment that you want to allocate to the following options. The
PAYMENT total must equal 100 percent. IF CHANGES ARE MADE TO THE ALLOCATIONS LISTED BELOW THE APPLICANT MUST INITIAL
ALLOCATION(S) THE CHANGES.
-----------------------------------------------------------------------------------------------------------------------------
INTEREST RATE OPTIONS OPTION VARIABLE INVESTMENT OPTIONS OPTION
(Not available if you elect Credit.) CODES % (continued) CODES %
-----------------------------------------------------------------------------------------------------------------------------
1 Year Fixed-Rate Option 1YRFXD AIM V.I. Growth & Income Fund AIMGRI
-----------------------------------------------------------------------------------------------------------------------------
Dollar Cost Averaging (DCA) 6 Month* DCA6 AIM V.I. Value Fund AIMVAL
-----------------------------------------------------------------------------------------------------------------------------
Dollar Cost Averaging (DCA) 12 Month* DCA12 Alliance Capital Premier Growth ALLCAP
-----------------------------------------------------------------------------------------------------------------------------
VARIABLE INVESTMENT OPTIONS American Century VP Value AMCVAL
-----------------------------------------------------------------------------------------------------------------------------
Prudential Diversified Bond BOND Davis Value DAVVAL
-----------------------------------------------------------------------------------------------------------------------------
Prudential Diversified Franklin Small Cap Investments
Conservative Growth DCGRW Fund - Class 2 FTSMCP
-----------------------------------------------------------------------------------------------------------------------------
Prudential Equity Income HIDV Janus Aspen Series Growth JANGRW
-----------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series
Prudential Equity STOCK International Growth JANINT
-----------------------------------------------------------------------------------------------------------------------------
Prudential Global GLEQ MFS Emerging Growth Series MFSEMG
-----------------------------------------------------------------------------------------------------------------------------
Prudential High Yield Bond HYLD MFS Research Series MFSRSR
-----------------------------------------------------------------------------------------------------------------------------
OpCap Advisors OCC Accumulation
Prudential Jennison GROWTH Trust Managed OPPMAN
-----------------------------------------------------------------------------------------------------------------------------
OpCap Advisors OCC Accumulation
Prudential Money Market MMKT Trust Small Cap OPPSMC
-----------------------------------------------------------------------------------------------------------------------------
Prudential Small
Capitalization Stock SCAP T. Rowe Price Equity Income TREQST
-----------------------------------------------------------------------------------------------------------------------------
Prudential Stock Index STIX T. Rowe Price International Stock TRINST
-----------------------------------------------------------------------------------------------------------------------------
Prudential 20/20 Focus FOCUS
---------------------------------------------------------------
Warburg Pincus Trust Global
Post-Venture Capital WARVCP TOTAL 100%
-----------------------------------------------------------------------------------------------------------------------------
*THE DOLLAR EQUIVALENT OF THE PERCENTAGE ALLOCATED MUST EQUAL AT LEAST $5,000.
===================================================================================================================================
11 DOLLAR COST If you elect to use more than one Dollar Cost Averaging option, you must also complete a Dollar Cost
AVERAGING Averaging Enrollment Request form (ORD78275).
PROGRAM [ ] DOLLAR COST AVERAGING: I authorize Prudential to automatically transfer funds as indicated below.
TRANSFER FROM: (You cannot transfer from the 1 Year Fixed-Rate option.)*
*If you selected the DCA6 or DCA12 option in section 10, only complete the TRANSFER TO information.
Option code: ________________ $____,______,______.____ OR ______%
TRANSFER FREQUENCY: [ ] Annually [ ] Semiannually [ ] Quarterly [ ] Monthly
TRANSFER TO: (You cannot transfer to the Interest Rate Options.)
The total of the two columns must equal 100 percent.
OPTION CODE PERCENT OPTION CODE PERCENT
__________________________ _____________% __________________________ _____________%
__________________________ _____________% __________________________ _____________%
__________________________ _____________% __________________________ _____________%
I understand that the transfer will continue until: (1) I terminate the program; (2) the funds in the account
from which money is being transferred are exhausted; or (3) the funds in the account fall below the required
minimum. I also understand that the Dollar Cost Averaging (DCA) programs are described in and subject to
the rules and restrictions contained in the prospectus, and that upon termination of the DCA6 or DCA12
programs, I will no longer receive the interest at the rate associated with this program.
====================================================================================================================================
</TABLE>
[ORD 99537] Ed. 4/2000
Page 3 of 6
<PAGE> 4
<TABLE>
<S> <C>
====================================================================================================================================
12 AUTO- [ ] AUTO-REBALANCING: I want to maintain my allocation percentages. Please have my portfolio mix
REBALANCING automatically adjusted as allocated in section 10 under my variable investment options.
Adjust my portfolio: [ ] Annually [ ] Semiannually [ ] Quarterly [ ] Monthly
Please specify the start date if different than the contract date: _______ ______ __________
month day year
====================================================================================================================================
13 TELEPHONE We will accept your transfers and reallocations over the telephone. Please indicate below if you wish
TRANSFER to extend authority as follows.
[ ] I authorize Prudential to accept telephone transfers and reallocation instructions from my
Registered Investment Advisor.
====================================================================================================================================
14 AGGREGATION [ ] I have purchased another non-qualified annuity from Prudential or an affiliated company this
(non-qualified calendar year.
annuities only) Contract number _______________________________
====================================================================================================================================
15 REPLACEMENT THIS SECTION MUST BE COMPLETED.
(Please enter
additional Will the proposed annuity contract replace any existing insurance policy(ies)
comments in or annuity contract(s)? [ ] Yes [ ] No
section 19.)
If yes, provide the following information for each policy or contract and attach all applicable
Prudential disclosure and state replacement forms.
Company name
___________________________________________________________________________
Policy or contract number Year of issue Name of plan (if applicable)
_________________________________ _____ _____ ____________ _______________________________
month day year
THIS QUESTION MUST BE COMPLETED BY THE REPRESENTATIVE.
Do you have, from any source, facts that any person named as the owner or
joint owner above is replacing or changing any current insurance or annuity
in any company? [ ] Yes [ ] No
====================================================================================================================================
16 FEATURES AND Please note that you have various options available under this annuity contract. You have made choices
COSTS OF A concerning: 1) the addition of a credit to your purchase payment; 2) the Death Benefit available to
STRATEGIC your beneficiaries; and 3) the Guaranteed Minimum Income Benefit available to provide a guaranteed
PARTNERS payout at annuitization. Each of these choices has both costs and benefits associated with it.
VARIABLE
ANNUITY The following is a summary of the costs, which you should review before signing this application. If
you have any questions, please consult with your representative and review the contract or prospectus,
which contains a more complete explanation of these features.
CREDIT. a) The addition of the Credit to your purchase payment results in a longer surrender
charge period for your contract. The surrender charge period is nine years, rather than for
seven years should you elect not to receive the Credit. b) The Credit that is added to your
purchase payment vests over the surrender charge period. If you make a withdrawal, or if certain
other events occur during the period in which the Credit associated with that purchase payment
is still vesting, you will receive only the vested portion of the Credit. We will recapture the
non-vested portion of the Credit according to the vesting schedule. c) If the Credit is elected,
no fixed investment options are available under your contract. This includes the Dollar Cost
Averaging Fixed Interest Rate Investment Option. d) If the Credit is elected, the commission
paid to your representative in connection with your purchase is lower than if you had not
elected the Credit.
GUARANTEED MINIMUM DEATH BENEFIT (GMDB). The Insurance Charge for the contract is 1.40 percent
if you do not elect a GMDB. There is an additional charge for a GMDB which depends on the GMDB
option that you choose. If you chose either the GMDB with a Roll-Up option or the GMDB with an
annual Step-Up option, there is an additional charge of 0.20 percent. If you chose the GMDB
with a Roll-Up and annual Step-Up option there is an additional charge of 0.30 percent.
(continued)
====================================================================================================================================
- ---------
ORD 99537 Ed. 4/2000
- ---------
</TABLE>
Page 4 of 6
<PAGE> 5
<TABLE>
<S> <C>
====================================================================================================================================
16 FEATURES AND GUARANTEED MINIMUM INCOME BENEFIT (GMIB). a) This feature is only available if you also chose a GMDB
COSTS OF A feature. For this feature, there is an additional charge of 0.25 percent. b) There is a waiting
STRATEGIC period for exercising the GMIB payout option which ranges from 10 to 15 years. c) If the GMIB is
PARTNERS utilized, your annuity payout options are limited to a life with period certain option on either an
VARIABLE individual life or joint and survivor basis (only if there is a co-annuitant).
ANNUITY
(continued) For a more complete explanation of the terms and conditions discussed in this section, you should refer to
your contract or prospectus.
I acknowledge that I have read and that I understand the information contained in section 16.
X
------------------------------------------------------------ _______ ____ __________
Contract owner's signature and date month day year
X
------------------------------------------------------------ _______ ____ __________
Joint owner's signature (if applicable) and date month day year
====================================================================================================================================
17 SIGNATURE(S) If applying for an IRA or Roth IRA, I acknowledge receiving an IRA disclosure statement and understand
that I will be given a financial disclosure statement with the contract. I understand that tax deferral is
provided by the IRA, and acknowledge that I am purchasing this contract for its features other than tax
deferral, including the lifetime income payout option, the Death Benefit protection, the ability to
transfer among investment options without sales or withdrawal charges, and other features as described in
the prospectus.
No representative can make or change a contract or waive any of the rights.
I believe that this contract meets my needs and financial objectives. Furthermore, I (1) understand that
any amount of purchase payments allocated to a variable investment option will reflect the investment
experience of that option and, therefore, annuity payments and surrender values may vary and are not
guaranteed as to a fixed dollar amount, and (2) acknowledge receipt of the current prospectus for this
contract and the variable investment options.
[ ] If this contract has a joint owner, please check this box to authorize Prudential to act on the
instruction(s) of either the owner or joint owner with regard to transactions under the contract.
[ ] If this application is being signed at the time the contract is delivered, I acknowledge receipt of
the contract.
[ ] Check here to request a Statement of Additional Information.
Any person who knowingly gives false or deceptive information when completing this form for the purpose
of defrauding the company may be guilty of insurance fraud.
CONNECTICUT: Any person who knowingly gives false or deceptive information when completing this form
for the purpose of defrauding the company may be guilty of insurance fraud. This is to be determined by a
court of competent jurisdiction.
VIRGINIA: Any person who, with the intent to defraud or knowing that he or she is facilitating a fraud
against an insurer, submits an application or files a claim containing a false or deceptive statement may
have violated state law.
COLORADO: It is unlawful to knowingly provide false, incomplete, or misleading facts or information to an
insurance company for the purpose of defrauding or attempting to defraud the company. Penalties may
include imprisonment, fines, denial of insurance, and civil damages. Any insurance company or agent of an
insurance company who knowingly provides false, incomplete, or misleading facts or information to a
policy holder or claimant for the purpose of defrauding or attempting to defraud the policy holder or
claimant with regard to a settlement or award payable from insurance proceeds shall be reported to the
Colorado Division of Insurance within the Department of Regulatory Agencies.
MINIMUM DISTRIBUTION UNDER AN IRA: IF YOU HAVE NOT MET THE REQUIRED MINIMUM DISTRIBUTION FOR THE YEAR
IN WHICH THE FUNDS ARE PAID TO PRUDENTIAL:
I understand it is my responsibility to remove the minimum distribution from the purchase payment prior to
sending money to Prudential with this application. Unless we are notified otherwise, Prudential will
assume that the owner is satisfied with the required minimum distributions from other IRA funds.
By signing this form, the trustee(s)/officer(s) hereby represents that the trustee(s)/officer(s)
possess(es) the authority, on behalf of the non-natural person, to purchase the annuity contract and to
exercise all rights of ownership and control over the contract, including the right to make purchase
payments to the contract.
(continued)
====================================================================================================================================
- ----------
ORD 99537 Ed. 4/2000
- ----------
</TABLE>
Page 5 of 6
<PAGE> 6
<TABLE>
<S> <C>
====================================================================================================================================
17 SIGNATURE(S) OWNER'S TAX CERTIFICATION
(continued)
----------------------------------------------------------------------------------------------------------
Under penalty of perjury, I certify that the taxpayer identification number (TIN) I have listed on this
form is my correct taxpayer identification number. I HAVE / HAVE NOT (circle one) been notified by the
Internal Revenue Service that I am subject to backup withholding due to underreporting of interest or
dividends.
----------------------------------------------------------------------------------------------------------
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS
DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
----------------------------------------------------------------------------------------------------------
We must have both the contract owner's and annuitant's signatures even if this contract is owned by a
Trust, Corporation, or other entity. If the annuitant is a minor, please provide the signature of a legal
guardian or custodian.
X
--------------------------------------------------------- _____ ____ __________
Contract owner's signature and date month day year
X
--------------------------------------------------------- _____ ____ __________
Joint owner's signature (if applicable) and date month day year
X
--------------------------------------------------------- _____ ____ __________
Annuitant's signature (if applicable) and date month day year
X
--------------------------------------------------------- _____ ____ __________
Co-annuitant's signature (if applicable) and date month day year
---------------------------------------------------------
Signed at (city, state)
====================================================================================================================================
18 REPRESENTATIVE'S This application is submitted in the belief that the purchase of this contract is appropriate for the
SIGNATURE applicant based on the information provided and as reviewed with the applicant. Reasonable inquiry has
been made of the owner concerning the owner's overall financial situation, needs, and investment
objectives.
The representative hereby certifies that all information contained in this application is true to the
best of his or her knowledge.
--------------------------------------------------------- __________________________________
Representative's name Rep's contract/FA number
X
--------------------------------------------------------- _____ ____ __________
Representative's signature and date month day year
--------------------------------------------------------- __________________________________
Second representative's name Rep's contract/FA number
X
--------------------------------------------------------- _____ ____ __________
Second representative's signature and date month day year
--------------------------------------------------------- _______ ________ - ___________________
Branch/field office name and code Representative's telephone number
====================================================================================================================================
19 ADDITIONAL
REMARKS
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
====================================================================================================================================
STANDARD PRUDENTIAL ANNUITY SERVICE CENTER OVERNIGHT PRUDENTIAL ANNUITY SERVICE CENTER
MAIL TO: PO BOX 7590 MAIL TO: 2101 WELSH ROAD
PHILADELPHIA, PA 19101 DRESHER, PA 19025
If you have any questions, please call the Prudential Annuity Service Center at (888) 778-2888, Monday
through Friday between 8:00 a.m. to 9:00 p.m. Eastern time.
====================================================================================================================================
- ----------
ORD 99537 Ed. 4/2000
- ----------
</TABLE>
Page 6 of 6
