The Penn Mutual Life Insurance Company
A002430C
Founded 1847
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Date
Contract Number Contract Date
The Penn Mutual Life Insurance Company will make monthly annuity payments and
other payments as set forth in this contract.
This is a legal contract between the Owner and Penn Mutual. Please read the
contract carefully.
VALUES AND PAYMENTS UNDER THIS CONTRACT, WHEN BASED UPON THE INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE. THEY MAY DECREASE OR INCREASE
AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT.
TEN DAY RIGHT TO REVIEW CONTRACT: The Owner may cancel this contract within ten
days after its receipt. Simply return or mail it to Penn Mutual or the
representative through whom it was purchased. The Variable Account Value and
Purchase Payments credited to the Fixed Account will be refunded.
/s/ /s/
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Secretary Chairman
Chief Executive Officer
Individual Variable and Fixed
Annuity Contract
Flexible Purchase Payments
o Annuity Payments payable on Annuity Date
o Flexible Purchase Payments payable until
Annuity Date
o Participating
The Penn Mutual Life Insurance Company, Independence Square, Philadelphia,
Pennsylvania 19172
DV-790
Guide to Contract Sections
A002883I
Section 1 - Specifications
Section 2 - Endorsements
Section 3 - Definitions
Section 4 - Purchase Payments
Section 5 - Variable Account Provisions
Section 6 - Fixed Account Provisions
Section 7 - Payment on Death
Section 8 - Transfer To Another Contract
Section 9 - Withdrawal
Section 10 - Miscellaneous
SECTION I - CONTRACT SPECIFICATIONS
A002890P
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ANNUITANT ANNUITY DATE
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CONTRACT CONTRACT DATE
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FIRST PURCHASE PAYMENT TO SEPARATE ACCOUNT AGE OF ANNUITANT
DATE CONTRACT ADMINISTRATION
THE SEPARATE ACCOUNT CHARGE IS DEDUCTED EACH YEAR
PENN MUTUAL VARIABLE ANNUITY ACCOUNT III
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MORTALITY AND EXPENSE RISK CHARGES ARE MADE DAILY AGAINST THE ASSETS OF THE
SEPARATE ACCOUNT. ON AN ANNUAL BASIS THEY EQUAL 1.25% OF THE DAILY NET ASSET
VALUE OF THE SEPARATE ACCOUNT.
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THE ASSETS OF THE SEPARATE ACCOUNT MUST EARN AN INVESTMENT RETURN OF AT LEAST
4.00% SO THAT THE DOLLAR AMOUNT OF VARIABLE ANNUITY PAYMENTS WILL NOT DECREASE.
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ELIGIBLE FUNDS
Fidelity Management Quest for Value Advisors
Equity Income (a subsidiary of Oppenhiemer Capital)
Growth Value Equity
Asset Manager Small Capitalization
Independence Capital (ICMI) ▇. ▇▇▇▇ Price
Money Market High Yield Bond
Quality Bond Flexibly Managed
Growth Equity
Twentieth Century
Vontobel USA (Investors Research)
International Equity TCI Growth
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Limited Maturity Bond Portfolio
Balanced
EXCEPT WITH THE CONSENT OF PENN MUTUAL, THERE CAN BE NO ALLOCATION OF PURCHASE
PAYMENTS AND TRANSFERS TO MORE THAN 17 OF THE FUNDS AND THE FIXED INTEREST
ACCOUNTS OVER THE DURATION OF THE CONTRACT.
DIVISIBLE SURPLUS APPORTIONED TO THIS CONTRACT, IF ANY, WILL BE APPLIED TO
PROVIDE ADDITIONAL ACCUMULATION UNITS OR ANNUITY UNITS UNLESS YOU ELECT TO HAVE
IT PAID IN CASH. CONTRACT ADMINISTRATION CHARGE IS EQUAL TO THE LESSER OF $30,
OR 2% OF THE VARIABLE ACCOUNT VALUE EACHYEAR IN WHICH FUNDS ARE HELD IN ONE OR
MORE VARIABLE ACCOUNTS.
DV-790 PAGE 3A
SCHEDULE OF PURCHASE PAYMENTS TO THE FIXED ACCOUNTS
A002692P
DATE OF PAYMENT HOLDING ACCOUNT 1 YR GUARANTEE 3 YR GUARANTEE
5 YR GUARANTEE 7 YR GUARANTEE TOTAL PAYMENT
AFTER: HOLDING ACCOUNT 1 YR GUARANTEE 3 YR GUARANTEE
BUT BEFORE: 5 YR GUARANTEE 7 YR GUARANTEE TOTAL PAYMENT
BEGINNING: HOLDING ACCOUNT 1 YR GUARANTEE 3 YR GUARANTEE
UNTIL: 5 YR GUARANTEE 7 YR GUARANTEE TOTAL PAYMENT
THE AMOUNT OF PURCHASE PAYMENTS AND THE INTERVAL OF SUBSEQUENT PURCHASE PAYMENTS
MAY BE CHANGED BY THE OWNER SUBJECT TO THE PROVISIONS OF THIS CONTRACT. ANY
CHANGE WILL AFFECT THE AMOUNT OF THE ANNUITY BENEFIT.
GUARANTEED EFFECTIVE ANNUAL RATES OF INTEREST
DV-790
PAGE 3B
SCHEDULE OF BENEFITS - FIXED ACCOUNT
A002693P
THIS IS BASED ON THE ELECTION OF INTEREST OPTIONS AND PURCHASE PAYMENTS MADE IN
THE AMOUNTS AND AT THE INTERVALS STATED IN THE SCHEDULE OF PURCHASE PAYMENTS
SPECIFIED ON PAGE 3B. ACCUMULATIONS BEYOND THE INITIAL GUARANTEE PERIOD AND
PAYOUT OF BENEFITS ARE BASED ON THE MINIMUM CONTRACTUAL GUARANTEES.
THE AMOUNT OF MONTHLY ANNUITY BENEFIT ON THE ANNUITY DATE DEPENDS ON: (1) THE
AMOUNT AND FREQUENCY OF PURCHASE PAYMENTS MADE (2) THE INTEREST OPTION(S)
ELECTED (3) THE ACTUAL RATES CREDITED (4) THE ANNUITY OPTION CHOSEN.
FOR A WITHDRAWAL MADE DURING THE FIRST CONTRACT YEAR, THE WITHDRAWAL CHARGE
WOULD BE 7% OF THE AMOUNT WITHDRAWN. FOR OTHER CHARGES SEE SECTIONS 5-B, 6-C AND
9.
DV-790
PAGE 3C
Section 2 - Endorsements
A002884E
Endorsement-Individual Retirement Annuity
The contract is amended as follows:
1. The definition of Owner in the Definitions Section is amended by the addition
of the following provision:
The entire interest in this contract will be for the exclusive benefit of
the Annuitant who will be the Owner for his or her lifetime.
2. The following provision is added to the Purchase Payments Section:
There are no fixed Purchase Payments under this contract.
No Purchase Payments under this contract may be made unless this contract is
an Individual Retirement Annuity which meets the requirements of Section
408(b) of the Internal Revenue Code (Code) for the taxable year of the Owner
for or during which the Purchase Payment is made. Purchase Payments must be
paid in cash and either:
(a) must meet the requirements for deduction under Section 219 of the code
and must not exceed the lesser of $2,000 or 100% of compensation per year
except, in the case of a simplified employee pension as defined in
Section 408(k) of the Code, the maximum Purchase Payment per year shall
be 15% of compensation up to a maximum of $200,000 of compensation
(adjusted pursuant to Section 415 of the code) may be contributed by the
employer, or
(b) must be paid with funds which qualify as a rollover contribution under
Sections 402(a)(5), 402(a)(7), 408(b)(8), 408(d)(3), 409(b)(3)(c) of the
Internal Revenue Code.
3. The Participating Contract paragraph in the Miscellaneous Section is amended
to read as follows:
Participating Contract. The contract may participate in our divisible
surplus. Divisible surplus, if any. to be apportioned to the contract shall
be apportioned annually and shall be credited to your Contract Value at the
end of the contract year. Dividends will not be paid in cash.
No divisible surplus is expected to be apportioned to this contract in the
foreseeable future.
Any refund of Purchase Payments (other than those attributable to excess
contributions) will be applied before the close of the calendar year
following the year of the refund toward payment of future premiums or the
purchase of additional benefits.
4. Any benefits payable under the Annuity Payments Section, or Withdrawal
Section are subject to the following added provisions:
Article I-Notwithstanding any provision of this contract to the contrary, the
distribution of an individual's interest shall be made in accordance with the
minimum distribution requirements of section 408(a)(6) or section 408(b)(3)
of the Code and the regulations thereunder, including the incidental death
benefit provisions of section 1.401(a)(9)-2 of the proposed regulations, all
of which are herein incorporated by reference.
Article II-The owner's entire interest in the contract must be distributed,
or begin to be distributed, by the owner's required beginning date, which is
the April 1 following the calendar year in which the owner reaches age 70
1/2. For each succeeding year, a distribution must be made on or before
December 31. By the required beginning date the owner may elect to have the
balance in the contract distributed in one of the following forms:
a. a single sum payment;
b. equal or substantially equal payments over the life of the owner;
c. equal or substantially equal payments over the lives of the owner and his
or her designated beneficiary;
d. equal or substantially equal payments over a specified period that may
not be longer than the owner's life expectancy;
Endorsement No. 1534-90
Endorsement-Individual Retirement Annuity (continued)
A002885E
e. equal or substantially equal payments over a specified period that may not
be longer than the joint life and last survivor expectancy of the owner
and his or her designated beneficiary.
Article III-If the owner dies before his or her entire interest is
distributed, the entire remaining interest will be distributed as follows:
a. If the owner dies on or after distributions have begun under Article II,
the entire remaining interest must be distributed at least as rapidly as
provided under Article II.
b. If the owner dies before distributions have begun under Article II, the
entire remaining interest must be distributed as elected by the owner or,
if the owner has not so elected, as elected by the beneficiary or
beneficiaries, as follows:
1) by December 31 st of the year containing the fifth anniversary of the
owner's death; or
2) in equal or substantially equal payments over the life or life
expectancy of the designated beneficiary or beneficiaries starting by
December 31st of the year following the year of the owner's death. If,
however, the beneficiary is the owner's surviving spouse, then this
distribution is not required to begin before December 31st of the year
in which the owner would have turned 70 1/2.
Article IV-Unless otherwise elected by the owner prior to the commencement of
distributions under Article II or, if applicable, by the surviving spouse
where the owner dies before distributions have commenced, life expectancies
of an owner or spouse beneficiary shall be recalculated annually for purposes
of distributions under Article II and Article III. An election not to
recalculate shall be irrevocable and shall apply to all subsequent years. The
life expectancy of a non-spouse beneficiary shall not be recalculated.
Article V-An individual may satisfy the minimum distribution requirements
under sections 408(a)(6) and 408(b)(3) of the Code by receiving a
distribution from one IRA that is equal to the amount required to satisfy the
minimum distribution requirements for two or more IRAs. For this purpose, the
owner of two or more IRAs may use the alternative method described in Notice
88-38,1988-1 C.B. 524, to satisfy the minimum distribution requirements
described above.
5. In the Annuity Payments Section the Provision entitled Annuity Date is
changed to read as follows, subject to the minimum distribution requirements
of Section 4 above being satisfied by such alternative methods as may from
time to time be approved by the Commissioner of Internal Revenue: Annuity
Date. The Annuity Date must be on the first of the month. It may not be later
than the first day of the next month after the Annuitant 's 90th birthday.
You choose the Annuity Date in the application. You may change the Annuity
Date up to 30 days prior to the current Annuity Date.
6. In the Miscellaneous Section, the provision entitled Ownership of Contract is
changed to read as follows: Ownership-Transferability and Forfeitability
Restriction. The Annuitant is the Owner. This contract is nontransferable by
the Owner and the entire interest of the Owner is nonforfeitable in
accordance with applicable provisions of the Internal Revenue Code.
7. The following provision is added to the Miscellaneous Section: Amendment of
Policy. To the extent necessary to comply with applicable laws and
regulations, including the Internal Revenue Code and rules and regulations
thereunder, Penn Mutual reserves the right to amend this contract without the
consent of the Owner. Such amendment may, to the extent necessary, have
retroactive effect. The Owner will be given a copy of any such' amendments
when they are made.
8. The terms of this endorsement shall override any inconsistent or conflicting
provisions in the contract. The Effective Date of this endorsement is the
later of January 1,1989, or the Contract Date.
Philadelphia, Pennsylvania
(Included at Issue) The Penn Mutual Life Insurance Company
[GRAPHIC OMITTED]
Endorsement No. 1534-90
Section 2 - Endorsements
A002888E
Endorsement-Tax Deferred Annuity
The following provisions are added to the contract:
1. Non-transferable
This policy or contract is non-transferable in accordance with Section 401(g)
of the Internal Revenue Code. It may not be sold, assigned, discounted or
pledged as collateral for a loan or as security for the performance of an
obligation or for any other purpose, to any person other than Penn Mutual.
2. Benefit Commencement Date
On the Annuity Date or, if earlier, within 90 days following receipt of the
Owner's written notice of intent to commence annuity benefit payments, but in
no event later than the last day of the calendar year in which the Owner
attains age 701/2, annuity benefit payments will commence. The form of such
benefit payments will be determined in accordance with the provisions of the
following paragraphs.
3. Form of Benefit-Married Owner
The term married owner shall mean an Owner who has been married to the same
spouse for at least the twelve consecutive calendar months immediately
preceding the Benefit Commencement Date. The form of benefit for a Married
Owner shall be a Qualified Joint and 50% Survivor Annuity which is the
actuarial equivalent of a life annuity. Election of an optional form of
benefit may be made subject to the conditions set forth in Paragraph 6 below.
4. Form of Benefit-Unmarried Owner
The form of benefit for an Owner who is not a Married Owner shall be a life
annuity unless the Owner elects an optional form of benefit.
5. Payment of Death Benefit
If the married Owner dies before the Benefit Commencement Date, the Death
Benefit will be payable to the Married Owner's surviving spouse unless the
spouse has consented to the waiver of such Death Benefit in a written,
notarized statement of consent.
6. Notice and Election
A. Notice
At least 90 days before the earlier of (i) the Annuity Date or (ii) the
last day of the calendar year in which the owner attains age 701/2, or
immediately upon receipt of the Owner's written notice of intent to
commence annuity benefit payments, Penn Mutual will give the Owner written
Notice. Such Notice will:
1. Set forth the optional forms of benefit available to the Owner who is
not a Married Owner, and the procedure for electing an optional form of
benefit.
2. Provide, for the Married owner, an explanation of the Qualified Joint
and Survivor Annuity and of the optional forms of benefit available,
the Married Owner's right to elect an optional form of benefit, the
spouse's right to waive the Qualified Joint and Survivor Annuity, and
the Owner's rights during the election period.
B. Election Unless the owner notifies Penn Mutual in writing of election of
an optional form of benefit by the day before the Benefit Commencement
Date, annuity benefit payments shall be in the form of benefit set forth
in Paragraphs 3 and 4 above.
Election by a Married Owner of a form of benefit other than Qualified Joint
and Survivor Annuity will be valid only if accompanied by the written,
notarized consent to waiver of the Qualified Joint and Survivor Annuity by
the Married Owner's spouse.
Endorsement No. 1495-90
A002889E
7. Optional Forms of Benefit
Subject to the conditions and limitations in Paragraph 6 above, an owner may
elect any annuity payment option set forth in the Annuity Options section or
Income Payments Options section of the policy or contract. The form of
benefit may not be changed after the Benefit Commencement Date.
8. Benefit Restrictions
Any benefits payable under the Annuity Payments Section, or the Withdrawal
Section are subject to the following added provisions:
A. Effective with respect to contributions made after December 31, 1988,
withdrawals attributable to contributions made pursuant to a salary
reduction agreement may be made only when the Owner is over age 591/2,
leaves the employment of the employer who purchased the contract, dies,
becomes disabled as defined in Section 72(m)(7) of the Code, or
establishes hardship as defined in the Code. In the case of hardship
withdrawal, no income attributable to such contributions may be withdrawn.
B. Any withdrawal or annuity benefits under this contract will be paid
either:
(i) in one sum to the Owner not later than April 1 of the calendar year
following the year In which the Owner attains age 70 1/2; or
(ii) in equal or substantially equal monthly, quarterly, semiannual or
annual payments beginning no later than April 1 of the calendar year
following the year in which the Owner attains age 70 1/2.
The periodic payments must extend over either:
(i) the life of the Owner or the joint life of the Owner and designated
beneficiary; or (ii) a fixed period not to exceed the life expectancy
of the Owner or the joint life expectancy of the Owner and designated
beneficiary.
The periodic payments will be provided by an annuity option.
9. Effective Date
The Effective Date of this endorsement is the later of January 1, 1989 or the
Contract Date.
Philadelphia, Pennsylvania
(Included at Issue) The Penn Mutual Life Insurance Company
[GRAPHIC OMITTED]
Endorsement No. 1495-90
Section 2 - Endorsements
A002886E
Endorsement - 403(b) Contract Loans
The Individual Variable and Fixed Annuity Contract is amended as follows:
1. The following is added to Subsection A. Interest Options;
Section 6 - Fixed Account Provisions:
Restricted Account. Amounts will be transferred to and from the Restricted
Account in accordance with the provisions of Section 11 - Loans and the terms
of a Loan Request and Agreement as provided therein. For each amount
transferred to the Restricted Account, interest will be credited at an
effective annual rate declared by Penn Mutual. Such rate will be 2 1/2% less
than the interest rate charged by Penn Mutual on the loan with respect to
which the transfer to the Restricted Account was made. Interest will be
credited at the same rate for the entire period that all or any part of the
amount is held in the Restricted Account. The declared effective annual
interest rate under the Restricted Account will never be less than 4%. On
each contract anniversary, interest credited to the Restricted Account will
be transferred to the investment accounts in accordance with the Owner's then
current purchase payment allocation instructions.
2. Section 7 - Payment on Death is amended by the addition of the following: Any
outstanding loan balance will be repaid before any death benefit proceeds are
payable.
3. Section 9 - Withdrawal is amended by the addition of the following:
The proceeds of any full or partial withdrawal must first be applied to the
repayment of any outstanding loan balance. 4. The following provision is
added to Section 10 - Miscellaneous:
Any outstanding loan balance must be repaid before Account Values can be
applied to provide annuity payments and before the contract, or any part
thereof or right therein, is assigned, transferred or exchanged.
While a loan is outstanding, the net amount of any withdrawal, after
deduction of all applicable charges, must be at least equal to the scheduled
loan payment.
5. The following Section 11 is added to the contract:
Section 11 - Loans
Contract Loans. At any time following one month after the Contract Date, the
Owner may borrow funds from the general account of Penn Mutual if this
contract was issued as part of an arrangement under the provisions of Section
403(b) of the Internal Revenue Code.
Loan Request and Agreement. To make a loan under this contract, the Owner
must submit a completed Loan Request and Agreement on a form provided by Penn
Mutual.
Loan Amount. The maximum loan amount is one-half of the Contract Value but
not more than $50,000. The minimum loan amount is $2,000. No loan may be made
if the Contract Value is less than $4,000. No new loan may be made if any
part of a prior loan remains unpaid.
Restricted Account. When a loan is made, an amount equal to the amount of the
loan will be transferred to the Restricted Account from investment accounts
of the Variable Account and the Fixed Account in accordance with direction
provided by the Owner in the Loan Request and Agreement. When a loan payment
is received by Penn Mutual, an amount equal to the portion which is repayment
of principal will be transferred from the Restricted Account to the Fixed
Holding Account. Transfers from the Restricted Account will be made as of the
date a loan payment is received or, if earlier, the due date of a payment
received during the grace period.
Loan Interest. The loan will bear interest at a rate declared by Penn Mutual
for the entire term of the loan. Such rate will be based on the Monthly
Average of the Composite Yield on Seasoned Corporate Bonds as published by
▇▇▇▇▇'▇ Investor Service, Inc. for the calendar month ending two months
before the effective date of the loan. If the Monthly Average of the
Composite Yield on Seasoned Corporate Bonds is no longer published, the rate
used in its place will be as established by law or by regulation of the
insurance supervisory official of the jurisdiction in which this policy is
Endorsement No. 1536-90
delivered. Interest will accrue on the outstanding loan balance until the
entire loan is repaid; provided, however, that in the event of prepayment of
the entire loan in the first loan year, the amount of interest payable as
part of the scheduled payments during the first loan year must still be paid.
If interest is not paid when due, it will be added to the outstanding loan
balance and will then bear interest at the same rate.
A002887E
Term of Loan. A loan made for the purchase of a primary residence may be made
for 10 years. All other loans will be for a term of 5 years.
Repayment. Each loan, together with all accrued interest, must be fully
repaid in equal quarterly payments over its term. Payments will be due three
months from the effective date of the loan and every three months thereafter.
Payments must be made to Penn Mutual at its Home Office or its designated
service office.
Grace Period. Each scheduled loan payment shall have a grace period of 30
days from its due date during which a loan payment will not be deemed in
default. Any scheduled loan payment which is not made within the grace period
will be in default. A payment made after the grace period but before the next
scheduled bill date will be deemed an unscheduled prepayment of principal.
Payment In Default. If a payment is in default, an amount equal to the
defaulted payment including interest accrued plus any applicable contract
charges will be withdrawn from the contract in accordance with the Owner's
direction in the Loan Request and Agreement but subject to the timing
restrictions of Section 403(b)(11) of the Internal Revenue Code. The amount
withdrawn will be applied to the payment in default.
Such withdrawal will not be subject to minimum withdrawal amount or remaining
account balance.
Loan In Default. If at any time during the term of the loan four scheduled
payments are not made within the applicable grace periods, the entire loan
will be in default and immediately due and payable. An amount equal to the
outstanding loan balance, including all accrued interest plus any applicable
contract charges, will be withdrawn from the contract in accordance with the
Owner's direction in the Loan Request and Agreement but subject to the timing
restrictions of Section 403(b)(11) of the Internal Revenue Code. The amount
withdrawn will be applied to repay the loan in default.
Such withdrawal will not be subject to minimum withdrawal amount or remaining
account balance.
Death of Annuitant. In the event of the death of the Annuitant, any
outstanding loan shall be considered immediately due and payable in full from
proceeds payable under the Payment on Death provisions of the contract.
6. The effective date of this endorsement is the Contract Date unless a later
date is shown below.
Philadelphia. Pennsylvania
(Included at Issue) The Penn Mutual Life Insurance Company
[GRAPHIC OMITTED]
Endorsement No. 1536-90
Section 3 - Definitions
A002754P
Owner: The person or entity entitled to exercise all rights under the
contract.
Annuitant: The person during whose life annuity payments are made.
Purchase Payments: The money paid to Penn Mutual under this contract.
Variable Account: The account established for the Owner under Section 5 of
this contract to which Purchase Payments are credited.
Accumulation Unit: A measuring unit used to compute the Variable Account
Value prior to the Annuity Date.
Annuity Unit: A measuring unit used to compute Variable Annuity Payments.
Variable Account Value: The value of all Accumulation Units credited to the
Variable Account.
Fixed Account: The account established for the Owner under Section 6 of this
contract to which Purchase Payments are credited.
Fixed Account Value: The sum of all Purchase Payments and transfers allocated
to the Fixed Account, increased by interest credited to and reduced by
withdrawals and amounts transferred from the Fixed Account.
Contract Value: The sum of the Variable Account Value and the Fixed Account
Value.
Nonforfeiture Date: The later of (i) the date which is the tenth anniversary
of the contract date, or (ii) the Annuitant 's 70th birthday, but in no event
later than the Annuity Date.
Qualified Plan: A retirement plan which receives special tax treatment under
Sections 401, 403, 404, 408, 457 or any similar provisions of the Internal
Revenue Code.
Nonqualified Plan: Any arrangement other than a Qualified Plan.
Section 4 - Purchase Payments
Purchase Payments will be credited to the Variable Account or the Fixed
Account in accordance with instructions provided by the Owner.
First Purchase Payment: The first Purchase Payment must be made before issue
of the contract. The minimum first Purchase Payment is $250 for Qualified
Plans and $2,500 for Nonqualified Plans, or such lower minimums as Penn
Mutual may establish.
Subsequent Purchase Payments: Purchase Payments, after the first, may be made
at any time without prior notice to Penn Mutual. The minimum subsequent
Purchase Payment is $50 for Qualified Plans and $300 for Nonqualified Plans.
Total Purchase payments in any calendar year may not exceed $1,000,000
without the consent of Penn Mutual.
A002755P
Section 5 - Variable Account Provisions
A. The Separate Account. The name of the Separate Account is specified in
Section 1. It is a separate account of The Penn Mutual Life Insurance
Company. It is for this and other contracts. ▇▇▇▇▇▇▇ credited to the
Variable Account will be allocated to the Separate Account.
Investment of Separate Account Assets. Assets held in the Separate Account
will be invested in one or more eligible mutual funds. Current eligible
mutual funds are specified in Section 1.
For this and other contracts the Separate Account is divided into
investment accounts. There is an investment account for each eligible
mutual fund. For each investment account, there is a subaccount for
Qualified Plans and a subaccount for Nonqualified Plans.
The Owner must choose the investment account(s) to which Purchase Payments
credited to the Variable Account are to be allocated.
Penn Mutual owns the assets held in the Separate Account. However, the
portion of such assets equal to the reserves and other contract
liabilities with respect to each subaccount of each investment account of
the Separate Account are not chargeable with liabilities arising out of
any other business Penn Mutual may conduct.
Upon notice to Penn Mutual the Owner may transfer part or all the value of
the Accumulation Units or Annuity Units credited under this contract from
one investment account to another. Upon notice to Penn Mutual, the Owner
may transfer part or all the value of the Accumulation Units to the Fixed
Account. No more than two such transfers may be made in a calendar month
and no more than 12 such transfers may be made in a calendar year. Penn
Mutual reserves the right to charge a fee for transfers in excess of six
in a calendar year. Such fee for excess transfers will not exceed $10 per
transfer. The minimum transfer amount is $250, or, if less, the amount
held in the investment account.
Such investment account transfers, as well as all other investments, are
subject to the limits and rules applicable to each mutual fund.
Substitution of Investment. If investment in a mutual fund should no
longer be possible or in our judgment becomes inappropriate to the
purposes of the contract, we may substitute another mutual fund.
Substitution may be made with respect to existing investments and the
investment of future Purchase Payments.
Substitution will be subject to the approval of the Insurance Department
of the jurisdiction in which this contract is delivered.
B. Charges and Deductions
Contract Administration Charge. This charge is the lesser of 2% of the
Variable Account Value at the end of the contract year or $30. It will be
deducted each year in which funds are held in the Variable Account. It
will be deducted on the date specified in Section 1. It will also be
deducted when the Variable Account Value is withdrawn in full if
withdrawal is not on the date specified. The charge will never exceed $30.
The charge will not be deducted on or after the Annuity Date.
Expense Risk Charge. This charge is made to compensate Penn Mutual for
guaranteeing that the contract administration charge will never exceed
$30. On an annual basis it equals 0.5% of the daily net asset value of the
Separate Account.
Mortality Risk Charge. This charge is made to compensate Penn Mutual for
the mortality guarantees made under this contract. On an annual basis it
equals 0.75% of the daily net asset value of the Separate Account.
Contingent Deferred Sales Charge. This charge, if applicable, will be
deducted upon withdrawal, in whole or in part, of the Contract Value. See
Section 9. This charge will not apply to any 10% Free Withdrawal, any
disability Free Withdrawal, any payment on Death or any Variable or Fixed
Annuity Payments.
A002756P
Premium Taxes. Premium taxes, if any, imposed by a state or other
government will be deducted when due.
Deductions. The expense risk charge and mortality risk charge will be
computed and deducted from each subaccount of each investment account of
the Separate Account established under the contract for each day the
contract is in force. Other charges, to the extent applicable to the
Variable Account, will be deducted by canceling accumulation units or
annuity units of a value equal to the deduction. Cancellation of
accumulation units will be in the ratio of the Owner's interest in each
subaccount to the Variable Account Value.
C. Variable Accumulation Values
Valuation Period. As used in this contract, this is the interval from one
valuation time to the next valuation time. Valuation time is the time as
of which each mutual fund determines the net asset value of its shares.
Number of Accumulation Units. For each subaccount of each investment
account of the Separate Account, the number of Accumulation Units is the
sum of
Each Purchase Payment allocated to the subaccount
divided by
The value of an Accumulation Unit for that subaccount for the valuation
period in which the Purchase Payment was received.
The number of Accumulation Units will be adjusted for transfers,
withdrawals and charges. Adjustments will be made as of the valuation
period in which all requirements for the transaction are received.
Value of Each Accumulation Unit. For each subaccount of each investment
account of the Separate Account, the value was arbitrarily set at $10 when
the subaccount was established. The value may increase or decrease from
one valuation period to the next. For any valuation period the value is
The value of an Accumulation Unit for the prior valuation period.
multiplied by
The net investment factor for that subaccount for the current valuation
period.
Net Investment Factor. As used in this contract, Net Investment Factor is
an index used to measure the investment performance of a subaccount from
one valuation period to the next. For any subaccount, the net investment
factor for a valuation period is found by dividing (a) by (b) and
subtracting (c):
Where (a) is
The net asset value per share of the mutual fund held in the subaccount,
as of the end of the valuation period
plus
The per-share amount of any dividend or capital gain distributions by the
mutual fund if the "ex-dividend" date occurs in the valuation period
A002757P
plus or minus
A per-share charge or credit as Penn Mutual may determine, as of the end
of the valuation period, for tax reserves.
Where (b) is
The net asset value per share of the mutual fund held in the subaccount as
of the end of the last prior valuation period
plus or minus
The per-share charge or credit (if any) for tax reserves as of the end of
the last prior valuation period.
Where (c) is
The sum of the daily Expense Risk Charge and the daily Mortality Risk
Charge. On an annual basis, the sum of such charges equals 1.25% of the
daily net asset value of the Separate Account.
▇. ▇▇▇▇▇▇▇▇ Annuity Payments
Annuity Date. Unless another Annuity Date was chosen in the application or
later written notification, the Annuity Date for Nonqualified Plans will
be the first day of the next month after the Annuitant's 85th birthday
and, for Qualified Plans, the first day of April in the calendar year
following the year in which the Annuitant attained age 70 1/2.
The Annuity Date may not be earlier than the first contract anniversary
and must be on the first day of a month. The Owner may change the Annuity
Date up to 30 days before the current Annuity Date.
Variable Annuity Options. The Owner or the Owner's surviving beneficiary
may choose a variable annuity option up to 30 days prior to the Annuity
Date.
First Variable Annuity Payment. Premium taxes, if any, will be deducted
from the Variable Account Value. The net Variable Account Value as of the
Annuity Date will be applied to the annuity table for the option chosen.
The annuity tables show the amount of the first payment for each $1,000 so
applied, according to the age at the Annuity Date. The tables are based on
the 1983 Individual Annuity Mortality Table with interest at 4%. Adjusted
ages are used in applying those tables.
Subsequent Variable Annuity Payments. Payments after the first will vary
in amount according to the investment performance of the subaccount or
subaccounts chosen. The payment amount may change from month to month. The
amount of each subsequent payment is the sum of the following amounts
attributable to each applicable subaccount.
The number of Annuity Units for the subaccount
multiplied by
The value of an Annuity Unit for that subaccount for the valuation period
in which payment is due.
The amount of each annuity payment after the first will not be affected by
variations in expense or mortality experience.
Minimum Annuity Payments. If the net Contract Value to be applied at the
Annuity Date is less than $5,000, Penn Mutual may pay such amount in a
lump sum. Annuity payments will be made monthly, quarterly, semi-annually
or annually at the Owner's request. If any payment would be less than $50,
Penn Mutual may change the frequency so that payments are at least $50
each.
A002758P
Number of Annuity Units. The number of units for the subaccount of each
investment account chosen is
The amount of the first variable annuity payment attributable to that
subaccount
divided by
The value of an Annuity Unit for the subaccount as of the Annuity Date.
The number of Annuity Units is fixed except for adjustments for subaccount
transfers. Adjustments will be made as of the valuation period in which
all requirements for the transfer are received.
Value of Each Annuity Unit. For each subaccount of each investment
account, the value of an Annuity unit was arbitrarily set at $10 when the
subaccount was established. The value may increase or decrease from one
valuation period to the next. For any valuation period the value is
The value of an Annuity Unit for the last prior valuation period
multiplied by
The net investment factor for that subaccount for the valuation period
multiplied by
An interest factor to neutralize the assumed investment rate of 4% built
into the annuity tables.
E. Variable Annuity Options
Option 1 - Variable Annuity for Specified Number of Years. Payments will
be made for a specified number of years, which may not be less than 5 nor
more than 25.
Option 2 - Variable Life Annuity. Payments will be made for the life of
the Annuitant. Payments will cease with the last payment due prior to the
Annuitant's death.
Option 3 - Variable Life Annuity with Payments Guaranteed for 10 or 20
Years. Payments will be made for the life of the Annuitant. A guaranteed
payment period of either 10 or 20 years may be chosen.
Option 4 - Variable Joint and Survivor Life Annuity. Payments will be made
during the lifetimes of the Annuitant and a designated second Annuitant.
Payments will continue as long as either is living. The amount of such
payments will not change by reason of the death of the first Annuitant to
die.
If the Annuitant dies prior to the end of the specified period under
Option 1 or the guaranteed period under Option 3, the beneficiary may
choose either:
(1) To have the payments continue for the specified or guaranteed period,
or
(2) To receive at any time in one sum the present value of the remaining
payments to be made over the specified or guaranteed period.
If the beneficiary dies while receiving annuity payments under Option 1 or
Option 3, the present value of remaining payments will be paid in one sum
to the beneficiary's estate. The present value will be (a) computed as of
the valuation period in which due proof of death is received at our
designated service office, and (b) commuted at the rate of 4% per annum.
Payments. Payments will be made on the first day of the month starting
with the Annuity Date. Payments under all options will be made to or at
the direction of the Owner.
A002759P
F. Variable Annuity Option Tables
The following tables show the amount of the first monthly income payment for
each $1,000 of value applied under a variable annuity option. "Age" as used in
the tables for Options 2, 3, and 4 means an adjusted age determined in the
following manner from the actual age of the Annuitant on the birthday nearest
the date of the first payment:
Date of First Payment Adjusted Age
Before calendar year 2000 Actual age
2000 - 2009 Actual age decreased by 1
2010 - 2019 Actual age decreased by 2
2020 and later Actual age decreased by 3
Option 1 - Annuity for Specified Number of Years
------------------------------------------------------------------------------------------------------------------------------------
Number of Years 5 6 7 8 9 10 11 12 13 14
Monthly Income 18.32 15.56 13.59 12.12 10.97 10.06 9.31 8.69 8.17 7.72
------------------------------------------------------------------------------------------------------------------------------------
Number of Years 15 16 17 18 19 20 21 22 23 24 25
Monthly Income 7.34 7.00 6.71 6.44 6.21 6.00 5.81 5.65 5.49 5.35 5.22
------------------------------------------------------------------------------------------------------------------------------------
Option 2 - Variable Life Annuity and Option 3 - Variable Life Annuity with
Payments Guaranteed for 10 or 20 Years
------------------------------------------------------------------------------------------------------------------------------------
Life 10 Years 20 Years
Age Annuity Guaranteed Guaranteed
------------------------------------------------------------------------------------------------------------------------------------
50 4.68 4.64 4.53
51 4.75 4.71 4.58
52 4.82 4.78 4.64
53 4.90 4.85 4.69
54 4.98 4.92 4.75
55 5.06 5.00 4.81
56 5.15 5.08 4.87
57 5.25 5.17 4.93
58 5.35 5.27 4.99
59 5.46 5.36 5.06
60 5.58 5.47 5.12
61 5.71 5.58 5.19
62 5.84 5.69 5.25
63 5.98 5.81 5.31
64 6.14 5.94 5.38
65 6.30 6.07 5.44
66 6.48 6.21 5.50
67 6.66 6.36 5.56
68 6.86 6.51 5.61
69 7.08 6.67 5.66
70 7.31 6.83 5.71
71 7.56 7.00 5.75
72 7.83 7.17 5.79
73 8.12 7.35 5.83
74 8.43 7.53 5.86
75 8.77 7.72 5.89
76 9.13 7.90 5.91
77 9.52 8.08 5.93
78 9.94 8.26 5.95
79 10.40 8.44 5.96
80 10.88 8.61 5.97
81 11.41 8.77 5.98
82 11.98 8.93 5.99
83 12.58 9.07 5.99
84 13.23 9.20 5.99
85 13.92 9.33 6.00
Option 4 - Variable Joint and Survivor Life Annuity
--------------------------------------------------------------------------------
Age 50 55 60 65 70 75 80 85 Age
50 4.21 4.31 4.41 4.49 4.55 4.60 4.63 4.65 50
55 4.31 4.47 4.61 4.74 4.84 4.92 4.98 5.01 55
60 4.41 4.61 4.82 5.02 5.19 5.32 5.42 5.49 60
65 4.49 4.74 5.02 5.30 5.58 5.81 5.99 6.12 65
70 4.55 4.84 5.19 5.58 5.98 6.37 6.69 6.93 70
75 4.60 4.92 5.32 5.81 6.37 6.95 7.50 7.95 75
80 4.63 4.98 5.42 5.99 6.69 7.50 8.36 9.14 80
85 4.65 5.01 5.49 6.12 6.93 7.95 9.14 10.37 85
s
Section 6 - Fixed Account Provisions
A002760P
A. Interest Options
Interest will be earned on the Fixed Account value from the date amounts
are credited to the Fixed Account to the date amounts are applied to an
annuity option, paid upon the death of the Owner or Annuitant, transferred
or withdrawn.
Each amount credited to the Fixed Account will be credited with interest
under the Fixed Holding Account, the One Year Guaranteed Account, the
Three Year Guaranteed Account, the Five Year Guaranteed Account or the
Seven Year Guaranteed Account. The Owner chooses the account(s) to which
Purchase Payments and transfers credited to the Fixed Account are to be
allocated.
The minimum amount for an allocation to the Fixed Holding Account is $50.
The minimum amount for an allocation to the One Year Guaranteed Account or
the Three Year Guaranteed Account is $250. The minimum amount for an
allocation to the Five Year Guaranteed Account or the Seven Year
Guaranteed Account is $5,000.
Fixed Holding Account. For each amount allocated to the Fixed Holding
Account, interest will be credited at an effective annual rate declared by
Penn Mutual on the first day of each calendar year. The declared rate will
apply through the end of the calendar year. Thereafter, interest will be
credited on such amount for successive calendar years at the declared
effective rate then applicable to new allocations to the account.
The declared effective annual interest rate under the Fixed Holding
Account will never be less than 4%.
One Year Guaranteed Account. For each amount allocated to the One Year
Guaranteed Account, interest will be credited at an effective annual rate
declared by Penn Mutual. The declared rate will apply through the end of
the twelve month period which begins on the first day of the calendar
month in which the allocation is made. Thereafter, interest will be
credited on such amount for successive twelve month periods at the
declared effective annual rate then applicable to new allocations to the
account made as of the beginning of each such period.
For the first seven contract years Penn Mutual will declare an effective
annual interest rate under the One Year Guaranteed Account which is not
less than the published 52 Week United States Treasury Bill discount rate
from the most recent regularly scheduled auction held before the beginning
of the calendar month. If the auction program is discontinued, Penn Mutual
will substitute an index which in its option is comparable and which is
approved by the jurisdiction in which this contract is delivered.
The declared effective annual interest rate under the One Year Guaranteed
Account will never be less than 4%.
Three Year Guaranteed Account, Five Year Guaranteed Account and Seven Year
Guaranteed Account. For each amount allocated to the Three Year Guaranteed
Account, the Five Year Guaranteed Account or the Seven Year Guaranteed
Account, interest will be credited at an effective annual rate declared by
Penn Mutual for such account. The declared rate will apply through the end
of the thirty-six month period, sixty month period or eighty-four month
period, as applicable, which begins on the first day of the calendar month
in which the allocation is made.
Thereafter, interest will be credited on such amount for successive
thirty-six, sixty or eighty-four month periods at the declared effective
annual rate then applicable to new allocations as of the beginning of each
such period.
The declared interest rate under the Three Year, Five Year and Seven Year
Guaranteed Accounts will never be less than 4%. Page 11
A002761P
B. Change of Interest Election
The Owner may transfer an amount from the Fixed Holding Account to another
account within the Fixed or Variable Account at any time.
The Owner may transfer an amount from the One Year, Three Year, Five Year
or Seven Year Guaranteed Account to another account within the Fixed or
Variable Account only during the 25 day period immediately following the
end of the period for which an interest rate is guaranteed on such amount.
No more than two transfers from one account to another may be made in any
calendar month and no more than 12 such transfers may be made in any
calendar year. Penn Mutual reserves the right to charge a fee for
transfers in excess of six in a calendar year. Such fee for excess
transfers will not exceed $10 per transfer.
The minimum amount of transfer from one account to another is $250 or, if
less, the amount held in the account. In the event of a partial transfer
to another account, at least $50 must be left in the Fixed Holding
Account; at least $250 must be left in the One Year Guaranteed Account; at
least $5,000 must be left in the Five Year Guaranteed Account or the Seven
Year Guaranteed Account.
C. Charges
Group Maintenance Charge. This charge of $15 will be deducted on a
contract anniversary if (i) this contract was issued as part of a
Qualified plan as defined in Section 401, 403(b) or 457 of the Internal
Revenue Code, (ii) the Contract Value is less than $2,500 on the contract
anniversary and (iii) at no time during the preceding contract year were
any funds held in the Variable Account. No charge will be deducted if no
Purchase Payments were made in the preceding contract year. The charge
will be deducted from the amount most recently allocated to the account
with the shortest interest rate guarantee duration.
Contingent Deferred Sales Charge. This charge, if applicable, will be
deducted upon withdrawal, in whole or part, of the Contract Value. See
Section 9. This charge will not apply to any 10% Free Withdrawal, any
disability Free Withdrawal, any Payment on Death or any Variable or Fixed
Annuity Payments.
Premature Withdrawal Charge. This charge will be deducted from any amount
withdrawn from the Three Year Guaranteed Account, The Five Year Guaranteed
Account or the Seven Year Guaranteed Account before the end of the period
for which a declared effective annual interest rate is guaranteed on such
amount.
The amount subject to the Premature Withdrawal Charge will be:
1. for the first withdrawal from this contract in any Contract Year after
the first Contract Year, the total amount withdrawn from the Three
Year, Five Year or Seven Year Guaranteed Account minus the greater of
(i) any amount for which the declared effective annual interest rate
guarantee has expired within the immediately preceding 25 days, or (ii)
an amount equal to 10% of the Value, as of the date of the withdrawal,
of the Three Year, Five Year or Seven Year Guaranteed Account from
which the withdrawal is made; or
2. for any other withdrawal, the total amount withdrawn from the Three
Year, Five Year or Seven Year Guaranteed Account minus any amount for
which the declared effective annual interest rate guarantee has expired
within the immediately preceding 25 days.
Provided however, that the Premature Withdrawal Charge shall not apply to
any disability Free Withdrawal set forth in Section 9, any Payment on
Death or any Variable or Fixed Annuity Payments.
For premature withdrawal from the Three Year Guaranteed Account the
Premature Withdrawal Charge will be a percentage of the amount subject to
the charge equal to one-fourth of the most recent effective annual
interest rate then applicable to the amount subject to the charge.
A002762P
For premature withdrawals from the Five Year Guaranteed Account or the
Seven Year Guaranteed Account the Premature Withdrawal Charge will be a
percentage of the amount subject to the charge equal to one-half of the
most recent effective annual interest rate then applicable to the amount
subject to the change.
Maximum Charge. In no event will the sum of the Premature Withdrawal
Charge and the Contingent Deferred Sales Charge set forth in Section 9
exceed 10% of the amount withdrawn or such lesser percentage as may be the
maximum in the jurisdiction in which this contract is issued.
On the Nonforfeiture Date, the Premature Withdrawal Charge will be equal
to two percent of the entire amount withdrawn from the Three Year, Five
Year or Seven Year Guaranteed Account.
Before or after the Nonforfeiture Date, the Premature Withdrawal Charge
will not exceed two percent of the entire amount withdrawn from the Three
Year, Five Year or Seven Year Guaranteed Account.
The total of all Premature Withdrawal Charges deducted will never exceed
the total amount of all interest which has been credited to the Fixed
Account.
D. Fixed Annuity Payments
Annuity Date. Unless another Annuity Date was chosen in the application or
later written notification, the Annuity Date for Nonqualified Plans will
be the first day of the next month after the Annuitant's 85th birthday
and, for Qualified Plans, the first day of April in the calendar year
following the year in which the Annuitant attained age 70 1/2.
The Annuity Date may not be earlier than the first contract anniversary
and must be on the first day of a month. The Owner may change the Annuity
Date up to 30 days before the current Annuity Date.
Fixed Annuity Options. The Owner or the Owner's surviving beneficiary may
choose a fixed annuity option up to 30 days prior to the Annuity Date.
Amount of Fixed Annuity Payments. Premium taxes, if any, will be deducted
from the Fixed Account Value. The Fixed Account Value, net of any premium
taxes, as of the Annuity Date will be applied to the fixed annuity option
chosen. The monthly income under Options 1, 2, 3 and 4 will equal the
monthly income under a comparable single premium nonparticipating annuity
available from Penn Mutual at the time fixed annuity payments are to
begin.
The guaranteed monthly income under Option 1, Option 2, Option 3 and
Option 4 will be based on interest at a rate of 4% per year compounded
annually. Fixed Annuity Options 1, 2, 3 and 4 will not participate in
divisible surplus.
Minimum Annuity Payments. If the net Contract Value to be applied at the
Annuity Date is less than $5,000, Penn Mutual may pay such amount in a
lump sum. Fixed Annuity payments will be made monthly, quarterly,
semi-annually or annually at the Owner's request.
If any payment would be less than $50, Penn Mutual may change the
frequency of payment so that payments are at least $50 each.
E. Fixed Annuity Options
Option 1 - Fixed Annuity for Specified Number of Years. Payments will be
made for a specified number of years, which will be not less than 5 years
nor more than 25 years.
Option 2 - Fixed Life Annuity. Payments will be made for the life of the
Annuitant. Payments will cease with the last payment due prior to the
Annuitant's death.
A002763P
Option 3 - Fixed Life Annuity with Payments Guaranteed for 10 or 20 Years.
Payments will be made for the life of the Annuitant. A guaranteed payment
period of either 10 or 20 years may be chosen.
Option 4 - Fixed Joint and Survivor Life Annuity. Payments will be made
during the lifetimes of the Annuitant and a designated second Annuitant.
If the Annuitant dies prior to the end of the specified period under
Option 1 or the guaranteed period under Option 3, the beneficiary may
choose either:
(1) to have the payments continue for the specified or guaranteed period,
or
(2) to receive at any time in one sum the present value of the remaining
payments to be made over the specified or guaranteed period.
If the beneficiary dies while receiving annuity payments under Option 1 or
Option 3 the present value of remaining payments will be paid in one sum
to the beneficiary's estate. The present value will be based on interest
at a rate set by Penn Mutual at the time payments are to begin.
Payment. Payments will be made on the first day of the month starting with
the Annuity Date. Payments under all options will be made to or at the
direction of the Owner.
F. Fixed Annuity Option Tables
A002764P
The following tables show the amount of the monthly income payment for each
$1,000 of value applied under a fixed annuity option. "Age" as used in the
tables for Options 2, 3, and 4 means an adjusted age determined in the following
manner from the actual age of the Annuitant on the birthday nearest the date of
the first payment:
Date of First Payment Adjusted Age
Before calendar year 2000 Actual age
2000 - 2009 Actual age decreased by 1
2010 - 2019 Actual age decreased by 2
2020 and later Actual age decreased by 3
Option 1 - Fixed Annuity for Specified Number of Years
------------------------------------------------------------------------------------------------------------------------------------
Number of Years 5 6 7 8 9 10 11 12 13 14
Monthly Income 18.32 15.56 13.59 12.12 10.97 10.06 9.31 8.69 8.17 7.72
------------------------------------------------------------------------------------------------------------------------------------
Number of Years 15 16 17 18 19 20 21 22 23 24 25
Monthly Income 7.34 7.00 6.71 6.44 6.21 6.00 5.81 5.65 5.49 5.35 5.22
------------------------------------------------------------------------------------------------------------------------------------
Option 2 - Fixed Life Annuity and Option 3 - Fixed Life Annuity with Payments
Guaranteed for 10 or 20 Years
------------------------------------------------------------------------------------------------------------------------------------
Life 10 Years 20 Years
Age Annuity Guaranteed Guaranteed
------------------------------------------------------------------------------------------------------------------------------------
50 4.68 4.64 4.53
51 4.75 4.71 4.58
52 4.82 4.78 4.64
53 4.90 4.85 4.69
54 4.98 4.92 4.75
55 5.06 5.00 4.81
56 5.15 5.08 4.87
57 5.25 5.17 4.93
58 5.35 5.27 4.99
59 5.46 5.36 5.06
60 5.58 5.47 5.12
61 5.71 5.58 5.19
62 5.84 5.69 5.25
63 5.98 5.81 5.31
64 6.14 5.94 5.38
65 6.30 6.07 5.44
66 6.48 6.21 5.50
67 6.66 6.36 5.56
68 6.86 6.51 5.61
69 7.08 6.67 5.66
70 7.31 6.83 5.71
71 7.56 7.00 5.75
72 7.83 7.17 5.79
73 8.12 7.35 5.83
74 8.43 7.53 5.86
75 8.77 7.72 5.89
76 9.13 7.90 5.91
77 9.52 8.08 5.93
78 9.94 8.26 5.95
79 10.40 8.44 5.96
80 10.88 8.61 5.97
81 11.41 8.77 5.98
82 11.98 8.93 5.99
83 12.58 9.07 5.99
84 13.23 9.20 5.99
85 13.92 9.33 6.00
Option 4 - Fixed Joint and Survivor Life Annuity
--------------------------------------------------------------------------------
Age 50 55 60 65 70 75 80 85 Age
50 4.21 4.31 4.41 4.49 4.55 4.60 4.63 4.65 50
55 4.31 4.47 4.61 4.74 4.84 4.92 4.98 5.01 55
60 4.41 4.61 4.82 5.02 5.19 5.32 5.42 5.49 60
65 4.49 4.74 5.02 5.30 5.58 5.81 5.99 6.12 65
70 4.55 4.84 5.19 5.58 5.98 6.37 6.69 6.93 70
75 4.60 4.92 5.32 5.81 6.37 6.95 7.50 7.95 75
80 4.63 4.98 5.42 5.99 6.69 7.50 8.36 9.14 80
85 4.65 5.01 5.49 6.12 6.93 7.95 9.14 10.37 85
Section 7 - Payment on Death
A002765P
Death payments described in this Section shall be payable upon the earlier
of:
(1) the death of the Annuitant, or
(2) the death of the Owner (other than the trustee of a Qualified Plan).
Death Before The Annuity Date. Upon receipt of due proof of death prior to
the Annuity Date, Penn Mutual will pay to the beneficiary the greatest of:
(1) The sum of all Purchase Payments adjusted for withdrawals and contract
transfers,
(2) The Contract Value on the date of receipt of such proof of death, or
(3) The sum of (i) the Fixed Account Value on the date of death and (ii)
the Variable Account Value as of the Contract Date, or, if later, the
most recent seven year anniversary of the contract occurring before
the Owner's 81st birthday, increased by subsequent Purchase Payments
and transfers to the contract and reduced by subsequent withdrawals
and transfers from the contract.
If the beneficiary is not the decedent's spouse, the beneficiary can
choose an Annuity Option for death payments. The Option must provide for
payments over the beneficiary's life or over a period not longer than the
beneficiary's life expectancy. Payments shall begin within one year after
the date of death. If payment is made in a lump sum, such payment shall be
made within five years after the date of death.
If the beneficiary is the decedent's surviving spouse the surviving spouse
shall become the owner of this contract.
Death After The Annuity Date. If death occurs after the Annuity Date, the
amount payable, if any, will be according to the annuity option in force.
The premature withdrawal Charge set forth in Section 6 and the Contingent
Deferred Sales Charge set forth in Section 9 shall not apply to any
Payment on Death.
Section 8 - Transfer to or from Another Contract
Transfer to Another Annuity Contract. All or part of the Contract Value
may be transferred to another annuity contract issued by Penn Mutual,
provided that the Owner of both contracts is the same trustee(s) of the
same Qualified Plan. The amount of such transfer may not exceed the amount
of forfeiture upon termination of the annuitant's participation in the
plan.
Transfer from Another Annuity Contract. The Owner may make transfers to
this contract from another annuity contract issued by Penn Mutual which
provides for such transfers, subject to the limits set forth in that
contract.
Section 9 - Withdrawal
Withdrawal. Prior to the earlier of the Annuity Date or the first death to
occur of the Owner or the Annuitant, the Owner may withdraw all or part of
the Contract Value. After the Annuity Date if Option 1 in Section 5 or
Section 6 is in force, the payee may withdraw the present value of the
annuity payments remaining to be made.
For full withdrawal, this contract must be surrendered to Penn Mutual. For
partial withdrawals of the Contract Value, the withdrawal must be at least
$250. The amount remaining under the contract must be at least $250.
Free Withdrawal. Once in any Contract Year on or after the last day of the
first Contract Year and before the Annuity Date the Owner may withdraw
from the contract an amount equal to 10% of the Contract Value as of the
date of withdrawal free from Contingent Deferred Sales Charge.
A002766P
The Owner may at any time withdraw all or any part of the Contract Value
free from Contingent Deferred Sales Charge if (i) the Owner in a
Nonqualified Plan, or the Annuitant in a Qualified Plan, is then disabled
as defined in Section 72(m)(7) of the Internal Revenue Code and as applied
under the Social Security Act, (ii) the disability began after the
Contract Date and (iii) the disability has continued without interruption
for four months.
Contingent Deferred Sales Charge. This charge, if applicable, will be
deducted from amounts withdrawn from the contract. The charge will be a
percentage of any amount withdrawn in excess of a 10% Free Withdrawal in
accordance with the applicable table below. This charge will not apply to
any disability Free Withdrawal, any Payment on Death or any Variable or
Fixed Annuity Payments.
If no Purchase Payments have been made after the first contract year:
Contract Years: 1 2 3 4 5 6 7 8+
Charge: 7% 6% 5% 4% 3% 2% 1% 0
If Purchase Payments have been made in any contract year after the first:
Contract Years: 1 2 3 4 5 6 7 8 9 10 11+
Charge: 7% 6% 5% 4% 3.5% 3% 2.5% 2% 1.5% 1% 0
The sum of the Contingent Deferred Sales Charge and the Premature
Withdrawal Charge deducted from an amount withdrawn from the Fixed Account
will never exceed 10% (or such lesser percentage as may be the maximum in
the jurisdiction in which this contract is issued) of the amount withdrawn
from the Fixed Account.
The cumulative sum of Contingent Deferred Sales Charges deducted from
amounts withdrawn from the Variable Account will never exceed 8 1/2% of
the total of all Purchase Payments credited to or transferred to the
Variable Account.
Payment of Withdrawals. Unless the Owner directs otherwise, partial
withdrawals prior to the Annuity Date, and applicable charges, will be
deducted from accounts within the Fixed and Variable Accounts in the
following order:
first from the Fixed Holding Account;
next from each subaccount of each investment account of the Separate
Account in the ratio of the Owner's interest in each subaccount to the
Variable Account Value;
next from the One Year Guaranteed Account;
next from the Three Year Guaranteed Account;
next from the Five Year Guaranteed Account; and
finally from the Seven Year Guaranteed Account.
Partial withdrawal of amounts held under the One Year, Three Year, Five
Year and Seven Year Guaranteed Accounts will be made from amounts most
recently allocated to the account.
Page 18
A002767P
Section 10 - Miscellaneous
Beneficiary. The beneficiary is the person who is to receive:
(1) Payment on death of the Owner or the Annuitant prior to the Annuity
Date, or
(2) Remaining payments under specified or guaranteed annuity periods, if
any, on death of the payee on or after the Annuity Date.
The Owner shall choose the beneficiary in the application. The Owner may
change the beneficiary at any time before the death of the Owner or the
Annuitant, whichever occurs first.
If no beneficiary survives the first to die of the Owner or the Annuitant,
payment will be made to the Owner or the Owner's estate. The estate of a
beneficiary who dies before the first to die of the Owner or the Annuitant
shall have no rights under this contract.
Ownership of Contract. The Owner must be named in the application.
Upon notice to Penn Mutual the Owner may assign the contract to a new
Owner.
Deferment of Transfers and Payments. Transfers and payments of withdrawals
from the Variable Account will be made within seven days after receipt by
Penn Mutual of all documents required for such transfer or payment.
However, Penn Mutual may defer a transfer, a withdrawal, the Annuity Date
or annuity payments under the Variable Account Provisions of Section 5,
if:
(1) The New York Stock Exchange is closed (other than customary weekend
and holiday closings);
(2) Trading on the New York Stock Exchange is restricted;
(3) An emergency exists such that it is not reasonably practical to
dispose of securities held in the Separate Account or to fairly
determine the value of its assets; or
(4) The Securities and Exchange Commission by order so permits for the
protection of security holders.
Conditions in (2) and (3) will be decided by, or in accordance with rules
of, the Securities and Exchange Commission.
Penn Mutual may defer a transfer or withdrawal from the Fixed Account for
a period not exceeding six months, if it reasonably determines that
investment conditions are such that an orderly sale of assets held as part
of general assets is not possible.
Incontestability. No material misstatement made by the applicant will void
the contract unless it is contained in the written application attached to
the contract. The contract will be incontestable after it has been in
force for 2 years from the Contract Date.
Misstatement of Age. If the age of the Annuitant or a joint payee is
misstated, any amount payable under this contract will be that amount
which the Purchase Payments paid would have purchased on the basis of the
correct age.
If the annuity payments have been overpaid because the age of the
Annuitant or joint payee has been misstated, the amount overpaid, with
interest at the rate of 6% per year compounded annually, will be charged
against the payments still to be made under this contract.
If the annuity payments have been underpaid because the age of the
Annuitant or joint payee has been misstated, the amount underpaid, with
interest at the rate of 6% per year compounded annually, will be paid in
full with the next payment due under this contract.
Proof of Age and Survival. Penn Mutual may require satisfactory proof of
correct age at any time. If any payment under this contract depends on the
payee being alive, Penn Mutual may require satisfactory proof of survival.
A002768P
The Contract. The contract, any endorsements, and its attached application
are the entire contract. It is issued in consideration of the application
and Purchase Payments.
Only the President, a Vice President, Pension Actuary or Secretary of Penn
Mutual may change the contract. Any change must be in writing.
At any time, Penn Mutual may make such changes in this contract as are
required to make it conform with any law or regulation issued by any
government agency to which it is subject.
Participating Contract. The contract may participate in divisible surplus
of Penn Mutual. Divisible surplus, if any, to be apportioned to the
contract shall be apportioned annually and shall be paid in cash or
credited to the Contract Value at the end of the contract year. No
divisible surplus is expected to be apportioned to this contract in the
foreseeable future.
Dates. Contract years and anniversaries are measured from the Contract
Date.
Notices Changes and Choices. To be effective, all notices, changes and
choices which the Owner may make under the contract must be in writing, on
a form provided or approved by Penn Mutual, signed and received by Penn
Mutual at its Home Office or designated service office. If acceptable to
Penn Mutual, notices, changes and choices relating to beneficiaries and
ownership will take effect as of the date signed unless Penn Mutual has
already acted in reliance on the prior status. Penn Mutual is not
responsible for their validity.
Contract Payments. All sums payable to or by Penn Mutual are payable at
its designated service office.
Protection of Proceeds. Payments under this contract may not be assigned
by the payee prior to their due dates. To the extent allowed by law,
payments are not subject to legal process for debts of a payee.
Compliance with Minimum Value Requirements. Annuity, death and withdrawal
benefits are not less than the minimum benefits required under applicable
laws and regulations of the jurisdiction in which this contract is
delivered.
The benefits provided under this contract are increased by interest
credited in excess of the guaranteed minimums, if any.
Periodic Reports. As required by federal and state law and at least once
each year Penn Mutual will furnish the Owner a periodic report on the
Separate Account, the Variable Account Value, the number of Accumulation
Units, the value per Accumulation Unit and the Fixed Account Value.
TABLE OF GUARANTEED CONTRACT VALUES
A002694P
GUARANTEED GUARANTEED GUARANTEED GUARANTEED
GUARANTEED CONTRACT CONTRACT CONTRACT CONTRACT
CONTRACT VALUE VALUE VALUE VALUE TOTAL
VALUE 1 YEAR 3 YEAR 5 YEAR 7 YEAR GUARANTEE
FIXED HOLDING GUARANTEE GUARANTEE GUARANTEE GUARANTEE CONTRACT
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT VALUE
TABLE OF GUARANTEED CONTRACT VALUES
A002695P
GUARANTEED GUARANTEED GUARANTEED GUARANTEED
GUARANTEED CONTRACT CONTRACT CONTRACT CONTRACT
CONTRACT VALUE VALUE VALUE VALUE TOTAL
VALUE 1 YEAR 3 YEAR 5 YEAR 7 YEAR GUARANTEE
FIXED HOLDING GUARANTEE GUARANTEE GUARANTEE GUARANTEE CONTRACT
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT VALUE
CALCULATION OF GUARANTEED WITHDRAWAL VALUES
A002777P
I. SUPPOSE YOU PLACE $1,000.00 ANNUALLY INTO THE 3 YEAR GUARANTEED ACCOUNT. THE
GUARANTEED INTEREST RATE ON THE FIRST DEPOSIT IS 8.00% FOR THE FIRST THREE
YEARS. FOLLOWING ISSUE, DEPOSITS AND FUNDS MATURING EARN 4.00% (THE MINIMUM
CONTRACT GUARANTEE) FOR THREE YEARS FROM DEPOSIT OR MATURITY, RESPECTIVELY.
AT THE END OF YEAR ONE THE FOLLOWING VALUES WOULD APPLY:
GUARANTEED CONTRACT VALUE: $1080.00
FREE WITHDRAWAL: 1080.00*(0.10)= $108.00
CONTINGENT DEFERRED SALES CHARGE: (1080.00-108.00)*(0.07) = $68.04
PREMATURE WITHDRAWAL CHARGE:
AMOUNT MATURING: $0.00
AMOUNT TO WHICH CHARGE APPLIES: (1080.00-(GREATER OF (108.00 OR 000))) = $972.00
APPLICABLE INTEREST RATE: 8.00% (1)
CALCULATED CHARGE: (1080.00-108.00)*(0.08)*(0.25) = $19.44
2% OF GUARANTEED CONTRACT VALUE: 1080.00*(0.02) = $21.60
ACTUAL CHARGE: LESSER OF (19.44 OR 21.60) = $19.44 (2)
GUARANTEED WITHDRAWAL VALUE: 1080.00-68.04-19.44 = $992.52
(1) MOST RECENT INTEREST GUARANTEE ON AN AMOUNT TO WHICH THE CHARGE APPLIES.
(2) EXCEPT ON NONFORFEITURE DATE WHERE THE CHARGE IS EXACTLY 2.00% OF
THE GUARANTEED CONTRACT VALUE.
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II. SUPPOSE YOU PLACE $1,000.00 ANNUALLY INTO THE 5 YEAR GUARANTEED ACCOUNT. THE
GUARANTEED INTEREST RATE ON THE FIRST DEPOSIT IS 9.00% FOR THE FIRST FIVE
YEARS. FOLLOWING ISSUE, DEPOSITS AND FUNDS MATURING EARN 4.00% (THE MINIMUM
CONTRACT GUARANTEE) FOR FIVE YEARS FROM DEPOSIT OR MATURITY, RESPECTIVELY.
AT THE END OF YEAR FIFTEEN THE FOLLOWING VALUES WOULD APPLY:
GUARANTEED CONTRACT VALUE: $21301.13
FREE WITHDRAWAL: 21301.13*(0.10)= $2130.11
CONTINGENT DEFERRED SALES CHARGE: (21301.13-2130.11)*(0.00) = $0.00
PREMATURE WITHDRAWAL CHARGE:
AMOUNT MATURING: 1000*((1.09)^5*(1.04)^10+(1.04)^10+(1.04^5)=$4974.44
AMOUNT TO WHICH CHARGE APPLIES: (21301.13-(GREATER OF (2130.11 OR 4974.44))) =
$16326.69
APPLICABLE INTEREST RATE: 4.00% (1)
CALCULATED CHARGE: 16326.69*(0.04)*(0.50) = $326.53
2% OF GUARANTEED CONTRACT VALUE: 21301.13*(0.02) = $426.02
ACTUAL CHARGE: LESSER OF (326.53 OR 426.02) = $326.53 (2)
GUARANTEED WITHDRAWAL VALUE: 21301.13-0.00-326.53 = $20974.60
(1) MOST RECENT INTEREST GUARANTEE ON AN AMOUNT TO WHICH THE CHARGE APPLIES.
(2) EXCEPT ON NONFORFEITURE DATE WHERE THE CHARGE IS EXACTLY 2.00% OF
THE GUARANTEED CONTRACT VALUE.
DV-790
CALCULATION OF GUARANTEED WITHDRAWAL VALUES
A002778P
III. SUPPOSE YOU PLACE A SINGLE DEPOSIT OF $100,000.00 INTO THE 7 YEAR
GUARANTEED ACCOUNT. THE GUARANTEED INTEREST RATE ON THE FIRST DEPOSIT IS
10.00% FOR THE FIRST SEVEN YEARS. MATURING FUNDS EARN 4.00% (THE MINIMUM
CONTRACT GUARANTEE) FOR SEVEN YEARS FROM MATURITY.
AT THE END OF YEAR SIX THE FOLLOWING VALUES WOULD APPLY:
GUARANTEED CONTRACT VALUE: $177156.10
FREE WITHDRAWAL: 177156.10*(0.10)= $17715.61
CONTINGENT DEFERRED SALES CHARGE: (177156.10-17715.61)*(0.02) = $3188.81
PREMATURE WITHDRAWAL CHARGE:
AMOUNT MATURING: $0.00
AMOUNT TO WHICH CHARGE APPLIES: (177156.10-(GREATER OF (17715.61 OR 0.00))) = $3188.81
APPLICABLE INTEREST RATE: 10.00% (1)
CALCULATED CHARGE: 159440.49*(0.10)*(0.50) = $7972.02
2% OF GUARANTEED CONTRACT VALUE: 177156.10*(0.02) = $3543.12
ACTUAL CHARGE: LESSER OF (7972.02 OR 3543.21) = $3543.12 (2)
GUARANTEED WITHDRAWAL VALUE: 177156.10-3188.81-3543.12 = $170424.17
(1) MOST RECENT INTEREST GUARANTEE ON AN AMOUNT TO WHICH THE CHARGE APPLIES.
(2) EXCEPT ON NONFORFEITURE DATE WHERE THE CHARGE IS EXACTLY 2.00% OF
THE GUARANTEED CONTRACT VALUE.
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A002779B
Please notify Penn Mutual promptly of any change in address.
Annual Election - Penn Mutual is a mutual life insurance company. It has no
stockholders. The Owner of this contract is a member of Penn Mutual while this
contract is in force during the life of the Annuitant before the Annuity Date
and before total withdrawal of the Contract Value. Members have the right to
vote in person or by proxy at the annual election of Trustees held at the Home
Office, Independence Square, Philadelphia, Pennsylvania, on the first Tuesday of
March. If more information is desired, it may be obtained from the Secretary.
VALUES AND PAYMENTS UNDER THIS CONTRACT, WHEN BASED UPON THE INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT.
Individual Variable and Fixed
Annuity Contract
Flexible Purchase Payments
o Annuity Payments payable on Annuity Date
o Flexible Purchase Payments payable until
Annuity Date
o Participating
The Penn Mutual Life Insurance Company, Independence Square, Philadelphia,
Pennsylvania 19172
DV-790