1993 Variable Annuity issued
by LB with two annuitants
EXHIBIT 4
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LUTHERAN
[LOGO] BROTHERHOOD
A Fraternal Benefit Society
Minneapolis, Minnesota 55415
FLEXIBLE PREMIUM
DEFERRED VARIABLE ANNUITY
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This is a legal contract between you and Lutheran Brotherhood. We accept
each Annuitant as a member. We issue this contract based on the Application
signed by the applicant(s) and the payment of the first premium.
We will pay you the Annuity Income beginning on the Maturity Date (see page
3) if an Annuitant is living on that date and this contract is still in
force. If an Annuitant dies after Annuity Income payments have begun, any
amount payable will depend upon the terms of the settlement option elected.
We will pay the Death Proceeds to the beneficiary upon receiving proof that
the death of the Annuitant, or the death of the first Annuitant to die if
this contract has two Annuitants, occurred before the Maturity Date. The
Annuity Income and Death Proceeds will be paid according to the provisions
of this contract.
THE ACCUMULATED VALUE AND THE DEATH PROCEEDS MAY INCREASE OR DECREASE DAILY
BASED ON THE INVESTMENT EXPERIENCE OF THE VARIABLE ACCOUNT. ANNUITY
PAYMENTS PROVIDED BY THIS CONTRACT, WHEN BASED ON THE INVESTMENT EXPERIENCE
OF THE VARIABLE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO MINIMUM
DOLLAR AMOUNT.
RIGHT TO CANCEL. PLEASE READ THIS CONTRACT CAREFULLY. You may cancel the
contract before midnight of the 10th day after you first receive it. Do
this by (1) sending a telegram or mailing or delivering written notice to
Lutheran Brotherhood, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ or to
the representative through whom you bought it, and (2) returning the
contract. Notice given by mail and return of the contract by mail are
effective on being postmarked, properly addressed and postage prepaid. If
you cancel the contract, it will be deemed void from the beginning. Within
7 days after we receive it, we will refund the sum of: (1) The Accumulated
Value on the day the contract is first received by us or our representative;
and (2) The amount attributable to this contract for risk charges deducted
from the Variable Account and for advisory fees charged against the net
asset value in the Fund portfolios.
Annuity Income payable at maturity.
Death Proceeds payable at death before maturity.
Flexible premiums.
Return on investments reflected in contract benefits.
Annual dividends payable if earned.
Signed for the Society at Minneapolis, Minnesota
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President SAMPLE /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Secretary SAMPLE /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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ANNUITANT: ▇▇▇▇ ▇▇▇ AGE: 35 SEX: MALE
ANNUITANT: ▇▇▇▇ ▇▇▇ AGE: 35 SEX: FEMALE
CONTRACT NUMBER: ▇▇▇▇▇▇▇▇▇ DATE OF ISSUE: JULY 1, 1993
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TABLE OF CONTENTS
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Cover Page
Index
Contract Schedule, Contract Data
SECTION 1 Definitions
SECTION 2 General Provisions
SECTION 3 Membership and Ownership
SECTION 4 Premiums
SECTION 5 Accumulated Value
SECTION 6 Surrender
SECTION 7 Accounts and Unit Values
SECTION 8 Settlement Provisions
SECTION 9 Beneficiary
SECTION 10 Dividends
Additional Benefits, Amendments, Application
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INDEX
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SECTION
Accumulated Value .................................................... 5
Accumulation Unit Value .............................................. 7
Administrative Charge ................................................ 5
Allocation of Premiums ............................................... 7
Annual Report ........................................................ 5
Annuity Income ....................................................... 2
Annuity Unit Value ................................................... 7
Beneficiary .......................................................... 9
Cash Surrender Value ................................................. 6
Change in Annuity Unit Allocation .................................... 7
Change in Contract ................................................... 2
Change of Investment Policy .......................................... 7
Dividends ............................................................ 10
Death Proceeds ....................................................... 2
Deferment ............................................................ 2
Entire Contract ...................................................... 2
Exchange Provision ................................................... 3
Fixed Account ........................................................ 7
General Account ...................................................... 7
Incontestability ..................................................... 2
Maintenance of Solvency .............................................. 2
Membership ........................................................... 3
Minimum Accumulated Value Required ................................... 5
Misstatement of Age or Sex ........................................... 2
Ownership ............................................................ 3
Premiums ............................................................. 4
Settlement Options ................................................... 8
Surrender ............................................................ 6
Cash Surrender Value ............................................... 6
Full Surrender ..................................................... 6
Partial Surrender .................................................. 6
Surrender Charge ................................................... 6
Transfer and Assignment .............................................. 3
Transfer of Accumulated Values ....................................... 7
Variable Account ..................................................... 7
LUTHERAN BROTHERHOOD For information about this
[LOGO] BROTHERHOOD contract, consult your
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Representative or write to
us at our home office.
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CONTRACT SCHEDULE
BASIC BENEFIT
FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY
MATURITY DATE: July 1, 2023
GUARANTEED PERIOD: 10 YEARS
PREMIUM RECEIVED ON DATE OF ISSUE: $1,000.00
DATE OF INITIAL PREMIUM ALLOCATION: JULY 1, 1993
(SEE SECTION 7.4)
ACCUMULATED VALUES IN THE VARIABLE ACCOUNT DEPEND ON THE INVESTMENT
EXPERIENCE OF THE VARIABLE ACCOUNT.
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ADMINISTRATIVE CHARGE: $30.00 PER YEAR (SEE SECTION 5.2)
SURRENDER CHARGES*
CONTRACT YEAR PERCENT APPLIED
1 6%
2 5%
3 4%
4 3%
5 2%
6 1%
THEREAFTER 0%
*SEE SECTION 6.4 FOR A FULL DESCRIPTION OF THE SURRENDER CHARGE.
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ANNUITANT: ▇▇▇▇ ▇▇▇ AGE: 35 SEX: MALE
ANNUITANT: ▇▇▇▇ ▇▇▇ AGE: 35 SEX: FEMALE
CONTRACT NUMBER: ▇▇▇▇▇▇▇▇▇ DATE OF ISSUE: JULY 1, 1993
FLEXIBLE PREMIUM
DEFERRED VARIABLE ANNUITY
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VARIABLE ACCOUNT INFORMATION
Investment Company -- LB Series Fund, Inc.
Variable Account -- LB Variable Annuity Account I
Each subaccount of the LB Variable Annuity Account I invests in a
specific portfolio of LB Series Fund, Inc. Subaccounts of the
Variable Account and the portfolios in which they invest are as
follows:
GROWTH SUBACCOUNT -- Amounts credited to this
subaccount are invested in the
Growth Portfolio. This portfolio
invests primarily in equity
securities.
HIGH YIELD SUBACCOUNT -- Amounts credited to this
subaccount are invested in the
High Yield Portfolio. This
portfolio invests primarily in
high yield securities.
INCOME SUBACCOUNT -- Amounts credited to this
subaccount are invested in the
Income Portfolio. This portfolio
invests primarily in fixed income
securities.
MONEY MARKET SUBACCOUNT -- Amounts credited to this
subaccount are invested in the
Money Market Portfolio. This
portfolio invests primarily in
money market instruments.
The LB Series Fund, Inc. receives investment advice for each
portfolio from Lutheran Brotherhood. As investment advisor,
Lutheran Brotherhood charges the LB Series Fund, Inc. a daily
investment advisory fee equal to an annual rate of 0.4% of the
aggregate average daily net assets of LB Series Fund, Inc.
For a complete description of the Variable Account and the
designated portfolios, please refer to the current prospectus for
LB Series Fund, Inc.
FIXED ACCOUNT INFORMATION
Invests in the General Account of Lutheran Brotherhood.
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1. DEFINITIONS
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ANNUITANT. The person(s) named as Annuitant on page 3.
APPLICATION. The application(s) and all amendments and supplements.
CONTRACT ANNIVERSARY. The Date of Issue on page 3 and the same month and
day for years after issue as in the Date of Issue.
CONTRACT YEAR. The period of time from one Contract Anniversary to the next
Contract Anniversary.
FIXED ANNUITY. An annuity whose payments are:
1) Guaranteed as to minimum amount; and
2) Not dependent on the investment experience of the Variable
Account.
SEC. Securities and Exchange Commission.
VALUATION DAY. Any day, except the day after Thanksgiving Day and the day
before Christmas Day, that the New York Stock Exchange is open for trading
or there is sufficient trading in a Fund portfolio's securities to affect
the accumulation unit value of the corresponding subaccount of the Variable
Account.
VALUATION PERIOD. The period of time from the end of one Valuation Day to
the end of the next Valuation Day.
VARIABLE ANNUITY. An annuity whose payments vary depending on the
investment experience of the Variable Account.
WE, OUR, US, SOCIETY. Lutheran Brotherhood.
WRITTEN NOTICE. A written request or notice signed by you and received by
us at our Home Office in Minneapolis, Minnesota.
YOU, YOUR, YOURS. The owner(s) of this contract.
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2. GENERAL PROVISIONS
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2.1 ENTIRE CONTRACT. The Entire Contract consists of:
1) This contract including any attached riders, amendments or
endorsements;
2) The Application attached to this contract; and
3) The Articles of Incorporation and Bylaws of the Society which are
in force on the Date of Issue.
2.2 CHANGE OF CONTRACT. No change in this contract is valid unless it is
made in writing and signed by our President and Secretary.
2.3 DEATH PROCEEDS. The amount of Death Proceeds is calculated on the
later of:
1) The date we receive proof of death; and
2) The date we receive signed notice of the Beneficiary's election
to receive Death Proceeds.
The amount is the greatest of:
1) The Accumulated Value on the date Death Proceeds are calculated;
2) The sum of the premiums received by us, less the amount of any
Partial Surrenders; and
3) The Accumulated Value on the preceding Minimum Death Benefit Date
plus the sum of premiums received by us since that date, less the
amount of any Partial Surrenders since then. The first Minimum
Death Benefit Date is the Date of Issue of this contract.
Thereafter, Minimum Death Benefit Dates occur every 6 years on
the Contract Anniversary.
The Death Proceeds are not less than the minimum values required by law.
2.4 ANNUITY INCOME. The Annuity Income will be the amount provided by
the Cash Surrender Value on the Maturity Date. This income may be paid
under a Fixed Annuity, Variable Annuity, or both. Unless you elect
otherwise, the income will be determined according to Section 8.2 Optional
Plans of Settlement using the Guaranteed Period shown on page 3 and Option 4
if one Annuitant is living on the Maturity Date or Option 5 if two
Annuitants are then living.
2.5 MATURITY DATE. The Maturity Date is shown on page 3. We will pay
you the Annuity Income beginning on the Maturity Date if an Annuitant is
then living. You may change this date by giving Written Notice before the
Maturity Date.
2.6 STATEMENTS IN THE APPLICATION. We will not use any statement to
contest a claim or to have this contract declared invalid unless the
statement is contained in the Application. All statements made in the
Application are representations, not warranties.
2.7 INCONTESTABILITY. With respect to each Annuitant, we will not
contest the validity of this contract after it has been in force during the
Annuitant's lifetime for two years from the Date of Issue.
2.8 MISSTATEMENT OF AGE OR SEX. If an Annuitant's age or sex has been
misstated, any amount payable will be that which the premiums paid would
have bought at the correct age and sex. If we make any underpayment as a
result of misstatement of age or sex, we will pay you the underpayment with
interest compounded at the rate of 4% per year. If we make any overpayment,
future payments will be reduced until we have recovered the amount of the
overpayment plus interest compounded at 4% per year.
2.9 EXEMPTIONS FROM CLAIMS OF CREDITORS. To the extent permitted by law,
the proceeds of this contract and any payments under it will not be subject
to the claims of creditors or to any legal proceedings.
2.10 MAINTENANCE OF SOLVENCY. This provision applies only to values in
the Fixed Account:
Benefits provided by this contract will not change. If the solvency of the
Society becomes impaired, you may be required to make an extra payment. The
Board of Directors will determine the amount of any extra payment. It will
be based on each member's fair share of the deficiency. The amount will be
charged as a loan against the contract with interest compounded at the rate
of 5% per year.
You may prefer to make the extra payment by an equivalent reduction in
benefits or by a payment in cash. You may do this within 60 days from the
date we notify you of your share of the deficiency.
2.11 DEFERMENT. The Cash Surrender Value and Partial Surrenders will
normally be paid within 7 days after we receive Written Notice of surrender.
The Death Proceeds and Annuity Income will be paid as in Section 8.
However, we may defer the payment of any portion of surrender amounts, Death
Proceeds or Annuity Income which is in the Variable Account while:
1) The New York Stock Exchange is closed for trading; or
2) The SEC requires that trading be restricted or declares an
emergency.
We may defer for not more than six months the payment of any portion of
surrender amounts, Death Proceeds or Annuity Income which is in the Fixed
Account.
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3. MEMBERSHIP AND OWNERSHIP
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3.1 MEMBERSHIP. Each Annuitant is an adult member of the Society.
Rights and privileges of membership are set forth in the Bylaws of the
Society or in the Application. These rights and privileges are separate
from the ownership of this contract.
3.2 OWNERSHIP. The Annuitant is the owner unless another owner is named
in the Application. While an Annuitant is living, the owner may exercise
all rights set out in this contract. If there are two owners, both must act
in concert to exercise ownership rights. An owner has no membership rights
unless the owner is an Annuitant.
3.3 EXCHANGE PROVISION. If an Annuitant dies before Annuity Income
payments begin and that ▇▇▇▇▇▇▇▇▇'s spouse is the sole primary beneficiary,
then the spouse may elect, to the extent permitted by law, to continue this
contract in force as the Annuitant in lieu of receiving Death Proceeds.
Election must be made by giving Written Notice within 60 days after we
receive due proof of death. This election will be automatic if the spouse
beneficiary is also an Annuitant.
3.4 TRANSFER AND ASSIGNMENT. If this contract is used in a qualified
plan under Section 401, 403, 408 or 457 of the Internal Revenue Code, as
amended, then:
1) If the owner is a trust, custodian or employer, you may transfer
ownership to the Annuitant, otherwise
2) This contract may not be sold, assigned, discounted or pledged as
collateral for a loan or as security for performance of an
obligation or for any other purpose to any person other than us.
If this contract is not used in a qualified plan as described above, then:
1) Ownership may be transferred but not to a natural person; and
2) This contract may be assigned as collateral.
We are not bound by any assignment unless it is in writing and filed at our
Home Office. We are not responsible for the validity or effect of any
assignment.
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4. PREMIUMS
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4.1 PREMIUM PAYMENTS. The amount of the premium received on the Date of
Issue is shown on page 3. Additional premiums may be paid at any time
before the Maturity Date and in any amount except that we reserve the right
to require that each premium payment must be at least $50.
Premiums are payable at our Home Office. Upon request we will give you a
receipt, signed by an officer of the Society, for the premium paid. Except
as provided in Section 5.3, failure to pay premiums will not lapse this
contract.
4.2 PREMIUM BILLING. We will send premium ▇▇▇▇▇▇▇▇ based on the amount
and frequency of premium payments which you request. You may change the
amount and, subject to our published rules, the frequency or method of
billing by giving Written Notice. If we do not receive any premium payments
for 24 consecutive months, we will stop ▇▇▇▇▇▇▇▇.
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5. ACCUMULATED VALUE
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5.1 ACCUMULATED VALUE. On or before the Maturity Date, the Accumulated
Value of this contract is equal to the sum of the accumulated values for
this contract in the subaccounts and in the Fixed Account.
The accumulated value in any subaccount on a Valuation Day is equal to:
1) The number of accumulation units for this contract in that
subaccount (see Section 7.6); multiplied by
2) The accumulation unit value for that subaccount (see
Section 7.7).
The accumulated value for any day that is not a Valuation Day will be
determined on the next Valuation Day.
The accumulated value in the Fixed Account on any day is the sum of:
1) Premiums allocated to the Fixed Account;
2) Accumulated value transferred to the Fixed Account from a
subaccount; and
3) Interest credited;
Less
4) Partial Surrenders which are applied against the Fixed Account;
5) Accumulated value transferred from the Fixed Account to a
subaccount; and
6) Administrative Charges that are taken from the Fixed Account.
5.2 ADMINISTRATIVE CHARGE. On each Contract Anniversary prior to and
including the Maturity Date, if the sum of premiums received by us less the
amount of any Partial Surrenders is less than $5,000, we will deduct an
Administrative Charge from the Accumulated Value. The portion of the charge
applied against each subaccount of the Variable Account and the Fixed
Account will be determined according to the ratio for this contract of the
accumulated value in the subaccount or Fixed Account to the sum of the
accumulated values in all the subaccounts and the Fixed Account. The charge
applied against each subaccount will be the prorata portion of the
Administrative Charge for that subaccount. The charge applied against the
Fixed Account will be the lesser of:
1) The prorata portion of the Administrative Charge for the Fixed
Account; and
2) Interest accrued for the Contract Year in excess of interest
accrued at 3%.
With our approval, you may choose other allocations of the Administrative
Charge. The amount of the Administrative Charge is shown on page 3.
5.3 MINIMUM ACCUMULATED VALUE REQUIRED. We will terminate this contract
on any Contract Anniversary if:
1) The Accumulated Value is less than $1,000 and no premium payment
has been received in the Home Office for at least 24 months; or
2) The Accumulated Value (before any Administrative Charge is
applied) is less than the Administrative Charge.
Upon termination under paragraph (1) of this provision we will pay you the
Accumulated Value.
5.4 ANNUAL REPORT. We will mail you a statement of the value of this
contract at least once each year until the Maturity Date. The report will
show the Accumulated Value and any additional information required by law.
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6. SURRENDER
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6.1 FULL SURRENDER. On or before the Maturity Date, you may surrender
this contract for its Cash Surrender Value by giving Written Notice before
the Maturity Date and while an Annuitant is alive. The surrender will be
effective on the later of:
1) The date we receive Written Notice; and
2) The date you specify.
6.2 CASH SURRENDER VALUE. The Cash Surrender Value on any date is equal
to:
1) The Accumulated Value;
Less
2) Any Surrender Charge (see Section 6.4).
The Cash Surrender Values are not less than the minimum values required by
law.
6.3 PARTIAL SURRENDER. On or before the Maturity Date, you may surrender
a portion of the Accumulated Value by giving Written Notice before the
Maturity Date and while an Annuitant is alive. The portion surrendered is
the Partial Surrender. We will deduct any Surrender Charge (see Section
6.4) from the Partial Surrender, as determined on the date we receive
Written Notice.
A Partial Surrender:
1) Must be at least $500;
2) Will reduce the Accumulated Value by the amount of the Partial
Surrender. The reduction will be applied against each subaccount
of the Variable Account and against the Fixed Account according
to the ratio for this contract of the accumulated value in the
subaccount or Fixed Account to the sum of the accumulated values
in all the subaccounts and the Fixed Account. With our approval,
you may choose other allocations to the subaccounts and the Fixed
Account;
3) Must not reduce the remaining Accumulated Value to less than
$1,000; and
4) Will be effective on the date we receive Written Notice.
6.4 SURRENDER CHARGE. A Surrender Charge will be applied to Full and
Partial Surrenders. The charge is made as a percentage of the Accumulated
Value surrendered. The percent applied is shown on page 3. However:
1) On any date, the sum of all Surrender Charges applied up to that
date will not exceed 6 1/2% of the total of premiums paid to
that date;
2) For any surrender made more than three years after the Date of
Issue, no Surrender Charge will be deducted from the portion of
the Accumulated Value surrendered which is paid under:
a) Option 2, 3 or 3V of Section 8.2 provided that payments will
be made for at least 5 years and that the proceeds may not be
withdrawn; or
b) Option 4, 4V, 5 or 5V of Section 8.2 or any other life income
option agreed to by us;
3) In each Contract Year you may surrender without a Surrender
Charge up to 10% of the Accumulated Value existing at the time
the first surrender is made in that Contract Year; and
4) No Surrender Charge will be applied for surrenders made while an
Annuitant is confined in a hospital, nursing home or hospice if
the confinement begins while this contract is in force and has
continued for six consecutive months.
5) No Surrender Charge will be applied for surrenders made during
Total Disability of an Annuitant. Total Disability is a
disability:
a) Which begins before the Contract Anniversary after the
Annuitant's 65th birthday;
b) Which has continued for six consecutive months;
c) Which results from bodily injury sustained or disease which
first appears while this contract is in force; and
d) Which completely prevents the Annuitant from engaging in an
Occupation for gain or profit. During the first 24 months of
disability, Occupation is the Annuitant's regular occupation
when the disability begins. After this, it is any
occupation for which the Annuitant is or becomes qualified
by reason of education, training or experience. However, if
the Annuitant is primarily a homemaker when Total Disability
begins, Occupation for gain or profit means performing
household duties.
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7. ACCOUNTS AND UNIT VALUES
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7.1 VARIABLE ACCOUNT. We have established the Variable Account shown on
page 4 as a separate investment account according to Minnesota laws. The
Variable Account is registered with the SEC as a unit investment trust under
the Investment Company Act of 1940.
The Variable Account has subaccounts which invest in shares of the LB Series
Fund, Inc. (the Fund). The Fund is registered with the SEC under the
Investment Company Act of 1940 as a diversified open-end management
investment company. Each subaccount purchases shares in a specified
portfolio of the Fund. Amounts allocated to each subaccount buy shares of
the portfolio for that subaccount at net asset value. The portfolios and
subaccounts are shown on page 4. We may add additional subaccounts to invest
in a new portfolio of the Fund or in a different investment company.
We own the assets of the Variable Account. Assets equal to the reserves and
other liabilities of the Variable Account may not be charged with
liabilities from any other business we conduct. However, we may transfer
assets of the Variable Account in excess of account reserves and liabilities
to our General Account.
Income and realized and unrealized gains and losses from each subaccount of
the Variable Account are credited to or charged against that subaccount.
The value of the assets in the Variable Account is determined at the end of
each Valuation Day.
7.2 FIXED ACCOUNT. Amounts allocated to the Fixed Account are invested
with our General Account assets. Interest will be credited on premiums
allocated to the Fixed Account and on accumulated value transferred to the
Fixed Account from the date of allocation or transfer. The rate applied to
amounts in the Fixed Account depends on the date of allocation or transfer
to the Fixed Account. For any amount allocated or transferred to the Fixed
Account, we guarantee that the initial interest rate will be effective for
at least 12 months, and subsequent interest rates will not be changed more
often than once every 12 months. Interest will be compounded daily.
Interest rates will never be less than an effective rate of 3% per year.
The last-in, first-out accounting method will be used to credit interest for
Partial Surrenders, transfers and the Administrative Charge.
7.3 GENERAL ACCOUNT. The General Account includes all assets we own that
are not in the Variable Account or any other separate account of the
Society. Reserves for any Fixed Annuity are maintained in the General
Account.
7.4 ALLOCATION OF PREMIUMS. The first premium payment is applied on the
Date of Issue. After the Date of Issue, payments are applied on the date we
receive them.
The Date of Issue of this contract is the date the first premium is received
in our Home Office. The Date of Initial Premium Allocation is the date we
approve your Application. Both of these dates are shown on page 3.
Premiums are allocated to the subaccounts of the Variable Account and to the
Fixed Account as follows:
1) Each premium received before the Date of Initial Premium
Allocation will be applied to the Money Market Subaccount as of
the Date of Issue. On the Date of Initial Premium Allocation,
the accumulated value in the Money Market Subaccount will be
allocated to the subaccounts of the Variable Account and to the
Fixed Account.
2) Each premium received on or after the Date of Initial Premium
Allocation will be allocated to the subaccounts of the Variable
Account and to the Fixed Account.
Premiums are allocated according to the premium allocation percentages for
this contract. The initial premium allocation percentages are specified in
the Application. If you do not designate allocation percentages, the entire
premium will be allocated to the Money Market Subaccount.
You may change these premium allocation percentages by giving Written
Notice. The change will be effective for each premium received with or
after your notice. The sum of the premium allocation percentages must be
100%, and each premium allocation percentage must be a whole number not more
than 100%. We reserve the right to adjust your allocation to eliminate
fractional percentages.
7.5 TRANSFER OF ACCUMULATED VALUES. On or before the Maturity Date, you
may transfer some or all of the accumulated values among the subaccounts of
the Variable Account and the Fixed Account. You do this by giving Written
Notice. The transfer of accumulated value is subject to the following:
1) The total amount transferred cannot be less than the smaller of:
a) $500; and
b) The accumulated value in the subaccount(s) or Fixed Account
from which the transfer is being made.
2) The transfer will occur at the end of the day on which we receive
Written Notice.
3) We reserve the right to limit the number of transfers in each
Contract Year. However, subject to the limit on Fixed
Account transfers stated in (4), we will always allow at least
two transfers per Contract Year.
4) Transfers from the Fixed Account must be made on or within 45
days after a Contract Anniversary. Only one transfer from the
Fixed Account will be allowed per Contract Year.
We may defer making transfers subject to the same conditions as in Section
2.11 Deferment.
7.6 NUMBER OF ACCUMULATION UNITS. The number of accumulation units for
this contract in any subaccount may increase or decrease at the end of each
Valuation Period. The number of accumulation units increases when, during
the period:
1) Premiums are allocated to the subaccount; or
2) Accumulated value is transferred to the subaccount from another
subaccount or from the Fixed Account.
The number of accumulation units decreases when, during the Valuation
Period:
1) Accumulated value is transferred from the subaccount to another
subaccount or to the Fixed Account;
2) Partial Surrenders are applied against the subaccount; or
3) Administrative Charges are taken from the subaccount.
The increase or decrease in the number of accumulation units for this
contract in any subaccount is equal to:
1) The dollar amount allocated or transferred to or from that
subaccount;
Divided by
2) The accumulation unit value for that subaccount at the end of the
Valuation Period during which the amounts are allocated or
transferred.
7.7 ACCUMULATION UNIT VALUE. The accumulation unit value for a
subaccount is equal to (1) divided by (2) where:
1) Is the sum of:
a) The net asset value of the corresponding portfolio of the
subaccount at the end of the current Valuation Period; plus
b) The amount of any dividend or capital gain distribution made
by the portfolio if the "ex-dividend" date occurs during the
Valuation Period; plus or minus
c) A charge or credit for any taxes reserved for that we
determine to be a result of the investment operation of the
portfolio;
Less
d) The risk charge we deduct for each day in the Valuation
Period. This charge for mortality and expense risks is
guaranteed not to exceed, on an annual basis, 1.25% of the
daily value of the subaccount.
2) Is the number of accumulation units of that subaccount for all
contracts, including accumulation units held as reserves for
Variable Annuities.
Accumulation unit values are determined at the end of each Valuation Day
before the transfer or allocation of any amounts to or from the subaccounts.
The accumulation unit values may increase or decrease on each Valuation Day.
7.8 NUMBER OF ANNUITY UNITS. If a Variable Annuity is payable, each
annuity payment is defined in terms of annuity units. The total amount
payable is the sum of the payments from each subaccount. The number of
annuity units payable from any subaccount is equal to:
1) The dollar amount of the first annuity payment provided by that
subaccount;
Divided by
2) The annuity unit value for that subaccount on the Valuation Day
on which the first payment is calculated.
After the first payment, the number of annuity units payable from each
subaccount will not change unless you request a change in allocation as
provided in Section 7.11. The dollar amount payable from any subaccount
will be equal to:
1) The number of units payable from that subaccount;
Multiplied by
2) The annuity unit value for that subaccount on the Valuation Day
on which the payment is calculated.
7.9 ANNUITY UNIT VALUE. On any Valuation Day, the annuity unit value for a
subaccount is equal to:
1) The annuity unit value for the subaccount at the end of the prior
Valuation Day;
Multiplied by
2) The Investment Factor (see Section 7.10) for the subaccount for
that day;
Multiplied by
3) A discount factor equivalent to an assumed interest rate of
3 1/2% per year.
Annuity unit values are determined at the end of each Valuation Day before
the transfer or allocation of any amounts to or from the subaccounts. The
annuity unit values may increase or decrease on each Valuation Day.
7.10 INVESTMENT FACTOR. The Investment Factor for a subaccount measures
the investment performance of that subaccount. The Investment Factor for a
subaccount is equal to:
1) The accumulation unit value of the subaccount at the end of the
current Valuation Period;
Divided by
2) The accumulation unit value of the subaccount at the end of the
last prior Valuation Period.
7.11 CHANGE IN ANNUITY UNIT ALLOCATION. You may change the allocation of
Annuity Units among the subaccounts of the Variable Account. Any change in
Annuity Unit allocations:
1) Will occur at the end of the day on which we receive Written
Notice;
2) Will be based on annuity unit values for the subaccounts on that
day; and
3) May be made only once each Contract Year.
7.12 CHANGE OF INVESTMENT POLICY. The investment policy for the Variable
Account is described on page 4. We may change the investment policy of the
Variable Account with the approval of the insurance supervisory officials of
the State of Minnesota. We will notify you if there is a material change in
investment policy.
7.13 CHANGE OF PORTFOLIO. We may determine that a portfolio has become
unsuitable for investment by a subaccount or shares of a portfolio may cease
to be available for investment. In such event, we may substitute another
portfolio of the investment company or invest in a different investment
company. This change would not be made unless approved by:
1) The SEC; and
2) If required, the insurance supervisory officials in the state
where this contract is delivered.
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8. SETTLEMENT PROVISIONS
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8.1 PAYMENT OF PROCEEDS. Proceeds from death or surrender are payable in
a lump sum unless otherwise provided. On Death Proceeds, we will pay
interest at the rate payable in Option 1 - Interest Income or, if greater,
the rate required by law. Interest is payable from the date the amount of
Death Proceeds is calculated (see Section 2.3) until the date of settlement.
Instead of a lump sum, proceeds of $2,000 or more may be paid under any
settlement option in Section 8.2 by means of a supplementary contract which
we will issue.
8.2 OPTIONAL PLANS OF SETTLEMENT. Proceeds payable under a settlement
option may be paid under one or more of the following options.
OPTION 1 - INTEREST INCOME. The proceeds may be left on deposit. Interest
will be paid at a rate of not less than 3% per year. These proceeds may be
withdrawn upon request.
FIXED ANNUITY OPTION 2 - INCOME OF A FIXED AMOUNT. We will pay an income of
a fixed amount at agreed upon intervals. This income is subject to these
conditions:
1) Income per year must not be less than 6% of the proceeds.
2) Income is paid until the proceeds, with interest credited at the
rate of 3 1/2% per year on the unpaid balance, are paid in full.
This income may be increased by the crediting of additional
interest.
FIXED ANNUITY OPTION 3 AND VARIABLE ANNUITY OPTION 3V - INCOME FOR A FIXED
PERIOD. We will pay an income for a fixed number of years, not to exceed
30. Guaranteed payments for Options 3 and 3V are shown in the table on page
16. We use an effective annual interest rate of 3 1/2%. Under Option 3,
the income per $1,000 of proceeds will not be less than the amount shown.
Under Option 3V, the first monthly payment per $1,000 of proceeds in any
subaccount will be the amount shown.
FIXED ANNUITY OPTION 4 AND VARIABLE ANNUITY OPTION 4V - LIFE INCOME WITH
GUARANTEED PERIOD. We will pay an income for the lifetime of the payee. If
the payee dies during the guaranteed period, payments will be continued to
the end of that period and will be paid to the beneficiary. A period of 10
or 20 years may be elected. Guaranteed payments for Options 4 and 4V are
shown in the table on page 17. The incomes are based on the 1983 Table A
for Annuity Valuation using an effective annual interest rate of 3 1/2%.
Under Option 4, the income per $1,000 of proceeds will not be less than the
amount shown. Under Option 4V, the first monthly payment per $1,000 of
proceeds in any subaccount will be the amount shown. After the first
payment is made, Options 4 and 4V may not be revoked or changed.
FIXED ANNUITY OPTION 5 AND VARIABLE ANNUITY OPTION 5V - JOINT AND SURVIVOR
LIFE INCOME WITH GUARANTEED PERIOD. We will pay an income as long as at
least one of two payees is alive. If both payees die during the guaranteed
period, payments will be continued to the end of that period and will be
paid to the beneficiary. A period of 10 or 20 years may be elected.
Guaranteed payments for Options 5 and 5V for selected ages are shown in the
table on page 17. The incomes are based on the 1983 Table A for Annuity
Valuation using an effective annual interest rate of 3 1/2%. Under Option
5, the income per $1,000 of proceeds will not be less than the amount so
determined. Under Option 5V, the first monthly payment per $1,000 of
proceeds in any subaccount will be the amount so determined. After the
first payment is made, Options 5 and 5V may not be revoked or changed.
OPTION 6 - OTHER OPTIONS. The proceeds may be paid under any other
settlement option agreeable to us.
8.3 ELECTION OF AN OPTION. You may elect an option by Written Notice
during an Annuitant's lifetime. The option must be elected before proceeds
become payable. Assignees and third-party owners may elect an option only
with our consent. Each payee under Options 4, 4V, 5 and 5V must be a
natural person who is an Annuitant or a beneficiary.
If Death Proceeds are payable, the beneficiary may elect a settlement option
provided that:
1) The manner of settlement has not been restricted before the
Annuitant's death;
2) The Death Proceeds have not been paid; and
3) Either:
a) The principal and interest are completely distributed
within 5 years after the date of death; or
b) If you have designated a natural person as beneficiary,
distribution of the principal and interest is made by means of
a periodic payment which:
i) Begins within one year after the date of death; and
ii) Is not guaranteed for a period which extends beyond the
life expectancy of the beneficiary.
Election of an option is subject to these conditions:
1) Payments must not be less than $25;
2) Payments are made only at annual, semiannual, quarterly or
monthly intervals; and
3) The first payment, except under Option 1 - Interest Income, is
payable as of the date the option becomes effective. Under
Option 1, interest is payable at the end of the first payment
interval.
If annuity payments would be or become less than $25, we reserve the right
to change the frequency of payments to an interval such that payments are
not less than $25.
If the Beneficiary does not receive Death Proceeds or elect a settlement
option by the date one year after we receive proof of the Annuitant's death,
Death Proceeds will then be calculated and applied under Option 1 - Interest
Income. Any proceeds not subsequently withdrawn will be paid in a lump sum
on the date 5 years after the date of death.
OPTIONS 3 AND 3V
Option 3 - Guaranteed Monthly Payments for Each $1,000 of Proceeds
Option 3V - First Monthly Payment for Each $1,000 of Proceeds
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Years Monthly Years Monthly Years Monthly Years Monthly Years Monthly
Payable Payment Payable Payment Payable Payment Payable Payment Payable Payment
-----------------------------------------------------------------------------------------------------
1 84.65 7 13.37 13 7.93 19 5.96 25 4.96
2 43.05 8 11.89 14 7.48 20 5.75 26 4.84
3 29.19 9 10.75 15 7.10 21 5.56 27 4.73
4 22.26 10 9.83 16 6.76 22 5.39 28 4.62
5 18.11 11 9.08 17 6.46 23 5.23 29 4.53
6 15.34 12 8.46 18 6.20 24 5.09 30 4.44
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Annual, Semiannual or Quarterly payments are 11.813, 5.957 and 2.991 respectively,
times the Monthly payments.
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OPTIONS 4 AND 4V
Male Payee - Monthly Life Income
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Option 4 - Guaranteed Monthly Life Income for Each $1,000 of Proceeds
Option 4V - First Monthly Life Income Payment for Each $1,000 of Proceeds
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Payments Payments Payments Payments
Age of Payee Guaranteed Guaranteed Age of Payee Guaranteed Guaranteed
on Date of for for on Date of for for
First Payment 10 years 20 years First Payment 10 years 20 years
-----------------------------------------------------------------------------------------------------
40 3.94 3.89 70 6.87 5.52
45 4.20 4.11 71 7.05 5.55
50 4.51 4.36 72 7.22 5.59
55 4.91 4.66 73 7.40 5.62
60 5.42 4.97 74 7.57 5.64
61 5.54 5.04 75 7.75 5.65
62 5.67 5.10 76 7.92 5.65
63 5.80 5.16 77 8.09 5.65
64 5.94 5.22 78 8.26 5.65
65 6.08 5.28 79 8.42 5.65
66 6.23 5.33 80 8.57 5.65
67 6.38 5.38 85 9.20 5.65
68 6.54 5.43 90 9.59 5.65
69 6.71 5.48 95 9.73 5.65
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Female Payee - Monthly Life Income
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Option 4 - Guaranteed Monthly Life Income for Each $1,000 of Proceeds
Option 4V - First Monthly Life Income Payment for Each $1,000 of Proceeds
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Payments Payments Payments Payments
Age of Payee Guaranteed Guaranteed Age of Payee Guaranteed Guaranteed
on Date of for for on Date of for for
First Payment 10 years 20 years First Payment 10 years 20 years
-----------------------------------------------------------------------------------------------------
40 3.72 3.70 70 6.23 5.37
45 3.92 3.88 71 6.40 5.43
50 4.18 4.11 72 6.58 5.48
55 4.51 4.38 73 6.76 5.52
60 4.93 4.70 74 6.95 5.57
61 5.03 4.77 75 7.14 5.60
62 5.14 4.84 76 7.34 5.63
63 5.25 4.91 77 7.54 5.65
64 5.37 4.98 78 7.74 5.65
65 5.50 5.05 79 7.94 5.65
66 5.63 5.12 80 8.13 5.65
67 5.77 5.19 85 8.97 5.65
68 5.91 5.25 90 9.48 5.65
69 6.07 5.32 95 9.73 5.65
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OPTIONS 5 AND 5V
Male and Female Payees - Monthly Life Income
-----------------------------------------------------------------------------------------------------
Option 5 - Guaranteed Monthly Life Income For Each $1,000 Of Proceeds
Option 5V - First Monthly Life Income Payment For Each $1,000 Of Proceeds
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Payments Guaranteed for 10 Years Payments Guaranteed for 20 Years
-----------------------------------------------------------------------------------------------------
Age of Male
Payee On Age of Female Payee Age of Female Payee
Date of on Date of First Payment on Date of First Payment
First Payment 60 65 70 75 60 65 70 75
-----------------------------------------------------------------------------------------------------
60 4.51 4.75 4.98 5.16 4.45 4.66 4.82 4.92
65 4.65 4.98 5.31 5.61 4.57 4.83 5.05 5.19
70 4.76 5.17 5.62 6.07 4.65 4.95 5.22 5.40
75 4.84 5.32 5.88 6.48 4.68 5.02 5.32 5.53
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Rates not shown will be calculated on the same basis as the above rates and will be provided
upon request.
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9 BENEFICIARY
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9.1 BENEFICIARY. The beneficiary is named in the Application. You may
change the beneficiary by giving Written Notice. The change will become
effective if:
1) We receive Written Notice; and
2) We acknowledge the change.
The effective date of the change will be the date the notice was signed. We
will not be liable for any payment made or action taken by us before we
receive the notice.
9.2 RIGHTS OF BENEFICIARIES. Unless you designate otherwise, a surviving
beneficiary entitled to receive Annuity Income may:
1) Designate a contingent beneficiary; or
2) Take as a lump sum the commuted value of the Annuity Income
remaining payable to the end of the Guaranteed Period. The
commuted value will be based on the interest rate used to
determine the Annuity Income.
9.3 SUCCESSION OF BENEFICIARIES. You may designate one or more
beneficiaries to receive any Death Proceeds payable or any Annuity Income
remaining payable upon an Annuitant's death. You will classify each
beneficiary as primary or contingent. Upon the Annuitant's death, we will
pay to the primary beneficiaries who survive the Annuitant any proceeds or
income payable. If none survive, we will pay the surviving contingent
beneficiaries. In the event no beneficiary survives the Annuitant, any
Death Proceeds payable or the commuted value of any Annuity Income remaining
payable will be paid to the Annuitant's estate.
Other designations or successions of beneficiaries may be arranged with us.
9.4 SHARE OF PROCEEDS. Unless you specify otherwise, each beneficiary
receiving payments will have an equal share in any Death Proceeds payable or
any Annuity Income remaining payable. If this contract has two Annuitants
and both die such that the order of death cannot be determined, then one-
half of the Death Proceeds will be paid to the beneficiary of each
Annuitant.
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10. DIVIDENDS
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10.1 DIVIDENDS. Each year we will determine our divisible surplus. This
contract's share, if any, will be credited as a dividend on the Contract
Anniversary. Since we do not expect this contract to contribute to
divisible surplus, it is not expected that any dividends will be credited.
10.2 DIVIDEND OPTIONS. You may choose to use dividends credited prior to
the Maturity Date under any option which follows. After the Maturity Date,
dividends will be paid in cash.
CASH. Dividends are paid in cash.
PAYMENT OF PREMIUM. Dividends are applied as an additional premium
payment on the Contract Anniversary.
10.3 AUTOMATIC DIVIDEND OPTION. Dividends will be applied under the
Payment of Premium option unless a different option has been chosen in
writing.
LUTHERAN
[LOGO] BROTHERHOOD
A Fraternal Benefit Society
Minneapolis, Minnesota 55415
FLEXIBLE PREMIUM
DEFERRED VARIABLE ANNUITY
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Annuity Income payable at maturity.
Death Proceeds payable at death before maturity.
Flexible premiums.
Return on investments reflected in contract benefits.
Annual dividends payable if earned.
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