Allianz Life Insurance Company of North America [PO Box 561 Minneapolis, MN 55440-0561]
Allianz Life Insurance Company
of North America
[PO Box 561
Minneapolis, MN 55440-0561]
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Individual Flexible Purchase Payment Variable Deferred
Annuity Contract
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Purchase Payments we receive for this contract accumulate to provide Annuity Payments or a Death Benefit. This is a variable annuity contract with Contract Value and Annuity Payments increasing or decreasing depending on the experience of the Variable Account. This contract is nonparticipating, with no dividends payable. Benefits available under this contract are not less than those required by statute of the state in which this contract is delivered.
Signed for the Company at its home office on the Issue Date.
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Secretary President
RIGHT TO EXAMINE: This contract can be returned within 10 days after you receive it. It can be mailed or delivered to either us or the representative who sold it. Return of this contract by mail is effective on being postmarked, properly addressed and postage prepaid. We promptly refund the Contract Value in states where permitted. This may be more or less than the Purchase Payments. We have the right to allocate Purchase Payments to the Money Market Investment Option until the end of the Right to Examine period. If we so allocate Purchase Payments, we refund the greater of the Purchase Payments less any Withdrawals, or the Contract Value.
This is a legal contract between you and the Company.
Read this contract carefully.
L40533
Table of Contents
Contract Schedule 3
Definitions 4
Purchase Payments 6
Variable Account 6
Account Values 6
How the Account Values increase and decrease 6
Transfers 7
Suspension of payments or transfers 8
Contract Charges 9
Base Account Fee 9
Contract Maintenance Charge 9
Accessing your Account Values
Withdrawals 9
Full Withdrawal 9
Partial Withdrawals 10
Annuity Payments 10
How Annuity Payments begin 10
How we calculate Annuity Payments 10
Annuity Options 11
Death Benefit 13
Ownership 14
General Provisions 15
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Definitions
Some of the terms found in this contract are defined below. Additional terms are defined throughout this contract where they are used. Section titles, provision titles, and terms used on the Contract Schedule are also capitalized to help you easily recognize them.
We, Our, Us, and the Company
Allianz Life Insurance Company of North America. The terms We, Our, and Us may not be capitalized throughout this contract.
You , Your
The Owner of this contract. The terms You and Your may not be capitalized throughout this contract.
Accounts
The Base Account and any other Account associated with an attached rider.
Account Values
The Base Account Value and any other Account Value associated with an attached rider.
Adjusted Base Account Value
The Base Account Value minus any Premium Tax paid by us.
Age
An individual’s age on his or her most recent birthday, unless otherwise specified.
Annuitant
An individual whose Age determines the Annuity Payments. You may be an Annuitant or you may name someone else.
Annuity Phase
The period of time beginning on the Annuity Date during which we make Annuity Payments. The Annuity Phase terminates on the earliest of the following.
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Under Annuity Options 1 and 3, the death of the last surviving Annuitant.
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Under Annuity Options 2 and 4, the death of the last surviving Annuitant and expiration of the guaranteed period. If we make a lump sum payment of the remaining guaranteed Annuity Payments at the death of the last surviving Annuitant, this portion of the contract terminates on payment of the lump sum.
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Under Annuity Option 5, the death of the Annuitant and payment of any lump sum refund.
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The Business Day that the contract terminates.
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Authorized Request
A request that is received in good order and in a form that is satisfactory to us.
Base Account
The account available to you under this contract.
Base Account Accumulation Phase
The Base Account Accumulation Phase begins on the Business Day you allocate to the Base Account. The Base Account Accumulation Phase ends on the earliest of the following.
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The Business Day we process your request for a Full Withdrawal of the total Contract Value.
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The Business Day before the Annuity Date.
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The Business Day we receive both an Authorized Request of the death benefit payment option and due proof of death, upon the death of any Owner, unless this contract is continued by the deceased Owner’s spouse.
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Base Account Value
The sum of the values in the selected Base Account Investment Options.
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Definitions continued from the previous page
Beneficiary
An individual or non-individual entitled to the Death Benefit under this contract. If an Owner dies, any surviving Owner automatically becomes the sole Beneficiary and replaces any primary or contingent Beneficiary you previously named.
Business Day
Each day on which the New York Stock Exchange is open for trading, except when an Investment Option does not value its shares. Our Business Day closes when regular trading on the New York Stock Exchange closes, which is usually at 4:00 p.m. Eastern Time. We process any instructions received after the close of any Business Day on the next Business Day.
Contract Anniversary
A twelve-month anniversary of the Issue Date or any subsequent twelve-month Contract Anniversary.
Contract Value
The sum of all Account Values.
Contract Year
A period of 12 months. The first Contract Year begins on the Issue Date. Subsequent Contract Years begin on the Contract Anniversaries. All Contract Years end at the end of the day before the next Contract Anniversary.
Death Benefit
The Base Death Benefit and any Death Benefit associated with an attached rider.
Investment Options
The investment choices available under the Variable Account. We may add, eliminate, or substitute Investment Options; if we do, we will provide written notice. If we offer more than one Investment Option group, after the Issue Date, we can only move Investment Options between groups if the move is to a less restrictive group.
Issue Date
The first day this contract is effective. The Issue Date is shown on the Contract Schedule.
Joint Annuitant
You can add a Joint Annuitant for the Annuity Phase subject to our approval. If we allow Joint Annuitants, we determine Annuity Payments using the Ages of both Joint Annuitants.
Joint Owner
Joint Owners have equal contract Ownership rights and must authorize the exercise of these rights in writing, unless otherwise allowed by us. If Joint Owners are named, all references to Owner shall mean Joint Owners.
Payee
The individual or non-individual to whom we make Annuity Payments. Unless you designate another Payee, you are the Payee of the Annuity Payments.
Premium Tax
Any Premium Taxes owed by the Company to any governmental entity.
Purchase Payment
Any payment made toward this contract.
Quarterly Anniversary
The day that occurs three, six, and nine calendar months after the Issue Date or any subsequent Contract Anniversary. Quarterly Anniversaries also include Contract Anniversaries.
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Purchase Payments
Initial Purchase Payment
The Initial Purchase Payment is the Purchase Payment we receive on and before the Issue Date and is shown on the Contract Schedule. The Initial Purchase Payment must be greater than or equal to the Minimum Required Purchase Payment shown on the Contract Schedule, and cannot be greater than the Maximum Total Purchase Payments shown on the Contract Schedule without our approval.
Additional Purchase Payments
Additional Purchase Payments are Purchase Payments we receive after the Issue Date and during the Base Account Accumulation Phase. Additional Purchase Payments must be greater than or equal to the Minimum Additional Purchase Payment shown on the Contract Schedule. We may decline any Additional Purchase Payment.
No Default
This contract will not be in default if you do not make Additional Purchase Payments.
Allocation of Purchase Payments
We allocate Purchase Payments to one or more of the Accounts and Investment Options according to your instructions. Your instructions must comply with the Allocation Guidelines and Investment Option restrictions shown on the Contract Schedule. However, we may allocate the Initial Purchase Payment to the Money Market Investment Option until the end of the Right to Examine period.
Unless you inform us otherwise, we allocate Additional Purchase Payments in the same manner as the Initial Purchase Payment. In addition, for each Account that has Investment Option restrictions, at the end of the Business Day before each Quarterly Anniversary, we rebalance the Account Value in each of your selected Investment Options according to your allocation instructions for Additional Purchase Payments.
Variable Account
The Variable Account consists of assets we have set aside and have kept separate from the rest of our assets and those of our other separate accounts. The assets of the Variable Account, equal to reserves and other liabilities of this contract and all other contracts issued through the Variable Account, will not be charged with liabilities arising out of any other business we may conduct.
The Variable Account assets are divided into subaccounts corresponding to the Accounts and Investment Options you select.
Account Values
How the Account Values increase and decrease
Account Values increase and decrease based on Purchase Payments, Transfers, Withdrawals, the deduction of contract and rider fees and charges, and the investment performance of the Investment Options you select.
We place Purchase Payments you allocate to the Accounts and Investment Options into subaccounts of the Variable Account. Each subaccount invests exclusively in one Investment Option within an Account. We use Accumulation Units to account for all amounts allocated to or withdrawn from each subaccount as a result of Purchase Payments, Withdrawals, Transfers, or the deduction of contract and rider fees and charges. We determine each Account Value in the Variable Account by multiplying the number of subaccount Accumulation Units in an Account by the subaccount’s Accumulation Unit Value and then adding these results together.
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Account Values continued from previous page
Number of Accumulation Units
On the Issue Date, the number of Accumulation Units in each subaccount is equal to the initial Purchase Payment amount allocated to that subaccount, divided by that subaccount’s Accumulation Unit Value.
At the end of each Business Day we adjust the number of Accumulation Units in each subaccount as follows. Additional Purchase Payments and Transfers into a subaccount will increase the number of Accumulation Units. Withdrawals, Transfers out of a subaccount, and the deduction of any Transfer Fee, Contract Maintenance Charge or any charge associated with an attached rider will decrease the number of Accumulation Units. The change in the number of Accumulation Units is equal to the net amount allocated to or deducted from the subaccount, divided by that subaccount’s Accumulation Unit Value.
Accumulation Unit Value
We arbitrarily set the initial Accumulation Unit Value for each subaccount. At the end of each Business Day, we multiply the Accumulation Unit Value for each subaccount at the end of the prior Business Day by the Net Investment Factor for that subaccount at the end of the current Business Day to determine the new Accumulation Unit Value for that subaccount.
Net Investment Factor
We determine the Net Investment Factor for a subaccount by:
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(a)
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dividing the Investment Option’s Net Asset Value at the end of the current Business Day by the Net Asset Value at the end of the prior Business Day,
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(b)
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adding any dividend or capital gains declared on behalf of the Investment Option that has an ex-dividend date after the prior Business Day and before the close of business on the current Business Day, and
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(c)
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multiplying this result by one minus the Base Account Fee, if applicable, for the current Business Day and any additional calendar days since the prior Business Day and charges for any tax liability related to this contract or the Variable Account. The Base Account Fee is shown on the Contract Schedule.
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Net Asset Value
The Net Asset Value is the valuation of an underlying Investment Option, less any investment management and portfolio administration fees and expenses, as of the close of trading on a Business Day.
Transfers
You can Transfer all or a part of the Account Value in an Investment Option into another Investment Option within an Account, or into another Investment Option in another Account, by providing an Authorized Request. If we offer more than one Investment Option group in an Account, you can make Transfers into or out of these groups as long as you comply with any Investment Option restrictions shown on the Contract Schedule.
Each Contract Year, you are allowed the Number of Free Transfers Permitted shown on the Contract Schedule. This applies to Transfers before and after the Annuity Date.
We may charge a Transfer Fee for each Transfer you make in excess of the Number of Free Transfers Permitted. Transfers we make at the end of the Right to Examine period, Transfers made pursuant to a regularly scheduled Transfer, Transfers made between the same Investment Option in different Accounts, quarterly rebalancing Transfers, or other Transfers under programs specifically waiving the Transfer Fee are not counted in determining the application of the Transfer Fee.
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Transfers continued from previous page
All Transfers are subject to the following.
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Each Transfer of Base Account Value into another Account reduces the Base Account Value on a dollar for dollar basis.
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Any Transfer Fee that we may impose is shown on the Contract Schedule. We deduct the Transfer Fee from the Investment Options from which the Transfer is made. If you are transferring from multiple Investment Options, we treat the Transfer as a single transfer, and we deduct any Transfer Fee proportionately from the Investment Options. If you Transfer the total amount in the Investment Option, then we deduct the Transfer Fee from the amount transferred. The deduction of the Transfer Fee reduces the Account Values on a dollar for dollar basis. We deduct the Transfer Fee from the Account Values at the end of the Business Day that we process the transfer request.
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We may limit Transfers until the end of the Right to Examine period.
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Any transfer request must clearly specify the amount you wish to Transfer and the Accounts and Investment Options involved.
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After the Annuity Date, you cannot make Transfers from a fixed Annuity Payment stream to a variable Annuity Payment stream.
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After the Annuity Date, you can make Transfers from a variable Annuity Payment stream to establish a new fixed Annuity Payment stream. The number of Annuity Units canceled from a subaccount is equal in value to the amount of Annuity Reserve transferred out of the subaccount. Annuity Reserve is the assets that support the selected Annuity Option during the Annuity Phase. The amount transferred purchases fixed Annuity Payments under the Annuity Option in effect based on the Annuitant’s gender (where permitted) and Age at the time of the Transfer.
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Your right to make Transfers is subject to modification if we determine, at our sole discretion, that the exercise of the right by one or more Owners is, or would be, to the disadvantage of other Owners. We may apply restrictions in any manner reasonably designed to prevent any use of the transfer right which we consider to be to the disadvantage of other Owners, including rejecting a transfer request. We may apply restrictions on Transfers into or out of one or more of the Investment Options, which could include, but are not limited to, the following.
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Requiring a minimum time period between each Transfer.
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Limiting the frequency of Transfers.
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Not accepting a transfer request from, or made on your behalf by, a third party.
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Limiting the dollar amounts that an Owner can Transfer between the Investment Options at any one time.
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Not accepting transfer instructions other than by first class U.S. mail.
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Prohibiting Transfers into specific Investment Options.
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If you use this transfer privilege, we are not liable for Transfers made in accordance with your instructions. We determine the number and value of the subaccount Accumulation Units to be transferred as of the end of the Business Day immediately following our receipt of the Authorized Request for Transfer.
Suspension of payments or transfers
We may suspend or postpone Transfers or payments for withdrawals from the Variable Account for any period when:
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The New York Stock Exchange is closed, other than customary weekend and holiday closings.
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Trading on the New York Stock Exchange is restricted.
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An emergency, as determined by the Securities and Exchange Commission, exists as a result of which disposal of the Investment Option shares is not reasonably practicable or we cannot reasonably value the Investment Option shares.
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During any other period when the Securities and Exchange Commission, by order, so permits for the protection of Owners.
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Contract Charges
Base Account Fee
If you allocate to the Base Account, we deduct a Base Account Fee from your selected Base Account Investment Options’ assets on each Business Day during the Base Account Accumulation Phase, and during the Annuity Phase if you select variable Annuity Payments. We do not deduct a Base Account Fee during the Annuity Phase for any portion of the Base Account Value that you apply to fixed Annuity Payments.
The Base Account Fee is an annualized rate that is calculated and accrued on a daily basis as a percentage of the Base Account Investment Options’ Net Asset Value. This fee’s annualized rate is shown on the Contract Schedule.
During the Base Account Accumulation Phase, the Base Account Fee continues until the Base Account Accumulation Phase terminates. During the Annuity Phase, the Base Account Fee continues until the variable Annuity Payments terminate.
Contract Maintenance Charge
We deduct an annual Contract Maintenance Charge. This charge is shown on the Contract Schedule.
Before the Annuity Date, we deduct the Contract Maintenance Charge first from the Base Account Value. If this charge is greater than the Base Account Value, we deduct the remaining charge proportionately from any other Account Value associated with an attached rider that is greater than zero. The deduction of the Contract Maintenance Charge reduces the Account Values on a dollar for dollar basis. We deduct the Contract Maintenance Charge from the Account Values on the last Business Day of each Contract Year. We deduct the Contract Maintenance Charge from the appropriate Account’s Investment Options proportionately based on the amount of the Account Value in each Investment Option relative to the total Account Value. On and after the Annuity Date, we deduct the Contract Maintenance Charge proportionately from each Annuity Payment.
Before the Annuity Date, we do not deduct the Contract Maintenance Charge if the Contract Value at the time we deduct the charge is greater than or equal to the Designated Amount shown on the Contract Schedule. On and after the Annuity Date, we do not deduct the Contract Maintenance Charge if the Base Account Value on the Annuity Date is greater than or equal to the Designated Amount. If you take a Full Withdrawal on a date other than on a Contract Anniversary, we deduct the full Contract Maintenance Charge. If you own more than one of this contract, we use the total Contract Value or Base Account Value, as applicable, for all of the contracts to determine if we waive this charge. If the total Contract Value, or Base Account Value, as applicable, for all of the contracts registered under the same social security or tax identification number is greater than or equal to the Designated Amount at the time we are to deduct the charge, we do not assess the Contract Maintenance Charge.
Withdrawals
Before the Annuity Date, you can request a Full or Partial Withdrawal from this contract by providing an Authorized Request.
We pay the amount of any Withdrawal from the Variable Account within seven days of receipt of an Authorized Request unless the Suspension of payments or transfers provision of this contract is in effect.
Full Withdrawal
A Full Withdrawal is a request for the total Contract Value. We process a Full Withdrawal on the Business Day we receive an Authorized Request based on the values at the end of the Business Day. The Full Withdrawal amount is equal to the total Contract Value minus any Contract Maintenance Charge and any accrued charge associated with an attached rider. This contract terminates upon a Full Withdrawal.
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Withdrawals continued from the previous page
Partial Withdrawals
A Partial Withdrawal is a request for an amount less than the total Contract Value. Each Partial Withdrawal must be greater than or equal to the Minimum Partial Withdrawal shown on the Contract Schedule. If we offer more than one Investment Option group in an Account, you can make Withdrawals from these groups as long as you comply with any Investment Option restrictions shown on the Contract Schedule.
We deduct Partial Withdrawals proportionately from the Investment Options, unless we receive alternate instructions. The deduction of a Partial Withdrawal reduces the Account Values on a dollar for dollar basis. We deduct a Partial Withdrawal from the Account Values at the end of the Business Day that we process the Withdrawal request.
If you request a Partial Withdrawal that causes the Contract Value to be less than the Minimum Required Value shown on the Contract Schedule, we treat your request as a Full Withdrawal.
Annuity Payments
This contract provides for variable or fixed Annuity Payments, or a combination of both variable and fixed Annuity Payments. The Annuity Date is the date Annuity Payments begin. The Annuity Date must be the first day of the calendar month.
How Annuity Payments begin
You may begin Annuity Payments by providing an Authorized Request. The scheduled Annuity Date is the Latest Annuity Date. You may request a different Annuity Date by providing an Authorized Request at least 30 days before the Annuity Date. Your requested Annuity Date is subject to our approval and cannot be earlier than the Earliest Annuity Date or later than the Latest Annuity Date. We require you to begin Annuity Payments on the Latest Annuity Date if the Contract Value is greater than zero. The Annuity Date will never be later than the last Annuity Date permitted by applicable state or federal law. The Earliest Annuity Date and Latest Annuity Date are shown on the Contract Schedule.
We make Annuity Payments according to the Annuity Option and payment frequency you select. You can select a monthly, quarterly, semi-annual, or annual payment frequency. We may require that Annuity Payments be greater than or equal to the Minimum Annuity Payment shown on the Contract Schedule. We send Annuity Payments to the Payee.
If you do not select an Annuity Option or payment frequency, we make monthly variable Annuity Payments, according to Option 2 – Life Annuity with a 5-year guaranteed period.
Before the Annuity Date, we may require proof of the Age and gender of an Annuitant.
On and after the Annuity Date, you cannot change the Annuity Option or the payment frequency, and we may periodically require proof that the Annuitant is still living.
If a sole Owner dies on or after the Annuity Date, the Beneficiary becomes the Owner of this contract. If a Joint Owner dies on or after the Annuity Date, the surviving Joint Owner becomes the sole Owner of this contract.
How we calculate Annuity Payments
We calculate Annuity Payments on the Annuity Date using the Adjusted Base Account Value and current purchase rates for the Annuity Option you select. Current purchase rates will be greater than or equal to the rates in the Guaranteed Purchase Rate Tables shown on the Contract Schedule. You may contact us at any time to get the current purchase rates that we would use if you were to begin Annuity Payments at that time.
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Annuity Payments continued from the previous page
Fixed Annuity Payments
The guaranteed purchase rates for fixed Annuity Payments are based on the Annuity Mortality Table and the Minimum Annual Annuity Payment Rate, and are shown in Table A on the Contract Schedule. The Annuity Mortality Table and Minimum Annual Annuity Payment Rate are also shown on the Contract Schedule.
Fixed Annuity Payments are equal to the portion of the Adjusted Base Account Value allocated to fixed Annuity Payments, divided by $1,000, and then multiplied by the applicable purchase rate for the Annuity Option you select. Fixed Annuity Payments will not change, unless as described in Annuity Option 3 – Joint and Last Survivor Annuity.
Variable Annuity Payments
The guaranteed purchase rates for variable Annuity Payments are based on the Annuity Mortality Table and the Assumed Investment Rate, and are shown in Table B on the Contract Schedule. The Annuity Mortality Table and Assumed Investment Rate are also shown on the Contract Schedule.
The first variable Annuity Payment is equal to the portion of the Adjusted Base Account Value allocated to variable Annuity Payments, divided by $1,000, and then muliplied by the applicable purchase rate for the Annuity Option you select. Variable Annuity Payments may change, based on the performance of your selected Investment Options and the Assumed Investment Rate.
We then purchase a fixed number of Annuity Units on the Annuity Date for each subaccount of your selected Investment Options. We do this by dividing the amount of the first Annuity Payment among your selected Investment Options’ subaccounts according to your future Purchase Payment allocation instructions. We then divide the Annuity Payment amount in each subaccount by the subaccount’s Annuity Unit value.
On each Business Day after the Annuity Date, we determine each subaccount’s Annuity Unit value by multiplying the Annuity Unit value for the prior Business Day by the Net Investment Factor for the current Business Day, and then dividing by the assumed Net Investment Factor for the current Business Day. The assumed Net Investment Factor for the current Business Day is equal to one plus the Assumed Investment Rate, adjusted to reflect the number of calendar days that have elapsed since the prior Business Day.
Thereafter, the number of Annuity Units in each subaccount remains unchanged unless you make a Transfer. However, the number of Annuity Units will change if, under Annuity Option 3, one Annuitant dies and you requested Annuity Payments at 75% or 50% of the previous payment amount. All calculations will appropriately reflect the payment frequency you selected.
On each subsequent variable Annuity Payment date, the total variable Annuity Payment is the sum of the variable Annuity Payments for each subaccount. We determine the Annuity Payment for each subaccount by multiplying the subaccount’s number of Annuity Units by the Annuity Unit value on the payment date.
Annuity Options
You may select an Annuity Option other than Options 1 through 5 with our written agreement.
Option 1 – Life Annuity
We make Annuity Payments during the life of the Annuitant. The last payment will be the one that is due before the Annuitant’s death.
Option 2 – Life Annuity with a guaranteed period over 5, 10, 15 or 20 years
We make Annuity Payments during the life of the Annuitant. If the Annuitant dies before the end of the selected guaranteed period we continue to make Annuity Payments to the Payee for the rest of the guaranteed period. If the Payee and Annuitant were the same person, we will make payments to the Owner. If the Payee, Annuitant and Owner were the same person, we will make payments to the Beneficiary.
Alternatively, the Owner can select to receive a lump sum payment. A lump sum payment under this Annuity Option is equal to the present value of the remaining guaranteed Annuity Payments, as of the date we receive proof of the Annuitant’s death and a payment selection form.
For variable Annuity Payments, we base the remaining guaranteed Annuity Payments on the current value of the Annuity Units and we use the Assumed Investment Rate to calculate the present value.
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Annuity Payments continued from the previous page
Option 2 – Life Annuity with a guaranteed period over 5, 10, 15 or 20 years (continued)
For fixed Annuity Payments, we calculate the present value of the remaining guaranteed Annuity Payments using the Statutory Calendar Year Interest Rate based on the NAIC Standard Valuation Law for Single Premium Immediate Annuities corresponding to the Annuity Date.
We require due proof of death of the Annuitant and return of this contract before we make any lump sum payment.
Option 3- Joint and Last Survivor Annuity
We make Annuity Payments during the lifetimes of the Annuitant and Joint Annuitant. Upon the death of one Annuitant, Annuity Payments to the Payee continue during the lifetime of the surviving Joint Annuitant at a level of 100%, 75% or 50% of the previous amount, as selected by the Owner. The last payment will be the one that is due before the last surviving Joint Annuitant’s death.
Option 4 – Joint and Last Survivor Annuity with a guaranteed period over 5, 10, 15 or 20 years
We make Annuity Payments during the lifetime of the Annuitant and Joint Annuitant. Upon the death of one Annuitant, Annuity Payments to the Payee continue during the lifetime of the surviving Joint Annuitant at 100% of the previous amount. If the surviving Joint Annuitant dies after the selected guaranteed period, the last payment will be the one that is due before the Annuitant’s death. However, if both Joint Annuitants die before the end of the selected guaranteed period, we continue to make Annuity Payments to the Payee for the rest of the guaranteed period. If the Payee and Annuitant were the same person, we will make payments to the Owner. If the Payee, Annuitant and Owner were the same person, we will make payments to the Beneficiary.
Alternatively, the Owner can select to receive a lump sum payment. A lump sum payment under this Annuity Option is equal to the present value of the remaining guaranteed Annuity Payments, as of the date we receive due proof of the last surviving Joint Annuitant’s death.
For variable Annuity Payments, we base the remaining guaranteed Annuity Payments on the current value of the Annuity Units and we use the Assumed Investment Rate to calculate the present value.
For fixed Annuity Payments, we calculate the present value of the remaining guaranteed Annuity Payments using the Statutory Calendar Year Interest Rate based on the NAIC Standard Valuation Law for Single Premium Immediate Annuities corresponding to the Annuity Date.
We require due proof of death of both Joint Annuitants and return of this contract before we make any lump sum payment.
Option 5 – Refund Life Annuity
We make Annuity Payments during the lifetime of the Annuitant. The last payment will be the one that is due before the Annuitant’s death. After the Annuitant’s death, the Payee can receive a lump sum refund.
For fixed Annuity Payments, the refund equals the Adjusted Base Account Value on the Annuity Date minus all Annuity Payments made.
For variable Annuity Payments, the refund is the sum of refund amounts attributable to each Investment Option. We calculate the refund amount for a given Investment Option using the following formula.
(a) x {[(b) x (c) x (d)/(e)] – [(d) x (f)]}, where:
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is the Annuity Unit value of the subaccount for that Investment Option as of the Business Day when due proof of death of the Annuitant is received by us.
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is the amount applied to variable Annuity Payments on the Annuity Date.
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is the allocation percentage in that subaccount, in decimal form, as of the Business Day when due proof of death of the Annuitant is received by us.
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is the number of Annuity Units used in determining each variable Annuity Payment attributable to that subaccount as of the Business Day when due proof of death of the Annuitant is received by us.
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(e)
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is the dollar value of the first variable Annuity Payment.
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(f)
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is the number of variable Annuity Payments made since the Annuity Date.
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We base this calculation on the allocation of Annuity Units in force as of the Business Day when due proof of death of the Annuitant is received by us. If the total refund determined using the above calculation is less than or equal to zero, no refund payment is due.
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Death Benefit
Who receives the Death Benefit
If the sole Owner dies before the Annuity Date, we pay the Death Benefit to the Beneficiary.
If a Joint Owner dies before the Annuity Date, the surviving Joint Owner automatically becomes the sole primary Beneficiary, replacing all Beneficiaries previously named, and we pay the Death Benefit to the surviving Joint Owner. If the Joint Owners were spouses and the surviving Joint Owner dies before we pay the Death Benefit, we pay the Death Benefit to any named contingent Beneficiaries. If there are no named contingent Beneficiaries, we pay the Death Benefit to the estate of the Joint Owner that last died. If the Joint Owners were not spouses and the surviving Joint Owner dies before we pay the Death Benefit, we pay the Death Benefit to the estate of the Joint Owner that last died.
If the Owner is a non-individual and the Annuitant dies before the Annuity Date, we pay the Death Benefit to the Beneficiary.
If there are multiple Beneficiaries, they share equally in the Death Benefit unless you have specified different percentages.
Base Death Benefit
Before the Annuity Date, the Base Death Benefit is the Adjusted Base Account Value determined at the end of the Business Day we receive both an Authorized Request of the death benefit payment option and due proof of death.
The Base Death Benefit remains in the Variable Account until distribution begins.
Payment of the Death Benefit
We require due proof of death, selection of a death benefit payment option, and any required governmental forms before we pay any Death Benefit. Due proof of death includes a certified copy of the death certificate, a decree of court of competent jurisdiction as to the finding of death, or any other proof satisfactory to us.
All Death Benefits will be paid in accordance with applicable law or regulations governing Death Benefit payments under Option A, B, or C.
Continuation of this contract by the surviving spouse
An eligible surviving spouse can choose to continue their portion of this contract, instead of receiving payment of the Death Benefit, by providing an Authorized Request.
If a Beneficiary is the surviving spouse of the deceased Owner, he or she is eligible to continue their portion of this contract as the sole Owner.
If a Joint Owner is the surviving spouse of the deceased Owner, he or she is eligible to continue their portion of this contract as the sole Owner.
If the Owner is a non-individual, a Beneficiary is the surviving spouse of the deceased Annuitant, and this contract is qualified under the federal tax code, the surviving spouse is eligible to continue their portion of this contract as the Annuitant.
If a surviving spouse continues this contract as the sole Owner, he or she can exercise all Ownership rights under this contract.
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Death benefit payment options
If the Owner has not previously designated a death benefit payment option, a Beneficiary must request that the Death Benefit be paid by one of the payment options below.
Option A - A lump sum payment of the Death Benefit. We do not deduct the Contract Maintenance Charge under this Option.
Option B - Deferral of payment of the Death Benefit for up to five years from the date of the death of any Owner. This option is available only if the Owner dies before the Annuity Date.
Option C - If the Beneficiary is an individual, payment of the Death Benefit as an Annuity Payment under an Annuity Option over the lifetime of the Beneficiary, or over a period not extending beyond the life expectancy of the Beneficiary. Distribution must begin within one year of the date of death of any Owner’s death. We no longer assess the Contract Maintenance Charge on any portion of the death benefit applied to fixed Annuity Payments, or if the Base Account Value on the Annuity Date is greater than or equal to the Designated Amount. We continue to assess the full Contract Maintenance Charge on each Beneficiary’s portion proportionately for any portion of the death benefit applied to variable Annuity Payments.
Any portion of the Death Benefit not applied to Annuity Payments under an Annuity Option within one year of the date of the Owner’s death must be distributed within five years of the date of death.
If a beneficiary requests a lump sum payment, we pay the amount from the Variable Account within seven days of receipt of both an Authorized Request of the death benefit payment option and due proof of death, including any required governmental forms, unless the Suspension of payments or transfers provision in this contract is in effect.
Ownership
Assignment of this contract
You can, by Authorized Request and with our written consent, assign or otherwise transfer your rights under this contract. We reserve the right to refuse to consent to assignments or other transfers at any time on a non-discriminatory basis. We will withhold our consent if the assignment or other transfer would violate or result in noncompliance with any applicable state or federal law or regulation. Upon consent, we will record the assignment. We will not be liable for any payment made or action taken before we consent and record the assignment. We will not be responsible for the validity or tax consequences of any assignment. If the Contract is assigned, your rights may only be exercised with the consent of the assignee of record.
Change of Ownership
You can, by Authorized Request and with our written consent, change ownership of this contract to a new Owner before the Annuity Date. The Owner may be an individual or non-individual. We reserve the right to refuse to consent to any change of ownership at any time on a non-discriminatory basis. We will not consent if the change in ownership would violate or result in noncompliance with any applicable state or federal law or regulation. Upon consent, we will record the change of ownership, subject to our underwriting guidelines at the time of the request. We will not be responsible for the validity or effect of the change of ownership, including tax consequences of such transfer. We will not be liable to the new Owner for any actions we take or payments we make before we consent and record the change of ownership.
A change of Ownership does not change the Annuitant or Beneficiary. The new Owner can request a change of Annuitant or Beneficiary by providing an Authorized Request.
Non-Individual owners
If this contract is owned by a non-individual, then we treat the Annuitant as the Owner for purposes of any Death Benefit. We use the Age of the Annuitant to determine any Death Benefit. If the Annuitant dies on a non-individually owned contract, we pay the Death Benefit.
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Change of Annuitant
A non-individual Owner cannot change the Annuitant. Otherwise, you can change the Annuitant before the Annuity Date by providing an Authorized Request. If the Annuitant dies before the Annuity Date, a sole Owner automatically becomes the Annuitant, but can name another Annuitant at any time. If there are Joint Owners, the younger Joint Owner automatically becomes the Annuitant, but the Joint Owners can name another Annuitant at any time. An Annuitant change takes effect as of the date you signed the Notice, subject to our approval guidelines at that time. We will not be liable for any actions we take or payments we make before we receive the Authorized Request.
Change of Beneficiary
For solely owned contracts, you can change the Beneficiary at any time by providing an Authorized Request.
For jointly owned contracts, the surviving Joint Owner is the sole primary Beneficiary and cannot be changed. For tax reasons, we do not allow non-spousal Joint Owners to appoint contingent Beneficiaries.
An irrevocable Beneficiary must give written consent before we will change the Beneficiary. A Beneficiary change takes effect as of the date you signed the Authorized Request. We will not be liable for any actions we take or payments we make before we receive the Authorized Request.
General Provisions
Entire contract
We have issued this contract in consideration of the Initial Purchase Payment. This contract, any attached application, any amendments, endorsements, and any riders together are the entire contract.
Incontestability of this contract
We will not contest this contract.
Misstatement of Age or gender
After the Annuity Date, if there is a misstatement of the Age or gender of the Annuitant, we recalculate the Annuity Payments based on the correct Age and gender. If the misstatement caused an underpayment, we pay the Payee the difference in one payment. If the misstatement caused an overpayment, we reduce the next payment by the amount of the difference. If the amount of the difference is larger than the next payment, we reduce the subsequent payment, and so on until the entire difference has been subtracted. If the future payments are insufficient to cover the difference, we bill the Payee for the amount due.
Annual report
At the end of each Contract Year before the Annuity Date, we send you a report that shows contract activity and Account Values.
No dividends are payable
This contract is nonparticipating. This contract does not participate in our profits or surplus.
Who can make changes in this contract
Only our President together with our Secretary has the authority to make any changes to this contract. Any change must be in writing.
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Taxes
Taxes paid to any governmental entity results in an amount equivalent to the tax being charged against the Contract Value. We, in our sole discretion, determine whether taxes have resulted from the investment experience of the Variable Account, our receipt of Purchase Payments, or commencement of Annuity Payments. We may, at our discretion, pay taxes when due and deduct that amount from the Contract Value at a later date. This will not waive any right we may have to deduct previously paid amounts at a later date.
We may establish a provision for federal income taxes if we determine, in our sole discretion, that we will incur such tax as a result of the operation of the Variable Account. We will deduct for any income taxes incurred as a result of the operation of the Variable Account whether or not there was a provision for taxes and whether or not it was sufficient.
We deduct any withholding taxes from any payment we make, as required by applicable law.
Protection of proceeds
No Beneficiary can commute, encumber, alienate or assign any payment under this contract before it is due. To the extent permitted by law, no payment is subject to the debts, contracts or engagements of any Beneficiary or to any judicial process to levy upon or attach the same for payment thereof.
Evidence of survival
Where any benefits under this contract are contingent on a person being alive on a given date, we may require proof satisfactory to us that the condition has been met.
Termination
This contract terminates when:
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All applicable phases of the contract have terminated.
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All applicable Death Benefit payments have been made.
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Amendments
We may amend this contract in order to include any future changes which would retain this contract’s qualification for treatment as an annuity, whether under state or federal law, including the following.
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The Internal Revenue Code, as amended.
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Internal Revenue Service Rulings and Regulations.
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Any requirements imposed by the Internal Revenue Service.
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Allianz Life Insurance Company
of North America
[PO Box 561]
[Minneapolis, MN 55440-0561]
[800/624-0197]
Purchase Payments we receive for this contract accumulate to provide Annuity Payments or a Death Benefit. This is a variable annuity contract with Contract Value and Annuity Payments increasing or decreasing depending on the experience of the Variable Account. This contract is nonparticipating, with no dividends payable. Benefits available under this contract are not less than those required by statute of the state in which this contract is delivered.
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