FIRST FORTIS LIFE
FIRST FORTIS LIFE
INSURANCE COMPANY
Home Office-▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Suite 255
Syracuse, New York 13220
A Stock Company
We will pay the Annuitant the first of a series of annuity payments on the Annuity Commencement Date. Subsequent payments will be paid on the same day of each month according to the provisions of this Contract.
This Contract is issued in consideration of the attached application and the payment of the Purchase Payment shown on the Contract Data Page.
Signed for First Fortis Life Insurance Company at Syracuse, New York, on the Issue Date.
10 DAY RIGHT TO CANCEL CONTRACT
You may cancel this contract by delivering or mailing a written notice or sending a telegram to the company and returning the contract before midnight of the tenth day after the date you received it. Notice given by mail and return of the contract by mail are effective on being postmarked, properly addressed, and postage prepaid. The company must return the sum of (a) the difference between the premiums paid including any contract fees or other charges and the amounts allocated to any separate accounts including the fixed account under the contract and (b) the cash value of the contract, or if the contract does not have a cash value, the reserve for the contract, on the date the returned contract is mailed or actually delivered to the company or its agent. The company must return the payment within 10 days after it receives notice of cancellation and the returned contract.
SECRETARY PRESIDENT
FLEXIBLE PREMIUM DEFERRED COMBINATION VARIABLE AND FIXED ANNUITY--NON-PARTICIPATING. NO DIVIDENDS.
ALL PAYMENTS AND VALUES PROVIDED BY THE CONTRACT, WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE VARIABLE ACCOUNT ARE VARIABLE, MAY INCREASE OR DECREASE AND ARE NOT GUARANTEED AS TO AMOUNT. THE VARIABLE PROVISIONS OF THIS CONTRACT ARE FOUND ON PAGES 7 AND 8. IF A VARIABLE ANNUITY PAYOUT OPTION IS SELECTED, THE ANNUAL NET INVESTMENT RETURN MUST BE AT LEAST 3% IN ORDER TO AVOID A DECREASE IN THE AMOUNT OF THE VARIABLE ANNUITY PAYMENT. THE MAXIMUM ASSET CHARGE APPLICABLE TO THE SEPARATE ACCOUNT ASSETS UNDER THIS CONTRACT IS .45% ANNUALLY.
PAYMENTS AND VALUES BASED ON THE FIXED ACCOUNT ARE SUBJECT TO A MARKET VALUE
ADJUSTMENT FORMULA, WHICH MAY RESULT IN UPWARD AND DOWNWARD ADJUSTMENTS IN
AMOUNTS PAYABLE, INCLUDING SURRENDERS, TRANSFERS, AND AMOUNTS APPLIED TO
PURCHASE AN ANNUITY. DEATH BENEFIT AMOUNTS BASED ON THE FIXED ACCOUNT ARE NOT
SUBJECT TO A MARKET VALUE ADJUSTMENT. THE MARKET VALUE ADJUSTMENT PROVISION IS FOUND ON PAGE 6 AND 7. PAYMENTS MADE FROM FIXED ACCOUNT VALUES WHICH ARE WITHIN 15 DAYS BEFORE OR AFTER THE END OF A GUARANTEE PERIOD ARE NOT SUBJECT TO THE MARKET VALUE ADJUSTMENT.
READ YOUR CONTRACT CAREFULLY
This contract is a legal contract between the contract owner and First Fortis
Life Insurance Company.
TABLE OF CONTENTS:
Page # Page #
Annuitant.......................2 Market Value Adjustment.........7
Beneficiary.....................4 Purchase Payments...............5
Death Benefit.............10 & 11 Surrenders......................9
Definitions.................2 & 3 Termination.....................5
Fixed Account...............6 & 7 Transfers.......................8
Fixed Annuity Payments.........11 Variable Account............7 & 8
General Provisions..........4 & 5 Variable Annuity Payments......12
Guarantees......................6
Any contract amendments or endorsements follow the Contract Data Page.
Additional benefits added by rider follow the Optional Annuity Forms Tables. The application is the last page of the contract.
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CONTRACT DATA PAGE
ANNUITANT: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇
CONTRACT NUMBER: 999999
CONTRACT ISSUE DATE: FEBRUARY 26, 1993
OWNER: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇
ANNUITY COMMENCEMENT DATE: FEBRUARY 26, 2013
INITIAL PURCHASE PAYMENT: $20,000.00
MAXIMUM ASSET CHARGE FACTOR: .45% Annually (or .0012329% Daily)
For the Variable Account Only
CURRENT MAXIMUM
------- -------
TRANSFER CHARGE: $ 0.00 $25.00
SURRENDER CHARGE: None
Amounts withdrawn at any time from the fixed account (including transfers) are
subject to market value adjustment. See details on page 10.
THE ANNUAL ADMINISTRATIVE CHARGE IS $30.00
INITIAL ALLOCATION OF NET PURCHASE PAYMENTS
<TABLE>
<CAPTION>
INITIAL NET PURCHASE
INVESTMENT CHOICE PERCENTAGE PAYMENT DOLLAR AMOUNT
----------------- ---------- -----------
Variable Account
----------------
<S> <C> <C>
Alliance Money Market Subaccount 100% $20,000.00
Alliance International Subaccount 0% 0.00
Alliance Premier Growth Subaccount 0% 0.00
Federated High Income Bond Subaccount 0% 0.00
Federated Utility Subaccount 0% 0.00
Federated American Leaders Subaccount 0% 0.00
Lexington Natural Resources Subaccount 0% 0.00
Lexington Emerging Markets Subaccount 0% 0.00
MFS Emerging Growth Subaccount 0% 0.00
MFS High Income Subaccount 0% 0.00
MFS World Governments Subaccount 0% 0.00
▇▇▇▇▇▇▇▇▇▇ Emerging Markets Subaccount 0% 0.00
▇▇▇▇▇▇▇▇▇▇ Growth Subaccount 0% 0.00
Strong Discovery Subaccount 0% 0.00
Strong Government Securities Subaccount 0% 0.00
Strong Advantage Subaccount 0% 0.00
Strong International Stock Subaccount 0% 0.00
TCI Balanced Subaccount 0% 0.00
TCI Growth Subaccount 0% 0.00
▇▇▇ ▇▇▇ Worldwide Subaccount 0% 0.00
▇▇▇ ▇▇▇ Gold and Natural Resources Subaccount 0.00
</TABLE>
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<TABLE>
<CAPTION>
INITIAL NET PURCHASE
INVESTMENT CHOICE PERCENTAGE PAYMENT DOLLAR AMOUNT
- ----------------- ---------- ---------------------
Fixed Account
- ----------------
<S> <C> <C>
1 year guaranteed period 0% .00
2 year guaranteed period 0% .00
3 year guaranteed period 0% .00
4 year guaranteed period 0% .00
5 year guaranteed period 0% .00
6 year guaranteed period 0% .00
7 year guaranteed period 0% .00
8 year guaranteed period 0% .00
9 year guaranteed period 0% .00
10 year guaranteed period 0% .00
</TABLE>
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DEFINITIONS
WE, US, OUR, THE COMPANY
First Fortis Life Insurance Company.
YOU, YOUR
The owner of this Contract, or after the annuity commencement date, the Annuitant.
ACCUMULATION UNIT
A unit of measurement used to calculate the value of your interest in the Variable Account before the annuity commencement date.
ANNUITANT
The person or persons named in the Application and on whose life the first annuity payment is to be made. If more than one person is so named, all provisions of the Contract which are based on the death of the "Annuitant" will be based on the date of death of the last survivor of the persons so named. By example, the death benefit will become due only upon the death, prior to the annuity commencement date, of the last survivor of the persons so named. Collectively, these persons are referred to in the Contract as "Annuitant" or "Annuitants". The Contract owner is not permitted to name more than one annuitant under a Contract used in connection with a retirement plan that receives favorable tax treatment under the Internal Revenue Code.
ANNUITY UNIT
A unit of measurement to calculate variable annuity payments.
BENEFICIARY
The person entitled to receive benefits as per the terms of the Contract in case of the death of the Annuitant or the Contract owner or the joint owner, as applicable.
CONTRACT VALUE
The total of the Fixed Account value and the Variable Account value.
CONTRACT YEAR
A period of 12 consecutive months beginning on the Issue Date or any anniversary thereafter.
DATE OF DEPOSIT
The date We receive any Purchase Payment at our Home Office.
DESIGNATED BENEFICIARY
The person designated as the Beneficiary by the Contract owner.
FIXED ACCOUNT
The Fixed Account is a non-unitized Separate Account that We use for
amounts allocated to the Guarantee Period.
FIXED ANNUITY OPTION
An annuity option with payments which do not vary as to dollar amount.
FUND
The "Fund" or "Funds" are those investment portfolios available under the contract to which the owner may allocate Purchase Payments, each of which is, or is a series of a management investment company registered under the Investment Company Act of 1940.
GUARANTEE PERIOD
The period for which a Guaranteed Interest Rate is credited.
GUARANTEED INTEREST RATE
The rate of interest We credit on an effective annual basis during any Guarantee Period.
HOME OFFICE
Our office at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇; ▇-▇▇▇-▇▇▇-▇▇▇▇; Mailing Address: P.O. Box 3249, Syracuse, New York, 13220-3249.
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ISSUE DATE
The date on which this Contract becomes effective as shown on the Contract Data Page.
MARKET VALUE ADJUSTMENT
Positive or negative adjustment in the Fixed Account value that We make if such value is paid out more than 15 days before or after the end of a Guarantee Period in which it was being held.
NET ASSET VALUE PER SHARE
The net assets of a Fund portfolio divided by the number of shares in a Fund portfolio.
NET PURCHASE PAYMENT
The gross amount of the Purchase Payment less any applicable premium taxes.
PURCHASE PAYMENT
An amount paid to the Company under this Contract as consideration for the benefits described herein.
SUBACCOUNT
The Subaccounts of the Variable Account to which Contract Value may be allocated. Each Subaccount invests all of its assets in a portfolio a Series Fund having the same investment policies and objectives as that Subaccount.
VALUATION DATE
All business days except, with respect to any Subaccount, days on which the related portfolio does not value its shares.
VALUATION PERIOD
The period that starts at the close of the New York Stock Exchange on a Valuation Date and ends at the close of the Exchange on the next succeeding Valuation Date.
VARIABLE ACCOUNT
A segregated investment account entitled "Variable Account D", established by us pursuant to applicable law. That portion of the assets of the Variable Account equal to the reserves and other Contract liabilities with respect to the Variable Account shall not be chargeable with liabilities arising out of any other business We may conduct. Income, gains and losses, whether or not realized, from assets allocated to the Variable Account, are credited to or charged against such account without regard to our other income, gains or losses.
VARIABLE ANNUITY OPTION
An annuity option under which We promise to pay the annuitant or other properly designated payee one or more payments which vary in amount in accordance with the net investment experience of the applicable Subaccounts selected to measure the value of the Contract.
WRITTEN, IN WRITING
A written request or notice in acceptable form and content, which is signed, dated, and received at our Home Office.
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GENERAL PROVISIONS
THE CONTRACT
This Contract is issued in consideration of the Application and payment of the initial Purchase Payment. All statements made in the Application will be deemed representations and not warranties, and no statement will void the Contract or be used in defense to a claim unless it is contained in the Application and a copy is attached to the Contract at issue. Only an Officer of the Company can agree to change or waive any provisions of this Contract.
INCONTESTABILITY
The Contract is incontestable.
MISSTATEMENT OF AGE
If any date of birth has been misstated in the Application, or elsewhere, the amounts payable under this Contract will be the amounts which would have been
provided using the correct age. Any deficiency in the payments already made by Us will be paid immediately and any excess in the payments already made by Us will be charged against the benefits falling due after adjustment. The amount of any adjustment will be credited or charged interest at the effective annual rate of 3% per year.
GUARANTEES
Subject to the Net Investment Factor provision, We guarantee that the dollar amount of Variable Annuity payments made during the lifetime of the payee(s) will not be adversely affected by Our actual mortality experience or by the actual expenses incurred by Us in excess of the expense deductions provided for in the Contract.
SETTLEMENT
All benefits under this Contract are payable from Our Home Office.
NON-PARTICIPATING
This Contract is non-participating and does not share in Our surplus earnings.
BENEFICIARY
Subject to the rights of an irrevocably Designated Beneficiary, You may change or revoke the designation of a Beneficiary at any time while a Contract owner and the Annuitant are living. You must send Us a Written beneficiary designation or revocation. The change or revocation will not be binding upon Us until it is received by Us at Our Home Office. When it is so received, the change or revocation will be effective as of the date on which the beneficiary designation or revocation was signed, but the change or revocation will be without prejudice to Us on account of any payment made or any action taken by Us prior to receiving the change or revocation. Except as otherwise provided below, the beneficiary will be the beneficiary designated by the contract owner. If there is no such designated beneficiary in effect or if such designated beneficiary is no longer living, the contract owner, or his estate, will be the beneficiary. However, in the event of the death of a contract owner prior to the annuity commencement date and if there are surviving owners, the surviving owners will be the beneficiaries in equal shares, notwithstanding that the beneficiaries designated by the contract owners may be different.
RIGHTS RESERVED BY US
Upon notice to You, the Contract may be modified by Us, but only if such modification is necessary to:
(1) Operate the Variable Account in any form permitted under the Investment Company Act of 1940 or in any other form permitted by law.
(2) Transfer any assets in any Subaccount to another Subaccount, or to one or more separate accounts, or to the fixed account.
(3) Add, combine or remove Subaccounts in the Variable Account.
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(4) Substitute for the shares held in a Subaccount, the shares of another Fund.
(5) Make any changes as required by the Internal Revenue Code or by any other applicable law in order to continue treatment of the Contract as an annuity.
Any changes described above are subject to the prior approval of Superintendent of Insurance of the State of New York. Also, when required, we will obtain your approval of any changes.
TERMINATION
This Contract remains in force until surrendered for its full value, or all annuity payments have been made, or the death benefit has been paid.
If the Contract Value is less than $500, We may cancel this Contract on any Valuation Date. We will notify You at least 90 days in advance of Our intention to cancel this Contract. Upon such cancellation we will pay You Your Contract Value.
PURCHASE PAYMENTS
PAYMENTS
The initial Purchase Payment is shown on the Contract Data Page. The initial Purchase Payment must be at least $5,000 ($2,000 for Qualified Contracts). Additional Purchase Payments must be at least $500. The total of all Purchase
Payments for all annuity policies issued by us having the same owner or annuitant may not exceed $1 million (not more than $500,000 allocated to the fixed account) without our prior approval. We reserve the right to modify this limitation at any time.
ALLOCATION OF PURCHASE PAYMENTS
The initial allocation for all Net Purchase Payments is shown on the Contract Data Page and will remain in effect until changed by Written notice. The percentage allocation for future Net Purchase Payments may be changed at any time by Written notice. Changes in the allocation will be effective on the date We receive Your notice. The allocation may be 100% to any available Subaccount or Guarantee Period, or may be divided among the accounts in whole percentage points totaling 100%.
OWNERSHIP PROVISIONS
EXERCISE OF CONTRACT RIGHTS
The Contract belongs to the Owner. As Owner, You will be entitled to exercise all rights and privileges in connection with this Contract. In any case, such rights and privileges can be exercised without the consent of the Beneficiary (other than an irrevocably designated beneficiary) or any other person. Such rights and privileges may be exercised only during the lifetime of the Annuitant and prior to the Annuity Commencement Date, except as otherwise provided in this Contract.
Unless You specify otherwise, the Annuitant becomes the Payee on the Annuity Commencement Date. The Beneficiary becomes the Payee on the death of You or the Annuitant. Such Payees may thereafter exercise such rights and privileges, if any, of ownership which continue.
CHANGE OF OWNERSHIP
During the lifetime of the Annuitant and prior to the Annuity Commencement Date, You may change the ownership interest in Your Contract. A change of ownership will not be binding upon Us until We receive Written notification at our Home Office. When such notification is so received, the change will be effective as of the date You signed the request for change, but the change will be without prejudice to Us on account of any payment made or any action taken by Us prior to receiving the change.
PERIODIC REPORTS
Prior to the Annuity Commencement Date, We will send You, at least once each Contract Year, a statement showing the Contract Value, any applicable Market Value Adjustment, and the Surrender Value. These values will be as of a date
not more than two months previous to the date of mailing. We will also send such statements as may be required by applicable laws, rules, and regulations.
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FIXED ACCOUNT
FIXED ACCOUNT
The Fixed Account is a non-unitized separate account (designated as Separate Account B) that We use to account for amounts allocated to Guarantee Periods under the Contract. All amounts allocated to a Guarantee Period, whether Net Purchase Payments or transfers, become part of the Fixed Account.
FIXED ACCOUNT VALUE
When we receive a purchase payment, all or that portion, if any, of the Net Purchase Payment which is allocated to the Fixed Account will be allocated to the Guarantee Period(s) You select. Your Fixed Account Value, if any, for any Valuation Period is equal to the sum of the values in each of the Guarantee
Periods.
The value in any one Guarantee Period on a Valuation Date is the accumulated value of the Net Purchase Payment (or transfer) at the Guaranteed Interest Rate minus the accumulated value of surrenders and transfers out of that Guarantee Period at the Guaranteed Interest Rate.
GUARANTEE PERIODS
You may select one or more Guarantee Period(s) from those We make available. The period(s) selected will determine the Guaranteed Interest Rates(s). The Net Purchase Payment or the portion thereof (or amount transferred in accordance with the transfer privilege described below) allocated to a particular Guarantee Period will earn interest at the Guaranteed Interest Rate during the Guarantee Period. Guarantee Periods begin on the Date of Deposit or, in the case of a transfer, on the effective date of the transfer. The Guarantee Period is the number of years We credit the Guaranteed Interest Rate. The expiration date of any Guarantee Period is the last day of the Guarantee Period. Subsequent Guarantee Periods begin on the first day following the expiration date. As a result of Guarantee Period renewals, additional purchase payments and transfers of portions of the Contract Value, Guarantee Periods of the same duration may have different expiration dates and Guaranteed Interest Rates.
We will notify You In Writing at least 45 and no more than 60 days prior to the expiration date for any Guarantee Period. A new Guarantee Period of the same duration as the previous Guarantee Period will begin automatically at the end of the previous Guarantee Period unless We receive Written notice to the contrary at least 3 business days prior to the end of such Guarantee Period. You may elect a different Guarantee Period or Subaccount from those We offer at such time.
GUARANTEED INTEREST RATES
We will periodically establish an applicable Guaranteed Interest Rate for each Guarantee Period We offer. These rates will be guaranteed for the duration of the respective Guarantee Periods.
No Guaranteed Interest Rate shall be less than an effective annual rate of 3% per year.
MARKET VALUE ADJUSTMENT
Any withdrawal (which for purposes of this section includes transfers, surrenders, or amounts applied to purchase an annuity) from the Fixed Account, other than a withdrawal effective within 15 days before or after the Expiration Date of a Guarantee Period, will be subject to a Market Value Adjustment ("MVA").
The Market Value Adjustment may increase or decrease the amount of Fixed Account Value being withdrawn or transferred. The comparison of two Guaranteed Interest Rates determines whether the Market Value Adjustment produces an increase or a decrease. The first rate to compare is the Guaranteed Interest Rate for the amount being transferred or withdrawn. The second rate is the Guaranteed Interest Rate then being offered for new Guarantee Periods of the same duration as that remaining in the Guarantee Period from which the funds are being withdrawn or transferred. If the first rate exceeds the second by more than 1/4%, the Market Value Adjustment produces an increase. If the first rate does not exceed the second by at least 1/4%, the Market Value Adjustment produces a decrease.
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The MVA will be determined by multiplying the amount being withdrawn, from the Guarantee Period (after deduction of any applicable administrative charge) by the following factor:
( 1 + I ) N/12
( ------------------- )
( 1 + J + .0025 ) -1
where:
- - I is the Guaranteed Interest Rate being credited to the amount being withdrawn from the existing Guarantee Period,
- - J is the Guaranteed Interest Rate then being offered for new Guarantee Periods with durations equal to the number of years remaining in the existing Guarantee Period (rounded up to the next higher number of years), and
- - N is the number of months remaining in the current Guarantee Period (rounded up to the next higher number of months).
A detailed description of this Market Value Adjustment formula has been filed with the Superintendent of Insurance of the State of New York.
In the event that we discontinue offering a Guaranteed Interest Rate for a Guarantee Period, I and J will not be determined as described above. Instead we will use the bond equivalent yield on the applicable U.S. Treasury Bill or Note ("the yield") as determined on either the 1st or the 15th of the applicable month.
I will be equal to "the yield" at the beginning of the Guarantee Period and assuming a maturity equal to the length of the Guarantee Period at that time.
J will be equal to "the yield" at the time the Market Value Adjustment is being calculated and assuming a maturity equal to the length of the Guarantee Period remaining at that time.
VARIABLE ACCOUNT
SUBACCOUNTS
The Variable Account has several Subaccounts, each investing in one of the corresponding Funds. Net Purchase Payments are initially allocated to the Subaccounts and the Fixed Account as shown on the Contract Data Page.
We will use the Net Purchase Payments and any transferred amounts to purchase Fund shares applicable to the Subaccounts at their net asset value. We will be the owner of all Fund shares purchased with the Net Purchase Payment or transferred amount.
SUBACCOUNT ACCUMULATION UNITS
Net Purchase Payments received under this Contract and transferred amounts allocated to the Variable Account will be credited in the form of Subaccount Accumulation Units. The number of Subaccount Accumulation Units is found by dividing the amount of the Net Purchase Payment or transferred amount allocated to the Subaccount by the Subaccount Accumulation Unit value at the end of the Valuation Period in which the Purchase Payment or transfer request was received at the Home Office. The value of each Subaccount Accumulation Unit with respect to the Contracts was arbitrarily set as of the date the Subaccount first purchased the portfolio shares with respect to the Contracts. Subsequent values on any Valuation Date are equal to the previous Subaccount Accumulation Unit value times the Net Investment Factor for the Valuation Period ending on that Valuation Date.
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NET INVESTMENT FACTOR
The Net Investment Factor is an index applied to measure the investment performance of a Subaccount from one Valuation Period to the next. The Net Investment Factor may be greater or less than or equal to one; therefore, the value of an Accumulation Unit may increase, decrease or remain the same.
The Net Investment Factor for a Subaccount is determined by dividing (1) by (2), and then subtracting (3) from the result, where:
(1) is the net result of:
(a) the Net Asset Value Per Share of the Fund shares held in the Subaccount, determined at the end of the current Valuation Period,
(b) plus the per share amount of any dividend or capital gain distributions made on the Fund shares held in the Subaccount during the current Valuation Period,
(c) minus a per share charge for the increase plus a per share credit for the decrease, in any income taxes reserved for which we determine to have resulted from the investment operations of the Subaccount or any other taxes which are applicable to the Contract.
(2) is the Net Asset Value Per Share of the Fund shares held in the Subaccount,determined at the beginning of the current Valuation Period, and
(3) is a factor representing the mortality risk, expense risk, and administrative expense charge. We will determine the daily asset charge factor annually, but in no event may it exceed the Maximum Asset Charge Factor as specified on the Contract Data Page.
VARIABLE ACCOUNT VALUE
Your Variable Account value for any Valuation Period is the total of Your values in each Subaccount. Your value for each Subaccount is equal to:
(1) Your number of Subaccount Accumulation Units,
(2) times the Subaccount Accumulation Unit value for the Valuation Period.
Your Variable Account value will vary from Valuation Date to Valuation Date reflecting Your total value in the Subaccounts.
ANNUAL ADMINISTRATIVE CHARGE
We will deduct an annual administrative charge of $30 at the following times:
(1) On each Contract anniversary
(2) On the surrender of this Contract for its full value if not surrendered on a Contract anniversary.
These deductions will be made from the Fixed Account and Variable Account on a pro-rata basis. The amount deducted from the Variable Account Value will be deducted by an automatic surrender of Subaccount Accumulation Units on a pro-rata basis.
TRANSFERS
We will make transfers among the Fixed Account and the Subaccounts at the end of the Valuation Period in which We receive Your request for the transfer, subject to the following restrictions. The current and maximum transfer charges are shown on the Contract Data Page. However, we will not impose a transfer charge on the first six transfers between Guaranty Periods of the Fixed Account, between the Fixed Account and the Subaccounts, or between the Subaccounts in any calendar year. In addition, the Funds may impose charges.
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Before the annuity commencement date, You may transfer part or all of Your
Contract Value subject to the following:
(1) All transfers from the Fixed Account will be subject to a Market Value Adjustment.
(2) Each transfer must be at least $1,000 or the total value of any account, if less.
After the annuity commencement date, You may make up to four transfers per year among the Subaccounts. You may not make transfers from the Fixed Account.
SURRENDERS
GENERAL SURRENDER PROVISIONS
The amount surrendered will normally be paid to You within 7 days of:
(1) Our receipt of Your Written request; and
(2) Our receipt of this Contract, if required.
We reserve the right to defer payment of surrenders from the Fixed Account for up to 6 months from the date We receive Your request.
FULL SURRENDER
At any time prior to the annuity commencement date and during the lifetime of the Annuitant, You may surrender this Contract by sending Us a Written request. The amount payable on surrender is:
(1) the Contract Value at the end of the Valuation Period in which We receive Your request,
(2) minus any applicable administrative charge,
(3) plus or minus any applicable Market Value Adjustment.
The amount payable upon surrender will not be less than the amount required by the state law where the policy is delivered.
Upon payment of the above surrender amount, this Contract is terminated and We have no further obligation under this Contract.
All collateral assignees must consent to any surrender. We may require that this Contract be returned to Our Home Office prior to making payment.
PARTIAL SURRENDER
At any time prior to the annuity commencement date and during the lifetime of the Annuitant, You may surrender a portion of the Fixed Account value and/or the Variable Account value. You must send Us a Written request specifying the account from which the surrender is to be made. Surrenders will be made effective at the end of the Valuation Period in which We receive Your Written request.
You must surrender an amount equal to at least $1,000. If the Contract Value remaining would be less than $1,000, We may treat Your request as a full surrender.
We will surrender Subaccount Accumulation Units from the Variable Account, and/or dollar amounts from the Fixed Account, so that the total amount surrendered equals the sum of the following:
(1) the amount payable to you,
(2) plus or minus any applicable Market Value Adjustment.
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DEATH BENEFIT
DEATH BENEFIT BEFORE THE ANNUITY COMMENCEMENT DATE
If you or the Annuitant die prior to the annuity commencement date, We will pay the death benefit to the Beneficiary. In the event that there are multiple owners, the death benefit will be payable upon the first death of an owner. Where a contract owner dies before the annuity commencement date and there one or more surviving owners, the beneficiary of the death benefit will be the surviving owner or owners in equal shares, rather than the beneficiary
designated by the contract owners.
The amount of the death benefit is the greater of:
(1) The sum of Net Purchase Payments made less any prior surrenders charges and prior negative Market Value Adjustments; or
(2) Contract Value as of the date We receive proof of the Annuitant's or Your death and a Written request from the Beneficiary for either a single sum payment or payment under an annuity form.
If a contract owner dies before the annuity commencement date, the death benefit must be distributed to the beneficiary, either (1) within five years after the date of death of the contract owner, or (2) over some period not greater than the life or life expectancy of the beneficiary, with payments beginning within one year after the date of death of the contract owner. These mandatory distribution requirements will not apply when the beneficiary designated by the contract owner is the spouse of the deceased contract owner, if the spouse elects to continue the contract in the spouse's own name as contract owner.
If the Owner of this contract is a corporation or other non-individual, then for purposes of the mandatory distribution requirements described in this section the Annuitant will be deemed to be the Owner.
The death benefit will not be less than the amount payable on a full surrender at the date used to value the death benefit. The death benefit will be paid when We receive:
(1) Proof of the Annuitant's or Your death; and
(2) A Written Request from the Beneficiary for either a single sum or payment under an annuity form.
We will pay a single sum to the Beneficiary unless an annuity option is chosen.
DEATH BENEFIT ON OR AFTER THE ANNUITY COMMENCEMENT DATE
If the annuitant dies on or after the annuity commencement date, the beneficiary will receive the death benefit, if any, as provided by the annuity form in effect. In any event, to the extent required by the Internal Revenue Code, the remaining interest payable to the beneficiary will be distributed at least as rapidly as the method of distribution used at the date of death.
PROOF OF DEATH
We accept any of the following as proof of the Annuitant's or Your death:
(1) A copy of a certified death certificate.
(2) A copy of a certified decree of a court of competent jurisdiction as to the finding of death.
(3) A Written statement by a medical doctor who attended the deceased at the time of death.
(4) Any other proof satisfactory to Us.
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PAYMENT OF BENEFITS
GENERAL
On the annuity commencement date, the Contract Value, adjusted by the Market Value Adjustment, will be applied, as specified by the Contract owner, to provide payments to the Annuitant under one or more of the annuity options provided in the Contract or under such other settlement options as may be agreed to by the Company. If more than one person is named as Annuitant, due to the designation of multiple Annuitants, the Contract owner may elect to name one of such persons to be the sole Annuitant as of the annuity commencement date.
APPLICATION OF CONTRACT VALUE
Unless directed otherwise, We will apply the Fixed Account value adjusted by the Market Value Adjustment, to provide a Fixed Annuity, and the Variable Account value to provide a Variable Annuity. You must tell Us In Writing at least 30 days prior to the annuity commencement date if You want Us to apply Fixed and Variable Account values in different proportions.
ANNUITY COMMENCEMENT DATE
The annuity commencement date is selected by You and stated in the Application. The date must be before the Annuitant's 75th birthday unless We agree to it. You may change the annuity commencement date at any time if We receive Written notice at least 30 days before both the current annuity commencement date and the new annuity commencement date. The Annuity Commencement Date cannot be later than the Annuitant's 90th birthday.
If the annuity commencement date does not occur on a Valuation Date that is at least 2 years after the Issue Date, We reserve the right to change the annuity commencement date to the first Valuation Date that is at least 2 years after the Issue Date.
FREQUENCY AND AMOUNT OF PAYMENTS
Annuity payments will be made monthly unless We agree to a different payment schedule. We reserve the right to change the frequency of either a Fixed Annuity payment or a Variable Annuity payment so that each payment will be at least $50.
FIXED ANNUITY PAYMENTS
Fixed Annuity payments start on the end of the Valuation Period that contains the annuity commencement date. The amount of the first monthly payment for the annuity form selected will be at least as favorable as that produced by the annuity tables of this Contract for each $1,000 of Contract Value adjusted by the Market Value Adjustment, applied as of the end of such Valuation Period.
We may, as of the annuity commencement date, offer for sale single premium immediate annuity contracts. If so, the annuity benefits available under this contract will be at least as favorable as the benefit available by using the Contract Value, adjusted by the Market Value Adjustment, to purchase one of our single premium immediate annuities.
The dollar amount of any payments after the first payment are specified during the entire period of annuity payments, according to the provisions of the annuity form selected.
VARIABLE ANNUITY PAYMENTS
We convert the Subaccount Accumulation Units into Subaccount Annuity Units at the values determined at the end of the Valuation Period which contains the annuity commencement date. The number of Subaccount Accumulation Units remains constant as long as an annuity remains in force and allocation among the Subaccounts has not changed.
Each Subaccount Annuity Unit Value was arbitrarily set when the Subaccount first converted Subaccount Accumulation Units into Annuity Units. Subsequent values on any Valuation Date are equal to the previous Subaccount Annuity Unit Value times the Net Investment Factor for that Subaccount for the Valuation Period ending on that Valuation Date, with an offset for the 3% assumed interest rate used in the annuity tables of this Contract.
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Variable Annuity payments start on the end of the Valuation Period that contains the annuity commencement date. The amount of the first monthly payment for the annuity form selected, is shown on the annuity tables of this Contract for each $1,000 of Contract Value applied as of the end of such Valuation Period.
Payments after the first payment will vary in amount and are determined on the first Valuation Date of each subsequent monthly period. If the monthly payment under the annuity form selected is based on the variable annuity unit value of a single Subaccount, the monthly payment is found by multiplying the Subaccount unit value on the payment date by the number of Subaccount Annuity Units.
If the monthly payment under the annuity form selected is based upon Annuity Unit values of more than one Subaccount, the above procedure is repeated for each applicable Subaccount. The sum of these payments is the variable annuity payment.
We guarantee that the amount of each payment after the first payment will not be affected by variations in expense or mortality experience.
OPTIONAL ANNUITY FORMS
You may select an annuity form or change a previous selection. The selection or change must be In Writing and received by Us at least 30 days before the annuity commencement date. If no annuity form selection is in effect on the annuity commencement date, We automatically apply Option B, with payments guaranteed for 10 years.
The following options are available for the Fixed Annuity payments and the Variable Annuity payments:
Option A. - Life Annuity
Payments are made as of the first valuation date of each monthly period during the Annuitant's life, starting with the annuity commencement date.
No payments will be made after the Annuitant dies.
Option B. - Life Annuity with Payments Guaranteed for 10 Years or 20 Years
Payments are made as of the first Valuation Date of each monthly period starting on the annuity commencement date. Payments will continue as long as the Annuitant lives. If the Annuitant dies before all of the guaranteed payments have been made, We will continue installments of the guaranteed payments to the beneficiary.
Option C. - Joint and Full Survivor Annuity
Payments are made as of the first Valuation Date of each monthly period starting with the annuity commencement date. Payments will continue as long as either the Annuitant or the Joint Annuitant are alive. Payments will stop when both the Annuitant and the Joint Annuitant have died.
We also have other annuity forms available and information about them can be obtained by Writing to Us.
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OPTION TABLES
Installments shown are for an initial monthly payment for each $1,000 of Contract Value applied under an option. Age, as used in these tables, is age as of nearest birthday on the annuity commencement date. Rates for monthly payments for ages and periods certain not shown, if allowed by us, will be computed on an actuarially equivalent basis.
ACTUARIAL BASIS
Installments shown in these tables are based on the 1983 Table a, with projections, (50/50 Male/Female) and compound interest at the effective rate of 3% per year.
OPTIONS A AND B
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10 Year Period 20 Year Period
Age Life Only Certain and Life Certain and Life
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50 3.94 3.92 3.84
51 4.00 3.98 3.89
52 4.07 4.04 3.95
53 4.14 4.11 4.00
54 4.21 4.18 4.06
55 4.29 4.25 4.12
56 4.37 4.33 4.18
57 4.46 4.41 4.24
58 4.55 4.49 4.31
59 4.65 4.58 4.37
60 4.75 4.68 4.44
61 4.86 4.78 4.50
62 4.98 4.89 4.57
63 5.11 5.00 4.64
64 5.24 5.12 4.71
65 5.38 5.24 4.78
66 5.54 5.37 4.84
67 5.70 5.51 4.91
68 5.88 5.65 4.97
69 6.06 5.80 5.03
70 6.27 5.95 5.09
71 6.48 6.11 5.15
72 6.71 6.28 5.20
73 6.96 6.45 5.25
74 7.22 6.63 5.29
75 7.51 6.81 5.33
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OPTION C
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JOINT ANNUITANT AGE
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50 55 60 65 70
50 3.52 3.62 3.71 3.78 3.84
ANNUITANT 55 3.62 3.77 3.90 4.02 4.11
AGE 60 3.71 3.90 4.09 4.27 4.42
65 3.78 4.02 4.27 4.53 4.77
70 3.84 4.11 4.42 4.77 5.13
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FLEXIBLE PREMIUM DEFERRED COMBINATION VARIABLE AND FIXED
ANNUITY--NON-PARTICIPATING. NO DIVIDENDS.
FIRST FORTIS LIFE
INSURANCE COMPANY
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