Loading...
HomeMy WebLinkAbout12-3977E. Thomas Henefer Attorney I.D. No. 55773 111 North Sixth Street P.O. Box 679 Reading, PA 19603-0679 (610) 478-2000 ` 1` ERLA;tJ C0UI•J N 1'Z) Y L\ "H 1 A Attorneys for Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY LIFE INSURANCE COMPANY OF THE SOUTHWEST, Plaintiff, CIVIL ACTION eivo V. No. )a . 367 MINDY DEATRICK, KIMBERLY PAULUS, ALECIA BAGROSKY, and GWENDOLYN BARRICK, Defendants. NOTICE TO DEFEND To: MINDY DEATRICK, KIMBERLY PAULUS, ALECIA BAGROSKY and GWENDOLYN BARRICK You have been sued in court. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this complaint and notice are served by entering a written appearance personally or by attorney and filing in writing with the court your defenses or objections to the claims set forth against you. You are warned that if you fail to do so, the case may proceed without you and a judgment may be entered against you by the court without further notice for any money claimed in the complaint or for any other claim or relief requested by the plaintiff. You may lose money or property or other rights important to you. YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW TO FIND OUT WHERE YOU CAN GET LEGAL HELP. Cumberland County Bar Association 32 S. Bedford Street Carlisle, PA 17013 Phone (717) 249-3166 Toll Free (800) 990-9108 SL I 11704350 101789.00007 ?spa ccd?1°sia ?7 t2+?a?-,?ss E. Thomas Henefer Attorney I.D. No. 55773 111 North Sixth Street P.O. Box 679 Reading, PA 19603-0679 (610) 478-2000 Attorneys for Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY LIFE INSURANCE COMPANY OF THE SOUTHWEST, Plaintiff, CIVIL ACTION V. No. MINDY DEATRICK, KIMBERLY PAULUS, ALECIA BAGROSKY, and GWENDOLYN BARRICK, Defendants. COMPLAINT Plaintiff Life Insurance Company of the Southwest ("LSW") files this Complaint for interpleader relief against Defendants Mindy Deatrick, Kimberly Paulus, Alecia Bagrosky and Gwendolyn Barrick, and in support of its Complaint, LSW avers as follows: Parties 1. LSW is a life insurance company domiciled in Texas with its principal place of business at 15455 Dallas Pkwy., Ste. 800, Addison, TX 75001. LSW is engaged in, among other things, the sale of life insurance policies and annuities. 2. Mindy Deatrick is an adult individual residing at 147 Liberty Valley Dr., Ickesburg, Pennsylvania. 3. Kimberly Paulus is an adult individual residing at 2536 Ritner Hwy Lot 105, Carlisle, Pennsylvania. 1 SL I 1170435v l 101789.00007 4. Alecia Bagrosky is an adult individual residing Mt. Holly Springs, Pennsylvania. 5. Gwendolyn Barrick is an adult individual residing at 61 Fickes Road, Newville, Pennsylvania. Facts 6. At all times relevant to this action the late Delores J. Bailey resided at 287 Meadows Road, Newville, Pennsylvania. 7. Defendants Mindy Deatrick, Kimberly Paulus, Alecia Bagrosky and Gwendolyn Barrick are Delores J. Bailey's daughters. 8. Delores J. Bailey was the owner of two annuities issued by LSW bearing contract numbers 709637X and 681235X (hereinafter, the "Annuities"). Annuity No. 709637X has a value of $18,999.79 and Annuity No. 681235X has a value of $31,511.55. The combined value of the Annuities is therefore $50,511.34. 9. True and correct copies of the Annuities (with personal identification data redacted) are attached hereto as Exhibits A and B, respectively. 10. When the Annuities were first issued, Delores J. Bailey designated the following beneficiaries in the following percentages: (a) Mindy Deatrick - 40% (b) Kimberly Paulus - 40% (c) Alecia Bagrosky -10% (d) Gwendolyn Barrick - 10% 11. A true and correct copy of the original beneficiary designation (with personal identification data redacted) is attached as Exhibit C. 2 SL1 1170435vt 101789.00007 12. On or about February 9, 2010 Delores J. Bailey executed change in beneficiary designation forms for the Annuities, naming the following beneficiaries in the following percentages: (a) Mindy Deatrick - 55% (b) Kimberly Paulus -15% (c) Alecia Bagrosky -15% (d) Gwendolyn Barrick - 15% 13. True and correct copies of the February 9, 2010 change in beneficiary designation forms (with personal identification data redacted) are attached as Exhibit D. 14. On or about August 19, 2011 Delores J. Bailey executed change in beneficiary designation forms for the Annuities, naming the following beneficiaries in the following percentages: (a) Kimberly Paulus - 33'/3% (b) Alecia Bagrosky - 33'/3% (c) Gwendolyn Barrick - 33'/3% 15. True and correct copies of the August 19, 2011 change in beneficiary designation forms (with personal identification data redacted) are attached as Exhibit E. 16. Delores J. Bailey passed away from cancer on October 19, 2011. 17. After Delores J. Bailey passed away, Defendants Kimberly Paulus, Alecia Bagrosky and Gwendolyn Barrick submitted claims seeking benefits under the Annuities in accordance with the August 19, 2011 beneficiary designation. 18. On or about October 26, 2011, Defendant Mindy Deatrick gave notice to LSW that she was contesting the validity of the August 19, 2011 beneficiary designation and contended 3 SL I 1170435v l 101789.00007 that the distribution of benefits under the Annuities should be made in accordance with the February 10, 2010 beneficiary designation. 19. In reviewing the competing claims for the benefits payable under the Annuities, LSW cannot conclusively determine who were the proper beneficiaries based on the conflicting claims. 20. LSW notified the Defendants of the conflicting claims for benefits by separate letters dated November 30, 2011. 21. LSW informed the Defendants that because of the conflicting claims it could not conclusively determine who were the proper beneficiaries and requested that the parties attempt to reconcile how the proceeds should be disbursed. 22. LSW further informed the Defendants that if no agreement could be reached it would be forced to seek to interplead the funds with the Court. 23. To date, no agreement has been reached between the Defendants. COUNTI For Interpleader Relief 24. LSW incorporates herein paragraphs 1 through 23 of this Complaint as though set forth in their entirety. 25. Defendants claim adversely to each other the $50,511.34 in benefits under the Annuities. 26. On November 30, 2011, LSW communicated with the Defendants and advised them of the conflicting claims and advised them that LSW would retain the Annuity proceeds until the competing parties reached an agreement as to how the insurance proceeds should be 4 SL I 1170435v l 101789.00007 disbursed and, if the parties were unable to reach agreement in a reasonable amount of time, LSW would pay the proceeds into the Court through an interpleader action. 27. Upon information and belief, these putative beneficiaries have been unable to resolve their dispute over the payment and/or allocation of the benefits. 28. Because of the adverse claims, LSW is in doubt and cannot make a determination as to which of said Defendants it may safely pay the proceeds of the Annuities in the event that the Defendants are not interpleaded in this action. 29. In the event that the Defendants are not interpleaded in this action, LSW may be subjected to vexatious litigation and possibly subjected to double liability because of various claims. 30. Consequently, LSW cannot pay any of the parties because it may subject itself to liability for multiple payments. 31. By reason of the above, LSW has been obliged, in order to protect itself, to file this Complaint and, to do this, it has been necessary for LSW to retain the undersigned attorneys to advise it, prepare pleadings, and file this Complaint to represent its interest herein. LSW's expenses, including fees for the undersigned attorneys, should be allowed and paid to LSW, or to its said attorneys, out of the funds tendered into this Court. See 42 Pa. C.S.A. § 2503 (4). 32. LSW is a disinterested stakeholder with respect to the proceeds of the Annuities and claims no beneficial interest therein except for attorney's fees and costs. 33. In that regard, LSW asks permission of the Court to deposit to the Registry of the Court the sum of $50,511.34 representing the combined proceeds of the Annuities, and an amount in interest calculated to the date the deposit is permitted, all of which is payable by virtue of the death of Delores J. Bailey. 5 SL I 1170435v l 101789.00007 WHEREFORE, Plaintiff LSW requests the following equitable relief: (a) That the Court accept the proceeds of LSW Annuities 709637X and 681235X; (b) That the Court require the named Defendants to enter appearances and interplead their claims to the proceeds of the Annuities; (c) That the Court permits this interpleader action to go forward and enters judgment that LSW is discharged from liability and dismisses LSW, with prejudice, from the interpleader action; (d) That the Court award LSW's costs and attorneys' fees to be paid from the interpled funds; (e) That on final hearing the Court award the proceeds of the Annuities to whomever the Court deems to rightfully and legally be entitled to the proceeds; and (f) That LSW has such other and further relief as the Court deems just and equitable. Dated: June 22, 2012 STEVENS & LEE By: - E. Thomas nefer Attorney I.D. No. 55773 111 North Sixth Street P.O. Box 679 Reading, PA 19603-0679 (610) 478-2000 Attorneys for Plaintiff, Life Insurance Company of the Southwest 6 SL I 1170435v l 101789.00007 VERIFICATION 1, Katherine Miller, an authorized representative of Life Insurance Company of the Southwest, Plaintiff in the within action, execute this verification and verify that the facts set forth in the attached Complaint are based not upon my personal knowledge, but upon information gathered from regularly kept business records, were furnished by counsel, were gathered during an investigation, and have been gathered in the course of preparing the foregoing answer; and that the facts set forth in the attached answer are true and correct to the best of my information and belief, although the language of the answer is that of counsel and not my own. I understand that the statements herein are made subject to the penalties of 18 Pa. C.S.A. §4904, relating to unsworn falsification to authorities. f S Date: June 19,2012 SL 11170435v 1 101789.00007 m Rif LS'W Life Insurance Company of the Southwest (LSW) 1300 West Mockingbird Lane • Dallas, Texas 75247-4921 Process Date: September 22, 2008 Agent Information Millard G Engle 8140 Rice Road Shippensburg Pa 17257 DELIVERY TRANSMITTAL www.lifeofsouthwest.com Agent Services: 1-800-228-4579 Agent Email: ENGLES@EMBARQMAIL.COM Agent Number: 5500032459 Agent Phone No: 717 532 3572 Owner Information Name: Delores Jean Bailey Address: 287 Meadows Rd Newville Pa 17241-9769 Annuitant Information Name: Delores Jean Bailey Issue Information For Policy\Certificate Number: 681235X Product: PREMIER8 Type: Individual Retirement Annuity Issue Age: 71 Bill Mode: No Bill Policy Effective Date: 09/21/2008 Annuity Date: 09/21/2036 Initial Premium: $ 30,555.28 Modal Premium: $ 0.00 Issue State: PA Mailing Instructions: Mail Federal Express to Agent Note: To view this policy's specific rate information, go to www.lifeofsouthwest.com to see the policy Coverage Page in your E-Documents. Outstanding Requirements Amendment - Product Summary Form No. Application To Be Signed By, Check All That Apply: _ Agent _ Owner Other: - Delivery Receipt _ Annuitant For Requirements Checked Above:_ Fax Is Not Acceptable, Please Mail _ Fax Is Acceptable to 214-638-9371 Thank you for your support of LSW. If you have any questions concerning this Policy\Certificate, please contact LSW Service at: 1-800-228-4579 Form No. 5917 Wade H. Mayo President and CEO September 22, 2008 Delores Jean Bailey 287 Meadows Rd Newville Pa 17241-9769 Re: LSW Annuity 681235X Dear Delores Jean Bailey, The above referenced Annuity, together with other materials regarding Life Insurance Company of the Southwest (LSW ), are enclosed for your review. It is particularly important that you take the time to review your Annuity, as you need to understand its terms. We realize that when you purchased your Annuity, you placed significant trust in us. We know its proceeds may be used to supplement your income, meet your financial obligations, or satisfy estate planning needs. We will always use our best efforts to make sure you are pleased with your Annuity. If you have questions about your Annuity, please call LSW Service at 800-579-2878 or email your question to LSWService@nationallife.com. One of our professionally trained representatives will be glad to assist you and respond to any of your questions. Additional information regarding, LSW, its products and services, such as commonly used service forms and answers to frequently asked questions, can be accessed through our web site at www.lifeofsouthwest.com. Regards, J%/t/x /V/ ??V Wade H. Mayo LSV Life Insurance company of the Southwest (LSW) 1300 West Mockingbird Lane • Dallas, Texas 75247-4921 www.lifeofsouthwest.com Customer Service 800-579-2878 Instructions: A newly issued Policy/Certificate may be hand delivered or sent by mail, depending on the State regulations. LSW will accept, as proof of delivery, the Owner's signature on this receipt or a Certified Mail or other mailing (Fed Ex, UPS, etc.) receipt signed by the Policyowner. Owner Name: (Print) Policy or Certificate Number: Owner's Signature: Date Delivered: Joint Owner's Signature: Date Delivered: Agent's delivery statement: I was unable to personally deliver this Policy/Certificate because: I mailed the Policy/Certificate on (Date) via Certified Mail, return receipt requested, UPS, Federal Express or other service with proof of delivery and signed receipt is attached. Date Policy/Certificate Mailed: Agent's Signature: ANNUITY DELIVERY RECEIPT Form No. 1124 (0903) SUMMARY OF THE LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION ACT AND NOTICE CONCERNING LIMITATIONS AND EXCLUSIONS INTRODUCTION Residents of Pennsylvania who purchase life insurance, annuities or health insurance should know that the insurance companies licensed in this state to write these types of insurance are members of the Pennsylvania Life and Health Insurance Guaranty Association (PLHIGA). The purpose of this Association is to assure that policyholders will be protected, within limits, in the unlikely event that a member insurer becomes financially unable to meet its obligations. If this should happen, the Association will assess its other member insurance companies for the money to pay the claims of insured persons who live in Pennsylvania and, in some cases, to keep coverage in force. The valuable extra protection provided by these insurers through the Association is limited, however, As noted below, this protection is not a substitute for consumers' care in selecting companies that are well managed and financially stable. Insurance companies and their agents are prohibited by law from using the existence of the Association to induce you to purchase any kind of insurance policy. This Information is Provided By: Pennsylvania Life and Health Insurance Guaranty Association 290 King of Prussia Road Radnor Station Building 2, Suite 218 Radnor, PA 19087 (610) 97S-OS72 Summary The state law that provides for this safety-net coverage is called the Pennsylvania Life and Health Insurance Guaranty Association Act. Below is a brief summary of the law's coverages, exclusions and limits. This summary does not cover all provisions of the law; not does it in any way change anyone's rights or obligations under the act or the rights or obligations of the Association. Coverage. Generally, individuals will be protected by the Pennsylvania Life and Health Insurance Guaranty Association if they live in this state and hold a life or health insurance contract, or an annuity, or if they hold certificates under a group life or health insurance contract or annuity, issued by a member insurer. The beneficiaries, payees or assignees of insured persons are protected as well, even if they live in another state. Exclusions From Coverage. Persons holding such policies or contracts are not protected by this Association if: • they are not residents of the State of Pennsylvania, except under certain very specific circumstances; • the insurer was not authorized or licensed to do business in Pennsylvania at the time the policy or contract was issued; • their policy was issued by a nonprofit hospital or health service corporation (e.g., a blue cross or blue shield plan), an HMO, a fraternal benefit society, a mandatory state pooling plan, a mutual assessment company or similar plan in which the policyholder is subject to future assessments, or by an insurance exchange. Form No. 7884 The Association also does not provide coverage for: • any policy or portion of a policy which is not guaranteed by the insurer or for which the individual has assumed the risk: • any policy of reinsurance (unless an assumption certificate was issued); • plans of employers, association or similar entities to the extent they are self-funded or uninsured (that is, not insured by an insurance company, even if an insurance company administers them); • interest rate yields that exceed an average rate; • dividends; • experience rating credits; • credits given in connection with the administration of a policy or contract; • annuity contracts or group annuity certificates used by nonprofit insurance companies to provide retirement benefits for nonprofit educational institutions and their employees; • policies, contracts, certificates or subscriber agreements issued by a prepaid dental care plan; • sickness and accident insurance when written by a property and casualty insurer as part of an automobile insurance contract; • unallocated annuity contracts issued to an employee benefit plan protected under the federal Pension Benefit Guaranty Corporation; • financial guarantees, funding agreements or guaranteed investment contracts not containing mortality guarantees and not issued to or in connection with a specific employee benefit plan or governmental lottery; • any kind of insurance or annuity, the benefits of which are exclusively payable or determined by a separate account required by the terms of such insurance policy or annuity maintained by the insurer or by a separate entity. Limits On Amount of Coverage. The act also limits the amount the Association is obligated to pay out. The Association cannot pay more than what the insurance company would owe under a policy or contract. Also, for any one insured life, the Association will pay a maximum of $300,000 - no matter how many policies and contracts there were with the same company, even if they provided different types of coverages. Subject to the over-all $300,000 limit, the Association will pay up to $300,000 in life insurance death benefits, but not more than $100,000 in net cash surrender or withdrawal values. For annuities, the Association will pay up to $300,000 in annuity benefits, or $100,000 in net cash surrender or withdrawal benefits. For health insurance, the Association will pay up to $100,000, including any net cash surrender or withdrawal benefits. Form No. 7884 YOUR SINGLE PREMIUM EQUITY-INDEXED AND DECLARED-INTEREST DEFERRED ANNUITY POLICY Policy Number. 681235X Annuitant: Delores Jean Bailey Owner: Delores Jean Bailey Issue Date: September 21, 2008 Annuity Date: September 21, 2036 Issue Age: 71 Annuity Benefits We will pay an annuity income beginning on the Annuity Date if the Annuitant and Owner and, if named, joint Owner are then living, subject to the terms of this Policy. Death Benefits We will pay a Death Benefit to the Beneficiary when We receive due proof of the death of the Owner, Joint Owner, or the Annuitant occurring before the Annuity Date, subject to the terms of this Policy. Right to Examine this Policy This Policy may be returned within thirty days after it is received. Return it to Our Home Office or to the agent through whom it was purchased. We will cancel the Policy and return any premium paid. Request for Information Upon written request from You, We will provide, within a reasonable time, factual information regarding the benefits and provisions of this Policy. This Policy is signed for Life Insurance Company of the Southwest, Dallas, Texas, by Secretary President This Policy is a legal contract between You and the Company. Please read it carefully. We want You to understand the coverage it provides. Single Premium Equity-Indexed and Declared Interest Deferred Annuity. Benefits may be calculated based on the movement of an index or stipulated interest rates. Minimum underlying values. Income payments start on the Annuity Date. Death Benefit payable before the Annuity Date. Nonparticipating. Form No. 7954-PA Data Pages Policy Number. 681235X Annuitant: Delores Jean Bailey Owner: Delores Jean Bailey Issue Date: September 21, 2008 Annuity Date: September 21, 2036 Issue Age: 71 Coverage Equity-Indexed and Declared-Interest Single Premium Deferred Annuity Single Premium $30,555.28 3.00% Immediate Interest Credit at Issue $916.66 Premium Taxes The state of Pennsylvania does not impose a premium tax on annuities issued after January 1, 1996. In the event that such tax becomes applicable to this Policy in the future, you will be advised of the amount and its effect upon any payments to be made. Form No. 7954-PA Data Page 1 of 2 Interest Accounts Declared Interest Account: The Declared Rate in effect for a the Declared Interest Account on the Issue Date is 3.85%. The minimum rate is 2.25% in all Policy Years. The Declared Rate will be declared once per Policy Year. See Rate Declaration in Part 4. Index: Standard & Poors 500 Index Initial Index Value: 1,255.08 Ending Index Rate Option 1 Index Rate Cap Floor Rates in effect for the first Policy Year 100.00% 7.50% 0.00% Guaranteed minimum rates for Policy Years after the first 30.00% 3.00% 0.00% Ending Index Rate Option 2 Index Rate Cap Floor Rates in effect for the first Policy Year 50.00% 10.00% 0.00% Guaranteed minimum rates for Policy Years after the first 30.00% 3.00% 0.00% Average Index Index Rate Cap Floor Rates in effect for the first Policy Year 70.00% NO CAP 0.00% Guaranteed minimum rates for Policy Years after the first 30.00% 3.00% 0.00% Index: Russell 2000 Index Initial Index Value: 753.74 Ending Index Rate Option 1 Index Rate Cap Floor Rates in effect for the first Policy Year 100.00% 7.50% 0.00% Guaranteed minimum rates for Policy Years after the first 30.00% 3.00% 0.00% Ending Index Rate Option 2 Index Rate Cap Floor Rates in effect for the first Policy Year 50.00% 9.00% 0.00% Guaranteed minimum rates for Policy Years after the first 30.00% 3.00% 0.00% Policy Value Interest Rate The interest rate credited to the Policy Value is 2.25% in all Policy Years. The Company declares Index Rates, Caps, and Floors in advance only on each Policy anniversary. Rates will not be less than the minimums shown above. The Declared Rates, Index Rates, Caps, and Floors do not affect the computation of the Policy Value. Form No. 7954-PA Data Page 2 of 2 TABLE OF CONTENTS PAGE PAGE PART I: OWNERSHIP OF THE POLICY Floor 7 Owner 1 Rate Declaration 7 Joint Owner 1 Transfers 7 Rights of Owner 1 PART 5: PAYMENT OF BENEFITS Transfer of Ownership 1 Death Benefits 8 Assignment 1 Annuity Benefits 9 PART 2: THE ANNUITANT PART 6: OTHER PROVISIONS Annuitant 1 This Agreement 9 Contingent Annuitant 1 Tax Qualification 9 PART j: BENEFICIARY PROVISIONS Incontestability 9 Beneficiary 2 Misstatement of Age or Gender 9 Minors 2 Premium Taxes 9 Change of Beneficiary 2 Reports 10 PART 4: POLICY DATES AND VALUES Nonparticipating 10 Issue Date 2 Required Standards 10 Policy Years 2 Protection from Creditors 10 Annuity Date 2 Our Liability 10 Net Single Premium 2 PART 7: THE PAYMENT OPTIONS Total Withdrawals 2 Option Selection 10 Cash Value 3 The Installment Income Options (Option 1) 10 Policy Value 3 Life Income Options (Option 2) 12 Accumulation Value 3 Joint and Survivor Life Income Bonus Accumulation Value 3 (Option 3) 14 Withdrawal Charges 4 More Information About Our Withdrawal Charge Percentage 5 Payment Options 14 Free Withdrawal Amount 5 Right to Increase Monthly Income 14 Partial Withdrawals 5 Amounts Too Small 14 Interest Accounts 5 Automatic Cancellation 14 Declared Interest Account 5 Payments to Minors 14 Declared Interest 5 PART H: SPECIAL ENHANCED LIFE INCOME Declared Rate 6 OPTIONS Indexed Interest Account 6 Election Date 15 Indexed Interest 6 Commencement Date 15 Index Methods 6 Activities of Daily Living 15 Indices 6 Without Substantial Assistance 15 Index Increase Percentage Factor 6 Eligibility Requirements 16 Index Change 7 Special Enhanced Life Income Payment Options (Option 4) 16 Index Rate 7 Amounts Too Small 17 Cap 7 Form No. 79S4-PA - I - TABLE OF CONTENTS PAGE Limitations and Exclusions 18 How to Elect a Special Enhanced Life Income 18 Any riders and Endorsements and a copy of the application, follow page 19 Form No. 7954-PA - 11 - In this Policy, the words We, Us, Our and The Company mean Life Insurance Company of the Southwest. You and Your mean the Owner of the Policy. PART I: OWNERSHIP OF THE POLICY Owner The Owner on the Issue Date of this Policy is named in the application. If the Owner is not designated in the application, the Annuitant is the Owner. Joint Owner A Joint Owner may be named in the application on the Issue Date of this Policy. If a Joint Owner is named, You and Your shall refer to both the Owner and the Joint Owner together. Rights of Owner You may exercise all rights and privileges under this Policy, while the Annuitant is living, prior to the Annuity Date. Use of these rights may be subject to the consent of any Assignee or irrevocable Beneficiary. Transfer of Ownership Subject to the limitations described below, You may transfer ownership of this Policy. We will not be responsible for any payment We make or other action We take before a copy of the written request for transfer of ownership is received at Our Home Office. We are not responsible for the validity of the transfer. We may require the Policy to record the transfer. Under certain provisions of the Internal Revenue Code, ownership and assignment of annuity policies are restricted. If this annuity is issued to qualify under such a provision, this will be specified in the application. We will restrict ownership and assignment of this Policy so that it will comply with the provisions of the internal Revenue Code or any successor statute. Assignment Subject to the limitations described in the Transfer of Ownership provision, this Policy may be assigned. We will not be responsible for any payment We make or any other action We take before a written copy of the assignment is received at Our Home Office. We are not responsible for the validity of the assignment. PART 2: THE ANNUITANT Annuitant The Annuitant is named in the application and on the Data Pages of this Policy. The Annuitant may not be changed after this Policy is issued, except as otherwise provided in this Policy. If the Annuitant is living on the Annuity Date while this Policy is in force, We will pay an annuity income as provided in Part 5: Payment of Benefits. Contingent Annuitant If the Owner and the Joint Owner are both natural persons, and neither the Owner nor the joint Owner are the Annuitant, You may name a Contingent Annuitant in the application or by written request. The written request must be signed while the Annuitant is living and prior to the Annuity Date. The designation of a Contingent Annuitant takes effect on the date We approve it and is subject to any action We take before receiving the request. Any designation of a Contingent Annuitant expires on the Annuity Date. If the Annuitant dies prior to the Annuity Date while this Policy is in force and while the Contingent Annuitant is alive: • The Death Benefit will not be payable; The Contingent Annuitant becomes the Annuitant for purposes of this Policy; and All other rights and benefits provided by this Policy will continue in effect. Form No. 7954-PA Page 1 Under certain provisions of the Internal Revenue Code, You are not permitted to name a Contingent Annuitant. If this annuity is issued to qualify under such a provision in the Internal Revenue Code, the Contingent Annuitant provision will not apply. PART 3: BENEFICIARY PROVISIONS Beneficiary The Beneficiary on the Issue Date of this Policy is named in the application. The primary Beneficiary will receive any Death Benefit payable under this Policy. A contingent Beneficiary may be named to receive the Death Benefit if the primary Beneficiary is not living at the time the Death Benefit is payable. If no named Beneficiary is living at the time the Death Benefit is payable, it will be paid to Your estate. You may name more than one primary Beneficiary and more than one contingent Beneficiary. If more than one Beneficiary is to receive the Death Benefit, it will be paid in equal shares unless You specify otherwise in writing. If a Joint Owner is named under the Policy, on the death of either the Owner or joint Owner, the surviving owner will be the sole Beneficiary and will succeed to all ownership rights under this Policy. Minors If a Beneficiary is a minor, We will make payment to the minor's court appointed guardian. If there is no court appointed guardian, We will hold the Death Benefit at interest until the minor reaches the age of majority as defined by the state where this policy was issued. We may require proof of age of any Beneficiary. Change of Beneficiary You may change the Beneficiary at any time during the Annuitant's life. You must make a written request to Our Home Office in a form acceptable to Us. We may require the Policy to record the change. The request will take effect when signed, subject to any action We take before receiving it. PART 4: POLICY DATES AND VALUES Issue Date The Issue Date of this Policy is shown on the Data Pages. It is the date that Your Policy takes effect. Policy Years Policy Years are yearly periods which start on the Issue Date and on the same month and day of each year thereafter. Annuity Date Annuity income payments begin on the Annuity Date shown on the Data Pages if the Annuitant is living. Net Single Premium The Net Single Premium is the Single Premium shown on the Data Pages of this Policy, minus any applicable Premium Tax (see Premium Taxes, Part 6). Total Withdrawals You may withdraw all of the Cash Value of this Policy at any time at or before the commencement of any annuity income payments. If You withdraw all of the Cash Value of this Policy, this Policy will terminate. Form No. 7954-PA Page 2 Cash Value The Cash Value of this Policy is the greater of- • the Accumulation Value less applicable Withdrawal Charges; or • the Policy Value, less any applicable Premium Tax (see Premium Taxes: Part 6). We reserve the right to defer the payment of the Cash Value for a period not to exceed six (6) months after making written request and receiving written approval of the commissioner of insurance of the state in which this Policy is issued. If required by state law, We will pay interest according to the laws of the state in which this Policy is issued. You may withdraw all or part of the value of this annuity to provide a periodic income from Us. If You do so before the end of the fifth Policy Year, We will determine the annuity payments using the Cash Value withdrawn, less any applicable Premium Tax. If You do so after the end of the fifth and prior to the end of the twelfth Policy Year, We will determine the annuity payments by applying the greater of (a) or (b), where: (a) is the Accumulation Value withdrawn plus a portion of the then-remaining Bonus Accumulation Value; and (b) is the Policy Value reduction as a result of the withdrawal, less any applicable Premium Tax (see Premium Taxes: Part 6). The amount of the Bonus Accumulation Value that will be included is (a) times (b) divided by (c), where: (a) is the value to provide the income; (b) is the whole number of completed Policy Years at the time of the withdrawal of the value to provide the income; and (c) is twelve (12). If You do so after the end of the twelfth Policy Year, We will determine the annuity payments by applying the greater of (a) or (b), where: (a) is the Accumulation Value withdrawn less any applicable Premium Tax; and (b) is the Policy Value reduction as a result of the withdrawal less any applicable Premium Tax (see Premium Taxes: Part 6). Polic Value The Policy Value at any time is equal to: • 100% of the Single Premium; less • 10% of the Single Premium for expenses and guarantees; less • any amounts withdrawn (excluding any applicable Withdrawal Charges); plus or minus, as applicable, • interest on the above items credited at the Policy Value Interest Rate shown on the Data Pages. Accumulation Value The Accumulation Value at any time equals the sum of the values of the Interest Accounts. Bonus Accumulation Value When we issue the policy, We will establish a Bonus Accumulation Value. During the first seven Policy Years, the Bonus Accumulation Value equals five percent (5%) times the Accumulation Value. You have no rights to or interest in the Bonus Accumulation Value until and unless it transfers to the Accumulation Value. Beginning at the end of the eighth Policy Year, the Bonus Accumulation Value will be transferred to the Accumulation Value as stated below. Form No. 7954-PA Page 3 During Policy Years eight through twelve, We will credit interest to the Bonus Accumulation Value. The amount of interest credited to the Bonus Accumulation Value will be: the dollar amount of interest credited to the Accumulation Value since the previous Policy anniversary; divided by the Accumulation Value on the previous Policy anniversary; multiplied times • the Bonus Accumulation Value on the previous Policy anniversary. During the eighth through twelfth Policy Years, whenever You make a Partial Withdrawal, the then-existing Bonus Accumulation Value will be reduced by an amount equal to: the dollar amount of the Partial Withdrawal, including any Withdrawal Charges assessed; divided by the amount of the Accumulation Value just prior to the time the Partial Withdrawal is made; multiplied times • the amount of the Bonus Accumulation Value just prior to the time the Partial Withdrawal is made. On the eighth Policy anniversary, just after crediting interest to the Bonus Accumulation Value, We will: • transfer one-fifth (20%) of the then-existing Bonus Accumulation Value to the Accumulation Value; and • reduce the Bonus Accumulation Value by the amount transferred. On the ninth Policy anniversary, just after crediting interest to the Bonus Accumulation Value, We will: • transfer one-fourth (25%) of the then-existing Bonus Accumulation Value to the Accumulation Value; and • reduce the Bonus Accumulation Value by the amount transferred. On the tenth Policy anniversary, just after crediting interest to the Bonus Accumulation Value, We will: • transfer one-third (33.33%) of the then-existing Bonus Accumulation Value to the Accumulation Value; and • reduce the Bonus Accumulation Value by the amount transferred. On the eleventh Policy anniversary, just after crediting interest to the Bonus Accumulation Value, We will: • transfer one-half (50%) of the then-existing Bonus Accumulation Value to the Accumulation Value; and • reduce the Bonus Accumulation Value by the amount transferred. On the twelfth Policy anniversary, just after crediting interest to the Bonus Accumulation Value, We will transfer all of the then-existing Bonus Accumulation Value to the Accumulation Value, after which there will be no more Bonus Accumulation Value. All amounts transferred to the Accumulation Value will be added to the Interest Accounts in proportion to their values at the times of the transfers. Withdrawal Charges If You request a Total or Partial Withdrawal during the first twelve Policy Years, We will deduct a Withdrawal Charge from the Accumulation Value. If the amount withdrawn during a Policy Year is less than or equal to the Free Withdrawal Amount, then the Withdrawal Charge is zero. The Withdrawal Charge on any additional amount withdrawn equals (a) times (b), where: (a) is the additional amount withdrawn; and (b) is the Withdrawal Charge Percentage for the Policy Year in which the withdrawal occurs. Form No. 7954-PA Page 4 Withdrawal Charge Percentage The Withdrawal Charge Percentage is ten percent in the first three Policy Years. It reduces by one percent per year for the next nine Policy Years. The Withdrawal Charge Percentage is zero after the twelfth Policy Year. Free Withdrawal Amount In the first Policy Year, the Free Withdrawal Amount is the Immediate Interest Credit defined on the Data Pages. In Policy Years two and later, the Free Withdrawal Amount equals ten percent of the Accumulation Value at the time of the first Partial Withdrawal in that Policy Year. If the first Partial Withdrawal in a Policy Year exceeds the Free Withdrawal Amount, Withdrawal Charges are assessed as defined above, and the Free Withdrawal Amount for the remainder of the Policy Year is zero. If the first Partial Withdrawal is less than or equal to the Free Withdrawal Amount, no Withdrawal Charges are assessed, and the Free Withdrawal Amount is reduced by the amount withdrawn. Each Partial Withdrawal after the first one in a Policy Year is then treated in the same manner as the first Partial Withdrawal, measured against any remaining Free Withdrawal Amount at the time of the Partial Withdrawal. Partial Withdrawals Prior to the Annuity Date, You may withdraw part of the Cash Value of this Policy at any time. You may designate the Interest Account from which to deduct a Partial Withdrawal. If You make no such election, the Partial Withdrawal will be deducted from each Interest Account in proportion to its value. Partial Withdrawals are subject to the following limits: • each Partial Withdrawal must be at least $500; and • a Partial Withdrawal may not reduce the Accumulation Value to less than $5,000. Please note that the order of withdrawal, whether interest or principal, may not be identical to the order of withdrawal of earnings or premium as characterized by the Internal Revenue Service. We will also deduct any Partial Withdrawal, less any Withdrawal Charge assessed, from the Policy Value. Interest Accounts We make two interest crediting methods available for the interest Accounts under this Policy: crediting of interest based on an interest rate declared in advance or crediting of interest based on the change in an Index. The Interest Account for which an interest rate is declared in advance is called the Declared Interest Account. Interest Accounts based on the change in an Index are called Indexed Interest Accounts. The Net Single Premium and the Immediate Interest Credit shown on the Data Pages are allocated among the Interest Accounts according to Your instructions. Your instructions are recorded in Your application, which is attached to and made part of this Policy. Declared Interest Account The value of the Declared Interest Account at any time is equal to: • the amount of the Net Single Premium allocated to the Declared Interest Account; plus • the amount of the immediate Interest Credit allocated to the Declared Interest Account; plus • all transfers to the Declared Interest Account; plus • all Declared Interest credited to the Declared Interest Account; less • all transfers from the Declared Interest Account; less • all amounts withdrawn from the Declared Interest Account (including any applicable Withdrawal Charges). Declared Interest We credit Declared Interest to the Declared Interest Account daily at an interest rate equivalent to the Declared Rate, which is an annual effective rate. Form No. 7954-PA Page 5 Declared Rate We will formally determine the Declared Rate for the Declared Interest Account at the start of each Policy Year as described below under Rate Declaration. Its value on the Issue Date is shown on the Data Pages. Indexed Interest Account The value of an Indexed Interest Account at any time is equal to: • the amount of the Net Single Premium allocated to the Indexed Interest Account; plus • the amount of the Immediate Interest Credit allocated to the Indexed Interest Account; plus • all transfers to the Indexed Interest Account; plus • all Indexed Interest credited to the Indexed Interest Account; less • all transfers from the Indexed Interest Account; less • all amounts withdrawn from the Indexed Interest Account (including any applicable Withdrawal Charges). The rate at which an Indexed Interest Account grows depends on: • its Index; • its Index Method; • its Cap; • its Floor; and • its Index Rate. Indexed Interest The Indexed Interest for an Indexed Interest Account equals the Indexed Interest Account's value times the Index Increase Percentage Factor. We will calculate the Indexed Interest for each Indexed Interest Account on the Policy anniversary. If the Indexed Interest is greater than zero, We will credit it to the Indexed Interest Account on the Policy anniversary. Index Methods There are two index methods used in this Policy: Ending Index and Average Index. Indices The Indices for this Policy at issue are shown on the Data Pages. Each of the Indices for the Policy is guaranteed to apply while the Policy is in force unless publication of the Index is discontinued or the calculation of the Index is changed substantially. If one of these events occurs, We may substitute a suitable index. If required, We will notify the commissioner of the state in which the Policy is issued or request permission from the commissioner before taking such action. We will notify You of any change to Your Policy as a result of these actions. The value for a given day of an Index whose value is quoted continuously throughout that day in the United States is the value quoted by the provider of the Index at the close of activity for that day in the United States. The value for a given day of any other Index is the value quoted by the provider of the Index at the most recent close of activity for a day as of 5 p.m. in Dallas, Texas. If there is no activity in an Index for a day, no value will be used for that day. Index Increase Percentage Factor The Index Increase Percentage Factor for an Indexed Interest Account will never be less than the Floor or more than the Cap declared at the start of that Policy Year for that Indexed Interest Account. Within those bounds, the Index Increase Percentage Factor equals the Index Rate for the Indexed Interest Account declared at the start of that Policy Year multiplied by the index Change. Form No. 7954-PA Page 6 Index Change The Index Change for an Indexed Interest Account is (a) divided by (b) where: (a) for Indexed Interest Accounts that use the Index Method Ending Index, is the posted Index Value on the current Policy anniversary, or if there is no Index Value for the current Policy anniversary, the Index Value for the most recent day preceding that date for which there is an Index Value; or for Indexed Interest Accounts that use the Index Method Average Index , is the arithmetic average of every Index Value posted after the previous Policy anniversary until the current Policy anniversary; and (b) is the posted Index Value on the previous Policy anniversary or, if there is no Index Value for the previous Policy anniversary, the Index Value for the most recent day preceding that date for which there is an Index Value. Index Rate The Index Rate is a percentage used to calculate the Indexed Interest for an Indexed Interest Account. We will declare the Index Rate for an Indexed Interest Account at each Policy anniversary. We will declare Index Rates on a basis which does not discriminate unfairly within any class of policies. The value of the Index Rate on the Issue Date for each Indexed Interest Account is shown on the Data Pages. Cap The Cap is the maximum percentage per year by which an Indexed Interest Account will be increased. We will declare the Cap for an Indexed Interest Account at each Policy anniversary. We will declare Caps on a basis which does not discriminate unfairly within any class of policies. The Cap on the Issue Date for each Indexed Interest Account is shown on the Data Pages. Floor The Floor is the minimum percentage per year by which an Indexed Interest Account will be increased. The Floor will never be less than 0%. We will declare the Floor for an Indexed Interest Account at each Policy anniversary. We will declare Floors on a basis which does not discriminate unfairly within any class of policies. The Floor on the Issue Date for each Indexed Interest Account is shown on the Data Pages. Rate Declaration For the Declared Interest Account, We declare interest rates in advance at the start of each Policy Year. Rates We so declare are guaranteed to remain in effect for the entire Policy Year. For the Indexed Interest Accounts, We declare the Index Rates, Caps, and Floors in advance at the start of each Policy Year. When We declare initial and/or renewal Declared Rates, Index Rates, Caps, and Floors, We will do so in a manner that does not discriminate unfairly between any classes of Policies. We will set these factors depending on historical and then current interest rates and other relevant factors. Transfers You may request that We transfer amounts between Interest Accounts. Amounts can only be transferred on the Policy anniversary. The rate(s) applicable to amounts to be transferred to new Interest Account(s) will be the same rate that is made available to amounts that have been held in such new Interest Account from the Issue Date. You must notify Us requesting the transfer at least fifteen (15) days in advance of the Policy anniversary. Form No. 7954-PA Page 7 PART 5: PAYMENT OF BENEFITS Death Benefits While this Policy is in force and prior to the Annuity Date, We will pay a Death Benefit at the earlier of- • the death of the Owner; or • the death of the joint Owner; or • if neither the Owner nor the joint Owner is the Annuitant, the death of the Annuitant, unless a validly designated Contingent Annuitant is living. The Death Benefit will be the greater of the Policy Value or the Accumulation Value as of the date of death if the Annuitant dies. The Death Benefit will be the Cash Value as of the date of death if the Owner dies and the Owner is not the Annuitant. The Death Benefit will be the Cash Value as of the date of death if the joint Owner dies and the joint Owner is not the Annuitant. Payment will be made to the Beneficiary upon receipt of due proof of death. You may specify how the Death Benefit is to be paid, subject to the limits imposed by Section 72(s) of the Internal Revenue Code. If You do not specify how the Death Benefit is to be paid, the payment will be in a single sum unless the Beneficiary elects otherwise. In any event, the Death Benefit will be paid within five years of the date of death, unless one of the following exceptions applies. Death of the Owner or Joint Owner If the Owner or the joint Owner dies and the Beneficiary is the surviving spouse of the decedent, the Beneficiary may elect to be treated as the successor Owner of the Policy and continue the Contract. If the Owner or joint Owner who dies is also the Annuitant, and the Beneficiary is the surviving spouse of the decedent who elects to be treated as the successor Owner and continue the contract, the Beneficiary will become the Annuitant. In the event of such an election, on the death of the surviving spouse, the Death Benefit will be paid within five years of the date of such death, or distributed in accordance with the next paragraph, even if the Beneficiary at that time is a surviving spouse. If the Owner or the joint Owner dies and the surviving spouse of the decedent is not the Beneficiary, the Beneficiary may elect to receive the Beneficiary's entire interest in the Policy over such Beneficiary's life or over a period not extending beyond the life expectancy of such Beneficiary. Such distributions must begin within one year from the date of death. Death of the Annuitant, if neither the Outer nor the Joint Owner is the Annuitant Except as provided in the next section (Non-Natural Owners), if neither the Owner nor the joint Owner is the Annuitant and the Annuitant dies, the Beneficiary may elect to receive the Beneficiary's entire interest in the Policy over such Beneficiary's life or over a period not extending beyond the life expectancy of such Beneficiary. Such distributions must begin within one year from the date of death. Non-Natural Ounwrs if either the Owner or the joint Owner is not an individual and the Annuitant dies, and the Annuitant's surviving spouse is the Beneficiary, the Beneficiary may elect to be treated both as the successor Owner and as the successor Annuitant of the Policy and continue the Contract. In the event of such an election, on the death of the Annuitant's surviving spouse, the Death Benefit will be paid within five years of the date of such death, or distributed in accordance with the next paragraph, even if the Beneficiary at that time is a surviving spouse. If either the Owner or the joint Owner is not an individual and the Annuitant dies, and the Annuitant's surviving spouse is not the Beneficiary, the Beneficiary may elect to receive the Beneficiary's entire interest in the Policy over such Beneficiary's life or over a period not extending beyond the life expectancy of such Beneficiary. Such distributions must begin within one year from the date of death. Form No. 7954-PA Page 8 Annuity Benefits If the Annuitant is living on the Annuity Date and this Policy is in effect, We will apply the Cash Value to provide an annuity. The Annuity Benefits will be paid to You unless You direct Us in writing to pay another person. The amount and duration of the annuity depend on the amount applied and the Payment Option under which it is applied. If the Payment Option is one involving the life of the Annuitant, We reserve the right to require periodic proof that the Annuitant is still living. If the Annuitant dies on or after the Annuity Date, (or if both the Annuitant and the joint annuitant die if the selected Payment Option is a joint and Survivor Payment Option), any remaining payments provided by the selected Payment Option will be paid to the Beneficiary. If neither the Owner nor the joint Owner is the Annuitant or the joint annuitant and the Owner or the joint Owner dies on or after the Annuity Date, any remaining payments provided by the selected Payment Option will be paid to the Beneficiary. If the Owner, the Joint Owner, the Annuitant, or the joint annuitant dies on or after the Annuity Date, or if You direct us in writing irrevocably to pay the Annuity Benefits to another person, and that person dies on or after the Annuity Date, any remaining benefits will be paid at least as rapidly as under the Payment Option in effect as of the date of death. If You elect to receive the Annuity Benefits in a single sum, We will pay You the Cash Value on the Annuity Date. PART 6: OTHER PROVISIONS This part contains important general and required provisions. This Agreement This Policy, the application, and any attached riders and endorsements constitute the complete agreement between You and Us. We have issued this Policy in exchange for the application and the payment of the premium. Any change in this Policy must be in writing, signed by one of Our officers, and in the form of an amendment or endorsement to this Policy. No agent has the power or authority to waive, change, or alter any of the terms or conditions of this Policy. Only one of Our officers has the power or authority to waive, change, or alter any of the terms or conditions of this Policy. Tax Qualification We may amend this Policy as necessary to comply with the Internal Revenue Service requirements. If there is a change to the Internal Revenue Code We will send you an amendment form. You have the right to accept or reject the amendment. Incontestability We cannot contest this Policy. Misstatement of Age or Gender If the Annuitant's age or gender has been misstated on the application, the benefits during the accumulation period will be those which the premium paid would have bought for the correct age and gender. We will adjust the annuity payments on the basis of the correct age and gender. The total amount of any underpayment that may have been made will be credited with 5% interest and added to the annuity payment next following the adjustment. The total amount of any overpayment that may have been made will be charged with 5% interest and deducted from the annuity payments, as required, next following the adjustment. Premium Taxes Some states impose a Premium Tax on annuities. In the event that a Premium Tax is imposed on the premium received, such tax will be deducted from the premium. In the event that a Premium Tax is imposed at any other time, such Premium Tax will be deducted from any benefit payable under this Policy. Form No. 7954-PA Page 9 Reports At least once each year, We will send You a report showing the Accumulation Value. The report will also show all amounts added to and subtracted from the Accumulation Value during the period the report covers and any additional items required by the insurance department of the state where this Policy is issued. Nonparticipatin This Policy is not entitled to share in the profits or surplus of the Company. Required Standards All values under this Policy meet the requirements of the Standard Nonforfeiture Law for individual deferred annuities. A detailed statement of Our computation method for all values and reserves has been filed with the insurance department of the state where this Policy is delivered. All values and reserves are equal to, or greater than, those required by the laws of such state. Any paid-up annuity, cash values or Death Benefits or reserves under this Policy are not less than the minimum benefits required by any statute of the state in which the Policy is delivered. Protection from Creditors Benefits and Values payable under this Policy will be free from claims of creditors to the extent allowed by law. Our Liability We will not incur any liability or be responsible for Your failure, in whole or in part, to comply with the provisions set forth in the internal Revenue Code or any other law. PART 7: THE PAYMENT OPTIONS This part contains methods of payments of the Death and Annuity Benefits. Death Benefits must be paid in accordance with Part 5: Payment of Benefits. Monthly income payments are illustrated, but other frequencies of payments may be available. Option Selection You may select the option under which benefits will be paid while the Annuitant is still alive and prior to the Annuity Date. If no option is selected on the Annuity Date, Life Income Option 2(d) will be used automatically. The Installment Income Options (Option 1) We will pay monthly income for a se Options term or amount. The first payment is due on the Annuity Date. The right to withdraw money under the Installment Income Options will be as agreed upon when the option is elected. The following Installment Income Options are available. 1(a) Income for a Selected Term. We will make equal monthly payments for the number of years selected (not less than 5 years or more than 25 years). The monthly income for each $1,000 applied will not be less than those shown in Table 1. This table is based on interest guaranteed at a 1% annual effective rate. 1(b) Income of Selected Amount. We will make equal monthly payments of an amount selected. Payments will continue until the amount applied, including interest, has been paid. Payments must be made for at least 5 years and for not more than 25 years. We guarantee interest at a 1 % annual effective rate. Form No. 7954-PA Page 10 Table 1 - Installment Income Payments for a Selected Term (Per $1,000) Years Monthly Years Monthly Years Monthly Income Income Income 5 $17.08 12 $7.36 19 $4.81 6 14.30 13 6.83 20 4.59 7 12.32 14 6.37 21 4.40 8 10.83 15 5.98 22 4.22 9 9.68 16 5.63 23 4.05 10 8.75 17 5.33 24 3.90 11 7.99 18 5.05 25 3.76 Form No. 7954-PA Page 11 Life Income Options (Option 2) Payments depend on the life of the Annuitant. The monthly income for each $1,000 applied will not be less than those shown in Table 2. We will pay monthly income to the named person for the certain period selected and then for as long as the Annuitant is alive. The first payment is due on the Annuity Date. The money applied under a Life Income Option cannot be withdrawn once payments begin. 2(a) Payments For Life Only. We will make equal monthly payments for the lifetime of the Annuitant. Payments stop when the Annuitant dies. 2(b) Payments For Life with Thirty (30) Months Guaranteed. We will make equal monthly payments for 30 months and then for as long as the Annuitant is alive. 2(c) Payments For Life with Sixty (60) Months Guaranteed. We will make equal monthly payments for 60 months and then for as long as the Annuitant is alive. 2(d) Payments For Life with One Hundred Twenty (120) Months Guaranteed. We will make equal monthly payments for 120 months and then for as long as the Annuitant is alive. The values in Table 2 on the following page are based on the Annuitant's age (nearer birthday) on the Annuity Date. We may require proof of age. The values in this table are based on interest guaranteed at a 1% annual effective rate and the a2000 Individual Annuity Mortality Table with a 1 % improvement per year for fifteen years after election. Amounts of income for any age not shown will be furnished on request. Form No. 7954-PA Page 12 Table 2 - Life Income Payments (Per $1,000) If the Annuitant is Male If the Annuitant is Female Age 2(a) 2(b) 2(c) 2(d) 2(a) 2(b) 2(c) 2(d) Life Life with Life with Life with Life Life with Life with Life with Only 30 Mos 60 Mos 120 Mos Only 30 Mos 60 Mos 120 Mos 55 3.26 3.26 3.25 3.23 2.99 2.99 2.99 2.98 56 3.34 3.34 3.33 3.31 3.06 3.06 3.06 3.05 57 3.43 3.43 3.42 3.39 3.14 3.14 3.14 3.12 58 3.53 3.53 3.52 3.48 3.23 3.22 3.22 3.20 59 3.63 3.63 3.62 3.58 3.31 3.31 3.31 3.29 60 3.74 3.74 3.73 3.68 3.41 3.40 3.40 3.37 61 3.85 3.85 3.84 3.78 3.50 3.50 3.50 3.47 62 3.98 3.97 3.96 3.90 3.61 3.61 3.60 3.56 63 4.11 4.10 4.09 4.01 3.72 3.72 3.71 3.67 64 4.25 4.24 4.22 4.14 3.84 3.83 3.82 3.78 65 4.40 4.39 4.37 4.27 3.96 3.96 3.95 3.89 66 4.56 4.55 4.52 4.40 4.10 4.09 4.08 4.02 67 4.73 4.72 4.69 4.54 4.24 4.24 4.22 4.15 68 4.91 4.90 4.86 4.69 4.39 4.39 4.37 4.28 69 5.11 5.09 5.04 4.84 4.56 4.55 4.53 4.43 70 5.31 5.30 5.24 5.00 4.74 4.73 4.70 4.58 71 5.53 5.51 5.45 5.17 4.93 4.92 4.89 4.74 72 5.77 5.74 5.66 5.34 5.14 5.13 5.09 4.91 73 6.02 5.99 5.90 5.51 5.37 5.35 5.30 5.09 74 6.29 6.26 6.14 5.69 5.61 5.59 5.53 5.27 75 6.58 6.54 6.40 5.87 5.88 5.85 5.78 5.47 76 6.89 6.84 6.67 6.06 6.16 6.13 6.04 5.67 77 7.23 7.16 6.96 6.24 6.47 6.44 6.33 5.87 78 7.58 7.50 7.27 6.43 6.81 6.77 6.63 6.08 79 7.97 7.87 7.59 6.62 7.17 7.12 6.95 6.29 80 8.38 8.26 7.92 6.80 7.57 7.50 7.30 6.50 81 8.82 8.68 8.27 6.98 8.00 7.92 7.66 6.71 82 9.29 9.12 8.64 7.16 8.47 8.37 8.05 6.92 83 9.79 9.59 9.01 7.33 8.98 8.85 8.45 7.12 84 10.33 10.08 9.40 7.49 9.53 9.36 8.87 7.31 85 10.91 10.61 9.80 7.64 10.13 9.92 9.31 7.48 86 11.53 11.16 10.20 7.78 10.77 10.51 9.76 7.65 87 12.19 11.74 10.62 7.91 11.46 11.13 10.21 7.80 88 12.89 12.35 11.03 8.03 12.20 11.78 10.67 7.94 89 13.63 12.99 11.45 8.14 12.99 12.46 11.14 8.07 90 14.43 13.65 11.86 8.25 13.83 13.17 11.58 8.18 91 8.34 8.28 92 8.42 8.37 93 8.49 8.45 94 8.55 8.51 95 8.60 8.57 96 8.65 8.62 97 8.68 8.66 98 8.71 8.70 99 8.73 8.72 Form No. 7954-PA Page 13 Joint and Survivor Life Income (Option 3) We will make equal monthly payments during the joint lifetime of two persons and the remaining lifetime of the survivor. The monthly income for each $1,000 applied for sample age combinations will not be less than those shown in Table 3. The first payment is due on the Annuity Date. The money applied under a joint and Survivor Life Income Option cannot be withdrawn once payments begin. If the Joint Annuitant is the Annuitant's spouse, the amount of each monthly payment made to the spouse as survivor will not exceed the amount of each monthly payment made to the Annuitant. If the Joint Annuitant is not the Annuitant's spouse, the option elected must be in such form that the present value of the payments to the Annuitant will exceed one-half of the present value of all payments to be made to the Annuitant and Joint Annuitant. Present values will be determined as of the Annuity Date on the basis of the actuarial assumptions We use in determining the amount of the annuity payments. The values in Table 3 are based on the Annuitants' ages (nearer birthday) on the Annuity Date. We may require proof of ages. The values in this table are based on interest guaranteed at a 1% annual effective rate and the a2000 Individual Annuity Mortality Table with a 1 % improvement per year for fifteen years after election. Amounts of income for any ages not shown will be furnished on request. Table 3 - Monthly Life Income While Either Person Lives (Per $1,000) Female Age -> 55 60 65 70 75 80 85 90 95 Male Age 55 2.75 2.87 3.00 3.11 3.19 3.25 3.28 3.30 3.31 60 2.83 3.01 3.20 3.37 3.52 3.62 3.68 3.72 3.74 65 2.91 3.14 3.40 3.68 3.92 4.11 4.24 4.31 4.35 70 2.97 3.24 3.59 3.97 4.36 4.69 4.95 5.11 5.20 75 3.01 3.32 3.73 4.23 4.79 5.33 5.79 6.12 6.31 80 3.03 3.37 3.83 4.43 5.16 5.96 6.73 7.34 7.75 85 3.05 3.40 3.89 4.56 5.43 6.50 7.66 8.70 9.48 90 3.06 3.41 3.92 4.64 5.62 6.91 8.46 10.05 11.39 95 3.06 3.42 3.94 4.68 5.73 7.19 9.09 11.24 13.28 More Information About Our Payment Options We may agree to other installment Income or Life Income options. Right to Increase Monthly Income Subject to Our approval, a person who is to receive payments may make an extra contribution at the time of option selection to increase the income to be received. The contribution will be applied under the option at the same rates as are the benefits. We may make a charge, which will not exceed 3% of the extra contribution, plus any Premium Tax required. We may limit the extra contribution to an amount equal to the benefits. Amounts Too Small If payments would be less than $20, We may change the frequency of payments or pay the benefits in cash. Automatic Cancellation A previous election of a Payment Option for Death Benefits will be cancelled if the Beneficiary is changed. Payments to Minors While a person named to receive benefits is a minor, We will make all payments to the court appointed guardian of the minor's estate. We may require proof of age of any such person. Form No. 7954-PA Page 14 PART 8: SPECIAL ENHANCED LIFE INCOME OPTIONS If both the Policy and the Annuitant meet Eligibility Requirements detailed in this Part of the Policy, You may be entitled to apply some or all of the value of the Policy to provide a Life Income that is higher than that otherwise available under Part 7: The Payment Options. If You are entitled to do so, You may choose an Option from this Part under which You want the annuity payments to be made. Even if the Policy and Annuitant meet the Eligibility Requirements, it is not mandatory that You elect to make use of this Special Enhanced Life Income. All of the other benefits of this Policy, including those under Part 7: The Payment Options, are unaffected by the presence of these benefit options. None of the provisions of Part 7 apply to the Special Enhanced Life Income Options available under this Part. Election Date The Election Date is the date We receive a request from You electing to use some or all of the value of Your Policy to provide an annuity (see the Cash Value provision of this Policy) under the provisions of this Part of the Policy. The request must be in a form acceptable to us. Commencement Date The Commencement Date is the date We approve all proofs required by this Part; if this date is on a 29th, 30th, or 31st of a month, the Commencement Date is the next business day on or following the subsequent 14 of a month. Activities of Daily Living The Activities of Daily Living are: 1. Bathing: washing oneself by sponge bath or in either a tub or shower, including the tasks of getting into or out of the shower; 2. Dressing: putting on and taking off all items of clothing and any required braces, fasteners, or artificial limbs; 3. Transferring: moving into and out of a bed, chair, or wheelchair; 4. Toileting: getting to and from the toilet, getting on and off the toilet, and performing related personal hygiene; 5. Continence: ability to maintain control of bowel and bladder function or, when not able to maintain control of bowel or bladder function, ability to perform related personal hygiene (including caring for catheter or colostomy bag); 6. Eating: feeding oneself by getting food into the body from a receptacle (such as a cup, plate, or table) or by feeding tube or intravenously. Without Substantial Assistance Without Substantial Assistance means: 1. without the physical assistance of another person, the Annuitant would be unable to perform the Activity of Daily Living; or 2. the presence of another person within arm's reach of the Annuitant is necessary to prevent, by physical intervention, injury to the Annuitant while the Annuitant performs the Activity of Daily Living. Form No. 7954-PA Page 15 Eligibility Requirements The Eligibility Requirement for the Policy is that it has been in force at least five (5) years on the date the Special Enhanced Life Income commences. The Eligibility Requirements for the Annuitant are the following. 1. The Annuitant must be a U.S. resident. 2. The Annuitant must be at least fifty-five (55) years old and no more than ninety (90) years old on the Commencement Date. 3. We must receive proof satisfactory to Us that the Annuitant is unable to perform, without Substantial Assistance from another individual, at least two (2) of the six (6) Activities of Daily Living (ADLs ) defined above. This inability to perform the ADLs must be due to a permanent loss of functional capacity, and should We choose to use an independent health care professional (see How to Elect a Special Enhanced Life Income later in this Part) that person must agree and document that the loss is expected to be permanent. Special Enhanced Life Income Payment Options (Option 4) Payments depend on the life of the Annuitant. The monthly income for each $1,000 applied will not be less than those shown in Table 4. We will pay the monthly income to the named person for the certain period selected and then for as long as the Annuitant is alive. The money applied under the Special Enhanced Life Income Option cannot be withdrawn once payments begin. The first payment is due on the Commencement Date, but We may take up to thirty (30) days for accounting and administration before We make the first payment. Payments after the first are due on the same day of the month as the Commencement Date. Monthly Income payments are illustrated, but other frequencies of payments may be available. The following Special Enhanced Life Income Payment Options are available. 4(a) Payments for Life Only We will make equal monthly payments for the lifetime of the Annuitant. Payments stop when the Annuitant dies. 4(b) Payments for Life with Thirty (30) Months Guaranteed We will make equal monthly payments for 30 months and then for as long as the Annuitant is alive. 4(c) Payments for Life with Sixty (60) Months Guaranteed We will make equal monthly payments for 60 months and then for as long as the Annuitant is alive. 4(d) Payments for Life with One Hundred Twenty (120) Months Guaranteed We will make equal monthly payments for 120 months and then for as long as the Annuitant is alive. Form No. 7954-PA Page 16 The values in Table 4 are based on the Annuitant's age (nearer birthday) on the Commencement Date. We may require proof of age. The values in this table are based on interest guaranteed at a 1 % annual effective rate and a substandard a2000 Individual Annuity Mortality Table with a 1% improvement per year for fifteen years after election. Table 4 - Special Enhanced Life Income Payments (Per $1,000) If the Annuitant is Male If the Annuitant is Fermate Age 4(a) 4(b) 4(c) 4(d) 4(a) 4(b) 4(c) 4(d) Life Life with Life with Life with Life Life with Life with Life with Only 30 Mos. 60 Mos. 120 Mos. Only 30 Mos. 60 Mos. 120 Mos. 55 7.03 6.92 6.65 5.83 5.25 5.21 5.10 4.73 56 7.15 7.04 6.75 5.90 5.34 5.30 5.18 4.79 57 7.28 7.16 6.86 5.97 5.44 5.39 5.27 4.86 58 7.41 7.29 6.97 6.04 5.53 5.48 5.35 4.92 59 7.55 7.42 7.09 6.11 5.62 5.57 5.43 4.98 60 7.71 7.57 7.22 6.19 5.72 5.67 5.52 5.04 61 7.88 7.74 7.36 6.26 5.82 5.76 5.60 5.10 62 8.06 7.90 7.50 6.34 5.92 5.86 5.69 5.16 63 8.24 8.08 7.64 6.41 6.01 5.95 5.77 5.22 64 8.43 8.26 7.78 6.48 6.11 6.04 5.85 5.27 65 8.63 8.43 7.93 6.55 6.20 6.13 5.94 5.33 66 8.83 8.61 8.06 6.62 6.30 6.23 6.02 5.39 67 9.02 8.78 8.19 6.68 6.39 6.31 6.10 5.45 68 9.19 8.94 8.31 6.74 6.49 6.40 6.18 5.50 69 9.35 9.09 8.42 6.79 6.58 6.49 6.26 5.56 70 9.50 9.22 8.52 6.84 6.67 6.58 6.34 5.63 71 9.63 9.33 8.61 6.89 6.77 6.67 6.42 5.69 72 9.75 9.44 8.70 6.94 6.87 6.77 6.51 5.76 73 9.87 9.55 8.80 6.98 6.97 6.87 6.60 5.84 74 10.00 9.67 8.89 7.03 7.08 6.98 6.71 5.93 75 10.15 9.82 9.01 7.09 7.21 7.10 6.82 6.02 76 10.35 9.99 9.14 7.15 7.36 7.25 6.96 6.13 77 10.54 10.16 9.26 7.21 7.52 7.41 7.11 6.25 78 10.72 10.32 9.38 7.27 7.71 7.59 7.28 6.37 79 10.90 10.48 9.50 7.33 7.92 7.80 7.47 6.51 80 11.08 10.64 9.63 7.39 8.17 8.05 7.70 6.67 81 11.28 10.82 9.77 7.46 8.50 8.36 7.98 6.83 82 11.48 11.00 9.91 7.54 8.86 8.70 8.28 7.00 83 11.70 11.20 10.07 7.62 9.26 9.08 8.61 7.17 84 11-95 11.43 10.26 7.70 9.71 9.51 8.97 7.33 85 12.25 11.71 10.47 7.79 10.23 10.00 9.36 7.50 86 12.64 12.05 10.72 7.89 10.85 10.57 9.80 7.66 87 13.06 12.42 10.99 7.98 11.52 11.17 10.24 7.81 88 13.53 12.83 11.28 8.08 12.24 11.81 10.68 7.94 89 14.06 13.30 11.60 8.17 13.01 12.47 11.14 8.07 90 14.69 13.85 11.95 8.26 13.83 13.17 11.58 8.18 Amounts Too Small If payments would be less than $20, We may change the frequency of payments or pay the benefits in cash. Form No. 7954-PA Page 17 Limitations and Exclusions The requirement of the need for Substantial Assistance shall not have been met if that need was: 1. caused by any war or any act of war (whether declared or undeclared); or 2. caused by participation in a felony, riot, or insurrection; or 3. intentionally self-inflicted; or 4. required as a result of alcoholism or drug addiction (unless the addiction was the result of administration of the drugs as part of a legitimate treatment by a licensed physician). If You choose to apply less than the full value of this Policy to provide a Special Enhanced Life Income, the annualized amount of the payments must be at least $1,000.00. You agree that We must be notified in a timely fashion of the Annuitant's death and that the responsible individuals must return any payments made after the date of the Annuitant's death not guaranteed by the option chosen. The Annuitant must be available in the United States prior to the Commencement Date and at least once every twelve (12) months following the Commencement Date to prove continued life status. If the Annuitant is not available during this period, We will assume the Annuitant is not living and will stop payments after the guaranteed period, if any, under the provisions of this Part of the Policy. If this happens and the Annuitant later proves his or her continued life status in the United States, We will pay any payments that were not made in a lump sum and commence subsequent payments. How to Elect a Special Enhanced Life Income If You believe the requirements for the Special Enhanced Life Income are met, You can notify Us by contacting Us in writing at the address on the Policy cover. You should include: 1. Your Policy Number (see Data Pages); 2. Your name; 3. the Annuitant's name, if different; 4. the Activities of Daily Living with which the Annuitant needs Substantial Assistance; and 5. the nature of the Annuitant's need for Substantial Assistance. In order to determine whether You are eligible for Special Enhanced Life Income: 1. We have the right to have the Annuitant examined by an independent health care professional contracted by Us to provide such services at Our expense, and We have the right to conduct an on-site assessment. 2. The Annuitant and/or the Annuitant's legally-qualified representative must cooperate with Us so that the independent health care professional can obtain satisfactory proof from the Annuitant, the Annuitant's physician(s), the Annuitant's care-giver(s), and/or other persons familiar with the Annuitant's condition. 3. We may require and We must be given access to the Annuitant's medical and/or care-giver records to obtain information about the Annuitant's condition. After We have received all information We deem necessary, including information We request from You and all information We request or seek in the above three instances, We will approve or deny Your request for Special Enhanced Life Income as soon as reasonably possible. Within ten (10) days of having received all necessary information, We will send You written notice of Our decision or of Our need for additional time and the reason for that need. At the end of every subsequent forty-five (45) days, until We approve or deny Your request for Special Enhanced Life Income, We will send You notice of Our need for additional time and the reason for that need. Form No. 79S4-PA Page 18 If We deny the eligibility for Special Enhanced Life Income, We will review Our decision if You ask that We do so, in writing, within sixty (60) days of receiving Our decision to deny. Your request should provide Us the following: 1. the reason You disagree with Our decision; 2. facts and/or factors You believe We should consider in Our review; and 3. whom We may contact (please include names and complete contact information) to gather any additional pertinent information regarding the Annuitant's need for Substantial Assistance. Within sixty (60) days of the day We receive Your request, We will review the denial and make a final decision. Our final decision will be in writing and, if it is a denial, We will include Our specific reasons for the denial and make available all information directly relating to such denial. At any time prior to the Commencement Date, You may revoke Your election. Form No. 7954-PA Page 19 GUARANTEED LIFETIME WITHDRAWAL BENEFIT RIDER Life Insurance Company of the Southwest (LSW) • www.lifeofsouthwest.com 1300 West Mockingbird Lane • Dallas, Texas 75247-4921 • Customer Service 800-579-2878 This Guaranteed Lifetime Withdrawal Benefit Rider (Rider) provides certain withdrawals that are guaranteed to be available for the Annuitant's lifetime. The withdrawals are made from the Policy to which this Rider is attached. If only payments of the withdrawals guaranteed by this Rider are made, Guaranteed Withdrawal Payments will continue to be made for the lifetime of the Annuitant notwithstanding that the values of the Policy are reduced to zero. Excess withdrawals, as defined in this Rider, will reduce and may eliminate future guaranteed withdrawal payments. All benefits are subject to the terms of this Rider. Please read Your Policy and this Rider carefully. THIS RIDER MAY BE CANCELLED OR TERMINATED ONLY UNDER LIMITED CIRCUMSTANCES. PLEASE REFER TO PART 7: TERMINATION AND PART 8: CANCELLATION. This Rider may use terms that are defined in the Policy; when this occurs, the definition supplied in the Policy applies to this Rider. Other terms may be defined in this Rider, and those terms are bold-faced when they are defined. Terms defined in the Rider Coverage Pages are used in subsequent sections of this Rider. Please refer back to these Rider Coverage Pages when reading Your Rider: Base Policy Number 681235X Rider Issue Date September 21, 2008 Rider Issue Age 71 Accumulation Years 20 Years Accumulation Rollup Rate 7.00% Annual Rider Charge Rate Rider Years 1 -10 0.40% Annual Rider Years 11 and after 0.50% Annual Waiting Period 1 Year Cancellation Period 5 Years Income Benefit Adjustment Dates September 21, 2013 September 21, 2018 September 21, 2023 September 21, 2028 Benefit Age 60 Enhanced Benefit Waiting Period 5 Years Form No. 7960-PA Rider Coverage Page 1 of 2 GUARANTEED WITHDRAWAL PERCENTAGE TABLE Attained Single Lie (Two Lives) Age Guaranteed Enhanced joint 60 5.00 8.00 4.50 61 5.10 8.10 4.60 62 5.20 8.20 4.70 63 5.30 8.30 4.80 64 5.40 8.40 4.90 65 5.50 8.50 5.00 66 5.60 8.60 5.10 67 5.70 8.70 5.20 68 5.80 8.80 5.30 69 5.90 8.90 5.40 70 6.00 9.00 5.50 71 6.10 9.10 5.60 72 6.20 9.20 5.70 73 6.30 9.30 5.80 74 6.40 9.40 5.90 75 6.50 9.50 6.00 76 6.60 9.60 6.10 77 6.70 9.70 6.20 78 6.80 9.80 6.30 79 6.90 9.90 6.40 80 7.00 10.00 6.50 81 7.10 10.10 6.60 82 7.20 10.20 6.70 83 7.30 10.30 6.80 84 7.40 10.40 6.90 85 7.50 10.50 7.00 86 7.60 10.60 7.10 87 7.70 10.70 7.20 88 7.80 10.80 7.30 89 7.90 10.90 7.40 90+ 8.00 11.00 7.50 Form No. 7960-PA Rider Coverage Page 2 of 2 TABLE OF CONTENTS PAGE GUARANTEED LIFETIME WITHDRAWAL BENEFIT RIDER 1 PART I: THE BENEFITS 1 PART 2: THE RIDER CHARGE Rider Charge During the Accumulation Period 2 Rider Charge During the Withdrawal Period 2 PART 3: GENERAL PROVISIONS Annuitant 2 Attained Age 2 PART 4: GUARANTEED WITHDRAWAL BENEFIT Start of Benefit Payments 2 Guaranteed Withdrawal Payment 3 Income Base 3 Guaranteed Withdrawal Percentage 3 Withdrawals During the Withdrawal Period 3 Impact of Excess Withdrawals 4 Impact of Withdrawals During the Withdrawal Period on the Policy's Accounts 4 Guaranteed Withdrawal Payment Step-Up (Increases During Withdrawal Period) 4 Joint Withdrawal Option 4 Enhanced Benefit S PART S: SPOUSAL CONTINUATION If You Die During the Accumulation Period 6 If You Die During the Withdrawal Period 6 PART 6: CONTINGENT ANNUITANT 6 PART 7: TERMINATION 7 PART H: CANCELLATION 7 Form No. 7960-PA - I - GUARANTEED LIFETIME WITHDRAWAL BENEFIT RIDER Life Insurance Company of the Southwest (LSW) • www.lifcofsouthwest.com 1300 West Mockingbird Lane • Dallas, Texas 75247-4921 • Customer Service 800-579-2878 PART I: THE BENEFITS To access the benefits under this Rider, You must make the request in writing. Prior to the date We make the first payment under this Guaranteed Lifetime Withdrawal Benefit, the Rider is said to be in the Accumulation Period. Withdrawals during the Accumulation Period are: governed by the terms of the Policy and not this Rider; and will reduce the Guaranteed Withdrawal Payment that will be available to You once You start the Guaranteed Withdrawal Payments. When You first request a withdrawal under this Rider, We determine the maximum annual benefit available, termed the Guaranteed Withdrawal Payment (see Guaranteed Withdrawal Payment, Part 4). After We make the first benefit payment, the Policy is said to be in the Withdrawal Period. The annual amount of withdrawal benefit You request for any Policy Year during the Withdrawal Period may be no larger than the Guaranteed Withdrawal Payment. You may have all or any portion of the Guaranteed Withdrawal Payment paid in annual, semi-annual, quarterly, or monthly installments (Scheduled Withdrawal Payment). The amount of the semi-annual, quarterly, or monthly installment is the annual payment divided by two (2), four (4), or twelve (12) respectively. You may start, stop, or change a Scheduled Withdrawal Payment at any time during the Withdrawal Period. If You change a Scheduled Withdrawal Payment, it cannot be greater than the Guaranteed Withdrawal Payment for the applicable Policy Year. The Withdrawal Period ends when the Rider terminates (see Part 7: Termination). The Accumulation Period does not resume when a Scheduled Withdrawal Payment is stopped. Each Scheduled Withdrawal Payment and other withdrawals You request from the Policy will reduce the Policy's Accumulation Value and Policy Value, as defined in the Policy. If a Scheduled Withdrawal Payment results in both of these values being zero, then: • We will continue to make the Scheduled Withdrawal Payment until the death of the Annuitant if the terms of this Rider so provide; and • all other riders attached to the Policy will terminate. You have the right to withdraw any amount so provided by the Policy. Excess Withdrawals only apply to certain withdrawals after Guaranteed Withdrawal Payments have begun. Each withdrawal will be an Excess Withdrawal to the extent it and the sum of previous withdrawals in that Policy Year exceed the Guaranteed Withdrawal Payment for that Policy Year. Withdrawals taken in a Policy year before the start of the Withdrawal Period will not be considered in the sum of previous withdrawals. If any portion of a withdrawal is an Excess Withdrawal, such Excess Withdrawal will reduce or may eliminate future Guaranteed Withdrawal Payments according to the provisions hereof (see Impact of Excess Withdrawals, Part 4). PART 2: THE RIDER CHARGE We make an annual charge, called the Rider Charge, for this Rider. We will deduct the Rider Charge from the Policy Value and from all Interest Accounts in proportion to their values. Form No. 7960-PA Page 1 The first Rider Charge is made on the first Policy anniversary after the Rider Issue Date with additional Rider Charges made annually thereafter while this Rider is in force. If the Rider is issued on a Policy anniversary after the Policy's issue date, then the first Rider Charge will occur on the Rider Issue Date. Rider Charge During the Accumulation Period The Rider Charge during the Accumulation Period is determined separately each time the Rider Charge is assessed and equals (a) times (b) where: (a) is the Rider Charge Rate found on Rider Coverage Page 1 and varying by the number of Rider Years this Rider has been in force; and (b) is the Policy's Accumulation Value on the applicable Policy anniversary date determined after any interest has been credited to the Policy. Rider Charge During the Withdrawal Period The Rider Charge during the Withdrawal Period is determined separately each time the Rider Charge is assessed and equals (a) times (b) where: (a) is the Rider Charge Rate in effect at the beginning of the Withdrawal Period, continuing unchanged until this Rider terminates; and (b) is the Policy's Accumulation Value on the applicable Policy anniversary date determined after any interest has been credited to the Policy. PART 3: GENERAL PROVISIONS This Rider is part of the Policy to which it is attached. The Rider is subject to all terms, conditions, and provisions contained in the Policy. Where the provisions of this Rider are inconsistent with the provisions of the Policy, including the provisions of any other riders or endorsements, the provisions of this Rider will control. Coverage under this Rider begins on the Rider Issue Date, shown on Rider Coverage Page 1. This Rider has no cash value or loan value. Annuitant Annuitant means the Annuitant as defined in the Policy, unless the joint Withdrawal Option is elected under this Rider, in which case Annuitant means both the Annuitant and the Joint Annuitant together (see joint Withdrawal Option, Part 4). Attained Age A person's Attained Age on any date is that person's age as of his or her last birthday on that date. PART 4.: GUARANTEED WITHDRAWAL BENEFIT This section covers how, when, and the extent to which Rider benefits are paid. We will make all payments directly to You unless You direct us otherwise. Start of Benefit Payments We will make the first Scheduled Withdrawal Payment after You make a request in writing provided that, on the date of the first Scheduled Withdrawal Payment: • the Waiting Period, shown on Rider Coverage Page 1 and measured from the Rider Issue Date, has expired; and • the Annuitant's Attained Age is at least as great as the Benefit Age shown on Rider Coverage Page 1. Form No. 7960-PA Page 2 The Withdrawal Period cannot begin until You repay all Policy loans, if applicable. You may not take any Policy loans after the Withdrawal Period begins. Guaranteed Withdrawal Payment The Guaranteed Withdrawal Payment is determined at the beginning of the Withdrawal Period and at the beginning of each Policy Year thereafter. It represents the maximum amount that can be paid in the applicable Policy Year without any amount being treated as an Excess Withdrawal. The Guaranteed Withdrawal Payment on the date the Withdrawal Period begins equals (a) times (b), where: (a) is the greater of, on the date the Withdrawal Period begins, the Policy's Accumulation Value or the Income Base; and (b) is the Guaranteed Withdrawal Percentage, taken from the Guaranteed Withdrawal Percentage Table on Rider Coverage Page 2, on the date the Withdrawal Period begins. Income Base The Income Base is a calculated amount used solely in the determination of the amount of the Guaranteed Withdrawal Payment. It is established on the Rider Issue Date as being equal to the Policy's Accumulation Value. The Income Base increases after the Rider Issue Date at the Accumulation Rollup Rate, shown on Rider Coverage Page 1, until the earlier of the end of the Accumulation Period or the expiry of the Accumulation Years, shown on Rider Coverage Page 1. Thereafter, there is no further increase in the Income Base, except as defined below. During the Accumulation Period: • We will increase the Income Base by any amount other than credited interest added to the Accumulation Value; and • We will reduce the Income Base any time a withdrawal is made from the Accumulation Value, reducing it in the same proportion as the Accumulation Value is reduced. During the Accumulation Period We will increase the Income Base to equal the Accumulation Value, if larger, on each of the Income Benefit Adjustment Dates shown on Rider Coverage Page 1. Guaranteed Withdrawal Percentage The value from the Guaranteed Withdrawal Percentage Table used for all Rider purposes is determined by the Annuitant's Attained Age on the appropriate date. The column used is the Single-Life Guaranteed column unless the Joint Withdrawal Option is chosen (see joint Withdrawal Option, Part 4), in which case the (Two Lives) Joint column is used. If the joint Withdrawal Option is chosen, the Guaranteed Withdrawal Percentage is based on the attained age of the younger of the Joint Annuitants on the appropriate date. Withdrawals During the Withdrawal Period You may request withdrawals at any time. During the Withdrawal Period, We first treat a withdrawal request as being for a Guaranteed Withdrawal Payment. Any withdrawal during a Policy Year that exceeds the greater of the Required Minimum Distribution, defined below, or the Guaranteed Withdrawal Payment for such Policy Year will be an Excess Withdrawal. During each full Policy Year starting on or after the beginning of the Withdrawal Period, withdrawals are not subject to Withdrawal Charges to the extent their cumulative total during a Policy Year does not exceed the greatest of (Maximum Free Withdrawal): • the Guaranteed Withdrawal Payment for that Policy Year (see Guaranteed Withdrawal Payment, Part 4); or • the free withdrawal amount specified in the Policy for that Policy Year (Free Withdrawal Amount); or • an amount equal to the Required Minimum Distribution for that Policy Year. The Required Minimum Distribution is determined annually in accordance with applicable tax law and regulation in effect at the time of the required distribution taken, determined as if the Policy were the only annuity owned by the Owner (Required Minimum Distribution). Form No. 7960-PA Page 3 The Accumulation Value will be reduced by Withdrawal Charges to the extent the sum of all withdrawal(s), including Scheduled Withdrawal Payments, in a Policy Year exceed the Maximum Free Withdrawal. If the Withdrawal Period begins on any date that is not a Policy anniversary, the Accumulation Value will incur Withdrawal Charges to the extent any withdrawals, in the remainder of that Policy Year, including any portion of a Scheduled Withdrawal Payment, exceed the Free Withdrawal Amount. Im act of Excess Withdrawals To t e extent an Excess Withdrawal is made during the Withdrawal Period: the Guaranteed Withdrawal Payment for subsequent Policy Years will be reduced by the ratio of the Excess Withdrawal (including any Withdrawal Charge) to the Accumulation Value prior to the withdrawal; and the Excess Withdrawal (also see Part 1: The Benefits) may be subject to Withdrawal Charges as defined in the Policy (see Withdrawals During the Withdrawal Period, Part 4). Impact of Withdrawals During the Withdrawal Period on the Policy's Accounts Interest is credited to the Indexed Accounts of the Policy only on Policy anniversaries. Interest is credited to the Declared Account daily. A Scheduled Withdrawal Payment is first made from the Declared Interest Account, to the extent there is sufficient value in the Declared Interest Account. Any insufficiency is then taken from the Indexed Interest Accounts in proportion to their values. On each Policy anniversary during the Withdrawal Period, after interest is credited, We will determine if the value of the Declared Interest Account is less than the Guaranteed Withdrawal Payment. If so, an amount will be transferred to the Declared Interest Account to increase its value to the amount of the Guaranteed Withdrawal Payment. The amount transferred will be transferred from all Indexed Interest Accounts in proportion to their values. If the cumulative value of the Indexed Interest Accounts is insufficient to increase the Declared Interest Account to the Guaranteed Withdrawal Payment, all of the values of the Indexed Interest Accounts will be transferred to the Declared Interest Account. Guaranteed Withdrawal Payment Step-Up (Increases During Withdrawal Period) On each Policy anniversary during the Withdrawal Period, the Guaranteed Withdrawal Payment is increased to the result of (a) times (b), where: (a) is the Accumulation Value on the Policy anniversary after interest has been credited; and (b) is the Guaranteed Withdrawal Percentage, taken from the Guaranteed Withdrawal Percentage Table on Rider Coverage Page 2, using the Annuitant's attained age at the time of such Policy anniversary. Joint Withdrawal Option You may choose, at the beginning of the Withdrawal period, to have the Guaranteed Withdrawal Payment based on the lives of the Annuitant and the Annuitant's married spouse (Joint Annuitants), provided the Attained Ages of each of the Joint Annuitants is equal to or older than the Benefit Age. If You so elect, the beneficiary of the Policy shall be the spouse of the Annuitant, notwithstanding whether the application for the Policy provides otherwise. The Guaranteed Withdrawal Payment is guaranteed to be available until the death of the survivor of the joint Annuitants. All calculations of the Guaranteed Withdrawal Payment are made in the same manner as those for a single annuitant except that the entry from the Guaranteed Withdrawal Percentage Table is taken from the column for (Two Lives) Joint. The Enhanced Benefit is not available if the joint Withdrawal Option is chosen. Form No. 7960-PA Page 4 THE ENHANCED BENEFIT AMOUNT IS NOT AVAILABLE UNLESS CERTAIN REQUIREMENTS ARE MET. THE ANNUITANT MUST BE A U.S. RESIDENT ON THE APPROVAL DATE AND THE ANNUITANT'S ATTAINED AGE MUST BE AT LEAST THE BENEFIT AGE. WE MUST RECEIVE SATISFACTORY PROOF THAT THE ANNUITANT IS UNABLE TO PERFORM, WITHOUT SUBSTANTIAL ASSISTANCE, AT LEAST TWO (2) OF THE SIX (6) ACTIVITIES OF DAILY LIVING (ADLSs) AND THE RIDER MUST HAVE BEEN IN FORCE FOR AT LEAST THE ENHANCED BENEFIT WAITING PERIOD. PLEASE REFER TO THE ENHANCED BENEFIT BELOW FOR EXACT REQUIREMENTS AND DETAILS. Enhanced Benefit If both the Annuitant and this Rider meet the Eligibility Requirements detailed below, the Guaranteed Withdrawal Payment will be increased to the Enhanced Benefit Amount, also defined below, if larger. The Rider Eligibility Requirement means the Rider must have been in force on the Approval Date for at least the Enhanced Benefit Waiting Period. The Enhanced Benefit Waiting Period, shown on Rider Coverage Page 1, begins on the Rider Issue Date. The Approval Date is the date We approve all proofs required by this Part. Eligibility Requirements The Eligibility Requirements for the Annuitant are the following: 1. The Annuitant must be a U.S. resident on the Approval Date. 2. The Annuitant's Attained Age must be at least the Benefit Age, shown on Rider Coverage Page 1. 3. We must receive proof satisfactory to Us that the Annuitant is unable to perform, Without Substantial Assistance, at least two (2) of the six (6) Activities of Daily Living (ADLs). This inability to perform the ADLs must be due to a permanent loss of functional capacity. Should We choose to use an independent health care professional to assist Us in the assessment of whether the requirements of this item are met, the Annuitant must agree to cooperate in that assessment. The Activities of Daily Living are: 1. Bathing: washing oneself by sponge bath or in either a tub or shower, including the tasks of getting into or out of the shower; 2. Dressing: putting on and taking off all items of clothing and any required braces, fasteners, or artificial limbs; 3. Transferring: moving into and out of a bed, chair, or wheelchair; 4. Toileting: getting to and from the toilet, getting on and off the toilet, and performing related personal hygiene; 5. Continence: ability to maintain control of bowel and bladder function or, when not able to maintain control of bowel or bladder function, ability to perform related personal hygiene (including caring for catheter or colostomy bag); 6. Eating: feeding oneself by getting food into the body from a receptacle (such as a cup, plate, or table) or by feeding tube or intravenously. Without Substantial Assistance means: 1. without the physical assistance of another person, the Annuitant would be unable to perform the Activity of Daily Living; or 2. the presence of another person within arm's reach of the Annuitant is necessary to prevent, by physical intervention, injury to the Annuitant while the Annuitant performs the Activity of Daily Living. Form No. 7960-PA Page 5 Enhanced Benefit Amount The Enhanced Benefit Amount is calculated taking into account whether the Withdrawal Period has begun. 1. If the Approval Date is on or before the date the Withdrawal Period begins, the Enhanced Benefit Amount equals (a) times (b), where: (a) is the greater of the Policy's Accumulation Value or the Income Base on the date the Withdrawal Period begins; and (b) is the Guaranteed Withdrawal Percentage, taken from the Single-Life Enhanced column of the Guaranteed Withdrawal Percentage Table on Rider Coverage Page 2, on the date the Withdrawal Period begins. 2. If the Approval Date is after the Withdrawal Period has begun, the Enhanced Benefit Amount equals (a) times (b), where: (a) is the Policy's Accumulation Value on the Approval Date; and (b) is the Guaranteed Withdrawal Percentage, taken from the Single-Life Enhanced column of the Guaranteed Withdrawal Percentage Table on Rider Coverage Page 2, on the Approval Date. In either case, the Guaranteed Withdrawal Percentage is determined by the Annuitant's Attained Age on the later of the Approval Date or the date the Withdrawal Period begins. PART S : SPOUSAL CONTINUATION If You Die During the Accumulation Period If You die during the Accumulation Period and Your spouse becomes the Annuitant of the Policy, all Rider benefits will be determined as if Your spouse had been the Annuitant since the Rider was issued. If You Die During the Withdrawal Period If You die during the Withdrawal Period and Your spouse becomes the Annuitant of the Policy: 1. Your spouse may withdraw each Policy Year, without incurring Withdrawal Charges, an amount equal to the larger of- • the Guaranteed Withdrawal Payment at the time of Your death; or • the Free Withdrawal Amount; or • the Required Minimum Distribution. Your spouse may do so until both the Accumulation Value and the Policy Value are zero. When both of these values become zero, the Policy and this Rider will terminate. 2. The Rider Charges cease upon Your death, and no benefits are provided by this Rider other than those identified in item 1 above. PART 6: CONTINGENT ANNUITANT If the Contingent Annuitant becomes the Annuitant, this Rider will continue as follows: • If this Rider is in the Accumulation Period, all Rider benefits will be based on the successor Annuitant; or • If this Rider is in the Withdrawal Period, this Rider will terminate and no further charges will be made for it, and no further withdrawal benefits will be paid. Form No. 7960-PA Page 6 PART 7: TERMINATION This Rider will automatically terminate when: • the Policy terminates, except if this Rider is in the Withdrawal Period when the Policy would otherwise terminate, in which case the Policy and the Rider will remain in force and the withdrawal benefits will continue until the death of the Annuitant or the latter death of the Joint Annuitants, at which time the Policy and Rider terminate; or • You cancel this Rider. PART 8: CANCELLATION You may cancel this Rider after completion of the Cancellation Period shown on Rider Coverage Page 1. If You do so, no future benefits will be payable under this Rider, and no future Rider Charges will be made. SIGNED FOR LIFE INSURANCE COMPANY OF THE SOUTHWEST q?4e,e, 4?10?7W Secretary Form No. 7960-PA Page 7 INDIVIDUAL RETIREMENT ANNUITY (IRA) ENDORSEMENT Life Insurance Company of the Southwest (LSW) • www.lifeofsouthwest.com 1300 West Mockingbird Lane • Dallas, Texas 75247-4921 • Customer Service 800-579-2878 This Policy/Certificate to which this endorsement is attached is established for the exclusive benefit of the Owner or the Owner's beneficiaries. While this endorsement is in effect, the Owner must be: 1. the Annuitant; 2. the Payee; and 3. one of the chosen human beings in any Payment Option which has a life contingency and which is elected by the Owner. 1. Contributions Except in the case of a rollover contribution (as permitted by Internal Revenue Code (IRC) sections 402(c), 402(e)(6), 403(a)(4), 403(b)(8), 403(b)(10), 408(d)(3) and 457(e)(16)) or a contribution made in accordance with the terms of a Simplified Employee Pension Program (a SEP, as described in IRC sec. 408(k)), no contributions will be accepted unless they are in cash, and the total of such contributions shall not exceed: (a) $3,000 for any taxable year beginning in 2002 through 2004; (b) $4,000 for any taxable year beginning in 2005 through 2007; and (c) $5,000 for any taxable year beginning in 2008 and years thereafter. After 2008, the limit will be adjusted by the Secretary of the Treasury for cost-of-living increases under IRC sec. 219(b)(5)(C). Such adjustments will be in multiples of $500. In the case of an individual who is 50 or older, the annual cash contribution limit is increased by: (a) $500 for any taxable year beginning in 2002 through 2005; and (b) $1,000 for any taxable year beginning in 2006 and years thereafter. No contributions will be accepted under a SIMPLE IRA plan established by any employer pursuant to IRC sec. 408(p). Also, no transfer or rollover of funds attributable to contributions made by a particular employer under its SIMPLE IRA plan will be accepted from a SIMPLE IRA, that is, an IRA used in conjunction with a SIMPLE IRA plan, prior to the expiration of the 2-year period beginning on the date the Owner first participated in that employer's SIMPLE IRA plan. 2. Distributions to the Owner (a) Notwithstanding any provision of this IRA to the contrary, the distribution of the Owner's interest in the IRA shall be made in accordance with the requirements of IRC sec. 408(b)(3) and the regulations thereunder, the provisions of which are herein incorporated by reference. If distributions are not made in the form of an annuity on an irrevocable basis (except for acceleration), then distribution of the interest in the IRA (as determined under paragraph 3(c), below) must satisfy the requirements IRC sec 408(a)(6) and the regulations thereunder, rather than paragraphs (b), (c), and (d) below and the Distributions After the Owner's Death provision. (b) The entire interest of the individual for whose benefit the contract is maintained will commence to be distributed no later than the first day of April following the calendar year in which such individual attains age 70-1/2 (the required beginning date) over (a) the life of such individual or the lives of such individual and his or her designated beneficiary or (b) a period certain not extending beyond the life expectancy of such individual or the joint and last survivor expectancy of such individual and his or her designated beneficiary. Payments must be made in periodic payments at intervals of no longer than 1 year and must be either non-increasing or they may increase only as provided in Q&A's-1 and -4 of sec. 1.401(a)(9)-6T of the Temporary Income Tax Regulations. In addition, any distribution must satisfy the incidental benefit requirements specified in Q&A-2 of sec. 1.401(a)(9)-6T. Form No. 7814-PA (c) The distribution periods described in paragraph (b), above, cannot exceed the periods specified in sec. 1.401(a)(9)-6T of the Temporary Income Tax Regulations. (d) The first required payment can be made as late as April 1 of the year following the year the individual attains age 70-1/2 and must be the payment that is required for one payment interval. The second payment need not be made until the end of the next payment interval. 3. Distributions After the Owner's Death (a) Death on or After Required Distributions Commence. If the individual dies on or after the required distributions commence, the remaining portion of his or her interest will continue to be distributed under the contract option chosen. (b) Death Before Required Distributions Commence. If the individual dies before required distributions commence, his or her entire interest will be distributed at least as rapidly as follows: 1) If the designated Beneficiary is someone other than the individual's surviving spouse, the entire interest will be distributed, starting by the end of the calendar year following the calendar year of the individual's death, over the remaining life expectancy of the designated Beneficiary, with such life expectancy determined using the age of the Beneficiary as of his or her birthday in the year following the year of the individual's death, or, if elected, in accordance with paragraph (b)(3), below. 2) If the individual's sole designated Beneficiary is the individual's surviving spouse, the entire interest will be distributed, starting by the end of the calendar year following the calendar year of the individual's death (or by the end of the calendar year in which the individual would have attained age 70-1/2, if later), over such spouse's life, or, if elected, in accordance with paragraph (b)(3), below. If the surviving spouse dies before required distributions commence to him or her, the remaining interest will be distributed, starting by the end of the calendar year following the calendar year of the spouse's death, over the spouse's designated Beneficiary's remaining life expectancy determined using such Beneficiary's age as of his or her birthday in the year following the death of the spouse, or, if elected, will be distributed in accordance with paragraph (b)(3), below. If the surviving spouse dies after required distributions commence to him or her, any remaining interest will continue to be distributed under the contract option chosen. 3) If there is no designated Beneficiary, or if applicable by operation of paragraph (b)(1) or (b)(2), above, the entire interest will be distributed by the end of the calendar year containing the fifth anniversary of the individual's death (or of the spouse's death in the case of the surviving spouse's death before distributions are required to begin under paragraph (b)(2), above). 4) Life expectancy is determined using the Single Life Table in Q&A-1 of sec. 1.401(a)(9)-9 of the Income Tax Regulations. If distributions are being made to a surviving spouse as the sole designated Beneficiary, such spouse's remaining life expectancy for a year is the number in the Single Life Table corresponding to such spouse's age in the year. In all other cases, remaining life expectancy for a year is the number in the Single Life Table corresponding to the Beneficiary's age in the year specified in paragraph (b)(1) or (b)(2) and reduced by 1 for each subsequent year. (c) The interest of the IRA includes the amount of any outstanding rollover, transfer and re-characterization under Q&A's-7 and -8 of sec. 1.408-8 of the Income Tax Regulations and the actuarial value of any other benefits provided under the IRA, such as guaranteed death benefits. (d) For purposes of paragraphs (a) and (b) above, required distributions are considered to commence on the individual's required beginning date or, if applicable, on the date distributions are required to begin to the surviving spouse under paragraph (b)(2), above. However, if distributions start prior to the applicable date in the preceding sentence, on an irrevocable basis (except for acceleration) under an annuity contract meeting the requirements of sec. 1.401(a)(9)-6T of the Temporary Income Tax Regulations, then required distributions are considered to commence on the annuity starting date. (e) Surviving Spouse Election. If the sole designated Beneficiary is the individual's surviving spouse, the Form No. 7814-PA spouse may elect to treat the IRA as his or her own IRA. This election will be deemed to have been made if such surviving spouse makes a contribution to the IRA or fails to take required distributions as a Beneficiary. 4. Nonforfeitability The interest of the Owner is nonforfeitable. 5. Transferability Restrictions This Policy/Certificate is not transferable by the Owner to anyone except to us. This Policy/Certificate may not be sold, encumbered, or assigned to anyone except to us. 6. Limitations on Withdrawals We will not pay a Withdrawal Benefit if the Owner is under age 59-1/2 and not disabled unless the intended use of the funds is set forth in the withdrawal request. 7. General Terms References to IRC sections and to Income Tax Regulations are intended also to reference those items as amended and supplemented. We may amend the terms of this Policy/Certificate without the prior consent of the Owner if such amendment: (a) applies to all contracts with this endorsement; and (b) is in response to changes to federal law. If there is a change to the federal law LSW will send the Owner an Amendment form. The Owner will be given the right to accept or reject the Amendment. Any refund of premiums (other than those attributable to excess contributions) will be applied, before the close of the calendar year following the year of the refund, toward the payment of future premiums or the purchase of additional benefits. We will send annual calendar year reports to the Owner concerning the status of this Policy/Certificate and such information concerning required minimum distributions as is prescribed by the Commissioner of Internal Revenue. The effective date of this Policy/Certificate amendment for Individual Retirement Annuity is the effective date of the Policy/Certificate or January 1, 2002, if later. 9d-eyezz- ex?'"w Secretary Form No. 7814-PA Single Premium Equity-Indexed and Declared Interest Deferred Annuity. Benefits may be calculated based on the movement of an index or stipulated interest rates. Minimum underlying values. Income payments start on the Annuity Date. Death Benefit payable before the Annuity Date. Nonparticipating. LS'W Lice Insurance Company of the Southwesi Form No. 7954-PA IRA DISCLOSURE STATEMENT Life Insurance Company of the Southwest (LSW) • www.lifeofsouthwest.com 1300 West Mockingbird Lane • Dallas, Texas 75247-4921 • Customer Service 800-579-2878 The attached Individual Retirement Annuity Disclosure Statement covers various aspects of establishing an IRA, contributing to an IRA, and receiving distributions from an IRA. This disclosure statement concerns IRA's established for regular and rollover IRA contributions and various forms of Simplified Employee Pension Plans (SEP's) and SIMPLE IRA's established for Savings Incentive Match Plans for Employees (SIMPLE-IRA's). This disclosure statement does not apply to ROTH IRA's or to Coverdell Education Savings Accounts (formerly known as Education IRA's). Revocation: You have the right to revoke your IRA account within 10 days (or such longer period as is prescribed by applicable state law) of the date you receive your IRA annuity contract. If you revoke your IRA, you are entitled to a return of the entire amount contributed. To revoke the IRA, you must either mail or deliver a notice of revocation to the following address: Life Insurance Company of the Southwest 1300 West Mockingbird Lane Dallas, TX 75247-4921 If you send your notice by first class mail, your revocation will be deemed mailed as of the date of the postmark (or if sent by certified or registered mail, the date of certification or registration) if it is so deposited (mailed) in the United States, first class postage prepaid, and properly addressed. We have filed for approval with the Internal Revenue Service, a policy form which is representative of your particular Individual Retirement Annuity. The information in the following pages is provided to you in accordance with the requirements of the Internal Revenue Code (the Code) and Treasury regulations and should be reviewed in conjunction with your Individual Retirement Annuity including the IRA Endorsement (the IRA Annuity) and the Application for your IRA (the Application). The provisions of these documents govern in any instance where the Disclosure Statement is incomplete or appears to conflict. This Disclosure Statement reflects the provisions of the Internal Revenue Code in effect on January 1, 2002. This Disclosure Statement provides a nontechnical summary of the law. Please consult with your tax advisor and refer to IRS Publication 590 for more complete information. Form No. 7818 INDIVIDUAL RETIREMENT ANNUITY DISCLOSURE STATEMENT The following information concerns the rules for a traditional IRA, including an IRA maintained under a simplified employee pension plan (a SEP) and the rules for a SIMPLE IRA maintained under a SIMPLE IRA plan. Different rules, not discussed below, apply to ROTH IRA's and Coverdell Education Savings Accounts (formerly known as Education IRA's). 1. IRA STATUTORY REQUIREMENTS An IRA is an annuity contract established for the exclusive benefit of you and your beneficiaries. Current law requires that your IRA Annuity must be issued by an insurance company and that it meet the following requirements: (a) The IRA Annuity may not be transferred to anyone other than the insurer which issued it. (b) If the IRA Annuity permits more than a single premium payment, the amount of any subsequent premiums are not fixed. (c) The premium for any taxable year cannot exceed the tax year's maximum dollar contribution limit (the dollar limit), unless the contribution is a rollover contribution or an employer contribution to a SEP or a SIMPLE IRA plan. (d) Any refund of premiums will promptly be applied toward the payment of future premiums or the purchase of additional benefits under the IRA Annuity. (e) Your interest in your IRA Annuity is nonforfeitable. (f) Distribution from your IRA Annuity must be in accordance with certain minimum distribution rules, which are explained in Section S below. 2. ELIGIBILITY You may make regular contributions to an IRA if you receive compensation from employment, earnings from self-employment, or alimony, and you have not reached age 70-1/2 by the end of the tax year for which the contribution is made. In addition, if you are married and file a joint tax return, you may make contributions to an IRA for your spouse whether or not your spouse receives compensation. You may make a rollover contribution to an IRA if you have received an eligible rollover distribution (described in 3.(e). below) from an eligible retirement plan or if you have received a distribution from another IRA owned by you from which no other rollover has been made in the preceding 12-month period, and elect rollover treatment within 60 days. Finally, your employer may contribute to your IRA, and if your employer sponsors a SEP, your employer may make contributions to a SEPARA on your behalf. However, if your employer sponsors a SIMPLE IRA plan and establishes a SIMPLE IRA for your benefit under that plan, only your employer may make contributions to that SIMPLE IRA (other than rollover contributions described in section 1(h). below). 3. CONTRIBUTIONS (a) Regular Contributions. You may contribute each year up to the applicable dollar limit or 100% of your compensation, whichever is less, to your IRA. If you have a spouse and file jointly, you may take your joint income, less any contribution by your spouse to an IRA, into account for purposes of the 100% of compensation limit. If your employer contributes directly to your IRA on your behalf, the contribution is treated as compensation paid to you, whether or not the contribution is deductible, unless the contribution is made under a SEP or SIMPLE IRA (see below). Compensation for these purposes means wages, salaries, professional fees, or other amounts derived from or received for personal services actually rendered. It includes earned income from self-employment and alimony or separate maintenance payments includable in income. It does not include pension or annuity payments or deferred compensation. You may not make a regular IRA contribution to a SIMPLE IRA established for your benefit under a SIMPLE IRA plan. Form No. 7818 (b) Dollar Limit. The dollar limit depends on the year for which the contribution is being made: 2002 - 2004 $3,000 2005 - 2007 $4,000 2008 and thereafter $5,000 as adjusted after 2008 for increases in the cost of living in addition, for an individual who attains age 50 before the end of the year, the dollar limit is increased by the following amount: 2002 - 2005 $ 500 2006 and thereafter $1,000 (c) Time for Making Regular Contributions. You may make contributions to your IRA and/or your spousal IRA anytime during a year, or by the due date for filing your tax return for that year (without extensions). No contributions may be made to an IRA for the calendar year in which you reach age 70-1/2 or later years. No contributions to a spousal IRA may be made for years in which your spouse is age 70-1/2 or older. (d) Deductibility. IRA contributions you make to your IRA are fully deductible unless you or your spouse are active participants in certain types of retirement plan programs maintained by your employer. These plans are an employer's qualified retirement plan under Internal Revenue Code (IRC) Section 401(a) or 403(a), a tax-sheltered annuity program under IRC Section 403(b), a governmental retirement plan, a SEP or a SIMPLE IRA plan. If you or your spouse are active participants in such a plan, then your allowable deduction for IRA contributions is reduced or eliminated if your Adjusted Gross Income (AGI) exceeds certain levels. The reduction is in the same proportion as the excess of your AGI over the amount from the following table bears to $10,000 (see IRS Publication 590, available from the IRS website, for a more detailed explanation and a worksheet for calculating the deductible amount). Married Taxpayer Filing ointl Married Taxpayer Filing Singly Any Other Taxpayer 2002 54,000 $0 34,000 2003 60,000 $0 $40,000 2004 $65,000 $0 $45,000 2005 $70,000 $0 $50,000 2006 75,000 0 50,000 2007 and later $80,000 $0 $50,000 (If you file separately and are married but live apart from your spouse at all times during the year, you will be considered to be single when applying the rules regarding deduction limitations.) To the extent that the deductibility of IRA contributions is reduced or eliminated, then nondeductible contributions may be made to your IRA. Earnings on all IRA contributions, whether or not the contributions themselves are deductible, are tax-deferred until receipt. You must designate the amount of nondeductible IRA contributions when filing your tax return for the year. If you overstate the amount of your nondeductible contributions you must pay a $100 penalty, unless you can show that such overstatement was due to reasonable cause. If you fail to report nondeductible IRA contributions you will be subject to a $50 penalty, unless your failure was due to reasonable cause. (e) Rollover Contributions From an Eligible Retirement Plan to Your IRA. Amounts Eligible for Rollover. You may make a rollover contribution to your IRA of some or all of an eligible rollover distribution from an eligible retirement plan. An eligible retirement plan is an employer's qualified retirement plan under internal Revenue Code (IRC) Section 401(a) or 403(a)(an employer plan), a tax-sheltered annuity program under IRC Section 403(b), or an eligible deferred compensation plan, described in IRC Section 457(b) sponsored by a governmental entity. If the distribution is from an eligible retirement plan, the administrator of the plan should be able to tell you what portion of your payment is an eligible rollover distribution. An eligible rollover distribution is any distribution from an eligible retirement plan, with the following exceptions: Payments Spread Over Long Periods. You cannot roll over a payment from an eligible Form No. 7818 retirement plan if it is part of a series of equal (or almost equal) payments that are made at least once a year and that will last for your lifetime (or your life expectancy), or your lifetime and your beneficiary's lifetime (or life expectancies), or a period of ten years or more. Required Minimum Payments. Beginning in the year you reach age 70-1/2 (or for an employee in an employer plan who is not a 5% owner of the business, upon retirement if later), the law requires an eligible retirement plan to provide a certain minimum level of payments. A portion of the distribution from an eligible retirement plan equal to that required minimum payment may not be rolled over because it is a payment that must be paid to you. Hardship Distributions. You cannot roll over a distribution received from an eligible retirement plan on account of hardship. Direct Rollover. You can choose a direct rollover of all or any portion of your payment from an eligible retirement plan that is an eligible rollover distribution, as described above. In a direct rollover, the eligible rollover distribution is paid directly from the eligible retirement plan to your IRA. If you choose a direct rollover, you are not taxed on a payment until you later take it out of the IRA. iii. Rollover of Plan Payments Paid To You. If you have the payment from an eligible retirement plan which could have been directly rolled over paid to you, it is subject to 20% income tax withholding. The payment is taxed in the year you receive it unless, within 60 days, you roll it over to an IRA (or another eligible retirement plan that accepts rollovers). If you do not roll it over, special tax rules may apply. iv. Sixty-Day Rollover Option. If you have an eligible rollover distribution paid to you, you can still decide to roll over all or part of it to an IRA (or another eligible retirement plan that accepts rollovers). If you decide to roll over, you must make the rollover within 60 days after you receive the payment. The portion of your payment that is rolled over will not be taxed until you take it out of the IRA (or the eligible retirement plan). You can roll over up to 100% of the eligible rollover distribution, including an amount equal to the 20% that was withheld. If you choose to roll over 100%, you must find other money within the 60-day period to contribute to the IRA or the eligible retirement plan to replace the 20% that was withheld. (On the other hand, if you roll over only the 80% that you received, you will be taxed on the 20% that was withheld). See the Special Tax Notice Regarding Plan Payments that must be provided by your eligible retirement plan, for additional information on the rules governing rollover and taxation of plan distributions, or consult your tax advisor for more details. v. Other Rules. You can make a rollover from an eligible retirement plan of your spouse's employer if you received all or a part of your spouse's share as a result of his or her death. A spouse or former spouse who is a recipient of a distribution made under a qualified domestic relations order may roll over all or part of the distribution. An effective rollover allows you to postpone paying taxes on the amount distributed from the eligible retirement plan until it is withdrawn from the IRA. You do not report the distribution as income and you do not take a deduction for the rollover contribution. Earnings on your rollover IRA are tax deferred until receipt. Because complex rules apply to distribution and rollovers of payments from eligible retirement plans, you should seek competent tax advice whenever you contemplate receiving a distribution from an eligible retirement plan. (f) Rollover Contributions From Another IRA to Your IRA. You may also make a rollover contribution of amounts held in another IRA you own. There are no limits on the amount of rollover contributions made to an IRA from another IRA. However, the distribution from the first IRA must be rolled over within 60 days of receipt and no more than one distribution per year from an IRA may be rolled over into another IRA. (g) SEP Contributions. If your employer has established a simplified employee pension (SEP), your employer may make contributions to your SEPARA. The maximum SEP contribution, is the lesser of 25% compensation or $40,000 (as adjusted for increases in the cost of living). SEP contributions are not included in your taxable income. You may also contribute to this IRA, but since the SEP is treated as an employer plan, the deductibility limits discussed in 3.(d). above would apply to your contributions. Form No. 7818 (h) SIMPLE IRA Plans. If your employer has established a SIMPLE IRA plan, only your employer may make contributions to a SIMPLE IRA established on your behalf under that plan. You may not make contributions to that SIMPLE IRA, except that you may make a rollover contribution to your SIMPLE IRA of the amounts from another SIMPLE IRA established on your behalf. 4. EXCESS CONTRIBUTIONS Amounts contributed to an IRA which exceed the maximum allowable contribution are treated as excess contributions and are subject to a nondeductible 6% penalty tax for each year in which the excess remains in the IRA. Excess contributions may be corrected and the 6% penalty tax avoided by withdrawal of the excess and any earnings thereon before the due date (including extensions) of the tax return for the tax year for which the excess contribution was made. No deduction may be taken for the excess contributions and the earnings must be included in taxable income for the year the contribution was made. The earnings withdrawn may be subject to a 10% premature distribution tax if you are under age 59-1/2. See Section 5.(b). An excess contribution may be withdrawn after the due date of the tax return (including extensions) with the following consequences: (a) If your total contribution for the tax year the excess contribution was made does not exceed the dollar limit described in 1(b), the excess contribution and any earnings on it may be withdrawn by the due date of your tax return for that year (including extensions) without being included in income or being subject to the 10% premature distribution tax. No deduction may be taken for the excess contribution. Any earnings withdrawn will be included in income and may be subject to the premature distribution tax. (b) If your total contribution for the tax year the excess contribution was made exceeds the dollar limit described in 30). any excess contribution and any earnings on the excess withdrawn after the due date for tax filing (including extensions), will be includible in income in the year received and will be subject to any 10% premature distribution tax that may apply. Additionally, no deduction may be taken for the excess contribution for the year in which it is made. (c) Any excess contribution withdrawn after the due date for the tax filing (including extensions) for the year for which the contribution was made is subject to the 6% penalty tax on the amount of the excess contribution for the taxable year in which made and each tax year that it is still in your IRA at the end of the year. You may also correct an excess contribution to your IRA by treating the excess amount as contributed to your IRA in a subsequent year to the extent that the excess, when aggregated with your IRA contribution (if any) for the subsequent year, does not exceed the maximum amount for that year. You may be entitled to a deduction for the amount of the excess contribution that is applied in the subsequent year. 5. DISTRIBUTIONS (a) Taxation of Distribution as Ordinary Income. In general, you must include distributions from your IRA in your gross income for the year in which the distributions are received. There is a 10% additional income tax assessed against premature distributions to the extent such distributions are includible in income, as described in Part (b) below. You may exclude from your income that portion of a distribution that constitutes a return of the nontaxable portion of your IRA. The nontaxable portion of your IRA consists of amounts for which you did not receive a tax benefit or as to which you already have recognized the income, for example your properly reported nondeductible contributions or the nontaxable portion of an eligible retirement distribution which you rolled into your IRA. The amount of the distribution excludable from income is the portion that bears the same ratio to the total distribution that your aggregate nontaxable portion (not distributed in prior years) bears to the balance at the end of the year (calculated after adding back distributions made during the year) of your IRA. For this purpose, all of your IRA's are treated as a single IRA, and all distributions from an IRA during a taxable year are to be treated as one distribution. In addition, your gross income does not include any distribution from an IRA that is properly rolled over. You may roll over all or any part of property received in a distribution of assets within 60 days of receipt, into another IRA or individual retirement annuity, and maintain the tax-deferred status of such assets, but only one such rollover of a distribution from any one IRA is permitted in any 12-month period. Form No. 7818 Alternatively, a distribution from an IRA may be rolled over into an eligible retirement plan which agrees to accept such rollovers. If the eligible retirement plan is a governmental deferred compensation plan described in IRC section 457(b), however, the rollover is only permitted if that plan agrees to separately account for such rollover amounts. The maximum amount which may be rolled over from an IRA to an eligible retirement plan is the amount which would be included in gross income. In other words, the nontaxable portion of an IRA distribution cannot be rolled over into an eligible retirement plan. In determining the taxable and nontaxable portions, all of an individual's IRA's may be aggregated and distributions are considered to come first from taxable portions of the aggregated IRA amount. As explained in Section 4, certain distributions of excess contributions are not included in income. In addition, IRA contributions for a taxable year which do not exceed the contribution limits for such year may also be withdrawn without being included in income or being subject to a 10% premature distribution tax, as long as such contributions and earnings thereon are withdrawn prior to the due date (including extensions) of the tax year for which the contribution was made. The earnings withdrawn must be included in taxable income for the year in which the contribution was made and may be subject to the 10% premature distribution tax. (b) Tax on Premature Distributions. To the extent they are included in income, distributions from your IRA made before you reach age 59-112 will be subject to a 10% nondeductible penalty tax (in addition to being taxable as ordinary income) unless the distribution is made on account of your death or disability, is needed for medical expenses in excess of 7.5% of your adjusted gross income, is needed for certain qualified higher education expenses of you, your spouse, or child, or the distribution is one of a scheduled series of substantially equal payments over your life expectancy or the joint life expectancies of you and your beneficiary, or the distribution is needed for the payment of certain health insurance premiums upon separation from employment, subject to certain conditions, or the distribution is used to pay certain expenses in connection with the purchase of a principal residence if you are a first-time homebuyer. (c) Required Minimum Distributions During Your Life. You must begin receiving distributions from your IRA accounts by April 1 of the calendar year following the calendar year in which you reach age 70-1/2 (the requited beginning date). Subsequent distribution must be made by December 31 of each year. See IRS Publication 590 for a more detailed explanation of how to calculate the minimum distribution. The minimum distribution required must be calculated separately for each IRA you own, but the amounts so determined may be totaled and taken from any one or more of your IRA's. You will be subject to a 50% excise tax on the amount by which the distribution you actually received in any year falls short of the minimum distribution required for the year. (d) Required Minimum Distributions After Your Death. If you die before your required beginning date, distribution must be made to your beneficiary within 5 years after your death unless, within 1 year after your death, your beneficiary begins receiving distributions over a period not extending beyond your beneficiary's life expectancy. When your beneficiary is your spouse, however, distributions can be postponed until the date you would have become age 70-1/2, at which time your spouse must take them over a period not extending beyond his or her life expectancy. See IRS Publication 590 for a more detailed explanation of how to calculate the minimum distribution. If you die after your required beginning date, the remaining value of your IRA must be paid over a period which, depending on how you met the required minimum distribution requirements after your required beginning date, may be based on the terms of your annuity and/or may be based on your designated beneficiary's life expectancy, or if it is longer, your life expectancy determined based on your age in the year you died. See IRS Publication 590 for a more detailed explanation of how to calculate the minimum distribution. If your beneficiary is your spouse, your beneficiary can elect to treat your IRA as his or her own IRA as long as this election is made within 5 years of your death. The minimum distribution required must be calculated separately for each IRA, but the amounts so determined may be totaled and taken from any one or more IRA's. A payee is subject to a 50% excise tax on the amount by which a distribution for the year falls short of the minimum distribution required. (e) Distributions from a SIMPLE IRA. During the 2-year period beginning on the date an individual first participates in a SIMPLE IRA plan maintained by the individual's employer, certain special rules apply. The premature distribution tax described in 5.(b), above is 25% rather than 10% of the amount includible in gross income. And a tax-free rollover described in 5.(a). is only available if the distribution is rolled over into another SIMPLE IRA. Thereafter, the regular distribution rules apply to a distribution from a SIMPLE IRA. Form No. 7818 6. LOSS OF TAX-EXEMPT STATUS OF IRA If you borrow any money from or by use of your IRA, or engage in any of the prohibited transactions listed in Section 4975 of the Code (such as any sale, exchange, or leasing of any property (including most collectibles) between you and your IRA), your account will be disqualified and the entire balance of your account will be treated as if it had been distributed to you as of the first day of the year in which the prohibited transaction occurred. The fair market value of your IRA will be included in income in the year the prohibited transaction takes place and, if you are under age 59-112 at the time, you may be subject to the 10% penalty tax on premature distributions. Should you or your beneficiary pledge all or any portion of your IRA as security for a loan, the portion so pledged will be treated as if distributed to you, will be included in your income, and may be subject to the 10% premature distribution penalty during the year in which the pledge occurred. 7. OTHER TAX CONSIDERATIONS (a) Federal Income Tax Withholding. Federal Income tax will be withheld on amounts distributed from your IRA unless you elect not to have withholding apply. Generally, tax will be withheld at a 10% rate. At the time of distribution from your IRA, you will be notified of your right to elect not to have withholding apply and will be provided with the appropriate election form. If your IRA distribution is to be delivered outside of the U.S., you may elect not to have withholding apply only if you certify to the insurer that you are not a U.S. citizen residing overseas or a tax avoidance expatriate as described in Section 877 of the Internal Revenue Code. (b) Distribution not Eligible for Lump-Sum Averaging or Capital Gains Treatment. No distribution to you or anyone else from your account can qualify for capital gains treatment under the federal income tax laws or for the five or ten-year averaging available with respect to certain lump sum distributions from other types of retirement plans. The distribution is taxed to the person receiving it as ordinary income. (c) Gift Tax. If you elect during your lifetime to have all or any part of your account payable to a beneficiary at or after your death, the election will not subject you to any gift tax liability. (d) Reporting for Tax Purposes. You must report deductible IRA contributions and distributions on your tax Form 1040 or 1040A for the taxable year in which the contributions or distributions were made. If you make any nondeductible contributions, you must include the amount of such nondeductible contributions and the aggregate account balance of all your IRA's as of the end of the calendar year on Form 8606. Additional reporting is required in the event that special taxes or penalties described herein are due. You must file Form 5329 with the IRS for each taxable year in which the contribution limits are exceeded, a premature distribution takes place, less than the required minimum amount is distributed from your IRA, or excess distributions are made. 8. IRS INFORMATION You may obtain further information with respect to your IRA from the Internal Revenue Service or from IRS Publication 590, which is available on the IRS website. Form No. 7818 Traditional IRA Disclosure Statement Table of Guaranteed Values Policy Number. 68123SX Issue Date: September 21, 2008 Annuitant: Delores Jean Bailey Annuity Date: September 21, 2036 Owner: Delores Jean Bailey Issue Age: 71 As of Policy Cash September 21 Value Value 2008 27,499.75 28,416.41 2009 28,118.50 29,283.85 2010 28,751.16 29,942.74 2011 29,398.06 30,919.25 2012 30,059.52 31,924.55 2013 30,735.86 32,959.43 2014 31,427.42 34,024.72 2015 32,134.53 35,121.26 2016 32,857.56 36,612.37 2017 33,596.86 38,159.74 2018 34,352.78 39,765.26 2019 35,125.72 41,431.03 2020 35,916.05 43,159.07 2021 36,724.16 44,130.15 2022 37,550.46 45,123.07 2023 38,395.34 46,138.34 2024 39,259.24 47,176.46 2025 40,142.57 48,237.93 2026 41,045.78 49,323.28 2027 41,969.31 50,433.05 2028 42,913.62 51,567.80 2029 43,879.17 52,728.07 2030 44,866.45 53,914.45 2031 45,875.95 55,127.53 2032 46,908.16 56,367.90 2033 47,963.59 57,636.18 2034 49,042.77 58,932.99 2035 50,146.23 60,258.98 2036 51,274.52 61,614.81 Guaranteed Monthly Income on September 21, 2036 = $537.28" *Income is payable for the lifetime of the Annuitant with 120 payments guaranteed. Form No. 4886 These values are based on the guarantees as shown on the Data Pages and assume that no Premium Tax is paid by the Company, and that no Partial Withdrawals are made. Form No. 4886 LSiW AppIC900 18P Amiq Life Insurance Company of the Southwest (L.M • 1300 R: Mockingbird Ln. • Dallas, TX 752474921 • Customer Service 800-579-2878 Owner's None 50107 SS No or Ta pryer ID DOB (m/Oy) Abe Sex Home Address City State tip 0xie ?s-7 01??a 11'ewvt( c,e_ 1 I-7)Lit Home Phorw Number Home Fax Number Hone a-mail Address I ? (-? - ?7 Co --71 1 n ?4- N 4 Annuitant's Name (if different from Owner) SS No or Taxpayer 11) DOB Wdlyy) Age Sm Home Addre-s. City State Zip Code Hoare Phone Number Home Fax Number Hotne a-mail Address Joint Owner's Name (if applicable, non-qualified only) SS No or ThMmyer ID DO11(m/0,v) ,%w Sex Home Address City State Zip Codc Home Phone Number Home Fax Number Hone e-mail Address Prirttary BenefichI Relationship Social Security Number DOB (m/d/yy) Share a 1 i) % 2) % Continvat Beneficiary Relatio[L*p Social Security Number DUB (m/OY) Share 1) % 2) % SM M M - ft ft SOM Amount Arid with Application Premium Allocation - Must be whole numbers and sum to 100%. Selection required for Interest Accounts. F- I Kolloveriframsfef/1035 (Approximate) 3 0 -7 i 1 (oa7) Declared Interest Account 10 0 % S" 500' Russell 200011 (0o3) Emling lndeK Rate Option I Y. (oog) Ending Indrv Rate Option i % (pa) Ending Index Rate Option 2 % (wo) Ending Index Ratc Option 2 % (M) Average Index % am N - PIM MW V3ecsnow- PirlNlCr R 50403 SM V - No Odkdon 50504 0403(b) TSA D ER1SA 403(b) ? ROTH 403(b) XIRA 0 KOTH IR1 ? SIMPLE IR•1 0457 Def. Comp ? PtiWon/Proht Sharing 0IRARollover ONon-Qualified 0401(k) 0SEP OOther(specify) Form Mo. 7909 I &&rarrPlirs Premier 8 rorm No. 7909 R Vi - E1[latb? 6gOPdACB S0602 Does the applicant have any edsting policies and/or annuities? XYes O No (Applicant to check bux) If yes, will the annuity applied for replace any of the existing insurance or annuity? x5ia O No (Applicant to check boas) if yes, provide A 1/ t t/ 1+ and complete appropriate replacement and exchange forms. (Name of Company) 3EMONVO-Row" S0701 SOB01 1101- FOP HONE on EIdOP1011111061E GUR. (Not applkable in Pennsylvania or West Virginia) SEE ENBeRSEMEN9F SECM 11-MW WE" WIDOW 50901 DC/WA - it is a crime to knowingly provide false Incomplete or misleading information to an insurance company for the purposes of defrauding the company Penalties include imprisonment, fines and denial of insurance benefits. PL - Notice: Any person who knowingly and with intent to injim defiaud, or deeehe arty insurer files a statement of claim or an application containing any false, incomplate, or misleading Information is guilty of a felony In the third degree. [Y/IMM - Any person who knowingly and with intent to injure, defraud, or deceive any insurer files an application for insurance containing any materially faire information or conceals for the purpose of misleading, information concerning any fad material thereto commits a fraudulent insurance ad, which is a crime. LA-Arms person who knowingly presents false or fraudulent claim for payment of a kiss or benefit or knowingly presents false information in An application for insurance is guilty of a crime and may be subject to fines and conftnernent in prison. NJ - Notice: Any person who includes any false or misleading information on an application for on insurance polity is subject to criminal and civil penahies. Ait/Nlb/PA - Wkmb* Any person who knowingly and with intent to ddraud any insurance company or odder paw files an application for insurance or statement of claim containing any materially false infonmtion or commis for the purpose of mWeading, information concerning Any fact material thereto commits a fraudulent insurance ad, which is A crime and subjects such person to criminal and dvd penalties. VA - Any person who, with intent to def and or knowing that he is facilitating a fraud against an insurer, submits an application or files a claim containing a false or deceptive statement may have violated state laws Notice to Residents of AZ: The annuity to which this applica ion is attached may be returned within 31 days after it is received. Retina 0 to our Home Olftce or to the agent through whom it was purchased If returned, we will cancel the anm* and retum any premium paid. Upon written request from tine Owner, we will provide within a reasonable time, factual information regarding the benefits and provtsbm of the annuity to which this application is suadied. IMM X - ACh is .1100; The Annuitant and the Owner, if other than the Annuitant; (1) represents, to die best of their knowledge and bellef, that all statements and answers contained herein are full, complete and true as written and are correctly recorded; and, (2) expressly agrees as follows: 1. This application and the answers and agreements contained herein shall be the basis of, a part of the consideration for and a part of the annuity hereby applied for. 2. The payment of prenmium constitutes consideration to the Company for the granting of an annuity and upon payment becomes the absolute property of the Company 3. If prof of age is not given with this application, the Annuitant(s) will furnish the Company with such proof before annuity payments begin. 4. The annuity applied for shall take effect on the date the premium is received by the Company in its Borne Office, The SecarteK m single premium deferred annuities shall take effect on the 7th, 141h, 21st or 2tith of time month following or coincident with the date the premium is received by the Company in its Home Office 5. The Company is authorized to amend this application by an appropriate notation in the space designated "For Home Office Endorsement Only" in order to correct apparent errors or omissions. The acceptance of any annuity issued on this application shall constitute acceptance and ratification of the beneficiary designation, if any, in such annuity and of any amendments contemplated above except that no change shall be made in the plan of annuity or benefits without the written acceptance of the Annuitant(s) or of the Owner if other than the Annuitant(s). w9: Under the penalties of perjury, I eertlfy that: (1) the number shown on this application r my correct taxpayer identification number; (2) the IRS has never notified me that I am subject to backup withholding, or has notified mac that 1 ant no longer subject to such withholding or I on exempt from such withholding; and (3) lain a U.S. person (including a U.S. resklent alien). You must crams out dein 2 J(jm bays been notified by the IRS mbar you are currently, srr*d to backup ivitbbolding because taf urrderreportfng interest or dividends on your tar return. x1- 1M A81111 MONO S1102 Dated at (city/state) on (month/day/year) 1) &4 Signature of owner Signature of Annuitant (if different from Owner) Signature of joint owner (if applimble) To the best of my knowledge, a replacement ? is ? is not involved in this transaction. (Agent to check bat.) Fbrfb License ID No. Signature of Agent Soliciting Agent (print) AgentNo.,3agdq Percent lard Agent Phone Number Other Agent (print) Agent No. Percent ? Trail Commission option for seemPlus Pmmler 8 SaftKI-admile It S1202 I have received a copy of the disclosure material and understand that the results shown, other than the guaranteed minimum values, are not guarantees, promises or warranties. Applicant Signature Date 8'L !51O8, I certify that the disclosure material has been presented to the applicaVand a copy was provided to the applicant. 1 have not made statements that differ from this material nor have 1 made any promises about the expected future equity values of this contract. Agent Signature Date (') ,- In&i W W ? m a m u; LSW Life Insurance Company of the Southwest (LSW) 1300 West Mockingbird Lane • Dallas, Texas 75247-4921 DELIVERY TRANSMITTAL www.lifeofsouthwest.com Agent Services: 1-800-228-4579 Process Date: April 16, 2009 Agent Information Millard G Engle 8140 Rice Road Shippensburg Pa 17257 Agent Email: ENGLES@EMBARQMAIL.COM Agent Number: 5500032459 Agent Phone No: 717 532 3572 Owner Information Name: Delores Jean Bailey Address: 287 Meadows Rd Newville Pa 17241-9769 Annuitant Information Name: Delores Jean Bailey Issue Information For Policy\Certificate Number: 709637X Product: PREMIER8 Type: Non-qualified Issue Age: 72 Bill Mode: No Bill Policy Effective Data 04/14/2009 Annuity Date: 04/14/2036 Initial Premium: $ 18,791.22 Modal Premium: $ 0.00 Issue State: PA Mailing Instructions: Mail Federal Express to Agent Note: To view this policy's specific rate information, go to www.lifeofsouthwest.com to see the policy Coverage Page in your E-Documents. Outstanding Requirements - Amendment - Product Summary Form No. _ Delivery Receipt - Application To Be Signed By, Check All That Apply: _ Agent _ Owner _ Annuitant Other: For Requirements Checked Above:_ Fax Is Not Acceptable, Please Mail _ Fax Is Acceptable to 214-638-9371 Thank you for your support of LSW. If you have any questions concerning this Policy\Certificate, please contact LSW Service at: 1-800-228-4579 Form No. S917 Wade H. Mayo President and CEO April 16, 2009 Delores Jean Bailey 287 Meadows Rd Newville Pa 17241-9769 Re: LSW Annuity 709637X Dear Delores Jean Bailey, The above referenced Annuity, together with other materials regarding Life Insurance Company of the Southwest (LSW ), are enclosed for your review. It is particularly important that you take the time to review your Annuity, as you need to understand its terms. We realize that when you purchased your Annuity, you placed significant trust in us. We know its proceeds may be used to supplement your income, meet your financial obligations, or satisfy estate planning needs. We will always use our best efforts to make sure you are pleased with your Annuity. If you have questions about your Annuity, please call LSW Service at 800-579-2878 or email your question to LSWService@nationallife.com. One of our professionally trained representatives will be glad to assist you and respond to any of your questions. Additional information regarding LSW, its products and services, such as commonly used service forms and answers to frequently asked questions, can be accessed through our web site at www.lifeofsouthwest.com. Regards, J?ezec /V/ ??V Wade H. Mayo LSW Life Insurance company of the Southwest (LSW) 1300 West Mockingbird Lane • Dallas, Texas 75247-4921 www.lifeofsouthwest.com Customer Service 800-579-2878 Instructions: A newly issued Policy/Certificate may be hand delivered or sent by mail, depending on the State regulations. LSW will accept, as proof of delivery, the Owner's signature on this receipt or a Certified Mail or other mailing (Fed Ex, UPS, etc.) receipt signed by the Policyowner. Owner Name: (Print) Policy or Certificate Number: Owner's Signature: Date Delivered: Joint Owner's Signature: Date Delivered: Agent's delivery statement: I was unable to personally deliver this Policy/Certificate because: I mailed the Policy/Certificate on (Date) via Certified Mail, return receipt requested, UPS, Federal Express or other service with proof of delivery and signed receipt is attached. Date Policy/Certificate Mailed: ANNUITY DELIVERY RECEIPT Agent's Signature: Form No. 1124 (0903) SUMMARY OF THE LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION ACT AND NOTICE CONCERNING LIMITATIONS AND EXCLUSIONS INTRODUCTION Residents of Pennsylvania who purchase life insurance, annuities or health insurance should know that the insurance companies licensed in this state to write these types of insurance are members of the Pennsylvania Life and Health Insurance Guaranty Association (PLHIGA). The purpose of this Association is to assure that policyholders will be protected, within limits, in the unlikely event that a member insurer becomes financially unable to meet its obligations. If this should happen, the Association will assess its other member insurance companies for the money to pay the claims of insured persons who live in Pennsylvania and, in some cases, to keep coverage in force. The valuable extra protection provided by these insurers through the Association is limited, however, As noted below, this protection is not a substitute for consumers' care in selecting companies that are well managed and financially stable. Insurance companies and their agents are prohibited by law from using the existence of the Association to induce you to purchase any kind of insurance policy. This Information is Provided By: Pennsylvania Life and Health Insurance Guaranty Association 290 King of Prussia Road Radnor Station Building 2, Suite 218 Radnor, PA 19087 (610) 975-0572 Summary The state law that provides for this safety-net coverage is called the Pennsylvania Life and Health Insurance Guaranty Association Act. Below is a brief summary of the law's coverages, exclusions and limits. This summary does not cover all provisions of the law; not does it in any way change anyone's rights or obligations under the act or the rights or obligations of the Association. Coverage. Generally, individuals will be protected by the Pennsylvania Life and Health Insurance Guaranty Association if they live in this state and hold a life or health insurance contract, or an annuity, or if they hold certificates under a group life or health insurance contract or annuity, issued by a member insurer. The beneficiaries, payees or assignees of insured persons are protected as well, even if they live in another state. Exclusions From Coverage. Persons holding such policies or contracts are not protected by this Association if: they are not residents of the State of Pennsylvania, except under certain very specific circumstances; the insurer was not authorized or licensed to do business in Pennsylvania at the time the policy or contract was issued; their policy was issued by a nonprofit hospital or health service corporation (e.g., a blue cross or blue shield plan), an HMO, a fraternal benefit society, a mandatory state pooling plan, a mutual assessment company or similar plan in which the policyholder is subject to future assessments, or by an insurance exchange. Form No. 7884 The Association also does not provide coverage for: • any policy or portion of a policy which is not guaranteed by the insurer or for which the individual has assumed the risk: • any policy of reinsurance (unless an assumption certificate was issued); • plans of employers, association or similar entities to the extent they are self-funded or uninsured (that is, not insured by an insurance company, even if an insurance company administers them); • interest rate yields that exceed an average rate; • dividends; • experience rating credits; • credits given in connection with the administration of a policy or contract; • annuity contracts or group annuity certificates used by nonprofit insurance companies to provide retirement benefits for nonprofit educational institutions and their employees; • policies, contracts, certificates or subscriber agreements issued by a prepaid dental care plan; • sickness and accident insurance when written by a property and casualty insurer as part of an automobile insurance contract; • unallocated annuity contracts issued to an employee benefit plan protected under the federal Pension Benefit Guaranty Corporation; • financial guarantees, funding agreements or guaranteed investment contracts not containing mortality guarantees and not issued to or in connection with a specific employee benefit plan or governmental lottery; • any kind of insurance or annuity, the benefits of which are exclusively payable or determined by a separate account required by the terms of such insurance policy or annuity maintained by the insurer or by a separate entity. Limits On Amount of Coverage. The act also limits the amount the Association is obligated to pay out. The Association cannot pay more than what the insurance company would owe under a policy or contract. Also, for any one insured life, the Association will pay a maximum of $300,000 - no matter how many policies and contracts there were with the same company, even if they provided different types of coverages. Subject to the over-all $300,000 limit, the Association will pay up to $300,000 in life insurance death benefits, but not more than $100,000 in net cash surrender or withdrawal values. For annuities, the Association will pay up to $300,000 in annuity benefits, or $100,000 in net cash surrender or withdrawal benefits. For health insurance, the Association will pay up to $100,000, including any net cash surrender or withdrawal benefits. Form No. 7884 YOUR SINGLE PREMIUM EQUITY-INDEXED AND DECLARED-INTEREST DEFERRED ANNUITY POLICY Policy Number: 709637X Annuitant: Delores Jean Bailey Owner: Delores Jean Bailey Issue Date: April 14, 2009 Annuity Date: April 14, 2036 Issue Age: 72 Annuity Benefits We will pay an annuity income beginning on the Annuity Date if the Annuitant and Owner and, if named, joint Owner are then living, subject to the terms of this Policy. Death Benefits We will pay a Death Benefit to the Beneficiary when We receive due proof of the death of the Owner, Joint Owner, or the Annuitant occurring before the Annuity Date, subject to the terms of this Policy. Right to Examine this Policy This Policy may be returned within thirty days after it is received. Return it to Our Home Office or to the agent through whom it was purchased. We will cancel the Policy and return any premium paid. Request for Information Upon written request from You, We will provide, within a reasonable time, factual information regarding the benefits and provisions of this Policy. This Policy is signed for Life Insurance Company of the Southwest, Dallas, Texas, by Secretary President This Policy is a legal contract between You and the Company. Please read it carefully. We want You to understand the coverage it provides. Single Premium Equity-Indexed and Declared Interest Deferred Annuity. Benefits may be calculated based on the movement of an index or stipulated interest rates. Minimum underlying values. Income payments start on the Annuity Date. Death Benefit payable before the Annuity Date. Nonparticipating. Form No. 7954-PA Data Pages Policy Number. 709637X Annuitant: Delores Jean Bailey Owner: Delores Jean Bailey Issue Date: April 14, 2009 Annuity Date: April 14, 2036 Issue Age: 72 Coverage Equity-Indexed and Declared-Interest Single Premium Deferred Annuity Single Premium $18,791.22 3.00% Immediate Interest Credit at Issue $563.74 Premium Taxes The state of Pennsylvania does not impose a premium tax on annuities issued after January 1, 1996. In the event that such tax becomes applicable to this Policy in the future, you will be advised of the amount and its effect upon any payments to be made. Form No. 7954-PA Data Page 1 of 2 Interest Accounts Declared Interest Account: The Declared Rate in effect for the Declared Interest Account on the Issue Date is 3.85%. The minimum rate is 1.95% for the first six Policy Years. It is 1.00% for Policy Years seven and later. The Declared Rate will be declared once per Policy Year. See Rate Declaration in Part 4. Index: Standard & Poors 500 Index Initial Index Value: 841.50 Ending Index Rate Option 1 Index Rate Cap Floor Rates in effect for the first Policy Year 100.00% 8.25% 0.00% Guaranteed minimum rates for Policy Years after the first 30.00% 3.00% 0.00% Ending Index Rate Option 2 Index Rate Cap Floor Rates in effect for the first Policy Year 50.00% 9.25% 0.00% Guaranteed minimum rates for Policy Years after the first 30.00% 3.00% 0.00% Average Index Index Rate Cap Floor Rates in effect for the first Policy Year 45.00% NO CAP 0.00% Guaranteed minimum rates for Policy Years after the first 30.00% 3.00% 0.00% Index: Russell 2000 Index Initial Index Value: 453.22 Ending Index Rate Option 1 Index Rate Cap Floor Rates in effect for the first Policy Year 100.00% 8.25% 0.00% Guaranteed minimum rates for Policy Years after the first 30.00% 3.00% 0.00% Ending Index Rate Option 2 Index Rate Cap Floor Rates in effect for the first Policy Year 50.00% 9.25% 0.00% Guaranteed minimum rates for Policy Years after the first 30.00% 3.00% 0.00% Policy Value Interest Rate The interest rate credited to the Policy Value is 1.95% in Policy Years one through six. It is 1.00% in Policy Years seven and later. The Company declares Index Rates, Caps, and Floors in advance only on each Policy anniversary. Rates will not be less than the minimums shown above. The Declared Rates, Index Rates, Caps, and Floors do not affect the computation of the Policy Value. Form No. 7954-PA Data Page 2 of 2 TABLE OF CONTENTS PAGE PAGE PART I: OWNERSHIP OF THE POLICY Floor 7 Owner 1 Rate Declaration 7 Joint Owner 1 Transfers 7 Rights of Owner 1 PART 5: PAYMENT OF BENEFITS Transfer of Ownership 1 Death Benefits 8 Assignment 1 Annuity Benefits 9 PART 2: THE ANNUITANT PART 6: OTHER PROVISIONS Annuitant 1 This Agreement 9 Contingent Annuitant 1 Tax Qualification 9 PART 3: BENEFICIARY PROVISIONS Incontestability 9 Beneficiary 2 Misstatement of Age or Gender 9 Minors 2 Premium Taxes 9 Change of Beneficiary 2 Reports 10 PART 4: POLICY DATES AND VALUES Nonparticipating 10 Issue Date 2 Required Standards 10 Policy Years 2 Protection from Creditors 10 Annuity Date 2 Our Liability 10 Net Single Premium 2 PART 7: THE PAYMENT OPTIONS Total Withdrawals 2 Option Selection 10 Cash Value 3 The Installment Income Options (Option 1) 10 Policy Value 3 Life Income Options (Option 2) 12 Accumulation Value 3 Joint and Survivor Life Income Bonus Accumulation Value 3 (Option 3) 14 Withdrawal Charges 4 More Information About Our Withdrawal Charge Percentage 5 Payment Options 14 Free Withdrawal Amount 5 Right to Increase Monthly Income 14 Partial Withdrawals 5 Amounts Too Small 14 Interest Accounts 5 Automatic Cancellation 14 Declared Interest Account 5 Payments to Minors 14 Declared Interest 5 PART 8: SPECIAL ENHANCED LIFE INCOME Declared Rate 6 OPTIONS Indexed Interest Account 6 Election Date 15 Indexed Interest 6 Commencement Date 15 Index Methods 6 Activities of Daily Living 15 Indices 6 Without Substantial Assistance 15 Index Increase Percentage Factor 6 Eligibility Requirements 16 Index Change 7 Special Enhanced Life Income Payment Options (Option 4) 16 Index Rate 7 Amounts Too Small 17 Cap 7 Form No. 7954-PA - I - TABLE OF CONTENTS RAGE Limitations and Exclusions 18 How to Elect a Special Enhanced Life Income 18 Any riders and Endorsements and a copy of the application, follow page 19 Form No. 7954-PA - II - In this Policy, the words We, Us, Our and The Company mean Life Insurance Company of the Southwest. You and Your mean the Owner of the Policy. PART I: OWNERSHIP OF THE POLICY Owner The Owner on the Issue Date of this Policy is named in the application. If the Owner is not designated in the application, the Annuitant is the Owner. Joint Owner A Joint Owner may be named in the application on the Issue Date of this Policy. If a Joint Owner is named, You and Your shall refer to both the Owner and the Joint Owner together. Rights of Owner You may exercise all rights and privileges under this Policy, while the Annuitant is living, prior to the Annuity Date. Use of these rights may be subject to the consent of any Assignee or irrevocable Beneficiary. Transfer of Ownership Subject to the limitations described below, You may transfer ownership of this Policy. We will not be responsible for any payment We make or other action We take before a copy of the written request for transfer of ownership is received at Our Home Office. We are not responsible for the validity of the transfer. We may require the Policy to record the transfer. Under certain provisions of the Internal Revenue Code, ownership and assignment of annuity policies are restricted. If this annuity is issued to qualify under such a provision, this will be specified in the application. We will restrict ownership and assignment of this Policy so that it will comply with the provisions of the Internal Revenue Code or any successor statute. Assignment Subject to the limitations described in the Transfer of Ownership provision, this Policy may be assigned. We will not be responsible for any payment We make or any other action We take before a written copy of the assignment is received at Our Home Office. We are not responsible for the validity of the assignment. PART 2: THE ANNUITANT Annuitant The Annuitant is named in the application and on the Data Pages of this Policy. The Annuitant may not be changed after this Policy is issued, except as otherwise provided in this Policy. If the Annuitant is living on the Annuity Date while this Policy is in force, We will pay an annuity income as provided in Part 5: Payment of Benefits. Contingent Annuitant If the Owner and the Joint Owner are both natural persons, and neither the Owner nor the joint Owner are the Annuitant, You may name a Contingent Annuitant in the application or by written request. The written request must be signed while the Annuitant is living and prior to the Annuity Date. The designation of a Contingent Annuitant takes effect on the date We approve it and is subject to any action We take before receiving the request. Any designation of a Contingent Annuitant expires on the Annuity Date. If the Annuitant dies prior to the Annuity Date while this Policy is in force and while the Contingent Annuitant is alive: The Death Benefit will not be payable; The Contingent Annuitant becomes the Annuitant for purposes of this Policy; and All other rights and benefits provided by this Policy will continue in effect. Form No. 7954-PA Page 1 Under certain provisions of the Internal Revenue Code, You are not permitted to name a Contingent Annuitant. If this annuity is issued to qualify under such a provision in the Internal Revenue Code, the Contingent Annuitant provision will not apply. PART 3: BENEFICIARY PROVISIONS Beneficiary The Beneficiary on the Issue Date of this Policy is named in the application. The primary Beneficiary will receive any Death Benefit payable under this Policy. A contingent Beneficiary may be named to receive the Death Benefit if the primary Beneficiary is not living at the time the Death Benefit is payable. If no named Beneficiary is living at the time the Death Benefit is payable, it will be paid to Your estate. You may name more than one primary Beneficiary and more than one contingent Beneficiary. If more than one Beneficiary is to receive the Death Benefit, it will be paid in equal shares unless You specify otherwise in writing. If a Joint Owner is named under the Policy, on the death of either the Owner or joint Owner, the surviving owner will be the sole Beneficiary and will succeed to all ownership rights under this Policy. Minors If a Beneficiary is a minor, We will make payment to the minor's court appointed guardian. If there is no court appointed guardian, We will hold the Death Benefit at interest until the minor reaches the age of majority as defined by the state where this policy was issued. We may require proof of age of any Beneficiary. Change of Beneficiary You may change the Beneficiary at any time during the Annuitant's life. You must make a written request to Our Home Office in a form acceptable to Us. We may require the Policy to record the change. The request will take effect when signed, subject to any action We take before receiving it. PART 4: POLICY DATES AND VALUES Issue Date The Issue Date of this Policy is shown on the Data Pages. It is the date that Your Policy takes effect. Policy Years Policy Years are yearly periods which start on the Issue Date and on the same month and day of each year thereafter. Annuity Date Annuity income payments begin on the Annuity Date shown on the Data Pages if the Annuitant is living. Net Single Premium The Net Single Premium is the Single Premium shown on the Data Pages of this Policy, minus any applicable Premium Tax (see Premium Taxes, Part 6). Total Withdrawals You may withdraw all of the Cash Value of this Policy at any time at or before the commencement of any annuity income payments. If You withdraw all of the Cash Value of this Policy, this Policy will terminate. Form No. 7954-PA Page 2 Cash Value The Cash Value of this Policy is the greater of- • the Accumulation Value less applicable Withdrawal Charges; or • the Policy Value, less any applicable Premium Tax (see Premium Taxes: Part 6). We reserve the right to defer the payment of the Cash Value for a period not to exceed six (6) months after making written request and receiving written approval of the commissioner of insurance of the state in which this Policy is issued. If required by state law, We will pay interest according to the laws of the state in which this Policy is issued. You may withdraw all or part of the value of this annuity to provide a periodic income from Us. If You do so before the end of the fifth Policy Year, We will determine the annuity payments using the Cash Value withdrawn, less any applicable Premium Tax. If You do so after the end of the fifth and prior to the end of the twelfth Policy Year, We will determine the annuity payments by applying the greater of (a) or (b), where: (a) is the Accumulation Value withdrawn plus a portion of the then-remaining Bonus Accumulation Value; and (b) is the Policy Value reduction as a result of the withdrawal, less any applicable Premium Tax (see Premium Taxes: Part 6). The amount of the Bonus Accumulation Value that will be included is (a) times (b) divided by (c), where: (a) is the value to provide the income; (b) is the whole number of completed Policy Years at the time of the withdrawal of the value to provide the income; and (c) is twelve ('12). If You do so after the end of the twelfth Policy Year, We will determine the annuity payments by applying the greater of (a) or (b), where: (a) is the Accumulation Value withdrawn less any applicable Premium Tax; and (b) is the Policy Value reduction as a result of the withdrawal less any applicable Premium Tax (see Premium Taxes: Part 6). Policy Value The Policy Value at any time is equal to: • 100% of the Single Premium; less • 10% of the Single Premium for expenses and guarantees; less • any amounts withdrawn (excluding any applicable Withdrawal Charges); plus or minus, as applicable, • interest on the above items credited at the Policy Value Interest Rate shown on the Data Pages. Accumulation Value The Accumulation Value at any time equals the sum of the values of the Interest Accounts. Bonus Accumulation Value When we issue the policy, We will establish a Bonus Accumulation Value. During the first seven Policy Years, the Bonus Accumulation Value equals five percent (5%) times the Accumulation Value. You have no rights to or interest in the Bonus Accumulation Value until and unless it transfers to the Accumulation Value. Beginning at the end of the eighth Policy Year, the Bonus Accumulation Value will be transferred to the Accumulation Value as stated below. Form No. 7954-PA Page 3 During Policy Years eight through twelve, We will credit interest to the Bonus Accumulation Value. The amount of interest credited to the Bonus Accumulation Value will be: the dollar amount of interest credited to the Accumulation Value since the previous Policy anniversary; divided by the Accumulation Value on the previous Policy anniversary; multiplied times • the Bonus Accumulation Value on the previous Policy anniversary. During the eighth through twelfth Policy Years, whenever You make a Partial Withdrawal, the then-existing Bonus Accumulation Value will be reduced by an amount equal to: • the dollar amount of the Partial Withdrawal, including any Withdrawal Charges assessed; divided by • the amount of the Accumulation Value just prior to the time the Partial Withdrawal is made; multiplied times • the amount of the Bonus Accumulation Value just prior to the time the Partial Withdrawal is made. On the eighth Policy anniversary, just after crediting interest to the Bonus Accumulation Value, We will: • transfer one-fifth (20%) of the then-existing Bonus Accumulation Value to the Accumulation Value; and • reduce the Bonus Accumulation Value by the amount transferred. On the ninth Policy anniversary, just after crediting interest to the Bonus Accumulation Value, We will: • transfer one-fourth (25%) of the then-existing Bonus Accumulation Value to the Accumulation Value; and • reduce the Bonus Accumulation Value by the amount transferred. On the tenth Policy anniversary, just after crediting interest to the Bonus Accumulation Value, We will: • transfer one-third (33.33%) of the then-existing Bonus Accumulation Value to the Accumulation Value; and • reduce the Bonus Accumulation Value by the amount transferred. On the eleventh Policy anniversary, just after crediting interest to the Bonus Accumulation Value, We will: • transfer one-half (50%) of the then-existing Bonus Accumulation Value to the Accumulation Value; and • reduce the Bonus Accumulation Value by the amount transferred. On the twelfth Policy anniversary, just after crediting interest to the Bonus Accumulation Value, We will transfer all of the then-existing Bonus Accumulation Value to the Accumulation Value, after which there will be no more Bonus Accumulation Value. All amounts transferred to the Accumulation Value will be added to the Interest Accounts in proportion to their values at the times of the transfers. Withdrawal Charges If You request a Total or Partial Withdrawal during the first twelve Policy Years, We will deduct a Withdrawal Charge from the Accumulation Value. If the amount withdrawn during a Policy Year is less than or equal to the Free Withdrawal Amount, then the Withdrawal Charge is zero. The Withdrawal Charge on any additional amount withdrawn equals (a) times (b), where: (a) is the additional amount withdrawn; and (b) is the Withdrawal Charge Percentage for the Policy Year in which the withdrawal occurs. Form No. 7954-PA Page 4 Withdrawal Charge Percentage The Withdrawal Charge Percentage is ten percent in the first three Policy Years. It reduces by one percent per year for the next nine Policy Years. The Withdrawal Charge Percentage is zero after the twelfth Policy Year. Free Withdrawal Amount In the first Policy Year, the Free Withdrawal Amount is the Immediate Interest Credit defined on the Data Pages. In Policy Years two and later, the Free Withdrawal Amount equals ten percent of the Accumulation Value at the time of the first Partial Withdrawal in that Policy Year. If the first Partial Withdrawal in a Policy Year exceeds the Free Withdrawal Amount, Withdrawal Charges are assessed as defined above, and the Free Withdrawal Amount for the remainder of the Policy Year is zero. If the first Partial Withdrawal is less than or equal to the Free Withdrawal Amount, no Withdrawal Charges are assessed, and the Free Withdrawal Amount is reduced by the amount withdrawn. Each Partial Withdrawal after the first one in a Policy Year is then treated in the same manner as the first Partial Withdrawal, measured against any remaining Free Withdrawal Amount at the time of the Partial Withdrawal. Partial Withdrawals Prior to the Annuity Date, You may withdraw part of the Cash Value of this Policy at any time. You may designate the Interest Account from which to deduct a Partial Withdrawal. If You make no such election, the Partial Withdrawal will be deducted from each Interest Account in proportion to its value. Partial Withdrawals are subject to the following limits: • each Partial Withdrawal must be at least $500; and • a Partial Withdrawal may not reduce the Accumulation Value to less than $5,000. Please note that the order of withdrawal, whether interest or principal, may not be identical to the order of withdrawal of earnings or premium as characterized by the Internal Revenue Service. We will also deduct any Partial Withdrawal, less any Withdrawal Charge assessed, from the Policy Value. Interest Accounts We make two interest crediting methods available for the Interest Accounts under this Policy: crediting of interest based on an interest rate declared in advance or crediting of interest based on the change in an Index. The Interest Account for which an interest rate is declared in advance is called the Declared Interest Account. Interest Accounts based on the change in an Index are called Indexed Interest Accounts. The Net Single Premium and the Immediate Interest Credit shown on the Data Pages are allocated among the Interest Accounts according to Your instructions. Your instructions are recorded in Your application, which is attached to and made part of this Policy. Declared Interest Account The value of the Declared Interest Account at any time is equal to: • the amount of the Net Single Premium allocated to the Declared Interest Account; plus • the amount of the immediate Interest Credit allocated to the Declared Interest Account; plus • all transfers to the Declared Interest Account; plus • all Declared Interest credited to the Declared Interest Account; less • all transfers from the Declared Interest Account; less • all amounts withdrawn from the Declared Interest Account (including any applicable Withdrawal Charges). Declared Interest We credit Declared Interest to the Declared Interest Account daily at an interest rate equivalent to the Declared Rate, which is an annual effective rate. Form No. 7954-PA Page 5 Declared Rate We will formally determine the Declared Rate for the Declared Interest Account at the start of each Policy Year as described below under Rate Declaration. Its value on the Issue Date is shown on the Data Pages. Indexed Interest Account The value of an Indexed Interest Account at any time is equal to: • the amount of the Net Single Premium allocated to the Indexed Interest Account; plus • the amount of the Immediate Interest Credit allocated to the Indexed Interest Account; plus • all transfers to the Indexed Interest Account; plus • all Indexed Interest credited to the Indexed Interest Account; less • all transfers from the Indexed Interest Account; less • all amounts withdrawn from the Indexed Interest Account (including any applicable Withdrawal Charges). The rate at which an Indexed Interest Account grows depends on: • its Index; • its index Method; • its Cap; • its Floor; and • its Index Rate. Indexed Interest The Indexed Interest for an Indexed Interest Account equals the Indexed Interest Account's value times the Index Increase Percentage Factor. We will calculate the Indexed Interest for each Indexed Interest Account on the Policy anniversary. If the Indexed Interest is greater than zero, We will credit it to the Indexed Interest Account on the Policy anniversary. Index Methods There are two Index methods used in this Policy: Ending Index and Average Index. Indices The Indices for this Policy at issue are shown on the Data Pages. Each of the Indices for the Policy is guaranteed to apply while the Policy is in force unless publication of the Index is discontinued or the calculation of the Index is changed substantially. If one of these events occurs, We may substitute a suitable index. If required, We will notify the commissioner of the state in which the Policy is issued or request permission from the commissioner before taking such action. We will notify You of any change to Your Policy as a result of these actions. The value for a given day of an Index whose value is quoted continuously throughout that day in the United States is the value quoted by the provider of the Index at the close of activity for that day in the United States. The value for a given day of any other Index is the value quoted by the provider of the Index at the most recent close of activity for a day as of S p.m. in Dallas, Texas. If there is no activity in an Index for a day, no value will be used for that day. Index Increase Percentage Factor The Index Increase Percentage Factor for an Indexed Interest Account will never be less than the Floor or more than the Cap declared at the start of that Policy Year for that Indexed Interest Account. Within those bounds, the Index Increase Percentage Factor equals the Index Rate for the Indexed Interest Account declared at the start of that Policy Year multiplied by the Index Change. Form No. 7954-PA Page 6 Index Change The Index Change for an Indexed Interest Account is (a) divided by (b) where: (a) for Indexed Interest Accounts that use the Index Method Ending Index, is the posted Index Value on the current Policy anniversary, or if there is no Index Value for the current Policy anniversary, the Index Value for the most recent day preceding that date for which there is an Index Value; or for Indexed Interest Accounts that use the Index Method Average Index, is the arithmetic average of every Index Value posted after the previous Policy anniversary until the current Policy anniversary; and (b) is the posted Index Value on the previous Policy anniversary or, if there is no Index Value for the previous Policy anniversary, the Index Value for the most recent day preceding that date for which there is an Index Value. Index Rate The Index Rate is a percentage used to calculate the Indexed Interest for an Indexed Interest Account. We will declare the index Rate for an Indexed Interest Account at each Policy anniversary. We will declare Index Rates on a basis which does not discriminate unfairly within any class of policies. The value of the Index Rate on the Issue Date for each Indexed Interest Account is shown on the Data Pages. Cap The Cap is the maximum percentage per year by which an Indexed Interest Account will be increased. We will declare the Cap for an Indexed Interest Account at each Policy anniversary. We will declare Caps on a basis which does not discriminate unfairly within any class of policies. The Cap on the Issue Date for each Indexed Interest Account is shown on the Data Pages. Floor The Floor is the minimum percentage per year by which an Indexed Interest Account will be increased. The Floor will never be less than 0%. We will declare the Floor for an Indexed Interest Account at each Policy anniversary. We will declare Floors on a basis which does not discriminate unfairly within any class of policies. The Floor on the Issue Date for each Indexed Interest Account is shown on the Data Pages. Rate Declaration For the Declared Interest Account, We declare interest rates in advance at the start of each Policy Year. Rates We so declare are guaranteed to remain in effect for the entire Policy Year. For the Indexed Interest Accounts, We declare the Index Rates, Caps, and Floors in advance at the start of each Policy Year. When We declare initial and/or renewal Declared Rates, Index Rates, Caps, and Floors, We will do so in a manner that does not discriminate unfairly between any classes of Policies. We will set these factors depending on historical and then current interest rates and other relevant factors. Transfers You may request that We transfer amounts between Interest Accounts. Amounts can only be transferred on the Policy anniversary. The rate(s) applicable to amounts to be transferred to new Interest Account(s) will be the same rate that is made available to amounts that have been held in such new Interest Account from the Issue Date. You must notify Us requesting the transfer at least fifteen (15) days in advance of the Policy anniversary. Form No. 7954-PA Page 7 PART S : PAYMENT OF BENEFITS Death Benefits While this Policy is in force and prior to the Annuity Date, We will pay a Death Benefit at the earlier of: • the death of the Owner; or • the death of the joint Owner; or • if neither the Owner nor the joint Owner is the Annuitant, the death of the Annuitant, unless a validly designated Contingent Annuitant is living. The Death Benefit will be the greater of the Policy Value or the Accumulation Value as of the date of death if the Annuitant dies. The Death Benefit will be the Cash Value as of the date of death if the Owner dies and the Owner is not the Annuitant. The Death Benefit will be the Cash Value as of the date of death if the joint Owner dies and the joint Owner is not the Annuitant. Payment will be made to the Beneficiary upon receipt of due proof of death. You may specify how the Death Benefit is to be paid, subject to the limits imposed by Section 72(s) of the Internal Revenue Code. If You do not specify how the Death Benefit is to be paid, the payment will be in a single sum unless the Beneficiary elects otherwise. In any event, the Death Benefit will be paid within five years of the date of death, unless one of the following exceptions applies. Death of the Owner or Joint Owner If the Owner or the joint Owner dies and the Beneficiary is the surviving spouse of the decedent, the Beneficiary may elect to be treated as the successor Owner of the Policy and continue the Contract. If the Owner or joint Owner who dies is also the Annuitant, and the Beneficiary is the surviving spouse of the decedent who elects to be treated as the successor Owner and continue the contract, the Beneficiary will become the Annuitant. In the event of such an election, on the death of the surviving spouse, the Death Benefit will be paid within five years of the date of such death, or distributed in accordance with the next paragraph, even if the Beneficiary at that time is a surviving spouse. If the Owner or the joint Owner dies and the surviving spouse of the decedent is not the Beneficiary, the Beneficiary may elect to receive the Beneficiary's entire interest in the Policy over such Beneficiary's life or over a period not extending beyond the life expectancy of such Beneficiary. Such distributions must begin within one year from the date of death. Death of the Annuitant, if neither the Owner nor the Joint Owner is the Annuitant Except as provided in the next section (Non-Natural Owners), if neither the Owner nor the joint Owner is the Annuitant and the Annuitant dies, the Beneficiary may elect to receive the Beneficiary's entire interest in the Policy over such Beneficiary's life or over a period not extending beyond the life expectancy of such Beneficiary. Such distributions must begin within one year from the date of death. Non-Natural Owners if either the Owner or the joint Owner is not an individual and the Annuitant dies, and the Annuitant's surviving spouse is the Beneficiary, the Beneficiary may elect to be treated both as the successor Owner and as the successor Annuitant of the Policy and continue the Contract. In the event of such an election, on the death of the Annuitant's surviving spouse, the Death Benefit will be paid within five years of the date of such death, or distributed in accordance with the next paragraph, even if the Beneficiary at that time is a surviving spouse. If either the Owner or the joint Owner is not an individual and the Annuitant dies, and the Annuitant's surviving spouse is not the Beneficiary, the Beneficiary may elect to receive the Beneficiary's entire interest in the Policy over such Beneficiary's life or over a period not extending beyond the life expectancy of such Beneficiary. Such distributions must begin within one year from the date of death. Form No. 7954-PA Page 8 Annuity Benefits If the Annuitant is living on the Annuity Date and this Policy is in effect, We will apply the Cash Value to provide an annuity. The Annuity Benefits will be paid to You unless You direct Us in writing to pay another person. The amount and duration of the annuity depend on the amount applied and the Payment Option under which it is applied. If the Payment Option is one involving the life of the Annuitant, We reserve the right to require periodic proof that the Annuitant is still living. If the Annuitant dies on or after the Annuity Date, (or if both the Annuitant and the joint annuitant die if the selected Payment Option is a joint and Survivor Payment Option), any remaining payments provided by the selected Payment Option will be paid to the Beneficiary. If neither the Owner nor the joint Owner is the Annuitant or the joint annuitant and the Owner or the joint Owner dies on or after the Annuity Date, any remaining payments provided by the selected Payment Option will be paid to the Beneficiary. If the Owner, the Joint Owner, the Annuitant, or the joint annuitant dies on or after the Annuity Date, or if You direct us in writing irrevocably to pay the Annuity Benefits to another person, and that person dies on or after the Annuity Date, any remaining benefits will be paid at least as rapidly as under the Payment Option in effect as of the date of death. If You elect to receive the Annuity Benefits in a single sum, We will pay You the Cash Value on the Annuity Date. PART 6: OTHER PROVISIONS This part contains important general and required provisions. This Agreement This Policy, the application, and any attached riders and endorsements constitute the complete agreement between You and Us. We have issued this Policy in exchange for the application and the payment of the premium. Any change in this Policy must be in writing, signed by one of Our officers, and in the form of an amendment or endorsement to this Policy. No agent has the power or authority to waive, change, or alter any of the terms or conditions of this Policy. Only one of Our officers has the power or authority to waive, change, or alter any of the terms or conditions of this Policy. Tax Qualification We may amend this Policy as necessary to comply with the Internal Revenue Service requirements. If there is a change to the Internal Revenue Code We will send you an amendment form. You have the right to accept or reject the amendment. Incontestability We cannot contest this Policy. Misstatement of Age or Gender If the Annuitant's age or gender has been misstated on the application, the benefits during the accumulation period will be those which the premium paid would have bought for the correct age and gender. We will adjust the annuity payments on the basis of the correct age and gender. The total amount of any underpayment that may have been made will be credited with 5% interest and added to the annuity payment next following the adjustment. The total amount of any overpayment that may have been made will be charged with 5% interest and deducted from the annuity payments, as required, next following the adjustment. Premium Taxes Some states impose a Premium Tax on annuities. In the event that a Premium Tax is imposed on the premium received, such tax will be deducted from the premium. In the event that a Premium Tax is imposed at any other time, such Premium Tax will be deducted from any benefit payable under this Policy. Form No. 7954-PA Page 9 Reports At least once each year, We will send You a report showing the Accumulation Value. The report will also show all amounts added to and subtracted from the Accumulation Value during the period the report covers and any additional items required by the insurance department of the state where this Policy is issued. Nonparticipatin This Policy is not entitled to share in the profits or surplus of the Company. Required Standards All values under this Policy meet the requirements of the Standard Nonforfeiture Law for individual deferred annuities. A detailed statement of Our computation method for all values and reserves has been filed with the insurance department of the state where this Policy is delivered. All values and reserves are equal to, or greater than, those required by the laws of such state. Any paid-up annuity, cash values or Death Benefits or reserves under this Policy are not less than the minimum benefits required by any statute of the state in which the Policy is delivered. Protection from Creditors Benefits and Values payable under this Policy will be free from claims of creditors to the extent allowed by law. Our Liability We will not incur any liability or be responsible for Your failure, in whole or in part, to comply with the provisions set forth in the Internal Revenue Code or any other law. PART 7: THE PAYMENT OPTIONS This part contains methods of payments of the Death and Annuity Benefits. Death Benefits must be paid in accordance with Part 5: Payment of Benefits. Monthly income payments are illustrated, but other frequencies of payments may be available. Option Selection You may select the option under which benefits will be paid while the Annuitant is still alive and prior to the Annuity Date. If no option is selected on the Annuity Date, Life Income Option 2(d) will be used automatically. The Installment Income Options (Option 1) We will pay monthly income for a se Options term or amount. The first payment is due on the Annuity Date. The right to withdraw money under the Installment Income Options will be as agreed upon when the option is elected. The following Installment Income Options are available. 1(a) Income for a Selected Term. We will make equal monthly payments for the number of years selected (not less than 5 years or more than 25 years). The monthly income for each $1,000 applied will not be less than those shown in Table 1. This table is based on interest guaranteed at a 1% annual effective rate. 1(b) Income of Selected Amount. We will make equal monthly payments of an amount selected. Payments will continue until the amount applied, including interest, has been paid. Payments must be made for at least 5 years and for not more than 25 years. We guarantee interest at a 1 % annual effective rate. Form No. 7954-PA Page 10 Table 1 - Installment Income Payments for a Selected Term (Per $1,000) Years Monthly Years Monthly Years Monthly Income Income Income 5 $17.08 12 $7.36 19 $4.81 6 14.30 13 6.83 20 4.59 7 12.32 14 6.37 21 4.40 8 10.83 15 5.98 22 4.22 9 9.68 16 5.63 23 4.05 10 8.75 17 5.33 24 3.90 11 7.99 18 5.05 25 3.76 Form No. 7954-PA Page 11 Life Income Options (Option 2) Payments depend on the life of the Annuitant. The monthly income for each $1,000 applied will not be less than those shown in Table 2. We will pay monthly income to the named person for the certain period selected and then for as long as the Annuitant is alive. The first payment is due on the Annuity Date. The money applied under a Life Income Option cannot be withdrawn once payments begin. 2(a) Payments For Life Only. We will make equal monthly payments for the lifetime of the Annuitant. Payments stop when the Annuitant dies. 2(b) Payments For Life with Thirty (30) Months Guaranteed. We will make equal monthly payments for 30 months and then for as long as the Annuitant is alive. 2(c) Payments For Life with Sixty (60) Months Guaranteed. We will make equal monthly payments for 60 months and then for as long as the Annuitant is alive. 2(d) Payments For Life with One Hundred Twenty (120) Months Guaranteed. We will make equal monthly payments for 120 months and then for as long as the Annuitant is alive. The values in Table 2 on the following page are based on the Annuitant's age (nearer birthday) on the Annuity Date. We may require proof of age. The values in this table are based on interest guaranteed at a 1% annual effective rate and the a2000 Individual Annuity Mortality Table with a 1 % improvement per year for fifteen years after election. Amounts of income for any age not shown will be furnished on request. Form No. 7954-PA Page 12 Table 2 - Life Income Payments (Per $1,000) If the Annuitant is Male If the Annuitant is Female Age 2(a) 2(b) 2(c) 2(d) 2(a) 2(b) 2(c) 2(d) Life Life with Life with Life with Life Life with Life with Life with Only 30 Mos 60 Mos 120 Mos Only 30 Mos 60 Mos 120 Mos 55 3.26 3.26 3.25 3.23 2.99 2.99 2.99 2.98 56 3.34 3.34 3.33 3.31 3.06 3.06 3.06 3.05 57 3.43 3.43 3.42 3.39 3.14 3.14 3.14 3.12 58 3.53 3.53 3.52 3.48 3.23 3.22 3.22 3.20 59 3.63 3.63 3.62 3.58 3.31 3.31 3.31 3.29 60 3.74 3.74 3.73 3.68 3.41 3.40 3.40 3.37 61 3.85 3.85 3.84 3.78 3.50 3.50 3.50 3.47 62 3.98 3.97 3.96 3.90 3.61 3.61 3.60 3.56 63 4.11 4.10 4.09 4.01 3.72 3.72 3.71 3.67 64 4.25 4.24 4.22 4.14 3.84 3.83 3.82 3.78 65 4.40 4.39 4.37 4.27 3.96 3.96 3.95 3.89 66 4.56 4.55 4.52 4.40 4.10 4.09 4.08 4.02 67 4.73 4.72 4.69 4.54 4.24 4.24 4.22 4.15 68 4.91 4.90 4.86 4.69 4.39 4.39 4.37 4.28 69 5.11 5.09 5.04 4.84 4.56 4.55 4.53 4.43 70 5.31 5.30 5.24 5.00 4.74 4.73 4.70 4.58 71 5.53 5.51 5.45 5.17 4.93 4.92 4.89 4.74 72 5.77 5.74 5.66 5.34 5.14 5.13 5.09 4.91 73 6.02 5.99 5.90 5.51 5.37 5.35 5.30 5.09 74 6.29 6.26 6.14 5.69 5.61 5.59 5.53 5.27 75 6.58 6.54 6.40 5.87 5.88 5.85 5.78 5.47 76 6.89 6.84 6.67 6.06 6.16 6.13 6.04 5.67 77 7.23 7.16 6.96 6.24 6.47 6.44 6.33 5.87 78 7.58 7.50 7.27 6.43 6.81 6.77 6.63 6.08 79 7.97 7.87 7.59 6.62 7.17 7.12 6.95 6.29 80 8.38 8.26 7.92 6.80 7.57 7.50 7.30 6.50 81 8.82 8.68 8.27 6.98 8.00 7.92 7.66 6.71 82 9.29 9.12 8.64 7.16 8.47 8.37 8.05 6.92 83 9.79 9.59 9.01 7.33 8.98 8.85 8.45 7.12 84 10.33 10.08 9.40 7.49 9.53 9.36 8.87 7.31 85 10.91 10.61 9.80 7.64 10.13 9.92 9.31 7.48 86 11.53 11.16 10.20 7.78 10.77 10.51 9.76 7.65 87 12.19 11.74 10.62 7.91 11.46 11.13 10.21 7.80 88 12.89 12.35 11.03 8.03 12.20 11.78 10.67 7.94 89 13.63 12.99 11.45 8.14 12.99 12.46 11.14 8.07 90 14.43 13.65 11.86 8.25 13.83 13.17 11.58 8.18 91 8.34 8.28 92 8.42 8.37 93 8.49 8.45 94 8.55 8.51 95 8.60 8.57 96 8.65 8.62 97 8.68 8.66 98 8.71 8.70 99 8.73 8.72 Form No. 7954-PA Page 13 Joint and Survivor Life Income (Option 3) We will make equal monthly payments during the joint lifetime of two persons and the remaining lifetime of the survivor. The monthly income for each $1,000 applied for sample age combinations will not be less than those shown in Table 3. The first payment is due on the Annuity Date. The money applied under a joint and Survivor Life Income Option cannot be withdrawn once payments begin. If the Joint Annuitant is the Annuitant's spouse, the amount of each monthly payment made to the spouse as survivor will not exceed the amount of each monthly payment made to the Annuitant. If the Joint Annuitant is not the Annuitant's spouse, the option elected must be in such form that the present value of the payments to the Annuitant will exceed one-half of the present value of all payments to be made to the Annuitant and Joint Annuitant. Present values will be determined as of the Annuity Date on the basis of the actuarial assumptions We use in determining the amount of the annuity payments. The values in Table 3 are based on the Annuitants' ages (nearer birthday) on the Annuity Date. We may require proof of ages. The values in this table are based on interest guaranteed at a 1% annual effective rate and the a2000 Individual Annuity Mortality Table with a 1% improvement per year for fifteen years after election. Amounts of income for any ages not shown will be furnished on request. Table 3 - Monthly Life Income While Either Person Lives (Per $1,000) Female Age -> 55 60 65 70 75 80 85 90 95 Male Age 55 2.75 2.87 3.00 3.11 3.19 3.25 3.28 3.30 3.31 60 2.83 3.01 3.20 3.37 3.52 3.62 3.68 3.72 3.74 65 2.91 3.14 3.40 3.68 3.92 4.11 4.24 4.31 4.35 70 2.97 3.24 3.S9 3.97 4.36 4.69 4.95 5.11 5.20 75 3.01 3.32 3.73 4.23 4.79 5.33 5.79 6.12 6.31 80 3.03 3.37 3.83 4.43 5.16 5.96 6.73 7.34 7.75 85 3.05 3.40 3.89 4.56 5.43 6.50 7.66 8.70 9.48 90 3.06 3.41 3.92 4.64 5.62 6.91 8.46 10.05 11.39 95 3.06 3.42 3.94 4.68 5.73 7.19 9.09 11.24 13.28 More Information About Our Payment Options We may agree to other Installment Income or Life Income options. Right to Increase Monthly Income Subject to Our approval, a person who is to receive payments may make an extra contribution at the time of option selection to increase the income to be received. The contribution will be applied under the option at the same rates as are the benefits. We may make a charge, which will not exceed 3% of the extra contribution, plus any Premium Tax required. We may limit the extra contribution to an amount equal to the benefits. Amounts Too Small If payments would be less than $20, We may change the frequency of payments or pay the benefits in cash. Automatic Cancellation A previous election of a Payment Option for Death Benefits will be cancelled if the Beneficiary is changed. Payments to Minors While a person named to receive benefits is a minor, We will make all payments to the court appointed guardian of the minor's estate. We may require proof of age of any such person. Form No. 79S4-PA Page 14 PART 8: SPECIAL ENHANCED LIFE INCOME OPTIONS If both the Policy and the Annuitant meet Eligibility Requirements detailed in this Part of the Policy, You may be entitled to apply some or all of the value of the Policy to provide a Life Income that is higher than that otherwise available under Part 7: The Payment Options. If You are entitled to do so, You may choose an Option from this Part under which You want the annuity payments to be made. Even if the Policy and Annuitant meet the Eligibility Requirements, it is not mandatory that You elect to make use of this Special Enhanced Life Income. All of the other benefits of this Policy, including those under Part 7: The Payment Options, are unaffected by the presence of these benefit options. None of the provisions of Part 7 apply to the Special Enhanced Life Income Options available under this Part. Election Date The Election Date is the date We receive a request from You electing to use some or all of the value of Your Policy to provide an annuity (see the Cash Value provision of this Policy) under the provisions of this Part of the Policy. The request must be in a form acceptable to us. Commencement Date The Commencement Date is the date We approve all proofs required by this Part; if this date is on a 29th, 30th, or 31st of a month, the Commencement Date is the next business day on or following the subsequent 1S of a month. Activities of Daily Living The Activities of Daily Living are: 1. Bathing: washing oneself by sponge bath or in either a tub or shower, including the tasks of getting into or out of the shower; 2. Dressing: putting on and taking off all items of clothing and any required braces, fasteners, or artificial limbs; 3. Transferring: moving into and out of a bed, chair, or wheelchair; 4. Toileting: getting to and from the toilet, getting on and off the toilet, and performing related personal hygiene; 5. Continence: ability to maintain control of bowel and bladder function or, when not able to maintain control of bowel or bladder function, ability to perform related personal hygiene (including caring for catheter or colostomy bag); 6. Eating: feeding oneself by getting food into the body from a receptacle (such as a cup, plate, or table) or by feeding tube or intravenously. Without Substantial Assistance Without Substantial Assistance means: 1. without the physical assistance of another person, the Annuitant would be unable to perform the Activity of Daily Living; or 2. the presence of another person within arm's reach of the Annuitant is necessary to prevent, by physical intervention, injury to the Annuitant while the Annuitant performs the Activity of Daily Living. Form No. 7954-PA Page 15 Eligibility Requirements The Eligibility Requirement for the Policy is that it has been in force at least five (5) years on the date the Special Enhanced Life Income commences. The Eligibility Requirements for the Annuitant are the following. 1. The Annuitant must be a U.S. resident. 2. The Annuitant must be at least fifty-five (55) years old and no more than ninety (90) years old on the Commencement Date. 3. We must receive proof satisfactory to Us that the Annuitant is unable to perform, without Substantial Assistance from another individual, at least two (2) of the six (6) Activities of Daily Living (ADLs ) defined above. This inability to perform the ADLs must be due to a permanent loss of functional capacity, and should We choose to use an independent health care professional (see How to Elect a Special Enhanced Life Income later in this Part) that person must agree and document that the loss is expected to be permanent. Special Enhanced Life Income Payment Options (Option 4) Payments depend on the life of the Annuitant. The monthly income for each $1,000 applied will not be less than those shown in Table 4. We will pay the monthly income to the named person for the certain period selected and then for as long as the Annuitant is alive. The money applied under the Special Enhanced Life Income Option cannot be withdrawn once payments begin. The first payment is due on the Commencement Date, but We may take up to thirty (30) days for accounting and administration before We make the first payment. Payments after the first are due on the same day of the month as the Commencement Date. Monthly Income payments are illustrated, but other frequencies of payments may be available. The following Special Enhanced Life Income Payment Options are available. 4(a) Payments for Life Only We will make equal monthly payments for the lifetime of the Annuitant. Payments stop when the Annuitant dies. 4(b) Payments for Life with Thirty (30) Months Guaranteed We will make equal monthly payments for 30 months and then for as long as the Annuitant is alive. 4(c) Payments for Life with Sixty (60) Months Guaranteed We will make equal monthly payments for 60 months and then for as long as the Annuitant is alive. 4(d) Payments for Life with One Hundred Twenty (120) Months Guaranteed We will make equal monthly payments for 120 months and then for as long as the Annuitant is alive. Form No. 7954-PA Page 16 The values in Table 4 are based on the Annuitant's age (nearer birthday) on the Commencement Date. We may require proof of age. The values in this table are based on interest guaranteed at a 1% annual effective rate and a substandard a2000 Individual Annuity Mortality Table with a 1% improvement per year for fifteen years after election. Table 4 - Special Enhanced Life Income Payments (Per $1,000) If the Annuitant is Male If the Annuitant is Female Age 4(a) 4(b) 4(c) 4(d) 4(a) 4(b) 4(c) 4(d) Life Life with Life with Life with Life Life with Life with Life with Only 30 Mos. 60 Mos. 120 Mos. Only 30 Mos. 60 Mos. 120 Mos. 55 7.03 6.92 6.65 S.83 5.25 5.21 5.10 4.73 56 7.15 7.04 6.75 5.90 5.34 5.30 5.18 4.79 57 7.28 7.16 6.86 5.97 5.44 5.39 5.27 4.86 58 7.41 7.29 6.97 6.04 5.53 5.48 5.35 4.92 59 7.55 7.42 7.09 6.11 5.62 5.57 5.43 4.98 60 7.71 7.57 7.22 6.19 5.72 5.67 5.52 5.04 61 7.88 7.74 7.36 6.26 5.82 5.76 5.60 5.10 62 8.06 7.90 7.50 6.34 5.92 5.86 5.69 5.16 63 8.24 8.08 7.64 6.41 6.01 5.95 5.77 S.22 64 8.43 8.26 7.78 6.48 6.11 6.04 5.85 5.27 65 8.63 8.43 7.93 6.55 6.20 6.13 5.94 5.33 66 8.83 8.61 8.06 6.62 6.30 6.23 6.02 5.39 67 9.02 8.78 8.19 6.68 6.39 6.31 6.10 5.45 68 9.19 8.94 8.31 6.74 6.49 6.40 6.18 5.50 69 9.35 9.09 8.42 6.79 6.58 6.49 6.26 5.56 70 9.50 9.22 8.52 6.84 6.67 6.58 6.34 5.63 71 9.63 9.33 8.61 6.89 6.77 6.67 6.42 5.69 72 9.75 9.44 8.70 6.94 6.87 6.77 6.51 S.76 73 9.87 9.55 8.80 6.98 6.97 6.87 6.60 5.84 74 10.00 9.67 8.89 7.03 7.08 6.98 6.71 5.93 75 10.15 9.82 9.01 7.09 7.21 7.10 6.82 6.02 76 10.35 9.99 9.14 7.15 7.36 7.25 6.96 6.13 77 10.54 10.16 9.26 7.21 7.52 7.41 7.11 6.25 78 10.72 10.32 9.38 7.27 7.71 7.59 7.28 6.37 79 10.90 10.48 9.50 7.33 7.92 7.80 7.47 6.51 80 11.08 10.64 9.63 7.39 8.17 8.05 7.70 6.67 81 11.28 10.82 9.77 7.46 8.S0 8.36 7.98 6.83 82 11.48 11.00 9.91 7.54 8.86 8.70 8.28 7.00 83 11.70 11.20 10.07 7.62 9.26 9.08 8.61 7.17 84 11.95 11.43 10.26 7.70 9.71 9.51. 8.97 7.33 85 12.25 11.71 10.47 7.79 10.23 10.00 9.36 7.50 86 12.64 12.05 10.72 7.89 10.85 10.57 9.80 7.66 87 13.06 12.42 10.99 7.98 11.52 11.17 10.24 7.81 88 13.53 12.83 11.28 8.08 12.24 11.81 10.68 7.94 89 14.06 13.30 11.60 8.17 13.01 12.47 11.14 8.07 90 14.69 13.85 11.95 8.26 13.83 13.17 11.58 8.18 Amounts Too Small If payments would be less than $20, We may change the frequency of payments or pay the benefits in cash. Form No. 7954-PA Page 17 Limitations and Exclusions The requirement of the need for Substantial Assistance shall not have been met if that need was: 1. caused by any war or any act of war (whether declared or undeclared); or 2. caused by participation in a felony, riot, or insurrection; or 3. intentionally self-inflicted; or 4. required as a result of alcoholism or drug addiction (unless the addiction was the result of administration of the drugs as part of a legitimate treatment by a licensed physician). If You choose to apply less than the full value of this Policy to provide a Special Enhanced Life income, the annualized amount of the payments must be at least $1,000.00. You agree that We must be notified in a timely fashion of the Annuitant's death and that the responsible individuals must return any payments made after the date of the Annuitant's death not guaranteed by the option chosen. The Annuitant must be available in the United States prior to the Commencement Date and at least once every twelve (12) months following the Commencement Date to prove continued life status. If the Annuitant is not available during this period, We will assume the Annuitant is not living and will stop payments after the guaranteed period, if any, under the provisions of this Part of the Policy. If this happens and the Annuitant later proves his or her continued life status in the United States, We will pay any payments that were not made in a lump sum and commence subsequent payments. How to Elect a Special Enhanced Life Income If You believe the requirements for the Special Enhanced Life Income are met, You can notify Us by contacting Us in writing at the address on the Policy cover. You should include: 1. Your Policy Number (see Data Pages); 2. Your name; 3. the Annuitant's name, if different; 4. the Activities of Daily Living with which the Annuitant needs Substantial Assistance; and S, the nature of the Annuitant's need for Substantial Assistance. In order to determine whether You are eligible for Special Enhanced Life Income: We have the right to have the Annuitant examined by an independent health care professional contracted by Us to provide such services at Our expense, and We have the right to conduct an on-site assessment. 2. The Annuitant and/or the Annuitant's legally-qualified representative must cooperate with Us so that the independent health care professional can obtain satisfactory proof from the Annuitant, the Annuitant's physician(s), the Annuitant's care-giver(s), and/or other persons familiar with the Annuitant's condition. 3. We may require and We must be given access to the Annuitant's medical and/or care-giver records to obtain information about the Annuitant's condition. After We have received all information We deem necessary, including information We request from You and all information We request or seek in the above three instances, We will approve or deny Your request for Special Enhanced Life Income as soon as reasonably possible. Within ten (10) days of having received all necessary information, We will send You written notice of Our decision or of Our need for additional time and the reason for that need. At the end of every subsequent forty-five (45) days, until We approve or deny Your request for Special Enhanced Life Income, We will send You notice of Our need for additional time and the reason for that need. Form No. 7954-PA Page 18 If We deny the eligibility for Special Enhanced Life Income, We will review Our decision if You ask that We do so, in writing, within sixty (60) days of receiving Our decision to deny. Your request should provide Us the following: 1. the reason You disagree with Our decision; 2. facts and/or factors You believe We should consider in Our review; and 3. whom We may contact (please include names and complete contact information) to gather any additional pertinent information regarding the Annuitant's need for Substantial Assistance. Within sixty (60) days of the day We receive Your request, We will review the denial and make a final decision. Our final decision will be in writing and, if it is a denial, We will include Our specific reasons for the denial and make available all information directly relating to such denial. At any time prior to the Commencement Date, You may revoke Your election. Form No. 7954-PA Page 19 GUARANTEED LIFETIME WITHDRAWAL BENEFIT RIDER Life Insurance Company of the Southwest (LSW) • www.lifeofsouthwest.com 1300 West Mockingbird Lane • Dallas, Texas 75247-4921 • Customer Service 800-579-2878 This Guaranteed Lifetime Withdrawal Benefit Rider (Rider) provides certain withdrawals that are guaranteed to be available for the Annuitant's lifetime. The withdrawals are made from the Policy to which this Rider is attached. If only payments of the withdrawals guaranteed by this Rider are made, Guaranteed Withdrawal Payments will continue to be made for the lifetime of the Annuitant notwithstanding that the values of the Policy are reduced to zero. Excess withdrawals, as defined in this Rider, will reduce and may eliminate future guaranteed withdrawal payments. All benefits are subject to the terms of this Rider. Please read Your Policy and this Rider carefully. THIS RIDER MAY BE CANCELLED OR TERMINATED ONLY UNDER LIMITED CIRCUMSTANCES. PLEASE REFER TO PART 7: TERMINATION AND PART 8: CANCELLATION. This Rider may use terms that are defined in the Policy; when this occurs, the definition supplied in the Policy applies to this Rider. Other terms may be defined in this Rider, and those terms are bold-faced when they are defined. Terms defined in the Rider Coverage Pages are used in subsequent sections of this Rider. Please refer back to these Rider Coverage Pages when reading Your Rider: Base Policy Number 709637X Rider Issue Date April 14, 2009 Rider Issue Age 72 Accumulation Years 20 Years Accumulation Rollup Rate 7.00% Annual Rider Charge Rate Rider Years 1 - 10 0.40% Annual Rider Years 11 and after 0.50% Annual Waiting Period 1 Year Cancellation Period 5 Years Income Benefit Adjustment Dates April 14, 2014 April 14, 2019 April 14, 2024 April 14, 2029 Benefit Age 60 Enhanced Benefit Waiting Period 5 Years Form No. 7960-PA Rider Coverage Page 1 of 2 GUARANTEED WITHDRAWAL PERCENTAGE TABLE Attained Single Life (Two Lives) Age Guaranteed Enhanced joint 60 5.00 8.00 4.50 61 5.10 8.10 4.60 62 5.20 8.20 4.70 63 5.30 8.30 4.80 64 5.40 8.40 4.90 65 5.50 8.50 5.00 66 5.60 8.60 5.10 67 5.70 8.70 5.20 68 5.80 8.80 5.30 69 5.90 8.90 5.40 70 6.00 9.00 5.50 71 6.10 9.10 5.60 72 6.20 9.20 5.70 73 6.30 9.30 5.80 74 6.40 9.40 5.90 75 6.50 9.50 6.00 76 6.60 9.60 6.10 77 6.70 9.70 6.20 78 6.80 9.80 6.30 79 6.90 9.90 6.40 80 7.00 10.00 6.50 81 7.10 10.10 6.60 82 7.20 10.20 6.70 83 7.30 10.30 6.80 84 7.40 10.40 6.90 85 7.50 10.50 7.00 86 7.60 10.60 7.10 87 7.70 10.70 7.20 88 7.80 10.80 7.30 89 7.90 10.90 7.40 90+ 8.00 11.00 7.50 Form No. 7960-PA Rider Coverage Page 2 of 2 TABLE OF CONTENTS PAGE GUARANTEED LIFETIME WITHDRAWAL BENEFIT RIDER 1 PART I: THE BENEFITS 1 PART 2: THE RIDER CHARGE Rider Charge During the Accumulation Period 2 Rider Charge During the Withdrawal Period 2 PART 3: GENERAL PROVISIONS Annuitant 2 Attained Age 2 PART 4: GUARANTEED WITHDRAWAL BENEFIT Start of Benefit Payments 2 Guaranteed Withdrawal Payment 3 Income Base 3 Guaranteed Withdrawal Percentage 3 Withdrawals During the Withdrawal Period 3 Impact of Excess Withdrawals 4 Impact of Withdrawals During the Withdrawal Period on the Policy's Accounts 4 Guaranteed Withdrawal Payment Step-Up (Increases During Withdrawal Period) 4 Joint Withdrawal Option 4 Enhanced Benefit 5 PART S: SPOUSAL CONTINUATION If You Die During the Accumulation Period 6 If You Die During the Withdrawal Period 6 PART 6: CONTINGENT ANNUITANT 6 PART 7: TERMINATION 7 PART 8: CANCELLATION 7 Form No. 7960-PA - I - GUARANTEED LIFETIME WITHDRAWAL BENEFIT RIDER Life Insurance Company of the Southwest (LSW) • www.lifeofsouthwest.com 1300 West Mockingbird Lane • Dallas, Texas 75247-4921 • Customer Service 800-579-2878 PART I: THE BENEFITS To access the benefits under this Rider, You must make the request in writing. Prior to the date We make the first payment under this Guaranteed Lifetime Withdrawal Benefit, the Rider is said to be in the Accumulation Period. Withdrawals during the Accumulation Period are: • governed by the terms of the Policy and not this Rider; and will reduce the Guaranteed Withdrawal Payment that will be available to You once You start the Guaranteed Withdrawal Payments. When You first request a withdrawal under this Rider, We determine the maximum annual benefit available, termed the Guaranteed Withdrawal Payment (see Guaranteed Withdrawal Payment, Part 4). After We make the first benefit payment, the Policy is said to be in the Withdrawal Period. The annual amount of withdrawal benefit You request for any Policy Year during the Withdrawal Period may be no larger than the Guaranteed Withdrawal Payment. You may have all or any portion of the Guaranteed Withdrawal Payment paid in annual, semi-annual, quarterly, or monthly installments (Scheduled Withdrawal Payment). The amount of the semi-annual, quarterly, or monthly installment is the annual payment divided by two (2), four (4), or twelve (12) respectively. You may start, stop, or change a Scheduled Withdrawal Payment at any time during the Withdrawal Period. If You change a Scheduled Withdrawal Payment, it cannot be greater than the Guaranteed Withdrawal Payment for the applicable Policy Year. The Withdrawal Period ends when the Rider terminates (see Part 7: Termination). The Accumulation Period does not resume when a Scheduled Withdrawal Payment is stopped. Each Scheduled Withdrawal Payment and other withdrawals You request from the Policy will reduce the Policy's Accumulation Value and Policy Value, as defined in the Policy. If a Scheduled Withdrawal Payment results in both of these values being zero, then: • We will continue to make the Scheduled Withdrawal Payment until the death of the Annuitant if the terms of this Rider so provide; and • all other riders attached to the Policy will terminate. You have the right to withdraw any amount so provided by the Policy. Excess Withdrawals only apply to certain withdrawals after Guaranteed Withdrawal Payments have begun. Each withdrawal will be an Excess Withdrawal to the extent it and the sum of previous withdrawals in that Policy Year exceed the Guaranteed Withdrawal Payment for that Policy Year. Withdrawals taken in a Policy Year before the start of the Withdrawal Period will not be considered in the sum of previous withdrawals. If any portion of a withdrawal is an Excess Withdrawal, such Excess Withdrawal will reduce or may eliminate future Guaranteed Withdrawal Payments according to the provisions hereof (see Impact of Excess Withdrawals, Part 4). PART 2: THE RIDER CHARGE We make an annual charge, called the Rider Charge, for this Rider. We will deduct the Rider Charge from the Policy Value and from all Interest Accounts in proportion to their values. Form No. 7960-PA Page 1 The first Rider Charge is made on the first Policy anniversary after the Rider Issue Date with additional Rider Charges made annually thereafter while this Rider is in force. If the Rider is issued on a Policy anniversary after the Policy's issue date, then the first Rider Charge will occur on the Rider Issue Date. Rider Charge During the Accumulation Period The Rider Charge during the Accumulation Period is determined separately each time the Rider Charge is assessed and equals (a) times (b) where: (a) is the Rider Charge Rate found on Rider Coverage Page 1 and varying by the number of Rider Years this Rider has been in force; and (b) is the Policy's Accumulation Value on the applicable Policy anniversary date determined after any interest has been credited to the Policy. Rider Charge During the Withdrawal Period The Rider Charge during the Withdrawal Period is determined separately each time the Rider Charge is assessed and equals (a) times (b) where: (a) is the Rider Charge Rate in effect at the beginning of the Withdrawal Period, continuing unchanged until this Rider terminates; and (b) is the Policy's Accumulation Value on the applicable Policy anniversary date determined after any interest has been credited to the Policy. PART 3: GENERAL PROVISIONS This Rider is part of the Policy to which it is attached. The Rider is subject to all terms, conditions, and provisions contained in the Policy. Where the provisions of this Rider are inconsistent with the provisions of the Policy, including the provisions of any other riders or endorsements, the provisions of this Rider will control. Coverage under this Rider begins on the Rider Issue Date, shown on Rider Coverage Page 1. This Rider has no cash value or loan value. Annuitant Annuitant means the Annuitant as defined in the Policy, unless the joint Withdrawal Option is elected under this Rider, in which case Annuitant means both the Annuitant and the Joint Annuitant together (see joint Withdrawal Option, Part 4). Attained Age A person's Attained Age on any date is that person's age as of his or her last birthday on that date. PART 4: GUARANTEED WITHDRAWAL BENEFIT This section covers how, when, and the extent to which Rider benefits are paid. We will make all payments directly to You unless You direct us otherwise. Start of Benefit Payments We will make the first Scheduled Withdrawal Payment after You make a request in writing provided that, on the date of the first Scheduled Withdrawal Payment: • the Waiting Period, shown on Rider Coverage Page 1 and measured from the Rider Issue Date, has expired; and • the Annuitant's Attained Age is at least as great as the Benefit Age shown on Rider Coverage Page 1. Form No. 7960-PA Page 2 The Withdrawal Period cannot begin until You repay all Policy loans, if applicable. You may not take any Policy loans after the Withdrawal Period begins. Guaranteed Withdrawal Payment The Guaranteed Withdrawal Payment is determined at the beginning of the Withdrawal Period and at the beginning of each Policy Year thereafter. It represents the maximum amount that can be paid in the applicable Policy Year without any amount being treated as an Excess Withdrawal. The Guaranteed Withdrawal Payment on the date the Withdrawal Period begins equals (a) times (b), where: (a) is the greater of, on the date the Withdrawal Period begins, the Policy's Accumulation Value or the Income Base; and (b) is the Guaranteed Withdrawal Percentage, taken from the Guaranteed Withdrawal Percentage Table on Rider Coverage Page 2, on the date the Withdrawal Period begins. Income Base The Income Base is a calculated amount used solely in the determination of the amount of the Guaranteed Withdrawal Payment. It is established on the Rider Issue Date as being equal to the Policy's Accumulation Value. The Income Base increases after the Rider Issue Date at the Accumulation Rollup Rate, shown on Rider Coverage Page 1, until the earlier of the end of the Accumulation Period or the expiry of the Accumulation Years, shown on Rider Coverage Page 1. Thereafter, there is no further increase in the Income Base, except as defined below. During the Accumulation Period: • We will increase the income Base by any amount other than credited interest added to the Accumulation Value; and • We will reduce the Income Base any time a withdrawal is made from the Accumulation Value, reducing it in the same proportion as the Accumulation Value is reduced. During the Accumulation Period We will increase the Income Base to equal the Accumulation Value, if larger, on each of the income Benefit Adjustment Dates shown on Rider Coverage Page 1. Guaranteed Withdrawal Percentage The value from the Guaranteed Withdrawal Percentage Table used for all Rider purposes is determined by the Annuitant's Attained Age on the appropriate date. The column used is the Single-Life Guaranteed column unless the Joint Withdrawal Option is chosen (see joint Withdrawal Option, Part 4), in which case the (rwo Lives) Joint column is used. If the Joint Withdrawal Option is chosen, the Guaranteed Withdrawal Percentage is based on the attained age of the younger of the joint Annuitants on the appropriate date. Withdrawals During the Withdrawal Period You may request withdrawals at any time. During the Withdrawal Period, We first treat a withdrawal request as being for a Guaranteed Withdrawal Payment. Any withdrawal during a Policy Year that exceeds the greater of the Required Minimum Distribution, defined below, or the Guaranteed Withdrawal Payment for such Policy Year will be an Excess Withdrawal. During each full Policy Year starting on or after the beginning of the Withdrawal Period, withdrawals are not subject to Withdrawal Charges to the extent their cumulative total during a Policy Year does not exceed the greatest of (Maximum Free Withdrawal): • the Guaranteed Withdrawal Payment for that Policy Year (see Guaranteed Withdrawal Payment, Part 4); or • the free withdrawal amount specified in the Policy for that Policy Year (Free Withdrawal Amount); or • an amount equal to the Required Minimum Distribution for that Policy Year. The Required Minimum Distribution is determined annually in accordance with applicable tax law and regulation in effect at the time of the required distribution taken, determined as if the Policy were the only annuity owned by the Owner (Required Minimum Distribution). Form No. 7960-PA Page 3 The Accumulation Value will be reduced by Withdrawal Charges to the extent the sum of all withdrawal(s), including Scheduled Withdrawal Payments, in a Policy Year exceed the Maximum Free Withdrawal. If the Withdrawal Period begins on any date that is not a Policy anniversary, the Accumulation Value will incur Withdrawal Charges to the extent any withdrawals, in the remainder of that Policy Year, including any portion of a Scheduled Withdrawal Payment, exceed the Free Withdrawal Amount. Impact of Excess Withdrawals To the extent an Excess Withdrawal is made during the Withdrawal Period: the Guaranteed Withdrawal Payment for subsequent Policy Years will be reduced by the ratio of the Excess Withdrawal (including any Withdrawal Charge) to the Accumulation Value prior to the withdrawal; and the Excess Withdrawal (also see Part 1: The Benefits) may be subject to Withdrawal Charges as defined in the Policy (see Withdrawals During the Withdrawal Period, Part 4). Impact of Withdrawals During the Withdrawal Period on the Policy's Accounts Interest is credited to the Indexed Accounts of the Policy only on Policy anniversaries. Interest is credited to the Declared Account daily. A Scheduled Withdrawal Payment is first made from the Declared Interest Account, to the extent there is sufficient value in the Declared Interest Account. Any insufficiency is then taken from the Indexed Interest Accounts in proportion to their values. On each Policy anniversary during the Withdrawal Period, after interest is credited, We will determine if the value of the Declared Interest Account is less than the Guaranteed Withdrawal Payment. If so, an amount will be transferred to the Declared Interest Account to increase its value to the amount of the Guaranteed Withdrawal Payment. The amount transferred will be transferred from all Indexed Interest Accounts in proportion to their values. If the cumulative value of the Indexed Interest Accounts is insufficient to increase the Declared Interest Account to the Guaranteed Withdrawal Payment, all of the values of the Indexed Interest Accounts will be transferred to the Declared Interest Account. Guaranteed Withdrawal Payment Step-Up (Increases During Withdrawal Period) On each Policy anniversary during the Withdrawal Period, the Guaranteed Withdrawal Payment is increased to the result of (a) times (b), where: (a) is the Accumulation Value on the Policy anniversary after interest has been credited; and (b) is the Guaranteed Withdrawal Percentage, taken from the Guaranteed Withdrawal Percentage Table on Rider Coverage Page 2, using the Annuitant's attained age at the time of such Policy anniversary. Joint Withdrawal Option You may choose, at the beginning of the Withdrawal period, to have the Guaranteed Withdrawal Payment based on the lives of the Annuitant and the Annuitant's married spouse (Joint Annuitants), provided the Attained Ages of each of the joint Annuitants is equal to or older than the Benefit Age. If You so elect, the beneficiary of the Policy shall be the spouse of the Annuitant, notwithstanding whether the application for the Policy provides otherwise. The Guaranteed Withdrawal Payment is guaranteed to be available until the death of the survivor of the joint Annuitants. All calculations of the Guaranteed Withdrawal Payment are made in the same manner as those for a single annuitant except that the entry from the Guaranteed Withdrawal Percentage Table is taken from the column for (Two Lives) Joint. The Enhanced Benefit is not available if the Joint Withdrawal Option is chosen. Form No. 7960-PA Page 4 THE ENHANCED BENEFIT AMOUNT IS NOT AVAILABLE UNLESS CERTAIN REQUIREMENTS ARE MET. THE ANNUITANT MUST BE A U.S. RESIDENT ON THE APPROVAL DATE AND THE ANNUITANT'S ATTAINED AGE MUST BE AT LEAST THE BENEFIT AGE. WE MUST RECEIVE SATISFACTORY PROOF THAT THE ANNUITANT IS UNABLE TO PERFORM, WITHOUT SUBSTANTIAL ASSISTANCE, AT LEAST TWO (2) OF THE SIX (6) ACTIVITIES OF DAILY LIVING (ADLSs) AND THE RIDER MUST HAVE BEEN IN FORCE FOR AT LEAST THE ENHANCED BENEFIT WAITING PERIOD. PLEASE REFER TO THE ENHANCED BENEFIT BELOW FOR EXACT REQUIREMENTS AND DETAILS. Enhanced Benefit If both the Annuitant and this Rider meet the Eligibility Requirements detailed below, the Guaranteed Withdrawal Payment will be increased to the Enhanced Benefit Amount, also defined below, if larger. The Rider Eligibility Requirement means the Rider must have been in force on the Approval Date for at least the Enhanced Benefit Waiting Period. The Enhanced Benefit Waiting Period, shown on Rider Coverage Page 1, begins on the Rider Issue Date. The Approval Date is the date We approve all proofs required by this Part. Eligibility Requirements The Eligibility Requirements for the Annuitant are the following: 1. The Annuitant must be a U.S. resident on the Approval Date. 2. The Annuitant's Attained Age must be at least the Benefit Age, shown on Rider Coverage Page 1. 3. We must receive proof satisfactory to Us that the Annuitant is unable to perform, Without Substantial Assistance, at least two (2) of the six (6) Activities of Daily Living (ADLs). This inability to perform the ADLs must be due to a permanent loss of functional capacity. Should We choose to use an independent health care professional to assist Us in the assessment of whether the requirements of this item are met, the Annuitant must agree to cooperate in that assessment. The Activities of Daily Living are: 1. Bathing: washing oneself by sponge bath or in either a tub or shower, including the tasks of getting into or out of the shower; 2. Dressing: putting on and taking off all items of clothing and any required braces, fasteners, or artificial limbs; 3. Transferring: moving into and out of a bed, chair, or wheelchair; 4. Toileting: getting to and from the toilet, getting on and off the toilet, and performing related personal hygiene; S. Continence: ability to maintain control of bowel and bladder function or, when not able to maintain control of bowel or bladder function, ability to perform related personal hygiene (including caring for catheter or colostomy bag); 6. Eating: feeding oneself by getting food into the body from a receptacle (such as a cup, plate, or table) or by feeding tube or intravenously. Without Substantial Assistance means: 1. without the physical assistance of another person, the Annuitant would be unable to perform the Activity of Daily Living; or 2. the presence of another person within arm's reach of the Annuitant is necessary to prevent, by physical intervention, injury to the Annuitant while the Annuitant performs the Activity of Daily Living. Form No. 7960-PA Page 5 Enhanced Benefit Amount The Enhanced Benefit Amount is calculated taking into account whether the Withdrawal Period has begun. 1. If the Approval Date is on or before the date the Withdrawal Period begins, the Enhanced Benefit Amount equals (a) times (b), where: (a) is the greater of the Policy's Accumulation Value or the Income Base on the date the Withdrawal Period begins; and (b) is the Guaranteed Withdrawal Percentage, taken from the Single-Life Enhanced column of the Guaranteed Withdrawal Percentage Table on Rider Coverage Page 2, on the date the Withdrawal Period begins. 2. If the Approval Date is after the Withdrawal Period has begun, the Enhanced Benefit Amount equals (a) times (b), where: (a) is the Policy's Accumulation Value on the Approval Date; and (b) is the Guaranteed Withdrawal Percentage, taken from the Single-Life Enhanced column of the Guaranteed Withdrawal Percentage Table on Rider Coverage Page 2, on the Approval Date. In either case, the Guaranteed Withdrawal Percentage is determined by the Annuitant's Attained Age on the later of the Approval Date or the date the Withdrawal Period begins. PART 5: SPOUSAL CONTINUATION If You Die During the Accumulation Period If You die during the Accumulation Period and Your spouse becomes the Annuitant of the Policy, all Rider benefits will be determined as if Your spouse had been the Annuitant since the Rider was issued. If You Die During the Withdrawal Period If You die during the Withdrawal Period and Your spouse becomes the Annuitant of the Policy: 1. Your spouse may withdraw each Policy Year, without incurring Withdrawal Charges, an amount equal to the larger of- • the Guaranteed Withdrawal Payment at the time of Your death; or • the Free Withdrawal Amount; or • the Required Minimum Distribution. Your spouse may do so until both the Accumulation Value and the Policy Value are zero. When both of these values become zero, the Policy and this Rider will terminate. 2. The Rider Charges cease upon Your death, and no benefits are provided by this Rider other than those identified in item 1 above. PART 6: CONTINGENT ANNUITANT If the Contingent Annuitant becomes the Annuitant, this Rider will continue as follows: • If this Rider is in the Accumulation Period, all Rider benefits will be based on the successor Annuitant; or • If this Rider is in the Withdrawal Period, this Rider will terminate and no further charges will be made for it, and no further withdrawal benefits will be paid. Form No. 7960-PA Page 6 PART 7: TERMINATION This Rider will automatically terminate when: • the Policy terminates, except if this Rider is in the Withdrawal Period when the Policy would otherwise terminate, in which case the Policy and the Rider will remain in force and the withdrawal benefits will continue until the death of the Annuitant or the latter death of the joint Annuitants, at which time the Policy and Rider terminate; or • You cancel this Rider. PART 8: CANCELLATION You may cancel this Rider after completion of the Cancellation Period shown on Rider Coverage Page 1. If You do so, no future benefits will be payable under this Rider, and no future Rider Charges will be made. SIGNED FOR LIFE INSURANCE COMPANY OF THE SOUTHWEST Secretary Form No. 7960-PA Page 7 Single Premium Equity-Indexed and Declared Interest Deferred Annuity. Benefits may be calculated based on the movement of an index or stipulated interest rates. Minimum underlying values. Income payments start on the Annuity Date. Death Benefit payable before the Annuity Date. Nonparticipating. LSW Life Insurance Company of the Southwest Form No. 7954-PA BUYER'S GUIDE TO FIXED DEFERRED ANNUITIES With Appendix for Equity-Indexed Annuities Reprinted with permission by Life Insurance Company of the Southwest (LSW) • www.lifeofsouthwest.com 1300 West Mockingbird Lane • Dallas, Texas 75247-4921 • Customer Service 800-579-2878 Prepared by the National Association of Insurance Commissioners Copyright 1999 The National Association of Insurance Commissioners is an association of state insurance regulatory officials. This association helps the various insurance departments to coordinate insurance laws for the benefit of all consumers. This guide does not endorse any company or policy. It is important that you understand the differences among various annuities so you can choose the kind that best fits your needs. This guide focuses on fixed deferred annuity contracts. There is, however, a brief description of variable annuities. If you're thinking of buying an equity-indexed annuity, an appendix to this guide will give you specific information. This Guide isn't meant to offer legal, financial or tax advice. You may want to consult independent advisors. At the end of this Guide are questions you should ask your agent or the company. Make sure you're satisfied with the answers before you buy. What is an Annuity? An annuity is a contract in which an insurance company makes a series of income payments at regular intervals in return for a premium or premiums you have paid. Annuities are most often bought for future retirement income. Only an annuity can pay an income that can be guaranteed to last as long as you live. An annuity is neither a life insurance nor a health insurance policy. It's not a savings account or a savings certificate. You shouldn't buy an annuity to reach short-term financial goals. Your value in an annuity contract is the premiums you've paid, less any applicable charges, plus interest credited. The insurance company uses the value to figure the amount of most of the benefits that you can choose to receive from an annuity contract. This guide explains how interest is credited as well as some typical charges and benefits of annuity contracts. A deferred annuity has two parts or periods. During the accumulation period, the money you put into the annuity, less any applicable charges, earns interest. The earnings grow tax-deferred as long as you leave them in the annuity. During the second period, called the payout period, the company pays income to you or to someone you choose. What are the Different Kinds of Annuities? This guide explains major differences in different kinds of annuities to help you understand how each might meet your needs. But look at the specific terms of an individual contract you're considering and the disclosure document you receive. If your annuity is being used to fund or provide benefits under a pension plan the benefits you get will depend on the terms of the plan. Contact your pension plan administrator for information. This Buyer's Guide will focus on individual fixed deferred annuities. Single Premium or Multiple Premium You pay the insurance company only one payment for a single premium annuity. You make a series of payments for a multiple premium annuity. There are two kinds of multiple premium annuities. One kind is a flexible premium contract. Within set limits, you pay as much premium as you want, whenever you want. In the other kind, a scheduled premium annuity, the contract spells out your payments and how often you'll make them. Form No. 5722 Page 1 Immediate or Deferred With an immediate annuity, income payments start no later than one year after you pay the premium. You usually pay for an immediate annuity with one payment. The income payments from a deferred annuity often start many years later. Deferred annuities have an accumulation period, which is the time between when you start paying premiums and when income payments start. Fixed or Variable • Fixed. During the accumulation period of a fixed deferred annuity, your money (less any applicable charges) earns interest at rates set by the insurance company or in a way spelled out in the annuity contract. The company guarantees that it will pay no less than a minimum rate of interest. During the payout period, the amount of each income payment to you is generally set when the payments start and will not change. Variable. During the accumulation period of a variable annuity the insurance company puts your premiums (less any applicable charges) into a separate account. You decide how the company will invest those premiums, depending on how much risk you want to take. You may put your premium into a stock, bond or other account, with no guarantees, or into a fixed account, with a minimum guaranteed interest. During the payout period of a variable annuity, the amount of each income payment to you may be fixed (set at the beginning) or variable (changing with the value of the investments in the separate account). How are the Interest Rates Set for My Fixed Deferred Annuity? During the accumulation period, your money (less any applicable charges) earns interest at rates that change from time to time. Usually, what these rates will be is entirely up to the insurance company. Current Interest Rate The current rate is the rate the company decides to credit to your contract at a particular time. The company will guarantee it will not change for some time period. • The initial rate is an interest rate the insurance company may credit for a set period of time after you first buy your annuity. The initial rate in some contracts may be higher than it will be later. This is often called a bonus rate. • The renewal rate is the rate credited by the company after the end of the set time period. The contract tells how the company will set the renewal rate, which may be tied to an external reference or index. Minimum Guaranteed Rate The minimum guaranteed interest rate is the lowest rate your annuity will earn. This rate is stated in the contract. Multiple Interest Rates Some annuity contracts apply different interest rates to each premium you pay or to premiums you pay during different time periods. Other annuity contracts may have two or more accumulated values that fund different benefit options. These accumulated values may use different interest rates. You get only one of the accumulated values depending on which benefit you choose. What Charges May be Subtracted from My Fixed Deferred Annuity? Most annuities have charges related to the cost of selling or servicing it. These charges may be subtracted directly from the contract value. Ask your agent or the company to describe the charges that apply to your annuity. Some examples of charges, fees and taxes are: Form No. 5722 Page 2 Surrender or Withdrawal Char es If you need access to your money, you may a able to take all or part of the value out of your annuity at any time during the accumulation period. If you take out part of the value, you may pay a withdrawal charge. If you take out all of the value and surrender, or terminate, the annuity, you may pay a surrender charge. In either case, the company may figure the charge as a percentage of the value of the contract, of the premiums you've paid or of the amount you're withdrawing. The company may reduce or even eliminate the surrender charge after you've had the contract for a stated number of years. A company may waive the surrender charge when it pays a death benefit. Some annuities have stated terms. When the term is up, the contract may automatically expire or renew. You're usually given a short period of time, called a window, to decide if you want to renew or surrender the annuity. If you surrender during the window, you won't have to pay surrender charges. If you renew, the surrender or withdrawal charges may start over. In some annuities, there is no charge if you surrender your contract when the company's current interest rate falls below a certain level. This may be called a bail-out option. In a multiple-premium annuity, the surrender charge may apply to each premium paid for a certain period of time. This may be called a rolling surrender or withdrawal charge. Some annuity contracts have a market value adjustment feature. If interest rates are different when you surrender your annuity than when you bought it, a market value adjustment may make the cash surrender value higher or lower. Since you and the insurance company share this risk, an annuity with an MVA feature may credit a higher rate than an annuity without that feature. Be sure to read the Tax Treatment section and ask your tax advisor for information about possible tax penalties on withdrawals. Free Withdrawal Your annuity may have a limited free withdrawal feature. That lets you make one or more withdrawals without a charge. The size of the free withdrawal is often limited to a set percentage of your contract value. If you make a larger withdrawal, you may pay withdrawal charges. You may lose any interest above the minimum guaranteed rate on the amount withdrawn. Some annuities waive withdrawal charges in certain situations, such as death, confinement in a nursing home or terminal illness. Contract Fee A contract fee is a flat dollar amount charged either once or annually. Transaction Fee A transaction fee is a charge per premium payment or other transaction. Percentage of Premium Charge A percentage of premium charge is a charge deducted from each premium paid. The percentage may be lower after the contract has been in force for a certain number of years or after total premiums paid have reached a certain amount. Premium Tax Some states charge a tax on annuities. The insurance company pays this tax to the state. The company may subtract the amount of the tax when you pay your premium, when you withdraw your contract value, when you start to receive income payments or when it pays a death benefit to your beneficiary. What are Some Fixed Deferred Annuity Contract Benefits? Annuity Income Payments. One of the most important benefits of deferred annuities is your ability to use the value built up during the accumulation period to give you a lump sum payment or to make income payments during the payout period. Income payments are usually made monthly but you may choose to receive them less often. The size of income payments is based on the accumulated value in your annuity and the annuity's benefit rate in effect when income payments start. The benefit rate usually depends on your age and sex, and the annuity payment option you choose. For example, you might choose payments that continue as long as you live, as long as your spouse lives, or for a set number of years. Form No. 5722 Page 3 There is a table of guaranteed benefit rates in each annuity contract. Most companies have current benefit rates as well. The company can change the current rate at any time, but the current rates can never be less than the guaranteed benefit rates. When income payments start, the insurance company generally uses the benefit rate in effect at that time to figure the amount of your income payment. Companies may offer various income payment options. You (the owner) or another person that you name may choose the option. The options are described here as if the payments are made to you. • Life Only. The company pays income for your lifetime. It doesn't make any payments to anyone after you die. This payment option usually pays the highest income possible. You might choose it if you have no dependents, if you have taken care of them through other means or if the dependents have enough income of their own. • Life Annuity with Period Certain. The company pays income for as long as you live and guarantees to make payments for a set number of years even if you die. This period certain is usually 10 or 20 years. If you live longer than the period certain, you'll continue to receive payments until you die. If you die during the period certain, your beneficiary gets regular payments for the rest of that period. If you die after the period certain, your beneficiary doesn't receive any payments from your annuity. Because the period certain is an added benefit, each income payment will be smaller than in a life-only option. • Joint and Survivor. The company pays income as long as either you or your beneficiary lives. You may choose to decrease the amount of the payments after the first death. You may also be able to choose to have payments continue for a set length of time. Because the survivor feature is an added benefit, each income payment is smaller than in a life-only option. Death Benefit In some annuity contracts, the company may pay a death benefit to your beneficiary if you die before the income payments start. The most common death benefit is the contract value or the premiums paid, whichever is more. Can My Annuity's Value be Different Depending on My Choice of Benefit? While all deferred annuities offer a choice of benefits, some use different accumulated values to pay different benefits. For example, an annuity may use one value if annuity payments are for retirement benefits and a different value if the annuity is surrendered. As another example, an annuity may use one value for long-term care benefits and a different value if the annuity is surrendered. You can't receive more than one benefit at the same time. What About the Tax Treatment of Annuities? Below is a general discussion about taxes and annuities. You should consult a professional tax advisor to discuss your individual tax situation. Under current federal law, annuities receive special tax treatment. Income tax on annuities is deferred, which means you aren't taxed on the interest your money earns while it stays in the annuity. Tax-deferred accumulation isn't the same as tax-free accumulation. An advantage of tax deferral is that the tax bracket you're in when you receive annuity income payments may be lower than the one you're in during the accumulation period. You'll also be earning interest on the amount you would have paid in taxes during the accumulation period. Most states' tax laws on annuities follow the federal law. Part of the payments you receive from an annuity will be considered as a return of the premium you've paid. You won't have to pay taxes on that part. Another part of the payments is considered interest you've earned. You must pay taxes on the part that is considered interest when you withdraw the money. You may also have to pay a 10% tax penalty if you withdraw the accumulation before age 59-1/2. The Internal Revenue Code also has rules about distributions after the death of a contract holder. Annuities used to fund certain employee pension benefit plans (those under Internal Revenue Code Sections 401(a), 401(k), 403(b), 457 or 414) defer taxes on plan contributions as well as on interest or investment income. Within the limits set by the law, you can use pretax dollars to make payments to the annuity. When you take money out, it will be taxed. You can also use annuities to fund traditional and Roth IRAs under internal Revenue Code Section 408. If you buy an annuity to fund an IRA, you'll receive a disclosure statement describing the tax treatment. Form No. 5722 Page 4 What is a Free Look Provision? Many states have laws which give you a set number of days to look at the annuity contract after you buy it. If you decide during that time that you don't want the annuity, you can return the contract and get all your money back. This is often referred to as a free look or right to return period. The free look period should be prominently stated in your contract. Be sure to read your contract carefully during the free look period. How Do I Know if a Fixed Deferred Annuity is Right for Me? The questions listed below may help you decide which type of annuity, if any, meets your retirement planning and financial needs. You should think about what your goals are for the money you may put into the annuity. You need to think about how much risk you're willing to take with the money. Ask yourself: • How much retirement income will I need in addition to what I will get from Social Security and my pension? • Will I need that additional income only for myself or for myself and someone else? • How long can I leave my money in the annuity? • When will I need income payments? • Does the annuity let me get money when I need it? • Do I want a fixed annuity with a guaranteed interest rate and little or no risk of losing the principal? • Do I want a variable annuity with the potential for higher earnings that aren't guaranteed and the possibility that I may risk losing principal? • Or, am I somewhere in between and willing to take some risks with an equity-indexed annuity? What Questions Should I Ask My Agent or the Company? • Is this a single premium or multiple premium contract? • Is this an equity-indexed annuity? • How long is the term? • What is the initial interest rate and how long is it guaranteed? • Does the initial rate include a bonus rate and how much is the bonus? • What is the guaranteed minimum interest rate? • What renewal rate is the company crediting on annuity contracts of the same type that were issued last year? • Are there withdrawal or surrender charges or penalties if I want to end my contract early and take out all of my money? How much are they? • Can I get a partial withdrawal without paying surrender or other charges or losing interest? • Does my annuity waive withdrawal charges for reasons such as death, confinement in a nursing home or terminal illness? • Is there a market value adjustment (MVA) provision in my annuity? • What other charges, if any, may be deducted from my premium or contract value? • If I pick a shorter or longer payout period or surrender the annuity, will the accumulated value or the way interest is credited change? • Is there a death benefit? How is it set? Can it change? • What income payment options can I choose? Once I choose a payment option, can I change it? Form No. S722 Page 5 Final Points to Consider Before you decide to buy an annuity, you should review the contract. Terms and conditions of each annuity contract will vary. Ask yourself if, depending on your needs or age, this annuity is right for you. Taking money out of an annuity may mean you must pay taxes. Also, while it's sometimes possible to transfer the value of an older annuity into a new annuity, the new annuity may have a new schedule of charges that could mean new expenses you must pay directly or indirectly. You should understand the long-term nature of your purchase. Be sure you plan to keep an annuity long enough so that the charges don't take too much of the money you put in. Be sure you understand the effect of all charges. If you're buying an annuity to fund an IRA or other tax-deferred retirement program, be sure that you're eligible. Also, ask if there are any restrictions connected with the program. Remember that the quality of service that you can expect from the company and the agent is a very important factor in your decision. When you receive your annuity contract, READ IT CAREFULLY. Ask the agent and company for an explanation of anything you don't understand. Do this before any free look period ends. Compare information for similar contracts from several companies. Comparing products may help you make a better decision. If you have a specific question or can't get answers you need from the agent or company, contact your state insurance department. Form No. 5722 Page 6 APPENDIX I Equity-Indexed Annuities This appendix to the Buyer's Guide for fixed Deferred Annuities will focus on equity-indexed annuities. Like other types of fixed deferred annuities, equity-indexed annuities provide for annuity income payments, death benefits and tax-deferred accumulation. You should read the Buyer's Guide for general information about those features and about provisions such as withdrawal and surrender charges. What are Equity-Indexed Annuities? An equity-indexed annuity is a fixed annuity, either immediate or deferred, that earns interest or provides benefits that are linked to an external equity reference or an equity index. The value of the index might be tied to a stock or other equity index. One of the most commonly used indices is Standard & Poor's 500 Composite Stock Price Index (the S&P 500'), which is an equity index. The value of any index varies from day to day and is not predictable. When you buy an equity-indexed annuity you own an insurance contract. You are not buying shares of any stock or index. While immediate equity-indexed annuities may be available, this appendix will focus on deferred equity- indexed annuities. *S&P 500 is a registered trademark of the McGraw-Hill Companies Inc., used with permission. How are They Different from Other Fixed Annuities? An equity-indexed annuity is different from other fixed annuities because of the way it credits interest to your annuity's value. Some fixed annuities only credit interest calculated at a rate set in the contract. Other fixed annuities also credit interest at rates set from time to time by the insurance company. Equity-indexed annuities credit interest using a formula based on changes in the index to which the annuity is linked. The formula decides how the additional interest, if any, is calculated and credited. How much additional interest you get and when you get it depends on the features of your particular annuity. Your equity-indexed annuity, like other fixed annuities, also promises to pay a minimum interest rate. The rate that will be applied will not be less than this minimum guaranteed rate even if the index-linked interest rate is lower. The value of your annuity also will not drop below a guaranteed minimum. For example, many single premium contracts guarantee the minimum value will never be less than 90 percent of the premium paid, plus at least 3% in annual interest (less any partial withdrawals). The guaranteed value is the minimum amount available during a term for withdrawals, as well as for some annuitizations (see Annuity Income Payments) and death benefits. The insurance company will adjust the value of the annuity at the end of each term to reflect any index increases. What are Some Equity-Indexed Annuity Contract Features? Two features that have the greatest effect on the amount of additional interest that may be credited to an equity-indexed annuity are the indexing method and the participation rate. It is important to understand the features and how they work together. The following describes some other equity-indexed annuity features that affect the index-linked formula. Indexing Method The indexing method means the approach used to measure the amount of change, if any, in the index. Some of the most common indexing methods, which are explained more fully later on, include annual reset (ratcheting), high-water mark, and point-to-point Form No. 5722 Page 7 Term The index term is the period over which index-linked interest is calculated; the interest is credited to your annuity at the end of a term. Terms are generally from one to ten years, with six or seven years being most common. Some annuities offer single terms while others offer multiple, consecutive terms. If your annuity has multiple terms, there will usually be a window at the end of each term, typically 30 days, during which you may withdraw your money without penalty. For installment premium annuities, the payment of each premium may begin a new term for that premium. Participation Rate The participation rate decides how much of the increase in the index will be used to calculate index-linked interest. For example, if the calculated change in the index is 9% and the participation rate is 70%, the index-linked interest rate for your annuity will be 6.3% (9% x 70% = 6.3%). A company may set a different participation rate for newly issued annuities as often as each day. Therefore, the initial participation rate in your annuity will depend on when it is issued by the company. The company usually guarantees the participation rate for a specific period (from one year to the entire term). When that period is over, the company sets a new participation rate for the next period. Some annuities guarantee that the participation rate will never be set lower than a specified minimum or higher than a specified maximum. Cap Rate or Cap Some annuities may put an upper limit, or cap, on the index-linked interest rate. This is the maximum rate of interest the annuity will earn. In the example given above, if the contract has a 6% cap rate, 6%, and not 6.3%, would be credited. Not all annuities have a cap rate. Floor on Equity Index-Linked Interest The floor is the minimum index-linked interest rate you will earn. The most common floor is 0%. A 0% floor assures that even if the index decreases in value, the index-linked interest that you earn will be zero and not negative. As in the case of a cap, not all annuities have a stated floor on index-linked interest rates. But in all cases, your fixed annuity will have a minimum guaranteed value. Averaging In some annuities, the average of an index's value is used rather than the actual value of the index on a specified date. The index averaging may occur at the beginning, the end, or throughout the entire term of the annuity. Interest Compounding Some annuities pay simple interest during an index term. That means index-linked interest is added to your original premium amount but does not compound during the term. Others pay compound interest during a term, which means that index-linked interest that has already been credited also earns interest in the future. In either case, however, the interest earned in one term is usually compounded in the next. Margin/Spread/Administrative Fee In some annuities, the index-linked interest rate is computed by subtracting a specific percentage from any calculated change in the index. This percentage, sometimes referred to as the margin, spread, or administrative fee, might be instead of, or in addition to, a participation rate. For example, if the calculated change in the index is 10%, your annuity might specify that 2.25% will be subtracted from the rate to determine the interest rate credited. In this example, the rate would be 7.75% (10% - 2.25% = 7.75%). In this example the company subtracts the percentage only if the change in the index produces a positive interest rate. Vesting Some annuities credit none of the index-linked interest or only part of it, if you take out all your money before the end of the term. The percentage that is vested, or credited, generally increases as the term comes closer to its end and is always 100% at the end of the term. Form No. 5722 Page 8 How do the Common Indexing Methods Differ? Annual Reset. Index-linked interest, if any, is determined each year by comparing the index value at the end of the contract year with the index value at the start of the contract year. Interest is added to your annuity each year during the term. High-Water Mark. The index-linked interest, if any, is decided by looking at the index value at various points during the term, usually the annual anniversaries of the date you bought the annuity. The interest is based on the difference between the highest index value and the index value at the start of the term. Interest is added to your annuity at the end of the term. Low-Water Mark. The index-linked interest, if any, is determined by looking at the index value at various points during the term, usually the annual anniversaries of the date you bought the annuity. The interest is based on the difference between the index value at the end of the term and the lowest index value. Interest is added to your annuity at the end of the term. Point-to-Point. The index-linked interest, if any, is based on the difference between the index value at the end of the term and the index value at the start of the term. Interest is added to your annuity at the end of the term. What are Some of the Features and Trade-offs of Different Indexing Methods? Features: Annual Reset. Since the interest earned is locked in annually and the index value is reset at the end of each year, future decreases in the index will not affect the interest you have already earned. Therefore, your annuity using the annual reset method may credit more interest than annuities using other methods when the index fluctuates up and down often during the term. This design is more likely than others to give you access to index-linked interest before the term ends. High-Water Mark. Since interest is calculated using the highest value of the index on a contract anniversary during the term, this design may credit higher interest than some other designs if the index reaches a high point early or in the middle of the term, then drops off at the end of the term. Low-Water Mark. Since interest is calculated using the lowest value of the index prior to the end of the term this design may credit higher interest than some other designs if the index reaches a low point early or in the middle of the term and then rises at the end of the term. Point-to-Point. Since interest cannot be calculated before the end of the term, use of this design may permit a higher participation rate than annuities using other designs. Generally, equity-indexed annuities offer preset combinations of features. You may have to make trade-offs to get features you want in an annuity. This means the annuity you chose may also have features you don't want. Tradeoffs: Annual Reset. Your annuity's participation rate may change each year and generally will be lower than that of other indexing methods. Also, an annual reset design may use a cap or averaging to limit the total amount of interest you might earn each year. High-Water Mark. Interest is not credited until the end of the term. In some annuities, if you surrender your annuity before the end of the term, you may not get index-linked interest for that term. In other annuities, you may receive index-linked interest, based on the highest anniversary value to date and the annuity's vesting schedule. Also, contracts with this design may have a lower participation rate than annuities using other designs or may use a cap to limit the total amount of interest you might earn. Low-Water Mark. Interest is not credited until the end of the term. With some annuities, if you surrender your annuity before the end of the term, you may not get index-linked interest for that term. In other annuities, you may receive index-linked interest based on a comparison of the lowest anniversary value to date with the index value at surrender and the annuity's vesting schedule. Also, contracts with this design may have a lower participation rate than annuities using other designs or may use a cap to limit the total amount of interest you might earn. Form No. S722 Page 9 Point-to-Point. Since interest is not credited until the end of the term, typically six or seven years, you may not be able to get the index-linked interest until the end of the term. What is the Impact of Some Other Equity-Indexed Annuity Product Features? Cap on Interest Earned. While a cap limits the amount of interest you might earn each year, annuities with this feature may have other product features you want, such as annual interest crediting or the ability to take partial withdrawals. Also, annuities that have a cap may have a higher participation rate. Averaging. Averaging at the beginning of a term protects you from buying your annuity at a high point, which would reduce the amount of interest you might earn. Averaging at the end of the term protects you against severe declines in the index and losing index-linked interest as a result. On the other hand, averaging may reduce the amount of index-linked interest you earn when the index rises either near the start or at the end of the term. Participation Rate. The participation rate may vary greatly from one annuity to another and from time to time within a particular annuity. Therefore, it is important for you to know how your annuity's participation rate works with the indexing method. A high participation rate may be offset by other features, such as simple interest, averaging, or a point-to-point indexing method. On the other hand, an insurance company may offset a lower participation rate by also offering a feature such as an annual reset indexing method. Interest Compounding. It is important for you to know whether your annuity pays compound or simple interest during a term. While you may earn less from an annuity that pays simple interest, it may have other features you want, such as a higher participation rate. What Will it Cost Me to Take My Money Out Before the End of the Term? In addition to the information discussed in this Buyer's Guide about surrender and withdrawal charges and free withdrawals, there are additional considerations for equity-indexed annuities. Some annuities credit none of the index-linked interest or only part of it if you take out money before the end of the term. The percentage that is vested, or credited, generally increases as the term comes closer to its end and is always 100% at the end of the term. Are Dividends Included in the Index? Depending on the index used, stock dividends may or may not be included in the index's value. For example, the S&P 300 is a stock price index and only considers the prices of stocks. It does not recognize any dividends paid on those stocks. How Do I Know if an Equity-Indexed Annuity is Right for Me? elp you decide which type of annuity, if any, meets your retirement planning and The questions listed below may help, financial needs. You should consider what your goals are for the money you may put into the annuity. You need to think about how much risk you're willing to take with the money. Ask yourself: Am I interested in a variable annuity with the potential for higher earnings that are not guaranteed and willing to risk losing the principal? Is a guaranteed interest rate more important to me, with little or no risk of losing the principal? Or, am I somewhere in between these two extremes and willing to take some risks? How do I Know Which Equity-Indexed Annuity is Best for Me? As with any other insurance product, you must carefully consider your own personal situation and how you feel about the choices available. No single annuity design may have all the features you want. It is important to understand the features and trade-offs available so you can choose the annuity that is right for you. Keep in mind that it may be misleading to compare one annuity to another unless you compare all the other features of each annuity. You must decide for yourself what combination of features makes the most sense for you. Also remember that it is not possible to predict the future behavior of an index. Form No. 5722 Page 10 Questions You Should Ask Your Agent or the Company You should ask the following questions about equity-indexed annuities in ad ition to the questions in the Buyer's Guide to Fixed Deferred Annuities. • How long is the term? • What is the guaranteed minimum interest rate? • What is the participation rate? For how long is the participation rate guaranteed? • Is there a minimum participation rate? • Does my contract have an interest rate cap? What is it? • Does my contract have an interest rate floor? What is it? • Is interest rate averaging used? How does it work? • Is interest compounded during a term? • Is there a margin, spread, or administrative fee? Is that in addition to or instead of a participation rate? • What indexing method is used in my contract? • What are the surrender charges or penalties if I want to end my contract early and take out all of my money? • Can I get a partial withdrawal without paying charges or losing interest? Does my contract have vesting? If so, what is the rate of vesting? Final Points to Consider Remember to read your annuity contract carefully when you receive it. Ask your agent or insurance company to explain anything you don't understand. If you have a specific complaint or can't get answers you need from the agent or company, contact your state insurance department. Form No. 5722 Page 11 LSW Application for Annum Life Insurance Company of the Southwest (LSW) • 1300 W Mockingbird Ln. • Dallas, TX 75247-4921 • Customer Service 800-579-2878 SecUm I - Oww/JeM Omer/Aumbot Owner's Name SS No or Taxpayer ID DOB (m/OT) Age Scx Home Address - City State Zip Code Home Phone Number Home Fax Number Home e-mail Address Joint Owner's Name (if applicable, non-qualified only) SS No or Taxpayer ID DOB (m/oy) Age Sex Home Address City State Zip Code Home Phone Number Home Fax Number Home e-mail Address SECTION II - Beck s0202 Primary Beneficiary Relationship Social Securitv Number DOB (nn/07) Share 1) % % Contingent Beneficiary Relationship ',octal xcunty,xumoer IAM tnvwyp Iuare 1) % 2) % SECTION M - Premium Amount Paid Mth Application Rollover/Transfer/1035 (Approximate) el- t g 90o 50107 S0308 Premium Allocation - Must be whole numbers and sum to 100%. Selection required for Interest Accounts. (007) Declared Interest Account -to 0 % S&P 5006 Russell 20001 (003) Ending Index Rate Option 1 % (o9) Ending Index Rate Option 1 (out) Ending Index Rate Option 2 % (oto) Ending Index Rate Option 2 % (o05) Average lndex % SECM IV - ft l?Securel?trs9° Preraler 8 S0403 WTlOfll V - Mn Q01iftdb0 50504 ? 403(b) TSA ? ERiSA 403(b) ? ROTH 403(b) ? IRA ? ROTH IRA ? SIMPLE IRA ? 457 Def. Comp ? Pension/Profit Shari ng ? IRA Rollover XNon-Qualified ? 401(k) ? SEP ? Other (specify) Form No. 7909 1 SecurePlus Prwnier 8 Fonu No. 7909 Home Phone Number Home Fax Number Home a-mail auaress 1 -7 1-7 - ?.7 (.. ?29 1 Annuitant's Name (if different from Owner) SS No or Taxpayer ID DOB (m/d/)y) Age Sex OM VI - E*ft 6=MN 50602 Dues the applicant have any existing policies and/or annuities? )<Yes ? No (Applicant to check box) If yes, will the annuity applied for replace any of the existing insurance or annuity? 'Yes ? No (Applicant to check box) If yes, provide U q and complete appropriate replacement and exchange forms. (Name of Company) SKM VII - Reel FU 50701 SMIN M - Fir Iml Oft Mmmod QI s0801 (Not applicable in Pennsylvania or West Virginia) ; SEEM IIi - FMed W&V* ad Was 50901 DC/WA - It is a crime to knowingly provide false incomplete or misleading information to an insurance company for the purposes of defrauding the company. Penalties include imprisonment, fines and denial of insurance benefits. FL - Notice: Any person who knowingly and with intent to injure, defraud; or deceive any insurer files a statement of claim or an application containing any false, incomplete, or misleading information is guilty of a felony in the third degree. KY/MR/OH - Any person who knowingly and with intent to injure, defraud, or deceive any insurer files an application for insurance containing any materially false information or conceals for the purpose of misleading, information concerting any fact material thereto commits a fraudulent insurance act, which is a crime. LA-Any person who knowingly presents false or fraudulent claim for payment of a loss or benefit or knowingly presents false information in an application for insurance is guilty of a crime and may be subject to fines and confinement in prison. NJ - Notice: Any person who includes any false or misleading information on an application for an insurance policy is subject to criminal and civil penalties. AR/NM/PA - Warning: Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance or statement of claim containing any materially false information or conceals for the purpose of misleading, information concerning any fact material thereto commits a fraudulent insurance act, which is a crime and subjects such person to criminal and civil penalties. VA - Any person wiio, with intent to defraud or knowing that he is facilitating a fraud against an insurer, submits an application or files a claim containing a false or deceptive statement may have violated state law. Notice to Residents of AZ: The annuity to which this application is attached may be returned within 31 days after it is received. Return it to our Home Office or to the agent through whom it was purchased. If retumed, we will cancel the annuity and return any premium paid. Upon written request from the owner, we will provide within a reasonable time, factual information regarding the benefits and provisions of the annuity to which this application is attached. REM K - .stoo3 The Annuitant and the Owner, if other than the Annuitant; (1) represents, to the best of their knowledge and belief, that all statements and answers contained herein are full, complete and true as written and are correctly recorded; and, (2) expressly agrees as follows: 1. This application and the answers and agreements contained herein shall be the basis of, a part of the consideration for and a part of the annuity hereby applied for. 2. The payment of premium constitutes consideration to the Company for the granting of an annuity and upon payment becomes the absolute property of the Company. 3. If proof of age is not given with this application, the Annuitant(s) will furnish the Company with such proof before annuity payments begin. 4. The annuity applied for shall take effect on the date the premium is received by the Company in its Home Office-The SetwrePlns single premium deferred annuities shall take effect on the 7th, 14th, 21st or 281h of the month following or coincident with the date the premium is received by the Company in its Home Office. 5. The Company is authorized to amend this application by an appropriate notation in the space designated "For Home Office Endorsement Only" in order to correct apparent errors or omissions. The acceptance of any annuity issued on this application shall constitute acceptance and ratification of the beneficiary designation, if any, in such annuity and of any amendments contemplated above except that no change shall be made in the plan of annuity or benefits without the written acceptance of the Annuitant(s) or of the Owner if other than the Annuitant(s). Wq: Under the penalties of perjury, l certify that: (1) the number shimm on this application is my correct taxpayer identification number; (2) the IRS has never notified me that I am subject to backup withholding, or has notified me that I am no longer subject to such withholding or I am exempt from such withholding; and (3) 1 am a U.S. person (including a U.S. resident alien). You must cross out item 21f you bane been notified by the IRS that you are currently subject to backup witbbolding because of underreporting interest or dividends on your tax return. SIO N M - ' and ANIN Idto MFM Snot Dated at (city/state) ?. on (month/day/year) .3 --a S - n ?f Signature of Owne Signature of Annuitant (if different from Owner) Signature of Joint Owner (if applicable) To the best of my knowledge, a replacement is O is not involved in this transaction. (Agent to check box.) Florida License-ID No. Signature of Agent Soliciting Agent (print) At ( R& Agent No. 3 2'f sQ Percent ton aro Agent Phone Number -(:2 -S a--3 2 Other Agent (print) Agent No. Percent [I Trail Commission Option for SecurePlus Premier 8 Sedlen kill - Mom Ielorafn 51202 I have received a copy of the disclosure material and understand that the results shown, other than the guaranteed minimum values, are not guarantees, promises or warranties. Applicant Signature Date 3 -+ J --d!] 1 certify that the disclosure material has been presented to the applicant and a copy was provided to the applicant. I have not made statements that differ from this material nor have I made any promises about the ex ected future equity values of this contract. 7 Agent Signature Date 3-d. 5-0 III T3'-e-aj? r.?(f-`" l e C c.d?. a r o stC iAt y r V .fa..) E'-vt??y.1!\ ? a?-ic.?S ? C.?(l?,t,??k'?•?,,• - ? l b aC? t'. oa bla f ? ! 1 ?1 `:? ? ?? 4 e v-t C- 'CA. v . •e V`t elc?.?.a.?. s5 ? s t ??a.{r?c1<-- oQ^ LID 6e,?. P ?s u- - Lfo bl too f I ? 4 I ? n??- r ,_ I? ®'?- ca co U S m a 'm ?n National Life Insurance Company National Life life insurance Company of the Southwest Ait?s. Group° _ Change of Beneficiary Matting Instructions: LSWAmxailes- Life Insurance Ccffg2 yof the Southwest 0 VV NL Anwas beginning wifb NG - National Life bnswmm Co Po Box 56M. Dallas, TX 75&% FEB 16 2010 Service: 800579-2878 • Fmc 2144i38-9162 Policy No.: St2 $ C 3 S X Hams of Annuuifant: b-fla e s Date: (mmldaryyyy) 2 '? 'a 0 r O OwrW s Address: ? New QL 8 M eQd o u I s Rd n e y vi l te. 8- Phone No.: 7 1--7 - -7 7 (,e q `l t 1. Primary Beneficlwypes} 1 `7z `7 t- Name: Relationship: Soc. Sec. No. ? - % of Proceeds Address: P.0- An x? rty M- 14,11 ? State z2acogL o w? 2. Name: fr'c_ Reladonsirip: as k-v'SocDO. B Adcraw- -p. 0. f Lct?rr °it e?? ?4 ?k State Ps_ Zip Code l70 37 % of Proceeds 5% 3. Name: ( u Or, Relationship: u-c le Soc. Sec. No. 8 Adds: R ,e.re ? K VC Cx 10(5('e State P L . 7p Code -701 % of Prooeeds f-S °f a P',.a"Coar-il"F$eneiiciary(ies) . Name: 1AI-evIriall4vi RAP- Relations V.& u?t, Soc. Sec. No. ?" DOB ? Address d-?5 ? . City n -e tj if c t t p- State Po-_ Zip Code t 41 % of Proceeds j-5°Y1> Address: City Soc. Sec. No. DOB Stela % of Proceeds 3. Name. Relationship: Soc. Sec. No. [? Address: City State Zip Code % of The Life Insurance Canpany of the Southwas"lionai Life insurance Company (hereinafter called the Company) Is hereby requested to revoke all prior beneficiary designations and previously selected settlement options. Unless otherwise provided herein. the proceeds wig be paid in a lump an to the Primary Beneficiary, if living, otherwise to the contingent Beneficiary. if living, otherwise provided in the policy. If there is more than one beneficiary designated either by name or class of the same rank (Primary or Contingent) payment will be made in equal shares to all beneficiaries of such rank who survive the insured, unless otherwise provided herein. All references to'8eneficiary herein shall apply to beneficiaries of the same rant when thm are more than one. If this request will make any provision for children of any persm as a class, the phrase shall Include only lawful children of that person, including any legally adopted child, except as the term'chld" or `children' shag be otherwise specifically defined in this Request. The Company in determining the pars= compmng any class designated as beneficiary hereunder, or any facts relating to any person or beneficiary mentioned herein either as a class or otherwise, may rely solely upon proof by affidavit or other evidence deemed satisfactory to it and any payment made by the Company in reliance thereon shall, to the extent of such payment, be a valid discharge of the Company's obligation under the I hereby request that any provision of said policy requiring that it be submitted to the Company for endorsement of change of beneficiary thereon be waived. This change of beneficiary will be effective only when recorded by the Company at its Home Office but when so recorded shag take effect as of the date signed by the owner, without prejudice to the Company on account of any payment made or other action taken by the Company before such recording. 1 make this change in accordance writ the provisions of said policy and subject to the above conditions as well as any erasting assignment and, unless otherwise provided by me, in this request, t expressly reserve the right to again change the beneficiary at arry time I may elect To snake this Beneficiary designation irrevocable, please check here. ? Nom: An imrvoeable Beneficiary designation cannot be changed widlout the Wntfen consent of the iaevoc" Beneficiary. I agree that any change requested shall be subject to the provisions of the policy and approval by the Company. It is also agreed that any additional information required by the Company to effect the requested changes will be std led upon request. Following completion of all requirements, dw requested changes made by the application constitute a supplement to the original application for the policy and shall form a part of the policy. The Company is hereby authorized to amend this request to correct obvious errors or omisslom. ? , 4 day of ,fir .20 Dated at this G Owner's Signature Spouses Signature': Yore spouse's signature is required on a 403(b) policy by ERISA; and on all requests in the following states: AZ. CA, ID, LA, NM, W. TX. WA, VA. if you have a change In marital status, you must provide a certi copy of the legal document (ie. name change, divorce decree, death certificate). DO NOT SEND POLICY _ Foam cannot be accented which contain corrections or erasures. Date Recorded Space W Horne Office Use SY 5026(1209) National Ule Groups is a trade name of NaWnat Life Insurance company and its affiliates. Each company is solely respo oWe Page 1 of Z Cat No. 100170 for its own Wricial condition and contractual obligations. Life lrnstrance Company or to SwAtmett is licensed to do business in 49 states and the District of Columbia- it is not licensed to do business ui New York. Nab oriat life Insurance Compwj is licensed to do business in all 50 states and the District of Columbia. National Life Insurance Company National Life Life Insurance Company of the Southwest JAC Grour .- ee_.:,cit,`ri: I ka'*of Beneficiary Mailing Instructions: LSWA-xifts - life Insurance Compary of the Southwest NL AnnuMJes begfmiirg Wh NG - National Life Insurance Co FEB X 6 2010 PO Sox 569080. Dallas, TX 75356 Service: 80tlS194878 • Far 214.638.9182 Policy No.. bg 3 7 X Name of Annuitant e n sz P s .? . e:? -Date: (mm/ddyyyy) 01 "q `')-O c owners Address: ? New X3-2 M eA.d o , s ?ryUr l ?e?P4. Phone No.: 7 G 7 -? ?Co -7 ` I 1. Primary Beneficiaty(les) (? `t iIM f. Name: Relationship:r U Soc. Sec. No. OB _? state (?ola? % of Proceeds 15-70/o Adders: P. D. r3o xZ - - ity Al 4-, 14011" U 2 Name: f r r c.k Relationship Y ' Soc. No. 'DOB Address: .P D _ ) W er litzzi Psi Slate PQ . Zip Code 1 O % of Proceeds 3. Name: Relationship: Sac. Sec. No. t,R {t a`i? (? 1't v l c S("9- State Zip Code 1'70+3 % of Prooseds L S °t'n pvv,A tpptiagpA4-B eGCiarypes) ((?? _ i Lf. Name: C°t +. s . p , rf o l u in Ra R-Z Retationship. t-er Soc. Sec. No. t 08 Address: {? I hckes Fzd -city -e r L a lfe. State Pa.. Zili Code j? ;L(% of P=eeds j-S'-'/ a -a fonshin: Soc. Sec. No. DDB Address: 3. Name: _ Address: City State Zi Relationship: Soc. Sec. No. City State Zip Code % of Proceeds %01 The tale insurance Company of the SouttrnestiNatrond Life Insurance Company (hereinafter catled the Company) Is hereby requested to revoke all prior beneftdary dadWebons and previously selected settlement option. Unless otherwise plroNfded herein, the p Doseds vmll be paid in a ke p an to the Primary Beneficiary, if living, otherwise to the contingent Beneficiary, d living, otherwise provided in the policy. If there is more than one beneficiary designated either by name or class of the same rank {Primary or Contingent) payment mil be made in equal shares to all beneficiaries of such rank who survive the insured, unless otherwise provided herein. All references to'BerrefuW herein shalt apply to beneficiaries of the same rank when theta are more then one. It this request wf8 make any provision for children of any person as a chess, the phrase shall include only lawful children of that person, including any regally adopted child, exwo as the temp 'child or'd ikk shall be otherwise sped5c * defined in this Request The Company In dalermkling the persons comprising any dam designaled as beneficiary herounder, or any facts refacing to any person or beneficiary mentioned herein either as a class or otharwise, may rely solely upon proof by affidavit or other evidence deemed satisfactory to it and any payment made by the Company In reliance thereon shall, to the extent of such payment be a valid discharge of the Company's ob4gation under the hereby request that any provision of said policy requiring that it be submitted to the Company for endowment of change of beneficiary thereon be waived. This change of beneficiary will be effective only when retarded by the Company at Its Hoare Office but when so recorded shaft take effect as of the date signed by the owner, without prejudice to the Company on account of any payment made or other action taken by the Company before such recording. I make this charge In amordance with the provisions of said policy and subject to the above condtions as WON as any exisling assignment arxi, unless ofherwise provided by me In W request, I expressly reserve the right to again change the beneficiary at arty time i may elect To make this Bemetfty designation irrevocable, please check here. D Note-- An irrevocable Benefidwy designation cannot be changed withm tie wrf an r>onmt of the iimvoc" Beneficiary. I agree that any dharrga requested shall be su ject to the pmvisions of the policy and app mf by the Company. R is also agreed that arty additional information required by the Company to effect the requested urges will be supplied upon rust Following axnpletim of all requirements, the requested charges made by the application constitute a stoement to the original application for the policy and shall form a part d Uie policy The Company is hereby authorized to amend this request to correct obvious errors or omissions Dated at this day of Q?- -.20 _ thrcier`s Signature: Spouse's signature: *Your spouse's signature on ary 403(b)by EFtlW and an all rem kr the kkwkV slates: AZ, CA. ID, LA. Nat. W. TX. WA. WI. if you have a ohm ige is marm status, you roust provide a certked copy of the legal document (.e. name change, divorce decree. death crstiricate)_ DDHOT SM POLICY Forms cannot be accepted which contain cwredons ar eh?eargs. ,? Space for Home Office, Use Date Recorded BY Seaefarh: Lde 5026('1208) National Life Gro" is a trade nettle of National Lft Insurance Company end its Antes. Each company is solely respoisible Page I of 2 Cat No. 100170 for its own financial condition and contractual oblJOA s. Ufe inmame Cwnpany of the Southgvd is lid to do business in 49 states and the District of Columbia. It is not kensed tD-• . do business in New York. National We Insurance Car>pany is licensed to do business in all 50 states and the District Oi Columbia. /? ,? ??_ °? c? m g ? m sn D National Life Insurance CompaW National Life ? Life Insurance Company ofthe Southwest" Groupm _ _ _ Change of Beneficiary Pokcy ND-'?21 -11 X Framed AnnutarrC ? e & Darts: (anw&yt+} Owner's Address: ? New 4 aq O0crc41n 04 0 r}. 1, 5 6 t?0 - (hone No.: 21-7 4g -SS15 L Pdmary Send) `?( r? -zSx? 1. Nams Retetionft: hr-u kv- Soc. Sec. No. Addtass: P. ID - ' a [ 2 Jf Cd7 State Ro -_ Zip Code t? % of Proceeds X13 2. Name: ti• Qn ,_f I MA : l4f, dt 4d to Soc. Sec. No: tOS a5 C?(t? j t? r, n {(ty State P42_ Zip Code lot % of Proceeds 3. Nart>e:c? , RelatiottclriSoc. Sec., ? address. _Se l?F s d . t ity stare zi))L tir % a ftmds 3 Ii. CanHngerd Ekmedidai"es) ?z.. s L • t ?* +r''? fA4 a 1. Name: RetWwship Soc. Sec- No. DOB Address: 2. Naorre: _ Address: 3. Name: _ city a9' State Zip Cods % of Proceeds Rte: Sac Sec. No. DOB State Zp Code % of Proceeds Rata onslW Soc. Sec. No DOB Address: Cffyr State Zip Code .%of Proceeds The life it umme Conq>erty of the Sm*mesft#oW Ufe Insurance Cornpeny {hereinafter called the Company) is hhmaby requested to revoke all prior bens fimy dosomborm and previously selected senlernent cpbom Unless oftwiss proWcW hualn, the proceeds A be paid in a limp sum to the PdT any Bendiciary, I living, ott awioe to ft conWVent Benefxdary, if IiNrhg, ottterwtse prvvfded in the potidy. If Ilmm is roars than one beneficiary dadgnated either by name or class of the same rank (Primary or COrttirtguaQ payment will be madam egrad shares tool bmwWo ies d such rank *v 8h1 Wm iha instaed, mikes atfttvwlse provided herein. All references b'BwAfiaaoyr herein shag apply to benalkimies of th same mold wheat ihefe are more than one. ff titis request "make arty prwidw for dot of any persona a class, the phase shall kAxle only IaVYM dt&an of that person, frvkx tg arty legally edophed dAck ezapt as ba farm duW ar'dddren' shah be ad a rwim spedfically dedrned in ft s Request The Company In &Wndr*V to persons corMnsir g arty doss desWabd as banethdmy hereunder, or ahoy tMCb relating to any person or benef dwy nwidw ed herein either as a doss or off, may rely solely tom proof by moult or o0w eV0mm deemed S$t15 ackxy b it and any payment made by the Ca;pany in telfar m Ummon sW, tD the went of web paynherk be a valid disdmrge of the Compotys obFgabon under icy hereto request that mV pnaviaiort of said potihy recpkfng that it be subnrGed b the Company for artdorserrw of dww of berrduiary+ Dow I be wa vrved. This change of bans irdary YOU be eitecva only when rembd by the CmpmV at its Boma Office tart when so reoorded shall take effect as of the date signed by ft owner, withmA prejudice to the Corrvem on a=ft of mry paynoent made or other aeon Ow by the ODnq V Wore such mm* 4 I make ibis r#mW in acoop*rm wM the p Wskm of said policy and w1 ject to the abmre conditfonsas well as any eusfing assigrunent and, Wass otherwise provided by me in Vb request I agree* reserve the right to again d mtge tine bertefid8l)fat arty lime 1 may elect To snake riffs Bwokfary deWpak n Ittavohabte, please credo here. ? Nola: An bftvtat* Bens dany deagnafion cannot be changed t91fAM doe tt dlen h7wSC d of file lrfatroc bk BormfIdery. I agree that any chanpo mquadad shelf ba sttjecd b ft p vAdoEts of the pok and approval by the CmrpaW. ft is 09D weed prat any additiorml informairorh required b4'the Car{pary b gifted the requested Idhanges wiA be sappfie?d tpon request Foilo"drtg oonpEeualt of all mWir wits,, ft requested dtart8es made by the t im cimalute a &Vpl nwd b the adgbW 4Vticdm for the p0 q and dmV form a part of the poficy CW"W m t0 WW d !this request to coffeci dMm s errors or . 20 / / Dated at this ,C day c4 '1?0 owners Signafine: Sparse s ' Your spa li dWmhm is mqued hn any by t RMk* sold an eft Ie%mt9 In fits to mkV sbbm AZ, CA, ID, UA M. NV, TX. W& tM. if you have a change in marital statts, yura roast provide a cermed mpy of the bgah dau meet {a name clWW. dvom'I death certificate). DO NOT SIM POLICY /J/ Jj Fom6 rennot be accepted vrhidt 0011tarn cohreciiyf?ar erasow, This Space for Nome offtCe . bate Recorded BY 5026(061 t) Nstronai t3fa Orotgr9 is a each hmrtte off ire insurance Ch qmV, Malmo Vf, life luWanm Ceepaarlr of phi Page 1012 Cat No, toot io Sot tmest ¢S", Addhson. TX aid Unkalf Bates Eadt mpmyal Natiohml tits GmW issatety roVor mble for th am ti EMW co K%m gird *XftchW dip5oea. LSW is not an aud"i ted insurer i t New Ycrk and axe not hz WL d iuaamhce . txhsihthas in 8krr Park P: aoo-732-8 s I F'214-63"162 .sar? 1 www.Nall"I MnURCOm C *efimd Meiling Addvm One NoWW MOM, Mon"llor, Vf WM0555 ! 0 Mail l.ifie Insurance Company' National ire Ufe tnsuram company nfft Southwest Group- Change of Beanoftuaf?r Pansy No 7 d q? 3 '7 x f+tame of Armeitant t nS v3 P30, Da p yw O~ s Addresss: p New q aq Oa ??5 na? 0 0 rjY ISte?pa I -7o1 rsa ? t Z - .z q - ssr s L PrbMy ft MICba(kS :I-s?o i. Nam. - Sr, Sea Nn jj? Addesa Cf1y `?'• Sfi . p s - 2v Code t l s at Ptows& aY3 C 2. Name: Q Pr- 14 95 Pr 1?D Sc g?i?sc Soc. Sec loo. ? Address: a S 3 Cray r.. I . a / .v _ __ Stwe ?a ZrP Gads ?A e % d ftwa s 5 3 r 3. Nafie A• soa sec . , --.- OOp3B 212 Re?A(At WOC E d 23P coos n? f4f 96 of Proceeds 36 U. CanifrrOent Hendictarey{[es} t 1 •'43JL" . u ari- jL t. Haines RdaBcatship: Sac Sec. Na DOB I Addrew Air Ststa 73p Code % of P4oceeda + Z Name: Refetiats sac sec. Na OM Address; qty State Zsip Cade % of panceeds 3. Name: Sooc; Sec. No. DOS A dd8ss: CRY Ska - 24> Code ate of Pmoeeds The Life lrutsrreaoe Cot pW d the SaAwestlNadonal M kwarrce t?pnp"{hereaaew caged the Cortrpmsy) is f amAV requested to moke r a8 prw W ptwfdsd irere4L the Pr'ooaeds f? s? fo the f?tmra?r 8oner>c? , 7 Gvir?, dt?eswlss ?o ?e d Bwmfuciary, Weft oatw Mice pra&1ad inthe pricy. N there is mom #= are bwofAny deeig W%d a by hares arcbm d ft same twstr . (pommy a C? peyttserri rrdP be mods ?? egad straws m aQ benalidarias of Sods rardr who s+arui+ae the irrsueQ, rodeos cti>arwisa provided ' herein. Afi taferenoea fo'9ene herein ziratl apptg En betse?erfea d the sasse rrutlc ?rf tert there ate mote than arw if this r+DCKssi vMal reeks eery prwisiora fort?en d arty petaan as s oPaas, gee phase sdleil itadsrrla ?Y larrfad da'kten af'6redP?4 ?? TM C mpwW deGertsr? Pmt q tr?? doss ?? as ?. ? ? 'In fo anir person or ber>e dwy merdlo?ed herein ea'Oter as a dews or4 W U% aa" fefy saf* q= prod by affiftd craisarevkhmm dlearnad rfiory fo Nand [ripe>ertt rttade by the Canparty 61 taftanoe thereon shaA, Ai arse d ardt payrraerrl, be a?ra6d disdsespe of the f,,ortiparys oiobigaibort under hereby request rheE arty po?risia? d tasid P?7 ?? ? ttt?e >?antUed rn the Camperry far exsdorsamert d d rer>e?ry thereon be waived. TW dmnpe of bwwfdwy tat be etfscdw only wlsan reoodded by the Campeny at b fiome Office b lA vt n so recorded vW take ' safari ag d Ilse defa aign?ed by the oaarraaes, rritlmad prejtsdce to the Conapwq ear accouter of arty paymeart made ar other adbn Raioen by ttse Cortrpany i make atria dwge in awmehrm with 1e pmAs+otrs of Wd poEcy end vAW to the above oon bxo as wep as arty wft&p aw4wx rd en4 ualeers atlterwiae proridnd by an in this re4aest, ! spessly resertre Ute rigtd to aka t tarps lies ben at t6rte i MW elecd. To tfaeim ft BerrA chy dxtnakn kxwcabb. pieeee check hers ? P? An b r#vcaW Owwat be dm9ed a17fUrarrt the wrMn consent Of no urarroc" y I aga3e Oast ary/ dMV r "gBd diafl be sit W 8t the prwidom d the polo and gprwA by the CorrtpenY it is also agreed Osat arty addi6ort81 irdp8lebora fa¢sired by Ore CaFnpenY loetfiar# the re?stad chmrges ria7f be pC'ed npan res et Fodfaaring aanpla1 dal req,siresnerda, use requested fins mks by? Sae appficafiOt! taoee a 8e?pterarerd to alas ari?aai appifor?tar the poky and std arm a pert or then pdIcy! The Corp" is aut wfa3 lio amend Sass request tD COI,Bd abvkm errors or ? ?Por! F}ateBai cttia 6tis /9 day at taaaacs s Sp°a'ser§ ;°Yeer • Yoar spouse's stgnahse i:: oa any 4mOs} fro6q eY t3tts?l' asv! at aB re?sls rn ee ta6orrinp A? CA, tO, ? ta8af, iv?r, Yx, tr?1a, vn_ t; you have a charge is srenrHat stssfra yw rtetntpavide a caper d ire paper dowrrara[ {t e. rrearre aTmrdys, drMpoe dea?ag death oert?Ca6a}. DOMM sm POUCY Yhls space for Norge OHIM aataRaa:aad AUG 312011 By____ 9028fD ) NaGor uratirft;oisaUedararuedfbfw1lt.Plsltasww=Carlpaay,Monve6e.Vfsf?161f?eabE?[`.f Pop1gf2 Cat. W. 1=70 SaolnMd gZ", AditM. A and their RM*& E8ch oca'Pa M d NDbwJ d Life efow issotetytaspoaa+fafor hears 6n eredeicu+if"n and oordrecbwc6ftaft&LSWisnotanaaBnrtMdirassaartoNewYorkodd= notcm*dbrs:srvms in, kww k flew YtrL P:800-T3mm f F.2f4Smte2 { oom { sou CasrU in d MeXzq Adrtew Are NmWW LA3 skive, IJ1en"89r, V F OSBN-9M y IN "THE COURT OF COMMON PLEAS OF CUMBERLAND COUN7~°'Y" LIFE INSURANCE COMPANY OF THE ~ ~"' SOIITHWBST, ~~ Plaintiff, CIVIL ACTION -~ ;~.~ _ ' _ ~ ;- ., ._ ... v. No• 12-3977 MILADY DEATRICK, KIMBERLY " - ~_-." PAUL,US, ALECIA BAGROSKY, and GWF.NDOLYN BARRICK, Defendants. ACCEPTANCE ~F SERVICE UNDER PA. RULE CIV. P. 402(b) 1 accept service of the Complaint on behalf of Defendant Mindy Deatrick and certify that I am authorized to do so. ,` ~ MARSTON, DEARDORFF, WILL,IAMS, llated: ~~? 6 ! OTTO, GILROY & FALLER y~ ~------__- Katie J. Ma¢c,~'ll 10 East High Street Carlisle, PA 17013 (717) 234-3341 (717} 243-1850 {fax} kmaxwell(c~martsonlaw.com Attorneys for Defendant Mindy Deatrick SLl Il?5772v] 10]784.00407 CERTIFICATE OF SERVICE I, E. Thomas Henefer, certify that on this date. I served a true and correct copy of the foregoing Accepl;ance of Service upon the following counsel of record by first class mail, postage f~repaid: Katie J. Max~rell 10 East High Street Carlisle, PA 17013 Dated: October 19, 2012 Marcus A.. McKnight, III 60 West Pomfret Street Carlisle,l'A 1701.3 E. Thomas Hen er SI.1 11'; ~772~a 1 101789.00007