ProspectusPolarisII
May 2, 2016
The Privacy Notice is printed at the end of this document. The Privacy Notice is not part of this prospectus.
Polaris Variable Annuities are issued by American General Life Insurance Company.
SUPPLEMENT TO THE VARIABLE ANNUITY PROSPECTUS DATED MAY 2, 2016
AMERICAN GENERAL LIFE INSURANCE COMPANY
VARIABLE SEPARATE ACCOUNTPolaris Variable Annuity
Polaris Choice II Variable Annuity Polaris Choice III Variable Annuity
Polaris II Variable AnnuityPolaris Platinum Variable Annuity
Polaris Platinum II Variable Annuity Polaris Preferred Solution Variable Annuity
VARIABLE ANNUITY ACCOUNT FOURAnchor Advisor Variable Annuity
VARIABLE ANNUITY ACCOUNT SEVENPolaris II A-Class Platinum Series Variable Annuity
Polaris II A-Class Variable Annuity
THE UNITED STATES LIFE INSURANCE COMPANY IN THE CITY OF NEW YORK
FS VARIABLE SEPARATE ACCOUNTPolaris Preferred Solution Variable Annuity
Effective on or about June 30, 2016, the SunAmerica Series Trust “SA Marsico Focused GrowthPortfolio” changed its name to “SA Janus Focused Growth Portfolio,” and its investment manager changed from “Marsico Capital Management, LLC” to “Janus Capital Management, LLC.” Accordingly, all references in the prospectuses to the “SA Marsico Focused Growth Portfolio” and to its manager,“Marsico Capital Management, LLC” are respectively replaced with the “SA Janus Focused Growth Portfolio” and “Janus Capital Management, LLC.”
Underlying Fund: Managed by: Trust Asset Class
SA Janus Focused Growth Janus Capital Management, LLC SAST STOCK
Dated: June 30, 2016
Please keep this Supplement with your Prospectus
S-3865-IN1.3 (06/16)
ProspectusMay 2, 2016
FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACTissued by Depositor
AMERICAN GENERAL LIFE INSURANCE COMPANYin connection with
VARIABLE SEPARATE ACCOUNTThis variable annuity has several investment choices — Variable Portfolios (which are subaccounts of the separate account) andavailable Fixed Account options. Each Variable Portfolio invests exclusively in shares of one of the Underlying Funds listed below. TheUnderlying Funds are part of the AIM Variable Insurance Funds (Invesco Variable Insurance Funds), American Funds Insurance Series,Anchor Series Trust, Lord Abbett Series Fund, Inc., Seasons Series Trust and SunAmerica Series Trust.
This contract is no longer available for purchase by new contract owners.
UNDERLYING FUNDS: Managed by:Aggressive Growth Wells Capital Management IncorporatedAmerican Funds Asset Allocation Capital Research and Management CompanyAmerican Funds Global Growth Capital Research and Management CompanyAmerican Funds Growth Capital Research and Management CompanyAmerican Funds Growth-Income Capital Research and Management CompanyAsset Allocation Edge Asset Management, Inc.Balanced J.P. Morgan Investment Management Inc.Blue Chip Growth Massachusetts Financial Services CompanyCapital Appreciation Wellington Management Company LLPCapital Growth The Boston Company Asset Management, LLCCorporate Bond Federated Investment Management Company“Dogs” of Wall Street SunAmerica Asset Management, LLCEmerging Markets J.P. Morgan Investment Management Inc.Equity Opportunities OppenheimerFunds, Inc.Foreign Value Templeton Investment Counsel, LLCFundamental Growth Wells Capital Management IncorporatedGlobal Bond Goldman Sachs Asset Management InternationalGlobal Equities J.P. Morgan Investment Management Inc.Government and Quality Bond Wellington Management Company LLPGrowth Wellington Management Company LLPGrowth-Income J.P. Morgan Investment Management Inc.Growth Opportunities Invesco Advisers, Inc.High-Yield Bond PineBridge Investments LLCInternational Diversified Equities Morgan Stanley Investment Management Inc.International Growth and Income Putnam Investment Management, LLCInvesco V.I. American Franchise Fund, Series II Shares Invesco Advisers, Inc.Invesco V.I. Comstock Fund, Series II Shares Invesco Advisers, Inc.Invesco V.I. Growth and Income Fund, Series II Shares Invesco Advisers, Inc.Lord Abbett Growth and Income Lord, Abbett & Co. LLCLord Abbett Mid Cap Stock Lord, Abbett & Co. LLCMid-Cap Growth J.P. Morgan Investment Management Inc.Natural Resources Wellington Management Company LLPReal Estate FIAM LLC1
Real Return Wellington Management Company LLPSA AB Growth AllianceBernstein L.P.SA JPMorgan MFS Core Bond J.P. Morgan Investment Management Inc. and Massachusetts
Financial Services CompanySA Legg Mason BW Large Cap Value2 Brandywine Global Investment Management, LLC2
SA Marsico Focused Growth Marsico Capital Management, LLCSA MFS Massachusetts Investors Trust Massachusetts Financial Services CompanySA MFS Total Return Massachusetts Financial Services CompanySmall & Mid Cap Value AllianceBernstein L.P.Small Company Value Franklin Advisory Services, LLCSunAmerica Dynamic Allocation Portfolio SunAmerica Asset Management, LLC & AllianceBernstein L.P.SunAmerica Dynamic Strategy Portfolio SunAmerica Asset Management, LLC & AllianceBernstein L.P.Technology Columbia Management Investment Advisers, LLC
(Underlying Funds continued on next page)
UNDERLYING FUNDS: Managed by:Telecom Utility Massachusetts Financial Services CompanyUltra Short Bond Portfolio3 Dimensional Fund Advisors LP3
1 On December 10, 2015, the investment manager Pyramis Global Advisors, LLC was renamed FIAM LLC.2 On September 8, 2015, the Davis Venture Value Portfolio was renamed SA Legg Mason BW Large Cap Value Portfolio and the
investment adviser changed from Davis Selected Advisers, L.P. to Brandywine Global Investment Management, LLC.3 On May 2, 2016, the Cash Management Portfolio became Ultra Short Bond Portfolio and the investment manager changed from
BofA Advisors, LLC to Dimensional Fund Advisors LP.
Please read this prospectus carefully before investing and keep it for future reference. It contains important information about thevariable annuity, including a description of all material features of the contract.
If you are considering funding a tax-qualified retirement plan (e.g., IRAs, 401k or 403b plans) with an annuity, you shouldknow that an annuity does not provide any additional tax deferral treatment of earnings beyond the treatment provided by thetax-qualified plan itself. You should fully discuss this decision with your financial representative.
To learn more about the annuity offered in this prospectus, you can obtain a copy of the Statement of Additional Information (“SAI”)dated May 2, 2016. The SAI has been filed with the United States Securities and Exchange Commission (“SEC”) and is incorporated byreference into this prospectus. The Table of Contents of the SAI appears at the end of this prospectus. For a free copy of the SAI, call usat (800) 445-7862 or write to us at our Annuity Service Center, P.O. Box 15570, Amarillo, Texas 79105-5570.
In addition, the SEC maintains a website (http://www.sec.gov) that contains the SAI, materials incorporated by reference and otherinformation filed electronically with the SEC by the Company.
Variable Annuities involve risks, including possible loss of principal, and are not a deposit or obligation of, or guaranteed or endorsedby, any bank. They are not federally insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board or any otheragency. These securities have not been approved or disapproved by the SEC, nor any state securities commission, nor has the SECpassed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
This variable annuity provides an optional Payment Enhancement feature. If you elect this feature, in exchange for PaymentEnhancements credited to your contract, your withdrawal charge schedule will be longer and greater than if you chose not to elect thisfeature. These withdrawal charges may more than offset the value of any Payment Enhancement.
GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3HIGHLIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4FEE TABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Maximum Owner Transaction Expenses. . . . . . . . . . . . 5Contract Maintenance Fee . . . . . . . . . . . . . . . . . . . . . . 5Separate Account Annual Expenses . . . . . . . . . . . . . . . 5Total Annual Portfolio Operating Expenses . . . . . . . . . 5
MAXIMUM AND MINIMUM EXPENSE EXAMPLES. . . . . . . 6THE POLARISII VARIABLE ANNUITY . . . . . . . . . . . . . . . . . . 7PURCHASING A POLARISII VARIABLE ANNUITY . . . . . . . . 7
Allocation of Purchase Payments . . . . . . . . . . . . . . . . . 8Polaris Rewards Program . . . . . . . . . . . . . . . . . . . . . . . 9Accumulation Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Free Look . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Exchange Offers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Important Information for Military Servicemembers . . 11
INVESTMENT OPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Variable Portfolios. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
AIM Variable Insurance Funds (Invesco VariableInsurance Funds). . . . . . . . . . . . . . . . . . . . . . . . . . 12
American Funds Insurance Series . . . . . . . . . . . . . . . 12Lord Abbett Series Fund, Inc. . . . . . . . . . . . . . . . . . . 12Anchor Series Trust. . . . . . . . . . . . . . . . . . . . . . . . . . 12Seasons Series Trust . . . . . . . . . . . . . . . . . . . . . . . . . 12SunAmerica Series Trust. . . . . . . . . . . . . . . . . . . . . . 12
Substitution, Addition or Deletion of VariablePortfolios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Fixed Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Dollar Cost Averaging Fixed Accounts. . . . . . . . . . . . . 15Dollar Cost Averaging Program . . . . . . . . . . . . . . . . . . 16Polaris Portfolio Allocator Program . . . . . . . . . . . . . . . 16Transfers During the Accumulation Phase . . . . . . . . . . 18Automatic Asset Rebalancing Program . . . . . . . . . . . . 21Return Plus Program . . . . . . . . . . . . . . . . . . . . . . . . . . 21Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ACCESS TO YOUR MONEY . . . . . . . . . . . . . . . . . . . . . . . . . . 21Free Withdrawal Amount . . . . . . . . . . . . . . . . . . . . . . . 21Systematic Withdrawal Program . . . . . . . . . . . . . . . . . 23Nursing Home Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . 23Minimum Contract Value . . . . . . . . . . . . . . . . . . . . . . . 23Qualified Contract Owners . . . . . . . . . . . . . . . . . . . . . . 23
LIVING BENEFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23Income Protector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
DEATH BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25Beneficiary Continuation Programs . . . . . . . . . . . . . . . 26Death Benefit Defined Terms . . . . . . . . . . . . . . . . . . . . 27Death Benefit Options. . . . . . . . . . . . . . . . . . . . . . . . . . 27Optional EstatePlus Benefit . . . . . . . . . . . . . . . . . . . . . 28Spousal Continuation. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29Separate Account Expenses . . . . . . . . . . . . . . . . . . . . . 30Withdrawal Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . 30Underlying Fund Expenses . . . . . . . . . . . . . . . . . . . . . . 30Contract Maintenance Fee . . . . . . . . . . . . . . . . . . . . . . 31Transfer Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31Optional Income Protector Fee . . . . . . . . . . . . . . . . . . . 31Optional EstatePlus Fee . . . . . . . . . . . . . . . . . . . . . . . . 31Premium Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31Reduction or Elimination of Fees, Expenses and
Additional Amounts Credited . . . . . . . . . . . . . . . . . . 31PAYMENTS IN CONNECTION WITH DISTRIBUTION OF
THE CONTRACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31ANNUITY INCOME OPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . 33
The Income Phase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33Annuity Income Options . . . . . . . . . . . . . . . . . . . . . . . . 34Fixed or Variable Annuity Income Payments. . . . . . . . 35Annuity Income Payments . . . . . . . . . . . . . . . . . . . . . . 35Transfers During the Income Phase . . . . . . . . . . . . . . . 35Deferment of Payments . . . . . . . . . . . . . . . . . . . . . . . . 35
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35Annuity Contracts in General . . . . . . . . . . . . . . . . . . . . 36Tax Treatment of Distributions – Non-Qualified
Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36Tax Treatment of Distributions – Qualified Contracts . 37Required Minimum Distributions. . . . . . . . . . . . . . . . . . 38Tax Treatment of Death Benefits. . . . . . . . . . . . . . . . . 38Contracts Owned by a Trust or Corporation . . . . . . . . 38Foreign Account Tax Compliance (“FATCA”) . . . . . . 39Other Withholding Tax . . . . . . . . . . . . . . . . . . . . . . . . . 39Gifts, Pledges and/or Assignments of a Contract . . . . 39Diversification and Investor Control . . . . . . . . . . . . . . . 39
OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40The Distributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40The Separate Account . . . . . . . . . . . . . . . . . . . . . . . . . . 40The General Account. . . . . . . . . . . . . . . . . . . . . . . . . . . 41Guarantee of Insurance Obligations . . . . . . . . . . . . . . . 41Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . 41Administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42Registration Statements . . . . . . . . . . . . . . . . . . . . . . . . 43
CONTENTS OF STATEMENT OF ADDITIONALINFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
APPENDIX A – CONDENSED FINANCIAL INFORMATION . . A-1APPENDIX B – MARKET VALUE ADJUSTMENT (“MVA”) . . B-1APPENDIX C – DEATH BENEFITS FOLLOWING SPOUSAL
CONTINUATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1APPENDIX D – STATE CONTRACT AVAILABILITY AND/OR
VARIABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1
TABLE OF CONTENTS
2
GLOSSARY
We have capitalized some of the technical terms used in thisprospectus. To help you understand these terms, we havedefined them in this glossary.Accumulation Phase - The period during which you investmoney in your contract.Accumulation Units - A measurement we use to calculate thevalue of the variable portion of your contract during theAccumulation Phase.Annuitant - The person on whose life we base annuity incomepayments after you begin the Income Phase.Annuity Date - The date you select on which annuity incomepayments begin.Annuity Units - A measurement we use to calculate theamount of annuity income payments you receive from thevariable portion of your contract during the Income Phase.Beneficiary - The person you designate to receive any benefitsunder the contract if you or, in the case of a non-naturalOwner, the Annuitant dies. If your contract is jointly owned,you and the joint Owner are each other’s primary Beneficiary.Company - Refers to American General Life InsuranceCompany (“AGL”). The term “we,” “us” and “our” are alsoused to identify the issuing Company.Continuation Contribution - An amount by which the deathbenefit that would have been paid to the spousal Beneficiaryupon the death of the original Owner exceeds the contractvalue as of the Good Order date. We will contribute thisamount, if any, to the contract value upon spousal continuation.Continuing Spouse - Spouse of original contract owner at thetime of death who elects to continue the contract after thedeath of the original contract owner.Fixed Account - An account, if available, in which you mayinvest money and earn a fixed rate of return. Fixed Accountsare obligations of the General Account.General Account - The Company’s account, which includes anyamounts you have allocated to available Fixed Accounts,including any interest credited thereon, and amounts owedunder your contract for death and/or living benefits which arein excess of portions of contract value allocated to the VariablePortfolios.Good Order - Fully and accurately completed forms, which arevalid, including any necessary supplementary documentation,applicable to any given transaction or request received by us.Income Phase - The period upon annuitization during whichwe make annuity income payments to you.Insurable Interest - Evidence that the Owner(s),Annuitant(s) or Beneficiary(ies) will suffer a financial loss atthe death of the life that triggers the death benefit. Generally,we consider an interest insurable if a familial relationshipand/or an economic interest exists. A familial relationshipgenerally includes those persons related by blood or by law. Aneconomic interest exists when the Owner has a lawful andsubstantial economic interest in having the life, health or bodilysafety of the insured life preserved.Latest Annuity Date - For contracts issued prior to January 1,2001, the Latest Annuity Date is defined as the first NYSEbusiness day of the month following your 90th birthday or10 years after your contract issue date, whichever is later. Forcontracts issued on or after January 1, 2001, your Latest
Annuity Date is defined as the first NYSE business day of themonth following your 95th birthday or 10 years after yourcontract issue date, whichever is later.Market Close - The close of the New York Stock Exchange,usually at 1:00 p.m. Pacific Time.Non-Qualified (contract) - A contract purchased with after-taxdollars. In general, these contracts are not under any pensionplan, specially sponsored program or individual retirementaccount (“IRA”).NYSE - New York Stock ExchangeOwner - The person or entity (if a non-natural owner) with aninterest or title to this contract. The term “you” or “your” arealso used to identify the Owner.Payment Enhancement(s) - The amount(s) allocated to yourcontract by us under the Polaris Rewards Program. PaymentEnhancements are calculated as a percentage of your PurchasePayments and are considered earnings.Purchase Payments - The money you give us to buy andinvest in the contract.Qualified (contract) - A contract purchased with pretaxdollars. These contracts are generally purchased under apension plan, specially sponsored program or IRA.Separate Account - A segregated asset account maintained bythe Company separately from the Company’s General Account.The Separate Account consists of Variable Portfolios orsubaccounts, each investing in shares of the Underlying Funds.Trusts - Collectively refers to the AIM Variable InsuranceFunds (Invesco Variable Insurance Funds), American FundInsurance Series, Anchor Series Trust, Lord Abbett SeriesFund, Inc., Seasons Series Trust and SunAmerica Series Trust.Underlying Funds - The underlying investment portfolios of theTrusts in which the Variable Portfolios invest.Variable Portfolio(s) - The variable investment optionsavailable under the contract. Each Variable Portfolio, which is asubaccount of the Separate Account, invests in shares of one ofthe Underlying Funds. Each Underlying Fund has its owninvestment objective.
3
HIGHLIGHTS
The PolarisII Variable Annuity is a contract between youand the Company. It is designed to help you invest on atax-deferred basis and meet long-term financial goals. Thereare minimum Purchase Payment amounts required topurchase a contract. Purchase Payments may be invested ina variety of Variable Portfolios and Fixed Accounts, ifavailable. Like all deferred annuities, the contract has anAccumulation Phase and an Income Phase. During theAccumulation Phase, you invest money in your contract. TheIncome Phase begins when you start receiving annuityincome payments from your annuity to help provide for yourretirement.
This variable annuity contract may provide you with PaymentEnhancements that are invested in your contract as earnings.
Free Look: You may cancel your contract within 10 daysafter receiving it (or whatever longer period is required inyour state), and not be charged a withdrawal charge. Youwill receive whatever your contract is worth on the day thatwe receive your request minus any applicable PaymentEnhancement, if you elected Polaris Rewards. The contractvalue refunded may be more or less than your originalPurchase Payments. However, you receive any gain and webear any loss on any applicable Payment Enhancement. Ifyour contract was issued as an IRA or if required by certainstates, we will return the greater of your original PurchasePayment(s) or the contract value minus any applicablePayment Enhancements. We will return your originalPurchase Payments if required by law. Please seePURCHASING A POLARIS II VARIABLE ANNUITYand FREE LOOK in the prospectus.
Expenses: There are fees and charges associated with thecontract. Each year, we deduct a $35 contract maintenance feefrom your contract, which may be waived for contracts of$50,000 or more. We also deduct insurance charges, whichequal 1.52% annually of the average daily value of yourcontract allocated to the Variable Portfolios. There areinvestment charges on amounts invested in the VariablePortfolios including 12b-1 fees of up to 0.25%. If you electoptional features available under the contract we may chargeadditional fees for these features. A separate withdrawalcharge schedule applies to each Purchase Payment. The
amount of the withdrawal charge declines over time. After aPurchase Payment has been in the contract for seven completeyears or nine complete years if you elected the PolarisRewards program, withdrawal charges no longer apply to thatPurchase Payment. Please see FEE TABLE, PURCHASINGA POLARISII VARIABLE ANNUITY and EXPENSES inthe prospectus.
Access to Your Money: You may withdraw money fromyour contract during the Accumulation Phase. If you make awithdrawal, earnings are deemed to be withdrawn first. Youwill pay income taxes on earnings and untaxed contributionswhen you withdraw them. Annuity income paymentsreceived during the Income Phase are considered partly areturn of your original investment. A federal tax penaltymay apply if you make withdrawals before age 59½. Asnoted above, a withdrawal charge may apply. Please seeACCESS TO YOUR MONEY and TAXES in theprospectus.
Death Benefit: A death benefit feature is available underthe contract which is payable to your Beneficiaries in theevent of your death during the Accumulation Phase. Pleasesee DEATH BENEFITS in the prospectus.
Annuity Income Options: When you switch to the IncomePhase, you can choose to receive annuity income paymentson a variable basis, fixed basis or a combination of both.You may also choose from five different annuity incomeoptions, including an option for annuity income that youcannot outlive. Please see ANNUITY INCOME OPTIONSin the prospectus.
Inquiries: If you have questions about your contract, callyour financial representative or contact us at AnnuityService Center, P.O. Box 15570, Amarillo, Texas79105-5570. Telephone Number: (800) 445-7862 andwebsite (www.aig.com/annuities). Please seeALLOCATION OF PURCHASE PAYMENTS in theprospectus for the address to which you must sendPurchase Payments.
All material state variations are described inAppendix D – STATE CONTRACT AVAILABILITYAND/OR VARIABILITY.
The Company offers several different variable annuity contracts to meet the diverse needs of our investors. Ourcontracts may provide different features, benefits, programs and investment options offered at different fees andexpenses. We also offer contracts that do not offer the Polaris Rewards program. Electing the Polaris Rewardsprogram does not result in higher separate account charges. However, a contract without the Polaris Rewardsprogram has a shorter and lower surrender charge schedule. When working with your financial representative todetermine the best product to meet your needs, you should consider among other things, whether the features of thiscontract and the related fees provide the most appropriate package to help you meet your retirement savings goals.
If you would like information regarding how money is shared among our business partners, including broker-dealersthrough which you may purchase a variable annuity and from certain investment advisers of the Underlying Funds,please see PAYMENTS IN CONNECTION WITH DISTRIBUTION OF THE CONTRACT below.
Please read the prospectus carefully for more detailed information regarding these and other features and benefits ofthe contract, as well as the risks of investing.
4
FEE TABLE
The following information describes the fees andexpenses that you will pay when buying, owning, andsurrendering the contract. The Maximum OwnerTransaction Expenses describe the fees and expensesthat you will pay at the time that you buy or surrenderthe contract, or transfer contract value betweeninvestment options.
MAXIMUM OWNER TRANSACTION EXPENSES
Maximum Withdrawal Charges(as a percentage of each Purchase Payment)1. . . . . . . . . 9%
Transfer Fee
$25 per transfer after the first 15 transfers in any contractyear.
Premium Tax2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5%
The following describes the fees and expenses that youmay pay periodically during the time that you own thecontract, not including Underlying Fund expenses whichare outlined in the next section.
Contract Maintenance Fee3 . . . . . . . . . . . . . . . . . . . . $35
Separate Account Annual Expenses4
(deducted from the average daily ending net asset value allocatedto the Variable Portfolios)
Separate Account Charge . . . . . . . . . . . . . . . . . . . . . . 1.52%Optional EstatePlus Fee5 . . . . . . . . . . . . . . . . . . . . . . . 0.25%
Maximum Separate Account Annual Expenses . . . 1.77%
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES(as of January 31, 2016)
The following shows the minimum and maximum totaloperating expenses charged by the Underlying Funds ofthe Trusts, before any waivers or reimbursements thatyou may pay periodically during the time that you ownthe contract. More detail concerning the UnderlyingFunds’ expenses is contained in the prospectus for eachof the Trusts. Please read them carefully beforeinvesting.
Total Annual Portfolio Operating Expenses Minimum6 Maximum6
(expenses that are deducted fromUnderlying Fund assets, includingmanagement fees, other expenses and12b-1 fees, if applicable) . . . . . . . . . . . . . . 0.53% 1.26%
Footnotes to the Fee Table:1 Withdrawal Charge Schedule (as a percentage of each Purchase Payment withdrawn) declines over 7 or 9 years depending on whether you elected Polaris
Rewards, as follows:
Years Since Receipt: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2 3 4 5 6 7 8 9 10+Without Polaris Rewards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7% 6% 5% 4% 3% 2% 1% 0% 0% 0%With Polaris Rewards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9% 9% 8% 7% 6% 5% 4% 3% 2% 0%
Your contract provides for a free withdrawal amount each year. Please see FREE WITHDRAWAL AMOUNT below.2 If applicable, state premium taxes of up to 3.5% may also be deducted when you begin the Income Phase. Please see PREMIUM TAX and Appendix D –
STATE CONTRACT AVAILABILITY AND/OR VARIABILITY.3 The contract maintenance fee is assessed annually and may be waived if contract value is $50,000 or more.4 If you do not elect any optional features, your total separate account annual expenses would be 1.52%. If your Beneficiary elects to take the death benefit
amount under the Extended Legacy Program, we will deduct an annual Separate Account Charge of 1.15% which is deducted daily from the average dailyending net asset value allocated to the Variable Portfolios. Please see Extended Legacy Program under DEATH BENEFITS below.
5 EstatePlus is an optional earnings enhancement death benefit. This feature is not available on contracts issued in Washington.6 The maximum expense is for an Underlying Fund of SunAmerica Series Trust, as of its fiscal year ended January 31, 2016. The minimum expense is for an
Underlying Fund of Anchor Series Trust as of its fiscal year ended December 31, 2015.
5
MAXIMUM AND MINIMUM EXPENSE EXAMPLES
These examples are intended to help you compare the cost of investing in the contract with the cost of investing in othervariable annuity contracts. These costs include owner transaction expenses, the contract maintenance fee if any, separateaccount annual expenses, available optional feature fees and Underlying Fund expenses.
The examples assume that you invest $10,000 in the contract for the time periods indicated; that your investment has a 5%return each year; and you incur the maximum or minimum fees and expenses of the Underlying Fund as indicated in theexamples. Although your actual costs may be higher or lower, based on these assumptions, your costs at the end of the statedperiod would be the amounts set forth in the tables below.
MAXIMUM EXPENSE EXAMPLES(assuming maximum separate account annual expenses of 1.77%(including EstatePlus) and investment in an Underlying Fund withtotal expenses of 1.26%)
(1) If you surrender your contract at the end of theapplicable time period:
1 year 3 years 5 years 10 years
$1,211 $1,751 $2,216 $3,392
(2) If you do not surrender or if you annuitize yourcontract at the end of the applicable time period:
1 year 3 years 5 years 10 years
$311 $951 $1,616 $3,392
MINIMUM EXPENSE EXAMPLES(assuming minimum separate account annual expenses of 1.52%,no election of optional features and investment in an UnderlyingFund with total expenses of 0.53%)
(1) If you surrender your contract at the end of theapplicable time period:
1 year 3 years 5 years 10 years
$913 $1,158 $1,429 $2,431
(2) If you do not surrender or if you annuitize yourcontract at the end of the applicable time period:
1 year 3 years 5 years 10 years
$213 $658 $1,129 $2,431
Explanation of Expense Examples1. The Maximum Expense Examples reflect the highest possible
combination of charges. The purpose of the Expense Examplesis to show you the various fees and expenses you would incurdirectly and indirectly by investing in this variable annuitycontract. The Expense Examples represent both fees of theseparate account as well as the maximum and minimum totalannual Underlying Fund operating expenses. We converted thecontract maintenance fee to a percentage (0.05%). The actualimpact of the contract maintenance fee may differ from thispercentage and may be waived for contract values of $50,000or more. Additional information on the Underlying Fund feescan be found in the Trust prospectuses.
2. In addition to the stated assumptions, the Expense Examplesalso assume that no transfer fees were imposed. Althoughpremium taxes may apply in certain states, they are notreflected in the Expense Examples.
3. Expense Examples with election of the Polaris Rewardsprogram reflect the Polaris Rewards withdrawal chargeschedule, but do not reflect any upfront PaymentEnhancement.
4. If you elected the Income Protector Plus or Income ProtectorMax feature between November 2, 1998 and March 31, 1999,please see the Income Protector program below for detailsregarding the fee applicable to the feature.
These examples should not be considered a representation of past or future expenses. Actual expenses may be greater orless than those shown.
CONDENSED FINANCIAL INFORMATION APPEARS IN THE CONDENSED FINANCIAL INFORMATIONAPPENDIX OF THIS PROSPECTUS.
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THE POLARISII VARIABLE ANNUITY
When you purchase a variable annuity, a contract existsbetween you and the Company. You are the Owner of thecontract. The contract provides several main benefits:
• Death Benefit: If you die during the AccumulationPhase, the Company pays a death benefit to yourBeneficiary.
• Guaranteed Income: Once you begin the IncomePhase, you receive a stream of annuity incomepayments for your lifetime, or another availableperiod you select.
• Tax Deferral: This means that you do not pay taxeson your earnings from the contract until youwithdraw them.
Tax-qualified retirement plans (e.g., IRAs, 401(k) or403(b) plans) defer payment of taxes on earnings untilwithdrawal. If you are considering funding a tax-qualifiedretirement plan with an annuity, you should know that anannuity does not provide any additional tax deferraltreatment of earnings beyond the treatment provided by thetax-qualified retirement plan itself. However, annuities doprovide other insurance features and benefits, which may bevaluable to you. You should fully discuss this decision withyour financial representative.
This variable annuity was developed to help you plan foryour retirement. In the Accumulation Phase, it can help youbuild assets on a tax-deferred basis. In the Income Phase, itcan provide you with guaranteed income through annuityincome payments.
The contract is called a “variable” annuity because it allowsyou to invest in Variable Portfolios which, like mutual funds,have different investment objectives and performance. Youcan gain or lose money if you invest in these VariablePortfolios. The amount of money you accumulate in yourcontract depends on the performance of the VariablePortfolios in which you invest.
Fixed Accounts, if available, earn interest at a rate set andguaranteed by the Company. If you allocate money to anavailable Fixed Account, the amount of money thataccumulates in the contract depends on the total interestcredited to the particular Fixed Account in which you invest.
For more information on investment options available underthis contract, please see INVESTMENT OPTIONS below.
As a function of the Internal Revenue Code (“IRC”), youmay be assessed a 10% federal tax penalty on anywithdrawal made prior to your reaching age 59½. Pleasesee TAXES below. Additionally, you will be charged awithdrawal charge on each Purchase Payment withdrawnprior to the end of the applicable withdrawal charge period,please see FEE TABLE above. Because of these potentialpenalties, you should fully discuss all of the benefits andrisks of this contract with your financial representative priorto purchase.
PURCHASING A POLARISII VARIABLE ANNUITY
An initial Purchase Payment is the money you give us tobuy a contract. Any additional money you give us to investin the contract after purchase is a subsequent PurchasePayment.
The following chart shows the minimum initial andsubsequent Purchase Payments permitted under yourcontract. These amounts depend upon whether a contract isQualified or Non-Qualified for tax purposes. For furtherexplanation, please see TAXES below.
Minimum InitialPurchasePayment
MinimumSubsequentPurchasePayment
MinimumAutomaticSubsequentPurchasePayment
Qualified $2,000 $250 $100Non-Qualified $5,000 $500 $100
Once you have contributed at least the minimum initialPurchase Payment, you can establish an automatic paymentplan that allows you to make subsequent PurchasePayments of as little as $100. We will not accept subsequentPurchase Payments from contract owners age 86 or older.
We reserve the right to refuse any Purchase Payment.Furthermore, we reserve the right to require Companyapproval prior to accepting Purchase Payments greater than$1,500,000. For contracts owned by a non-natural owner,we reserve the right to require prior Company approval toaccept any Purchase Payment. Purchase Payments thatwould cause total Purchase Payments in all contracts issuedby the Company or its affiliate, The United States LifeInsurance Company in the City of New York, to the sameOwner and/or Annuitant to exceed these limits may also besubject to Company pre-approval. The terms creating anylimit on the maximum death benefit payable would bemutually agreed upon in writing by you and the Companyprior to purchasing the contract.
Non-Natural Ownership
A trust, corporation or other non-natural entity may onlypurchase this contract if such entity has sufficientlydemonstrated an Insurable Interest in the Annuitantselected. For more information on non-naturalownership, please see TAXES below.
Various considerations may apply with respect tonon-natural ownership of this contract including but notlimited to estate planning, tax consequences and thepropriety of this contract as an investment consistent with anon-natural Owner’s organizational documentation. Youshould consult with your tax and/or legal advisor inconnection with non-natural ownership of this contract.
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Maximum Issue Age
We will not issue a contract to anyone age 86 or older onthe contract issue date. We will not accept subsequentPurchase Payments from contract owners age 86 or older.In general, we will not issue a Qualified contract to anyonewho is age 70½ or older, unless it is shown that theminimum distribution required by the IRS is being made.Please see TAXES below. If we learn of a misstatement ofage, we reserve the right to fully pursue our remediesincluding termination of the contract and/or revocation ofany age-driven benefits.
Termination of the Contract for Misstatement and/orFraud
The Company reserves the right to terminate the contract atany time if it discovers a misstatement or fraudulentrepresentation of any information provided in connectionwith the issuance or ongoing administration of the contract.
Joint Ownership
We allow this contract to be jointly owned by spouses (asdetermined for federal tax law purposes). The age of theolder Owner is used to determine the availability of mostage driven benefits. The addition of a joint Owner after thecontract has been issued is contingent upon prior review andapproval by the Company.
Certain states require that the benefits and features of thecontract be made available to domestic or civil unionpartners (“Domestic Partners”) who qualify for treatmentas, or are equal to, spouses under state law. There are alsostates that require us to issue the contract to non-spousaljoint Owners. However, non-spousal joint Owners (whichcan include Domestic Partners) who jointly own or areBeneficiaries of a contract should consult with their taxadviser and/or financial representative as, under current taxlaw, they are not eligible for spousal continuation of thecontract. Therefore, the ability of such non-spousal jointOwners to fully benefit from certain benefits and features ofthe contract, such as optional living benefit(s), if applicable,that guarantee withdrawals over two lifetimes may belimited.
Assignment of the Contract/Change of Ownership
You may assign this contract before beginning the IncomePhase by sending a written request to us at the AnnuityService Center for an assignment. Your rights and those ofany other person with rights under this contract will besubject to the assignment. We will not be bound by anyassignment until written notice is processed by us at ourAnnuity Service Center and you have received confirmation.We are not responsible for the validity, tax or other legalconsequences of any assignment. An assignment will notaffect any payments we may make or actions we may takebefore we receive notice of the assignment.
We reserve the right not to recognize any assignment if itchanges the risk profile of the owner of the contract, as
determined in our sole discretion, if no Insurable Interestexists or if not permitted by the Internal Revenue Code.Please see the Statement of Additional Information fordetails on the tax consequences of an assignment. Youshould consult a qualified tax adviser before assigning thecontract.
ALLOCATION OF PURCHASE PAYMENTS
In order to issue your contract, we must receive your initialPurchase Payment and all required paperwork in GoodOrder, including Purchase Payment allocation instructions atour Annuity Service Center. We will accept initial andsubsequent Purchase Payments by electronic transmissionfrom certain broker-dealer firms. In connection witharrangements we have to transact business electronically,we may have agreements in place whereby yourbroker-dealer may be deemed our agent for receipt of yourPurchase Payments. Thus, if we have an agreement with abroker-dealer deeming them our agent, Purchase Paymentsreceived by the broker-dealer will be priced as of the timethey are received by the broker-dealer. However, if we donot have an agreement with a broker-dealer deeming themour agent, Purchase Payments received by the broker-dealerwill not be priced until they are received by us. You assumeany risk in market fluctuations if you submit your PurchasePayment directly to a broker-dealer that is not deemed ouragent, should there be a delay in that broker-dealerdelivering your Purchase Payment to us. Please check withyour financial representative to determine if his/herbroker-dealer has an agreement with the Company thatdeems the broker-dealer an agent of the Company.
An initial Purchase Payment will be priced within two NYSEbusiness days after it is received by us in Good Order if thePurchase Payment is received before Market Close. If theinitial Purchase Payment is received in Good Order afterMarket Close, the initial Purchase Payment will be pricedwithin two NYSE business days after the next NYSEbusiness day. We allocate your initial Purchase Payment asof the date such Purchase Payment is priced. If we do nothave complete information necessary to issue your contract,we will contact you. If we do not have the informationnecessary to issue your contract within five NYSE businessdays, we will send your money back to you, or obtain yourpermission to keep your money until we get the informationnecessary to issue the contract.
Any subsequent Purchase Payment will be priced as of theday it is received by us in Good Order if the request isreceived before Market Close. If the subsequent PurchasePayment is received in Good Order after Market Close, itwill be priced as of the next NYSE business day. We investyour subsequent Purchase Payments in the VariablePortfolios and available Fixed Accounts according to anyallocation instructions that accompany the subsequentPurchase Payment. If we receive a Purchase Paymentwithout allocation instructions, we will invest the Purchase
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Payment according to your allocation instructions on file.Please see INVESTMENT OPTIONS below.
Purchase Payments submitted by check can only be acceptedby the Company at the Payment Center at the followingaddress:
American General Life Insurance CompanyAnnuity Service CenterP.O. Box 100330Pasadena, CA 91189-0330
Purchase Payments sent to the Annuity Service Center willbe forwarded and priced when received at the PaymentCenter.
Overnight deliveries of Purchase Payments can only beaccepted at the following address:
American General Life Insurance CompanyAnnuity Service CenterBuilding #6, Suite 1202710 Media Center DriveLos Angeles, CA 90065-1750
Delivery of Purchase Payments to any other address willresult in a delay in crediting your contract until thePurchase Payment is received at the Payment Center.
POLARIS REWARDS PROGRAM
If you were age 80 or younger at the time your contractwas issued you may have elected to participate in thisprogram at contract issue. We contribute an upfrontPayment Enhancement and, if available, a deferred PaymentEnhancement to your contract in conjunction with eachPurchase Payment you invest during the life of yourcontract. If you elected to participate in this program, allPurchase Payments are subject to a nine year withdrawalcharge schedule. Please see EXPENSES below. Thesewithdrawal charges may offset the value of any PaymentEnhancement, if you make an early withdrawal. Amountswe contribute to your contract under this program areconsidered earnings and are allocated to your contract asdescribed below. There may be scenarios in which due tonegative market conditions and your inability to remaininvested over the long-term, a contract with the PolarisRewards program may not perform as well as the contractwithout the program.
Purchase Payments may not be invested in dollar costaveraging Fixed Accounts if you participate in the PolarisRewards program. However, you may use other FixedAccount options, if available, for dollar cost averaging.Please see DOLLAR COST AVERAGING PROGRAMbelow.
Polaris Rewards Enhancement Levels
Each enhancement level is a range of dollar amounts, whichmay correspond to different enhancement rates and dates.The enhancement level applicable to your initial PurchasePayment is determined by the amount of that initial
Purchase Payment. With respect to any subsequent PurchasePayments we determine your enhancement level by addingyour contract value on the date we receive each subsequentPurchase Payment to the amount of the subsequentPurchase Payment. Enhancement levels may change fromtime to time, at our sole discretion.
Upfront Payment Enhancement
An upfront Payment Enhancement is an amount we add toyour contract on the day we receive a Purchase Payment.We calculate an upfront Payment Enhancement amount as apercentage of each Purchase Payment. We refer to thispercentage amount as the upfront Payment EnhancementRate. We periodically review and establish the upfrontPayment Enhancement Rate, which may increase ordecrease at any time, but will never be less than 2%. Theapplicable upfront Payment Enhancement Rate is the rate ineffect for the applicable enhancement level at the time wereceive each Purchase Payment under your contract. Theupfront Payment Enhancement amounts are allocatedamong Variable Portfolios and available Fixed Accountsaccording to the current allocation instructions on file whenwe receive each Purchase Payment.
Deferred Payment Enhancement
A deferred Payment Enhancement is an amount we mayadd to your contract on a stated future date (the “deferredPayment Enhancement date”). We calculate a deferredPayment Enhancement amount, if applicable, as apercentage of each Purchase Payments received at the timewe receive the Purchase Payment. We refer to thispercentage amount as the deferred Payment EnhancementRate. We periodically review and establish the deferredPayment Enhancement Rates and deferred PaymentEnhancement dates. The deferred Payment EnhancementRate being offered may increase, decrease or be eliminatedby us at any time. The deferred Payment Enhancementdate, if applicable, may change at any time. The applicabledeferred Payment Enhancement date and deferred PaymentEnhancement Rate are those which may be in effect for theapplicable enhancement level at the time when we receiveeach Purchase Payment. Any applicable deferred PaymentEnhancement, when credited, is allocated to a money marketor similar portfolio.
If you withdraw any portion of a Purchase Payment, towhich a deferred Payment Enhancement applies, prior to thedeferred Payment Enhancement date, we reduce the amountof the corresponding deferred Payment Enhancement in thesame proportion that your withdrawal (and any fees andcharges associated with such withdrawals) reduces thatPurchase Payment. For purposes of determining the deferredPayment Enhancement, withdrawals are assumed to betaken from earnings first, then from Purchase Payments, ona first-in-first-out basis.
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We will not allocate any applicable deferred PaymentEnhancement, if any, to your contract if the followingcircumstances occur prior to the deferred PaymentEnhancement date:
• You surrender your contract;
• A death benefit is paid on your contract;
• You switch to the Income Phase of your contract; or
• You fully withdraw the corresponding PurchasePayment.
90 Day Window
As of the 90th day after your contract was issued, we willtotal your Purchase Payments made over those 90 days,without considering any investment gain or loss in contractvalue on those Purchase Payments. If your total PurchasePayments bring you to an enhancement level which, as ofthe date we issued your contract, would have provided for ahigher upfront and/or deferred Payment Enhancement rateon each Purchase Payment, you will get the benefit of theenhancement rate(s) that were applicable to that higherenhancement level at the time your contract was issued(“Look Back Adjustment”). We will add any applicableupfront Look Back Adjustment to your contract on the 90thday following the date of contract issue. We will send you aconfirmation indicating any applicable upfront and/ordeferred Look Back Adjustment, on or about the 90th dayfollowing the date of contract issuance. We will allocate anyapplicable upfront Look Back Adjustment according to yourthen current allocation instructions on file for subsequentPurchase Payments at the time we make the contributionand if applicable, to a money market or similar portfolio, fora deferred Look Back Adjustment.
Current Enhancement Levels
The Enhancement Levels, Upfront Payment EnhancementRate, Deferred Payment Enhancement Rate and DeferredPayment Enhancement date applicable to all PurchasePayments as of the date of this prospectus are:
Enhancement Level
UpfrontPayment
EnhancementRate
DeferredPayment
EnhancementRate
Deferred PaymentEnhancement Date
Under $40,000 2% 0% N/A
$40,000 – $99,999 4% 0% N/A
$100,000 – $499,999 4% 1% Nine years from thedate we receive eachPurchase Payment.
$500,000 – more 5% 1% Nine years from thedate we receive eachPurchase Payment.
The Polaris Rewards program may not be available in yourstate or through the broker-dealer with which your financialrepresentative is affiliated. Please check with your financialrepresentative regarding the availability of this program.
We reserve the right to modify, suspend or terminate thePolaris Rewards program at any time for prospectivelyissued contracts and for subsequent Purchase Payments.
ACCUMULATION UNITS
When you allocate a Purchase Payment to the VariablePortfolios, we credit your contract with Accumulation Unitsof the Separate Account. We base the number ofAccumulation Units you receive on the unit value of theVariable Portfolio as of the day we process your PurchasePayment, as described under Allocation of PurchasePayments above, if before that day’s Market Close, or onthe next NYSE business day’s unit value if we process yourPurchase Payment after that day’s Market Close. The valueof an Accumulation Unit goes up and down based on theperformance of the Variable Portfolios.
We determine the value of each Accumulation Unit at theclose of the NYSE every NYSE business day, by multiplyingthe Accumulation Unit value for the immediately precedingNYSE business day by a factor for the current NYSEbusiness day. The factor is determined by:
1. dividing the net asset value per share of theUnderlying Fund at the end of the current NYSEbusiness day, plus any dividend or capital gains pershare declared on behalf of the Underlying Fund asof that day, by the net asset value per share of theUnderlying Fund for the previous NYSE businessday; and
2. multiplying it by one minus all applicable daily assetbased charges.
We determine the number of Accumulation Units credited toyour contract by adding the Purchase Payment and PaymentEnhancement, if applicable, and dividing that amount, bythe Accumulation Unit value for the specific VariablePortfolio.
Example (Contracts Without Polaris Rewards):
We receive a $25,000 Purchase Payment from you onWednesday. You allocate the money to VariablePortfolio A. We determine that the value of anAccumulation Unit for Variable Portfolio A is $11.10 atMarket Close on Wednesday. We then divide $25,000 by$11.10 and credit your contract on Wednesday nightwith 2,252.2523 Accumulation Units for VariablePortfolio A.
Example (Contracts With Polaris Rewards):
We receive a $25,000 Purchase Payment from you onWednesday. You allocate the money to VariablePortfolio A. If the Payment Enhancement is 2% of yourPurchase Payment, we would add a PaymentEnhancement of $500 to your contract. We determinethat the value of an Accumulation Unit for VariablePortfolio A is $11.10 at Market Close on Wednesday.
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We then divide $25,500 by $11.10 and credit yourcontract on Wednesday with 2,297.2973 AccumulationUnits for Variable Portfolio A.
Performance of the Variable Portfolios and the insurancecharges under your contract affect Accumulation Unitvalues. These factors cause the value of your contract to goup and down.
FREE LOOK
You may cancel your contract within ten days afterreceiving it. Your state may require a longer free lookperiod. We call this a “free look.” Please check your contractor with your financial representative. To cancel, you mustmail the contract along with your written free look requestto our Annuity Service Center at P.O. Box 15570, Amarillo,Texas 79105-5570.
If you decide to cancel your contract during the free lookperiod, generally we will refund to you the value of yourcontract on the day we receive your request in Good Orderat the Annuity Service Center minus the Free Look PaymentEnhancement Deduction, if applicable. If you elect thePolaris Rewards feature, the Free Look PaymentEnhancement Deduction is equal to the lesser of (1) thevalue of any Payment Enhancement(s) on the day wereceive your free look request; or (2) the PaymentEnhancement amount(s), if any, which we allocated to yourcontract. Thus, you receive any gain and we bear any losson any Payment Enhancement(s) if you decide to cancelyour contract during the free look period. Certain statesrequire us to return your Purchase Payments upon a freelook request. Additionally, all contracts issued as an IRArequire the full return of Purchase Payments upon a freelook.
If your contract was issued either in a state requiring returnof Purchase Payments or as an IRA, and you cancel yourcontract during the free look period, we return the greaterof (1) your Purchase Payments; or (2) the value of yourcontract on the day we receive your request in Good Orderat the Annuity Service Center. With respect to thesecontracts, we reserve the right to put your money and thePayment Enhancement, if you elected the Polaris Rewardsfeature, in a money market or similar portfolio during thefree look period and will allocate your money and thePayment Enhancement according to your instructions at theend of the applicable free look period. Please see theSTATE CONTRACT AVAILABILITY AND/ORVARIABILITY Appendix for information about the freelook period in your state.
EXCHANGE OFFERS
From time to time, we allow you to exchange an oldervariable annuity issued by the Company or one of itsaffiliates, for a newer product with different features andbenefits issued by the Company or one of its affiliates. Suchan exchange offer will be made in accordance withapplicable federal securities laws and state insurance rules
and regulations. We will provide the specific terms andconditions of any such exchange offer at the time the offeris made.
IMPORTANT INFORMATION FOR MILITARYSERVICEMEMBERS
If you are an active duty full-time servicemember, and areconsidering the purchase of this contract, please read thefollowing important information before investing. Subsidizedlife insurance is available to members of the Armed Forcesfrom the Federal Government under the Servicemembers’Group Life Insurance program (also referred to as “SGLI”).More details may be obtained on-line at the followingwebsite: www.insurance.va.gov. This contract is not offeredor provided by the Federal Government and the FederalGovernment has in no way sanctioned, recommended, orencouraged the sale of this contract. No entity has receivedany referral fee or incentive compensation in connection withthe offer or sale of this contract, unless that entity has aselling agreement with the Company.
INVESTMENT OPTIONS
VARIABLE PORTFOLIOS
The Variable Portfolios invest in the Underlying Funds ofthe Trusts. Additional Variable Portfolios may be availablein the future. The Variable Portfolios are only availablethrough the purchase of certain insurance contracts weoffer.
The Underlying Funds offered through this contract areselected by us and we may consider various factors in theselection process, including but not limited to: asset classcoverage, the strength of the investment adviser’s orsubadviser’s reputation and tenure, brand recognition,performance and the capability and qualification of eachinvestment firm. Another factor we may consider is whetherthe Underlying Fund or its service providers (i.e., theinvestment adviser and/or subadviser(s)) or their affiliateswill make payments to us or our affiliates in connection withcertain administrative, marketing and support services, orwhether the Underlying Fund’s service providers haveaffiliates that can provide marketing and distributionsupport for sales of the contract. Please see PAYMENTSIN CONNECTION WITH DISTRIBUTION OF THECONTRACT below.
We review the Underlying Funds periodically and may makechanges if we determine that an Underlying Fund no longersatisfies one or more of the selection criteria and/or if theUnderlying Fund has not attracted significant allocationsfrom contract owners. We offer Underlying Funds of theAnchor Series Trust, Seasons Series Trust and SunAmericaSeries Trust at least in part because they are managed bySunAmerica Asset Management, LLC (“SAAMCo”), awholly-owned subsidiary of AGL.
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From time to time, certain Variable Portfolio names arechanged. When we are notified of a name change, we willmake changes so that the new name is properly shown.However, until we complete the changes, we may provideyou with various forms, reports and confirmations thatreflect a Variable Portfolio’s prior name.
You are responsible for allocating Purchase Payments to theVariable Portfolios as is appropriate for your own individualcircumstances, investment goals, financial situation and risktolerance. You should periodically review your allocationsand values to ensure they continue to suit your needs. Youbear the risk of any decline in contract value resulting fromthe performance of the Underlying Funds you have selected.In making your investment selections, you should investigateall information available to you including the UnderlyingFund’s prospectus, statement of additional information andannual and semi-annual reports.
During periods of low short-term interest rates, and in partdue to contract fees and expenses, the investment return ofa money market or similar portfolio may become extremelylow and possibly negative. In the case of negative returns,your investment in a money market or similar portfolio willlose value.
The Trusts serve as the underlying investment vehicles forother variable annuity contracts issued by the Company andother affiliated and unaffiliated insurance companies. Neitherthe Company nor the Trusts believe that offering shares of theTrusts in this manner disadvantages you. The Trusts aremonitored for potential conflicts. The Trusts may have otherUnderlying Funds, in addition to those listed here, that are notavailable for investment under this contract.
We do not provide investment advice, nor do we recommend orendorse any particular Underlying Fund. The UnderlyingFunds along with their respective advisers are listed below.
AIM Variable Insurance Funds (Invesco VariableInsurance Funds) — Series II Shares
Invesco Advisers, Inc. is the investment adviser to AIMVariable Insurance Funds (Invesco Variable InsuranceFunds) (“AVIF”).
American Funds Insurance Series — Class 2 Shares
Capital Research and Management Company is theinvestment adviser to American Funds Insurance Series(“AFIS”).
Lord Abbett Series Fund, Inc. — Class VC Shares
Lord, Abbett & Co. LLC is the investment adviser toLord Abbett Series Fund, Inc. (“LASF”).
SAAMCO MANAGED TRUSTS
We offer Underlying Funds of the Anchor Series Trust,Seasons Series Trust and SunAmerica Series Trust(the “SAAMCo Managed Trusts”) at least in partbecause they are managed by SunAmerica AssetManagement, LLC (“SAAMCo”), an affiliate of theCompany. SAAMCo engages subadvisers to provideinvestment advice for the Underlying Funds. TheCompany and/or its affiliates may be subject to certainconflicts of interest as the Company may derive greaterrevenues from Variable Portfolios offered by a Trustmanaged by an affiliate than certain other availableVariable Portfolios.
Anchor Series Trust — Class 1 Shares
SAAMCo is the investment adviser and variousmanagers are the subadviser to Anchor Series Trust(“AST”).
Seasons Series Trust — Class 3 Shares
The Real Return Portfolio listed below is part of theSeasons Series Trust (“SST”).
SunAmerica Series Trust – Class 1 Shares
SAAMCo is the investment adviser and variousmanagers are the subadvisers to SunAmerica SeriesTrust (“SAST”).
As noted below, certain portfolios invest in Class 3Shares of SAST.
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SunAmerica Dynamic Allocation Portfolio andSunAmerica Dynamic Strategy Portfolio
SAST also offers the SunAmerica DynamicAllocation Portfolio (the “Dynamic AllocationPortfolio”) and the SunAmerica Dynamic StrategyPortfolio (“Dynamic Strategy Portfolio”). SAAMCois the investment adviser of the Dynamic AllocationPortfolio and Dynamic Strategy Portfolio.AllianceBernstein L.P. is the subadviser(the “Subadviser”) of a component of each of theDynamic Allocation Portfolio and Dynamic StrategyPortfolio. The Dynamic Allocation Portfolio andDynamic Strategy Portfolio each invest part oftheir assets as a Fund-of-Funds that in turn investin Underlying Funds of the SAAMCo ManagedTrusts.
The Dynamic Allocation Portfolio and DynamicStrategy Portfolio each have a managed volatilitystrategy that may serve to reduce the risk of
investment losses that could require the Companyto use its own assets to make payments inconnection with certain guarantees under thecontract. In addition, the Dynamic AllocationPortfolio and Dynamic Strategy Portfolio mayenable the Company to more efficiently manage itsfinancial risks associated with guarantees like theliving and death benefits, due in part to a formuladeveloped by the Company and provided bySAAMCo to the Subadviser. The formula used bythe Subadviser may change over time based onproposals by the Company. Any changes to theformula proposed by the Company will beimplemented only if they are approved by theinvestment adviser and the Portfolio’s Board ofTrustees, including a majority of the IndependentTrustees. Please see the SunAmerica SeriesTrust prospectus and Statement of AdditionalInformation for details.
(See next page for full list of investment options)
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Underlying Funds Managed by: Trust Asset ClassAggressive Growth Wells Capital Management Incorporated SAST STOCKAmerican Funds Asset Allocation Capital Research and Management Company AFIS ASSET ALLOCATIONAmerican Funds Global Growth Capital Research and Management Company AFIS STOCKAmerican Funds Growth Capital Research and Management Company AFIS STOCKAmerican Funds Growth-Income Capital Research and Management Company AFIS STOCKAsset Allocation Edge Asset Management, Inc. AST ASSET ALLOCATIONBalanced J.P. Morgan Investment Management Inc. SAST ASSET ALLOCATIONBlue Chip Growth Massachusetts Financial Services Company SAST STOCKCapital Appreciation Wellington Management Company LLP AST STOCKCapital Growth The Boston Company Asset Management, LLC SAST STOCKCorporate Bond Federated Investment Management Company SAST BOND“Dogs” of Wall Street** SunAmerica Asset Management, LLC SAST STOCKEmerging Markets J.P. Morgan Investment Management Inc. SAST STOCKEquity Opportunities OppenheimerFunds, Inc. SAST STOCKForeign Value* Templeton Investment Counsel, LLC SAST STOCKFundamental Growth Wells Capital Management Incorporated SAST STOCKGlobal Bond Goldman Sachs Asset Management International SAST BONDGlobal Equities J.P. Morgan Investment Management Inc. SAST STOCKGovernment and Quality Bond Wellington Management Company LLP AST BONDGrowth Wellington Management Company LLP AST STOCKGrowth-Income J.P. Morgan Investment Management Inc. SAST STOCKGrowth Opportunities Invesco Advisers, Inc. SAST STOCKHigh-Yield Bond PineBridge Investments LLC SAST BONDInternational Diversified Equities Morgan Stanley Investment Management Inc. SAST STOCKInternational Growth and Income Putnam Investment Management, LLC SAST STOCKInvesco V.I. American Franchise Fund, Series II
Shares**Invesco Advisers, Inc. AVIF STOCK
Invesco V.I. Comstock Fund, Series II Shares** Invesco Advisers, Inc. AVIF STOCKInvesco V.I. Growth and Income Fund, Series II
SharesInvesco Advisers, Inc. AVIF STOCK
Lord Abbett Growth and Income Lord, Abbett & Co. LLC LASF STOCKLord Abbett Mid Cap Stock Lord, Abbett & Co. LLC LASF STOCKMid-Cap Growth J.P. Morgan Investment Management Inc. SAST STOCKNatural Resources Wellington Management Company LLP AST STOCKReal Estate FIAM LLC SAST STOCKReal Return Wellington Management Company LLP SST BONDSA AB Growth AllianceBernstein L.P. SAST STOCKSA JPMorgan MFS Core Bond J.P. Morgan Investment Management Inc. and
Massachusetts Financial Services CompanySAST BOND
SA Legg Mason BW Large Cap Value Brandywine Global Investment Management, LLC SAST STOCKSA Marsico Focused Growth Marsico Capital Management, LLC SAST STOCKSA MFS Massachusetts Investors Trust** Massachusetts Financial Services Company SAST STOCKSA MFS Total Return** Massachusetts Financial Services Company SAST ASSET ALLOCATIONSmall & Mid Cap Value* AllianceBernstein L.P. SAST STOCKSmall Company Value* Franklin Advisory Services, LLC SAST STOCKSunAmerica Dynamic Allocation Portfolio* SunAmerica Asset Management, LLC &
AllianceBernstein L.P.SAST ASSET ALLOCATION
SunAmerica Dynamic Strategy Portfolio* SunAmerica Asset Management, LLC &AllianceBernstein L.P.
SAST ASSET ALLOCATION
Technology Columbia Management Investment Advisers, LLC SAST STOCKTelecom Utility Massachusetts Financial Services Company SAST STOCKUltra Short Bond Portfolio Dimensional Fund Advisors LP SAST BOND
* Class 3 shares of SAST.
** “Dogs” of Wall Street is an equity fund seeking total return including capital appreciation and current income. Invesco V.I. American Franchise Fundis an equity fund seeking capital growth. Invesco V.I. Comstock Fund is an equity fund seeking capital growth and income. SA MFS MassachusettsInvestors Trust is an equity fund seeking reasonable current income and long-term growth of capital and income. SA MFS Total Return is an equityfund seeking reasonable current income, long term capital growth and conservation of capital.
You should read the prospectuses for the Trusts carefully. These prospectuses contain detailed information about theUnderlying Funds, including each Underlying Fund’s investment objective and risk factors. You may obtain anadditional copy of these prospectuses for the Trusts by calling our Annuity Service Center at (800) 445-7862 or byvisiting our website at www.aig.com/annuities. You may also obtain information about the Underlying Funds (includinga copy of the Statement of Additional Information) by accessing the U.S. Securities and Exchange Commission’s websiteat www.sec.gov.
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SUBSTITUTION, ADDITION OR DELETION OFVARIABLE PORTFOLIOS
We may, subject to any applicable law, make certainchanges to the Variable Portfolios offered in your contract.We may offer new Variable Portfolios or stop offeringexisting Variable Portfolios. New Variable Portfolios may bemade available to existing contract owners, and VariablePortfolios may be closed to new or subsequent PurchasePayments, transfers or allocations. In addition, we may alsoliquidate the shares of any Variable Portfolio, substitute theshares of one Underlying Fund held by a Variable Portfoliofor another and/or merge Variable Portfolios or cooperate ina merger of Underlying Funds. To the extent required bythe Investment Company Act of 1940, as amended, we maybe required to obtain SEC approval or your approval.
FIXED ACCOUNTS
Your contract may offer Fixed Accounts for varyingguarantee periods. A Fixed Account may be available fordiffering lengths of time (such as 1, 3, or 5 years). Eachguarantee period may have different guaranteed interestrates.
We guarantee that the interest rate credited to amountsallocated to any Fixed Account guarantee periods will neverbe less than the guaranteed minimum interest rate specifiedin your contract. Once the rate is established, it will notchange for the duration of the guarantee period. Theminimum guaranteed interest rate can vary but is neverlower than 1%. We determine which, if any, guaranteeperiods will be offered at any time in our sole discretion,unless state law requires us to do otherwise. Please checkwith your financial representative regarding the availabilityof Fixed Accounts.
There are three categories of interest rates for moneyallocated to the Fixed Accounts. The applicable rate isguaranteed until the corresponding guarantee period expires.With each category of interest rate, your money may becredited a different rate as follows:
• Initial Rate: The rate credited to any portion of theinitial Purchase Payment allocated to a FixedAccount.
• Current Rate: The rate credited to any portion of asubsequent Purchase Payment allocated to a FixedAccount.
• Renewal Rate: The rate credited to moneytransferred from a Fixed Account or a VariablePortfolio into a Fixed Account and to moneyremaining in a Fixed Account after expiration of aguarantee period.
There are no restrictions with respect to transferring out ofor taking a withdrawal from a Fixed Account. If you makea transfer out of or a withdrawal from a Fixed Accountprior to the end of a guarantee period, you will be creditedthe interest earned up to the time of transfer or withdrawal.
When a guarantee period ends, you may leave your moneyin the same Fixed Account or you may reallocate yourmoney to another Fixed Account, if available, or to theVariable Portfolios. If you do not want to leave your moneyin the same Fixed Account, you must contact us within30 days after the end of the guarantee period and provideus with new allocation instructions. We do not contact you.If you do not contact us, your money will remain in thesame Fixed Account where it will earn interest at therenewal rate then in effect for that Fixed Account.
We reserve the right to defer payments for a withdrawalfrom a Fixed Account for up to six months. Please seeACCESS TO YOUR MONEY below.
If available, you may systematically transfer interest earnedin available Fixed Accounts into any of the VariablePortfolios on certain periodic schedules offered by us.Systematic transfers may be started, changed or terminatedat any time by contacting our Annuity Service Center.Check with your financial representative about the currentavailability of this service.
At any time we are crediting the minimum guaranteedinterest rate specified in your contract, we reserve the rightto restrict your ability to invest into the Fixed Accounts. AllFixed Accounts may not be available in your state. Pleasecheck with your financial representative regarding theavailability of Fixed Accounts.
If your contract offered Fixed Accounts subject to a marketvalue adjustment, please see the Market Value Adjustment(“MVA”) Appendix in this prospectus for additionalinformation.
DOLLAR COST AVERAGING FIXED ACCOUNTS
You may invest initial and/or subsequent PurchasePayments in the dollar cost averaging (“DCA”) FixedAccounts, if available. The minimum Purchase Payment thatyou must invest for the 6-month DCA Fixed Account is$600 and for the 12-month DCA Fixed Account is $1,200.Purchase Payments less than these minimum amounts willautomatically be allocated to available investment optionsaccording to your instructions or your current allocationinstructions on file.
Purchase Payments may not be invested in DCA FixedAccounts if you elect the Polaris Rewards program.
DCA Fixed Accounts credit a fixed rate of interest and canonly be elected to facilitate a DCA program. Please seeDOLLAR COST AVERAGING PROGRAM below formore information. Interest is credited to amounts allocatedto the DCA Fixed Accounts while your money is transferredto available investment options over certain specified timeframes. The interest rates applicable to the DCA FixedAccounts may differ from those applicable to any otherFixed Account but will never be less than the minimumguaranteed interest rate specified in your contract. Theminimum guaranteed interest rate can vary but is neverlower than 1%. However, when using a DCA Fixed Account,
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the annual interest rate is paid on a declining balance asyou systematically transfer your money to availableinvestment options. Therefore, the actual effective yield willbe less than the stated annual crediting rate. We reserve theright to change the availability of DCA Fixed Accountsoffered, unless state law requires us to do otherwise.
DOLLAR COST AVERAGING PROGRAM
The DCA program allows you to invest gradually inavailable investment options at no additional cost. Under theprogram, you systematically transfer a specified dollaramount or percentage of contract value from a VariablePortfolio, available Fixed Account or DCA Fixed Account(“source account”) to any available investment options(“target account”). Fixed Accounts are not available astarget accounts for the DCA program. Transfers occur on amonthly periodic schedule. The minimum transfer amountunder the DCA program is $100 per transaction, regardlessof the source account. Transfers resulting from yourparticipation in the DCA program are not counted towardsthe number of free transfers per contract year.
The DCA Fixed Accounts only accept initial and subsequentPurchase Payments because they are offered as sourceaccounts exclusively to facilitate the DCA program for aspecified time period. You may not make a transfer from aVariable Portfolio or available Fixed Account into a DCAFixed Account.
If you choose to allocate subsequent Purchase Payments toan active DCA program with an available Fixed Accountserving as the source account, the rate applicable to thatFixed Account at the time we receive the subsequentPurchase Payment will apply. Further, we will begintransferring that subsequent Purchase Payment into yourtarget account allocations on the same day of the month asthe initial active DCA program. Therefore, you may notreceive a full 30 days of interest prior to the first transfer tothe target account(s).
You may terminate the DCA program at any time. If youterminate the DCA program and money remains in the DCAFixed Account(s), we transfer the remaining moneyaccording to your current allocation instructions on file.Upon notification of your death, we will terminate the DCAprogram unless your Beneficiary instructs us otherwise andwe will transfer the remaining money according to thecurrent allocation instructions on file.
The DCA program is designed to lessen the impact ofmarket fluctuations on your investment. However, the DCAprogram can neither guarantee a profit nor protect yourinvestment against a loss. When you elect the DCAprogram, you are continuously investing in securitiesfluctuating at different price levels. You should consideryour tolerance for investing through periods of fluctuatingprice levels.
Example of DCA Program:
Assume that you want to move $750 each month fromone Variable Portfolio to another Variable Portfolio oversix months. You set up a DCA program and purchaseAccumulation Units at the following values:
Month Accumulation Unit Value Units Purchased
1 $ 7.50 1002 $ 5.00 1503 $10.00 754 $ 7.50 1005 $ 5.00 1506 $ 7.50 100
You paid an average price of only $6.67 perAccumulation Unit over six months, while the averagemarket price actually was $7.08. By investing an equalamount of money each month, you automatically buymore Accumulation Units when the market price is lowand fewer Accumulation Units when the market price ishigh. This example is for illustrative purposes only.
We reserve the right to modify, suspend or terminatethe DCA program at any time and we will provide younotice at least 30 days prior to modification, suspensionor termination of the DCA program. In the event ofsuspension or termination of the DCA program, we willtransfer the remaining money according to your currentDCA target allocations on file.
POLARIS PORTFOLIO ALLOCATOR PROGRAM
Program Description
The Polaris Portfolio Allocator program is offered to you atno additional cost to assist in diversifying your investmentacross various asset classes. The Polaris Portfolio Allocatorprogram allows you to choose from one of the four PortfolioAllocator models designed to assist in meeting your statedinvestment goals. Each Portfolio Allocator model iscomprised of a carefully selected combination of VariablePortfolios representing various asset classes. The modelsallocate among the various asset classes to attempt to matchcertain combinations of investors’ investment time horizonand risk tolerance. Please consult your financialrepresentative about investment in the Polaris PortfolioAllocator program.
Enrolling in the Polaris Portfolio Allocator Program
You may enroll in the Polaris Portfolio Allocator program byelecting a Portfolio Allocator model when you purchase yourvariable annuity or if after contract issue, by contacting ourAnnuity Service Center. You and your financialrepresentative should determine the model most appropriatefor you based on your financial needs, risk tolerance andinvestment time horizon. You may request to discontinue the
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use of a model by providing a written reallocation request,calling our Annuity Service Center or logging onto ourwebsite.
You may also choose to invest gradually into a PortfolioAllocator model through the DCA program. Please see theDOLLAR COST AVERAGING PROGRAM above.
You may only invest in one Portfolio Allocator model at atime. Participation in this program requires that you invest100% of your initial Purchase Payment and subsequentPurchase Payment(s) in the same Portfolio Allocator Model.If you: 1) attempt to allocate a portion of your PurchasePayment outside of your elected Portfolio Allocator model,or 2) if you invest in any Variable Portfolios in addition toinvestment in a Portfolio Allocator model under thisprogram, such an investment may no longer be consistentwith the Portfolio Allocator model’s intended objectives andtherefore, will effectively terminate your election of thePolaris Portfolio Allocator Model. If your election of thePolaris Portfolio Allocator Model is terminated, yourinvestment will remain allocated to the same VariablePortfolios and in the same amounts as before the programwas terminated; however, your investment will no longer bedeemed to be in a Polaris Portfolio Allocator Model.
You may request withdrawals, as permitted by yourcontract, which will be taken proportionately from each ofthe allocations in the selected Portfolio Allocator modelunless otherwise indicated in your withdrawal instructions. Ifyou choose to make a non-proportional withdrawal from theVariable Portfolios in the Portfolio Allocator model, yourinvestment may no longer be consistent with the PortfolioAllocator model’s intended objectives and therefore, willeffectively terminate your participation in the program.Withdrawals may be subject to a withdrawal charge.Withdrawals may also be taxable and a 10% IRS penaltymay apply if you are under age 59½.
You can transfer 100% of your investment from onePortfolio Allocator model to another Portfolio Allocatormodel at any time; you will be transferred into the mostcurrent model available in your contract. As a result of atransfer, we will automatically update your allocationinstructions on file with respect to subsequent PurchasePayments and DCA target allocation instructions, ifapplicable, and we will automatically update your AutomaticAsset Rebalancing Program instructions to reflect your newinvestment. Please see DOLLAR COST AVERAGINGPROGRAM above and AUTOMATIC ASSETREBALANCING PROGRAM below.
A subsequent Purchase Payment will be invested in thesame Portfolio Allocator model as your current investmentunless we receive different instructions from you. Youshould consult with your financial representative todetermine if you should update your allocation instructions,DCA target allocation instructions and/or Automatic AssetRebalancing Program instructions on file when you make asubsequent Purchase Payment.
Rebalancing the Models
You can elect to have your investment in the PortfolioAllocator models rebalanced quarterly, semi-annually, orannually to maintain the target asset allocation among theVariable Portfolios of the model you selected. If you chooseto make investments outside of a Portfolio Allocator model,only those Variable Portfolios within the Portfolio Allocatormodel you selected will be rebalanced. Investments in otherVariable Portfolios not included in the Portfolio Allocatormodel cannot be rebalanced if you wish to maintain yourcurrent Portfolio Allocator model allocations.
Over time, the Portfolio Allocator model you select may nolonger align with its original investment objective due to theeffects of Variable Portfolio performance and changes in theVariable Portfolio’s investment objectives. Therefore, if youdo not elect to have your investment in the PortfolioAllocator model rebalanced at least annually, then yourinvestment may no longer be consistent with the PortfolioAllocator model’s intended objectives. In addition, yourinvestment goals, financial situation and risk tolerance maychange over time. You should consult with your financialrepresentative about how to keep your Portfolio Allocatormodel’s allocations in line with your investment goals.Finally, changes in investment objectives or management ofthe Underlying Funds in the models may mean that, overtime, the models no longer are consistent with their originalinvestment goals.
Important Information about the Polaris PortfolioAllocator Program
The Portfolio Allocator models are not intended asinvestment advice about investing in the Variable Portfolios,and we do not provide investment advice regarding whethera Portfolio Allocator model should be revised or whether itremains appropriate to invest in accordance with anyparticular Portfolio Allocator model.
The Polaris Portfolio Allocator program does not guaranteegreater or more consistent returns. Future market and assetclass performance may differ from the historicalperformance upon which the Portfolio Allocator models mayhave been built. Also, allocation to a single asset class mayoutperform a model, so that you could have betterinvestment returns investing in a single asset class than in aPortfolio Allocator model. However, such a strategy mayinvolve a greater degree of risk because of the concentrationof similar securities in a single asset class. Further, therecan be no assurance that any Variable Portfolio chosen for aparticular Portfolio Allocator model will perform well or thatits performance will closely reflect that of the asset class itis designed to represent.
The Portfolio Allocator models represent suggestedallocations that are provided to you as general guidance.You should work with your financial representative indetermining if one of the Portfolio Allocator models meetsyour financial needs, investment time horizon, and isconsistent with your risk tolerance level. Information
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concerning the specific Portfolio Allocator models can beobtained from your financial representative.
Polaris Portfolio Allocator Models(effective May 2, 2016)
Variable Portfolios Model 1 Model 2 Model 3 Model 4
American Funds Global Growth 2.0% 3.0% 4.0% 6.0%
American Funds Growth-Income 0.0% 0.0% 1.0% 4.0%
Blue Chip Growth 2.0% 3.0% 4.0% 4.0%
Capital Appreciation 3.0% 3.0% 4.0% 5.0%
Capital Growth 2.0% 3.0% 3.0% 4.0%
Corporate Bond 10.0% 8.0% 7.0% 1.0%
“Dogs” of Wall Street 3.0% 3.0% 3.0% 5.0%
Emerging Markets 0.0% 1.0% 2.0% 2.0%
Equity Opportunities 3.0% 4.0% 4.0% 6.0%
Foreign Value 3.0% 3.0% 3.0% 4.0%
Global Bond 4.0% 4.0% 2.0% 2.0%
Government and Quality Bond 8.0% 8.0% 7.0% 2.0%
Growth-Income 6.0% 7.0% 8.0% 8.0%
High-Yield Bond 4.0% 3.0% 2.0% 0.0%
International Diversified Equities 3.0% 3.0% 4.0% 5.0%
Invesco V.I. Comstock Fund, Series IIShares 5.0% 5.0% 6.0% 8.0%
Invesco V.I. Growth and Income Fund,Series II Shares 6.0% 7.0% 8.0% 8.0%
Real Estate 0.0% 0.0% 0.0% 1.0%
Real Return 5.0% 3.0% 2.0% 0.0%
SA AB Growth 1.0% 1.0% 1.0% 2.0%
SA JPMorgan MFS Core Bond 17.0% 13.0% 10.0% 5.0%
SA Legg Mason BW Large Cap Value 4.0% 4.0% 4.0% 5.0%
SA Marsico Focused Growth 0.0% 1.0% 1.0% 2.0%
SA MFS Massachusetts InvestorsTrust 6.0% 6.0% 7.0% 8.0%
Small & Mid Cap Value 1.0% 1.0% 1.0% 2.0%
Small Company Value 0.0% 2.0% 2.0% 1.0%
Ultra Short Bond 2.0% 1.0% 0.0% 0.0%
Total 100% 100% 100% 100%
The Polaris Portfolio Allocator Models listed above show themost current allocations available for this product. ThePortfolio Allocator models are configured from time to time.Once you invest in a Portfolio Allocator model, thepercentages of your contract value allocated to eachVariable Portfolio within a Portfolio Allocator model will notbe changed by us. If you invested in models in previousyears, your investments, and any subsequent PurchasePayments, will be invested in the same Portfolio Allocatormodel as your current investment and will not be invested inthe Portfolio Allocator models with the most currentallocations specified above unless you provide us withspecific instructions to do so. You should speak with yourfinancial representative about how to keep the VariablePortfolio allocations in each Portfolio Allocator model in linewith your investment goals over time.
We reserve the right to change the Variable Portfoliosand/or allocations to certain Variable Portfolios in eachmodel to the extent that Variable Portfolios are liquidated,substituted, merged or otherwise reorganized.
We reserve the right to modify, suspend or terminatethe Polaris Portfolio Allocator Program at any time andwe will notify you prior to exercising that right. In theevent of modification, we will administer the programaccording to the parameters of the modification. In theevent of suspension or termination of the program, yourinvestment will remain in the same Variable Portfoliosand in the same amounts as before the program wassuspended or terminated; however, your investment willno longer be deemed to be in a Portfolio Allocatormodel.
TRANSFERS DURING THE ACCUMULATION PHASE
Subject to our rules, restrictions and policies describedbelow, during the Accumulation Phase you may transferfunds between the Variable Portfolios and/or any availableFixed Accounts, subject to the Company’s and theUnderlying Funds’ short term trading policies, by telephone(800) 445-7862, through the Company’s website(www.aig.com/annuities), by U.S. Mail addressed to ourAnnuity Service Center, P.O. Box 15570, Amarillo, Texas79105-5570 or by facsimile. All transfer instructionssubmitted via facsimile must be sent to (818) 615-1543;otherwise they will not be considered received by us. Wemay accept transfers by telephone or the Internet unless youtell us not to on your contract application. If your contractwas issued in the state of New York, we may accepttransfers by telephone if you complete and send theTelephone Transfer Agreement form to our Annuity ServiceCenter. When receiving instructions over the telephone orthe Internet, we have procedures to provide reasonableassurance that the transactions executed are genuine. Thus,we are not responsible for any claim, loss or expense fromany error resulting from instructions received over thetelephone or the Internet. If we fail to follow ourprocedures, we may be liable for any losses due tounauthorized or fraudulent instructions.
We cannot guarantee that we will be able to accepttelephone, fax and/or internet transfer instructions at alltimes. Any telephone, fax or computer system, whether it isyours, your broker-dealer’s, or ours, can experience outagesor delays for a variety of reasons and may prevent ourprocessing of your transfer request. We reserve the right tomodify, suspend or terminate telephone, fax and/or internettransfer privileges at any time. If telephone, fax and/orinternet access is unavailable, you must make your transferrequest in writing by U.S. Mail to our Annuity ServiceCenter.
Any transfer request will be priced as of the day it isreceived by us in Good Order if the request is received
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before Market Close. If the transfer request is received afterMarket Close, the request will be priced as of the nextNYSE business day.
Funds already in your contract cannot be transferred intothe DCA Fixed Accounts.
You must transfer at least $100 per transfer. If less than$100 remains in any Variable Portfolio or Fixed Accountafter a transfer, that amount must be transferred as well.
There is no charge for your first 15 transfers. We chargefor transfers in excess of 15 in any contract year. The fee is$25 for each transfer exceeding this limit. Transfersresulting from your participation in the DCA or AutomaticAsset Rebalancing programs are not counted towards thenumber of free transfers per contract year.
Short-Term Trading Policies
We do not want to issue this variable annuity contract tocontract owners engaged in frequent trading or tradingstrategies that seek to benefit from short-term pricefluctuations or price inefficiencies in the Variable Portfoliosof this product (“Short-Term Trading”) and we discourageShort-Term Trading as more fully described below.However, we cannot always anticipate if a potential contractowner intends to engage in Short-Term Trading. Short-TermTrading may create risks that may result in adverse effectson investment return of the Underlying Fund in which aVariable Portfolio invests. Such risks may include, but arenot limited to: (1) interference with the management andplanned investment strategies of an Underlying Fund;(2) dilution of the interests in the Underlying Fund due topractices such as “arbitrage”; and/or (3) increasedbrokerage and administrative costs due to forced andunplanned fund turnover. These circumstances may reducethe value of the Variable Portfolio. In addition to negativelyimpacting the Owner, a reduction in contract value may alsobe harmful to Annuitants and/or Beneficiaries.
We have adopted the following administrative procedures todiscourage Short-Term Trading which are summarizedbelow.
The first 15 transfers in a rolling 12-month look-back period(“12-Month Rolling Period”) can be made by telephone,through the Company’s website, or in writing by mail or byfacsimile. The 15th transfer in a 12-Month Rolling Periodtriggers the U.S. Mail method of transfer. Therefore, onceyou make the 15th transfer in a 12-Month Rolling Period,all transfers must be submitted by United States PostalService first-class mail (“U.S. Mail”) for 12-monthsfollowing the date of the 15th transfer (“Standard U.S. MailPolicy”).
For example, if you made a transfer on August 17, 2016and within the previous twelve months (from August 18,2015 forward) you made 15 transfers including theAugust 17th transfer, then all transfers made for twelve
months after August 17, 2016 must be submitted byU.S. Mail (from August 18, 2016 through August 17,2017).
U.S. Mail includes any postal service delivery method thatoffers delivery no sooner than United States Postal Servicefirst-class mail, as determined in the Company’s solediscretion. We will not accept transfer requests sent by anyother medium except U.S. Mail during this 12-month period.Transfer requests required to be submitted by U.S. Mail canonly be cancelled by a written request sent by U.S. Mailwith the appropriate paperwork received prior to theexecution of the transfer.
All transfers made on the same day prior to Market Closeare considered one transfer request for purposes of applyingthe Short-Term Trading policy and calculating the numberof free transfers. Transfers resulting from your participationin the DCA or Automatic Asset Rebalancing programs arenot included for the purposes of determining the number oftransfers before applying the Standard U.S. Mail Policy.
We apply the Standard U.S. Mail Policy uniformly andconsistently to all contract owners except for omnibus groupcontracts as described below.
We believe that the Standard U.S. Mail Policy is a sufficientdeterrent to Short-Term Trading. However, we may becomeaware of transfer patterns among the Variable Portfoliosand/or Fixed Accounts which appear to be Short-TermTrading or otherwise detrimental to the Variable Portfoliosbut have not yet triggered the limitations of the StandardU.S. Mail Policy described above. If such transfer activitycomes to our attention, we may require you to adhere to ourStandard U.S. Mail Policy prior to reaching the specifiednumber of transfers (“Accelerated U.S. Mail Policy”). Tothe extent we become aware of Short-Term Tradingactivities which cannot be reasonably controlled solely by theStandard U.S. Mail Policy or the Accelerated U.S. MailPolicy, we reserve the right to evaluate, in our solediscretion, whether to: (1) impose further limits on the size,manner, number and/or frequency of transfers you canmake; (2) impose minimum holding periods; (3) reject anyPurchase Payment or transfer request; (4) terminate yourtransfer privileges; and/or (5) request that you surrenderyour contract. We will notify you in writing if your transferprivileges are modified, suspended or terminated. Inaddition, we reserve the right not to accept or otherwiserestrict transfers from a third party acting for you and notto accept pre-authorized transfer forms.
Some of the factors we may consider when determiningwhether to accelerate the Standard U.S. Mail Policy, rejecttransfers or impose other conditions on transfer privilegesinclude:
(1) the number of transfers made in a defined period;
(2) the dollar amount of the transfer;
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(3) the total assets of the Variable Portfolio involved inthe transfer and/or transfer requests thatrepresent a significant portion of the total assets ofthe Variable Portfolio;
(4) the investment objectives and/or asset classes ofthe particular Variable Portfolio involved in yourtransfers;
(5) whether the transfer appears to be part of apattern of transfers to take advantage ofshort-term market fluctuations or marketinefficiencies;
(6) the history of transfer activity in the contract or inother contracts we may offer; and/or
(7) other activity, as determined by us, that creates anappearance, real or perceived, of Short-TermTrading or the possibility of Short-Term Trading.
Notwithstanding the administrative procedures above, thereare limitations on the effectiveness of these procedures. Ourability to detect and/or deter Short-Term Trading is limitedby operational systems and technological limitations, as wellas our ability to predict strategies employed by contractowners (or those acting on their behalf) to avoid detection.We cannot guarantee that we will detect and/or deter allShort-Term Trading and it is likely that some level ofShort-Term Trading will occur before it is detected andsteps are taken to deter it. To the extent that we are unableto detect and/or deter Short-Term Trading, the VariablePortfolios may be negatively impacted as described above.Additionally, the Variable Portfolios may be harmed bytransfer activity related to other insurance companies and/orretirement plans or other investors that invest in shares ofthe Underlying Fund. Moreover, our ability to deterShort-Term Trading may be limited by decisions by stateregulatory bodies and court orders which we cannot predict.You should be aware that the design of our administrativeprocedures involves inherently subjective decisions which weattempt to make in a fair and reasonable manner consistentwith the interests of all Owners of this contract. We do notenter into agreements with contract owners whereby wepermit or intentionally disregard Short-Term Trading.
The Standard and Accelerated U.S. Mail Policies are applieduniformly and consistently to contract owners utilizing thirdparty trading services/strategies performing asset allocationservices for a number of contract owners at the same time.You should be aware that such third party trading servicesmay engage in transfer activities that can also bedetrimental to the Variable Portfolios, including tradingrelatively large groups of contracts simultaneously. Thesetransfer activities may not be intended to take advantage ofshort-term price fluctuations or price inefficiencies. However,such activities can create the same or similar risks asShort-Term Trading and negatively impact the VariablePortfolios as described above.
Omnibus group contracts may invest in the same UnderlyingFunds available in your contract but on an aggregate, not
individual basis. Thus, we have limited ability to detectShort-Term Trading in omnibus group contracts and theStandard U.S. Mail Policy does not apply to these contracts.Our inability to detect Short-Term Trading may negativelyimpact the Variable Portfolios as described above.
We reserve the right to modify the policies andprocedures described in this section at any time. To theextent that we exercise this reservation of rights, we will doso uniformly and consistently unless we disclose otherwise.
Underlying Funds’ Short-Term Trading Policies
Please note that the Underlying Funds have their ownpolicies and procedures with respect to frequent purchasesand redemptions of their respective shares which may bemore or less restrictive than ours. We reserve the right toenforce these Underlying Fund policies and procedures,including, but not limited to, the right to collect aredemption fee on shares of the Underlying Fund if imposedby such Fund’s Board of Trustees/Directors. As of the dateof this prospectus, none of the Underlying Funds impose aredemption fee. We also reserve the right to reject, with orwithout prior notice, any purchase, transfer or allocation intoa Variable Portfolio if the corresponding Underlying Fundwill not accept such purchase, transfer or allocation for anyreason. The prospectuses for the Underlying Funds describethese procedures, which may be different among UnderlyingFunds and may be more or less restrictive than our policiesand procedures.
Under rules adopted by the Securities and ExchangeCommission, we also have written agreements with theUnderlying Funds that obligate us to, among other things,provide the Underlying Funds promptly upon request certaininformation about you (e.g., your social security number)and your trading activity. In addition, we are obligated toexecute instructions from the Underlying Funds to restrictor prohibit further purchases or transfers in an UnderlyingFund under certain circumstances.
Many investments in the Underlying Funds outside of thesecontracts are omnibus orders from intermediaries such asother separate accounts or retirement plans. If anUnderlying Fund’s policies and procedures fail tosuccessfully detect and discourage Short-Term trading, theremay be a negative impact to the owners of the UnderlyingFund. If an Underlying Fund believes that an omnibus orderwe submit may reflect transfer requests from ownersengaged in Short-Term Trading, the Underlying Fund mayreject the entire omnibus order and delay or prevent us fromimplementing your transfer request.
Transfers During the Income Phase
During the Income Phase, only one transfer per month ispermitted between the Variable Portfolios. No othertransfers are allowed during the Income Phase. Transferswill be effected for the last NYSE business day of themonth in which we receive your request for the transfer.
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AUTOMATIC ASSET REBALANCING PROGRAM
Market fluctuations may cause the percentage of yourinvestment in the Variable Portfolios to differ from youroriginal allocations. Under the Automatic Asset RebalancingProgram, you may elect to have your investments in theVariable Portfolios and/or Fixed Accounts, if applicable,periodically rebalanced to return your allocations to thepercentages given at your last instructions for no additionalcharge. If you make a transfer, you must provide updatedrebalancing instructions. If you do not provide newrebalancing instructions at the time you make such transfer,we will change your ongoing rebalancing instructions toreflect the percentage allocations among the new VariablePortfolios and/or Fixed Accounts, if applicable, resultingfrom your transfer which will replace any previousrebalancing instructions you may have provided (“DefaultRebalancing Instructions”). You may change any applicableDefault Rebalancing Instructions at any time by contactingthe Annuity Service Center.
Automatic Asset Rebalancing typically involves shifting aportion of your money out of investment options which hadhigher returns into investment options which had lowerreturns. At your request, rebalancing occurs on a quarterly,semiannual or annual basis. Transfers resulting from yourparticipation in this program are not counted against thenumber of free transfers per contract year.
We reserve the right to modify, suspend or terminatethe Automatic Asset Rebalancing Program at any timeand we will notify you prior to exercising that right. Inthe event of modification, we will administer theprogram according to the parameters of themodification. In the event of suspension or terminationof the program, we will no longer administer theprogram and your investments will no longer berebalanced.
RETURN PLUS PROGRAM
The Return Plus program, available only if we are offeringmulti-year Fixed Accounts and available for no additionalcharge, allocates your investment strategically between theFixed Accounts and Variable Portfolios. You decide howmuch you want to invest and approximately when you wanta return of Purchase Payments. We calculate how much ofyour Purchase Payment to allocate to the particular FixedAccount to ensure that it grows to an amount equal to yourtotal Purchase Payment invested under this program. Weinvest the rest of your Purchase Payment in the VariablePortfolio(s) according to your allocation instructions.
Example of Return Plus Program:
Assume that you want to allocate a portion of yourinitial Purchase Payment of $100,000 to a multi-yearFixed Account. You want the amount allocated to themulti-year Fixed Account to grow to $100,000 in3 years. If the 3-year Fixed Account is offering a 4%interest rate, Return Plus will allocate $88,900 to the
3-year Fixed Account to ensure that this amount willgrow to $100,000 at the end of the 3-year period. Theremaining $11,100 may be allocated among the VariablePortfolios according to your allocation instructions.
We reserve the right to modify, suspend or terminatethe Return Plus program at any time.
VOTING RIGHTS
The Company is the legal owner of the Trusts’ shares.However, when an Underlying Fund solicits proxies inconjunction with a shareholder vote, we must obtain yourinstructions on how to vote those shares. We vote all of theshares we own in proportion to your instructions. Thisincludes any shares we own on our own behalf. As a resultof this proportionate voting, the vote of a small number ofcontract owners can determine the outcome of a vote.Should we determine that we are no longer required to votein the manner described above, we will vote the shares inour own right.
ACCESS TO YOUR MONEY
You can access money in your contract by making asystematic, partial, or total withdrawal (surrender), and/orby receiving annuity income payments during the IncomePhase. Please see ANNUITY INCOME OPTIONS below.Any request for withdrawal will be priced as of the day it isreceived by us in Good Order at the Annuity Service Center,if the request is received before Market Close. If the requestfor withdrawal is received after Market Close, the requestwill be priced as of the next NYSE business day.
We deduct a withdrawal charge applicable to any partial ortotal withdrawal made before the end of the withdrawalcharge period.
FREE WITHDRAWAL AMOUNT
Your contract provides for a free withdrawal amount eachyear. A free withdrawal amount, as defined below, is theportion of your contract that we allow you to take out eachyear without being charged a withdrawal charge at the timeof the withdrawal if it is taken during the withdrawalcharge period. The free withdrawal amount does not reducethe basis used to calculate future annual free withdrawalsand withdrawal charges. As a result, if you fullysurrender your contract in the future while withdrawalcharges are still applicable, you will not receive thebenefit of any previously withdrawn free withdrawalsor any withdrawals subject to minimum distributionrequirements upon a full surrender for the purposes ofcalculating the withdrawal charge.
Withdrawals of Purchase Payments made prior to the end ofthe withdrawal charge schedule that are in excess of yourfree withdrawal amount will result in a withdrawal charge.Before purchasing this contract, you should consider theeffect of withdrawal charges on your investment if you need
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to withdraw more money than the annual free withdrawalamount during the withdrawal charge period. You shouldfully discuss this decision with your financial representative.
To determine your free withdrawal amount and yourwithdrawal charge, we refer to two special terms:“penalty-free earnings” and “total invested amount.”
Penalty-free earnings are equal to your contract value lessyour total invested amount and may be withdrawn free of awithdrawal charge at any time, including upon a fullsurrender of your contract. Purchase Payments that are nolonger subject to a withdrawal charge and not previouslywithdrawn may also be withdrawn free of a withdrawalcharge at any time. The total invested amount is the sum ofall Purchase Payments less portions of prior withdrawalsthat reduce your total invested amount as follows:
• Free withdrawals in any year that were in excess ofyour penalty-free earnings and were based on theportion of the total invested amount that was nolonger subject to withdrawal charges at the time ofthe withdrawal; and
• Any prior withdrawals (including withdrawalcharges applicable to those withdrawals) of thetotal invested amount on which you already paid awithdrawal charge.
When you make a withdrawal, we deduct it frompenalty-free earnings first, any remaining penalty-freewithdrawal amount, and then from the total investedamount on a first-in, first-out basis. This means that youcan also access your Purchase Payments, which are nolonger subject to a withdrawal charge before those PurchasePayments, which are still subject to the withdrawal charge.
During the first contract year, your free withdrawal amountis the greater of:
(1) your penalty-free earnings; or
(2) if you are participating in the SystematicWithdrawal program, a total of 10% of your totalinvested amount; or
After the first contract year, your free withdrawal amount isthe greater of (1) or (2) plus any portion of your totalinvested amount no longer subject to a withdrawal charge:
(1) your penalty-free earnings; or
(2) 10% of the portion of your total invested amountthat has been in your contract for at least one yearand still subject to a withdrawal charge.
Amounts withdrawn free of a withdrawal charge under the10% provision do not reduce the amount you invested forpurposes of calculating the withdrawal charge andpenalty-free earnings. As a result, if you surrender yourcontract in the future and withdrawal charges are stillapplicable, any previous free withdrawals under the 10%provision would then be subject to applicable withdrawalcharges. We calculate charges upon surrender of the
contract on the day after we receive your request and yourcontract. We return to you your contract value less anyapplicable fees and charges.
If you participate in the Polaris Rewards program, you willnot receive any deferred Payment Enhancement if you fullywithdraw a Purchase Payment or if you surrender yourcontract prior to the corresponding Deferred PaymentEnhancement Date.
Although we do not assess a withdrawal charge when youtake a 10% free withdrawal of the total invested amount wewill proportionally reduce the amount of any correspondingDeferred Payment Enhancement. Please see POLARISREWARDS PROGRAM above.
The withdrawal charge percentage is determined by thenumber of years the Purchase Payment has been in thecontract at the time of the withdrawal. Please seeEXPENSES below. For the purpose of calculating thewithdrawal charge if you are surrendering your contract,any prior free withdrawal amount in the current contractyear is not subtracted from the total Purchase Paymentsstill subject to withdrawal charges.
For example, you make an initial Purchase Payment of$100,000. For purposes of this example we will assume a0% growth rate over the life of the contract, no subsequentPurchase Payments and no election of optional features, ifapplicable. In contract year 2, you take out your maximumfree withdrawal of $10,000. After that free withdrawal yourcontract value is $90,000. In the 3rd contract year, yourequest a total withdrawal of your contract. We will applythe following calculation:
A–(B × C)=D, where:
A=Your contract value at the time of your request forwithdrawal ($90,000)
B=The amount of your Purchase Payments still subjectto withdrawal charge ($100,000)
C=The withdrawal charge percentage applicable to theage of each Purchase Payment (assuming 5% is theapplicable percentage) [B × C=$5,000]
D=Your full contract value ($85,000) available for totalwithdrawal
If you surrender your contract, we may also deduct anypremium taxes, if applicable. Please see EXPENSESbelow.
Under most circumstances, the minimum amount you canwithdraw is $1,000. We require that the value left in anyVariable Portfolio or available Fixed Account be at least$100 after the withdrawal, and your total contract valuemust be at least $500. The request for withdrawal must bein writing and sent to the Annuity Service Center. Forwithdrawals of $500,000 and more, you are required toinclude a signature guarantee issued by your broker-dealerwhich verifies the validity of your signature. Unless youprovide us with different instructions, partial withdrawals
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will be made proportionately from each Variable Portfolioand the Fixed Account in which you are invested. In theevent that a proportionate partial withdrawal would causethe value of any Variable Portfolio, Fixed Account or DCAFixed Account investment to be less than $100, we willcontact you to obtain alternate instructions on how tostructure the withdrawal.
Withdrawals made prior to age 59½ may result in a 10%IRS penalty tax. Please see TAXES below. Under certainQualified plans, access to the money in your contract maybe restricted.
We may be required to suspend or postpone the payment ofa withdrawal for any period of time when: (1) the NYSE isclosed (other than a customary weekend and holidayclosings); (2) trading with the NYSE is restricted; (3) anemergency exists such that disposal of or determination ofthe value of shares of the Variable Portfolios is notreasonably practicable; (4) the SEC, by order, so permitsfor the protection of contract owners.
Additionally, we reserve the right to defer payments for awithdrawal from a Fixed Account for up to six months.
SYSTEMATIC WITHDRAWAL PROGRAM
During the Accumulation Phase, you may elect to receiveperiodic withdrawals under the Systematic Withdrawalprogram for no additional charge. Under the program, youmay choose to take monthly, quarterly, semi-annual orannual payments from your contract. Electronic transfer ofthese withdrawals to your bank account is also available.The minimum amount of each withdrawal is $100. Theremust be at least $500 remaining in your contract at alltimes, or withdrawals may be discontinued. Withdrawalsmay be taxable and a 10% federal penalty tax may apply ifyou are under age 59½. A withdrawal charge may apply ifthe amount of the periodic withdrawals in any year exceedsthe free withdrawal amount permitted each year. Please seeACCESS TO YOUR MONEY above and see EXPENSESbelow.
Please contact our Annuity Service Center which can providethe necessary enrollment forms.
Upon notification of your death, we will terminate theSystematic Withdrawal program unless your Beneficiaryinstructs us otherwise.
We reserve the right to modify, suspend or terminatethe Systematic Withdrawal program at any time and wewill notify you prior to exercising that right.
NURSING HOME WAIVER
If you are confined to a nursing home for 60 days or longer,we may waive the withdrawal charge on certain withdrawalsprior to the Annuity Date. The waiver applies only towithdrawals made during the confinement period while youare in a nursing home or within 90 days after you leave thenursing home. You cannot use this waiver during the first90 days after your contract is issued. In addition, the
confinement period for which you seek the waiver mustbegin after you purchase your contract. We will only waivethe withdrawal charges on withdrawals or surrenders paiddirectly to the contract owner, and not to a third party orother financial services company.
In order to use this waiver, you must submit with yourwithdrawal request to the Annuity Service Center, thefollowing documents: (1) a doctor’s note recommendingadmittance to a nursing home; (2) an admittance formwhich shows the type of facility you entered; and (3) a billfrom the nursing home which shows that you met the60-day confinement requirement.
MINIMUM CONTRACT VALUE
Where permitted by state law, we may terminate yourcontract if both of the following occur: (1) your contractvalue is less than $500 as a result of withdrawals; and(2) you have not made any Purchase Payments during thepast three years. We will provide you with sixty dayswritten notice that your contract is being terminated. At theend of the notice period, we will distribute the contract’sremaining value to you.
QUALIFIED CONTRACT OWNERS
Certain Qualified plans restrict and/or prohibit your abilityto withdraw money from your contract. Please see TAXESbelow for a more detailed explanation.
LIVING BENEFIT
INCOME PROTECTOR
Income Protector is a minimum income benefit and providesa future “safety net” which can offer you the ability toreceive a guaranteed fixed minimum retirement incomewhen you switch to the Income Phase. With IncomeProtector, you can know the level of minimum income thatwill be available to you upon annuitization, regardless offluctuating market conditions. Income Protector is availableon contracts issued prior to May 1, 2006.
The minimum level of Income Protector benefit available isgenerally based upon the Purchase Payments remaining inyour contract at the time you decide to begin taking income.If available and elected, a growth rate can provide increasedlevels of minimum guaranteed income.
If you purchased your contract between November 2, 1998and March 31, 1999 and the Income Protector was availablein your state at that time, other options were availableunder Income Protector, please see details below.
How We Determine the Amount of Your MinimumGuaranteed Income
If you elect Income Protector, we base the amount ofminimum income available to you upon a calculation we callthe Income Benefit Base. Your Income Benefit Base is equalto your contract value on the date of election. Income
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Protector is effective on either the date of issue of thecontract or at the contract anniversary following yourelection of Income Protector.
The Income Benefit Base is only a calculation. It does notrepresent a contract value, nor does it guaranteeperformance of the Variable Portfolios in which you invest.
Your Income Benefit Base increases if you make subsequentPurchase Payments and decreases if you withdraw moneyfrom your contract. The Income Benefit Base is equal to(a) plus (b) minus (c) where:
(a) is equal to, for the first year of calculation, yourinitial Purchase Payment, or for each subsequentyear of calculation, the Income Benefit Base on theprior contract anniversary, and;
(b) is equal to the sum of all subsequent PurchasePayments made into the contract since the date ofelection, and;
(c) is equal to all withdrawals and applicable fees andcharges since the date of election, in an amountproportionate to the amount by which suchwithdrawals decreased your contract value.
In order to obtain the benefit of Income Protector, you maynot begin the Income Phase for at least 7 years followingelection. You may not elect this feature if the requiredwaiting period before beginning the Income Phase wouldoccur later than your Latest Annuity Date.
Re-Set of Your Income Protector Benefit
You may also have the opportunity to “Re-Set” your IncomeBenefit Base. The Re-Set feature allows you to increaseyour Income Benefit Base to the amount of your contractvalue on your next contract anniversary. You can onlyRe-Set within the 30 days before your next contractanniversary. Upon a Re-Set, the waiting period before youcan begin the Income Phase will start over. In addition, theIncome Protector fee will be charged as a percentage ofyour Re-Set Income Benefit Base. You may not elect toRe-Set if the required waiting period before beginning theIncome Phase would occur later than your Latest AnnuityDate.
Electing to Receive Income Payments
You may elect to begin the Income Phase of your contractusing the Income Protector Program only within the 30 daysafter the 7th or later contract anniversary following theeffective date of electing Income Protector or Re-Set, ifapplicable.
The Income Benefit Date is the contract anniversary dateon which the Income Benefit is calculated and applied. Thisis the date as of which we calculate your Income BenefitBase to use in determining your guaranteed minimumincome payments. To arrive at the minimum guaranteedincome payments available to you, we apply the annuityrates stated in your Income Protector Endorsement for the
income option you select to your final Income Benefit Base.You then choose if you would like to receive that incomeannually, quarterly or monthly for the time guaranteedunder your selected annuity option. Your final IncomeBenefit Base is equal to (a) minus (b) where:
(a) is your Income Benefit Base as of your IncomeBenefit Date, and;
(b) is any withdrawal charges calculated as if you fullysurrender your contract as of the Income BenefitDate, and any applicable premium taxes.
The annuity income options available under this featurewhen using Income Protector to receive your guaranteedincome payments are:
• Life Annuity with 10 Year Period Certain, or
• Joint and 100% Survivor Annuity with 20 YearPeriod Certain
At the time you elect to begin receiving annuity incomepayments, we will calculate your annual guaranteed incomepayments using both your final Income Benefit Base andyour contract value. We will use the same income option foreach calculation; however, the annuity factors used tocalculate your guaranteed income payments under IncomeProtector will be different. You will receive whicheverprovides a greater stream of income. If you annuitize usingIncome Protector, your annuity income payments will befixed in amount. You are not required to use IncomeProtector to receive income payments.
You may never need to rely upon the Income Protector, ifyour contract performs within a historically anticipatedrange. However, past performance is no guarantee of futureresults.
Fees Associated with the Income Protector Program
There is no fee for the Income Protector Base program.
If you purchased your contract between November 2, 1998and March 31, 1999, the following applies only to theIncome Protector option you may have elected:
Options available for contracts issued between November 2,1998 and March 31, 1999:
Growth Rate
Fee as a %of Your IncomeBenefit Base Waiting Period
Income Protector Base 0% 0% 7 yearsIncome Protector Plus 3.25% 0.15% 7 yearsIncome Protector Max 6.50% 0.30% 7 years
Income Protector provides three alternative levels ofminimum retirement income. The base Income Protector is astandard feature of all Polaris II contracts issued afterNovember 2, 1998, if the feature is available for sale inyour state. There is no additional charge associated with theIncome Protector Base feature. If elected, the IncomeProtector Plus and Income Protector Max options can
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provide increased levels of minimum guaranteed income. Wecharge a fee for each of these alternatives, see table above.
We deduct the annual fee from your contract value. If youelect Income Protector Plus or Income Protector Max atissue, we begin deducting the annual fee on your firstcontract anniversary. We will deduct the charge from yourcontract value on every contract anniversary up to andincluding your Income Benefit Date. Additionally, we deductthe full annual fee from your contract value upon surrender.If you elect the feature at some later date, we begindeducting the annual fee on the contract anniversaryfollowing the date of election. We will not refund fees paidfor Income Protector if you annuitize under the annuityprovisions of your contract under the Income Protector Plusor Income Protector Max options.
For the Income Protector Plus or Income Protector Maxoptions, the Income Benefit Base accumulates at one of theannual growth rates, see table above, from the date yourelection in the alternative becomes effective through yourelection to begin receiving income under the feature. Thegrowth rates for the Income Protector Plus or IncomeProtector Max options cease on the contract anniversaryfollowing the Annuitant’s 90th birthday.
In order to obtain the benefit of the Income Protector Plusor Income Protector Max option, you may not begin theIncome Phase for at least 7 years following your election ofthe option. Thus, you must make your election prior to thelater of:
• your 83rd birthday; or
• your 3rd contract anniversary.
Note to Qualified Contract Holders
Qualified contracts generally require that you select anannuity income option that does not exceed your lifeexpectancy. That restriction, if it applies to you, may limitthe benefit of Income Protector. To utilize Income Protector,you must take annuity income payments under one of thetwo annuity income options described above. If thoseannuity income options exceed your life expectancy, youmay be prohibited from receiving your guaranteed incomepayments under the feature. If you own a Qualified contractto which this restriction applies and you elect IncomeProtector, you may pay for this feature and not be able torealize the benefit.
You should consult your tax advisor for informationconcerning your particular circumstances.
DEATH BENEFITS
If you die during the Accumulation Phase of your contract,we pay a death benefit to your Beneficiary. You must selecta death benefit option at the time you purchase yourcontract. Once selected, you cannot change your death
benefit option. You should discuss the available options withyour financial representative to determine which option isbest for you.
We do not pay a death benefit if you die after you begin theIncome Phase; your Beneficiary would receive any remainingguaranteed annuity income payments in accordance with theannuity income option you selected. Please see ANNUITYINCOME OPTIONS below.
You designate your Beneficiary(ies) who will receive anydeath benefit payments. You may change the Beneficiary atany time. If your contract is jointly owned, the survivingjoint Owner is the sole Beneficiary. Joint Annuitants, if any,when the Owner is a non-natural person shall be eachother’s sole Beneficiary, except when the Owner is acharitable remainder trust. In designating your Beneficiary,you may impose restrictions on the timing and manner ofthe payment of death benefits. Those restrictions can governthe payment of the death benefit.
If the contract is owned by a trust or any other non-naturalperson, we will treat the death of the Primary Annuitant asthe death of any Owner.
If any contract is owned by a trust, whether as an agent fora natural person or otherwise, you should consider thecontractual provisions that apply, including provisions thatapply in the event of the death or change of an Annuitant,in determining whether the contract is an appropriate trustinvestment. You may wish to consult with your tax and/orlegal adviser.
We calculate and pay the death benefit when we receive allrequired paperwork and satisfactory proof of death in GoodOrder. All death benefit calculations discussed below aremade as of the day a death benefit request is received by usin Good Order at the Annuity Service Center, (includingsatisfactory proof of death) if the request is received beforeMarket Close. If the death benefit request is received afterMarket Close, the death benefit calculations will be as of thenext NYSE business day. If the death benefit request is notreceived by us in Good Order or if notification of the deathis made by the Beneficiary prior to submitting all requiredpaperwork and satisfactory proof of death, the Beneficiarymay have the option of transferring the entire contract valueto the a money market or similar portfolio, or availableFixed Account by contacting the Annuity Service Center. Weconsider due proof of death in Good Order to be satisfactorywritten proof of death which may include: (1) a certifiedcopy of the death certificate; (2) a certified copy of adecree of a court of competent jurisdiction as to the findingof death; or (3) a written statement by a medical doctorwho attended the deceased at the time of death.
For contracts in which the aggregate of all PurchasePayments in contracts issued by the Company or itsaffiliate, The United States Life Insurance Company in theCity of New York, to the same Owner/Annuitant are inexcess of $1,500,000, we reserve the right to limit the deathbenefit amount that is in excess of contract value at the
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time we receive all paperwork and satisfactory proof ofdeath. Any limit on the maximum death benefit payablewould be mutually agreed upon in writing by you and theCompany prior to purchasing the contract.
If a Beneficiary does not elect a settlement option, within60 days of our receipt of all required paperwork andsatisfactory proof of death received by us in Good Order, wepay a lump sum death benefit by check to the Beneficiary’saddress of record, unless otherwise required by state law.
The death benefit must be paid within 5 years of the date ofdeath unless the Beneficiary elects to have it payable in theform of an annuity income option. If the Beneficiary electsan annuity income option, it must be paid over theBeneficiary’s lifetime or for a period not extending beyondthe Beneficiary’s life expectancy. Payments must beginwithin one year of your death.
If the Beneficiary is the spouse of a deceased owner, he orshe can elect to continue the contract at the then currentvalue. Please see SPOUSAL CONTINUATION below.
BENEFICIARY CONTINUATION PROGRAMS
Extended Legacy Program
The Extended Legacy Program, if available, can allow aBeneficiary to an existing contract issued by the Companyto take the death benefit amount in the form of withdrawalsover a longer period of time, with the flexibility to withdrawmore than the IRS required minimum distribution. TheBeneficiary may elect the Extended Legacy Program on theDeath Claim Form. The Extended Legacy Guide includesimportant information regarding the program offered toBeneficiaries on or after September 20, 2010. The ExtendedLegacy Guide may be requested from the Annuity ServiceCenter.
We will send the Beneficiary a prospectus which describesthe investment options and administrative features availableunder the Extended Legacy Program along with theExtended Legacy Guide. The prospectus that the Beneficiarywill receive may be for a different product than the originalOwner purchased. Upon election of the Extended LegacyProgram, the contract continues in the original Owner’sname for the benefit of the Beneficiary. Generally, IRSrequired minimum distributions must be made at leastannually over a period not to exceed the Beneficiary’s lifeexpectancy as determined in the calendar year after theOwner’s death. Payments must begin no later than the firstanniversary of death for Non-Qualified contracts orDecember 31st of the year following the year of death forIRAs. Your Beneficiary cannot participate in the ExtendedLegacy Program if he/she has already elected anothersettlement option.
If the Beneficiary elects to participate in this program andthe contract value is less than the death benefit amount asof the date we receive satisfactory proof of death and allrequired paperwork, we will increase the contract value bythe amount which the death benefit exceeds contract value.
There are certain restrictions applicable to the ExtendedLegacy Program. The Extended Legacy Program cannot beelected with rollover contracts from other companies. NoPurchase Payments are permitted. Living Benefits andDeath Benefits that may have been elected by the originalOwner are not available and any charges associated withthese features will no longer be deducted. In the event ofthe Beneficiary’s death, any remaining contract value will bepaid to the person(s) named by the Beneficiary. Thecontract may not be assigned and ownership may not bechanged or jointly owned.
We may offer Variable Portfolios currently available underthe Separate Account to the Beneficiary upon election of theExtended Legacy Program. These Variable Portfolios maydiffer from those available to the original Owner; inaddition, the Variable Portfolios may be of a different shareclass subject to higher 12b-1 fees. The Beneficiary maytransfer funds among the Variable Portfolios. Any FixedAccounts that may have been available to the originalOwner will no longer be available for investment to theBeneficiary.
If the Beneficiary elects the Extended Legacy Program, wewill charge a lower annual Separate Account Charge of1.15%. This charge is deducted daily from the average dailyending net asset value allocated to the Variable Portfolios.The Beneficiary may withdraw all or a portion of thecontract value at any time and withdrawals are not subjectto withdrawal charges. Additionally, the Beneficiary maychoose to participate in the Systematic Withdrawal Programand the Automatic Asset Rebalancing Program.
Beneficiaries that elected the Extended Legacy Programprior to September 20, 2010 will continue to be charged thesame Separate Account Charge as described above underSEPARATE ACCOUNT EXPENSES and will continue tobe offered the same Variable Portfolios as the originalOwner.
5-Year Settlement Option
The Beneficiary may also elect to receive the death benefitunder a 5-year settlement option. The Beneficiary may takewithdrawals as desired, but the death benefit proceeds mustbe distributed by December 31st of the year containing thefifth anniversary of death. For IRAs, the 5-year settlementoption is not available if the date of death is after therequired beginning date for distributions (April 1 of theyear following the year the original Owner reaches the ageof 70½).
Please consult a qualified adviser regarding taximplications about your particular circumstances if youare considering one of these Beneficiary Continuationoptions.
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DEATH BENEFIT DEFINED TERMS
The term “Net Purchase Payment” is used frequently indescribing the death benefit payable. Net Purchase Paymentis an on-going calculation. It does not represent a contractvalue.
We define Net Purchase Payments as Purchase Paymentsless an adjustment for each withdrawal, including fees andcharges applicable to that withdrawal. If you have not takenany withdrawals from your contract, Net PurchasePayments equal total Purchase Payments into your contract.To calculate the adjustment amount for the first withdrawalmade under the contract, we determine the percentage bywhich the withdrawal reduced the contract value. Forexample, a $10,000 withdrawal from a $100,000 contract isa 10% reduction in value. This percentage is calculated bydividing the amount of each withdrawal by the contractvalue immediately before taking the withdrawal. Theresulting percentage is then multiplied by the amount of thetotal Purchase Payments and subtracted from the amount ofthe total Purchase Payments on deposit at the time of thewithdrawal. The resulting amount is the initial Net PurchasePayment.
To arrive at the Net Purchase Payment calculation forsubsequent withdrawals, we determine the percentage bywhich the contract value is reduced, by taking the amountof the withdrawal in relation to the contract valueimmediately before the withdrawal. We then multiply theNet Purchase Payment calculation as determined prior to thewithdrawal, by this percentage. We subtract that result fromthe Net Purchase Payment calculation as determined prior tothe withdrawal to arrive at all subsequent Net PurchasePayment calculations.
The term “withdrawals” as used in describing the deathbenefit options is defined as withdrawals and the fees andcharges applicable to those withdrawals.
The Company does not accept Purchase Payments fromanyone age 86 or older. Therefore, the death benefitcalculations assume that no Purchase Payments are receivedon or after your 86th birthday.
DEATH BENEFIT OPTIONS
This contract provides two death benefit options: thePurchase Payment Accumulation Option and the MaximumAnniversary Value Option. Your death benefit calculationmay be different depending on when you purchased yourcontract, please see details below. In addition, you may alsoelect the optional EstatePlus feature, described below. Theseelections must be made at the time you purchase yourcontract and once made, cannot be changed or terminated.You may pay for the optional EstatePlus feature and yourBeneficiary may never receive the benefit once you beginthe Income Phase on or before the Latest Annuity Date.
The following is a description of the death benefit optionsif your contract was issued on or after June 1, 2004:
Option 1 – Purchase Payment Accumulation Option
The death benefit is the greatest of:
1. Contract value; or
2. Net Purchase Payments, compounded at 3% annualgrowth rate to the earlier of the 75th birthday ordate of death, reduced for withdrawals after the75th birthday in the same proportion that thecontract value was reduced on the date of suchwithdrawal, and adjusted for Purchase Paymentsreceived after the 75th birthday; or
3. Contract value on the seventh contract anniversary,reduced for withdrawals since the seventh contractanniversary in the same proportion that the contractvalue was reduced on the date of such withdrawal,and adjusted for Purchase Payments received afterthe seventh contract anniversary.
The Purchase Payment Accumulation Option can only beelected prior to your 75th birthday.
Option 2 – Maximum Anniversary Value Option
If the contract is issued prior to your 83rd birthday, thedeath benefit is the greatest of:
1. Contract value; or
2. Net Purchase Payments; or
3. Maximum anniversary value on any contractanniversary prior to the earlier of your 83rd birthdayor date of death. The anniversary values equal thecontract value on a contract anniversary, reduced forwithdrawals since that contract anniversary in thesame proportion that the contract value was reducedon the date of such withdrawal, and adjusted forany Purchase Payments since that anniversary.
If the contract is issued on or after your 83rd birthday butbefore your 86th birthday, the death benefit is greater of:
1. Contract value; or
2. The lesser of:
a. Net Purchase Payments; or
b. 125% of Contract Value.
If you are age 90 or older at the time of death and selectedthe Maximum Anniversary death benefit, the death benefitwill be equal to the contract value. Accordingly, you will notget any benefit from this option if you are age 90 or olderat the time of your death.
The following is a description of the death benefit optionsif your contract was issued between October 24, 2001 andJune 1, 2004:
Option 1 – Purchase Payment Accumulation Option
The death benefit is the greatest of:
1. Contract value; or
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2. Net Purchase Payments compounded at a 4% annualgrowth rate until the date of death (3% growth rateif age 70 or older at the time of contract issue) plusany Purchase Payments recorded after the date ofdeath; and reduced for any withdrawals on the sameproportion that the withdrawal reduced contractvalue on the date of the withdrawal; or
3. Contract value on the seventh contract anniversary,plus any Purchase Payments since the seventhcontract anniversary; and reduced for anywithdrawal since the seventh contract anniversary inthe same proportion that each withdrawal reducedthe contract value on the date of the withdrawal, allcompounded at a 4% annual growth rate until thedate of death (3% growth rate if age 70 or older atthe time of contract issue) plus any PurchasePayments recorded after the date of death; andreduced for each withdrawal recorded after the dateof death in the same proportion that eachwithdrawal reduced the contract value on the date ofthe withdrawal.
Option 2 – Maximum Anniversary Value Option
The death benefit is the greatest of:
1. Contract value; or
2. Net purchase Payments; or
3. Maximum anniversary value on any contractanniversary prior to your 81st birthday plus anyPurchase Payments since that contract anniversary;and reduced for any withdrawals since the contractanniversary in the same proportion that eachwithdrawal reduced the contract value on the date ofthe withdrawal.
If you are age 90 or older at the time of death and selectedthe Maximum Anniversary Value death benefit, the deathbenefit will be equal to contract value. Accordingly, you willnot get any benefit from this option if you are age 81 orolder at the time of contract issue or you are age 90 orolder at the time of your death.
The following is a description of the death benefit optionsif your contract was issued prior to October 24, 2001:
Option 1 – Purchase Payment Accumulation Option
The death benefit is the greatest of:
1. Contract value; or
2. Total Purchase Payments less withdrawals,compounded at a 4% annual growth rate until thedate of death (3% growth rate if age 70 or older atthe time of contract issue) plus any PurchasePayments less withdrawals recorded after the dateof death; or
3. Contract value on the seventh contract anniversary,plus any Purchase Payments and less anywithdrawals, since the seventh contract anniversary,
all compounded at a 4% annual growth rate until thedate of death (3% growth rate if age 70 or older atthe time of contract issue) plus any PurchasePayments less withdrawals recorded after the dateof death.
Option 2 – Maximum Anniversary Value Option
The death benefit is the greatest of:
1. Contract value; or
2. Total Purchase Payments less withdrawals; or
3. Maximum anniversary value on any contractanniversary prior to your 81st birthday. Theanniversary value equals the contract value on acontract anniversary plus any Purchase Paymentsand less any withdrawals, since that contractanniversary.
If you are age 90 or older at the time of death and selectedthe Maximum Anniversary Value death benefit, the deathbenefit will be equal to contract value. Accordingly, you willnot get any benefit from this option if you are age 81 orolder at the time of contract issue or you are age 90 orolder at the time of your death.
The following is a description of the EstatePlus Benefit ifyour contract was issued on or after December 29, 2000:
OPTIONAL ESTATEPLUS BENEFIT
EstatePlus, an optional earnings enhancement benefit ofyour contract, may increase the death benefit amount if youhave earnings in your contract at the time of death. The feefor the benefit is 0.25% of the average daily ending netasset value allocated to the Variable Portfolios. EstatePlus isnot available if you are age 81 or older at the time weissued your contract. This benefit is not available forelection in Washington.
You must have elected EstatePlus at the time we issuedyour contract and you may not terminate this election.Furthermore, EstatePlus is not payable after the LatestAnnuity Date. You may pay for EstatePlus and yourBeneficiary may never receive the benefit if you live pastthe Latest Annuity Date.
We will add a percentage of your contract earnings(the “EstatePlus Percentage”), subject to a maximum dollaramount (the “Maximum EstatePlus Benefit”), to the deathbenefit payable. The contract year of your death willdetermine the EstatePlus Percentage and the MaximumEstatePlus Benefit.
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The table below applies to contracts issued prior to your70th birthday:
Contract Yearof Death
EstatePlusPercentage
MaximumEstatePlus Benefit
Years 0 – 4 25% of Earnings 40% of Net PurchasePayments
Years 5 – 9 40% of Earnings 65% of Net PurchasePayments*
Years 10+ 50% of Earnings 75% of Net PurchasePayments*
The table below applies to contracts issued on or after your70th birthday but prior to your 81st birthday:
Contract Yearof Death
EstatePlusPercentage
MaximumEstatePlus Benefit
All ContractYears
25% of Earnings 40% of Net PurchasePayments*
* Purchase Payments received after the 5th contract anniversary mustremain in the contract for at least 6 full months to be included as partof Net Purchase Payments for the purpose of the Maximum EstatePlusBenefit.
What is the Contract Year of Death?
Contract Year of Death is the number of full 12-monthperiods during which you have owned your contract endingon the date of death. Your Contract Year of Death is usedto determine the EstatePlus Percentage and MaximumEstatePlus Benefit as indicated in the table above.
What is the EstatePlus Percentage?
We determine the EstatePlus benefit using the EstatePlusPercentage, indicated in the table above, which is a specifiedpercentage of the earnings in your contract on the date ofdeath. For the purpose of this calculation, earnings equalscontract value minus Net Purchase Payments as of the dateof death. If there are no earnings in your contract at thetime of death, the amount of your EstatePlus benefit will bezero.
What is the Maximum EstatePlus Benefit?
The EstatePlus benefit is subject to a maximum dollaramount. The Maximum EstatePlus Benefit is equal to aspecified percentage of your Net Purchase Payments, asindicated in the table above.
A Continuing Spouse may continue EstatePlus if they areage 80 or younger on the Continuation Date or terminatethe benefit. If a Continuing Spouse is age 81 or older on theContinuation Date, they may continue the contract only andmay not continue the EstatePlus feature. If the ContinuingSpouse terminates EstatePlus or dies after the LatestAnnuity Date, no EstatePlus benefit will be payable to theContinuing Spouse’s Beneficiary. Please see SPOUSALCONTINUATION below.
We reserve the right to modify, suspend or terminateEstatePlus (in its entirety or any component) at anytime for prospectively issued contracts.
SPOUSAL CONTINUATION
The Continuing Spouse may elect to continue the contractafter your death. Generally, the contract, its benefits andelected features, if any, remain the same. The ContinuingSpouse is subject to the same fees, charges and expensesapplicable to the original Owner of the contract. A spousalcontinuation can only take place once, upon the death of theoriginal Owner of the contract. If the Continuing Spouseterminates any optional death benefit or dies after theLatest Annuity Date, no optional death benefit will bepayable to the Continuing Spouse’s Beneficiary.
Non-spousal joint Owners (which can include DomesticPartners) who jointly own or are Beneficiaries of a contractshould consult with their tax adviser and/or financialrepresentative as, under current tax law, they are noteligible for spousal continuation of the contract.
Upon a spousal continuation, we will contribute to thecontract value an amount by which the death benefit thatwould have been paid to the Beneficiary upon the death ofthe original Owner, exceeds the contract value as of theGood Order date (“Continuation Contribution”), if any. Wewill add any Continuation Contribution as of the date wereceive both the Continuing Spouse’s written request tocontinue the contract and satisfactory proof of death of theoriginal Owner (“Continuation Date”) at the AnnuityService Center. The Continuation Contribution is notconsidered a Purchase Payment for the purposes of anyother calculations except the death benefit following theContinuing Spouse’s death. Generally, the age of theContinuing Spouse on the Continuation Date and on thedate of the Continuing Spouse’s death will be used indetermining any future death benefits under the contract.Please see the SPOUSAL CONTINUATION APPENDIXfor a discussion of the death benefit calculations upon aContinuing Spouse’s death.
The Continuing Spouse may not terminate the MaximumAnniversary Value death benefit if elected at contract issue.To the extent that the Continuing Spouse invests in theVariable Portfolios, he/she will be subject to investment riskas was the original Owner.
EXPENSES
There are fees and expenses associated with your contractwhich reduce your investment return. We will not increasecertain contract fees, such as mortality and expense chargesor withdrawal charges for the life of your contract.Underlying Fund investment management fees may increaseor decrease. Some states may require that we charge lessthan the amounts described below. Please see the STATECONTRACT AVAILABILITY AND/OR VARIABILITYAppendix for state-specific expenses.
We intend to profit from the sale of the contracts. Our profitmay be derived as a result of a variety of pricing factorsincluding but not limited to the fees and charges assessed
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under the contract and/or amounts we may receive from anUnderlying Fund, its investment adviser and/or subadvisers(or affiliates thereof). Please see PAYMENTS INCONNECTION WITH DISTRIBUTION OF THECONTRACT below. The fees, charges, amounts receivedfrom the Underlying Funds (or affiliates thereof) and anyresulting profit may be used for any corporate purposeincluding supporting marketing, distribution and/oradministration of the contract and, in its role as anintermediary, the Underlying Funds.
SEPARATE ACCOUNT EXPENSES
The annualized Separate Account expense is 1.52% of theaverage daily ending net asset value allocated to theVariable Portfolios. This charge compensates the Companyfor the mortality and expense risk and the costs of contractdistribution assumed by the Company.
Generally, the mortality risks assumed by the Company arisefrom its contractual obligations to make annuity incomepayments after the Annuity Date and to provide a deathbenefit. The expense risk assumed by the Company is thatthe costs of administering the contracts and the SeparateAccount will exceed the amount received from the fees andcharges assessed under the contract.
If these charges do not cover all of our expenses, we willpay the difference. Likewise, if these charges exceed ourexpenses, we will keep the difference. The mortality andexpense risk charge is expected to result in a profit. Profitmay be used for any cost or expense including supportingdistribution. Please see PAYMENTS IN CONNECTIONWITH DISTRIBUTION OF THE CONTRACT below.
WITHDRAWAL CHARGES
The contract provides a free withdrawal amount everycontract year. Please see ACCESS TO YOUR MONEYabove. You may incur a withdrawal charge if you take awithdrawal in excess of the free withdrawal amount and/orif you fully surrender your contract. Withdrawal Chargesreimburse us for the cost of contract sales, expensesassociated with issuing your contract and other acquisitionexpenses.
We apply a withdrawal charge schedule against eachPurchase Payment you contribute to the contract. After aPurchase Payment has been in the contract for 9 completeyears if you elected to participate in the Polaris Rewardsprogram, a withdrawal charge no longer applies to thatPurchase Payment. The withdrawal charge percentagedeclines over time for each Purchase Payment in thecontract. The withdrawal charge schedules are as follows:
Withdrawal Charge without Polaris Rewards Program:
Years SincePurchase PaymentReceipt 1 2 3 4 5 6 7 8
Withdrawal Charge 7% 6% 5% 4% 3% 2% 1% 0%
Withdrawal Charge with election of Polaris RewardsProgram:
Years SincePurchase PaymentReceipt 1 2 3 4 5 6 7 8 9 10+
Withdrawal Charge 9% 9% 8% 7% 6% 5% 4% 3% 2% 0%
These higher potential withdrawal charges for the PolarisRewards program may compensate us for the expensesassociated with the program.
The Polaris Rewards program is designed for long terminvesting. We expect that if you remain committed to thisinvestment over the long term, we will profit as a result offees charged over the life of your contract. However, otherthan the withdrawal charge, no other fees or charges arehigher if you elect Polaris Rewards than the contractwithout an election of this program.
When calculating the withdrawal charge, we treatwithdrawals as coming first from the Purchase Paymentsthat have been in your contract the longest, which meansthe Purchase Payments that have the lowest WithdrawalCharge percentages. However, for tax purposes, per IRSrequirements, your withdrawals are considered as comingfirst from taxable earnings, then from Purchase Payments,which are not taxable if your contract is Non-Qualified.Please see ACCESS TO YOUR MONEY above.
If you take a partial withdrawal, you can choose whetherany applicable withdrawal charges are deducted from theamount withdrawn or from the contract value remainingafter the amount withdrawn. If you fully surrender yourcontract value, we deduct any applicable withdrawal chargesfrom the amount surrendered.
We will not assess a withdrawal charge when we pay adeath benefit, assess contract fees and/or when you switchto the Income Phase.
Withdrawals made prior to age 59½ may result in taxpenalties. Please see TAXES below.
UNDERLYING FUND EXPENSES
Investment Management Fees
Each Variable Portfolio purchases shares of a correspondingUnderlying Fund. The Accumulation Unit value for eachVariable Portfolio reflects the investment management feesand other expenses of the corresponding Underlying Fund.These fees may vary. They are not fixed or specified in yourannuity contract, rather the fees are set by the UnderlyingFunds’ own board of directors.
12b-1 Fees
Certain Underlying Funds available in this product assess a12b-1 fee of 0.25% of the average daily net assets allocatedto those Underlying Funds. Over time these fees willincrease the cost of your investment.
There is an annualized 0.25% fee applicable to Series IIshares of AIM Variable Insurance Funds (Invesco Variable
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Insurance Funds), Class 2 shares of American FundsInsurance Series, Class 3 shares of Seasons Series Trust andSunAmerica Series Trust. This amount is generally used topay financial intermediaries for services provided over thelife of your contract.
The 12b-1 fees compensate us for costs associated with theservicing of these shares, including, but not limited to,reimbursing us for expenditures we make to registeredrepresentatives in selling firms for providing services tocontract owners who are indirect beneficial owners of theseshares and for maintaining contract owner accounts.
There are deductions from and expenses paid out of theassets of each Underlying Fund. Detailed informationabout these deductions and expenses can be found inthe prospectuses for the Underlying Funds.
CONTRACT MAINTENANCE FEE
During the Accumulation Phase, we deduct a contractmaintenance fee of $35 from your contract once per year onyour contract anniversary. This charge compensates us forthe cost of administering your contract. The fee is deductedproportionately from your contract value on your contractanniversary by redeeming the number of AccumulationUnits invested in the Variable Portfolios and the dollaramount invested in available Fixed Accounts which in totalequal the amount of the fee. If you withdraw your entirecontract value, we will deduct the contract maintenance feefrom that withdrawal.
If your contract value is $50,000 or more on your contractanniversary date, we currently waive this fee. This waiver issubject to change without notice.
Please see STATE CONTRACT AVAILABILITYAND/OR VARIABILITY Appendix for the state-specificContract Maintenance Fee.
TRANSFER FEE
We permit 15 free transfers between investment optionseach contract year. We charge you $25 for each additionaltransfer that contract year. The transfer fee compensates usfor the cost of processing your transfer.
OPTIONAL INCOME PROTECTOR FEE
Please see INCOME PROTECTOR above for a descriptionof the Fees Associated with the Income ProtectorProgram for contracts issued between November 2, 1998and March 31, 1999.
OPTIONAL ESTATEPLUS FEE
The annualized fee for the optional EstatePlus benefit is0.25% of the average daily ending net asset value allocatedto the Variable Portfolio(s).
PREMIUM TAX
Certain states charge the Company a tax on PurchasePayments up to a maximum of 3.5%. These states permit usto either deduct the premium tax when you make aPurchase Payment or when you fully surrender yourcontract or begin the Income Phase. Please see the STATECONTRACT AVAILABILITY AND/OR VARIABILITYAppendix for a listing of the states that charge premiumtaxes, the percentage of the tax and distinctions in impacton Qualified and Non-Qualified contracts.
INCOME TAXES
We do not currently deduct income taxes from yourcontract. We reserve the right to do so in the future.
REDUCTION OR ELIMINATION OF FEES, EXPENSESAND ADDITIONAL AMOUNTS CREDITED
Sometimes sales of contracts to groups of similarly situatedindividuals may lower our fees and expenses. We reserve theright to reduce or waive certain fees and expenses when thistype of sale occurs. In addition, we may also creditadditional amounts to contracts sold to such groups. Wedetermine which groups are eligible for this treatment. Someof the criteria we evaluate to make a determination are sizeof the group; amount of expected Purchase Payments;relationship existing between us and the prospectivepurchaser; length of time a group of contracts is expected toremain active; purpose of the purchase and whether thatpurpose increases the likelihood that our expenses will bereduced; and/or any other factors that we believe indicatethat fees and expenses may be reduced.
The Company may make such a determination regardingsales to its employees, its affiliates’ employees andemployees of currently contracted broker-dealers; itsregistered representatives; and immediate family members ofall of those described.
We reserve the right to modify, suspend or terminateany such determination or the treatment applied to aparticular group at any time.
PAYMENTS IN CONNECTION WITH DISTRIBUTIONOF THE CONTRACT
Payments We Make
We make payments in connection with the distribution ofthe contracts that generally fall into the three categoriesbelow.
Commissions. Registered representatives of affiliated andunaffiliated broker-dealers (“selling firms”) licensed underfederal securities laws and state insurance laws sell thecontract to the public. The selling firms have entered intowritten selling agreements with the Company and AIGCapital Services, Inc., the distributor of the contracts. Wepay commissions to the selling firms for the sale of your
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contract. The selling firms are paid commissions for thepromotion and sale of the contracts according to one ormore schedules. The amount and timing of commissions willvary depending on the selling firm and its selling agreementwith us. For example, as one option, we may pay upfrontcommission only, up to a maximum 7.00% of each PurchasePayment you invest (which may include promotionalamounts we may pay periodically as commission specials).Another option may be a lower upfront commission on eachPurchase Payment, with a trail commission of up to amaximum 1.50% of contract value annually for the life ofthe contract.
The registered representative who sells you the contracttypically receives a portion of the compensation we pay tohis/her selling firm, depending on the agreement betweenthe selling firms and its registered representative and theirinternal compensation program. We are not involved indetermining your registered representatives’ compensation.
Additional Cash Compensation. We may enter intoagreements to pay selling firms support fees in the form ofadditional cash compensation (“revenue sharing”). Theserevenue sharing payments may be intended to reimburse theselling firms for specific expenses incurred or may be basedon sales, certain assets under management, longevity ofassets invested with us and/or a flat fee. Asset-basedpayments primarily create incentives to service and maintainpreviously sold contracts. Sales-based payments primarilycreate incentives to make new sales of contracts.
These revenue sharing payments may be consideration for,among other things, product placement/preference andvisibility, greater access to train and educate the sellingfirm’s registered representatives about our contracts, ourparticipation in sales conferences and educational seminarsand for selling firms to perform due diligence on ourcontracts. The amount of these fees may be tied to theanticipated level of our access in that selling firm.
We enter into such revenue sharing arrangements in ourdiscretion and we may negotiate customized arrangementswith selling firms, including affiliated and non-affiliatedselling firms based on various factors. These specialcompensation arrangements are not offered to all sellingfirms and the terms of such arrangements may varybetween selling firms depending on, among other things, thelevel and type of marketing and distribution supportprovided, assets under management and the volume and sizeof the sales of our contracts.
If allowed by his or her selling firm, a registeredrepresentative or other eligible person may purchase acontract on a basis in which an additional amount is creditedto the contract. Please see REDUCTION ORELIMINATION OF FEES, EXPENSES ANDADDITIONAL AMOUNTS CREDITED above.
We provide a list of firms to whom we paid annual amountsgreater than $5,000 under these revenue sharing
arrangements in 2015 in the Statement of AdditionalInformation which is available upon request.
Non-Cash Compensation. Some registered representativesand their supervisors may receive various types of non-cashcompensation such as gifts, promotional items andentertainment in connection with our marketing efforts. Wemay also pay for registered representatives to attendeducational and/or business seminars. Any suchcompensation is paid in accordance with SEC and FINRArules.
We do not assess a specific charge directly to you or yourseparate account assets in order to cover commissions andother sales expenses and incentives we pay. However, weanticipate recovering these amounts from our profits whichare derived from the fees and charges collected under thecontract. We hope to benefit from these revenue sharingarrangements through increased sales of our contracts andgreater customer service support.
Revenue sharing arrangements may provide selling firmsand/or their registered representatives with an incentive tofavor sales of our contracts over other variable annuitycontracts (or other investments) with respect to which aselling firm does not receive the same level of additionalcompensation. You should discuss with your selling firmand/or registered representative how they arecompensated for sales of a contract and/or anyresulting real or perceived conflicts of interest. Youmay wish to take such revenue sharing arrangementsinto account when considering or evaluating anyrecommendation relating to this contract.
Payments We Receive
We and our affiliates may directly or indirectly receiverevenue sharing payments from the Trusts, their investmentadvisers, sub-advisers and/or distributors (or affiliatesthereof), in connection with certain administrative,marketing and other services we provide and relatedexpenses we incur. The availability of these revenue sharingarrangements creates an incentive for us to seek and offerUnderlying Funds (and classes of shares of such UnderlyingFunds) that pay us higher amounts. Other UnderlyingFunds (or available classes of shares) may have lower feesand better overall investment performance. Not all Trustspay the same amount of revenue sharing. Therefore, theamount of fees we collect may be greater or smaller basedon the Underlying Funds you select.
We and our affiliates generally receive three kinds ofpayments described below.
Rule 12b-1 or Service Fees. We receive 12b-1 fees of upto 0.25% or service fees of up to 0.50% of the average dailynet assets in certain Underlying Funds. These fees arededucted directly from the assets of the Underlying Funds.Please see EXPENSES above.
Administrative, Marketing and Support Service Fees.We receive compensation of up to 0.525% annually based on
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assets under management from certain Trusts’ investmentadvisers, subadvisers and/or distributors (or affiliatesthereof). These payments may be derived, in whole or inpart, from the profits the investment adviser realizes on theinvestment management fees deducted from assets of theUnderlying Funds or wholly from the assets of theUnderlying Funds. Contract Owners, through their indirectinvestment in the Trusts, bear the costs of these investmentmanagement fees, which in turn will reduce the return onyour investment. The payments we receive are generallybased on assets under management from certain Trusts’investment advisers or their affiliates and vary by Trust.Some investment advisers, subadvisers and/or distributors(or affiliates thereof) pay us more than others. The amountmay be significant. Such amounts received from SAAMCo, awholly-owned subsidiary of AGL, are not expected to exceed0.50% annually based on assets under management.
Other Payments. Certain investment advisers, subadvisersand/or distributors (or affiliates thereof) may help offsetthe costs we incur for marketing activities and training tosupport sales of the Underlying Funds in the contract. Theseamounts are paid voluntarily and may provide such advisers,subadvisers and/or distributors access to national andregional sales conferences attended by our employees andregistered representatives. The amounts paid depend on thenature of the meetings, the number of meetings attended,the costs expected to be incurred and the level of theadviser’s, subadviser’s or distributor’s participation.
In addition, we (and our affiliates) may receive occasionalgifts, entertainment or other compensation as an incentive tomarket the Underlying Funds and to cooperate with theirmarketing efforts. As a result of these payments, theinvestment advisers, subadvisers and/or distributors (oraffiliates thereof) may benefit from increased access to ourwholesalers and to our affiliates involved in the distributionof the contract.
ANNUITY INCOME OPTIONS
THE INCOME PHASE
What is the Income Phase?
During the Income Phase, we use the money accumulated inyour contract to make regular payments to you. This isknown as “annuitizing” your contract. At this point, theAccumulation Phase ends. You will no longer be able to takewithdrawals of contract value and all other features andbenefits of your contract will terminate, including yourability to surrender your contract.
Beginning the Income Phase is an important event. Youhave different options available to you. You shoulddiscuss your options with your financial representativeand/or tax advisor so that together you may make thebest decision for your particular circumstances.
When does the Income Phase begin?
Generally, you can annuitize your contract any time afteryour second contract anniversary (“Annuity Date”) and onor before the Latest Annuity Date, defined below, bycompleting and mailing the Annuity Option Selection Formto our Annuity Service Center.
If you do not request to annuitize your contract on theAnnuity Date of your choice, your contract will beannuitized on the Latest Annuity Date, except as specifiedbelow. For contracts issued prior to January 1, 2001, theLatest Annuity Date is defined as the first business day ofthe month following your 90th birthday or 10 years afteryour contract issue date, whichever is later. For contractsissued on or after January 1, 2001, your Latest AnnuityDate is defined as the first business day of the monthfollowing your 95th birthday or 10 years after your contractissue date, whichever is later. If your contract is jointlyowned, the Latest Annuity Date is based on the olderOwner’s date of birth.
How do I elect to begin the Income Phase?
You must select one of the annuity income payment options,listed below, that best meets your needs by mailing acompleted Annuity Option Selection Form to our AnnuityService Center. If you do not select an annuity incomepayment option, your contract will be annuitized inaccordance with the default annuity income payment optionspecified under Annuity Income Options below.
What is the impact on the Death Benefit if I annuitize?
Upon annuitizing the contract, the death benefit willterminate. Please see DEATH BENEFITS above.
Can I extend the Accumulation Phase past the LatestAnnuity Date?
If you do not begin the Income Phase earlier, annuityincome payments must begin on your Latest Annuity Date.For contracts issued prior to January 1, 2001, with a LatestAnnuity Date of age 90, we may offer you the opportunityto extend your Accumulation Phase up to age 95 at our solediscretion. Currently, we allow extensions of theAccumulation Phase, in one-year increments (“ExtensionPeriods”), provided your contract is eligible for an ExtensionPeriod as described below upon your request. Accepting ouroffer to extend the Accumulation Phase does not precludeyou from requesting to annuitize your contract prior to theend of the Extension Period. If you enter an ExtensionPeriod, your contract remains in the Accumulation Phase,you retain all current benefits, and can choose to surrenderor annuitize in the future.
In accordance with the Company’s final settlement of amulti-state audit and market conduct examination, and otherrelated state regulatory inquiries regarding unclaimedproperty, if you qualify for Extension Periods you mustnotify us that you want to extend your Accumulation Phase.
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If you do not notify us that you wish to enter an ExtensionPeriod, your contract will be annuitized on the LatestAnnuity Date using the default option specified below. Youcan elect a different Annuity Payout Option by completingand mailing an Annuity Option Selection Form to ourAnnuity Service Center.
Extension Periods will not be offered beyond the firstbusiness day of the month following your 95th birthday.If your Accumulation Phase is extended to the first businessday of the month following your 95th birthday but you havenot selected an Annuity Payout Option by that date, we willautomatically annuitize your contract using the defaultoption specified below.
We will contact you prior to your Latest Annuity Date toinform you of Extension Periods, if available. Currently, youmay be eligible for an Extension Period provided you do nothave a Leveraged Death Benefit. A Leveraged DeathBenefit is determined as follows:
(1) a withdrawal is taken after May 2, 2011 (unlesstaken as a systematic withdrawal of the RMD forthis contract); and
(2) the death benefit to contract value ratio is 300% ormore, on the date we determine eligibility for anExtension Period.
If we determine you are not eligible for an Extension Perioddue to having a Leveraged Death Benefit, as defined above,we will not allow any extensions of your AccumulationPhase, and your contract will be annuitized on the LatestAnnuity Date. Subsequently, if we determine you are nolonger eligible for an Extension Period, we will thenannuitize your contract on the first business day of themonth following the end of the current Extension Period inaccordance with the default annuity income payment optionspecified below and in your contract. You may select anotherannuity income payment option so long as you notify us inwriting at least 30 days prior to that date.
We reserve the right, at our sole discretion, to refuse tooffer Extension Periods, regardless of whether we may havegranted Extension Periods in the past to you or othersimilarly situated contract owners.
ANNUITY INCOME OPTIONS
You must send a written request to our Annuity ServiceCenter to select an annuity income option. Once you beginreceiving annuity income payments, you cannot change yourannuity income option. If you elect to receive annuity incomepayments but do not select an annuity income option, yourannuity income payments shall be in accordance withOption 4 for a period of 10 years; for annuity incomepayments based on joint lives, the default is Option 3 for aperiod of 10 years. Generally, the amount of each annuityincome payment will be less with greater frequency ofpayments or if you chose a longer period certain guarantee.
We base our calculation of annuity income payments on thelife expectancy of the Annuitant and the annuity rates set
forth in your contract. In most contracts, the Owner andAnnuitant are the same person. The Owner may change theAnnuitant if different from the Owner at any time prior tothe Annuity Date. The Owner must notify us if theAnnuitant dies before the Annuity Date and designate anew Annuitant. If we do not receive a new Annuitantelection, the Owner may not select an annuity income optionbased on the life of the Annuitant.
If the contract is owned by a non-natural Owner, theAnnuitant cannot be changed after the contract has beenissued and the death of the Annuitant will trigger thepayment of the death benefit.
Annuity Income Option 1 – Life Income Annuity
This option provides annuity income payments for the life ofthe Annuitant. Annuity income payments end when theAnnuitant dies.
Annuity Income Option 2 – Joint and Survivor Life IncomeAnnuity
This option provides annuity income payments for the life ofthe Annuitant and for the life of another designated person.Upon the death of either person, we will continue to makeannuity income payments during the lifetime of the survivor.Annuity income payments end when the survivor dies.
Annuity Income Option 3 – Joint and Survivor Life IncomeAnnuity with 10 or 20 Years Guaranteed
This option is similar to Option 2 above, with an additionalguarantee of payments for at least 10 or 20 years,depending on the period chosen. If the Annuitant and thesurvivor die before all of the guaranteed annuity incomepayments have been made, the remaining annuity incomepayments are made to the Beneficiary under your contract.
Annuity Income Option 4 – Life Income Annuity with 10or 20 Years Guaranteed
This option is similar to income Option 1 above with anadditional guarantee of payments for at least 10 or20 years, depending on the period chosen. If the Annuitantdies before all guaranteed annuity income payments aremade, the remaining annuity income payments are made tothe Beneficiary under your contract.
Annuity Income Option 5 – Income for a Specified Period
This option provides annuity income payments for aguaranteed period ranging from 5 to 30 years, depending onthe period chosen. If the Annuitant dies before all theguaranteed annuity income payments are made, theremaining annuity income payments are made to theBeneficiary under your contract. Additionally, if variableannuity income payments are elected under this option, you(or the Beneficiary under the contract if the Annuitant diesprior to all guaranteed annuity income payments beingmade) may redeem any remaining guaranteed variableannuity income payments after the Annuity Date. The
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amount available upon such redemption would be thediscounted present value of any remaining guaranteedvariable annuity income payments.
The value of an Annuity Unit, regardless of the optionchosen, takes into account separate account charges whichincludes a mortality and expense risk charge. Since Option 5does not contain an element of mortality risk, no benefit isderived from this charge.
Please see the Statement of Additional Information for amore detailed discussion of the annuity income options.
FIXED OR VARIABLE ANNUITY INCOME PAYMENTS
You can choose annuity income payments that are fixed,variable or both. Unless otherwise elected, if at the datewhen annuity income payments begin you are invested inthe Variable Portfolios only, your annuity income paymentswill be variable and if your money is only in Fixed Accountsat that time, your annuity income payments will be fixed inamount. Further, if you are invested in both Fixed Accountsand Variable Portfolios when annuity income paymentsbegin, your payments will be fixed and variable, unlessotherwise elected. If annuity income payments are fixed, theCompany guarantees the amount of each payment. If theannuity income payments are variable, the amount is notguaranteed and may fluctuate as described underANNUITY INCOME PAYMENTS below.
ANNUITY INCOME PAYMENTS
We make annuity income payments on a monthly, quarterly,semi-annual or annual basis. You instruct us to send you acheck or to have the payments directly deposited into yourbank account. If state law allows, we distribute annuitieswith a contract value of $5,000 or less in a lump sum. Also,if state law allows and the selected annuity income optionresults in annuity income payments of less than $50 perpayment, we may decrease the frequency of payments.
If you are invested in the Variable Portfolios after theAnnuity Date, your annuity income payments varydepending on the following:
• for life income options, your age when annuityincome payments begin; and
• the contract value attributable to the VariablePortfolios on the Annuity Date; and
• the 3.5% assumed investment rate used in theannuity table for the contract; and
• the performance of the Variable Portfolios in whichyou are invested during the time you receiveannuity income payments.
If you are invested in both the Fixed Accounts and theVariable Portfolios after the Annuity Date, the allocation offunds between the Fixed Accounts and Variable Portfoliosalso impacts the amount of your annuity income payments.
The value of fixed annuity income payments, if elected, isbased on the guaranteed minimum interest rate specified in
your contract and will not be less than 1%. The value ofvariable annuity income payments, if elected, is based on anassumed interest rate (“AIR”) of 3.5% compoundedannually. Variable annuity income payments generallyincrease or decrease from one annuity income payment dateto the next based upon the performance of the applicableVariable Portfolios. If the performance of the VariablePortfolios selected is equal to the AIR, the annuity incomepayments will remain constant. If performance of VariablePortfolios is greater than the AIR, the annuity incomepayments will increase and if it is less than the AIR, theannuity income payments will decline.
TRANSFERS DURING THE INCOME PHASE
During the Income Phase, only one transfer per month ispermitted between the Variable Portfolios. No othertransfers are allowed during the Income Phase. Transferswill be effected for the last NYSE business day of themonth in which we receive your request for the transfer.
DEFERMENT OF PAYMENTS
We may defer making fixed payments for up to six months,or less if required by law. Interest is credited to you duringthe deferral period. Please see ACCESS TO YOURMONEY above for a discussion of when payments froma Variable Portfolio may be suspended or postponed.
TAXES
The Contracts provide tax-deferred accumulation overtime, but may be subject to certain federal income andexcise taxes, mentioned below. Refer to the Statementof Additional Information for further details. Sectionreferences are to the Internal Revenue Code (“IRC”).We do not attempt to describe any potential estate orgift tax, or any applicable state, local or foreign tax lawother than possible premium taxes mentionedunder “Premium Tax Charge.” Discussions regardingthe tax treatment of any annuity contract or retirementplans and programs are intended for generalinformational purposes only and are not intended as taxadvice, either general or individualized, nor should theybe interpreted to provide any predictions or guaranteesof a particular tax treatment. Such discussions generallyare based upon the Company’s understanding of currenttax rules and interpretations, and may include areas ofthose rules that are more or less clear or certain. Taxlaws are subject to legislative modification, and whilemany such modifications will have only a prospectiveapplication, it is important to recognize that a changecould have retroactive effect as well. You should seekcompetent tax or legal advice, as you deem necessary orappropriate, regarding your own circumstances.
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ANNUITY CONTRACTS IN GENERAL
The IRC provides for special rules regarding the taxtreatment of annuity contracts. Generally, taxes on theearnings in your annuity contract are deferred until you takethe money out. Qualified retirement investmentarrangements that satisfy specific IRC requirementsautomatically provide tax deferral regardless of whether theunderlying contract is an annuity, a trust, or a custodialaccount. Different rules and tax treatment apply dependingon how you take the money out and whether your contractis Qualified or Non-Qualified.
If you do not purchase your contract under anemployer-sponsored retirement plan, or an IndividualRetirement Account or Annuity (“IRA”), your contract isreferred to as a Non-Qualified contract. In general, yourcost basis in a Non-Qualified contract is equal to thePurchase Payments you put into the contract. You havealready been taxed on the cost basis in your Non-Qualifiedcontract.
If you purchase your contract under a qualifiedemployer-sponsored retirement plan or an IRA, yourcontract is referred to as a Qualified contract.
Examples of qualified plans or arrangements are: traditional(pre-tax) IRAs, Tax-Sheltered Annuities (also referred toas 403(b) annuities or 403(b) contracts), plans ofself-employed individuals (often referred to as H.R. 10Plans or Keogh Plans), pension and profit sharing plans(including 401(k) plans), and governmental457(b) deferred compensation plans. Typically, for employerplans and tax deductible IRA contributions, you have notpaid any tax on the Purchase Payments used to buy yourcontract and therefore, you have no cost basis in yourcontract.
U.S. Department of Labor Fiduciary Regulation
On April 8, 2016 the United States Department of Laborpublished its final regulation defining fiduciary advice, alongwith related revisions to certain existing guidance, as wellas a new exemption from specific ERISA prohibitions. Therequirements under the regulation and related guidanceapply primarily to ERISA plans and IRAs. While the newrequirements generally will not impact your rights under theContract, they may, however, affect recommendations madeby your financial representative and your financialrepresentative’s ability to make those recommendations.More specifically, the regulation and related guidancegenerally will apply to recommendations to buy, sell or holdinterests in the Contract, as well as recommendations fordistributions and rollovers to/from the Contract where theContract is in an ERISA plan or IRA. The initial compliancedate for portions of the new regulation is April 10, 2017,while compliance with other portions of the regulation andguidance is required by January 1, 2018.
Aggregation of Contracts
Federal tax rules generally require that all Non-Qualifiedcontracts issued by the same company to the samepolicyholder during the same calendar year will be treatedas one annuity contract for purposes of determining thetaxable amount upon distribution.
TAX TREATMENT OF DISTRIBUTIONS –NON-QUALIFIED CONTRACTS
If you make partial or total withdrawals from aNon-Qualified contract, the IRC generally treats suchwithdrawals as coming first from taxable earnings and thencoming from your Purchase Payments. Purchase Paymentsmade prior to August 14, 1982, however, are an importantexception to this general rule, and for tax purposesgenerally are treated as being distributed first, before eitherthe earnings on those contributions, or other PurchasePayments and earnings in the contract. If you annuitizeyour contract, a portion of each annuity income paymentwill be considered, for tax purposes, to be a return of aportion of your Purchase Payment, generally until you havereceived all of your Purchase Payment. The portion of eachannuity income payment that is considered a return of yourPurchase Payment will not be taxed. Additionally, thetaxable portion of any withdrawals, whether annuitized orother withdrawals, generally is subject to applicable stateand/or local income taxes, and may be subject to anadditional 10% penalty tax unless withdrawn in conjunctionwith the following circumstances:
• after attaining age 59½;
• when paid to your Beneficiary after you die;
• after you become disabled (as defined in the IRC);
• when paid as a part of a series of substantiallyequal periodic payments (not less frequently thanannually) made for your life (or life expectancy) orthe joint lives (or joint life expectancies) of you andyour designated beneficiary for a period of 5 yearsor attainment of age 59½, whichever is later;
• under an immediate annuity contract;
• when attributable to Purchase Payments made priorto August 14, 1982.
On March 30, 2010, the Health Care and EducationReconciliation Act (“Reconciliation Act”) was signed intolaw. Among other provisions, the Reconciliation Act imposesa new tax on net investment income, which went into effectin 2013, at the rate of 3.8% of applicable thresholds forModified Adjusted Gross Income (“MAGI”) ($250,000 forjoint filers; $125,000 for married individuals filingseparately; and, $200,000 for individual filers). Anindividual with MAGI in excess of the threshold will berequired to pay this new tax on net investment income inexcess of the applicable MAGI threshold. For this purpose,net investment income generally will include taxablewithdrawals from a Non-Qualified contract, as well as other
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taxable amounts including amounts taxed annually to anowner that is not a natural person (see Contracts Owned bya Trust or Corporation). This new tax generally does notapply to Qualified contracts, however taxable distributionsfrom such contracts may be taken into account indetermining the applicability of the MAGI thresholds.
A transfer of contract value to another annuity contractgenerally will be tax reported as a distribution unless wehave sufficient information to confirm that the transferqualifies as an exchange under IRC Section 1035 (a “1035exchange”).
TAX TREATMENT OF DISTRIBUTIONS – QUALIFIEDCONTRACTS
Generally, you have not paid any taxes on the PurchasePayments used to buy a Qualified contract. As a result,most amounts withdrawn from the contract or received asannuity income payments will be taxable income. Exceptionsto this general rule include withdrawals attributable toafter-tax amounts permitted under the employer’s plan.
The taxable portion of any withdrawal or income paymentfrom a Qualified contract will be subject to an additional10% penalty tax, under the IRC, except in the followingcircumstances:
• after attainment of age 59½;
• when paid to your Beneficiary after you die;
• after you become disabled (as defined in the IRC);
• as a part of a series of substantially equal periodicpayments (not less frequently than annually) madefor your life (or life expectancy) or the joint lives(or joint expectancies) of you and your designatedBeneficiary for a period of 5 years or attainment ofage 59½, whichever is later;
• payments to employees after separation fromservice after attainment of age 55 (does not applyto IRAs);
• dividends paid with respect to stock of a corporationdescribed in IRC Section 404(k);
• for payment of medical expenses to the extent suchwithdrawals do not exceed limitations set by theIRC for deductible amounts paid during the taxableyear for medical care;
• transfers to alternate payees pursuant to a qualifieddomestic relations order (does not apply to IRAs);
• for payment of health insurance if you areunemployed and meet certain requirements;
• distributions from IRAs for qualifying highereducation expenses or first home purchases, withcertain limitations;
• amounts distributed from a Code Section 457(b)plan other than to the extent such amounts in agovernmental Code Section 457(b) plan representrollovers from an IRA or employer-sponsored plan
to which the 10% penalty would otherwise applyand which are treated as distributed from aQualified plan for purposes of the prematuredistribution penalty;
• payments to certain individuals called up for activeduty after September 11, 2001; and
• payments up to $3,000 per year for health, life andaccident insurance by certain retired public safetyofficers, which are federal income tax-free.
The IRC limits the withdrawal of an employee’s electivedeferral Purchase Payments from a Tax-Sheltered Annuity(TSA) contract under IRC 403(b). Generally, withdrawalscan only be made when an Owner: (1) reaches age 59½;(2) severs employment with the employer; (3) dies;(4) becomes disabled (as defined in the IRC); or(5) experiences a financial hardship (as defined in theIRC). In the case of hardship, the owner can only withdrawPurchase Payments. Additional plan limitations may alsoapply. Amounts held in a TSA contract as of December 31,1988 are not subject to these restrictions except asotherwise imposed by the plan.
Qualifying transfers (including intra-plan exchanges) ofamounts from one TSA contract or account to another TSAcontract or account, and qualifying transfers to a statedefined benefit plan to purchase service credits, wherepermitted under the employer’s plan, generally are notconsidered distributions, and thus are not subject to thesewithdrawal limitations. If amounts are transferred to acontract with less restrictive IRC withdrawal limitationsthan the account from which it is transferred, the morerestrictive withdrawal limitations will continue to apply.
Transfers among 403(b) annuities and/or403(b)(7) custodial accounts generally are subject to rulesset out in the plan, the IRC, treasury regulations, IRSpronouncements, and other applicable legal authorities.
On July 26, 2007, the Department of the Treasury publishedfinal 403(b) regulations that were largely effective onJanuary 1, 2009. These comprehensive regulations includeseveral new rules and requirements, such as a requirementthat employers maintain their 403(b) plans pursuant to awritten plan. Subsequent IRS guidance and/or the terms ofthe written plan may impose new restrictions on both newand existing contracts, including restrictions on theavailability of loans, distributions, transfers and exchanges,regardless of when a contract was purchased. EffectiveJanuary 1, 2009, the Company no longer accepts newPurchase Payments (including contributions, transfers andexchanges) into new or existing 403(b) contracts. You maywish to discuss the new regulations and/or the generalinformation above with your tax adviser.
Withdrawals from other Qualified contracts are often limitedby the IRC and by the employer’s plan.
If you are purchasing the contract as an investment vehiclefor a trust under a Qualified Plan, you should consider that
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the contract does not provide any additional tax-deferralbenefits beyond the treatment provided by the trust itself. Inaddition, if the contract itself is a qualifying arrangement(as with a 403(b) annuity or IRA), the contract generallydoes not provide tax deferral benefits beyond the treatmentprovided to alternative qualifying arrangements such astrusts or custodial accounts. However, in both cases thecontract offers features and benefits that other investmentsmay not offer. You and your financial representative shouldcarefully consider whether the features and benefits,including the investment options, lifetime annuity incomeoptions, and protection through living benefits, deathbenefits and other benefits provided under an annuitycontract issued in connection with a Qualified contract aresuitable for your needs and objectives and are appropriate inlight of the expense.
REQUIRED MINIMUM DISTRIBUTIONS
Generally, the IRC requires that you begin taking annualdistributions from Qualified annuity contracts by April 1 ofthe calendar year following the later of (1) the calendaryear in which you attain age 70½ or (2) the calendar yearin which you sever employment from the employersponsoring the plan. If you own a traditional IRA, you mustbegin receiving minimum distributions by April 1 of thecalendar year following the calendar year in which youreach age 70½. If you choose to delay your first distributionuntil the year after the year in which you reach 70½ orsever employment, as applicable, then you will be required towithdraw your second required minimum distribution on orbefore December 31 in that same year. For each yearthereafter, you must withdraw your required minimumdistribution by December 31.
If you own more than one IRA, you may be permitted totake your annual distributions in any combination from yourIRAs. A similar rule applies if you own more than one TSA.However, you cannot satisfy this distribution requirement foryour IRA contract by taking a distribution from a TSA, andyou cannot satisfy the requirement for your TSA by takinga distribution from an IRA.
You may be subject to a surrender charge on withdrawalstaken to meet minimum distribution requirements, if thewithdrawals exceed the contract’s maximum penalty freeamount.
Failure to satisfy the minimum distribution requirementsmay result in a tax penalty. You should consult your taxadviser for more information. You may elect to have therequired minimum distribution amount on your contractcalculated and withdrawn each year under the automaticwithdrawal option. You may select monthly, quarterly,semiannual, or annual withdrawals for this purpose. Thisservice is provided as a courtesy and we do not guaranteethe accuracy of our calculations. Accordingly, we recommendyou consult your tax adviser concerning your requiredminimum distribution. You may terminate your election forautomated minimum distribution at any time by sending a
written request to our Annuity Service Center. Uponnotification of your death, we will terminate the automaticrequired minimum distribution unless your Beneficiaryinstructs us otherwise. We reserve the right to change ordiscontinue this service at any time.
IRS regulations require that the annuity contract value usedto determine required minimum distributions include theactuarial value of other benefits under the contract, such asoptional death benefits and/or living benefits. As a result, ifyou request a minimum distribution calculation, or if one isotherwise required to be provided, in those specificcircumstances where this requirement applies, the calculationmay be based upon a value that is greater than yourcontract value, resulting in a larger required minimumdistribution. This regulation does not apply to requiredminimum distributions made under an irrevocable annuityincome option. You should discuss the effect of theseregulations with your tax adviser.
TAX TREATMENT OF DEATH BENEFITS
The taxable amount of any death benefits paid under thecontract are taxable to the Beneficiary. The rules governingthe taxation of payments from an annuity contract, asdiscussed above, generally apply whether the death benefitis paid as lump sum or annuity income payments. Estatetaxes may also apply.
Enhanced death benefits are used as investment protectionand are not expected to give rise to any adverse tax effects.However, the IRS could take the position that some or all ofthe charges for these death benefits should be treated as apartial withdrawal from the contract. In that case, theamount of the partial withdrawal may be includible intaxable income and subject to the 10% penalty if the owneris under 59½, unless another exception applies.
If you own a Qualified contract and purchase theseenhanced death benefits, the IRS may consider thesebenefits “incidental death benefits” or “life insurance.” TheIRC imposes limits on the amount of the incidental benefitsand/or life insurance allowable for Qualified contracts andthe employer-sponsored plans under which they arepurchased. If the death benefit(s) selected by you areconsidered to exceed these limits, the benefit(s) could resultin taxable income to the owner of the Qualified contract,and in some cases could adversely impact the qualifiedstatus of the Qualified contract or the plan. You shouldconsult your tax adviser regarding these features andbenefits prior to purchasing a contract.
CONTRACTS OWNED BY A TRUST ORCORPORATION
A Trust or Corporation or other owner that is not a naturalperson (“Non-Natural Owner”) that is consideringpurchasing this contract should consult a tax adviser.
Generally, the IRC does not confer tax-deferred status upona Non-Qualified contract owned by a Non-Natural Owner for
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federal income tax purposes. Instead in such cases, theNon-Natural Owner pays tax each year on the contract’svalue in excess of the owner’s cost basis, and the contract’scost basis is then increased by a like amount. However, thistreatment is not applied to a contract held by a trust orother entity as an agent for a natural person nor tocontracts held by Qualified Plans. Please see the Statementof Additional Information for a more detailed discussion ofthe potential adverse tax consequences associated withnon-natural ownership of a Non-Qualified annuity contract.
FOREIGN ACCOUNT TAX COMPLIANCE (“FATCA”)
A Contract Owner who is not a “United States person”which is defined to mean:
• a citizen or resident of the United States
• a partnership or corporation created or organized inthe United States or under the law of the UnitedStates or of any state, or the District of Columbia
• any estate or trust other than a foreign estate orforeign trust (see Internal Revenue Code section7701(a)(31) for the definition of a foreign estateand a foreign trust)
should be aware that FATCA, enacted in 2010, providesthat a 30% withholding tax will be imposed on certain grosspayments (which could include distributions from cash valuelife insurance or annuity products) made to a foreign entityif such entity fails to provide applicable certifications undera Form W-9, Form W-8 BEN-E, Form W-8 IMY, or otherapplicable form. Certain withholding certifications willremain effective until a change in circumstances makes anyinformation on the form incorrect. Notwithstanding thepreceding sentence, the Form W-8 BEN-E, is only effectivefor three years from date of signature unless a change incircumstances makes any information on the form incorrect.An entity, for this purpose, will be considered a foreignentity unless it provide an applicable such withholdingcertifications to the contrary. The Contract Owner mustinform the Company within 30 days of any change incircumstances that makes any information on the formincorrect by furnishing a new IRS Form W-9, Form W-8BEN-E, Form W-8IMY, or acceptable substitute form.
OTHER WITHHOLDING TAX
A Contract Owner that is not exempt from United Statesfederal withholding tax should consult its tax advisor as tothe availability of an exemption from, or reduction of, suchtax under an applicable income tax treaty, if any.
GIFTS, PLEDGES AND/OR ASSIGNMENTS OF ACONTRACT
If you transfer ownership of your Non-Qualified contract toa person other than your spouse (or former spouse incidentto divorce) as a gift you will pay federal income tax on thecontract’s cash value to the extent it exceeds your costbasis. The recipient’s cost basis will be increased by the
amount on which you will pay federal taxes. In addition, theIRC treats any assignment or pledge (or agreement toassign or pledge) of any portion of a Non-Qualified contractas a withdrawal. Please see the Statement of AdditionalInformation for a more detailed discussion regardingpotential tax consequences of gifting, assigning, or pledginga Non-Qualified contract.
The IRC prohibits Qualified annuity contracts includingIRAs from being transferred, assigned or pledged assecurity for a loan. This prohibition, however, generally doesnot apply to loans under an employer-sponsored plan(including loans from the annuity contract) that satisfycertain requirements, provided that: (a) the plan is not anunfunded deferred compensation plan; and (b) the planfunding vehicle is not an IRA.
DIVERSIFICATION AND INVESTOR CONTROL
The IRC imposes certain diversification requirements on theunderlying investments for a variable annuity. We believethat the manager of the Underlying Funds monitors theFunds so as to comply with these requirements. To betreated as a variable annuity for tax purposes, theUnderlying Funds must meet these requirements.
The diversification regulations do not provide guidance as tothe circumstances under which you, and not the Company,would be considered the owner of the shares of the VariablePortfolios under your Non-Qualified contract, because of thedegree of control you exercise over the underlyinginvestments. This diversification requirement is sometimesreferred to as “investor control.” The determination ofwhether you possess sufficient incidents of ownership overVariable Portfolio assets to be deemed the owner of theUnderlying Funds depends on all of the relevant facts andcircumstances. However, IRS Revenue Ruling 2003-91provides that an annuity owner’s ability to choose amonggeneral investment strategies either at the time of the initialpurchase or thereafter, does not constitute control sufficientto cause the contract holder to be treated as the owner ofthe Variable Portfolios. The Revenue Ruling provides that if,based on all the facts and circumstances, you do not havedirect or indirect control over the Separate Account or anyVariable Portfolio asset, then you do not possess sufficientincidents of ownership over the assets supporting theannuity to be deemed the owner of the assets for federalincome tax purposes. If any guidance is provided which isconsidered a new position, then the guidance shouldgenerally be applied prospectively. However, if suchguidance is considered not to be a new position, it may beapplied retroactively. This would mean that you, as theowner of the Non-Qualified contract, could be treated as theowner of the Underlying Fund. Due to the uncertainty inthis area, we reserve the right to modify the contract in anattempt to maintain favorable tax treatment.
These investor control limitations generally do not apply toQualified contracts, which are referred to as “Pension Plan
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Contracts” for purposes of this rule, although the limitationscould be applied to Qualified contracts in the future.
OTHER INFORMATION
THE DISTRIBUTOR
AIG Capital Services, Inc., Harborside Financial Center,3200 Plaza 5, Jersey City, NJ 07311-4992, distributes thecontracts. AIG Capital Services, Inc., an indirect,wholly-owned subsidiary of AGL, is a registeredbroker-dealer under the Securities Exchange Act of 1934, asamended, and is a member of the Financial IndustryRegulatory Authority (“FINRA”). No underwriting fees areretained by AIG Capital Services, Inc. in connection with thedistribution of the contracts.
THE COMPANY
American General Life Insurance Company (“AGL”) is astock life insurance company organized under the laws ofthe state of Texas on April 11, 1960. AGL’s home office is2727-A Allen Parkway, Houston, Texas 77019-2191. AGL issuccessor in interest to a company originally organizedunder the laws of Delaware on January 10, 1917. AGL is anindirect, wholly owned subsidiary of American InternationalGroup, Inc. (“AIG”), a Delaware corporation.
Effective December 31, 2012, SunAmerica Annuity and LifeAssurance Company (“SunAmerica Annuity”), a formeraffiliate of AGL, merged with and into AGL (“Merger”).Before the Merger, contracts in all states except New Yorkwere issued by SunAmerica Annuity. Upon the Merger, allcontractual obligations of SunAmerica Annuity becameobligations of AGL.
The Merger did not affect the terms of, or the rights andobligations under your contract, other than to reflect thechange to the Company that provides your contract benefitsfrom SunAmerica Annuity to AGL. The Merger also did notresult in any adverse tax consequences for any contractOwners.
Ownership Structure of the Company
AGL is an indirect, wholly owned subsidiary of AmericanInternational Group, Inc. (“AIG”), a Delaware corporation.
AGL is regulated for the benefit of policy owners by theinsurance regulator in its state of domicile and also by allstate insurance departments where it is licensed to conductbusiness. AGL is required by its regulators to hold aspecified amount of reserves in order to meet its contractualobligations to contract owners. Insurance regulations alsorequire AGL to maintain additional surplus to protectagainst a financial impairment; the amount of which surplusis based on the risks inherent in AGL’s operations.
AIG is a leading international insurance organization servingcustomers in more than 100 countries and jurisdictions. AIGcompanies serve commercial, institutional, and individual
customers through one of the most extensive worldwideproperty-casualty networks of any insurer. In addition, AIGcompanies are leading providers of life insurance andretirement services in the United States. AIG common stockis listed on the New York Stock Exchange and the TokyoStock Exchange.
More information about AIG may be found in the regulatoryfilings AIG files from time to time with the U.S. Securitiesand Exchange Commission (“SEC”) at www.sec.gov.
Operation of the Company
The operations of the Company are influenced by manyfactors, including general economic conditions, monetary andfiscal policies of the federal government, and policies ofstate and other regulatory authorities. The level of sales ofthe Company’s financial and insurance products is influencedby many factors, including general market rates of interest,the strength, weakness and volatility of equity markets,terms and conditions of competing financial and insuranceproducts and the relative value of such brands.
The Company is exposed to market risk, interest rate risk,contract owner behavior risk and mortality/longevity risk.Market volatility may result in increased risks related todeath and living guaranteed benefits on the Company’sfinancial and insurance products, as well as reduced feeincome in the case of assets held in separate accounts,where applicable. These guaranteed benefits are sensitive toequity market and other conditions. The Company primarilyuses capital market hedging strategies to help cover the riskof paying guaranteed living benefits in excess of accountvalues as a result of significant downturns in equity marketsor as a result of other factors. The Company has treaties toreinsure a portion of the guaranteed minimum incomebenefits and guaranteed death benefits for equity andmortality risk on some of its older contracts. Such riskmitigation may or may not reduce the volatility of netincome and capital and surplus resulting from equity marketvolatility.
The Company is regulated for the benefit of contract ownersby the insurance regulator in its state of domicile; and alsoby all state insurance departments where it is licensed toconduct business. The Company is required by its regulatorsto hold a specified amount of reserves in order to meet itscontractual obligations to contract owners. Insuranceregulations also require the Company to maintain additionalsurplus to protect against a financial impairment the amountof which is based on the risks inherent in the Company’soperations.
THE SEPARATE ACCOUNT
Before December 31, 2012, Variable Separate Account wasa separate account of SunAmerica Annuity, originallyestablished under Arizona law on January 1, 1996 when itassumed the Separate Account, originally established underCalifornia law on June 25, 1981. On December 31, 2012,and in conjunction with the merger of AGL and SunAmerica
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Annuity, Variable Separate Account was transferred to andbecame a separate account of AGL under Texas law. It maybe used to support the contract and other variable annuitycontracts, and used for other permitted purposes.
The Separate Account is registered with the SEC as a unitinvestment trust under the Investment Company Act of1940, as amended.
Purchase Payments you make that are allocated to theVariable Portfolios are invested in the Separate Account.The Company owns the assets in the Separate Account andinvests them on your behalf, according to your instructions.Purchase Payments invested in the Separate Account arenot guaranteed and will fluctuate with the value of theVariable Portfolios you select. Therefore, you assume all ofthe investment risk for contract value allocated to theVariable Portfolios. These assets are kept separate from ourGeneral Account and may not be charged with liabilitiesarising from any other business we may conduct.Additionally, income gains and losses (realized andunrealized) resulting from assets in the Separate Accountare credited to or charged against the Separate Accountwithout regard to other income gains or losses of theCompany.
You benefit from dividends received by the SeparateAccount through an increase in your unit value. TheCompany expects to benefit from these dividends throughtax credits and corporate dividends received deductions;however, these corporate deductions are not passed back tothe Separate Account or to contract Owners.
THE GENERAL ACCOUNT
Obligations that are paid out of the Company’s generalaccount (“General Account”) include any amounts you haveallocated to available Fixed Accounts, including any interestcredited thereon, and amounts owed under your contract fordeath and/or living benefits which are in excess of portionsof contract value allocated to the Variable Portfolios. Theobligations and guarantees under the contract are the soleresponsibility of the Company. Therefore, payments of theseobligations are subject to our financial strength and claimspaying ability, and our long term ability to make suchpayments.
The General Account assets are invested in accordance withapplicable state regulation. These assets are exposed to thetypical risks normally associated with a portfolio of fixedincome securities, namely interest rate, option, liquidity andcredit risk. The Company manages its exposure to theserisks by, among other things, closely monitoring andmatching the duration and cash flows of its assets andliabilities, monitoring or limiting prepayment and extensionrisk in its portfolio, maintaining a large percentage of itsportfolio in highly liquid securities and engaging in adisciplined process of underwriting, reviewing andmonitoring credit risk. With respect to the living benefitsavailable in your contract, we also manage interest rate andcertain market risk through a hedging strategy in the
portfolio and we may require that those who elect a livingbenefit allocate their Purchase Payments in accordance withspecified investment parameters.
GUARANTEE OF INSURANCE OBLIGATIONS
The Company’s insurance policy obligations for individualand group contracts issued prior to December 29, 2006 at4:00 p.m. Eastern Time, are guaranteed (the “Guarantee”)by American Home Assurance Company (“American Home”or “Guarantor”).
As of December 29, 2006 at 4:00 p.m. Eastern Time(the “Point of Termination”), the Guarantee by AmericanHome was terminated for prospectively issued contracts. TheGuarantee will not cover any contracts or certificates with adate of issue later than the Point of Termination. TheGuarantee will continue to cover individual contracts,individual certificates and group unallocated contracts with adate of issue earlier than the Point of Termination until allinsurance obligations under such contracts or certificates aresatisfied in full. Insurance obligations include, withoutlimitation, contract value invested in any available FixedAccounts, death benefits, living benefits and annuity incomeoptions. The Guarantee does not guarantee contract value orthe investment performance of the Variable Portfoliosavailable under the contracts. The Guarantee provides thatindividual contract owners, individual certificate holders andgroup unallocated contract owners with a date of issueearlier than the Point of Termination can enforce theGuarantee directly.
Guarantees for contracts and certificates issued prior to theMerger will continue after the Merger. As a result, theMerger of SunAmerica Annuity into AGL will not impact theinsurance obligations under the Guarantee. Please see THECOMPANY above for more details regarding theMerger.
American Home is a stock property-casualty insurancecompany incorporated under the laws of the State of NewYork on February 7, 1899. American Home’s principalexecutive office is located at 175 Water Street, New York,New York 10038. American Home is licensed in all 50states of the United States and the District of Columbia, aswell as certain foreign jurisdictions, and engages in a broadrange of insurance and reinsurance activities. AmericanHome, an affiliate of the Company, is an indirect whollyowned subsidiary of American International Group, Inc.
FINANCIAL STATEMENTS
The financial statements described below are important foryou to consider. Information about how to obtain thesefinancial statements is also provided below.
The Company, the Separate Account and the Guarantor
The financial statements of the Company and the SeparateAccount are required to be made available because you mustlook to those entities directly to satisfy our obligations toyou under the Contract. The financial statements of the
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Guarantor are provided in relation to its ability to meet itsobligations under the Guarantee. Please see GUARANTEEOF INSURANCE OBLIGATIONS above.
Instructions to Obtain Financial Statements
The financial statements of the Company, Separate Account,and Guarantor are available by requesting a free copy of theStatement of Additional Information by calling(800) 445-7862 or by using the request form on the lastpage of this prospectus.
We encourage both existing and prospective contractOwners to read and understand the financial statements.
You can also inspect and copy this information at SECpublic facilities at the following locations:
Washington, District of Columbia100 F. Street, N.E., Room 1580Washington, DC 20549
Chicago, Illinois175 W. Jackson BoulevardChicago, IL 60604
New York, New York3 World Financial Center, Room 4300New York, NY 10281
To obtain copies by mail, contact the Washington, D.C.location. After you pay the fees as prescribed by the rulesand regulations of the SEC, the required documents aremailed. The Company will provide without charge to eachperson to whom this prospectus is delivered, upon written ororal request, a copy of the above documents. Requests forthese documents should be directed to the Company’sAnnuity Service Center, as follows:
By Mail:Annuity Service CenterP.O. Box 15570Amarillo, Texas 79105-5570Telephone Number: (800) 445-7862
ADMINISTRATION
We are responsible for the administrative servicing of yourcontract. Please contact our Annuity Service Center at(800) 445-7862, if you have any comments, questions orservice requests.
We send out transaction confirmations and quarterlystatements. During the Accumulation Phase, you will receiveconfirmation of transactions for your contract. Transactionsmade pursuant to contractual or systematic agreements,such as dollar cost averaging, if available, may be confirmedquarterly. Purchase Payments received through theautomatic payment plan or a salary reduction arrangement,may also be confirmed quarterly. For all other transactions,we send confirmations. It is your responsibility to reviewthese documents carefully and notify our Annuity ServiceCenter of any inaccuracies immediately. We investigate allinquiries. Depending on the facts and circumstances, we
may retroactively adjust your contract, provided you notifyus of your concern within 30 days of receiving thetransaction confirmation or quarterly statement. Any otheradjustments we deem warranted are made as of the time wereceive notice of the error. If you fail to notify our AnnuityService Center of any mistakes or inaccuracy within 30 daysof receiving the transaction confirmation or quarterlystatement, we will deem you to have ratified the transaction.
Business Disruption and Cyber Security Risks
We rely heavily on interconnected computer systems anddigital data to conduct our variable product businessactivities. Because our variable product business is highlydependent upon the effective operation of our computersystems and those of our business partners, our business isvulnerable to disruptions from physical disruptions andutility outages, and susceptible to operational andinformation security risks resulting from informationsystems failure (e.g., hardware and software malfunctions)and cyber-attacks. These risks include, among other things,the theft, misuse, corruption and destruction of datamaintained online or digitally, interference with or denial ofservice attacks on websites and other operational disruptionand unauthorized release of confidential customerinformation. Such systems failures and cyber-attacksaffecting us, any third party administrator, the underlyingfunds, intermediaries and other affiliated or third-partyservice providers may adversely affect us and your contractvalue. For instance, systems failures and cyber-attacks mayinterfere with our processing of contract transactions,including the processing of orders from our website or withthe Underlying Funds, impact our ability to calculateAccumulation Unit Values (“AUVs”), cause the release andpossible destruction of confidential customer or businessinformation, impede order processing, subject us and/or ourservice providers and intermediaries to regulatory fines andfinancial losses and/or cause reputational damage. Cybersecurity risks may also impact the issuers of securities inwhich the Underlying Funds invest, which may cause thefunds underlying your contract to lose value. There can beno assurance that we or the Underlying Funds or ourservice providers will avoid losses affecting your contractdue to cyber-attacks or information security breaches in thefuture.
LEGAL PROCEEDINGS
There are no pending legal proceedings affecting theSeparate Account. Various federal, state or other regulatoryagencies may from time to time review, examine or inquireinto the operations, practices and procedures of theCompany, such as through financial examinations, marketconduct exams or other regulatory inquiries. Based on thecurrent status of pending regulatory examinations andinquiries involving the Company, the Company believes it isnot likely that these regulatory examinations or inquirieswill have a material adverse effect on the financial position,results of operations or cash flows of the Company.
42
Various lawsuits against the Company have arisen in theordinary course of business. As of April 29, 2016, theCompany believes it is not likely that contingent liabilitiesarising from the above matters will have a material adverseeffect on the financial condition of the Company.
REGISTRATION STATEMENTS
Registration statements under the Securities Act of 1933, asamended, related to the contracts offered by this prospectusare on file with the SEC. This prospectus does not containall of the information contained in the registrationstatements and exhibits. For further information regardingthe Separate Account, the Company and its GeneralAccount, American Home, the Variable Portfolios and thecontract, please refer to the registration statements andexhibits.
CONTENTS OF STATEMENT OF ADDITIONALINFORMATION
Additional information concerning the operations of theSeparate Account is contained in the Statement ofAdditional Information, which is available without chargeupon written request. Please use the request form at theback of this prospectus and send it to our Annuity ServiceCenter at P.O. Box 15570, Amarillo, Texas 79105-5570 orby calling (800) 445-7862. The table of contents of the SAIis listed below.
Separate Account and the Company
General Account
Performance Data
Annuity Income Payments
Annuity Unit Values
Taxes
Broker-Dealer Firms Receiving Revenue Sharing Payments
Distribution of Contracts
Financial Statements
43
APPENDIX A – CONDENSED FINANCIAL INFORMATION
Portfolios
Fiscal YearEnded
12/31/06
Fiscal YearEnded
12/31/07
Fiscal YearEnded
12/31/08
Fiscal YearEnded
12/31/09
Fiscal YearEnded
12/31/10
Fiscal YearEnded
12/31/11
Fiscal YearEnded
12/31/12
Fiscal YearEnded
12/31/13
Fiscal YearEnded
12/31/14
Fiscal YearEnded
12/31/15
Aggressive Growth – SAST Class 1 Shares(Inception Date – 6/9/97)
Beginning AUV . . . . . . . . . . . . . . (a)$15.776 (a)$17.604 (a)$17.254 (a)$8.048 (a)$11.136 (a)$13.288 (a)$12.829 (a)$14.685 (a)$20.675 (a)$20.475(b)$15.589 (b)$17.351 (b)$16.964 (b)$7.893 (b)$10.894 (b)$12.967 (b)$12.488 (b)$14.258 (b)$20.025 (b)$19.782
Ending AUV. . . . . . . . . . . . . . . . (a)$17.604 (a)$17.254 (a)$8.048 (a)$11.136 (a)$13.288 (a)$12.829 (a)$14.685 (a)$20.675 (a)$20.475 (a)$19.927(b)$17.351 (b)$16.964 (b)$7.893 (b)$10.894 (b)$12.967 (b)$12.488 (b)$14.258 (b)$20.025 (b)$19.782 (b)$19.204
Ending Number of AUs . . . . . . . . . . (a)4,214,968 (a)3,130,278 (a)2,409,320 (a)2,001,930 (a)1,696,428 (a)1,405,921 (a)1,216,341 (a)1,126,788 (a)848,093 (a)773,345(b)75,949 (b)70,577 (b)29,369 (b)23,081 (b)18,886 (b)17,579 (b)13,786 (b)16,098 (b)14,245 (b)9,915
American Funds Insurance Series – Asset Allocation – AFIS Class 2 Shares(Inception Date: – 9/30/02)
Beginning AUV . . . . . . . . . . . . . . (a)$14.250 (a)$16.092 (a)$16.888 (a)$11.724 (a)$14.318 (a)$15.865 (a)$15.828 (a)$18.113 (a)$22.067 (a)$22.907(b)$14.135 (b)$15.923 (b)$16.669 (b)$11.543 (b)$14.061 (b)$15.541 (b)$15.467 (b)$17.655 (b)$21.456 (b)$22.217
Ending AUV. . . . . . . . . . . . . . . . (a)$16.092 (a)$16.888 (a)$11.724 (a)$14.318 (a)$15.865 (a)$15.828 (a)$18.113 (a)$22.067 (a)$22.907 (a)$22.877(b)$15.923 (b)$16.669 (b)$11.543 (b)$14.061 (b)$15.541 (b)$15.467 (b)$17.655 (b)$21.456 (b)$22.217 (b)$22.133
Ending Number of AUs . . . . . . . . . . (a)8,732,303 (a)8,221,664 (a)6,456,948 (a)5,560,973 (a)4,750,892 (a)4,014,867 (a)3,385,906 (a)3,094,310 (a)2,711,169 (a)2,419,912(b)470,704 (b)467,085 (b)401,751 (b)311,359 (b)257,432 (b)232,662 (b)187,996 (b)165,031 (b)151,674 (b)140,076
American Funds Insurance Series – Global Growth – AFIS Class 2 Shares(Inception Date: – 9/30/02)
Beginning AUV . . . . . . . . . . . . . . (a)$18.324 (a)$21.736 (a)$24.587 (a)$14.919 (a)$20.911 (a)$23.014 (a)$20.653 (a)$24.930 (a)$31.720 (a)$31.965(b)$18.167 (b)$21.494 (b)$24.253 (b)$14.680 (b)$20.524 (b)$22.531 (b)$20.169 (b)$24.285 (b)$30.823 (b)$30.983
Ending AUV. . . . . . . . . . . . . . . . (a)$21.736 (a)$24.587 (a)$14.919 (a)$20.911 (a)$23.014 (a)$20.653 (a)$24.930 (a)$31.720 (a)$31.965 (a)$33.666(b)$21.494 (b)$24.253 (b)$14.680 (b)$20.524 (b)$22.531 (b)$20.169 (b)$24.285 (b)$30.823 (b)$30.983 (b)$32.551
Ending Number of AUs . . . . . . . . . . (a)6,293,072 (a)5,744,321 (a)4,567,411 (a)3,858,977 (a)3,285,745 (a)2,666,879 (a)2,198,604 (a)1,876,170 (a)1,649,886 (a)1,448,480(b)247,667 (b)255,116 (b)187,616 (b)154,966 (b)114,543 (b)88,303 (b)74,669 (b)59,776 (b)52,987 (b)46,414
American Funds Insurance Series – Growth – AFIS Class 2 Shares(Inception Date: – 9/30/02)
Beginning AUV . . . . . . . . . . . . . . (a)$18.599 (a)$20.190 (a)$22.342 (a)$12.329 (a)$16.929 (a)$19.788 (a)$18.656 (a)$21.661 (a)$27.758 (a)$29.666(b)$18.448 (b)$19.977 (b)$22.050 (b)$12.137 (b)$16.624 (b)$19.383 (b)$18.229 (b)$21.112 (b)$26.988 (b)$28.771
Ending AUV. . . . . . . . . . . . . . . . (a)$20.190 (a)$22.342 (a)$12.329 (a)$16.929 (a)$19.788 (a)$18.656 (a)$21.661 (a)$27.758 (a)$29.666 (a)$31.222(b)$19.977 (b)$22.050 (b)$12.137 (b)$16.624 (b)$19.383 (b)$18.229 (b)$21.112 (b)$26.988 (b)$28.771 (b)$30.205
Ending Number of AUs . . . . . . . . . . (a)10,924,340 (a)9,078,866 (a)7,201,513 (a)6,199,851 (a)5,131,757 (a)4,144,172 (a)3,529,217 (a)2,954,082 (a)2,588,276 (a)2,225,553(b)412,920 (b)385,893 (b)307,472 (b)242,258 (b)218,421 (b)175,356 (b)133,973 (b)107,120 (b)97,456 (b)88,242
American Funds Insurance Series – Growth-Income – AFIS Class 2 Shares(Inception Date: – 9/30/02)
Beginning AUV . . . . . . . . . . . . . . (a)$16.088 (a)$18.254 (a)$18.886 (a)$11.561 (a)$14.944 (a)$16.399 (a)$15.856 (a)$18.347 (a)$24.126 (a)$26.289(b)$15.952 (b)$18.055 (b)$18.633 (b)$11.377 (b)$14.670 (b)$16.059 (b)$15.489 (b)$17.876 (b)$23.449 (b)$25.487
Ending AUV. . . . . . . . . . . . . . . . (a)$18.254 (a)$18.886 (a)$11.561 (a)$14.944 (a)$16.399 (a)$15.856 (a)$18.347 (a)$24.126 (a)$26.289 (a)$26.269(b)$18.055 (b)$18.633 (b)$11.377 (b)$14.670 (b)$16.059 (b)$15.489 (b)$17.876 (b)$23.449 (b)$25.487 (b)$25.404
Ending Number of AUs . . . . . . . . . . (a)13,242,886 (a)11,361,386 (a)9,397,385 (a)7,999,242 (a)6,745,430 (a)5,483,083 (a)4,590,656 (a)3,837,871 (a)3,342,370 (a)2,895,626(b)598,948 (b)556,960 (b)443,735 (b)376,174 (b)318,066 (b)257,920 (b)229,077 (b)191,622 (b)176,405 (b)161,646
Asset Allocation – AST Class 1 Shares(Inception Date – 6/3/97)
Beginning AUV . . . . . . . . . . . . . . (a)$23.083 (a)$25.309 (a)$27.031 (a)$20.487 (a)$24.678 (a)$27.673 (a)$27.508 (a)$30.329 (a)$35.216 (a)$37.272(b)$22.816 (b)$24.953 (b)$26.585 (b)$20.099 (b)$24.150 (b)$27.013 (b)$26.785 (b)$29.458 (b)$34.119 (b)$36.021
Ending AUV. . . . . . . . . . . . . . . . (a)$25.309 (a)$27.031 (a)$20.487 (a)$24.678 (a)$27.673 (a)$27.508 (a)$30.329 (a)$35.216 (a)$37.272 (a)$36.078(b)$24.953 (b)$26.585 (b)$20.099 (b)$24.150 (b)$27.013 (b)$26.785 (b)$29.458 (b)$34.119 (b)$36.021 (b)$34.780
Ending Number of AUs . . . . . . . . . . (a)5,038,218 (a)3,925,836 (a)3,184,347 (a)2,579,022 (a)2,288,586 (a)1,946,489 (a)1,655,162 (a)1,433,033 (a)1,236,258 (a)1,071,558(b)59,448 (b)52,989 (b)37,439 (b)32,654 (b)28,843 (b)30,262 (b)23,929 (b)20,309 (b)17,129 (b)16,290
Balanced – SAST Class 1 Shares(Inception Date – 6/5/97)
Beginning AUV . . . . . . . . . . . . . . (a)$15.017 (a)$16.398 (a)$17.023 (a)$12.425 (a)$15.179 (a)$16.719 (a)$16.841 (a)$18.765 (a)$22.083 (a)$24.239(b)$14.834 (b)$16.158 (b)$16.733 (b)$12.183 (b)$14.845 (b)$16.311 (b)$16.389 (b)$18.215 (b)$21.383 (b)$23.412
Ending AUV. . . . . . . . . . . . . . . . (a)$16.398 (a)$17.023 (a)$12.425 (a)$15.179 (a)$16.719 (a)$16.841 (a)$18.765 (a)$22.083 (a)$24.239 (a)$23.881(b)$16.158 (b)$16.733 (b)$12.183 (b)$14.845 (b)$16.311 (b)$16.389 (b)$18.215 (b)$21.383 (b)$23.412 (b)$23.008
Ending Number of AUs . . . . . . . . . . (a)5,968,190 (a)4,516,745 (a)3,349,532 (a)2,786,094 (a)2,434,890 (a)2,010,612 (a)1,718,596 (a)1,587,205 (a)1,428,905 (a)1,306,823(b)74,947 (b)63,354 (b)45,783 (b)46,000 (b)38,593 (b)34,842 (b)21,581 (b)18,626 (b)19,177 (b)22,986
Blue Chip Growth – SAST Class 1 Shares(Inception Date – 7/10/00)
Beginning AUV . . . . . . . . . . . . . . (a)$6.056 (a)$6.357 (a)$7.142 (a)$4.290 (a)$5.782 (a)$6.408 (a)$5.958 (a)$6.548 (a)$8.640 (a)$9.524(b)$5.980 (b)$6.261 (b)$7.017 (b)$4.205 (b)$5.653 (b)$6.248 (b)$5.796 (b)$6.353 (b)$8.363 (b)$9.195
Ending AUV. . . . . . . . . . . . . . . . (a)$6.357 (a)$7.142 (a)$4.290 (a)$5.782 (a)$6.408 (a)$5.958 (a)$6.548 (a)$8.640 (a)$9.524 (a)$9.792(b)$6.261 (b)$7.017 (b)$4.205 (b)$5.653 (b)$6.248 (b)$5.796 (b)$6.353 (b)$8.363 (b)$9.195 (b)$9.430
Ending Number of AUs . . . . . . . . . . (a)1,928,960 (a)1,610,755 (a)1,129,365 (a)1,093,199 (a)792,106 (a)1,034,715 (a)710,036 (a)558,663 (a)555,931 (a)497,727(b)131,289 (b)127,468 (b)85,048 (b)86,554 (b)56,189 (b)50,416 (b)45,867 (b)35,815 (b)32,254 (b)20,755
AUV - Accumulation Unit ValueAU - Accumulation Unit(a) Reflecting minimum Separate Account expenses.(b) Reflecting maximum Separate Account expenses with election of the optional EstatePlus feature.
A-1
Portfolios
Fiscal YearEnded
12/31/06
Fiscal YearEnded
12/31/07
Fiscal YearEnded
12/31/08
Fiscal YearEnded
12/31/09
Fiscal YearEnded
12/31/10
Fiscal YearEnded
12/31/11
Fiscal YearEnded
12/31/12
Fiscal YearEnded
12/31/13
Fiscal YearEnded
12/31/14
Fiscal YearEnded
12/31/15
Capital Appreciation – AST Class 1 Shares(Inception Date – 6/3/97)
Beginning AUV . . . . . . . . . . . . . . (a)$39.703 (a)$43.571 (a)$54.805 (a)$32.197 (a)$43.370 (a)$52.425 (a)$47.995 (a)$58.566 (a)$78.348 (a)$88.928(b)$39.206 (b)$42.917 (b)$53.849 (b)$31.556 (b)$42.400 (b)$51.125 (b)$46.688 (b)$56.829 (b)$75.835 (b)$85.860
Ending AUV. . . . . . . . . . . . . . . . (a)$43.571 (a)$54.805 (a)$32.197 (a)$43.370 (a)$52.425 (a)$47.995 (a)$58.566 (a)$78.348 (a)$88.928 (a)$95.234(b)$42.917 (b)$53.849 (b)$31.556 (b)$42.400 (b)$51.125 (b)$46.688 (b)$56.829 (b)$75.835 (b)$85.860 (b)$91.719
Ending Number of AUs . . . . . . . . . . (a)9,051,900 (a)7,059,517 (a)5,327,234 (a)4,329,110 (a)3,667,068 (a)3,069,869 (a)2,559,119 (a)2,139,108 (a)1,853,937 (a)1,617,140(b)320,014 (b)286,653 (b)211,147 (b)177,413 (b)171,747 (b)149,934 (b)136,586 (b)95,871 (b)86,895 (b)73,230
Capital Growth – SAST Class 1 Shares(Inception Date – 7/5/00)
Beginning AUV . . . . . . . . . . . . . . (a)$7.117 (a)$8.177 (a)$9.145 (a)$4.939 (a)$6.981 (a)$7.510 (a)$7.299 (a)$8.190 (a)$10.428 (a)$11.153(b)$7.027 (b)$8.054 (b)$8.985 (b)$4.841 (b)$6.824 (b)$7.323 (b)$7.100 (b)$7.947 (b)$10.092 (b)$10.767
Ending AUV. . . . . . . . . . . . . . . . (a)$8.177 (a)$9.145 (a)$4.939 (a)$6.981 (a)$7.510 (a)$7.299 (a)$8.190 (a)$10.428 (a)$11.153 (a)$11.597(b)$8.054 (b)$8.985 (b)$4.841 (b)$6.824 (b)$7.323 (b)$7.100 (b)$7.947 (b)$10.092 (b)$10.767 (b)$11.168
Ending Number of AUs . . . . . . . . . . (a)1,385,753 (a)1,126,856 (a)837,441 (a)831,921 (a)665,886 (a)507,898 (a)440,410 (a)360,229 (a)308,409 (a)280,511(b)115,040 (b)109,679 (b)85,773 (b)72,768 (b)58,111 (b)56,498 (b)44,970 (b)30,927 (b)27,071 (b)25,736
Cash Management* – SAST Class 1 Shares(Inception Date – 6/5/97)
Beginning AUV . . . . . . . . . . . . . . (a)$12.997 (a)$13.394 (a)$13.787 (a)$13.740 (a)$13.539 (a)$13.303 (a)$13.066 (a)$12.838 (a)$12.612 (a)$12.387(b)$12.838 (b)$13.197 (b)$13.550 (b)$13.470 (b)$13.240 (b)$12.977 (b)$12.714 (b)$12.460 (b)$12.210 (b)$11.962
Ending AUV. . . . . . . . . . . . . . . . (a)$13.394 (a)$13.787 (a)$13.740 (a)$13.539 (a)$13.303 (a)$13.066 (a)$12.838 (a)$12.612 (a)$12.387 (a)$12.174(b)$13.197 (b)$13.550 (b)$13.470 (b)$13.240 (b)$12.977 (b)$12.714 (b)$12.460 (b)$12.210 (b)$11.962 (b)$11.728
Ending Number of AUs . . . . . . . . . . (a)6,703,826 (a)8,010,993 (a)9,356,176 (a)5,757,268 (a)4,608,185 (a)3,353,681 (a)2,554,602 (a)2,327,100 (a)2,148,703 (a)1,853,581(b)158,105 (b)227,039 (b)273,162 (b)139,013 (b)132,926 (b)98,384 (b)105,859 (b)95,623 (b)94,687 (b)50,563
Corporate Bond – SAST Class 1 Shares(Inception Date – 6/9/97)
Beginning AUV . . . . . . . . . . . . . . (a)$17.217 (a)$17.951 (a)$18.648 (a)$16.938 (a)$21.850 (a)$23.881 (a)$25.029 (a)$27.465 (a)$27.430 (a)$28.584(b)$16.997 (b)$17.677 (b)$18.318 (b)$16.597 (b)$21.356 (b)$23.283 (b)$24.341 (b)$26.643 (b)$26.543 (b)$27.591
Ending AUV. . . . . . . . . . . . . . . . (a)$17.951 (a)$18.648 (a)$16.938 (a)$21.850 (a)$23.881 (a)$25.029 (a)$27.465 (a)$27.430 (a)$28.584 (a)$27.809(b)$17.677 (b)$18.318 (b)$16.597 (b)$21.356 (b)$23.283 (b)$24.341 (b)$26.643 (b)$26.543 (b)$27.591 (b)$26.776
Ending Number of AUs . . . . . . . . . . (a)6,479,223 (a)5,806,328 (a)4,582,366 (a)4,215,913 (a)3,489,293 (a)2,880,351 (a)2,496,111 (a)2,019,815 (a)1,650,264 (a)1,431,807(b)278,795 (b)272,314 (b)202,481 (b)189,931 (b)163,530 (b)123,745 (b)113,291 (b)104,135 (b)89,651 (b)80,936
“Dogs” of Wall Street – SAST Class 1 Shares(Inception Date – 4/1/98)
Beginning AUV . . . . . . . . . . . . . . (a)$10.906 (a)$13.067 (a)$12.621 (a)$9.125 (a)$10.799 (a)$12.415 (a)$13.779 (a)$15.447 (a)$20.786 (a)$22.675(b)$10.771 (b)$12.873 (b)$12.403 (b)$8.944 (b)$10.558 (b)$12.109 (b)$13.406 (b)$14.990 (b)$20.122 (b)$21.895
Ending AUV. . . . . . . . . . . . . . . . (a)$13.067 (a)$12.621 (a)$9.125 (a)$10.799 (a)$12.415 (a)$13.779 (a)$15.447 (a)$20.786 (a)$22.675 (a)$22.794(b)$12.873 (b)$12.403 (b)$8.944 (b)$10.558 (b)$12.109 (b)$13.406 (b)$14.990 (b)$20.122 (b)$21.895 (b)$21.955
Ending Number of AUs . . . . . . . . . . (a)3,418,157 (a)2,396,535 (a)1,852,095 (a)1,415,060 (a)1,314,393 (a)1,205,382 (a)1,092,015 (a)1,015,491 (a)857,323 (a)778,953(b)82,478 (b)63,912 (b)52,422 (b)43,472 (b)48,627 (b)46,014 (b)36,137 (b)27,321 (b)28,845 (b)25,092
Emerging Markets – SAST Class 1 Shares(Inception Date – 6/5/97)
Beginning AUV . . . . . . . . . . . . . . (a)$14.894 (a)$19.234 (a)$26.784 (a)$11.444 (a)$19.913 (a)$23.244 (a)$16.921 (a)$19.790 (a)$18.832 (a)$17.456(b)$14.714 (b)$18.954 (b)$26.329 (b)$11.222 (b)$19.477 (b)$22.678 (b)$16.468 (b)$19.212 (b)$18.237 (b)$16.862
Ending AUV. . . . . . . . . . . . . . . . (a)$19.234 (a)$26.784 (a)$11.444 (a)$19.913 (a)$23.244 (a)$16.921 (a)$19.790 (a)$18.832 (a)$17.456 (a)$14.738(b)$18.954 (b)$26.329 (b)$11.222 (b)$19.477 (b)$22.678 (b)$16.468 (b)$19.212 (b)$18.237 (b)$16.862 (b)$14.201
Ending Number of AUs . . . . . . . . . . (a)5,102,242 (a)4,177,375 (a)2,819,671 (a)2,667,144 (a)2,300,683 (a)1,822,182 (a)1,511,536 (a)1,256,774 (a)1,075,345 (a)948,717(b)109,797 (b)97,331 (b)52,073 (b)49,967 (b)44,024 (b)39,249 (b)32,368 (b)32,947 (b)26,344 (b)27,606
Equity Opportunities – SAST Class 1 Shares(Inception Date – 6/4/97)
Beginning AUV . . . . . . . . . . . . . . (a)$18.148 (a)$20.859 (a)$20.567 (a)$12.463 (a)$16.215 (a)$18.699 (a)$18.398 (a)$21.173 (a)$27.366 (a)$29.768(b)$17.917 (b)$20.543 (b)$20.204 (b)$12.213 (b)$15.850 (b)$18.232 (b)$17.894 (b)$20.541 (b)$26.484 (b)$28.736
Ending AUV. . . . . . . . . . . . . . . . (a)$20.859 (a)$20.567 (a)$12.463 (a)$16.215 (a)$18.699 (a)$18.398 (a)$21.173 (a)$27.366 (a)$29.768 (a)$30.199(b)$20.543 (b)$20.204 (b)$12.213 (b)$15.850 (b)$18.232 (b)$17.894 (b)$20.541 (b)$26.484 (b)$28.736 (b)$29.079
Ending Number of AUs . . . . . . . . . . (a)3,467,877 (a)2,531,973 (a)1,880,033 (a)1,507,623 (a)1,242,968 (a)993,331 (a)863,911 (a)743,070 (a)634,236 (a)557,876(b)131,746 (b)118,485 (b)94,498 (b)79,663 (b)66,127 (b)56,612 (b)51,647 (b)42,516 (b)41,760 (b)35,410
Foreign Value – SAST Class 3 Shares(Inception Date – 8/11/03)**
Beginning AUV . . . . . . . . . . . . . . (a)$15.918 (a)$19.918 (a)$22.377 (a)$12.999 (a)$16.636 (a)$16.865 (a)$14.641 (a)$17.202 (a)$20.854 (a)$19.108(b)$15.770 (b)$19.684 (b)$22.059 (b)$12.782 (b)$16.317 (b)$16.501 (b)$14.290 (b)$16.747 (b)$20.252 (b)$18.509
Ending AUV. . . . . . . . . . . . . . . . (a)$19.918 (a)$22.377 (a)$12.999 (a)$16.636 (a)$16.865 (a)$14.641 (a)$17.202 (a)$20.854 (a)$19.108 (a)$17.901(b)$19.684 (b)$22.059 (b)$12.782 (b)$16.317 (b)$16.501 (b)$14.290 (b)$16.747 (b)$20.252 (b)$18.509 (b)$17.297
Ending Number of AUs . . . . . . . . . . (a)2,618,789 (a)2,577,869 (a)1,994,623 (a)1,637,025 (a)1,390,358 (a)1,190,604 (a)1,013,129 (a)942,773 (a)912,083 (a)860,750(b)89,847 (b)104,537 (b)76,417 (b)59,044 (b)49,985 (b)40,339 (b)36,521 (b)34,905 (b)29,294 (b)28,151
AUV - Accumulation Unit ValueAU - Accumulation Unit(a) Reflecting minimum Separate Account expenses.(b) Reflecting maximum Separate Account expenses with election of the optional EstatePlus feature.
* On May 2, 2016, the Cash Management Portfolio changed to the Ultra Short Bond Portfolio.** Class 3 shares of SunAmerica Series Trust, which are subject to a 0.25% 12b-1 fee.
A-2
Portfolios
Fiscal YearEnded
12/31/06
Fiscal YearEnded
12/31/07
Fiscal YearEnded
12/31/08
Fiscal YearEnded
12/31/09
Fiscal YearEnded
12/31/10
Fiscal YearEnded
12/31/11
Fiscal YearEnded
12/31/12
Fiscal YearEnded
12/31/13
Fiscal YearEnded
12/31/14
Fiscal YearEnded
12/31/15
Fundamental Growth – SAST Class 1 Shares(Inception Date – 6/3/97)
Beginning AUV . . . . . . . . . . . . . . (a)$18.253 (a)$19.018 (a)$21.569 (a)$11.718 (a)$15.694 (a)$18.085 (a)$16.836 (a)$19.261 (a)$26.004 (a)$27.556(b)$18.028 (b)$18.736 (b)$21.196 (b)$11.487 (b)$15.345 (b)$17.640 (b)$16.381 (b)$18.693 (b)$25.174 (b)$26.610
Ending AUV. . . . . . . . . . . . . . . . (a)$19.018 (a)$21.569 (a)$11.718 (a)$15.694 (a)$18.085 (a)$16.836 (a)$19.261 (a)$26.004 (a)$27.556 (a)$27.555(b)$18.736 (b)$21.196 (b)$11.487 (b)$15.345 (b)$17.640 (b)$16.381 (b)$18.693 (b)$25.174 (b)$26.610 (b)$26.543
Ending Number of AUs . . . . . . . . . . (a)4,194,979 (a)3,076,179 (a)2,389,307 (a)1,981,033 (a)1,697,392 (a)1,437,757 (a)1,267,806 (a)1,100,628 (a)965,742 (a)840,379(b)80,135 (b)62,786 (b)50,285 (b)39,255 (b)32,090 (b)27,251 (b)25,582 (b)18,749 (b)16,824 (b)11,828
Global Bond – SAST Class 1 Shares(Inception Date – 6/11/97)
Beginning AUV . . . . . . . . . . . . . . (a)$17.601 (a)$18.006 (a)$19.753 (a)$20.557 (a)$21.765 (a)$22.783 (a)$23.730 (a)$24.279 (a)$23.067 (a)$22.642(b)$17.383 (b)$17.738 (b)$19.411 (b)$20.150 (b)$21.281 (b)$22.220 (b)$23.086 (b)$23.561 (b)$22.329 (b)$21.863
Ending AUV. . . . . . . . . . . . . . . . (a)$18.006 (a)$19.753 (a)$20.557 (a)$21.765 (a)$22.783 (a)$23.730 (a)$24.279 (a)$23.067 (a)$22.642 (a)$21.660(b)$17.738 (b)$19.411 (b)$20.150 (b)$21.281 (b)$22.220 (b)$23.086 (b)$23.561 (b)$22.329 (b)$21.863 (b)$20.863
Ending Number of AUs . . . . . . . . . . (a)2,206,262 (a)2,332,343 (a)1,968,034 (a)1,696,322 (a)1,429,614 (a)1,236,123 (a)1,042,112 (a)862,839 (a)769,979 (a)661,042(b)103,492 (b)118,522 (b)102,647 (b)97,675 (b)53,776 (b)43,289 (b)34,427 (b)27,835 (b)24,841 (b)24,598
Global Equities – SAST Class 1 Shares(Inception Date – 6/3/97)
Beginning AUV . . . . . . . . . . . . . . (a)$19.712 (a)$24.050 (a)$26.498 (a)$14.774 (a)$18.829 (a)$21.204 (a)$18.715 (a)$21.545 (a)$26.781 (a)$27.483(b)$19.465 (b)$23.689 (b)$26.036 (b)$14.480 (b)$18.408 (b)$20.678 (b)$18.205 (b)$20.906 (b)$25.921 (b)$26.534
Ending AUV. . . . . . . . . . . . . . . . (a)$24.050 (a)$26.498 (a)$14.774 (a)$18.829 (a)$21.204 (a)$18.715 (a)$21.545 (a)$26.781 (a)$27.483 (a)$26.736(b)$23.689 (b)$26.036 (b)$14.480 (b)$18.408 (b)$20.678 (b)$18.205 (b)$20.906 (b)$25.921 (b)$26.534 (b)$25.749
Ending Number of AUs . . . . . . . . . . (a)3,629,967 (a)2,843,723 (a)2,031,575 (a)1,655,569 (a)1,368,042 (a)1,184,001 (a)1,015,016 (a)879,023 (a)772,746 (a)675,815(b)60,435 (b)56,396 (b)39,105 (b)31,795 (b)27,696 (b)24,157 (b)19,530 (b)20,346 (b)20,406 (b)19,344
Government and Quality Bond – AST Class 1 Shares(Inception Date – 6/11/97)
Beginning AUV . . . . . . . . . . . . . . (a)$17.157 (a)$17.456 (a)$18.274 (a)$18.779 (a)$19.284 (a)$19.940 (a)$21.032 (a)$21.500 (a)$20.734 (a)$21.476(b)$16.946 (b)$17.198 (b)$17.959 (b)$18.409 (b)$18.857 (b)$19.450 (b)$20.463 (b)$20.866 (b)$20.073 (b)$20.739
Ending AUV. . . . . . . . . . . . . . . . (a)$17.456 (a)$18.274 (a)$18.779 (a)$19.284 (a)$19.940 (a)$21.032 (a)$21.500 (a)$20.734 (a)$21.476 (a)$21.266(b)$17.198 (b)$17.959 (b)$18.409 (b)$18.857 (b)$19.450 (b)$20.463 (b)$20.866 (b)$20.073 (b)$20.739 (b)$20.485
Ending Number of AUs . . . . . . . . . . (a)10,317,622 (a)8,901,950 (a)7,951,600 (a)6,258,446 (a)5,095,299 (a)4,124,674 (a)3,488,270 (a)2,856,906 (a)2,410,141 (a)2,070,842(b)380,456 (b)355,855 (b)304,369 (b)268,647 (b)200,453 (b)156,924 (b)147,629 (b)123,926 (b)109,428 (b)97,509
Growth – AST Class 1 Shares(Inception Date – 6/3/97)
Beginning AUV . . . . . . . . . . . . . . (a)$30.747 (a)$34.307 (a)$37.234 (a)$21.849 (a)$29.782 (a)$33.482 (a)$30.915 (a)$34.700 (a)$46.201 (a)$48.894(b)$30.369 (b)$33.800 (b)$36.593 (b)$21.419 (b)$29.123 (b)$32.659 (b)$30.080 (b)$33.679 (b)$44.730 (b)$47.219
Ending AUV. . . . . . . . . . . . . . . . (a)$34.307 (a)$37.234 (a)$21.849 (a)$29.782 (a)$33.482 (a)$30.915 (a)$34.700 (a)$46.201 (a)$48.894 (a)$48.230(b)$33.800 (b)$36.593 (b)$21.419 (b)$29.123 (b)$32.659 (b)$30.080 (b)$33.679 (b)$44.730 (b)$47.219 (b)$46.461
Ending Number of AUs . . . . . . . . . . (a)5,373,478 (a)4,169,241 (a)3,078,846 (a)2,473,417 (a)2,033,900 (a)1,655,308 (a)1,375,481 (a)1,165,966 (a)954,687 (a)815,249(b)176,297 (b)156,790 (b)102,945 (b)83,931 (b)64,910 (b)55,814 (b)49,679 (b)45,668 (b)39,940 (b)35,774
Growth-Income – SAST Class 1 Shares(Inception Date – 6/3/97)
Beginning AUV . . . . . . . . . . . . . . (a)$29.924 (a)$31.663 (a)$34.653 (a)$19.486 (a)$24.600 (a)$27.015 (a)$28.827 (a)$32.294 (a)$41.909 (a)$47.100(b)$29.557 (b)$31.195 (b)$34.056 (b)$19.102 (b)$24.055 (b)$26.352 (b)$28.049 (b)$31.343 (b)$40.574 (b)$45.486
Ending AUV. . . . . . . . . . . . . . . . (a)$31.663 (a)$34.653 (a)$19.486 (a)$24.600 (a)$27.015 (a)$28.827 (a)$32.294 (a)$41.909 (a)$47.100 (a)$45.380(b)$31.195 (b)$34.056 (b)$19.102 (b)$24.055 (b)$26.352 (b)$28.049 (b)$31.343 (b)$40.574 (b)$45.486 (b)$43.716
Ending Number of AUs . . . . . . . . . . (a)7,934,876 (a)5,766,168 (a)4,309,550 (a)3,519,499 (a)2,953,002 (a)2,528,008 (a)2,141,478 (a)1,830,624 (a)1,561,369 (a)1,369,174(b)196,416 (b)157,549 (b)106,029 (b)91,696 (b)69,345 (b)59,667 (b)47,612 (b)46,136 (b)42,258 (b)31,467
Growth Opportunities – SAST Class 1 Shares(Inception Date – 7/6/00)
Beginning AUV . . . . . . . . . . . . . . (a)$5.074 (a)$5.670 (a)$6.789 (a)$4.287 (a)$4.994 (a)$6.115 (a)$5.880 (a)$6.808 (a)$9.241 (a)$9.441(b)$5.016 (b)$5.590 (b)$6.677 (b)$4.206 (b)$4.887 (b)$5.969 (b)$5.725 (b)$6.613 (b)$8.953 (b)$9.124
Ending AUV. . . . . . . . . . . . . . . . (a)$5.670 (a)$6.789 (a)$4.287 (a)$4.994 (a)$6.115 (a)$5.880 (a)$6.808 (a)$9.241 (a)$9.441 (a)$9.237(b)$5.590 (b)$6.677 (b)$4.206 (b)$4.887 (b)$5.969 (b)$5.725 (b)$6.613 (b)$8.953 (b)$9.124 (b)$8.904
Ending Number of AUs . . . . . . . . . . (a)2,702,054 (a)2,141,492 (a)1,609,670 (a)1,446,073 (a)1,276,639 (a)1,215,038 (a)935,873 (a)762,780 (a)595,775 (a)566,942(b)144,748 (b)122,823 (b)92,645 (b)64,276 (b)61,919 (b)54,975 (b)40,427 (b)36,409 (b)35,756 (b)30,715
High-Yield Bond – SAST Class 1 Shares(Inception Date – 6/9/97)
Beginning AUV . . . . . . . . . . . . . . (a)$18.658 (a)$21.072 (a)$21.041 (a)$14.060 (a)$19.667 (a)$22.199 (a)$22.799 (a)$26.269 (a)$27.920 (a)$27.732(b)$18.450 (b)$20.785 (b)$20.702 (b)$13.799 (b)$19.254 (b)$21.678 (b)$22.209 (b)$25.526 (b)$27.062 (b)$26.812
Ending AUV. . . . . . . . . . . . . . . . (a)$21.072 (a)$21.041 (a)$14.060 (a)$19.667 (a)$22.199 (a)$22.799 (a)$26.269 (a)$27.920 (a)$27.732 (a)$26.140(b)$20.785 (b)$20.702 (b)$13.799 (b)$19.254 (b)$21.678 (b)$22.209 (b)$25.526 (b)$27.062 (b)$26.812 (b)$25.211
Ending Number of AUs . . . . . . . . . . (a)5,549,798 (a)3,958,927 (a)3,007,630 (a)2,986,678 (a)2,523,585 (a)1,878,431 (a)1,647,261 (a)1,361,528 (a)1,105,450 (a)931,690(b)155,586 (b)135,608 (b)113,112 (b)107,221 (b)82,747 (b)62,257 (b)55,881 (b)48,371 (b)38,434 (b)34,903
International Diversified Equities – SAST Class 1 Shares(Inception Date – 6/4/97)
Beginning AUV . . . . . . . . . . . . . . (a)$11.975 (a)$14.561 (a)$16.543 (a)$9.863 (a)$12.546 (a)$13.406 (a)$11.275 (a)$13.031 (a)$15.483 (a)$13.960(b)$11.828 (b)$14.347 (b)$16.258 (b)$9.669 (b)$12.268 (b)$13.077 (b)$10.971 (b)$12.648 (b)$14.990 (b)$13.482
Ending AUV. . . . . . . . . . . . . . . . (a)$14.561 (a)$16.543 (a)$9.863 (a)$12.546 (a)$13.406 (a)$11.275 (a)$13.031 (a)$15.483 (a)$13.960 (a)$13.786(b)$14.347 (b)$16.258 (b)$9.669 (b)$12.268 (b)$13.077 (b)$10.971 (b)$12.648 (b)$14.990 (b)$13.482 (b)$13.281
Ending Number of AUs . . . . . . . . . . (a)5,857,269 (a)4,758,533 (a)3,633,037 (a)2,794,513 (a)2,306,293 (a)1,952,732 (a)1,644,720 (a)1,448,376 (a)1,299,742 (a)1,196,892(b)135,671 (b)123,868 (b)102,250 (a)80,233 (b)63,755 (b)50,013 (b)38,232 (b)36,109 (b)47,041 (b)43,682
AUV - Accumulation Unit ValueAU - Accumulation Unit(a) Reflecting minimum Separate Account expenses.(b) Reflecting maximum Separate Account expenses with election of the optional EstatePlus feature.
A-3
Portfolios
Fiscal YearEnded
12/31/06
Fiscal YearEnded
12/31/07
Fiscal YearEnded
12/31/08
Fiscal YearEnded
12/31/09
Fiscal YearEnded
12/31/10
Fiscal YearEnded
12/31/11
Fiscal YearEnded
12/31/12
Fiscal YearEnded
12/31/13
Fiscal YearEnded
12/31/14
Fiscal YearEnded
12/31/15
International Growth and Income – SAST Class 1 Shares(Inception Date – 6/4/97)
Beginning AUV . . . . . . . . . . . . . . (a)$15.119 (a)$18.918 (a)$19.968 (a)$10.638 (a)$13.386 (a)$14.119 (a)$11.988 (a)$14.320 (a)$17.214 (a)$15.351(b)$14.926 (b)$18.630 (b)$19.615 (b)$10.424 (b)$13.083 (b)$13.766 (b)$11.659 (b)$13.892 (b)$16.657 (b)$14.818
Ending AUV. . . . . . . . . . . . . . . . (a)$18.918 (a)$19.968 (a)$10.638 (a)$13.386 (a)$14.119 (a)$11.988 (a)$14.320 (a)$17.214 (a)$15.351 (a)$14.877(b)$18.630 (b)$19.615 (b)$10.424 (b)$13.083 (b)$13.766 (b)$11.659 (b)$13.892 (b)$16.657 (b)$14.818 (b)$14.325
Ending Number of AUs . . . . . . . . . . (a)9,016,137 (a)7,177,111 (a)4,935,491 (a)3,905,433 (a)3,197,393 (a)2,646,481 (a)2,225,815 (a)1,975,099 (a)1,717,703 (a)1,493,682(b)250,303 (b)223,698 (b)168,853 (b)143,907 (b)138,753 (b)110,387 (b)94,815 (b)85,259 (b)75,291 (b)59,269
Invesco V.I. American Franchise Fund, Series II Shares(Inception Date – 10/15/01)
Beginning AUV . . . . . . . . . . . . . . (a)$9.602 (a)$9.705 (a)$11.150 (a)$5.588 (a)$9.117 (a)$10.736 (a)$9.898 (a)$11.055 (a)$15.222 (a)$16.217(b)$9.466 (b)$9.544 (b)$10.938 (b)$5.468 (b)$8.899 (b)$10.453 (b)$9.613 (b)$10.709 (b)$14.710 (b)$15.632
Ending AUV. . . . . . . . . . . . . . . . (a)$9.705 (a)$11.150 (a)$5.588 (a)$9.117 (a)$10.736 (a)$9.898 (a)$11.055 (a)$15.222 (a)$16.217 (a)$16.731(b)$9.544 (b)$10.938 (b)$5.468 (b)$8.899 (b)$10.453 (b)$9.613 (b)$10.709 (b)$14.710 (b)$15.632 (b)$16.087
Ending Number of AUs . . . . . . . . . . (a)723,802 (a)561,053 (a)466,691 (a)710,954 (a)467,275 (a)378,933 (a)289,109 (a)254,550 (a)229,628 (a)212,806(b)87,991 (b)78,472 (b)67,059 (b)58,929 (b)44,908 (b)40,145 (b)37,598 (b)29,967 (b)33,369 (b)23,706
Invesco V.I. Comstock Fund, Series II Shares(Inception Date – 10/15/01)
Beginning AUV . . . . . . . . . . . . . . (a)$12.371 (a)$14.139 (a)$13.601 (a)$8.600 (a)$10.877 (a)$12.394 (a)$11.949 (a)$13.996 (a)$18.701 (a)$20.095(b)$12.252 (b)$13.968 (b)$13.404 (b)$8.454 (b)$10.665 (b)$12.122 (b)$11.658 (b)$13.621 (b)$18.155 (b)$19.459
Ending AUV. . . . . . . . . . . . . . . . (a)$14.139 (a)$13.601 (a)$8.600 (a)$10.877 (a)$12.394 (a)$11.949 (a)$13.996 (a)$18.701 (a)$20.095 (a)$18.566(b)$13.968 (b)$13.404 (b)$8.454 (b)$10.665 (b)$12.122 (b)$11.658 (b)$13.621 (b)$18.155 (b)$19.459 (b)$17.934
Ending Number of AUs . . . . . . . . . . (a)9,842,057 (a)8,018,169 (a)6,084,221 (a)4,927,721 (a)4,114,051 (a)3,304,110 (a)2,690,724 (a)2,318,217 (a)1,948,680 (a)1,694,885(b)491,727 (b)459,227 (b)393,682 (b)329,381 (b)290,160 (b)243,140 (b)210,270 (b)177,375 (b)157,605 (b)147,894
Invesco V.I. Growth and Income Fund, Series II Shares(Inception Date – 10/15/01)
Beginning AUV . . . . . . . . . . . . . . (a)$13.529 (a)$15.454 (a)$15.605 (a)$10.419 (a)$12.736 (a)$14.073 (a)$13.547 (a)$15.256 (a)$20.102 (a)$21.772(b)$13.392 (b)$15.259 (b)$15.370 (b)$10.236 (b)$12.481 (b)$13.757 (b)$13.210 (b)$14.840 (b)$19.504 (b)$21.072
Ending AUV. . . . . . . . . . . . . . . . (a)$15.454 (a)$15.605 (a)$10.419 (a)$12.736 (a)$14.073 (a)$13.547 (a)$15.256 (a)$20.102 (a)$21.772 (a)$20.733(b)$15.259 (b)$15.370 (b)$10.236 (b)$12.481 (b)$13.757 (b)$13.210 (b)$14.840 (b)$19.504 (b)$21.072 (b)$20.016
Ending Number of AUs . . . . . . . . . . (a)7,392,655 (a)6,255,093 (a)4,659,922 (a)3,897,412 (a)3,253,934 (a)2,654,417 (a)2,190,069 (a)1,838,521 (a)1,557,797 (a)1,348,973(b)382,611 (b)353,339 (b)286,514 (b)230,417 (b)193,272 (b)156,160 (b)128,871 (b)105,020 (b)93,645 (b)81,843
Lord Abbett Growth and Income – LASF Class VC Shares(Inception Date – 5/1/02)
Beginning AUV . . . . . . . . . . . . . . (a)$11.911 (a)$13.758 (a)$14.016 (a)$8.777 (a)$10.278 (a)$11.885 (a)$10.994 (a)$12.137 (a)$16.246 (a)$17.226(b)$11.791 (b)$13.586 (b)$13.806 (b)$8.624 (b)$10.074 (b)$11.620 (b)$10.722 (b)$11.806 (b)$15.765 (b)$16.674
Ending AUV. . . . . . . . . . . . . . . . (a)$13.758 (a)$14.016 (a)$8.777 (a)$10.278 (a)$11.885 (a)$10.994 (a)$12.137 (a)$16.246 (a)$17.226 (a)$16.480(b)$13.586 (b)$13.806 (b)$8.624 (b)$10.074 (b)$11.620 (b)$10.722 (b)$11.806 (b)$15.765 (b)$16.674 (b)$15.912
Ending Number of AUs . . . . . . . . . . (a)7,039,698 (a)5,595,948 (a)4,240,866 (a)3,455,204 (a)2,955,373 (a)2,353,048 (a)1,879,112 (a)1,559,008 (a)1,319,255 (a)1,092,287(b)591,319 (b)369,241 (b)309,245 (b)263,854 (b)211,672 (b)170,264 (b)143,431 (b)125,675 (b)117,530 (b)113,468
Lord Abbett Mid Cap Stock – LASF Class VC Shares(Inception Date – 5/1/02)
Beginning AUV . . . . . . . . . . . . . . (a)$13.641 (a)$15.079 (a)$14.938 (a)$8.922 (a)$11.126 (a)$13.745 (a)$12.994 (a)$14.659 (a)$18.818 (a)$20.670(b)$13.514 (b)$14.902 (b)$14.726 (b)$8.773 (b)$10.914 (b)$13.448 (b)$12.682 (b)$14.272 (b)$18.274 (b)$20.023
Ending AUV. . . . . . . . . . . . . . . . (a)$15.079 (a)$14.938 (a)$8.922 (a)$11.126 (a)$13.745 (a)$12.994 (a)$14.659 (a)$18.818 (a)$20.670 (a)$19.587(b)$14.902 (b)$14.726 (b)$8.773 (b)$10.914 (b)$13.448 (b)$12.682 (b)$14.272 (b)$18.274 (b)$20.023 (b)$18.926
Ending Number of AUs . . . . . . . . . . (a)6,191,002 (a)4,942,307 (a)3,430,895 (a)2,653,324 (a)2,282,157 (a)1,849,361 (a)1,469,405 (a)1,214,256 (a)1,014,125 (a)882,819(b)334,550 (b)325,265 (b)232,371 (b)193,997 (b)159,779 (b)126,614 (b)115,351 (b)91,258 (b)71,544 (b)66,471
Mid-Cap Growth – SAST Class 1 Shares(Inception Date – 4/5/99)
Beginning AUV . . . . . . . . . . . . . . (a)$10.778 (a)$10.888 (a)$12.541 (a)$6.996 (a)$9.814 (a)$12.126 (a)$11.234 (a)$12.841 (a)$18.013 (a)$19.740(b)$10.643 (b)$10.725 (b)$12.323 (b)$6.857 (b)$9.594 (b)$11.825 (b)$10.929 (b)$12.461 (b)$17.436 (b)$19.060
Ending AUV. . . . . . . . . . . . . . . . (a)$10.888 (a)$12.541 (a)$6.996 (a)$9.814 (a)$12.126 (a)$11.234 (a)$12.841 (a)$18.013 (a)$19.740 (a)$20.023(b)$10.725 (b)$12.323 (b)$6.857 (b)$9.594 (b)$11.825 (b)$10.929 (b)$12.461 (b)$17.436 (b)$19.060 (b)$19.285
Ending Number of AUs . . . . . . . . . . (a)7,083,920 (a)5,245,424 (a)3,979,326 (a)3,369,696 (a)2,745,127 (a)2,243,721 (a)1,919,217 (a)1,621,435 (a)1,355,160 (a)1,205,347(b)482,909 (b)404,791 (b)270,281 (b)232,540 (b)243,843 (b)222,417 (b)197,436 (b)97,150 (b)84,206 (b)72,935
Natural Resources – AST Class 1 Shares(Inception Date – 6/4/97)
Beginning AUV . . . . . . . . . . . . . . (a)$39.440 (a)$48.529 (a)$67.013 (a)$33.134 (a)$51.584 (a)$59.037 (a)$46.364 (a)$47.271 (a)$49.260 (a)$39.526(b)$38.951 (b)$47.807 (b)$65.852 (b)$32.479 (b)$50.438 (b)$57.580 (b)$45.107 (b)$45.875 (b)$47.686 (b)$38.167
Ending AUV. . . . . . . . . . . . . . . . (a)$48.529 (a)$67.013 (a)$33.134 (a)$51.584 (a)$59.037 (a)$46.364 (a)$47.271 (a)$49.260 (a)$39.526 (a)$30.601(b)$47.807 (b)$65.852 (b)$32.479 (b)$50.438 (b)$57.580 (b)$45.107 (b)$45.875 (b)$47.686 (b)$38.167 (b)$29.475
Ending Number of AUs . . . . . . . . . . (a)2,578,703 (a)2,128,120 (a)1,451,926 (a)1,237,929 (a)994,268 (a)849,708 (a)676,610 (a)566,028 (a)491,072 (a)417,611(b)72,230 (b)67,125 (b)45,528 (b)42,997 (b)34,461 (b)29,980 (b)23,475 (b)19,384 (b)17,048 (b)16,099
Real Estate – SAST Class 1 Shares(Inception Date – 6/4/97)
Beginning AUV . . . . . . . . . . . . . . (a)$23.839 (a)$31.578 (a)$26.640 (a)$14.721 (a)$18.818 (a)$22.221 (a)$23.670 (a)$27.330 (a)$26.357 (a)$33.689(b)$23.540 (b)$31.103 (b)$26.174 (b)$14.427 (b)$18.397 (b)$21.670 (b)$23.025 (b)$26.519 (b)$25.510 (b)$32.525
Ending AUV. . . . . . . . . . . . . . . . (a)$31.578 (a)$26.640 (a)$14.721 (a)$18.818 (a)$22.221 (a)$23.670 (a)$27.330 (a)$26.357 (a)$33.689 (a)$33.786(b)$31.103 (b)$26.174 (b)$14.427 (b)$18.397 (b)$21.670 (b)$23.025 (b)$26.519 (b)$25.510 (b)$32.525 (b)$32.538
Ending Number of AUs . . . . . . . . . . (a)3,520,907 (a)2,320,753 (a)1,697,283 (a)1,311,337 (a)1,144,274 (a)984,953 (a)914,168 (a)778,803 (a)696,197 (a)619,984(b)79,423 (b)53,323 (b)43,728 (b)33,564 (b)29,331 (b)20,242 (b)17,746 (b)16,741 (b)15,432 (b)14,561
AUV - Accumulation Unit ValueAU - Accumulation Unit(a) Reflecting minimum Separate Account expenses.(b) Reflecting maximum Separate Account expenses with election of the optional EstatePlus feature.
A-4
Portfolios
Fiscal YearEnded
12/31/06
Fiscal YearEnded
12/31/07
Fiscal YearEnded
12/31/08
Fiscal YearEnded
12/31/09
Fiscal YearEnded
12/31/10
Fiscal YearEnded
12/31/11
Fiscal YearEnded
12/31/12
Fiscal YearEnded
12/31/13
Fiscal YearEnded
12/31/14
Fiscal YearEnded
12/31/15
Real Return – SST Class 3 Shares(Inception Date – 4/30/12)
Beginning AUV . . . . . . . . . . . . . . (a)N/A (a)N/A (a)N/A (a)N/A (a)N/A (a)N/A (a)$12.040 (a)$12.166 (a)$11.355 (a)$11.367(b)N/A (b)N/A (b)N/A (b)N/A (b)N/A (b)N/A (b)$11.975 (b)$12.080 (b)$11.247 (b)$11.230
Ending AUV. . . . . . . . . . . . . . . . (a)N/A (a)N/A (a)N/A (a)N/A (a)N/A (a)N/A (a)$12.166 (a)$11.355 (a)$11.367 (a)$11.044(b)N/A (b)N/A (b)N/A (b)N/A (b)N/A (b)N/A (b)$12.080 (b)$11.247 (b)$11.230 (b)$10.883
Ending Number of AUs . . . . . . . . . . (a)N/A (a)N/A (a)N/A (a)N/A (a)N/A (a)N/A (a)44,037 (a)88,867 (a)124,008 (a)123,740(b)N/A (b)N/A (b)N/A (b)N/A (b)N/A (b)N/A (b)2,085 (b)3,124 (b)3,016 (b)6,471
SA AB Growth – SAST Class 1 Shares(Inception Date – 6/2/97)
Beginning AUV . . . . . . . . . . . . . . (a)$33.404 (a)$33.154 (a)$37.424 (a)$21.843 (a)$30.342 (a)$32.944 (a)$31.701 (a)$36.404 (a)$49.282 (a)$55.414(b)$32.991 (b)$32.663 (b)$36.777 (b)$21.412 (b)$29.669 (b)$32.132 (b)$30.842 (b)$35.330 (b)$47.709 (b)$53.511
Ending AUV. . . . . . . . . . . . . . . . (a)$33.154 (a)$37.424 (a)$21.843 (a)$30.342 (a)$32.944 (a)$31.701 (a)$36.404 (a)$49.282 (a)$55.414 (a)$60.724(b)$32.663 (b)$36.777 (b)$21.412 (b)$29.669 (b)$32.132 (b)$30.842 (b)$35.330 (b)$47.709 (b)$53.511 (b)$58.492
Ending Number of AUs . . . . . . . . . . (a)10,235,622 (a)7,407,003 (a)5,596,463 (a)4,495,276 (a)3,769,942 (a)3,187,476 (a)2,742,461 (a)2,296,708 (a)1,994,656 (a)1,732,354(b)183,981 (b)149,503 (b)110,672 (b)94,069 (b)70,800 (b)61,287 (b)51,200 (b)47,267 (b)42,882 (b)37,024
SA JPMorgan MFS Core Bond – SAST Class 1 Shares(Inception Date – 6/5/97)
Beginning AUV . . . . . . . . . . . . . . (a)$19.822 (a)$21.404 (a)$22.251 (a)$23.027 (a)$25.309 (a)$26.507 (a)$27.770 (a)$29.340 (a)$27.861 (a)$28.761(b)$19.614 (b)$21.128 (b)$21.909 (b)$22.616 (b)$24.794 (b)$25.904 (b)$27.070 (b)$28.530 (b)$27.024 (b)$27.827
Ending AUV. . . . . . . . . . . . . . . . (a)$21.404 (a)$22.251 (a)$23.027 (a)$25.309 (a)$26.507 (a)$27.770 (a)$29.340 (a)$27.861 (a)$28.761 (a)$28.294(b)$21.128 (b)$21.909 (b)$22.616 (b)$24.794 (b)$25.904 (b)$27.070 (b)$28.530 (b)$27.024 (b)$27.827 (b)$27.307
Ending Number of AUs . . . . . . . . . . (a)1,510,105 (a)1,208,608 (a)1,240,581 (a)1,682,150 (a)1,740,549 (a)1,611,886 (a)1,538,096 (a)1,218,369 (a)1,035,607 (a)905,913(b)26,992 (b)25,974 (b)17,887 (b)35,334 (b)36,659 (b)44,311 (b)52,899 (b)47,485 (b)38,366 (b)37,075
SA Legg Mason BM Large Cap Value*** – SAST Class 1 Shares(Inception Date – 6/2/97)
Beginning AUV . . . . . . . . . . . . . . (a)$34.369 (a)$39.032 (a)$40.618 (a)$24.739 (a)$32.530 (a)$35.942 (a)$33.903 (a)$37.636 (a)$49.555 (a)$52.096(b)$33.939 (b)$38.448 (b)$39.910 (b)$24.247 (b)$31.804 (b)$35.052 (b)$32.980 (b)$36.520 (b)$47.966 (b)$50.300
Ending AUV. . . . . . . . . . . . . . . . (a)$39.032 (a)$40.618 (a)$24.739 (a)$32.530 (a)$35.942 (a)$33.903 (a)$37.636 (a)$49.555 (a)$52.096 (a)$51.984(b)$38.448 (b)$39.910 (b)$24.247 (b)$31.804 (b)$35.052 (b)$32.980 (b)$36.520 (b)$47.966 (b)$50.300 (b)$50.066
Ending Number of AUs . . . . . . . . . . (a)21,551,983 (a)16,708,780 (a)12,509,711 (a)10,122,293 (a)8,430,928 (a)6,925,429 (a)5,837,630 (a)4,961,588 (a)4,269,390 (a)3,681,971(b)665,116 (b)648,516 (b)500,635 (b)427,333 (b)293,423 (b)238,514 (b)201,071 (b)182,395 (b)163,253 (b)129,987
SA Marsico Focused Growth – SAST Class 1 Shares(Inception Date – 12/29/00)
Beginning AUV . . . . . . . . . . . . . . (a)$11.413 (a)$12.206 (a)$13.663 (a)$7.964 (a)$10.252 (a)$11.855 (a)$11.508 (a)$12.610 (a)$16.730 (a)$18.328(b)$11.268 (b)$12.021 (b)$13.423 (b)$7.804 (b)$10.021 (b)$11.559 (b)$11.193 (b)$12.234 (b)$16.191 (b)$17.694
Ending AUV. . . . . . . . . . . . . . . . (a)$12.206 (a)$13.663 (a)$7.964 (a)$10.252 (a)$11.855 (a)$11.508 (a)$12.610 (a)$16.730 (a)$18.328 (a)$18.100(b)$12.021 (b)$13.423 (b)$7.804 (b)$10.021 (b)$11.559 (b)$11.193 (b)$12.234 (b)$16.191 (b)$17.694 (b)$17.430
Ending Number of AUs . . . . . . . . . . (a)4,532,761 (a)3,251,304 (a)2,359,841 (a)1,655,121 (a)1,326,403 (a)1,079,220 (a)961,733 (a)912,354 (a)739,805 (a)638,893(b)365,702 (b)325,864 (b)212,942 (b)167,436 (b)135,016 (b)104,636 (b)99,587 (b)78,582 (b)68,504 (b)34,485
SA MFS Massachusetts Investors Trust – SAST Class 1 Shares(Inception Date – 6/4/97)
Beginning AUV . . . . . . . . . . . . . . (a)$21.074 (a)$23.492 (a)$25.584 (a)$17.024 (a)$21.251 (a)$23.272 (a)$22.483 (a)$26.384 (a)$34.256 (a)$37.408(b)$20.816 (b)$23.147 (b)$25.145 (b)$16.690 (b)$20.782 (b)$22.701 (b)$21.877 (b)$25.609 (b)$33.167 (b)$36.129
Ending AUV. . . . . . . . . . . . . . . . (a)$23.492 (a)$25.584 (a)$17.024 (a)$21.251 (a)$23.272 (a)$22.483 (a)$26.384 (a)$34.256 (a)$37.408 (a)$36.925(b)$23.147 (b)$25.145 (b)$16.690 (b)$20.782 (b)$22.701 (b)$21.877 (b)$25.609 (b)$33.167 (b)$36.129 (b)$35.573
Ending Number of AUs . . . . . . . . . . (a)3,090,975 (a)2,322,220 (a)1,820,283 (a)1,576,830 (a)1,246,247 (a)1,052,937 (a)894,483 (a)768,871 (a)668,728 (a)578,993(b)139,414 (b)130,487 (b)83,221 (b)61,694 (b)41,674 (b)37,181 (b)27,941 (b)26,543 (b)25,722 (b)22,876
SA MFS Total Return – SAST Class 1 Shares(Inception Date – 6/10/97)
Beginning AUV . . . . . . . . . . . . . . (a)$25.473 (a)$28.098 (a)$28.848 (a)$22.156 (a)$25.854 (a)$28.020 (a)$28.129 (a)$30.839 (a)$36.148 (a)$38.611(b)$25.169 (b)$27.694 (b)$28.362 (b)$21.728 (b)$25.292 (b)$27.342 (b)$27.380 (b)$29.943 (b)$35.010 (b)$37.302
Ending AUV. . . . . . . . . . . . . . . . (a)$28.098 (a)$28.848 (a)$22.156 (a)$25.854 (a)$28.020 (a)$28.129 (a)$30.839 (a)$36.148 (a)$38.611 (a)$37.854(b)$27.694 (b)$28.362 (b)$21.728 (b)$25.292 (b)$27.342 (b)$27.380 (b)$29.943 (b)$35.010 (b)$37.302 (b)$36.479
Ending Number of AUs . . . . . . . . . . (a)10,418,969 (a)8,455,282 (a)6,459,511 (a)5,251,645 (a)4,373,784 (a)3,554,667 (a)2,996,408 (a)2,554,481 (a)2,199,491 (a)1,869,082(b)669,899 (b)602,972 (b)454,782 (b)384,218 (b)294,309 (b)253,589 (b)214,874 (b)186,941 (b)174,620 (b)153,440
Small & Mid Cap Value – SAST Class 3 Shares(Inception Date – 8/11/03)**
Beginning AUV . . . . . . . . . . . . . . (a)$16.432 (a)$18.363 (a)$18.366 (a)$11.728 (a)$16.419 (a)$20.299 (a)$18.349 (a)$21.380 (a)$28.945 (a)$31.035(b)$16.273 (b)$18.140 (b)$18.098 (b)$11.528 (b)$16.099 (b)$19.853 (b)$17.901 (b)$20.806 (b)$28.098 (b)$30.052
Ending AUV. . . . . . . . . . . . . . . . (a)$18.363 (a)$18.366 (a)$11.728 (a)$16.419 (a)$20.299 (a)$18.349 (a)$21.380 (a)$28.945 (a)$31.035 (a)$28.710(b)$18.140 (b)$18.098 (b)$11.528 (b)$16.099 (b)$19.853 (b)$17.901 (b)$20.806 (b)$28.098 (b)$30.052 (b)$27.732
Ending Number of AUs . . . . . . . . . . (a)1,564,940 (a)1,549,901 (a)1,145,139 (a)906,916 (a)1,012,851 (a)797,817 (a)666,960 (a)560,194 (a)442,414 (a)390,227(b)64,988 (b)55,513 (b)44,307 (b)31,739 (b)30,313 (b)20,148 (b)17,389 (b)13,605 (b)12,720 (b)12,223
AUV - Accumulation Unit ValueAU - Accumulation Unit(a) Reflecting minimum Separate Account expenses.(b) Reflecting maximum Separate Account expenses with election of the optional EstatePlus feature.
** Class 3 shares of SunAmerica Series Trust, which are subject to a 0.25% 12b-1 fee.*** On September 8, 2015, the Davis Venture Value Portfolio was renamed SA Legg Mason BW Large Cap Value Portfolio.
A-5
Portfolios
Fiscal YearEnded
12/31/06
Fiscal YearEnded
12/31/07
Fiscal YearEnded
12/31/08
Fiscal YearEnded
12/31/09
Fiscal YearEnded
12/31/10
Fiscal YearEnded
12/31/11
Fiscal YearEnded
12/31/12
Fiscal YearEnded
12/31/13
Fiscal YearEnded
12/31/14
Fiscal YearEnded
12/31/15
Small Company Value – SAST Class 3 Shares(Inception Date – 4/30/12)**
Beginning AUV . . . . . . . . . . . . . . (a)N/A (a)N/A (a)N/A (a)N/A (a)N/A (a)N/A (a)$10.128 (a)$10.747 (a)$14.294 (a)$14.046(b)N/A (b)N/A (b)N/A (b)N/A (b)N/A (b)N/A (b)$9.972 (b)$10.563 (b)$14.015 (b)$13.738
Ending AUV. . . . . . . . . . . . . . . . (a)N/A (a)N/A (a)N/A (a)N/A (a)N/A (a)N/A (a)$10.747 (a)$14.294 (a)$14.046 (a)$12.771(b)N/A (b)N/A (b)N/A (b)N/A (b)N/A (b)N/A (b)$10.563 (b)$14.015 (b)$13.738 (b)$12.459
Ending Number of AUs . . . . . . . . . . (a)N/A (a)N/A (a)N/A (a)N/A (a)N/A (a)N/A (a)7,120 (a)34,791 (a)44,390 (a)39,070(b)N/A (b)N/A (b)N/A (b)N/A (b)N/A (b)N/A (b)233 (b)2,085 (b)1,771 (b)1,868
SunAmerica Dynamic Allocation – SAST Class 3 Shares(Inception Date – 6/18/12)**
Beginning AUV . . . . . . . . . . . . . . (a)N/A (a)N/A (a)N/A (a)N/A (a)N/A (a)N/A (a)$10.034 (a)$10.517 (a)$12.134 (a)$12.468(b)N/A (b)N/A (b)N/A (b)N/A (b)N/A (b)N/A (b)$10.020 (b)$10.510 (b)$11.479 (b)$12.397
Ending AUV. . . . . . . . . . . . . . . . (a)N/A (a)N/A (a)N/A (a)N/A (a)N/A (a)N/A (a)$10.517 (a)$12.134 (a)$12.468 (a)$11.647(b)N/A (b)N/A (b)N/A (b)N/A (b)N/A (b)N/A (b)$10.510 (b)$11.479 (b)$12.397 (b)$11.552
Ending Number of AUs . . . . . . . . . . (a)N/A (a)N/A (a)N/A (a)N/A (a)N/A (a)N/A (a)4,627 (a)25,828 (a)41,856 (a)44,044(b)N/A (b)N/A (b)N/A (b)N/A (b)N/A (b)N/A (b)0 (b)0 (b)0 (b)0
SunAmerica Dynamic Strategy – SAST Class 3 Shares(Inception Date – 7/16/12)**
Beginning AUV . . . . . . . . . . . . . . (a)N/A (a)N/A (a)N/A (a)N/A (a)N/A (a)N/A (a)$9.999 (a)$10.416 (a)$12.060 (a)$12.389(b)N/A (b)N/A (b)N/A (b)N/A (b)N/A (b)N/A (b)$9.999 (b)$10.418 (b)$11.420 (b)$12.330
Ending AUV. . . . . . . . . . . . . . . . (a)N/A (a)N/A (a)N/A (a)N/A (a)N/A (a)N/A (a)$10.416 (a)$12.060 (a)$12.389 (a)$11.542(b)N/A (b)N/A (b)N/A (b)N/A (b)N/A (b)N/A (b)$10.418 (b)$11.420 (b)$12.330 (b)$11.457
Ending Number of AUs . . . . . . . . . . (a)N/A (a)N/A (a)N/A (a)N/A (a)N/A (a)N/A (a)3,853 (a)32,843 (a)36,571 (a)33,598(b)N/A (b)N/A (b)N/A (b)N/A (b)N/A (b)N/A (b)0 (b)0 (b)0 (b)0
Technology – SAST Class 1 Shares(Inception Date – 7/5/00)
Beginning AUV . . . . . . . . . . . . . . (a)$2.413 (a)$2.403 (a)$2.886 (a)$1.389 (a)$2.058 (a)$2.437 (a)$2.271 (a)$2.410 (a)$2.989 (a)$3.675(b)$2.383 (b)$2.368 (b)$2.836 (b)$1.362 (b)$2.012 (b)$2.377 (b)$2.210 (b)$2.339 (b)$2.894 (b)$3.549
Ending AUV. . . . . . . . . . . . . . . . (a)$2.403 (a)$2.886 (a)$1.389 (a)$2.058 (a)$2.437 (a)$2.271 (a)$2.410 (a)$2.989 (a)$3.675 (a)$3.985(b)$2.368 (b)$2.836 (b)$1.362 (b)$2.012 (b)$2.377 (b)$2.210 (b)$2.339 (b)$2.894 (b)$3.549 (b)$3.839
Ending Number of AUs . . . . . . . . . . (a)5,247,705 (a)5,972,375 (a)3,627,861 (a)4,763,506 (a)3,676,676 (a)2,936,389 (a)2,605,570 (a)2,280,934 (a)2,116,724 (a)1,956,180(b)255,524 (b)279,894 (b)180,117 (b)195,746 (b)168,495 (b)105,951 (b)134,510 (b)114,529 (b)99,520 (b)67,090
Telecom Utility – SAST Class 1 Shares(Inception Date – 6/6/97)
Beginning AUV . . . . . . . . . . . . . . (a)$12.192 (a)$15.191 (a)$18.091 (a)$11.146 (a)$14.499 (a)$16.219 (a)$16.975 (a)$18.972 (a)$22.419 (a)$24.839(b)$12.044 (b)$14.969 (b)$17.782 (b)$10.928 (b)$14.180 (b)$15.823 (b)$16.519 (b)$18.416 (b)$21.708 (b)$23.991
Ending AUV. . . . . . . . . . . . . . . . (a)$15.191 (a)$18.091 (a)$11.146 (a)$14.499 (a)$16.219 (a)$16.975 (a)$18.972 (a)$22.419 (a)$24.839 (a)$21.520(b)$14.969 (b)$17.782 (b)$10.928 (b)$14.180 (b)$15.823 (b)$16.519 (b)$18.416 (b)$21.708 (b)$23.991 (b)$20.733
Ending Number of AUs . . . . . . . . . . (a)2,091,217 (a)1,658,591 (a)1,199,535 (a)942,786 (a)785,095 (a)734,326 (a)609,591 (a)526,116 (a)469,382 (a)389,666(b)47,836 (b)43,307 (b)33,022 (b)25,653 (b)19,923 (b)15,853 (b)12,765 (b)12,680 (b)12,963 (b)11,600
AUV - Accumulation Unit ValueAU - Accumulation Unit(a) Reflecting minimum Separate Account expenses.(b) Reflecting maximum Separate Account expenses with election of the optional EstatePlus feature.
** Class 3 shares of SunAmerica Series Trust, which are subject to a 0.25% 12b-1 fee.
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APPENDIX B – MARKET VALUE ADJUSTMENT (“MVA”)
Depending on the issue date of your contract, your contract may offer multi-year Fixed Accounts. If you take money out ofany available multi-year Fixed Accounts before the guarantee period ends, we may make an adjustment to your contract. Werefer to this as a Market Value Adjustment (“MVA”). The MVA does not apply to any available one-year Fixed Accounts. TheMVA reflects any difference in the interest rate environment between the time you placed your money in the multi-year FixedAccounts and the time when you withdraw or transfer that money. Generally, this adjustment can increase or decrease yourcontract value or the amount of your withdrawal. If interest rates drop between the time you put your money into a multi-yearFixed Account and the time you take it out, we credit a positive adjustment to your contract. Conversely, if interest ratesincrease during the same period, we could post a negative adjustment to your contract. You have 30 days after the end of eachguarantee period to reallocate your funds without application of any MVA.
Regardless of the outcome of the MVA calculation, application of the MVA to any partial or full withdrawal or transfer fromthe multi-year Fixed Accounts after May 2, 2005, will not result in a negative adjustment to your contract value or thewithdrawal amount. Thus, the MVA will not result in a loss of principal or previously credited interest for transactions afterMay 2, 2005. You will continue to receive any positive adjustment resulting from application of the MVA.
The information below applies only if you take money out of multi-year Fixed Accounts before the end of the GuaranteePeriod.
We calculate the MVA by doing a comparison between current rates and the rate being credited to you in the Fixed Accounts.For the current rate we use a rate being offered by us for a guarantee period that is equal to the time remaining in the FixedAccounts from which you seek withdrawal (rounded up to a full number of years). If we are not currently offering aguarantee period for that period of time, we determine an applicable rate by using a formula to arrive at a number based onthe interest rates currently offered for the two closest periods available.
Where the MVA is positive, we add the adjustment to your withdrawal amount. If a withdrawal charge applies, it is deductedbefore the MVA calculation. The MVA is assessed on the amount withdrawn less any withdrawal charges.
The MVA is computed by multiplying the amount withdrawn, transferred or taken under an income option by the followingfactor:
[(1+I/(1+J+L)]N/12 – 1
where:
I is the interest rate you are earning on the money invested in the Fixed Account;
J is the interest rate then currently available for the period of time equal to the number of years remaining in theterm you initially agreed to leave your money in the Fixed Account;
N is the number of full months remaining in the term you initially agreed to leave your money in the Fixed Account;and
L is 0.005 (Some states require a different value. Please see your contract.)
We do not assess an MVA against withdrawals from an Fixed Account under the following circumstances:
• If a withdrawal or transfer made after May 2, 2005 results in a negative MVA calculation;
• If a withdrawal or transfer is made within 30 days after the end of a guarantee period;
• If a withdrawal or transfer is made to pay contract fees and charges;
• To pay a death benefit; and
• Upon beginning an income option, if occurring on the Latest Annuity Date.
Examples of the MVA
The purpose of the examples below is to show how the MVA adjustments are calculated and may not reflect theGuarantee Periods available or withdrawal charges applicable under your contract.
The examples below assume the following:
(1) You made an initial Purchase Payment of $10,000 and allocated it to a Fixed Account at a rate of 5%;
(2) You make a partial withdrawal of $4,000 at a time when 18 months remain in the term you initially agreed to leaveyour money in the Fixed Account (N = 18);
(3) You have not made any other transfers, additional Purchase Payments, or withdrawals; and
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(4) Your contract was issued in a state where L = 0.005.
Positive Adjustment, No Withdrawal Charge Applies
Assume that on the date of withdrawal, the interest rate in effect for new Purchase Payments in the 1-year Fixed Account is3.5% and the 3-year Fixed Account is 4.5%. By linear interpolation, the interest rate for the remaining 2 years (18 monthsrounded up to the next full year) in the contract is calculated to be 4%. No withdrawal charge is reflected in this example,assuming that the Purchase Payment withdrawn falls within the free withdrawal amount.
The MVA factor is = [(1+I/(1+J+0.005)]N/12 – 1= [(1.05)/(1.04+0.005)]18/12 – 1= (1.004785)1.5 – 1= 1.007186 – 1= + 0.007186
The requested withdrawal amount is multiplied by the MVA factor to determine the MVA:
$4,000 × (+0.007186) = +$28.74
$28.74 represents the positive MVA that would be added to the withdrawal.
Positive Adjustment, Withdrawal Charge Applies
Assume that on the date of withdrawal, the interest rate in effect for new Purchase Payments in the 1-year Fixed Account is3.5% and the 3-year Fixed Account is 4.5%. By linear interpolation, the interest rate for the remaining 2 years (18 monthsrounded up to the next full year) in the contract is calculated to be 4%. A withdrawal charge of 6% is reflected in thisexample, assuming that the Purchase Payment withdrawn exceeds the free withdrawal amount.
The MVA factor is = [(1+I)/(1+J+0.005)]N/12 – 1= [(1.05)/(1.04+0.005)]18/12 – 1= (1.004785)1.5 – 1= 1.007186 – 1= + 0.007186
The requested withdrawal amount, less the withdrawal charge ($4,000 – 6% = $3,760) is multiplied by the MVA factor todetermine the MVA:
$3,760 × (+0.007186) = +$27.02
$27.02 represents the positive MVA that would be added to the withdrawal.
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APPENDIX C – DEATH BENEFITS FOLLOWING SPOUSAL CONTINUATION
Capitalized terms used in this Appendix have the samemeaning as they have in prospectus.
We define “Continuation Net Purchase Payments” as NetPurchase Payments made as of the Continuation Date. Forthe purpose of calculating Continuation Net PurchasePayments, the amount that equals the contract value on theContinuation Date, including the Continuation Contributionis considered a Purchase Payment. If the Continuing Spousemakes no additional Purchase Payments or withdrawal,Continuation Net Purchase Payments equals the contractvalue on the Continuation Date, including the ContinuationContribution.
The term “withdrawals” as used in describing the deathbenefit options below is defined as withdrawals and any feesand charges applicable to those withdrawals.
The Company will not accept Purchase Payments fromanyone age 86 or older. Furthermore, the death benefitcalculations assume that no Purchase Payment arereceived on or after your 86th birthday.
The following details the death benefit options andEstatePlus benefit upon the Continuing Spouse’s death:
The death benefit we will pay to the new Beneficiary chosenby the Continuing Spouse varies depending on the deathbenefit option elected by the original owner of the contractand the age of the Continuing Spouse as of the ContinuationDate.
The following is a description of the Death BenefitOptions Payable Following Spousal Continuation forcontracts issued on or after June 1, 2004:
1. Purchase Payment Accumulation Option
If the Continuing Spouse is age 74 or younger onthe Continuation Date, the death benefit will be thegreatest of:
a. Contract value; or
b. Continuation Net Purchase Payments,compounded at 3% annual growth rate, to theearlier of the Continuing Spouse’s 75th birthdayor date of death; reduced for withdrawals afterthe 75th birthday in the same proportion that thecontract value was reduced on the date of suchwithdrawal, and adjusted for any PurchasePayments received after the Continuing Spouse’s75th birthday; or
c. Contract value on the seventh contractanniversary (from the original contract issuedate), reduced for withdrawals since the seventhcontract anniversary in the same proportion thatthe contract value was reduced on the date ofsuch withdrawal, and adjusted for any PurchasePayments received after the seventh contractanniversary date.
If the Continuing Spouse is age 75-82 on theContinuation Date, then the death benefit will be thegreatest of:
a. Contract value; or
b. Continuation Net Purchase Payments; or
c. Maximum anniversary value on any contractanniversary that occurred after the ContinuationDate, but prior to the earlier of the ContinuingSpouse’s 83rd birthday or date of death. Theanniversary value for any year is equal to thecontract value on the applicable contractanniversary date, reduced for withdrawals sincethat contract anniversary in the same proportionthat the contract value was reduced on the dateof such withdrawal, and adjusted for anyPurchase Payments received since thatanniversary date.
If the Continuing Spouse is age 83-85 on theContinuation Date, then the death benefit will be thegreatest of:
a. Contract value; or
b. the lesser of:
(1) Continuation Net Purchase Payments; or
(2) 125% of the contract value.
If the Continuing Spouse is age 86 or older on theContinuation Date, the death benefit will be equal tothe contract value.
2. Maximum Anniversary Value Option
If the Continuing Spouse is age 82 or younger onthe Continuation Date, then upon the death of theContinuing Spouse, the death benefit will be thegreatest of:
a. Contract value; or
b. Continuation Net Purchase Payments; or
c. Maximum anniversary value on any contractanniversary that occurred after the ContinuationDate, but prior to the earlier of the ContinuingSpouse’s 83rd birthday or date of death. Theanniversary value for any year is equal to thecontract value on the applicable contractanniversary date after the Continuation Date,reduced for withdrawals since that contractanniversary in the same proportion that thecontract value was reduced on the date of suchwithdrawal, and adjusted for any PurchasePayments received since that anniversary date.
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If the Continuing Spouse is age 83-85 on theContinuation Date, then the death benefit will be thegreater of:
a. Contract value; or
b. the lesser of:
(1) Continuation Net Purchase Payments; or
(2) 125% of the contract value.
If the Continuing Spouse is age 86 or older on theContinuation Date or age 90 or older at the time ofdeath, the death benefit is equal to contract value.
The following is a description of the Death BenefitOptions Payable Following Spousal Continuation forcontracts issued between October 24, 2001 and June 1,2004:
Purchase Payment Accumulation Option Payable UponContinuing Spouse’s Death
If a Continuation Contribution is added on the ContinuationDate, the death benefit is the greatest of:
1. The contract value; or
2. Continuation Net Purchase Payments compounded tothe date of death at a 4% annual growth rate, (3%growth rate if the Continuing Spouse was age 70 orolder on the Continuation Date) plus any PurchasePayments recorded after the date of death; andreduced by any Gross Withdrawals recorded afterthe date of death in the same proportion that theGross Withdrawal reduced the contract value on thedate of each withdrawal; or
3. Contract value on the seventh contract anniversaryfollowing the original issue date of the contract, plusany Purchase Payments since the seventh contractanniversary and reduced for any Gross Withdrawalsrecorded after the seventh contract anniversary inthe same proportion that the Gross Withdrawalreduced the contract value on the date of the GrossWithdrawal, all compounded at a 4% annual growthrate until the date of death (3% annual growth rateif the Continuing Spouse is age 70 or older on theContinuation Date) plus any Purchase Payments;and reduced for any withdrawals recorded after thedate of death in the same proportion that eachwithdrawal reduced the contract value on the date ofthe withdrawal.
If a Continuation Contribution is not added on theContinuation Date, the death benefit is the greater of:
1. Contract value; or
2. Net Purchase Payments made from the originalcontract issue date compounded to the date of deathat a 4% annual growth rate, (3% growth rate if theContinuing Spouse was age 70 or older on theoriginal contract issue date) plus any PurchasePayments recorded after the date of death; and
reduced for any Gross Withdrawals recorded afterthe date of death in the same proportion that eachGross Withdrawal reduced the contract value on thedate of the withdrawal; or
3. Contract value on the seventh contract anniversaryfollowing the original issue date of the contract, plusany Purchase Payments since the seventh contractanniversary; and reduced for any Gross Withdrawalssince the seventh contract anniversary in the sameproportion that each Gross Withdrawal reduced thecontract value on the date of the Gross Withdrawal,all compounded at a 4% annual growth rate until thedate of death (3% annual growth rate if theContinuing Spouse is age 70 or older on the contractissue date) plus any Purchase Payments; andreduced for any Gross Withdrawals recorded afterthe date of death in the same proportion that eachGross Withdrawal reduced the contract value on thedate of the Gross Withdrawal.
Maximum Anniversary Value Option Payable UponContinuing Spouse’s Death
If the Continuing Spouse is below age 90 at the time ofdeath, and:
If a Continuation Contribution is added on the ContinuationDate, the death benefit is the greatest of:
1. Contract value; or
2. Continuation Net Purchase Payments; or
3. Maximum anniversary value on any contractanniversary occurring after the Continuation Dateand prior to the Continuing Spouse’s 81st birthday.The anniversary value equals the contract value on acontract anniversary plus any Purchase Paymentsmade since that contract anniversary; and reducedfor any Gross Withdrawals recorded since thecontract anniversary in the same proportion thateach Gross Withdrawal reduced the contract valueon the date of the Gross Withdrawal. Contractanniversary is defined as any anniversary followingthe full 12 month period after the original contractissue date.
If a Continuation Contribution is not added on theContinuation Date, the death benefit is the greatest of:
1. Contract value; or
2. Net Purchase Payments received since the originalissue date; or
3. Maximum anniversary value on any contractanniversary from the original contract issue dateprior to the Continuing Spouse’s 81st birthday. Theanniversary value equals the contract value on acontract anniversary plus any Purchase Paymentssince that contract anniversary; and reduced for anyGross Withdrawals since the contract anniversary inthe same proportion that the Gross Withdrawal
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reduced each contract value on the date of the GrossWithdrawal. Contract anniversary is defined as thefull 12 month period after the original contract issuedate.
If the Continuing Spouse is age 90 or older at the time ofdeath, their beneficiary will receive only the contract value.
The following is a description of the Death BenefitOptions Payable Following Spousal Continuation forcontracts issued prior to October 24, 2001:
Purchase Payment Accumulation Option Payable UponContinuing Spouse’s Death
If a Continuation Contribution is added on the ContinuationDate, the death benefit is the greater of:
1. Contract value; or
2. Contract value on the Continuation Date (includingthe Continuation Contribution) plus any PurchasePayments minus any withdrawals made since theContinuation Date compounded to the date of deathat a 4% annual growth rate, (3% growth rate if theContinuing Spouse was age 70 or older on theContinuation Date) plus any Purchase Paymentsminus withdrawals recorded after the date of death;or
3. Contract value on the seventh contract anniversaryfollowing the original issue date of the contract, plusany Purchase Payments and less any withdrawals,since the seventh contract anniversary, allcompounded at a 4% annual growth rate until thedate of death (3% growth rate if the ContinuingSpouse is age 70 or older on the Continuation Date)plus any Purchase Payments less withdrawalsrecorded after the date of death. The ContinuationContribution is considered a Purchase Paymentreceived on the Continuation Date.
If a Continuation Contribution is not added on theContinuation Date, the death benefit is the greater of:
1. Contract value; or
2. Purchase Payments minus withdrawals made fromthe original contract issue date compounded to thedate of death at a 4% annual growth rate, (3%growth rate if the Continuing Spouse was age 70 orolder on the Contract Issue Date) plus any PurchasePayments minus withdrawals recorded after the dateof death; or
3. The contract value on the seventh contractanniversary following the original issue date of thecontract, plus any Purchase Payments and less anywithdrawals, since the seventh contract anniversary,all compounded at a 4% annual growth rate until thedate of death (3% growth rate if the ContinuingSpouse was age 70 or older on the Contract IssueDate) plus any Purchase Payments less withdrawalsrecorded after the date of death.
Maximum Anniversary Value Death Benefit OptionFollowing Spousal Continuation
If the Continuing Spouse is below age 90 at the time ofdeath, and:
If a Continuation Contribution is added on the ContinuationDate, the death benefit is the greater of:
1. Contract value; or
2. Continuation Net Purchase Payments plus PurchasePayments made since the Continuation Date; andreduced for withdrawals in the same proportion thatthe contract value was reduced on the date of suchwithdrawal; or
3. Maximum anniversary value on any contractanniversary occurring after the Continuation Dateprior to the Continuing Spouse’s 81st birthday. Theanniversary value equals the contract value on acontract anniversary plus any Purchase Paymentssince that contract anniversary; and reduced for anywithdrawals recorded since that contract anniversaryin the same proportion that the withdrawal reducedthe contract value on the date of the withdrawal.Contract anniversary is defined as any anniversaryfollowing the full 12 month period after the originalcontract issue date.
If a Continuation Contribution is not added on theContinuation Date, the death benefit is the greater of:
1. Contract value; or
2. Net Purchase Payments received since the originalissue date; or
3. Maximum anniversary value on any contractanniversary from the original contract issue dateprior to the Continuing Spouse’s 81st birthday. Theanniversary value equals the contract value on acontract anniversary plus any Purchase Paymentssince that contract anniversary; and reduced for anywithdrawals recorded since that contract anniversaryin the same proportion that the withdrawal reducedthe contract value on the date of the withdrawal.Contract anniversary is defined as any anniversaryfollowing the full 12 month period after the originalcontract issue date.
If the Continuing Spouse is age 90 or older at the time ofdeath, their beneficiary will receive only the contract value.
The EstatePlus Benefit Payable upon ContinuingSpouse’s Death:
The EstatePlus benefit is only available if the original ownerelected EstatePlus and the Continuing Spouse is age 80 oryounger on the Continuation Date. EstatePlus is not payableafter the Latest Annuity Date.
If the Continuing Spouse had earnings in the contract at thetime of his/her death, we will add a percentage of thoseearnings (the “EstatePlus Percentage”), subject to amaximum dollar amount (the “Maximum EstatePlus
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Percentage”), to the death benefit payable. The contractyear of death will determine the EstatePlus Percentage andthe Maximum EstatePlus benefit. The EstatePlus benefit, ifany, is added to the death benefit payable under thePurchase Payment Accumulation or the MaximumAnniversary Value option.
On the Continuation Date, if the Continuing Spouse is 69 oryounger, the table below shows the available EstatePlusbenefit:
Contract Yearof Death
EstatePlusPercentage
MaximumEstatePlus Benefit
Years 0-4 25% of Earnings 40% of Continuation NetPurchase Payments*
Years 5-9 40% of Earnings 65% of Continuation NetPurchase Payments*
Years 10+ 50% of Earnings 75% of Continuation NetPurchase Payments*
On the Continuation Date, if the Continuing Spouse isbetween his/her 70th and 81st birthdays, table below showsthe available EstatePlus benefit:
Contract Yearof Death
EstatePlusPercentage
MaximumEstatePlus Benefit
All ContractYears
25% of Earnings 40% of Continuation NetPurchase Payments*
* Purchase Payments received after the 5th anniversary of theContinuation Date must remain in the contract for at least 6full months to be included as part of the Continuation NetPurchase Payments for the purpose of the MaximumEstatePlus Benefit calculation.
What is the Contract Year of Death?
Contract Year of Death is the number of full 12-monthperiods starting on the Continuation Date and ending on theContinuing Spouse’s date of death. The Contract Year ofDeath is used to determine the EstatePlus Percentage andMaximum EstatePlus benefit as indicated in the tablesabove.
What is the EstatePlus benefit?
We determine the EstatePlus benefit using the EstatePlusPercentage, as indicated in the tables above, which is aspecified percentage of the earnings in the contract at thetime of the Continuing Spouse’s death. For the purpose ofthis calculation, earnings equals (1) minus (2) where
(1) equals the contract value on the ContinuingSpouse’s date of death;
(2) equals the Continuation Net Purchase Payment(s).
What is the Maximum EstatePlus amount?
The EstatePlus benefit is subject to a maximum dollaramount. The Maximum EstatePlus benefit is equal to aspecified percentage of the Continuation Net PurchasePayments, as indicated in the tables above.
We reserve the right to modify, suspend or terminatethe Spousal Continuation provision (in its entirety orany component) at any time with respect toprospectively issued contracts.
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APPENDIX D – STATE CONTRACT AVAILABILITY AND/OR VARIABILITY
PROSPECTUS PROVISION AVAILABILITY OR VARIATION ISSUE STATE
Administration Charge Contract Maintenance Fee is $30. New MexicoNorth Dakota
Free Look If you reside in Arizona and are age 65 or older on your Contract Date, the Free Look period is 30 days ArizonaFree Look If you reside in California and are age 60 or older on your Contract Date, the Free Look period is 30 days. CaliforniaMarket Value Adjustment L equal to 0.0025 FloridaPremium Tax We deduct premium tax charges of 0.50% for Qualified contracts and 2.35% for Non-Qualified contracts based
on contract value when you begin the Income Phase.California
Premium Tax We deduct premium tax charges of 2.0% for Non-Qualified contracts based on total Purchase Payments whenyou begin the Income Phase.
Maine
Premium Tax We deduct premium tax charges of 3.5% for Non-Qualified contracts based on contract value when you beginthe Income Phase.
Nevada
Premium Tax For the first $500,000 in the contract, we deduct premium tax charges of 1.25% for Non-Qualified contractsbased on total Purchase Payments when you begin the Income Phase. For any amount in excess of $500,000 inthe contract, we deduct front-end premium tax charges of 0.08% for Non-Qualified contracts based on totalPurchase Payments when you begin the Income Phase.
South Dakota
Premium Tax We deduct premium tax charges of 1.0% for Qualified contracts and 1.0% for Non-Qualified contracts based oncontract value when you begin the Income Phase.
West Virginia
Premium Tax We deduct premium tax charges of 1.0% for Non-Qualified contracts based on total Purchase Payments whenyou begin the Income Phase.
Wyoming
Systematic Withdrawal Minimum withdrawal amount is $250 per withdrawal or the penalty free withdrawal amount. OregonTransfer Privilege Any transfer over the limit of 15 will incur a $10 transfer fee. Pennsylvania
Texas
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Please forward a copy (without charge) of the PolarisII Variable Annuity Statement of AdditionalInformation to:
(Please print or type and fill in all information.)
Name
Address
City/State/Zip
Contract Issue Date:
Date: Signed:
Return to: American General Life Insurance Company, Annuity Service Center, P.O. Box 15570,Amarillo, Texas 79105-5570
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PRIVACY NOTICE Rev. 3/2016
FACTSWHAT DO AMERICAN GENERAL LIFE INSURANCE COMPANY (AGL) AND THEUNITED STATES LIFE INSURANCE COMPANY IN THE CITY OF NEW YORK (US Life)DO WITH YOUR PERSONAL INFORMATION?
Why?Financial companies choose how they share your personal information. Federal law gives consumers theright to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, andprotect your personal information. Please read this notice carefully to understand what we do.
What?
The types of personal information we collect and share depend on the product or service you have with us.This information can include:
• Social Security number and Medical Information• Income and Credit History• Payment History and Employment Information
When you are no longer our customer, we continue to share your information as described in this notice.
How?All financial companies need to share customers’ personal information to run their everyday business. Inthe section below, we list the reasons financial companies can share their customers’ personal information;the reasons AGL and US Life choose to share; and whether you can limit this sharing.
Reasons we can share your personal information Do AGL & US Lifeshare?
Can you limit thissharing?
For our everyday business purposes — such as to process your transactions,maintain your account(s), respond to court orders and legal investigations,conduct research including data analytics, or report to credit bureaus. Yes No
For our marketing purposes — to offer our products and services to you Yes No
For joint marketing with other financial companies Yes No
For our affiliates’ everyday business purposes — information about yourtransactions and experiences Yes No
For our affiliates’ everyday business purposes — information about yourcreditworthiness No We don’t share
For nonaffiliates to market to you No We don’t share
Questions? For AGL and US Life variable or index annuity contracts, call 1-800-445-7862, or send a secure messagevia our website at www.aig.com/asc/eservice or write to us at: P. O. Box 15570, Amarillo, TX 79105-5570.
For AGL and US Life variable universal life insurance policies, call 1-800-340-2765 or write to us at:VUL Administration, P. O. Box 305600, Nashville, TN 37230-5600.
For AGL and US Life Corporate Markets Group or High Net Worth life policies or annuity contracts, call1-888-222-4943 (AGL), 1-877-883-6596 (US Life) or 1-800-871-4536 (High Net Worth) or write to us at:Affluent and Corporate Markets Group, 2929 Allen Parkway - A35-50, Houston, TX 77019.
For AGL and US Life single premium immediate variable annuity contracts, call 1-877-299-1724, emailus at: [email protected] or write to us at: Group Annuity Admin Department, 405 King Street,4th Floor, Wilmington, DE 19801.
Rev. 3/2016Page 2
Who we are
Who is providing this notice? American General Life Insurance Company and The United States Life InsuranceCompany in the City of New York.
What we do
How do AGL & US Life protectmy personal information?
To protect your personal information from unauthorized access and use, we usesecurity measures that comply with federal law. These measures include computersafeguards and secured files and buildings. We restrict access to employees,representatives, agents, or selected third parties who have been trained to handlenonpublic personal information.
How do AGL & US Life collect We collect your personal information, for example, when youmy personal information? • Open an account or give us your contact information
• Provide account information or make a wire transfer• Deposit money or close/surrender an account
We also collect your personal information from others, such as credit bureaus,affiliates, or other companies.
Why can’t I limit all sharing? Federal law gives you the right to limit only• sharing for affiliates’ everyday business purposes — information about your
creditworthiness• affiliates from using your information to market to you• sharing for nonaffiliates to market to you
State laws may give you additional rights to limit sharing. See below for more on yourrights under state law.
Definitions
Affiliates Companies related by common ownership or control. They can be financial and non-financial companies.
• Our affiliates include the member companies of American International Group, Inc.
Nonaffiliates Companies not related by common ownership or control. They can be financial andnonfinancial companies.
• AGL & US Life do not share with nonaffiliates so they can market to you.
Joint Marketing A formal agreement between nonaffiliated financial companies that together marketfinancial products or services to you.
• Our joint marketing partners include companies with which we jointly offerinsurance products, such as a bank.
Other important information
You have the right to see and, if necessary, correct personal data. This requires a written request, both to see your personaldata and to request correction. We do not have to change our records if we do not agree with your correction, but we willplace your statement in our file. If you would like a more detailed description of our information practices and your rights,please write us at the addresses indicated on the first page.
For Vermont Residents only. We will not disclose information about your creditworthiness to our affiliates and will notdisclose your personal information, financial information, credit report, or health information to nonaffiliated third parties tomarket to you, other than as permitted by Vermont law, unless you authorize us to make those disclosures. Additionalinformation concerning our privacy policies can be found using the contact information above for Questions.
For California Residents only. We will not share information we collect about you with nonaffiliated third parties, exceptas permitted by California law, such as to process your transactions or to maintain your account.
For Nevada Residents only. We are providing this notice pursuant to state law. You may be placed on our internal Do NotCall List by calling the numbers referenced in the Questions section. Nevada law requires that we also provide you with thefollowing contact information: Bureau of Consumer Protection, Office of the Nevada Attorney General, 555 E. WashingtonSt., Suite 3900, Las Vegas, NV 89101; Phone number: 702-486-3132; email: [email protected]. You may contact ourcustomer service department by using the contact information referenced in the Questions section.
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For online access to fund prospectuses for the investment portfolios in this variable annuity, please go to aig.com/getprospectus.
S3465PRO.10 (5/16)*S3465PRO.10*
Annuity Service CenterP.O. Box 15570Amarillo, TX 79105-5570
CHANGE SERVICE REQUESTED
