Individual Flexible Premium Modified Guaranteed, Fixed and Variable Deferred Annuity Contract – Kemper Investors Life Insurance Company

Summary

This contract is between an individual contract owner and Kemper Investors Life Insurance Company for a flexible premium deferred annuity. The contract allows the owner to make purchase payments, which are allocated among fixed, guaranteed, and variable investment options. The annuity provides for periodic payments to the annuitant starting on a specified date, as long as the annuitant is alive and the contract is in force. It also includes a death benefit payable before the annuity start date. The contract includes a 10-day free look period for cancellation and refund, and outlines terms for withdrawals, transfers, and market value adjustments.

View More
EX-4.(B) 3 0003.txt FORM OF INDIVIDUAL ANNUITY CERTIFICATE EXHIBIT 4.2 Kemper Investors Life Insurance Company A Stock Life Insurance Company Long Grove, Illinois 60049-0001 [LOGO] ZURICH KEMPER RIGHT TO CANCEL - FREE LOOK PROVISION - At any time within 10 days of receiving this Contract You may return it to Us or to the agent through whom it was purchased. All Purchase Payments allocated to the Guarantee Periods plus the Fixed Account plus the Separate Account Contract Value computed at the end of the valuation period following Our receipt of this Contract will then be refunded within ten days, after deduction of any applicable Purchase Payment bonus and the interest and investment experience related to any Purchase Payment bonus. We agree to pay an Annuity to the Annuitant provided the Annuitant is living and this Contract is in force on the Annuity Date. We further agree to pay the death benefit prior to the Annuity Date upon the death of the Contract Owner or, in certain circumstances, the death of the Annuitant. Payment will be made upon Our receipt of due proof of death and the return of this Contract. This Contract is issued in consideration of the attached application and payment of the initial Purchase Payment. The provisions on this cover and the pages that follow are part of this Contract. Signed for Kemper Investors Life Insurance Company at its home office, in Long Grove, Illinois. /s/ Debra P. Rezabek /s/ Gale K. Caruso Secretary President INDIVIDUAL FLEXIBLE PREMIUM MODIFIED GUARANTEED, FIXED AND VARIABLE DEFERRED ANNUITY CONTRACT NON-PARTICIPATING ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE SUBACCOUNTS ARE VARIABLE AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT. WITHDRAWALS AND TRANSFERS FROM THE GUARANTEED PERIOD VALUE BEFORE THE END OF THE GUARANTEED PERIOD ARE SUBJECT TO A MARKET VALUE ADJUSTMENT. This is a legal Contract between the Contract Owner and Kemper Investors Life Insurance Company. READ YOUR CONTRACT CAREFULLY. Policy Form No. L-8698 L-8698 INDEX Page ANNUITY OPTION TABLE Follows Page 20 ANNUITY PERIOD PROVISIONS 16 - 20 Election of Annuity Option 16 - 20 Annuity Options 17 Transfers During the Annuity Period 19 - 20 APPLICATION Follows Contract Schedule CONTRACT SCHEDULE Follows Index DEATH BENEFIT PROVISIONS 15 - 16 Amount Payable Upon Death 15 Payment Of Death Benefits 15 - 16 DEFINITIONS 5 - 7 ENDORSEMENTS, if any Follows Annuity Option Table FIXED ACCOUNT PROVISIONS 10 Fixed Account 10 Fixed Account Contract Value 10 GENERAL PROVISIONS 7 - 8 The Contract 7 Incontestability 7 Assignment 7 Reports 8 Premium Taxes 8 GUARANTEE PERIOD PROVISIONS 10 - 11 Guarantee Period Value 10 OWNERSHIP PROVISIONS 8 - 9 Owner of Contract 8 Change of Ownership 8 Beneficiary 9 PURCHASE PAYMENT PROVISIONS 9 Initial Purchase Payments 9 Purchase Payment Limitations 9 TRANSFER AND WITHDRAWAL PROVISIONS 13 - 15 Transfers During The Accumulation Period 13 Withdrawals During The Accumulation Period 14 Transfer and Withdrawal Procedures 14 - 15 VARIABLE ACCOUNT PROVISIONS 11 - 12 Separate Account 11 Liabilities Of Separate Account 11 Subaccounts 11 Rights Reserved By The Company 11 - 12 Accumulation Unit Value 12 DEFINITIONS Accumulation Period: The period between the Issue Date and the Annuity Date. Accumulation Unit: An accounting unit of measure used to calculate the value of each Subaccount. Age: The attained age of the Annuitant. Annuitant: The person named in the application during whose lifetime the Annuity is to be paid. When two people are named as Joint Annuitants the term "Annuitant" means the Joint Annuitants or the survivor. Under Qualified Plans, only the spouse may be named as Joint Annuitant. You may not change the person(s) named as the Annuitant. Annuity: A series of payments paid in accordance with this Contract which begins on the Annuity Date. Annuity Date: The date on which this Contract matures and Annuity payments begin. It must be at least one year from the Issue Date and no later than the maximum age at annuitization as stated on the Contract Schedule, unless otherwise agreed. The Annuity Date can be changed, but not beyond the maximum age. Annuity Period: This is the period that starts on the Annuity Date. Annuity Unit: An accounting unit of measure used to calculate the amount of Variable Annuity payments after the first Annuity payment. Contract: An individual Contract which we issue to You as evidence of the rights and benefits under the Contract. Contract Owner: See "You, Your, Yours" below. Contract Value: The sum of the Fixed Account Contract Value plus the Separate Account Contract Value plus the Guarantee Period Value. Contract Year: A one-year period starting on the Issue Date and successive Contract anniversaries. Fixed Account: Our assets other than those allocated to the Separate Account or any other Separate Account under which We guarantee a fixed rate of return. Fixed Account Contract Value: The Fixed Account Contract Value is the value of amounts allocated under this Contract to the Fixed Account. Fixed Annuity: An Annuity payment that does not vary with investment performance. Fund: An investment company or separate series thereof, in which the Subaccounts of the Separate Account invest. Guarantee Period: A period of time during which an amount is to be credited with a guaranteed interest rate, subject to a Market Value Adjustment prior to the end of the Guarantee Period. The Guarantee Periods initially offered are stated on the Contract Schedule. L-8698 Page 5 L-8698 Page 6 DEFINITIONS (Continued) Guarantee Period Value: The (1) Purchase Payment allocated or the amount transferred to a Guarantee Period; plus (2) interest credited; minus (3) withdrawals and transfers adjusted for (4) any applicable Market Value Adjustment previously made. There is a $5,000 minimum on the sum of Purchase Payments and amounts transferred to any Guarantee Period Value. Issue Date: The Issue Date is stated on the Contract Schedule. It is the date Your initial Purchase Payment is available for use and Your application has been accepted by Us. It is also the date on which Your Purchase Payment begins to be credited with interest and/or investment experience. Market Adjusted Value: A Guarantee Period Value adjusted by the Market Value Adjustment formula prior to the end of a Guarantee Period. Market Value Adjustment: An adjustment of Guarantee Period Values in accordance with the Market Value Adjustment formula prior to the end of the Guarantee Period. The adjustment reflects the change in the value of the Guarantee Period Value due to changes in interest rates since the date the Guarantee Period commenced. The Market Value Adjustment formula is stated on the Contract Schedule. Mortality and Expense Risk Charge: A charge deducted in the calculation of the Accumulation Unit value and the Annuity Unit value. It is for Our assumption of mortality risks and expense guarantees. The charge is shown on the Contract Schedule. Nonqualified: A Contract issued to other than a Qualified Plan. Purchase Payments: The dollar amount We receive in U.S. currency to buy the benefits this Contract provides. Qualified Plan: A Contract issued under a retirement plan which qualifies for favorable income tax treatment under Section 401, 403, 408 or 457 of the Internal Revenue Code as amended. If this Contract is issued under a Qualified Plan additional provisions may apply. The rider or amendment to this Contract used to qualify it under the applicable section of the Internal Revenue Code will indicate the extent of change in the provisions. Records Maintenance Charge: A charge assessed against Your Contract as specified on the Contract Schedule. We reserve the right to make this charge against the Fixed Account Contract Value or the Guarantee Period Value. Received: Received by Kemper Investors Life Insurance Company at its home office. Separate Account: A unit investment trust registered with the Securities and Exchange Commission under the Investment Act of 1940 known as the KILICO Variable Annuity Separate Account. Separate Account Contract Value: The sum of the Subaccount Values of this Contract on the Valuation Date. Subaccounts: The Separate Account has Subaccounts. The Subaccounts initially available are stated on the Contract Schedule. Subaccount Value: The value of each Subaccount calculated separately according to the formulas stated in this Contract. DEFINITIONS (Continued) Valuation Date: Each business day that applicable law requires that We value the assets of the Separate Account. Currently this is each day that the New York Stock Exchange is open for trading. Valuation Period: The period that starts at the close of a Valuation Date and ends at the close of business the next succeeding Valuation Date. Variable Annuity: An Annuity payment which varies as to dollar amount because of Subaccount investment experience. We, Our, Us: Kemper Investors Life Insurance Company, Long Grove, Illinois. You, Your, Yours: The party(ies) named as Contract Owner in the application unless later changed as provided in this Contract. (See Change of Ownership.) The Contract Owner is the Annuitant unless a different Contract Owner is named in the application. Under a Nonqualified Annuity when more than one person is named as Contract Owner, the terms "You", "Your" means Joint Contract Owners. The Contract Owner may be changed during the lifetime of the Contract Owner and the Annuitant. The Contract Owner, prior to the Annuity Date or any distribution of any death benefit, has the exclusive right to exercise every option and right conferred by this Contract. GENERAL PROVISIONS The Entire Contract The Contract, any application attached to the Contract, and any endorsements constitute the entire contract between the parties. All statements made in the application are deemed representations and not warranties. No statement will void this Contract or be used as a defense of a claim unless it is contained in the application. Modification of Only Our President, Secretary and Assistant Secretaries have Contract the power to approve a change or waive any provision of this Contract. Any such modifications must be in writing. No agent or person other than the officers named has the authority to change or waive the provisions of this Contract. Upon notice to You or the payees during the Annuity Period, this Contract may be modified by Us as is necessary to comply with any law or regulation issued by a governmental agency to which We or the Separate Account is subject or as is necessary to assure continued qualification of this Contract under the Internal Revenue Code or other laws relating to retirement plans or Annuities or as otherwise may be in Your best interest. In the event of a modification, We may make appropriate endorsement to this Contract and We will obtain all required regulatory approvals. Incontestability This Contract is incontestable from the Issue Date. Change of Annuity You may write to Us prior to distribution of a death benefit Date or the first Annuity payment date and request a change of the Annuity Date. Assignment No assignment under this Contract is binding unless We receive it in writing. We assume no responsibility for the validity or sufficiency of any assignment. Once filed, Your rights, the Annuitant's rights and the beneficiary's rights are subject to the assignment. Any claim is subject to proof of interest of the assignee. L-8698 Page 7 L-8698 Page 8 GENERAL PROVISIONS (Continued) Due Proof of Death We must receive proof upon Your death or that of the Annuitant before a death benefit is payable. The death benefit will be paid within 2 months after the receipt of such proof. Reserves, Certificate All reserves are equal to or greater than those required Values and Death by statute. Any available Contract Value and death Benefits benefit will not be less than the minimum benefit required by the statutes of the state in which this Contract is delivered. Non-Participating This Contract does not pay dividends. It will not share in Our surplus earnings. Reports At least once each Contract Year We will send You a statement showing Purchase Payments received, interest credited, investment experience, and charges made since the last report, as well as any other information required by statute. Premium Taxes We will make a deduction for state premium taxes in certain situations. On any Contract subject to premium tax, as provided under applicable law, the tax will be deducted from: a. The Purchase Payments when We receive them; b. the Contract Value upon total withdrawal; or c. from the total Contract Value applied to an Annuity option at the time Annuity payments start. Determination The method of determination by Us of the investment Of Values experience factor, the number and value of Accumulation Units, and the number and value of Annuity Units shall be conclusive upon You, any payee, and any beneficiary. Creditors The proceeds of this Contract and any payment under an Annuity option will be exempt from the claim of creditors and from legal process to the extent permitted by law. OWNERSHIP PROVISIONS Owner of Contract The Annuitant is You unless otherwise provided in the application. Before the Annuity Date or any distribution of death benefit, You have the right to cancel or amend this Contract if We agree. You may exercise every option and right conferred by this Contract. The Joint Contract Owners must agree to any change if more than one Contract Owner is named. Change of Ownership You may change the Contract Owner by written request at any time while You and the Annuitant are alive. You must furnish information sufficient to clearly Identify the new Contract Owner to Us. The change is subject to any existing assignment of this Contract. When We record the effective date of the change, it will be the date We received the notice except for action taken by Us prior to receiving the request. Any change is subject to the payment of any proceeds. We may require You to return this Contract to Us for endorsement of a change. OWNERSHIP PROVISIONS (Continued) Beneficiary Designation and The application for this Contract shows the Change of Beneficiary original beneficiary. You may change the beneficiary if You send Us a written notice in a form acceptable to Us. Changes are subject to the following conditions: 1. The change must be filed while the Annuitant is alive; 2. This Contract must be in force at the time You file a change; 3. Such change must not be prohibited by the terms of an existing assignment, beneficiary designation or other restriction; 4. Such change will take effect when We receive it; 5. After We receive the change, it will take effect on the date We received the change form. However, action taken by Us before the change form was received will remain in effect; and 6. The request for change must provide information sufficient to identify the new beneficiary. We may require You to return this Contract for endorsement of a change. Death of Beneficiary The interest of a beneficiary who dies before the distribution of the death benefit will pass to the other beneficiaries, if any, share and share alike, unless otherwise provided in the beneficiary designation. If no beneficiary survives or is named, the distribution will be made to Your estate when You die, or to the estate of the Annuitant upon the death of the Annuitant if You are not also the Annuitant. If a beneficiary dies within ten days of the date of Your death, the death benefit will be paid as if You had survived the beneficiary. If a beneficiary dies within ten days of the death of the Annuitant and You are not the Annuitant, We will pay the death benefit as if the Annuitant survived the beneficiary. If You, the Annuitant, and the beneficiary die simultaneously, We will pay the death benefit as if You had survived the Annuitant and the beneficiary. PURCHASE PAYMENT PROVISIONS Initial Purchase Payment The minimum initial Purchase Payment is shown on the Contract Schedule. Purchase Payment The minimum and maximum Purchase Payments Limitations that may be made are shown on the Contract Schedule. We reserve the right to waive or modify these limits and to not accept any Purchase Payment. Subsequent Purchase Payments will be allocated according to Your most recent instructions at the time We receive Your Purchase Payment. Place of Payment All Purchase Payments under this Contract must be paid to Us at Our home office or such other location as We may select. We will notify You and any other interest parties in writing of such other locations. Purchase Payments received by an agent will begin earning interest after We receive it. Purchase Payment Subject to the limitations shown below, Bonus Purchase Payments will be increased by the Purchase Payment bonus shown on the Contract Schedule before being allocated to the various accounts of this Contract. We reserve the right to not increase a Purchase Payment by the Purchase Payment bonus in the following situations. 1. If at the time the Purchase Payment is made the sum of Purchase Payments, partial withdrawals and loans made under this Contract exceeds the sum of Purchase Payments and loan repayments, or 2. The Purchase Payment arises from the transfer of money from any other Life Insurance or Annuity contract. L-8698 Page 9 L-8698 Page 10 FIXED ACCOUNT PROVISIONS Fixed Account The Fixed Account Contract Value is increased by: Contract Value 1. Your Purchase Payment allocated to the Fixed Account; 2. amounts transferred from a Guarantee Period or Subaccount to the Fixed Account at Your request; and 3. the interest credited to amounts so allocated or transferred. Transfers, charges, and withdrawals from the Fixed Account reduce the Fixed Account Contract Value. Fixed Account interest rates are credited for certain periods of time referred to as Fixed Account interest rate periods. An initial Fixed Account interest rate period runs from the date We receive each Purchase Payment through the end of the calendar month in which that Purchase Payment is received and for 12 calendar months thereafter. The initial Fixed Account interest rate for the initial Purchase Payment is shown on the Contract Schedule. We will declare an initial Fixed Account interest rate for each subsequent Purchase Payment when that Purchase Payment is received. For each Purchase Payment, a subsequent Fixed Account interest rate period begins immediately after the Initial Fixed Account interest rate periods ends and runs for 12 calendar months. Subsequent Fixed Account interest rate periods are in effect for periods of 12 calendar months immediately following the end of each previous subsequent Fixed Account Interest Rate Period. We will declare an interest rate applicable to each Purchase Payment for each subsequent Fixed Account Interest Rate Period. We reserve the right to declare the Fixed Account current interest rate(s) based upon: the Issue Date; the date We receive a Purchase Payment, or the date of account transfer. We calculate the interest credited to the Fixed Account by compounding daily, at daily interest rates, rates which would produce at the end of a Contract Year a result identical to the one produced by applying an annual interest rate. The minimum guaranteed Fixed Account interest rate is 3.00% per year. GUARANTEE PERIOD PROVISIONS Guarantee Period We hold all amounts allocated to a Guarantee Period in a non-unitized Separate Account. The assets of this Separate Account equal to the reserves and other liabilities of this Separate Account will not be charged with liabilities arising out of any other business We may conduct. The initial Guarantee Periods available under this Contract are shown on the Contract Schedule. Guarantee Period Value On any Valuation Date, the Guarantee Period Value includes: 1. Your Purchase Payments or transfers allocated to the Guarantee Period; plus 2. interest credited; minus 3. withdrawals and transfers; minus 4. any applicable portion of the Records Maintenance Charge and charges for other benefits; adjusted for 5. any applicable Market Value Adjustment previously made. The Guarantee Period(s) initially elected and the interest rate(s) initially credited are shown on the Contract Schedule. The initial interest rate credited to subsequent Purchase Payments will be declared at the time the payment is received. At the end of a Guarantee Period, the Guarantee Period Value will be transferred to a money market Subaccount unless You tell Us to do otherwise. Accumulated Guarantee On any Valuation Date, the Accumulated Guarantee Period Value Period Value is the sum of the Guarantee Period Values. At any time during the Accumulation Period, the Accumulated Guarantee Period Value may be allocated to more than one Guarantee Period with our agreement. We calculate the interest credited to the Guarantee Period Value by compounding daily, at daily interest rates, rates which would produce at the end of a Contract Year a result identical to the one produced by applying an annual interest rate. Market Value Adjustment The Market Value Adjustment formula is stated on the Contract Schedule. This formula is applicable for both an upward or downward adjustment to a Guarantee Period Value when, prior to the end of a Guarantee Period, such value is: 1. taken as a total or partial withdrawal; 2. applied to purchase an Annuity; or 3. transferred to another Guarantee Period, the Fixed Account or a Subaccount. VARIABLE ACCOUNT PROVISIONS Separate Account The variable benefits under this Contract are provided through the KILICO Variable Annuity Separate Account. This is called the Separate Account. The Separate Account is registered with the Securities and Exchange Commission as a unit investment trust under the Investment Company Act of 1940. It is a separate investment account maintained by Us into which a portion of the company's assets have been allocated for this Contract and may be allocated for certain other Contracts. Liabilities of Separate The assets equal to the reserves and other Account liabilities of the Separate Account will not be charged with liabilities arising out of any other business We may conduct. We will value the assets of the Separate Account on each Valuation Date. Separate Account On any Valuation Date the Separate Account Contract Value Contract Value is the sum of its Subaccount values. Subaccounts The Separate Account consists of Subaccounts. The initial Subaccounts available under this Contract are shown on the Contract Schedule. We may, from time to time, combine or remove Subaccounts in the Separate Account and establish additional Subaccounts of the Separate Account. In such event We may permit You to select other Subaccounts under this Contract. However, the right to select any other Subaccount is limited by the terms and conditions We may impose on such transactions. Fund Each Subaccount of the Separate Account will buy shares of a separate series of a Fund. Each Fund is registered under the Investment Company Act of 1940 as an open-end management investment company. Each series of a Fund represents a separate investment portfolio which corresponds to one of the Subaccounts of the Separate Account. If We establish additional Subaccounts each new Subaccount will invest in a new series of a Fund or in shares of another investment company. We may also substitute other investment companies. Rights Reserved by the We reserve the right, subject to compliance with Company the current law or as it may be changed in the future: 1. To operate the Separate Account in any form permitted under the Investment Company Act of 1940 or in any other form permitted by law; 2. To take any action necessary to comply with or obtain and continue any exemptions from the Investment Company Act of 1940 or to comply with any other applicable law; 3. To transfer any assets in any Subaccount to another Subaccount or to one or more separate accounts, or the General Account, or to add, combine or remove Subaccounts in the Separate Account; L-8698 Page 11 L-8698 Page 12 VARIABLE ACCOUNT PROVISIONS (Continued) 4. To delete the shares of any of the portfolios of a Fund or any other open-end investment company and to substitute, for the Fund shares held in any Subaccount, the shares of another portfolio of a Fund or the shares of another investment company or any other investment permitted by law; and 5. To change the way We assess charges, but not to increase the aggregate amount above that currently charged to the Separate Account and the Funds in connection with this Contract. When required by law, We will obtain Your approval of such changes and the approval of any regulatory authority. Accumulation Unit Value Each Subaccount has an Accumulation Unit Value. When Purchase Payments or other amounts are allocated to a Subaccount, a number of units are purchased based on the Accumulation Unit Value of the Subaccount at the end of the Valuation Period during which the allocation is made. When amounts are transferred out of or deducted from a Subaccount, units are redeemed in a similar manner. The value of a Subaccount on any Valuation Date is the number of units held in the Subaccount times the Accumulation Unit Value on that Valuation Date. The Accumulation Unit Value for each subsequent Valuation Period is the investment experience factor for that period multiplied by the Accumulation Unit Value for the period immediately preceding. Each Valuation Period has a single Accumulation Unit Value that is applied to each day in the period. The number of Accumulation Units will not change as a result of investment experience. Investment Experience Each Subaccount has its own investment experience Factor factor. The investment experience of the Separate Account is calculated by applying the investment experience factor to the value in each Subaccount during a Valuation Period. The investment experience factor of a Subaccount for a Valuation Period is determined by dividing 1. by 2. and subtracting 3. from the result, where: 1. is the net result of; a. the net asset value per share of the investment held in the Subaccount determined at the end of the current Valuation Period; plus b. the per share amount of any dividend or capital gain distributions made by the investments held in the Subaccount, if the "ex-dividend" date occurs during the current Valuation Period; plus or minus c. a charge or credit for taxes reserved for the current Valuation Period which We determine resulted from the investment operations of the Subaccount. 2. is the net asset value per share of the investment held in the Subaccount, determined at the end of the last Valuation Period. 3. is the factor representing the sum of the Separate Account charges stated on the Contract Schedule for the number of days in the Valuation Period. TRANSFER AND WITHDRAWAL PROVISIONS Transfers During the You may direct the following transfers; Accumulation Period 1. All or part of the Separate Account Contract Value or a Guarantee Period Value may be transferred to the Fixed Account or to another Subaccount or Guarantee Period. We will allow the first transfer at the end of the free look period. 2. During the thirty days that follow a Contract Year Anniversary or the thirty day period that follows the date You receive an annual report, if later, all or part of the Fixed Account Contract Value, less debt, may be transferred to one or more Subaccounts or to one or more Guarantee Periods. Transfers will also be subject to the following conditions: 1. The minimum amount which may be transferred is $500 or if smaller, the remaining value in the Fixed Account, Subaccount or a Guarantee Period. 2. No partial transfer will be made if the remaining Contract Value of the Fixed Account or any Subaccount will be less than $500 or any Guarantee Period less than $5,000 unless the transfer will eliminate Your interest in such account; 3. No transfer may be made within seven calendar days of the date on which the first annuity payment is due; 4. You may request an additional transfer from the Fixed Account to one or more Subaccounts or to a Guarantee Period during the thirty day period before the date on which the first Annuity payment is due. Such transfer must become effective no later that the seventh calendar day before such due date; 5. When You request a transfer from the Fixed Account Contract Value to a Subaccount or to a Guarantee Period, We will limit the amount that can be transferred to the amount which exceeds 125% of any debt and withdrawal charge, if any, applicable to the total Fixed Account Contract Value. We will transfer amounts bought by Purchase Payments and all related accumulation received in a given Contract Year, in the chronological order We received them. We reserve the right to charge for transfers as described on the Contract Schedule. Any transfer request from the Certificate Owner or other authorized person must clearly specify: 1. the amount which is to be transferred; and 2. the names of the accounts which are affected. We will honor a telephone transfer request if a properly executed telephone transfer authorization is on file with Us. Such request for a transfer must comply with the conditions of the authorization. We reserve the right at any time and without notice to any party, to terminate, suspend, or modify these transfer rights. L-8698 Page 13 L-8698 Page 14 Withdrawals During the During the Accumulation Period, You may Accumulation Period withdraw all or part of the Contract Value reduced by any applicable premium taxes and withdrawal charge and adjusted by any applicable Market Value Adjustment. The Market Value Adjustment formula will be applied to the applicable portion of the total value withdrawn. We must receive a written request that indicates the amount of the withdrawal from the Fixed Account and each Subaccount and Guarantee Period. You must return the Contract to Us if You elect a total withdrawal. Withdrawals are subject to these conditions: The Contract Value less any debt and any applicable withdrawal charges remaining after a withdrawal must be at least $5,000. Withdrawals from the Subaccounts will reduce the amounts in each Subaccount on a proportional basis, unless You tell Us otherwise. Each withdrawal from a Guarantee Period must be at least $5,000 or the value that remains in the Guarantee Period, if smaller; The maximum You may withdraw from any account is the value of the respective account less the amount of any withdrawal charge and Market Value Adjustment. Any withdrawal amount You request will be increased by any applicable withdrawal charge. A withdrawal from the Fixed Account is limited to an amount equal to the Fixed Account Contract Value. We reserve the right to restrict partial withdrawals from the Fixed Account in the first Contract Year. You will ratably forfeit any Purchase Payment bonus and related positive accumulation on any withdrawal in the first Certificate Year. Withdrawal Charges All Purchase Payments in a given Contract Year and all related accumulations are totaled by account and each total is used separately in computing the withdrawal charge as stated in the Withdrawal Charge Table shown on the Contract Schedule. All amounts to be withdrawn and any applicable withdrawal charges will be charged first against Purchase Payments and all related accumulations in the chronological order we received such purchase payments by Contract Year. Any amount withdrawn which is not subject to a withdrawal charge will be considered a "partial free withdrawal." In the event of a partial withdrawal, a "partial free withdrawal" is applied against Purchase Payments and all related accumulations in the chronological order we received such Purchase Payments by Contract Year even though the Purchase Payments and related accumulations are no longer subject to a withdrawal charge. Transfer and Withdrawal We will withdraw or transfer from the Fixed Procedures Account or Guarantee Periods as of the Valuation Date that follows the date We receive Your written or telephone transfer request. Amounts to be withdrawn or transferred from the Fixed Account or Guarantee Periods will be done on a first in - first out basis, unless You request otherwise. To process a withdrawal, the request must contain all required information. TRANSFER AND WITHDRAWAL PROVISIONS (Continued) We will redeem the necessary number of Accumulation Units to achieve the dollar amount when the withdrawal or transfer is made from a Subaccount. We will reduce the number of Accumulation Units credited in each Subaccount by the number of Accumulation Units redeemed. The reduction in the number of Accumulation Units is determined on the basis of the Accumulation Unit Value at the end of the Valuation Period when We receive the request, provided the request contains all required information. We will pay the amount within seven calendar days after the date We receive the request, except as provided below. Deferment of Withdrawal If the withdrawal or transfer is to be made from a Transfer Subaccount, We may suspend the right of withdrawal or transfer or delay payment more than seven calendar days: 1. during any period when the New York Stock Exchange is closed other than customary weekend and holiday closings; 2. when trading markets normally utilized are restricted, or an emergency exists as determined by the Securities and Exchange Commission, so that disposal of investments or determination of the Accumulation Unit Value is not practical; or 3. for such other periods as the Securities and Exchange Commission by order may permit for protection of Certificate Owners. We may defer the payment of a withdrawal or transfer from the Fixed Account or Guarantee Periods, for the period permitted by law. This can never be more than six months after You send Us a written request. During the period of deferral, We will continue to credit interest, at the then current interest rate(s), to the Fixed Account Contract Value and/or each Guarantee Period Value. DEATH BENEFIT PROVISIONS Amount Payable Upon Death We compute the death benefit at the end of the Valuation Period following Our receipt of due proof of death and the return of this Contract. If death occurs prior to attaining age 75, We will pay the greater of: a. the Contract Value; or b. the total amount of Purchase Payments, less the aggregate dollar amount of all previous withdrawals or c. the amount that would have been payable in the event of a full surrender. We will pay the larger of the Contract Value or the amount that would have been payable in the event of a full surrender if death occurs at age 75 or later. Payment of Death Benefits If You or the last surviving Annuitant dies while the Contract is in effect and before the Annuity Date, We will pay a death benefit. If a Contract Owner is a non-natural person, the death of an Annuitant will be considered as the death of a Contract Owner for purposes of this death benefit provision. If an Annuitant dies after the Annuity Date, the death benefit, if any, will depend on the Annuity Option in effect. If You die after the Annuity Date, income payments will be made at least as rapidly as under the method of distribution being used as of the date of such death. We will pay the death benefit to the beneficiary when We receive due proof of death. We will then have no further obligation under this Contract. When You die, We will pay the death benefit in a lump sum. The entire interest in this Contract must be distributed within five years from the date of death unless it is applied under an Annuity Option or the spouse continues this Contract as described below. L-8698 Page 15 L-8698 Page 16 DEATH BENEFIT PROVISIONS (Continued) Instead of a lump sum payment the beneficiary may elect to have the death benefit distributed as stated in Option 1 for a period not to exceed the beneficiary's life expectancy; or Options 2, or 3 based upon the life expectancy of the beneficiary as prescribed by federal regulations. The beneficiary must make this choice within sixty days of the time We receive due proof of death and distribution must commence within one year of the date of death. If the beneficiary is not a natural person, the beneficiary must elect that the entire death benefit be distributed within five years of Your death. Distribution of the death benefit must start within one year after Your death. It may start later if prescribed by federal regulations. If the primary beneficiary is the surviving spouse when You die, the surviving spouse may elect to be the successor Contract Owner of this Contract, in lieu of receiving a death benefit. In such a case, there will be no requirement to start a distribution of death benefits. ANNUITY PERIOD PROVISIONS Election of Annuity Option We must receive an election of Annuity option in writing. You may make an election before the Annuity Date providing the Annuitant is alive. The Annuitant may make an election on the Annuity Date unless You have restricted the right to make such an election. The beneficiary may make an election when We pay the death benefit. An election will be revoked by 1. a subsequent change of beneficiary; or 2. an assignment of this Contact unless the assignment provides otherwise. Subject to the terms of the death benefit provision, the beneficiary may elect to have the death benefit remain with Us under one of the Annuity options. If an Annuity option is not elected, an Annuity will be paid under Option 3 for a Guaranteed Period of ten years and for as long thereafter as the payee is alive. If the total Contract Value is applied under one of the Annuity options, this Contract must be surrendered to Us. An option cannot be changed after the first Annuity payment is made. If, on the seventh calendar day before the first Annuity payment due date, all the Contract Value is allocated to the Fixed Account or Guarantee Periods, the Annuity will be paid as a Fixed Annuity. The Fixed Annuity is funded in Our General Account, which consists of Our assets other than those allocated to the Separate Account or any other separate account. If all of the Contract Value on such date is allocated to the Separate Account, the Annuity will be paid as a Variable Annuity. If the Contract Value on such date is allocated to both the Fixed Account or a Guarantee Period and a Subaccount, then the Annuity will be paid as a combination of a Fixed and a Variable Annuity. A Fixed and Variable Annuity payment will reflect the investment performance of the Subaccounts in accordance with the allocation of the Contract Values existing on such date. Allocations will not be changed thereafter, except as provided in the Transfers During the Annuity Period provision of this Contract. ANNUITY PERIOD PROVISIONS (Continued) Payments for all options are derived from the applicable tables. Current Annuity rates will be used if they produce greater payments than those quoted in this Contract. The age in the tables is the age of the payee on the last birthday before the first payment is due. We reserve the right to deduct one year from the age for each 10 calendar years that have elapsed since the year 2000. The option selected must result in a payment that is at least equal to Our minimum payment, according to Our rules, at the time the Annuity option is chosen. If at any time the payments are less than the minimum payment, We have the right to increase the period between payment to quarterly, semi-annual or annual so that the payment is at least equal to the minimum payment or to make payment in one lump sum. OPTION 1 Specified Period We will make monthly payments for a fixed number of installments. Payments must be made for at least 5 years, but not more than 30 years. OPTION 2 Life Annuity We will make monthly payments while the payee is alive. OPTION 3 Life Annuity with We will make monthly payments for a Guaranteed Installments Guaranteed Period and thereafter while the payee is alive. The Guaranteed Period must be selected at the time the Annuity option is chosen. The Guaranteed Periods available are 5, 10, 15 and 20 years. OPTION 4 Joint and Survivor Annuity We will pay the full monthly income while both payees are alive. Upon the death of either payee, We will continue to pay the surviving payee a percentage of the original monthly payment. The percentage payable to the surviving payee must be selected at the time the Annuity option is chosen. The percentages available are 50%, 66 2/3%, 75% and 100%. OTHER OPTIONS We may make other Annuity options available. Payments are also available on a quarterly, semi- annual or annual basis. Fixed Annuity The Contract Value allocated to the Fixed Account or the Guarantee Periods on the first day preceding the date on which the first Annuity payment is due is first reduced by any premium taxes and charges that apply. The value that remains will be used to determine the Fixed Annuity monthly payment in accordance with the Annuity option selected. L-8698 Page 17 L-8698 Page 16 Annuity PERIOD PROVISIONS (Continued) Variable Annuity The Separate Account Contract Value, at the end of the Valuation Period preceding the Valuation Period that includes the date on which the first Annuity payment is due, is first reduced by any Records Maintenance Charge, charges for other benefits if any that may be added by a rider to this Contract and any premium taxes that apply. The value that remains is used to determine the first monthly Annuity payment. The first monthly Annuity payment is based upon the guaranteed Annuity option shown in the Annuity Option Table. You may elect any option available. The dollar amount of subsequent payments may increase or decrease depending on the investment experience of each Subaccount. The number of Annuity Units per payment will remain fixed for each Subaccount unless a transfer is made. If a transfer is made, the number of Annuity Units per payment will change. Some Annuity options provide for a reduction in the income level upon the death of an Annuitant, which will reduce the number of Annuity Units. The number of Annuity Units for each Subaccount is calculated by dividing a. by b. where: a. is the amount of the monthly payment that can be attributed to that Subaccount, and b. is the Annuity Unit Value for that Subaccount at the end of the Valuation Period. The Valuation Period includes the date on which the payment is made. Monthly Annuity payments, after the first payment, are calculated by summing up, for each Subaccount, the product of a. times b. where: a. is the number of Annuity Units per payment in each Subaccount; and b. is the Annuity Unit Value for that Subaccount at the end of the Valuation Period. The Valuation Period includes the date on which the payment is made. After the first payment, We guarantee that the dollar amount of each Annuity payment will not be affected adversely by actual expenses or changes in mortality experience from the expense and mortality assumptions on which We based the first payment. Annuity Unit Value The value of an Annuity Unit for each Subaccount, at the end of any subsequent Valuation Period is determined by multiplying the result of a. times b. by c. where: a. is the Annuity Unit Value for the immediately preceding Valuation Period; and b. is the net investment factor for the Valuation Period for which the Annuity Unit Value is being calculated; and c. is the interest factor of .99993235 per calendar day of such subsequent Valuation Period to offset the effect of the assumed rate of 2.50% per year used in the Annuity Option Table. A different interest factor will be used if an assumed rate other than 2.50% is used in the Annuity Option Table. ANNUITY PERIOD PROVISIONS (Continued) The net investment factor for each Subaccount for any Valuation Period is determined by dividing a. by b. where: a. is the value of an Annuity Unit of the applicable Subaccount as of the end of the current Valuation Period plus or minus the per share charge or credit for taxes reserved. b. is the value of an Annuity Unit of the applicable Subaccount as of the end of the immediately preceding Valuation Period, plus or minus the per share charge or credit for taxes reserved. Transfers During the During the Annuity Period, the payee(s) may not Annuity Period convert Fixed Annuity payments to Variable Annuity payments. However, during the Annuity Period, the payee(s), by sending Us a written notice in a form satisfactory to Us, may convert Variable Annuity payments to Fixed Annuity payments; or have Variable Annuity payments reflect the investment experience of other Subaccounts. A transfer may be made subject to the following: 1. Transfers from a Subaccount to the General Account can be effective only on an anniversary of the first Annuity payment date. We must receive notice of such transfer at least thirty days prior to the effective date of the transfer. Unless You specify otherwise, transfers to the General Account from the Separate Account will be proportional among the Subaccounts. 2. Transfers from one Subaccount to another Subaccount will be effective during the Valuation Period next succeeding the date the notice is received by Us. However, if the notice for the transfer is received within seven days immediately preceding an Annuity payment date, the transfer will be effective during the Valuation Period next succeeding that Annuity payment date. 3. We reserve the right to limit the number of transfers between Subaccounts to no less than one each Contract Year. 4. We reserve the right to limit the number of Subaccounts that may be used at one time to no less than 3. 5. Requests for transfers must meet Our current rules and be in a form acceptable to Us. The number of Annuity Units per payment attributable to a Subaccount to which transfer is made is equal to, in the case of a transfer between Subaccounts, the number of Annuity Units per payment in the Subaccount from which transfer is being made multiplied by the Annuity Unit Value for that Subaccount divided by the Annuity Unit Value for the Subaccount to which transfer is being made. L-8698 Page 19 L-8698 Page 20 ANNUITY PERIOD PROVISIONS (Continued) The amount of money allocated to the General Account in the event of a transfer from a Subaccount equals the Annuity reserve for the payee's interest in such Subaccount. The Annuity reserve is the product of a. multiplied by b. multiplied by c. where: a. is the number of Annuity Units representing the payee's interest in such Subaccount per Annuity payment; b. is the Annuity Unit Value for such Subaccount; and c. is the present value of $1.00 per payment period using the attained age(s) of the payee(s) and any remaining guaranteed payment that may be due at the time of the transfer. The fixed monthly payments resulting from the transfer will not be less than the amount purchased using the guarantees under this Contract. Money allocated to the General Account upon such transfer will be applied under the same Annuity option as originally elected. Any Guaranteed Period payments will be adjusted to reflect the number of guaranteed payments that have already been made. If all guaranteed payments have already been made, no further payments will be guaranteed. All amounts and Annuity Unit Values are determined as of the end of the Valuation Period which precedes the effective date of the transfer. We reserve the right at any time and without notice to any party to terminate, suspend or modify the transfer privileges. Supplementary Agreement A supplementary agreement will be issued to reflect payments that will be made under a settlement option. If payment is made as a death benefit distribution, the effective date will be the date of death. Otherwise the effective date will be the date chosen by the Contract Owner. Date of First Payment Interest, under an option, will start to accrue on the effective date of the supplementary agreement. The supplementary agreement will provide details on the payments to be made. Evidence of Age, Sex We may require satisfactory evidence of the age, and Survival sex and the continued survival of any person on whose life the income is based. Misstatement of Age or Sex If the age or sex of the payee has been misstated, the amount payable under this Contract will be such as the Purchase Payments sent to Us would have purchased at the correct age or sex. Interest not to exceed 6% compounded each year will be charged to any overpayment or credited to any underpayment against future payments We make under this Contract. Basis of Annuity Options The guaranteed monthly payments are based on an interest rate of 2.50% per year and where mortality is involved, the A2000 Table developed by the Society of Actuaries. We may also make available Variable Annuity payment options based on assumed investment rates other than 2.50% but not greater than 5%. Disbursement of Funds When the payee dies, the value of any unpaid Upon Death of Payee: installments will be paid in one sum, to the Under Options 1 or 3 estate of the payee unless otherwise provided in the agreement. The commuted value for fixed installments based upon a minimum interest rate of not less than 2.50% will be paid. The commuted value of any variable installments will be determined by applying the Annuity Unit Value next determined following Our receipt of due proof of death and will be based on the Assumed Investment Return. Protection of Benefits Unless otherwise provided in the supplementary agreement the payee may not commute, anticipate, assign, alienate or otherwise hinder the receipt of any payment. ANNUITY OPTION TABLE AMOUNT OF MONTHLY PAYMENT FOR EACH $1,000 OF VALUE APPLIED Option One - Specified Period
Number Number Number Number of years Monthly of years Monthly of years Monthly of years Monthly selected Payment selected Payment selected Payment selected Payment - ------------------------------------------------------------------------------------------------ 5 17.69 12 8.01 19 5.48 26 4.33 6 14.92 13 7.48 20 5.27 27 4.22 7 12.94 14 7.03 21 5.08 28 4.11 8 11.46 15 6.64 22 4.90 29 4.02 9 10.31 16 6.29 23 4.74 30 3.92 10 9.39 17 5.99 24 4.59 11 8.64 18 5.72 25 4.46 - ------------------------------------------------------------------------------------------------
Options Two and Three - Life Annuity With Installments Guaranteed
Age of Monthly Payments Guaranteed Age of Monthly Payments Guaranteed Male Female Payee Payee None 60 120 180 240 None 60 120 180 240 55 4.17 4.16 4.13 4.06 3.96 55 3.87 3.86 3.84 3.81 3.75 56 4.27 4.25 4.21 4.14 4.03 56 3.95 3.94 3.92 3.88 3.82 57 4.36 4.35 4.30 4.22 4.09 57 4.03 4.02 4.00 3.95 3.88 58 4.46 4.45 4.40 4.30 4.16 58 4.11 4.11 4.08 4.03 3.95 59 4.57 4.55 4.50 4.39 4.22 59 4.21 4.20 4.17 4.11 4.01 60 4.69 4.67 4.60 4.48 4.29 60 4.30 4.29 4.26 4.19 4.08 61 4.81 4.79 4.71 4.57 4.36 61 4.41 4.40 4.35 4.28 4.15 62 4.94 4.92 4.83 4.66 4.43 62 4.52 4.50 4.46 4.37 4.23 63 5.09 5.05 4.95 4.76 4.49 63 4.64 4.62 4.56 4.46 4.30 64 5.24 5.20 5.08 4.86 4.56 64 4.76 4.74 4.68 4.56 4.37 65 5.40 5.35 5.21 4.96 4.62 65 4.90 4.87 4.80 4.66 4.45 66 5.57 5.52 5.35 5.06 4.69 66 5.04 5.01 4.93 4.77 4.52 67 5.75 5.69 5.49 5.17 4.75 67 5.19 5.16 5.06 4.87 4.59 68 5.95 5.87 5.64 5.27 4.81 68 5.36 5.32 5.20 4.98 4.66 69 6.15 6.07 5.80 5.37 4.86 69 5.53 5.49 5.35 5.10 4.73 70 6.38 6.27 5.96 5.48 4.91 70 5.72 5.68 5.51 5.21 4.80 71 6.61 6.49 6.12 5.58 4.96 71 5.93 5.87 5.67 5.33 4.86 72 6.86 6.72 6.29 5.68 5.00 72 6.15 6.08 5.85 5.44 4.92 73 7.13 6.96 6.47 5.77 5.04 73 6.39 6.31 6.03 5.56 4.97 74 7.42 7.21 6.64 5.86 5.08 74 6.65 6.55 6.21 5.67 5.02 75 7.72 7.48 6.82 5.95 5.11 75 6.93 6.81 6.41 5.78 5.06 76 8.05 7.76 7.00 6.03 5.14 76 7.24 7.08 6.60 5.88 5.10 77 8.40 8.06 7.18 6.11 5.17 77 7.57 7.38 6.80 5.98 5.13 78 8.77 8.37 7.35 6.18 5.19 78 7.92 7.69 7.01 6.07 5.16 79 9.18 8.69 7.53 6.25 5.20 79 8.31 8.02 7.21 6.15 5.18 80 9.60 9.03 7.70 6.31 5.22 80 8.72 8.37 7.41 6.23 5.20 81 10.06 9.38 7.86 6.36 5.23 81 9.17 8.74 7.61 6.30 5.22 82 10.55 9.74 8.02 6.41 5.24 82 9.66 9.13 7.80 6.35 5.23 83 11.07 10.12 8.17 6.45 5.25 83 10.20 9.54 7.98 6.41 5.24 84 11.63 10.50 8.32 6.49 5.26 84 10.77 9.96 8.15 6.45 5.25 85 12.22 10.89 8.45 6.52 5.26 85 11.39 10.40 8.31 6.49 5.26 - ------------------------------------------------------------------------------------------------
Option Four - Joint and 100% Survivor Annuity Age of Age of Female Payee Male Payee 55 60 65 70 75 80 85 55 3.49 3.66 3.81 3.93 4.02 4.08 4.12 60 3.61 3.83 4.05 4.24 4.40 4.52 4.59 65 3.69 3.97 4.28 4.57 4.84 5.05 5.20 70 3.76 4.09 4.47 4.89 5.31 5.67 5.95 75 3.80 4.17 4.63 5.16 5.75 6.34 6.83 80 3.83 4.23 4.73 5.37 6.14 6.99 7.80 85 3.84 4.26 4.80 5.51 6.44 7.55 8.75 Rates for ages not shown here will be provided upon request. L-8698 Page 21 INDIVIDUAL FLEXIBLE PREMIUM MODIFIED GUARANTEED, FIXED AND VARIABLE DEFERRED ANNUITY CONTRACT NON-PARTICIPATING ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE SUBACCOUNTS ARE VARIABLE AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT. WITHDRAWALS AND TRANSFERS FROM THE GUARANTEED PERIOD VALUE BEFORE THE END OF THE GUARANTEED PERIOD ARE SUBJECT TO A MARKET VALUE ADJUSTMENT. This is a legal Contract between the Owner and Kemper Investors Life Insurance Company. READ YOUR CONTRACT CAREFULLY Kemper Investors Life Insurance Company A Stock Life Insurance Company 1 Kemper Drive, Long Grove, Illinois 60049-0001 Policy Form No. L-8698