Filed with the Securities and Exchange Commission on June 27, 2008
Registration No. 333-136996
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Form S-3
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Post-Effective Amendment No. 9
Registration Statement
Under
The Securities Act of 1933*
PRUDENTIAL ANNUITIES LIFE ASSURANCE CORPORATION
(Exact name of registrant as specified in its charter)
CONNECTICUT
(State or other jurisdiction of incorporation or organization)
63
(Primary Standard Industrial Classification Code Number)
06-1241288
(I.R.S. Employer Identification No.)
ONE CORPORATE DRIVE, SHELTON, CONNECTICUT 06484 (203) 926-1888
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
JOSEPH D. EMANUEL, CHIEF LEGAL OFFICER
ONE CORPORATE DRIVE, SHELTON, CONNECTICUT 06484 (203) 944-7504
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copy To:
C. CHRISTOPHER SPRAGUE, ESQ.
One Corporate Drive, Shelton, Connecticut 06484 (203) 402-1233
Approximate date of commencement of proposed sale to the public: June 30, 2008
or as soon as practicable after the effective date of this Registration
Statement
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
reinvestment plans, check the following: [x].
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering [_]
If this Form is a registration statement pursuant to General Instruction I.D.
or a post-effective amendment thereto that shall become effective upon filing
with the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box [_]
If this Form is a post-effective amendment to a registration statement filed
pursuant to General Instruction I.D. filed to register additional securities or
additional classes of securities pursuant to Rule 413(b) under the Securities
Act, check the following box [_]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [_] Accelerated filer [_]
Non-accelerated filer [X] (Do not check if a smaller reporting company) Smaller reporting company [_]
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Calculation of Registration Fee
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Proposed Proposed
maximum maximum
Title of each class Amount offering aggregate Amount of
of securities to be to be price per offering registration
registered registered unit price** fee
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Market Value Adjusted Annuity
Contracts.................... $35,789,769.0 $10,845.00
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* Securities are not issued in predetermined units
** Registration fee for these securities, in the amount of $10,845.00, was paid
at the time the securities were originally registered on Form S-2 as filed
by Prudential Annuities Life Insurance Corporation on April 24, 1997.
Prudential Annuities Distributors, Inc., the principal underwriter of these
contracts under a "best efforts" arrangement, will be reimbursed by Prudential
Annuities Life Assurance Corporation for its costs and expenses incurred in
connection with the sale of these contracts.
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Note:
Registrant is filing this Post-Effective Amendment No. 9 to Registration
Statement No. 333-136996 for the purpose of including in the Registration
Statement two Prospectus Supplements. The Prospectus and Part II that were
filed as part of Post-Effective Amendment No. 6 filed with the SEC on April 18,
2008, as supplemented, are hereby incorporated by reference. Other than as set
forth herein, this Post-Effective Amendment does not amend or delete any other
part of this Registration Statement.
PRUDENTIAL ANNUITIES LIFE ASSURANCE CORPORATION
ADVANCED SERIES ADVISOR PLAN III
ADVANCED SERIES APEX II
ADVANCED SERIES XTRA CREDIT SIX
ADVANCED SERIES LIFEVEST II
ADVANCED SERIES ADVISORS CHOICE(R) 2000
(marketed by some firms as "Advisors Select 2000")
Supplement, dated July 21, 2008
To
Prospectus, dated May 1, 2008
This supplement should be read and retained with the prospectus for your
Annuity. If you would like another copy of the prospectus, please call us at
1-888-PRU-2888.
This supplement is being issued to describe enhancements that are being made
to certain optional living benefits available under each of the
above-referenced Annuities. The terms used in this supplement are defined in
the Glossary of Terms in the prospectus. With respect to Highest Daily
Lifetime Seven, we (a) revise the way that certain withdrawals of the Annual
Income Amount are impacted by the Contingent Deferred Sales Charge ("CDSC")
(b) add an optional death benefit, (the "Highest Daily Lifetime Seven with
Beneficiary Income Option") (c) add an optional benefit that increases the
Annual Income Amount if the owner qualifies for increased payments, (the
"Highest Daily Lifetime Seven with Lifetime Income Accelerator") (d) increase
the range of "permitted portfolios" that you may elect if you have chosen the
benefit, with some restrictions and (e) modify the asset transfer formula
under the benefit, to make clear that the Account Value may include amounts
allocated to certain Fixed Rate Options. For Spousal Highest Daily Lifetime
Seven, we (a) revise the way that certain withdrawals of the Annual Income
Amount are impacted by CDSC (b) add an optional death benefit (the "Spousal
Highest Daily Lifetime Seven with Beneficiary Income Option") (c) increase the
range of "permitted portfolios" that you may elect if you have chosen the
benefit, with some restrictions and (d) modify the asset transfer formula
under the benefit, to make clear that the Account Value may include amounts
allocated to certain Fixed Rate Options. The Highest Daily Lifetime Seven with
Beneficiary Income Option and the Spousal Highest Daily Lifetime Seven with
Beneficiary Income Option allow the beneficiary to continue to withdraw the
Annual Income Amount until the Protected Withdrawal Value is depleted. Thus,
the option may be appropriate for an Annuity Owner who wants to provide an
additional death benefit option to his/her beneficiary.
The Highest Daily Lifetime Seven with Lifetime Income Accelerator provides a
benefit under which the Annuity Owner may withdraw double the Annual Income
Amount once he/she meets the benefit's eligibility requirements (e.g., being
confined to a qualified nursing facility or being unable to perform two daily
life activities as defined below). Thus, this benefit may be appropriate for
an Annuity Owner who may meet these requirements at a future date.
Except as otherwise provided here, the description of each optional living
benefit set forth in the May 1, 2008 prospectus remains unchanged.
This supplement also discusses certain changes to the Advanced Series Lifevest
II Annuity ("ASL II"). Specifically, we have removed limitations on the amount
of the basic Death Benefit paid under ASLII when death occurs on or after the
decedent's age 85. We are also adding a restriction that the ASLII Annuity is
only available for purchase up to age 85.
CHANGES TO HIGHEST DAILY LIFETIME SEVEN
A. Addition of Death Benefit (HD Lifetime Seven with Beneficiary Income
Option/SM/)
For elections of Highest Daily Lifetime Seven on or after July 21, 2008, the
Annuity Owner may opt for a death benefit, the value of which is linked to the
Annual Income Amount under the benefit. As detailed below, a beneficiary
taking the Annuity's death benefit under this feature is paid the Annual
Income Amount until the Protected Withdrawal Value is depleted. (Note that the
final payment, exhausting the Protected Withdrawal Value, may be less than the
Annual Income Amount). If you choose the Highest Daily Lifetime Seven with
Beneficiary Income Option, the maximum charge we may impose is 2.00% of
Protected Withdrawal Value ("PWV") annually. We currently assess a charge of
0.95% of PWV annually. See the table entitled "Your Optional Benefit Fees and
Charges" in the prospectus for a description of all fees and charges related
to optional benefits.
1. To reflect this death benefit option, we add the following to the
description of Highest Daily Lifetime Seven, immediately after the
sub-section entitled Additional Tax Considerations:
HD Lifetime Seven with Beneficiary Income Option/SM/
We offer an optional death benefit feature under this benefit, the amount of
which is linked to your Annual Income Amount. We refer to this optional death
benefit as the Beneficiary Income Option or ("BIO"). You may choose Highest
Daily Lifetime Seven without also selecting the Beneficiary Income Option
death benefit. You must elect the Beneficiary Income Option death benefit at
the time you elect Highest Daily Lifetime Seven. If you elect Highest Daily
Lifetime Seven prior to your state's approval of the Beneficiary Income Option
and would like to add this feature later, you must terminate the Highest Daily
Lifetime Seven benefit and elect the Highest Daily Lifetime Seven with
Beneficiary Income Option. If you elected the Highest Daily Lifetime Seven
benefit, you will have a 90 day transition period from the date the
Beneficiary Income Option is approved in your state of residence to terminate
your Highest Daily Lifetime Seven benefit and elect the Highest Daily Lifetime
benefit with Beneficiary Income Option. After the 90 day transition period,
you may elect to add the Beneficiary Income Option on any anniversary of the
Issue Date in accordance with the eligibility rules and restrictions described
in the "Election of and Designations under the Program" section of the
prospectus describing the Highest Daily Lifetime Seven benefit. If you
terminate your Highest Daily Lifetime Seven benefit to elect the Highest Daily
Lifetime Seven with Beneficiary Income Option benefit, you will lose the
guarantees that you had accumulated under your Highest Daily Lifetime Seven
benefit and will begin new guarantees under the Highest Daily Lifetime Seven
with BIO benefit based on the Account Value as of the date the new benefit
becomes active.
If you elect this death benefit, you may not elect any other optional benefit.
You may elect the Beneficiary Income Option death benefit so long as the
Annuitant is no older than age 75 at the time of election. For purposes of
this optional death benefit, we calculate the Annual Income Amount and
Protected Withdrawal Value in the same manner that we do under Highest Daily
Lifetime Seven itself (except that for XTra Credit SIX, we exclude from the
Protected Withdrawal Value the amount of any Credit that was granted within 12
months prior to death). Because the fee for this benefit is based on the
Protected Withdrawal Value, the fee for Highest Daily Lifetime Seven with the
beneficiary income option may be greater than it would have been based on the
Account Value alone.
Upon a death that triggers payment of a death benefit under the Annuity, we
identify the following amounts: (a) the amount of the basic death benefit
under the Annuity (b) the Protected Withdrawal Value and (c) the Annual Income
Amount. If there were no withdrawals prior to the date of death, then we
calculate the Protected Withdrawal Value for purposes of this death benefit as
of the date of death, and we calculate the Annual Income Amount as if there
were a withdrawal on the date of death. If there were withdrawals prior to the
date of death, then we set the Protected Withdrawal Value and Annual Income
Amount for purposes of this death benefit as of the date that we receive due
proof of death.
If there is one beneficiary, he/she must choose to receive either the basic
death benefit (in a lump sum or other permitted form of distribution) or the
Beneficiary Income Option death benefit (in the form of periodic payments of
the Annual Income Amount - such payments may be annual or at other intervals
that we permit). If there are multiple beneficiaries, each beneficiary is
presented with the same choice. Thus, each beneficiary can choose to take
his/her portion of either (a) the basic death benefit or (b) the Beneficiary
Income Option death benefit. In order to receive the Beneficiary Income Option
death benefit, each beneficiary's share of the death benefit proceeds must be
allocated as a percentage of the total death benefit to be paid. We allow a
beneficiary who has opted to receive the Annual Income Amount to designate
another beneficiary, who would receive any remaining payments upon the former
beneficiary's death. Note also that the final payment, exhausting the
Protected Withdrawal Value, may be less than the Annual Income Amount.
Here is an example to illustrate how the death benefit may be paid:
. Assume that (i) the basic death benefit is $50,000, the Protected
Withdrawal Value is $100,000, and the Annual Income Amount is $5,000;
(ii) there are two beneficiaries (the first designated to receive 75% of
the death benefit and the second designated to receive 25% of the death
benefit); (iii) the first beneficiary chooses to receive his/her portion
of the death benefit in the form of the Annual Income Amount, and the
second beneficiary chooses to receive his/her portion of the death
benefit with reference to the basic death benefit.
. Under those assumptions, the first beneficiary will be paid a pro-rated
portion of the Annual Income Amount for 20 years (the 20 year pay out
period is derived from the $5,000 Annual Income Amount, paid each year
until it exhausts the entire $100,000 Protected Withdrawal Value).
The pro-rated portion of the Annual Income Amount, equal to $3,750
annually (i.e., the first beneficiary's 75% share multiplied by $5000),
is then paid each year for the 20 year period. Payment of $3,750 for 20
years results in total payments of $75,000 (i.e., the first
beneficiary's 75% share of the $100,000 Protected Withdrawal Value).
The second beneficiary would receive 25% of the basic death benefit
amount (or $12,500).
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If you elect to terminate Highest Daily Lifetime Seven with Beneficiary Income
Option, both Highest Daily Lifetime Seven and that death benefit option will
be terminated. You may not terminate the death benefit option without
terminating the entire benefit. If you terminate Highest Daily Lifetime Seven
with Beneficiary Income Option, your ability to elect other optional living
benefits will be affected as indicated in the "Election and Designations under
the Program" section, above.
2. We add the following as a new line item within the portion of the fee table
entitled "Your Optional Benefit Fees and Charges" to reflect the fee for
Highest Daily Lifetime Seven With Beneficiary Income Option:
Highest Daily Lifetime Seven with Beneficiary Income Option: maximum charge of
2.00% of PWV; current charge of 0.95% of PWV. *
Total Maximum Charges Total Current Charges
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ASAPIII: 1.25% of Sub-account net ASAPIII: 1.25% of Sub-account net
assets + 2.00% of PWV assets + 0.95% of PWV
APEX II: 1.65% of Sub-account net APEX II: 1.65% of Sub-account net
assets + 2.00% of PWV assets + 0.95% of PWV
ASL II: 1.65% of Sub-account net ASL II: 1.65% of Sub-account net
assets + 2.00% of PWV assets + 0.95% of PWV
XT6: 1.65% of Sub-account net XT6: 1.65% of Sub-account net
assets + 2.00% of PWV assets + 0.95% of PWV
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* Highest Daily Lifetime Seven with Beneficiary Income Option. Charge for
this benefit is assessed against the Protected Withdrawal Value ("PWV"). As
discussed in the description of the benefit, the charge is taken out of the
Sub-accounts. For ASAP III, 0.95% of PWV is in addition to 1.25% annual
charge of amounts invested in the Sub-accounts (in Annuity Years 1-8) and
0.65% annual charge of amounts invested in the Sub-accounts in subsequent
Annuity Years. For APEX II and ASL II, 0.95% of PWV is in addition to 1.65%
annual charge of amounts invested in the Sub-accounts. For XT6, 0.95% of
PWV is in addition to 1.65% annual charge of amounts invested in the
Sub-accounts in Annuity Years 1-10 and 0.65% annual charge of amounts
invested in the Sub-accounts in subsequent Annuity Years.
B. Addition of Lifetime Income Accelerator Feature (HD Lifetime Seven with
Lifetime Income Accelerator/SM/).
1. The following is added at the end of the section concerning Highest Daily
Lifetime Seven.
HD Lifetime Seven with Lifetime Income Accelerator/SM/. We offer another
version of Highest Daily Lifetime Seven that we call Highest Daily Lifetime
Seven with Lifetime Income Accelerator ("Highest Daily Lifetime Seven with
LIA"). This version is only being offered in those jurisdictions where we have
received regulatory approval and will be offered subsequently in other
jurisdictions when we receive regulatory approval in those jurisdictions.
Highest Daily Lifetime Seven with LIA is offered as an alternative to other
lifetime withdrawal options. If you elect this benefit, you may not elect any
other optional benefit. The income benefit under Highest Daily Lifetime Seven
with LIA currently is based on a single "designated life" who is between the
ages of 55 and 75 on the date that the benefit is elected. If you elected the
Highest Daily Lifetime Seven benefit prior to your state's approval of LIA,
you will have a 90 day transition period from the date the Highest Daily
Lifetime Seven with Lifetime Income Accelerator is approved in your state of
residence to terminate your Highest Daily Lifetime Seven benefit and elect the
Highest Daily Lifetime Seven with LIA benefit. After the 90 day transition
period, you may elect to add the Lifetime Income Accelerator option on any
anniversary of the Issue Date in accordance with the eligibility rules and
restrictions described in the "Election of and Designations under the Program"
section of the prospectus describing the Highest Daily Lifetime Seven benefit.
If you terminate your Highest Daily Lifetime Seven Benefit to elect the
Highest Daily Lifetime Seven with LIA benefit, you will lose the guarantees
that you had accumulated under your Highest Daily Lifetime Seven benefit and
will begin the new guarantees under the Highest Daily Lifetime Seven benefit
with LIA based on the account value as of the date the new benefit becomes
active.
Highest Daily Lifetime Seven with LIA guarantees, until the death of the
single designated life, the ability to withdraw an amount equal to double the
Annual Income Amount (which we refer to as the "LIA Amount") if you meet the
conditions set forth below. If you choose the Highest Daily Lifetime Seven
with LIA, the maximum charge is 2.00% of Protected Withdrawal Value ("PWV")
annually. We deduct the current charge (0.95% of PWV) at the end of each
quarter, where each such quarter is part of a year that begins on the
effective date of the benefit or an anniversary thereafter. Thus, on each such
quarter-end (or the next Valuation Day, if the quarter-end is not a Valuation
Day), we deduct 0.2375% of the Protected Withdrawal Value at the end of the
quarter. We deduct the fee pro rata from each of your Sub-accounts including
the AST Investment Grade Bond Portfolio Sub-account. Since this fee is based
on the protected withdrawal value, the fee for Highest Daily Lifetime Seven
with LIA may be greater than it would have been, had it been based on the
Account Value alone. If the fee to be deducted exceeds the current Account
Value, we will reduce the Account Value to zero, and continue the benefit as
described below.
If this benefit is being elected on an Annuity held as a 403 (b) plan, then in
addition to meeting the eligibility requirements listed below for the LIA
Amount you must separately qualify for distributions from the 403 (b) plan
itself.
You may choose Highest Daily Lifetime Seven without also electing LIA, however
you may not elect LIA without Highest Daily Lifetime Seven. All terms and
conditions of Highest Daily Lifetime Seven apply to this version of the
benefit, except as described herein. Currently, if you elect Highest Daily
Lifetime Seven with LIA and subsequently terminate the benefit, you will be
able to
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re-elect Highest Daily Lifetime Seven with LIA but all conditions of the
benefit described below must be met, and you may be subject to a waiting
period until you can elect this or another lifetime withdrawal benefit.
Eligibility Requirements for LIA Amount. Both a waiting period of 36 months,
from the benefit effective date, and an elimination period of 120 days, from
the date of notification that one or both of the requirements described
immediately below have been met, apply before you can become eligible for the
LIA Amount. Assuming the 36 month waiting period has been met and we have
received the notification referenced in the immediately preceding sentence,
the LIA amount would be available for withdrawal on the Valuation Day
immediately after the 120/th/ day. The waiting period and the elimination
period may run concurrently. In addition to satisfying the waiting and
elimination period, either or both of the following requirements ("LIA
conditions") must be met. It is not necessary to meet both conditions:
(1) The designated life is confined to a qualified nursing facility. A
qualified nursing facility is a facility operated pursuant to law or any
state licensed facility providing medically necessary in-patient care which
is prescribed by a licensed physician in writing and based on physical
limitations which prohibit daily living in a non-institutional setting.
(2) The designated life is unable to perform two or more basic abilities of
caring for oneself or "activities of daily living." We define these basic
abilities as:
i. Eating: Feeding oneself by getting food into the body from a receptacle
(such as a plate, cup or table) or by a feeding tube or intravenously.
ii. Dressing: Putting on and taking off all items of clothing and any
necessary braces, fasteners or artificial limbs.
iii. Bathing: Washing oneself by sponge bath; or in either a tub or shower,
including the task of getting into or out of the tub or shower.
iv. Toileting: Getting to and from the toilet, getting on and off the
toilet, and performing associated personal hygiene.
v. Transferring: Moving into or out of a bed, chair or wheelchair.
vi. Continence: Maintaining control of bowel or bladder function; or when
unable to maintain control of bowel or bladder function, the ability to
perform personal hygiene (including caring for catheter or colostomy bag).
You must notify us when the LIA conditions have been met. If, when we receive
such notification, there are more than 120 days remaining until the end of the
waiting period described above, you will not be eligible for the LIA Amount.
If there are 120 days or less remaining until the end of the waiting period
when we receive notification that the LIA conditions are met, we will
determine eligibility for the LIA Amount through our then current
administrative process, which may include, but is not limited to,
documentation verifying the LIA conditions and/or an assessment by a third
party of our choice. Such assessment may be in person and we will assume any
costs associated with the aforementioned assessment. Once eligibility is
determined, the LIA Amount is equal to double the Annual Income Amount as
described in this prospectus under the Highest Daily Lifetime Seven Benefit.
Additionally, we will reassess your eligibility on an annual basis although
your LIA benefit for the year that immediately precedes our reassessment will
not be affected if it is determined that you are no longer eligible. Your
first reassessment may occur in the same year as your initial assessment. If
we determine you are no longer eligible to receive the LIA Amount, upon the
next Annuity Anniversary the Annual Income Amount would replace the LIA
Amount. There is no limit on the number of times you can become eligible for
the LIA Amount, however, each time would require the completion of the 120-day
elimination period, notification that the designated life meets the LIA
conditions, and determination, through our then current administrative
process, that you are eligible for the LIA Amount, each as described above.
LIA amount at the first Withdrawal. If your first withdrawal subsequent to
election of Highest Daily Lifetime Seven with LIA occurs while you are
eligible for the LIA Amount, the available LIA Amount is equal to double the
Annual Income Amount.
LIA amount after the First Withdrawal. If you become eligible for the LIA
Amount after you have taken your first withdrawal, the available LIA amount
for the current and subsequent Annuity Years is equal to double the then
current Annual Income Amount, however the available LIA amount in the current
Annuity Year is reduced by any withdrawals that have been taken in the current
Annuity Year. Cumulative withdrawals in an Annuity Year which are less than or
equal to the LIA Amount (when eligible for the LIA amount) will not reduce
your LIA Amount in subsequent Annuity Years, but any such withdrawals will
reduce the LIA Amount on a dollar-for-dollar basis in that Annuity Year.
Withdrawals In Excess of the LIA amount. If your cumulative withdrawals in an
Annuity Year are in excess of the LIA Amount when you are eligible ("Excess
Withdrawal"), your LIA Amount in subsequent years will be reduced (except with
regard to required minimum distributions) by the result of the ratio of the
excess portion of the withdrawal to the Account Value immediately prior to the
Excess Withdrawal. Reductions include the actual amount of the withdrawal,
including any CDSC that may apply. Withdrawals of any amount up to and
including the LIA Amount will reduce the Protected Withdrawal Value by the
4
amount of the withdrawal. Excess Withdrawals will reduce the Protected
Withdrawal Value by the same ratio as the reduction to the LIA Amount. Any
withdrawals that are less than or equal to the LIA amount (when eligible) but
in excess of the free withdrawal amount available under this Annuity will not
incur a CDSC.
Withdrawals are not required. However, subsequent to the first withdrawal, the
LIA Amount is not increased in subsequent Annuity Years if you decide not to
take a withdrawal in an Annuity Year or take withdrawals in an Annuity Year
that in total are less than the LIA Amount.
Purchase Payments. If you are eligible for the LIA Amount as described under
"Eligibility Requirements for LIA Amount" and you make an additional Purchase
Payment, we will increase your LIA Amount by double the amount we add to your
Annual Income Amount.
Step Ups. If your Annual Income Amount is stepped up, your LIA Amount will be
stepped up to equal double the stepped up Annual Income Amount.
Guarantee Payments. If your Account Value is reduced to zero as a result of
cumulative withdrawals that are equal to or less than the LIA Amount, or as a
result of the fee that we assess for Highest Daily Lifetime Seven with LIA,
and there is still a LIA Amount available, we will make an additional payment
for that Annuity Year equal to the remaining LIA Amount. Thus, in that
scenario, the remaining LIA Amount would be payable even though your Account
Value was reduced to zero. In subsequent Annuity Years we make payments that
equal the LIA Amount as described in this section. We will make payments until
the death of the single designated life. Should the designated life no longer
qualify for the LIA amount (as described under "Eligibility Requirements for
LIA Amount" above), the Annual Income Amount would continue to be available.
Subsequent eligibility for the LIA Amount would require the completion of the
120 day elimination period as well as meeting the LIA conditions listed above
under "Eligibility Requirements for LIA Amount". To the extent that cumulative
withdrawals in the current Annuity Year that reduce your Account Value to zero
are more than the LIA Amount (except in the case of required minimum
distributions), Highest Daily Lifetime Seven with LIA terminates, and no
additional payments are made.
Annuity Options. In addition to the Highest Daily Lifetime Seven Annuity
Options described above, after the 10th benefit anniversary you may also
request that we make annuity payments each year equal to the Annual Income
Amount. In any year that you are eligible for the LIA Amount, we make annuity
payments equal to the LIA Amount. If you would receive a greater payment by
applying your Account Value to receive payments for life under your Annuity,
we will pay the greater amount. Prior to the 10th benefit anniversary this
option is not available.
We will continue to make payments until the death of the Designated Life. If
this option is elected, the Annual Income Amount and LIA Amount will not
increase after annuity payments have begun.
If you elect Highest Daily Lifetime Seven with LIA, and never meet the
eligibility requirements you will not receive any additional payments based on
the LIA Amount.
2. We add the following as a new line item within the portion of the fee table
entitled "Your Optional Benefit Fees and Charges" to reflect the fee for
Highest Daily Lifetime Seven With Optional Lifetime Income Accelerator:
Highest Daily Lifetime Seven w/Optional Lifetime Income Accelerator: maximum
charge of 2.00% of PWV; current charge of 0.95% of PWV. *
Total Maximum Charges Total Current Charges
- --------------------------------------- -------------------------------------
ASAPIII: 1.25% of Sub-account net ASAPIII: 1.25% of Sub-account net
assets + 2.00% of PWV assets + 0.95% of PWV
APEX II: 1.65% of Sub-account net APEX II: 1.65% of Sub-account net
assets + 2.00% of PWV assets + 0.95% of PWV
ASL II: 1.65% of Sub-account net ASL II: 1.65% of Sub-account net
assets + 2.00% of PWV assets + 0.95% of PWV
XT6: 1.65% of Sub-account net XT6: 1.65% of Sub-account net
assets + 2.00% of PWV assets + 0.95% of PWV
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* Highest Daily Lifetime Seven With Lifetime Income Accelerator. Charge for
this benefit is assessed against the Protected Withdrawal Value ("PWV"). As
discussed in the description of the benefit, the charge is taken out of the
Sub-accounts. For ASAP III, 0.95% of PWV is in addition to 1.25% annual
charge of amounts invested in the Sub-accounts (in Annuity Years 1-8) and
0.65% annual charge of amounts invested in the Sub-accounts in subsequent
Annuity Years. For APEX II and ASL II, 0.95% of PWV is in addition to 1.65%
annual charge of amounts invested in the Sub-accounts. For XT6, 0.95% of
PWV is in addition to 1.65% annual charge of amounts invested in the
Sub-accounts in Annuity Years 1-10 and 0.65% annual charge of amounts
invested in the Sub-accounts in subsequent Annuity Years.
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C. Revision to the way that certain withdrawals of the Annual Income Amount
are impacted by CDSC
We add the following as the last sentence of the first paragraph under the
sub-section entitled "Key Feature - Annual Income Amount under the Highest
Daily Lifetime Seven Benefit" to make clear that no withdrawal of the Annual
Income Amount (provided such withdrawal does not constitute Excess Income)
will be subject to a CDSC:
Note that if your withdrawal of the Annual Income Amount in a given Annuity
Year exceeds the applicable free withdrawal amount under the Annuity (but is
not considered Excess Income), we will not impose any CDSC on the amount of
that withdrawal.
D. Revised Asset Transfer Formula for Highest Daily Lifetime Seven and Spousal
Highest Daily Lifetime Seven
For elections of Highest Daily Lifetime Seven on or after July 21, 2008, the
asset transfer formula differs from that set forth in the May 1, 2008
prospectus. The revised formula reflects the fact that Account Value may
include amounts allocated to certain Fixed Rate Options. Currently, no Fixed
Rate Options are available for use with Highest Daily Lifetime Seven and
Spousal Highest Daily Lifetime Seven.
Here is the revised formula (the Table of "a" factors remains the same):
Terms and Definitions referenced in the calculation formula:
. Cu - the upper target is established on the effective date of the
Highest Daily Lifetime Seven benefit (the "Effective Date") and is not
changed for the life of the guarantee. Currently, it is 83%.
. Ct - the target is established on the Effective Date and is not changed
for the life of the guarantee. Currently, it is 80%.
. Cl - the lower target is established on the Effective Date and is not
changed for the life of the guarantee. Currently, it is 77%.
. L - the target value as of the current business day.
. r - the target ratio.
. a - factors used in calculating the target value. These factors are
established on the Effective Date and are not changed for the life of
the guarantee.
. V\\v\\ - the total value of all Permitted Sub-accounts in the Annuity.
. V\\F\\ the total value of all elected Fixed Rate Options in the Annuity.
. B - the total value of the AST Investment Grade Bond Portfolio
Sub-account.
. P - Income Basis. Prior to the first withdrawal, the Income Basis is the
Protected Withdrawal Value calculated as if the first withdrawal were
taken on the date of calculation. After the first withdrawal, the Income
Basis is equal to the greater of (1) the Protected Withdrawal Value at
the time of the first withdrawal, adjusted for additional purchase
payments including the amount of any associated Credits, and adjusted
proportionally for excess withdrawals*, (2) any highest quarterly value
increased for additional purchase payments including the amount of any
associated Credits, and adjusted for withdrawals, and (3) the Account
Value.
. T - the amount of a transfer into or out of the AST Investment Grade
Bond Portfolio Sub-account.
. * Note: withdrawals of less than the Annual Income Amount do not reduce
the Income Basis.
Target Value Calculation:
On each business day, a target value (L) is calculated, according to the
following formula. If the Account Value (V\\V\\ + V\\F\\) is equal to zero, no
calculation is necessary.
L = 0.05 * P * a
Transfer Calculation:
The following formula, which is set on the Benefit Effective Date and is not
changed for the life of the guarantee, determines when a transfer is required:
Target Ratio r = (L - B) / (V\\V\\ + V\\F\\).
. If r (greater than) Cu, assets in the Permitted Sub-accounts are
transferred to the AST Investment Grade Bond Portfolio Sub-account.
6
. If r (less than) Cl, and there are currently assets in the AST
Investment Grade Bond Portfolio Sub-account (B (greater than) 0), assets
in the AST Investment Grade Bond Portfolio Sub-account are transferred
to the Permitted Sub-accounts according to most recent allocation
instructions.
The following formula, which is set on the Benefit Effective Date and is not
changed for the life of the guarantee, determines the transfer amount:
T = {Min (V\\V\\ + V\\F\\), [L - B - Money is transferred from the
(V\\V\\ + V\\F\\) * Ct] / (1-Ct))} elected Sub-accounts and Fixed
Rate Options to the Transfer
Account
T = {Min (B,-[L - B -(V\\V\\ + V\\F\\)* Money is transferred from the
C\\t\\] / (1-C\\t\\))} Transfer Account to the elected
Sub-accounts
CHANGES TO SPOUSAL HIGHEST DAILY LIFETIME SEVEN
1. We add the following, immediately after the section entitled "Additional
Tax Considerations":
A. Addition of Death Benefit (Spousal HD Lifetime Seven with Beneficiary Income
Option/SM/)
The Annuity Owner may opt for a death benefit, the value of which is linked to
the Annual Income Amount under the benefit. We refer to the death benefit as
the Beneficiary Income Option. As detailed below, a beneficiary taking the
Annuity's death benefit under this feature is paid the Annual Income Amount
until the Protected Withdrawal Value is depleted. (Note that the final
payment, exhausting the Protected Withdrawal Value, may be less than the
Annual Income Amount). If you choose the Spousal Highest Daily Lifetime Seven
with Beneficiary Income Option the maximum charge we may impose is 2.00% of
Protected Withdrawal Value ("PWV") annually. However, we impose a current
charge of 0.95% of PWV annually. To reflect this death benefit option, we add
the following to the description of Spousal Highest Daily Lifetime Seven:
Spousal HD Lifetime Seven with Beneficiary Income Option/SM/
We offer an optional death benefit feature under this benefit, the amount of
which is linked to your Annual Income Amount. You may choose Spousal Highest
Daily Lifetime Seven without also selecting the Beneficiary Income Option
death benefit ("BIO"). If you elect Spousal Highest Daily Lifetime Seven
without the Beneficiary Income Option and would like to add this feature
later, you must terminate the Spousal Highest Daily Lifetime Seven benefit and
elect the Spousal Highest Daily Lifetime Seven with Beneficiary Income Option.
If you elected the Spousal Highest Daily Lifetime Seven benefit prior to your
state's approval of BIO, you will have a 90 day transition period from the
date the Beneficiary Income Option is approved in your state of residence to
terminate your Spousal Highest Daily Lifetime Seven benefit and elect the
Spousal Highest Daily Lifetime Seven benefit with Beneficiary Income Option.
After the 90 day transition period, you may elect to add the Beneficiary
Income Option on any anniversary of the Issue Date in accordance with the
eligibility rules and restrictions described in the "Election of and
Designations under the Program" section of the prospectus describing the
Highest Daily Lifetime Seven benefit. If you terminate your Spousal Highest
Daily Lifetime Seven benefit to elect the Spousal Highest Daily Lifetime Seven
with Beneficiary Income Option benefit, you will lose all guarantees under the
Spousal Highest Daily Lifetime Seven benefit, and will begin new guarantees
under the Spousal Highest Daily Lifetime Seven with BIO based on the Account
Value as of the date the new benefit becomes active.
If you elect the Beneficiary Income Option death benefit, you may not elect
any other optional benefit. You may elect the Beneficiary Income Option death
benefit so long as each Designated Life is no older than age 75 at the time of
election. This death benefit is not transferable in the event of a divorce,
nor may the benefit be split in accordance with any divorce proceedings or
similar instrument of separation. Since this fee is based on the Protected
Withdrawal Value, the fee for Spousal Highest Daily Lifetime Seven with BIO
may be greater than it would have been, had it been based on the Account Value
alone.
For purposes of the Beneficiary Income Option death benefit, we calculate the
Annual Income Amount and Protected Withdrawal Value in the same manner that we
do under Spousal Highest Daily Lifetime Seven itself (except that for XTra
Credit SIX, we exclude from the Protected Withdrawal Value the amount of any
Credit that was granted within 12 months prior to death). Upon the first death
of a Designated Life, no amount is payable under the Beneficiary Income Option
death benefit. Upon the second death of a Designated Life, we identify the
following amounts: (a) the amount of the base death benefit under the Annuity
(b) the Protected Withdrawal Value and (c) the Annual Income Amount. If there
were no withdrawals prior to the date of death, then we calculate the
Protected Withdrawal Value for purposes of this death benefit as of the date
of death, and we calculate the Annual Income Amount as if there were a
withdrawal on the date of death. If there were withdrawals prior to the date
of death, then we set the Protected Withdrawal Value and Annual Income Amount
for purposes of this death benefit as of the date that we receive due proof of
death.
7
If there is one beneficiary, he/she must choose to receive either the base
death benefit (in a lump sum or other permitted form of distribution) or the
Beneficiary Income Option death benefit (in the form of annual payment of the
Annual Income Amount - such payments may be annual or at other intervals that
we permit). If there are multiple beneficiaries, each beneficiary is presented
with the same choice. Thus, each beneficiary can choose to take his/her
portion of either (a) the basic death benefit or (b) the Beneficiary Income
Option death benefit. In order to receive the Beneficiary Income Option death
benefit, each beneficiary's share of the death benefit proceeds must be
allocated as a percentage of the total death benefit to be paid. We allow a
beneficiary who has opted to receive the Annual Income Amount to designate
another beneficiary, who would receive any remaining payments upon the former
beneficiary's death. Note also that the final payment, exhausting the
Protected Withdrawal Value, may be less than the Annual Income Amount.
Here is an example to illustrate how the death benefit may be paid:
. Assume that (i) the basic death benefit is $50,000, the Protected
Withdrawal Value is $100,000, and the Annual Income Amount is $5,000;
(ii) there are two beneficiaries (the first designated to receive 75% of
the death benefit and the second designated to receive 25% of the death
benefit); (iii) the first beneficiary chooses to receive his/her portion
of the death benefit in the form of the Annual Income Amount, and the
second beneficiary chooses to receive his/her portion of the death
benefit with reference to the basic death benefit.
. Under those assumptions, the first beneficiary will be paid a pro-rated
portion of the Annual Income Amount for 20 years (the 20 year pay out
period is derived from the $5,000 Annual Income Amount, paid each year
until it exhausts the entire $100,000 Protected Withdrawal Value).
The pro-rated portion of the Annual Income Amount equal to $3,750 (i.e.,
the first beneficiary's 75% share multiplied by $5,000) is then paid
each year for the 20 year period. Payment of $3,750 for 20 years results
in total payments of $75,000 (i.e., the first beneficiary's 75% share of
the $100,000 Protected Withdrawal Value).
The second beneficiary would receive 25% of the basic death benefit
amount (or $12,500).
If you elect to terminate Spousal Highest Daily Lifetime Seven with
Beneficiary Income Option, both Spousal Highest Daily Lifetime Seven and that
death benefit option will be terminated. You may not terminate the death
benefit option without terminating the entire benefit. If you terminate
Spousal Highest Daily Lifetime Seven with Beneficiary Income Option, your
ability to elect other optional living benefits will be affected as indicated
in the "Election and Designations under the Program" section, above.
2. We add the following as a new line item within the portion of the fee table
entitled "Your Optional Benefit Fees and Charges" to reflect the fee for
Spousal Highest Daily Lifetime Seven With Beneficiary Income Option:
Spousal Highest Daily Lifetime Seven w/Beneficiary Income Option: maximum
charge of 2.00% of PWV; current charge of 0.95% of PWV. *
Total Maximum Charges Total Current Charges
- --------------------------------------- -------------------------------------
ASAPIII: 1.25% of Sub-account net ASAPIII: 1.25% of Sub-account net
assets + 2.00% of PWV assets + 0.95% of PWV
APEX II: 1.65% of Sub-account net APEX II: 1.65% of Sub-account net
assets + 2.00% of PWV assets + 0.95% of PWV
ASL II: 1.65% of Sub-account net ASL II: 1.65% of Sub-account net
assets + 2.00% of PWV assets + 0.95% of PWV
XT6: 1.65% of Sub-account net XT6: 1.65% of Sub-account net
assets + 2.00% of PWV assets + 0.95% of PWV
- --------
* Spousal Highest Daily Lifetime Seven With Beneficiary Income Option. Charge
for this benefit is assessed against the Protected Withdrawal Value
("PWV"). As discussed in the description of the benefit, the charge is
taken out of the Sub-accounts. For ASAP III, 0.95% of PWV is in addition to
1.25% annual charge of amounts invested in the Sub-accounts (in Annuity
Years 1-8) and 0.65% annual charge of amounts invested in the Sub-accounts
in subsequent Annuity Years. For APEX II and ASL II, 0.95% of PWV is in
addition to 1.65% annual charge of amounts invested in the Sub-accounts.
For XT6, 0.95% of PWV is in addition to 1.65% annual charge of amounts
invested in the Sub-accounts in Annuity Years 1-10 and 0.65% annual charge
of amounts invested in the Sub-accounts in subsequent Annuity Years.
B. Revision to the way that certain withdrawals of the Annual Income Amount
are impacted by CDSC
We add the following as the last sentence of the first paragraph under the
sub-section entitled "Key Feature - Annual Income Amount under the Spousal
Highest Daily Lifetime Seven Benefit" to make clear that no withdrawal of the
Annual Income Amount (provided such withdrawal does not constitute Excess
Income) will be subject to a CDSC:
Note that if your withdrawal of the Annual Income Amount in a given Annuity
Year exceeds the applicable free withdrawal amount under the Annuity (but is
not considered Excess Income), we will not impose any CDSC on the amount of
that withdrawal.
8
C. Revised Asset Transfer Formula for Highest Daily Lifetime Seven and Spousal
Highest Daily Lifetime Seven
For elections of Spousal Highest Daily Lifetime Seven on or after July 21,
2008, the asset transfer formula differs from that set forth in the May 1,
2008 prospectus. See the section above under Highest Daily Lifetime Seven for
the revised formula.
EXPANDED GROUP OF AVAILABLE FUNDS
Under Investment Options, What Are the Investment Objectives And Policies Of
The Portfolios?, we make the revisions appearing below.
1. We replace the sentence stating "[t] following chart lists the currently
available and permitted investment options . . ." with the following:
As a condition to your participating in certain of our optional benefits, we
limit the investment options to which you may allocate your Account Value.
Broadly speaking, we offer two groups of permitted funds. Under the first
group, your allowable investment options are more limited, but you are not
subject to mandatory quarterly re-balancing. Under the second group, you may
allocate your Account Value between a broader range of investment options, but
must participate in quarterly re-balancing. The set of tables immediately
below describes the first category of permitted investment options. The second
set of tables describes the second category, under which:
(a) you must allocate at least 20% of your Account Value to certain fixed
income portfolios (currently, the AST PIMCO Total Return Bond Portfolio
and the AST Western Asset Core Plus Bond Portfolio).
(b) you may allocate up to 80% in the equity and other portfolios listed in
the table below.
(c) on each quarter (or the next Valuation Day, if the quarter-end is not a
Valuation Day), we will automatically re-balance your Account Value, so
that the percentages devoted to each Portfolio remain the same as those in
effect on the immediately preceding quarter-end. Note that on the first
quarter-end following your participation in the Optional Allocation and
Rebalancing Program, we will re-balance your Account Value so that the
percentages devoted to each Portfolio remain the same as those in effect
when you began the Optional Allocation and Rebalancing Program.
(d) between quarter-ends, you may re-allocate your Account Value among the
investment options permitted within this category. If you reallocate, the
next quarterly rebalancing will restore the percentages to those of your
most recent reallocation.
While those who do not participate in any optional benefit generally may
invest in any of the investment options described in this prospectus, only
those who participate in Highest Daily Lifetime Seven and Spousal Highest
Daily Lifetime Seven may participate in the second category (along with its
attendant re-balancing requirement). This second category is called our
"Optional Allocation and Rebalancing Program." If you participate in the
Optional Allocation and Rebalancing Program, you may not participate in a
Dollar Cost Averaging Program or Automatic Rebalancing Program. We may modify
or terminate the Optional Allocation and Rebalancing Program at any time. Any
such modification or termination will (i) be implemented only after we have
notified you in advance (ii) not affect the guarantees you had accrued under
Highest Daily Lifetime Seven or Spousal Highest Daily Lifetime Seven or your
ability to continue to participate in those optional benefits and (iii) not
require you to transfer Account Value out of any Portfolio in which you
participated immediately prior to the modification or termination.
9
The following chart lists the currently available and permitted investment
options when you choose certain optional benefits/1/:
Group I: Allowable Benefit Allocations
- --------
/1/ Fund availability may vary by annuity.
Optional Benefit Name/2/ Allowable Benefit Allocations
Lifetime Five Income Benefit AST Academic Strategies Asset
Spousal Lifetime Five Income Benefit Allocation Portfolio
Highest Daily Lifetime Five Income AST Capital Growth Asset
Benefit Allocation Portfolio
AST Balanced Asset Allocation
Highest Daily Lifetime Seven Income Portfolio
Benefit AST Focus Four Plus Portfolio
AST Preservation Asset Allocation
Spousal Highest Daily Lifetime Seven Portfolio
Income Benefit AST First Trust Balanced Target
Portfolio
Highest Daily Value Death Benefit AST First Trust Capital
Appreciation Target Portfolio
AST Advanced Strategies Portfolio
AST T. Rowe Price Asset
Allocation Portfolio
AST UBS Dynamic Alpha Strategy
Portfolio
AST Schroders Multi-Asset World
Strategies Portfolio
AST Niemann Capital Growth Asset
Allocation Portfolio
AST CLS Growth Asset Allocation
Portfolio
AST CLS Moderate Asset Allocation
Portfolio
AST Horizon Growth Asset
Allocation Portfolio
AST Horizon Moderate Asset
Allocation Portfolio
Franklin Templeton VIP Founding
Funds Allocation Fund
--------------------------------------------------------------------------------
Combo 5% Rollup & HAV Death Benefit All investment options permitted,
EXCEPT these:
Guaranteed Minimum Income Benefit ProFund VP UltraNASDAQ-100
Guaranteed Minimum Withdrawal Benefit ProFund VP UltraSmall Cap
GRO/GRO PLUS/GRO PLUS 2008 ProFund VP Semiconductor
Highest Anniversary Value Death Benefit ProFund VP Internet
ProFund VP UltraBull
Highest Daily GRO Value Line(R) Target 25
AIM VI Technology
ProFund VP Technology
NASDAQ(R) Target 15
ProFund VP Biotechnology
ProFund VP Short Small-Cap
Access VP High Yield
ProFund VP Short Mid-Cap
Evergreen VA Growth Fund
--------------------------------------------------------------------------------
Additional 5 investment options
NOT permitted with GRO Plus 2008
GRO Plus 2008 & Highest Daily GRO
Highest Daily GRO ProFund VP Ultra Mid-Cap
ProFund VP Precious Metals
ProFund VP NASDAQ-100
ProFund VP Asia 30
ProFund VP Short NASDAQ-100
--------------------------------------------------------------------------------
Group II: Optional Allocation and Rebalancing Program
Optional Benefit Name/2/ Allowable Benefit Allocations
Highest Daily Lifetime Seven AST Academic Strategies Asset
Spousal Highest Daily Lifetime Seven Allocation
AST Advanced Strategies
AST Aggressive Asset Allocation
AST AllianceBernstein Core Value
AST AllianceBernstein Growth &
Income
--------------------------------------------------------------------------------
/2/ Detailed Information regarding these optional benefits can be found in the
"Living Benefits" and "Death Benefits" sections of this prospectus.
10
AST American Century Income &
Growth
AST Balanced Asset Allocation
AST Capital Growth Asset
Allocation
AST CLS Growth Asset Allocation
AST CLS Moderate Asset Allocation
AST Cohen & Steers Realty
AST DeAM Large-Cap Value
AST Federated Aggressive Growth
AST First Trust Balanced Target
AST First Trust Capital
Appreciation Target
AST Focus Four Plus
AST Global Real Estate
AST Goldman Sachs Concentrated
Growth
AST Goldman Sachs Mid-Cap Growth
AST Goldman Sachs Small-Cap Value
AST High Yield
AST Horizon Growth Asset
Allocation
AST Horizon Moderate Asset
Allocation
AST International Growth
AST International Value
AST JPMorgan International Equity
AST Large-Cap Value
AST Lord Abbett Bond-Debenture
AST Marsico Capital Growth
AST MFS Global Equity
AST MFS Growth
AST Mid-Cap Value
AST Money Market
AST Neuberger Berman Mid-Cap
Growth
AST Neuberger Berman LSV Midcap
Value
AST Neuberger Berman Small-Cap
Growth
AST Niemann Capital Growth Asset
Allocation
AST Parametric Emerging Markets
Equity
AST PIMCO Limited Maturity Bond
AST PIMCO Total Return Bond
AST Preservation Asset Allocation
AST QMA US Equity Alpha
AST Schroders Multi-Asset World
Strategies Portfolio
AST Small-Cap Growth
AST Small-Cap Value
AST T. Rowe Price Asset Allocation
AST T. Rowe Price Global Bond
AST T. Rowe Price Large-Cap Growth
AST T. Rowe Price Natural
Resources
AST UBS Dynamic Alpha Strategy
AST Western Asset Core Plus Bond
Franklin Templeton VIP Founding
Funds Allocation Fund
ProFund VP Consumer Goods
ProFund VP Consumer Services
ProFund VP Financials
ProFund VP Health Care
ProFund VP Industrials
ProFund VP Large-Cap Growth
ProFund VP Large-Cap Value
ProFund VP Mid-Cap Growth
ProFund VP Mid-Cap Value
ProFund VP Real Estate
ProFund VP Small-Cap Growth
ProFund VP Small-Cap Value
ProFund VP Telecommunications
ProFund VP Utilities
11
CHANGES TO THE ASLII ANNUITY
We make the following revisions to the prospectus in order to remove
limitations on the amount of the basic Death Benefit paid under our ASLII
Annuity when death occurs on or after the decedent's age 85. We are also
adding a restriction that the ASLII Annuity is only available for purchase up
to age 85.
. Within the section "Purchasing Your Annuity," within the subsection
"What Are Our Requirements for Purchasing One of the Annuities?," we
replace the paragraph entitled "Age Restrictions" with the following:
Age Restrictions: Unless we agree otherwise and subject to our rules, the
Owner (or Annuitant if entity owned) must not be older than a maximum issue
age as of the Issue Date of the Annuity as follows: age 80 for ASAP III, age
75 for XT6 and age 85 for APEX II and ASL II. If an Annuity is owned jointly,
the oldest of the Owners must not be older than the maximum issue age on the
Issue Date. You should consider your need to access your Account Value and
whether the Annuity's liquidity features will satisfy that need. If you take a
distribution prior to age 59 1/2, you may be subject to a 10% penalty in
addition to ordinary income taxes on any gain. The availability and level of
protection of certain optional benefits may vary based on the age of the Owner
on the Issue Date of the Annuity or the date of the Owner's death.
. Within the section "Death Benefit," within the subsection "Basic Death
Benefit," we replace the last three paragraphs with the following:
For ASAP III, APEX II and XT6 Annuities, the existing basic Death Benefit (for
all decedent ages) is the greater of:
. The sum of all Purchase Payments (not including any Credits) less the
sum of all proportional withdrawals.
. The sum of your Account Value in the Sub-accounts and your Interim Value
in the Fixed Allocations (less the amount of any Credits applied within
12-months prior to the date of death, with respect to XT6).
For ASL II Annuities issued before July 21, 2008,where death occurs before the
decedent's age 85, the basic Death Benefit is the greater of:
. The sum of all Purchase Payments less the sum of all proportional
withdrawals.
. The sum of your Account Value in the Sub-accounts and your Interim Value
in the Fixed Allocations.
For ASL II Annuities issued before July 21, 2008 where death occurs after the
decedent's age 85, the Death Benefit is (a) your Account Value (for Annuities
other than those issued in New York) or (b) your Account Value in the
Sub-accounts plus your Interim Value in the Fixed Allocations (for Annuities
issued in New York only).
For ASL II Annuities issued on or after July 21, 2008, subject to regulatory
approval, the basic Death Benefit is the greater of:
. The sum of all Purchase Payments less the sum of all proportional
withdrawals.
. The sum of your Account Value in the Sub-accounts and your Interim Value
in the Fixed Allocations.
"Proportional withdrawals" are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn. For
example, a withdrawal of 50% of Account Value would be considered as a 50%
reduction in Purchase Payments for purposes of calculating the basic Death
Benefit.
12
PRUDENTIAL ANNUITIES LIFE ASSURANCE CORPORATION
OPTIMUM/SM/
OPTIMUM FOUR/SM/
OPTIMUM PLUS/SM/
Supplement, dated July 21, 2008
To
Prospectus, dated May 1, 2008
This supplement should be read and retained with the prospectus for your
Annuity. If you would like another copy of the prospectus, please call us at
1-888-PRU-2888.
This supplement is being issued to describe enhancements that are being made
to certain optional living benefits available under each of the
above-referenced Annuities. The terms used in this supplement are defined in
the Glossary of Terms in the prospectus. With respect to Highest Daily
Lifetime Seven, we (a) revise the way that certain withdrawals of the Annual
Income Amount are impacted by the Contingent Deferred Sales Charge ("CDSC")
(b) add an optional death benefit, (the "Highest Daily Lifetime Seven with
Beneficiary Income Option") (c) add an optional benefit that increases the
Annual Income Amount if the owner qualifies for increased payments, (the
"Highest Daily Lifetime Seven with Lifetime Income Accelerator"), and
(d) modify the asset transfer formula under the benefit, to make clear that
the Account Value may include amounts allocated to certain Fixed Rate Options.
For Spousal Highest Daily Lifetime Seven, we (a) revise the way that certain
withdrawals of the Annual Income Amount are impacted by CDSC (b) add an
optional death benefit (the "Spousal Highest Daily Lifetime Seven with
Beneficiary Income Option") and (c) modify the asset transfer formula under
the benefit, to make clear that the Account Value may include amounts
allocated to certain Fixed Rate Options. The Highest Daily Lifetime Seven with
Beneficiary Income Option and the Spousal Highest Daily Lifetime Seven with
Beneficiary Income Option allow the beneficiary to continue to withdraw the
Annual Income Amount until the Protected Withdrawal Value is depleted. Thus,
the option may be appropriate for an Annuity Owner who wants to provide an
additional death benefit option to his/her beneficiary.
The Highest Daily Lifetime Seven with Lifetime Income Accelerator provides a
benefit under which the Annuity Owner may withdraw double the Annual Income
Amount once he/she meets the benefit's eligibility requirements (e.g., being
confined to a qualified nursing facility or being unable to perform two daily
life activities as defined below). Thus, this benefit may be appropriate for
an Annuity Owner who may meet these requirements at a future date.
Except as otherwise provided here, the description of each optional living
benefit set forth in the May 1, 2008 prospectus remains unchanged.
CHANGES TO HIGHEST DAILY LIFETIME SEVEN
A. Addition of Death Benefit (HD Lifetime Seven with Beneficiary Income
Option/SM/)
For elections of Highest Daily Lifetime Seven on or after July 21, 2008, the
Annuity Owner may opt for a death benefit, the value of which is linked to the
Annual Income Amount under the benefit. As detailed below, a beneficiary
taking the Annuity's death benefit under this feature is paid the Annual
Income Amount until the Protected Withdrawal Value is depleted. (Note that the
final payment, exhausting the Protected Withdrawal Value, may be less than the
Annual Income Amount). We may impose a maximum charge of 2.00% of Protected
Withdrawal Value ("PWV") annually, but currently impose a charge of 0.95% of
PWV annually, if you choose Highest Daily Lifetime Seven with Beneficiary
Income Option. See the table entitled "Your Optional Benefit Fees and Charges"
in the prospectus for a description of all fees and charges related to
optional benefits.
1. To reflect this death benefit option, we add the following to the
description of Highest Daily Lifetime Seven, immediately after the
sub-section entitled Additional Tax Considerations:
HD Lifetime Seven with Beneficiary Income Option/SM/
We offer an optional death benefit feature under this benefit, the amount of
which is linked to your Annual Income Amount. We refer to this optional death
benefit as the Beneficiary Income Option ("BIO"). You may choose Highest Daily
Lifetime Seven without also selecting the Beneficiary Income Option death
benefit. You must elect the Beneficiary Income Option death benefit at the
time you elect Highest Daily Lifetime Seven. If you elect Highest Daily
Lifetime Seven prior to your state's approval of the Beneficiary Income Option
and would like to add this feature later, you must terminate the Highest Daily
Lifetime Seven benefit and elect the Highest Daily Lifetime Seven with
Beneficiary Income Option. If you elected the Highest Daily Lifetime Seven
benefit, you will have a 90 day transition period from the date the
Beneficiary Income Option is approved in your state of residence to terminate
your Highest Daily Lifetime Seven benefit and elect the Highest Daily Lifetime
Seven benefit with Beneficiary Income Option. If you do not elect to add the
Beneficiary Income Option in the 90 day transition period, you can elect it on
any anniversary of the Issue Date that is at least 90 calendar days from the
date that the Highest Daily Lifetime Seven benefit was terminated. If you
terminate your Highest Daily Lifetime Seven benefit to elect the Highest Daily
Lifetime Seven with Beneficiary Income Option benefit, you will lose all
guarantees under the Highest Daily Lifetime Seven benefit, and will begin the
new guarantees under the Highest Daily Lifetime Seven benefit with BIO based
on the Account Value as of the date the new benefit is elected.
If you elect this death benefit, you may not elect any other optional benefit.
You may elect the Beneficiary Income Option death benefit so long as the
Annuitant is no older than age 75 at the time of election. For purposes of
this optional death benefit, we calculate the Annual Income Amount and
Protected Withdrawal Value in the same manner that we do under Highest Daily
Lifetime Seven itself (except that for Optimum Plus, we exclude from the
Protected Withdrawal Value the amount of any Credit that was granted within 12
months prior to death). Because the fee for this benefit is based on the
Protected Withdrawal Value, the fee for Highest Daily Lifetime Seven with the
Beneficiary Income Option may be greater than it would have been based on the
Account Value alone.
Upon a death that triggers payment of a death benefit under the Annuity, we
identify the following amounts: (a) the amount of the basic Death Benefit
under the Annuity (b) the Protected Withdrawal Value and (c) the Annual Income
Amount. If there were no withdrawals prior to the date of death, then we
calculate the Protected Withdrawal Value for purposes of this death benefit as
of the date of death, and we calculate the Annual Income Amount as if there
were a withdrawal on the date of death. If there were withdrawals prior to the
date of death, then we set the Protected Withdrawal Value and Annual Income
Amount for purposes of this death benefit as of the date that we receive due
proof of death.
If there is one beneficiary, he/she must choose to receive either the basic
death benefit (in a lump sum or other permitted form of distribution) or the
Beneficiary Income Option death benefit (in the form of periodic payments of
the Annual Income Amount - such payments may be annual or at other intervals
that we permit). If there are multiple beneficiaries, each beneficiary is
presented with the same choice. Thus, each beneficiary can choose to take
his/her portion of either (a) the basic death benefit or (b) the Beneficiary
Income Option death benefit. In order to receive the Beneficiary Income Option
death benefit, each beneficiary's share of the death benefit proceeds must be
allocated as a percentage of the total death benefit to be paid. We allow a
beneficiary who has opted to receive the Annual Income Amount to designate
another beneficiary, who would receive any remaining payments upon the former
beneficiary's death. Note also that the final payment, exhausting the
Protected Withdrawal Value, may be less than the Annual Income Amount.
Here is an example to illustrate how the death benefit may be paid:
. Assume that (i) the basic death benefit is $50,000, the Protected
Withdrawal Value is $100,000, and the Annual Income Amount is $5,000;
(ii) there are two beneficiaries (the first designated to receive 75% of
the death benefit and the second designated to receive 25% of the death
benefit); (iii) the first beneficiary chooses to receive his/her portion
of the death benefit in the form of the Annual Income Amount, and the
second beneficiary chooses to receive his/her portion of the death
benefit with reference to the basic death benefit.
. Under those assumptions, the first beneficiary will be paid a pro-rated
portion of the Annual Income Amount for 20 years (the 20 year pay out
period is derived from the $5,000 Annual Income Amount, paid each year
until it exhausts the entire $100,000 Protected Withdrawal Value).
The pro-rated portion of the Annual Income Amount, equal to $3,750
annually (i.e., the first beneficiary's 75% share multiplied by $5000),
is then paid each year for the 20 year period. Payment of $3,750 for 20
years results in total payments of $75,000 (i.e., the first
beneficiary's 75% share of the $100,000 Protected Withdrawal Value).
The second beneficiary would receive 25% of the basic death benefit
amount (or $12,500).
If you elect to terminate Highest Daily Lifetime Seven with Beneficiary Income
Option, both Highest Daily Lifetime Seven and that death benefit option will
be terminated. You may not terminate the death benefit option without
terminating the entire benefit. If you terminate Highest Daily Lifetime Seven
with Beneficiary Income Option, your ability to elect other optional living
benefits will be affected as indicated in the "Election and Designations under
the Program" section, above.
2
2. We add the following as a new line item within the portion of the fee table
entitled "Your Optional Benefit Fees and Charges" to reflect the fee for
Highest Daily Lifetime Seven With Beneficiary Income Option:
Highest Daily Lifetime Seven with Beneficiary Income Option: maximum charge of
2.00% of PWV; current charge of 0.95% of PWV. *
Total Maximum Charges Total Current Charges
- --------------------------------------- -------------------------------------
Optimum: 1.25% of Sub-account net Optimum: 1.25% of Sub-account net
assets + 2.00% of PWV assets + 0.95% of PWV
Optimum 1.65% of Sub-account net Optimum 1.65% of Sub-account net
Four: assets + 2.00% of PWV Four: assets + 0.95% of PWV
Optimum 1.65% of Sub-account net Optimum 1.65% of Sub-account net
Plus: assets + 2.00% of PWV Plus: assets + 0.95% of PWV
- --------
* Highest Daily Lifetime Seven With Beneficiary Income Option. Charge for
this benefit is assessed against the Protected Withdrawal Value ("PWV"). As
discussed in the description of the benefit, the charge is taken out of the
Sub-accounts. For Optimum, 0.95% of PWV is in addition to 1.25% annual
charge of amounts invested in the Sub-accounts (in Annuity Years 1-8) and
0.65% annual charge of amounts invested in the Sub-accounts in subsequent
Annuity Years. For Optimum Four, 0.95% of PWV is in addition to 1.65%
annual charge of amounts invested in the Sub-accounts. For Optimum Plus,
0.95% of PWV is in addition to 1.65% annual charge in Annuity Years 1-10
and 0.65% annual charge of amounts invested in the Sub-accounts in
subsequent Annuity Years.
B. Addition of Lifetime Income Accelerator Feature (HD Lifetime Seven with
Lifetime Income Accelerator/SM/).
A. The following is added at the end of the section concerning Highest Daily
Lifetime Seven.
HD Lifetime Income Accelerator /SM/. We offer another version of Highest Daily
Lifetime Seven that we call Highest Daily Lifetime Seven with Lifetime Income
Accelerator ("Highest Daily Lifetime Seven with LIA"). This version is only
being offered in those jurisdictions where we have received regulatory
approval and will be offered subsequently in other jurisdictions when we
receive regulatory approval in those jurisdictions. Highest Daily Lifetime
Seven with LIA is offered as an alternative to other lifetime withdrawal
options. If you elect this benefit, you may not elect any other optional
benefit. The income benefit under Highest Daily Lifetime Seven with LIA
currently is based on a single "designated life" who is between the ages of 55
and 75 on the date that the benefit is elected. If you elected the Highest
Daily Lifetime Seven benefit prior to your state's approval of LIA, you will
have a 90 day transition period from the date the Highest Daily Lifetime Seven
with Lifetime Income Accelerator is approved in your state of residence to
terminate your Highest Daily Lifetime Seven benefit and elect the Highest
Daily Lifetime Seven with LIA benefit. If you do not elect to add the Lifetime
Income Accelerator option in the 90 day transition period, you can elect it on
any anniversary of the Issue Date that is at least 90 calendar days from the
date that the Highest Daily Lifetime Seven benefit was terminated. If you
terminate your Highest Daily Lifetime Seven benefit to elect the Highest Daily
Lifetime Seven with LIA benefit, you will lose all guarantees under the
Highest Daily Lifetime Seven benefit and will begin the new guarantees under
the Highest Daily Lifetime Seven benefit with LIA based on the Account Value
as of the date the new benefit is elected.
Highest Daily Lifetime Seven with LIA guarantees, until the death of the
single designated life, the ability to withdraw an amount equal to double the
Annual Income Amount (which we refer to as the "LIA Amount") if you meet the
conditions set forth below. If you choose the Highest Daily Lifetime Seven
with LIA, the maximum charge we may impose is 2.00% of Protected Withdrawal
Value ("PWV") annually. We deduct the current charge (0.95% of PWV) at the end
of each quarter, where each such quarter is part of a year that begins on the
effective date of the benefit or an anniversary thereafter. Thus, on each such
quarter-end (or the next Valuation Day, if the quarter-end is not a Valuation
Day), we deduct 0.2375% of the Protected Withdrawal Value at the end of the
quarter. We deduct the fee pro rata from each of your Sub-accounts including
the AST Investment Grade Bond Portfolio Sub-account. Since this fee is based
on the Protected Withdrawal Value, the fee for Highest Daily Lifetime Seven
with LIA may be greater than it would have been, had it been based on the
Account Value alone. If the fee to be deducted exceeds the current Account
Value, we will reduce the Account Value to zero, and continue the benefit as
described below.
If this benefit is being elected on an Annuity held as a 403 (b) plan, then in
addition to meeting the eligibility requirements listed below for the LIA
Amount you must separately qualify for distributions from the 403 (b) plan
itself.
You may choose Highest Daily Lifetime Seven without also electing LIA, however
you may not elect LIA without Highest Daily Lifetime Seven. All terms and
conditions of Highest Daily Lifetime Seven apply to this version of the
benefit, except as described herein. Currently, if you elect Highest Daily
Lifetime Seven with LIA and subsequently terminate the benefit, you will be
able to re-elect Highest Daily Lifetime Seven with LIA but all conditions of
the benefit described below must be met, and you may be subject to a waiting
period until you can elect this or another lifetime withdrawal benefit.
3
Eligibility Requirements for LIA Amount. Both a waiting period of 36 months,
from the benefit effective date, and an elimination period of 120 days, from
the date of notification that one or both of the requirements described
immediately below have been met, apply before you can become eligible for the
LIA Amount. Assuming the 36 month waiting period has been met and we have
received the notification referenced in the immediately preceding sentence,
the LIA amount would be available for withdrawal on the Valuation Date
immediately after the 120/th/ day. The waiting period and the elimination
period may run concurrently. In addition to satisfying the waiting and
elimination period, either or both of the following requirements ("LIA
conditions") must be met. It is not necessary to meet both conditions:
(1) The designated life is confined to a qualified nursing facility. A
qualified nursing facility is a facility operated pursuant to law or any
state licensed facility providing medically necessary in-patient care which
is prescribed by a licensed physician in writing and based on physical
limitations which prohibit daily living in a non-institutional setting.
(2) The designated life is unable to perform two or more basic abilities of
caring for oneself or "activities of daily living." We define these basic
abilities as:
i. Eating: Feeding oneself by getting food into the body from a receptacle
(such as a plate, cup or table) or by a feeding tube or intravenously.
ii. Dressing: Putting on and taking off all items of clothing and any
necessary braces, fasteners or artificial limbs.
iii. Bathing: Washing oneself by sponge bath; or in either a tub or shower,
including the task of getting into or out of the tub or shower.
iv. Toileting: Getting to and from the toilet, getting on and off the
toilet, and performing associated personal hygiene.
v. Transferring: Moving into or out of a bed, chair or wheelchair.
vi. Continence: Maintaining control of bowel or bladder function; or when
unable to maintain control of bowel or bladder function, the ability to
perform personal hygiene (including caring for catheter or colostomy bag).
You must notify us when the LIA conditions have been met. If, when we receive
such notification, there are more than 120 days remaining until the end of the
waiting period described above, you will not be eligible for the LIA Amount.
If there are 120 days or less remaining until the end of the waiting period
when we receive notification that the LIA conditions are met, we will
determine eligibility for the LIA Amount through our then current
administrative process, which may include, but is not limited to,
documentation verifying the LIA conditions and/or an assessment by a third
party of our choice. Such assessment may be in person and we will assume any
costs associated with the aforementioned assessment. Once eligibility is
determined, the LIA Amount is equal to double the Annual Income Amount as
described in this prospectus under the Highest Daily Lifetime Seven Benefit.
Additionally, we will reassess your eligibility on an annual basis although
your LIA benefit for the year that immediately precedes our reassessment will
not be affected if it is determined that you are no longer eligible. Your
first reassessment may occur in the same year as your initial assessment. If
we determine you are no longer eligible to receive the LIA Amount, upon the
next Annuity Anniversary the Annual Income Amount would replace the LIA
Amount. There is no limit on the number of times you can become eligible for
the LIA Amount, however, each time would require the completion of the 120-day
elimination period, notification that the designated life meets the LIA
conditions, and determination, through our then current administrative
process, that you are eligible for the LIA Amount, each as described above.
LIA amount at the First Withdrawal. If your first withdrawal subsequent to
election of Highest Daily Lifetime Seven with LIA occurs while you are eligible
for the LIA Amount, the available LIA Amount is equal to double the Annual
Income Amount.
LIA amount after the First Withdrawal. If you become eligible for the LIA
Amount after you have taken your first withdrawal, the available LIA amount for
the current and subsequent Annuity Years is equal to double the then current
Annual Income Amount, however the available LIA amount in the current Annuity
Year is reduced by any withdrawals that have been taken in the current Annuity
Year. Cumulative withdrawals in an Annuity Year which are less than or equal to
the LIA Amount (when eligible for the LIA amount) will not reduce your LIA
Amount in subsequent Annuity Years, but any such withdrawals will reduce the
LIA Amount on a dollar-for-dollar basis in that Annuity Year.
Withdrawals in Excess of the LIA amount. If your cumulative withdrawals in an
Annuity Year are in excess of the LIA Amount when you are eligible ("Excess
Withdrawal"), your LIA Amount in subsequent years will be reduced (except with
regard to required minimum distributions) by the result of the ratio of the
excess portion of the withdrawal to the Account Value immediately prior to the
Excess Withdrawal. Reductions include the actual amount of the withdrawal,
including any CDSC that may apply. Withdrawals of any amount up to and
including the LIA Amount will reduce the Protected Withdrawal Value by the
amount of the withdrawal. Excess Withdrawals will reduce the Protected
Withdrawal Value by the same ratio as the reduction to
4
the LIA Amount. Any withdrawals that are less than or equal to the LIA amount
(when eligible) but in excess of the free withdrawal amount available under
this Annuity will not incur a CDSC.
Withdrawals are not required. However, subsequent to the first withdrawal, the
LIA Amount is not increased in subsequent Annuity Years if you decide not to
take a withdrawal in an Annuity Year or take withdrawals in an Annuity Year
that in total are less than the LIA Amount.
Purchase Payments. If you are eligible for the LIA Amount as described under
"Eligibility Requirements for LIA Amount" and you make an additional Purchase
Payment, we will increase your LIA Amount by double the amount we add to your
Annual Income Amount.
Step Ups. If your Annual Income Amount is stepped up your LIA Amount will be
stepped up to equal double the stepped up Annual Income Amount.
Guarantee Payments. If your Account Value is reduced to zero as a result of
cumulative withdrawals that are equal to or less than the LIA Amount, or as a
result of the fee that we assess for Highest Daily Lifetime Seven with LIA, and
there is still a LIA Amount available, we will make an additional payment for
that Annuity Year equal to the remaining LIA Amount. Thus, in that scenario,
the remaining LIA Amount would be payable even though your Account Value was
reduced to zero. In subsequent Annuity Years we make payments that equal the
LIA Amount as described in this section. We will make payments until the death
of the single designated life. Should the designated life no longer qualify for
the LIA amount (as described under "Eligibility Requirements for LIA Amount"
above), the Annual Income Amount would continue to be available. Subsequent
eligibility for the LIA Amount would require the completion of the 120 day
elimination period as well as meeting the LIA conditions listed above under
"Eligibility Requirements for LIA Amount". To the extent that cumulative
withdrawals in the current Annuity Year that reduce your Account Value to zero
are more than the LIA Amount (except in the case of required minimum
distributions), Highest Daily Lifetime Seven with LIA terminates, and no
additional payments are made.
Annuity Options. In addition to the Highest Daily Lifetime Seven Annuity
Options described above, after the 10th benefit anniversary you may also
request that we make annuity payments each year equal to the Annual Income
Amount. In any year that you are eligible for the LIA Amount, we make annuity
payments equal to the LIA Amount. If you would receive a greater payment by
applying your Account Value to receive payments for life under your Annuity, we
will pay the greater amount. Prior to the 10th benefit anniversary this option
is not available.
We will continue to make payments until the death of the Designated Life. If
this option is elected, the Annual Income Amount and LIA Amount will not
increase after annuity payments have begun.
If you elect Highest Daily Lifetime Seven with LIA, and never meet the
eligibility requirements you will not receive any additional payments based on
the LIA Amount.
B. We add the following as a new line item within the portion of the fee table
entitled "Your Optional Benefit Fees and Charges" to reflect the fee for
Highest Daily Lifetime Seven With Optional Lifetime Income Accelerator:
Highest Daily Lifetime Seven w/Optional Lifetime Income Accelerator maximum
charge of 2.00% of PWV; current charge of 0.95% of PWV. *
Total Maximum Charges Total Current Charges
- --------------------------------------- -------------------------------------
Optimum: 1.25% of Sub-account net Optimum: 1.25% of Sub-account net
assets + 2.00% of PWV assets + 0.95% of PWV
Optimum 1.65% of Sub-account net Optimum 1.65% of Sub-account net
Four: assets + 2.00% of PWV Four: assets + 0.95% of PWV
Optimum 1.65% of Sub-account net Optimum 1.65% of Sub-account net
Plus: assets + 2.00% of PWV Plus: assets + 0.95% of PWV
- --------
* Highest Daily Lifetime Seven with Lifetime Income Accelerator. Charge for
this benefit is assessed against the Protected Withdrawal Value ("PWV"). As
discussed in the description of the benefit, the charge is taken out of the
Sub-accounts. For Optimum, 0.95% of PWV is in addition to 1.25% annual
charge of amounts invested in the Sub-accounts (in Annuity Years 1-8) and
0.65% annual charge of amounts invested in the Sub-accounts in subsequent
Annuity Years. For Optimum Four, 0.95% of PWV is in addition to 1.65%
annual charge of amounts invested in the Sub-accounts. For Optimum Plus,
0.95% of PWV is in addition to 1.65% annual charge of amounts invested in
the Sub-accounts in Annuity Years 1-10 and 0.65% annual charge of amounts
invested in the Sub-accounts in subsequent Annuity Years.
5
C. Revision to the way that certain withdrawals of the Annual Income Amount
are impacted by CDSC
We add the following as the last sentence of the first paragraph under the
sub-section entitled "Key Feature - Annual Income Amount under the Highest
Daily Lifetime Seven Benefit" to make clear that no withdrawal of the Annual
Income Amount (provided such withdrawal does not constitute Excess Income)
will be subject to a CDSC:
Note that if your withdrawal of the Annual Income Amount in a given Annuity
Year exceeds the applicable free withdrawal amount under the Annuity (but is
not considered Excess Income), we will not impose any CDSC on the amount of
that withdrawal.
D. Revised Asset Transfer Formula for Highest Daily Lifetime Seven and Spousal
Highest Daily Lifetime Seven
For elections of Highest Daily Lifetime Seven on or after July 21, 2008, the
asset transfer formula differs from that set forth in the May 1, 2008
prospectus. The revised formula reflects the fact that Account Value may
include amounts allocated to certain Fixed Rate Options. Currently, no Fixed
Rate Options are available for use with Highest Daily Lifetime Seven and
Spousal Highest Daily Lifetime Seven.
Here is the revised formula (the Table of "a" factors remains the same):
Terms and Definitions referenced in the calculation formula:
. Cu - the upper target is established on the effective date of the
Highest Daily Lifetime Seven benefit (the "Effective Date") and is not
changed for the life of the guarantee. Currently, it is 83%.
. Ct - the target is established on the Effective Date and is not changed
for the life of the guarantee. Currently, it is 80%.
. Cl - the lower target is established on the Effective Date and is not
changed for the life of the guarantee. Currently, it is 77%.
. L - the target value as of the current business day.
. r - the target ratio.
. a - factors used in calculating the target value. These factors are
established on the Effective Date and are not changed for the life of
the guarantee.
. V\\v\\ - the total value of all Permitted Sub-accounts in the Annuity.
. V\\F\\ the total value of all elected Fixed Rate Options in the Annuity.
. B - the total value of the AST Investment Grade Bond Portfolio
Sub-account.
. P - Income Basis. Prior to the first withdrawal, the Income Basis is the
Protected Withdrawal Value calculated as if the first withdrawal were
taken on the date of calculation. After the first withdrawal, the Income
Basis is equal to the greater of (1) the Protected Withdrawal Value at
the time of the first withdrawal, adjusted for additional purchase
payments including the amount of any associated Credits, and adjusted
proportionally for excess withdrawals*, (2) any highest quarterly value
increased for additional purchase payments including the amount of any
associated Credits, and adjusted for withdrawals, and (3) the Account
Value.
. T - the amount of a transfer into or out of the AST Investment Grade
Bond Portfolio Sub-account.
* Note: withdrawals of less than the Annual Income Amount do not reduce the
Income Basis.
Target Value Calculation:
On each business day, a target value (L) is calculated, according to the
following formula. If the Account Value (V\\V\\ + V\\F\\) is equal to zero, no
calculation is necessary.
L = 0.05 * P * a
6
Transfer Calculation:
The following formula, which is set on the Benefit Effective Date and is not
changed for the life of the guarantee, determines when a transfer is required:
Target Ratio r = (L - B) / (V\\V\\ + V\\F\\).
. If r (greater than) Cu, assets in the Permitted Sub-accounts are
transferred to the AST Investment Grade Bond Portfolio Sub-account.
. If r (less than) Cl, and there are currently assets in the AST
Investment Grade Bond Portfolio Sub-account (B (greater than) 0), assets
in the AST Investment Grade Bond Portfolio Sub-account are transferred
to the Permitted Sub-accounts according to most recent allocation
instructions.
The following formula, which is set on the Benefit Effective Date and is not
changed for the life of the guarantee, determines the transfer amount:
T = {Min (V\\V\\ + V\\F\\), [L - B - (V\\V\\ + V\\F\\) * Ct] / (1-Ct))}
Money is transferred from the elected Sub-accounts and Fixed Rate
Options to the Transfer Account
T = {Min (B, - [L - B -(V\\V\\ + V\\F\\)* C\\t\\] / (1-C\\t\\))} Money
is transferred from the Transfer Account to the elected Sub-accounts
CHANGES TO SPOUSAL HIGHEST DAILY LIFETIME SEVEN
1. We add the following, immediately after the section entitled "Additional
Tax Considerations":
A. Addition of Death Benefit (Spousal HD Lifetime Seven with Beneficiary
Income Option/SM/)
The Annuity Owner may opt for a death benefit, the value of which is linked to
the Annual Income Amount under the benefit. We refer to the death benefit as
the Beneficiary Income Option. As detailed below, a beneficiary taking the
Annuity's death benefit under this feature is paid the Annual Income Amount
until the Protected Withdrawal Value is depleted. (Note that the final payment,
exhausting the Protected Withdrawal Value, may be less than the Annual Income
Amount). We may impose a maximum charge of 2.00% of Protected Withdrawal Value
("PWV") annually, but currently impose a charge of 0.95% of PWV annually, if
you choose Spousal Highest Daily Lifetime Seven with Beneficiary Income Option.
To reflect this death benefit option, we add the following to the description
of Spousal Highest Daily Lifetime Seven:
Spousal HD Lifetime Seven with Beneficiary Income Option/SM/
We offer an optional death benefit feature under this benefit, the amount of
which is linked to your Annual Income Amount. You may choose Spousal Highest
Daily Lifetime Seven without also selecting the Beneficiary Income Option
death benefit. If you elect Spousal Highest Daily Lifetime Seven without the
Beneficiary Income Option ("BIO") and would like to add this feature later,
you must terminate the Spousal Highest Daily Lifetime Seven benefit and elect
the Spousal Highest Daily Lifetime Seven with Beneficiary Income Option. If
you elected the Spousal Highest Daily Lifetime Seven benefit prior to your
state's approval of BIO, you will have a 90 day transition period from the
date the Beneficiary Income Option is approved in your state of residence to
terminate your Spousal Highest Daily Lifetime Seven benefit and elect the
Spousal Highest Daily Lifetime Seven benefit with Beneficiary Income Option.
If you do not elect to add the Beneficiary Income Option in the 90 day
transition period, you can elect it on any anniversary of the Issue Date that
is at least 90 calendar days from the date that the Spousal Highest Daily
Lifetime Seven benefit was terminated. If you terminate your Spousal Highest
Daily Lifetime Seven benefit to elect the Spousal Highest Daily Lifetime Seven
with Beneficiary Income Option benefit, you will lose all guarantees that you
had accumulated under your Spousal Highest Daily Lifetime Seven benefit, and
will begin the new guarantees under the Spousal Highest Daily Lifetime Seven
benefit with BIO based on the Account Value as of the date the new benefit is
elected.
If you elect the Beneficiary Income Option death benefit, you may not elect
any other optional benefit. You may elect the Beneficiary Income Option death
benefit so long as each Designated Life is no older than age 75 at the time of
election. This death benefit is not transferable in the event of a divorce,
nor may the benefit be split in accordance with any divorce proceedings or
similar instrument of separation. Since this fee is based on the Protected
Withdrawal Value, the fee for Spousal Highest Daily Lifetime Seven with BIO
may be greater than it would have been, had it been based on the Account Value
alone.
For purposes of the Beneficiary Income Option death benefit, we calculate the
Annual Income Amount and Protected Withdrawal Value in the same manner that we
do under Spousal Highest Daily Lifetime Seven itself (except that for Optimum
Plus, we exclude from the Protected Withdrawal Value the amount of any Credit
that was granted within 12 months prior to death). Upon the first
7
death of a Designated Life, no amount is payable under the Beneficiary Income
Option death benefit. Upon the second death of a Designated Life, we identify
the following amounts: (a) the amount of the base death benefit under the
Annuity (b) the Protected Withdrawal Value and (c) the Annual Income Amount.
If there were no withdrawals prior to the date of death, then we calculate the
Protected Withdrawal Value for purposes of this death benefit as of the date
of death, and we calculate the Annual Income Amount as if there were a
withdrawal on the date of death. If there were withdrawals prior to the date
of death, then we set the Protected Withdrawal Value and Annual Income Amount
for purposes of this death benefit as of the date that we receive due proof of
death.
If there is one beneficiary, he/she must choose to receive either the base
death benefit (in a lump sum or other permitted form of distribution) or the
Beneficiary Income Option death benefit (in the form of annual payment of the
Annual Income Amount - such payments may be annual or at other intervals that
we permit). If there are multiple beneficiaries, each beneficiary is presented
with the same choice. Thus, each beneficiary can choose to take his/her
portion of either (a) the basic death benefit or (b) the Beneficiary Income
Option death benefit. In order to receive the Beneficiary Income Option death
benefit, each beneficiary's share of the death benefit proceeds must be
allocated as a percentage of the total death benefit to be paid. We allow a
beneficiary who has opted to receive the Annual Income Amount to designate
another beneficiary, who would receive any remaining payments upon the former
beneficiary's death. Note also that the final payment, exhausting the
Protected Withdrawal Value, may be less than the Annual Income Amount.
Here is an example to illustrate how the death benefit may be paid:
. Assume that (i) the basic death benefit is $50,000, the Protected
Withdrawal Value is $100,000, and the Annual Income Amount is $5,000;
(ii) there are two beneficiaries (the first designated to receive 75% of
the death benefit and the second designated to receive 25% of the death
benefit); (iii) the first beneficiary chooses to receive his/her portion
of the death benefit in the form of the Annual Income Amount, and the
second beneficiary chooses to receive his/her portion of the death
benefit with reference to the basic death benefit.
. Under those assumptions, the first beneficiary will be paid a pro-rated
portion of the Annual Income Amount for 20 years (the 20 year pay out
period is derived from the $5,000 Annual Income Amount, paid each year
until it exhausts the entire $100,000 Protected Withdrawal Value).
The pro-rated portion of the Annual Income Amount equal to $3,750 (i.e.,
the first beneficiary's 75% share multiplied by $5,000) is then paid
each year for the 20 year period. Payment of $3,750 for 20 years results
in total payments of $75,000 (i.e., the first beneficiary's 75% share of
the $100,000 Protected Withdrawal Value).
The second beneficiary would receive 25% of the basic death benefit
amount (or $12,500).
If you elect to terminate Spousal Highest Daily Lifetime Seven with
Beneficiary Income Option, both Spousal Highest Daily Lifetime Seven and that
death benefit option will be terminated. You may not terminate the death
benefit option without terminating the entire benefit. If you terminate
Spousal Highest Daily Lifetime Seven with Beneficiary Income Option, your
ability to elect other optional living benefits will be affected as indicated
in the "Election and Designations under the Program" section, above.
2. We add the following as a new line item within the portion of the fee table
entitled "Your Optional Benefit Fees and Charges" to reflect the fee for
Spousal Highest Daily Lifetime Seven With Beneficiary Income Option:
Spousal Highest Daily Lifetime Seven w/Beneficiary Income Option : maximum
charge of 2.00% of PWV; current charge of 0.95% of PWV. *
Total Maximum Charges Total Current Charges
- --------------------------------------- -------------------------------------
Optimum: 1.25% of Sub-account net Optimum: 1.25% of Sub-account net
assets + 2.00% of PWV assets + 0.95% of PWV
Optimum 1.65% of Sub-account net Optimum 1.65% of Sub-account net
Four: assets + 2.00% of PWV Four: assets + 0.95% of PWV
Optimum 1.65% of Sub-account net Optimum 1.65% of Sub-account net
Plus: assets + 2.00% of PWV Plus: assets + 0.95% of PWV
- --------
* Spousal Highest Daily Lifetime Seven With Beneficiary Income Option. Charge
for this benefit is assessed against the Protected Withdrawal Value
("PWV"). As discussed in the description of the benefit, the charge is
taken out of the Sub-accounts. For Optimum, 0.95% of PWV is in addition to
1.25% annual charge of amounts invested in the Sub-accounts (in Annuity
Years 1-8) and 0.65% annual charge of amounts invested in the Sub-accounts
in subsequent Annuity Years. For Optimum Four, 0.95% of PWV is in addition
to 1.65% annual charge of amounts invested in the Sub-accounts. For Optimum
Plus, 0.95% of PWV is in addition to 1.65% annual charge of amounts
invested in the Sub-accounts in Annuity Years 1-10 and 0.65% annual charge
of amounts invested in the Sub-accounts in subsequent Annuity Years.
8
B. Revision to the way that certain withdrawals of the Annual Income Amount
are impacted by CDSC
We add the following as the last sentence of the first paragraph under the
sub-section entitled "Key Feature - Annual Income Amount under the Spousal
Highest Daily Lifetime Seven Benefit" to make clear that no withdrawal of the
Annual Income Amount (provided such withdrawal does not constitute Excess
Income) will be subject to a CDSC:
Note that if your withdrawal of the Annual Income Amount in a given Annuity
Year exceeds the applicable free withdrawal amount under the Annuity (but is
not considered Excess Income), we will not impose any CDSC on the amount of
that withdrawal.
C. Revised Asset Transfer Formula for Highest Daily Lifetime Seven and Spousal
Highest Daily Lifetime Seven
For elections of Spousal Highest Daily Lifetime Seven on or after July 21,
2008, the asset transfer formula differs from that set forth in the May 1,
2008 prospectus. See the section above under Highest Daily Lifetime Seven for
the revised formula.
9
PRUDENTIAL ANNUITIES LIFE ASSURANCE CORPORATION
ADVANCED SERIES ADVISOR PLAN III
ADVANCED SERIES APEX II
ADVANCED SERIES LIFEVEST II
Supplement, dated July 21, 2008
To
Prospectus, dated May 1, 2008
This supplement should be read and retained with the prospectus for your
Advanced Series Advisor Plan III, Advanced Series APEX II, and Advanced Series
Lifevest II Annuities. If you would like another copy of the prospectus,
please call us at 1-888-PRU-2888.
This supplement is being issued to describe enhancements that are being made
to certain optional living benefits available under each of the
above-referenced Annuities. The terms used in this supplement are defined in
the Glossary of Terms in the prospectus. With respect to Highest Daily
Lifetime Seven, we (a) revise the way that certain withdrawals of the Annual
Income Amount are impacted by the Contingent Deferred Sales Charge ("CDSC")
(b) add an optional death benefit, (the "Highest Daily Lifetime Seven with
Beneficiary Income Option") (c) add an optional benefit that increases the
Annual Income Amount if the owner qualifies for increased payments, (the
"Highest Daily Lifetime Seven with Lifetime Income Accelerator") (d) increase
the range of "permitted portfolios" that you may elect if you have chosen the
benefit, with some restrictions and (e) modify the asset transfer formula
under the benefit, to make clear that the Account Value may include amounts
allocated to certain Fixed Rate Options. For Spousal Highest Daily Lifetime
Seven, we (a) revise the way that certain withdrawals of the Annual Income
Amount are impacted by CDSC (b) add an optional death benefit (the "Spousal
Highest Daily Lifetime Seven with Beneficiary Income Option") (c) increase the
range of "permitted portfolios" that you may elect if you have chosen the
benefit, with some restrictions and (d) modify the asset transfer formula
under the benefit, to make clear that the Account Value may include amounts
allocated to certain Fixed Rate Options. The Highest Daily Lifetime Seven with
Beneficiary Income Option and the Spousal Highest Daily Lifetime Seven with
Beneficiary Income Option allow the beneficiary to continue to withdraw the
Annual Income Amount until the Protected Withdrawal Value is depleted. Thus,
the option may be appropriate for an Annuity Owner who wants to provide an
additional death benefit option to his/her beneficiary.
The Highest Daily Lifetime Seven with Lifetime Income Accelerator provides a
benefit under which the Annuity Owner may withdraw double the Annual Income
Amount once he/she meets the benefit's eligibility requirements (e.g., being
confined to a qualified nursing facility or being unable to perform two daily
life activities as defined below). Thus, this benefit may be appropriate for
an Annuity Owner who may meet these requirements at a future date.
Except as otherwise provided here, the description of each optional living
benefit set forth in the May 1, 2008 prospectus remains unchanged.
This supplement also discusses certain changes to the Advanced Series Lifevest
II Annuity ("ASL II"). Specifically, we have removed limitations on the amount
of the basic Death Benefit paid under ASLII when death occurs on or after the
decedent's age 85. We are also adding a restriction that the ASLII Annuity is
only available for purchase up to age 85.
CHANGES TO HIGHEST DAILY LIFETIME SEVEN
A. Addition of Death Benefit (HD Lifetime Seven with Beneficiary Income
Option/SM/)
For elections of Highest Daily Lifetime Seven on or after July 21, 2008, the
Annuity Owner may opt for a death benefit, the value of which is linked to the
Annual Income Amount under the benefit. As detailed below, a beneficiary
taking the Annuity's death benefit under this feature is paid the Annual
Income Amount until the Protected Withdrawal Value is depleted. (Note that the
final payment, exhausting the Protected Withdrawal Value, may be less than the
Annual Income Amount). We may impose a maximum charge of 2.00% of Protected
Withdrawal Value ("PWV") annually, but currently impose a charge of 0.95% of
PWV annually, if you choose Highest Daily Lifetime Seven with Beneficiary
Income Option. See the table entitled "Your Optional Benefit Fees and Charges"
in the prospectus for a description of all fees and charges related to
optional benefits.
1. To reflect this death benefit option, we add the following to the
description of Highest Daily Lifetime Seven, immediately after the
sub-section entitled Additional Tax Considerations:
HD Lifetime Seven with Beneficiary Income Option/SM/
We offer an optional death benefit feature under this benefit, the amount of
which is linked to your Annual Income Amount. We refer to this optional death
benefit as the Beneficiary Income Option or ("BIO"). You may choose Highest
Daily Lifetime Seven without also selecting the Beneficiary Income Option
death benefit. You must elect the Beneficiary Income Option death benefit at
the time you elect Highest Daily Lifetime Seven. If you elect Highest Daily
Lifetime Seven prior to your state's approval of the Beneficiary Income Option
and would like to add this feature later, you must terminate the Highest Daily
Lifetime Seven benefit and elect the Highest Daily Lifetime Seven with
Beneficiary Income Option. If you elected the Highest Daily Lifetime Seven
benefit, you will have a 90 day transition period from the date the
Beneficiary Income Option is approved in your state of residence to terminate
your Highest Daily Lifetime Seven benefit and elect the Highest Daily Lifetime
benefit with Beneficiary Income Option. If you do not elect to add the
Beneficiary Income Option in the 90 day transition period, you can elect it on
any anniversary of the Issue Date that is at least 90 calendar days from the
date that the Highest Daily Lifetime Seven benefit was terminated. If you
terminate your Highest Daily Lifetime Seven benefit to elect the Highest Daily
Lifetime Seven with Beneficiary Income Option benefit, you will lose the
guarantees that you had accumulated under your Highest Daily Lifetime Seven
benefit and will begin new guarantees under the Highest Daily Lifetime Seven
with BIO benefit based on the Account Value as of the date the new benefit is
elected.
If you elect this death benefit, you may not elect any other optional benefit.
You may elect the Beneficiary Income Option death benefit so long as the
Annuitant is no older than age 75 at the time of election. For purposes of
this optional death benefit, we calculate the Annual Income Amount and
Protected Withdrawal Value in the same manner that we do under Highest Daily
Lifetime Seven itself. Because the fee for this benefit is based on the
Protected Withdrawal Value, the fee for Highest Daily Lifetime Seven with the
Beneficiary Income Option may be greater than it would have been based on the
Account Value alone.
Upon a death that triggers payment of a death benefit under the Annuity, we
identify the following amounts: (a) the amount of the basic Death Benefit
under the Annuity (b) the Protected Withdrawal Value and (c) the Annual Income
Amount. If there were no withdrawals prior to the date of death, then we
calculate the Protected Withdrawal Value for purposes of this death benefit as
of the date of death, and we calculate the Annual Income Amount as if there
were a withdrawal on the date of death. If there were withdrawals prior to the
date of death, then we set the Protected Withdrawal Value and Annual Income
Amount for purposes of this death benefit as of the date that we receive due
proof of death.
If there is one beneficiary, he/she must choose to receive either the basic
Death Benefit (in a lump sum or other permitted form of distribution) or the
Beneficiary Income Option death benefit (in the form of periodic payments of
the Annual Income Amount - such payments may be annual or at other intervals
that we permit). If there are multiple beneficiaries, each beneficiary is
presented with the same choice. Thus, each beneficiary can choose to take
his/her portion of either (a) the basic death benefit or (b) the Beneficiary
Income Option death benefit. In order to receive the Beneficiary Income Option
death benefit, each beneficiary's share of the death benefit proceeds must be
allocated as a percentage of the total death benefit to be paid. We allow a
beneficiary who has opted to receive the Annual Income Amount to designate
another beneficiary, who would receive any remaining payments upon the former
beneficiary's death. Note also that the final payment, exhausting the
Protected Withdrawal Value, may be less than the Annual Income Amount.
Here is an example to illustrate how the death benefit may be paid:
. Assume that (i) the basic death benefit is $50,000, the Protected
Withdrawal Value is $100,000, and the Annual Income Amount is $5,000;
(ii) there are two beneficiaries (the first designated to receive 75% of
the death benefit and the second designated to receive 25% of the death
benefit); (iii) the first beneficiary chooses to receive his/her portion
of the death benefit in the form of the Annual Income Amount, and the
second beneficiary chooses to receive his/her portion of the death
benefit with reference to the basic death benefit.
. Under those assumptions, the first beneficiary will be paid a pro-rated
portion of the Annual Income Amount for 20 years (the 20 year pay out
period is derived from the $5,000 Annual Income Amount, paid each year
until it exhausts the entire $100,000 Protected Withdrawal Value).
The pro-rated portion of the Annual Income Amount, equal to $3,750
annually (i.e., the first beneficiary's 75% share multiplied by $5000),
is then paid each year for the 20 year period. Payment of $3,750 for 20
years results in total payments of $75,000 (i.e., the first
beneficiary's 75% share of the $100,000 Protected Withdrawal Value).
The second beneficiary would receive 25% of the basic death benefit
amount (or $12,500).
2
If you elect to terminate Highest Daily Lifetime Seven with Beneficiary Income
Option, both Highest Daily Lifetime Seven and that death benefit option will
be terminated. You may not terminate the death benefit option without
terminating the entire benefit. If you terminate Highest Daily Lifetime Seven
with Beneficiary Income Option, your ability to elect other optional living
benefits will be affected as indicated in the "Election and Designations under
the Program" section, above.
2. We add the following as a new line item within the portion of the fee table
entitled "Your Optional Benefit Fees and Charges" to reflect the fee for
Highest Daily Lifetime Seven With Beneficiary Income Option:
Highest Daily Lifetime Seven with Beneficiary Income Option: maximum charge of
2.00% of PWV; current charge of 0.95% of PWV. *
Total Maximum Charges Total Current Charges
- ------------------------------------- ---------------------------------------
ASAPIII: 1.25% of Sub-account net ASAPIII: 1.25% of Sub-account net
assets + 2.00% of PWV assets + 0.95% of PWV
APEX II: 1.65% of Sub-account net APEX II: 1.65% of Sub-account net
assets + 2.00% of PWV assets + 0.95% of PWV
ASL II: 1.65% of Sub-account net ASL II: 1.65% of Sub-account net
assets + 2.00% of PWV assets + 0.95% of PWV
- --------
* Highest Daily Lifetime Seven with Beneficiary Income Option. Charge for
this benefit is assessed against the Protected Withdrawal Value ("PWV"). As
discussed in the description of the benefit, the charge is taken out of the
Sub-accounts. For ASAP III, 0.95% of PWV is in addition to 1.25% annual
charge of amounts invested in the Sub-accounts(in Annuity Years 1-8) and
0.65% annual charge of amounts invested in the Sub-accounts in subsequent
Annuity Years. For APEX II and ASL II, 0.95% of PWV is in addition to 1.65%
annual charge of amounts invested in the Sub-accounts.
B. Addition of Lifetime Income Accelerator Feature (HD Lifetime Seven with
Lifetime Income Accelerator/SM/).
1. The following is added at the end of the section concerning Highest Daily
Lifetime Seven.
HD Lifetime Seven with Lifetime Income Accelerator/SM/. We offer another
version of Highest Daily Lifetime Seven that we call Highest Daily Lifetime
Seven with Lifetime Income Accelerator ("Highest Daily Lifetime Seven with
LIA"). This version is only being offered in those jurisdictions where we have
received regulatory approval and will be offered subsequently in other
jurisdictions when we receive regulatory approval in those jurisdictions
Highest Daily Lifetime Seven with LIA is offered as an alternative to other
lifetime withdrawal options. If you elect this benefit, you may not elect any
other optional benefit. The income benefit under Highest Daily Lifetime Seven
with LIA currently is based on a single "designated life" who is between the
ages of 55 and 75 on the date that the benefit is elected. If you elected the
Highest Daily Lifetime Seven benefit prior to your state's approval of LIA,
you will have a 90 day transition period from the date the Highest Daily
Lifetime Seven with Lifetime Income Accelerator is approved in your state of
residence to terminate your Highest Daily Lifetime Seven benefit and elect the
Highest Daily Lifetime Seven with LIA benefit. If you do not elect to add the
Lifetime Income Accelerator option in the 90 day transition period, you can
elect it on any anniversary of the Issue Date that is at least 90 calendar
days from the date that the Highest Daily Lifetime Seven benefit was
terminated. If you terminate your Highest Daily Lifetime Seven Benefit to
elect the Highest Daily Lifetime Seven with LIA benefit, you will lose the
guarantees that you had accumulated under your Highest Daily Lifetime Seven
benefit and will begin the new guarantees under the Highest Daily Lifetime
Seven benefit with LIA based on the account value as of the date the new
benefit is elected.
Highest Daily Lifetime Seven with LIA guarantees, until the death of the
single designated life, the ability to withdraw an amount equal to double the
Annual Income Amount (which we refer to as the "LIA Amount") if you meet the
conditions set forth below. If you choose the Highest Daily Lifetime Seven
with LIA, the maximum charge we may impose is 2.00% of Protected Withdrawal
Value ("PWV") annually. We deduct the current charge (0.95% of PWV) at the end
of each quarter, where each such quarter is part of a year that begins on the
effective date of the benefit or an anniversary thereafter. Thus, on each such
quarter-end (or the next Valuation Day, if the quarter-end is not a Valuation
Day), we deduct 0.2375% of the Protected Withdrawal Value at the end of the
quarter. We deduct the fee pro rata from each of your Sub-accounts including
the AST Investment Grade Bond Portfolio Sub-account. Since this fee is based
on the Protected Withdrawal Value, the fee for Highest Daily Lifetime Seven
with LIA may be greater than it would have been, had it been based on the
Account Value alone. If the fee to be deducted exceeds the current Account
Value, we will reduce the Account Value to zero, and continue the benefit as
described below.
If this benefit is being elected on an Annuity held as a 403 (b) plan, then in
addition to meeting the eligibility requirements listed below for the LIA
Amount you must separately qualify for distributions from the 403 (b) plan
itself.
You may choose Highest Daily Lifetime Seven without also electing LIA, however
you may not elect LIA without Highest Daily Lifetime Seven. All terms and
conditions of Highest Daily Lifetime Seven apply to this version of the
benefit, except as described herein. Currently, if you elect Highest Daily
Lifetime Seven with LIA and subsequently terminate the benefit, you will be
able to re-elect Highest Daily Lifetime Seven with LIA but all conditions of
the benefit described below must be met, and you may be subject to a waiting
period until you can elect this or another lifetime withdrawal benefit.
3
Eligibility Requirements for LIA Amount. Both a waiting period of 36 months,
from the benefit effective date, and an elimination period of 120 days, from
the date of notification that one or both of the requirements described
immediately below have been met, apply before you can become eligible for the
LIA Amount. Assuming the 36 month waiting period has been met and we have
received the notification referenced in the immediately preceding sentence,
the LIA amount would be available for withdrawal on the Valuation Day
immediately after the 120/th/ day. The waiting period and the elimination
period may run concurrently. In addition to satisfying the waiting and
elimination period, either or both of the following requirements ("LIA
conditions") must be met. It is not necessary to meet both conditions:
(1) The designated life is confined to a qualified nursing facility. A
qualified nursing facility is a facility operated pursuant to law or any
state licensed facility providing medically necessary in-patient care which
is prescribed by a licensed physician in writing and based on physical
limitations which prohibit daily living in a non-institutional setting.
(2) The designated life is unable to perform two or more basic abilities of
caring for oneself or "activities of daily living." We define these basic
abilities as:
i. Eating: Feeding oneself by getting food into the body from a receptacle
(such as a plate, cup or table) or by a feeding tube or intravenously.
ii. Dressing: Putting on and taking off all items of clothing and any
necessary braces, fasteners or artificial limbs.
iii. Bathing: Washing oneself by sponge bath; or in either a tub or shower,
including the task of getting into or out of the tub or shower.
iv. Toileting: Getting to and from the toilet, getting on and off the
toilet, and performing associated personal hygiene.
v. Transferring: Moving into or out of a bed, chair or wheelchair.
vi. Continence: Maintaining control of bowel or bladder function; or when
unable to maintain control of bowel or bladder function, the ability to
perform personal hygiene (including caring for catheter or colostomy bag).
You must notify us when the LIA conditions have been met. If, when we receive
such notification, there are more than 120 days remaining until the end of the
waiting period described above, you will not be eligible for the LIA Amount.
If there are 120 days or less remaining until the end of the waiting period
when we receive notification that the LIA conditions are met, we will
determine eligibility for the LIA Amount through our then current
administrative process, which may include, but is not limited to,
documentation verifying the LIA conditions and/or an assessment by a third
party of our choice. Such assessment may be in person and we will assume any
costs associated with the aforementioned assessment. Once eligibility is
determined, the LIA Amount is equal to double the Annual Income Amount as
described in this prospectus under the Highest Daily Lifetime Seven Benefit.
Additionally, we will reassess your eligibility on an annual basis although
your LIA benefit for the year that immediately precedes our reassessment will
not be affected if it is determined that you are no longer eligible. Your
first reassessment may occur in the same year as your initial assessment. If
we determine you are no longer eligible to receive the LIA Amount, upon the
next Annuity Anniversary the Annual Income Amount would replace the LIA
Amount. There is no limit on the number of times you can become eligible for
the LIA Amount, however, each time would require the completion of the 120-day
elimination period, notification that the designated life meets the LIA
conditions, and determination, through our then current administrative
process, that you are eligible for the LIA Amount, each as described above.
LIA amount at the first Withdrawal. If your first withdrawal subsequent to
election of Highest Daily Lifetime Seven with LIA occurs while you are
eligible for the LIA Amount, the available LIA Amount is equal to double the
Annual Income Amount.
LIA amount after the First Withdrawal. If you become eligible for the LIA
Amount after you have taken your first withdrawal, the available LIA amount
for the current and subsequent Annuity Years is equal to double the then
current Annual Income Amount, however the available LIA amount in the current
Annuity Year is reduced by any withdrawals that have been taken in the current
Annuity Year. Cumulative withdrawals in an Annuity Year which are less than or
equal to the LIA Amount (when eligible for the LIA amount) will not reduce
your LIA Amount in subsequent Annuity Years, but any such withdrawals will
reduce the LIA Amount on a dollar-for-dollar basis in that Annuity Year.
Withdrawals In Excess of the LIA amount. If your cumulative withdrawals in an
Annuity Year are in excess of the LIA Amount when you are eligible ("Excess
Withdrawal"), your LIA Amount in subsequent years will be reduced (except with
regard to required minimum distributions) by the result of the ratio of the
excess portion of the withdrawal to the Account Value immediately prior to the
Excess Withdrawal. Reductions include the actual amount of the withdrawal,
including any CDSC that may apply. Withdrawals of any amount up to and
including the LIA Amount will reduce the Protected Withdrawal Value by the
amount of the withdrawal. Excess Withdrawals will reduce the Protected
Withdrawal Value by the same ratio as the reduction to the LIA Amount. Any
withdrawals that are less than or equal to the LIA amount (when eligible) but
in excess of the free withdrawal amount available under this Annuity will not
incur a CDSC.
4
Withdrawals are not required. However, subsequent to the first withdrawal, the
LIA Amount is not increased in subsequent Annuity Years if you decide not to
take a withdrawal in an Annuity Year or take withdrawals in an Annuity Year
that in total are less than the LIA Amount.
Purchase Payments. If you are eligible for the LIA Amount as described under
"Eligibility Requirements for LIA Amount" and you make an additional Purchase
Payment, we will increase your LIA Amount by double the amount we add to your
Annual Income Amount.
Step Ups. If your Annual Income Amount is stepped up, your LIA Amount will be
stepped up to equal double the stepped up Annual Income Amount.
Guarantee Payments. If your Account Value is reduced to zero as a result of
cumulative withdrawals that are equal to or less than the LIA Amount, or as a
result of the fee that we assess for Highest Daily Lifetime Seven with LIA,
and there is still a LIA Amount available, we will make an additional payment
for that Annuity Year equal to the remaining LIA Amount. Thus, in that
scenario, the remaining LIA Amount would be payable even though your Account
Value was reduced to zero. In subsequent Annuity Years we make payments that
equal the LIA Amount as described in this section. We will make payments until
the death of the single designated life. Should the designated life no longer
qualify for the LIA amount (as described under "Eligibility Requirements for
LIA Amount" above), the Annual Income Amount would continue to be available.
Subsequent eligibility for the LIA Amount would require the completion of the
120 day elimination period as well as meeting the LIA conditions listed above
under "Eligibility Requirements for LIA Amount". To the extent that cumulative
withdrawals in the current Annuity Year that reduce your Account Value to zero
are more than the LIA Amount (except in the case of required minimum
distributions), Highest Daily Lifetime Seven with LIA terminates, and no
additional payments are made.
Annuity Options. In addition to the Highest Daily Lifetime Seven Annuity
Options described above, after the 10th benefit anniversary you may also
request that we make annuity payments each year equal to the Annual Income
Amount. In any year that you are eligible for the LIA Amount, we make annuity
payments equal to the LIA Amount. If you would receive a greater payment by
applying your Account Value to receive payments for life under your Annuity,
we will pay the greater amount. Prior to the 10th benefit anniversary this
option is not available.
We will continue to make payments until the death of the Designated Life. If
this option is elected, the Annual Income Amount and LIA Amount will not
increase after annuity payments have begun.
If you elect HD Lifetime Seven with LIA, and never meet the eligibility
requirements you will not receive any additional payments based on the LIA
Amount.
2. We add the following as a new line item within the portion of the fee table
entitled "Your Optional Benefit Fees and Charges" to reflect the fee for
Highest Daily Lifetime Seven With Optional Lifetime Income Accelerator:
Highest Daily Lifetime Seven w/Optional Lifetime Income Accelerator: maximum
charge of 2.00% of PWV; current charge of 0.95% of PWV. *
Total Maximum Charges Total Current Charges
- --------------------------------------- -------------------------------------
ASAPIII: 1.25% of Sub-account net ASAPIII: 1.25% of Sub-account net
assets + 2.00% of PWV assets + 0.95% of PWV
APEX II: 1.65% of Sub-account net APEX II: 1.65% of Sub-account net
assets + 2.00% of PWV assets + 0.95% of PWV
ASL II: 1.65% of Sub-account net ASL II: 1.65% of Sub-account net
assets + 2.00% of PWV assets + 0.95% of PWV
- --------
* Highest Daily Lifetime Seven With Lifetime Income Accelerator. Charge for
this benefit is assessed against the Protected Withdrawal Value ("PWV"). As
discussed in the description of the benefit, the charge is taken out of the
Sub-accounts. For ASAP III, 0.95% of PWV is in addition to 1.25% annual
charge of amounts invested in the Sub-accounts (in Annuity Years 1-8) and
0.65% annual charge of amounts invested in the Sub-accounts in subsequent
Annuity Years. For APEX II and ASL II, 0.95% of PWV is in addition to 1.65%
annual charge of amounts invested in the Sub-accounts.
C. Revision to the way that certain withdrawals of the Annual Income Amount
are impacted by CDSC
We add the following as the last sentence of the first paragraph under the
sub-section entitled "Key Feature - Annual Income Amount under the Highest
Daily Lifetime Seven Benefit" to make clear that no withdrawal of the Annual
Income Amount (provided such withdrawal does not constitute Excess Income)
will be subject to a CDSC:
Note that if your withdrawal of the Annual Income Amount in a given Annuity
Year exceeds the applicable free withdrawal amount under the Annuity (but is
not considered Excess Income), we will not impose any CDSC on the amount of
that withdrawal.
5
D. Revised Asset Transfer Formula for Highest Daily Lifetime Seven and Spousal
Highest Daily Lifetime Seven
For elections of Highest Daily Lifetime Seven on or after July 21, 2008, the
asset transfer formula differs from that set forth in the May 1, 2008
prospectus. The revised formula reflects the fact that Account Value may
include amounts allocated to certain Fixed Rate Options. Currently, no Fixed
Rate Options are available for use with Highest Daily Lifetime Seven and
Spousal Highest Daily Lifetime Seven.
Here is the revised formula (the Table of "a" factors remains the same):
Terms and Definitions referenced in the calculation formula:
. Cu - the upper target is established on the effective date of the
Highest Daily Lifetime Seven benefit (the "Effective Date") and is not
changed for the life of the guarantee. Currently, it is 83%.
. Ct - the target is established on the Effective Date and is not changed
for the life of the guarantee. Currently, it is 80%.
. Cl - the lower target is established on the Effective Date and is not
changed for the life of the guarantee. Currently, it is 77%.
. L - the target value as of the current business day.
. r - the target ratio.
. a - factors used in calculating the target value. These factors are
established on the Effective Date and are not changed for the life of
the guarantee.
. V\\v\\ - the total value of all Permitted Sub-accounts in the Annuity.
. V\\F\\ the total value of all elected Fixed Rate Options in the Annuity.
. B - the total value of the AST Investment Grade Bond Portfolio
Sub-account.
. P - Income Basis. Prior to the first withdrawal, the Income Basis is the
Protected Withdrawal Value calculated as if the first withdrawal were
taken on the date of calculation. After the first withdrawal, the Income
Basis is equal to the greater of (1) the Protected Withdrawal Value at
the time of the first withdrawal, adjusted for additional purchase
payments including the amount of any associated Credits, and adjusted
proportionally for excess withdrawals*, (2) any highest quarterly value
increased for additional purchase payments including the amount of any
associated Credits, and adjusted for withdrawals, and (3) the Account
Value.
. T - the amount of a transfer into or out of the AST Investment Grade
Bond Portfolio Sub-account.
. * Note: withdrawals of less than the Annual Income Amount do not reduce
the Income Basis.
Target Value Calculation:
On each business day, a target value (L) is calculated, according to the
following formula. If the Account Value (V\\V\\ + V\\F\\) is equal to zero, no
calculation is necessary.
L = 0.05 * P * a
Transfer Calculation:
The following formula, which is set on the Benefit Effective Date and is not
changed for the life of the guarantee, determines when a transfer is required:
Target Ratio r = (L - B) / (V\\V\\ + V\\F\\).
. If r (greater than) Cu, assets in the Permitted Sub-accounts are
transferred to the AST Investment Grade Bond Portfolio Sub-account.
. If r (less than) Cl, and there are currently assets in the AST
Investment Grade Bond Portfolio Sub-account (B (greater than) 0), assets
in the AST Investment Grade Bond Portfolio Sub-account are transferred
to the Permitted Sub-accounts according to most recent allocation
instructions.
6
The following formula, which is set on the Benefit Effective Date and is not
changed for the life of the guarantee, determines the transfer amount:
T = {Min (V\\V\\ + V\\F\\), [L - B - Money is transferred from the
(V\\V\\ + V\\F\\) * Ct] / (1-Ct))} elected Sub-accounts and Fixed
Rate Options to the Transfer
Account
T = {Min (B,-[L - B -(V\\V\\ + V\\F\\)* Money is transferred from the
C\\t\\] / (1-C\\t\\))} Transfer Account to the elected
Sub-accounts
CHANGES TO SPOUSAL HIGHEST DAILY LIFETIME SEVEN
1. We add the following, immediately after the section entitled "Additional
Tax Considerations":
A. Addition of Death Benefit (Spousal HD Lifetime Seven with Beneficiary Income
Option/SM/)
The Annuity Owner may opt for a death benefit, the value of which is linked to
the Annual Income Amount under the benefit. We refer to the death benefit as
the Beneficiary Income Option. As detailed below, a beneficiary taking the
Annuity's death benefit under this feature is paid the Annual Income Amount
until the Protected Withdrawal Value is depleted. (Note that the final
payment, exhausting the Protected Withdrawal Value, may be less than the
Annual Income Amount). We may impose a maximum charge of 2.00% of Protected
Withdrawal Value ("PWV") annually, but currently impose a charge of 0.95% of
PWV annually, if you choose Spousal Highest Daily Lifetime Seven with
Beneficiary Income Option. To reflect this death benefit option, we add the
following to the description of Spousal Highest Daily Lifetime Seven:
Spousal HD Lifetime Seven with Beneficiary Income Option/SM/
We offer an optional death benefit feature under this benefit, the amount of
which is linked to your Annual Income Amount. You may choose Spousal Highest
Daily Lifetime Seven without also selecting the Beneficiary Income Option
death benefit ("BIO"). If you elect Spousal Highest Daily Lifetime Seven
without the Beneficiary Income Option and would like to add this feature
later, you must terminate the Spousal Highest Daily Lifetime Seven benefit and
elect the Spousal Highest Daily Lifetime Seven with Beneficiary Income Option.
If you elected the Spousal Highest Daily Lifetime Seven benefit prior to your
state's approval of BIO, you will have a 90 day transition period from the
date the Beneficiary Income Option is approved in your state of residence to
terminate your Spousal Highest Daily Lifetime Seven benefit and elect the
Spousal Highest Daily Lifetime Seven benefit with Beneficiary Income Option.
If you do not elect to add the Beneficiary Income Option in the 90 day
transition period, you can elect it on any anniversary of the Issue Date that
is at least 90 calendar days from the date that the Spousal Highest Daily
Lifetime Seven benefit was terminated. If you terminate your Spousal Highest
Daily Lifetime Seven benefit to elect the Spousal Highest Daily Lifetime Seven
with Beneficiary Income Option benefit, you will lose all guarantees under the
Spousal Highest Daily Lifetime Seven benefit, and will begin new guarantees
under the Spousal Highest Daily Lifetime Seven with BIO based on the Account
Value as of the date the new benefit is elected.
If you elect the Beneficiary Income Option death benefit, you may not elect
any other optional benefit. You may elect the Beneficiary Income Option death
benefit so long as each Designated Life is no older than age 75 at the time of
election. This death benefit is not transferable in the event of a divorce,
nor may the benefit be split in accordance with any divorce proceedings or
similar instrument of separation. Since this fee is based on the Protected
Withdrawal Value, the fee for Spousal Highest Daily Lifetime Seven with BIO
may be greater than it would have been, had it been based on the Account Value
alone.
For purposes of the Beneficiary Income Option death benefit, we calculate the
Annual Income Amount and Protected Withdrawal Value in the same manner that we
do under Spousal Highest Daily Lifetime Seven itself. Upon the first death of
a Designated Life, no amount is payable under the Beneficiary Income Option
death benefit. Upon the second death of a Designated Life, we identify the
following amounts: (a) the amount of the base death benefit under the Annuity
(b) the Protected Withdrawal Value and (c) the Annual Income Amount. If there
were no withdrawals prior to the date of death, then we calculate the
Protected Withdrawal Value for purposes of this death benefit as of the date
of death, and we calculate the Annual Income Amount as if there were a
withdrawal on the date of death. If there were withdrawals prior to the date
of death, then we set the Protected Withdrawal Value and Annual Income Amount
for purposes of this death benefit as of the date that we receive due proof of
death.
If there is one beneficiary, he/she must choose to receive either the base
death benefit (in a lump sum or other permitted form of distribution) or the
Beneficiary Income Option death benefit (in the form of annual payment of the
Annual Income Amount - such payments may be annual or at other intervals that
we permit). If there are multiple beneficiaries, each beneficiary is presented
with the same choice. Thus, each beneficiary can choose to take his/her
portion of either (a) the basic death benefit or (b) the Beneficiary Income
Option death benefit. In order to receive the Beneficiary Income Option death
benefit, each beneficiary's share of the death benefit proceeds must be
allocated as a percentage of the total death benefit to be paid. We allow a
beneficiary who
7
has opted to receive the Annual Income Amount to designate another
beneficiary, who would receive any remaining payments upon the former
beneficiary's death. Note also that the final payment, exhausting the
Protected Withdrawal Value, may be less than the Annual Income Amount.
Here is an example to illustrate how the death benefit may be paid:
. Assume that (i) the basic death benefit is $50,000, the Protected
Withdrawal Value is $100,000, and the Annual Income Amount is $5,000;
(ii) there are two beneficiaries (the first designated to receive 75% of
the death benefit and the second designated to receive 25% of the death
benefit); (iii) the first beneficiary chooses to receive his/her portion
of the death benefit in the form of the Annual Income Amount, and the
second beneficiary chooses to receive his/her portion of the death
benefit with reference to the basic death benefit.
. Under those assumptions, the first beneficiary will be paid a pro-rated
portion of the Annual Income Amount for 20 years (the 20 year pay out
period is derived from the $5,000 Annual Income Amount, paid each year
until it exhausts the entire $100,000 Protected Withdrawal Value).
The pro-rated portion of the Annual Income Amount equal to $3,750 (i.e.,
the first beneficiary's 75% share multiplied by $5,000) is then paid
each year for the 20 year period. Payment of $3,750 for 20 years results
in total payments of $75,000 (i.e., the first beneficiary's 75% share of
the $100,000 Protected Withdrawal Value).
The second beneficiary would receive 25% of the basic death benefit
amount (or $12,500).
If you elect to terminate Spousal Highest Daily Lifetime Seven with
Beneficiary Income Option, both Spousal Highest Daily Lifetime Seven and that
death benefit option will be terminated. You may not terminate the death
benefit option without terminating the entire benefit. If you terminate
Spousal Highest Daily Lifetime Seven with Beneficiary Income Option, your
ability to elect other optional living benefits will be affected as indicated
in the "Election and Designations under the Program" section, above.
2. We add the following as a new line item within the portion of the fee table
entitled "Your Optional Benefit Fees and Charges" to reflect the fee for
Spousal Highest Daily Lifetime Seven With Beneficiary Income Option:
Spousal Highest Daily Lifetime Seven w/Beneficiary Income Option: maximum
charge of 2.00% of PWV; current charge of 0.95% of PWV. *
Total Maximum Charges Total Current Charges
- --------------------------------------- -------------------------------------
ASAPIII: 1.25% of Sub-account net ASAPIII: 1.25% of Sub-account net
assets + 2.00% of PWV assets + 0.95% of PWV
APEX II: 1.65% of Sub-account net APEX II: 1.65% of Sub-account net
assets + 2.00% of PWV assets + 0.95% of PWV
ASL II: 1.65% of Sub-account net ASL II: 1.65% of Sub-account net
assets + 2.00% of PWV assets + 0.95% of PWV
- --------
* Spousal Highest Daily Lifetime Seven With Beneficiary Income Option. Charge
for this benefit is assessed against the Protected Withdrawal Value
("PWV"). As discussed in the description of the benefit, the charge is
taken out of the Sub-accounts. For ASAP III, 0.95% of PWV is in addition to
1.25% annual charge of amounts invested in the Sub-accounts (in Annuity
Years 1-8) and 0.65% annual charge of amounts invested in the Sub-accounts
in subsequent Annuity Years. For APEX II and ASL II, 0.95% of PWV is in
addition to 1.65% annual charge of amounts invested in the Sub-accounts.
B. Revision to the way that certain withdrawals of the Annual Income Amount
are impacted by CDSC
We add the following as the last sentence of the first paragraph under the
sub-section entitled "Key Feature - Annual Income Amount under the Spousal
Highest Daily Lifetime Seven Benefit" to make clear that no withdrawal of the
Annual Income Amount (provided such withdrawal does not constitute Excess
Income) will be subject to a CDSC:
Note that if your withdrawal of the Annual Income Amount in a given Annuity
Year exceeds the applicable free withdrawal amount under the Annuity (but is
not considered Excess Income), we will not impose any CDSC on the amount of
that withdrawal.
C. Revised Asset Transfer Formula for Highest Daily Lifetime Seven and Spousal
Highest Daily Lifetime Seven
For elections of Spousal Highest Daily Lifetime Seven on or after July 21,
2008, the asset transfer formula differs from that set forth in the May 1,
2008 prospectus. See the section above under Highest Daily Lifetime Seven for
the revised formula.
8
EXPANDED GROUP OF AVAILABLE FUNDS
Under Investment Options, What Are the Investment Objectives And Policies Of
The Portfolios?, we make the revisions appearing below.
1. We replace the sentence stating "[t] following chart lists the currently
available and permitted investment options . . ." with the following:
As a condition to your participating in certain of our optional benefits, we
limit the investment options to which you may allocate your Account Value.
Broadly speaking, we offer two groups of permitted funds. Under the first
group, your allowable investment options are more limited, but you are not
subject to mandatory quarterly re-balancing. Under the second group, you may
allocate your Account Value between a broader range of investment options, but
must participate in quarterly re-balancing. The set of tables immediately
below describes the first category of permitted investment options. The second
set of tables describes the second category, under which:
(a) you must allocate at least 20% of your Account Value to certain fixed
income portfolios (currently, the AST PIMCO Total Return Bond Portfolio
and the AST Western Asset Core Plus Bond Portfolio).
(b) you may allocate up to 80% in the equity and other portfolios listed in
the table below.
(c) on each quarter (or the next Valuation Day, if the quarter-end is not a
Valuation Day), we will automatically re-balance your Account Value, so
that the percentages devoted to each Portfolio remain the same as those in
effect on the immediately preceding quarter-end. Note that on the first
quarter-end following your participation in the Optional Allocation and
Rebalancing Program, we will re-balance your Account Value so that the
percentages devoted to each Portfolio remain the same as those in effect
when you began the Optional Allocation and Rebalancing Program.
(d) between quarter-ends, you may re-allocate your Account Value among the
investment options permitted within this category. If you reallocate, the
next quarterly rebalancing will restore the percentages to those of your
most recent reallocation.
While those who do not participate in any optional benefit generally may
invest in any of the investment options described in this prospectus, only
those who participate in Highest Daily Lifetime Seven and Spousal Highest
Daily Lifetime Seven may participate in the second category (along with its
attendant re-balancing requirement). This second category is called our
"Optional Allocation and Rebalancing Program." If you participate in the
Optional Allocation and Rebalancing Program, you may not participate in a
Dollar Cost Averaging Program or Automatic Rebalancing Program. We may modify
or terminate the Optional Allocation and Rebalancing Program at any time. Any
such modification or termination will (i) be implemented only after we have
notified you in advance (ii) not affect the guarantees you had accrued under
Highest Daily Lifetime Seven or Spousal Highest Daily Lifetime Seven or your
ability to continue to participate in those optional benefits and (iii) not
require you to transfer Account Value out of any Portfolio in which you
participated immediately prior to the modification or termination.
9
The following chart lists the currently available and permitted investment
options when you choose certain optional benefits/1/:
Group I: Allowable Benefit Allocations
- --------
/1/ Fund availability may vary by annuity.
Optional Benefit Name/2/ Allowable Benefit Allocations
Lifetime Five Income Benefit AST Academic Strategies Asset
Spousal Lifetime Five Income Benefit Allocation Portfolio
Highest Daily Lifetime Five Income AST Capital Growth Asset
Benefit Allocation Portfolio
Highest Daily Lifetime Seven Income AST Balanced Asset Allocation
Benefit Portfolio
Spousal Highest Daily Lifetime Seven AST Focus Four Plus Portfolio
Income Benefit AST Preservation Asset Allocation
Portfolio
Highest Daily Value Death Benefit AST First Trust Balanced Target
Portfolio
AST First Trust Capital
Appreciation Target Portfolio
AST Advanced Strategies Portfolio
AST T. Rowe Price Asset
Allocation Portfolio
AST UBS Dynamic Alpha Strategy
Portfolio
AST Schroders Multi-Asset World
Strategies Portfolio
AST Niemann Capital Growth Asset
Allocation Portfolio
AST CLS Growth Asset Allocation
Portfolio
AST CLS Moderate Asset Allocation
Portfolio
AST Horizon Growth Asset
Allocation Portfolio
AST Horizon Moderate Asset
Allocation Portfolio
Franklin Templeton VIP Founding
Funds Allocation Fund
--------------------------------------------------------------------------------
Combo 5% Rollup & HAV Death Benefit All investment options permitted,
EXCEPT these:
Guaranteed Minimum Income Benefit ProFund VP UltraNASDAQ-100
Guaranteed Minimum Withdrawal Benefit ProFund VP UltraSmall Cap
GRO/GRO PLUS/GRO PLUS 2008 ProFund VP Semiconductor
Highest Anniversary Value Death Benefit ProFund VP Internet
ProFund VP UltraBull
Highest Daily GRO Value Line(R) Target 25
AIM VI Technology
ProFund VP Technology
NASDAQ(R) Target 15
ProFund VP Biotechnology
ProFund VP Short Small-Cap
Access VP High Yield
ProFund VP Short Mid-Cap
Evergreen VA Growth Fund
--------------------------------------------------------------------------------
Additional 5 investment options
NOT permitted with GRO Plus 2008
GRO Plus 2008 & Highest Daily GRO
Highest Daily GRO ProFund VP Ultra Mid-Cap
ProFund VP Precious Metals
ProFund VP NASDAQ-100
ProFund VP Asia 30
ProFund VP Short NASDAQ-100
--------------------------------------------------------------------------------
Group II: Optional Allocation and Rebalancing Program
Optional Benefit Name/2/ Allowable Benefit Allocations
Highest Daily Lifetime Seven AST Academic Strategies Asset
Spousal Highest Daily Lifetime Seven Allocation
AST Advanced Strategies
AST Aggressive Asset Allocation
AST AllianceBernstein Core Value
AST AllianceBernstein Growth &
Income
--------------------------------------------------------------------------------
/2/ Detailed Information regarding these optional benefits can be found in the
"Living Benefits" and "Death Benefits" sections of this prospectus.
10
AST American Century Income &
Growth
AST Balanced Asset Allocation
AST Capital Growth Asset
Allocation
AST CLS Growth Asset Allocation
AST CLS Moderate Asset Allocation
AST Cohen & Steers Realty
AST DeAM Large-Cap Value
AST Federated Aggressive Growth
AST First Trust Balanced Target
AST First Trust Capital
Appreciation Target
AST Focus Four Plus
AST Global Real Estate
AST Goldman Sachs Concentrated
Growth
AST Goldman Sachs Mid-Cap Growth
AST Goldman Sachs Small-Cap Value
AST High Yield
AST Horizon Growth Asset
Allocation
AST Horizon Moderate Asset
Allocation
AST International Growth
AST International Value
AST JPMorgan International Equity
AST Large-Cap Value
AST Lord Abbett Bond-Debenture
AST Marsico Capital Growth
AST MFS Global Equity
AST MFS Growth
AST Mid-Cap Value
AST Money Market
AST Neuberger Berman Mid-Cap
Growth
AST Neuberger Berman LSV Midcap
Value
AST Neuberger Berman Small-Cap
Growth
AST Niemann Capital Growth Asset
Allocation
AST Parametric Emerging Markets
Equity
AST PIMCO Limited Maturity Bond
AST PIMCO Total Return Bond
AST Preservation Asset Allocation
AST QMA US Equity Alpha
AST Schroders Multi-Asset World
Strategies Portfolio
AST Small-Cap Growth
AST Small-Cap Value
AST T. Rowe Price Asset Allocation
AST T. Rowe Price Global Bond
AST T. Rowe Price Large-Cap Growth
AST T. Rowe Price Natural
Resources
AST UBS Dynamic Alpha Strategy
AST Western Asset Core Plus Bond
Franklin Templeton VIP Founding
Funds Allocation Fund
ProFund VP Consumer Goods
ProFund VP Consumer Services
ProFund VP Financials
ProFund VP Health Care
ProFund VP Industrials
ProFund VP Large-Cap Growth
ProFund VP Large-Cap Value
ProFund VP Mid-Cap Growth
ProFund VP Mid-Cap Value
ProFund VP Real Estate
ProFund VP Small-Cap Growth
ProFund VP Small-Cap Value
ProFund VP Telecommunications
ProFund VP Utilities
11
CHANGES TO THE ASLII ANNUITY
We make the following revisions to the prospectus in order to remove
limitations on the amount of the basic Death Benefit paid under our ASLII
Annuity when death occurs on or after the decedent's age 85. We are also
adding a restriction that the ASLII Annuity is only available for purchase up
to age 85.
. Within the section "Purchasing Your Annuity," within the subsection
"What Are Our Requirements for Purchasing One of the Annuities?," we
replace the paragraph entitled "Age Restrictions" with the following:
Age Restrictions: Unless we agree otherwise and subject to our rules, the
Owner (or Annuitant if entity owned) must not be older than a maximum issue
age as of the Issue Date of the Annuity as follows: age 80 for ASAP III, and
age 85 for APEX II and ASL II. If an Annuity is owned jointly, the oldest of
the Owners must not be older than the maximum issue age on the Issue Date. You
should consider your need to access your Account Value and whether the
Annuity's liquidity features will satisfy that need. If you take a
distribution prior to age 59 1/2, you may be subject to a 10% penalty in
addition to ordinary income taxes on any gain. The availability and level of
protection of certain optional benefits may vary based on the age of the Owner
on the Issue Date of the Annuity or the date of the Owner's death.
. Within the section "Death Benefit," within the subsection "Basic Death
Benefit," we replace the last three paragraphs with the following:
For ASAP III and APEX II Annuities, the existing basic Death Benefit (for all
decedent ages) is the greater of:
. The sum of all Purchase Payments less the sum of all proportional
withdrawals.
. The sum of your Account Value in the Sub-accounts and your Interim Value
in the Fixed Allocations.
For ASL II Annuities issued before July 21, 2008, where death occurs before
the decedent's age 85, the basic Death Benefit is the greater of:
. The sum of all Purchase Payments less the sum of all proportional
withdrawals.
. The sum of your Account Value in the Sub-accounts and your Interim Value
in the Fixed Allocations.
For ASL II Annuities issued before July 21, 2008 where death occurs after the
decedent's age 85, the Death Benefit is (a) your Account Value (for Annuities
other than those issued in New York) or (b) your Account Value in the
Sub-accounts plus your Interim Value in the Fixed Allocations (for Annuities
issued in New York only).
For ASL II Annuities issued on or after July 21, 2008, subject to regulatory
approval, the basic Death Benefit is the greater of:
. The sum of all Purchase Payments less the sum of all proportional
withdrawals.
. The sum of your Account Value in the Sub-accounts and your Interim Value
in the Fixed Allocations.
"Proportional withdrawals" are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn. For
example, a withdrawal of 50% of Account Value would be considered as a 50%
reduction in Purchase Payments for purposes of calculating the basic Death
Benefit.
12
PRUDENTIAL ANNUITIES LIFE ASSURANCE CORPORATION
OPTIMUM/SM/
OPTIMUM FOUR/SM/
OPTIMUM XTRA
Supplement, dated July 21, 2008
To
Prospectus, dated May 1, 2008
This supplement should be read and retained with the prospectus for your
Optimum and Optimum Four Annuities. If you would like another copy of the
prospectus, please call us at 1-888-PRU-2888.
This supplement is being issued to describe enhancements that are being made
to certain optional living benefits available under each of the
above-referenced Annuities. The terms used in this supplement are defined in
the Glossary of Terms in the prospectus. With respect to Highest Daily
Lifetime Seven, we (a) revise the way that certain withdrawals of the Annual
Income Amount are impacted by the Contingent Deferred Sales Charge ("CDSC")
(b) add an optional death benefit, (the "Highest Daily Lifetime Seven with
Beneficiary Income Option") (c) add an optional benefit that increases the
Annual Income Amount if the owner qualifies for increased payments, (the
"Highest Daily Lifetime Seven with Lifetime Income Accelerator"), and
(d) modify the asset transfer formula under the benefit, to make clear that
the Account Value may include amounts allocated to certain Fixed Rate Options.
For Spousal Highest Daily Lifetime Seven, we (a) revise the way that certain
withdrawals of the Annual Income Amount are impacted by CDSC (b) add an
optional death benefit (the "Spousal Highest Daily Lifetime Seven with
Beneficiary Income Option") and (c) modify the asset transfer formula under
the benefit, to make clear that the Account Value may include amounts
allocated to certain Fixed Rate Options. The Highest Daily Lifetime Seven with
Beneficiary Income Option and the Spousal Highest Daily Lifetime Seven with
Beneficiary Income Option allow the beneficiary to continue to withdraw the
Annual Income Amount until the Protected Withdrawal Value is depleted. Thus,
the option may be appropriate for an Annuity Owner who wants to provide an
additional death benefit option to his/her beneficiary.
The Highest Daily Lifetime Seven with Lifetime Income Accelerator provides a
benefit under which the Annuity Owner may withdraw double the Annual Income
Amount once he/she meets the benefit's eligibility requirements (e.g., being
confined to a qualified nursing facility or being unable to perform two daily
life activities as defined below). Thus, this benefit may be appropriate for
an Annuity Owner who may meet these requirements at a future date.
Except as otherwise provided here, the description of each optional living
benefit set forth in the May 1, 2008 prospectus remains unchanged.
CHANGES TO HIGHEST DAILY LIFETIME SEVEN
A. Addition of Death Benefit (HD Lifetime Seven with Beneficiary Income
Option/SM/)
For elections of Highest Daily Lifetime Seven on or after July 21, 2008, the
Annuity Owner may opt for a death benefit, the value of which is linked to the
Annual Income Amount under the benefit. As detailed below, a beneficiary
taking the Annuity's death benefit under this feature is paid the Annual
Income Amount until the Protected Withdrawal Value is depleted. (Note that the
final payment, exhausting the Protected Withdrawal Value, may be less than the
Annual Income Amount). We may impose a maximum charge of 2.00% of Protected
Withdrawal Value ("PWV") annually, but currently impose a charge of 0.95% of
PWV annually, if you choose Highest Daily Lifetime Seven with Beneficiary
Income Option. See the table entitled "Your Optional Benefit Fees and Charges"
in the prospectus for a description of all fees and charges related to
optional benefits.
1. To reflect this death benefit option, we add the following to the
description of Highest Daily Lifetime Seven, immediately after the
sub-section entitled Additional Tax Considerations:
HD Lifetime Seven with Beneficiary Income Option/SM/
We offer an optional death benefit feature under this benefit, the amount of
which is linked to your Annual Income Amount. We refer to this optional death
benefit as the Beneficiary Income Option ("BIO"). You may choose Highest Daily
Lifetime Seven without also selecting the Beneficiary Income Option death
benefit. You must elect the Beneficiary Income Option death benefit at the
time you elect Highest Daily Lifetime Seven. If you elect Highest Daily
Lifetime Seven prior to your state's approval of the Beneficiary Income Option
and would like to add this feature later, you must terminate the Highest Daily
Lifetime Seven benefit and elect the Highest Daily Lifetime Seven with
Beneficiary Income Option. If you elected the Highest Daily Lifetime Seven
benefit, you will have a 90 day transition period from the date the
Beneficiary Income Option is approved in your state of residence to terminate
your Highest Daily Lifetime Seven benefit and elect the Highest Daily Lifetime
Seven benefit with Beneficiary Income Option. If you do not elect to add the
Beneficiary Income Option in the 90 day transition period, you can elect it on
any anniversary of the Issue Date that is at least 90 calendar days from the
date that the Highest Daily Lifetime Seven benefit was terminated. If you
terminate your Highest Daily Lifetime Seven benefit to elect the Highest Daily
Lifetime Seven with Beneficiary Income Option benefit, you will lose all
guarantees under the Highest Daily Lifetime Seven benefit, and will begin the
new guarantees under the Highest Daily Lifetime Seven benefit with BIO based
on the Account Value as of the date the new benefit becomes active.
If you elect this death benefit, you may not elect any other optional benefit.
You may elect the Beneficiary Income Option death benefit so long as the
Annuitant is no older than age 75 at the time of election. For purposes of
this optional death benefit, we calculate the Annual Income Amount and
Protected Withdrawal Value in the same manner that we do under Highest Daily
Lifetime Seven itself (except that for Optimum XTra, we exclude from the
Protected Withdrawal Value the amount of any Credit that was granted within 12
months prior to death). Because the fee for this benefit is based on the
Protected Withdrawal Value, the fee for Highest Daily Lifetime Seven with the
Beneficiary Income Option may be greater than it would have been based on the
Account Value alone.
Upon a death that triggers payment of a death benefit under the Annuity, we
identify the following amounts: (a) the amount of the basic Death Benefit
under the Annuity (b) the Protected Withdrawal Value and (c) the Annual Income
Amount. If there were no withdrawals prior to the date of death, then we
calculate the Protected Withdrawal Value for purposes of this death benefit as
of the date of death, and we calculate the Annual Income Amount as if there
were a withdrawal on the date of death. If there were withdrawals prior to the
date of death, then we set the Protected Withdrawal Value and Annual Income
Amount for purposes of this death benefit as of the date that we receive due
proof of death.
If there is one beneficiary, he/she must choose to receive either the basic
Death Benefit (in a lump sum or other permitted form of distribution) or the
Beneficiary Income Option death benefit (in the form of periodic payments of
the Annual Income Amount - such payments may be annual or at other intervals
that we permit). If there are multiple beneficiaries, each beneficiary is
presented with the same choice. Thus, each beneficiary can choose to take
his/her portion of either (a) the basic death benefit or (b) the Beneficiary
Income Option death benefit. In order to receive the Beneficiary Income Option
death benefit, each beneficiary's share of the death benefit proceeds must be
allocated as a percentage of the total death benefit to be paid. We allow a
beneficiary who has opted to receive the Annual Income Amount to designate
another beneficiary, who would receive any remaining payments upon the former
beneficiary's death. Note also that the final payment, exhausting the
Protected Withdrawal Value, may be less than the Annual Income Amount.
Here is an example to illustrate how the death benefit may be paid:
. Assume that (i) the basic death benefit is $50,000, the Protected
Withdrawal Value is $100,000, and the Annual Income Amount is $5,000;
(ii) there are two beneficiaries (the first designated to receive 75% of
the death benefit and the second designated to receive 25% of the death
benefit); (iii) the first beneficiary chooses to receive his/her portion
of the death benefit in the form of the Annual Income Amount, and the
second beneficiary chooses to receive his/her portion of the death
benefit with reference to the basic death benefit.
. Under those assumptions, the first beneficiary will be paid a pro-rated
portion of the Annual Income Amount for 20 years (the 20 year pay out
period is derived from the $5,000 Annual Income Amount, paid each year
until it exhausts the entire $100,000 Protected Withdrawal Value).
The pro-rated portion of the Annual Income Amount, equal to $3,750
annually (i.e., the first beneficiary's 75% share multiplied by $5000),
is then paid each year for the 20 year period. Payment of $3,750 for 20
years results in total payments of $75,000 (i.e., the first
beneficiary's 75% share of the $100,000 Protected Withdrawal Value).
The second beneficiary would receive 25% of the basic death benefit
amount (or $12,500).
If you elect to terminate Highest Daily Lifetime Seven with Beneficiary Income
Option, both Highest Daily Lifetime Seven and that death benefit option will
be terminated. You may not terminate the death benefit option without
terminating the entire benefit. If you terminate Highest Daily Lifetime Seven
with Beneficiary Income Option, your ability to elect other optional living
benefits will be affected as indicated in the "Election and Designations under
the Program" section, above.
2
2. We add the following as a new line item within the portion of the fee table
entitled "Your Optional Benefit Fees and Charges" to reflect the fee for
Highest Daily Lifetime Seven With Beneficiary Income Option:
Highest Daily Lifetime Seven with Beneficiary Income Option: maximum charge of
2.00% of PWV; current charge of 0.95% of PWV. *
Total Maximum Charges Total Current Charges
- --------------------------------------- -------------------------------------
Optimum: 1.25% of Sub-account net Optimum: 1.25% of Sub-account net
assets + 2.00% of PWV assets + 0.95% of PWV
Optimum 1.65% of Sub-account net Optimum 1.65% of Sub-account net
Four: assets + 2.00% of PWV Four: assets + 0.95% of PWV
Optimum 1.75% of Sub-account net Optimum 1.75% of Sub-account net
XTra: assets + 2.00% of PWV XTra: assets + 0.95% of PWV
- --------
* Highest Daily Lifetime Seven With Beneficiary Income Option. Charge for
this benefit is assessed against the Protected Withdrawal Value ("PWV"). As
discussed in the description of the benefit, the charge is taken out of the
Sub-accounts. For Optimum, 0.95% of PWV is in addition to 1.25% annual
charge of amounts invested in the Sub-accounts (in Annuity Years 1-8) and
0.65% annual charge of amounts invested in the Sub-accounts in subsequent
Annuity Years. For Optimum Four, 0.95% of PWV is in addition to 1.65%
annual charge of amounts invested in the Sub-accounts. For Optimum XTra,
0.95% of PWV is in addition to 1.75% annual charge.
B. Addition of Lifetime Income Accelerator Feature (HD Lifetime Seven with
Lifetime Income Accelerator/SM/).
A. The following is added at the end of the section concerning Highest Daily
Lifetime Seven.
HD Lifetime Income Accelerator/SM/. We offer another version of Highest Daily
Lifetime Seven that we call Highest Daily Lifetime Seven with Lifetime Income
Accelerator ("Highest Daily Lifetime Seven with LIA"). This version is only
being offered in those jurisdictions where we have received regulatory
approval and will be offered subsequently in other jurisdictions when we
receive regulatory approval in those jurisdictions. Highest Daily Lifetime
Seven with LIA is offered as an alternative to other lifetime withdrawal
options. If you elect this benefit, you may not elect any other optional
benefit. The income benefit under Highest Daily Lifetime Seven with LIA
currently is based on a single "designated life" who is between the ages of 55
and 75 on the date that the benefit is elected. If you elected the Highest
Daily Lifetime Seven benefit prior to your state's approval of LIA, you will
have a 90 day transition period from the date the Highest Daily Lifetime Seven
with Lifetime Income Accelerator is approved in your state of residence to
terminate your Highest Daily Lifetime Seven benefit and elect the Highest
Daily Lifetime Seven with LIA benefit. If you do not elect to add the Lifetime
Income Accelerator option in the 90 day transition period, you can elect it on
any anniversary of the Issue Date that is at least 90 calendar days from the
date that the Highest Daily Lifetime Seven benefit was terminated. If you
terminate your Highest Daily Lifetime Seven benefit to elect the Highest Daily
Lifetime Seven with LIA benefit, you will lose all guarantees under the
Highest Daily Lifetime Seven benefit and will begin the new guarantees under
the Highest Daily Lifetime Seven benefit with LIA based on the Account Value
as of the date the new benefit becomes active.
Highest Daily Lifetime Seven with LIA guarantees, until the death of the
single designated life, the ability to withdraw an amount equal to double the
Annual Income Amount (which we refer to as the "LIA Amount") if you meet the
conditions set forth below. If you choose the Highest Daily Lifetime Seven
with LIA, the maximum charge we may impose is 2.00% of Protected Withdrawal
Value ("PWV") annually. We currently assess a charge of 0.95% of PWV annually.
We deduct this 0.95% fee at the end of each quarter, where each such quarter
is part of a year that begins on the effective date of the benefit or an
anniversary thereafter. Thus, on each such quarter-end (or the next Valuation
Day, if the quarter-end is not a Valuation Day), we deduct 0.2375% of the
Protected Withdrawal Value at the end of the quarter. We deduct the fee pro
rata from each of your Sub-accounts including the AST Investment Grade Bond
Portfolio Sub-account. Since this fee is based on the Protected Withdrawal
Value, the fee for Highest Daily Lifetime Seven with LIA may be greater than
it would have been, had it been based on the Account Value alone. If the fee
to be deducted exceeds the current Account Value, we will reduce the Account
Value to zero, and continue the benefit as described below.
If this benefit is being elected on an Annuity held as a 403 (b) plan, then in
addition to meeting the eligibility requirements listed below for the LIA
Amount you must separately qualify for distributions from the 403 (b) plan
itself.
You may choose Highest Daily Lifetime Seven without also electing LIA, however
you may not elect LIA without Highest Daily Lifetime Seven. All terms and
conditions of Highest Daily Lifetime Seven apply to this version of the
benefit, except as described herein. Currently, if you elect Highest Daily
Lifetime Seven with LIA and subsequently terminate the benefit, you will be
able to re-elect Highest Daily Lifetime Seven with LIA but all conditions of
the benefit described below must be met, and you may be subject to a waiting
period until you can elect this or another lifetime withdrawal benefit.
3
Eligibility Requirements for LIA Amount. Both a waiting period of 36 months,
from the benefit effective date, and an elimination period of 120 days, from
the date of notification that one or both of the requirements described
immediately below have been met, apply before you can become eligible for the
LIA Amount. Assuming the 36 month waiting period has been met and we have
received the notification referenced in the immediately preceding sentence,
the LIA amount would be available for withdrawal on the Valuation Date
immediately after the 120/th/ day. The waiting period and the elimination
period may run concurrently. In addition to satisfying the waiting and
elimination period, either or both of the following requirements ("LIA
conditions") must be met. It is not necessary to meet both conditions:
(1) The designated life is confined to a qualified nursing facility. A
qualified nursing facility is a facility operated pursuant to law or any
state licensed facility providing medically necessary in-patient care which
is prescribed by a licensed physician in writing and based on physical
limitations which prohibit daily living in a non-institutional setting.
(2) The designated life is unable to perform two or more basic abilities of
caring for oneself or "activities of daily living." We define these basic
abilities as:
i. Eating: Feeding oneself by getting food into the body from a receptacle
(such as a plate, cup or table) or by a feeding tube or intravenously.
ii. Dressing: Putting on and taking off all items of clothing and any
necessary braces, fasteners or artificial limbs.
iii. Bathing: Washing oneself by sponge bath; or in either a tub or shower,
including the task of getting into or out of the tub or shower.
iv. Toileting: Getting to and from the toilet, getting on and off the
toilet, and performing associated personal hygiene.
v. Transferring: Moving into or out of a bed, chair or wheelchair.
vi. Continence: Maintaining control of bowel or bladder function; or when
unable to maintain control of bowel or bladder function, the ability to
perform personal hygiene (including caring for catheter or colostomy bag).
You must notify us when the LIA conditions have been met. If, when we receive
such notification, there are more than 120 days remaining until the end of the
waiting period described above, you will not be eligible for the LIA Amount.
If there are 120 days or less remaining until the end of the waiting period
when we receive notification that the LIA conditions are met, we will
determine eligibility for the LIA Amount through our then current
administrative process, which may include, but is not limited to,
documentation verifying the LIA conditions and/or an assessment by a third
party of our choice. Such assessment may be in person and we will assume any
costs associated with the aforementioned assessment. Once eligibility is
determined, the LIA Amount is equal to double the Annual Income Amount as
described in this prospectus under the Highest Daily Lifetime Seven Benefit.
Additionally, we will reassess your eligibility on an annual basis although
your LIA benefit for the year that immediately precedes our reassessment will
not be affected if it is determined that you are no longer eligible. Your
first reassessment may occur in the same year as your initial assessment. If
we determine you are no longer eligible to receive the LIA Amount, upon the
next Annuity Anniversary the Annual Income Amount would replace the LIA
Amount. There is no limit on the number of times you can become eligible for
the LIA Amount, however, each time would require the completion of the 120-day
elimination period, notification that the designated life meets the LIA
conditions, and determination, through our then current administrative
process, that you are eligible for the LIA Amount, each as described above.
LIA amount at the First Withdrawal. If your first withdrawal subsequent to
election of Highest Daily Lifetime Seven with LIA occurs while you are eligible
for the LIA Amount, the available LIA Amount is equal to double the Annual
Income Amount.
LIA amount after the First Withdrawal. If you become eligible for the LIA
Amount after you have taken your first withdrawal, the available LIA amount for
the current and subsequent Annuity Years is equal to double the then current
Annual Income Amount, however the available LIA amount in the current Annuity
Year is reduced by any withdrawals that have been taken in the current Annuity
Year. Cumulative withdrawals in an Annuity Year which are less than or equal to
the LIA Amount (when eligible for the LIA amount) will not reduce your LIA
Amount in subsequent Annuity Years, but any such withdrawals will reduce the
LIA Amount on a dollar-for-dollar basis in that Annuity Year.
Withdrawals in Excess of the LIA amount. If your cumulative withdrawals in an
Annuity Year are in excess of the LIA Amount when you are eligible ("Excess
Withdrawal"), your LIA Amount in subsequent years will be reduced (except with
regard to required minimum distributions) by the result of the ratio of the
excess portion of the withdrawal to the Account Value immediately prior to the
Excess Withdrawal. Reductions include the actual amount of the withdrawal,
including any CDSC that may apply. Withdrawals of any amount up to and
including the LIA Amount will reduce the Protected Withdrawal Value by the
amount of the withdrawal. Excess Withdrawals will reduce the Protected
Withdrawal Value by the same ratio as the reduction to
4
the LIA Amount. Any withdrawals that are less than or equal to the LIA amount
(when eligible) but in excess of the free withdrawal amount available under
this Annuity will not incur a CDSC.
Withdrawals are not required. However, subsequent to the first withdrawal, the
LIA Amount is not increased in subsequent Annuity Years if you decide not to
take a withdrawal in an Annuity Year or take withdrawals in an Annuity Year
that in total are less than the LIA Amount.
Purchase Payments. If you are eligible for the LIA Amount as described under
"Eligibility Requirements for LIA Amount" and you make an additional Purchase
Payment, we will increase your LIA Amount by double the amount we add to your
Annual Income Amount.
Step Ups. If your Annual Income Amount is stepped up your LIA Amount will be
stepped up to equal double the stepped up Annual Income Amount.
Guarantee Payments. If your Account Value is reduced to zero as a result of
cumulative withdrawals that are equal to or less than the LIA Amount, or as a
result of the fee that we assess for Highest Daily Lifetime Seven with LIA, and
there is still a LIA Amount available, we will make an additional payment for
that Annuity Year equal to the remaining LIA Amount. Thus, in that scenario,
the remaining LIA Amount would be payable even though your Account Value was
reduced to zero. In subsequent Annuity Years we make payments that equal the
LIA Amount as described in this section. We will make payments until the death
of the single designated life. Should the designated life no longer qualify for
the LIA amount (as described under "Eligibility Requirements for LIA Amount"
above), the Annual Income Amount would continue to be available. Subsequent
eligibility for the LIA Amount would require the completion of the 120 day
elimination period as well as meeting the LIA conditions listed above under
"Eligibility Requirements for LIA Amount". To the extent that cumulative
withdrawals in the current Annuity Year that reduce your Account Value to zero
are more than the LIA Amount (except in the case of required minimum
distributions), Highest Daily Lifetime Seven with LIA terminates, and no
additional payments are made.
Annuity Options. In addition to the Highest Daily Lifetime Seven Annuity
Options described above, after the 10th benefit anniversary you may also
request that we make annuity payments each year equal to the Annual Income
Amount. In any year that you are eligible for the LIA Amount, we make annuity
payments equal to the LIA Amount. If you would receive a greater payment by
applying your Account Value to receive payments for life under your Annuity, we
will pay the greater amount. Prior to the 10th benefit anniversary this option
is not available.
We will continue to make payments until the death of the Designated Life. If
this option is elected, the Annual Income Amount and LIA Amount will not
increase after annuity payments have begun.
If you elect HD Lifetime Seven with LIA, and never meet the eligibility
requirements you will not receive any additional payments based on the LIA
Amount.
B. We add the following as a new line item within the portion of the fee table
entitled "Your Optional Benefit Fees and Charges" to reflect the fee for
Highest Daily Lifetime Seven With Optional Lifetime Income Accelerator:
Highest Daily Lifetime Seven w/Optional Lifetime Income Accelerator maximum
charge of 2.00% of PWV; current charge of 0.95% of PWV. *
Total Maximum Charges Total Current Charges
- --------------------------------------- -------------------------------------
Optimum: 1.25% of Sub-account net Optimum: 1.25% of Sub-account net
assets + 2.00% of PWV assets + 0.95% of PWV
Optimum 1.65% of Sub-account net Optimum 1.65% of Sub-account net
Four: assets + 2.00% of PWV Four: assets + 0.95% of PWV
Optimum 1.75% of Sub-account net Optimum 1.75% of Sub-account net
XTra: assets + 2.00% of PWV XTra: assets + 0.95% of PWV
- --------
* Highest Daily Lifetime Seven with Lifetime Income Accelerator. Charge for
this benefit is assessed against the Protected Withdrawal Value ("PWV"). As
discussed in the description of the benefit, the charge is taken out of the
Sub-accounts. For Optimum, 0.95% of PWV is in addition to 1.25% annual
charge of amounts invested in the Sub-accounts (in Annuity Years 1-8) and
0.65% annual charge of amounts invested in the Sub-accounts in subsequent
Annuity Years. For Optimum Four, 0.95% of PWV is in addition to 1.65%
annual charge of amounts invested in the Sub-accounts. For Optimum XTra,
0.95% of PWV is in addition to 1.75% annual charge.
5
C. Revision to the way that certain withdrawals of the Annual Income Amount
are impacted by CDSC
We add the following as the last sentence of the first paragraph under the
sub-section entitled "Key Feature - Annual Income Amount under the Highest
Daily Lifetime Seven Benefit" to make clear that no withdrawal of the Annual
Income Amount (provided such withdrawal does not constitute Excess Income)
will be subject to a CDSC:
Note that if your withdrawal of the Annual Income Amount in a given Annuity
Year exceeds the applicable free withdrawal amount under the Annuity (but is
not considered Excess Income), we will not impose any CDSC on the amount of
that withdrawal.
D. Revised Asset Transfer Formula for Highest Daily Lifetime Seven and Spousal
Highest Daily Lifetime Seven
For elections of Highest Daily Lifetime Seven on or after July 21, 2008, the
asset transfer formula differs from that set forth in the May 1, 2008
prospectus. The revised formula reflects the fact that Account Value may
include amounts allocated to certain Fixed Rate Options. Currently, no Fixed
Rate Options are available for use with Highest Daily Lifetime Seven and
Spousal Highest Daily Lifetime Seven.
Here is the revised formula (the Table of "a" factors remains the same):
Terms and Definitions referenced in the calculation formula:
. Cu - the upper target is established on the effective date of the
Highest Daily Lifetime Seven benefit (the "Effective Date") and is not
changed for the life of the guarantee. Currently, it is 83%.
. Ct - the target is established on the Effective Date and is not changed
for the life of the guarantee. Currently, it is 80%.
. Cl - the lower target is established on the Effective Date and is not
changed for the life of the guarantee. Currently, it is 77%.
. L - the target value as of the current business day.
. r - the target ratio.
. a - factors used in calculating the target value. These factors are
established on the Effective Date and are not changed for the life of
the guarantee.
. V\\v\\ - the total value of all Permitted Sub-accounts in the Annuity.
. V\\F\\ the total value of all elected Fixed Rate Options in the Annuity.
. B - the total value of the AST Investment Grade Bond Portfolio
Sub-account.
. P - Income Basis. Prior to the first withdrawal, the Income Basis is the
Protected Withdrawal Value calculated as if the first withdrawal were
taken on the date of calculation. After the first withdrawal, the Income
Basis is equal to the greater of (1) the Protected Withdrawal Value at
the time of the first withdrawal, adjusted for additional purchase
payments including the amount of any associated Credits, and adjusted
proportionally for excess withdrawals*, (2) any highest quarterly value
increased for additional purchase payments including the amount of any
associated Credits, and adjusted for withdrawals, and (3) the Account
Value.
. T - the amount of a transfer into or out of the AST Investment Grade
Bond Portfolio Sub-account.
* Note: withdrawals of less than the Annual Income Amount do not reduce the
Income Basis.
Target Value Calculation:
On each business day, a target value (L) is calculated, according to the
following formula. If the Account Value (V\\V\\ + V\\F\\) is equal to zero, no
calculation is necessary.
L = 0.05 * P * a
6
Transfer Calculation:
The following formula, which is set on the Benefit Effective Date and is not
changed for the life of the guarantee, determines when a transfer is required:
Target Ratio r = (L - B) / (V\\V\\ + V\\F\\).
. If r (greater than) Cu, assets in the Permitted Sub-accounts are
transferred to the AST Investment Grade Bond Portfolio Sub-account.
. If r (less than) Cl, and there are currently assets in the AST
Investment Grade Bond Portfolio Sub-account (B (greater than) 0), assets
in the AST Investment Grade Bond Portfolio Sub-account are transferred
to the Permitted Sub-accounts according to most recent allocation
instructions.
The following formula, which is set on the Benefit Effective Date and is not
changed for the life of the guarantee, determines the transfer amount:
T = {Min (V\\V\\ + V\\F\\), [L - B - (V\\V\\ + V\\F\\) * Ct] / (1-Ct))}
Money is transferred from the elected Sub-accounts and Fixed Rate
Options to the Transfer Account
T = {Min (B, - [L - B -(V\\V\\ + V\\F\\)* C\\t\\] / (1-C\\t\\))} Money
is transferred from the Transfer Account to the elected Sub-accounts
CHANGES TO SPOUSAL HIGHEST DAILY LIFETIME SEVEN
1. We add the following, immediately after the section entitled "Additional
Tax Considerations":
A. Addition of Death Benefit (Spousal HD Lifetime Seven with Beneficiary
Income Option/SM/)
The Annuity Owner may opt for a death benefit, the value of which is linked to
the Annual Income Amount under the benefit. We refer to the death benefit as
the Beneficiary Income Option. As detailed below, a beneficiary taking the
Annuity's death benefit under this feature is paid the Annual Income Amount
until the Protected Withdrawal Value is depleted. (Note that the final payment,
exhausting the Protected Withdrawal Value, may be less than the Annual Income
Amount). We may impose a maximum charge of 2.00% of Protected Withdrawal Value
("PWV") annually, but currently impose a charge of 0.95% of PWV annually if you
choose the Spousal Highest Daily Lifetime Seven with Beneficiary Income Option.
To reflect this death benefit option, we add the following to the description
of Spousal Highest Daily Lifetime Seven:
Spousal HD Lifetime Seven with Beneficiary Income Option/SM/
We offer an optional death benefit feature under this benefit, the amount of
which is linked to your Annual Income Amount. You may choose Spousal Highest
Daily Lifetime Seven without also selecting the Beneficiary Income Option
death benefit. If you elect Spousal Highest Daily Lifetime Seven without the
Beneficiary Income Option ("BIO") and would like to add this feature later,
you must terminate the Spousal Highest Daily Lifetime Seven benefit and elect
the Spousal Highest Daily Lifetime Seven with Beneficiary Income Option. If
you elected the Spousal Highest Daily Lifetime Seven benefit prior to your
State's approval of BIO, you will have a 90 day transition period from the
date the Beneficiary Income Option is approved in your state of residence to
terminate your Spousal Highest Daily Lifetime Seven benefit and elect the
Spousal Highest Daily Lifetime Seven benefit with Beneficiary Income Option.
If you do not elect to add the Beneficiary Income Option in the 90 day
transition period, you can elect it on any anniversary of the Issue Date that
is at least 90 calendar days from the date that the Spousal Highest Daily
Lifetime Seven benefit was terminated. If you terminate your Spousal Highest
Daily Lifetime Seven benefit to elect the Spousal Highest Daily Lifetime Seven
with Beneficiary Income Option benefit, you will lose all guarantees that you
had accumulated under your Spousal Highest Daily Lifetime Seven benefit, and
will begin the new guarantees under the Spousal Highest Daily Lifetime Seven
benefit with BIO based on the Account Value as of the date the new benefit
becomes active.
If you elect the Beneficiary Income Option death benefit, you may not elect
any other optional benefit. You may elect the Beneficiary Income Option death
benefit so long as each Designated Life is no older than age 75 at the time of
election. This death benefit is not transferable in the event of a divorce,
nor may the benefit be split in accordance with any divorce proceedings or
similar instrument of separation. Since this fee is based on the Protected
Withdrawal Value, the fee for Spousal Highest Daily Lifetime Seven with BIO
may be greater than it would have been, had it been based on the Account Value
alone.
For purposes of the Beneficiary Income Option death benefit, we calculate the
Annual Income Amount and Protected Withdrawal Value in the same manner that we
do under Spousal Highest Daily Lifetime Seven itself (except that for Optimum
XTra, we exclude from the Protected Withdrawal Value the amount of any Credit
that was granted within 12 months prior to death). Upon the first death of a
Designated Life, no amount is payable under the Beneficiary Income Option
death benefit. Upon the second
7
death of a Designated Life, we identify the following amounts: (a) the amount
of the base death benefit under the Annuity (b) the Protected Withdrawal Value
and (c) the Annual Income Amount. If there were no withdrawals prior to the
date of death, then we calculate the Protected Withdrawal Value for purposes
of this death benefit as of the date of death, and we calculate the Annual
Income Amount as if there were a withdrawal on the date of death. If there
were withdrawals prior to the date of death, then we set the Protected
Withdrawal Value and Annual Income Amount for purposes of this death benefit
as of the date that we receive due proof of death.
If there is one beneficiary, he/she must choose to receive either the base
death benefit (in a lump sum or other permitted form of distribution) or the
Beneficiary Income Option death benefit (in the form of annual payment of the
Annual Income Amount - such payments may be annual or at other intervals that
we permit). If there are multiple beneficiaries, each beneficiary is presented
with the same choice. Thus, each beneficiary can choose to take his/her
portion of either (a) the basic death benefit or (b) the Beneficiary Income
Option death benefit. In order to receive the Beneficiary Income Option death
benefit, each beneficiary's share of the death benefit proceeds must be
allocated as a percentage of the total death benefit to be paid. We allow a
beneficiary who has opted to receive the Annual Income Amount to designate
another beneficiary, who would receive any remaining payments upon the former
beneficiary's death. Note also that the final payment, exhausting the
Protected Withdrawal Value, may be less than the Annual Income Amount.
Here is an example to illustrate how the death benefit may be paid:
. Assume that (i) the basic death benefit is $50,000, the Protected
Withdrawal Value is $100,000, and the Annual Income Amount is $5,000;
(ii) there are two beneficiaries (the first designated to receive 75% of
the death benefit and the second designated to receive 25% of the death
benefit); (iii) the first beneficiary chooses to receive his/her portion
of the death benefit in the form of the Annual Income Amount, and the
second beneficiary chooses to receive his/her portion of the death
benefit with reference to the basic death benefit.
. Under those assumptions, the first beneficiary will be paid a pro-rated
portion of the Annual Income Amount for 20 years (the 20 year pay out
period is derived from the $5,000 Annual Income Amount, paid each year
until it exhausts the entire $100,000 Protected Withdrawal Value).
The pro-rated portion of the Annual Income Amount equal to $3,750 (i.e.,
the first beneficiary's 75% share multiplied by $5,000) is then paid
each year for the 20 year period. Payment of $3,750 for 20 years results
in total payments of $75,000 (i.e., the first beneficiary's 75% share of
the $100,000 Protected Withdrawal Value).
The second beneficiary would receive 25% of the basic death benefit
amount (or $12,500).
If you elect to terminate Spousal Highest Daily Lifetime Seven with
Beneficiary Income Option, both Spousal Highest Daily Lifetime Seven and that
death benefit option will be terminated. You may not terminate the death
benefit option without terminating the entire benefit. If you terminate
Spousal Highest Daily Lifetime Seven with Beneficiary Income Option, your
ability to elect other optional living benefits will be affected as indicated
in the "Election and Designations under the Program" section, above.
2. We add the following as a new line item within the portion of the fee table
entitled "Your Optional Benefit Fees and Charges" to reflect the fee for
Spousal Highest Daily Lifetime Seven With Beneficiary Income Option:
Spousal Highest Daily Lifetime Seven w/Beneficiary Income Option : maximum
charge of 2.00% of PWV; current charge of 0.95% of PWV. *
Total Maximum Charges Total Current Charges
- --------------------------------------- -------------------------------------
Optimum: 1.25% of Sub-account net Optimum: 1.25% of Sub-account net
assets + 2.00% of PWV assets + 0.95% of PWV
Optimum 1.65% of Sub-account net Optimum 1.65% of Sub-account net
Four: assets + 2.00% of PWV Four: assets + 0.95% of PWV
Optimum 1.75% of Sub-account net Optimum 1.75% of Sub-account net
XTra: assets + 2.00% of PWV XTra: assets + 0.95% of PWV
- --------
* Spousal Highest Daily Lifetime Seven With Beneficiary Income Option. Charge
for this benefit is assessed against the Protected Withdrawal Value
("PWV"). As discussed in the description of the benefit, the charge is
taken out of the Sub-accounts. For Optimum, 0.95% of PWV is in addition to
1.25% annual charge of amounts invested in the Sub-accounts (in Annuity
Years 1-8) and 0.65% annual charge of amounts invested in the Sub-accounts
in subsequent Annuity Years. For Optimum Four, 0.95% of PWV is in addition
to 1.65% annual charge of amounts invested in the Sub-accounts. For Optimum
XTra, 0.95% of PWV is in addition to 1.75% annual charge.
8
B. Revision to the way that certain withdrawals of the Annual Income Amount
are impacted by CDSC
We add the following as the last sentence of the first paragraph under the
sub-section entitled "Key Feature - Annual Income Amount under the Spousal
Highest Daily Lifetime Seven Benefit" to make clear that no withdrawal of the
Annual Income Amount (provided such withdrawal does not constitute Excess
Income) will be subject to a CDSC:
Note that if your withdrawal of the Annual Income Amount in a given Annuity
Year exceeds the applicable free withdrawal amount under the Annuity (but is
not considered Excess Income), we will not impose any CDSC on the amount of
that withdrawal.
C. Revised Asset Transfer Formula for Highest Daily Lifetime Seven and Spousal
Highest Daily Lifetime Seven
For elections of Spousal Highest Daily Lifetime Seven on or after July 21,
2008, the asset transfer formula differs from that set forth in the May 1,
2008 prospectus. See the section above under Highest Daily Lifetime Seven for
the revised formula.
9
PRUDENTIAL ANNUITIES LIFE ASSURANCE CORPORATION
ADVANCED SERIES ADVISOR PLAN III
ADVANCED SERIES APEX II
ADVANCED SERIES XTRA CREDIT SIX
ADVANCED SERIES LIFEVEST II
ADVANCED SERIES ADVISORS CHOICE(R) 2000
(marketed by some firms as "Advisors Select 2000")
Supplement, dated July 21, 2008
To
Prospectus, dated May 1, 2008
This supplement should be read and retained with the prospectus for your
Annuity. If you would like another copy of the prospectus, please call us at
1-888-PRU-2888.
This supplement is being issued to describe several changes that we are making
to the variable investment options within each of the above-referenced
Annuities. We summarize each change immediately below, and then indicate how
the pertinent portion of each prospectus is amended to reflect the change.
The changes are as follows:
1. AST Focus Four Plus Portfolio. We add the Portfolio as an investment option
available under each Annuity. Accordingly, we (a) add the Portfolio to the
list of Investment Options on the inside front cover, and (b) set forth the
fees of the Portfolio in the table of Underlying Mutual Fund Portfolio Annual
Expenses, and (c) in the Investment Options section, add the Portfolio to the
list of portfolios that are permitted if you elect Lifetime Five, Spousal
Lifetime Five, Highest Daily Lifetime Five, Highest Daily Lifetime Seven,
Spousal Highest Daily Lifetime Seven, or the Highest Daily Value death
benefit, and (d) add a summary description of the Portfolio to the chart of
each Portfolio's Investment Objectives and Policies. In addition, to reflect
the effect of the addition of the Portfolio on the average fees of all
Portfolios available under the Annuity, we describe the effect of the revised
average fees on the comparison charts appearing within the section entitled
"Selecting the Annuity That's Right for You."
2. AST Parametric Emerging Markets Equity Portfolio; AST Global Real Estate
Portfolio. We add each Portfolio as an investment option available under each
Annuity. Accordingly, we (a) add each Portfolio to the list of Investment
Options on the inside front cover, and (b) set forth the fees of each
Portfolio in the table of Underlying Mutual Fund Portfolio Annual Expenses,
and (c) in the Investment Options section, add each Portfolio to the list of
portfolios that are permitted if you elect Highest Daily Lifetime Seven or
Spousal Highest Daily Lifetime Seven under the Optional Allocation and
Rebalancing Program, or Highest Daily GRO and (d) add a summary description of
the Portfolio to the chart of each Portfolio's Investment Objectives and
Policies. In addition, to reflect the effect of the addition of each Portfolio
on the average fees of all Portfolios available under the Annuity, we describe
the effect of the revised average fees on the comparison charts appearing
within the section entitled "Selecting the Annuity That's Right for You."
3. AST Conservative Asset Allocation Portfolio; AST Balanced Asset Allocation
Portfolio; and AST American Century Strategic Allocation Portfolio. The name
and investment objective of each Portfolio has been changed. (In the case of
the AST Balanced Asset Allocation Portfolio and AST American Century Strategic
Allocation Portfolio only, the changed investment objective was authorized by
a vote of Annuity Owners). AST Conservative Asset Allocation Portfolio has
been renamed AST Balanced Asset Allocation Portfolio and will be sub-advised
by Quantitative Management Associates LLC, the original AST Balanced Asset
Allocation Portfolio has become AST Academic Strategies Asset Allocation
Portfolio, and AST American Century Strategic Allocation Portfolio has become
AST Schroders Multi-Asset World Strategies Portfolio. Accordingly, we
(a) reflect the revised Portfolio names in the list of Investment Options on
the inside front cover, and (b) with respect to these Portfolios, set forth
the fees of each Portfolio in the table of Underlying Mutual Fund Portfolio
Annual Expenses, and (c) in the Investment Options section, reflect each
Portfolio in the list of portfolios that are permitted if you elect Lifetime
Five, Spousal Lifetime Five, Highest Daily Lifetime Five, Highest Daily
Lifetime Seven, Spousal Highest Daily Lifetime Seven, or the Highest Daily
Value death benefit, and (d) include a summary description of the Portfolio to
the chart of each Portfolio's Investment Objectives and Policies. In addition,
to reflect the effect on the average fees of all Portfolios available under
the Annuity, we describe the effect of the revised average fees on the
comparison charts appearing within the section entitled "Selecting the Annuity
That's Right for You."
4. AST Goldman Sachs Small-Cap Value Portfolio. Previously, this Portfolio was
not available for new purchases in each of these Annuities - Advanced Series
APEX II, Advanced Series XTRA Credit SIX and Advanced Series Lifevest II.
Effective as of the date of this supplement, we have removed that restriction.
Accordingly, we (a) remove the asterisk next to this Portfolio's name on the
list of Portfolios on the inside front cover and (b) delete the fifth
paragraph under Investment Options. With respect to the
Advanced Series Advisor Plan III Annuity, AST Goldman Sachs Small-Cap Value
Portfolio is being added as an investment option. Accordingly, we (a) set
forth the fees of the Portfolio in the table of Underlying Mutual Fund
Portfolio Annual Expenses, and (b) in the Investment Options section, add the
Portfolio to the list of portfolios that are permitted if you elect Highest
Daily Lifetime Seven or Spousal Highest Daily Lifetime Seven under the
Optional Allocation and Rebalancing Program, or the Highest Daily GRO and
(c) add a summary description of the Portfolio to the chart of each
Portfolio's Investment Objectives and Policies. In addition, to reflect the
effect of the addition of the Portfolio on the average fees of all Portfolios
available under the Annuity, we describe the effect of the revised average
fees on the comparison charts appearing within the section entitled "Selecting
the Annuity That's Right for You."
5. Merger of AST DeAM Small-Cap Value Portfolio into AST Small-Cap Value
Portfolio. The AST DeAM Small-Cap Value Portfolio has merged out of existence
into the AST Small-Cap Value Portfolio. Accordingly, we (a) remove the AST
DeAM Small-Cap Value Portfolio from the list of Investment Options on the
inside front cover, and (b) set forth the fees of the AST Small-Cap Value
Portfolio in the table of Underlying Mutual Fund Portfolio Annual Expenses,
and (c) in the Investment Options section, remove the AST DeAM Small-Cap Value
Portfolio and add the AST Small-Cap Value Portfolio to the list of portfolios
that are permitted if you elect Highest Daily Lifetime Seven or Spousal
Highest Daily Lifetime Seven under the Optional Allocation and Rebalancing
Program, or the Highest Daily GRO and (d) revise the summary description of
the AST Small-Cap Value Portfolio in the chart of each Portfolio's Investment
Objectives and Policies and (e) in footnote 3 to the table within Underlying
Mutual Fund Portfolio Annual Expenses, remove the reference to the AST DeAM
Small-Cap Value Portfolio. In addition, to reflect the effect of this change
on the average fees of all Portfolios available under the Annuity, we describe
the effect of the revised average fees on the comparison charts appearing
within the section entitled "Selecting the Annuity That's Right for You."
6. AST Small-Cap Growth Portfolio. Neuberger Berman Management Inc. is no
longer a sub-adviser to this Portfolio. The assets formerly managed by
Neuberger Berman now are managed by Eagle Asset Management. Accordingly, we
revise the summary description of this Portfolio in the chart of each
Portfolio's Investment Objectives and Policies.
7. AST Neuberger Berman Mid-Cap Value Portfolio. We have added LSV Asset
Management as a sub-adviser to this Portfolio and have re-named the Portfolio
the AST Neuberger Berman/LSV Mid-Cap Value Portfolio. Accordingly, we
(a) reflect the revised Portfolio name in the list of Investment Options on
the inside front cover and in footnote 3 to the table within Underlying Mutual
Fund Portfolio Annual Expenses, and (b) set forth the fees of the Portfolio in
the table of Underlying Mutual Fund Portfolio Annual Expenses, and (c) in the
Investment Options section, reflect the Portfolio in the list of portfolios
that are permitted if you elect Highest Daily Lifetime Seven or Spousal
Highest Daily Lifetime Seven under the Optional Allocation and Rebalancing
Program, or the Highest Daily GRO and (d) include a revised summary
description of the Portfolio to the chart of each Portfolio's Investment
Objectives and Policies. In addition, to reflect the effect on the average
fees of all Portfolios available under the Annuity, we describe the effect of
the revised average fees on the comparison charts appearing within the section
entitled "Selecting the Annuity That's Right for You."
8. AST Aggressive Asset Allocation Portfolio, AST Balanced Asset Allocation
Portfolio, AST Capital Growth Asset Allocation Portfolio, AST Preservation
Asset Allocation Portfolio, and AST Advanced Strategies Portfolio. We are
adding Quantitative Management Associates LLC as a sub-adviser to each
Portfolio. Accordingly, we include a revised summary description of each
Portfolio in the chart of each Portfolio's Investment Objectives and Policies.
2
With respect to the changed fees referenced above, here is a fee table showing
the applicable underlying mutual fund portfolio annual expenses:
Acquired Total
Portfolio Annual
Management Other Fees & Portfolio
FUNDS Fee Expenses 12b-1 Fee Expenses Expenses
- ---------------------------------------------------------------------------------------------------------------
AST Academic Strategies Asset Allocation /1,2,3,4/ 0.72% 0.10% 0.00% 0.69% 1.51%
Management and Other Expense fee waivers/reduction: 0.02%
Net expenses after fee reimbursement/expense waiver: 1.49%
AST Schroders Multi-Asset World Strategies 1.10% 0.16% 0.00% 0.14% 1.40%
AST Focus Four Plus /1,2,3/ 0.85% 0.19% 0.00% 0.20% 1.24%
Management and administration fee waivers/reductions: 0.21%
Net expenses after fee reimbursement/expense waiver: 1.03%
AST Global Real Estate 1.00% 0.30% 0.00% 0.00% 1.30%
AST Paramentric Emerging Markets Equity 1.10% 0.46% 0.00% 0.00% 1.56%
AST Goldman Sachs Small-Cap Value 0.95% 0.13% 0.00% 0.00% 1.08%
AST Small-Cap Value 0.90% 0.10% 0.00% 0.00% 1.00%
AST Advanced Strategies 0.85% 0.15% 0.00% 0.04% 1.04%
AST Aggressive Asset Allocation 0.15% 0.03% 0.00% 0.96% 1.14%
AST Capital Growth Asset Allocation 0.15% 0.01% 0.00% 0.93% 1.09%
AST Balanced Asset Allocation 0.15% 0.02% 0.00% 0.87% 1.04%
AST Neuberger Berman/LSV Mid-Cap Value 0.89% 0.10% 0.00% 0.00% 0.99%
AST Preservation Asset Allocation 0.15% 0.03% 0.00% 0.82% 1.00%
1 Estimated Other Expenses for the fiscal year ending December 31, 2008. As
used in connection with the Portfolio, "Other Expenses" include certain
operating expenses, including, without limitation, fees for custodian
services, Independent Trustees' fees, and fees for legal, accounting,
valuation, and transfer agency services. The Trust has also entered into
arrangements with the issuers of the variable insurance products offering
the Portfolio under which the Trust currently compensates such issuers for
providing ongoing services to Portfolio shareholders (e.g., the printing
and mailing of Trust prospectuses and shareholder reports) in lieu of the
Trust providing such services directly to shareholders. The contractual
administrative services fee is 0.10% of the Portfolio's average daily net
assets. The Portfolio is not directly subject to the administrative
services fee to the extent it invests in the Core Plus Bond Portfolio or
any other Trust Portfolio (each, an Underlying Trust Portfolio and
collectively, the Underlying Trust Portfolios). The Core Plus Bond
Portfolio and each Underlying Trust Portfolio in which the Portfolio
invests, however, are subject to the administrative services fee. See
footnote 1 of the table within "Underlying Mutual Fund Portfolio Annual
Expenses" in the May 1, 2008 prospectus for a discussion of the
administrative services fee applicable to certain other AST Portfolios.
2 Estimated Underlying Portfolio Fees & Expenses for the fiscal year ending
December 31, 2008. The Portfolio will indirectly incur a pro rata portion
of the fees and expenses of the Core Plus Bond Portfolio and any other
Underlying Trust Portfolio in which it invests. The expenses shown under
"Underlying Portfolio Fees and Expenses" represent the portion of the Core
Plus Bond Portfolio's estimated annualized operating expense ratio for the
fiscal year ending December 31, 2008 to be borne by the Portfolio based
upon the Portfolio's expected initial holdings in the Core Plus Bond
Portfolio. No sales loads, distribution fees, service fees, redemption
fees, or other transaction fees will be assessed in connection with the
Portfolio's purchase or redemption of shares of Underlying Trust Portfolios.
3 Estimated Contractual Fee Waiver and/or Expense Reimbursement for the
fiscal year ending December 31, 2008. The Investment Managers have
contractually agreed to waive their investment management fees with respect
to the Portfolio's investments in the Core Plus Bond Portfolio (i.e.,
assumes a waiver of 25% of the Investment Managers' contractual investment
management fee).
4 The Co-Managers have contractually agreed to reimburse expenses and/or
waive fees so that the Academic Strategies Portfolio's investment
management fees plus "Other Expenses" (exclusive in all cases of taxes,
interest, brokerage commissions, distribution fees, and extraordinary
expenses) do not exceed 0.80% of the Portfolio's average daily net assets
during the Academic Strategies Portfolio's first year of operations (i.e.,
expected to be July 21, 2008 through July 20, 2009).
3
With respect to the changed Investment Objectives/Policies referenced above,
here is a table showing the applicable changes:
--------------------------------------------------------------------------
STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO
TYPE ADVISOR/
SUB-ADVISOR
--------------------------------------------------------------------------
ADVANCED SERIES TRUST
--------------------------------------------------------------------------
ASSET AST Advanced Strategies Portfolio: LSV Asset
ALLOCA seeks a high level of absolute Management;
TION/ return. The Portfolio invests Marsico Capital
BALANCED primarily in a diversified portfolio Management, LLC;
of equity and fixed income Pacific Investment
securities across different Management
investment categories and investment Company LLC
managers. The Portfolio pursues a (PIMCO); T. Rowe
combination of traditional and Price Associates,
non-traditional investment Inc.; William Blair
strategies. & Company, LLC;
Quantitative
Management
Associates LLC
--------------------------------------------------------------------------
ASSET AST Aggressive Asset Allocation AST Investment
ALLOCA Portfolio: seeks the highest Services, Inc. &
TION/ potential total return consistent Prudential
BALANCED with its specified level of risk Investments LLC/
tolerance. The Portfolio will invest Prudential
its assets in several other Advanced Investments LLC;
Series Trust Portfolios. Under Quantitative
normal market conditions, the Management
Portfolio will devote approximately Associates LLC
100% of its net assets to underlying
portfolios investing primarily in
equity securities (with a range of
92.5% to 100%) and the remainder of
its net assets to underlying
portfolios investing primarily in
debt securities and money market
instruments (with a range of 0% -
7.5%).
--------------------------------------------------------------------------
ASSET AST Schroders Multi-Asset World Schroder
ALLOCA Strategies (formerly known as AST Investment
TION/ American Century Strategic Management North
BALANCED Allocation Portfolio): The AST America Inc.
Schroders Multi-Asset World
Strategies Portfolio seeks long-term
capital appreciation through a
global flexible asset allocation
approach. This asset allocation
approach entails investing in
traditional asset classes, such as
equity and fixed-income investments,
and alternative asset classes, such
as investments in real estate,
commodities, currencies, private
equity, and absolute return
strategies. The sub-advisor seeks to
emphasize the management of risk and
volatility. Exposure to different
asset classes and investment
strategies will vary over time based
upon the sub advisor's assessments
of changing market, economic,
financial and political factors and
events.
--------------------------------------------------------------------------
ASSET AST Academic Strategies Asset Credit Suisse
ALLOCA Allocation (formerly known as AST Securities (USA)
TION/ Balanced Asset Allocation LLC; Jennison
BALANCED Portfolio): seeks total return Associates LLC;
consistent with its specified level Mellon Capital
of risk. The Portfolio will be a Management
multi-asset class fund that employs Corporation; Pacific
both top-down asset allocation Investment
strategies and bottom-up Management
manager/security selection. Under Company LLC
normal circumstances, approximately (PIMCO);
60% of the assets will be allocated Prudential Bache
to traditional asset classes Asset Management,
(including US and international Incorporated;
equities and bonds) and Quantitative
approximately 40% of the assets will Management
be allocated to nontraditional asset Associates LLC
classes (including real estate,
commodities, and alternative
strategies). Those percentages are
subject to change by the Investment
Managers.
--------------------------------------------------------------------------
4
---------------------------------------------------------------------------
STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO
TYPE ADVISOR/
SUB-ADVISOR
---------------------------------------------------------------------------
ASSET AST Capital Growth Asset Allocation AST Investment
ALLOCA Portfolio: seeks the highest Services, Inc. &
TION/ potential total return consistent Prudential
BALANCED with its specified level of risk Investments LLC;
tolerance. The Portfolio will invest Quantitative
its assets in several other Advanced Management
Series Trust Portfolios. Under Associates LLC
normal market conditions, the
Portfolio will devote approximately
75% of its net assets to underlying
portfolios investing primarily in
equity securities (with a range of
67.5% to 80.0%), and 25% of its net
assets to underlying portfolios
investing primarily in debt
securities and money market
instruments (with a range of 20.0%
to 32.5%).
---------------------------------------------------------------------------
ASSET AST Balanced Asset Allocation AST Investment
ALLOCA (formerly known as AST Conservative Services, Inc. &
TION/ Asset Allocation Portfolio): seeks Prudential
BALANCED the highest potential total return Investments LLC;
consistent with its specified level Quantitative
of risk tolerance. The Portfolio Management
will invest its assets in several Associates LLC
other Advanced Series Trust
Portfolios. Under normal market
conditions, the Portfolio will
devote approximately 60% of its net
assets to underlying portfolios
investing primarily in equity
securities (with a range of 52.5% to
67.5%), and 40% of its net assets to
underlying portfolios investing
primarily in debt securities and
money market instruments (with a
range of 32.5% to 47.5%).
---------------------------------------------------------------------------
SPECIALTY AST Global Real Estate Portfolio: Prudential Real
seeks capital appreciation and Estate Investors
income. The Portfolio will normally
invest at least 80% of its liquid
assets (net assets plus any
borrowing made for investment
purposes) in equity-related
securities of real estate companies.
The Portfolio will invest in
equity-related securities of real
estate companies on a global basis
and the Portfolio may invest up to
15% of its net assets in ownership
interests in commercial real estate
through investments in private real
estate.
---------------------------------------------------------------------------
ASSET AST Focus Four Plus Portfolio: seeks First Trust Advisors
ALLOCA long-term capital growth balanced by L.P.
TION/ current income. The Portfolio seeks
BALANCED to achieve its objective by
investing approximately 75% in
common stocks and approximately 25%
in fixed-income securities. The
Portfolio allocates the equity
portion of the portfolio across four
uniquely specialized strategies -
The Dow(R) Target Dividend, the
Value Line(R) Target 25, the NYSE(R)
International Target 25, and the S&P
Mid 60. Each strategy employs a
quantitative approach by screening
common stocks for certain attributes
and/or using a multi-factor scoring
system to select the common stocks.
---------------------------------------------------------------------------
INTER AST Parametric Emerging Markets Parametric Portfolio
NATIONAL Equity Portfolio: seeks long-term Associates LLC
EQUITY capital appreciation. The Portfolio
normally invests at least 80% of its
net assets in equity securities
traded on the equity markets of
emerging market countries, which are
those considered to be developing.
Emerging markets countries include
countries in Asia, Latin America,
the Middle East, Southern Europe,
Eastern Europe, Africa and the
region formerly comprising the
Soviet Union. A company will be
considered to be located in an
emerging market country if it is
domiciled in or derives more that
50% of its revenues or profits from
emerging market countries. The
Portfolio seeks to employ a
top-down, disciplined and structured
investment process that emphasizes
broad exposure and diversification
among emerging market countries,
economic sectors and issuers.
---------------------------------------------------------------------------
MID CAP AST Neuberger Berman/LSV Mid-Cap LSV Asset
VALUE Value Portfolio (formerly known as Management;
AST Neuberger Berman Mid-Cap Value Neuberger Berman
Portfolio): seeks capital growth. Management Inc.
Under normal market conditions, the
Portfolio invests at least 80% of
its net assets in the common stocks
of medium capitalization companies.
For purposes of the Portfolio,
companies with market
capitalizations that fall within the
range of the Russell Mid-cap(R)
Index at the time of investment are
considered medium capitalization
companies. Some of the Portfolio's
assets may be invested in the
securities of large-cap companies as
well as in small-cap companies.
Under the Portfolio's value-oriented
investment approach, the subadviser
looks for companies whose stock
prices are undervalued and that may
raise in price before other
investors realize their worth.
---------------------------------------------------------------------------
5
-----------------------------------------------------------------------
STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO
TYPE ADVISOR/
SUB-ADVISOR
-----------------------------------------------------------------------
ASSET AST Preservation Asset Allocation AST Investment
ALLOCA Portfolio: seeks the highest Services, Inc. &
TION/ potential total return consistent Prudential
BALANCED with its specified level of risk Investments LLC;
tolerance. The Portfolio will invest Quantitative
its assets in several other Advanced Management
Series Trust Portfolios. Under Associates LLC
normal market conditions, the
Portfolio will devote approximately
35% of its net assets to underlying
portfolios investing primarily in
equity securities (with a range of
27.5% to 42.5%), and 65% of its net
assets to underlying portfolios
investing primarily in debt
securities and money market
instruments (with a range of 57.5%
to 72.5%.
-----------------------------------------------------------------------
SMALL AST Small-Cap Growth Portfolio: Eagle Asset
CAP seeks long-term capital growth. The Management
GROWTH Portfolio pursues its objective by
investing, under normal
circumstances, at least 80% of the
value of its assets in
small-capitalization companies.
Small-capitalization companies are
those companies with a market
capitalization, at the time of
purchase, no larger than the largest
capitalized company included in the
Russell 2000(R) Index at the time of
the Portfolio's investment.
-----------------------------------------------------------------------
SMALL AST Small-Cap Value Portfolio: seeks ClearBridge
CAP to provide long-term capital growth Advisors, LLC;
VALUE by investing primarily in Dreman Value
small-capitalization stocks that Management LLC;
appear to be undervalued. The J.P. Morgan
Portfolio invests, under normal Investment
circumstances, at least 80% of the Management, Inc.;
value of its net assets in small Lee Munder
capitalization stocks. Small Investments, Ltd
capitalization stocks are the stocks
of companies with market
capitalization that are within the
market capitalization range of the
Russell 2000(R) Value Index.
-----------------------------------------------------------------------
In the May 1, 2008 prospectuses, the summary fund descriptions of the AST
Balanced Asset Allocation Portfolio and the AST Capital Growth Asset
Allocation Portfolio were reversed. Thus, the correct summary fund description
for each such Portfolio should have appeared as follows:
AST Balanced Asset Allocation Portfolio: seeks the highest potential total
return consistent with its specified level of risk tolerance. The Portfolio
will invest its assets in several other Advanced Series Trust Portfolios.
Under normal market conditions, the Portfolio will devote approximately 65% of
its net assets to underlying portfolios investing primarily in equity
securities (with a range of 57.5% to 72.5%), and 35% of its net assets to
underlying portfolios investing primarily in debt securities and money market
instruments (with a range of 27.5% to 42.5%).
AST Capital Growth Asset Allocation Portfolio: seeks the highest potential
total return consistent with its specified level of risk tolerance. The
Portfolio will invest its assets in several other Advanced Series Trust
Portfolios. Under normal market conditions, the Portfolio will devote
approximately 75% of its net assets to underlying portfolios investing
primarily in equity securities (with a range of 67.5% to 80%), and 25% of its
net assets to underlying portfolios investing primarily in debt securities and
money market instruments (with a range of 20.0% to 32.5%).
With respect to ASAP III, APEX II, XTra Credit 6, and ASLII, Appendix F of the
prospectus, entitled Selecting The Variable Annuity That's Right For You, we
set forth hypothetical illustrations of Contract Value and Surrender Value for
each Annuity. Those illustrations assume average fund expenses of 1.14% (1.36%
for APEX II). As a result of the fund changes described in this supplement,
the average fund expenses have changed to 1.15% (no change to APEX II). This
change in average fund expenses would have the effect of decreasing the
hypothetical illustrated values (for ASAP III, XTra Credit 6 and ASL II) by a
commensurate amount.
6
PRUDENTIAL ANNUITIES LIFE ASSURANCE CORPORATION
OPTIMUM/SM/
OPTIMUM FOUR/SM/
OPTIMUM PLUS/SM/
OPTIMUM XTRA/SM/
Supplement, dated July 21, 2008
To
Prospectus, dated May 1, 2008
This supplement should be read and retained with the prospectus for your
Annuity. If you would like another copy of the prospectus, please call us at
1-888-PRU-2888.
This supplement is being issued to describe several changes that we are making
to the variable investment options within each of the above-referenced
Annuities. We summarize each change immediately below, and then indicate how
the pertinent portion of each prospectus is amended to reflect the change.
The changes are as follows:
3. AST Conservative Asset Allocation Portfolio; and AST Balanced Asset
Allocation Portfolio. The name and investment objective of each Portfolio has
been changed. (In the case of the AST Balanced Asset Allocation Portfolio, the
changed investment objective was authorized by a vote of Annuity Owners). AST
Conservative Asset Allocation Portfolio has been renamed AST Balanced Asset
Allocation Portfolio and will be sub-advised by Quantitative Management
Associates LLC, and the original AST Balanced Asset Allocation Portfolio has
become AST Academic Strategies Asset Allocation Portfolio. Accordingly, we
(a) reflect the revised Portfolio names in the list of Investment Options on
the inside front cover, and (b) with respect to these Portfolios, set forth
the fees of each Portfolio in the table of Underlying Mutual Fund Portfolio
Annual Expenses, and (c) in the Investment Options section, reflect each
Portfolio in the list of portfolios that are permitted if you elect Lifetime
Five, Spousal Lifetime Five, Highest Daily Lifetime Five, Highest Daily
Lifetime Seven, Spousal Highest Daily Lifetime Seven, or the Highest Daily
Value death benefit, and (d) include a summary description of the Portfolio to
the chart of each Portfolio's Investment Objectives and Policies. In addition,
to reflect the effect on the average fees of all Portfolios available under
the Annuity, we describe the effect of the revised average fees on the
comparison charts appearing within the section entitled "Selecting the Annuity
That's Right for You."
4. Merger of AST DeAM Small-Cap Value Portfolio into AST Small-Cap Value
Portfolio. The AST DeAM Small-Cap Value Portfolio has merged out of existence
into the AST Small-Cap Value Portfolio. Accordingly, we (a) set forth the fees
of the AST Small-Cap Value Portfolio in the table of Underlying Mutual Fund
Portfolio Annual Expenses, and (b) revise the summary description of the AST
Small-Cap Value Portfolio in the chart of each Portfolio's Investment
Objectives and Policies. In addition, to reflect the effect of this change on
the average fees of all Portfolios available under each Annuity, we describe
the effect of the revised average fees on the comparison charts appearing
within the section entitled "Selecting the Annuity That's Right for You."
5. AST Small-Cap Growth Portfolio. Neuberger Berman Management Inc. is no
longer a sub-adviser to this Portfolio. The assets formerly managed by
Neuberger Berman now are managed by Eagle Asset Management. Accordingly, we
revise the summary description of this Portfolio in the chart of each
Portfolio's Investment Objectives and Policies.
6. AST Balanced Asset Allocation Portfolio, AST Capital Growth Asset
Allocation Portfolio, and AST Preservation Asset Allocation Portfolio. We are
adding Quantitative Management Associates LLC as a sub-adviser to each
Portfolio. Accordingly, we include a revised summary description of each
Portfolio in the chart of each Portfolio's Investment Objectives and Policies.
With respect to the changed fees referenced above, here is a fee table showing
the applicable underlying mutual fund portfolio annual expenses:
Acquired Total
Portfolio Annual
Management Other Fees & Portfolio
FUNDS Fee Expenses 12b-1 Fee Expenses Expenses
- --------------------------------------------------------------------------------------------------------------
AST Academic Strategies Asset Allocation/ 1,2,3,4/ 0.72% 0.10% 0.00% 0.69% 1.51%
Management and Other Expense fee waivers/reduction: 0.02%
Net expenses after fee reimbursement/expense waiver: 1.49%
AST Small-Cap Value 0.90% 0.10% 0.00% 0.00% 1.00%
AST Capital Growth Asset Allocation 0.15% 0.01% 0.00% 0.93% 1.09%
AST Balanced Asset Allocation 0.15% 0.02% 0.00% 0.87% 1.04%
AST Preservation Asset Allocation 0.15% 0.03% 0.00% 0.82% 1.00%
1 Estimated Other Expenses for the fiscal year ending December 31, 2008. As
used in connection with the Portfolio, "Other Expenses" include certain
operating expenses, including, without limitation, fees for custodian
services, Independent Trustees' fees, and fees for legal, accounting,
valuation, and transfer agency services. The Trust has also entered into
arrangements with the issuers of the variable insurance products offering
the Portfolio under which the Trust currently compensates such issuers for
providing ongoing services to Portfolio shareholders (e.g., the printing
and mailing of Trust prospectuses and shareholder reports) in lieu of the
Trust providing such services directly to shareholders. The contractual
administrative services fee is 0.10% of the Portfolio's average daily net
assets. The Portfolio is not directly subject to the administrative
services fee to the extent it invests in the Core Plus Bond Portfolio or
any other Trust Portfolio (each, an Underlying Trust Portfolio and
collectively, the Underlying Trust Portfolios). The Core Plus Bond
Portfolio and each Underlying Trust Portfolio in which the Portfolio
invests, however, are subject to the administrative services fee. See
footnote 1 of the table within "Underlying Mutual Fund Portfolio Annual
Expenses" in the May 1, 2008 prospectus for a discussion of the
administrative services fee applicable to certain other AST Portfolios.
2 Estimated Underlying Portfolio Fees & Expenses for the fiscal year ending
December 31, 2008. The Portfolio will indirectly incur a pro rata portion
of the fees and expenses of the Core Plus Bond Portfolio and any other
Underlying Trust Portfolio in which it invests. The expenses shown under
"Underlying Portfolio Fees and Expenses" represent the portion of the Core
Plus Bond Portfolio's estimated annualized operating expense ratio for the
fiscal year ending December 31, 2008 to be borne by the Portfolio based
upon the Portfolio's expected initial holdings in the Core Plus Bond
Portfolio. No sales loads, distribution fees, service fees, redemption
fees, or other transaction fees will be assessed in connection with the
Portfolio's purchase or redemption of shares of Underlying Trust Portfolios.
3 Estimated Contractual Fee Waiver and/or Expense Reimbursement for the
fiscal year ending December 31, 2008. The Investment Managers have
contractually agreed to waive their investment management fees with respect
to the Portfolio's investments in the Core Plus Bond Portfolio (i.e.,
assumes a waiver of 25% of the Investment Managers' contractual investment
management fee).
4 The Co-Managers have contractually agreed to reimburse expenses and/or
waive fees so that the Academic Strategies Portfolio's investment
management fees plus "Other Expenses" (exclusive in all cases of taxes,
interest, brokerage commissions, distribution fees, and extraordinary
expenses) do not exceed 0.80% of the Portfolio's average daily net assets
during the Academic Strategies Portfolio's first year of operations (i.e.,
expected to be July 21, 2008 through July 20, 2009).
2
With respect to the changed Investment Objectives/Policies referenced above,
here is a table showing the applicable changes:
--------------------------------------------------------------------------
STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO
TYPE ADVISOR/
SUB-ADVISOR
--------------------------------------------------------------------------
ADVANCED SERIES TRUST
--------------------------------------------------------------------------
ASSET AST Academic Strategies Asset Credit Suisse
ALLOCA Allocation (formerly known as AST Securities (USA)
TION/ Balanced Asset Allocation LLC; Jennison
BALANCED Portfolio): seeks total return Associates LLC;
consistent with its specified level Mellon Capital
of risk. The Portfolio will be a Management
multi-asset class fund that employs Corporation; Pacific
both top-down asset allocation Investment
strategies and bottom-up Management
manager/security selection. Under Company LLC
normal circumstances, approximately (PIMCO);
60% of the assets will be allocated Prudential Bache
to traditional asset classes Asset Management,
(including US and international Incorporated;
equities and bonds) and Quantitative
approximately 40% of the assets will Management
be allocated to nontraditional asset Associates LLC
classes (including real estate,
commodities, and alternative
strategies). Those percentages are
subject to change by the Investment
Managers.
--------------------------------------------------------------------------
ASSET AST Capital Growth Asset Allocation AST Investment
ALLOCA Portfolio: seeks the highest Services, Inc. &
TION/ potential total return consistent Prudential
BALANCED with its specified level of risk Investments LLC;
tolerance. The Portfolio will invest Quantitative
its assets in several other Advanced Management
Series Trust Portfolios. Under Associates LLC
normal market conditions, the
Portfolio will devote approximately
75% of its net assets to underlying
portfolios investing primarily in
equity securities (with a range of
67.5% to 80%), and 25% of its net
assets to underlying portfolios
investing primarily in debt
securities and money market
instruments (with a range of 20.0%
to 32.5%).
--------------------------------------------------------------------------
ASSET AST Balanced Asset Allocation AST Investment
ALLOCA (formerly known as AST Conservative Services, Inc. &
TION/ Asset Allocation Portfolio): seeks Prudential
BALANCED the highest potential total return Investments LLC;
consistent with its specified level Quantitative
of risk tolerance. The Portfolio Management
will invest its assets in several Associates LLC
other Advanced Series Trust
Portfolios. Under normal market
conditions, the Portfolio will
devote approximately 60% of its net
assets to underlying portfolios
investing primarily in equity
securities (with a range of 52.5% to
67.5%), and 40% of its net assets to
underlying portfolios investing
primarily in debt securities and
money market instruments (with a
range of 32.5% to 47.5%).
--------------------------------------------------------------------------
ASSET AST Preservation Asset Allocation AST Investment
ALLOCA Portfolio: seeks the highest Services, Inc. &
TION/ potential total return consistent Prudential
BALANCED with its specified level of risk Investments LLC;
tolerance. The Portfolio will invest Quantitative
its assets in several other Advanced Management
Series Trust Portfolios. Under Associates LLC
normal market conditions, the
Portfolio will devote approximately
35% of its net assets to underlying
portfolios investing primarily in
equity securities (with a range of
27.5% to 42.5%), and 65% of its net
assets to underlying portfolios
investing primarily in debt
securities and money market
instruments (with a range of 57.5%
to 72.5%.
--------------------------------------------------------------------------
SMALL AST Small-Cap Growth Portfolio: Eagle Asset
CAP seeks long-term capital growth. The Management
GROWTH Portfolio pursues its objective by
investing, under normal
circumstances, at least 80% of the
value of its assets in
small-capitalization companies.
Small-capitalization companies are
those companies with a market
capitalization, at the time of
purchase, no larger than the largest
capitalized company included in the
Russell 2000(R) Index at the time of
the Portfolio's investment.
--------------------------------------------------------------------------
3
---------------------------------------------------------------------
STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO
TYPE ADVISOR/
SUB-ADVISOR
---------------------------------------------------------------------
SMALL AST Small-Cap Value Portfolio: seeks ClearBridge
CAP to provide long-term capital growth Advisors, LLC;
VALUE by investing primarily in Dreman Value
small-capitalization stocks that Management LLC;
appear to be undervalued. The J.P. Morgan
Portfolio invests, under normal Investment
circumstances, at least 80% of the Management, Inc.;
value of its net assets in small Lee Munder
capitalization stocks. Small Investments, Ltd
capitalization stocks are the stocks
of companies with market
capitalization that are within the
market capitalization range of the
Russell 2000(R) Value Index.
---------------------------------------------------------------------
In the May 1, 2008 prospectuses, the summary fund descriptions of the AST
Balanced Asset Allocation Portfolio and the AST Capital Growth Asset
Allocation Portfolio were reversed. Thus, the correct summary fund description
for each such Portfolio should have been as follows:
AST Balanced Asset Allocation Portfolio: seeks the highest potential total
return consistent with its specified level of risk tolerance. The Portfolio
will invest its assets in several other Advanced Series Trust Portfolios.
Under normal market conditions, the Portfolio will devote approximately 65% of
its net assets to underlying portfolios investing primarily in equity
securities (with a range of 57.5% to 72.5%), and 35% of its net assets to
underlying portfolios investing primarily in debt securities and money market
instruments (with a range of 27.5% to 42.5%).
AST Capital Growth Asset Allocation Portfolio: seeks the highest potential
total return consistent with its specified level of risk tolerance. The
Portfolio will invest its assets in several other Advanced Series Trust
Portfolios. Under normal market conditions, the Portfolio will devote
approximately 75% of its net assets to underlying portfolios investing
primarily in equity securities (with a range of 67.5% to 80%), and 25% of its
net assets to underlying portfolios investing primarily in debt securities and
money market instruments (with a range of 20.0% to 32.5%).
In Appendix D of the prospectus, entitled Selecting The Variable Annuity
That's Right For You, we set forth hypothetical illustrations of Contract
Value and Surrender Value for each Annuity. Those illustrations assume average
fund expenses of 0.97%. As a result of the fund changes described in this
supplement, the average fund expenses have changed to 0.99%. This change in
average fund expenses would have the effect of decreasing the hypothetical
illustrated values by a commensurate amount.
4
PART II
Item 16. Exhibits
23a Consent of PricewaterhouseCoopers LLP
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Shelton, State of Connecticut, on the 27/th/ day of
June, 2008.
PRUDENTIAL ANNUITIES LIFE ASSURANCE CORPORATION
Depositor
By: /s/ C. Christopher Sprague
------------------------------
C. Christopher Sprague,
Vice President, Corporate
Counsel
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities and on the date indicated.
Signature Title Date
- --------- ----------------------------------------------- --------------
(Principal Executive Officer)
David R. Odenath* Chief Executive Officer and President June 27, 2008
- ------------------
David R. Odenath
(Principal Financial Officer and
Principal Accounting Officer)
Kenneth Y. Tanji* Executive Vice President and Chief Financial June 27, 2008
- ------------------ Officer
Kenneth Y. Tanji
(Board of Directors)
James Avery*
- ------------------
James Avery
Kenneth Y. Tanji*
- ------------------
Kenneth Y. Tanji
Bernard J. Jacob*
- ------------------
Bernard J. Jacob
David R. Odenath*
- ------------------
David R. Odenath
Helen Galt*
- ------------------
Helen Galt
By: /s/ C. Christopher Sprague
--------------------------
C. Christopher Sprague
- --------
* Executed by C. Christopher Sprague on behalf of those indicated pursuant to
Power of Attorney
Exhibits
Exhibit 23a Consent of PricewaterhouseCoopers LLP. FILED HEREWITH