424B3: Prospectus [Rule 424(b)(3)]
Published on
Pruco Life Insurance Company of New Jersey
Strategic Partners Annuity One 3
Strategic Partners Plus 3
Supplement, dated March 19, 2007
To
Prospectuses, dated May 1, 2006
In this supplement, we reflect the addition of a new living benefit called the
Highest Daily Lifetime Five Benefit.
A. TABLE OF CONTENTS
o As a new entry within the section entitled What Is The
Lifetime Five Income Benefit?, we add a line item for Highest
Daily Lifetime Five.
o As a new entry at the end of the Table of Contents, we add a
reference to Appendix C, entitled "Asset Transfer Formula
Under Highest Daily Lifetime Five Benefit"
B. We add the following new definitions to the Glossary, as follows:
o We add a definition for Benefit Fixed Rate Account, that reads as
follows: "An investment option offered as part of this contract that is
used only if you have elected the optional Highest Daily Lifetime Five
Benefit. Amounts allocated to the Benefit Fixed Rate Account earn a
fixed rate of interest, and are held within our general account. You
may not allocate purchase payments to the Benefit Fixed Rate Account.
Rather, contract value is transferred to the Benefit Fixed Rate Account
only under the asset transfer feature of the Highest Daily Lifetime
Five Benefit."
o We add a definition for Highest Daily Lifetime Five Benefit that reads
as follows: "An optional feature available for an additional cost that
guarantees your ability to withdraw amounts equal to a percentage of a
principal value called the Protected Withdrawal Value. Subject to our
rules regarding the timing and amount of withdrawals, we guarantee
these withdrawal amounts, regardless of the impact of market
performance on your contract value."
o We add a definition for Enhanced Protected Withdrawal Value that reads
as follows: "Under the Highest Daily Lifetime Five Benefit only, a sum
that we add to your existing Protected Withdrawal Value, provided that
you have not made any withdrawal during the first ten years that your
Highest Daily Lifetime Five Benefit has been in effect and you
otherwise meet the conditions set forth in the rider and this
prospectus."
o We add a definition for Total Annual Income Amount that reads as
follows: "Under the Highest Daily Lifetime Five Benefit only, an amount
that you can withdraw each year as long as the annuitant lives, which
may reflect the inclusion of an additional sum if you have made no
withdrawal during the first ten years that the benefit is in effect."
o We add a definition for Total Protected Withdrawal Value that reads as
follows: "Under the Highest Daily Lifetime Five Benefit only, an amount
that we guarantee regardless of the investment performance of your
contract value, which may reflect the inclusion of an additional sum,
if you have made no withdrawal during the first ten years that the
benefit is in effect."
We revise the following Glossary definitions:
o We revise the first sentence of the definition of "Annual Income
Amount" to state: "Under the terms of the Lifetime Five Income Benefit,
an amount that you can withdraw each year as long as the annuitant
lives. For the Highest Daily Lifetime Five Benefit only, we refer to an
amount that you can withdraw each year as long as the annuitant lives
as the "Total Annual Income Amount."
o We revise the first sentence of the definition of "Excess Income/Excess
Withdrawal" to state: "Under the Lifetime Five Income Benefit, Spousal
Lifetime Five Income Benefit, and Highest Daily Lifetime Five Benefit,
Excess Income refers to cumulative withdrawals that exceed the Annual
Income Amount (the Total Annual Income Amount, for Highest Daily
Lifetime Five only)."
We revise the definition of "Protected Withdrawal Value" to read as
follows: "Under the Lifetime Five Income Benefit and Spousal Lifetime
Five Income Benefit, an amount that we guarantee regardless of the
investment performance of your Contract Value. For the Highest Daily
Lifetime Five Benefit only, we refer to an amount that we guarantee
regardless of the investment performance of your Contract Value as the
"Total Protected Withdrawal Value".
C. We revise the Summary section of each prospectus as follows:
o We revise the last paragraph of the Section 3 portion of the Summary to
read as follows: "The Lifetime Five Income Benefit, Spousal Lifetime
Five Income Benefit, and Highest Daily Lifetime Five Benefit (discussed
in Section 5) and the Income Appreciator Benefit (discussed in Section
6) each may provide an additional amount upon which your annuity
payments are based."
o We add the following as the last paragraph of the Section 5 portion of
the Summary, to read as follows: "Finally, we offer a benefit called the Highest
Daily Lifetime Five Benefit. Highest Daily Lifetime Five is similar to our
Lifetime Five and Spousal Lifetime Five benefits, in that under each such
benefit, there is a "protected withdrawal value" that serves as the basis for
withdrawals you can make. As we discuss in more detail later, we guarantee this
protected withdrawal value, even if your contract value declines. Thus, as a
participant in one of these benefits, you are assured of a certain amount that
you can withdraw, even if there is a significant decline in the securities
markets. Highest Daily Lifetime Five Benefit differs from Lifetime Five and
Spousal Lifetime Five in that (a) the Protected Withdrawal Value is determined
based on the highest daily contract value and (b) we require you to participate
in an asset transfer program, under which your contract value may be transferred
periodically between the variable investment options and the Benefit Fixed Rate
Account (which is part of our general account). We operate the asset transfer
program under a formula, which is described in the portion of Section 5
concerning the Highest Daily Lifetime Five Benefit. In addition, in Appendix C,
we set out the formula itself. As discussed in Section 5, when you elect Highest
Daily Lifetime Five, the asset transfer formula is made a part of your annuity
contract, and thus may not be altered thereafter. However, we do reserve the
right to amend the formula for new-issued annuity contracts that elect Highest
Daily Lifetime Five and for existing contracts that elect the benefit in the
future. As we discuss in more detail later in this prospectus, this required
asset transfer program helps us manage our financial exposure under Highest
Daily Lifetime Five, by moving assets out of the variable investment options in
the event of securities market declines. In essence, we seek to preserve the
value of these assets, by transferring them to a more stable account. Of course,
the formula also contemplates the transfer of assets from the Benefit Fixed Rate
Account to the variable investment options in certain other scenarios. "
o We add the following as the last line item in the bullet within the
Section 8 portion of the Summary concerning insurance and administrative costs:
"- 0.60% if you choose the Highest Daily Lifetime Five Benefit. This charge
is in addition to the charge for the applicable death benefit."
D. We revise the Summary of Contract Expenses Section as follows:
o In the table entitled Periodic Account Expenses, Insurance and
Administrative Expenses with the Indicated Benefits, we add a line item
for Highest Daily Lifetime Five. In addition, we add a footnote (which
appears immediately after "Insurance And Administrative Expenses With
The Indicated Benefits"):
Contract Contract
With Without
Credit Credit
Maximum charge for each of Lifetime Five
and Highest Daily Lifetime Five* 2.00% 2.00%
Highest Daily Lifetime Five Income Benefit (current charge) 0.60% 0.60%
*The charge for the Lifetime Five Income Benefit (and, if available under your
contract, Spousal Lifetime Five and Highest Daily Lifetime Five) is imposed
based on the value of assets in the variable investment options. We reserve the
right to increase the charge for Lifetime Five and Highest Daily Lifetime Five
to a maximum of 2% (3% for Spousal Lifetime Five) upon a step-up or for a new
election of each such benefit. However, we have no present intention of
increasing the charges for those benefits to that maximum level.
E. The following is added at the end of Section 5, entitled What Is The
Lifetime Five Income Benefit?, to describe the Highest Daily Lifetime Five
Income Benefit.
HIGHEST DAILY LIFETIME FIVE INCOME BENEFIT
(HIGHEST DAILY LIFETIME FIVE)
The Highest Daily Lifetime Five program described below 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 Five is offered as an alternative
to Lifetime Five and Spousal Lifetime Five. Currently, if you elect Highest
Daily Lifetime Five and subsequently terminate the benefit, you will not be able
to re-elect Highest Daily Lifetime Five, and will have a waiting period until
you can elect Spousal Lifetime Five or Lifetime Five. Specifically, you will be
permitted to elect Lifetime Five or Spousal Lifetime Five only on an anniversary
of the contract date that is at least 90 calendar days from the date that
Highest Daily Lifetime Five was terminated. We reserve the right to further
limit the election frequency in the future. The income benefit under Highest
Daily Lifetime Five currently is based on a single "designated life" who is at
least 55 years old on the date that the benefit is acquired. The Highest Daily
Lifetime Five Benefit is not available if you elect any other optional living
benefit, although you may elect any optional death benefit. As long as your
Highest Daily Lifetime Five Benefit is in effect, you must allocate your
Contract Value in accordance with the then-permitted and available investment
option(s) with this program.
We offer a benefit that guarantees until the death of the single designated life
the ability to withdraw an annual amount (the "Total Annual Income Amount")
equal to a percentage of an initial principal value (the "Total Protected
Withdrawal Value") regardless of the impact of market performance on the
Contract Value, subject to our program rules regarding the timing and amount of
withdrawals. The benefit may be appropriate if you intend to make periodic
withdrawals from your Contract, and wish to ensure that market performance will
not affect your ability to receive annual payments. You are not required to make
withdrawals as part of the program -- the guarantees are not lost if you
withdraw less than the maximum allowable amount each year under the rules of the
benefit. We discuss Highest Daily Lifetime Five in greater detail immediately
below. In addition, please see the Glossary section of this prospectus for
definitions of some of the key terms used with this benefit. As discussed below,
we require that you participate in our asset transfer program in order to
participate in Highest Daily Lifetime Five, and in the Appendices to this
prospectus, we set forth the formula under which we make those asset transfers.
As discussed below, a key component of Highest Daily Lifetime Five is the Total
Protected Withdrawal Value, which is an amount that is distinct from Contract
Value. Because each of the Total Protected Withdrawal Value and Total Annual
Income Amount is determined in a way that is not solely related to Contract
Value, it is possible for the Contract Value to fall to zero, even though the
Total Annual Income Amount remains. You are guaranteed to be able to withdraw
the Total Annual Income Amount for the rest of your life, provided that you have
not made "excess withdrawals." Excess withdrawals, as discussed below, will
reduce your Total Annual Income Amount. Thus, you could experience a scenario in
which your Contract Value was zero, and, due to your excess withdrawals, your
Total Annual Income Amount also was reduced to zero. In that scenario, no
further amount would be payable under Highest Daily Lifetime Five.
KEY FEATURE -- Total Protected Withdrawal Value
The Total Protected Withdrawal Value is used to determine the amount of the
annual payments under Highest Daily Lifetime Five. The Total Protected
Withdrawal Value is equal to the greater of the Protected Withdrawal Value and
any Enhanced Protected Withdrawal Value that may exist. We describe how we
determine Enhanced Protected Withdrawal Value, and when we begin to calculate
it, below. If the conditions described below for obtaining Enhanced Protected
Withdrawal Value are not met, then Total Protected Withdrawal Value is simply
equal to Protected Withdrawal Value.
The Protected Withdrawal Value initially is equal to the Contract Value on the
date that you elect Highest Daily Lifetime Five. On each business day
thereafter, until the earlier of the first withdrawal or ten years after the
date of your election of the benefit, we recalculate the Protected Withdrawal
Value. Specifically, on each such business day (the "Current Business Day"), the
Protected Withdrawal Value is equal to the greater of:
o the Protected Withdrawal Value for the immediately preceding
business day (the "Prior Business Day "), appreciated at the
daily equivalent of 5% annually during the calendar day(s)
between the Prior Business Day and the Current Business Day
(i.e., one day for successive business days , but more than one
calendar day for business days that are separated by weekends
and/or holidays), plus the amount of any Purchase Payment
(including any associated credit) made on the Current Business
Day; and
o the Contract Value.
If you have not made a withdrawal prior to the tenth anniversary of the date you
elected Highest Daily Lifetime Five (which we refer to as the "Tenth
Anniversary"), we will continue to calculate a Protected Withdrawal Value. On or
after the Tenth Anniversary and up until the date of the first withdrawal, your
Protected Withdrawal Value is equal to the greater of the Protected Withdrawal
Value on the Tenth Anniversary or your Contract Value.
The Enhanced Protected Withdrawal Value is only calculated if you do not take a
withdrawal prior to the Tenth Anniversary. Thus, if you do take a withdrawal
prior to the Tenth Anniversary, you are not eligible to receive Enhanced
Protected Withdrawal Value. If so, then on or after the Tenth Anniversary up
until the date of the first withdrawal, the Enhanced Protected Withdrawal Value
is equal to the sum of:
(a) 200% of the Contract Value on the date you elected Highest Daily
Lifetime Five;
(b) 200% of all Purchase Payments (and any associated Credits) made
during the one-year period after the date you elected Highest Daily
Lifetime Five; and (c) 100% of all Purchase Payments (and any
associated Credits) made more than one year after the date you
elected Highest Daily Lifetime Five, but prior to the date of your
first withdrawal.
We cease these daily calculations of the Protected Withdrawal Value and the
Enhanced Protected Withdrawal Value (and therefore, the Total Protected
Withdrawal Value) when you make your first withdrawal. However, as discussed
below, subsequent Purchase Payments (and any associated Credits) will increase
the Total Annual Income Amount, while "excess" withdrawals (as described below)
may decrease the Total Annual Income Amount.
KEY FEATURE -- Total Annual Income Amount under the Highest Daily Lifetime
Five Benefit
The initial Total Annual Income Amount is equal to 5% of the Total Protected
Withdrawal Value. For purposes of the asset transfer formula described below, we
also calculate a Highest Daily Annual Income Amount, which is initially equal to
5% of the Protected Withdrawal Value. Under the Highest Daily Lifetime Five
Benefit, if your cumulative withdrawals in a Contract Year are less than or
equal to the Total Annual Income Amount, they will not reduce your Total Annual
Income Amount in subsequent Contract Years, but any such withdrawals will reduce
the Total Annual Income Amount on a dollar-for-dollar basis in that Contract
Year. If your cumulative withdrawals are in excess of the Total Annual Income
Amount ("Excess Income"), your Total Annual Income Amount in subsequent years
will be reduced (except with regard to required minimum distributions) by the
result of the ratio of the Excess Income to the Contract Value immediately prior
to such withdrawal (see examples of this calculation below). If you withdraw
Excess Income, your Highest Daily Annual Income Amount also will be reduced by
the same ratio. Reductions include the actual amount of the withdrawal,
including any CDSC that may apply. A Purchase Payment that you make will
increase the then-existing Total Annual Income Amount and Highest Daily Annual
Income Amount by an amount equal to 5% of the Purchase Payment (including the
amount of any associated Credits).
An automatic step-up feature ("Highest Quarterly Auto Step-Up") is included as
part of this benefit. As detailed in this paragraph, the Highest Quarterly Auto
Step-Up feature can result in a larger Total Annual Income Amount if your
Contract Value increases subsequent to your first withdrawal. We begin examining
the Contract Value for purposes of this feature starting with the anniversary of
the Contract Date (the "Contract Anniversary") immediately after your first
withdrawal under the benefit. Specifically, upon the first such Contract
Anniversary, we identify the Contract Value on the business days corresponding
to the end of each quarter that (i) is based on your Contract Year, rather than
a calendar year; (ii) is subsequent to the first withdrawal; and (iii) falls
within the immediately preceding Contract Year. If the end of any such quarter
falls on a holiday or a weekend, we use the next business day. We multiply each
of those quarterly Contract Values by 5%, adjust each such quarterly value for
subsequent withdrawals and Purchase Payments, and then select the highest of
those values. If the highest of those values exceeds the existing Total Annual
Income Amount, we replace the existing amount with the new, higher amount.
Otherwise, we leave the existing Total Annual Income Amount intact. In later
years, (i.e., after the first Contract Anniversary after the first withdrawal)
we determine whether an automatic step-up should occur on each Contract
Anniversary, by performing a similar examination of the Contract Values on the
end of the four immediately preceding quarters. If we step-up your Total Annual
Income Amount, we also step-up your Highest Daily Annual Income Amount, to equal
your Total Annual Income Amount. If, on the date that we implement a Highest
Quarterly Auto Step-Up to your Total Annual Income Amount, the charge for
Highest Daily Lifetime Five has changed for new purchasers, you may be subject
to the new charge at the time of such step-up. Prior to increasing your charge
for Highest Daily Lifetime Five upon a step-up, we would notify you, and give
you the opportunity to cancel the automatic step-up feature. If you receive
notice of a proposed step-up and accompanying fee increase, you should carefully
evaluate whether the amount of the step-up justifies the increased fee to which
you will be subject.
The Highest Daily Lifetime Five program does not affect your ability to make
withdrawals under your contract, or limit your ability to request withdrawals
that exceed the Total Annual Income Amount. Under Highest Daily Lifetime Five,
if your cumulative withdrawals in a Contract Year are less than or equal to the
Total Annual Income Amount, they will not reduce your Total Annual Income Amount
in subsequent Contract Years, but any such withdrawals will reduce the Total
Annual Income Amount on a dollar-for-dollar basis in that Contract Year.
If, cumulatively, you withdraw an amount less than the Total Annual Income
Amount in any Contract Year, you cannot carry-over the unused portion of the
Total Annual Income Amount to subsequent Contract Years.
Examples of dollar-for-dollar and proportional reductions and the Highest
Quarterly Auto Step-Upare set forth below. The values depicted here are purely
hypothetical, and do not reflect the charges for the Highest Daily Lifetime Five
benefit or any other fees and charges. Assume the following for all three
examples:
|X| The Contract Date is December 1, 2006
|X| The Highest Daily Lifetime Five benefit is elected on March 5, 2007.
Dollar-for-dollar reductions
On May 2, 2007, the Total Protected Withdrawal Value is $120,000, resulting in a
Total Annual Income Amount of $6,000 (5% of $120,000). Assuming $2,500 is
withdrawn from the Contract on this date, the remaining Total Annual Income
Amount for that Contract Year (up to and including December 1, 2007) is $3,500.
This is the result of a dollar-for-dollar reduction of the Total Annual Income
Amount -- $6,000 less $2,500 = $3,500.
Proportional reductions
Continuing the previous example, assume an additional withdrawal of $5,000
occurs on August 6, 2007 and the Contract Value at the time of this withdrawal
is $110,000. The first $3,500 of this withdrawal reduces the Total Annual Income
Amount for that Contract Year to $0. The remaining withdrawal amount -- $1,500 -
reduces the Total Annual Income Amount in future Contract Years on a
proportional basis based on the ratio of the excess withdrawal to the Contract
Value immediately prior to the excess withdrawal. (Note that if there were other
withdrawals in that Contract Year, each would result in another proportional
reduction to the Total Annual Income Amount).
Here is the calculation:
Contract value before withdrawal $110,000.00
Less amount of "non" excess withdrawal -$3,500.00
Contract value immediately before excess withdrawal of $1,500 $106,500.00
Excess withdrawal amount $1,500.00
Divided by Contract Value immediately before excess withdrawal $106,500.00
Ratio 1.41%
Total Annual Income Amount $6,000.00
Less ratio of 1.41% -$84.51
Total Annual Income Amount for future Contract Years $5,915.49
Highest Quarterly Auto Step-Up
On each Contract Anniversary date, the Total Annual Income Amount is stepped-up
if 5% of the highest quarterly value since your first withdrawal (or last
Contract Anniversary in subsequent years), adjusted for excess withdrawals and
additional Purchase Payments, is higher than the Total Annual Income Amount,
also adjusted for excess withdrawals and additional Purchase Payments.
Continuing the same example as above, the Total Annual Income Amount for this
Contract Year is $6,000. However, the excess withdrawal on August 6 reduces this
amount to $5,915.49 for future years (see above). For the next Contract Year,
the Total Annual Income Amount will be stepped-up if 5% of the highest quarterly
Contract Value, adjusted for withdrawals, is higher than $5,915.49. Here are the
calculations for determining the quarterly values. Only the June 1 value is
being adjusted for excess withdrawals as the September 1 and December 1
Valuation Days occur after the excess withdrawal on August 6.
*In this example, the Contract Anniversary date is December 1. The quarterly
valuation dates are every three months thereafter - March 1, June 1, September
1, and December 1. In this example, we do not use the March 1 date as the first
withdrawal took place after March 1. The Contract Anniversary Date of December 1
is considered the fourth and final quarterly valuation date for the year.
**In this example, the first quarterly value after the first withdrawal is
$118,000 on June 1, yielding an adjusted Total Annual Income Amount of
$5,900.00. This amount is adjusted on August 6 to reflect the $5,000 withdrawal.
The calculations for the adjustments are:
|X| The Contract Value of $118,000 on June 1 is first reduced
dollar-for-dollar by $3,500 ($3,500 is the remaining Total Annual
Income Amount for the Contract Year), resulting in an adjusted Contract
Value of $114,500 before the excess withdrawal.
|X| This amount ($114,500) is further reduced by 1.41% (this is the ratio
in the above example which is the excess withdrawal divided by the
Contract Value immediately preceding the excess withdrawal) resulting
in a Highest Quarterly Value of $112,885.55.
The adjusted Total Annual Income Amount is carried forward to the next quarterly
anniversary date of September 1. At this time, we compare this amount to 5% of
the Contract Value on September 1. Since the June 1 adjusted Total Annual Income
Amount of $5,644.28 is higher than $5,600.00 (5% of $112,000), we continue to
carry $5,644.28 forward to the next and final quarterly anniversary date of
December 1. The Contract Value on December 1 is $119,000 and 5% of this amount
is $5,950. Since this is higher than $5,644.28, the adjusted Total Annual Income
Amount is reset to $5,950.00.
In this example, 5% of the December 1 value yields the highest amount of $
5,950.00. Since this amount is higher than the current year's Total Annual
Income Amount of $5,915.49 adjusted for excess withdrawals, the Total Annual
Income Amount for the next Contract Year, starting on December 2, 2007 and
continuing through December 1, 2008, will be stepped-up to $5,950.00.
BENEFITS UNDER THE HIGHEST DAILY LIFETIME FIVE PROGRAM
o To the extent that your Contract Value was reduced to zero as a result of
cumulative withdrawals that are equal to or less than the Total Annual Income
Amount and amounts are still payable under Highest Daily Lifetime Five, we will
make an additional payment, if any, for that Contract Year equal to the
remaining Total Annual Income Amount for the Contract Year. Thus, in that
scenario, the remaining Total Annual Income Amount would be payable even though
your Contract Value was reduced to zero. In subsequent Contract Years we make
payments that equal the Total Annual Income Amount as described in this section.
We will make payments until the death of the single designated life. To the
extent that cumulative withdrawals in the current Contract Year that reduced
your Contract Value to zero are more than the Total Annual Income Amount, the
Highest Daily Lifetime Five benefit terminates, and no additional payments will
be made.
o If Annuity payments are to begin under the terms of your Contract, or if
you decide to begin receiving annuity payments and there is a Total Annual
Income Amount due in subsequent Contract Years, you can elect one of the
following two options:
(1) apply your Contract Value to any annuity option available; or
(2) request that, as of the date annuity payments are to begin, we
make annuity payments each year equal to the Total Annual Income
Amount. We will make payments until the death of the single
designated life.
We must receive your request in a form acceptable to us at our office.
In the absence of an election when mandatory contract payments are to begin, we
will make annual contract payments in the form of a single life fixed contract
with ten payments certain, by applying the greater of the contract rates then
currently available or the contract rates guaranteed in your Contract. The
amount that will be applied to provide such annuity payments will be the greater
of:
(1) the present value of the future Total Annual Income Amount
payments. Such present value will be calculated using the greater of the single
life fixed contract rates then currently available or the single life fixed
contract rates guaranteed in your Contract; and
(2) the Contract Value.
o If no withdrawal was ever taken, we will calculate the Total Annual
Income Amount as if you made your first withdrawal on the date the
contract payments are to begin.
o Please note that payments that we make under this benefit after the
contract anniversary coinciding with or next following the annuitant's
95th birthday will be treated as annuity payments.
Other Important Considerations
o Withdrawals under the Highest Daily Lifetime Five benefit are subject
to all of the terms and conditions of the Contract, including any CDSC.
o Withdrawals made while the Highest Daily Lifetime Five Benefit is in
effect will be treated, for tax purposes, in the same way as any other
withdrawals under the Contract. The Highest Daily Lifetime Five Benefit
does not directly affect the Contract Value or surrender value, but any
withdrawal will decrease the Contract Value by the amount of the
withdrawal (plus any applicable CDSC). If you surrender your Contract
you will receive the current surrender value.
o You can make withdrawals from your Contract while your Contract Value
is greater than zero without purchasing the Highest Daily Lifetime Five
benefit. The Highest Daily Lifetime Five benefit provides a guarantee
that if your Contract Value declines due to market performance, you
will be able to receive your Total Annual Income Amount in the form of
periodic benefit payments.
o You must allocate your Contract Value in accordance with the then
available investment option(s) that we may permit in order to elect and
maintain the Highest Daily Lifetime Five benefit. We reserve the right
to change the required investment option(s) at the time of a step-up,
subject to regulatory approval.
Election of and Designations under the Program
For Highest Daily Lifetime Five, there must be either a single Owner who is the
same as the Annuitant, or if the Contract is entity-owned, there must be a
single natural person Annuitant. In either case, the Annuitant must be at least
55 years old.
Any change of the Annuitant under the Contract will result in cancellation of
Highest Daily Lifetime Five. Similarly, any change of Owner will result in
cancellation of Highest Daily Lifetime Five, except if (a) the new Owner has the
same taxpayer identification number as the previous owner (b) both the new Owner
and previous Owner are entities or (c) the previous Owner is a natural person
and the new Owner is an entity.
Currently, if you terminate the Highest Daily Lifetime Five benefit, you will
(a) not be permitted to re-elect the benefit and (b) will be allowed to elect
the Spousal Lifetime Five Benefit or the Lifetime Five Income Benefit on any
anniversary of the Contract Date that is at least 90 calendar days from the date
the Highest Daily Lifetime Five Benefit was terminated. We reserve the right to
further limit the election frequency in the future. Before making any such
change to the election frequency, we will provide prior notice to Owners who
have an effective Highest Daily Lifetime Five benefit.
Termination of the Program
You may terminate the benefit at any time by notifying us. If you terminate the
benefit, any guarantee provided by the benefit will terminate as of the date the
termination is effective, and certain restrictions on re-election will apply as
described above. . The benefit terminates: (i) upon your termination of the
benefit (ii) upon your surrender of the Contract (iii) upon your election to
begin receiving contract payments (iv) upon the death of the Annuitant (v) if
both the Contract Value and Total Annual Income Amount equal zero or (vi) if you
fail to meet our requirements for issuing the benefit.
Upon termination of Highest Daily Lifetime Five, we cease deducting the charge
for the benefit. With regard to your investment allocations, upon termination we
will: (i) leave intact amounts that are held in the variable investment options,
and (ii) transfer all amounts held in the Benefit Fixed Rate Account (as defined
below) to your variable investment options, based on your existing allocation
instructions or (in the absence of such existing instructions) pro rata (i.e. in
the same proportion as the current balances in your variable investment
options).
Return of Principal Guarantee
If you have not made a withdrawal before the Tenth Anniversary, we will increase
your Contract Value on that Tenth Anniversary (or the next business day, if that
anniversary is not a business day), if the requirements set forth in this
paragraph are met. On the Tenth Anniversary, we add:
(a) your Contract Value on the day that you elected Highest Daily Lifetime Five;
and
(b) the sum of each Purchase Payment you made (including any Credits) during the
one-year period after you elected the benefit.
If the sum of (a) and (b) is greater than your Contract Value on the Tenth
Anniversary, we increase your Contract Value to equal the sum of (a) and (b), by
contributing funds from our general account. If the sum of (a) and (b) is less
than or equal to your Contract Value on the Tenth Anniversary, we make no such
adjustment. The amount that we add to your Contract Value under this provision
will be allocated to each of your variable investment options and the Benefit
Fixed Rate Account (described below), in the same proportion that each such
investment option bears to your total Contract Value, immediately prior to the
application of the amount. Any such amount will not be considered a purchase
payment when calculating your Total Protected Withdrawal Value, your death
benefit, or the amount of any other optional benefit that you may have selected,
and therefore will have no direct impact on any such values at the time we add
this amount. This potential addition to Contract Value is available only if you
have elected Highest Daily Lifetime Five and if you meet the conditions set
forth in this paragraph.
Asset Transfer Component of Highest Daily Lifetime Five
As indicated above, we limit the sub-accounts to which you may allocate Contract
Value if you elect Highest Daily Value Lifetime Five. For purposes of this
benefit, we refer to those permitted sub-accounts as the "Permitted
Sub-accounts". As a requirement of participating in Highest Daily Lifetime Five,
we require that you participate in our specialized asset transfer program, under
which we may transfer Contract Value between the Permitted Sub-accounts and a
fixed interest rate account that is part of our general account (the "Benefit
Fixed Rate Account"). We determine whether to make a transfer, and the amount of
any transfer, under a non-discretionary formula, discussed below. The Benefit
Fixed Rate Account is available only with this benefit, and thus you may not
allocate Purchase Payments to that Account.
Under the asset transfer component of Highest Daily Lifetime Five, we monitor
your Contract Value daily and, if necessary, systematically transfer amounts
between the Permitted Sub-accounts you have chosen and the Benefit Fixed Rate
Account. Any transfer would be made in accordance with a formula, which is set
forth in the schedule supplement to the endorsement for this benefit (and also
appears in the Appendices to this prospectus). Speaking generally, the formula,
which we apply each business day, operates as follows. The formula starts by
identifying your Protected Withdrawal Value for that day and then multiplies
that figure by 5%, to produce a projected (i.e., hypothetical) Highest Daily
Annual Income Amount. Then, using our actuarial tables, we produce an estimate
of the total amount we would target in our allocation model, based on the
projected Highest Daily Annual Income Amount each year for the rest of your
life. In the formula, we refer to that value as the "Target Value" or "L". If
you have already made a withdrawal, your projected Highest Daily Annual Income
Amount (and thus your Target Value) would take into account any automatic
step-up that was scheduled to occur according to the step-up formula described
above. Next, the formula subtracts from the Target Value the amount held within
the Benefit Fixed Rate Account on that day, and divides that difference by the
amount held within the Permitted Sub-accounts. That ratio, which essentially
isolates the amount of your Target Value that is not offset by amounts held
within the Benefit Fixed Rate Account, is called the "Target Ratio" or "r". If
the Target Ratio exceeds a certain percentage, it means essentially that too
much Target Value is not offset by assets within the Benefit Fixed Rate
Account, and therefore we will transfer an amount from your Permitted
Sub-accounts to the Benefit Fixed Rate Account. Conversely, if the Target Ratio
falls below a certain percentage, then a transfer from the Benefit Fixed Rate
Account to the Permitted Sub-accounts would occur. Note that the formula is
calculated with reference to the Highest Daily Annual Income Amount, rather
than with reference to the Total Annual Income Amount.
As you can glean from the formula, a downturn in the securities markets (i.e.,
a reduction in the amount held within the Permitted Sub-accounts) may cause us
to transfer some of your variable Contract Value to the Benefit Fixed Rate
Account, because such a reduction will tend to increase the Target Ratio.
Moreover, certain market return scenarios involving "flat" returns over a
period of time also could result in the transfer of money to the Benefit Fixed
Rate Account. In deciding how much to transfer, we use another formula, which
essentially seeks to re-balance amounts held in the Permitted Sub-accounts and
the Benefit Fixed Rate Account so that the Target Ratio meets a target, which
currently is equal to 80%. Once you elect Highest Daily Lifetime Five, the
ratios we use will be fixed. For contracts issued in the future, however, we
reserve the right to change the ratios.
While you are not notified when your Contract reaches a reallocation trigger,
you will receive a confirmation statement indicating the transfer of a portion
of your Contract Value either to or from the Benefit Fixed Rate Account. The
formula by which the reallocation triggers operate is designed primarily to
mitigate the financial risks that we incur in providing the guarantee under
Highest Daily Lifetime Five.
Depending on the results of the calculation relative to the reallocation
triggers, we may, on any day:
o Not make any transfer; or
o If a portion of your Contract Value was previously allocated to the
Benefit Fixed Rate Account, transfer all or a portion of those amounts
to the Permitted Sub-accounts, based on your existing allocation
instructions or (in the absence of such existing instructions) pro rata
(i.e., in the same proportion as the current balances in your variable
investment options). Amounts taken out of the Benefit Fixed Rate
Account will be withdrawn for this purpose on a last-in, first-out
basis (an amount renewed into a new guarantee period under the Benefit
Fixed Rate Account will be deemed a new investment for purposes of this
last-in, first-out rule); or
o Transfer all or a portion of your Contract Value in the Permitted
Sub-accounts pro-rata to the Benefit Fixed Rate Account. The interest
that you earn on such transferred amount will be equal to the annual
rate that we have set for that day, and we will credit the daily
equivalent of that annual interest until the earlier of one year from
the date of the transfer or the date that such amount in the Benefit
Fixed Rate Account is transferred back to the Permitted Sub-accounts.
If a significant amount of your Contract Value is systematically transferred to
the Benefit Fixed Rate Account during periods of market declines or low interest
rates, less of your Contract Value may be available to participate in the
investment experience of the Permitted Sub-accounts if there is a subsequent
market recovery. Under the reallocation formula that we employ, it is possible
that a significant portion, and under certain circumstances all, of your
contract value may be allocated to the Benefit Fixed Rate Account. Note that if
your entire contract value is transferred to the Benefit Fixed Rate Account,
then based on the way the formula operates, that value would remain in the
Benefit Fixed Rate Account unless you made additional purchase payments.
Additional Tax Considerations
If you purchase a contract as an investment vehicle for "qualified" investments,
including an IRA, SEP-IRA, Tax Sheltered Annuity (or 403(b)) or employer plan
under Code Section 401(a), the minimum distribution rules under the Code require
that you begin receiving periodic amounts from your contract beginning after age
70 1/2. For a Tax Sheltered Annuity or a 401(a) plan for which the participant
is not a greater than 5 percent owner of the employer, this required beginning
date can generally be deferred to retirement, if later. Roth IRAs are not
subject to these rules during the owner's lifetime. The amount required under
the Code may exceed the Total Annual Income Amount, which will cause us to
increase the Total Annual Income Amount in any Contract Year that required
minimum distributions due from your Contract that are greater than such amounts.
In addition, the amount and duration of payments under the contract payment and
death benefit provisions may be adjusted so that the payments do not trigger any
penalty or excise taxes due to tax considerations such as minimum distribution
requirements. Please note, however, that any withdrawal you take prior to the
Tenth Anniversary, even if withdrawn to satisfy required minimum distribution
rules, will cause you to lose the ability to receive Enhanced Protected
Withdrawal Value and an amount under the Return of Principal Guarantee.
As indicated, withdrawals made while the Highest Daily Lifetime Five Benefit is
in effect will be treated, for tax purposes, in the same way as any other
withdrawals under the contract. Please see the Tax Considerations section of the
prospectus for a detailed discussion of the tax treatment of withdrawals. We do
not address each potential tax scenario that could arise with respect to this
Benefit here. However, we do note that if you participate in Highest Daily
Lifetime Five through a non-qualified annuity, and your annuity has received
Enhanced Protected Withdrawal Value and/or an additional amount under the Return
of Principal Guarantee, as with all withdrawals, once all purchase payments are
returned under the contract, all subsequent withdrawal amounts will be taxed as
ordinary income.
F. THE FOLLOWING IS ADDED AS APPENDIX C:
Appendix C
Asset Transfer Formula Under Highest Daily Lifetime Five Benefit
We set out below the current formula under which we may transfer amounts between
the variable investment options and the Benefit Fixed Rate Account. Upon your
election of Highest Daily Lifetime Five, we will not alter the asset transfer
formula that applies to your contract. However, as discussed in the "What Is the
Lifetime Five Income Benefit" section, we reserve the right to modify this
formula with respect to those who elect Highest Daily Lifetime Five in the
future.
Terms and Definitions referenced in the calculation formula:
o Cu - the upper target is established on the effective date of the Highest
Daily Lifetime Five benefit (the "Effective Date") and is not changed for
the life of the guarantee. Currently, it is 83%.
o Ct - the target is established on the Effective Date and is not changed for
the life of the guarantee. Currently, it is 80%. o Cl - the lower target is
established on the Effective Date and is not changed for the life of the
guarantee. Currently, it
is 77%.
o L - the target value as of the current Valuation Day.
o r - the target ratio.
o a - the 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. The factors that we use currently are derived from the a2000
Individual Annuity Mortality Table with an assumed interest rate of 3%.
Each number in the table "a" factors (which appears below) represents a
factor, which when multiplied by the Highest Daily Annual Income Amount,
projects our total liability for the purpose of asset transfers under the
guarantee.
o Q - age based 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. The factor is currently set equal to 1.
o V - the total value of all Permitted Sub-accounts in the contract. o F - the
total value of all Benefit Fixed Rate Account allocations.
o I - the income value prior to the first withdrawal. The income value is
equal to what the Highest Daily Annual Income Amount would be if the
first withdrawal were taken on the date of calculation. After the first
withdrawal the income value equals the greater of the Highest Daily
Annual Income Amount, the quarterly step-up amount times the annual
income percentage, and the contract value times the annual income
percentage.
o T - the amount of a transfer into or out of the Benefit Fixed Rate Account.
o I% - annual income amount percentage. This factor is established on the
Effective Date and is not changed for the life of the guarantee.
Currently, it is 5%
Target Value Calculation:
On each Valuation Day, a target value (L) is calculated, according to the
following formula. If the variable Contract Value (V) is equal to zero, no
calculation is necessary.
L = I * Q * a
Transfer Calculation:
The following formula, which is set on the Effective Date and is not changed for
the life of the guarantee, determines when a transfer is required:
Target Ratio r = (L - F) / V.
o If r > Cu, assets in the Permitted Sub-accounts are transferred to
Benefit Fixed Rate Account.
o If r < Cl, and there are currently assets in the Benefit Fixed Rate
Account (F > 0), assets in the Benefit Fixed Rate Account are transferred to the
Permitted Sub-accounts.
The following formula, which is set on the Effective Date and is not changed for
the life of the guarantee, determines the transfer amount:
Example:
Male age 65 contributes $100,000 into the Permitted Sub accounts and the value
drops to $92,300 during year one, end of day one. A table of values for "a"
appears below.
Target Value Calculation:
L = I * Q * a
= 5000.67 * 1 * 15.34
= 76,710.28
Target Ratio:
r = (L - F) / V
= (76,710.28 - 0) / 92,300.00
= 83.11%
Since r > Cu ( because 83.11% > 83%) a transfer into the Benefit Fixed rate
Account occurs.
T = { Min ( V, [ L - F - V * Ct] / ( 1 - Ct))}
= { Min ( 92,300.00, [ 76,710.28 - 0 - 92,300.00 * 0.80] / ( 1 - 0.80))}
= { Min ( 92,300.00, 14,351.40 )}
= 14,351.40
Age 65 "a" Factors for Liability Calculations
(in Years and Months since Benefit Effective Date)*
SPVANJSUP2
Pruco Life Insurance Company
Pruco Life Insurance Company Of New Jersey
Strategic Partners Annuity One
Strategic Partners Plus
Strategic Partners Annuity One 3
Strategic Partners Plus 3
Strategic Partners FlexElite
Strategic Partners Advisor
Supplement, dated March 19, 2007
To
Prospectuses, dated May 1, 2006
We are issuing this supplement to each of the above-referenced prospectuses for
actively-sold contracts, in order to describe an alternative way in which the
death benefit under your annuity may be paid to your beneficiaries.
This Supplement should be read and retained with the current Prospectus for your
annuity contract. This Supplement is intended to update certain information in
the Prospectus for the variable annuity you own, and is not intended to be a
prospectus or offer for any other variable annuity listed here that you do not
own. If you would like another copy of the current Prospectus, please contact us
at (888) PRU-2888.
A. In the "What Is The Death Benefit?" section of each prospectus, in the
sub-section entitled "Payout Options," we re-word the lead-in language to the
second paragraph to state "With respect to a death benefit paid on or before
March 19, 2007, the death benefit payout options are . . . ", and we add the
following to the end of that section:
With respect to a death benefit paid after March 19, 2007, unless the surviving
spouse opts to continue the contract (or spousal continuance is required under
the terms of your contract), a beneficiary may, within 60 days of providing
proof of death, take the death benefit as follows:
o as a lump sum. If the beneficiary does not choose a payout option within
sixty days, the beneficiary will be paid in this manner; or
o as payment of the entire death benefit within a period of 5 years from
the date of death; or
o as a series of payments not extending beyond the life expectancy of the
beneficiary, or over the life of the beneficiary. Payments under this option
must begin within one year of the date of death; or
o as the beneficiary continuation option, described immediately below.
Upon our receipt of proof of death, we will send to the beneficiary materials
that list these payment options, as well as an election form with which the
beneficiary may choose an option.
Beneficiary Continuation Option
Instead of receiving the death benefit in a single payment, or under an annuity
option, a beneficiary may take the death benefit under an alternative death
benefit payment option, as provided by the Code. This "Beneficiary Continuation
Option" is described below and is available for both qualified contracts (i.e.,
contracts sold to an IRA, Roth IRA, SEP IRA, or 403(b)) and non-qualified
contracts. In the section below entitled "Alternative Death Benefit Payment
Options - Qualified Contracts", we describe Beneficiary Continuation Option
provisions that are unique to qualified contracts.
Under the beneficiary continuation option:
o The Owner's contract will be continued in the Owner's name, for the benefit of
the beneficiary.
o Beginning on the date we receive an election by the beneficiary to take
the death benefit in a form other than a lump sum, we charge an amount
equal to 1.00% annually, imposed daily against the average daily net
assets allocated to the variable investment options.
o Beginning on the date we receive an election by the beneficiary to take
the death benefit in a form other than a lump sum, the beneficiary will
incur an annual maintenance fee equal to the lesser of $30 or 2% of
contract value if the contract value is less than $25,000 at the time
the fee is assessed. The fee will not apply if it is assessed 30 days
prior to a surrender request.
o The initial contract value will be equal to any death benefit
(including any optional death benefit) that would have been payable to
the beneficiary if the beneficiary had taken a lump sum distribution.
o The available variable investment options will be among those available
to the Owner at the time of death, however certain variable investment
options may not be available.
o The beneficiary may request transfers among variable investment
options, subject to the same limitations and restrictions that applied
to the Owner. Transfers in excess of 20 per year will incur a $10
transfer fee.
o No fixed interest rate options will be offered. o No additional Purchase
Payments can be applied to the contract.
o The basic death benefit and any optional benefits elected by the Owner will no
longer apply to the beneficiary. o The beneficiary can request a withdrawal of
all or a portion of the contract value at any time without application of any
applicable CDSC.
o Upon the death of the Beneficiary, if the beneficiary's successor does
not take a lump sum, the successor may take any remaining benefit over
the life expectancy of the beneficiary.
Currently, only Investment Options corresponding to Portfolios of the American
Skandia Trust and the Prudential Money Market Portfolio of The Prudential Series
Fund are available under the Beneficiary Continuation Option.
In addition to the materials referenced above, the beneficiary will be provided
with a prospectus and a settlement agreement describing the Beneficiary
Continuation Option. Please contact us for additional information on the
availability, restrictions and limitations that will apply to a beneficiary
under the Beneficiary Continuation Option. We may pay compensation to the
selling broker-dealer based on amounts held in the Beneficiary Continuation
Option.
Alternative Death Benefit Payment Options - Qualified Contracts
The Code provides for alternative death benefit payment options when a contract
is held through a tax-qualified arrangement that requires minimum distributions.
Upon death under an IRA, 403(b) or other "qualified investment", a beneficiary
may generally elect to continue the contract and receive minimum distributions
under the contract instead of receiving the death benefit in a single payment.
The available payment options will depend on whether death occurred on or before
the date minimum distributions under the Code were required to begin, and
whether the beneficiary is the surviving spouse.
o If death occurs before the date minimum distributions must begin under the
Code (i.e., by April 1 of the year after the year the Owner reaches age 70
1/2), the death benefit can be paid out in either a lump sum, within five
years from the date of death, or over the life or life expectancy of the
designated beneficiary (as long as payments begin by December 31st of the
year following the year of death). However, if the spouse is the
beneficiary, the death benefit can be paid out over the life or life
expectancy of the spouse with such payments beginning no later than
December 31st of the year following the year of death or December 31st of
the year in which the deceased would have reached age 70 1/2, which ever is
later.
o If death occurs after the date minimum distributions must begin under the
Code (i.e., by April 1 of the year after the year the Owner reaches age 70
1/2), the death benefit must be paid out at least as rapidly as under the
method that had been in effect when the Owner was receiving distributions.
A beneficiary has the flexibility to take out more each year than required
under the minimum distribution rules.
Until withdrawn, amounts in an IRA, 403(b) or other "qualified investment"
continue to be tax deferred. Amounts withdrawn each year, including amounts that
are required to be withdrawn under the minimum distribution rules, are subject
to tax. You may wish to consult a professional tax advisor for tax advice as to
your particular situation.
For a Roth IRA, if death occurs before the entire interest is distributed, the
death benefit must be distributed under the same rules applied to IRAs where
death occurs before the date minimum distributions must begin under the Code.
The tax consequences to the beneficiary may vary among the different death
benefit payment options. See the Tax Considerations section of this prospectus,
and consult your tax advisor.
B. For each of the above-referenced prospectuses, we revise the section entitled
"Summary of Contract Expenses" to the extent indicated below to illustrate the
fees that are unique to the Beneficiary Continuation Option:
CONTRACT OWNER TRANSACTION EXPENSES
Maximum Transfer Fee
Each transfer after 20
(Beneficiary Continuation Option ONLY) $10.00
The next table describes the fees and expenses you will pay periodically during
the time that you own the contract, not including underlying mutual fund fees
and expenses.
PERIODIC ACCOUNT EXPENSES
Maximum Annual Contract Fee
If Contract Value is less than $25,000
(Beneficiary Continuation Option ONLY) lesser of $30 or 2% of Contract Value
INSURANCE AND ADMINISTRATIVE EXPENSES
AS A PERCENTAGE OF CONTRACT VALUE IN VARIABLE INVESTMENT OPTIONS
Settlement Service Charge* 1.00%
* The other Insurance and Administrative Expense Charges do not apply if you are
a beneficiary under the Beneficiary Continuation Option. Instead, the Settlement
Service Charge set forth here applies, if your beneficiary elects the
Beneficiary Continuation Option. The 1.00% charge is an annual charge that is
assessed daily against the assets in the variable investment options.
C. For each of the above-referenced prospectuses, in the section entitled "What
Are the Expenses Associated With The . . . Contract", the following paragraph is
added, immediately before "Taxes Attributable To Premium" (and an entry entitled
"Beneficiary Continuation Option Charges" is added as a new line item to the
Table of Contents):
Beneficiary Continuation Option Charges: If your beneficiary takes the
death benefit under the beneficiary continuation option, we deduct a
Settlement Service Charge. The charge is assessed daily against the average
assets allocated to the variable investment options, and is equal to an
annual charge of 1.00%. In addition, the beneficiary will incur an annual
maintenance fee equal to the lesser of $30 or 2% of contract value if the
contract value is less than $25,000 at the time the fee is assessed. The
fee will not apply if it is assessed 30 days prior to a surrender request.
Finally, transfers in excess of 20 per year will incur a $10 transfer fee.
SPVASUP9