Prudential Enhances Popular Annuity Optional Benefits

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Improved guarantees, lower issue age, and more opportunities to lock in the highest daily values make Highest Daily Lifetime 7 PlusSM among the most flexible benefits available

Prudential Annuities this week expanded the availability and boosted the minimum income guarantees of its most popular suite of options available with its variable annuities.

The domestic annuity business of Prudential Financial Inc. (NYSE:PRU) said its award winning set of Highest Daily optional living benefits, which can be purchased for an additional fee with a variable annuity from Prudential issuing companies, is now available to investors as young as age 45. Prudential's Highest Daily benefits lock in the highest daily value, for income purposes, of an investor's annuity contract each day the market is open.

The improvements announced today also offer clients a richer basis for income guarantees -- with an income base of up to 600% of the client's account value, for income purposes, (provided no Lifetime Withdrawals have been taken) after 25 years -- and provide greater opportunities to capture an annuity's highest daily value.
"In today's environment, guarantees are critical to investors and their focus on retirement income," said Stephen Pelletier, President of Prudential Annuities. "The new Highest Daily Lifetime 7 Plus benefit allows Prudential to respond to the changing needs of American investors in today's turbulent financial market. Our Highest Daily benefits are designed to provide guarantees, for income purposes, while ensuring that in the event of significant market declines, the protection we provide responsibly manages risk for the client as well as for the company."

Similar to its predecessor, the new options capture the annuity's highest daily value and grow that value at an annual 7% compounded rate, until lifetime income begins. Highest Daily Lifetime 7 Plus and Spousal Highest Daily Lifetime 7 PlusSM will replace Highest Daily Lifetime SevenSM and Spousal Highest Daily Lifetime SevenSM in all states where they have been approved.
Prudential Annuities announced the following enhancements effective today:

  • Enhanced Guarantees: Provided that no Lifetime Withdrawals have been taken, investors are guaranteed a minimum Protected Withdrawal Value (the basis for lifetime income) of 200%, 400% and 600% of the account value at benefit election after 10, 20 and 25 years, respectively. If the minimum guarantee exceeds an investor's current Protected Withdrawal Value, it becomes the new basis for lifetime income and will continue to grow at a compounded 7% rate until the first Lifetime Withdrawal (the guaranteed regular payment the annuity-holder receives for his or her lifetime.) The Protected Withdrawal Value is available through withdrawals; it is not available as a lump sum.
  • Increased Step-Up Opportunities: HD Lifetime 7 Plus gives investors the opportunity to increase their Protected Withdrawal Value every day the market is open for trading with no cap on rollups or step ups. This benefit captures the annuity's highest day, for income purposes, and grows that value at an annual 7% compounded rate, until the first Lifetime Withdrawal, giving investors the opportunity to increase their annuities' income potential every day the markets are open until the first Lifetime Withdrawal. Clients electing the HD Lifetime 7 Plus with the Beneficiary Income OptionSM (and its spousal versions), receive 7% compounded growth on their annuity's highest day for the first 10 years from benefit election or until their first Lifetime Withdrawal, whichever is sooner.     
  • Lower Issue Age: Prudential Annuities has lowered the issue age for HD Lifetime 7 Plus and HD Lifetime 7 Plus with Lifetime Income AcceleratorSM, to 45 from 55. Lifetime Income Accelerator is a Prudential optional benefit that will double an investor's annual income amount when certain conditions are present. The minimum issue age for Spousal HD Lifetime 7 Plus has been lowered to 50 (for the younger spouse) and 55 (for the older spouse) from 59 ½ years of age. Cost for the enhanced HD Lifetime 7 Plus benefit is 75 basis points, or 0.75%. , HD Lifetime 7 Plus with Lifetime Income Accelerator is 110 basis points, and Spousal HD7 Lifetime Plus is 90 basis points. (Lifetime Income Accelerator is not available with Spousal HD Lifetime 7 Plus.)
  • Beneficiary Income Option: Available with both HD Lifetime 7 Plus and Spousal HD Lifetime 7 Plus, this optional feature, available to clients at age 45, offers beneficiaries the option of either continuing to receive the Annual Income Amount or receiving the base death benefit included in the underlying annuity. Payments will continue, uninterrupted, until the Protected Withdrawal Value is depleted. The Beneficiary Income Option is available through a stream of annual income payments only; it is not available as a lump sum. The cost for HD Lifetime 7 Plus with Beneficiary Income Option and Spousal HD Lifetime 7 Plus with Beneficiary Income Option is 110 basis points. The enhanced guarantees at years 20 and 25 do not pertain to elections of HD Lifetime 7 Plus with Beneficiary Income Option (both single and spousal).
  • Increased Withdrawal Flexibility: Investors purchasing an annuity with HD Lifetime 7 Plus will now have the ability to take a one-time partial withdrawal known as a Non-Lifetime Withdrawal that will not interrupt the growth of their income base (Protected Withdrawal Value.) This option must be elected at the time the withdrawal is being taken, and will reduce all current and future guarantees associated with the benefit proportionally
  • Post-Withdrawal Step-Up Opportunities: On each contract anniversary, starting with the contract anniversary immediately following the first Lifetime Withdrawal, the HD Lifetime 7 Plus and Spousal HD Lifetime 7 Plus suite of benefits will look at back at the highest daily account value in the prior contract year and will lock in that value if it would generate a higher Annual Income Amount than their current Annual Income Amount
  • Return of Principal Guarantee: If upon the 10th benefit anniversary, an investor has not taken any Lifetime Withdrawals and the current account value is less than the principal value, Prudential will credit the difference directly into the annuity's account value. The Principal Value is the account value on the date of benefit election, plus any additional purchase payments and applicable credits received within one year from benefit election. This guarantee is not available in the state of Washington.

Reflecting the popularity of Prudential's lifetime guaranteed withdrawal benefits, the overall election rate for our Highest Daily benefit suite grew to 75% during the fourth quarter of 2008. Total account values with guaranteed withdrawal benefits for life at the end of that period were $17.7 billion.

"Our customers are looking for both protection and growth opportunities in today's volatile markets," said Bruce Ferris, senior vice president, Sales and Distribution. "Our new options can protect the retirement income of thousands of clients who otherwise would be redrafting their plans for retirement, delaying retirement or seeking additional sources of income - a real concern for those in The Retirement Red Zone® - the five years before and the five years after retirement. Prudential's Highest Daily benefits guarantee an investor that their income base will be at its all-time high regardless of when they retire."

A variable annuity is a tax-deferred retirement investment vehicle. For an additional fee, optional living benefits provide investors with performance-based guarantees that become effective while the owner is still alive. Additionally, today's optional living benefits can provide income protection, while allowing individuals to remain invested in the market, providing opportunities for growth. Prudential Annuities' Highest Daily optional living benefits allow investors to step up the guaranteed income base through a daily monitoring of the Account Value that allows participation in up markets and can cushion the principal when equity markets decline. On a daily basis, the account value is monitored relative to the guarantee and depending on those values some, most, or none of the account value may be transferred to a Bond Portfolio. HD Lifetime 7 Plus provides additional growth opportunities, more minimum income guarantees, more availability (through lower minimum issue ages) and additional withdrawal flexibility to the Highest Daily suite of benefits. Prudential Annuities optional living benefits have received the Boomer Market Advisor Readers Choice Award for four consecutive years. Variable annuities and all optional living benefits are available to investors through licensed financial professionals.

An annuity can help you manage investment risks in many ways, including the ability to invest in equities, fixed income and other securities through a broad range of professionally managed investment options. An annuity also provides payment options to meet your income needs and, prior to annuitization, a guaranteed death benefit for your beneficiaries. Variable annuities offered by Prudential Companies are available at an annual cost of 0.65 basis points to 1.65 basis points for mortality expense & administration fees, with an additional fee related to the professional investment options. The fees will vary depending on the underlying annuity and investment options selected. Variable annuities also offer optional benefits, such as HD Lifetime 7 Plus, which, for an additional fee of 0.75% of the greater of the account value and Protected Withdrawal Value, can help you avoid the risk of outliving your retirement income.

Remember that optional benefits have certain investment, holding period, liquidity and withdrawal limitations and restrictions; you should see the prospectus for more information.

Of course, you must remember that variable annuities are appropriate for long-term investing and designed for retirement purposes. Investment return and principal value of an investment will fluctuate so that an investor's unit values, when redeemed, may be worth more or less than their original cost. Withdrawals or surrenders may be subject to contingent deferred sales charge (CDSC). Withdrawals and distributions of taxable amounts are subject to ordinary income tax and, if made prior to age 59 ½, may be subject to an additional 10% federal income tax penalty. Withdrawals, for tax purposes are deemed to be gains out first withdrawals can reduce the living benefit, death benefit and account value.

Optional living and death benefits may not be available in every state and may not be elected in conjunction with certain optional benefits. The fees are in addition to fees and charges associated with the basic annuity. See the prospectus for more detailed information.

Prudential Financial, Inc. (NYSE: PRU), a financial services leader with approximately $558 billion of assets under management as of December 31, 2008, has operations in the United States, Asia, Europe, and Latin America. Leveraging its heritage of life insurance and asset management expertise, Prudential is focused on helping approximately 50 million individual and institutional customers grow and protect their wealth. The company's well-known Rock symbol is an icon of strength, stability, expertise and innovation that has stood the test of time. Prudential's businesses offer a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds, investment management, and real estate services. For more information, please visit http://www.news.prudential.com/.

Investors should consider the contract and underlying portfolios' investment objectives, risks, charges and expenses carefully before investing. This and other important information are contained in the prospectuses, which can be obtained from your financial professional. You should read the prospectuses carefully before investing.

This material was prepared to support the promotion and marketing of variable annuities available through Prudential. Prudential, its affiliates, its distributors and their respective representatives do not provide tax, accounting or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used for the purpose of avoiding U.S. federal, state or local tax penalties. Please consult your own independent advisor as to any tax, accounting or legal statements made herein.

Your needs and the suitability of an annuity product should be carefully considered before investing. When evaluating your needs, please consider other variable annuities available from Prudential Financial companies.

Highest Daily Lifetime 7 Plus and Spousal Highest Daily Lifetime 7 Plus use a predetermined mathematical formula to help manage your guarantee through all market cycles. Each business day, the formula determines if any portion of your account value needs to be transferred into or out of the AST Investment Grade Bond Portfolio (the "Bond Portfolio"). Amounts transferred by the formula depend on a number of factors unique to your individual annuity and include:

(i) The difference between the account value and the Protected Withdrawal Value;
(ii) How long you have owned Highest Daily Lifetime 7 Plus or Spousal Highest Daily Lifetime 7 Plus;
(iii) The amount invested in, and the performance of, the Permitted Subaccounts;
(iv) The amount invested in, and the performance of, the Bond Portfolio; and
(v) The impact of additional purchase payments made to and withdrawals taken from the annuity.

Therefore, at any given time, some, most, or none of the account value may be allocated to the Bond Portfolio. Transfers to and from the Bond Portfolio do not impact any income guarantees that have already been locked in. The Protected Withdrawal Value (the basis for guaranteed lifetime income) is separate from the account value, and only available through withdrawals, not as a lump sum.

Any amounts invested in the Bond Portfolio will affect your ability to participate in a subsequent recovery within the Permitted Subaccounts. Conversely, the account value may be higher at the beginning of the recovery, e.g. more of the account value may have been protected from decline and volatility than it otherwise would have been had the benefit not been elected. Please see the prospectus for complete details.

Annuity contracts contain exclusions, limitations, reductions of benefits and terms for keeping them in force. Your licensed financial professional can provide you with costs and complete details.

Highest Daily Lifetime 7 Plus with Lifetime Income Accelerator is not long-term care insurance and should not be purchased as a substitute for long-term care insurance. The income you receive through the Lifetime Income Accelerator may be used for any purpose, and it may or may not be sufficient to address expenses you may incur for long-term care. You should seek professional advice to determine your financial needs for long-term care.

The fees for optional benefits are in addition to fees and charges associated with the basic annuity. See the prospectus for more detailed information. Guarantees are backed by the claims-paying ability of the issuing company and do not apply to the underlying investment options.

Variable annuities are issued by Pruco Life Insurance Company (in New York, by Pruco Life Insurance Company of New Jersey), Newark, NJ, or by Prudential Annuities Life Assurance Corporation, Shelton, CT. All are distributed by Prudential Annuities Distributors, Inc., Shelton, CT. All are Prudential Financial companies and each is solely responsible for its own financial condition and contractual obligations. Wachovia Corporation is the majority owner and Prudential Financial, indirectly through subsidiaries, is a minority owner of Wachovia Securities, LLC. Prudential, Prudential Financial, the Rock logo, the Rock Prudential logo and The Retirement Red Zone are registered service marks of The Prudential Insurance Company of America and its affiliates. Prudential Annuities is a business division of Prudential Financial, Inc.

Issued on riders: RID-HD7 (2/09), RID-HD7-DB (2/09), RID-HD7-LIA (2/09), P-RID-HD7 (2/09), P-RID-HD7-DB (2/09), P-RID-HD7-LIA (2/09), et al or state variation thereof.

IFS-A161778 Ed.02/2009

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Alicia Rodgers Alston
Prudential
973-802-4446
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