The Paragon Asset Protection and Deferred Variable Annuity gives the policyholder the ability to carry out a self-directed investment strategy on a tax-advantaged basis with far more investment options than are currently available with conventional variable annuities in the United States. As long as the policyholder’s funds remain invested in the annuity, there is no current U.S. tax liability to the investor. A withdrawal from the annuity is taxable to the holder as ordinary income to the extent gains have been realized in the account, with the remainder generally treated as a tax-free return of capital. As with all annuities, any withdrawal before age 59½ is subject to a 10% penalty tax on the gains in the account. The policyholder is permitted to direct that the separate account be invested in a number of private investment funds or through one or more independent investment managers. A policyholder is not permitted to make specific investment decisions for the separate account, but may redirect the investment strategy of the account at any time to another fund or replace the investment manager, with no tax consequences.

The following table sets out the significant benefits of tax-deferred compounding, assuming that taxes are deducted annually at the rate of 34% for the taxed numbers.

Plan 1 Single Premium Table

Paragon International Insurance Limited
Male Nonsmoker
Net Investment Return: 10%
Plan 1 Single Premium
AGE Beginning Cash Deposit Ending Cash Year End
Face Amount		 Amount if
fully taxable
60 3,000,000 0 3,304,012 6,657,642 3,216,000
61 3,304,012 0 3,634,389 6,657,642 3,447,552
62 3,634,389 0 3,996,297 6,657,642 3,695,776
63 3,996,297 0 4,395,520 6,657,642 3,961,872
64 4,395,520 0 4,837,752 6,657,642 4,247,126
65 4,837,752 0 5,329,157 6,657,642 4,552,919
66 5,329,157 0 5,876,501 7,198,713 4,880,730
67 5,876,501 0 6,480,074 7,857,089 5,232,142
68 6,480,074 0 7,144,492 8,573,390 5,608,856
69 7,144,492 0 7,875,078 9,351,655 6,012,694
70 7,875,078 0 8,677,695 10,087,821 6,445,608
71 8,677,695 0 9,561,252 10,875,925 46,909,692
72 9,561,252 0 10,534,411 11,719,532 7,407,190
73 10,534,411 0 12,623,020 12,623,020 7,940,507
74 11,607,375 0 12,792,346 13,591,868 8,512,224
75 12,792,346 0 14,104,461 14,985,990 9,125,104
76 14,104,461 0 15,546,646 16,518,311 9,782,111
77 15,546,646 0 17,130,874 18,201,554 10,486,423
78 17,130,874 0 18,869,962 20,049,335 11,241,446
79 18,869,962 0 20,777,879 22,076,497 12,050,830
80 20,777,879 0 22,869,959 24,299,331 12,918,490
81 22,869,959 0 25,162,927 26,735,610 13,848,621
82 25,162,927 0 27,674,165 29,403,800 14,845,722
83 27,674,165 0 30,422,400 32,323,799 15,914,614
84 30,422,400 0 33,426,482 35,515,638 17,060,466
85 33,426,482 0 36,706,568 39,000,729 18,288,820
86 36,706,568 0 40,284,165 42,801,926 19,605,615
87 40,284,165 0 44,181,080 46,942,397 21,017,219
88 44,181,080 0 48,422,083 51,448,464 22,530,459
89 48,422,083 0 53,037,851 56,352,716 24,152,562
90 53,037,851 0 58,065,186 61,694,260 25,891,642
91 58,065,186 0 63,434,578 67,399,239 27,755,841
92 63,434,578 0 69,145,215 73,466,791 29,754,261
93 69,145,215 0 75,163,872 79,861,614 31,896,568
94 75,163,872 0 81,421,285 81,421,285 34,193,121
95 81,421,285 0 89,656,579 89,656,579 36,655,026
96 89,656,579 0 99,160,176 99,160,176 39,294,187
97 99,160,176 0 109,671,155 109,671,155 42,123,369
98 109,671,155 0 121,296,297 122,831,694 45,156,252
99 121,296,297 0 134,153,705 48,407,502

THIS ILLUSTRATION IS NOT A CONTRACT. IT IS ENTIRELY DEPENDENT ON THE HYPOTHETICAL ASSUMPTIONS IT INCORPORATES. IF INVESTMENT RETURNS ARE LESS THAN ASSUMED, OR IF MORTALITY EXPERIENCE IS HIGHER THAN ASSUMED, OR IF ADMINISTRATIVE CHARGES ARE HIGHER THAN ASSUMED, THE ILLUSTRATED CASH VALUES AND DEATH BENEFITS WILL NOT BE SUPPORTED.

PARAGON INTERNATIONAL INSURANCE LIMITED DOES NOT ANTICIPATE ANY CHANGE IN MORTALITY CHARGES OR ADMINISTRATIVE FEES OVER THE PERIOD OF ANY PROPOSED CONTRACT; HOWEVER IT DOES NOT GUARANTEE THAT CHARGES WILL NOT CHANGE.

PARAGON INTERNATIONAL INSURANCE LIMITED DOES NOT GUARANTEE AND HAS NO RESPONSIBILITY FOR INVESTMENT RETURNS.

Plan 1 7 Pay Table

Paragon International Insurance Limited
Male Nonsmoker
Net Investment Return: 10%
Plan 1  7 Pay
AGE Beginning Cash Deposit Ending Cash Year End
Face Amount		 Amount if
fully taxable
50 0 600,000 655,128 9,834,453 643,200
51 655,128 600,000 1,373,179 9,834,453 1,332,710
52 1,373,179 600,000 2,163,180 9,834,453 2,071,866
53 2,163,180 600,000 3,034,314 9,834,453 2,864,240
54 3,034,314 600,000 3,996,753 9,834,453 3,713,665
55 3,996,753 0 4,386,911 9,834,453 3,981,049
56 4,386,911 0 4,816,919 9,834,453 4,267,685
57 4,816,919 0 5,291,570 9,834,453 4,574,958
58 5,291,570 0 5,816,136 9,834,453 4,904,355
59 5,816,136 0 6,396,724 9,834,453 5,257,468
60 6,396,724 0 7,040,027 9,834,453 5,636,006
61 7,040,027 0 7,753,826 10,273,819 6,041,799
62 7,753,826 0 8,541,908 11,104,480 6,476,808
63 8,541,908 0 9,407,677 11,994,789 6,943,138
64 9,407,677 0 10,358,695 12,948,368 7,443,044
65 10,358,695 0 11,403,664 14,112,035 7,978,943
66 11,403,664 0 12,551,434 15,375,507 8,553,427
67 12,551,434 0 13,812,208 16,747,302 9,169,274
68 13,812,208 0 15,197,221 18,236,665 9,829,462
69 15,197,221 0 16,719,294 19,854,162 10,537,183
70 16,719,294 0 18,392,331 21,381,085 11,295,860
71 18,392,331 0 20,237,989 23,020,713 12,109,162
72 20,237,989 0 22,276,185 24,782,255 12,981,022
73 22,276,185 0 24,530,521 26,676,942 13,915,655
74 24,530,521 0 27,028,030 28,717,282 14,917,582
75 27,028,030 0 29,800,303 31,662,822 15,991,648
76 29,800,303 0 32,847,391 34,900,353 17,143,047
77 32,847,391 0 36,194,594 38,456,756 18,377,347
78 36,194,594 0 39,868,988 42,360,800 19,700,515
79 39,868,988 0 43,900,089 46,643,845 21,118,953
80 43,900,089 0 48,320,294 51,340,313 22,639,517
81 48,320,294 0 53,164,941 56,487,750 24,269,562
82 53,164,941 0 58,470,756 62,125,178 26,016,971
83 58,470,756 0 64,277,304 68,294,635 27,890,193
84 64,277,304 0 70,624,415 75,038,441 29,898,287
85 70,624,415 0 77,554,673 82,401,840 32,050,963
86 77,554,673 0 85,113,521 90,433,116 34,358,633
87 85,113,521 0 93,347,032 99,181,221 36,832,454
88 93,347,032 0 102,307,544 108,701,765 39,484,391
89 102,307,544 0 112,059,867 119,063,609 42,327,267
90 112,059,867 0 122,681,762 130,349,372 45,374,830
91 122,681,762 0 134,026,365 142,403,013 48,641,818
92 134,026,365 0 146,091,960 155,222,708 52,144,0291
93 146,091,960 0 158,808,348 168,733,870 55,898,399
94 158,808,348 0 172,029,187 172,029,187 59,923,084
95 172,029,187 0 189,428,949 189,428,949 64,237,546
96 189,428,949 0 209,508,418 209,508,418 68,862,649
97 209,508,418 0 231,716,310 231,716,310 73,820,760
98 231,716,310 0 256,278,239 259,522,267 76,135,855

The variable annuity can accumulate on a tax-deferred basis until age 85, at which time it must be converted to a standard, fixed payment annuity. However, the annuity can be surrendered in whole or in part at any time prior to that date. Once annuity payments commence, they are treated for U.S. tax purposes partly as returns of capital and partly as ordinary income.