SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 1 (File No. 811-07355) [X]
---------
(Check appropriate box or boxes)
IDS LIFE VARIABLE ACCOUNT 10
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(Exact Name of Registrant)
IDS Life Insurance Company
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(Name of Depositor)
IDS Tower 10, Minneapolis, MN 55440-0010
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(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (612) 671-3678
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Mary Ellyn Minenko, IDS Tower 10, Minneapolis, MN 55440-0010
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective: as soon as possible.
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8 (a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission acting pursuant to Section 8 (a) may
determine.
<PAGE>
Prospectus
[_____], 1999
AXP Retirement Advisor Variable Annuity
Individual flexible premium deferred combination fixed/variable annuity.
IDS Life Variable Account 10
Issued by: IDS Life Insurance Company (IDS Life)
IDS Tower 10
Minneapolis, MN 55440-0010
Telephone: 800-437-0602
http://www.americanexpress.com/advisors
This prospectus contains information that you should know before investing. You
also will receive the following prospectuses:
o IDS Life Retirement Annuity Mutual Funds; o New Fund;
o New Fund; o New Fund;
o New Fund; o New Fund;
o New Fund; o New Fund;
o New Fund; o New Fund;
o New Fund; o New Fund;
o New Fund; o New Fund;
o New Fund; o New Fund;
o New Fund; o New Fund;
o New Fund; o New Fund;
o New Fund; o New Fund; and
o New Fund
<PAGE>
Please read the prospectuses carefully and keep them for future reference. This
contract is available for qualified and nonqualified plans.
The Securities and Exchange Commission (SEC) has not approved or disapproved
these securities or passed upon the adequacy or accuracy of this prospectus. Any
representation to the contrary is a criminal offense.
An investment in this contract is not a deposit of a bank or financial
institution and is not insured or guaranteed by the federal deposit insurance
corporation or any other government agency. An investment in this contract
involves investment risk including the possible loss of principal.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC and is available without charge by contacting IDS Life at the telephone
number above or by completing and sending the order form on the last page of
this prospectus. The table of contents of the SAI is on the last page of this
prospectus.
<PAGE>
Table of Contents
Key Terms
The Contract in Brief
Expense Summary
Condensed Financial Information (Unaudited)
Financial Statements
Performance Information
The Variable Account and The Funds
The Fixed Account
Buying Your Contract
Charges
Valuing Your Investment
Making the Most of Your Contract
Surrenders
TSA -- Special Surrender Provisions
Changing Ownership
Benefits in Case of Death
The Annuity Payout Period
Taxes
Voting Rights
Substitution of Investments
About the Service Providers
Year 2000
Table of Contents of the Statement of Additional Information
<PAGE>
Key Terms
These terms can help you understand details about your contract.
Accumulation unit -- A measure of the value of each subaccount before annuity
payouts begin.
Annuitant -- The person on whose life or life expectancy the annuity payouts are
based.
Annuity payouts -- An amount paid at regular intervals under one of several
plans.
Beneficiary -- The person you designate to receive annuity benefits in case of
the owner's or annuitant's death while the contract is in force and before
annuity payouts begin.
Close of business -- When the New York Stock Exchange (NYSE) closes, normally 4
p.m. Eastern time.
Contract value -- The total value of your contract before we deduct any
applicable charges.
Contract year -- A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
Fixed account -- An account to which you may allocate purchase payments. Amounts
you allocate to this account earn interest at rates that we declare
periodically.
Funds -- Mutual funds and/or portfolios that are investment options under your
contract, each with a different investment objective. You may allocate your
purchase payments into subaccounts investing in shares of any or all of these
funds.
Owner (you, your) -- The person who controls the contract (decides on investment
allocations, transfers, payout options, etc.). Usually, but not always, the
owner is also the annuitant. The owner is responsible for taxes, regardless of
whether he or she receives the contract's benefits.
Qualified annuity -- A contract that you purchase for one of the following
retirement plans that is subject to applicable federal law and any rules of the
plan itself:
o Individual Retirement Annuities (IRAs)
o Simplified Employee Pension (SEP) plans
o Section 401(k) plans
o Custodial and trusteed pension and profit sharing plans
o Tax-Sheltered Annuities (TSAs)
All other contracts are considered nonqualified annuities.
Settlement date -- The date when annuity payouts are scheduled to begin.
Surrender value -- The amount you are entitled to receive if you make a full
surrender from your contract. It is the contract value minus any applicable
charges.
Valuation date -- Any normal business day, Monday through Friday, that the NYSE
is open. Each valuation date ends at the close of business. We calculate the
value of each subaccount at the close of business on each valuation date.
Variable account -- Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one fund. The value of your
investment in each subaccount changes with the performance of the particular
fund.
<PAGE>
The Contract in Brief
Purpose: The purpose of the contract is to allow you
to accumulate money for retirement. You do
this by making one or more investments
(purchase payments) that may earn returns
that increase the value of the contract. The
contract provides lifetime or other forms of
payouts beginning at a specified date (the
settlement date).
Free look period: You may return your contract to our office
within 10 days after it is delivered to you
and receive a full refund of the contract
value, less any purchase payment credits up
to the maximum surrender charge. (See
"Valuing Your Investment - Purchase payment
credits.") We will not deduct any other
charges. However, you bear the investment
risk from the time of purchase until you
return the contract; the refund amount may
be more or less than the payment you made.
(Exception: If the law requires, we will
refund all of your purchase payments.)
Accounts: Currently, you may allocate your purchase
payments among any or all of:
o the subaccounts, each of which invests
in a fund with a particular investment
objective. The value of each subaccount
varies with the performance of the
particular fund in which it invests. We
cannot guarantee that the value at the
settlement date will equal or exceed the
total purchase payments you allocate to
the subaccounts. (p. __)
o the fixed account, which earns interest
at a rate that we adjust periodically.
(p. __)
Buying your contract: We will help you complete and submit an
application. Applications are subject to
acceptance at our office. You may buy a
nonqualified annuity or a qualified annuity.
After your initial purchase payment, you
have the option of making additional
purchase payments in the future.
o Minimum initial purchase payment --
$2,000 ($1,000 for qualified annuities)
unless you pay in installments by means
of a bank authorization or under a group
billing arrangement such as a payroll
deduction.
o Minimum additional purchase payment
-- $50.
o Minimum installment purchase payment --
$50 monthly; $23.08 biweekly (scheduled
payment plan billing).
o Maximum first-year purchase payments --
$100,000 to $1,000,000 depending on your
age.
o Maximum purchase payment for each
subsequent year -- $50,000 to $100,000
depending upon your age. (p. __)
Transfers: Subject to certain restrictions you currently may
redistribute your money among the subaccounts and the
fixed account without charge at any time until annuity
payouts begin, and once per contract year among the
subaccounts after annuity payouts begin. You may
establish automated transfers among the fixed account
and subaccounts. Fixed account transfers are subject to
special restrictions. (p. __)
Surrenders: You may surrender all or part of your contract value at
any time before the settlement date. You also may
establish automated partial surrenders. Surrenders may
be subject to charges and tax penalties (including a 10%
IRS penalty if you surrender prior to your reaching age
59 1/2) and may have other tax consequences; also,
certain restrictions apply. (p.--)
Changing ownership: You may change ownership of a nonqualified annuity by
written instruction, but this may have federal income
tax consequences. Restrictions apply to changing
ownership of a qualified annuity. (p. __)
Benefits in case
of death: If you or the annuitant die before annuity payouts
begin, we will pay the beneficiary an amount at least
equal to the contract value. (p. __)
Annuity Payouts: You can apply your contract value to an annuity payout
plan that begins on the settlement date. You may choose
from a variety of plans to make sure that payouts
continue as long as you like. If you purchased a
qualified annuity, the payout schedule must meet the
requirements of the qualified plan. We can make payouts
on a fixed or variable basis, or both. Total monthly
payouts may include amounts from each subaccount and
the fixed account. During the annuity payout period, you
cannot be invested in more than five subaccounts at any
one time unless we agree otherwise. (p. __)
Taxes: Generally, your contract grows tax-deferred until you
surrender it or begin to receive payouts. (Under certain
circumstances, IRS penalty taxes may apply.) Even if you
direct payouts to someone else, you will be taxed on the
income if you are the owner. (p. __)
Charges:
o $30 annual contract administrative charge;
o for nonqualified annuities a 0.95% mortality and
expense risk fee;
o for qualified annuities a 0.75% mortality and expense
risk fee;
o surrender charge;
o any premium taxes that may be imposed on us by state
or local governments(currently, we deduct any
applicable premium tax when you make a full surrender
or when annuity payouts begin); and
o the operating expenses of the funds.
<PAGE>
Expense Summary
The purpose of the following information is to help you understand the various
costs and expenses associated with your contract.
You pay no sales charge when you purchase your contract. We show all costs that
you bear directly or indirectly for the subaccounts and funds below. Some
expenses may vary as we explain under "Charges."
Contract owner expenses:
Surrender charge: contingent deferred sales charge as a percentage of
purchase payment surrendered. The owner selects either a seven year or
ten year surrender charge schedule at the time of application.
<TABLE>
<CAPTION>
Seven year schedule Ten year schedule
Years from purchase payment Years from purchase
<S> <C> <C> <C> <C>
receipt Surrender charge percentage payment receipt Surrender charge percentage
1 7% 1 8%
2 7 2 8
3 7 3 8
4 6 4 7
5 5 4 7
6 4 6 6
7 2 7 5
Thereafter 0 8 4
9 3
10 2
Thereafter 0
Annual contract administrative charge $30*
* We will waive this charge when your contract value, or total purchase
payments less any payments surrendered, is $50,000 or more on the current
contract anniversary.
</TABLE>
Annual subaccount expenses (as a percentage of average subaccount value):
Mortality and expense risk fee 0.95% for nonqualified annuities
0.75% for qualified annuities
<TABLE>
<CAPTION>
Annual operating expenses of the funds (as a percentage of average daily net assets)
<S> <C> <C> <C> <C>
Management 12b-1 Other
Fees Fees Expenses Total
IDS Life Aggressive Growth Fund
IDS Life Capital Resource Fund
IDS Life Global Yield Fund
IDS Life Growth Dimensions Fund
IDS Life Income Advantage Fund
IDS Life International Equity Fund
IDS Life Managed Fund IDS Life Moneyshare Fund
IDS Life Special Income Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Examples:*
You would pay the following expenses on a $1,000 investment in a nonqualified
annuity with a seven year surrender charge schedule and a 0.95% mortality and
expense risk fee assuming a 5% annual return and....
<S> <C> <C>
no surrender or selection
a full surrender at the end of an annuity payout plan at the
of each time period end each time period
1 year 3 years 1 year 3 years
IDS Life Aggressive Growth Fund
IDS Life Capital Resource Fund
IDS Life Global Yield Fund
IDS Life Growth Dimensions Fund
IDS Life Income Advantage Fund
IDS Life International Equity Fund
IDS Life Managed Fund
IDS Life Moneyshare Fund
IDS Life Special Income Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
You would pay the following expenses on a $1,000 investment in a nonqualified
annuity with a ten year surrender charge schedule and a 0.95% mortality and
expense risk fee assuming a 5% annual return and....
<S> <C> <C>
no surrender or selection
a full surrender at the end of an annuity payout plan at the
of each time period end of each time period
1 year 3 years 1 year 3 years
IDS Life Aggressive Growth Fund
IDS Life Capital Resource Fund
IDS Life Global Yield Fund
IDS Life Growth Dimensions Fund
IDS Life Income Advantage Fund
IDS Life International Equity Fund
IDS Life Managed Fund
IDS Life Moneyshare Fund
IDS Life Special Income Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
You would pay the following expenses on a $1,000 investment in a qualified
annuity with a seven year surrender charge schedule and a 0.75% mortality and
expense risk fee assuming a 5% annual return and....
<S> <C> <C>
no surrender or selection
a full surrender at the end of an annuity payout plan at the end of
of each time period each time period
1 year 3 years 1 year 3 years
IDS Life Aggressive Growth Fund
IDS Life Capital Resource Fund
IDS Life Global Yield Fund
IDS Life Growth Dimensions Fund
IDS Life Income Advantage Fund
IDS Life International Equity Fund
IDS Life Managed Fund
IDS Life Moneyshare Fund
IDS Life Special Income Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
You would pay the following expenses on a $1,000 investment in a qualified
annuity with a ten year surrender charge schedule and a 0.75% mortality and
expense risk fee assuming a 5% annual return and....
<S> <C> <C>
no surrender or selection
a full surrender at the end of an annuity payout plan at the end of
of each time period each time period
1 year 3 years 1 year 3 years
IDS Life Aggressive Growth Fund
IDS Life Capital Resource Fund
IDS Life Global Yield Fund
IDS Life Growth Dimensions Fund
IDS Life Income Advantage Fund
IDS Life International Equity Fund
IDS Life Managed Fund
IDS Life Moneyshare Fund
IDS Life Special Income Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
* In these examples, the $30 contract administrative charge is approximated as
a [___]% charge based on our estimated average contract size. Premium taxes
imposed by some state and local governments are not reflected in this table.
We entered into certain arrangements under which we are compensated by the
funds' advisors and/or distributors for the administrative services we
provide to the funds.
</TABLE>
You should not consider these examples as representations of past or future
expenses. Actual expenses may be more or less than those shown.
<PAGE>
Condensed Financial Information (Unaudited)
The following tables give per-unit information about the financial history of
each subaccount. We have not provided this information for the subaccounts
because they are new and do not have any history.
[To be inserted by accounting.]
<PAGE>
Financial Statements
You can find our audited financial statements and the audited financial
statements of the subaccounts in the SAI.
Performance Information
Performance information for the subaccounts may appear from time to time in
advertisements or sales literature. This information reflects the performance of
a hypothetical investment in a particular subaccount during a specified time
period. Currently, we do not provide any performance information for the
subaccounts because they are new and have not had any activity to date. However,
we show performance from the commencement date of the funds as if the contract
existed at that time. Although we base performance figures on historical
earnings, past performance does not guarantee future results.
We include non-recurring charges (such as surrender charges) in total return
figures, but not in yield quotations. Excluding non-recurring charges in yield
calculations increases the reported value.
Total return figures reflect deduction of all applicable charges, including:
o the contract administrative charge,
o mortality and expense risk fee, and
o surrender charge (assuming a surrender at the end of the illustrated
period).
We also may make optional total return quotations that do not reflect a
surrender charge deduction (assuming no surrender). Total return quotations may
be shown by means of schedules, charts or graphs.
Average annual total return is the average annual compounded rate of return of
the investment over a period of one, five and ten years (or up to the life of
the subaccount if it is less than ten years old).
Cumulative total return is the cumulative change in the value of an investment
over a specified time period. We assume that income earned by the investment is
reinvested. Cumulative total return generally will be higher than average annual
total return.
Annualized simple yield (for subaccounts investing in money market funds)
"annualizes" the income generated by the investment over a given seven-day
period. That is, we assume the amount of income generated by the investment
during the period will be generated each seven-day period for a year. We show
this as a percentage of the investment.
Annualized compound yield (for subaccounts investing in money market funds) is
calculated like simple yield except that we assume the income is reinvested when
we annualize it. Compound yield will be higher than the simple yield because of
the compounding effect of the assumed reinvestment.
Annualized yield (for subaccounts investing in income funds) divides the net
investment income (income less expenses) for each accumulation unit during a
given 30-day period by the value of the unit on the last day of the period. We
then convert the result to an annual percentage. You should consider performance
information in light of the investment objectives, policies, characteristics and
quality of the fund in which the subaccount invests and the market conditions
during the specified time period. Advertised yields and total return figures
include charges that reduce advertised performance. Therefore, you should not
compare subaccount performance to that of mutual funds that sell their shares
directly to the public. (See the SAI for a further description of methods used
to determine total return and yield.)
If you would like additional information about actual performance, please
contact us.
<PAGE>
The Variable Account and The Funds
<TABLE>
<CAPTION>
You may allocate payments to any or all the subaccounts of the variable account
that invest in shares of the following funds:
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Investment Advisor or
Subaccount Investing in Investment Objectives and Policies: Manager
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? IDS Life Aggressive Growth Objective: capital appreciation. Invests primarily IDS Life, investment
?? Fund in common stocks of small-and medium-size companies. manager; American Express
Financial
Corporation
(AEFC)
investment
advisor.
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? IDS Life Capital Resource Objective: capital appreciation. Invests primarily IDS Life, investment
?? Fund in U.S. common stocks. manager; AEFC investment
advisor.
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? IDS Life Global Yield Fund Objective: high total return through income and IDS Life, investment
?? growth of capital. Invests primarily in debt manager; AEFC investment
securities of U.S. and foreign issuers. advisor.
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? IDS Life Growth Dimensions Objective: long-term growth of capital. Invests IDS Life, investment
?? Fund primarily in common stocks of U.S. and foreign manager; AEFC investment
companies showing potential for significant growth. advisor.
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? IDS Life Income Advantage Objective: high current income, with capital growth IDS Life, investment
?? Fund as a secondary objective. Invests primarily in manager; AEFC investment
long-term, high-yielding, high-risk debt securities advisor.
below investment grade issued by U.S. and foreign
corporations.
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? IDS Life International Objective: capital appreciation. Invests primarily IDS Life, investment
?? Equity Fund in common stock of foreign issuers. manager; AEFC investment
advisor.1
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? IDS Life Managed Fund Objective: maximum total investment return through IDS Life, investment
?? a combination of capital growth and current income. manager; AEFC investment
Invests primarily in stocks, convertible advisor.
securities, bonds and money market instruments.
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? IDS Life Moneyshare Fund Objective: maximum current income consistent with IDS Life, investment
?? liquidity and conservation of capital. Invests in manager; AEFC investment
money market securities. advisor.
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? IDS Life Special Income Objective: high level of current income while IDS Life, investment
?? Fund conserving the value of the investment for the manager; AEFC investment
longest time period. Invests primarily in advisor.
investment-grade bonds.
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? New Fund
??
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? New Fund
??
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? New Fund
??
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? New Fund
??
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? New Fund
??
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? New Fund
??
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? New Fund
??
- ------------------------------------------------------------------------------------------------------------------------------
1 American Express Asset Management International, Inc., a wholly-owned
subsidiary of AEFC, is the sub-investment advisor for IDS Life International
Equity Fund.
</TABLE>
[Managers for the new funds to be filed by amendment.]
The investment objectives and policies of some of the funds are similar to the
investment objectives and policies of other mutual funds that the investment
advisor or its affiliates manage. Although the objectives and policies may be
similar, each fund will have its own portfolio holdings and its own fees and
expenses. Accordingly, each fund will have its own investment results.
The investment managers and advisors cannot guarantee that the funds will meet
their investment objectives. Please read the funds' prospectuses for facts you
should know before investing. These prospectuses are available by contacting us
at the address or telephone number on the first page of this prospectus.
All funds are available to serve as the underlying investments for variable
annuities. Some funds also are available to serve as investment options for
variable life insurance policies and qualified plans. It is possible that in the
future, it may be disadvantageous for variable annuity accounts and variable
life insurance accounts and/or qualified plans to invest in the available funds
simultaneously.
Although the insurance company and the funds do not currently foresee any such
disadvantages, the boards of directors or trustees of the appropriate funds will
monitor events in order to identify any material conflicts between annuity
owners, policy owners and qualified plans and to determine what action, if any,
should be taken in response to a conflict. If a board were to conclude that it
should establish separate funds for the variable annuity, variable life
insurance and qualified plan accounts, you would not bear any expenses
associated with establishing separate funds. Please refer to the fund
prospectuses for risk disclosure regarding simultaneous investments by variable
annuity, variable life insurance and qualified plan accounts.
The IRS issued final regulations relating to the diversification requirements
under Section 817(h) of the Internal Revenue Code of 1986, as amended (the
Code). Each fund intends to comply with these requirements.
The variable account was established under Minnesota law on Aug. 23, 1995 and
the subaccounts are registered together as a single unit investment trust under
the Investment Company Act of 1940 (the 1940 Act). This registration does not
involve any supervision of our management or investment practices and policies
by the SEC. All obligations arising under the contracts are general obligations
of IDS Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
The U.S. Treasury and the Internal Revenue Service (IRS) indicated that they may
provide additional guidance on investment control. This concerns how many
variable subaccounts an insurance company may offer and how many exchanges among
subaccounts it may allow before the contract owner would be currently taxed on
income earned within subaccount assets. At this time, we do not know what the
additional guidance will be or when action will be taken. We reserve the right
to modify the contract, as necessary, so that the owner will not be subject to
current taxation as the owner of the subaccount assets.
We intend to comply with all federal tax laws so that the contract continues to
qualify as an annuity for federal income tax purposes. We reserve the right to
modify the contract as necessary to comply with any new tax laws.
<PAGE>
The Fixed Account
You also may allocate purchase payments to the fixed account. We back the
principal and interest guarantees relating to the fixed account. The value of
the fixed account increases as we credit interest to the account. Purchase
payments and transfers to the fixed account become part of our general account.
We credit interest daily and compound it annually. We will change the interest
rates from time to time at our discretion.
Interests in the fixed account are not required to be registered with the SEC.
The SEC staff does not review the disclosures in this prospectus on the fixed
account. Disclosures regarding the fixed account, however, may be subject to
certain generally applicable provisions of the federal securities laws relating
to the accuracy and completeness of statements made in prospectuses. (See
"Making the Most of Your Contract -- Transfer policies" for restrictions on
transfers involving the fixed account.)
<PAGE>
Buying Your Contract
You can fill out an application and send it along with your initial purchase
payment to our office. As the owner, you have all rights and may receive all
benefits under the contract. You can own a nonqualified annuity in joint tenancy
with rights of survivorship only in spousal situations. You cannot own a
qualified annuity in joint tenancy. You can buy a contract or become an
annuitant if you are 90 or younger.
When you apply, you may select:
o the length of the surrender charge period (seven or ten years);
o the fixed account and/or subaccounts in which you want to invest;
o how you want to make purchase payments; and
o a beneficiary.
The contract provides for allocation of purchase payments to the subaccounts of
the variable account and/or to the fixed account in even 1% increments.
If your application is complete, we will process it and apply your purchase
payment to the fixed account and subaccounts you selected within two business
days after we receive it at our office. If we accept your application, we will
send you a contract. If we cannot accept your application within five business
days, we will decline it and return your payment. We will credit additional
purchase payments you make to your accounts on the valuation date we receive
them. We will value the additional payments at the next accumulation unit value
calculated after we receive your payments at our office.
The settlement date
Annuity payouts are scheduled to begin on the settlement date. When we process
your application, we will establish the settlement date to the maximum age or
date described below. You can also select a date within the maximum limits. You
can align this date with your actual retirement from a job, or it can be a
different future date, depending on your needs and goals and on certain
restrictions. You also can change the date, provided you send us written
instructions at least 30 days before annuity payouts begin.
For nonqualified annuities, the settlement date must be:
o no earlier than the 60th day after the contract's effective date; and
o no later than the annuitant's 85th birthday or the 10th contract
anniversary, if purchased after age 75. (In Pennsylvania, the maximum
settlement date ranges from age 85 to 96 based on the annuitant's age when
we issue the contract. See contract for details.)
For qualified annuities, to avoid IRS penalty taxes, the settlement date
generally must be:
o on or after the date the annuitant reaches age 59 1/2; and
o for IRAs and SEPs, by April 1 of the year following the calendar year when
the annuitant reaches age 70 1/2; or
o for all other qualified annuities by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2, or, if later retires
(except that 5% business owners may not select a settlement date that is
later than April 1 of the year following the calendar year when they reach
age 70 1/2).
If you take the minimum IRA or TSA distributions as required by the Code from
another tax-qualified investment, or in the form of partial surrenders from this
contract, annuity payouts can start as late as the annuitant's 85th birthday or
the 10th contract anniversary, if later. (In Pennsylvania, the annuity payout
ranges from age 85 to 96 based on the annuitant's age when the contract is
issued. See contract for details.)
Beneficiary
If death benefits become payable before the settlement date (while the contract
is in force and before annuity payouts begin), we will pay your named
beneficiary all or part of the contract value. If there is no named beneficiary,
then you or your estate will be the beneficiary. (See "Benefits in Case of
Death" for more about beneficiaries.)
Purchase payments
Minimum allowable purchase payments
If paying by installments* If paying by any other method:
under a scheduled payment
plan: $1,000 initial payment for qualified plans
$23.08 biweekly, or $2,000 initial payment for nonqualified plans
$50 per month $50 for any additional payments
* Installments must total at least $600 in the first year. If you do not
make any purchase payments for 24 months, and your previous payments total
$600 or less, we have the right to give you 30 days' written notice and
pay you the total value of your contract in a lump sum. This right does
not apply to contracts sold to New Jersey residents.
Maximum allowable purchase payments** based on the age of you or the
annuitant, whoever is older, on the effective date of the contract:
For the first year: For each subsequent year:
$100,000 for ages 86 to 90 $50,000 for ages 86-90
$1,000,000 up to age 85 $100,000 up to age 85
**These limits apply in total to all IDS Life annuities you own. We reserve
the right to increase maximum limits. For qualified annuities the
qualified plan's limits on annual contributions also apply.
We reserve the right to not accept purchase payments allocated to the fixed
account for twelve months following either:
1. a partial surrender from the fixed account; or
2. a lump sum transfer from the fixed account to a subaccount.
How to make purchase payments
1
By letter Send your check along with your name and contract number to:
Regular mail:
IDS Life Insurance Company
Box 74
Minneapolis, MN 55440-0074
Express mail:
IDS Life Insurance Company
733 Marquette Avenue
Minneapolis, MN 55402
2 We can help you set up:
By Scheduled
payment plan
o an automatic payroll deduction, salary reduction or other group
billing arrangement; or
o a bank authorization.
<PAGE>
Charges
Contract administrative charge
We charge this fee for establishing and maintaining your records. We deduct $30
from the contract value on your contract anniversary at the end of each contract
year. We prorate this charge among the subaccounts and the fixed account in the
same proportion your interest in each account bears to your total contract
value.
We will waive this charge when your contract value, or total purchase payments
less any payments surrendered, is $50,000 or more on the current contract
anniversary.
If you surrender your contract, we will deduct the charge at the time of
surrender regardless of the contract value or purchase payments made. We cannot
increase the annual contract administrative charge and it does not apply after
annuity payouts begin or when we pay death benefits.
Mortality and expense risk fee
We charge this fee daily to the subaccounts. The unit values of your subaccounts
reflect this fee. For nonqualified annuities the fee totals 0.95% of the average
daily net assets on an annual basis. For qualified annuities the fee totals
0.75% of the average daily net assets on an annual basis. This fee covers the
mortality and expense risk that we assume. Approximately two-thirds of this
amount is for our assumption of mortality risk, and one-third is for our
assumption of expense risk. This fee does not apply to the fixed account.
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific annuitant lives and no matter how long our entire
group of annuitants live. If, as a group, annuitants outlive the life expectancy
we assumed in our actuarial tables, then we must take money from our general
assets to meet our obligations. If, as a group, annuitants do not live as long
as expected, we could profit from the mortality risk fee.
Expense risk arises because we cannot increase the contract administrative
charge and this charge may not cover our expenses. We would have to make up any
deficit from our general assets.
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
o first, to the extent possible, the subaccounts pay this fee from any
dividends distributed from the funds in which they invest;
o then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses. We do not expect that
the surrender charge, discussed in the following paragraphs, will cover sales
and distribution expenses.
Surrender charge
If you surrender all or part of your contract, you may be subject to a surrender
charge. A surrender charge applies if all or part of the surrender amount is
from purchase payments we received within seven (7) or ten (10) years before
surrender. You select the surrender charge period at the time of your
application for the contract. The surrender charge percentages that apply to you
are shown in your contract.
For purposes of calculating any surrender charge, we treat amounts surrendered
from your contract value in the following order:
1. First, we surrender any contract earnings (contract value less purchase
payments received and not previously surrendered). We do not assess a
surrender charge on contract earnings.
NOTE: We determine contract earnings by looking at the entire contract value,
not the earnings of any particular subaccount or the fixed account.
2. Next, in each contract year, we surrender amounts totaling up to 10% of
your prior contract anniversary contract value, but only to the extent not
included and surrendered in Number 1 above. (Your initial purchase payment
is considered the prior contract anniversary contract value during the
first contract year.) We do not assess a surrender charge on this amount.
3. Next we surrender purchase payments received prior to the surrender charge
period you selected and shown in your contract. We do not assess a
surrender charge on these purchase payments.
4. Finally, if necessary, we surrender purchase payments received that are
still within the surrender charge period you selected and shown in your
contract. We surrender these payments on a first-in, first-out basis. We do
assess a surrender charge on these payments.
We determine your surrender charge by multiplying each of your payments
surrendered by the applicable surrender charge percentage, and then adding the
total surrender charges.
<TABLE>
<CAPTION>
The surrender charge percentage depends on the number of years since you made
the payments that are surrendered, depending on the schedule you selected:
Seven year schedule Ten year schedule
<S> <C> <C> <C>
Years from purchase payment Years from purchase
receipt Surrender charge percentage payment receipt Surrender charge percentage
1 7% 1 8%
2 7 2 8
3 7 3 8
4 6 4 7
5 5 4 7
6 4 6 6
7 2 7 5
Thereafter 0 8 4
9 3
10 2
Thereafter 0
Surrender charge calculation example
[To be filed by amendment.]
</TABLE>
For a partial surrender that is subject to a surrender charge, the amount we
actually surrender from your contract will be the amount you request plus any
applicable surrender charge. We apply the surrender charge to this total amount.
We pay you the amount you requested. If you make a full surrender of your
contract, we also will deduct the $30 contract administrative charge.
Waiver of surrender charges
We do not assess surrender charges for:
o surrenders of any contract earnings;
o amounts totaling up to 10% of your prior contract anniversary contract
value to the extent it exceeds contract earnings;
o required minimum distributions from a qualified annuity (for those amounts
required to be distributed from the contract described in this prospectus);
o contracts settled using an annuity payout plan;
o amounts we refund to you during the free look period*;
o death benefits*; and
o surrenders you make under your contract's "Waiver of Surrender Charges for
Nursing Home Confinement" provision*. To the extent permitted by state law,
this provision applies when you are under age 76 on the date that we issue
the contract. We will waive surrender charges that we normally assess upon
full or partial surrender if you provide proof satisfactory to us that, as
of the date you request the surrender, you or the annuitant are confined to
a nursing home and have been for the prior 90 days and the confinement
began after the contract date. (See your contract for additional conditions
and restrictions on this waiver.)
* However, we will reverse certain purchase payment credits up to the maximum
surrender charge. (See "Valuing Your Investment - Purchase payment credits.")
Other information on charges: AEFC makes certain custodial services available to
some custodial and trusteed pension and profit sharing plans and 401(k) plans
funded by our annuities. Fees for these services start at $30 per calendar year
per participant. AEFC will charge a termination fee for owners under age 59 1/2
(fee waived in case of death or disability).
Possible group reductions: In some cases we may incur lower sales and
administrative expenses due to the size of the group, the average contribution
and the use of group enrollment procedures. In such cases, we may be able to
reduce or eliminate the contract administrative and surrender charges. However,
we expect this to occur infrequently.
Premium taxes
Certain state and local governments impose premium taxes (up to 3.5%). These
taxes depend upon the state of residence or the state in which the contract was
sold. In some cases, we deduct premium taxes from your purchase payments before
we allocate them. In other cases, we deduct them when you surrender your
contract or when annuity payouts begin.
<PAGE>
Valuing Your Investment
We value your fixed account and subaccounts as follows:
Fixed account: We value the amounts you allocated to the fixed account directly
in dollars. The fixed account value equals:
o the sum of your purchase payments and transfer amounts allocated to the fixed
account;
o plus any purchase payment credits allocated to the fixed account;
o plus interest credited;
o minus the sum of amounts surrendered (including any applicable surrender
charges) and amounts transferred out; and
o minus any prorated contract administrative charge.
Subaccounts: We convert amounts you allocated to the subaccounts into
accumulation units. Each time you make a purchase payment or transfer amounts
into one of the subaccounts or we apply any purchase payment credits to a
subaccount, we credit a certain number of accumulation units to your contract
for that subaccount. Conversely, each time you take a partial surrender,
transfer amounts out of a subaccount, or we assess a contract administrative
charge, we subtract a certain number of accumulation units from your contract.
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the fund in which the subaccount invests.
The dollar value of each accumulation unit can rise or fall daily depending on
the variable account expenses, performance of the fund and on certain fund
expenses. Here is how we calculate accumulation unit values:
Number of units
To calculate the number of accumulation units for a particular subaccount, we
divide your investment after deduction of any premium taxes, by the current
accumulation unit value.
Accumulation unit value
The current accumulation unit value for each subaccount equals the last value
times the subaccount's current net investment factor.
Net investment factor
We determine the net investment factor by:
o adding the fund's current net asset value per share, plus the per share
amount of any accrued income or capital gain dividends to obtain a current
adjusted net asset value per share; then
o dividing that sum by the previous adjusted net asset value per share; and
o subtracting the percentage factor representing the mortality and expense
risk fee from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
Factors that affect subaccount accumulation units
Accumulation units may change in two ways: in number and in value. Here are th
factors that influence those changes:
The number of accumulation units you own may fluctuate due to:
o additional purchase payments you allocate to the subaccounts;
o any purchase payment credits allocated to the subaccounts;
o transfers into or out of the subaccounts;
o partial surrenders;
o surrender charges; and/or
o prorated portions of the contract administrative charge.
Accumulation unit values will fluctuate due to:
o changes in funds' net asset value;
o dividends distributed to the subaccounts;
o capital gains or losses of funds;
o fund operating expenses; and/or
o mortality and expense risk fees.
Purchase payment credits
We add a credit to your contract in the amount of:
o 1% of each purchase payment received if you elect the ten year surrender
charge schedule for your contract or if your initial purchase payment to
the contract is at least $100,000.
o 2% of each purchase payment received if you elect the ten year surrender
charge schedule for your contract and your initial purchase payment to the
contract is at least $100,000.
We fund the credit from our general account. We do not consider credits to be
"investments" for income tax purposes. (See "Taxes.")
We allocate each credit to your contract value when the applicable purchase
payment is applied to your contract value. We allocate such credits to your
contract value according to allocation instructions in effect for your purchase
payments.
We will reverse credits from the contract value for any purchase payment that is
not honored.
We will reverse from the contract value credits applied within twelve months
preceding: (1) the date of death that results in a lump sum death benefit under
this contract; or (2) a request for surrender charge waiver due to Nursing Home
Confinement, if applicable. The amount returned to you under the free look
provision will not include any credits applied to your contract. In those cases
where we reverse purchase payment credits, we do not assess surrender charges.
However, the amount of the reversal will not exceed the maximum surrender
charge.
<PAGE>
Making the Most of Your Contract
Automated dollar-cost averaging
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, you
might transfer a set amount monthly from a relatively conservative subaccount to
a more aggressive one, or to several others, or from the fixed account to one or
more subaccounts. There is no charge for dollar-cost averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
How dollar-cost averaging works
<TABLE>
<CAPTION>
How dollar-cost averaging works
<S> <C> <C> <C> <C>
By investing an Amount Accumulation unit Number of units
equal number of Month invested value purchased
dollars each month... Jan $100 $20 5.00
Feb 100 18 5.56
you automatically buy Mar 100 17 5.88
more units when the Apr 100 15 6.67
per unit market price May 100 16 6.25
is low... Jun 100 18 5.56
Jul 100 17 5.88
and fewer units when Aug 100 19 5.26
the per unit market Sept 100 21 4.76
price is high. Oct 100 20 5.00
</TABLE>
You paid an average price of only $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success with this
strategy will depend upon your willingness to continue to invest regularly
through periods of low price levels. Dollar-cost averaging can be an effective
way to help meet your long-term goals. For specific features contact us.
Transferring money between accounts
You may transfer money from any one subaccount, or the fixed account, to another
subaccount before annuity payouts begin. (Certain restrictions apply to
transfers involving the fixed account.) We will process your transfer on the
valuation date we receive your request. We will value your transfer at the next
accumulation unit value calculated after we receive your request. There is no
charge for transfers. Before making a transfer, you should consider the risks
involved in switching investments.
We may suspend or modify transfer privileges at any time. Excessive trading
activity can disrupt fund management strategy and increase expenses, which are
borne by all contract owners who allocated purchase payments to the fund
regardless of their transfer activity. We may apply modifications or
restrictions in any reasonable manner to prevent transfers we believe will
disadvantage other contract owners. (For information on transfers after annuity
payouts begin, see "Transfer policies.")
Transfer policies
o Before annuity payouts begin, you may transfer contract values between the
subaccounts, or from the subaccounts to the fixed account at any time.
However, if you made a transfer from the fixed account to the subaccounts,
you may not make a transfer from any subaccount back to the fixed account
until the next contract anniversary.
o You may transfer contract values from the fixed account to the subaccounts
once a year during a 31-day transfer period starting on each contract
anniversary (except for automated transfers, which can be set up at any
time for certain transfer periods subject to certain minimums).
o If we receive your request within 30 days before the contract anniversary
date, the transfer from the fixed account to the subaccounts will be
effective on the anniversary.
o If we receive your request on or within 30 days after the contract
anniversary date, the transfer from the fixed account to the subaccounts
will be effective on the valuation date we receive it.
o We will not accept requests for transfers from the fixed account at any
other time.
o Once annuity payouts begin, you may not make transfers to or from the fixed
account, but you may make transfers once per contract year among the
subaccounts. During the annuity payout period, you cannot invest in more
than five subaccounts at any one time unless we agree otherwise.
<PAGE>
How to request a transfer or surrender
1
By letter Send your name, contract number, Social Security
Number or Taxpayer Identification Number and signed
request for a transfer or surrender to:
Regular mail:
IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN 55440-0010
Express mail:
IDS Life Insurance Company
733 Marquette Avenue
Minneapolis, MN 55402
Minimum amount
Transfers or
surrenders: $250 or entire account balance
Maximum amount
Transfers or
surrenders: Contract value
2 We can help you set up automated transfers among your
By automated transfers subaccounts or fixed account or partial surrenders
and automated partial from the accounts.
surrenders
You can start or stop this service by written request
or other method acceptable to us. You must allow 30
days for us to change any instructions that are
currently in place.
o Automated transfers from the fixed account to any
one of the subaccounts may not exceed an amount
that, if continued, would deplete the fixed
account within 12 months.
o Automated surrenders may be restricted by
applicable law under some contracts.
o You may not make additional purchase payments i
automated partial surrenders are in effect.
o Automated partial surrenders may result in IRS
taxes and penalties on all or part of the amount
surrendered.
Minimum amount
Transfers or
surrenders: $50
3 Call between 7 a.m. and 6 p.m. Central time:
By phone
800-437-0602
TTY service for the hearing impaired:
1-800-285-8846 (toll free)
Minimum amount
Transfers or
surrenders: $250 or entire account balance
Maximum amount
Transfers: Contract value
Surrenders: $50,000
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or surrender requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and tape recording calls. We will not
allow a telephone surrender within 30 days of a phoned-in address change. As
long as we follow the procedures, we (and our affiliates) will not be liable for
any loss resulting from fraudulent requests.
Telephone transfers or surrenders are automatically available. You may request
that telephone transfers or surrenders not be authorized from your account by
writing to us.
<PAGE>
Surrenders
You may surrender all or part of your contract at any time before annuity
payouts begin by sending us a written request or calling us. We will process
your surrender request on the valuation date we receive it. For total
surrenders, we will compute the value of your contract at the next accumulation
unit value calculated after we receive your request. We may ask you to return
the contract. You may have to pay surrender charges (see "Charges") and IRS
taxes and penalties (see "Taxes"). You cannot make surrenders after annuity
payouts begin.
Surrender policies
If you have a balance in more than one account and you request a partial
surrender, we will withdraw money from all your subaccounts and/or the fixed
account in the same proportion as your value in each account correlates to your
total contract value, unless you request otherwise. The minimum contract value
after partial surrender is $600.
Receiving payment
By regular or express mail:
o payable to you;
o mailed to address of record.
NOTE: We will charge you a fee if you request express mail delivery.
By wire:
o request that payment be wired to your bank;
o bank account must be in the same ownership as your contract; and
o pre-authorization required.
For instructions, contact us.
Normally, we will send the payment within seven days after receiving your
request. However, we may postpone the payment if:
- -- the surrender amount includes a purchase payment check that has not cleared;
- -- the NYSE is closed, except for normal holiday and weekend closings;
- -- trading on the NYSE is restricted, according to SEC rules;
- -- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- -- the SEC permits us to delay payment for the protection of security holders.
<PAGE>
TSA -- Special Surrender Provisions
Participants in Tax-Sheltered Annuities: The Code imposes certain restrictions
on your right to receive early distributions from a TSA:
o Distributions attributable to salary reduction contributions (plus
earnings) made after Dec. 31, 1988, or to transfers or rollovers from other
contracts, may be made from the TSA only if:
-- you are at least age 59 1/2;
-- you are disabled as defined in the Code;
-- you separated from the service of the employer who purchased the
contract; or
-- the distribution is because of your death.
o If you encounter a financial hardship (as defined by the Code), you may
receive a distribution of all contract values attributable to salary
reduction contributions made after Dec. 31, 1988, but not the earnings on
them.
o Even though a distribution may be permitted under the above rules, it may
be subject to IRS taxes and penalties (see "Taxes").
o The employer must comply with certain nondiscrimination requirements for
certain types of contributions under a TSA contract to be excluded from
taxable income. You should consult your employer to determine whether the
nondiscrimination rules apply to you.
o The above restrictions on distributions do not affect the availability of
the amount credited to the contract as of Dec. 31, 1988. The restrictions
also do not apply to transfers or exchanges of contract value within the
contract, or to another registered variable annuity contract or investment
vehicle available through the employer.
o If the contract has a loan provision, the right to receive a loan as
described in detail in your contract.
<PAGE>
Changing Ownership
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our office. The change
will become binding upon us when we receive and record it. We will honor any
change of ownership request that we believe is authentic and we will use
reasonable procedures to confirm authenticity. If we follow these procedures, we
will not take any responsibility for the validity of the change.
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (See "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code. However, if the owner is a trust or custodian, or an
employer acting in a similar capacity, ownership of a contract may be
transferred to the annuitant.
<PAGE>
Benefits in Case of Death
We will pay the death benefit to your beneficiary upon the earlier of your death
or the annuitant's death. If a contract has more than one person as the owner,
we will pay benefits upon the first to die of any owner or the annuitant.
If you or the annuitant die before annuity payouts begin while this contract is
in force, we will pay the beneficiary as follows:
If both you and the annuitant are age 80 or younger on the date of death, the
beneficiary receives the greatest of:
o the contract value;
o purchase payments, minus any "adjusted partial surrenders"; or
o the contract value as of the most recent sixth contract anniversary, plus
any purchase payments paid and minus any "adjusted partial surrenders"
since that anniversary.
If either you or the annuitant are age 81 or older on the date of death, the
beneficiary receives the greater of:
o the contract value; or
o purchase payments minus any "adjusted partial surrenders."
Adjusted partial surrenders: We calculate an "adjusted partial surrender" for
each partial surrender as the product of (a) times (b) where
(a) is the ratio of the amount of the partial surrender
(including any applicable surrender charge) to the contract
value on the date of (but prior to) the partial surrender; and
(b) is the death benefit on the date of (but prior to) the
partial surrender.
Example:
[To be filed by amendment.]
If your spouse is sole beneficiary under a nonqualified annuity and you die
before the settlement date, your spouse may keep the contract as owner. To do
this your spouse must, within 60 days after we receive proof of death, give us
written instructions to keep the contract in force.
Under a qualified annuity, if the annuitant dies before the Code requires
distributions to begin, and the spouse is the only beneficiary, the spouse may
keep the contract as owner until the date on which the annuitant would have
reached 70 1/2 or any other date permitted by the Code. To do this, the spouse
must give us written instructions within 60 days after we receive proof of
death.
Payments: Under a nonqualified annuity we will pay the beneficiary in a single
sum unless you give us other written instructions. We must fully distribute the
death benefit within five years of your death. However, the beneficiary may
receive payouts under any annuity payout plan available under this contract if:
o the beneficiary asks us in writing within 60 days after we receive proof of
death; and
o payouts begin no later than one year after your death, or other date as
permitted by the Code; and
o the payout period does not extend beyond the beneficiary's life or life
expectancy.
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value at the next accumulation unit value calculated after our death
claim requirements are fulfilled. We pay interest, if any, from the date of
death at a rate no less than required by law. We will mail payment to the
beneficiary within seven days after our death claim requirements are fulfilled.
(See "Taxes.")
<PAGE>
The Annuity Payout Period
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting at the settlement date. You may select one of the
annuity payout plans outlined below, or we may mutually agree on other payout
arrangements.
The amount available for payouts under the plan you select is the contract value
on your settlement date (less any applicable premium tax). We do not deduct any
surrender charges under the payout plans listed below.
You also decide whether we will make annuity payouts on a fixed or variable
basis, or a combination of fixed and variable. The amounts available to purchase
payouts under the plan you select is the contract value on your settlement date
(less any applicable premium tax). You may reallocate this contract value to the
fixed account to provide fixed dollar payouts and/or among the subaccounts to
provide variable annuity payouts. During the annuity payout period, you cannot
invest in more than five subaccounts at any one time unless we agree otherwise.
Amounts of fixed and variable payouts depend on:
o the annuity payout plan you select;
o the annuitant's age and, in most cases, sex;
o the annuity table in the contract; and
o the amounts you allocated to the accounts at settlement.
In addition, for variable payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the funds will fluctuate. (In the case of fixed
annuities, payouts remain the same from month to month.)
For information with respect to transfers between accounts after annuity payouts
begin, see "Making the Most of Your Contract -- Transfer policies."
Annuity table
The annuity table in your contract shows the amount of the first monthly payment
for each $1,000 of contract value according to the age and, when applicable, the
sex of the annuitant. (Where required by law, we will use a unisex table of
settlement rates.) The table assumes that the contract value is invested at the
beginning of the annuity payout period and earns a 5% rate of return, which is
reinvested and helps to support future payouts.
Substitution of 3.5% table
If you ask us at least 30 days before the settlement date, we will substitute an
annuity table based on an assumed 3.5% investment rate for the 5% table in the
contract. The assumed investment rate affects both the amount of the first
payout and the extent to which subsequent payouts increase or decrease. Using
the 5% table results in a higher initial payment, but later payouts will
increase more slowly when annuity unit values rise and decrease more rapidly
when they decline.
Annuity payout plans
You may choose any one of these annuity payout plans by giving us written
instructions at least 30 days before contract values are used to purchase the
payout plan:
o Plan A -- Life annuity - no refund: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the
annuitant dies after we have made only one monthly payout, we will not make
any more payouts.
o Plan B -- Life annuity with five, 10 or 15 years certain: We make monthly
payouts for a guaranteed payout period of five, 10 or 15 years that you
elect. This election will determine the length of the payout period to the
beneficiary if the annuitant should die before the elected period expires.
We calculate the guaranteed payout period from the settlement date. If the
annuitant outlives the elected guaranteed payout period, we will continue
to make payouts until the annuitant's death.
o Plan C -- Life annuity - installment refund: We make monthly payouts until
the annuitant's death, with our guarantee that payouts will continue for
some period of time. We will make payouts for at least the number of months
determined by dividing the amount applied under this option by the first
monthly payout, whether or not the annuitant is living.
o Plan D -- Joint and last survivor life annuity - no refund: We make monthly
payouts while both the annuitant and a joint annuitant are living. If
either annuitant dies, we will continue to make monthly payouts at the full
amount until the death of the surviving annuitant. Payouts end with the
death of the second annuitant.
o Plan E -- Payouts for a specified period: We make monthly payouts for a
specific payout period of 10 to 30 years that you elect. We will make
payouts only for the number of years specified whether the annuitant is
living or not. Depending on the selected time period, it is foreseeable
that an annuitant can outlive the payout period selected. During the payout
period, you can elect to have us determine the present value of any
remaining variable payouts and pay it to you in a lump sum. A 10% IRS
penalty tax could apply under this payout plan. (See "Taxes.")
Restrictions for some qualified plans: If you purchased a qualified annuity, you
may be required to select a payout plan that provides for payouts:
o over the life of the annuitant;
o over the joint lives of the annuitant and a designated beneficiary;
o for a period not exceeding the life expectancy of the annuitant; or
o for a period not exceeding the joint life expectancies of the annuitant
and a designated beneficiary.
You have the responsibility for electing a payout plan that complies with your
contract and with applicable law.
If we do not receive instructions: You must give us written instructions for the
annuity payouts at least 30 days before the annuitant's settlement date. If you
do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
Contract values that you allocated to the fixed account will provide fixed
dollar payouts and contract values that you allocated among the subaccounts will
provide variable annuity payouts.
If monthly payouts would be less than $20: We will calculate the amount of
monthly payouts at the time the contract value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the contract value to you in a lump sum or to change the
frequency of the payouts.
Death after annuity payouts begin
If you or the annuitant die after annuity payouts begin, we will pay any amount
payable to the beneficiary as provided in the annuity payout plan in effect.
<PAGE>
Taxes
Generally, under current law, any increase in your contract value is taxable to
you only when you receive a payout or surrender (see detailed discussion below).
Any portion of the annuity payouts and any surrenders you request that represent
ordinary income are normally taxable. We will send you a tax information
reporting form for any year in which we made a taxable distribution according to
our records.
Qualified annuities: We designed this contract for use with qualified retirement
plans. Special rules apply to these retirement plans. Your rights to benefits
may be subject to the terms and conditions of these retirement plans regardless
of the terms of the contract.
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions during your life and after your death. You should refer
to your retirement plan or adoption agreement or consult a tax advisor for more
information about your distribution rules.
Annuity payouts under nonqualified annuities: A portion of each payout will be
ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment and will not be taxed. All
amounts you receive after your investment in the contract is fully recovered
will be subject to tax.
Tax law requires that all nonqualified deferred annuities issued by the same
company (and possibly its affiliates) to the same owner during a calendar year
be taxed as a single, unified contract when you take distributions from any one
of those contracts.
Annuity payouts under qualified annuities: Under a qualified annuity, the entire
payout generally is includable as ordinary income and is subject to tax except
to the extent that contributions were made with after-tax dollars. If you or
your employer invested in your contract with deductible or pre-tax dollars as
part of a qualified retirement plan, such amounts are not considered to be part
of your investment in the contract and will be taxed when paid to you.
Surrenders: If you surrender part or all of your contract before your annuity
payouts begin, your surrender payment will be taxed to the extent that the value
of your contract immediately before the surrender exceeds your investment. You
also may have to pay a 10% IRS penalty for surrenders you make before reaching
age 59 1/2 unless certain exceptions apply. For qualified annuities, other
penalties may apply if you surrender your contract before your plan specifies
that you can receive payouts.
Death benefits to beneficiaries: The death benefit under a contract is not
tax-exempt. Any amount your beneficiary receives that represents previously
deferred earnings within the contract is taxable as ordinary income to the
beneficiary in the years he or she receives the payments.
Annuities owned by corporations, partnerships or trusts: For nonqualified
annuities any annual increase in the value of annuities held by such entities
generally will be treated as ordinary income received during that year. This
provision is effective for purchase payments made after Feb. 28, 1986. However,
if the trust was set up for the benefit of a natural person only, the income
will remain tax-deferred.
Penalties: If you receive amounts from your contract before reaching age 59 1/2,
you may have to pay a 10% IRS penalty on the amount includable in your ordinary
income. However, this penalty will not apply to any amount received by you or
your beneficiary:
o because of your death;
o because you become disabled (as defined in the Code);
o if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or
joint lives or life expectancies of you and your beneficiary); or
o if it is allocable to an investment before Aug. 14, 1982 (except for
qualified annuities).
For a qualified annuity, other penalties or exceptions may apply if you
surrender your contract before your plan specifies that payouts can be made.
Withholding, generally: If you receive all or part of the contract value, we may
deduct withholding against the taxable income portion of the payment. Any
withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual tax return.
If the payment is part of an annuity payout plan, we generally compute the
amount of withholding using payroll tables. You may provide us with a statement
of how many exemptions to use in calculating the withholding. As long as you've
provided us with a valid Social Security Number or Taxpayer Identification
Number, you can elect not to have any withholding occur.
If the distribution is any other type of payment (such as a partial or full
surrender), we compute withholding using 10% of the taxable portion. Similar to
above, as long as you have provided us with a valid Social Security Number or
Taxpayer Identification Number, you can elect not to have this withholding
occur.
Some states also impose withholding requirements similar to the federal
withholding described above. If this should be the case, we may deduct state
withholding from any payment from which we deduct federal withholding. The
withholding requirements may differ if we are making payment to a non-U.S.
citizen or if we deliver the payment outside the United States.
Withholding from qualified annuities: If you receive directly all or part of the
contract value from a qualified annuity (except an IRA or SEP), mandatory 20%
federal income tax withholding (and possibly state income tax withholding)
generally will be imposed at the time we make payout. This mandatory withholding
is in place of the elective withholding discussed above. This mandatory
withholding will not be imposed if:
o instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan;
o the payout is one in a series of substantially equal periodic payouts, made
at least annually, over your life or life expectancy (or the joint lives or
life expectancies of you and your designated beneficiary) or over a
specified period of 10 years or more; or
o the payout is a minimum distribution required under the Code.
Payments we make to a surviving spouse instead of being directly rolled over to
an IRA also may be subject to mandatory 20% income tax withholding.
State withholding also may be imposed on taxable distributions.
Transfer of ownership of a nonqualified annuity: If you transfer a nonqualified
annuity without receiving adequate consideration, the transfer is a gift and
also may be a surrender for federal income tax purposes. If the gift is a
currently taxable event for income tax purposes, the original owner will be
taxed on the amount of deferred earnings at the time of the transfer and also
may be subject to the 10% IRS penalty discussed earlier. In this case, the new
owner's investment in the contract will be the value of the contract at the time
of the transfer.
Collateral assignment of a nonqualified annuity: If you collaterally assign or
pledge your contract, earnings on purchase payments you made after Aug. 13, 1982
will be taxed to you like a surrender.
Important: Our discussion of federal tax laws is based upon our understanding of
current interpretations of these laws. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
Tax qualification: We intend that the contract qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any such amendment.
<PAGE>
Voting Rights
As a contract owner with investments in the subaccounts, you may vote on
important fund policies until annuity payouts begin. Once they begin, the person
receiving them has voting rights. We will vote fund shares according to the
instructions of the person with voting rights.
Before annuity payouts begin, the number of votes you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
After annuity payouts begin, the number of votes you have is equal to:
o the reserve held in each subaccount for your contract; divided by
o the net asset value of one share of the applicable fund.
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
<PAGE>
Substitution of Investments
We may substitute the funds in which the subaccounts invest if:
o laws or regulations change,
o existing funds become unavailable, or
o in our judgment, the funds no longer are suitable for the subaccounts.
If any of these situations occur and if we believe it is in the best interest of
persons having voting rights under the contract, we have the right to substitute
funds other than those currently listed in this prospectus.
We may also:
o change the funds in which the subaccounts invest, and
o add additional subaccounts investing in other funds.
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments. We will notify
you of any substitution or change.
<PAGE>
About the Service Providers
Issuer and principal underwriter
IDS Life issues and is the principal underwriter for the contracts. IDS Life is
a stock life insurance company organized in 1957 under the laws of the State of
Minnesota and is located at IDS Tower 10, Minneapolis, MN 55440-0010. IDS Life
conducts a conventional life insurance business.
[Additional distribution and commission information to be filed by amendment.]
Legal proceedings
A number of lawsuits have been filed against life and health insurers in
jurisdictions in which IDS Life and AEFC do business involving insurers' sales
practices, alleged agent misconduct, failure to properly supervise agents and
other matters. IDS Life and AEFC, like other life and health insurers, from time
to time are involved in such litigation. On December 13, 1996, an action
entitled Lesa Benacquisto and Daniel Benacquisto vs. IDS Life Insurance Company
and American Express Financial Corporation was commenced in Minnesota state
court. The action was brought by individuals who replaced an existing IDS Life
insurance policy with a new IDS Life policy. The plaintiffs purport to represent
a class consisting of all persons who replaced existing IDS Life policies with
new policies from and after January 1, 1985. The complaint puts at issue various
alleged sales practices and misrepresentations, alleged breaches of fiduciary
duties and alleged violations of consumer fraud statutes. IDS Life and AEFC
filed an answer to the complaint on February 18, 1997, denying the allegations.
A second action, entitled Arnold Mork, Isabella Mork, Ronald Melchart and Susan
Melchart vs. IDS Life Insurance Company and American Express Financial
Corporation was commenced in the same court on March 21,1997. In addition to
claims that are included in the Benacquisto lawsuit, the second action includes
an allegation of improper replacement of an existing IDS Life annuity contract.
A subsequent class action, Richard Thoresen and Elizabeth Thoresen vs. AEFC,
American Partners Life Insurance Company, American Enterprise Life Insurance
Company, American Centurion Life Assurance Company, IDS Life Insurance Company
and IDS Life Insurance Company of New York, was filed in the same court on
October 13, 1998 alleging that the sale of annuities in tax-deferred
contributory retirement investment plans (e.g. IRAs) was done through deceptive
marketing practices, which IDS Life denies. Plaintiffs in each of the above
actions seek damages in an unspecified amount and also seek to establish a
claims resolution facility for the determination of individual issues.
IDS Life and AEFC believe they have meritorious defenses to the claims raised in
the lawsuits. The outcome of any litigation cannot be predicted with certainty.
In the opinion of management, however, the ultimate resolution of the above
lawsuits and others filed against IDS Life should not have a material adverse
effect on IDS Life's consolidated financial position.
<PAGE>
Year 2000
The Year 2000 issue is the result of computer programs having been written using
two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or miscalculations,
which could have a material impact on the operations of IDS Life and the
variable account. IDS Life and the variable account have no computer systems of
their own but are dependent upon the systems of AEFC and certain other third
parties.
A comprehensive review of AEFC's computer systems and business processes has
been conducted to identify the major systems that could be affected by the Year
2000 issue. Steps are being taken to resolve any potential problems including
modification to existing software and the purchase of new software. These
measures are scheduled to be completed and tested on a timely basis. AEFC's
target date for substantially completing corrective measures on business
critical systems was Dec. 31, 1998. Substantial testing of these systems was
targeted for completion early in 1999. AEFC currently is on track with this
schedule and also is on track to finish the work on non-critical systems by June
30, 1999. The Year 2000 readiness of unaffiliated investment managers and other
third parties whose system failures could have an impact on IDS Life's and the
variable account's operations continues to be evaluated. The potential
materiality of any such impact is not known at this time.
AEFC's Year 2000 project includes establishing Year 2000 contingency plans for
all key business units. Business continuation plans, which address business
continuation in the event of a system disruption, are in place for all key
business units. These plans are being amended to include specific Year 2000
considerations and will continue to be refined throughout 1999 as additional
information related to potential Year 2000 exposure is gathered.
[This information will be updated so that it is current as of the time the
product becomes effective.]
<PAGE>
Table of Contents of the Statement of Additional Information
IDS Life Preferred Retirement Account p.
Performance Information p.
Calculating Annuity Payouts p.
Rating Agencies p.
Principal Underwriter p.
Independent Auditors p.
Financial Statements
<PAGE>
Please check the box to receive a copy of the Statement of Additional
Information for:
- -- AXP Retirement Advisor Variable Annuity
- -- IDS Life Retirement Annuity Mutual Funds
- -- New Fund
- -- New Fund
- -- New Fund
- -- New Fund
- -- New Fund
- -- New Fund
- -- New Fund
- -- New Fund
- -- New Fund
- -- New Fund
- -- New Fund
- -- New Fund
- -- New Fund
Mail your request to:
IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN 55440-0010
We will mail your request to:
Your name _____________________________________________
Address _______________________________________________
City _____________________ State _________ Zip ________
<PAGE>
Prospectus
[_____], 1999
AXP Retirement Advisor Variable Annuity - Band 3
Individual flexible premium deferred combination fixed/variable annuity for:
o current or retired employees of American Express Financial Corporation or its
subsidiaries and their spouses (employees),
o current or retired American Express financial advisors and their spouses
(advisors), and o individuals investing an initial payment of $1 million
(otherindividuals).
IDS Life Variable Account 10
Issued by: IDS Life Insurance Company (IDS Life)
IDS Tower 10
Minneapolis, MN 55440-0010
Telephone: 800-437-0602
http://www.americanexpress.com/advisors
This prospectus contains information that you should know before investing. You
also will receive the following prospectuses:
o IDS Life Retirement Annuity Mutual Funds;
o New Fund;
o New Fund;
o New Fund;
o New Fund;
o New Fund;
o New Fund;
o New Fund;
o New Fund;
o New Fund;
o New Fund;
o New Fund;
o New Fund;
o New Fund;
o New Fund;
o New Fund;
o New Fund;
o New Fund; and
o New Fund
<PAGE>
Please read the prospectuses carefully and keep them for future reference. This
contract is available for qualified and nonqualified plans.
The Securities and Exchange Commission (SEC) has not approved or disapproved
these securities or passed upon the adequacy or accuracy of this prospectus. Any
representation to the contrary is a criminal offense.
An investment in this contract is not a deposit of a bank or financial
institution and is not insured or guaranteed by the federal deposit insurance
corporation or any other government agency. An investment in this contract
involves investment risk including the possible loss of principal.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC and is available without charge by contacting IDS Life at the telephone
number above or by completing and sending the order form on the last page of
this prospectus. The table of contents of the SAI is on the last page of this
prospectus.
<PAGE>
Table of Contents
Key Terms
The Contract in Brief
Expense Summary
Condensed Financial Information (Unaudited)
Financial Statements
Performance Information
The Variable Account and The Funds
The Fixed Account
Buying Your Contract
Charges
Valuing Your Investment
Making the Most of Your Contract
Surrenders
TSA -- Special Surrender Provisions
Changing Ownership
Benefits in Case of Death
The Annuity Payout Period
Taxes
Voting Rights
Substitution of Investments
About the Service Providers
Year 2000
Table of Contents of the Statement of Additional Information
<PAGE>
Key Terms
These terms can help you understand details about your contract.
Accumulation unit -- A measure of the value of each subaccount before annuity
payouts begin.
Annuitant -- The person on whose life or life expectancy the annuity payouts are
based.
Annuity payouts -- An amount paid at regular intervals under one of several
plans.
Beneficiary -- The person you designate to receive annuity benefits in case of
the owner's or annuitant's death while the contract is in force and before
annuity payouts begin.
Close of business -- When the New York Stock Exchange (NYSE) closes, normally 4
p.m. Eastern time.
Contract value -- The total value of your contract before we deduct any
applicable charges.
Contract year -- A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
Fixed account -- An account to which you may allocate purchase payments. Amounts
you allocate to this account earn interest at rates that we declare
periodically.
Funds -- Mutual funds and/or portfolios that are investment options under your
contract, each with a different investment objective. You may allocate your
purchase payments into subaccounts investing in shares of any or all of these
funds.
Owner (you, your) -- The person who controls the contract (decides on investment
allocations, transfers, payout options, etc.). Usually, but not always, the
owner is also the annuitant. The owner is responsible for taxes, regardless of
whether he or she receives the contract's benefits.
Qualified annuity -- A contract that you purchase for one of the following
retirement plans that is subject to applicable federal law and any rules of the
plan itself:
o Individual Retirement Annuities (IRAs)
o Simplified Employee Pension (SEP) plans
o Section 401(k) plans
o Custodial and trusteed pension and profit sharing plans
o Tax-Sheltered Annuities (TSAs)
All other contracts are considered nonqualified annuities.
Settlement date -- The date when annuity payouts are scheduled to begin.
Surrender value -- The amount you are entitled to receive if you make a full
surrender from your contract. It is the contract value minus any applicable
charges.
Valuation date -- Any normal business day, Monday through Friday, that the NYSE
is open. Each valuation date ends at the close of business. We calculate the
value of each subaccount at the close of business on each valuation date.
Variable account -- Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one fund. The value of your
investment in each subaccount changes with the performance of the particular
fund.
<PAGE>
The Contract in Brief
Purpose: The purpose of the contract is to allow you
to accumulate money for retirement. You do
this by making one or more investments
(purchase payments) that may earn returns
that increase the value of the contract. The
contract provides lifetime or other forms of
payouts beginning at a specified date (the
settlement date).
Free look period: You may return your contract to our office
within 10 days after it is delivered to you
and receive a full refund of the contract
value. No charges will be deducted. However,
you bear the investment risk from the time
of purchase until you return the contract;
the refund amount may be more or less than
the payment you made. (Exception: If the law
requires, we will refund all of your
purchase payments.)
Accounts: Currently, you may allocate your purchase
payments among any or all of:
o the subaccounts, each of which invests
in a fund with a particular investment
objective. The value of each subaccount
varies with the performance of the
particular fund in which it invests. We
cannot guarantee that the value at the
settlement date will equal or exceed the
total purchase payments you allocate to
the subaccounts. (p. __)
o the fixed account, which earns interest
at a rate that we adjust periodically.
(p. __)
Buying your contract: We will help you complete and
submit an application. Applications are
subject to acceptance at our office. You may
buy a nonqualified annuity or a qualified
annuity. After your initial purchase
payment, you have the option of making
additional purchase payments in the future.
o Minimum initial purchase payment for
employees/advisors -- $2,000 ($1,000 for
qualified annuities) unless you pay in
installments by means of a bank
authorization or under a group billing
arrangement such as a payroll deduction.
o Minimum initial purchase payment for
other individuals -- $1,000,000.
o Minimum additional purchase payment --
$50.
o Minimum installment purchase payment --
$50 monthly; $23.08 biweekly (scheduled
payment plan billing).
o Maximum first-year purchase payments for
employees/advisors -- $100,000 to
$2,000,000 depending on your age.
o Maximum first-year purchase payments for
other individuals -- $1,000,000 to
$2,000,000 depending on your age.
o Maximum purchase payment for each
subsequent year for employees/advisors
-- $50,000 to $100,000 depending upon
your age.
o Maximum purchase payment for each
subsequent year for other individuals
-- $100,000. (p.--)
Transfers: Subject to certain restrictions you currently may
redistribute your money among the subaccounts and the fixed
account without charge at any time until annuity payouts
begin, and once per contract year among the subaccounts after
annuity payouts begin. You may establish automated transfers
among the fixed account and subaccounts. Fixed account
transfers are subject to special restrictions. (p. __)
Surrenders: You may surrender all or part of your contract value at any
time before the settlement date. You also may establish
automated partial surrenders. Surrenders may be subject to
tax penalties (including a 10% IRS penalty if you surrender
prior to your reaching age 59 1/2) and may have other tax
consequences; also, certain restrictions apply. (p. __)
Changing ownership: You may change ownership of a nonqualified annuity by
written instruction, but this may have federal income tax
consequences. Restrictions apply to changing ownership of
a qualified annuity. (p. __)
Benefits in case
of death: If you or the annuitant die before annuity payouts begin, we
will pay the beneficiary an amount at least equal to the
contract value. (p. __)
Annuity Payouts: You can apply your contract value to an annuity payout plan
that begins on the settlement date. You may choose from a
variety of plans to make sure that payouts continue as long
as you like. If you purchased a qualified annuity, the payout
schedule must meet the requirements of the qualified plan. We
can make payouts on a fixed or variable basis, or both. Total
monthly payouts may include amounts from each subaccount and
the fixed account. During the annuity payout period, you
cannot be invested in more than five subaccounts at any one
time unless we agree otherwise. (p. __)
Taxes: Generally, your contract grows tax-deferred until you
surrender it or begin to receive payouts. (Under certain
circumstances, IRS penalty taxes may apply.) Even if you
direct payouts to someone else, you will be taxed on the
income if you are the owner. (p. __)
Charges:
o $30 annual contract administrative charge;
o a 0.55% mortality and expense risk fee;
o any premium taxes that may be imposed on
us by state or local governments (currently, we
deduct any applicable premium tax when you make a
full surrender or when annuity payouts begin); and
o the operating expenses of the funds.
<PAGE>
Expense Summary
The purpose of the following information is to help you understand the various
costs and expenses associated with your contract.
You pay no sales charge when you purchase your contract. We show all costs that
you bear directly or indirectly for the subaccounts and funds below. Some
expenses may vary as we explain under "Charges."
Contract owner expenses:
Surrender charge 0%
Annual contract administrative charge $30*
* We will waive this charge when your contract value, or total purchase
payments less any payments surrendered, is $50,000 or more on the current
contract anniversary.
<TABLE>
<CAPTION>
Annual subaccount expenses (as a percentage of average subaccount value):
Mortality and expense risk fee 0.55%
Annual operating expenses of the funds (as a percentage of average daily net assets)
<S> <C> <C> <C> <C>
Management 12b-1 Other
Fees Fees Expenses Total
IDS Life Aggressive Growth Fund
IDS Life Capital Resource Fund
IDS Life Global Yield Fund
IDS Life Growth Dimensions Fund
IDS Life Income Advantage Fund
IDS Life International Equity Fund
IDS Life Managed Fund IDS Life Moneyshare Fund
IDS Life Special Income Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
</TABLE>
<PAGE>
Example:*
You would pay the following expenses on a $1,000 investment assuming a 5% annual
return and full surrender, no surrender or selection of an annuity payout plan
at the end of each time period
1 year 3 years
IDS Life Aggressive Growth Fund
IDS Life Capital Resource Fund
IDS Life Global Yield Fund
IDS Life Growth Dimensions Fund
IDS Life Income Advantage Fund
IDS Life International Equity Fund
IDS Life Managed Fund IDS Life Moneyshare Fund
IDS Life Special Income Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
New Fund
* In this example, the $30 contract administrative charge is approximated as a
[___]% charge based on our estimated average contract size. Premium taxes
imposed by some state and local governments are not reflected in this table.
We entered into certain arrangements under which we are compensated by the
funds' advisors and/or distributors for the administrative services we
provide to the funds.
You should not consider this example as a representation of past or future
expenses. Actual expenses may be more or less than those shown.
<PAGE>
Condensed Financial Information (Unaudited)
The following tables give per-unit information about the financial history of
each subaccount. We have not provided this information for the subaccounts
because they are new and do not have any history.
[To be inserted by accounting.]
<PAGE>
Financial Statements
You can find our audited financial statements and the audited financial
statements of the subaccounts in the SAI.
Performance Information
Performance information for the subaccounts may appear from time to time in
advertisements or sales literature. This information reflects the performance of
a hypothetical investment in a particular subaccount during a specified time
period. Currently, we do not provide any performance information for the
subaccounts because they are new and have not had any activity to date. However,
we show performance from the commencement date of the funds as if the contract
existed at that time. Although we base performance figures on historical
earnings, past performance does not guarantee future results.
Total return figures reflect deduction of all applicable charges, including:
o the contract administrative charge, and
o mortality and expense risk fee.
Total return quotations may be shown by means of schedules, charts or graphs.
Average annual total return is the average annual compounded rate of return of
the investment over a period of one, five and ten years (or up to the life of
the subaccount if it is less than ten years old).
Cumulative total return is the cumulative change in the value of an investment
over a specified time period. We assume that income earned by the investment is
reinvested. Cumulative total return generally will be higher than average annual
total return.
Annualized simple yield (for subaccounts investing in money market funds)
"annualizes" the income generated by the investment over a given seven-day
period. That is, we assume the amount of income generated by the investment
during the period will be generated each seven-day period for a year. We show
this as a percentage of the investment.
Annualized compound yield (for subaccounts investing in money market funds) is
calculated like simple yield except that we assume the income is reinvested when
we annualize it. Compound yield will be higher than the simple yield because of
the compounding effect of the assumed reinvestment.
Annualized yield (for subaccounts investing in income funds) divides the net
investment income (income less expenses) for each accumulation unit during a
given 30-day period by the value of the unit on the last day of the period. We
then convert the result to an annual percentage. You should consider performance
information in light of the investment objectives, policies, characteristics and
quality of the fund in which the subaccount invests and the market conditions
during the specified time period. Advertised yields and total return figures
include charges that reduce advertised performance. Therefore, you should not
compare subaccount performance to that of mutual funds that sell their shares
directly to the public. (See the SAI for a further description of methods used
to determine total return and yield.)
If you would like additional information about actual performance, please
contact us.
<PAGE>
The Variable Account and The Funds
<TABLE>
<CAPTION>
You may allocate payments to any or all the subaccounts of the variable account
that invest in shares of the following funds:
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Investment Advisor or
Subaccount Investing in Investment Objectives and Policies: Manager
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? IDS Life Aggressive Growth Objective: capital appreciation. Invests primarily IDS Life, investment
?? Fund in common stocks of small-and medium-size companies. manager; American Express
Financial
Corporation
(AEFC)
investment
advisor.
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? IDS Life Capital Resource Objective: capital appreciation. Invests primarily IDS Life, investment
?? Fund in U.S. common stocks. manager; AEFC investment
advisor.
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? IDS Life Global Yield Fund Objective: high total return through income and IDS Life, investment
?? growth of capital. Invests primarily in debt manager; AEFC investment
securities of U.S. and foreign issuers. advisor.
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? IDS Life Growth Dimensions Objective: long-term growth of capital. Invests IDS Life, investment
?? Fund primarily in common stocks of U.S. and foreign manager; AEFC investment
companies showing potential for significant growth. advisor.
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? IDS Life Income Advantage Objective: high current income, with capital growth IDS Life, investment
?? Fund as a secondary objective. Invests primarily in manager; AEFC investment
long-term, high-yielding, high-risk debt securities advisor.
below investment grade issued by U.S. and foreign
corporations.
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? IDS Life International Objective: capital appreciation. Invests primarily IDS Life, investment
?? Equity Fund in common stock of foreign issuers. manager; AEFC investment
advisor.1
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? IDS Life Managed Fund Objective: maximum total investment return through IDS Life, investment
?? a combination of capital growth and current income. manager; AEFC investment
Invests primarily in stocks, convertible advisor.
securities, bonds and money market instruments.
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? IDS Life Moneyshare Fund Objective: maximum current income consistent with IDS Life, investment
?? liquidity and conservation of capital. Invests in manager; AEFC investment
money market securities. advisor.
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? IDS Life Special Income Objective: high level of current income while IDS Life, investment
?? Fund conserving the value of the investment for the manager; AEFC investment
longest time period. Invests primarily in advisor.
investment-grade bonds.
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? New Fund
??
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? New Fund
??
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? New Fund
??
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? New Fund
??
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? New Fund
??
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? New Fund
??
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
?? New Fund
??
- ------------------------------------------------------------------------------------------------------------------------------
1 American Express Asset management International, Inc., a wholly-owned
subsidiary of AEFC, is the sub-investment advisor for IDS Life International
Equity Fund.
</TABLE>
[Managers for the new funds to be filed by amendment.]
The investment objectives and policies of some of the funds are similar to the
investment objectives and policies of other mutual funds that the investment
advisor or its affiliates manage. Although the objectives and policies may be
similar, each fund will have its own portfolio holdings and its own fees and
expenses. Accordingly, each fund will have its own investment results.
The investment managers and advisors cannot guarantee that the funds will meet
their investment objectives. Please read the funds' prospectuses for facts you
should know before investing. These prospectuses are available by contacting us
at the address or telephone number on the first page of this prospectus.
All funds are available to serve as the underlying investments for variable
annuities. Some funds also are available to serve as investment options for
variable life insurance policies and qualified plans. It is possible that in the
future, it may be disadvantageous for variable annuity accounts and variable
life insurance accounts and/or qualified plans to invest in the available funds
simultaneously.
Although the insurance company and the funds do not currently foresee any such
disadvantages, the boards of directors or trustees of the appropriate funds will
monitor events in order to identify any material conflicts between annuity
owners, policy owners and qualified plans and to determine what action, if any,
should be taken in response to a conflict. If a board were to conclude that it
should establish separate funds for the variable annuity, variable life
insurance and qualified plan accounts, you would not bear any expenses
associated with establishing separate funds. Please refer to the fund
prospectuses for risk disclosure regarding simultaneous investments by variable
annuity, variable life insurance and qualified plan accounts.
The IRS issued final regulations relating to the diversification requirements
under Section 817(h) of the Internal Revenue Code of 1986, as amended (the
Code). Each fund intends to comply with these requirements.
The variable account was established under Minnesota law on Aug. 23, 1995 and
the subaccounts are registered together as a single unit investment trust under
the Investment Company Act of 1940 (the 1940 Act). This registration does not
involve any supervision of our management or investment practices and policies
by the SEC. All obligations arising under the contracts are general obligations
of IDS Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
The U.S. Treasury and the Internal Revenue Service (IRS) indicated that they may
provide additional guidance on investment control. This concerns how many
variable subaccounts an insurance company may offer and how many exchanges among
subaccounts it may allow before the contract owner would be currently taxed on
income earned within subaccount assets. At this time, we do not know what the
additional guidance will be or when action will be taken. We reserve the right
to modify the contract, as necessary, so that the owner will not be subject to
current taxation as the owner of the subaccount assets.
We intend to comply with all federal tax laws so that the contract continues to
qualify as an annuity for federal income tax purposes. We reserve the right to
modify the contract as necessary to comply with any new tax laws.
<PAGE>
The Fixed Account
You also may allocate purchase payments to the fixed account. We back the
principal and interest guarantees relating to the fixed account. The value of
the fixed account increases as we credit interest to the account. Purchase
payments and transfers to the fixed account become part of our general account.
We credit interest daily and compound it annually. We will change the interest
rates from time to time at our discretion.
Interests in the fixed account are not required to be registered with the SEC.
The SEC staff does not review the disclosures in this prospectus on the fixed
account. Disclosures regarding the fixed account, however, may be subject to
certain generally applicable provisions of the federal securities laws relating
to the accuracy and completeness of statements made in prospectuses. (See
"Making the Most of Your Contract -- Transfer policies" for restrictions on
transfers involving the fixed account.)
<PAGE>
Buying Your Contract
You can fill out an application and send it along with your initial purchase
payment to our office. As the owner, you have all rights and may receive all
benefits under the contract. You can own a nonqualified annuity in joint tenancy
with rights of survivorship only in spousal situations. You cannot own a
qualified annuity in joint tenancy. You can buy a contract or become an
annuitant if you are 90 or younger.
When you apply, you may select:
o the fixed account and/or subaccounts in which you want to invest;
o how you want to make purchase payments; and
o a beneficiary.
The contract provides for allocation of purchase payments to the subaccounts of
the variable account and/or to the fixed account in even 1% increments.
If your application is complete, we will process it and apply your purchase
payment to the fixed account and subaccounts you selected within two business
days after we receive it at our office. If we accept your application, we will
send you a contract. If we cannot accept your application within five business
days, we will decline it and return your payment. We will credit additional
purchase payments you make to your accounts on the valuation date we receive
them. We will value the additional payments at the next accumulation unit value
calculated after we receive your payments at our office.
The settlement date
Annuity payouts are scheduled to begin on the settlement date. When we process
your application, we will establish the settlement date to the maximum age or
date described below. You can also select a date within the maximum limits. You
can align this date with your actual retirement from a job, or it can be a
different future date, depending on your needs and goals and on certain
restrictions. You also can change the date, provided you send us written
instructions at least 30 days before annuity payouts begin.
For nonqualified annuities, the settlement date must be:
o no earlier than the 60th day after the contract's effective date; and
o no later than the annuitant's 85th birthday or the 10th contract anniversary,
if purchased after age 75. (In Pennsylvania, the maximum settlement date
ranges from age 85 to 96 based on the annuitant's age when we issue the
contract. See contract for details.)
For qualified annuities, to avoid IRS penalty taxes, the settlement date
generally must be:
o on or after the date the annuitant reaches age 59 1/2; and
o for IRAs and SEPs, by April 1 of the year following the calendar year when
the annuitant reaches age 70 1/2; or
o for all other qualified annuities by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2, or, if later retires
(except that 5% business owners may not select a settlement date that is
later than April 1 of the year following the calendar year when they reach
age 70 1/2).
If you take the minimum IRA or TSA distributions as required by the Code from
another tax-qualified investment, or in the form of partial surrenders from this
contract, annuity payouts can start as late as the annuitant's 85th birthday or
the 10th contract anniversary, if later. (In Pennsylvania, the annuity payout
ranges from age 85 to 96 based on the annuitant's age when the contract is
issued. See contract for details.)
Beneficiary
If death benefits become payable before the settlement date (while the contract
is in force and before annuity payouts begin), we will pay your named
beneficiary all or part of the contract value. If there is no named beneficiary,
then you or your estate will be the beneficiary. (See "Benefits in Case of
Death" for more about beneficiaries.)
Purchase payments
Minimum allowable purchase payments
For employees/advisors:
If paying by installments* If paying by any other method:
under a scheduled payment plan: $1,000 initial payment for qualified plans
$23.08 biweekly, or $2,000 initial payment for nonqualified plans
$50 per month $50 for any additional payments
For other individuals:
$1 million
* Installments must total at least $600 in the first year. If you do not
make any purchase payments for 24 months, and your previous payments total
$600 or less, we have the right to give you 30 days' written notice and
pay you the total value of your contract in a lump sum. This right does
not apply to contracts sold to New Jersey residents.
Maximum allowable purchase payments** based on the age of you or the annuitant,
whoever is older, on the effective date of the contract:
For employees/advisors:
First year: Each subsequent year:
$ 100,000 for ages 86 to 90 $ 50,000 for ages 86-90
$2,000,000 up to age 85 $100,000 up to age 85
For other individuals:
First year: Each subsequent year:
$1,000,000 for ages 86 to 90 $100,000
$2,000,000 up to age 85
**These limits apply in total to all IDS Life annuities you own. We reserve
the right to increase maximum limits. For qualified annuities the
qualified plan's limits on annual contributions also apply.
We reserve the right to not accept purchase payments allocated to the fixed
account for twelve months following either:
1. a partial surrender from the fixed account; or
2. a lump sum transfer from the fixed account to a subaccount.
How to make purchase payments
1
By letter Send your check along with your name and contract number to:
Regular mail:
IDS Life Insurance Company
Box 74
Minneapolis, MN 55440-0074
Express mail:
IDS Life Insurance Company
733 Marquette Avenue
Minneapolis, MN 55402
2 For employees/advisors only
By Scheduled We can help you set up:
payment plan
o an automatic payroll deduction, salary reduction or other
group billing arrangement; or
o a bank authorization.
<PAGE>
Charges
Contract administrative charge
We charge this fee for establishing and maintaining your records. We deduct $30
from the contract value on your contract anniversary at the end of each contract
year. We prorate this charge among the subaccounts and the fixed account in the
same proportion your interest in each account bears to your total contract
value.
We will waive this charge when your contract value, or total purchase payments
less any payments surrendered, is $50,000 or more on the current contract
anniversary.
If you surrender your contract, we will deduct the charge at the time of
surrender regardless of the contract value or purchase payments made. We cannot
increase the annual contract administrative charge and it does not apply after
annuity payouts begin or when we pay death benefits.
Mortality and expense risk fee
We charge this fee daily to the subaccounts. The unit values of your subaccounts
reflect this fee. The fee totals 0.55% of the average daily net assets on an
annual basis. This fee covers the mortality and expense risk that we assume.
Approximately two-thirds of this amount is for our assumption of mortality risk,
and one-third is for our assumption of expense risk. This fee does not apply to
the fixed account.
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific annuitant lives and no matter how long our entire
group of annuitants live. If, as a group, annuitants outlive the life expectancy
we assumed in our actuarial tables, then we must take money from our general
assets to meet our obligations. If, as a group, annuitants do not live as long
as expected, we could profit from the mortality risk fee.
Expense risk arises because we cannot increase the contract administrative
charge and this charge may not cover our expenses. We would have to make up any
deficit from our general assets.
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
o first, to the extent possible, the subaccounts pay this fee from any
dividends distributed from the funds in which they invest;
o then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses.
Other information on charges: AEFC makes certain custodial services available to
some custodial and trusteed pension and profit sharing plans and 401(k) plans
funded by our annuities. Fees for these services start at $30 per calendar year
per participant. AEFC will charge a termination fee for owners under age 59 1/2
(fee waived in case of death or disability).
Possible group reductions: In some cases we may incur lower sales and
administrative expenses due to the size of the group, the average contribution
and the use of group enrollment procedures. In such cases, we may be able to
reduce or eliminate the contract administrative charge. However, we expect this
to occur infrequently.
Premium taxes
Certain state and local governments impose premium taxes (up to 3.5%). These
taxes depend upon the state of residence or the state in which the contract was
sold. In some cases, we deduct premium taxes from your purchase payments before
we allocate them. In other cases, we deduct them when you surrender your
contract or when annuity payouts begin.
<PAGE>
Valuing Your Investment
We value your fixed account and subaccounts as follows:
Fixed Account: We value the amounts you allocated to the fixed account directly
in dollars. The fixed account value equals:
o the sum of your purchase payments and transfer amounts allocated to the fixed
account;
o plus interest credited;
o minus the sum of amounts surrendered and amounts transferred out; and
o minus any prorated contract administrative charge.
Subaccounts: We convert amounts you allocated to the subaccounts into
accumulation units. Each time you make a purchase payment or transfer amounts
into one of the subaccounts, we credit a certain number of accumulation units to
your contract for that subaccount. Conversely, each time you take a partial
surrender, transfer amounts out of a subaccount, or we assess a contract
administrative charge, we subtract a certain number of accumulation units from
your contract.
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the fund in which the subaccount invests.
The dollar value of each accumulation unit can rise or fall daily depending on
the variable account expenses, performance of the fund and on certain fund
expenses. Here is how we calculate accumulation unit values:
Number of units
To calculate the number of accumulation units for a particular subaccount, we
divide your investment after deduction of any premium taxes, by the current
accumulation unit value.
Accumulation unit value
The current accumulation unit value for each subaccount equals the last value
times the subaccount's current net investment factor.
Net investment factor
We determine the net investment factor by:
o adding the fund's current net asset value per share, plus the per share
amount of any accrued income or capital gain dividends to obtain a current
adjusted net asset value per share; then
o dividing that sum by the previous adjusted net asset value per share; and
o subtracting the percentage factor representing the mortality and expense
risk fee from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
Factors that affect subaccount accumulation units
Accumulation units may change in two ways: in number and in value. Here are the
factors that influence those changes:
The number of accumulation units you own may fluctuate due to:
o additional purchase payments you allocate to the subaccounts;
o transfers into or out of the subaccounts;
o partial surrenders; and/or
o prorated portions of the contract administrative charge.
Accumulation unit values will fluctuate due to:
o changes in funds' net asset value;
o dividends distributed to the subaccounts;
o capital gains or losses of funds;
o fund operating expenses; and/or
o mortality and expense risk fees.
<PAGE>
Making the Most of Your Contract
Automated dollar-cost averaging
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, you
might transfer a set amount monthly from a relatively conservative subaccount to
a more aggressive one, or to several others, or from the fixed account to one or
more subaccounts. There is no charge for dollar-cost averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
<TABLE>
<CAPTION>
How dollar-cost averaging works
How dollar-cost averaging works
<S> <C> <C> <C> <C>
By investing an Amount Accumulation unit Number of units
equal number of Month invested value purchased
dollars each month... Jan $100 $20 5.00
Feb 100 18 5.56
you automatically buy Mar 100 17 5.88
more units when the Apr 100 15 6.67
per unit market price May 100 16 6.25
is low... Jun 100 18 5.56
Jul 100 17 5.88
and fewer units when Aug 100 19 5.26
the per unit market Sept 100 21 4.76
price is high. Oct 100 20 5.00
</TABLE>
You paid an average price of only $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success with this
strategy will depend upon your willingness to continue to invest regularly
through periods of low price levels. Dollar-cost averaging can be an effective
way to help meet your long-term goals. For specific features contact us.
Transferring money between accounts
You may transfer money from any one subaccount, or the fixed account, to another
subaccount before annuity payouts begin. (Certain restrictions apply to
transfers involving the fixed account.) We will process your transfer on the
valuation date we receive your request. We will value your transfer at the next
accumulation unit value calculated after we receive your request. There is no
charge for transfers. Before making a transfer, you should consider the risks
involved in switching investments.
We may suspend or modify transfer privileges at any time. Excessive trading
activity can disrupt fund management strategy and increase expenses, which are
borne by all contract owners who allocated purchase payments to the fund
regardless of their transfer activity. We may apply modifications or
restrictions in any reasonable manner to prevent transfers we believe will
disadvantage other contract owners. (For information on transfers after annuity
payouts begin, see "Transfer policies.")
Transfer policies
o Before annuity payouts begin, you may transfer contract values between the
subaccounts, or from the subaccounts to the fixed account at any time.
However, if you made a transfer from the fixed account to the subaccounts,
you may not make a transfer from any subaccount back to the fixed account
until the next contract anniversary.
o You may transfer contract values from the fixed account to the subaccounts
once a year during a 31-day transfer period starting on each contract
anniversary (except for automated transfers, which can be set up at any
time for certain transfer periods subject to certain minimums).
o If we receive your request within 30 days before the contract anniversary
date, the transfer from the fixed account to the subaccounts will be
effective on the anniversary.
o If we receive your request on or within 30 days after the contract
anniversary date, the transfer from the fixed account to the subaccounts
will be effective on the valuation date we receive it.
o We will not accept requests for transfers from the fixed account at any
other time.
o Once annuity payouts begin, you may not make transfers to or from the fixed
account, but you may make transfers once per contract year among the
subaccounts. During the annuity payout period, you cannot invest in more
than five subaccounts at any one time unless we agree otherwise.
<PAGE>
How to request a transfer or surrender
1 Send your name, contract number, Social Security
By letter Number or Taxpayer Identification Number and signed
request for a transfer or surrender to:
Regular mail:
IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN 55440-0010
Express mail:
IDS Life Insurance Company
733 Marquette Avenue
Minneapolis, MN 55402
Minimum amount
Transfers or
surrenders: $250 or entire account balance
Maximum amount
Transfers or
surrenders: Contract value
2 We can help you set up automated transfers among your
By automated subaccounts or fixed account or partial surrenders
transfers and from the accounts.
automated partial
surrenders You can start or stop this service by written request
or other method acceptable to us. You must allow 30
days for us to change any instructions that are
currently in place.
o Automated transfers from the fixed account to any
one of the subaccounts may not exceed an amount
that, if continued, would deplete the fixed
account within 12 months.
o Automated surrenders may be restricted by
applicable law under some contracts.
o You may not make additional purchase payments if
automated partial surrenders are in effect.
o Automated partial surrenders may result in IRS
taxes and penalties on all or part of the amount
surrendered.
Minimum amount
Transfers or
surrenders: $50
3 Call between 7 a.m. and 6 p.m. Central time:
By phone
800-437-0602
TTY service for the hearing impaired:
1-800-285-8846 (toll free)
Minimum amount
Transfers or
surrenders: $250 or entire account balance
Maximum amount
Transfers: Contract value
Surrenders: $50,000
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or surrender requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and tape recording calls. We will not
allow a telephone surrender within 30 days of a phoned-in address change. As
long as we follow the procedures, we (and our affiliates) will not be liable for
any loss resulting from fraudulent requests.
Telephone transfers or surrenders are automatically available. You may request
that telephone transfers or surrenders not be authorized from your account by
writing to us.
<PAGE>
Surrenders
You may surrender all or part of your contract at any time before annuity
payouts begin by sending us a written request or calling us. We will process
your surrender request on the valuation date we receive it. For total
surrenders, we will compute the value of your contract at the next accumulation
unit value calculated after we receive your request. We may ask you to return
the contract. You may have to pay IRS taxes and penalties (see "Taxes"). You
cannot make surrenders after annuity payouts begin.
Surrender policies
If you have a balance in more than one account and you request a partial
surrender, we will withdraw money from all your subaccounts and/or the fixed
account in the same proportion as your value in each account correlates to your
total contract value, unless you request otherwise. The minimum contract value
after partial surrender is $600.
Receiving payment
By regular or express mail:
o payable to you;
o mailed to address of record.
NOTE: We will charge you a fee if you request express mail delivery.
By wire:
o request that payment be wired to your bank;
o bank account must be in the same ownership as your contract; and
o pre-authorization required.
For instructions, contact us.
Normally, we will send the payment within seven days after receiving your
request. However, we may postpone the payment if:
- -- the surrender amount includes a purchase payment check that has not cleared;
- -- the NYSE is closed, except for normal holiday and weekend closings;
- -- trading on the NYSE is restricted, according to SEC rules;
- -- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- -- the SEC permits us to delay payment for the protection of security holders.
<PAGE>
TSA -- Special Surrender Provisions
Participants in Tax-Sheltered Annuities: The Code imposes certain restrictions
on your right to receive early distributions from a TSA:
o Distributions attributable to salary reduction contributions (plus
earnings) made after Dec. 31, 1988, or to transfers or rollovers from other
contracts, may be made from the TSA only if:
-- you are at least age 59 1/2;
-- you are disabled as defined in the Code;
-- you separated from the service of the employer who purchased the
contract; or
-- the distribution is because of your death.
o If you encounter a financial hardship (as defined by the Code), you may
receive a distribution of all contract values attributable to salary
reduction contributions made after Dec. 31, 1988, but not the earnings on
them.
o Even though a distribution may be permitted under the above rules, it may
be subject to IRS taxes and penalties (see "Taxes").
o The employer must comply with certain nondiscrimination requirements for
certain types of contributions under a TSA contract to be excluded from
taxable income. You should consult your employer to determine whether the
nondiscrimination rules apply to you.
o The above restrictions on distributions do not affect the availability of
the amount credited to the contract as of Dec. 31, 1988. The restrictions
also do not apply to transfers or exchanges of contract value within the
contract, or to another registered variable annuity contract or investment
vehicle available through the employer.
o If the contract has a loan provision, the right to receive a loan as
described in detail in your contract.
<PAGE>
Changing Ownership
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our office. The change
will become binding upon us when we receive and record it. We will honor any
change of ownership request that we believe is authentic and we will use
reasonable procedures to confirm authenticity. If we follow these procedures, we
will not take any responsibility for the validity of the change.
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (See "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code. However, if the owner is a trust or custodian, or an
employer acting in a similar capacity, ownership of a contract may be
transferred to the annuitant.
<PAGE>
Benefits in Case of Death
We will pay the death benefit to your beneficiary upon the earlier of your death
or the annuitant's death. If a contract has more than one person as the owner,
we will pay benefits upon the first to die of any owner or the annuitant.
If you or the annuitant die before annuity payouts begin while this contract is
in force, we will pay the beneficiary as follows:
If both you and the annuitant are age 80 or younger on the date of death, the
beneficiary receives the greatest of:
o the contract value;
o purchase payments, minus any "adjusted partial surrenders"; or
o the contract value as of the most recent sixth contract anniversary, plus
any purchase payments paid and minus any "adjusted partial surrenders"
since that anniversary.
If either you or the annuitant are age 81 or older on the date of death, the
beneficiary receives the greater of:
o the contract value; or
o purchase payments minus any "adjusted partial surrenders."
Adjusted partial surrenders: We calculate an "adjusted partial surrender" for
each partial surrender as the product of (a) times (b) where
(a) is the ratio of the amount of the partial surrender to the
contract value on the date of (but prior to) the partial
surrender; and
(b) is the death benefit on the date of (but prior to) the
partial surrender.
Example:
[To be filed by amendment.]
If your spouse is sole beneficiary under a nonqualified annuity and you die
before the settlement date, your spouse may keep the contract as owner. To do
this your spouse must, within 60 days after we receive proof of death, give us
written instructions to keep the contract in force.
Under a qualified annuity, if the annuitant dies before the Code requires
distributions to begin, and the spouse is the only beneficiary, the spouse may
keep the contract as owner until the date on which the annuitant would have
reached 70 1/2 or any other date permitted by the Code. To do this, the spouse
must give us written instructions within 60 days after we receive proof of
death.
Payments: Under a nonqualified annuity we will pay the beneficiary in a single
sum unless you give us other written instructions. We must fully distribute the
death benefit within five years of your death. However, the beneficiary may
receive payouts under any annuity payout plan available under this contract if:
o the beneficiary asks us in writing within 60 days after we receive proof of
death; and
o payouts begin no later than one year after your death, or other date as
permitted by the Code; and
o the payout period does not extend beyond the beneficiary's life or life
expectancy.
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value at the next accumulation unit value calculated after our death
claim requirements are fulfilled. We pay interest, if any, from the date of
death at a rate no less than required by law. We will mail payment to the
beneficiary within seven days after our death claim requirements are fulfilled.
(See "Taxes.")
<PAGE>
The Annuity Payout Period
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting at the settlement date. You may select one of the
annuity payout plans outlined below, or we may mutually agree on other payout
arrangements.
The amount available for payouts under the plan you select is the contract value
on your settlement date (less any applicable premium tax).
You also decide whether we will make annuity payouts on a fixed or variable
basis, or a combination of fixed and variable. The amounts available to purchase
payouts under the plan you select is the contract value on your settlement date
(less any applicable premium tax). You may reallocate this contract value to the
fixed account to provide fixed dollar payouts and/or among the subaccounts to
provide variable annuity payouts. During the annuity payout period, you cannot
invest in more than five subaccounts at any one time unless we agree otherwise.
Amounts of fixed and variable payouts depend on:
o the annuity payout plan you select;
o the annuitant's age and, in most cases, sex;
o the annuity table in the contract; and
o the amounts you allocated to the accounts at settlement.
In addition, for variable payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the funds will fluctuate. (In the case of fixed
annuities, payouts remain the same from month to month.)
For information with respect to transfers between accounts after annuity payouts
begin, see "Making the Most of Your Contract -- Transfer policies."
Annuity table
The annuity table in your contract shows the amount of the first monthly payment
for each $1,000 of contract value according to the age and, when applicable, the
sex of the annuitant. (Where required by law, we will use a unisex table of
settlement rates.) The table assumes that the contract value is invested at the
beginning of the annuity payout period and earns a 5% rate of return, which is
reinvested and helps to support future payouts.
Substitution of 3.5% table
If you ask us at least 30 days before the settlement date, we will substitute an
annuity table based on an assumed 3.5% investment rate for the 5% table in the
contract. The assumed investment rate affects both the amount of the first
payout and the extent to which subsequent payouts increase or decrease. Using
the 5% table results in a higher initial payment, but later payouts will
increase more slowly when annuity unit values rise and decrease more rapidly
when they decline.
Annuity payout plans
You may choose any one of these annuity payout plans by giving us written
instructions at least 30 days before contract values are used to purchase the
payout plan:
o Plan A -- Life annuity - no refund: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the
annuitant dies after we have made only one monthly payout, we will not make
any more payouts.
o Plan B -- Life annuity with five, 10 or 15 years certain: We make monthly
payouts for a guaranteed payout period of five, 10 or 15 years that you
elect. This election will determine the length of the payout period to the
beneficiary if the annuitant should die before the elected period expires.
We calculate the guaranteed payout period from the settlement date. If the
annuitant outlives the elected guaranteed payout period, we will continue
to make payouts until the annuitant's death.
o Plan C -- Life annuity - installment refund: We make monthly payouts until
the annuitant's death, with our guarantee that payouts will continue for
some period of time. We will make payouts for at least the number of months
determined by dividing the amount applied under this option by the first
monthly payout, whether or not the annuitant is living.
o Plan D -- Joint and last survivor life annuity - no refund: We make monthly
payouts while both the annuitant and a joint annuitant are living. If
either annuitant dies, we will continue to make monthly payouts at the full
amount until the death of the surviving annuitant. Payouts end with the
death of the second annuitant.
o Plan E -- Payouts for a specified period: We make monthly payouts for a
specific payout period of 10 to 30 years that you elect. We will make
payouts only for the number of years specified whether the annuitant is
living or not. Depending on the selected time period, it is foreseeable
that an annuitant can outlive the payout period selected. During the payout
period, you can elect to have us determine the present value of any
remaining variable payouts and pay it to you in a lump sum. A 10% IRS
penalty tax could apply under this payout plan. (See "Taxes.")
Restrictions for some qualified plans: If you purchased a qualified annuity, you
may be required to select a payout plan that provides for payouts:
o over the life of the annuitant;
o over the joint lives of the annuitant and a designated beneficiary;
o for a period not exceeding the life expectancy of the annuitant; or
o for a period not exceeding the joint life expectancies of the annuitant
and a designated beneficiary.
You have the responsibility for electing a payout plan that complies with your
contract and with applicable law.
If we do not receive instructions: You must give us written instructions for the
annuity payouts at least 30 days before the annuitant's settlement date. If you
do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
Contract values that you allocated to the fixed account will provide fixed
dollar payouts and contract values that you allocated among the subaccounts will
provide variable annuity payouts.
If monthly payouts would be less than $20: We will calculate the amount of
monthly payouts at the time the contract value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the contract value to you in a lump sum or to change the
frequency of the payouts.
Death after annuity payouts begin
If you or the annuitant die after annuity payouts begin, we will pay any amount
payable to the beneficiary as provided in the annuity payout plan in effect.
<PAGE>
Taxes
Generally, under current law, any increase in your contract value is taxable to
you only when you receive a payout or surrender (see detailed discussion below).
Any portion of the annuity payouts and any surrenders you request that represent
ordinary income are normally taxable. We will send you a tax information
reporting form for any year in which we made a taxable distribution according to
our records.
Qualified annuities: We designed this contract for use with qualified retirement
plans. Special rules apply to these retirement plans. Your rights to benefits
may be subject to the terms and conditions of these retirement plans regardless
of the terms of the contract.
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions during your life and after your death. You should refer
to your retirement plan or adoption agreement or consult a tax advisor for more
information about your distribution rules.
Annuity payouts under nonqualified annuities: A portion of each payout will be
ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment and will not be taxed. All
amounts you receive after your investment in the contract is fully recovered
will be subject to tax.
Tax law requires that all nonqualified deferred annuities issued by the same
company (and possibly its affiliates) to the same owner during a calendar year
be taxed as a single, unified contract when you take distributions from any one
of those contracts.
Annuity payouts under qualified annuities: Under a qualified annuity, the entire
payout generally is includable as ordinary income and is subject to tax except
to the extent that contributions were made with after-tax dollars. If you or
your employer invested in your contract with deductible or pre-tax dollars as
part of a qualified retirement plan, such amounts are not considered to be part
of your investment in the contract and will be taxed when paid to you.
Surrenders: If you surrender part or all of your contract before your annuity
payouts begin, your surrender payment will be taxed to the extent that the value
of your contract immediately before the surrender exceeds your investment. You
also may have to pay a 10% IRS penalty for surrenders you make before reaching
age 59 1/2 unless certain exceptions apply. For qualified annuities, other
penalties may apply if you surrender your contract before your plan specifies
that you can receive payouts.
Death benefits to beneficiaries: The death benefit under a contract is not
tax-exempt. Any amount your beneficiary receives that represents previously
deferred earnings within the contract is taxable as ordinary income to the
beneficiary in the years he or she receives the payments.
Annuities owned by corporations, partnerships or trusts: For nonqualified
annuities any annual increase in the value of annuities held by such entities
generally will be treated as ordinary income received during that year. This
provision is effective for purchase payments made after Feb. 28, 1986. However,
if the trust was set up for the benefit of a natural person only, the income
will remain tax-deferred.
Penalties: If you receive amounts from your contract before reaching age 59 1/2,
you may have to pay a 10% IRS penalty on the amount includable in your ordinary
income. However, this penalty will not apply to any amount received by you or
your beneficiary:
o because of your death;
o because you become disabled (as defined in the Code);
o if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or
joint lives or life expectancies of you and your beneficiary); or
o if it is allocable to an investment before Aug. 14, 1982 (except for
qualified annuities).
For a qualified annuity, other penalties or exceptions may apply if you
surrender your contract before your plan specifies that payouts can be made.
Withholding, generally: If you receive all or part of the contract value, we may
deduct withholding against the taxable income portion of the payment. Any
withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual tax return.
If the payment is part of an annuity payout plan, we generally compute the
amount of withholding using payroll tables. You may provide us with a statement
of how many exemptions to use in calculating the withholding. As long as you've
provided us with a valid Social Security Number or Taxpayer Identification
Number, you can elect not to have any withholding occur.
If the distribution is any other type of payment (such as a partial or full
surrender), we compute withholding using 10% of the taxable portion. Similar to
above, as long as you have provided us with a valid Social Security Number or
Taxpayer Identification Number, you can elect not to have this withholding
occur.
Some states also impose withholding requirements similar to the federal
withholding described above. If this should be the case, we may deduct state
withholding from any payment from which we deduct federal withholding. The
withholding requirements may differ if we are making payment to a non-U.S.
citizen or if we deliver the payment outside the United States.
Withholding from qualified annuities: If you receive directly all or part of the
contract value from a qualified annuity (except an IRA or SEP), mandatory 20%
federal income tax withholding (and possibly state income tax withholding)
generally will be imposed at the time we make payout. This mandatory withholding
is in place of the elective withholding discussed above. This mandatory
withholding will not be imposed if:
o instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan;
o the payout is one in a series of substantially equal periodic payouts, made
at least annually, over your life or life expectancy (or the joint lives or
life expectancies of you and your designated beneficiary) or over a
specified period of 10 years or more; or
o the payout is a minimum distribution required under the Code.
Payments we make to a surviving spouse instead of being directly rolled over to
an IRA also may be subject to mandatory 20% income tax withholding.
State withholding also may be imposed on taxable distributions.
Transfer of ownership of a nonqualified annuity: If you transfer a nonqualified
annuity without receiving adequate consideration, the transfer is a gift and
also may be a surrender for federal income tax purposes. If the gift is a
currently taxable event for income tax purposes, the original owner will be
taxed on the amount of deferred earnings at the time of the transfer and also
may be subject to the 10% IRS penalty discussed earlier. In this case, the new
owner's investment in the contract will be the value of the contract at the time
of the transfer.
Collateral assignment of a nonqualified annuity: If you collaterally assign or
pledge your contract, earnings on purchase payments you made after Aug. 13, 1982
will be taxed to you like a surrender.
Important: Our discussion of federal tax laws is based upon our understanding of
current interpretations of these laws. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
Tax qualification: We intend that the contract qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any such amendment.
<PAGE>
Voting Rights
As a contract owner with investments in the subaccounts, you may vote on
important fund policies until annuity payouts begin. Once they begin, the person
receiving them has voting rights. We will vote fund shares according to the
instructions of the person with voting rights.
Before annuity payouts begin, the number of votes you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
After annuity payouts begin, the number of votes you have is equal to:
o the reserve held in each subaccount for your contract; divided by
o the net asset value of one share of the applicable fund.
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
<PAGE>
Substitution of Investments
We may substitute the funds in which the subaccounts invest if:
o laws or regulations change,
o existing funds become unavailable, or
o in our judgment, the funds no longer are suitable for the subaccounts.
If any of these situations occur and if we believe it is in the best interest of
persons having voting rights under the contract, we have the right to substitute
funds other than those currently listed in this prospectus.
We may also:
o change the funds in which the subaccounts invest, and
o add additional subaccounts investing in other funds.
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments. We will notify
you of any substitution or change.
<PAGE>
About the Service Providers
Issuer and principal underwriter
IDS Life issues and is the principal underwriter for the contracts. IDS Life is
a stock life insurance company organized in 1957 under the laws of the State of
Minnesota and is located at IDS Tower 10, Minneapolis, MN 55440-0010. IDS Life
conducts a conventional life insurance business.
[Additional distribution and commission information to be filed by amendment.]
Legal proceedings
A number of lawsuits have been filed against life and health insurers in
jurisdictions in which IDS Life and AEFC do business involving insurers' sales
practices, alleged agent misconduct, failure to properly supervise agents and
other matters. IDS Life and AEFC, like other life and health insurers, from time
to time are involved in such litigation. On December 13, 1996, an action
entitled Lesa Benacquisto and Daniel Benacquisto vs. IDS Life Insurance Company
and American Express Financial Corporation was commenced in Minnesota state
court. The action was brought by individuals who replaced an existing IDS Life
insurance policy with a new IDS Life policy. The plaintiffs purport to represent
a class consisting of all persons who replaced existing IDS Life policies with
new policies from and after January 1, 1985. The complaint puts at issue various
alleged sales practices and misrepresentations, alleged breaches of fiduciary
duties and alleged violations of consumer fraud statutes. IDS Life and AEFC
filed an answer to the complaint on February 18, 1997, denying the allegations.
A second action, entitled Arnold Mork, Isabella Mork, Ronald Melchart and Susan
Melchart vs. IDS Life Insurance Company and American Express Financial
Corporation was commenced in the same court on March 21,1997. In addition to
claims that are included in the Benacquisto lawsuit, the second action includes
an allegation of improper replacement of an existing IDS Life annuity contract.
A subsequent class action, Richard Thoresen and Elizabeth Thoresen vs. AEFC,
American Partners Life Insurance Company, American Enterprise Life Insurance
Company, American Centurion Life Assurance Company, IDS Life Insurance Company
and IDS Life Insurance Company of New York, was filed in the same court on
October 13, 1998 alleging that the sale of annuities in tax-deferred
contributory retirement investment plans (e.g. IRAs) was done through deceptive
marketing practices, which IDS Life denies. Plaintiffs in each of the above
actions seek damages in an unspecified amount and also seek to establish a
claims resolution facility for the determination of individual issues.
IDS Life and AEFC believe they have meritorious defenses to the claims raised in
the lawsuits. The outcome of any litigation cannot be predicted with certainty.
In the opinion of management, however, the ultimate resolution of the above
lawsuits and others filed against IDS Life should not have a material adverse
effect on IDS Life's consolidated financial position.
<PAGE>
Year 2000
The Year 2000 issue is the result of computer programs having been written using
two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or miscalculations,
which could have a material impact on the operations of IDS Life and the
variable account. IDS Life and the variable account have no computer systems of
their own but are dependent upon the systems of AEFC and certain other third
parties.
A comprehensive review of AEFC's computer systems and business processes has
been conducted to identify the major systems that could be affected by the Year
2000 issue. Steps are being taken to resolve any potential problems including
modification to existing software and the purchase of new software. These
measures are scheduled to be completed and tested on a timely basis. AEFC's
target date for substantially completing corrective measures on business
critical systems was Dec. 31, 1998. Substantial testing of these systems was
targeted for completion early in 1999. AEFC currently is on track with this
schedule and also is on track to finish the work on non-critical systems by June
30, 1999. The Year 2000 readiness of unaffiliated investment managers and other
third parties whose system failures could have an impact on IDS Life's and the
variable account's operations continues to be evaluated. The potential
materiality of any such impact is not known at this time.
AEFC's Year 2000 project includes establishing Year 2000 contingency plans for
all key business units. Business continuation plans, which address business
continuation in the event of a system disruption, are in place for all key
business units. These plans are being amended to include specific Year 2000
considerations and will continue to be refined throughout 1999 as additional
information related to potential Year 2000 exposure is gathered.
[This information will be updated so that it is current as of the time the
product becomes effective.]
<PAGE>
Table of Contents of the Statement of Additional Information
IDS Life Preferred Retirement Account p.
Performance Information p.
Calculating Annuity Payouts p.
Rating Agencies p.
Principal Underwriter p.
Independent Auditors p.
Financial Statements
<PAGE>
Please check the box to receive a copy of the Statement of Additional
Information for:
- -- AXP Retirement Advisor Variable Annuity - Band 3
- -- IDS Life Retirement Annuity Mutual Funds
- -- New Fund
- -- New Fund
- -- New Fund
- -- New Fund
- -- New Fund
- -- New Fund
- -- New Fund
- -- New Fund
- -- New Fund
- -- New Fund
- -- New Fund
- -- New Fund
- -- New Fund
Mail your request to:
IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN 55440-0010
We will mail your request to:
Your name _____________________________________________
Address _______________________________________________
City _____________________ State _________ Zip ________
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
for
AXP RETIREMENT ADVISOR VARIABLE ANNUITY
IDS Life Variable Account 10
__, 1999
IDS Life Variable Account 10 is a separate account established and maintained by
IDS Life Insurance Company (IDS Life).
This Statement of Additional Information (SAI) is not a prospectus. It should be
read together with the prospectus dated the same date as this SAI, which may be
obtained by writing or calling us at the address and telephone number below. The
prospectus is incorporated in this SAI by reference.
IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN 55440-0010
800-437-0602
<PAGE>
AXP Retirement Advisor Variable Annuity
IDS Life Variable Account 10
TABLE OF CONTENTS
IDS Life Preferred Retirement Account...............................p.3
Performance Information.............................................p.4
Calculating Annuity Payouts.........................................p.8
Rating Agencies....................................................p.10
Principal Underwriter..............................................p.10
Independent Auditors...............................................p.10
Financial Statements
<PAGE>
IDS LIFE PREFERRED RETIREMENT ACCOUNT
You may use the AXP Retirement Advisor Variable Annuity to fund the IDS Life
Preferred Retirement Account (PRA) as a way to build tax-deferred retirement
income. You may use the PRA to supplement, or as an alternative to, a
non-deductible IRA or other retirement plan.
The advantages of the IDS Life Preferred Retirement Account over a
non-deductible IRA are shown below:
<TABLE>
<CAPTION>
<S> <C> <C>
IDS Life Preferred
Retirement Account Non-deductible IRA
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------
Maximum amount $100,000 to $1 million initially, $2,000 per year ($4,000 per year
you can contribute then $50,000 to $100,000 per year for married individuals filing
depending on your age. (jointly)
(spouse can have own plan)
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------
Highest age you The later of age 85 or the 10th 701/2years old
can contribute contract anniversary
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------
Types of income Any type: wages, investment Generally limited to income from
you can contribute income, gifts, inheritance, etc. employment
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------
Records you must keep None required, but IDS Life You must keep all records yourself
furnishes you regular reports for
your files
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------
Reports you must None You must report all contributions
file with the IRS and withdrawals each year
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------
Age at which you The later of age 85 or the 10th 701/2years old
must begin withdrawals contract anniversary
- ------------------------------------- ----------------------------------- -----------------------------------
</TABLE>
<PAGE>
PERFORMANCE INFORMATION
- -------------------------------------------------------------------------------
The subaccounts may quote various performance figures to illustrate past
performance. We base total return and current yield quotations (if applicable)
on standardized methods of computing performance as required by the Securities
and Exchange Commission (SEC). An explanation of the methods used to compute
performance follows below.
Average Annual Total Return
We will express quotations of average annual total return for the subaccounts in
terms of the average annual compounded rate of return of a hypothetical
investment in the contract over a period of one, five and ten years (or, if
less, up to the life of the subaccounts), calculated according to the following
formula:
P(1+T)n = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = Ending Redeemable Value of a hypothetical $1,000 payment
made at the beginning of the period, at the end of the
period (or fractional portion thereof)
We calculated the following performance figures on the basis of historical
performance of each fund. Currently we do not show any performance information
for the subaccounts because they are new and have not had any activity to date.
However, we show performance from the commencement date of the funds as if the
contract existed at that time. Past performance does not guarantee future
results.
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return For Nonqualified Annuities With a Seven Year Surrender Schedule For
Periods Ending [________]
Performance since commencement of the
Fund**
<S> <C> <C> <C> <C> <C>
Since
Subaccount Investing in: 1 Year 5 Years 10 Years commencement
IDS LIFE
[__] Aggressive Growth Fund (1/92)* % % % %
[__] Capital Resource Fund (10/81)
[__] Global Yield Fund (4/96)
[__] Growth Dimensions Fund (4/96)
[__] Income Advantage Fund (4/96)
[__] International Equity Fund (1/92)
[__] Managed Fund (4/86)
[__] Moneyshare Fund (10/81)
[__] Special Income Fund (10/81)
NEW FUND
[__] New Fund (___)
NEW FUND
[__] New Fund (___)
NEW FUND
[__] New Fund (___)
NEW FUND
[__] New Fund (___)
* (Commencement dates of the Funds)
** Current applicable charges deducted from fund performance include a $30
contract administrative charge, a 0.95% mortality and expense risk fee and
applicable surrender charges associated with the seven year surrender
charge schedule.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return For Nonqualified Annuities With a Ten Year Surrender Schedule For
Periods Ending [________]
Performance since commencement of the
Fund**
<S> <C> <C> <C> <C> <C>
Since
Subaccount Investing in: 1 Year 5 Years 10 Years commencement
IDS LIFE
[__] Aggressive Growth Fund (1/92)* % % % %
[__] Capital Resource Fund (10/81)
[__] Global Yield Fund (4/96)
[__] Growth Dimensions Fund (4/96)
[__] Income Advantage Fund (4/96)
[__] International Equity Fund (1/92)
[__] Managed Fund (4/86)
[__] Moneyshare Fund (10/81)
[__] Special Income Fund (10/81)
NEW FUND
[__] New Fund (___)
NEW FUND
[__] New Fund (___)
NEW FUND
[__] New Fund (___)
NEW FUND
[__] New Fund (___)
* (Commencement dates of the Funds)
** Current applicable charges deducted from fund performance include a $30
contract administrative charge, a 0.95% mortality and expense risk fee and
applicable surrender charges associated with the ten year surrender charge
schedule.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return For Nonqualified Annuities Without Surrender For Periods Ending
[--------]
Performance since commencement of the
Fund**
<S> <C> <C> <C> <C> <C>
Since
Subaccount Investing in: 1 Year 5 Years 10 Years commencement
IDS LIFE
[__] Aggressive Growth Fund (1/92)* % % % %
[__] Capital Resource Fund (10/81)
[__] Global Yield Fund (4/96)
[__] Growth Dimensions Fund (4/96)
[__] Income Advantage Fund (4/96)
[__] International Equity Fund (1/92)
[__] Managed Fund (4/86)
[__] Moneyshare Fund (10/81)
[__] Special Income Fund (10/81)
NEW FUND
[__] New Fund (___)
NEW FUND
[__] New Fund (___)
NEW FUND
[__] New Fund (___)
NEW FUND
[__] New Fund (___)
* (Commencement dates of the Funds)
** Current applicable charges deducted from fund performance include a $30
contract administrative charge and a 0.95% mortality and expense risk fee.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return For Qualified Annuities With a Seven Year Surrender Schedule For
Periods Ending [________]
Performance since commencement of the
Fund**
<S> <C> <C> <C> <C> <C>
Since
Subaccount Investing in: 1 Year 5 Years 10 Years commencement
IDS LIFE
[__] Aggressive Growth Fund (1/92)* % % % %
[__] Capital Resource Fund (10/81)
[__] Global Yield Fund (4/96)
[__] Growth Dimensions Fund (4/96)
[__] Income Advantage Fund (4/96)
[__] International Equity Fund (1/92)
[__] Managed Fund (4/86)
[__] Moneyshare Fund (10/81)
[__] Special Income Fund (10/81)
-----------------------------------
NEW FUND
[__] New Fund (___)
NEW FUND
[__] New Fund (___)
NEW FUND
[__] New Fund (___)
NEW FUND
[__] New Fund (___)
* (Commencement dates of the Funds)
** Current applicable charges deducted from fund performance include a $30
contract administrative charge, a 0.75% mortality and expense risk fee and
applicable surrender charges associated with the seven year surrender
charge schedule.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return For Qualified Annuities With a Ten Year Surrender Schedule For
Periods Ending [________]
Performance since commencement of the
Fund**
<S> <C> <C> <C> <C> <C>
Since
Subaccount Investing in: 1 Year 5 Years 10 Years commencement
IDS LIFE
[__] Aggressive Growth Fund (1/92)* % % % %
[__] Capital Resource Fund (10/81)
[__] Global Yield Fund (4/96)
[__] Growth Dimensions Fund (4/96)
[__] Income Advantage Fund (4/96)
[__] International Equity Fund (1/92)
[__] Managed Fund (4/86)
[__] Moneyshare Fund (10/81)
[__] Special Income Fund (10/81)
-----------------------------------
NEW FUND
[__] New Fund (___)
NEW FUND
[__] New Fund (___)
NEW FUND
[__] New Fund (___)
NEW FUND
[__] New Fund (___)
* (Commencement dates of the Funds)
** Current applicable charges deducted from fund performance include a $30
contract administrative charge, a 0.75% mortality and expense risk fee and
applicable surrender charges associated with the ten year surrender charge
schedule.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return For Qualified Annuities Without Surrender For Periods Ending
[--------]
Performance since commencement of the
Fund**
<S> <C> <C> <C> <C> <C>
Since
Subaccount Investing in: 1 Year 5 Years 10 Years commencement
IDS LIFE
[__] Aggressive Growth Fund (1/92)* % % % %
[__] Capital Resource Fund (10/81)
[__] Global Yield Fund (4/96)
[__] Growth Dimensions Fund (4/96)
[__] Income Advantage Fund (4/96)
[__] International Equity Fund (1/92)
[__] Managed Fund (4/86)
[__] Moneyshare Fund (10/81)
[__] Special Income Fund (10/81)
NEW FUND
[__] New Fund (___)
NEW FUND
[__] New Fund (___)
NEW FUND
[__] New Fund (___)
NEW FUND
[__] New Fund (___)
* (Commencement dates of the Funds)
** Current applicable charges deducted from fund performance include a $30
contract administrative charge and a 0.75% mortality and expense risk fee.
</TABLE>
<PAGE>
Cumulative Total Return
Cumulative total return represents the cumulative change in the value of an
investment for a given period (reflecting change in a subaccount's accumulation
unit value). We compute cumulative total return by using the following formula:
ERV - P
P
where: P = a hypothetical initial payment of $1,000
ERV = Ending Redeemable Value of a hypothetical $1,000
payment made at the beginning of the period, at the
end of the period (or fractional portion thereof).
Total return figures reflect the deduction of the surrender charge which assumes
you withdraw the entire contract value at the end of the one, five and ten year
periods (or, if less, up to the life of the subaccount). We also may show
performance figures without the deduction of a surrender charge. In addition,
total return figures reflect the deduction of all other applicable charges
including the contract administrative charge and mortality and expense risk fee.
Annualized Calculation of Yield for Subaccounts Investing in Money Market Funds
Simple Yield:
For the subaccounts investing in money market funds, we base quotations of
simple yield on:
(a) the change in the value of a hypothetical subaccount (exclusive of
capital changes and income other than investment income) at the
beginning of a particular seven-day period;
(b) less a pro rata share of the subaccount expenses accrued over the
period; (c) dividing this difference by the value of the
subaccount at the beginning of the period to obtain the base
period return; and
(d) multiplying the base period return by 365/7.
The subaccount's value includes:
o any declared dividends,
o the value of any shares purchased with dividends paid during the period, and
o any dividends declared for such shares.
It does not include:
o the effect of any applicable surrender charge, or
o any realized or unrealized gains or losses.
Annualized Compound Yield:
We calculate compound yield using the base period return described above, which
we then compound according to the following formula:
Compound Yield = [(Base Period Return + 1)365/7] -1
<PAGE>
You must consider (when comparing an investment in subaccounts investing in
money market funds with fixed annuities) that fixed annuities often provide an
agreed-to or guaranteed yield for a stated period of time, whereas the
subaccount's yield fluctuates. In comparing the yield of the subaccount to a
money market fund, you should consider the different services that the contract
provides.
Annualized Yield for Subaccounts Investing in Income Funds
For the subaccounts investing in income funds, we base quotations of yield on
all investment income earned during a particular 30-day period, less expenses
accrued during the period (net investment income) and compute it by dividing net
investment income per accumulation unit by the value of an accumulation unit on
the last day of the period, according to the following formula:
YIELD = 2[( a-b + 1)6 - 1]
cd
where: a = dividends and investment income earned during the
period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of accumulation units
outstanding during the period that were entitled t
receive dividends
d the maximum offering price per accumulation unit on
the last day of the period
The subaccount earns yield from the increase in the net asset value of shares of
the fund in which it invests and from dividends declared and paid by the fund,
which are automatically invested in shares of the fund.
The yield on the subaccount's accumulation unit may fluctuate daily and does not
provide a basis for determining future yields.
Independent rating or statistical services or publishers or publications such as
those listed below may quote subaccount performance, compare it to rankings,
yields or returns, or use it in variable annuity accumulation or settlement
illustrations they publish or prepare.
The Bank Rate Monitor National Index, Barron's, Business Week, CDA
Technologies, Donoghue's Money Market Fund Report, Financial Services
Week, Financial Times, Financial World, Forbes, Fortune, Global
Investor, Institutional Investor, Investor's Daily, Kiplinger's
Personal Finance, Lipper Analytical Services, Money, Morningstar,
Mutual Fund Forecaster, Newsweek, The New York Times, Personal
Investor, Stanger Report, Sylvia Porter's Personal Finance, USA Today,
U.S. News and World Report, The Wall Street Journal and Wiesenberger
Investment Companies Service.
CALCULATING ANNUITY PAYOUTS
The Variable Account
We do the following calculations separately for each of the subaccounts of the
variable account. The separate monthly payouts, added together, make up your
total variable annuity payout.
<PAGE>
Initial Payout: To compute your first monthly payment, we:
o determine the dollar value of your contract as of the valuation date that
falls on (or closest to the valuation date that falls before) the seventh
calendar day before the settlement date and then deduct any applicable
premium tax; then
o apply the result to the annuity table contained in the contract or another
table at least as favorable.
The annuity table shows the amount of the first monthly payment for each $1,000
of value which depends on factors built into the table, as described below.
Annuity Units: We then convert the value of your subaccount to annuity units. To
compute the number of units credited to you, we divide the first monthly payment
by the annuity unit value (see below) on the valuation date that falls on (or
closest to the valuation date that falls before) the seventh calendar day before
the settlement date. The number of units in your subaccount is fixed. The value
of the units fluctuates with the performance of the underlying fund.
Subsequent Payouts: To compute later payouts, we multiply:
o the annuity unit value on the valuation date that falls on (or closest to
the valuation date that falls before) the seventh calendar day before the
payout is due; by
o the fixed number of annuity units credited to you.
Annuity Unit Values: We originally set this value at $1 for each subaccount.
To calculate later values we multiply the last annuity value by the product of:
o the net investment factor; and
o the neutralizing factor.
The purpose of the neutralizing factor is to offset the effect of the assumed
rate built into the annuity table. With an assumed investment rate of 5%, the
neutralizing factor is 0.999866 for a one day valuation period.
Net Investment Factor: We determine the net investment factor by:
o adding the fund's current net asset value per share plus the per share
amount of any accrued income or capital gain dividends to obtain a current
adjusted net asset value per share; then
o dividing that sum by the previous adjusted net asset value per share; and
o subtracting the percentage factor representing the mortality and expense
risk fee from the result.
Because the net asset value of the fund may fluctuate, the net investment factor
may be greater or less than one, and the annuity unit value may increase or
decrease. You bear this investment risk in a variable subaccount.
The Fixed Account
We guarantee your fixed annuity payout amounts. Once calculated, your payout
will remain the same and never change. To calculate your annuity payouts we:
o take the value of your fixed account at the settlement date or the date you
selected to begin receiving your annuity payouts; then
o using an annuity table, we apply the value according to the annuity payout
plan you select.
The annuity payout table we use will be the one in effect at the time you choose
to begin your annuity payouts. The values in the table will be equal to or
greater than the table in your contract.
<PAGE>
RATING AGENCIES
The following chart reflects the ratings given to us by independent rating
agencies. These agencies evaluate the financial soundness and claims-paying
ability of insurance companies based on a number of different factors. This
information does not relate to the management or performance of the subaccounts
of the contract. This information relates only to the fixed account and reflects
our ability to make annuity payouts and to pay death benefits and other
distributions from the contract.
Rating Agency Rating
A.M. Best A+
(Superior)
Duff & Phelps AAA
Moody's Aa2
PRINCIPAL UNDERWRITER
The principal underwriter for the contract is IDS Life which offers the contract
on a continuous basis.
The contract is new and therefore we have not received any surrender charges or
paid any commissions.
INDEPENDENT AUDITORS
[To be filed by amendment.]
FINANCIAL STATEMENTS
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
for
AXP RETIREMENT ADVISOR VARIABLE ANNUITY-BAND 3
IDS Life Variable Account 10
__, 1999
IDS Life Variable Account 10 is a separate account established and maintained by
IDS Life Insurance Company (IDS Life).
This Statement of Additional Information (SAI) is not a prospectus. It should be
read together with the prospectus dated the same date as this SAI, which may be
obtained by writing or calling us at the address and telephone number below. The
prospectus is incorporated in this SAI by reference.
IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN 55440-0010
800-437-0602
<PAGE>
AXP Retirement Advisor Variable Annuity-Band 3
IDS Life Variable Account 10
TABLE OF CONTENTS
IDS Life Preferred Retirement Account............................p.3
Performance Information..........................................p.4
Calculating Annuity Payouts......................................p.8
Rating Agencies.................................................p.10
Principal Underwriter...........................................p.10
Independent Auditors............................................p.10
Financial Statements
<PAGE>
IDS LIFE PREFERRED RETIREMENT ACCOUNT
You may use the AXP Retirement Advisor Variable Annuity-Band 3 to fund the IDS
Life Preferred Retirement Account (PRA) as a way to build tax-deferred
retirement income. You may use the PRA to supplement, or as an alternative to, a
non-deductible IRA or other retirement plan.
The advantages of the IDS Life Preferred Retirement Account over a
non-deductible IRA are shown below:
<TABLE>
<CAPTION>
<S> <C> <C>
IDS Life Preferred
Retirement Account Non-deductible IRA
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------
Maximum amount $100,000 to $2 million initially, $2,000 per year ($4,000 per year
you can contribute then $50,000 to $100,000 per for married individuals filing year
year depending on your age and jointly)
category. (spouse can have own
account)
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------
Highest age you The later of age 85 or the 10th 701/2years old
can contribute contract anniversary
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------
Types of income Any type: wages, investment Generally limited to income from
you can contribute income, gifts, inheritance, etc. employment
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------
Records you must keep None required, but IDS Life You must keep all records yourself
furnishes you regular reports
for your files
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------
Reports you must None You must report all contributions
file with the IRS and withdrawals each year
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------
Age at which you The later of age 85 or the 10th 701/2years old
must begin withdrawals contract anniversary
- ------------------------------------- ----------------------------------- -----------------------------------
</TABLE>
<PAGE>
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The subaccounts may quote various performance figures to illustrate past
performance. We base total return and current yield quotations (if applicable)
on standardized methods of computing performance as required by the Securities
and Exchange Commission (SEC). An explanation of the methods used to compute
performance follows below.
Average Annual Total Return
We will express quotations of average annual total return for the subaccounts in
terms of the average annual compounded rate of return of a hypothetical
investment in the contract over a period of one, five and ten years (or, if
less, up to the life of the subaccounts), calculated according to the following
formula:
P(1+T)n = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = Ending Redeemable Value of a hypothetical $1,000 payment
made at the beginning of the period, at the end of the
period (or fractional portion thereof)
We calculated the following performance figures on the basis of historical
performance of each fund. Currently we do not show any performance information
for the subaccounts because they are new and have not had any activity to date.
However, we show performance from the commencement date of the funds as if the
contract existed at that time. Past performance does not guarantee future
results.
<PAGE>
Average Annual Total Return For Periods Ending [________]
<TABLE>
<CAPTION>
Performance since commencement of theFund**
<S> <C> <C> <C> <C> <C>
Since
Subaccount Investing in: 1 Year 5 Years 10 Years commencement
IDS LIFE
[__] Aggressive Growth Fund (1/92)* % % % %
[__] Capital Resource Fund (10/81)
[__] Global Yield Fund (4/96)
[__] Growth Dimensions Fund (4/96)
[__] Income Advantage Fund (4/96)
[__] International Equity Fund (1/92)
[__] Managed Fund (4/86)
[__] Moneyshare Fund (10/81)
[__] Special Income Fund (10/81)
-----------------------------------
NEW FUND
[__] New Fund (___)
NEW FUND
[__] New Fund (___)
NEW FUND
[__] New Fund (___)
NEW FUND
[__] New Fund (___)
* (Commencement dates of the Funds)
** Current applicable charges deducted from fund performance include a $30
contract administrative charge and a 0.55% mortality and expense risk fee.
</TABLE>
<PAGE>
Cumulative Total Return
Cumulative total return represents the cumulative change in the value of an
investment for a given period (reflecting change in a subaccount's accumulation
unit value). We compute cumulative total return by using the following formula:
ERV - P
P
where: P = a hypothetical initial payment of $1,000
ERV = Ending Redeemable Value of a hypothetical $1,000
payment made at the beginning of the period, at the
end of the period (or fractional portion thereof).
All total return figures reflect the deduction of all applicable charges
including the contract administrative charge and mortality and expense risk fee.
Annualized Calculation of Yield for Subaccounts Investing in Money Market Funds
Simple Yield:
For the subaccounts investing in money market funds, we base quotations of
simple yield on:
(a) the change in the value of a hypothetical subaccount (exclusive
of capital changes and income other than investment income) at the
beginning of a particular seven-day
period;
(b) less a pro rata share of the subaccount expenses accrued over the
period;
(c) dividing this difference by the value of the subaccount at the
beginning of the period to obtain the base period return; and
(d) multiplying the base period return by 365/7.
The subaccount's value includes:
o any declared dividends,
o the value of any shares purchased with dividends paid during the period, and
o any dividends declared for such shares.
It does not include any realized or unrealized gains or losses.
Annualized Compound Yield:
We calculate compound yield using the base period return described above, which
we then compound according to the following formula:
Compound Yield = [(Base Period Return + 1)365/7] -1
<PAGE>
You must consider (when comparing an investment in subaccounts investing in
money market funds with fixed annuities) that fixed annuities often provide an
agreed-to or guaranteed yield for a stated period of time, whereas the
subaccount's yield fluctuates. In comparing the yield of the subaccount to a
money market fund, you should consider the different services that the contract
provides.
Annualized Yield for Subaccounts Investing in Income Funds
For the subaccounts investing in income funds, we base quotations of yield on
all investment income earned during a particular 30-day period, less expenses
accrued during the period (net investment income) and compute it by dividing net
investment income per accumulation unit by the value of an accumulation unit on
the last day of the period, according to the following formula:
YIELD = 2[( a-b + 1)6 - 1]
cd
where: a = dividends and investment income earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of accumulation units outstanding
during the period that were entitled to receive dividends
d = the maximum offering price per accumulation unit on the last
day of the period
The subaccount earns yield from the increase in the net asset value of shares of
the fund in which it invests and from dividends declared and paid by the fund,
which are automatically invested in shares of the fund.
The yield on the subaccount's accumulation unit may fluctuate daily and does not
provide a basis for determining future yields.
Independent rating or statistical services or publishers or publications such as
those listed below may quote subaccount performance, compare it to rankings,
yields or returns, or use it in variable annuity accumulation or settlement
illustrations they publish or prepare.
The Bank Rate Monitor National Index, Barron's, Business Week, CDA
Technologies, Donoghue's Money Market Fund Report, Financial Services
Week, Financial Times, Financial World, Forbes, Fortune, Global
Investor, Institutional Investor, Investor's Daily, Kiplinger's
Personal Finance, Lipper Analytical Services, Money, Morningstar,
Mutual Fund Forecaster, Newsweek, The New York Times, Personal
Investor, Stanger Report, Sylvia Porter's Personal Finance, USA Today,
U.S. News and World Report, The Wall Street Journal and Wiesenberger
Investment Companies Service.
CALCULATING ANNUITY PAYOUTS
The Variable Account
We do the following calculations separately for each of the subaccounts of the
variable account. The separate monthly payouts, added together, make up your
total variable annuity payout.
<PAGE>
Initial Payout: To compute your first monthly payment, we:
o determine the dollar value of your contract as of the valuation date that
falls on (or closest to the valuation date that falls before) the seventh
calendar day before the settlement date and then deduct any applicable
premium tax; then
o apply the result to the annuity table contained in the contract or another
table at least as favorable.
The annuity table shows the amount of the first monthly payment for each $1,000
of value which depends on factors built into the table, as described below.
Annuity Units: We then convert the value of your subaccount to annuity units. To
compute the number of units credited to you, we divide the first monthly payment
by the annuity unit value (see below) on the valuation date that falls on (or
closest to the valuation date that falls before) the seventh calendar day before
the settlement date. The number of units in your subaccount is fixed. The value
of the units fluctuates with the performance of the underlying fund.
Subsequent Payouts: To compute later payouts, we multiply:
o the annuity unit value on the valuation date that falls on (or closest to
the valuation date that falls before) the seventh calendar day before the
payout is due; by
o the fixed number of annuity units credited to you.
Annuity Unit Values: We originally set this value at $1 for each subaccount.
To calculate later values we multiply the last annuity value by the product of:
o the net investment factor; and
o the neutralizing factor.
The purpose of the neutralizing factor is to offset the effect of the assumed
rate built into the annuity table. With an assumed investment rate of 5%, the
neutralizing factor is 0.999866 for a one day valuation period.
Net Investment Factor: We determine the net investment factor by:
o adding the fund's current net asset value per share plus the per share
amount of any accrued income or capital gain dividends to obtain a current
adjusted net asset value per share; then
o dividing that sum by the previous adjusted net asset value per share; and
o subtracting the percentage factor representing the mortality and expense
risk fee from the result.
Because the net asset value of the fund may fluctuate, the net investment factor
may be greater or less than one, and the annuity unit value may increase or
decrease. You bear this investment risk in a variable subaccount.
The Fixed Account
We guarantee your fixed annuity payout amounts. Once calculated, your payout
will remain the same and never change. To calculate your annuity payouts we:
o take the value of your fixed account at the settlement date or the date you
selected to begin receiving your annuity payouts; then
o using an annuity table, we apply the value according to the annuity payout
plan you select.
The annuity payout table we use will be the one in effect at the time you choose
to begin your annuity payouts. The values in the table will be equal to or
greater than the table in your contract.
<PAGE>
RATING AGENCIES
The following chart reflects the ratings given to us by independent rating
agencies. These agencies evaluate the financial soundness and claims-paying
ability of insurance companies based on a number of different factors. This
information does not relate to the management or performance of the subaccounts
of the contract. This information relates only to the fixed account and reflects
our ability to make annuity payouts and to pay death benefits and other
distributions from the contract.
Rating Agency Rating
A.M. Best A+
(Superior)
Duff & Phelps AAA
Moody's Aa2
PRINCIPAL UNDERWRITER
The principal underwriter for the contract is IDS Life which offers the contract
on a continuous basis.
The contract is new and therefore we have not received any surrender charges or
paid any commissions.
INDEPENDENT AUDITORS
[To be filed by amendment.]
FINANCIAL STATEMENTS
<PAGE>
PART C.
Item 24. Financial Statements and Exhibits
(a) Financial statements included in Part B of this Registration Statement:
To be filed by amendment.
(b) Exhibits:
1. Resolution of the Board of Directors of IDS Life establishing the IDS
Life Variable Account 10 dated August 23, 1995, filed electronically as
Exhibit 1 to Registrant's Initial Registration Statement No. 33-62407
is incorporated herein by reference.
2. Not applicable.
3. Not applicable.
4.1 Form of Deferred Annuity Contract for non-qualified contracts (form
31043), is filed electronically herewith.
4.2 Form of Deferred Annuity Contract for tax qualified contracts (form
31044), is filed electronically herewith.
4.3 Form of Deferred Annuity Contract for IRA contracts (form 31045-IRA),
is filed electronically herewith.
4.4 Form of Deferred Annuity Contract for non-qualified contracts (form
31046), is filed electronically herewith.
4.5 Form of Deferred Annuity Contract for tax qualified contracts (form
31047), is filed electronically herewith.
4.6 Form of Deferred Annuity Contract for IRA contracts (form 31048-IRA),
is filed electronically herewith.
5. Form of Variable Annuity Application to be filed by amendment.
6.1 Certificate of Incorporation of IDS Life dated July 24, 1957, filed
electronically as Exhibit 6.1 to Registrant's Initial Registration
Statement No. 33-62407 is incorporated herein by reference.
6.2 Amended By-Laws of IDS Life filed electronically as Exhibit 6.2 to
Registrant's Initial Registration Statement No. 33-62407 is
incorporated herein by reference.
<PAGE>
7. Not applicable.
8. Participation Agreements to be filed by amendment.
9. Opinion of counsel and consent to its use as the legality of the
securities being registered to be filed by amendment.
10. Consent of Independent Auditors to be filed by amendment.
11. None.
12. Not applicable.
13. To be filed by amendment.
14. Not applicable.
15(a) Power of Attorney to sign this Registration Statement dated March 12,
1997, filed electronically as Exhibit 15 to Post-Effective Amendment
No.2 to Registration Statement No. 33-62407, is incorporated herein by
reference.
15(b) Power of Attorney to sign this Registration Statement dated April 9,
1998, filed electronically as Exhibit 15(b) to Post-Effective Amendment
No. 3 to Registration Statement No. 33-62407, is incorporated by
reference.
<PAGE>
<TABLE>
<CAPTION>
Item 25. Directors and Officers of the Depositor (IDS Life Insurance Company)
<S> <C> <C>
Name Principal Business Address Positions and Offices with Depositor
Timothy V. Bechtold IDS Tower 10 Executive Vice President, Risk
Minneapolis, MN 55440 Management Products
David J. Berry IDS Tower 10 Vice President
Minneapolis, MN 55440
Mark W. Carter IDS Tower 10 Executive Vice President, Marketing
Minneapolis, MN 55440
Robert M. Elconin IDS Tower 10 Vice President
Minneapolis, MN 55440
Lorraine R. Hart IDS Tower 10 Vice President, Investments
Minneapolis, MN 55440
Jeffrey S. Horton IDS Tower 10 Vice President, Treasurer and
Minneapolis, MN 55440 Assistant Secretary
David R. Hubers IDS Tower 10 Director
Minneapolis, MN 55440
James M. Jensen IDS Tower 10 Vice President, Insurance Product
Minneapolis, MN 55440 Development
Richard W. Kling IDS Tower 10 Director and President
Minneapolis, MN 55440
Paul F. Kolkman IDS Tower 10 Director and Executive Vice President
Minneapolis, MN 55440
Paula R. Meyer IDS Tower 10 Director and Executive Vice
Minneapolis, MN 55440 President, Assured Assets
James A. Mitchell IDS Tower 10 Director, Chairman of the Board and
Minneapolis, MN 55440 Chief Executive Officer
Pamela J. Moret IDS Tower 10 Executive Vice President, Variable
Minneapolis, MN 55440 Assets
Barry J. Murphy IDS Tower 10 Director and Executive Vice
Minneapolis, MN 55440 President, Client Service
James R. Palmer IDS Tower 10 Vice President, Taxes
Minneapolis, MN 55440
Stuart A. Sedlacek IDS Tower 10 Director and Executive Vice President
Minneapolis, MN 55440
F. Dale Simmons IDS Tower 10 Vice President, Real Estate Loan
Minneapolis, MN 55440 Management
William A. Stoltzmann IDS Tower 10 Vice President, General Counsel and
Minneapolis, MN 55440 Secretary
<PAGE>
Philip C. Wentzel IDS Tower 10 Vice President and Controller
Minneapolis, MN 55440
</TABLE>
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant
IDS Life Insurance Company is a wholly-owned subsidiary of
American Express Financial Corporation. American Express
Financial Corporation is a wholly-owned subsidiary of American
Express Company (American Express).
The following list includes the names of major subsidiaries of
American Express.
<TABLE>
<CAPTION>
Jurisdiction of
Name of Subsidiary
Incorporation
<S> <C>
I. Travel Related Services
American Express Travel Related Services Company, Inc. New York
II. International Banking Services
American Express Bank Ltd.
Connecticut
III. Companies engaged in Financial Services
Advisory Capital Partners LLC Delaware
Advisory Capital Strategies Group Inc. Minnesota
American Centurion Life Assurance Company New York
American Enterprise Investment Services Inc. Minnesota
American Enterprise Life Insurance Company Indiana
American Express Asset Management Group Inc. Minnesota
American Express Asset Management International Inc. Delaware
American Express Asset Management International (Japan) Ltd. Japan
American Express Asset Management Ltd. England
American Express Client Service Corporation Minnesota
American Express Corporation Delaware
American Express Financial Advisors Inc. Delaware
American Express Financial Advisors Japan Inc. Delaware
American Express Financial Corporation Delaware
American Express Insurance Agency of Arizona Inc. Arizona
American Express Insurance Agency of Idaho Inc. Idaho
American Express Insurance Agency of Nevada Inc. Nevada
American Express Insurance Agency of Oregon Inc. Oregon
American Express Minnesota Foundation Minnesota
American Express Property Casualty Insurance Agency of Kentucky Inc. Kentucky
American Express Property Casualty Insurance Agency of Maryland Inc. Maryland
American Express Property Casualty Insurance Agency of Mississippi Inc.
Mississippi
American Express Property Casualty Insurance Agency of Pennsylvania Inc.
Pennsylvania
American Express Trust Company Minnesota
American Partners Life Insurance Company Arizona
IDS Cable Corporation Minnesota
IDS Cable II Corporation Minnesota
IDS Capital Holdings Inc. Minnesota
IDS Certificate Company Delaware
IDS Futures Brokerage Group Minnesota
IDS Futures Corporation Minnesota
IDS Insurance Agency of Alabama Inc. Alabama
IDS Insurance Agency of Arkansas Inc. Arkansas
IDS Insurance Agency of Massachusetts Inc.
Massachusetts
IDS Insurance Agency of Mississippi Ltd.
Mississippi
<PAGE>
IDS Insurance Agency of New Mexico Inc. New Mexico
IDS Insurance Agency of North Carolina Inc. North
Carolina
IDS Insurance Agency of Ohio Inc. Ohio
IDS Insurance Agency of Texas Inc. Texas
IDS Insurance Agency of Utah Inc. Utah
IDS Insurance Agency of Wyoming Inc. Wyoming
IDS Life Insurance Company Minnesota
IDS Life Insurance Company of New York New York
IDS Management Corporation Minnesota
IDS Partnership Services Corporation Minnesota
IDS Plan Services of California, Inc. Minnesota
IDS Property Casualty Insurance Company Wisconsin
IDS Real Estate Services, Inc. Delaware
IDS Realty Corporation Minnesota
IDS Sales Support Inc. Minnesota
Investors Syndicate Development Corp. Nevada
Public Employee Payment Company Minnesota
</TABLE>
Item 27. Number of Contractowners
Not applicable.
Item 28. Indemnification
The By-Laws of the depositor provide that it shall indemnify
any person who was or is a party or is threatened to be made a
party, by reason of the fact that he is or was a director,
officer, employee or agent of this Corporation, or is or was
serving at the direction of the Corporation as a director,
officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, to any
threatened, pending or completed action, suit or proceeding,
wherever brought, to the fullest extent permitted by the laws
of the State of Minnesota, as now existing or hereafter
amended, provided that this Article shall not indemnify or
protect any such director, officer, employee or agent against
any liability to the Corporation or its security holders to
which he would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence, in the
performance of his duties or by reason of his reckless
disregard of his obligations and duties.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to director, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
<PAGE>
Item 29. Principal Underwriters
To be filed by amendment.
Item 30. Location of Accounts and Records
IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Registrant undertakes to file a post-effective amendment to this
registration statement as frequently as is necessary to ensure that the
audited financial statements in the registration statement are never
more than 16 months old for so long as payments under the variable
annuity contracts may be accepted.
(b) Registrant undertakes to include either (1) as part of any application
to purchase a contract offered by the prospectus, a space that an
applicant can check to request a Statement of Additional Information,
or (2) a post card or similar written communication affixed to or
included in the prospectus that the applicant can remove to send for a
Statement of Additional Information.
(c) Registrant undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available
under this Form promptly upon written or oral request.
(d) Registrant represents that it is relying upon the no-action assurance
given to the American Council of Life Insurance (pub. avail.
Nov. 28, 1988).Further, Registrant represents that it has complied with
the provisions of paragraphs (1)-(4) of that no-action letter.
(e) The sponsoring insurance company represents that the fees and charges
deducted under the contract, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by the insurance company.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, IDS Life Insurance Company, on behalf of the Registrant, certifies that it
meets requirements for effectiveness of this Amendment to its Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Registration Statement to be signed on its behalf in the City of
Minneapolis, and State of Minnesota, on the 26th day of May, 1999.
IDS LIFE VARIABLE ANNUITY ACCOUNT 10
(Registrant)
By IDS Life Insurance Company
(Sponsor)
By /s/ Richard W. Kling*
Richard W. Kling
President
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities indicated on the 26th day of
May, 1999.
Signature Title
/s/ Jeffrey S. Horton** Vice President, Treasurer and
Jeffrey S. Horton Assistant Secretary
/s/ David R. Hubers* Director
David R. Hubers
/s/ Richard W. Kling* Director and President
Richard W. Kling
/s/ Paul F. Kolkman* Director and Executive Vice
Paul F. Kolkman President
/s/ James A. Mitchell* Director, Chairman of the
James A. Mitchell Board and Chief Executive Officer
/s/ Barry J. Murphy* Director and Executive Vice
Barry J. Murphy President, Client Service
/s/ Stuart A. Sedlacek* Director and Executive Vice
Stuart A. Sedlacek President
/s/ Philip C. Wentzel** Vice President and Controller
Philip C. Wentzel
<PAGE>
*Signed pursuant to Power of Attorney dated March 12, 1997, filed electronically
as Exhibit 15 to Post-Effective Amendment No. 2 to Registration Statement No.
33-62407, is incorporated herein by reference.
**Signed pursuant to Power of Attorney dated April 9, 1998, filed electronically
as Exhibit 15(b) to Post-Effective Amendment No. 3 to the Registration Statement
No. 33-62407, is incorporated herein by reference.
/s/ Mary Ellyn Minenko
Mary Ellyn Minenko
Vice President and Group Counsel
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement is comprised of the following papers and documents:
The Cover Page.
Part A.
The prospectus.
Part B.
Statement of Additional Information.
Part C.
Other Information.
The signatures.
Exhibits.
EXHIBIT INDEX
Exhibit 4.1 Deferred Annuity Contract for non-qualified contracts (31043)
Exhibit 4.2 Deferred Annuity Contract for tax qualified contracts (31044)
Exhibit 4.3 Deferred Annuity Contract for IRA contracts (31045-IRA)
Exhibit 4.4 Deferred Annuity Contract for non-qualified contracts (31046)
Exhibit 4.5 Deferred Annuity Contract for tax qualified contracts (31047)
Exhibit 4.6 Deferred Annuity Contract for IRA contracts (31048-IRA)
IDS Life Insurance Company
DEFERRED ANNUITY CONTRACT
- - Flexible purchase payments.
- - Optional fixed dollar or variable accumulation values and annuity payments.
- - Annuity payments to begin on the settlement date.
- - This contract is nonparticipating. Dividends are not payable.
Annuitant:
Contract Number:
Contract Date:
Settlement Date:
This is a deferred annuity contract. It is a legal contract between you, as the
owner, and us, IDS Life Insurance Company, a Stock Company, Minneapolis,
Minnesota. PLEASE READ YOUR CONTRACT CAREFULLY.
If the annuitant is living on the Settlement Date, upon your request, we will
begin to pay you monthly annuity payments. Any payments made by us are subject
to the terms of this contract.
We issue this contract in consideration of your application and the payment of
the purchase payments.
Signed for and issued by IDS Life Insurance Company in Minneapolis, Minnesota,
as of the contract date shown above.
ACCUMULATION VALUES AND ANNUITY PAYMENTS, WHEN BASED ON THE INVESTMENT RESULTS
OF THE VARIABLE SUBACCOUNTS, ARE VARIABLE AND NOT GUARANTEED AS TO FIXED DOLLAR
AMOUNT. SEE PAGE 9 FOR VARIABLE PROVISIONS.
NOTICE OF YOUR RIGHT TO EXAMINE THIS CONTRACT FOR 10 DAYS
If for any reason you are not satisfied with this contract, return it to us or
our representative within 10 days after you receive it. We will then cancel this
contract. Upon such cancellation we will refund an amount equal to the sum of:
(1) the contract value; and (2) any premium tax charges paid. This contract will
then be considered void from its start.
[signature of] Richard W. Kling
President
[signature of] William A. Stoltzmann
Secretary
<PAGE>
CONTRACT DATA
Annuitiant: John Doe Contract Date: October 6, 1999
Contract Number: XXXX-XXXXXXX Settlement Date: October 6, 2019
Contract Owner: John Doe
Deferred Annuity Contract (AXP Retirement Advisor Variable Annuity)
Upon issuance of this contract your purchase payments have been scheduled to be
paid and applied to the fixed and variable subaccounts as shown below. You may
change the amount, frequency and allocations as provided in this contract. Refer
to the Purchase Payments provision.
Amount submitted With Application: $2,000
Scheduled Purchase Payment:
Annual Amount: NA
Variable Purchase Payments
Subaccounts Fund Allocation Percentage
1. IDS Life Capital Resource Fund 25%
2. IDS Life Special Income Fund 0%
3. IDS Life Moneyshare Fund 0%
4. IDS Life Managed Fund 25%
5. IDS Life International Equity Fund 0%
6. IDS Life Aggressive Growth Fund 0%
7. IDS Life Income Advantage Fund 0%
8. IDS Life Growth Dimensions Fund 0%
9. IDS Life Global Yield Fund 0%
10. Fund 10 0%
11. Fund 11 0%
12. Fund 12 0%
13. Fund 13 0%
14. Fund 14 0%
15. Fund 15 0%
16. Fund 16 0%
17. Fund 17 0%
18. Fund 18 0%
19. Fund 19 0%
20. Fund 20 0%
21. Fund 21 0%
22. Fund 22 0%
23. Fund 23 0%
24. Fund 24 0%
25. Fund 25 0%
26. Fund 26 0%
27. Fund 27 0%
28. Fund 28 0%
Fixed Account 50%
<PAGE>
Schedule of Surrender Charges
Surrender Charge Period for Each Purchase Payment: 10 years
Number of Completed Surrender Charge
Years from Date of Percentage Applied to Each
Purchase Payment Purchase Payment
- ---------------- ----------------
0 8%
1 8%
2 8%
3 7%
4 7%
5 6%
6 5%
7 4%
8 3%
9 2%
10 0%
Contract Administrative Charge: $30 annually. Charge is waived if
contract value, or purchase payments
less purchase payments surrendered,
equals or exceeds $50,000. See
Contract Administrative Charge
provision.
Maximum Purchase Payments Permitted:
1st contract year: $ 2,000,000
Each contract year thereafter: $ 100,000
Fixed Account Guaranteed Interest Rate: 3% Annual Effective Rate
As of the date this contract was issued, any amounts allocated to the fixed
account will earn interest, for the first year, at the annual effective rate of
4.25%. New rates may be declared from time to time.
<PAGE>
GUIDE TO CONTRACT PROVISIONS
Definitions Important words and meanings/Page 3
General Provisions Entire Contract; Incontestable; Benefits
Based on Incorrect Data; State Laws; Federal
Laws; Reports to Owner; Evidence of
Survival; Protection of Proceeds; Payments
by Us; Voting Rights/Page 4
Ownership and Beneficiary Owner's Rights; Change of Ownership;
Beneficiary; Change of Beneficiary;
Beneficiary's Rights; Assignment/Page 5
Payments to Beneficiary Describes options and amounts payable upon
death/Page 6
Purchase Payments Purchase Payments; Amounts and Intervals;
Payment Limits; Allocation of Purchase
Payments; Additional "Credits" for Purchase
Payments/Page 7
Contract Value Describes the fixed and variable account
contract values; Interest to be Credited;
Contract Administrative Charge; Premium Tax
Charges; Transfers of Contract Values/Page 8
Fixed and Variable Accounts Describes the variable subaccounts,
accumulation units and values; Net
Investment Factor; Mortality and Expense
Risk Charge; Annuity Unit Value/Page 9
Surrender Provisions Surrender of the contract for its surrender
value; Rules for Surrender; Surrender Value;
Surrender Charge; Surrender Order; Waiver of
Surrender Charges; Suspension or Delay in
Payment of Surrender/Page 11
Annuity Provisions When annuity payments begin;
Different ways to receive annuity payments;
Determination of payment amounts/Page 13
Tables of Settlement Rates Tables showing amount of first
variable annuity payment
and the guaranteed fixed
annuity payments for the
various payment plans/Page
15
<PAGE>
DEFINITIONS
The following words are often used in this contract. When we use these words,
this is what we mean:
accumulation unit
An accumulation unit is an accounting unit of measure. It is used to calculate
the contract value prior to settlement.
annuitant
The person or persons on whose life monthly annuity payments depend.
annuity unit
An annuity unit is an accounting unit of measure. It is used to calculate the
value of annuity payments from the variable subaccounts on and after the
settlement date.
code
The Internal Revenue Code of 1986, as amended, its regulations thereunder and/or
promulgations of the Internal Revenue Service, as applicable.
contract anniversary
The same day and month as the contract date each year that the contract remains
in force.
contract date
The date from which contract anniversaries, contract years, and contract months
are determined. Your contract date is shown under Contract Data.
contract value
The sum of the Fixed Account Contract Value (which receives a declared interest
rate) and the Variable Account Contract Value (which varies with the investment
performance of the elected subaccounts) for this contract.
fixed account
The fixed account is made up of all our assets other than those in any separate
account.
fixed annuity
A fixed annuity is an annuity with payments which are guaranteed by us as to
dollar amount during the annuity payment period.
settlement
The application of the contract value of this contract to an Annuity Payment
Plan to provide annuity payments.
settlement date
The date shown under Contract Data on which annuity payments are scheduled to
begin. This date may be changed as provided in this contract. You will be
notified prior to the settlement date in order to select an appropriate annuity
payment plan.
valuation date
A valuation date is each day the New York Stock Exchange is open for trading.
valuation period
A valuation period is the interval of time commencing at the close of business
on each valuation date and ending at the close of business on the next valuation
date.
variable annuity
A variable annuity is an annuity with payments which: (1) are not predetermined
or guaranteed as to dollar amounts; and (2) vary in amount with the investment
experience of one or more of the variable subaccounts.
<PAGE>
variable subaccounts
The portfolios of the Variable Account. The subaccounts available on the
contract date are named under Contract Data.
we, our, us
IDS Life Insurance Company
written request
A request in writing signed by you and delivered to us at our corporate office.
you, your
The owner of this contract. The owner may be someone other than the annuitant.
The owner may be changed as provided in this contract.
<PAGE>
GENERAL PROVISIONS
Entire Contract
This contract form is the entire contract between you and us.
No one except one of our corporate officers (President, Vice President,
Secretary or Assistant Secretary) can change or waive any of our rights or
requirements under this contract. That person must do so in writing. None of our
other representatives or other persons has the authority to change or waive any
of our rights or requirements under this contract.
Incontestable
This contract is incontestable from its date of issue.
Benefits Based on Incorrect Data
If the amount of benefits is determined by data as to a person's age or sex that
is incorrect, benefits will be recalculated on the basis of the correct data.
Any underpayments made by us will be made up immediately. Any overpayments made
by us will be subtracted from future payments.
State Laws
This contract is governed by the laws of the state in which it is delivered. The
values and benefits of this contract are at least equal to those required by
such state.
Federal Laws
This contract is intended to qualify as an annuity contract under Section 72 of
the Internal Revenue Code for Federal income tax purposes. To that end, the
provisions of this contract are to be interpreted to ensure or maintain such tax
qualification, despite any other provisions to the contrary. We reserve the
right to amend this contract to reflect any clarifications that may be needed or
are appropriate to maintain such tax qualification. We will send you a copy of
any such amendments.
Reports to Owner
At least once a year we will send you a statement showing the contract value and
the cash surrender value of this contract. This statement will be based on any
laws or regulations that apply to contracts of this type.
Evidence of Survival
Where any payments under this contract depend on the recipient or annuitant
being alive on a given date, proof that such condition has been met may be
required by us. Such proof may be required prior to making the payment.
Protection of Proceeds
Payments under this contract are not assignable by any beneficiary prior to the
time they are due.
Payments by Us
All sums payable by us are payable from our corporate office. Any payment or
surrender from a variable annuity is based on the variable contract value.
Voting Rights
So long as federal law requires, we will give certain voting rights to contract
owners. As contract owner, if you have voting rights we will send a notice to
you telling you the time and place of the shareholder meeting. The notice will
also explain matters to be voted upon and how many votes you have.
<PAGE>
OWNERSHIP AND BENEFICIARY
Owner's Rights
As long as the annuitant is living and unless otherwise provided in this
contract, you may exercise all rights and privileges provided in this contract
or allowed by us.
Change of Ownership
You can change the ownership of this contract by written request on a form
approved by us. The change must be made while the annuitant is living. Once the
change is recorded by us, it will take effect as of the date of your request,
subject to any action taken or payment made by us before recording.
Beneficiary
Unless designated otherwise, beneficiaries are those you name, in a form
satisfactory to us, to receive benefits of this contract when the first of you
or the annuitant die while this contract is in force. The owner may change the
beneficiary as provided below.
Benefits will be paid equally to all primary beneficiaries surviving the
annuitant. If none survive, proceeds will be paid equally to all contingent
beneficiaries surviving the annuitant. If no beneficiary survives the annuitant,
we will pay the benefits to you, if living, otherwise to your estate.
Change of Beneficiary
You may change the beneficiary anytime while the annuitant is living by
satisfactory written request to us. Once the change is recorded by us, it will
take effect as of the date of your request, subject to any action taken or
payment made by us before the recording.
Beneficiary's Rights
If the death benefit under this contract becomes payable to a beneficiary
(payee) under an Annuity Payment Plan, that payee shall have the right to name a
beneficiary. Any such request from the payee must be made on a form satisfactory
to us.
Assignment
While the annuitant is living, you can assign this contract or any interest in
it. Your interest and the interest of any beneficiary is subject to the interest
of the assignee. An assignment is not a change of ownership and an assignee is
not an owner as these terms are used in this contract. Any amounts payable to
the assignee will be paid in a single sum.
A copy of any new assignment must be submitted to us at our corporate office.
Any assignment is subject to any action taken or payment made by us before the
assignment was recorded at our corporate office. We are not responsible for the
validity or effect, tax or otherwise, of any assignment.
<PAGE>
PAYMENTS TO BENEFICIARY
Death Benefit Before the Settlement Date
If you or the annuitant die before the Settlement Date while this contract is in
force, and both you and the annuitant are age 80 or younger on the date of
death, we will pay the beneficiary the greatest of:
1. the contract value; or
2. the total purchase payments paid less any "adjusted partial surrenders"; or
3. the contract value as of the most recent sixth contract anniversary, plus any
purchase payments paid and less any "adjusted partial surrenders" since that
contract anniversary.
An "adjusted partial surrender" is calculated for each partial surrender as the
product of (a) times (b) where:
(a) is the ratio of the amount of the partial surrender to the contract
value on the date of (but prior to) the partial surrender; and
(b) is the death benefit on the date of (but prior to) the partial
surrender.
If either you or the annuitant are age 81 or older on the date of death, we will
pay the beneficiary the greater of:
1. the contract value; or
2. the total purchase payments less any adjusted partial surrenders.
The above amount will be payable in a lump sum on the valuation date we receive
due proof of death of the annuitant or owner, whichever first occurs. The
beneficiary may elect to receive payment anytime within 5 years after the date
of death.
In lieu of a lump sum, payment may be made under an Annuity Payment Plan,
provided:
1. the beneficiary elects the plan within 60 days after we receive due proof of
death; and
2. payments begin no later than one year after the date of death; and
3. the plan provides payments over a period which does not exceed the life or
the life expectancy of the beneficiary.
In this event, the reference to "annuitant" in the Annuity Provisions shall
apply to the beneficiary.
We will determine the contract value on which we base amounts payable or applied
under this section at the next accumulation unit value calculated after we
receive due proof of death at our corporate office.
Pre-election of an Annuity Payment Plan
During your lifetime you may elect how the death benefit described herein is to
be paid under the contract in the event of death before the settlement date. Any
such election must be made on a form satisfactory to us. We must receive the
form in our corporate office prior to the date of death of the first to die of
the owner or annuitant. In this event the death benefit shall be payable as so
elected by you, rather than as requested by the beneficiary. If for any reason
such election does not satisfy Section 72 of the Code or related distribution
requirements, the election will be void and the beneficiary will then be
permitted to elect payment pursuant to the provisions of the contract.
Spouse Option to Continue Contract Upon Owner's Death
If the owner's death occurs prior to the settlement date, the owner's spouse, if
designated as sole beneficiary, or as a joint tenant with right of survivorship,
may elect in writing to forego receipt of the death benefit and instead continue
this contract in force as owner. The election by the spouse must be made within
60 days after we receive due proof of death.
Annuitant's Death After the Settlement Date
If the annuitant or owner dies after the settlement date, the amount payable, if
any, will be as provided in the Annuity Payment Plan then in effect.
<PAGE>
PURCHASE PAYMENTS
Purchase Payments
Purchase payments are the payments you make for this contract and the benefits
it provides. Purchase payments must be paid or mailed to us at our corporate
office or to an authorized agent. If requested, we'll give you a receipt for
your purchase payments.
Net purchase payments are that part of your purchase payments applied to the
contract value. A net purchase payment is equal to the purchase payment less any
applicable premium tax charge.
Amount and Intervals
Purchase payments may be paid in a single sum or in installments until the
earlier of: (1) the date this contract terminates by surrender or otherwise; or
(2) the date on which the annuity payments begin.
Subject to the Payment Limits Provision you may: (1) stop and/or restart
purchase payments; or (2) increase or decrease the amount of your purchase
payments; or (3) change the interval of your purchase payments.
Payment Limits Provision
Maximum Purchase Payments - The maximum purchase payments in the first or later
contract years may not exceed the amounts shown under Contract Data. We reserve
the right to increase the maximums.
Minimum Purchase Payments - Upon issue of this contract, a purchase payment
intended as a Single Purchase Payment must be at least $2,000. If you intend to
make installment purchase payments such payments, on an annualized basis, must
be at least equal to $600. Additional payments must be at least $50.
We reserve the right to not accept purchase payments allocated to the fixed
account for twelve months following: (1) a partial surrender from the fixed
account; or (2) a lump sum transfer from the fixed account to the variable
subaccounts.
We also reserve the right to cancel this contract if both of the following
conditions exist at the same time: (1) no purchase payments have been paid for a
continuous period of 24 months; and (2) less than $600 in purchase payments have
been paid under this contract. In this event we will give you 30 days written
notice of our intent to cancel this contract. Upon such cancellation we will pay
you the contract value in one sum. This contract will then terminate.
Allocation of Purchase Payments
You instruct us on how you want your purchase payments allocated among the fixed
account and variable subaccounts. Your choice for each account may be made in
any whole percent from 0% to 100% as long as the total adds up to 100%. Your
allocation instructions as of the contract date are shown under Contract Data.
By written request, or by other method agreed to by us, you may change your
choice of accounts or percentages. The first net purchase payment will be
allocated as of the end of the valuation period during which we make an
affirmative decision to issue this contract. Net purchase payments after the
first will be allocated as of the end of the valuation period during which we
receive the payment at our corporate office.
Additional "Credits" for Purchase Payments
We will add a Credit of 1% of all purchase payments received under this contract
in each of the following situations:
1. if your contract has a 10-year surrender charge schedule as shown under
Contract Data; or
2. if your initial purchase payment to this contract was at least $100,000.
Each credit is allocated to your contract value when the applicable purchase
payment is applied to your contract value. Such Credits are allocated to your
contract value according to allocation instructions in effect for your purchase
payments.
Credits shall be reversed from the contract value for any purchase payment that
is not honored.
Credits applied within 12 months preceding: (1) the date of death that results
in a lump sum death benefit under this contract; or (2) a request for surrender
charge waiver due to Nursing Home Confinement, if applicable, shall be reversed
from the contract value.
The amount returned to you under the Right to Examine Contract (Free-look)
provision shall not include any Credits applied to your contract.
<PAGE>
CONTRACT VALUE
Contract Value
The contract value at any time is the sum of: (1) the Fixed Account Contract
Value; and (2) the Variable Account Contract Value.
If: (1) part or all of the contract value is surrendered; or (2) charges
described herein are made against the contract value; then a number of
accumulation units from the variable subaccounts and an amount from the fixed
account will be deducted to equal such amount. For surrenders, deductions will
be made from the fixed or variable subaccounts that you specify. Otherwise, the
number of units from the variable subaccounts and the amount from the fixed
account will be deducted in the same proportion that your interest in each bears
to the total contract value.
Variable Account Contract Value
The variable account contract value at any time will be: (1) the sum of the
value of all variable subaccount accumulation units under this contract
resulting from purchase payments and any purchase payment credits so allocated,
or transfers among the variable and fixed accounts; less (2) any units deducted
for charges or surrenders.
Fixed Account Contract Value
The fixed account contract value at any time will be: (1) the sum of all amounts
credited to the fixed account under this contract; less (2) any amounts deducted
for charges or surrenders.
Interest to be Credited
We will credit interest to the fixed account contract value. Interest will begin
to accrue on the date the purchase payments which are received in our corporate
office become available to us for use. Such interest will be credited at a rate
that we determine from time to time. However, we guarantee that the rate will
not be less than the Guaranteed Interest Rate shown under Contract Data.
Contract Administrative Charge
We charge a fee for establishing and maintaining our records for this contract.
The charge is $30 per year and is deducted from the contract value at the end of
each contract year or, if earlier, when the contract is fully surrendered. The
charge deducted will be prorated among the variable subaccounts and the fixed
account in the same proportion your interest in each bears to the total contract
value.
We waive this charge if your contract value, or your total purchase payments
less any purchase payments surrendered, equals or exceeds $50,000.
If you make a full surrender of this contract, we deduct the full $30 contract
administrative charge at the time of the full surrender regardless of purchase
payments made or contract value.
The charge does not apply after settlement of this contract under an annuity
payment plan.
Premium Tax Charges
A charge will be made by us against the contract value of this contract at the
time that any premium taxes not previously deducted are payable.
Transfers of Contract Values
While this contract is in force prior to the settlement date, transfer of
contract values may be made as outlined below:
1. You may transfer all or part of the values held in one or more variable
subaccounts to another one or more of the variable subaccounts. Subject to
item 2, you may also transfer values held in one or more of the variable
subaccounts to the fixed account.
2. On or within the 30 days after a contract anniversary you may transfer
values from the fixed account to one or more of the variable subaccounts.
Only one such transfer is allowed during this period each year. If such a
transfer is made, no transfers from a variable subaccount to the fixed
account may be made until the next contract anniversary.
You may make a transfer by written request. Transfer requests may also be made
according to telephone procedures or automated transfer procedures that are then
currently in effect, if any. There is no fee or charge for these transfers.
However, the minimum transfer amount is $250, or if less, the entire value in
the account from which the transfer is being made. Smaller minimums may apply to
automated transfer procedures. This transfer privilege may be suspended or
modified by us at any time.
<PAGE>
FIXED AND VARIABLE ACCOUNTS
The Fixed Account
The fixed account is our general account. It is made up of all of our assets
other than:
(1) those in the variable subaccounts; and
(2) those in any other segregated asset account.
The Variable Account
The variable account is a separate investment account of ours. It consists of
several subaccounts, which are named under Contract Data. We have allocated a
part of our assets for this contract to the variable accounts. Such assets
remain our property. However, they may not be charged with the liabilities from
any other business in which we may take part.
Investments of the Variable Account
Purchase payments applied to the variable subaccounts will be allocated as
specified by the owner. Each variable subaccount will buy, at net asset value,
shares of the fund shown for that subaccount under Contract Data or as later
added or changed.
We may change the funds from which the variable subaccounts buy shares if laws
or regulations change, the existing funds become unavailable or in our judgment,
the funds are no longer suitable for the subaccounts. We have the right to
substitute funds for those shown under Contract Data, including funds other than
those shown under Contract Data. We may also: add additional subaccounts
investing in other funds; combine subaccounts; transfer assets to and from the
subaccounts or the variable account; and eliminate or close any subaccounts.
When required, we would first seek approval of the Securities and Exchange
Commission and, the insurance regulator of the state where this contract is
delivered.
Valuation of Assets
Fund shares in the variable subaccounts will be valued at their net asset value.
Variable Account Accumulation Units
The number of accumulation units for each of the variable subaccounts is found
by adding the number of accumulation units resulting from:
1. purchase payments and any purchase payment credits allocated to the
subaccount; and
2. transfers to the subaccount;
and subtracting the number of accumulation units from:
1. transfers from the subaccount; and
2. surrenders (including surrender charges) from the subaccount; and
3. contract administrative charge deductions from the subaccount.
The number of accumulation units added or subtracted for each of the above
transactions is found by dividing (1) by (2) where:
1. is the amount allocated to or deducted from the subaccount; and
2. is the accumulation unit value for the subaccount for the respective
valuation period during which we receive the purchase payment or transfer
value, or during which we deducted transfers, surrenders, surrender charges
or contract administrative charges.
<PAGE>
Variable Account Accumulation Unit Value
The value of an accumulation unit for each of the variable subaccounts was
arbitrarily set at $1 when the first fund shares were bought. The value for any
later valuation period is found as follows:
The accumulation unit value for each variable subaccount for the last prior
valuation period is multiplied by the net investment factor for the same account
for the next following valuation period. The result is the accumulation unit
value. The value of an accumulation unit may increase or decrease from one
valuation period to the next.
Net Investment Factor
The net investment factor is an index applied to measure the investment
performance of a variable subaccount from one valuation period to the next. The
net investment factor may be greater or less than one; therefore, the value of
an accumulation or annuity unit may increase or decrease.
The net investment factor for any such subaccount for any one valuation period
is determined by: dividing (1) by (2) and subtracting (3) from the result. This
is done where:
(1) is the sum of:
a) the net asset value per share of the fund held in the variable
subaccount determined at the end of the current valuation period; plus
b) the per share amount of any dividend or capital gain distributions made
by the fund held in the variable subaccount, if the "ex-dividend" date
occurs during the current valuation period.
(2) is the net asset value per share of fund held in the variable
subaccount, determined at the end of the last prior valuation period.
(3) is a factor representing the mortality and expense risk charge.
Mortality and Expense Risk Charge
In calculating unit values we will deduct a mortality and expense risk charge
from the variable subaccounts equal, on an annual basis, to .95% of the daily
net asset value. This deduction is made to compensate us for assuming the
mortality and expense risks under contracts of this type. We estimate that
approximately 2/3 of this charge is for assumption of mortality risk and 1/3 is
for assumption of expense risk. The deduction will be: (1) made from each
variable subaccount; and (2) computed on a daily basis.
Annuity Unit Value
The value of an Annuity Unit for each variable subaccount was arbitrarily set at
$1 when the first funds were bought. The value for any later valuation period is
found as follows:
1. The annuity unit value for each variable subaccount for the last prior
valuation periods is multiplied by the net investment factor for the
subaccount for the valuation period for which the annuity unit value is
being calculated.
2. The result is multiplied by an interest factor. This is done to
neutralize the assumed investment rate which is built into the
settlement tables on page 15.
<PAGE>
SURRENDER PROVISIONS
Surrender
By written request and subject to the rules below you may:
1. surrender this contract for the total surrender value; or
2. partially surrender this contract for a part of the surrender value.
Rules for Surrender
All surrenders will have the following conditions;
1. You must apply by written request or other method agreed to by us: (a)
while this contract is in force; and (b) prior to the earlier of the
settlement date or the death of the annuitant.
2. Unless we agree otherwise, you must surrender an amount equal to at least
$250 or the entire contract value, if less. The contract value after a
partial surrender must be at least $600.
3. The amount surrendered, less any charges, will normally be paid to you
within seven days of our receipt of your written surrender request and the
return of this contract, if required. For surrenders from the fixed
account, we have the right to defer payment to you for up to 6 months from
the date we receive the request.
4. For partial surrenders, if you do not specify from which accounts the
surrender is to be made, the surrender will be made from the variable
subaccounts and fixed account in the same proportion as your interest in
each bears to the contract value.
5. Any amounts surrendered and charges which may apply can not be repaid.
Upon surrender for the full surrender value this contract will terminate. We may
require that you return the contract to us before we pay the full surrender
value.
Surrender Value
The surrender value at any time will be:
1. the contract value;
2. minus the contract administrative charge;
3. minus any surrender charge.
Surrender Charge
If you surrender all or a part of your contract, you may be subject to a
surrender charge. A surrender charge applies if all or part of the surrender
amount is from purchase payments we received within seven (7) or ten (10) years
before surrender. The surrender charge period you selected at the time of
application for this contract and applicable surrender charge percentages are
shown under Contract Data. We determine your surrender charge by multiplying
each of your payments surrendered by the applicable surrender charge percentage,
and then adding the total surrender charges.
Surrender Order
For purposes of determining any surrender charge, we treat amounts surrendered
from your contract value in the following order so that the amount actually
surrendered, less any surrender charge that applies, equals your requested
surrender amount.
1. First, surrenders are from contract earnings. Contract earnings are defined
as the contract value less purchase payments not previously surrendered.
(No surrender charge.)
2. Next, in each contract year, amounts totaling up to 10% of your prior
contract anniversary contract value, but only to the extent not included
and surrendered in Number 1. above. Your initial purchase payment is
considered the prior contract anniversary contract value during the first
contract year. (No surrender charge.)
3. Next, surrenders are from purchase payments received prior to the surrender
charge period shown in the schedule under Contract Data. (No surrender
charge.)
<PAGE>
4. Next, surrenders are from purchase payments received that are still within
the surrender charge period shown in the schedule under Contract Data. We
surrender these payments on a first-in, first-out basis to minimize the
surrender charge that applies to these payments.
Waiver of Surrender Charges
Surrender charges are waived for all of the following:
1. Death Benefit payments made in the event of the death of the owner or
annuitant; or
2. Contracts settled under an Annuity Payment Plan; or
3. Surrenders made if you were under age 76 on the contract date, and you
provide proof satisfactory to us that, as of the date you request the
surrender, you or the annuitant are confined to a nursing home, have been
confined for the prior 90 days, and such confinement began while this
contract was in force.
To qualify, the nursing home must:
(a) be licensed by an appropriate licensing agency to provide nursing services;
and
(b) provide 24-hour-a-day nursing services; and
(c) have a doctor available for emergency situations; and
(d) have a nurse on duty or call at all times; and
(e) maintain clinical records; and
(f) have appropriate methods for administering drugs.
Suspension or Delay in Payment of Surrender
We have the right to suspend or delay the date of any surrender payment from the
variable subaccounts for any period:
1. when the New York Stock Exchange is closed; or
2 when trading on the New York Stock Exchange is restricted; or
3. when an emergency exists as a result of which: (a) disposal of securities
held in the variable subaccounts is not reasonably practicable; or (b) it
is not reasonably practicable to fairly determine the value of the net
assets of the variable subaccounts; or
4. during any other period when the Securities and Exchange Commission, by
order, so permits for the protection of security holders.
Rules and regulations of the Securities and Exchange Commission will govern as
to whether the conditions set forth in 2 and 3 exist.
<PAGE>
ANNUITY PROVISIONS
Settlement
When settlement occurs, the contract value will be applied to make annuity
payments. The first payment will be made as of the settlement date. This date is
shown under Contract Data. Before payments begin we will require satisfactory
proof that the annuitant is alive. We may also require that you exchange this
contract for a supplemental contract, which provides for the annuity payments.
Change of Settlement Date
You may change the settlement date shown for this contract. Tell us the new date
by written request. However the settlement date may not be later than the later
of: (1) the annuitant's 85th birthday; or (2) the tenth contract anniversary.
Also, if you select a new date, it must be at least 30 days after we receive
your written request at our corporate office.
Annuity Payment Plans
Subject to the terms of this contract, annuity payments may be made on a fixed
dollar basis, a variable basis, or a combination of both. You can schedule
receipt of annuity payments according to one of the Plans A through E below or
another plan agreed to by us.
Plan A - This provides monthly annuity payments during the lifetime of the
annuitant. No payments will be made after the annuitant dies.
Plan B - This provides monthly annuity payments during the lifetime of the
annuitant with a guarantee by us that payments will be made for a period of
at least five, ten or fifteen years. You must select the guaranteed period.
Plan C - This provides monthly annuity payments during the lifetime of the
annuitant with a guarantee by us that payments will be made for a certain
number of months. We determine the number of months by dividing the amount
applied under this Plan by the amount of the first monthly annuity payment.
Plan D - Monthly payments will be paid during the lifetime of the annuitant
and a joint annuitant. When either the annuitant or the joint annuitant
dies we will continue to make monthly payments during the lifetime of the
survivor. No payments will be paid after the death of both the annuitant
and joint annuitant.
Plan E - (Installments for a specified period ) This provides monthly
annuity payments for a period of years. The period of years may be no less
than 10 or more than 30.
By written request to us at least 30 days before the settlement date, you may
select the Plan. If at least 30 days before the settlement date we have not
received at our corporate office your written request to select a Plan, we will
make payments according to Plan B with payments guaranteed for ten years.
If the amount to applied to a Plan is less than $2,000 or would not provide an
initial monthly payment of at least $20, we have the right to make a lump sum
payment of the contract value.
Allocation of Contract Values at Settlement
At the time of settlement under an Annuity Payment Plan you may reallocate your
contract value to the Fixed Account to provide fixed dollar payments and/or
among the variable subaccounts to provide variable annuity payments. Unless we
agree otherwise, you may use a maximum of five variable subaccounts at any one
time during settlement.
Fixed Annuity
A fixed annuity is an annuity with payments that are guaranteed by us as to
dollar amount. Fixed annuity payments after the first will never be less than
the amount of the first payment. At settlement, the fixed account contract value
will be applied to the applicable Settlement Table. This will be done in
accordance with the Payment Plan chosen. The amount payable for each $1,000 so
applied is shown in Table B on page 16.
Variable Annuity
A variable annuity is an annuity with payments which: (1) are not predetermined
or guaranteed as to dollar amount: and (2) vary in amount with the investment
experience of the variable subaccounts.
<PAGE>
Determination of First Variable Annuity Payment
At settlement, the variable account contract value will be applied to the
applicable Settlement Table. This will be done: (1) on the valuation date on or
next preceding the 7th calendar day before the settlement date; and (2) in
accordance with the Payment Plan chosen. The amount payable for the first
payment for each $1,000 so applied is shown in Table A on page 15.
Variable Annuity Payments After the First Payment
Variable annuity payments after the first vary in amount. The amount changes
with the investment performance of the variable subaccounts. The dollar amount
of variable annuity payments after the first is not fixed. It may change from
month to month. The dollar amount of such payments is determined as follows:
1. The dollar amount of the first annuity payment is divided by the value of
an annuity unit as of the valuation date on or next preceding the 7th
calendar day before the settlement date. This result establishes the fixed
number of annuity units for each monthly annuity payment after the first.
This number of annuity units remains fixed during the annuity payment
period.
2. The fixed number of annuity units is multiplied by the annuity unit value
as of the valuation date on or next preceding the 7th calendar day before
the date the payment is due. The result establishes the dollar amount of
the payment.
We guarantee that the dollar amount of each payment after the first will not be
affected by variation in expenses or mortality experience.
Exchange of Annuity Units
After annuity payments begin, annuity units of any variable subaccount may be
exchanged for units of any of the other variable subaccounts. This may be done
no more than once a year. Unless we agree otherwise you may use a maximum of
five variable subaccounts at any one time. Once annuity payments start, no
exchanges may be made to or from any fixed annuity.
<PAGE>
TABLES OF SETTLEMENT RATES
Table A below shows the amount of the first monthly variable annuity payment,
based on a 5% assumed investment return, for each $1,000 of value applied under
any payment plan. The amount of the first and all subsequent monthly fixed
dollar annuity payments for each $1,000 of value applied under any payment plan
will be based on our fixed dollar Table of Settlement Rates in effect at
settlement. Such rates are guaranteed to be not less than those shown in Table
B. The amount of such annuity payments under Plans A, B and C will depend upon
the sex and age of the annuitant at settlement. The amount of such annuity
payments under Plan D will depend upon the sex and the age of the annuitant and
the joint annuitant at settlement.
<TABLE>
<CAPTION>
Table A - Dollar Amount of First Monthly Variable Annuity Payment Per $1,000 Applied
<S> <C> <C> <C> <C> <C> <C> <C>
Plan A Plan B Plan C Plan D
Age at Beginning Life Five Years Life Income Fifteen Years Life Income Joint &
Annui- In Income Certain with Ten Years Certain Installment Survivor
tization Non-Refund Certian Refund Non-Refund
Male & Female
Age 65 Year Male Female Male Female Male Female Male Female Male Female Same Age
- ---------- ------- -------- -------- ------ -------- ------- -------- ------- -------- ------ --------- --------------
2005 6.49 5.85 6.44 5.83 6.29 5.77 6.06 5.66 6.13 5.67 5.34
2010 6.40 5.78 6.35 5.76 6.22 5.71 6.00 5.61 6.06 5.61 5.30
2015 6.31 5.72 6.27 5.70 6.15 5.65 5.95 5.56 6.00 5.56 5.25
2020 6.23 5.66 6.19 5.64 6.08 5.60 5.90 5.52 5.93 5.51 5.21
2025 6.15 5.60 6.12 5.59 6.01 5.54 5.84 5.47 5.88 5.47 5.18
2030 6.08 5.55 6.05 5.53 5.95 5.50 5.80 5.43 5.82 5.43 5.14
Age 70 2005 7.41 6.54 7.29 6.50 6.98 6.36 6.54 6.14 6.79 6.22 5.85
2010 7.28 6.45 7.17 6.41 6.88 6.28 6.48 6.08 6.70 6.15 5.78
2015 7.16 6.35 7.06 6.32 6.80 6.21 6.42 6.03 6.61 6.08 5.72
2020 7.04 6.27 6.95 6.24 6.71 6.14 6.37 5.97 6.53 6.01 5.66
2025 6.93 6.19 6.85 6.16 6.63 6.07 6.31 5.92 6.45 5.95 5.61
2030 6.83 6.11 6.76 6.09 6.55 6.01 6.26 5.87 6.38 5.90 5.56
Age 75 2005 8.67 7.58 8.42 7.47 7.78 7.15 7.02 6.70 7.65 6.99 6.59
2010 8.49 7.43 8.26 7.34 7.68 7.05 6.97 6.63 7.53 6.89 6.49
2015 8.32 7.30 8.11 7.21 7.58 6.96 6.91 6.57 7.42 6.80 6.40
2020 8.16 7.18 7.97 7.10 7.48 6.87 6.86 6.51 7.31 6.71 6.31
2025 8.00 7.06 7.83 6.99 7.38 6.78 6.81 6.46 7.21 6.62 6.24
2030 7.86 6.95 7.70 6.89 7.29 6.70 6.75 6.40 7.12 6.55 6.16
Age 85 2005 13.01 11.44 11.71 10.69 9.46 9.09 7.69 7.60 10.30 9.50 9.30
2010 12.65 11.12 11.48 10.45 9.38 9.00 7.67 7.58 10.11 9.32 9.09
2015 12.31 10.82 11.26 10.23 9.30 8.90 7.66 7.56 9.93 9.15 8.90
2020 11.99 10.55 11.04 10.02 9.22 8.80 7.64 7.53 9.76 9.00 8.72
2025 11.70 10.29 10.84 9.83 9.15 8.71 7.62 7.51 9.60 8.85 8.55
2030 11.42 10.06 10.64 9.64 9.07 8.62 7.61 7.48 9.45 8.72 8.40
- ---------- ------- -------- -------- ------ -------- ------- -------- ------- -------- ------ --------- --------------
Table A above is based on the "1983 Individual Annuitant Mortality Table A" with
100% Projection Scale G and a 5% assumed investment return. Settlement rates for
any year, age, or any combination of year, age and sex not shown above, will be
calculated on the same basis as those rates shown in the Table above. Such rates
will be furnished by us upon request. Amounts shown in the Table below are based
on a 5% assumed investment return. </TABLE>
<TABLE>
<CAPTION>
Plan E - Dollar Amount of First Monthly Variable Annuity Payment Per $1,000 Applied
<S> <C> <C> <C> <C> <C>
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
Years Payable Monthly Payment Years Payable Monthly Payment Years Payable Monthly Payment
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
10 10.51 17 7.20 24 5.88
11 9.77 18 6.94 25 5.76
12 9.16 19 6.71 26 5.65
13 8.64 20 6.51 27 5.54
14 8.20 21 6.33 28 5.45
15 7.82 22 6.17 29 5.36
16 7.49 23 6.02 30 5.28
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
</TABLE>
<TABLE>
<CAPTION>
Table B- Dollar Amounts of Each Monthly Fixed Dollar Annuity Payment Per $1,000 Applied
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------- -------- ---------------- ------ -------- ---------------- ------- ------- ----------------- --------------
Plan A Plan B Plan C Plan D
- ---------- -------- ---------------- ------ -------- ---------------- ------- ------- ----------------- --------------
Settlement Life Income Life Income Life Income Joint &
Settlement Beginning Non-Refund Five Years with Fifteen Years Installment Survivor
In Certain Ten Years Certain Refund Non-Refund
Certain Male & Female
Age Year Male Female Male Female Male Female Male Female Male Female Same Age
- ---------- -------- ------- -------- ------ -------- ------- -------- ------- ------- -------- -------- --------------
Age 65 2005 5.30 4.68 5.26 4.66 5.15 4.62 4.95 4.53 4.84 4.43 4.20
2010 5.21 4.61 5.17 4.60 5.07 4.55 4.89 4.48 4.77 4.38 4.15
2015 5.12 4.55 5.09 4.53 4.99 4.49 4.83 4.42 4.71 4.34 4.11
2020 5.04 4.48 5.01 4.47 4.92 4.44 4.77 4.38 4.66 4.29 4.07
2025 4.96 4.43 4.94 4.42 4.86 4.39 4.72 4.33 4.60 4.25 4.03
2030 4.89 4.37 4.87 4.37 4.79 4.34 4.67 4.29 4.55 4.21 3.99
Age 70 2005 6.21 5.38 6.12 5.35 5.87 5.24 5.48 5.05 5.45 4.97 4.74
2010 6.08 5.29 6.01 5.26 5.77 5.16 5.41 4.99 5.37 4.90 4.67
2015 5.96 5.20 5.89 5.17 5.68 5.08 5.35 4.93 5.29 4.84 4.61
2020 5.85 5.11 5.79 5.09 5.59 5.01 5.29 4.87 5.22 4.78 4.55
2025 5.75 5.03 5.69 5.01 5.51 4.94 5.23 4.82 5.15 4.72 4.49
2030 5.64 4.96 5.59 4.94 5.43 4.88 5.17 4.76 5.08 4.67 4.44
Age 75 2005 7.47 6.42 7.27 6.33 6.72 6.07 6.00 5.65 6.24 5.68 5.50
2010 7.29 6.28 7.11 6.20 6.61 5.97 5.94 5.59 6.14 5.60 5.40
2015 7.12 6.15 6.96 6.08 6.50 5.87 5.88 5.52 6.04 5.51 5.31
2020 6.96 6.03 6.82 5.97 6.40 5.78 5.83 5.46 5.95 5.43 5.23
2025 6.81 5.91 6.68 5.86 6.30 5.69 5.77 5.40 5.86 5.36 5.15
2030 6.67 5.81 6.55 5.76 6.21 5.60 5.72 5.34 5.77 5.29 5.08
Age 85 2005 11.77 10.25 10.64 9.60 8.51 8.12 6.73 6.64 8.66 7.97 8.24
2010 11.42 9.94 10.40 9.37 8.42 8.02 6.71 6.61 8.50 7.82 8.03
2015 11.09 9.65 10.18 9.15 8.34 7.91 6.70 6.59 8.35 7.68 7.84
2020 10.78 9.38 9.96 8.94 8.26 7.81 6.68 6.56 8.20 7.55 7.66
2025 10.49 9.14 9.75 8.74 8.18 7.72 6.66 6.54 8.06 7.42 7.50
2030 10.22 8.91 9.56 8.56 8.09 7.62 6.65 6.51 7.94 7.31 7.35
- ---------- -------- ------- -------- ------ -------- ------- -------- ------- ------- -------- -------- --------------
Table B above is based on the "1983 Individual Annuitant Mortality Table A" at
3.00% with 100% Projection Scale G. Settlement rates for any year, age, or any
combination of year, age and sex not shown above, will be calculated on the same
basis as those rates shown in the Table above. Such rates will be furnished by
us upon request. Amounts shown in the Table below are based on a 3% annual
effective interest rate.
</TABLE>
<TABLE>
<CAPTION>
Plan E - Dollar Amount of Each Monthly Fixed Dollar Annuity Payment Per $1,000 Applied
<S> <C> <C> <C> <C> <C>
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
Years Payable Monthly Payment Years Payable Monthly Payment Years Payable Monthly Payment
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
10 9.61 17 6.23 24 4.84
11 8.86 18 5.96 25 4.71
12 8.24 19 5.73 26 4.95
13 7.71 20 5.51 27 4.47
14 7.26 21 5.32 28 4.37
15 6.87 22 5.15 29 4.27
16 6.53 23 4.99 30 4.18
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
</TABLE>
<PAGE>
DEFERRED ANNUITY CONTRACT
- - Flexible purchase payments.
- - Optional fixed dollar or variable accumulation values and annuity payments.
- - Annuity payments to begin on the settlement date.
- - This contract is nonparticipating. Dividends are not payable.
IDS Life Insurance Company
IDS Tower 10
Minneapolis, Minnesota 55440
IDS Life Insurance Company
DEFERRED ANNUITY CONTRACT
- - Flexible purchase payments.
- - Optional fixed dollar or variable accumulation values and annuity payments.
- - Annuity payments to begin on the settlement date.
- - This contract is nonparticipating. Dividends are not payable.
Annuitant:
Contract Number:
Contract Date:
Settlement Date:
This is a deferred annuity contract. It is a legal contract between you, as the
owner, and us, IDS Life Insurance Company, a Stock Company, Minneapolis,
Minnesota. PLEASE READ YOUR CONTRACT CAREFULLY.
If the annuitant is living on the Settlement Date, upon your request, we will
begin to pay you monthly annuity payments. Any payments made by us are subject
to the terms of this contract.
We issue this contract in consideration of your application and the payment of
the purchase payments.
Signed for and issued by IDS Life Insurance Company in Minneapolis, Minnesota,
as of the contract date shown above.
ACCUMULATION VALUES AND ANNUITY PAYMENTS, WHEN BASED ON THE INVESTMENT RESULTS
OF THE VARIABLE SUBACCOUNTS, ARE VARIABLE AND NOT GUARANTEED AS TO FIXED DOLLAR
AMOUNT. SEE PAGE 10 FOR VARIABLE PROVISIONS.
NOTICE OF YOUR RIGHT TO EXAMINE THIS CONTRACT FOR 10 DAYS
If for any reason you are not satisfied with this contract, return it to us or
our representative within 10 days after you receive it. We will then cancel this
contract. Upon such cancellation we will refund an amount equal to the sum of:
(1) the contract value; and (2) any premium tax charges paid. This contract will
then be considered void from its start.
[signature of] Richard W. Kling
President
[signature of] William A. Stoltzmann
[GRAPHIC OMITTED]
Secretary
<PAGE>
CONTRACT DATA
Annuitiant: John Doe Contract Date: October 6, 1999
Contract Number: XXXX-XXXXXXX Settlement Date: October 6, 2019
Contract Owner: John Doe
Deferred Annuity Contract ("AXP Retirement Advisor Variable Annuity")
Upon issuance of this contract your purchase payments have been scheduled to be
paid and applied to the fixed and variable subaccounts as shown below. You may
change the amount, frequency and allocations as provided in this contract. Refer
to the Purchase Payments provision.
Amount submitted With Application: $2,000
Scheduled Purchase Payment:
Annual Amount: NA
Variable Purchase Payments
Subaccounts Fund
Allocation Percentage
1. IDS Life Capital Resource Fund 25%
2. IDS Life Special Income Fund 0%
3. IDS Life Moneyshare Fund 0%
4. IDS Life Managed Fund 25%
5. IDS Life International Equity Fund 0%
6. IDS Life Aggressive Growth Fund 0%
7. IDS Life Income Advantage Fund 0%
8. IDS Life Growth Dimensions Fund 0%
9. IDS Life Global Yield Fund 0%
10. Fund 10 0%
11. Fund 11 0%
12. Fund 12 0%
13. Fund 13 0%
14. Fund 14 0%
15. Fund 15 0%
16. Fund 16 0%
17. Fund 17 0%
18. Fund 18 0%
19. Fund 19 0%
20. Fund 20 0%
21. Fund 21 0%
22. Fund 22 0%
23. Fund 23 0%
24. Fund 24 0%
25. Fund 25 0%
26. Fund 26 0%
27. Fund 27 0%
28. Fund 28 0%
Fixed Account 50%
<PAGE>
Schedule of Surrender Charges
Surrender Charge Period for Each Purchase Payment: 10 years
Number of Completed Surrender Charge
Years from Date of Percentage Applied to Each
Purchase Payment Purchase Payment
- ---------------- ----------------
0 8%
1 8%
2 8%
3 7%
4 7%
5 6%
6 5%
7 4%
8 3%
9 2%
10 0%
Contract Administrative Charge: $30 annually. Charge is waived if
contract value, or purchase payments
less purchase payments surrendered,
equals or exceeds $50,000. See
Contract Administrative Charge
provision.
Maximum Purchase Payments Permitted:
1st contract year: $2,000,000
Each contract year thereafter: $ 100,000
Fixed Account Guaranteed Interest Rate: 3% Annual Effective Rate
As of the date this contract was issued, any amounts allocated to the fixed
account will earn interest, for the first year, at the annual effective rate of
4.25%. New rates may be declared from time to time.
<PAGE>
GUIDE TO CONTRACT PROVISIONS
Definitions Important words and meanings/Page 3
General Provisions Entire Contract; Incontestable; Benefits
Based on Incorrect Data; State Laws; Federal
Laws; Reports to Owner; Evidence of
Survival; Protection of Proceeds; Payments
by Us; Voting Rights/Page 4
Ownership and Beneficiary Owner's Rights; Trust or Custodial
Ownership; Change of Ownership; Beneficiary;
Change of Beneficiary/Page 5
Payments to Beneficiary Describes options and amounts payable upon
death/Page 6
Purchase Payments Purchase Payments; Amounts and Intervals;
Payment Limits; Allocation of Purchase
Payments; Additional "Credits" for Purchase
Payments/Page 7
Contract Value Describes the fixed and variable account
contract values; Interest to be Credited,
Contract Administrative Charge; Premium Tax
Charges, Transfers of Contract Values/Page 9
Fixed and Variable Accounts Describes the variable subaccounts,
accumulation units and values; Net
Investment Factor; Mortality and Expense
Risk Charge; Annuity Unit Value/Page 10
Surrender Provisions Surrender; Rules for Surrender; Restrictions
on Distributions from the Contract;
Surrender Value; Surrender Charge; Surrender
Order; Waiver of Surrender Charges;
Suspension or Delay in Payment of Surrender;
Direct Rollover of Distributions; Eligible
Rollover Distributions/Page 12
Annuity Provisions When annuity payments begin;
Different ways to receive annuity payments;
Determination of payment amounts/Page 15
Tables of Settlement Rates Tables showing amount of first
variable annuity payment
and the guaranteed fixed
annuity payments for the
various payment plans/Page
17
DEFINITIONS
The following words are often used in this contract. When we use these words,
this is what we mean:
accumulation unit
An accumulation unit is an accounting unit of measure. It is used to calculate
the contract value prior to settlement.
annuitant
The person or persons on whose life monthly annuity payments depend.
annuity unit
An annuity unit is an accounting unit of measure. It is used to calculate the
value of annuity payments from the variable subaccounts on and after the
settlement date.
code
The Internal Revenue Code of 1986, as amended, its regulations thereunder and/or
promulgations of the Internal Revenue Service, as applicable.
contract anniversary
The same day and month as the contract date each year that the contract remains
in force.
contract date
The date from which contract anniversaries, contract years, and contract months
are determined. Your contract date is shown under Contract Data.
contract value
The sum of the Fixed Account Contract Value (which receives a declared interest
rate) and the Variable Account Contract Value (which varies with the investment
performance of the elected subaccounts) for this contract.
fixed account
The fixed account is made up of all our assets other than those in any separate
account.
fixed annuity
A fixed annuity is an annuity with payments which are guaranteed by us as to
dollar amount during the annuity payment period.
settlement
The application of the contract value of this contract to an Annuity Payment
Plan to provide annuity payments.
settlement date
The date shown under Contract Data on which annuity payments are scheduled to
begin. This date may be changed as provided in this contract. You will be
notified prior to the settlement date in order to select an appropriate annuity
payment plan.
valuation date
A valuation date is each day the New York Stock Exchange is open for trading.
valuation period
A valuation period is the interval of time commencing at the close of business
on each valuation date and ending at the close of business on the next valuation
date.
variable annuity
A variable annuity is an annuity with payments which: (1) are not predetermined
or guaranteed as to dollar amounts; and (2) vary in amount with the investment
experience of one or more of the variable subaccounts.
variable subaccounts
The portfolios of the Variable Account. The subaccounts available on the
contract date are named under Contract Data.
we, our, us
IDS Life Insurance Company
written request
A request in writing signed by you and delivered to us at our corporate office.
you, your
The owner of this contract.
<PAGE>
GENERAL PROVISIONS
Entire Contract
This contract form is the entire contract between you and us.
No one except one of our corporate officers (President, Vice President,
Secretary or Assistant Secretary) can change or waive any of our rights or
requirements under this contract. That person must do so in writing. None of our
other representatives or other persons has the authority to change or waive any
of our rights or requirements under this contract.
Incontestable
This contract is incontestable from its date of issue.
Benefits Based on Incorrect Data
If the amount of benefits is determined by data as to a person's age that is
incorrect, benefits will be recalculated on the basis of the correct data. Any
underpayments made by us will be made up immediately. Any overpayments made by
us will be subtracted from future payments.
State Laws
This contract is governed by the laws of the state in which it is delivered. The
values and benefits of this contract are at least equal to those required by
such state.
Federal Laws
This contract is intended to qualify as an annuity contract for Federal income
tax purposes. To that end, the provisions of this contract are to be interpreted
to ensure or maintain such tax qualification, despite any other provisions to
the contrary. We reserve the right to amend this contract to reflect any
clarifications that may be needed or are appropriate to maintain such tax
qualification. We will send you a copy of any such amendments.
Reports to Owner
At least once a year we will send you a statement showing the contract value and
the cash surrender value of this contract. This statement will be based on any
laws or regulations that apply to contracts of this type.
Evidence of Survival
Where any payments under this contract depend on the recipient or annuitant
being alive on a given date, proof that such condition has been met may be
required by us. Such proof may be required prior to making the payment.
Protection of Proceeds
Payments under this contract are not assignable by any beneficiary prior to the
time they are due.
Payments by Us
All sums payable by us are payable from our home office. Any payment or
surrender from a variable annuity is based on the variable contract value.
Voting Rights
So long as federal law requires, we will give certain voting rights to contract
owners. As contract owner, if you have voting rights we will send a notice to
you telling you the time and place of the shareholder meeting. The notice will
also explain matters to be voted upon and how many votes you have.
Trustee or custodian owners shall cast votes according to instructions received
from appropriate annuitants. All other votes of such trustee or custodian under
the same trust or custodial agreement shall be cast in the same proportion. If
no instructions are received, the votes may be cast at the trustee's or
custodian's discretion.
<PAGE>
OWNERSHIP AND BENEFICIARY
Owner's Rights
As long as the annuitant is living and unless otherwise provided in this
contract, you may exercise all rights and privileges provided in this contract
or allowed by us.
Trust or Custodial Ownership
If you are a tax qualified trust or tax qualified custodial account, then your
trustees or custodian (or their successors) properly named by your trust or
custodial agreement may exercise all rights and privileges provided in this
contract or allowed by us.
Change of Ownership (Restricted)
Your right to change the ownership of this contract is restricted. This contract
may not be sold, assigned, transferred, discounted or pledged as collateral for
a loan or as security for performance of an obligation or for any other purpose
to any person other than to us. However, if you are a trust or a custodian or an
employer as a part of a qualified plan under Sections 401 or 403 or a deferred
compensation plan under Section 457 of the Code, you may transfer ownership of
this contract to the annuitant. Such transfer must be on a form approved by us.
The change must be made while the annuitant is living. Once the change is
recorded by us, it will take effect as of the date of your request, subject to
any action taken or payment made by us before the recording.
Beneficiary
Unless designated otherwise, beneficiaries are those you name, in a form
satisfactory to us, to receive benefits of this contract if you or the annuitant
die while this contract is in force.
Only those beneficiaries who are living when death benefits become payable may
share in the benefits, if any. If no beneficiary is then living we will pay the
benefits to you, if living, otherwise to your estate.
Change of Beneficiary
You may change the beneficiary anytime while the annuitant is living by
satisfactory written request to us. Once the change is recorded by us, it will
take effect as of the date of your request, subject to any action taken or
payment made by us before the recording.
<PAGE>
PAYMENTS TO BENEFICIARY
Death Benefit Before the Settlement Date
If you or the annuitant die before the Settlement Date while this contract is in
force, and both you and the annuitant are age 80 or younger on the date of
death, we will pay the beneficiary the greatest of:
1 the contract value; or
2. the total purchase payments paid less any "adjusted partial surrenders"; or
3. the contract value as of the most recent sixth contract anniversary, plus any
purchase payments paid and less any "adjusted partial surrenders" since that
contract anniversary.
An "adjusted partial surrender" is calculated for each partial surrender as the
product of (a) times (b) where:
(a) is the ratio of the amount of the partial surrender to the contract
value on the date of (but prior to) the partial surrender; and
(b) is the death benefit on the date of (but prior to) the partial
surrender.
If either you or the annuitant are age 81 or older on the date of death, we will
pay the beneficiary the greater of:
1. contract value; or
2. the total purchase payments paid less any "adjusted partial surrenders".
The above amount will be payable in a lump sum on the valuation date we receive
due proof of death of the annuitant or owner, whichever first occurs. The
beneficiary may elect to receive payment anytime within 5 years after the date
of death.
In lieu of a lump sum, payment may be made under an Annuity Payment Plan,
provided:
1. the beneficiary elects the plan within 60 days after we receive due proof of
death; and
2. payments begin no later than one year after the date of death; and
3. the plan provides payments over a period which does not exceed the life or
the life expectancy of the beneficiary.
In this event, the reference to "annuitant" in the Annuity Provisions shall
apply to the beneficiary.
We will determine the contract value on which we base amounts payable or applied
under this section at the next accumulation unit value calculated after we
receive due proof of death at our corporate office.
Spouse Option to Continue Contract Upon Owner's Death
If the annuitant dies prior to the settlement date, a spouse who is designated
as sole beneficiary may elect in writing to forego receipt of the death benefit
and instead continue this contract in force. The election by the spouse must be
made within 60 days after we receive due proof of death.
In this event, the settlement date may not be later than April 1 following the
calendar year in which the annuitant would have attained 70 1/2 , or such other
date which allows the spouse to satisfy the minimum distribution requirements
under the Code.
Annuitant's Death After the Settlement Date
If the annuitant dies after the settlement date, the amount payable, if any,
will be as provided in the Annuity Payment Plan then in effect.
<PAGE>
PURCHASE PAYMENTS
Purchase Payments
Purchase payments are the payments you make for this contract and the benefits
it provides. Purchase payments must be paid or mailed to us at our corporate
office or to an authorized agent. If requested, we'll give you a receipt for
your purchase payments.
Net purchase payments are that part of your purchase payments applied to the
contract value. A net purchase payment is equal to the purchase payment less any
applicable premium tax charge.
Amount and Intervals
Purchase payments may be paid in a single sum or in installments until the
earlier of: (1) the date this contract terminates by surrender or otherwise; or
(2) the date on which the annuity payments begin.
Subject to the Payment Limits Provision you may: (1) stop and/or restart
purchase payments; or (2) increase or decrease the amount of your purchase
payments; or (3) change the interval of your purchase payments.
Payment Limits Provision
Maximum Purchase Payments - The maximum purchase payments in the first or later
contract years may not exceed the amounts shown under Contract Data. We reserve
the right to increase the maximums.
Minimum Purchase Payments - Upon issue of this contract, a purchase payment
intended as a Single Purchase Payment must be at least $1,000. If you intend to
make installment purchase payments such payments, on an annualized basis, must
be at least equal to $600. Additional payments must be at least $50.
We reserve the right to not accept purchase payments allocated to the fixed
account for twelve months following: (1) a partial surrender from the fixed
account; or (2) a lump sum transfer from the fixed account to the variable
subaccounts.
We reserve the right to not accept purchase payments allocated to the fixed
account for twelve months following: (1) a partial surrender from the fixed
account; or (2) a lump sum transfer from the fixed account to the variable
subaccounts.
We also reserve the right to cancel this contract if both of the following
conditions exist at the same time: (1) no purchase payments have been paid for a
continuous period of 24 months; and (2) less than $600 in purchase payments have
been paid under this contract. In this event we will give you 30 days written
notice of our intent to cancel this contract. Upon such cancellation we will pay
you the contract value in one sum. This contract will then terminate.
Limit on Elective Deferrals
If your contract is a Tax-Sheltered Annuity qualified under Section 403(b) of
the Code, Elective Deferrals made under the contract may not exceed the annual
limit on elective deferrals as provided in the Code. Elective Deferrals means
employer contributions to the annuity that are excludable from your current
income as provided in the Code.
Elective Deferrals means employer contributions to the annuity that are
excludable from your current income as provided in the Code.
Allocation of Purchase Payments
You instruct us on how you want your purchase payments allocated among the fixed
account and variable subaccounts. Your choice for each account may be made in
any whole percent from 0% to 100% as long as the total adds up to 100%. Your
allocation instructions as of the contract date are shown under Contract Data.
By written request, or by other method agreed to by us, you may change your
choice of accounts or percentages. The first net purchase payment will be
allocated as of the end of the valuation period during which we make an
affirmative decision to issue this contract. Net purchase payments after the
first will be allocated as of the end of the valuation period during which we
receive the payment at our home office.
Additional "Credits" for Purchase Payments
We will add a Credit of 1% of all purchase payments received under this contract
in each of the following situations:
1 if your contract has a 10-year surrender charge schedule as shown under
Contract Data; or
2. if your initial purchase payment to this contract was at least $100,000.
Each credit is allocated to your contract value when the applicable purchase
payment is applied to your contract value. Such Credits are allocated to your
contract value according to allocation instructions in effect for your purchase
payments.
Credits shall be reversed from the contract value for any purchase payment that
is not honored.
Credits applied within 12 months preceding: (1) the date of death that results
in a lump sum death benefit under this contract; or (2) a request for surrender
charge waiver due to Nursing Home Confinement, if applicable, shall be reversed
from the contract value. The amount returned to you under the Right to Examine
Contract (Free-look) provision shall not include any Credits applied to your
contract.
<PAGE>
CONTRACT VALUE
Contract Value
The contract value at any time is the sum of: (1) the Fixed Account Contract
Value; and (2) the Variable Account Contract Value.
If: (1) part or all of the contract value is surrendered; or (2) charges
described herein are made against the contract value; then a number of
accumulation units from the variable subaccounts and an amount from the fixed
account will be deducted to equal such amount. For surrenders, deductions will
be made from the fixed or variable subaccounts that you specify. Otherwise, the
number of units from the variable subaccounts and the amount from the fixed
account will be deducted in the same proportion that your interest in each bears
to the total contract value.
Variable Account Contract Value
The variable account contract value at any time will be: (1) the sum of the
value of all variable subaccount accumulation units under this contract
resulting from purchase payments and any purchase payment credits so allocated,
or transfers among the variable and fixed accounts; less (2) any units deducted
for charges or surrenders.
Fixed Account Contract Value
The fixed account contract value at any time will be: (1) the sum of all amounts
credited to the fixed account under this contract; less (2) any amounts deducted
for charges or surrenders.
Interest to be Credited
We will credit interest to the fixed account contract value. Interest will begin
to accrue on the date the purchase payments which are received in our corporate
office become available to us for use. Such interest will be credited at a rate
that we determine from time to time. However, we guarantee that the rate will
not be less than the Guaranteed Interest Rate shown under Contract Data.
Contract Administrative Charge
We charge a fee for establishing and maintaining our records for this contract.
The charge is $30 per year and is deducted from the value at the end of each
contract year or, if earlier, when the contract is fully surrendered. The charge
deducted will be prorated among the variable subaccounts and the fixed account
in the same proportion your interest in each bears to the total contract value.
We waive this charge if your contract value, or your total purchase payments
less any purchase payments surrendered, equals or exceeds $50,000.
If you make a full surrender of this contract, we deduct the full $30 contract
administrative charge at the time of the full surrender regardless of purchase
payments made or contract value.
The charge does not apply after settlement of this contract under an annuity
payment plan.
Premium Tax Charges
A charge will be made by us against the contract value of this contract at the
time that any premium taxes not previously deducted are payable.
Transfers of Contract Values
While this contract is in force prior to the settlement date, transfer of
contract values may be made as outlined below:
1. You may transfer all or part of the values held in one or more variable
subaccounts to another one or more of the variable subaccounts. Subject to
item 2, you may also transfer values held in one or more of the variable
subaccounts to the fixed account.
2. On or within the 30 days after a contract anniversary you may transfer
values from the fixed account to one or more of the variable subaccounts.
Only one such transfer is allowed during this period each year. If such a
transfer is made, no transfers from a variable subaccount to the fixed
account may be made until the next contract anniversary.
You may make a transfer by written request. Transfer requests may also be made
according to telephone procedures or automated transfer procedures that are then
currently in effect, if any. There is no fee or charge for these transfers.
However, the minimum transfer amount is $250, or if less, the entire value in
the account from which the transfer is being made. Smaller minimums may apply to
automated transfer procedures. This transfer privilege may be suspended or
modified by us at any time.
<PAGE>
FIXED AND VARIABLE ACCOUNTS
The Fixed Account
The fixed account is our general account. It is made up of all of our assets
other than:
(1) those in the variable subaccounts; and
(2) those in any other segregated asset account.
The Variable Account
The variable account is a separate investment account of ours. It consists of
several subaccounts, which are named under Contract Data. We have allocated a
part of our assets for this contract to the variable accounts. Such assets
remain our property. However, they may not be charged with the liabilities from
any other business in which we may take part.
Investments of the Variable Account
Purchase payments applied to the variable subaccounts will be allocated as
specified by the owner. Each variable subaccount will buy, at net asset value,
shares of the fund shown for that subaccount under Contract Data or as later
added or changed.
We may change the funds from which the variable subaccounts buy shares if laws
or regulations change, the existing funds become unavailable or in our judgment,
the funds are no longer suitable for the subaccounts. We have the right to
substitute funds for those shown under Contract Data, including funds other than
those shown under Contract Data. We may also: add additional subaccounts
investing in other funds; combine subaccounts; transfer assets to and from the
subaccounts or the variable account; and eliminate or close any subaccounts.
When required, we would first seek approval of the Securities and Exchange
Commission and, the insurance regulator of the state where this contract is
delivered.
Valuation of Assets
Fund shares in the variable subaccounts will be valued at their net asset value.
Variable Account Accumulation Units
The number of accumulation units for each of the variable subaccounts is found
by adding the number of accumulation units resulting from:
1. purchase payments and any purchase payment credits allocated to the
subaccount; and
2. transfers to the subaccount;
and subtracting the number of accumulation units from:
1. transfers from the subaccount; and
2. surrenders (including surrender charges) from the subaccount; and
3. contract administrative charge deductions from the subaccount.
The number of accumulation units added or subtracted for each of the above
transactions is found by dividing (1) by (2) where:
1. is the amount allocated to or deducted from the subaccount; and
2. is the accumulation unit value for the subaccount for the respective
valuation period during which we receive the purchase payment or transfer
value, or during which we deducted transfers, surrenders, surrender charges
or contract administrative charges.
Variable Account Accumulation Unit Value
The value of an accumulation unit for each of the variable subaccounts was
arbitrarily set at $1 when the first fund shares were bought. The value for any
later valuation period is found as follows:
The accumulation unit value for each variable subaccount for the last prior
valuation period is multiplied by the net investment factor for the same
account for the next following valuation period. The result is the
accumulation unit value. The value of an accumulation unit may increase or
decrease from one valuation period to the next.
Net Investment Factor
The net investment factor is an index applied to measure the investment
performance of a variable subaccount from one valuation period to the next. The
net investment factor may be greater or less than one; therefore, the value of
an accumulation or annuity unit may increase or decrease.
The net investment factor for any such subaccount for any valuation period is
determined by: dividing (1) by (2) and subtracting (3) from the result. This is
done where:
(1) is the sum of:
(a) the net asset value per share of the fund held in the variable
subaccount determined at the end of the current valuation period; plus
(b) the per share amount of any dividend or capital gain distributions made
by the fund held in the variable subaccount, if the "ex-dividend" date
occurs during the current valuation period.
(2) is the net asset value per share of the fund held in the variable
subaccount, determined at the end of the last prior valuation period.
(3) is a factor representing the mortality and expense risk charge.
Mortality and Expense Risk Charge
In calculating unit values we will deduct a mortality and expense risk charge
from the variable subaccounts equal, on an annual basis, to .75% of the daily
net asset value. This deduction is made to compensate us for assuming the
mortality and expense risks under contracts of this type. We estimate that
approximately 2/3 of this charge is for assumption of mortality risk and 1/3 is
for assumption of expense risk. The deduction will be: (1) made from each
variable subaccount; and (2) computed on a daily basis.
Annuity Unit Value
The value of an Annuity Unit for each variable subaccount was arbitrarily set at
$1 when the first funds were bought. The value for any later valuation period is
found as follows:
1. The annuity unit value for each variable subaccount for the last prior
valuation periods is multiplied by the net investment factor for the
subaccount for the valuation period for which the annuity unit value is
being calculated.
2. The result is multiplied by an interest factor. This is done to neutralize
the assumed investment rate which is built into the settlement tables on
page 17.
<PAGE>
SURRENDER PROVISIONS
Surrender
By written request and subject to the rules below you may:
Surrender this contract for the total surrender value; or
2. Partially surrender this contract for a part of the surrender value.
Rules for Surrender
All surrenders will have the following conditions;
1. You must apply by written request or other method agreed to by us: (a)
while this contract is in force; and (b) prior to the earlier of the
settlement date or the death of the annuitant.
2. Unless we agree otherwise, you must surrender an amount equal to at least
$250 or the entire contract value, if less. The contract value after a
partial surrender must be at least $600.
3. The amount surrendered, less any charges, will normally be paid to you
within seven days of our receipt of your written surrender request and the
return of this contract, if required. For surrenders from the fixed
account, we have the right to defer payment to you for up to 6 months from
the date we receive the request.
4. For partial surrenders, if you do not specify from which accounts the
surrender is to be made, the surrender will be made from the variable
subaccounts and fixed account in the same proportion as your interest in
each bears to the contract value.
5. Any amounts surrendered and charges which may apply can not be repaid.
Upon surrender for the full surrender value this contract will terminate. We may
require that you return the contract to us before we pay the full surrender
value.
Restrictions on Distributions from the Contract
If your contract is a Tax-Sheltered Annuity qualified under Section 403(b) of
the Code, and unless otherwise provided in the Code, no amounts may be
distributed from this contract unless you have:
1. attained age 59 1/2 ; or
2. separated from service; or
3. died; or
4. become disabled (as defined in Section 72(m)(7) of the Code); or
5. encountered hardship (within the meaning of Section 403(b) of the Code);
and then only such amounts as the Code may provide.
We shall require satisfactory written proof of the event(s) in items 1 through 5
above prior to any distribution from the contract.
Surrender Value
The surrender value at any time will be:
1. the contract value;
2. minus the contract administrative charge;
3. minus any surrender charge.
Surrender Charge
If you surrender all or a part of your contract, you may be subject to a
surrender charge. A surrender charge applies if all or part of the surrender
amount is from purchase payments we received within seven (7) or ten (10) years
before surrender. The surrender charge period you selected at the time of
application for this contract and applicable surrender charge percentages are
shown under Contract Data. We determine your surrender charge by multiplying
each of your payments surrendered by the applicable surrender charge percentage,
and then adding the total surrender charges.
Surrender Order
For purposes of determining any surrender charge, we treat amounts surrendered
from your contract value in the following order so that the amount actually
surrendered, less any surrender charge that applies, equals your requested
surrender amount.
1. First, surrenders are from contract earnings. Contract earnings are defined
as the contract value less purchase payments not previously surrendered.
(No surrender charge.)
2. Next, in each contract year, amounts totaling up to 10% of your prior
contract anniversary contract value, but only to the extent not included
and surrendered in Number 1. above. Your initial purchase payment is
considered the prior contract anniversary contract value during the first
contract year. (No surrender charge.)
3. Next, surrenders are from purchase payments received prior to the surrender
charge period shown in the schedule under Contract Data. (No surrender
charge.)
4. Next, surrenders are from purchase payments received that are still within
the surrender charge period shown in the schedule under Contract Data. We
surrender these payments on a first-in, first-out basis to minimize the
surrender charge that applies to these payments.
Waiver of Surrender Charges
Surrender charges are waived for all of the following:
1. Death benefit payments made in the event of the death of the owner or
annuitant; or
2. Contracts settled under an Annuity Payment Plan; or
3. Surrenders made if you were under age 76 on the contract date, and you
provide proof satisfactory to us that, as of the date you request the
surrender, you or the annuitant are confined to a nursing home, have been
confined for the prior 90 days, and such confinement began while this
contract was in force.
To qualify, the nursing home must:
(a) be licensed by an appropriate licensing agency to provide nursing services;
and
(b) provide 24-hour-a-day nursing services; and
(c) have a doctor available for emergency situations; and
(d) have a nurse on duty or call at all times; and
(e) maintain clinical records; and
(f) have appropriate methods for administering drugs.
4. Amounts surrendered to meet applicable minimum distribution requirements
under the Code. Amounts surrendered under this waiver provision are limited
to one time per year unless we agree otherwise.
Suspension or Delay in Payment of Surrender
We have the right to suspend or delay the date of any surrender payment from the
variable subaccounts for any period:
1. When the New York Stock Exchange is closed; or
2. When trading on the New York Stock Exchange is restricted; or
3. When an emergency exists as a result of which: (a) disposal of securities
held in the variable subaccounts is not reasonably practicable; or (b) it
is not reasonably practicable to fairly determine the value of the net
assets of the variable subaccounts; or
4. During any other period when the Securities and Exchange Commission, by
order, so permits for the protection of security holders.
Rules and regulations of the Securities and Exchange Commission will govern as
to whether the conditions set forth in 2 and 3 exist.
Direct Rollover of Distributions
If your contract is a Tax-Sheltered Annuity qualified under Section 403(b) of
the Code, the following provisions apply: When you are eligible to receive a
distribution from your contract, you may be able to have all or a portion of
that distribution paid in a "direct rollover." A direct rollover means that,
instead of paying you, we will make your payment directly to an individual
retirement account or annuity (IRA, as defined in Section 408 of the Code) or to
another Code Section 403(b) contract or custodial account that accepts direct
rollovers. If you choose a direct rollover, you will not be taxed on your
distribution until you later take it out of the IRA or 403(b) plan. However, you
will be subject to any surrender charges or other applicable charges under your
contract at the time of the distribution.
Eligible Rollover Distributions
Only an "eligible rollover distribution" as defined in Section 402(c) of the
Code may be paid as a direct rollover.
In general, eligible rollover distributions DO NOT include:
1. Any payment that is part of a series of equal or almost equal payments made
at least once a year;
- over your life or life expectancy,
- over the life or life expectancies of you and your beneficiary,
- for a period of ten years or more, or
2. Required minimum distributions made beginning in the year you reach age 70
1/2; or
3. Hardship distributions.
Qualified Domestic Relations Order
The rules outlined above apply to your former spouse, if any, who is an
"alternate payee" under a "qualified domestic relations order" (as defined in
Code Section 414(p)). A qualified domestic relations order is issued by a court,
usually in connection with a divorce or legal separation.
Distribution to your Surviving Spouse
A beneficiary who is your surviving spouse may elect to have an eligible
rollover distribution directly rolled over into an IRA, but not into another
403(b) plan.
<PAGE>
ANNUITY PROVISIONS
Settlement
When settlement occurs, the contract value will be applied to make annuity
payments. The first payment will be made as of the settlement date. This date is
shown under Contract Data. Before payments begin we will require satisfactory
proof that the annuitant is alive. We may also require that you exchange this
contract for a supplemental contract, which provides for the annuity payments.
Change of Settlement Date
You may change the settlement date shown for this contract. Tell us the new date
by written request. The maximum Settlement Date is the later of:
1. April 1 following the calendar year in which the annuitant attains age 70 1/2
or, if later, retires; or
2. such other date which satisfies the minimum distribution requirements under
the Code; or
3. Such other date as agreed upon by us.
Notwithstanding the above, the maximum Settlement Date is the later of:
1. The contract anniversary on or preceding the annuitant's 85th birthday; or
2. the 10th contract anniversary.
Also, if you select a new settlement date, it must be at least 30 days after we
receive your written request at our corporate office.
Annuity Payment Plans
Subject to the terms of this contract, annuity payments may be made on a fixed
dollar basis, a variable basis, or a combination of both. You can schedule
receipt of annuity payments according to one of the Plans A through E below or
another plan agreed to by us provided:
1. The Plan selected provides for payments over the life of the annuitant or
over the life of the annuitant and a joint annuitant; or
2. the Plan selected provides for payments over a period which does not exceed
the life expectancy of the annuitant, or the life expectancy of the
annuitant and a joint annuitant; and
3. the Plan selected meets the minimum distribution incidental benefit
requirements under the Code.
Plan A - This provides monthly annuity payments during the lifetime of the
annuitant. No payments will be made after the annuitant dies.
Plan B - This provides monthly annuity payments during the lifetime of the
annuitant with a guarantee by us that payments will be made for a period of
at least five, ten or fifteen years. You must select the guaranteed period.
Plan C - This provides monthly annuity payments during the lifetime of the
annuitant with a guarantee by us that payments will be made for a certain
number of months. We determine the number of months by dividing the amount
applied under this Plan by the amount of the first monthly annuity payment.
Plan D - Monthly payments will be paid during the lifetime of the annuitant
and a joint annuitant. When either the annuitant or the joint annuitant
dies we will continue to make monthly payments during the lifetime of the
survivor. No payments will be paid after the death of both the annuitant
and joint annuitant.
Plan E - (Installments for a specified period ) This provides monthly
annuity payments for a period of years. The period of years may be no less
than 10 or more than 30.
By written request to us at least 30 days before the settlement date, you may
select the Plan. If at least 30 days before the settlement date we have not
received at our corporate office your written request to select a Plan, we will
make payments according to Plan B with payments guaranteed for ten years.
If the amount to applied to a Plan is less than $2,000 or would not provide an
initial monthly payment of at least $20, we have the right to make a lump sum
payment of the contract value.
Allocation of Contract Values at Settlement
At the time of settlement under an Annuity Payment Plan you may reallocate your
contract value to the Fixed Account to provide fixed dollar payments and/or
among the variable subaccounts to provide variable annuity payments. Unless we
agree otherwise, you may use a maximum of five variable subaccounts at any one
time during settlement.
Fixed Annuity
A fixed annuity is an annuity with payments that are guaranteed by us as to
dollar amount. Fixed annuity payments after the first will never be less than
the amount of the first payment. At settlement, the fixed account contract value
will be applied to the applicable Settlement Table. This will be done in
accordance with the Payment Plan chosen. The amount payable for each $1,000 so
applied is shown in Table B on page 18.
Variable Annuity
A variable annuity is an annuity with payments which: (1) are not predetermined
or guaranteed as to dollar amount: and (2) vary in amount with the investment
experience of the variable subaccounts.
Determination of First Variable Annuity Payment
At settlement, the variable account contract value will be applied to the
applicable Settlement Table. This will be done: (1) on the valuation date on or
next preceding the 7th calendar day before the settlement date; and (2) in
accordance with the Payment Plan chosen. The amount payable for the first
payment for each $1,000 so applied is shown in Table A on page 17.
Variable Annuity Payments After the First Payment
Variable annuity payments after the first vary in amount. The amount changes
with the investment performance of the variable subaccounts. The dollar amount
of variable annuity payments after the first is not fixed. It may change from
month to month. The dollar amount of such payments is determined as follows:
1. The dollar amount of the first annuity payment is divided by the value of
an annuity unit as of the valuation date on or next preceding the 7th
calendar day before the settlement date. This result establishes the fixed
number of annuity units for each monthly annuity payment after the first.
This number of annuity units remains fixed during the annuity payment
period.
2. The fixed number of annuity units is multiplied by the annuity unit value
as of the valuation date on or next preceding the 7th calendar day before
the date the payment is due. The result establishes the dollar amount of
the payment.
We guarantee that the dollar amount of each payment after the first will not be
affected by variation in expenses or mortality experience.
Exchange of Annuity Units
After annuity payments begin, annuity units of any variable subaccount may be
exchanged for units of any of the other variable subaccounts. This may be done
no more than once a year. Unless we agree otherwise you may use a maximum of
five variable subaccounts at any one time. Once annuity payments start, no
exchanges may be made to or from any fixed annuity.
<PAGE>
TABLES OF SETTLEMENT RATES
Table A below shows the amount of the first monthly variable annuity payment,
based on a 5% assumed investment return, for each $1,000 of value applied under
any payment plan. The amount of the first and all subsequent monthly fixed
dollar annuity payments for each $1,000 of value applied under any payment plan
will be based on our fixed dollar Table of Settlement Rates in effect at
settlement. Such rates are guaranteed to be not less than those shown in Table
B. The amount of such annuity payments under Plans A, B and C will depend upon
the age of the annuitant at settlement. The amount of such annuity payments
under Plan D will depend upon the age of the annuitant and the joint annuitant
at settlement.
<PAGE>
<TABLE>
<CAPTION>
Table A - Dollar Amount of First Monthly Variable Annuity Payment Per $1,000 Applied
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------- -------- --------------- ------- -------- --------------- -------- ------- ---------------- ---------------
Plan A Plan B Plan C Plan D
- ---------- -------- --------------- ------- -------- --------------- -------- ------- ---------------- ---------------
Age Life Income Life Income Life Income Joint &
at Beginning Non-Refund Five Years with Fifteen Years Installment Survivor
Annui- In Certain Ten Years Certain Refund Non-Refund
tization Certain
Year
- ---------- -------- --- ----------- --- ------------ ---- ---------- --- ------------ ---- ----------- ---------------
Age 65 2005 5.85 5.83 5.77 5.66 5.67 5.20
2010 5.78 5.76 5.71 5.61 5.61 5.16
2015 5.72 5.70 5.65 5.56 5.56 5.13
2020 5.66 5.64 5.60 5.52 5.51 5.09
2025 5.60 5.59 5.54 5.47 5.47 5.06
2030 5.55 5.53 5.50 5.43 5.43 5.04
Age 70 2005 6.54 6.50 6.36 6.14 6.22 5.66
2010 6.45 6.41 6.28 6.08 6.15 5.60
2015 6.35 6.32 6.21 6.03 6.08 5.55
2020 6.27 6.24 6.14 5.97 6.01 5.50
2025 6.19 6.16 6.07 5.92 5.95 5.45
2030 6.11 6.09 6.01 5.87 5.90 5.41
Age 75 2005 7.58 7.47 7.15 6.70 6.99 6.33
2010 7.43 7.34 7.05 6.63 6.89 6.25
2015 7.30 7.21 6.96 6.57 6.80 6.17
2020 7.18 7.10 6.87 6.51 6.71 6.09
2025 7.06 6.99 6.78 6.46 6.62 6.02
2030 6.95 6.89 6.70 6.40 6.55 5.96
Age 85 2005 11.44 10.69 9.09 7.60 9.50 8.88
2010 11.12 10.45 9.00 7.58 9.32 8.69
2015 10.82 10.23 8.90 7.56 9.15 8.51
2020 10.55 10.02 8.80 7.53 9.00 8.34
2025 10.29 9.83 8.71 7.51 8.85 8.19
2030 10.06 9.64 8.62 7.48 8.72 8.05
- ---------- -------- --- ----------- --- ------------ ---- ---------- --- ------------ ---- ----------- ---------------
Table A above is based on the "1983 Individual Annuitant Mortality Table A" with
100% Projection Scale G and a 5% assumed investment return. Settlement rates for
any year, age, or any combination of year and age not shown above, will be
calculated on the same basis as those rates shown in the Table above. Such rates
will be furnished by us upon request. Amounts shown in the Table below are based
on a 5% assumed investment return.
</TABLE>
<TABLE>
<CAPTION>
Plan E - Dollar Amount of First Monthly Variable Annuity Payment Per $1,000 Applied
<S> <C> <C> <C> <C> <C>
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
Years Payable Monthly Payment Years Payable Monthly Payment Years Payable Monthly Payment
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
10 10.51 17 7.20 24 5.88
11 9.77 18 6.94 25 5.76
12 9.16 19 6.71 26 5.65
13 8.64 20 6.51 27 5.54
14 8.20 21 6.33 28 5.45
15 7.82 22 6.17 29 5.36
16 7.49 23 6.02 30 5.28
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Table B - Dollar Amounts of Each Monthly Fixed Dollar Annuity Payment Per $1,000 Applied
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------- ------- ---------------- ------- -------- --------------- -------- ------- ---------------- ---------------
Plan A Plan B Plan C Plan D
- ---------- ------- ---------------- ------- -------- --------------- -------- ------- ---------------- ---------------
Settlement Life Income Life Income Life Income Joint &
Settlement Beginning Non-Refund Five Years with Fifteen Years Installment Survivor
In Certain Ten Years Certain Refund Non-Refund
Certain
Age Year
- ---------- ------- ---- ----------- --- ------------ ---- ---------- ---- ----------- ---- ----------- ---------------
Age 65 2005 4.68 4.66 4.62 4.53 4.43 4.06
2010 4.61 4.60 4.55 4.48 4.38 4.02
2015 4.55 4.53 4.49 4.42 4.34 3.98
2020 4.48 4.47 4.44 4.38 4.29 3.94
2025 4.43 4.42 4.39 4.33 4.25 3.91
2030 4.37 4.37 4.34 4.29 4.21 3.88
Age 70 2005 5.38 5.35 5.24 5.05 4.97 4.55
2010 5.29 5.26 5.16 4.99 4.90 4.49
2015 5.20 5.17 5.08 4.93 4.84 4.43
2020 5.11 5.09 5.01 4.87 4.78 4.38
2025 5.03 5.01 4.94 4.82 4.72 4.33
2030 4.96 4.94 4.88 4.76 4.67 4.29
Age 75 2005 6.42 6.33 6.07 5.65 5.68 5.25
2010 6.28 6.20 5.97 5.59 5.60 5.16
2015 6.15 6.08 5.87 5.52 5.51 5.08
2020 6.03 5.97 5.78 5.46 5.43 5.01
2025 5.91 5.86 5.69 5.40 5.36 4.94
2030 5.81 5.76 5.60 5.34 5.29 4.88
Age 85 2005 10.25 9.60 8.12 6.64 7.97 7.83
2010 9.94 9.37 8.02 6.61 7.82 7.64
2015 9.65 9.15 7.91 6.59 7.68 7.46
2020 9.38 8.94 7.81 6.56 7.55 7.30
2025 9.14 8.74 7.72 6.54 7.42 7.15
2030 8.91 8.56 7.62 6.51 7.31 7.01
- ---------- ------- ---- ----------- --- ------------ ---- ---------- ---- ----------- ---- ----------- ---------------
Table B above is based on the "1983 Individual Annuitant Mortality Table A" at
3.00% with 100% Projection Scale G. Settlement rates for any year, age, or any
combination of year and age not shown above, will be calculated on the same
basis as those rates shown in the Table above. Such rates will be furnished by
us upon request. Amounts shown in the Table below are based on a 3% annual
effective interest rate.
</TABLE>
<TABLE>
<CAPTION>
Plan E - Dollar Amount of Each Monthly Fixed Dollar Annuity Payment Per $1,000 Applied
<S> <C> <C> <C> <C> <C>
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
Years Payable Monthly Payment Years Payable Monthly Payment Years Payable Monthly Payment
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
10 9.61 17 6.23 24 4.84
11 8.86 18 5.96 25 4.71
12 8.24 19 5.73 26 4.95
13 7.71 20 5.51 27 4.47
14 7.26 21 5.32 28 4.37
15 6.87 22 5.15 29 4.27
16 6.53 23 4.99 30 4.18
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
</TABLE>
<PAGE>
DEFERRED ANNUITY CONTRACT
- - Flexible purchase payments.
- - Optional fixed dollar or variable accumulation values and annuity payments.
- - Annuity payments to begin on the settlement date.
- - This contract is nonparticipating. Dividends are not payable.
IDS Life Insurance Company
IDS Tower 10
Minneapolis, Minnesota 55440
IDS Life Insurance Company
DEFERRED ANNUITY CONTRACT
- - Flexible purchase payments.
- - Optional fixed dollar or variable accumulation values and annuity payments.
- - Annuity payments to begin on the settlement date.
- - This contract is nonparticipating. Dividends are not payable.
Annuitant:
Contract Number:
Contract Date:
Settlement Date:
<PAGE>
This is a deferred annuity contract. It is a legal contract between you, as the
owner, and us, IDS Life Insurance Company, a Stock Company, Minneapolis,
Minnesota. PLEASE READ YOUR CONTRACT CAREFULLY.
If the annuitant is living on the Settlement Date, upon your request, we will
begin to pay you monthly annuity payments. Any payments made by us are subject
to the terms of this contract.
We issue this contract in consideration of your application and the payment of
the purchase payments.
Signed for and issued by IDS Life Insurance Company in Minneapolis, Minnesota,
as of the contract date shown above.
ACCUMULATION VALUES AND ANNUITY PAYMENTS, WHEN BASED ON THE INVESTMENT RESULTS
OF THE VARIABLE SUBACCOUNTS, ARE VARIABLE AND NOT GUARANTEED AS TO FIXED DOLLAR
AMOUNT. SEE PAGE 10 FOR VARIABLE PROVISIONS.
NOTICE OF YOUR RIGHT TO EXAMINE THIS CONTRACT FOR 10 DAYS
If for any reason you are not satisfied with this contract, return it to us or
our representative within 10 days after you receive it. We will then cancel this
contract and refund all premiums which you have paid. This contract will then be
considered void from its start.
[signature of] Richard W. Kling
President
[signature of] William A. Stoltzmann
Secretary
<PAGE>
CONTRACT DATA
Annuitiant: John Doe Contract Date: October
6, 1999
Contract Number: XXXX-XXXXXXX Settlement Date: October 6, 2019
Contract Owner: John Doe
Deferred Annuity Contract ("AXP Retirement Advisor Variable Annuity")
Upon issuance of this contract your purchase payments have been scheduled to be
paid and applied to the fixed and variable subaccounts as shown below. You may
change the amount, frequency and allocations as provided in this contract. Refer
to the Purchase Payments provision.
Amount submitted With Application: $2,000
Scheduled Purchase Payment:
Annual Amount: NA
Variable Purchase Payments
Subaccounts Fund Allocation Percentage
1. IDS Life Capital Resource Fund 25%
2. IDS Life Special Income Fund 0%
3. IDS Life Moneyshare Fund 0%
4. IDS Life Managed Fund 25%
5. IDS Life International Equity Fund 0%
6. IDS Life Aggressive Growth Fund 0%
7. IDS Life Income Advantage Fund 0%
8. IDS Life Growth Dimensions Fund 0%
9. IDS Life Global Yield Fund 0%
10. Fund 10 0%
11. Fund 11 0%
12. Fund 12 0%
13. Fund 13 0%
14. Fund 14 0%
15. Fund 15 0%
16. Fund 1 0%
17. Fund 1 0%
18. Fund 18 0%
19. Fund 19 0%
20. Fund 20 0%
21. Fund 21 0%
22. Fund 22 0%
23. Fund 23 0%
24. Fund 24 0%
25. Fund 25 0%
26. Fund 26 0%
27. Fund 27 0%
28. Fund 28 0%
Fixed Account 50%
<PAGE>
Schedule of Surrender Charges
Surrender Charge Period for Each Purchase Payment: 10 years
Number of Completed Surrender Charge
Years from Date of Percentage Applied to Each
Purchase Payment Purchase Payment
- ---------------- ----------------
0 8%
1 8%
2 8%
3 7%
4 7%
5 6%
6 5%
7 4%
8 3%
9 2%
10 0%
Contract Administrative Charge: $30 annually. Charge is waived if
contract value, or purchase payments
less purchase payments surrendered,
equals or exceeds $50,000. See
Contract Administrative Charge provision.
Maximum Purchase Payments Permitted:
1st contract year: $ 2,000,000
Each contract year thereafter: $ 100,000
Fixed Account Guaranteed Interest Rate: 3% Annual Effective Rate
As of the date this contract was issued, any amounts allocated to the fixed
account will earn interest, for the first year, at the annual effective rate of
4.25%. New rates may be declared from time to time.
<PAGE>
GUIDE TO CONTRACT PROVISIONS
Definitions Important words and meanings/Page 3
General Provisions Entire Contract; Traditional IRA; Roth IRA;
Incontestable; Benefits Based on Incorrect
Data; State Laws; Federal Laws; Reports to
Owner; Evidence of Survival; Protection of
Proceeds; Payments by Us; Voting Rights/
Page 4
Ownership and Beneficiary Owner's Rights; Trust or Custodial
Ownership; Change of Ownership; Beneficiary;
Change of Beneficiary/Page 5
Payments to Beneficiary Describes options and amounts payable upon
death/Page 6
Purchase Payments Purchase Payments; Amount and Intervals;
Payment Limits; Allocation of Purchase
Payments; Additional "Credits" for Purchase
Payments/Page 7
Contract Value Describes the fixed and variable account
contract values; Interest to be Credited,
Contract Administrative Charge; Premium Tax
Charges, Transfers of Contract Values/Page 9
Fixed and Variable Accounts Describes the variable subaccounts,
accumulation units and values; Net
Investment Factor; Mortality and Expense
Risk Charge; Annuity Unit Value/Page 10
Surrender Provisions Surrender of the contract for its surrender
value; Rules for Surrender; Surrender Value;
Surrender Charge; Surrender Order; Waiver of
Surrender Charges; Suspension or Delay in
Payment of Surrender/Page 12
Annuity Provisions When annuity payments begin; Different
ways to receive annuity payments; Determination
of payment amounts/Page 14
Tables of Settlement Rates Tables showing amount of first
variable annuity payment
and the guaranteed fixed
annuity payments for the
various payment plans/Page 16
<PAGE>
DEFINITIONS
The following words are often used in this contract. When we use these words,
this is what we mean:
accumulation unit
An accumulation unit is an accounting unit of measure. It is used to calculate
the contract value prior to settlement.
annuitant
The person or persons on whose life monthly annuity payments depend.
annuity unit
An annuity unit is an accounting unit of measure. It is used to calculate the
value of annuity payments from the variable subaccounts on and after the
settlement date.
code
The Internal Revenue Code of 1986, as amended, its regulations thereunder and/or
promulgations of the Internal Revenue Service, as applicable.
contract anniversary
The same day and month as the contract date each year that the contract remains
in force.
contract date
The date from which contract anniversaries, contract years, and contract months
are determined. Your contract date is shown under Contract Data.
contract value
The sum of the Fixed Account Contract Value (which receives a declared interest
rate) and the Variable Account Contract Value (which varies with the investment
performance of the elected subaccounts) for this contract.
fixed account
The fixed account is made up of all our assets other than those in any separate
account.
fixed annuity
A fixed annuity is an annuity with payments which are guaranteed by us as to
dollar amount during the annuity payment period.
settlement
The application of the contract value of this contract to an Annuity Payment
Plan to provide annuity payments.
settlement date
The date shown under Contract Data on which annuity payments are scheduled to
begin. This date may be changed as provided in this contract. You will be
notified prior to the settlement date in order to select an appropriate annuity
payment plan.
valuation date
A valuation date is each day the New York Stock Exchange is open for trading.
valuation period
A valuation period is the interval of time commencing at the close of business
on each valuation date and ending at the close of business on the next valuation
date.
variable annuity
A variable annuity is an annuity with payments which: (1) are not predetermined
or guaranteed as to dollar amounts; and (2) vary in amount with the investment
experience of one or more of the variable subaccounts.
variable subaccounts
The portfolios of the Variable Account. The subaccounts available on the
contract date are named under Contract Data.
we, our, us
IDS Life Insurance Company
written request
A request in writing signed by you and delivered to us at our corporate office.
you, your
The owner of this contract.
<PAGE>
GENERAL PROVISIONS
Entire Contract
This contract form is the entire contract between you and us.
No one except one of our corporate officers (President, Vice President,
Secretary or Assistant Secretary) can change or waive any of our rights or
requirements under this contract. That person must do so in writing. None of our
other representatives or other persons has the authority to change or waive any
of our rights or requirements under this contract.
Traditional IRA
If this contract is intended to qualify as an Individual Retirement Annuity
(IRA), we agree to and reserve the right to modify this contract to the extent
necessary to qualify this contract as an Individual Retirement Annuity, as
described in Sections 408(b) and 219 of the Internal Revenue Code of 1986, as
amended and all related sections and regulations which are in effect during the
term of the contract.
Roth IRA
If this contract is intended to qualify as a Roth IRA, we agree to and reserve
the right to modify this contract to the extent necessary to qualify this
contract as a Roth IRA as described in Section 408A of the Internal Revenue Code
of 1986, as amended and all related sections and regulations which are in effect
during the term of the contract.
Incontestable
This contract is incontestable from its date of issue.
Benefits Based on Incorrect Data
If the amount of benefits is determined by data as to a person's age or sex that
is incorrect, benefits will be recalculated on the basis of the correct data.
Any underpayments made by us will be made up immediately. Any overpayments made
by us will be subtracted from future payments.
State Laws
This contract is governed by the laws of the state in which it is delivered. The
values and benefits of this contract are at least equal to those required by
such state.
Federal Laws
This contract is intended to qualify as an annuity contract for Federal income
tax purposes. To that end, the provisions of this contract are to be interpreted
to ensure or maintain such tax qualification, despite any other provisions to
the contrary. We reserve the right to amend this contract to reflect any
clarifications that may be needed or are appropriate to maintain such tax
qualification. We will send you a copy of any such amendments.
Reports to Owner
At least once a year we will send you a statement showing the contract value and
the cash surrender value of this contract. This statement will be based on any
laws or regulations that apply to contracts of this type.
Evidence of Survival
Where any payments under this contract depend on the recipient or annuitant
being alive on a given date, proof that such condition has been met may be
required by us. Such proof may be required prior to making the payment.
Protection of Proceeds
Payments under this contract are not assignable by any beneficiary prior to the
time they are due.
Payments by Us
All sums payable by us are payable from our corporate office. Any payment or
surrender from a variable annuity is based on the variable contract value.
Voting Rights
So long as federal law requires, we will give certain voting rights to contract
owners. As contract owner, if you have voting rights we will send a notice to
you telling you the time and place of the shareholder meeting. The notice will
also explain matters to be voted upon and how many votes you have.
Trustee or custodian owners shall cast votes according to instructions received
from appropriate annuitants. All other votes of such trustee or custodian under
the same trust or custodial agreement shall be cast in the same proportion. If
no instructions are received, the votes may be cast at the trustee's or
custodian's discretion.
<PAGE>
OWNERSHIP AND BENEFICIARY
Owner's Rights
As long as the annuitant is living and unless otherwise provided in this
contract, you may exercise all rights and privileges provided in this contract
or allowed by us. Your entire interest is non-forfeitable.
Trust or Custodial Ownership
If you are a tax qualified trust or tax qualified custodial account, then your
trustees or custodian (or other successors) properly named by your trust or
custodial agreement may exercise all rights and privileges provided in this
contract or allowed by us.
Change of Ownership (Restricted)
Your right to change the ownership of this contract is restricted. This contract
may not be sold, assigned, transferred, forfeited, discounted or pledged as
collateral for a loan or as security for performance of an obligation or for any
other purpose to any other person other than as may be required or permitted
under Section 408 of the Internal Revenue Code or 1986, as amended. Your
interest in this contract may be transferred to your former spouse, if any,
under a divorce decree or a written instrument incident to such divorce.
However, if this contract is owned by a trustee of a tax-qualified trust or the
custodian of a tax-qualified custodial account, such trustee or custodian may
transfer ownership of this contract to the annuitant or to a qualified successor
trustee or custodian. Such transfer shall be effective only if received by us at
our corporate office. When so received, such transfer shall take effect as of
the date of instrument, subject to any payment made or other action taken by us
before such receipt.
Beneficiary
Unless designated otherwise, beneficiaries are those you name, in a form
satisfactory to us, to receive benefits of this contract if you or the annuitant
die while this contract is in force.
Only those beneficiaries who are living when death benefits become payable may
share in the benefits, if any. If no beneficiary is then living we will pay the
benefits to you, if living, otherwise to your estate.
Change of Beneficiary
You may change the beneficiary anytime while the annuitant is living by
satisfactory written request to us. Once the change is recorded by us, it will
take effect as of the date of your request, subject to any action taken or
payment made by us before the recording.
<PAGE>
PAYMENTS TO BENEFICIARY
Death Benefit Before the Settlement Date
If you die before the settlement date while this contract is in force, and you
are age 80 or younger on the date of death, we will pay the beneficiary the
greatest of:
1. the contract value; or
2. the total purchase payments paid less any "adjusted partial surrenders"; or
3. the contract value as of the most recent sixth contract anniversary, plus any
purchase payments paid and less any "adjusted partial surrenders" since that
contract anniversary.
An "adjusted partial surrender" is calculated for each partial surrender as the
product of (a) times (b) where:
(a) is the ratio of the amount of the partial surrender to the contract value
on the date of (but prior to) the partial surrender; and
(b) is the death benefit on the date of (but prior to) the partial surrender.
If you are age 81 or older on the date of death, we will pay the beneficiary the
greater of:
1. the contract value; or
2. the total purchase payments paid less any "adjusted partial surrenders".
If the annuitant dies before the settlement date, the beneficiary may elect to
receive a lump sum payment anytime within five years after the date of death of
the annuitant. In lieu of a lump sum payment, payments may be made under an
Annuity Payment Plan, provided:
1. the beneficiary elects the plan within 60 days after we receive due proof
of death; and
2. payments begin no later than:
(a) one year after the date of death in the case of a non-spouse beneficiary,
or
(b) the date on which the annuitant would have attained age 70 1/2 in the
case of a spouse beneficiary; and
3. the plan provides for payments over a period which does not exceed the life
or the life expectancy of the beneficiary.
In this event, the reference to "annuitant" in the Annuity Provisions shall
apply to the beneficiary.
We will determine the contract value on which we base amounts payable or applied
under this section at the next accumulation unit value calculated after we
receive due proof of death at our corporate office.
Spouse Option to Continue Contract Upon Owner's Death
If your death occurs prior to the settlement date, and your spouse is designated
as sole beneficiary, they may elect in writing to forego receipt of the death
benefit and instead continue this contract in force as the owner. This election
by your spouse must be made within 60 days after we receive due proofs of death.
If this contract is a traditional IRA, the settlement date may not be later than
April 1 following the calendar year in which the annuitant would have attained
70 1/2 , or such other date which allows the spouse to satisfy the minimum
distribution requirements under the Code.
Annuitant's Death After the Settlement Date
If the annuitant dies after the settlement date, the amount payable, if any,
will be as provided in the Annuity Payment Plan then in effect.
<PAGE>
PURCHASE PAYMENTS
Purchase Payments
Purchase payments are the payments you make for this contract and the benefits
it provides. Purchase payments must be paid or mailed to us at our corporate
office or to an authorized agent. If requested, we'll give you a receipt for
your purchase payments.
Net purchase payments are that part of your purchase payments applied to the
contract value. A net purchase payment is equal to the purchase payment less any
applicable premium tax charge.
Amount and Intervals
Purchase payments may be paid in a single sum or in installments until the
earlier of: (1) the date this contract terminates by surrender or otherwise; or
(2) the date on which the annuity payments begin.
Subject to the Payment Limits Provision you may: (1) stop and/or restart
purchase payments; or (2) increase or decrease the amount of your purchase
payments; or (3) change the interval of your purchase payments.
If this contract is a traditional IRA, no annual purchase payments may be made
with respect to the taxable year in which the annuitant attains age 70 1/2 or
any later year, with the exception of employer purchase payments made in
connection with a Simplified Employee Pension Plan.
If this contract is a Roth IRA, purchase payments may be made even after the
annuitant has attained age 70 1/2.
Payment Limits Provision
Maximum Purchase Payments - The maximum purchase payments in the first or later
contract years may not exceed the amounts shown under Contract Data. We reserve
the right to increase the maximums.
Minimum Purchase Payments - Upon issue of this contract, a purchase payment
intended as a Single Purchase Payment must be at least $1,000. If you intend to
make installment purchase payments such payments, on an annualized basis, must
be at least equal to $600. Additional payments must be at least $50.
If this contract is a traditional IRA, except as otherwise provided in this
paragraph, the total purchase payments for any taxable year may not exceed
$2,000. In the case of a rollover contribution described in Sections 402(a)(5),
402(a)(7), 403(a)(4), 403(b)(8) or 408(d)(3), of the Internal Revenue Code of
1986, as amended, there is no limit on the amount of your purchase payment. If
this contract is maintained in connection with a Simplified Employee Pension
Plan, employer purchase payments for any taxable year may not exceed 15% of your
compensation or $30,000, whichever is less. All purchase payments must be made
in cash. If you die before your entire interest in this contract has been
distributed to you, and your beneficiary is other than your surviving spouse, no
additional purchase payments will be accepted from your beneficiary under this
contract.
If this contract is a Roth IRA, except as otherwise provided in this paragraph,
the total purchase payments for any taxable year may not exceed $2,000. In the
case of a rollover contribution or a conversion of an Individual Retirement
Annuity (other than a Roth IRA) to a Roth IRA as described in Sections
408A(c)(6) and 408A(d)(3)(C) of the Internal Revenue Code of 1986, as amended,
there is no limit on the amount of your purchase payment. All purchase payments
must be made in cash. If you die before the entire interest in this contract has
been distributed to you, and your beneficiary is other than your surviving
spouse, no additional purchase payments will be accepted from your beneficiary
under this contract.
With the exception of employer purchase payments/premiums made to a SIMPLE
Retirement Account under a SIMPLE Savings Plan, no purchase payments/premiums
may be made to this contract other than a rollover contribution from another
SIMPLE Retirement Account under Section 408(d)(3)(G) of the Internal Revenue
Code of 1986, as amended.
Employer purchase payments/premiums made to a SIMPLE Retirement Account under a
SIMPLE Savings Plan for any taxable year may not exceed applicable contribution
limits described in Section 408(p)(2) of the Internal Revenue Code of 1986, as
amended.
Annual employer purchase payments/premiums to a SIMPLE Retirement Account under
a SIMPLE Savings Plan may be made with respect to the taxable year in which the
annuitant attains age 701/2 or any later date.
We reserve the right to not accept purchase payments allocated to the fixed
account for twelve months following: (1) a partial surrender from the fixed
account; or (2) a lump sum transfer from the fixed account to the variable
subaccounts.
We also reserve the right to cancel this contract if both of the following
conditions exist at the same time: (1) no purchase payments have been paid for a
continuous period of 24 months; and (2) less than $600 in purchase payments have
been paid under this contract. In this event we will give you 30 days written
notice of our intent to cancel this contract. Upon such cancellation we will pay
you the contract value in one sum. This contract will then terminate.
Allocation of Purchase Payments
You instruct us on how you want your purchase payments allocated among the fixed
account and variable subaccounts. Your choice for each account may be made in
any whole percent from 0% to 100% as long as the total adds up to 100%. Your
allocation instructions as of the contract date are shown under Contract Data.
By written request, or by other method agreed to by us, you may change your
choice of accounts or percentages. The first net purchase payment will be
allocated as of the end of the valuation period during which we make an
affirmative decision to issue this contract. Net purchase payments after the
first will be allocated as of the end of the valuation period during which we
receive the payment at our corporate office.
Additional "Credits" for Purchase Payments
We will add a Credit of 1% of all purchase payments received under this contract
in each of the following situations:
1. if your contract has a 10-year surrender charge schedule as shown under
Contract Data; or
2. if your initial purchase payment to this contract was at least $100,000.
Each credit is allocated to your contract value when the applicable purchase
payment is applied to your contract value. Such Credits are allocated to your
contract value according to allocation instructions in effect for your purchase
payments.
Credits shall be reversed from the contract value for any purchase payment that
is not honored.
Credits applied within 12 months preceding: (1) the date of death that results
in a lump sum death benefit under this contract; or (2) a request for surrender
charge waiver due to Nursing Home Confinement, if applicable, shall be reversed
from the contract value. The amount returned to you under the Right to Examine
Contract (Free-look) provision shall not include any Credits applied to your
contract.
<PAGE>
CONTRACT VALUE
Contract Value
The contract value at any time is the sum of: (1) the Fixed Account Contract
Value; and (2) the Variable Account Contract Value.
If: (1) part or all of the contract value is surrendered; or (2) charges
described herein are made against the contract value; then a number of
accumulation units from the variable subaccounts and an amount from the fixed
account will be deducted to equal such amount. For surrenders, deductions will
be made from the fixed or variable subaccounts that you specify. Otherwise, the
number of units from the variable subaccounts and the amount from the fixed
account will be deducted in the same proportion that your interest in each bears
to the total contract value.
Variable Account Contract Value
The variable account contract value at any time will be: (1) the sum of the
value of all variable subaccount accumulation units under this contract
resulting from purchase payments and any purchase payment credits so allocated,
or transfers among the variable and fixed accounts; less (2) any units deducted
for charges or surrenders.
Fixed Account Contract Value
The fixed account contract value at any time will be: (1) the sum of all amounts
credited to the fixed account under this contract; less (2) any amounts deducted
for charges or surrenders.
Interest to be Credited
We will credit interest to the fixed account contract value. Interest will begin
to accrue on the date the purchase payments which are received in our corporate
office become available to us for use. Such interest will be credited at a rate
that we determine from time to time. However, we guarantee that the rate will
not be less than the Guaranteed Interest Rate shown under Contract Data.
Contract Administrative Charge
We charge a fee for establishing and maintaining our records for this contract.
The charge is $30 per year and is deducted from the contract value at the end of
each contract year or, if earlier, when the contract is fully surrendered. The
charge deducted will be prorated among the variable subaccounts and the fixed
account in the same proportion your interest in each bears to the total contract
value.
We waive this charge if your contract value, or your total purchase payments
less any purchase payments surrendered, equals or exceeds $50,000.
If you make a full surrender of this contract, we deduct the full $30 contract
administrative charge at the time of the full surrender regardless of purchase
payments made or contract value.
The charge does not apply after settlement of this contract under an annuity
payment plan.
Premium Tax Charges
A charge will be made by us against the contract value of this contract at the
time that any premium taxes not previously deducted are payable.
Transfers of Contract Values
While this contract is in force prior to the settlement date, transfer of
contract values may be made as outlined below:
1. You may transfer all or part of the values held in one or more variable
subaccounts to another one or more of the variable subaccounts. Subject to
item 2, you may also transfer values held in one or more of the variable
subaccounts to the fixed account.
2. On or within the 30 days after a contract anniversary you may transfer
values from the fixed account to one or more of the variable subaccounts.
Only one such transfer is allowed during this period each year. If such a
transfer is made, no transfers from a variable subaccount to the fixed
account may be made until the next contract anniversary.
You may make a transfer by written request. Transfer requests may also be made
according to telephone procedures or automated transfer procedures that are then
currently in effect, if any. There is no fee or charge for these transfers.
However, the minimum transfer amount is $250, or if less, the entire value in
the account from which the transfer is being made. Smaller minimums may apply to
automated transfer procedures. This transfer privilege may be suspended or
modified by us at any time.
<PAGE>
FIXED AND VARIABLE ACCOUNTS
The Fixed Account
The fixed account is our general account. It is made up of all of our assets
other than: (1) those in the variable subaccounts; and (2) those in any other
segregated asset account.
The Variable Account
The variable account is a separate investment account of ours. It consists of
several subaccounts, which are named under Contract Data. We have allocated a
part of our assets for this contract to the variable accounts. Such assets
remain our property. However, they may not be charged with the liabilities from
any other business in which we may take part.
Investments of the Variable Account
Purchase payments applied to the variable subaccounts will be allocated as
specified by the owner. Each variable subaccount will buy, at net asset value,
shares of the fund shown for that subaccount under Contract Data or as later
added or changed.
We may change the funds from which the variable subaccounts buy shares if laws
or regulations change, the existing funds become unavailable or in our judgment,
the funds are no longer suitable for the subaccounts. We have the right to
substitute funds for those shown under Contract Data, including funds other than
those shown under Contract Data. We may also: add additional subaccounts
investing in other funds; combine subaccounts; transfer assets to and from the
subaccounts or the variable account; and eliminate or close any subaccounts.
When required, we would first seek approval of the Securities and Exchange
Commission and, the insurance regulator of the state where this contract is
delivered.
Valuation of Assets
Fund shares in the variable subaccounts will be valued at their net asset value.
Variable Account Accumulation Units
The number of accumulation units for each of the variable subaccounts is found
by adding the number of accumulation units resulting from:
1. purchase payments and any purchase payment credits allocated to the
subaccount; and
2. transfers to the subaccount;
and subtracting the number of accumulation units from:
1. transfers from the subaccount; and
2. surrenders (including surrender charges) from the subaccount; and
3. contract administrative charge deductions from the subaccount.
The number of accumulation units added or subtracted for each of the above
transactions is found by dividing (1) by (2) where:
1. is the amount allocated to or deducted from the subaccount; and
2. is the accumulation unit value for the subaccount for the respective
valuation period during which we receive the purchase payment or transfer
value, or during which we deducted transfers, surrenders, surrender charges
or contract administrative charges.
Variable Account Accumulation Unit Value
The value of an accumulation unit for each of the variable subaccounts was
arbitrarily set at $1 when the first fund shares were bought. The value for any
later valuation period is found as follows:
The accumulation unit value for each variable subaccount for the last prior
valuation period is multiplied by the net investment factor for the same account
for the next following valuation period. The result is the accumulation unit
value. The value of an accumulation unit may increase or decrease from one
valuation period to the next.
Net Investment Factor
The net investment factor is an index applied to measure the investment
performance of a variable subaccount from one valuation period to the next. The
net investment factor may be greater or less than one; therefore, the value of
an accumulation or annuity unit may increase or decrease.
The net investment factor for any such subaccount for any valuation period is
determined by: dividing (1) by (2) and subtracting (3) from the result. This is
done where:
1. is the sum of:
a. the net asset value per share of the fund held in the variable
subaccount determined at the end of the current valuation period; plus
b. the per share amount of any dividend or capital gain distributions made
by the fund held in the variable subaccount, if the "ex-dividend" date
occurs during the current valuation period.
2. is the net asset value per share of mutual fund held in the variable
subaccount, determined at the end of the last prior valuation period.
3. is a factor representing the mortality and expense risk charge.
Mortality and Expense Risk Charge
In calculating unit values we will deduct a mortality and expense risk charge
from the variable subaccounts equal, on an annual basis, to .75% of the daily
net asset value. This deduction is made to compensate us for assuming the
mortality and expense risks under contracts of this type. We estimate that
approximately 2/3 of this charge is for assumption of mortality risk and 1/3 is
for assumption of expense risk. The deduction will be: (1) made from each
variable subaccount; and (2) computed on a daily basis.
Annuity Unit Value
The value of an Annuity Unit for each variable subaccount was arbitrarily set at
$1 when the first funds were bought. The value for any later valuation period is
found as follows:
1. The annuity unit value for each variable subaccount for the last prior
valuation periods is multiplied by the net investment factor for the
subaccount for the valuation period for which the annuity unit value is
being calculated.
2. The result is multiplied by an interest factor. This is done to neutralize
the assumed investment rate which is built into the settlement tables on
page 16.
<PAGE>
SURRENDER PROVISIONS
Surrender
By written request and subject to the rules below you may:
1. surrender this contract for the total surrender value; or
2. partially surrender this contract for a part of the surrender value.
Rules for Surrender
All surrenders will have the following conditions;
1. You must apply by written request or other method agreed to by us: (a)
while this contract is in force; and (b) prior to the earlier of the
settlement date or the death of the annuitant.
2. Unless we agree otherwise, you must surrender an amount equal to at least
$250 or the entire contract value, if less. The contract value after a
partial surrender must be at least $600.
3. The amount surrendered, less any charges, will normally be paid to you
within seven days of our receipt of your written surrender request and the
return of this contract, if required. For surrenders from the fixed
account, we have the right to defer payment to you for up to 6 months from
the date we receive the request.
4. For partial surrenders, if you do not specify from which accounts the
surrender is to be made, the surrender will be made from the variable
subaccounts and fixed account in the same proportion as your interest in
each bears to the contract value.
5. Any amounts surrendered and charges which may apply can not be repaid.
Upon surrender for the full surrender value this contract will terminate. We may
require that you return the contract to us before we pay the full surrender
value.
Surrender Value
The surrender value at any time will be:
1. the contract value;
2. minus the contract administrative charge;
3. minus any surrender charge.
Surrender Charge
If you surrender all or a part of your contract, you may be subject to a
surrender charge. A surrender charge applies if all or part of the surrender
amount is from purchase payments we received within seven (7) or ten (10) years
before surrender. The surrender charge period you selected at the time of
application for this contract and applicable surrender charge percentages are
shown under Contract Data. We determine your surrender charge by multiplying
each of your payments surrendered by the applicable surrender charge percentage,
and then adding the surrender charges.
Surrender Order
For purposes of determining any surrender charge, we treat amounts surrendered
from your contract value in the following order so that the amount actually
surrendered, less any surrender charge that applies, equals your requested
surrender amount.
1. First, surrenders are from amounts representing contract earnings. Contract
earnings are defined as the contract value less purchase payments not
previously surrendered. (No surrender charge.)
Amounts surrendered from a Roth IRA: For tax purposes, the amounts
surrendered will be treated in accordance with the distribution rules
described in Section 408A of the Code.
2. Next, in each contract year, amounts totaling up to 10% of your prior
contract anniversary contract value, but only to the extent not included
and surrendered in Number 1. above. Your initial purchase payment is
considered the prior contract anniversary contract value during the first
contract year. (No surrender charge.)
3. Next, surrenders are from purchase payments received prior to the surrender
charge period shown in the schedule under Contract Data. (No surrender
charge.)
4. Next, surrenders are from purchase payments received that are still within
the surrender charge period shown in the schedule under Contract Data. We
surrender these payments on a first-in, first-out basis to minimize the
surrender charge that applies to these payments.
<PAGE>
Waiver of Surrender Charges
Surrender charges are waived for all of the following:
1. Death Benefit payments made in the event of the death of the owner or
annuitant; or
2. Contracts settled under an Annuity Payment Plan; or
3. Surrenders made if you were under age 76 on the contract date, and you
provide proof satisfactory to us that, as of the date you request the
surrender, you or the annuitant are confined to a nursing home, have been
confined for the prior 90 days, and such confinement began while this
contract was in force.
To qualify, the nursing home must:
(a) be licensed by an appropriate licensing agency to provide nursing services;
and
(b) provide 24-hour-a-day nursing services; and
(c) have a doctor available for emergency situations; and
(d) have a nurse on duty or call at all times; and
(e) maintain clinical records; and
(f) have appropriate methods for administering drugs.
4. Amounts surrendered to meet applicable minimum distribution requirements
under the Code. Amounts surrendered under this waiver provision are limited
to one time per year unless we agree other wise.
Suspension or Delay in Payment of Surrender
We have the right to suspend or delay the date of any surrender payment from the
variable subaccounts for any period:
1. when the New York Stock Exchange is closed; or
2. when trading on the New York Stock Exchange is restricted; or
3. when an emergency exists as a result of which: (a) disposal of securities
held in the variable subaccounts is not reasonably practicable; or (b) it
is not reasonably practicable to fairly determine the value of the net
assets of the variable subaccounts; or
4. during any other period when the Securities and Exchange Commission, by
order, so permits for the protection of security holders.
Rules and regulations of the Securities and Exchange Commission will govern as
to whether the conditions set forth in 2 and 3 exist.
<PAGE>
ANNUITY PROVISIONS
Settlement
When settlement occurs, the contract value will be applied to make
annuity payments. The first payment will be made as of the settlement date. This
date is shown under Contract Data. Before payments begin we will require
satisfactory proof that the annuitant is alive. We may also require that you
exchange this contract for a supplemental contract, which provides for the
annuity payments.
Change of Settlement Date - Traditional IRA
You may change the settlement date shown for this contract. Tell us the new date
by written request. The maximum settlement date is the later of:
1. April 1 following the calendar year in which the annuitant attains age
70 1/2 or if later, retires; or
2. such other date which satisfies the minimum distribution requirements under
the Code; or
3. Such other date as agreed upon by us.
Not withstanding the above, the maximum settlement date is the later of:
1. The contract anniversary on or proceeding the annuitant's 85th birthday; or
2. the 10th contract anniversary.
Also, if you select a new settlement date, it must be at least 30 days after we
receive your written request at our corporate office.
Change of Settlement Date - Roth IRA
You may change the settlement date shown for this contract. Tell us the new date
by written request. The maximum settlement date is the later of:
1. The contract anniversary on or proceeding the annuitant's 85th birthday; or
2. the 10th contract anniversary; or
3. such other date as agreed upon by us.
Also, if you select a new settlement date, it must be at least 30 days after we
receive your written request at our corporate office.
Annuity Payment Plans
Subject to the terms of this contract, annuity payments may be made on a fixed
dollar basis, a variable basis, or a combination of both. You can schedule
receipt of annuity payments according to one of the Plans A through E below or
another plan agreed to by us provided:
1. The Plan selected provides for payments over the life of the annuitant or
over the life of the annuitant and a joint annuitant; or
2. the Plan selected provides for payments over a period which does not exceed
the life expectancy of the annuitant, or the life expectancy of the
annuitant and a joint annuitant; and
3. the Plan selected meets the minimum death distribution requirements under
Section 401(a)(9)(B) of the Code and related regulations which are in
effect and applicable to Roth IRAs during the term of the contract.
Plan A - This provides monthly annuity payments during the lifetime of the
annuitant. No payments will be made after the annuitant dies.
Plan B - This provides monthly annuity payments during the lifetime of the
annuitant with a guarantee by us that payments will be made for a period of
at least five, ten or fifteen years. You must select the guaranteed period.
Plan C - This provides monthly annuity payments during the lifetime of the
annuitant with a guarantee by us that payments will be made for a certain
number of months. We determine the number of months by dividing the amount
applied under this Plan by the amount of the first monthly annuity payment.
Plan D - Monthly payments will be paid during the lifetime of the annuitant
and a joint annuitant. When either the annuitant or the joint annuitant
dies we will continue to make monthly payments during the lifetime of the
survivor. No payments will be paid after the death of both the annuitant
and joint annuitant.
Plan E - (Installments for a specified period ) This provides monthly
annuity payments for a period of years. The period of years may be no less
than 10 or more than 30.
By written request to us at least 30 days before the settlement date, you may
select the Plan. If at least 30 days before the settlement date we have not
received at our corporate office your written request to select a Plan, we will
make payments according to Plan B with payments guaranteed for ten years.
If the amount to applied to a Plan is less than $2,000 or would not provide an
initial monthly payment of at least $20, we have the right to make a lump sum
payment of the contract value.
Allocation of Contract Values at Settlement
At the time of settlement under an Annuity Payment Plan you may reallocate your
contract value to the Fixed Account to provide fixed dollar payments and/or
among the variable subaccounts to provide variable annuity payments. Unless we
agree otherwise, you may use a maximum of five variable subaccounts at any one
time during settlement.
Fixed Annuity
A fixed annuity is an annuity with payments that are guaranteed by us as to
dollar amount. Fixed annuity payments after the first will never be less than
the amount of the first payment. At settlement, the fixed account contract value
will be applied to the applicable Settlement Table. This will be done in
accordance with the Payment Plan chosen. The amount payable for each $1,000 so
applied is shown in Table B on page 17.
Variable Annuity
A variable annuity is an annuity with payments which: (1) are not predetermined
or guaranteed as to dollar amount: and (2) vary in amount with the investment
experience of the variable subaccounts.
Determination of First Variable Annuity Payment
At settlement, the variable account contract value will be applied to the
applicable Settlement Table. This will be done: (1) on the valuation date on or
next preceding the 7th calendar day before the settlement date; and (2) in
accordance with the Payment Plan chosen. The amount payable for the first
payment for each $1,000 so applied is shown in Table A on page 16.
Variable Annuity Payments After the First Payment
Variable annuity payments after the first vary in amount. The amount changes
with the investment performance of the variable subaccounts. The dollar amount
of variable annuity payments after the first is not fixed. It may change from
month to month. The dollar amount of such payments is determined as follows:
1. The dollar amount of the first annuity payment is divided by the value of
an annuity unit as of the valuation date on or next preceding the 7th
calendar day before the settlement date. This result establishes the fixed
number of annuity units for each monthly annuity payment after the first.
This number of annuity units remains fixed during the annuity payment
period.
2. The fixed number of annuity units is multiplied by the annuity unit value
as of the valuation date on or next preceding the 7th calendar day before
the date the payment is due. The result establishes the dollar amount of
the payment.
We guarantee that the dollar amount of each payment after the first will not be
affected by variation in expenses or mortality experience.
Exchange of Annuity Units
After annuity payments begin, annuity units of any variable subaccount may be
exchanged for units of any of the other variable subaccounts. This may be done
no more than once a year. Unless we agree otherwise you may use a maximum of
five variable subaccounts at any one time. Once annuity payments start, no
exchanges may be made to or from any fixed annuity.
<PAGE>
TABLES OF SETTLEMENT RATES
Table A below shows the amount of the first monthly variable annuity payment,
based on a 5% assumed investment return, for each $1,000 of value applied under
any payment plan. The amount of the first and all subsequent monthly fixed
dollar annuity payments for each $1,000 of value applied under any payment plan
will be based on our fixed dollar Table of Settlement Rates in effect at
settlement. Such rates are guaranteed to be not less than those shown in Table
B. The amount of such annuity payments under Plans A, B and C will depend upon
the sex and age of the annuitant at settlement. The amount of such annuity
payments under Plan D will depend upon the sex and the age of the annuitant and
the joint annuitant at settlement.
<TABLE>
<CAPTION>
Table A - Dollar Amount of First Monthly Variable Annuity Payment Per $1,000 Applied
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------- ------- ----------------- ------ -------- ---------------- ------- -------- ---------------- --------------
Plan A Plan B Plan C Plan D
- ---------- ------- ----------------- ------ -------- ---------------- ------- -------- ---------------- --------------
Age Life Income Life Income Life Income Joint &
at Beginning Non-Refund Five Years with Fifteen Years Installment Survivor
Annui- In Certain Ten Years Certain Refund Non-Refund
Certain Male & Female
tization Year Male Female Male Female Male Female Male Female Male Female Same Age
- ---------- ------- -------- -------- ------ -------- ------- -------- ------- -------- ------ --------- --------------
Age 65 2005 6.49 5.85 6.44 5.83 6.29 5.77 6.06 5.66 6.13 5.67 5.34
2010 6.40 5.78 6.35 5.76 6.22 5.71 6.00 5.61 6.06 5.61 5.30
2015 6.31 5.72 6.27 5.70 6.15 5.65 5.95 5.56 6.00 5.56 5.25
2020 6.23 5.66 6.19 5.64 6.08 5.60 5.90 5.52 5.93 5.51 5.21
2025 6.15 5.60 6.12 5.59 6.01 5.54 5.84 5.47 5.88 5.47 5.18
2030 6.08 5.55 6.05 5.53 5.95 5.50 5.80 5.43 5.82 5.43 5.14
Age 70 2005 7.41 6.54 7.29 6.50 6.98 6.36 6.54 6.14 6.79 6.22 5.85
2010 7.28 6.45 7.17 6.41 6.88 6.28 6.48 6.08 6.70 6.15 5.78
2015 7.16 6.35 7.06 6.32 6.80 6.21 6.42 6.03 6.61 6.08 5.72
2020 7.04 6.27 6.95 6.24 6.71 6.14 6.37 5.97 6.53 6.01 5.66
2025 6.93 6.19 6.85 6.16 6.63 6.07 6.31 5.92 6.45 5.95 5.61
2030 6.83 6.11 6.76 6.09 6.55 6.01 6.26 5.87 6.38 5.90 5.56
Age 75 2005 8.67 7.58 8.42 7.47 7.78 7.15 7.02 6.70 7.65 6.99 6.59
2010 8.49 7.43 8.26 7.34 7.68 7.05 6.97 6.63 7.53 6.89 6.49
2015 8.32 7.30 8.11 7.21 7.58 6.96 6.91 6.57 7.42 6.80 6.40
2020 8.16 7.18 7.97 7.10 7.48 6.87 6.86 6.51 7.31 6.71 6.31
2025 8.00 7.06 7.83 6.99 7.38 6.78 6.81 6.46 7.21 6.62 6.24
2030 7.86 6.95 7.70 6.89 7.29 6.70 6.75 6.40 7.12 6.55 6.16
Age 85 2005 13.01 11.44 11.71 10.69 9.46 9.09 7.69 7.60 10.30 9.50 9.30
2010 12.65 11.12 11.48 10.45 9.38 9.00 7.67 7.58 10.11 9.32 9.09
2015 12.31 10.82 11.26 10.23 9.30 8.90 7.66 7.56 9.93 9.15 8.90
2020 11.99 10.55 11.04 10.02 9.22 8.80 7.64 7.53 9.76 9.00 8.72
2025 11.70 10.29 10.84 9.83 9.15 8.71 7.62 7.51 9.60 8.85 8.55
2030 11.42 10.06 10.64 9.64 9.07 8.62 7.61 7.48 9.45 8.72 8.40
- ---------- ------- -------- -------- ------ -------- ------- -------- ------- -------- ------ --------- --------------
Table A above is based on the "1983 Individual Annuitant Mortality Table A" with
100% Projection Scale G and a 5% assumed investment return. Settlement rates for
any year, age, or any combination of year, age and sex not shown above, will be
calculated on the same basis as those rates shown in the Table above. Such rates
will be furnished by us upon request. Amounts shown in the Table below are based
on a 5% assumed investment return.
</TABLE>
<TABLE>
<CAPTION>
Plan E - Dollar Amount of First Monthly Variable Annuity Payment Per $1,000 Applied
<S> <C> <C> <C> <C> <C>
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
Years Payable Monthly Payment Years Payable Monthly Payment Years Payable Monthly Payment
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
10 10.51 17 7.20 24 5.88
11 9.77 18 6.94 25 5.76
12 9.16 19 6.71 26 5.65
13 8.64 20 6.51 27 5.54
14 8.20 21 6.33 28 5.45
15 7.82 22 6.17 29 5.36
16 7.49 23 6.02 30 5.28
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
</TABLE>
<TABLE>
<CAPTION>
Table B- Dollar Amounts of Each Monthly Fixed Dollar Annuity Payment Per $1,000 Applied
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------- -------- ---------------- ------ -------- ---------------- ------- ------- ----------------- --------------
Plan A Plan B Plan C Plan D
- ---------- -------- ---------------- ------ -------- ---------------- ------- ------- ----------------- --------------
Settlement Life Income Life Income Life Income Joint &
Beginning Non-Refund Five Years with Fifteen Years Installment Survivor
Settlement In Certain Ten Years Certain Refund Non-Refund
Certain Male & Female
Age Year Male Female Male Female Male Female Male Female Male Female Same Age
- ---------- -------- ------- -------- ------ -------- ------- -------- ------- ------- -------- -------- --------------
Age 65 2005 5.30 4.68 5.26 4.66 5.15 4.62 4.95 4.53 4.84 4.43 4.20
2010 5.21 4.61 5.17 4.60 5.07 4.55 4.89 4.48 4.77 4.38 4.15
2015 5.12 4.55 5.09 4.53 4.99 4.49 4.83 4.42 4.71 4.34 4.11
2020 5.04 4.48 5.01 4.47 4.92 4.44 4.77 4.38 4.66 4.29 4.07
2025 4.96 4.43 4.94 4.42 4.86 4.39 4.72 4.33 4.60 4.25 4.03
2030 4.89 4.37 4.87 4.37 4.79 4.34 4.67 4.29 4.55 4.21 3.99
Age 70 2005 6.21 5.38 6.12 5.35 5.87 5.24 5.48 5.05 5.45 4.97 4.74
2010 6.08 5.29 6.01 5.26 5.77 5.16 5.41 4.99 5.37 4.90 4.67
2015 5.96 5.20 5.89 5.17 5.68 5.08 5.35 4.93 5.29 4.84 4.61
2020 5.85 5.11 5.79 5.09 5.59 5.01 5.29 4.87 5.22 4.78 4.55
2025 5.75 5.03 5.69 5.01 5.51 4.94 5.23 4.82 5.15 4.72 4.49
2030 5.64 4.96 5.59 4.94 5.43 4.88 5.17 4.76 5.08 4.67 4.44
Age 75 2005 7.47 6.42 7.27 6.33 6.72 6.07 6.00 5.65 6.24 5.68 5.50
2010 7.29 6.28 7.11 6.20 6.61 5.97 5.94 5.59 6.14 5.60 5.40
2015 7.12 6.15 6.96 6.08 6.50 5.87 5.88 5.52 6.04 5.51 5.31
2020 6.96 6.03 6.82 5.97 6.40 5.78 5.83 5.46 5.95 5.43 5.23
2025 6.81 5.91 6.68 5.86 6.30 5.69 5.77 5.40 5.86 5.36 5.15
2030 6.67 5.81 6.55 5.76 6.21 5.60 5.72 5.34 5.77 5.29 5.08
Age 85 2005 11.77 10.25 10.64 9.60 8.51 8.12 6.73 6.64 8.66 7.97 8.24
2010 11.42 9.94 10.40 9.37 8.42 8.02 6.71 6.61 8.50 7.82 8.03
2015 11.09 9.65 10.18 9.15 8.34 7.91 6.70 6.59 8.35 7.68 7.84
2020 10.78 9.38 9.96 8.94 8.26 7.81 6.68 6.56 8.20 7.55 7.66
2025 10.49 9.14 9.75 8.74 8.18 7.72 6.66 6.54 8.06 7.42 7.50
2030 10.22 8.91 9.56 8.56 8.09 7.62 6.65 6.51 7.94 7.31 7.35
- ---------- -------- ------- -------- ------ -------- ------- -------- ------- ------- -------- -------- --------------
Table B above is based on the "1983 Individual Annuitant Mortality Table A" at
3.00% with 100% Projection Scale G. Settlement rates for any year, age, or any
combination of year, age and sex not shown above, will be calculated on the same
basis as those rates shown in the Table above. Such rates will be furnished by
us upon request. Amounts shown in the Table below are based on a 3% annual
effective interest rate.
</TABLE>
<TABLE>
<CAPTION>
Plan E - Dollar Amount of Each Monthly Fixed Dollar Annuity Payment Per $1,000 Applied
<S> <C> <C> <C> <C> <C>
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
Years Payable Monthly Payment Years Payable Monthly Payment Years Payable Monthly Payment
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
10 9.61 17 6.23 24 4.84
11 8.86 18 5.96 25 4.71
12 8.24 19 5.73 26 4.95
13 7.71 20 5.51 27 4.47
14 7.26 21 5.32 28 4.37
15 6.87 22 5.15 29 4.27
16 6.53 23 4.99 30 4.18
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
</TABLE>
<PAGE>
DEFERRED ANNUITY CONTRACT
- - Flexible purchase payments.
- - Optional fixed dollar or variable accumulation values and annuity payments.
- - Annuity payments to begin on the settlement date.
- - This contract is nonparticipating. Dividends are not payable.
IDS Life Insurance Company
IDS Tower 10
Minneapolis, Minnesota 55440
IDS Life Insurance Company
DEFERRED ANNUITY CONTRACT
- - Flexible purchase payments.
- - Optional fixed dollar or variable accumulation values and annuity payments.
- - Annuity payments to begin on the settlement date.
- - This contract is nonparticipating. Dividends are not payable.
Annuitant:
Contract Number:
Contract Date:
Settlement Date:
This is a deferred annuity contract. It is a legal contract between you, as the
owner, and us, IDS Life Insurance Company, a Stock Company, Minneapolis,
Minnesota. PLEASE READ YOUR CONTRACT CAREFULLY.
If the annuitant is living on the Settlement Date, upon your request, we will
begin to pay you monthly annuity payments. Any payments made by us are subject
to the terms of this contract.
We issue this contract in consideration of your application and the payment of
the purchase payments.
Signed for and issued by IDS Life Insurance Company in Minneapolis, Minnesota,
as of the contract date shown above.
ACCUMULATION VALUES AND ANNUITY PAYMENTS, WHEN BASED ON THE INVESTMENT RESULTS
OF THE VARIABLE SUBACCOUNTS, ARE VARIABLE AND NOT GUARANTEED AS TO FIXED DOLLAR
AMOUNT. SEE PAGE 9 FOR VARIABLE PROVISIONS.
NOTICE OF YOUR RIGHT TO EXAMINE THIS CONTRACT FOR 10 DAYS
If for any reason you are not satisfied with this contract, return it to us or
our representative within 10 days after you receive it. We will then cancel this
contract. Upon such cancellation we will refund an amount equal to the sum of:
(1) the contract value; and (2) any premium tax charges paid. This contract will
then be considered void from its start.
(signature of) Richard W. Kling
President
(signature of) William A. Stoltzmann
Secretary
<PAGE>
CONTRACT DATA
Annuitiant: John Doe Contract Date: October 6, 1999
Contract Number: XXXX-XXXXXXX Settlement Date: October 6, 2019
Contract Owner: John Doe
Deferred Annuity Contract ("AXP Retirement Advisor Variable Annuity-Band 3")
Upon issuance of this contract your purchase payments have been scheduled to be
paid and applied to the fixed and variable subaccounts as shown below. You may
change the amount, frequency and allocations as provided in this contract. Refer
to the Purchase Payments provision.
Amount submitted With Application: $1,000,000
Scheduled Purchase Payment:
Annual Amount: NA
Variable Purchase Payments
Subaccounts Fund Allocation Percentage
1. AXP VP Strategy Aggressive Fund 25%
2. AXP VP Capital Resources Fund 0%
3. AXP VP New Dimensions Fund 0%
4. AXP VP International Fund 25%
5. AXP VP Growth Fund 0%
6. AXP VP Blue Chip Advantage Fund 0%
7. AXP VP Small Cap Advantage Fund 0%
8. AXP VP Diversified Equity Income Fund 0%
9. AXP VP Managed Fund 0%
10. AXP VP Global Bond Fund 0%
11. AXP VP Extra Income Fund 0%
12. AXP VP Bond Fund 0%
13. AXP VP Federal Income Fund 0%
14. AXP VP Cash Management Fund 0%
15. Goldman Sachs CORE U.S. Equity Fund 0%
16. Goldman Sachs CORE Small Cap Equity Fund 0%
17. Goldman Sachs Mid Cap Value Fund 0%
18. American Century VP Value Fund 0%
19. American Century VP International Fund 0%
20. AIM V.I. Capital Appreciation Fund 0%
21. AIM V.I. Capital Development Fund 0%
22. Fidelity VIP Overseas Portfolio: Service Class 0%
23. Fidelity VIP III Growth & Income Portfolio: Service Class 0%
24. Fidelity VIP III Mid Cap Portfolio: Service Class 0%
25. Wagner U.S. Small Cap Advisor Portfolio 0%
26. Wagner International Small Cap Advisor Portfolio 0%
27. Royce Micro-Cap Portfolio 0%
28. Putnam VT Vista Fund Class IB 0%
29. Putnam VT Intl. New Opportunities Fund Class IB 0%
30. Lazard Retirement International Equity Portfolio 0%
31. Templeton Intl. Smaller Co's Investments Fund Class 2 0%
32. Franklin Real Estate Investments Fund Class 2 0%
33. Franklin Small Cap Value Investments Fund Class 2 0%
34. Warburg Pincus Trust Emerging Growth Portfolio 0%
35. Third Avenue Variable Series Small Cap Value Portfolio 0%
36. Janus Aspen Series International Growth Portfolio 0%
37. Janus Aspen series Capital Appreciation Portfolio 0%
Fixed Account 50%
Contract Administrative Charge: $30 annually. Charge is waived if contract
value, or purchase payments less purchase
payments surrendered, equals or
exceeds $50,000. See Contract Administrative
Charge provision.
Maximum Purchase Payments Permitted:
1st contract year: $2,000,000
Each contract year thereafter: $ 100,000
Fixed Account Guaranteed Interest Rate: 3% Annual Effective Rate
As of the date this contract was issued, any amounts allocated to the fixed
account will earn interest, for the first year, at the annual effective rate of
4.25%. New rates may be declared from time to time.
<PAGE>
GUIDE TO CONTRACT PROVISIONS
Definitions Important words and meanings/Page 3
General Provisions Entire Contract; Incontestable; Benefits
Based on Incorrect Data; State Laws; Federal
Laws; Reports to Owner; Evidence of
Survival; Protection of Proceeds; Payments
by Us; Voting Rights/Page 4
Ownership and Beneficiary Owner's Rights; Change of Ownership;
Beneficiary; Change of Beneficiary;
Beneficiary's Rights; Assignment/Page 5
Payments to Beneficiary Describes options and amounts payable upon
death/Page 6
Purchase Payments Purchase Payments; Allocation of Purchase
Payments; Amounts and Intervals; Payment
Limits/Page 7
Contract Value Describes the fixed and variable account
contract values; Interest to be Credited;
Contract Administrative Charge; Premium Tax
Charges; Transfers of Contract Values/Page 8
Fixed and Variable Accounts Describes the variable subaccounts,
accumulation units and values; Net
Investment Factor; Mortality and Expense
Risk Charge; Annuity Unit Value/Page 9
Surrender Provisions Surrender of the contract for its
surrender value; Rules for Surrender; Surrender
Value; Suspension or Delay in Payment of
Surrender/Page 11
Annuity Provisions When annuity payments begin;
Different ways to receive annuity payments;
Determination of payment amounts/Page 12
Tables of Settlement Rates Tables showing amount of first variable annuity
payment and the guaranteed fixed annuity
payments for the various payment plans/Page 14
<PAGE>
DEFINITIONS
The following words are often used in this contract. When we use these words,
this is what we mean:
accumulation unit
An accumulation unit is an accounting unit of measure. It is used to calculate
the contract value prior to settlement.
annuitant
The person or persons on whose life monthly annuity payments depend.
annuity unit
An annuity unit is an accounting unit of measure. It is used to calculate the
value of annuity payments from the variable subaccounts on and after the
settlement date.
code
The Internal Revenue Code of 1986, as amended, its regulations thereunder and/or
promulgations of the Internal Revenue Service, as applicable.
contract anniversary
The same day and month as the contract date each year that the contract remains
in force.
contract date
It is the date from which contract anniversaries, contract years, and contract
months are determined. Your contract date is shown under Contract Data.
contract value
The sum of the Fixed Account Contract Value (which receives a declared interest
rate) and the Variable Account Contract Value (which varies with the investment
performance of the elected subaccounts) for this contract.
fixed account
The fixed account is made up of all our assets other than those in any separate
account.
fixed annuity
A fixed annuity is an annuity with payments, which are guaranteed by us as to
dollar amount during the annuity payment period.
settlement
The application of the contract value of this contract to an Annuity Payment
Plan to provide annuity payments.
settlement date
The date shown under Contract Data on which annuity payments are scheduled to
begin. This date may be changed as provided in this contract. You will be
notified prior to the settlement date in order to select an appropriate annuity
payment plan.
valuation date
A valuation date is each day the New York Stock Exchange is open for trading.
valuation period
A valuation period is the interval of time commencing at the close of business
on each valuation date and ending at the close of business on the next valuation
date.
variable annuity
A variable annuity is an annuity with payments which: (1) are not predetermined
or guaranteed as to dollar amounts; and (2) vary in amount with the investment
experience of one or more of the variable subaccounts.
variable subaccounts
The portfolios of the Variable Account. The subaccounts available on the
contract date are named under Contract Data.
we, our, us
IDS Life Insurance Company
written request
A request in writing signed by you and delivered to us at our corporate office.
you, your
The owner of this contract. The owner may be someone other than the annuitant.
The owner may be changed as provided in this contract.
<PAGE>
GENERAL PROVISIONS
Entire Contract
This contract form is the entire contract between you and us.
No one except one of our corporate officers (President, Vice President,
Secretary or Assistant Secretary) can change or waive any of our rights or
requirements under this contract. That person must do so in writing. None of our
other representatives or other persons has the authority to change or waive any
of our rights or requirements under this contract.
Incontestable
This contract is incontestable from its date of issue.
Benefits Based on Incorrect Data
If the amount of benefits is determined by data as to a person's age or sex that
is incorrect, benefits will be recalculated on the basis of the correct data.
Any underpayments made by us will be made up immediately. Any overpayments made
by us will be subtracted from future payments.
State Laws
This contract is governed by the laws of the state in which it is delivered. The
values and benefits of this contract are at least equal to those required by
such state.
Federal Laws
This contract is intended to qualify as an annuity contract under Section 72 of
the Internal Revenue Code for Federal income tax purposes. To that end, the
provisions of this contract are to be interpreted to ensure or maintain such tax
qualification, despite any other provisions to the contrary. We reserve the
right to amend this contract to reflect any clarifications that may be needed or
are appropriate to maintain such tax qualification. We will send you a copy of
any such amendments.
Reports to Owner
At least once a year we will send you a statement showing the contract value and
the cash surrender value of this contract. This statement will be based on any
laws or regulations that apply to contracts of this type.
Evidence of Survival
Where any payments under this contract depend on the recipient or annuitant
being alive on a given date, proof that such condition has been met may be
required by us. Such proof may be required prior to making the payment.
Protection of Proceeds
Payments under this contract are not assignable by any beneficiary prior to the
time they are due.
Payments by Us
All sums payable by us are payable from our corporate office. Any payment or
surrender from a variable annuity is based on the variable contract value.
Voting Rights
So long as federal law requires, we will give certain voting rights to contract
owners. As contract owner, if you have voting rights we will send a notice to
you telling you the time and place of the shareholder meeting. The notice will
also explain matters to be voted upon and how many votes you have.
<PAGE>
OWNERSHIP AND BENEFICIARY
Owner's Rights
As long as the annuitant is living and unless otherwise provided in this
contract, you may exercise all rights and privileges provided in this contract
or allowed by us.
Change of Ownership
You can change the ownership of this contract by written request on a form
approved by us. The change must be made while the annuitant is living. Once the
change is recorded by us, it will take effect as of the date of your request,
subject to any action taken or payment made by us before recording.
Beneficiary
Unless designated otherwise, beneficiaries are those you name, in a form
satisfactory to us, to receive benefits of this contract when the first of you
or the annuitant die while this contract is in force. The owner may change the
beneficiary as provided below.
Benefits will be paid equally to all primary beneficiaries surviving the
annuitant. If none survive, proceeds will be paid equally to all contingent
beneficiaries surviving the annuitant. If no beneficiary survives the annuitant,
we will pay the benefits to you, if living, otherwise to your estate.
Change of Beneficiary
You may change the beneficiary anytime while the annuitant is living by
satisfactory written request to us. Once the change is recorded by us, it will
take effect as of the date of your request, subject to any action taken or
payment made by us before the recording.
Beneficiary's Rights
If the death benefit under this contract becomes payable to a beneficiary
(payee) under an Annuity Payment Plan, that payee shall have the right to name a
beneficiary. Any such request from the payee must be made on a form satisfactory
to us.
Assignment
While the annuitant is living, you can assign this contract or any interest in
it. Your interest and the interest of any beneficiary is subject to the interest
of the assignee. An assignment is not a change of ownership and an assignee is
not an owner as these terms are used in this contract. Any amounts payable to
the assignee will be paid in a single sum.
A copy of any new assignment must be submitted to us at our corporate office.
Any assignment is subject to any action taken or payment made by us before the
assignment was recorded at our corporate office. We are not responsible for the
validity or effect, tax or otherwise, of any assignment.
<PAGE>
PAYMENTS TO BENEFICIARY
Death Benefit Before the Settlement Date
If you or the annuitant die before the Settlement Date while this contract is in
force, and both you and the annuitant are age 80 or younger on the date of
death, we will pay the beneficiary the greatest of:
1. the contract value; or
2. the total purchase payments paid less any "adjusted partial surrenders"; or
3. the contract value as of the most recent sixth contract anniversary, plus
any purchase payments paid and less any "adjusted partial surrenders" since
that contract anniversary.
An "adjusted partial surrender" is calculated for each partial surrender as the
product of (a) times (b) where:
(a) is the ratio of the amount of the partial surrender to the contract
value on the date of (but prior to) the partial surrender; and
(b) is the death benefit on the date of (but prior to) the partial
surrender.
If either you or the annuitant are age 81 or older on the date of death, we will
pay the beneficiary the greater of:
1. the contract value; or
2. the total purchase payments less any adjusted partial surrenders.
The above amount will be payable in a lump sum on the valuation date we receive
due proof of death of the annuitant or owner, whichever first occurs. The
beneficiary may elect to receive payment anytime within 5 years after the date
of death.
In lieu of a lump sum, payment may be made under an Annuity Payment Plan,
provided:
1. the beneficiary elects the plan within 60 days after we receive due proof
of death; and
2. payments begin no later than one year after the date of death; and
3. the plan provides payments over a period which does not exceed the life or
life expectancy of the beneficiary.
In this event, the reference to "annuitant" in the Annuity Provisions shall
apply to the beneficiary.
We will determine the contract value on which we base amounts payable or applied
under this section at the next accumulation unit value calculated after we
receive due proof of death at our corporate office.
Pre-election of an Annuity Payment Plan
During your lifetime you may elect how the death benefit described herein is to
be paid under the contract in the event of death before the settlement date. Any
such election must be made on a form satisfactory to us. We must receive the
form in our corporate office prior to the date of death of the first to die of
the owner or annuitant. In this event the death benefit shall be payable as so
elected by you, rather than as requested by the beneficiary. If for any reason
such election does not satisfy Internal Revenue Code Section 72 or related
distribution requirements, the election will be void and the beneficiary will
then be permitted to elect payment pursuant to the provisions of the contract.
Spouse Option to Continue Contract Upon Owner's Death
If the owner's death occurs prior to the settlement date, the owner's spouse, if
designated as sole beneficiary, or as a joint tenant with right of survivorship,
may elect in writing to forego receipt of the death benefit and instead continue
this contract in force as owner. The election by the spouse must be made within
60 days after we receive due proof of death.
Annuitant's Death After the Settlement Date
If the annuitant or owner dies after the settlement date, the amount payable, if
any, will be as provided in the Annuity Payment Plan then in effect.
<PAGE>
PURCHASE PAYMENTS
Purchase Payments
Purchase payments are the payments you make for this contract and the benefits
it provides. Purchase payments must be paid or mailed to us at our corporate
office or to an authorized agent. If requested, we'll give you a receipt for
your purchase payments.
Net purchase payments are that part of your purchase payments applied to the
contract value. A net purchase payment is equal to the purchase payment less any
applicable premium tax charge.
Allocation of Purchase Payments
You instruct us on how you want your purchase payments allocated among the fixed
account and variable subaccounts. Your choice for each account may be made in
any whole percent from 0% to 100% as long as the total adds up to 100%. Your
allocation instructions as of the contract date are shown under Contract Data.
By written request, or by other method agreed to by us, you may change your
choice of accounts or percentages. The first net purchase payment will be
allocated as of the end of the valuation period during which we make an
affirmative decision to issue this contract. Net purchase payments after the
first will be allocated as of the end of the valuation period during which we
receive the payment at our corporate office.
Amount and Intervals
Your initial or scheduled purchase payments are shown under Contract Data.
Purchase payments may be paid until the earlier of: (1) the date this contract
terminates by surrender or otherwise; or (2) the date on which the annuity
payments begin.
Subject to the Payment Limits Provision you may: (1) stop and/or restart
purchase payments; or (2) increase or decrease the amount of your purchase
payments; or (3) change the interval of your purchase payments.
Payment Limits Provision
Maximum Purchase Payments - The maximum purchase payments in the first or later
contract years may not exceed the amounts shown under Contract Data. We reserve
the right to increase the maximums.
We reserve the right to not accept purchase payments allocated to the fixed
account for twelve months following: (1) a partial surrender from the fixed
account; or (2) a lump sum transfer from the fixed account to the variable
subaccounts.
We also reserve the right to cancel this contract if both of the following
conditions exist at the same time: (1) no purchase payments have been paid for a
continuous period of 24 months; and (2) less than $600 in purchase payments have
been paid under this contract. In this event we will give you 30 days written
notice of our intent to cancel this contract. Upon such cancellation we will pay
you the contract value in one sum. This contract will then terminate.
If this contract was purchased as part of your participation in the American
Express Diversified Portfolio Service (or similar "wrap fee" program) and you
discontinue such participation, we will cancel this contract. We will give you
30 days written notice before cancellation. Upon such cancellation we will pay
you the contract value in one sum. This contract will then terminate.
<PAGE>
CONTRACT VALUE
Contract Value
The contract value at any time is the sum of: (1) the Fixed Account Contract
Value; and (2) the Variable Account Contract Value.
If: (1) part or all of the contract value is surrendered; or (2) charges
described herein are made against the contract value; then a number of
accumulation units from the variable subaccounts and an amount from the fixed
account will be deducted to equal such amount. For surrenders, deductions will
be made from the fixed or variable subaccounts that you specify. Otherwise, the
number of units from the variable subaccounts and the amount from the fixed
account will be deducted in the same proportion that your interest in each bears
to the total contract value.
Variable Account Contract Value
The variable account contract value at any time will be: (1) the sum of the
value of all variable subaccount accumulation units under this contract
resulting from purchase payments so allocated, or transfers among the variable
and fixed accounts; less (2) any units deducted for charges or surrenders.
Fixed Account Contract Value
The fixed account contract value at any time will be: (1) the sum of all amounts
credited to the fixed account under this contract; less (2) any amounts deducted
for charges or surrenders.
Interest to be Credited
We will credit interest to the fixed account contract value. Interest will begin
to accrue on the date the purchase payments which are received in our corporate
office become available to us for use. Such interest will be credited at a rate
that we determine from time to time. However, we guarantee that the rate will
not be less than the Guaranteed Interest Rate shown under Contract Data.
Contract Administrative Charge
We charge a fee for establishing and maintaining our records for this contract.
The charge is $30 per year and is deducted from the contract value at the end of
each contract year or, if earlier, when the contract is fully surrendered. The
charge deducted will be prorated among the variable subaccounts and the fixed
account in the same proportion your interest in each bears to the total contract
value.
We waive this charge if your contract value, or your total purchase payments
less any purchase payments surrendered, equals or exceeds $50,000.
If you make a full surrender of this contract, we deduct the full $30 contract
administrative charge at the time of the full surrender regardless of purchase
payments made or contract value.
The charge does not apply after settlement of this contract under an annuity
payment plan.
Premium Tax Charges
A charge will be made by us against the contract value of this contract at the
time that any premium taxes not previously deducted are payable.
Transfers of Contract Values
While this contract is in force prior to the settlement date, transfer of
contract values may be made as outlined below:
1. You may transfer all or part of the values held in one or more variable
subaccounts to another one or more of the variable subaccounts. Subject to
item 2, you may also transfer values held in one or more of the variable
subaccounts to the fixed account.
2. On or within the 30 days after a contract anniversary you may transfer
values from the fixed account to one or more of the variable subaccounts.
Only one such transfer is allowed during this period each year. If such a
transfer is made, no transfers from a variable subaccount to the fixed
account may be made until the next contract anniversary.
You may make a transfer by written request. Transfer requests may also be made
according to telephone procedures or automated transfer procedures that are then
currently in effect, if any. There is no fee or charge for these transfers.
However, the minimum transfer amount is $250, or if less, the entire value in
the account from which the transfer is being made. Smaller minimums may apply to
automated transfer procedures. This transfer privilege may be suspended or
modified by us at any time.
<PAGE>
FIXED AND VARIABLE ACCOUNTS
The Fixed Account
The fixed account is our general account. It is made up of all of our assets
other than:
(1) those in the variable subaccounts; and
(2) those in any other segregated asset account.
The Variable Account
The variable account is a separate investment account of ours. It consists of
several subaccounts, which are named under Contract Data. We have allocated a
part of our assets for this contract to the variable accounts. Such assets
remain our property. However, they may not be charged with the liabilities from
any other business in which we may take part.
Investments of the Variable Account
Purchase payments applied to the variable subaccounts will be allocated as
specified by the owner. Each variable subaccount will buy, at net asset value,
shares of the fund shown for that subaccount under Contract Data or as later
added or changed.
We may change the funds from which the variable subaccounts buy shares if laws
or regulations change, the existing funds become unavailable or in our judgment,
the funds are no longer suitable for the subaccounts. We have the right to
substitute funds for those shown under Contract Data, including funds other than
those shown under Contract Data. We may also: add additional subaccounts
investing in other funds; combine subaccounts; transfer assets to and from the
subaccounts or the variable account; and eliminate or close any subaccounts.
When required, we would first seek approval of the Securities and Exchange
Commission and, the insurance regulator of the state where this contract is
delivered.
Valuation of Assets
Fund shares in the variable subaccounts will be valued at their net asset value.
Variable Account Accumulation Units
The number of accumulation units for each of the variable subaccounts is found
by adding the number of accumulation units resulting from:
1. purchase payments allocated to the subaccount; and
2. transfers to the subaccount;
and subtracting the number of accumulation units from:
1. transfers from the subaccount; and
2. surrenders from the subaccount; and
3. contract administrative charge deductions from the subaccount.
The number of accumulation units added or subtracted for each of the above
transactions is found by dividing (1) by (2) where:
1. is the amount allocated to or deducted from the subaccount; and
2. is the accumulation unit value for the subaccount for the respective
valuation period during which we receive the purchase payment or transfer
value, or during which we deducted transfers, surrenders, or contract
administrative charges.
Variable Account Accumulation Unit Value
The value of an accumulation unit for each of the variable subaccounts was
arbitrarily set at $1 when the first fund shares were bought. The value for any
later valuation period is found as follows:
The accumulation unit value for each variable subaccount for the last prior
valuation period is multiplied by the net investment factor for the same
account for the next following valuation period. The result is the
accumulation unit value. The value of an accumulation unit may increase or
decrease from one valuation period to the next.
Net Investment Factor
The net investment factor is an index applied to measure the investment
performance of a variable subaccount from one valuation period to the next. The
net investment factor may be greater or less than one; therefore, the value of
an accumulation or annuity unit may increase or decrease.
<PAGE>
The net investment factor for any such subaccount for any valuation period is
determined by: dividing (1) by (2) and subtracting (3) from the result. This is
done where:
(1) is the sum of:
a) the net asset value per share of the fund held in the variable
subaccount determined at the end of the current valuation period; plus
b) the per share amount of any dividend or capital gain distributions made
by the fund held in the variable subaccount, if the "ex-dividend" date
occurs during the current valuation period.
(1) is the net asset value per share of fund held in the variable subaccount,
determined at the end of the last prior valuation period.
(2) is a factor representing the mortality and expense risk charge.
Mortality and Expense Risk Charge
In calculating unit values we will deduct a mortality and expense risk charge
from the variable subaccounts equal, on an annual basis, to .55% of the daily
net asset value. This deduction is made to compensate us for assuming the
mortality and expense risks under contracts of this type. We estimate that
approximately 2/3 of this charge is for assumption of mortality risk and 1/3 is
for assumption of expense risk. The deduction will be: (1) made from each
variable subaccount; and (2) computed on a daily basis.
Annuity Unit Value
The value of an Annuity Unit for each variable subaccount was arbitrarily set at
$1 when the first funds were bought. The value for any later valuation period is
found as follows:
1. The annuity unit value for each variable subaccount for the last prior
valuation periods is multiplied by the net investment factor for the
subaccount for the valuation period for which the annuity unit value is
being calculated.
2. The result is multiplied by an interest factor. This is done to neutralize
the assumed investment rate which is built into the settlement tables on
page 14.
<PAGE>
SURRENDER PROVISIONS
Surrender
By written request and subject to the rules below you may:
1. surrender this contract for the total surrender value; or
2. partially surrender this contract for a part of the surrender value.
Rules for Surrender
All surrenders will have the following conditions;
1. You must apply by written request or other method agreed to by us: (a)
while this contract is in force; and (b) prior to the earlier of the
settlement date or the death of the annuitant.
2. Unless we agree otherwise, you must surrender an amount equal to at least
$250 or the entire contract value, if less. The contract value after a
partial surrender must be at least $600.
3. The amount surrendered, less any charges, will normally be paid to you
within seven days of our receipt of your written surrender request and the
return of this contract, if required. For surrenders from the fixed
account, we have the right to defer payment to you for up to 6 months from
the date we receive the request.
4. For partial surrenders, if you do not specify from which accounts the
surrender is to be made, the surrender will be made from the variable
subaccounts and fixed account in the same proportion as your interest in
each bears to the contract value.
5. Any amounts surrendered and charges which may apply can not be repaid.
Upon surrender for the full surrender value this contract will terminate. We may
require that you return the contract to us before we pay the full surrender
value.
Surrender Value
The surrender value at any time will be:
1. the contract value;
2. minus the contract administrative charge.
Suspension or Delay in Payment of Surrender
We have the right to suspend or delay the date of any surrender payment from the
variable subaccounts for any period:
1. when the New York Stock Exchange is closed; or
2. when trading on the New York Stock Exchange is restricted; or
3. when an emergency exists as a result of which: (a) disposal of securities
held in the variable subaccounts is not reasonably practicable; or (b) it
is not reasonably practicable to fairly determine the value of the net
assets of the variable subaccounts; or
4. during any other period when the Securities and Exchange Commission, by
order, so permits for the protection of security holders.
Rules and regulations of the Securities and Exchange Commission will govern as
to whether the conditions set forth in 2 and 3 exist.
<PAGE>
ANNUITY PROVISIONS
Settlement
When settlement occurs, the contract value will be applied to make annuity
payments. The first payment will be made as of the settlement date. This date is
shown under Contract Data. Before payments begin we will require satisfactory
proof that the annuitant is alive. We may also require that you exchange this
contract for a supplemental contract, which provides for the annuity payments.
Change of Settlement Date
You may change the settlement date shown for this contract. Tell us the new date
by written request. However the settlement date may not be later than the later
of: (1) the annuitant's 85th birthday; or (2) the tenth contract anniversary.
Also, if you select a new date, it must be at least 30 days after we receive
your written request at our corporate office.
Annuity Payment Plans
Subject to the terms of this contract, annuity payments may be made on a fixed
dollar basis, a variable basis, or a combination of both. You can schedule
receipt of annuity payments according to one of the Plans A through E below or
another plan agreed to by us.
Plan A - This provides monthly annuity payments during the lifetime of the
annuitant. No payments will be made after the annuitant dies.
Plan B - This provides monthly annuity payments during the lifetime of the
annuitant with a guarantee by us that payments will be made for a period of
at least five, ten or fifteen years. You must select the guaranteed period.
Plan C - This provides monthly annuity payments during the lifetime of the
annuitant with a guarantee by us that payments will be made for a certain
number of months. We determine the number of months by dividing the amount
applied under this Plan by the amount of the first monthly annuity payment.
Plan D - Monthly payments will be paid during the lifetime of the annuitant
and a joint annuitant. When either the annuitant or the joint annuitant
dies we will continue to make monthly payments during the lifetime of the
survivor. No payments will be paid after the death of both the annuitant
and joint annuitant.
Plan E - (Installments for a specified period ) This provides monthly
annuity payments for a period of years. The period of years may be no less
than 10 or more than 30.
By written request to us at least 30 days before the settlement date, you may
select the Plan. If at least 30 days before the settlement date we have not
received at our corporate office your written request to select a Plan, we will
make payments according to Plan B with payments guaranteed for ten years.
If the amount to applied to a Plan is less than $2,000 or would not provide an
initial monthly payment of at least $20, we have the right to make a lump sum
payment of the contract value.
Allocation of Contract Values at Settlement
At the time of settlement under an Annuity Payment Plan you may reallocate your
contract value to the Fixed Account to provide fixed dollar payments and/or
among the variable subaccounts to provide variable annuity payments. Unless we
agree otherwise, you may use a maximum of five variable subaccounts at any one
time during settlement.
Fixed Annuity
A fixed annuity is an annuity with payments that are guaranteed by us as to
dollar amount. Fixed annuity payments after the first will never be less than
the amount of the first payment. At settlement, the fixed account contract value
will be applied to the applicable Settlement Table. This will be done in
accordance with the Payment Plan chosen. The amount payable for each $1,000 so
applied is shown in Table B on page 15.
Variable Annuity
A variable annuity is an annuity with payments which: (1) are not predetermined
or guaranteed as to dollar amount: and (2) vary in amount with the investment
experience of the variable subaccounts.
Determination of First Variable Annuity Payment
At settlement, the variable account contract value will be applied to the
applicable Settlement Table. This will be done: (1) on the valuation date on or
next preceding the 7th calendar day before the settlement date; and (2) in
accordance with the Payment Plan chosen. The amount payable for the first
payment for each $1,000 so applied is shown in Table A on page 14.
Variable Annuity Payments After the First Payment
Variable annuity payments after the first vary in amount. The amount changes
with the investment performance of the variable subaccounts. The dollar amount
of variable annuity payments after the first is not fixed. It may change from
month to month. The dollar amount of such payments is determined as follows:
1. The dollar amount of the first annuity payment is divided by the value of
an annuity unit as of the valuation date on or next preceding the 7th
calendar day before the settlement date. This result establishes the fixed
number of annuity units for each monthly annuity payment after the first.
This number of annuity units remains fixed during the annuity payment
period.
2. The fixed number of annuity units is multiplied by the annuity unit value
as of the valuation date on or next preceding the 7th calendar day before
the date the payment is due. The result establishes the dollar amount of
the payment.
We guarantee that the dollar amount of each payment after the first will not be
affected by variation in expenses or mortality experience.
Exchange of Annuity Units
After annuity payments begin, annuity units of any variable subaccount may be
exchanged for units of any of the other variable subaccounts. This may be done
no more than once a year. Unless we agree otherwise you may use a maximum of
five variable subaccounts at any one time. Once annuity payments start, no
exchanges may be made to or from any fixed annuity.
<PAGE>
TABLES OF SETTLEMENT RATES
Table A below shows the amount of the first monthly variable annuity payment,
based on a 5% assumed investment return, for each $1,000 of value applied under
any payment plan. The amount of the first and all subsequent monthly fixed
dollar annuity payments for each $1,000 of value applied under any payment plan
will be based on our fixed dollar Table of Settlement Rates in effect at
settlement. Such rates are guaranteed to be not less than those shown in Table
B. The amount of such annuity payments under Plans A, B and C will depend upon
the sex and age of the annuitant at settlement. The amount of such annuity
payments under Plan D will depend upon the sex and the age of the annuitant and
the joint annuitant at settlement.
<TABLE>
<CAPTION>
Table A - Dollar Amount of First Monthly Variable Annuity Payment Per $1,000 Applied
- ---------- ------- ----------------- ------ -------- ---------------- ------- -------- ---------------- --------------
Plan A Plan B Plan C Plan D
- ---------- ------- ----------------- ------ -------- ---------------- ------- -------- ---------------- --------------
Age Life Income Life Income Life Income Joint &
at Beginning Non-Refund Five Years with Fifteen Years Installment Survivor
Annui- In Certain Ten Years Certain Refund Non-Refund
Certain Male & Female
tization Year Male Female Male Female Male Female Male Female Male Female Same Age
- ---------- ------- -------- -------- ------ -------- ------- -------- ------- -------- ------ --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Age 65 2005 6.49 5.85 6.44 5.83 6.29 5.77 6.06 5.66 6.13 5.67 5.34
2010 6.40 5.78 6.35 5.76 6.22 5.71 6.00 5.61 6.06 5.61 5.30
2015 6.31 5.72 6.27 5.70 6.15 5.65 5.95 5.56 6.00 5.56 5.25
2020 6.23 5.66 6.19 5.64 6.08 5.60 5.90 5.52 5.93 5.51 5.21
2025 6.15 5.60 6.12 5.59 6.01 5.54 5.84 5.47 5.88 5.47 5.18
2030 6.08 5.55 6.05 5.53 5.95 5.50 5.80 5.43 5.82 5.43 5.14
Age 70 2005 7.41 6.54 7.29 6.50 6.98 6.36 6.54 6.14 6.79 6.22 5.85
2010 7.28 6.45 7.17 6.41 6.88 6.28 6.48 6.08 6.70 6.15 5.78
2015 7.16 6.35 7.06 6.32 6.80 6.21 6.42 6.03 6.61 6.08 5.72
2020 7.04 6.27 6.95 6.24 6.71 6.14 6.37 5.97 6.53 6.01 5.66
2025 6.93 6.19 6.85 6.16 6.63 6.07 6.31 5.92 6.45 5.95 5.61
2030 6.83 6.11 6.76 6.09 6.55 6.01 6.26 5.87 6.38 5.90 5.56
Age 75 2005 8.67 7.58 8.42 7.47 7.78 7.15 7.02 6.70 7.65 6.99 6.59
2010 8.49 7.43 8.26 7.34 7.68 7.05 6.97 6.63 7.53 6.89 6.49
2015 8.32 7.30 8.11 7.21 7.58 6.96 6.91 6.57 7.42 6.80 6.40
2020 8.16 7.18 7.97 7.10 7.48 6.87 6.86 6.51 7.31 6.71 6.31
2025 8.00 7.06 7.83 6.99 7.38 6.78 6.81 6.46 7.21 6.62 6.24
2030 7.86 6.95 7.70 6.89 7.29 6.70 6.75 6.40 7.12 6.55 6.16
Age 85 2005 13.01 11.44 11.71 10.69 9.46 9.09 7.69 7.60 10.30 9.50 9.30
2010 12.65 11.12 11.48 10.45 9.38 9.00 7.67 7.58 10.11 9.32 9.09
2015 12.31 10.82 11.26 10.23 9.30 8.90 7.66 7.56 9.93 9.15 8.90
2020 11.99 10.55 11.04 10.02 9.22 8.80 7.64 7.53 9.76 9.00 8.72
2025 11.70 10.29 10.84 9.83 9.15 8.71 7.62 7.51 9.60 8.85 8.55
2030 11.42 10.06 10.64 9.64 9.07 8.62 7.61 7.48 9.45 8.72 8.40
- ---------- ------- -------- -------- ------ -------- ------- -------- ------- -------- ------ --------- --------------
</TABLE>
Table A above is based on the "1983 Individual Annuitant Mortality Table A" with
100% Projection Scale G and a 5% assumed investment return. Settlement rates for
any year, age, or any combination of year, age and sex not shown above, will be
calculated on the same basis as those rates shown in the Table above. Such rates
will be furnished by us upon request. Amounts shown in the Table below are based
on a 5% assumed investment return.
<TABLE>
<CAPTION>
Plan E - Dollar Amount of First Monthly Variable Annuity Payment Per $1,000 Applied
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
Years Payable Monthly Payment Years Payable Monthly Payment Years Payable Monthly Payment
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
<S> <C> <C> <C> <C> <C>
10 10.51 17 7.20 24 5.88
11 9.77 18 6.94 25 5.76
12 9.16 19 6.71 26 5.65
13 8.64 20 6.51 27 5.54
14 8.20 21 6.33 28 5.45
15 7.82 22 6.17 29 5.36
16 7.49 23 6.02 30 5.28
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
</TABLE>
<TABLE>
<CAPTION>
Table B- Dollar Amounts of Each Monthly Fixed Dollar Annuity Payment Per $1,000 Applied
- ---------- -------- ---------------- ------ -------- ---------------- ------- ------- ----------------- --------------
Plan A Plan B Plan C Plan D
- ---------- -------- ---------------- ------ -------- ---------------- ------- ------- ----------------- --------------
Settlement Life Income Life Income Life Income Joint &
Settlement Beginning Non-Refund Five Years with Fifteen Years Installment Survivor
In Certain Ten Years Certain Refund Non-Refund
Certain Male & Female
Age Year Male Female Male Female Male Female Male Female Male Female Same Age
- ---------- -------- ------- -------- ------ -------- ------- -------- ------- ------- -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Age 65 2005 5.30 4.68 5.26 4.66 5.15 4.62 4.95 4.53 4.84 4.43 4.20
2010 5.21 4.61 5.17 4.60 5.07 4.55 4.89 4.48 4.77 4.38 4.15
2015 5.12 4.55 5.09 4.53 4.99 4.49 4.83 4.42 4.71 4.34 4.11
2020 5.04 4.48 5.01 4.47 4.92 4.44 4.77 4.38 4.66 4.29 4.07
2025 4.96 4.43 4.94 4.42 4.86 4.39 4.72 4.33 4.60 4.25 4.03
2030 4.89 4.37 4.87 4.37 4.79 4.34 4.67 4.29 4.55 4.21 3.99
Age 70 2005 6.21 5.38 6.12 5.35 5.87 5.24 5.48 5.05 5.45 4.97 4.74
2010 6.08 5.29 6.01 5.26 5.77 5.16 5.41 4.99 5.37 4.90 4.67
2015 5.96 5.20 5.89 5.17 5.68 5.08 5.35 4.93 5.29 4.84 4.61
2020 5.85 5.11 5.79 5.09 5.59 5.01 5.29 4.87 5.22 4.78 4.55
2025 5.75 5.03 5.69 5.01 5.51 4.94 5.23 4.82 5.15 4.72 4.49
2030 5.64 4.96 5.59 4.94 5.43 4.88 5.17 4.76 5.08 4.67 4.44
Age 75 2005 7.47 6.42 7.27 6.33 6.72 6.07 6.00 5.65 6.24 5.68 5.50
2010 7.29 6.28 7.11 6.20 6.61 5.97 5.94 5.59 6.14 5.60 5.40
2015 7.12 6.15 6.96 6.08 6.50 5.87 5.88 5.52 6.04 5.51 5.31
2020 6.96 6.03 6.82 5.97 6.40 5.78 5.83 5.46 5.95 5.43 5.23
2025 6.81 5.91 6.68 5.86 6.30 5.69 5.77 5.40 5.86 5.36 5.15
2030 6.67 5.81 6.55 5.76 6.21 5.60 5.72 5.34 5.77 5.29 5.08
Age 85 2005 11.77 10.25 10.64 9.60 8.51 8.12 6.73 6.64 8.66 7.97 8.24
2010 11.42 9.94 10.40 9.37 8.42 8.02 6.71 6.61 8.50 7.82 8.03
2015 11.09 9.65 10.18 9.15 8.34 7.91 6.70 6.59 8.35 7.68 7.84
2020 10.78 9.38 9.96 8.94 8.26 7.81 6.68 6.56 8.20 7.55 7.66
2025 10.49 9.14 9.75 8.74 8.18 7.72 6.66 6.54 8.06 7.42 7.50
2030 10.22 8.91 9.56 8.56 8.09 7.62 6.65 6.51 7.94 7.31 7.35
- ---------- -------- ------- -------- ------ -------- ------- -------- ------- ------- -------- -------- --------------
</TABLE>
Table B above is based on the "1983 Individual Annuitant Mortality Table A" at
3.00% with 100% Projection Scale G. Settlement rates for any year, age, or any
combination of year, age and sex not shown above, will be calculated on the same
basis as those rates shown in the Table above. Such rates will be furnished by
us upon request. Amounts shown in the Table below are based on a 3% annual
effective interest rate.
<TABLE>
<CAPTION>
Plan E - Dollar Amount of Each Monthly Fixed Dollar Annuity Payment Per $1,000 Applied
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
Years Payable Monthly Payment Years Payable Monthly Payment Years Payable Monthly Payment
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
<S> <C> <C> <C> <C> <C>
10 9.61 17 6.23 24 4.84
11 8.86 18 5.96 25 4.71
12 8.24 19 5.73 26 4.95
13 7.71 20 5.51 27 4.47
14 7.26 21 5.32 28 4.37
15 6.87 22 5.15 29 4.27
16 6.53 23 4.99 30 4.18
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
</TABLE>
<PAGE>
DEFERRED ANNUITY CONTRACT
- - Flexible purchase payments.
- - Optional fixed dollar or variable accumulation values and annuity payments.
- - Annuity payments to begin on the settlement date.
- - This contract is nonparticipating. Dividends are not payable.
IDS Life Insurance Company
IDS Tower 10
Minneapolis, Minnesota 55440
IDS Life Insurance Company
DEFERRED ANNUITY CONTRACT
- - Flexible purchase payments.
- - Optional fixed dollar or variable accumulation values and annuity payments.
- - Annuity payments to begin on the settlement date.
- - This contract is nonparticipating. Dividends are not payable.
Annuitant:
Contract Number:
Contract Date:
Settlement Date:
This is a deferred annuity contract. It is a legal contract between you, as the
owner, and us, IDS Life Insurance Company, a Stock Company, Minneapolis,
Minnesota. PLEASE READ YOUR CONTRACT CAREFULLY.
If the annuitant is living on the Settlement Date, upon your request, we will
begin to pay you monthly annuity payments. Any payments made by us are subject
to the terms of this contract.
We issue this contract in consideration of your application and the payment of
the purchase payments.
Signed for and issued by IDS Life Insurance Company in Minneapolis, Minnesota,
as of the contract date shown above.
ACCUMULATION VALUES AND ANNUITY PAYMENTS, WHEN BASED ON THE INVESTMENT RESULTS
OF THE VARIABLE SUBACCOUNTS, ARE VARIABLE AND NOT GUARANTEED AS TO FIXED DOLLAR
AMOUNT. SEE PAGE 9 FOR VARIABLE PROVISIONS.
NOTICE OF YOUR RIGHT TO EXAMINE THIS CONTRACT FOR 10 DAYS
If for any reason you are not satisfied with this contract, return it to us or
our representative within 10 days after you receive it. We will then cancel this
contract. Upon such cancellation we will refund an amount equal to the sum of:
(1) the contract value; and (2) any premium tax charges paid. This contract will
then be considered void from its start.
(signature of) Richard W. Kling
President
(signature of) William A. Stoltzmann
Secretary
<PAGE>
CONTRACT DATA
Annuitiant: John Doe Contract Date: October 6, 1999
Contract Number: XXXX-XXXXXXX Settlement Date: October 6, 2019
Contract Owner: John Doe
Deferred Annuity Contract ("AXP Retirement Advisor Variable Annuit-Band 3")
Upon issuance of this contract your purchase payments have been scheduled to be
paid and applied to the fixed and variable subaccounts as shown below. You may
change the amount, frequency and allocations as provided in this contract. Refer
to the Purchase Payments provision.
Amount submitted With Application: $1,000,000
Scheduled Purchase Payment:
Annual Amount: NA
<TABLE>
<CAPTION>
Variable Purchase Payments
Subaccounts Fund Allocation Percentage
<S> <C> <C>
1. AXP VP Strategy Aggressive Fund 25%
2. AXP VP Capital Resources Fund 0%
3. AXP VP New Dimensions Fund 0%
4. AXP VP International Fund 25%
5. AXP VP Growth Fund 0%
6. AXP VP Blue Chip Advantage Fund 0%
7. AXP VP Small Cap Advantage Fund 0%
8. AXP VP Diversified Equity Income Fund 0%
9. AXP VP Managed Fund 0%
10. AXP VP Global Bond Fund 0%
11. AXP VP Extra Income Fund 0%
12. AXP VP Bond Fund 0%
13. AXP VP Federal Income Fund 0%
14. AXP VP Cash Management Fund 0%
15. Goldman Sachs CORE U.S. Equity Fund 0%
16. Goldman Sachs CORE Small Cap Equity Fund 0%
17. Goldman Sachs Mid Cap Value Fund 0%
18. American Century VP Value Fund 0%
19. American Century VP International Fund 0%
20. AIM V.I. Capital Appreciation Fund 0%
21. AIM V.I. Capital Development Fund 0%
22. Fidelity VIP Overseas Portfolio: Service Class 0%
23. Fidelity VIP III Growth & Income Portfolio: Service Class 0%
24. Fidelity VIP III Mid Cap Portfolio: Service Class 0%
25. Wagner U.S. Small Cap Advisor Portfolio 0%
26. Wagner International Small Cap Advisor Portfolio 0%
27. Royce Micro-Cap Portfolio 0%
28. Putnam VT Vista Fund Class IB 0%
29. Putnam VT Intl. New Opportunities Fund Class IB 0%
30. Lazard Retirement International Equity Portfolio 0%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONTRACT DATA - (continued)
Variable Purchase Payments
Subaccounts Fund Allocation Percentage
<S> <C> <C>
31. Templeton Intl. Smaller Co's Investments Fund Class 2 0%
32. Franklin Real Estate Investments Fund Class 2 0%
33. Franklin Small Cap Value Investments Fund Class 2 0%
34. Warburg Pincus Trust Emerging Growth Portfolio 0%
35. Third Avenue Variable Series Small Cap Value Portfolio 0%
36. Janus Aspen Series International Growth Portfolio 0%
37. Janus Aspen series Capital Appreciation Portfolio 0%
Fixed Account 50%
</TABLE>
Contract Administrative Charge: $30 annually. Charge is waived if contract
value, or purchase payments less purchase
payments surrendered, equals or exceeds
$50,000. See Contract Administrative Charge
provision.
Maximum Purchase Payments Permitted:
1st contract year: $2,000,000
Each contract year thereafter: $ 100,000
Fixed Account Guaranteed Interest Rate: 3% Annual Effective Rate
As of the date this contract was issued, any amounts allocated to the fixed
account will earn interest, for the first year, at the annual effective rate of
4.25%. New rates may be declared from time to time.
<PAGE>
GUIDE TO CONTRACT PROVISIONS
Definitions Important words and meanings/Page 3
General Provisions Entire Contract; Incontestable; Benefits
Based on Incorrect Data; State Laws; Federal
Laws; Reports to Owner; Evidence of
Survival; Protection of Proceeds; Payments
by Us; Voting Rights/Page 4
Ownership and Beneficiary Owner's Rights; Trust or Custodial
Ownership; Change of Ownership; Beneficiary;
Change of Beneficiary/Page 5
Payments to Beneficiary Describes options and amounts payable upon
death/Page 6
Purchase Payments Purchase Payments; Amount and Intervals;
Payment Limits; Limit on Elective Deferrals;
Allocation of Purchase Payments/Page 7
Contract Value Describes the fixed and variable account
contract values; Interest to be Credited,
Contract Administrative Charge; Premium Tax
Charges, Transfers of Contract Values/Page 8
Fixed and Variable Accounts Describes the variable subaccounts,
accumulation units and values; Net
Investment Factor; Mortality and Expense
Risk Charge; Annuity Unit Value/Page 9
Surrender Provisions Surrender; Rules for Surrender; Restrictions
on Distributions from the Contract;
Surrender Value; Suspension or Delay in
Payment of Surrender; Direct Rollover of
Distributions; Eligible Rollover
Distributions/Page 11
Annuity Provisions When annuity payments begin; Different
ways to receive annuity payments; Determination
of payment amounts/Page 13
Tables of Settlement Rates Tables showing amount of first variable annuity
payment and the guaranteed fixed annuity payments
for the various payment plans/Page 15
<PAGE>
DEFINITIONS
The following words are often used in this contract. When we use these words,
this is what we mean:
accumulation unit
An accumulation unit is an accounting unit of measure. It is used to calculate
the contract value prior to settlement.
annuitant
The person or persons on whose life monthly annuity payments depend.
annuity unit
An annuity unit is an accounting unit of measure. It is used to calculate the
value of annuity payments from the variable subaccounts on and after the
settlement date.
code
The Internal Revenue Code of 1986, as amended, its regulations thereunder and/or
promulgations of the Internal Revenue Service, as applicable.
contract anniversary
The same day and month as the contract date each year that the contract remains
in force.
contract date
The date from which contract anniversaries, contract years, and contract months
are determined. Your contract date is shown under Contract Data.
contract value
The sum of the Fixed Account Contract Value (which receives a declared interest
rate) and the Variable Account Contract Value (which varies with the investment
performance of the elected subaccounts) for this contract.
fixed account
The fixed account is made up of all our assets other than those in any separate
account.
fixed annuity
A fixed annuity is an annuity with payments which are guaranteed by us as to
dollar amount during the annuity payment period.
settlement
The application of the contract value of this contract to an Annuity Payment
Plan to provide annuity payments.
settlement date
The date shown under Contract Data on which annuity payments are scheduled to
begin. This date may be changed as provided in this contract. You will be
notified prior to the settlement date in order to select an appropriate annuity
payment plan.
valuation date
A valuation date is each day the New York Stock Exchange is open for trading.
valuation period
A valuation period is the interval of time commencing at the close of business
on each valuation date and ending at the close of business on the next valuation
date.
variable annuity
A variable annuity is an annuity with payments which: (1) are not predetermined
or guaranteed as to dollar amounts; and (2) vary in amount with the investment
experience of one or more of the variable subaccounts.
variable subaccounts
The portfolios of the Variable Account. The subaccounts available on the
contract date are named under Contract Data.
we, our, us
IDS Life Insurance Company
written request
A request in writing signed by you and delivered to us at our corporate office.
you, your
The owner of this contract.
<PAGE>
GENERAL PROVISIONS
Entire Contract
This contract form is the entire contract between you and us.
No one except one of our corporate officers (President, Vice President,
Secretary or Assistant Secretary) can change or waive any of our rights or
requirements under this contract. That person must do so in writing. None of our
other representatives or other persons has the authority to change or waive any
of our rights or requirements under this contract.
Incontestable
This contract is incontestable from its date of issue.
Benefits Based on Incorrect Data
If the amount of benefits is determined by data as to a person's age that is
incorrect, benefits will be recalculated on the basis of the correct data. Any
underpayments made by us will be made up immediately. Any overpayments made by
us will be subtracted from future payments.
State Laws
This contract is governed by the laws of the state in which it is delivered. The
values and benefits of this contract are at least equal to those required by
such state.
Federal Laws
This contract is intended to qualify as an annuity contract for Federal income
tax purposes. To that end, the provisions of this contract are to be interpreted
to ensure or maintain such tax qualification, despite any other provisions to
the contrary. We reserve the right to amend this contract to reflect any
clarifications that may be needed or are appropriate to maintain such tax
qualification. We will send you a copy of any such amendments.
Reports to Owner
At least once a year we will send you a statement showing the contract value and
the cash surrender value of this contract. This statement will be based on any
laws or regulations that apply to contracts of this type.
Evidence of Survival
Where any payments under this contract depend on the recipient or annuitant
being alive on a given date, proof that such condition has been met may be
required by us. Such proof may be required prior to making the payment.
Protection of Proceeds
Payments under this contract are not assignable by any beneficiary prior to the
time they are due.
Payments by Us
All sums payable by us are payable from our home office. Any payment or
surrender from a variable annuity is based on the variable contract value.
Voting Rights
So long as federal law requires, we will give certain voting rights to contract
owners. As contract owner, if you have voting rights we will send a notice to
you telling you the time and place of the shareholder meeting. The notice will
also explain matters to be voted upon and how many votes you have.
Trustee or custodian owners shall cast votes according to instructions received
from appropriate annuitants. All other votes of such trustee or custodian under
the same trust or custodial agreement shall be cast in the same proportion. If
no instructions are received, the votes may be cast at the trustee's or
custodian's discretion.
<PAGE>
OWNERSHIP AND BENEFICIARY
Owner's Rights
As long as the annuitant is living and unless otherwise provided in this
contract, you may exercise all rights and privileges provided in this contract
or allowed by us.
Trust or Custodial Ownership
If you are a tax qualified trust or tax qualified custodial account, then your
trustees or custodian (or their successors) properly named by your trust or
custodial agreement may exercise all rights and privileges provided in this
contract or allowed by us.
Change of Ownership (Restricted)
Your right to change the ownership of this contract is restricted. This contract
may not be sold, assigned, transferred, discounted or pledged as collateral for
a loan or as security for performance of an obligation or for any other purpose
to any person other than to us. However, if you are a trust or a custodian or an
employer as a part of a qualified plan under Sections 401 or 403 or a deferred
compensation plan under Section 457 of the Code, you may transfer ownership of
this contract to the annuitant. Such transfer must be on a form approved by us.
The change must be made while the annuitant is living. Once the change is
recorded by us, it will take effect as of the date of your request, subject to
any action taken or payment made by us before the recording.
Beneficiary
Unless designated otherwise, beneficiaries are those you name, in a form
satisfactory to us, to receive benefits of this contract if you or the annuitant
die while this contract is in force.
Only those beneficiaries who are living when death benefits become payable may
share in the benefits, if any. If no beneficiary is then living we will pay the
benefits to you, if living, otherwise to your estate.
Change of Beneficiary
You may change the beneficiary anytime while the annuitant is living by
satisfactory written request to us. Once the change is recorded by us, it will
take effect as of the date of your request, subject to any action taken or
payment made by us before the recording.
<PAGE>
PAYMENTS TO BENEFICIARY
Death Benefit Before the Settlement Date
If you or the annuitant die before the Settlement Date while this contract is in
force, and both you and the annuitant are age 80 or younger on the date of
death, we will pay the beneficiary the greatest of:
1. the contract value; or
2. the total purchase payments paid less any "adjusted partial surrenders"; or
3. the contract value as of the most recent sixth contract anniversary, plus
any purchase payments paid and less any "adjusted partial surrenders" since
that contract anniversary.
An "adjusted partial surrender" is calculated for each partial surrender as the
product of (a) times (b) where:
(a) is the ratio of the amount of the partial surrender to the contract
value on the date of (but prior to) the partial surrender; and
(b) is the death benefit on the date of (but prior to) the partial
surrender.
If either you or the annuitant are age 81 or older on the date of death, we will
pay the beneficiary the greater of:
1. contract value; or
2. the total purchase payments paid less any "adjusted partial surrenders".
The above amount will be payable in a lump sum on the valuation date we receive
due proof of death of the annuitant or owner, whichever first occurs. The
beneficiary may elect to receive payment anytime within 5 years after the date
of death.
In lieu of a lump sum, payment may be made under an Annuity Payment Plan,
provided:
1. the beneficiary elects the plan within 60 days after we receive due
proof of death; and
2. payments begin no later than one year after the date of death; and
3. the plan provides payments over a period which does not exceed the life or
the life expectancy of the beneficiary.
In this event, the reference to "annuitant" in the Annuity Provisions shall
apply to the beneficiary.
We will determine the contract value on which we base amounts payable or applied
under this section at the next accumulation unit value calculated after we
receive due proof of death at our corporate office.
Spouse Option to Continue Contract Upon Owner's Death
If the annuitant dies prior to the settlement date, a spouse who is designated
as sole beneficiary may elect in writing to forego receipt of the death benefit
and instead continue this contract in force. The election by the spouse must be
made within 60 days after we receive due proof of death.
In this event, the settlement date may not be later than April 1 following the
calendar year in which the annuitant would have attained 70 1/2 , or such other
date which allows the spouse to satisfy the minimum distribution requirements
under the Code.
Annuitant's Death After the Settlement Date
If the annuitant dies after the settlement date, the amount payable, if any,
will be as provided in the Annuity Payment Plan then in effect.
<PAGE>
PURCHASE PAYMENTS
Purchase Payments
Purchase payments are the payments you make for this contract and the benefits
it provides. Purchase payments must be paid or mailed to us at our corporate
office or to an authorized agent. If requested, we'll give you a receipt for
your purchase payments.
Net purchase payments are that part of your purchase payments applied to the
contract value. A net purchase payment is equal to the purchase payment less any
applicable premium tax charge.
Amount and Intervals
Purchase payments may be paid in a single sum or in installments until the
earlier of: (1) the date this contract terminates by surrender or otherwise; or
(2) the date on which the annuity payments begin.
Subject to the Payment Limits Provision you may: (1) stop and/or restart
purchase payments; or (2) increase or decrease the amount of your purchase
payments; or (3) change the interval of your purchase payments.
Payment Limits Provision
Maximum Purchase Payments - The maximum purchase payments in the first or later
contract years may not exceed the amounts shown under Contract Data. We reserve
the right to increase the maximums.
Minimum Purchase Payments - Upon issue of this contract, a purchase payment
intended as a Single Purchase Payment must be at least $2,000. If you intend to
make installment purchase payments such payments, on an annualized basis, must
be at least equal to $600. Additional payments must be at least $50.
We reserve the right to not accept purchase payments allocated to the fixed
account for twelve months following: (1) a partial surrender from the fixed
account; or (2) a lump sum transfer from the fixed account to the variable
subaccounts.
We also reserve the right to cancel this contract if both of the following
conditions exist at the same time: (1) no purchase payments have been paid for a
continuous period of 24 months; and (2) less than $600 in purchase payments have
been paid under this contract. In this event we will give you 30 days written
notice of our intent to cancel this contract. Upon such cancellation we will pay
you the contract value in one sum. This contract will then terminate.
Limit on Elective Deferrals
If your contract is a Tax-Sheltered Annuity qualified under Section 403(b) of
the Code, Elective Deferrals made under the contract may not exceed the annual
limit on elective deferrals as provided in the Code. Elective Deferrals means
employer contributions to the annuity that are excludable from your current
income as provided in the Code.
Allocation of Purchase Payments
You instruct us on how you want your purchase payments allocated among the fixed
account and variable subaccounts. Your choice for each account may be made in
any whole percent from 0% to 100% as long as the total adds up to 100%. Your
allocation instructions as of the contract date are shown under Contract Data.
By written request, or by other method agreed to by us, you may change your
choice of accounts or percentages. The first net purchase payment will be
allocated as of the end of the valuation period during which we make an
affirmative decision to issue this contract. Net purchase payments after the
first will be allocated as of the end of the valuation period during which we
receive the payment at our home office.
<PAGE>
CONTRACT VALUE
Contract Value
The contract value at any time is the sum of: (1) the Fixed Account Contract
Value; and (2) the Variable Account Contract Value.
If: (1) part or all of the contract value is surrendered; or (2) charges
described herein are made against the contract value; then a number of
accumulation units from the variable subaccounts and an amount from the fixed
account will be deducted to equal such amount. For surrenders, deductions will
be made from the fixed or variable subaccounts that you specify. Otherwise, the
number of units from the variable subaccounts and the amount from the fixed
account will be deducted in the same proportion that your interest in each bears
to the total contract value.
Variable Account Contract Value
The variable account contract value at any time will be: (1) the sum of the
value of all variable subaccount accumulation units under this contract
resulting from purchase payments so allocated, or transfers among the variable
and fixed accounts; less (2) any units deducted for charges or surrenders.
Fixed Account Contract Value
The fixed account contract value at any time will be: (1) the sum of all amounts
credited to the fixed account under this contract; less (2) any amounts deducted
for charges or surrenders.
Interest to be Credited
We will credit interest to the fixed account contract value. Interest will begin
to accrue on the date the purchase payments which are received in our corporate
office become available to us for use. Such interest will be credited at a rate
that we determine from time to time. However, we guarantee that the rate will
not be less than the Guaranteed Interest Rate shown under Contract Data.
Contract Administrative Charge
We charge a fee for establishing and maintaining our records for this contract.
The charge is $30 per year and is deducted from the value at the end of each
contract year or, if earlier, when the contract is fully surrendered. The charge
deducted will be prorated among the variable subaccounts and the fixed account
in the same proportion your interest in each bears to the total contract value.
We waive this charge if your contract value, or your total purchase payments
less any purchase payments surrendered, equals or exceeds $50,000.
If you make a full surrender of this contract, we deduct the full $30 contract
administrative charge at the time of the full surrender regardless of purchase
payments made or contract value.
The charge does not apply after settlement of this contract under an annuity
payment plan.
Premium Tax Charges
A charge will be made by us against the contract value of this contract at the
time that any premium taxes not previously deducted are payable.
Transfers of Contract Values
While this contract is in force prior to the settlement date, transfer of
contract values may be made as outlined below:
1. You may transfer all or part of the values held in one or more variable
subaccounts to another one or more of the variable subaccounts. Subject to
item 2, you may also transfer values held in one or more of the variable
subaccounts to the fixed account.
2. On or within the 30 days after a contract anniversary you may transfer
values from the fixed account to one or more of the variable subaccounts.
Only one such transfer is allowed during this period each year. If such a
transfer is made, no transfers from a variable subaccount to the fixed
account may be made until the next contract anniversary.
You may make a transfer by written request. Transfer requests may also be made
according to telephone procedures or automated transfer procedures that are then
currently in effect, if any. There is no fee or charge for these transfers.
However, the minimum transfer amount is $250, or if less, the entire value in
the account from which the transfer is being made. Smaller minimums may apply to
automated transfer procedures. This transfer privilege may be suspended or
modified by us at any time.
<PAGE>
FIXED AND VARIABLE ACCOUNTS
The Fixed Account
The fixed account is our general account. It is made up of all of our assets
other than:
(1) those in the variable subaccounts; and
(2) those in any other segregated asset account.
The Variable Account
The variable account is a separate investment account of ours. It consists of
several subaccounts, which are named under Contract Data. We have allocated a
part of our assets for this contract to the variable accounts. Such assets
remain our property. However, they may not be charged with the liabilities from
any other business in which we may take part.
Investments of the Variable Account
Purchase payments applied to the variable subaccounts will be allocated as
specified by the owner. Each variable subaccount will buy, at net asset value,
shares of the fund shown for that subaccount under Contract Data or as later
added or changed.
We may change the funds from which the variable subaccounts buy shares if laws
or regulations change, the existing funds become unavailable or in our judgment,
the funds are no longer suitable for the subaccounts. We have the right to
substitute funds for those shown under Contract Data, including funds other than
those shown under Contract Data. We may also: add additional subaccounts
investing in other funds; combine subaccounts; transfer assets to and from the
subaccounts or the variable account; and eliminate or close any subaccounts.
When required, we would first seek approval of the Securities and Exchange
Commission and, the insurance regulator of the state where this contract is
delivered.
Valuation of Assets
Fund shares in the variable subaccounts will be valued at their net asset value.
Variable Account Accumulation Units
The number of accumulation units for each of the variable subaccounts is found
by adding the number of accumulation units resulting from:
1. purchase payments allocated to the subaccount; and
2. transfers to the subaccount;
and subtracting the number of accumulation units from:
1. transfers from the subaccount; and
2. surrenders from the subaccount; and
3. contract administrative charge deductions from the subaccount.
The number of accumulation units added or subtracted for each of the above
transactions is found by dividing (1) by (2) where:
1. is the amount allocated to or deducted from the subaccount; and
2. is the accumulation unit value for the subaccount for the respective
valuation period during which we receive the purchase payment or transfer
value, or during which we deducted transfers, surrenders, surrender charges
or contract administrative charges.
Variable Account Accumulation Unit Value
The value of an accumulation unit for each of the variable subaccounts was
arbitrarily set at $1 when the first fund shares were bought. The value for any
later valuation period is found as follows:
The accumulation unit value for each variable subaccount for the last prior
valuation period is multiplied by the net investment factor for the same
account for the next following valuation period. The result is the
accumulation unit value. The value of an accumulation unit may increase or
decrease from one valuation period to the next.
Net Investment Factor
The net investment factor is an index applied to measure the investment
performance of a variable subaccount from one valuation period to the next. The
net investment factor may be greater or less than one; therefore, the value of
an accumulation or annuity unit may increase or decrease.
<PAGE>
The net investment factor for any such subaccount for any valuation period is
determined by: dividing (1) by (2) and subtracting (3) from the result. This is
done where:
(1) is the sum of:
a) the net asset value per share of the fund held in the variable
subaccount determined at the end of the current valuation period; plus
b) the per share amount of any dividend or capital gain distributions made
by the fund held in the variable subaccount, if the "ex-dividend" date
occurs during the current valuation period.
(2) is the net asset value per share of the fund held in the variable
subaccount, determined at the end of the last prior valuation period.
(3) is a factor representing the mortality and expense risk charge.
Mortality and Expense Risk Charge
In calculating unit values we will deduct a mortality and expense risk charge
from the variable subaccounts equal, on an annual basis, to .55% of the daily
net asset value. This deduction is made to compensate us for assuming the
mortality and expense risks under contracts of this type. We estimate that
approximately 2/3 of this charge is for assumption of mortality risk and 1/3 is
for assumption of expense risk. The deduction will be: (1) made from each
variable subaccount; and (2) computed on a daily basis.
Annuity Unit Value
The value of an Annuity Unit for each variable subaccount was arbitrarily set at
$1 when the first funds were bought. The value for any later valuation period is
found as follows:
1. The annuity unit value for each variable subaccount for the last prior
valuation periods is multiplied by the net investment factor for the
subaccount for the valuation period for which the annuity unit value is
being calculated.
2. The result is multiplied by an interest factor. This is done to neutralize
the assumed investment rate which is built into the settlement tables on
page 15.
<PAGE>
SURRENDER PROVISIONS
Surrender
By written request and subject to the rules below you may:
1. Surrender this contract for the total surrender value; or
2. Partially surrender this contract for a part of the surrender value.
Rules for Surrender
All surrenders will have the following conditions;
1. You must apply by written request or other method agreed to by us: (a)
while this contract is in force; and (b) prior to the earlier of the
settlement date or the death of the annuitant.
2. Unless we agree otherwise, you must surrender an amount equal to at least
$250 or the entire contract value, if less. The contract value after a
partial surrender must be at least $600.
3. The amount surrendered, less any charges, will normally be paid to you
within seven days of our receipt of your written surrender request and the
return of this contract, if required. For surrenders from the fixed
account, we have the right to defer payment to you for up to 6 months from
the date we receive the request.
4. For partial surrenders, if you do not specify from which accounts the
surrender is to be made, the surrender will be made from the variable
subaccounts and fixed account in the same proportion as your interest in
each bears to the contract value.
5. Any amounts surrendered and charges which may apply can not be repaid.
Upon surrender for the full surrender value this contract will terminate. We may
require that you return the contract to us before we pay the full surrender
value.
Restrictions on Distributions from the Contract
If your contract is a Tax-Sheltered Annuity qualified under Section 403(b) of
the Code, and unless otherwise provided in the Code, no amounts may be
distributed from this contract unless you have:
1. attained age 59 1/2 ; or
2. separated from service; or
3. died; or
4. become disabled (as defined in Section 72(m)(7) of the Code); or
5. encountered hardship (within the meaning of Section 403(b) of the Code);
and then only such amounts as the Code may provide.
We shall require satisfactory written proof of the event(s) in items 1 through 5
above prior to any distribution from the contract.
Surrender Value
The surrender value at any time will be:
1. the contract value;
2. minus the contract administrative charge.
Suspension or Delay in Payment of Surrender
We have the right to suspend or delay the date of any surrender payment from the
variable subaccounts for any period:
1. When the New York Stock Exchange is closed; or
2. When trading on the New York Stock Exchange is restricted; or
3. When an emergency exists as a result of which: (a) disposal of securities
held in the variable subaccounts is not reasonably practicable; or (b) it
is not reasonably practicable to fairly determine the value of the net
assets of the variable subaccounts; or
4. During any other period when the Securities and Exchange Commission, by
order, so permits for the protection of security holders.
Rules and regulations of the Securities and Exchange Commission will govern as
to whether the conditions set forth in 2 and 3 exist.
<PAGE>
Direct Rollover of Distributions
If your contract is a Tax-Sheltered Annuity qualified under Section 403(b) of
the Code, the following provisions apply:
When you are eligible to receive a distribution from your contract, you may be
able to have all or a portion of that distribution paid in a "direct rollover."
A direct rollover means that, instead of paying you, we will make your payment
directly to an individual retirement account or annuity (IRA, as defined in
Section 408 of the Code) or to another Code Section 403(b) contract or custodial
account that accepts direct rollovers. If you choose a direct rollover, you will
not be taxed on your distribution until you later take it out of the IRA or
403(b) plan. However, you will be subject to any surrender charges or other
applicable charges under your contract at the time of the distribution.
Eligible Rollover Distributions
Only an "eligible rollover distribution" as defined in Section 402(c) of the
Code may be paid as a direct rollover.
In general, eligible rollover distributions DO NOT include:
1. Any payment that is part of a series of equal or almost equal payments made
at least once a year;
- - over your life or life expectancy,
- - over the life or life expectancies of you and your beneficiary,
- - for a period of ten years or more, or
2. Required minimum distributions made beginning in the year you reach age 70
1/2; or
3. Hardship distributions.
Qualified Domestic Relations Order
The rules outlined above apply to your former spouse, if any, who is an
"alternate payee" under a "qualified domestic relations order" (as defined in
Code Section 414(p)). A qualified domestic relations order is issued by a court,
usually in connection with a divorce or legal separation.
Distribution to your Surviving Spouse
A beneficiary who is your surviving spouse may elect to have an eligible
rollover distribution directly rolled over into an IRA, but not into another
403(b) plan.
<PAGE>
ANNUITY PROVISIONS
Settlement
When settlement occurs, the contract value will be applied to make annuity
payments. The first payment will be made as of the settlement date. This date is
shown under Contract Data. Before payments begin we will require satisfactory
proof that the annuitant is alive. We may also require that you exchange this
contract for a supplemental contract, which provides for the annuity payments.
Change of Settlement Date
You may change the settlement date shown for this contract. Tell us the new date
by written request. The maximum Settlement Date is the later of:
1. April 1 following the calendar year in which the annuitant attains
age 70 1/2 or, if later, retires; or
2. such other date which satisfies the minimum distribution requirements under
the Code; or
3. Such other date as agreed upon by us.
Notwithstanding the above, the maximum Settlement Date is the later of:
1. The contract anniversary on or preceding the annuitant's 85th birthday; or
2. the 10th contract anniversary.
Also, if you select a new settlement date, it must be at least 30 days after we
receive your written request at our corporate office.
Annuity Payment Plans
Subject to the terms of this contract, annuity payments may be made on a fixed
dollar basis, a variable basis, or a combination of both. You can schedule
receipt of annuity payments according to one of the Plans A through E below or
another plan agreed to by us provided:
1. The Plan selected provides for payments over the life of the annuitant or
over the life of the annuitant and a joint annuitant; or
2. the Plan selected provides for payments over a period which does not exceed
the life expectancy of the annuitant, or the life expectancy of the
annuitant and a joint annuitant; and
3. the Plan selected meets the minimum distribution incidental benefit
requirements under the Code.
Plan A - This provides monthly annuity payments during the lifetime of the
annuitant. No payments will be made after the annuitant dies.
Plan B - This provides monthly annuity payments during the lifetime of the
annuitant with a guarantee by us that payments will be made for a period of
at least five, ten or fifteen years. You must select the guaranteed period.
Plan C - This provides monthly annuity payments during the lifetime of the
annuitant with a guarantee by us that payments will be made for a certain
number of months. We determine the number of months by dividing the amount
applied under this Plan by the amount of the first monthly annuity payment.
Plan D - Monthly payments will be paid during the lifetime of the annuitant
and a joint annuitant. When either the annuitant or the joint annuitant
dies we will continue to make monthly payments during the lifetime of the
survivor. No payments will be paid after the death of both the annuitant
and joint annuitant.
Plan E - (Installments for a specified period ) This provides monthly
annuity payments for a period of years. The period of years may be no less
than 10 or more than 30.
By written request to us at least 30 days before the settlement date, you may
select the Plan. If at least 30 days before the settlement date we have not
received at our corporate office your written request to select a Plan, we will
make payments according to Plan B with payments guaranteed for ten years.
If the amount to applied to a Plan is less than $2,000 or would not provide an
initial monthly payment of at least $20, we have the right to make a lump sum
payment of the contract value.
Allocation of Contract Values at Settlement
At the time of settlement under an Annuity Payment Plan you may reallocate your
contract value to the Fixed Account to provide fixed dollar payments and/or
among the variable subaccounts to provide variable annuity payments. Unless we
agree otherwise, you may use a maximum of five variable subaccounts at any one
time during settlement.
Fixed Annuity
A fixed annuity is an annuity with payments that are guaranteed by us as to
dollar amount. Fixed annuity payments after the first will never be less than
the amount of the first payment. At settlement, the fixed account contract value
will be applied to the applicable Settlement Table. This will be done in
accordance with the Payment Plan chosen. The amount payable for each $1,000 so
applied is shown in Table B on page 16.
Variable Annuity
A variable annuity is an annuity with payments which: (1) are not predetermined
or guaranteed as to dollar amount: and (2) vary in amount with the investment
experience of the variable subaccounts.
Determination of First Variable Annuity Payment
At settlement, the variable account contract value will be applied to the
applicable Settlement Table. This will be done: (1) on the valuation date on or
next preceding the 7th calendar day before the settlement date; and (2) in
accordance with the Payment Plan chosen. The amount payable for the first
payment for each $1,000 so applied is shown in Table A on page 15.
Variable Annuity Payments After the First Payment
Variable annuity payments after the first vary in amount. The amount changes
with the investment performance of the variable subaccounts. The dollar amount
of variable annuity payments after the first is not fixed. It may change from
month to month. The dollar amount of such payments is determined as follows:
1. The dollar amount of the first annuity payment is divided by the value of
any annuity unit as of the valuation date on or next preceding the 7th
calendar day before the settlement date. This result establishes the fixed
number of annuity units for each monthly annuity payment after the first.
This number of annuity units remains fixed during the annuity payment
period.
2. The fixed number of annuity units is multiplied by the annuity unit value
as of the valuation date on or next preceding the 7th calendar day before
the date the payment is due. The result establishes the dollar amount of
the payment.
We guarantee that the dollar amount of each payment after the first will not be
affected by variation in expenses or mortality experience.
Exchange of Annuity Units
After annuity payments begin, annuity units of any variable subaccount may be
exchanged for units of any of the other variable subaccounts. This may be done
no more than once a year. Unless we agree otherwise you may use a maximum of
five variable subaccounts at any one time. Once annuity payments start, no
exchanges may be made to or from any fixed annuity.
<PAGE>
TABLES OF SETTLEMENT RATES
Table A below shows the amount of the first monthly variable annuity payment,
based on a 5% assumed investment return, for each $1,000 of value applied under
any payment plan. The amount of the first and all subsequent monthly fixed
dollar annuity payments for each $1,000 of value applied under any payment plan
will be based on our fixed dollar Table of Settlement Rates in effect at
settlement. Such rates are guaranteed to be not less than those shown in Table
B. The amount of such annuity payments under Plans A, B and C will depend upon
the age of the annuitant at settlement. The amount of such annuity payments
under Plan D will depend upon the age of the annuitant and the joint annuitant
at settlement.
<TABLE>
<CAPTION>
Table A - Dollar Amount of First Monthly Variable Annuity Payment Per $1,000 Applied
- ---------- -------- --------------- ------- -------- --------------- -------- ------- ---------------- ---------------
Plan A Plan B Plan C Plan D
- ---------- -------- --------------- ------- -------- --------------- -------- ------- ---------------- ---------------
Age Life Income Life Income Life Income Joint &
at Beginning Non-Refund Five Years with Fifteen Years Installment Survivor
Annui- In Certain Ten Years Certain Refund Non-Refund
tization Certain
Year
- ---------- -------- --- ----------- --- ------------ ---- ---------- --- ------------ ---- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Age 65 2005 5.85 5.83 5.77 5.66 5.67 5.20
2010 5.78 5.76 5.71 5.61 5.61 5.16
2015 5.72 5.70 5.65 5.56 5.56 5.13
2020 5.66 5.64 5.60 5.52 5.51 5.09
2025 5.60 5.59 5.54 5.47 5.47 5.06
2030 5.55 5.53 5.50 5.43 5.43 5.04
Age 70 2005 6.54 6.50 6.36 6.14 6.22 5.66
2010 6.45 6.41 6.28 6.08 6.15 5.60
2015 6.35 6.32 6.21 6.03 6.08 5.55
2020 6.27 6.24 6.14 5.97 6.01 5.50
2025 6.19 6.16 6.07 5.92 5.95 5.45
2030 6.11 6.09 6.01 5.87 5.90 5.41
Age 75 2005 7.58 7.47 7.15 6.70 6.99 6.33
2010 7.43 7.34 7.05 6.63 6.89 6.25
2015 7.30 7.21 6.96 6.57 6.80 6.17
2020 7.18 7.10 6.87 6.51 6.71 6.09
2025 7.06 6.99 6.78 6.46 6.62 6.02
2030 6.95 6.89 6.70 6.40 6.55 5.96
Age 85 2005 11.44 10.69 9.09 7.60 9.50 8.88
2010 11.12 10.45 9.00 7.58 9.32 8.69
2015 10.82 10.23 8.90 7.56 9.15 8.51
2020 10.55 10.02 8.80 7.53 9.00 8.34
2025 10.29 9.83 8.71 7.51 8.85 8.19
2030 10.06 9.64 8.62 7.48 8.72 8.05
- ---------- -------- --- ----------- --- ------------ ---- ---------- --- ------------ ---- ----------- ---------------
</TABLE>
Table A above is based on the "1983 Individual Annuitant Mortality Table A" with
100% Projection Scale G and a 5% assumed investment return. Settlement rates for
any year, age, or any combination of year and age not shown above, will be
calculated on the same basis as those rates shown in the Table above. Such rates
will be furnished by us upon request. Amounts shown in the Table below are based
on a 5% assumed investment return.
<TABLE>
<CAPTION>
Plan E - Dollar Amount of First Monthly Variable Annuity Payment Per $1,000 Applied
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
Years Payable Monthly Payment Years Payable Monthly Payment Years Payable Monthly Payment
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
<S> <C> <C> <C> <C> <C>
10 10.51 17 7.20 24 5.88
11 9.77 18 6.94 25 5.76
12 9.16 19 6.71 26 5.65
13 8.64 20 6.51 27 5.54
14 8.20 21 6.33 28 5.45
15 7.82 22 6.17 29 5.36
16 7.49 23 6.02 30 5.28
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
</TABLE>
<TABLE>
<CAPTION>
Table B - Dollar Amounts of Each Monthly Fixed Dollar Annuity Payment Per $1,000 Applied
- ---------- ------- ---------------- ------- -------- --------------- -------- ------- ---------------- ---------------
Plan A Plan B Plan C Plan D
- ---------- ------- ---------------- ------- -------- --------------- -------- ------- ---------------- ---------------
Settlement Life Income Life Income Life Income Joint &
Settlement Beginning Non-Refund Five Years with Fifteen Years Installment Survivor
In Certain Ten Years Certain Refund Non-Refund
Certain
Age Year
- ---------- ------- ---- ----------- --- ------------ ---- ---------- ---- ----------- ---- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Age 65 2005 4.68 4.66 4.62 4.53 4.43 4.06
2010 4.61 4.60 4.55 4.48 4.38 4.02
2015 4.55 4.53 4.49 4.42 4.34 3.98
2020 4.48 4.47 4.44 4.38 4.29 3.94
2025 4.43 4.42 4.39 4.33 4.25 3.91
2030 4.37 4.37 4.34 4.29 4.21 3.88
Age 70 2005 5.38 5.35 5.24 5.05 4.97 4.55
2010 5.29 5.26 5.16 4.99 4.90 4.49
2015 5.20 5.17 5.08 4.93 4.84 4.43
2020 5.11 5.09 5.01 4.87 4.78 4.38
2025 5.03 5.01 4.94 4.82 4.72 4.33
2030 4.96 4.94 4.88 4.76 4.67 4.29
Age 75 2005 6.42 6.33 6.07 5.65 5.68 5.25
2010 6.28 6.20 5.97 5.59 5.60 5.16
2015 6.15 6.08 5.87 5.52 5.51 5.08
2020 6.03 5.97 5.78 5.46 5.43 5.01
2025 5.91 5.86 5.69 5.40 5.36 4.94
2030 5.81 5.76 5.60 5.34 5.29 4.88
Age 85 2005 10.25 9.60 8.12 6.64 7.97 7.83
2010 9.94 9.37 8.02 6.61 7.82 7.64
2015 9.65 9.15 7.91 6.59 7.68 7.46
2020 9.38 8.94 7.81 6.56 7.55 7.30
2025 9.14 8.74 7.72 6.54 7.42 7.15
2030 8.91 8.56 7.62 6.51 7.31 7.01
- ---------- ------- ---- ----------- --- ------------ ---- ---------- ---- ----------- ---- ----------- ---------------
</TABLE>
Table B above is based on the "1983 Individual Annuitant Mortality Table A" at
3.00% with 100% Projection Scale G. Settlement rates for any year, age, or any
combination of year and age not shown above, will be calculated on the same
basis as those rates shown in the Table above. Such rates will be furnished by
us upon request. Amounts shown in the Table below are based on a 3% annual
effective interest rate.
<TABLE>
<CAPTION>
Plan E - Dollar Amount of Each Monthly Fixed Dollar Annuity Payment Per $1,000 Applied
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
Years Payable Monthly Payment Years Payable Monthly Payment Years Payable Monthly Payment
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
<S> <C> <C> <C> <C> <C>
10 9.61 17 6.23 24 4.84
11 8.86 18 5.96 25 4.71
12 8.24 19 5.73 26 4.95
13 7.71 20 5.51 27 4.47
14 7.26 21 5.32 28 4.37
15 6.87 22 5.15 29 4.27
16 6.53 23 4.99 30 4.18
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
</TABLE>
<PAGE>
DEFERRED ANNUITY CONTRACT
- - Flexible purchase payments.
- - Optional fixed dollar or variable accumulation values and annuity payments.
- - Annuity payments to begin on the settlement date.
- - This contract is nonparticipating. Dividends are not payable.
IDS Life Insurance Company
IDS Tower 10
Minneapolis, Minnesota 55440
IDS Life Insurance Company
DEFERRED ANNUITY CONTRACT
- - Flexible purchase payments.
- - Optional fixed dollar or variable accumulation values and annuity payments.
- - Annuity payments to begin on the settlement date.
- - This contract is nonparticipating. Dividends are not payable.
Annuitant:
Contract Number:
Contract Date:
Settlement Date:
This is a deferred annuity contract. It is a legal contract between you, as the
owner, and us, IDS Life Insurance Company, a Stock Company, Minneapolis,
Minnesota. PLEASE READ YOUR CONTRACT CAREFULLY.
If the annuitant is living on the Settlement Date, upon your request, we will
begin to pay you monthly annuity payments. Any payments made by us are subject
to the terms of this contract.
We issue this contract in consideration of your application and the payment of
the purchase payments.
Signed for and issued by IDS Life Insurance Company in Minneapolis, Minnesota,
as of the contract date shown above.
ACCUMULATION VALUES AND ANNUITY PAYMENTS, WHEN BASED ON THE INVESTMENT RESULTS
OF THE VARIABLE SUBACCOUNTS, ARE VARIABLE AND NOT GUARANTEED AS TO FIXED DOLLAR
AMOUNT. SEE PAGE 10 FOR VARIABLE PROVISIONS.
NOTICE OF YOUR RIGHT TO EXAMINE THIS CONTRACT FOR 10 DAYS
If for any reason you are not satisfied with this contract, return it to us or
our representative within 10 days after you receive it. We will then cancel this
contract and refund all premiums which you have paid. This contract will then be
considered void from its start.
(signature of) Richard W. Kling
President
(signature of) William A. Stoltzmann
Secretary
<PAGE>
CONTRACT DATA
Annuitiant: John Doe Contract Date: October 6, 1999
Contract Number: XXXX-XXXXXXX Settlement Date: October 6, 2019
Contract Owner: John Doe
Deferred Annuity Contract ("AXP Retirement Advisor Variable Annuity-Band 3")
Upon issuance of this contract your purchase payments have been scheduled to be
paid and applied to the fixed and variable subaccounts as shown below. You may
change the amount, frequency and allocations as provided in this contract. Refer
to the Purchase Payments provision.
Amount submitted With Application: $1,000,000
Scheduled Purchase Payment:
Annual Amount: NA
<TABLE>
<CAPTION>
Variable Purchase Payments
Subaccounts Fund Allocation Percentage
<S> <C> <C>
1. AXP VP Strategy Aggressive Fund 25%
2. AXP VP Capital Resources Fund 0%
3. AXP VP New Dimensions Fund 0%
4. AXP VP International Fund 25%
5. AXP VP Growth Fund 0%
6. AXP VP Blue Chip Advantage Fund 0%
7. AXP VP Small Cap Advantage Fund 0%
8. AXP VP Diversified Equity Income Fund 0%
9. AXP VP Managed Fund 0%
10. AXP VP Global Bond Fund 0%
11. AXP VP Extra Income Fund 0%
12. AXP VP Bond Fund 0%
13. AXP VP Federal Income Fund 0%
14. AXP VP Cash Management Fund 0%
15. Goldman Sachs CORE U.S. Equity Fund 0%
16. Goldman Sachs CORE Small Cap Equity Fund 0%
17. Goldman Sachs Mid Cap Value Fund 0%
18. American Century VP Value Fund 0%
19. American Century VP International Fund 0%
20. AIM V.I. Capital Appreciation Fund 0%
21. AIM V.I. Capital Development Fund 0%
22. Fidelity VIP Overseas Portfolio: Service Class 0%
23. Fidelity VIP III Growth & Income Portfolio: Service Class 0%
24. Fidelity VIP III Mid Cap Portfolio: Service Class 0%
25. Wagner U.S. Small Cap Advisor Portfolio 0%
26. Wagner International Small Cap Advisor Portfolio 0%
27. Royce Micro-Cap Portfolio 0%
28. Putnam VT Vista Fund Class IB 0%
29. Putnam VT Intl. New Opportunities Fund Class IB 0%
30. Lazard Retirement International Equity Portfolio 0%
CONTRACT DATA - (continued)
<PAGE>
Variable Purchase Payments
Subaccounts Fund Allocation Percentage
31. Templeton Intl. Smaller Co's Investments Fund Class 2 0%
32. Franklin Real Estate Investments Fund Class 2 0%
33. Franklin Small Cap Value Investments Fund Class 2 0%
34. Warburg Pincus Trust Emerging Growth Portfolio 0%
35. Third Avenue Variable Series Small Cap Value Portfolio 0%
36. Janus Aspen Series International Growth Portfolio 0%
37. Janus Aspen series Capital Appreciation Portfolio 0%
Fixed Account 50%
</TABLE>
Contract Administrative Charge: $30 annually. Charge is waived if contract
value, or purchase payments less purchase
payments surrendered, equals or exceeds
$50,000. See Contract Administrative Charge
provision.
Maximum Purchase Payments Permitted:
1st contract year: $2,000,000
Each contract year thereafter: $ 100,000
Fixed Account Guaranteed Interest Rate: 3% Annual Effective Rate
As of the date this contract was issued, any amounts allocated to the fixed
account will earn interest, for the first year, at the annual effective rate of
4.25%. New rates may be declared from time to time.
<PAGE>
GUIDE TO CONTRACT PROVISIONS
Definitions Important words and meanings/Page 3
General Provisions Entire Contract; Traditional IRA; Roth IRA;
Incontestable; Benefits Based on Incorrect
Data; State Laws; Federal Laws; Reports to
Owner; Evidence of Survival; Protection of
Proceeds; Payments by Us; Voting Rights/
Page 4
Ownership and Beneficiary Owner's Rights; Trust or Custodial
Ownership; Change of Ownership; Beneficiary;
Change of Beneficiary/Page 5
Payments to Beneficiary Describes options and amounts payable upon
death/Page 6
Purchase Payments Purchase Payments; Allocation of Purchase
Payments; Amount and Intervals; Payment
Limits/Page 7
Contract Value Describes the fixed and variable account
contract values; Interest to be Credited,
Contract Administrative Charge; Premium Tax
Charges, Transfers of Contract Values/Page 9
Fixed and Variable Accounts Describes the variable subaccounts,
accumulation units and values; Net
Investment Factor; Mortality and Expense
Risk Charge; Annuity Unit Value/Page 10
Surrender Provisions Surrender of the contract for its surrender
value; Rules for Surrender; Surrender Value;
Suspension or Delay in Payment of
Surrender/Page 12
Annuity Provisions When annuity payments begin; Different ways
to receive annuity payments; Determination
of payment amounts/Page 13
Tables of Settlement Rates Tables showing amount of first variable annuity
payment and the guaranteed fixed annuity payments
for the various payment plans/Page 15
<PAGE>
DEFINITIONS
The following words are often used in this contract. When we use these words,
this is what we mean:
accumulation unit
An accumulation unit is an accounting unit of measure. It is used to calculate
the contract value prior to settlement.
annuitant
The person or persons on whose life monthly annuity payments depend.
annuity unit
An annuity unit is an accounting unit of measure. It is used to calculate the
value of annuity payments from the variable subaccounts on and after the
settlement date.
code
The Internal Revenue Code of 1986, as amended, its regulations thereunder and/or
promulgations of the Internal Revenue Service, as applicable.
contract anniversary
The same day and month as the contract date each year that the contract remains
in force.
contract date
The date from which contract anniversaries, contract years, and contract months
are determined. Your contract date is shown under Contract Data.
contract value
The sum of the Fixed Account Contract Value (which receives a declared interest
rate) and the Variable Account Contract Value (which varies with the investment
performance of the elected subaccounts) for this contract.
fixed account
The fixed account is made up of all our assets other than those in any separate
account.
fixed annuity
A fixed annuity is an annuity with payments which are guaranteed by us as to
dollar amount during the annuity payment period.
settlement
The application of the contract value of this contract to an Annuity Payment
Plan to provide annuity payments.
settlement date
The date shown under Contract Data on which annuity payments are scheduled to
begin. This date may be changed as provided in this contract. You will be
notified prior to the settlement date in order to select an appropriate annuity
payment plan.
valuation date
A valuation date is each day the New York Stock Exchange is open for trading.
valuation period
A valuation period is the interval of time commencing at the close of business
on each valuation date and ending at the close of business on the next valuation
date.
variable annuity
A variable annuity is an annuity with payments which: (1) are not predetermined
or guaranteed as to dollar amounts; and (2) vary in amount with the investment
experience of one or more of the variable subaccounts.
variable subaccounts
The portfolios of the Variable Account. The subaccounts available on the
contract date are named under Contract Data.
we, our, us
IDS Life Insurance Company
written request
A request in writing signed by you and delivered to us at our corporate office.
you, your
The owner of this contract.
<PAGE>
GENERAL PROVISIONS
Entire Contract
This contract form is the entire contract between you and us.
No one except one of our corporate officers (President, Vice President,
Secretary or Assistant Secretary) can change or waive any of our rights or
requirements under this contract. That person must do so in writing. None of our
other representatives or other persons has the authority to change or waive any
of our rights or requirements under this contract.
Traditional IRA
If this contract is intended to qualify as an Individual Retirement Annuity
(IRA), we agree to and reserve the right to modify this contract to the extent
necessary to qualify this contract as an Individual Retirement Annuity, as
described in Sections 408(b) and 219 of the Internal Revenue Code of 1986, as
amended and all related sections and regulations which are in effect during the
term of the contract.
Roth IRA
If this contract is intended to qualify as a Roth IRA, we agree to and reserve
the right to modify this contract to the extent necessary to qualify this
contract as a Roth IRA as described in Section 408A of the Internal Revenue Code
of 1986, as amended and all related sections and regulations which are in effect
during the term of the contract.
Incontestable
This contract is incontestable from its date of issue.
Benefits Based on Incorrect Data
If the amount of benefits is determined by data as to a person's age or sex that
is incorrect, benefits will be recalculated on the basis of the correct data.
Any underpayments made by us will be made up immediately. Any overpayments made
by us will be subtracted from future payments.
State Laws
This contract is governed by the laws of the state in which it is delivered. The
values and benefits of this contract are at least equal to those required by
such state.
Federal Laws
This contract is intended to qualify as an annuity contract for Federal income
tax purposes. To that end, the provisions of this contract are to be interpreted
to ensure or maintain such tax qualification, despite any other provisions to
the contrary. We reserve the right to amend this contract to reflect any
clarifications that may be needed or are appropriate to maintain such tax
qualification. We will send you a copy of any such amendments.
Reports to Owner
At least once a year we will send you a statement showing the contract value and
the cash surrender value of this contract. This statement will be based on any
laws or regulations that apply to contracts of this type.
Evidence of Survival
Where any payments under this contract depend on the recipient or annuitant
being alive on a given date, proof that such condition has been met may be
required by us. Such proof may be required prior to making the payment.
Protection of Proceeds
Payments under this contract are not assignable by any beneficiary prior to the
time they are due.
Payments by Us
All sums payable by us are payable from our corporate office. Any payment or
surrender from a variable annuity is based on the variable contract value.
Voting Rights
So long as federal law requires, we will give certain voting rights to contract
owners. As contract owner, if you have voting rights we will send a notice to
you telling you the time and place of the shareholder meeting. The notice will
also explain matters to be voted upon and how many votes you have.
Trustee or custodian owners shall cast votes according to instructions received
from appropriate annuitants. All other votes of such trustee or custodian under
the same trust or custodial agreement shall be cast in the same proportion. If
no instructions are received, the votes may be cast at the trustee's or
custodian's discretion.
<PAGE>
OWNERSHIP AND BENEFICIARY
Owner's Rights
As long as the annuitant is living and unless otherwise provided in this
contract, you may exercise all rights and privileges provided in this contract
or allowed by us. Your entire interest is non-forfeitable.
Trust or Custodial Ownership
If you are a tax qualified trust or tax qualified custodial account, then your
trustees or custodian (or other successors) properly named by your trust or
custodial agreement may exercise all rights and privileges provided in this
contract or allowed by us.
Change of Ownership (Restricted)
Your right to change the ownership of this contract is restricted. This contract
may not be sold, assigned, transferred, forfeited, discounted or pledged as
collateral for a loan or as security for performance of an obligation or for any
other purpose to any other person other than as may be required or permitted
under Section 408 of the Internal Revenue Code or 1986, as amended. Your
interest in this contract may be transferred to your former spouse, if any,
under a divorce decree or a written instrument incident to such divorce.
However, if this contract is owned by a trustee of a tax-qualified trust or the
custodian of a tax-qualified custodial account, such trustee or custodian may
transfer ownership of this contract to the annuitant or to a qualified successor
trustee or custodian. Such transfer shall be effective only if received by us at
our corporate office. When so received, such transfer shall take effect as of
the date of instrument, subject to any payment made or other action taken by us
before such receipt.
Beneficiary
Unless designated otherwise, beneficiaries are those you name, in a form
satisfactory to us, to receive benefits of this contract if you or the annuitant
die while this contract is in force.
Only those beneficiaries who are living when death benefits become payable may
share in the benefits, if any. If no beneficiary is then living we will pay the
benefits to you, if living, otherwise to your estate.
Change of Beneficiary
You may change the beneficiary anytime while the annuitant is living by
satisfactory written request to us. Once the change is recorded by us, it will
take effect as of the date of your request, subject to any action taken or
payment made by us before the recording.
<PAGE>
PAYMENTS TO BENEFICIARY
Death Benefit Before the Settlement Date
If you die before the settlement date while this contract is in force, and you
are age 80 or younger on the date of death, we will pay the beneficiary the
greatest of:
1. the contract value; or
2. the total purchase payments paid less any "adjusted partial surrenders"; or
3. the contract value as of the most recent sixth contract anniversary, plus
any purchase payments paid and less any "adjusted partial surrenders" since
that contract anniversary.
An "adjusted partial surrender" is calculated for each partial surrender as the
product of (a) times (b) where:
(a) is the ratio of the amount of the partial surrender to the contract value
on the date of (but prior to) the partial surrender; and
(b) is the death benefit on the date of (but prior to) the partial surrender.
If you are age 81 or older on the date of death, we will pay the beneficiary the
greater of:
1. the contract value; or
2. the total purchase payments paid less any "adjusted partial surrenders".
If the annuitant dies before the settlement date, the beneficiary may elect to
receive a lump sum payment anytime within five years after the date of death of
the annuitant. In lieu of a lump sum payment, payments may be made under an
Annuity Payment Plan, provided:
1. the beneficiary elects the plan within 60 days after we receive
due proof of death; and
2. payments begin no later than:
(a) one year after the date of death in the case of a non-spouse
beneficiary, or
(b) the date on which the annuitant would have attained age 70 1/2 in
the case of a spouse beneficiary; and
3. the plan provides for payments over a period which does not exceed the life
or the life expectancy of the beneficiary.
In this event, the reference to "annuitant" in the Annuity Provisions shall
apply to the beneficiary.
We will determine the contract value on which we base amounts payable or applied
under this section at the next accumulation unit value calculated after we
receive due proof of death at our corporate office.
Spouse Option to Continue Contract Upon Owner's Death
If your death occurs prior to the settlement date, and your spouse is designated
as sole beneficiary, they may elect in writing to forego receipt of the death
benefit and instead continue this contract in force as the owner. This election
by your spouse must be made within 60 days after we receive due proof of death.
If this contract is a traditional IRA, the settlement date may not be later than
April 1 following the calendar year in which the annuitant would have attained
70 1/2 , or such other date which allows the spouse to satisfy the minimum
distribution requirements under the Code.
Annuitant's Death After the Settlement Date
If the annuitant dies after the settlement date, the amount payable, if any,
will be as provided in the Annuity Payment Plan then in effect.
<PAGE>
PURCHASE PAYMENTS
Purchase Payments
Purchase payments are the payments you make for this contract and the benefits
it provides. Purchase payments must be paid or mailed to us at our corporate
office or to an authorized agent. If requested, we'll give you a receipt for
your purchase payments.
Net purchase payments are that part of your purchase payments applied to the
contract value. A net purchase payment is equal to the purchase payment less any
applicable premium tax charge.
Allocation of Purchase Payments
You instruct us on how you want your purchase payments allocated among the fixed
account and variable subaccounts. Your choice for each account may be made in
any whole percent from 0% to 100% as long as the total adds up to 100%. Your
allocation instructions as of the contract date are shown under Contract Data.
By written request, or by other method agreed to by us, you may change your
choice of accounts or percentages. The first net purchase payment will be
allocated as of the end of the valuation period during which we make an
affirmative decision to issue this contract. Net purchase payments after the
first will be allocated as of the end of the valuation period during which we
receive the payment at our corporate office.
Amount and Intervals
Your initial or scheduled purchase payments are shown under Contract Data.
Purchase payments may be paid until the earlier of: (1) the date this contract
terminates by surrender or otherwise; or (2) the date on which the annuity
payments begin.
Subject to the Payment Limits Provision you may: (1) stop and/or restart
purchase payments; or (2) increase or decrease the amount of your purchase
payments; or (3) change the interval of your purchase payments.
If this contract is a traditional IRA, no annual purchase payments may be made
with respect to the taxable year in which the annuitant attains age 70 1/2 or
any later year, with the exception of employer purchase payments made in
connection with a Simplified Employee Pension Plan.
If this contract is a Roth IRA, purchase payments may be made even after the
annuitant has attained age 70 1/2.
Payment Limits Provision
Maximum Purchase Payments - The maximum purchase payments in the first or later
contract years may not exceed the amounts shown under Contract Data. We reserve
the right to increase the maximums.
If this contract is a traditional IRA, except as otherwise provided in this
paragraph, the total purchase payments for any taxable year may not exceed
$2,000. In the case of a rollover contribution described in Sections 402(a)(5),
402(a)(7), 403(a)(4), 403(b)(8) or 408(d)(3), of the Internal Revenue Code of
1986, as amended, there is no limit on the amount of your purchase payment. If
this contract is maintained in connection with a Simplified Employee Pension
Plan, employer purchase payments for any taxable year may not exceed 15% of your
compensation or $30,000, whichever is less. All purchase payments must be made
in cash. If you die before your entire interest in this contract has been
distributed to you, and your beneficiary is other than your surviving spouse, no
additional purchase payments will be accepted from your beneficiary under this
contract.
If this contract is a Roth IRA, except as otherwise provided in this paragraph,
the total purchase payments for any taxable year may not exceed $2,000. In the
case of a rollover contribution or a conversion of an Individual Retirement
Annuity (other than a Roth IRA) to a Roth IRA as described in Sections
408A(c)(6) and 408A(d)(3)(C) of the Internal Revenue Code of 1986, as amended,
there is no limit on the amount of your purchase payment. All purchase payments
must be made in cash. If you die before the entire interest in this contract has
been distributed to you, and your beneficiary is other than your surviving
spouse, no additional purchase payments will be accepted from your beneficiary
under this contract.
With the exception of employer purchase payments/premiums made to a SIMPLE
Retirement Account under a SIMPLE Savings Plan, no purchase payments/premiums
may be made to this contract other than a rollover contribution from another
SIMPLE Retirement Account under Section 408(d)(3)(G) of the Internal Revenue
Code of 1986, as amended.
Employer purchase payments/premiums made to a SIMPLE Retirement Account under a
SIMPLE Savings Plan for any taxable year may not exceed applicable contribution
limits described in Section 408(p)(2) of the Internal Revenue Code of 1986, as
amended.
Annual employer purchase payments/premiums to a SIMPLE Retirement Account under
a SIMPLE Savings Plan may be made with respect to the taxable year in which the
annuitant attains age 701/2 or any later date.
We reserve the right to not accept purchase payments allocated to the fixed
account for twelve months following: (1) a partial surrender from the fixed
account; or (2) a lump sum transfer from the fixed account to the variable
subaccounts.
We also reserve the right to cancel this contract if both of the following
conditions exist at the same time: (1) no purchase payments have been paid for a
continuous period of 24 months; and (2) less than $600 in purchase payments have
been paid under this contract. In this event we will give you 30 days written
notice of our intent to cancel this contract. Upon such cancellation we will pay
you the contract value in one sum. This contract will then terminate.
If this contract was purchased as part of your participation in the American
Express Diversified Portfolio Service (or similar "wrap fee" program) and you
discontinue such participation, we will cancel this contract. We will give you
30 days written notice before cancellation. Upon such cancellation we will pay
you the contract value in one sum. This contract will then terminate.
<PAGE>
CONTRACT VALUE
Contract Value
The contract value at any time is the sum of: (1) the Fixed Account Contract
Value; and (2) the Variable Account Contract Value.
If: (1) part or all of the contract value is surrendered; or (2) charges
described herein are made against the contract value; then a number of
accumulation units from the variable subaccounts and an amount from the fixed
account will be deducted to equal such amount. For surrenders, deductions will
be made from the fixed or variable subaccounts that you specify. Otherwise, the
number of units from the variable subaccounts and the amount from the fixed
account will be deducted in the same proportion that your interest in each bears
to the total contract value.
Variable Account Contract Value
The variable account contract value at any time will be: (1) the sum of the
value of all variable subaccount accumulation units under this contract
resulting from purchase payments so allocated, or transfers among the variable
and fixed accounts; less (2) any units deducted for charges or surrenders.
Fixed Account Contract Value
The fixed account contract value at any time will be: (1) the sum of all amounts
credited to the fixed account under this contract; less (2) any amounts deducted
for charges or surrenders.
Interest to be Credited
We will credit interest to the fixed account contract value. Interest will begin
to accrue on the date the purchase payments which are received in our corporate
office become available to us for use. Such interest will be credited at a rate
that we determine from time to time. However, we guarantee that the rate will
not be less than the Guaranteed Interest Rate shown under Contract Data.
Contract Administrative Charge
We charge a fee for establishing and maintaining our records for this contract.
The charge is $30 per year and is deducted from the contract value at the end of
each contract year or, if earlier, when the contract is fully surrendered. The
charge deducted will be prorated among the variable subaccounts and the fixed
account in the same proportion your interest in each bears to the total contract
value.
We waive this charge if your contract value, or your total purchase payments
less any purchase payments surrendered, equals or exceeds $50,000.
If you make a full surrender of this contract, we deduct the full $30 contract
administrative charge at the time of the full surrender regardless of purchase
payments made or contract value.
The charge does not apply after settlement of this contract under an annuity
payment plan.
Premium Tax Charges
A charge will be made by us against the contract value of this contract at the
time that any premium taxes not previously deducted are payable.
Transfers of Contract Values
While this contract is in force prior to the settlement date, transfer of
contract values may be made as outlined below:
1. You may transfer all or part of the values held in one or more variable
subaccounts to another one or more of the variable subaccounts. Subject to
item 2, you may also transfer values held in one or more of the variable
subaccounts to the fixed account.
2. On or within the 30 days after a contract anniversary you may transfer
values from the fixed account to one or more of the variable subaccounts.
Only one such transfer is allowed during this period each year. If such a
transfer is made, no transfers from a variable subaccount to the fixed
account may be made until the next contract anniversary.
You may make a transfer by written request. Transfer requests may also be made
according to telephone procedures or automated transfer procedures that are then
currently in effect, if any. There is no fee or charge for these transfers.
However, the minimum transfer amount is $250, or if less, the entire value in
the account from which the transfer is being made. Smaller minimums may apply to
automated transfer procedures. This transfer privilege may be suspended or
modified by us at any time.
<PAGE>
FIXED AND VARIABLE ACCOUNTS
The Fixed Account
The fixed account is our general account. It is made up of all of our assets
other than: (1) those in the variable subaccounts; and (2) those in any other
segregated asset account.
The Variable Account
The variable account is a separate investment account of ours. It consists of
several subaccounts, which are named under Contract Data. We have allocated a
part of our assets for this contract to the variable accounts. Such assets
remain our property. However, they may not be charged with the liabilities from
any other business in which we may take part.
Investments of the Variable Account
Purchase payments applied to the variable subaccounts will be allocated as
specified by the owner. Each variable subaccount will buy, at net asset value,
shares of the fund shown for that subaccount under Contract Data or as later
added or changed.
We may change the funds from which the variable subaccounts buy shares if laws
or regulations change, the existing funds become unavailable or in our judgment,
the funds are no longer suitable for the subaccounts. We have the right to
substitute funds for those shown under Contract Data, including funds other than
those shown under Contract Data. We may also: add additional subaccounts
investing in other funds; combine subaccounts; transfer assets to and from the
subaccounts or the variable account; and eliminate or close any subaccounts.
When required, we would first seek approval of the Securities and Exchange
Commission and, the insurance regulator of the state where this contract is
delivered.
Valuation of Assets
Fund shares in the variable subaccounts will be valued at their net asset value.
Variable Account Accumulation Units
The number of accumulation units for each of the variable subaccounts is
found by adding the number of accumulation units resulting from:
1. purchase payments allocated to the subaccount; and
2. transfers to the subaccount;
and subtracting the number of accumulation units from:
1. transfers from the subaccount; and
2. surrenders from the subaccount; and
3. contract administrative charge deductions from the subaccount.
The number of accumulation units added or subtracted for each of the above
transactions is found by dividing (1) by (2) where:
1. is the amount allocated to or deducted from the subaccount; and
2. is the accumulation unit value for the subaccount for the respective
valuation period during which we receive the purchase payment or transfer
value, or during which we deducted transfers, surrenders, surrender charges
or contract administrative charges.
Variable Account Accumulation Unit Value
The value of an accumulation unit for each of the variable subaccounts was
arbitrarily set at $1 when the first fund shares were bought. The value for any
later valuation period is found as follows:
The accumulation unit value for each variable subaccount for the last prior
valuation period is multiplied by the net investment factor for the same account
for the next following valuation period. The result is the accumulation unit
value. The value of an accumulation unit may increase or decrease from one
valuation period to the next.
Net Investment Factor
The net investment factor is an index applied to measure the investment
performance of a variable subaccount from one valuation period to the next. The
net investment factor may be greater or less than one; therefore, the value of
an accumulation or annuity unit may increase or decrease.
The net investment factor for any such subaccount for any valuation period is
determined by: dividing (1) by (2) and subtracting (3) from the result. This is
done where:
1. is the sum of:
a. the net asset value per share of the fund held in the variable
subaccount determined at the end of the current valuation period; plus
b. the per share amount of any dividend or capital gain distributions made
by the fund held in the variable subaccount, if the "ex-dividend" date
occurs during the current valuation period.
2. is the net asset value per share of mutual fund held in the variable
subaccount, determined at the end of the last prior valuation period.
3. is a factor representing the mortality and expense risk charge.
Mortality and Expense Risk Charge
In calculating unit values we will deduct a mortality and expense risk charge
from the variable subaccounts equal, on an annual basis, to .55% of the daily
net asset value. This deduction is made to compensate us for assuming the
mortality and expense risks under contracts of this type. We estimate that
approximately 2/3 of this charge is for assumption of mortality risk and 1/3 is
for assumption of expense risk. The deduction will be: (1) made from each
variable subaccount; and (2) computed on a daily basis.
Annuity Unit Value
The value of an Annuity Unit for each variable subaccount was arbitrarily set at
$1 when the first funds were bought. The value for any later valuation period is
found as follows:
1. The annuity unit value for each variable subaccount for the last prior
valuation periods is multiplied by the net investment factor for the
subaccount for the valuation period for which the annuity unit value is
being calculated.
2. The result is multiplied by an interest factor. This is done to neutralize
the assumed investment rate which is built into the settlement tables on
page 15.
<PAGE>
SURRENDER PROVISIONS
Surrender
By written request and subject to the rules below you may:
1. surrender this contract for the total surrender value; or
2. partially surrender this contract for a part of the surrender value.
Rules for Surrender
All surrenders will have the following conditions;
1. You must apply by written request or other method agreed to by us: (a)
while this contract is in force; and (b) prior to the earlier of the
settlement date or the death of the annuitant.
2. Unless we agree otherwise, you must surrender an amount equal to at least
$250 or the entire contract value, if less. The contract value after a
partial surrender must be at least $600.
3. The amount surrendered, less any charges, will normally be paid to you
within seven days of our receipt of your written surrender request and the
return of this contract, if required. For surrenders from the fixed
account, we have the right to defer payment to you for up to 6 months from
the date we receive the request.
4. For partial surrenders, if you do not specify from which accounts the
surrender is to be made, the surrender will be made from the variable
subaccounts and fixed account in the same proportion as your interest in
each bears to the contract value.
5. Any amounts surrendered and charges which may apply can not be repaid.
Upon surrender for the full surrender value this contract will terminate. We may
require that you return the contract to us before we pay the full surrender
value.
Surrender Value
The surrender value at any time will be:
1. the contract value;
2. minus the contract administrative charge.
Amounts surrendered from a Roth IRA: For tax purposes, the amounts
surrendered will be treated in accordance with the distribution rules
described in Section 408A of the Code.
Suspension or Delay in Payment of Surrender
We have the right to suspend or delay the date of any surrender payment from the
variable subaccounts for any period:
1. when the New York Stock Exchange is closed; or
2. when trading on the New York Stock Exchange is restricted; or
3. when an emergency exists as a result of which: (a) disposal of securities
held in the variable subaccounts is not reasonably practicable; or (b) it
is not reasonably practicable to fairly determine the value of the net
assets of the variable subaccounts; or
4. during any other period when the Securities and Exchange Commission, by
order, so permits for the protection of security holders.
Rules and regulations of the Securities and Exchange Commission will govern as
to whether the conditions set forth in 2 and 3 exist.
<PAGE>
ANNUITY PROVISIONS
Settlement
When settlement occurs, the contract value will be applied to make annuity
payments. The first payment will be made as of the settlement date. This date is
shown under Contract Data. Before payments begin we will require satisfactory
proof that the annuitant is alive. We may also require that you exchange this
contract for a supplemental contract, which provides for the annuity payments.
Change of Settlement Date - Traditional IRA
You may change the settlement date shown for this contract. Tell us the new date
by written request. The maximum settlement date is the later of:
1. April 1 following the calendar year in which the annuitant attains
age 70 1/2 or if later, retires; or
2. such other date which satisfies the minimum distribution requirements under
the Code; or
3. Such other date as agreed upon by us.
Not withstanding the above, the maximum settlement date is the later of:
1. The contract anniversary on or proceeding the annuitant's 85th birthday; or
2. the 10th contract anniversary.
Also, if you select a new settlement date, it must be at least 30 days after we
receive your written request at our corporate office.
Change of Settlement Date - Roth IRA
You may change the settlement date shown for this contract. Tell us the new date
by written request. The maximum settlement date is the later of:
1. The contract anniversary on or proceeding the annuitant's 85th birthday; or
2. the 10th contract anniversary; or
3. such other date as agreed upon by us.
Also, if you select a new settlement date, it must be at least 30 days after we
receive your written request at our corporate office.
Annuity Payment Plans
Subject to the terms of this contract, annuity payments may be made on a fixed
dollar basis, a variable basis, or a combination of both. You can schedule
receipt of annuity payments according to one of the Plans A through E below or
another plan agreed to by us provided:
1. The Plan selected provides for payments over the life of the annuitant or
over the life of the annuitant and a joint annuitant; or
2. the Plan selected provides for payments over a period which does not exceed
the life expectancy of the annuitant, or the life expectancy of the
annuitant and a joint annuitant; and
3. the Plan selected meets the minimum death distribution requirements under
Section 401(a)(9)(B) of the Code and related regulations which are in
effect and applicable to Roth IRAs during the term of the contract.
Plan A - This provides monthly annuity payments during the lifetime of the
annuitant. No payments will be made after the annuitant dies.
Plan B - This provides monthly annuity payments during the lifetime of the
annuitant with a guarantee by us that payments will be made for a period of
at least five, ten or fifteen years. You must select the guaranteed period.
Plan C - This provides monthly annuity payments during the lifetime of the
annuitant with a guarantee by us that payments will be made for a certain
number of months. We determine the number of months by dividing the amount
applied under this Plan by the amount of the first monthly annuity payment.
Plan D - Monthly payments will be paid during the lifetime of the annuitant
and a joint annuitant. When either the annuitant or the joint annuitant
dies we will continue to make monthly payments during the lifetime of the
survivor. No payments will be paid after the death of both the annuitant
and joint annuitant.
<PAGE>
Plan E - (Installments for a specified period ) This provides monthly
annuity payments for a period of years. The period of years may be no less
than 10 or more than 30.
By written request to us at least 30 days before the settlement date, you may
select the Plan. If at least 30 days before the settlement date we have not
received at our corporate office your written request to select a Plan, we will
make payments according to Plan B with payments guaranteed for ten years.
If the amount to applied to a Plan is less than $2,000 or would not provide an
initial monthly payment of at least $20, we have the right to make a lump sum
payment of the contract value.
Allocation of Contract Values at Settlement
At the time of settlement under an Annuity Payment Plan you may reallocate your
contract value to the Fixed Account to provide fixed dollar payments and/or
among the variable subaccounts to provide variable annuity payments. Unless we
agree otherwise, you may use a maximum of five variable subaccounts at any one
time during settlement.
Fixed Annuity
A fixed annuity is an annuity with payments that are guaranteed by us as to
dollar amount. Fixed annuity payments after the first will never be less than
the amount of the first payment. At settlement, the fixed account contract value
will be applied to the applicable Settlement Table. This will be done in
accordance with the Payment Plan chosen. The amount payable for each $1,000 so
applied is shown in Table B on page 16.
Variable Annuity
A variable annuity is an annuity with payments which: (1) are not predetermined
or guaranteed as to dollar amount: and (2) vary in amount with the investment
experience of the variable subaccounts.
Determination of First Variable Annuity Payment
At settlement, the variable account contract value will be applied to the
applicable Settlement Table. This will be done: (1) on the valuation date on or
next preceding the 7th calendar day before the settlement date; and (2) in
accordance with the Payment Plan chosen. The amount payable for the first
payment for each $1,000 so applied is shown in Table A on page 15.
Variable Annuity Payments After the First Payment
Variable annuity payments after the first vary in amount. The amount changes
with the investment performance of the variable subaccounts. The dollar amount
of variable annuity payments after the first is not fixed. It may change from
month to month. The dollar amount of such payments is determined as follows:
1. The dollar amount of the first annuity payment is divided by the value of
an annuity unit as of the valuation date on or next preceding the 7th
calendar day before the settlement date. This result establishes the fixed
number of annuity units for each monthly annuity payment after the first.
This number of annuity units remains fixed during the annuity payment
period.
2. The fixed number of annuity units is multiplied by the annuity unit value
as of the valuation date on or next preceding the 7th calendar day before
the date the payment is due. The result establishes the dollar amount of
the payment.
We guarantee that the dollar amount of each payment after the first will not be
affected by variation in expenses or mortality experience.
Exchange of Annuity Units
After annuity payments begin, annuity units of any variable subaccount may be
exchanged for units of any of the other variable subaccounts. This may be done
no more than once a year. Unless we agree otherwise you may use a maximum of
five variable subaccounts at any one time. Once annuity payments start, no
exchanges may be made to or from any fixed annuity.
<PAGE>
TABLES OF SETTLEMENT RATES
Table A below shows the amount of the first monthly variable annuity payment,
based on a 5% assumed investment return, for each $1,000 of value applied under
any payment plan. The amount of the first and all subsequent monthly fixed
dollar annuity payments for each $1,000 of value applied under any payment plan
will be based on our fixed dollar Table of Settlement Rates in effect at
settlement. Such rates are guaranteed to be not less than those shown in Table
B. The amount of such annuity payments under Plans A, B and C will depend upon
the sex and age of the annuitant at settlement. The amount of such annuity
payments under Plan D will depend upon the sex and the age of the annuitant and
the joint annuitant at settlement.
<TABLE>
<CAPTION>
Table A - Dollar Amount of First Monthly Variable Annuity Payment Per $1,000 Applied
- ---------- ------- ----------------- ------ -------- ---------------- ------- -------- ---------------- --------------
Plan A Plan B Plan C Plan D
- ---------- ------- ----------------- ------ -------- ---------------- ------- -------- ---------------- --------------
Age Life Income Life Income Life Income Joint &
at Beginning Non-Refund Five Years with Fifteen Years Installment Survivor
Annui- In Certain Ten Years Certain Refund Non-Refund
Certain Male & Female
tization Year Male Female Male Female Male Female Male Female Male Female Same Age
- ---------- ------- -------- -------- ------ -------- ------- -------- ------- -------- ------ --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Age 65 2005 6.49 5.85 6.44 5.83 6.29 5.77 6.06 5.66 6.13 5.67 5.34
2010 6.40 5.78 6.35 5.76 6.22 5.71 6.00 5.61 6.06 5.61 5.30
2015 6.31 5.72 6.27 5.70 6.15 5.65 5.95 5.56 6.00 5.56 5.25
2020 6.23 5.66 6.19 5.64 6.08 5.60 5.90 5.52 5.93 5.51 5.21
2025 6.15 5.60 6.12 5.59 6.01 5.54 5.84 5.47 5.88 5.47 5.18
2030 6.08 5.55 6.05 5.53 5.95 5.50 5.80 5.43 5.82 5.43 5.14
Age 70 2005 7.41 6.54 7.29 6.50 6.98 6.36 6.54 6.14 6.79 6.22 5.85
2010 7.28 6.45 7.17 6.41 6.88 6.28 6.48 6.08 6.70 6.15 5.78
2015 7.16 6.35 7.06 6.32 6.80 6.21 6.42 6.03 6.61 6.08 5.72
2020 7.04 6.27 6.95 6.24 6.71 6.14 6.37 5.97 6.53 6.01 5.66
2025 6.93 6.19 6.85 6.16 6.63 6.07 6.31 5.92 6.45 5.95 5.61
2030 6.83 6.11 6.76 6.09 6.55 6.01 6.26 5.87 6.38 5.90 5.56
Age 75 2005 8.67 7.58 8.42 7.47 7.78 7.15 7.02 6.70 7.65 6.99 6.59
2010 8.49 7.43 8.26 7.34 7.68 7.05 6.97 6.63 7.53 6.89 6.49
2015 8.32 7.30 8.11 7.21 7.58 6.96 6.91 6.57 7.42 6.80 6.40
2020 8.16 7.18 7.97 7.10 7.48 6.87 6.86 6.51 7.31 6.71 6.31
2025 8.00 7.06 7.83 6.99 7.38 6.78 6.81 6.46 7.21 6.62 6.24
2030 7.86 6.95 7.70 6.89 7.29 6.70 6.75 6.40 7.12 6.55 6.16
Age 85 2005 13.01 11.44 11.71 10.69 9.46 9.09 7.69 7.60 10.30 9.50 9.30
2010 12.65 11.12 11.48 10.45 9.38 9.00 7.67 7.58 10.11 9.32 9.09
2015 12.31 10.82 11.26 10.23 9.30 8.90 7.66 7.56 9.93 9.15 8.90
2020 11.99 10.55 11.04 10.02 9.22 8.80 7.64 7.53 9.76 9.00 8.72
2025 11.70 10.29 10.84 9.83 9.15 8.71 7.62 7.51 9.60 8.85 8.55
2030 11.42 10.06 10.64 9.64 9.07 8.62 7.61 7.48 9.45 8.72 8.40
- ---------- ------- -------- -------- ------ -------- ------- -------- ------- -------- ------ --------- --------------
</TABLE>
Table A above is based on the "1983 Individual Annuitant Mortality Table A" with
100% Projection Scale G and a 5% assumed investment return. Settlement rates for
any year, age, or any combination of year, age and sex not shown above, will be
calculated on the same basis as those rates shown in the Table above. Such rates
will be furnished by us upon request. Amounts shown in the Table below are based
on a 5% assumed investment return.
<TABLE>
<CAPTION>
Plan E - Dollar Amount of First Monthly Variable Annuity Payment Per $1,000 Applied
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
Years Payable Monthly Payment Years Payable Monthly Payment Years Payable Monthly Payment
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
<S> <C> <C> <C> <C> <C>
10 10.51 17 7.20 24 5.88
11 9.77 18 6.94 25 5.76
12 9.16 19 6.71 26 5.65
13 8.64 20 6.51 27 5.54
14 8.20 21 6.33 28 5.45
15 7.82 22 6.17 29 5.36
16 7.49 23 6.02 30 5.28
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
</TABLE>
<TABLE>
<CAPTION>
Table B- Dollar Amounts of Each Monthly Fixed Dollar Annuity Payment Per $1,000 Applied
- ---------- -------- ---------------- ------ -------- ---------------- ------- ------- ----------------- --------------
Plan A Plan B Plan C Plan D
- ---------- -------- ---------------- ------ -------- ---------------- ------- ------- ----------------- --------------
Settlement Life Income Life Income Life Income Joint &
Beginning Non-Refund Five Years with Fifteen Years Installment Survivor
Settlement In Certain Ten Years Certain Refund Non-Refund
Certain Male & Female
Age Year Male Female Male Female Male Female Male Female Male Female Same Age
- ---------- -------- ------- -------- ------ -------- ------- -------- ------- ------- -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Age 65 2005 5.30 4.68 5.26 4.66 5.15 4.62 4.95 4.53 4.84 4.43 4.20
2010 5.21 4.61 5.17 4.60 5.07 4.55 4.89 4.48 4.77 4.38 4.15
2015 5.12 4.55 5.09 4.53 4.99 4.49 4.83 4.42 4.71 4.34 4.11
2020 5.04 4.48 5.01 4.47 4.92 4.44 4.77 4.38 4.66 4.29 4.07
2025 4.96 4.43 4.94 4.42 4.86 4.39 4.72 4.33 4.60 4.25 4.03
2030 4.89 4.37 4.87 4.37 4.79 4.34 4.67 4.29 4.55 4.21 3.99
Age 70 2005 6.21 5.38 6.12 5.35 5.87 5.24 5.48 5.05 5.45 4.97 4.74
2010 6.08 5.29 6.01 5.26 5.77 5.16 5.41 4.99 5.37 4.90 4.67
2015 5.96 5.20 5.89 5.17 5.68 5.08 5.35 4.93 5.29 4.84 4.61
2020 5.85 5.11 5.79 5.09 5.59 5.01 5.29 4.87 5.22 4.78 4.55
2025 5.75 5.03 5.69 5.01 5.51 4.94 5.23 4.82 5.15 4.72 4.49
2030 5.64 4.96 5.59 4.94 5.43 4.88 5.17 4.76 5.08 4.67 4.44
Age 75 2005 7.47 6.42 7.27 6.33 6.72 6.07 6.00 5.65 6.24 5.68 5.50
2010 7.29 6.28 7.11 6.20 6.61 5.97 5.94 5.59 6.14 5.60 5.40
2015 7.12 6.15 6.96 6.08 6.50 5.87 5.88 5.52 6.04 5.51 5.31
2020 6.96 6.03 6.82 5.97 6.40 5.78 5.83 5.46 5.95 5.43 5.23
2025 6.81 5.91 6.68 5.86 6.30 5.69 5.77 5.40 5.86 5.36 5.15
2030 6.67 5.81 6.55 5.76 6.21 5.60 5.72 5.34 5.77 5.29 5.08
Age 85 2005 11.77 10.25 10.64 9.60 8.51 8.12 6.73 6.64 8.66 7.97 8.24
2010 11.42 9.94 10.40 9.37 8.42 8.02 6.71 6.61 8.50 7.82 8.03
2015 11.09 9.65 10.18 9.15 8.34 7.91 6.70 6.59 8.35 7.68 7.84
2020 10.78 9.38 9.96 8.94 8.26 7.81 6.68 6.56 8.20 7.55 7.66
2025 10.49 9.14 9.75 8.74 8.18 7.72 6.66 6.54 8.06 7.42 7.50
2030 10.22 8.91 9.56 8.56 8.09 7.62 6.65 6.51 7.94 7.31 7.35
- ---------- -------- ------- -------- ------ -------- ------- -------- ------- ------- -------- -------- --------------
</TABLE>
Table B above is based on the "1983 Individual Annuitant Mortality Table A" at
3.00% with 100% Projection Scale G. Settlement rates for any year, age, or any
combination of year, age and sex not shown above, will be calculated on the same
basis as those rates shown in the Table above. Such rates will be furnished by
us upon request. Amounts shown in the Table below are based on a 3% annual
effective interest rate.
<TABLE>
<CAPTION>
Plan E - Dollar Amount of Each Monthly Fixed Dollar Annuity Payment Per $1,000 Applied
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
Years Payable Monthly Payment Years Payable Monthly Payment Years Payable Monthly Payment
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
<S> <C> <C> <C> <C> <C>
10 9.61 17 6.23 24 4.84
11 8.86 18 5.96 25 4.71
12 8.24 19 5.73 26 4.95
13 7.71 20 5.51 27 4.47
14 7.26 21 5.32 28 4.37
15 6.87 22 5.15 29 4.27
16 6.53 23 4.99 30 4.18
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
</TABLE>
<PAGE>
DEFERRED ANNUITY CONTRACT
- - Flexible purchase payments.
- - Optional fixed dollar or variable accumulation values and annuity payments.
- - Annuity payments to begin on the settlement date.
- - This contract is nonparticipating. Dividends are not payable.
IDS Life Insurance Company
IDS Tower 10
Minneapolis, Minnesota 55440
