<PAGE>
As filed with the Securities and Exchange Commission on MAY 19, 1999
Registration No. 333 - _____
811 - 07689
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
THE ONE INCOME ANNUITY
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 __X__
Pre-Effective Amendment No. ___
Post-Effective Amendment No. ___
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 14
------
PFL RETIREMENT BUILDER VARIABLE ANNUITY ACCOUNT
(Exact Name of Registrant)
PFL LIFE INSURANCE COMPANY
(Name of Depositor)
4333 Edgewood Road N.E.
Cedar Rapids, IA 52499-0001
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number: (319) 297-8468
Frank A. Camp, Esq.
PFL Life Insurance Company
4333 Edgewood Road, N.E.
Cedar Rapids, IA 52499-0001
(Name and Address of Agent for Service)
Copy to:
Frederick R. Bellamy, Esq.
Sutherland Asbill and Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2415
Approximate Date of Proposed Public Offering: As soon as practicable after the
- --------------------------------------------
effective date of the registration statement.
Registrant hereby amends this registration statement on such date or dates as
may be necessary to delay its effective date until 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 said Section 8(a),
may determine.
Title of Securities Being Registered: Single Premium Immediate Variable Annuity
- ------------------------------------
Contracts
<PAGE>
THE ONE
INCOME ANNUITY
Issued Through
PFL RETIREMENT BUILDER
VARIABLE ANNUITY ACCOUNT
By
PFL LIFE INSURANCE COMPANY
Prospectus
_____________________, 1999
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This prospectus and the mutual fund The immediate annuity contract has fixed and variable
prospectus give you important information payment options. There are nine portfolios listed below
about the contracts and the mutual funds. that you can select from if you choose to receive
Please read them carefully before you variable payments. You can choose any combination of
invest and keep them for future reference. fixed and variable payments. You bear the investment
risk if you choose variable payments.
If you would like more information about
The One Income Annuity, a fixed and ONE GROUP(R) INVESTMENT TRUST:
variable single premium immediate annuity One Group(R) Investment Trust Bond Portfolio
contract, you can obtain a free copy of the One Group(R) Investment Trust Government Bond Portfolio
Statement of Additional Information (SAI) One Group(R) Investment Trust Balanced Portfolio
dated ________________. Please call us at One Group(R) Investment Trust Large Cap Growth Portfolio
(800) 544-3152 or write us at: PFL Life One Group(R) Investment Trust Equity Index Portfolio
Insurance Company, Financial Markets One Group(R) Investment Trust Diversified Equity
Division, Variable Annuity Department, 4333 Portfolio
Edgewood Road N.E., P.O. Box 3183, Cedar One Group(R) Investment Trust Mid Cap Growth Portfolio
Rapids, Iowa, 52406-3183. A registration One Group(R) Investment Trust Diversified Mid Cap
statement, including the SAI, has been Portfolio
filed with the Securities and Exchange One Group(R) Investment Trust Mid Cap Value Portfolio
Commission (SEC) and is incorporated herein
by reference. Information about the Please note that the contracts and the underlying
separate account and the target account can portfolios:
be reviewed and copied at the SEC's Public . are not bank deposits or deposits of Bank One
Reference Room in Washington, D.C. You may Corporation;
obtain information about the operation of . are not insured or guaranteed bythe Federal Deposit
the public reference room by calling the insurance Coproration or by any other federal or state
SEC at 1-800-SEC-0330. The SEC also governmental agency;
maintains a web site (http://www.sec.gov) . are not endorsed by any bank or government agency;
that contains the prospectus, the SAI, . are not guaranteed to achieve their goal; and
material incorporated by reference, and . involve investment risk, including loss of premium.
other information. The table of contents
of the SAI is included at the end of this The Securities and Exchange Commission has not approved
prospectus. or disapproved these securities, or passed upon the
adequacy of this prospectus. Any representation to the
contrary is a criminal offense.
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TABLE OF CONTENTS Page
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GLOSSARY OF TERMS.........................................................
SUMMARY...................................................................
EXPENSE TABLE.............................................................
EXAMPLES..................................................................
1. THE ANNUITY CONTRACT.................................................
2. ANNUITY PAYMENTS.....................................................
Annuity Payment Dates................................................
Payments Under the Contract..........................................
Fixed, Variable or Combination Payments..............................
Assumed Investment Rate (AIR)........................................
Payment Options......................................................
3. PURCHASE.............................................................
Contract Issue Requirements..........................................
Premium Payment......................................................
Allocation of Premium Payments.......................................
Variable Annuity Units...............................................
4. INVESTMENT CHOICES...................................................
The Separate Account.................................................
Transfers............................................................
5. EXPENSES.............................................................
Separate Account Charge..............................................
Expenses of the Funds................................................
Premium Taxes........................................................
Other Taxes..........................................................
Surrender Value......................................................
Transfer Fee.........................................................
6. TAXES................................................................
General..............................................................
Taxation of Purchasers of Non-Qualified Contracts....................
Taxation of Purchasers of Qualified Contracts........................
Federal Income Tax Withholding.......................................
Contract Owners that are Nonresident Aliens
or Foreign Corporations.............................................
Possible Changes in Taxation.........................................
Other Tax Consequences...............................................
7. SURRENDER VALUE......................................................
Surrenders...........................................................
Surrender Value......................................................
8. PERFORMANCE..........................................................
9. DEATH BENEFIT........................................................
10. OTHER INFORMATION....................................................
PFL Life Insurance Company...........................................
The Separate Account.................................................
Voting Rights........................................................
Distributor of the Contracts.........................................
Non-participating Contract...........................................
Variations in Contract Provisions....................................
Year 2000 Matters....................................................
IMSA.................................................................
Delay of Payments....................................................
Legal Proceedings....................................................
Financial Statements.................................................
TABLE OF CONTENTS OF THE STATEMENT
OF ADDITIONAL INFORMATION.................................................
APPENDIX A
Historical Performance Data...............................................
APPENDIX B
Illustrations of Annuity Payment Values...................................
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No one is authorized to give any information or to make any representations that
are not in this prospectus and the SAI (or any sales literature approved by
PFL). You should rely only on the information contained in these documents.
The contracts are not available in all states. This prospectus is not an offer
anywhere that would be unlawful.
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GLOSSARY OF TERMS
Annuitant and Secondary Annuitant--The person upon whose life the annuity
payments are based. For joint options, annuity payments are based upon the lives
of both the annuitant and secondary annuitant. Either the annuitant or the
secondary annuitant generally must be no older than 80 years of age on the
contract issue date.
Annuity Payments--Payments made by us to the payee pursuant to the payment
option chosen. Annuity payments may be either fixed or variable or a combination
of both.
Assumed Investment Return or AIR--The annual effective rate shown in the
contract specifications section of the contract that is used in the calculation
of each variable annuity payment.
Beneficiary(ies)--The person(s) who may receive death proceeds or guaranteed
payments under this contract when there is no longer a living annuitant (or last
annuitant for joint options).
Contract Issue Date--The date the contract becomes effective. This will be
stated in the contract. Generally, the date the initial premium is allocated to
the separate account.
Net Investment Factor--A unit of measure used to reflect the change in variable
annuity unit values in a subaccount from one valuation period to the next
valuation period.
Owner(s)--"You," "your," and "yours." The person or entity named in the contract
specifications section who may, while any annuitant is living, exercise all
rights granted by the contract. The annuitant must be the owner, if the contract
is a qualified contract. If there is a secondary annuitant, he or she may also
be an owner (except for a qualified contract, where only one owner is
permitted). The secondary annuitant is never required to be an owner.
Payee--The person or entity to whom annuity payments are paid.
Payment Date--The date an annuity payment is paid to the payee. We may require
evidence that any annuitant(s) and/or payee is/are alive on the payment date.
Separate Account--PFL Retirement Builder Variable Annuity Account.
Subaccount--The investment options or divisions of the separate account. Each
subaccount invests in a different portfolio of the funds. We may make additional
subaccounts available in the future.
Successor Owner--The person named by the owner to whom ownership of the contract
passes upon the owner's death. If the owner is also the annuitant, the
annuitant's beneficiary is entitled to the death proceeds of the contract. If no
person is named, the owner's estate shall be deemed the successor owner.
Valuation Day--Each day the New York Stock Exchange is open for trading. The
determination of the variable annuity unit value is made at the end of each
valuation day.
Variable Annuity Unit--Variable annuity payments are expressed in terms of
variable annuity units, the value of which fluctuates in relation to the
selected subaccounts.
Variable Annuity Payment Calculation Date--The date, no more than seven business
days before each payment date, when the amount of the variable annuity payment
is determined. If the New York Stock Exchange is closed on a variable annuity
payment calculation date, we will determine the amount of annuity income on the
next day it is open.
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SUMMARY
The sections in this summary correspond to sections in this prospectus, which
discuss the topics in more detail. Words printed in italics in this prospectus
are defined in the Glossary.
1. THE ANNUITY CONTRACT
The Fixed and Variable Single Premium Immediate Annuity Contract offered by PFL
Life Insurance Company (PFL, we, us or our) is a contract between you, as the
owner, and PFL, an insurance company. The contract is intended to provide a
stream of income for life or for a specific period of time you select.
2. ANNUITY PAYMENTS
Annuity payments may be either fixed, variable or a combination of fixed and
variable. We guarantee the amount of fixed annuity payments. We do not, however,
guarantee the amount of variable annuity payments. Variable annuity payment
amounts are determined by the investment performance of the subaccounts you
select.
Annuity payments may be scheduled for either monthly or quarterly payments.
Semiannual and annual payments are available only with our approval.
We recommend using electronic funds transfer (EFT) whenever possible.
3. PURCHASE
You purchase this contract with a single premium. You cannot make additional
premium payments. The minimum premium is $25,000, although we can accept a
smaller premium if we want.
You may return your contract for a refund within 10 days after you receive it.
The amount of the refund will generally be the premium plus or minus the
investment performance of the subaccounts to which your premium was allocated,
if any.
We will generally pay the refund within 7 days after we receive written notice
of cancellation and the returned contract. The contract will then be deemed
void. In some states you may have more than 10 days, or receive a refund of more
(or less) than the amount described above.
4. INVESTMENT CHOICES
You choose between fixed or variable annuity payments, or a combination of both.
If you choose variable annuity payments you must also select one or more of the
following portfolios described in the One Group(R) Investment Trust prospectus:
One Group(R) Investment Trust Bond Portfolio
One Group(R) Investment Trust Government Bond Portfolio
One Group(R) Investment Trust Balanced Portfolio
One Group(R) Investment Trust Large Cap Growth Portfolio
One Group(R) Investment Trust Equity Index Portfolio
One Group(R) Investment Trust Diversified Equity Portfolio
One Group(R) Investment Trust Mid Cap Growth Portfolio
One Group(R) Investment Trust Diversified Mid Cap Portfolio
One Group(R) Investment Trust Mid Cap Value Portfolio
Your variable annuity payments may go up or down with the investment performance
of any of these portfolios. You bear this investment risk.
You may transfer amounts within the various subaccounts. You may also transfer
amounts from variable to fixed annuity payments at any time. If you do, then the
payment option for the fixed annuity payments will be a continuation of the
payment option currently applicable to variable annuity payments. Transfers from
fixed to variable annuity payments are not permitted. We may charge a fee for
excessive transfers (we currently do not charge for transfers).
5. EXPENSES
There is a separate account charge of 1.15% annually of average daily net assets
if you allocate $50,000 or more to variable annuity payments; if you allocate
less than $50,000 to variable annuity payments the separate account charge is
1.35%. This charge will not increase and does not apply to fixed annuity
payments.
Each portfolio has investment management and other fees charged directly to it.
In 1998, these ranged from 0.28% to 1.00% annually of average daily net assets.
In some states, a charge for applicable premium taxes ranging from 0% to 3.5% is
deducted from the premium when paid.
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6. TAXES
You are taxed on the part of your annuity payment considered income. Annuity
payments from nonqualified contracts may be considered partly a return of your
investment in the contract so that part of each payment would not be taxable as
income. Annuity payments from qualified contracts are generally considered as
all taxable income.
7. SURRENDER VALUE
You do not have access to your money and cannot surrender any of your contract
unless you select either the Certain Only payment option or Life with Emergency
Cash(SM) payment option. No other payment option allows surrenders. If you elect
a Certain Only payment option you may surrender the present value of the
remaining payments. If you select the Life with Emergency Cash(SM) payment
option, we will provide you with a Life with Emergency Cash(SM) benefit schedule
that will allow you to determine how much is available to surrender. For either
option, the amount you surrender must be at least 25% of the full surrender
value.
Surrenders may have adverse tax consequences. You should consult with your tax
advisor before requesting a surrender.
8. PERFORMANCE
The amount of your variable annuity payments will vary up or down depending upon
the investment performance of the subaccounts you choose. We provide historical,
or past, performance information for the portfolios (adjusted to reflect the
separate account charge) in Appendix A and in the Statement of Additional
Information. This data is not intended to indicate future performance.
9. DEATH BENEFIT
Some payment options provide a death benefit in the event the annuitant dies
after annuity payments begin or if an owner or annuitant dies before annuity
payments begin.
10. OTHER INFORMATION
This section of the prospectus contains information on:
. PFL Life Insurance Company
. The Separate Account
. Voting Rights
. Distributor of the Contracts
. Non-participating Contracts
. Variations of Contract Provisions
. Year 2000 Matters
. IMSA
. Delay of Payments
. Legal Proceedings
. Financial Statements
Inquiries
If you need more information, please contact us at:
Administrative and Service Office
Financial Markets Division
Variable Annuity Department
PFL Life Insurance Company
4333 Edgewood Road N.E.
P.O. Box 3183
Cedar Rapids, IA 52406-3183
(800) 525-6205
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EXPENSE TABLE
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Separate Account Annual Expenses
Contract Owner Transaction Expenses (as a percentage of average net assets)
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Sales Load charged to premium None Separate Account Charge:
-----------------------
Annual Contract Administration Charge.................... None Mortality and Expense Risk Charge............... 1.20%
Transfer Fee (for first six transfers in any contract (This charge is 1.00% if you allocate $50,000
year)/ (1)/............................................. None or more to variable annuity payments)...........
Surrender Charge......................................... None Administration Charge........................... 0.15%
-----
There is no surrender charge with respect to Total........................................... 1.35%
variable annuity payments under the contract. For
an explanation of the surrender value, see
"SURRENDER VALUE".
====================================================================================================================================
Portfolio Annual Expenses /(2)/
(as a percentage of average net assets and after expense reimbursements)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Portfolio
Management Other Annual
Portfolio Fees Expenses Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
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Bond Portfolio
Government Bond Portfolio
Balanced Portfolio
Large Cap Growth Portfolio
Equity Index Portfolio
Diversified Equity Portfolio
Mid Cap Growth Portfolio
Diversified Mid Cap Portfolio
Mid Cap Value Portfolio
====================================================================================================================================
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/(1)/ There is currently no charge /(2)/ The fee table information
for any transfers, although relating to the portfolios is
PFL reserves the right to for 1998 and was provided to PFL
charge $15 for each transfer by Nationwide Advisory Services,
in excess of six per year. Inc., the administrator for One
Group(R) Investment Trust, and
PFL has not independently
verified such information.
Expenses may be higher or lower
than these 1998 expenses.
<PAGE>
EXAMPLES
The following examples indicate the . there are no premium taxes;
expenses you would pay in various . there are no transfers;
situations, based on actual portfolio . the entire premium is allocated to
expenses for 1998, and the following each subaccount; and
assumptions: . the annuitant is a 65 year old male.
. a $1,000 investment (and, therefore, (Any different assumption(s) would
a 1.35% separate account charge); result in different expenses.)
. a 5.0% annual return on assets;
. monthly payments;
. a 5% assumed investment return;
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Single Life Annuity
Single Life Annuity 20 Year Certain Only Annuity with Emergency Cash(SM)
(the contract cannot be and the contract is not and the contract is
surrendered) surrendered surrendered
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Subaccounts 1 Year 3 Years 1 Year 3 Years 1 Year 3 Years
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Bond Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Government Bond Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Balanced Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Large Cap Growth Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Equity Index Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Diversified Equity Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Mid Cap Growth Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Diversified Mid Cap Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Mid Cap Value Portfolio
====================================================================================================================================
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The above tables will assist you in The examples are not a representation
understanding the costs and expenses of past or future expenses. Actual
of the contract and the underlying expenses may be more or less than
funds that you will bear, directly or those shown.
indirectly. The expense table assumes
that your entire premium is allocated Financial Information. The
to the separate account; therefore, it ---------------------
reflects expenses of the separate subaccounts had not commenced
account as well as the underlying operations as of December 31, 1998,
portfolios. therefore there is no condensed
financial information to report as
The tables do not reflect any of the date of this prospectus.
deductions for taxes. Any applicable
premium taxes are deducted from the
premium when you buy the contract.
<PAGE>
1. THE ANNUITY CONTRACT We will not pay interest on amounts
represented by uncashed annuity
This prospectus describes The payment checks if the postal or other
One Income Annuity. This is a delivery service is unable to deliver
single premium immediate checks to the payee's address of
annuity contract offered by record. Uncashed variable annuity
PFL Life Insurance Company. payments will not participate in the
performance of the portfolios. The
An annuity is a contract payee is responsible for keeping us
between you, the owner, and an informed of their current address of
insurance company (in this record.
case PFL), where the insurance
company promises to pay you an Fixed, Variable or Combination
income in the form of annuity Payments
payments. You choose the
frequency of these payments You allocate your premium between
and the first annuity payment fixed and variable payments under a
date. payment option when you buy the
contract. You may choose all fixed,
You can use the contract to all variable or a combination of
provide periodic payments over fixed and variable annuity payments.
your lifetime or some other
specific period of time you Any portion of your premium allocated
select. to a fixed payment option will always
remain allocated to fixed annuity
The contract is "fixed and payments. However, you may transfer
variable" because you can from variable annuity payments to
allocate your premium between fixed annuity payments at any time.
fixed and variable annuity
payments. The amount of the If you choose a combination of fixed
fixed annuity payments will and variable annuity payments, a
not vary and are guaranteed by portion of your annuity payments will
PFL. The amount of the be fixed and a portion will vary
variable annuity payments will according to the investment
vary depending on the experience of the portfolios
investment performance of your underlying the subaccounts. We will
investment choices. guarantee the dollar amount of any
fixed portion of each annuity
It is a "single premium" payment; however, the amount of the
contract because you purchase variable annuity payments will depend
it with a single premium. You upon the investment experience of the
cannot pay additional portfolios underlying the subaccounts
premiums. and is not guaranteed.
The contract is an "immediate" Under certain joint and survivor
contract because the annuity payment options, the annuity payments
payments must generally begin decrease upon the death of the
within 30 days. annuitant or secondary annuitant (as
described for payment options 5, 6,
2. ANNUITY PAYMENTS 8, and 9) whether they are fixed or
variable.
Annuity Payment Dates
Assumed Investment Return (AIR)
We provide annuity payments to
the payee on each payment The assumed investment return you
date. You select either a choose is used in the calculation of
monthly or quarterly payment variable annuity payments.
frequency when you purchase
the contract. Payments will IF:
generally be made by
electronic funds transfer. . the performance of the applicable
Semi-annual or annual payment subaccounts after all expenses is
frequencies and other equal to the AIR on a modal basis;
disbursement options may be
available, if we approve. The THEN:
first payment date is
typically 30 days after the . the variable annuity payments will
contract issue date. All remain constant.
subsequent payment dates will * * *
generally be on the same day IF:
of the month as the first
payment date. . the performance of the subaccount
after all expenses exceeds the AIR
Payments Under the Contract on a modal basis;
We usually make payments
within seven days of the
payment date or receipt of all
applicable written notices
and/or proofs of death.
<PAGE>
THEN: The amount of variable annuity
. the variable annuity payments will payments will depend on the
increase. investment performance of the
* * * portfolio(s) you select. The number
of annuity payments may depend on
IF: how long the annuitant or a
. the performance of the subaccounts secondary annuitant, if any, lives.
after all expenses is less than the Therefore, the sum of annuity
AIR on a modal basis; payments may be less than the
premium (except for option 10--Life
THEN: Annuity with Premium Refund
. the variable annuity payments will Payments).
decrease.
* * *
A "modal basis" refers to the frequency
of payments. For example, for monthly 1. Certain Only Annuity. This
payments to increase, the performance --------------------
of the subaccounts must exceed the option provides annuity payments
monthly equivalent AIR; for quarterly for a guaranteed period (10-30
payments to increase, the performance years). You choose the guaranteed
of the subaccounts must exceed the period. If the annuitant dies prior
quarterly equivalent AIR. to the last guaranteed payment
date, we will either:
You choose either a 3.5% AIR or a 5%
AIR. . continue payments as they become
due; or
IF:
. you choose a 5% AIR instead of a . pay the present value of the
3.5% AIR; remaining guaranteed payments in
a lump sum to the beneficiary
THEN: when we receive due proof of the
. you will receive a higher initial annuitant's death.
payment; and
. payments will increase less during No additional payments will be made
periods of good investment under this option after all the
performance (i.e., when investment guaranteed payments have been made.
performance exceeds the AIR) and
decrease more during periods of poor
investment performance (i.e., when If the lump sum death benefit is
investment performance is below the chosen and the payments under this
AIR). option are variable, the present
* * * value of the remaining guaranteed
IF: payments is calculated as of the
. you choose a 3.5% AIR instead of a 5% date we receive written notice of
AIR; the annuitant's death, using the
AIR you chose when the contract was
THEN: issued. If the payments under this
. you will receive a lower initial option are fixed, the present value
payment; and of the remaining guaranteed
. payments will increase more during payments is calculated using
periods of good investment interest rates (determined by PFL)
performance (i.e., when investment in effect on the date we receive
performance exceeds the AIR) and due proof of death.
decrease less during periods of poor
investment performance (i.e., when
investment performance is below the Under this option, you, as the
AIR). owner, can make full or partial
surrenders from the contract prior
See Appendix B for an illustration of to the last guaranteed payment
the difference in the two AIRs. date. Any surrender must be at
least 25% of the full surrender
value. A partial surrender will
reduce all future payments.
Payment Options See "SURRENDER VALUE."
You select the payment option and the You should consult a tax advisor
number of guaranteed years, if any. You before requesting a full or partial
cannot change the payment option and surrender.
guarantee period after we issue the
contract. Please note that generally
you can only select one payment option. 2. Single Life Annuity. This option
We currently offer the options -------------------
described below. provides annuity payments for the
annuitant's lifetime, no matter how
long that may be. The final payment
will be the payment made
immediately prior to the death of
the annuitant. No additional
payments will be made after the
annuitant dies.
<PAGE>
This option offers you the highest No surrenders are permitted under this
level of annuity payments, due to option.
the risk that only one annuity payment
will be made if the annuitant dies 6. Joint and Last Survivor Life
before the second payment date. ----------------------------
No surrenders are permitted under this Annuity. This option provides annuity
option. --------
payments for the annuitant's and
3. Single Life Annuity with Period secondary annuitant's lifetimes.
------------------------------- Payments are higher while both
Certain. This option provides annuity annuitants are living and decrease
- ------- upon the death of either the annuitant
payments for a guaranteed period (5 to ------
30 years) or for the life of the or the secondary annuitant. The final
annuitant, whichever is later. The annuity payment will be the one made
final annuity payment will be the later --
of either the last guaranteed payment immediately before the death of the
or the scheduled annuity payment last surviving annuitant. No additional
immediately prior to the annuitant's annuity payments will be made after
death. If the annuitant dies the death of both annuitants.
prior to the last guaranteed payment
date, we will make payments to the Upon the first death, the amount of the
beneficiary when we receive due proof ------
of the annuitant's death. No additional fixed annuity payments will be reduced
payments will be made if the annuitant to a percent you select: either 50%,
dies after all guaranteed payments have 66.67% or 75%. For variable annuity
been made. payments, the number of variable
------
No surrenders are permitted under this annuity units will also be reduced
option. to 50%, 66.67% or 75%.
4. 100% Joint and Survivor Life No surrenders are permitted under this
---------------------------- option.
Annuity. This option provides annuity
- ------- 7. 100% Joint and Survivor Life
payments for the annuitant and the ----------------------------
secondary annuitant's lifetimes. After Annuity with Period Certain. This
the death of either the annuitant or ---------------------------
the secondary annuitant, we will option provides annuity payments for a
continue to provide the full amount of guaranteed period (5-30 years) or for
annuity payments to the survivor. the annuitant's and joint annuitant's
Annuity payments stop when both the lifetimes, whichever is later. The
annuitant and the secondary annuitant final annuity payment will be the later
die. of the last guaranteed payment or the
annuity payment made immediately prior
No surrenders are permitted under this to the last surviving annuitant's
option. death. No additional payments will be
made if both annuitants die after all
5. Joint and Survivor Life Annuity guaranteed payments have been made.
-------------------------------
with Reduced Annuity Payments to the If both annuitants die prior to the
- ------------------------------------ last guaranteed payment date, we will
Secondary Annuitant. This option is continue to make guaranteed payments to
- ------------------- the beneficiary as they become due for
similar to option 4 above, except that the remainder of the guaranteed period.
annuity payments are higher while both
the annuitant and the secondary No surrenders are permitted under this
annuitant are living, and then are option.
lower if the annuitant dies before the
secondary annuitant. The final annuity 8. Joint and Survivor Life Annuity
payment will be the one made --------------------------------
immediately before the last surviving with Period Certain and Reduced Annuity
annuitant's death. No additional ---------------------------------------
annuity payments will be made after Payments to the Secondary Annuitant.
the death of both annuitants. -----------------------------------
This option is similar to option 7
If the annuitant dies before the above, except that annuity payments are
secondary annuitant, the amount of the higher while both the annuitant and the
------ secondary annuitant are living, and
fixed annuity payments will be reduced then are lower if the annuitant dies
to the percent you select: either 50%, before the secondary annuitant and
66.67% or 75%. For variable annuity after the guaranteed period. The final
payments, the number of variable annuity payment will be the later of
------ the last guaranteed payment or the
annuity units will also be reduced annuity payment made immediately prior
to 50%, 66.67% or 75%. to the last surviving annuitant's
death. No additional payments will be
If the secondary annuitant dies before made if both annuitants die after all
the annuitant, we will continue to make guaranteed annuity payments have been
annuity payments as they are due, and made.
the amount of the annuity payments will
not go down due to the death.
<PAGE>
If the annuitant dies before the 11. Single Life Annuity with
secondary annuitant and after the ------------------------
guaranteed period, the amount of the Emergency Cash(SM). This option
------ ------------------
fixed annuity payments will be reduced provides annuity payments for the
to the percent you select: either 50%, annuitant's lifetime. You can only
66.67% or 75%. For variable annuity receive variable payments under this
payments, the number of variable option. With the Life with Emergency
------ Cash(SM) feature, you are able to
annuity units will also be reduced to surrender all or a portion of the Life
50%, 66.67% or 75%. with Emergency Cash(SM) benefit. The
Life with Emergency Cash(SM) benefit
will continue through age 100 of the
If the secondary annuitant dies before annuitant.
the annuitant, we will continue to
make annuity payments as they are due,
and the amount of the annuity payments The amount you surrender must be at
will not go down due to the death. least 25% of the Life with Emergency
Cash(SM) benefit. We will provide you
No surrenders are permitted under this with a Life with Emergency Cash(SM)
option. benefit schedule as a rider to the
contract that will assist you in
determining the amount you have
9. Joint and Last Survivor Life available to surrender.
----------------------------
Annuity with Period Certain. This The Life with Emergency Cash(SM)
- --------------------------- benefit is also a death benefit that
option provides annuity payments for a is paid upon the death of the
guaranteed period (5-30 years) or for annuitant.
the annuitant's and secondary
annuitant's lifetimes, whichever is
later. Payments are higher while both For qualified contracts the death
annuitant(s) are living and decrease benefit ceases at the date the
after the guarantee period upon the annuitant reaches the IRS age
death of either the annuitant or the limitation (determined at the contract
------ -- issue date).
secondary annuitant. The final annuity
payment will be the later of the last See "SURRENDER VALUE."
guaranteed payment or the annuity
payment made immediately prior to the You should consult a tax advisor
last surviving annuitant's death. No before requesting a full or partial
additional annuity payments will be surrender.
made after the death of both
annuitants.
12. Joint and Survivor Life Annuity
-------------------------------
Upon the first death after the with Emergency Cash(SM). This option
guaranteed period (or the end of the -----------------------
guaranteed period if the first death provides annuity payments to the
occurred prior thereto), the amount of annuitant and the secondary annuitant
------ while both are living. You can only
the fixed annuity payments will be receive variable payments under this
reduced to a percent you select: option. After the death of either the
either 50%, 66.67% or 75%. For annuitant or the secondary annuitant,
variable annuity payments, the number we will continue to provide the full
------ amount of annuity payments to the
of variable annuity units will also be survivor. With the Life with Emergency
reduced to 50%, 66.67% or 75%. Cash(SM) feature, you are able to
surrender all or a portion of the Life
No surrenders are permitted under this with Emergency Cash(SM) benefit. The
option. Life with Emergency Cash(SM) benefit
will continue through age 100 of the
10. Life Annuity with Premium Refund younger of the annuitant and the
-------------------------------- secondary annuitant.
Payment. This option provides annuity
- ------- The amount you surrender must be at
payments for the annuitant's lifetime. least 25% of the Life with Emergency
The final annuity payment will be Cash(SM) benefit. We will provide you
either the payment made immediately with a Life with Emergency Cash(SM)
prior to the annuitant's death or the benefit schedule as a rider to the
premium refund benefit. contract that will assist you in
determining the amount you have
available to surrender.
We will pay the premium refund benefit
to the beneficiary if, at the date of The Life with Emergency Cash(SM)
the annuitant's death, the sum of all benefit is also a death benefit that
the annuity payments made is less than is paid upon the death of the last
the premium. The premium refund annuitant. We will provide a Life with
benefit will be the premium less the Emergency Cash(SM) benefit schedule as
sum of the previously distributed a rider to the contract.
variable and fixed annuity payments.
No surrenders are permitted under this
option.
<PAGE>
For qualified contracts the death If the order form is incomplete, we
benefit ceases at the date of the IRS will request the necessary
joint age limitation (determined at information. If the information is not
the contract issue date.) provided within five days, we will
return the premium unless we obtain
your specific consent to let us keep
See "SURRENDER VALUE." it until the order form is completed.
You should consult a tax advisor The date we credit the premium and
before requesting a full or partial issue the contract is called the
surrender. contract issue date. On the contract
issue date, we allocate the premium
(net of any premium tax deduction) as
Other payment options may be made you specify in the order form.
available.
You should make checks for premium
PLEASE NOTE CAREFULLY THAT IF: payments payable only to PFL Life
Insurance Company and send them to the
. you choose a Single Life Annuity, Administrative and Service Office.
100% Joint and Survivor Life Your check must be honored in order
Annuity, Joint and Survivor Life for us to pay any associated payments
Annuity with Reduced Annuity and benefits due under the contract.
Payments to the Secondary Annuitant,
or Joint and Last Survivor Annuity;
and Allocation of Premium Payment
. the annuitant(s) dies before the due
date of the second annuity payment; We will invest the amount of your
premium that you allocate to the
THEN: subaccounts of the separate account in
the designated subaccount(s) on the
. we may make only the one payment. contract issue date. You must allocate
percentages that are whole numbers,
not fractions. Your allocations must
Please also note that the federal equal 100%.
income tax laws may limit your payment
options where the contract is used as
a qualified contract. Variable Annuity Units
3. PURCHASE Any portion of your premium allocated
to the subaccounts will be used to
purchase variable annuity units. We
Contract Issue Requirements will determine the number of variable
annuity units based upon:
PFL will issue a contract only IF:
. the premium reduced by any premium
. PFL receives all information needed taxes,
to issue the contract; and . the annuitant's age and sex (and the
age and sex of the secondary
. PFL receives your entire premium annuitant, if any),
payment. . the payment option you choose,
. the frequency of payments you
choose,
Premium Payment . the AIR you choose,
. the first payment date, and
. the variable annuity unit value of
The minimum premium for a contract is the subaccounts you initially select.
$25,000. Amounts less than $25,000 may
be accepted with approval from our The number of variable annuity units
home office. You cannot make allocated to each subaccount will not
additional premium payments. change unless you transfer among the
subaccounts, transfer from variable to
fixed annuity payments or receive cash
You will allocate the premium to through a surrender (if allowed).
variable, fixed, or to a combination However, if you choose a joint and
of variable and fixed payment options. survivor payment option and benefits
We apply your premium to the contract are reduced due to the death of one of
within two business days after receipt the
(at the Administrative and Service
Office) of the later of the premium
and a properly completed order form.
<PAGE>
annuitants, the number of variable 4. INVESTMENT CHOICES
annuity units will be reduced at that
time.
The Separate Account
We calculate the amount of your
variable annuity payment on the
variable annuity payment calculation The separate account currently
date by taking the number of variable consists of nine subaccounts.
annuity units in each subaccount and
multiplying them by the variable
annuity unit value of each subaccount. The Underlying Portfolios. The
This calculation is performed for each -------------------------
subaccount, and the sum of the subaccounts invest in shares of the
subaccount calculations will equal the nine portfolios of the One Group(R)
amount of your variable annuity Investment Trust. Banc One Investment
payment. Advisors Corporation, an indirect
subsidiary of Bank One Corporation,
The variable annuity unit value in a provides investment advice and
particular subaccount on any valuation administrative services for all of the
day is equal to: underlying portfolios offered through
. the variable annuity unit value for this contract. The following
that subaccount on the immediately subaccounts are currently offered:
preceding valuation day; multiplied
by
. the net investment factor for that One Group(R) Investment Trust Bond
subaccount for the valuation period; Portfolio
multiplied by One Group(R) Investment Trust
. the daily factor for the valuation Government Bond Portfolio
period. One Group(R) Investment Trust Balanced
Portfolio
The daily factor for the valuation One Group(R) Investment Trust Large
period (the period of time beginning Cap Growth Portfolio
at the close of business each One Group(R) Investment Trust Equity
valuation day and ending at the close Index Portfolio
of business on the next valuation day) One Group(R) Investment Trust
is a discount factor that reflects the Diversified Equity Portfolio
AIR. Please refer to the Statement of One Group(R) Investment Trust Mid Cap
Additional Information. Growth Portfolio
One Group(R) Investment Trust
The net investment factor used to Diversified Mid Cap Portfolio
calculate the variable annuity unit One Group(R) Investment Trust Mid Cap
value for each subaccount for the Value Portfolio
valuation period is determined by
dividing (a) by (b) and subtracting
(c) from the result, where: The general public may not purchase
these underlying portfolios. The
(a) is the net result of: investment objectives and policies may
. the net asset value of a be similar to other portfolios and
portfolio share held in that mutual funds managed by the same
subaccount determined as of the investment adviser or manager that are
end of the current valuation sold directly to the public. You
period; plus should not expect that the investment
results of the other portfolios and
. the per share amount of any mutual funds will be comparable to
dividend or capital gain those of the underlying portfolios.
distributions made by the fund
for shares held in that
subaccount if the ex-dividend Detailed information about the
date occurs during the valuation underlying portfolios may be found in
period; plus or minus the current prospectus for the One
Group(R) Investment Trust. This
. a per share credit or charge for includes a description of each
any taxes reserved for, which we portfolio's investment objectives,
determine to have resulted from policies, and strategies. This
the investment operation of the prospectus is attached to this
subaccount. prospectus. You should read the
prospectus for the One Group(R)
(b) is the net asset value of a Investment Trust carefully before you
portfolio share held in that invest.
subaccount determined as of the
end of the immediately preceding
valuation period; and The investment objectives and policies
of certain portfolios are similar to
(c) is an amount representing the the investment objectives and policies
separate account charge (shown in of other portfolios that may be
the contract specifications managed by the same investment advisor
section of the contract). or manager. The investment results of
the portfolios, however, may differ
from the results of such other
portfolios. There can be no assurance,
and no representation is made, that
the investment results of any of the
portfolios will be comparable to the
investment results of
<PAGE>
any other portfolio, even if the other We reserve the right to impose
portfolio has the same investment transfer charges.
advisor or manager.
The percent of the allocation in each
Investment allocation models are subaccount will change over time with
offered in connection with this its investment performance. You should
product. The models may or may not periodically review the allocations in
achieve any desired goals or protect light of market conditions and
against a loss. See the Statement of financial objectives.
Additional Information for further
information about the models.
5. EXPENSES
Transfers
The following are all the charges made
under the contract.
You may transfer all or a part of the
value of variable annuity payments to
fixed annuity payments by telephoning Separate Account Charge
us or providing us with a notice you
have signed or an electronic notice
that gives us the facts that we need. A daily charge is deducted from the
If you transfer from variable annuity assets of each subaccount for our
payments to fixed annuity payments, assumption of mortality and expense
the fixed annuity payments will be a risks, and our administration
continuation of the payment option expenses. If the amount you allocate
under which the variable annuity to variable annuity payments is less
payments were being made, or a than $50,000, a daily mortality and
continuation of the fixed payment expense risk charge will be deducted
option that may already exist. at an effective annual rate of 1.20%;
otherwise, the mortality and expense
risk charge will be 1.00%.
For example, if you received variable
annuity payments for two years under a
10 Year Certain and Life Option and An administration expense charge will
elect to transfer to fixed annuity also be deducted daily from the assets
payments, your payment option would be of each subaccount at an effective
an 8 Year Certain and Life Option. If annual rate of 0.15%. We guarantee
your variable payment option is Life that the mortality and expense risk
with Emergency Cash(SM), the fixed and administrative charges will never
payment option will be Life only, Life increase.
with Premium Refund or Life with
Period Certain. The period certain
cannot be greater than the annuitant's The mortality risk arises from our
remaining life expectancy determined obligation to provide annuity income
at the contract issue date. (Life with for your life (and the life of the
Emergency Cash(SM) is only available secondary annuitant, if any) no matter
with variable annuity payments.) how long that might be. The expense
risk results from our obligation to
cover the cost of issuing and
Transfers from variable to fixed administering the contracts, no matter
annuity payments may have tax how long we may incur such cost or how
consequences. You should consult a tax large that cost may be. The
advisor before making a transfer from administration expense charge is for
variable to fixed annuity payments. the costs of administering the
contracts. We may earn a profit from
the separate account charge (and
You may not transfer from fixed to expect to do so). Any profit can be
variable annuity payments. used for distribution expenses or for
any other purpose.
Transfers are made using the variable
annuity unit values for the end of the Expenses of the Portfolios
day when we receive your request (that
is, at the end of the valuation period
during which we receive your request). The portfolios are charged management
fees and incur operating expenses. The
effect of these fees and expenses is
You may transfer amounts among reflected in the performance of the
subaccounts by telephoning us or by portfolios underlying the subaccounts,
providing us with a notice you have and therefore affects the variable
signed or an electronic notice that annuity unit value.
gives us the facts that we need.
Premium Taxes
Some states charge a premium tax based
on the amount of your premium. State
premium taxes currently range from
<PAGE>
0% to 3.5%. In addition, some to as tax deferral. There are
counties, cities or towns may charge different rules as to how you will be
additional premium taxes. If you live taxed depending on how you take the
in a place that has premium taxes, any money out and the type of policy -
amount needed to provide for the qualified or nonqualified (discussed
applicable premium taxes is deducted below).
from your premium. We allocate the
remainder of your premium to the
subaccounts and/or to the purchase of You will not be taxed on increases in
fixed annuity payments. the value of your policy until a
distribution occurs - either as a
withdrawal or as annuity payments.
Other Taxes
When a non-natural person (e.g.,
We reserve the right to charge for corporation or certain other entities
certain taxes (other than premium other than tax-qualified trusts) owns
taxes) that may be incurred due to the a nonqualified policy, the policy will
contracts or the separate account. generally not be treated as an annuity
Currently, we do not charge for any for tax purposes.
other taxes.
Qualified and Nonqualified Policies
Surrender Value
If you purchase the policy under an
There is no express or calculable individual retirement annuity, a
surrender charge for surrenders from pension plan, or specially sponsored
variable annuity payments under the program, your policy is referred to as
contract. Surrenders from variable a qualified policy.
annuity payments are generally not
permitted, unless you select the
Certain Only or Life With Emergency Qualified policies are issued in
Cash payment option. For a discussion connection with the following plans:
of surrender value, see "SURRENDER
VALUE". . Individual Retirement Annuity (IRA):
A traditional IRA allows individuals
to make contributions, which may be
Transfer Fee deductible, to the Contract. A Roth
IRA also allows individuals to make
contributions to the Contract, but
There is currently no charge for it does not allow a deduction for
transfers. We reserve the right to contributions, and distributions may
charge $15 for each transfer over six be tax-free if the owner meets
per contract year (all transfers made certain rules.
simultaneously will be treated as a . Tax-Sheltered Annuity (403(b) Plan):
single request). A 403(b) Plan may be made available
to employees of certain public
school systems and tax-exempt
6. TAXES organizations and permits
contributions to the Contract on a
pre-tax basis.
NOTE: PFL has prepared the following . Corporate Pension and Profit-Sharing
information on federal income taxes as and H.R. 10 Plan: Employers and self
a general discussion of the subject. employed individuals can establish
It is not intended as tax advice to pension or profit-sharing plans for
any individual. You should consult their employees or themselves and
your own tax adviser about your own make contributions to the Contract
circumstances. PFL has included an on a pre-tax basis.
additional discussion regarding taxes . Deferred Compensation Plan (457
in the Statement of Additional Plan): Certain governmental and tax-
Information. exempt organizations can establish a
plan to defer compensation on behalf
of their employees through
Annuity Policies in General contributions to the Contract.
Deferred annuity policies are a way of If you purchase the policy as an
setting aside money for future needs individual and not under an individual
like retirement. Congress recognized retirement annuity, 403(b) plan, 457
how important saving for retirement is plan, or pension or profit sharing
and provided special rules in the plan, your policy is referred to as a
Internal Revenue Code for annuities. nonqualified policy.
Simply stated, these rules provide Withdrawals - Nonqualified Policies
that generally you will not be taxed
on the earnings, if any, on the money
held in your annuity policy until you
take the money out. This is referred
<PAGE>
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If you make a withdrawal from your
policy before the annuity commencement
date, the Internal Revenue Code treats You should consult your legal counsel
that withdrawal as first coming from or tax adviser if you are considering
earnings and then from your premium purchasing a policy for use with any
payments. When you make a withdrawal retirement plan.
you are taxed on the amount of the
withdrawal that is earnings. (The
excess interest adjustment resulting Withdrawals - 403(b) Policies
from the withdrawal may affect the
amount on which you are taxed.)
Different rules apply for annuity The Internal Revenue Code limits the
payments. See "Annuity Payments" withdrawal of premium payments from
below. certain 403(b) policies. Withdrawals
can generally only be made when an
owner:
The Internal Revenue Code also
provides that withdrawn earnings may . reaches age 59 1/2;
be subject to a penalty. The amount of
the penalty is equal to 10% of the . leaves his/her job;
amount that is includable in income.
Some withdrawals will be exempt from . dies;
the penalty. They include any amounts:
. becomes disabled (as that term is
. paid on or after the taxpayer defined in the Internal Revenue Code);
reaches age 59 1/2; or
. paid after the taxpayer dies;
. in the case of hardship. However,
. paid if the taxpayer becomes in the case of hardship, the
totally disabled (as that term is owner can only withdraw the
defined in the Internal Revenue premium payments and not any
Code); earnings.
. paid in a series of substantially Diversification and Distribution
equal payments made annually (or Requirements
more frequently) under a lifetime
annuity; The Internal Revenue Code provides
that the underlying investments for a
. paid under an immediate annuity; or variable annuity must satisfy certain
diversification requirements in order
. which come from premium payments to be treated as an annuity policy.
made prior to August 14, 1982. The policy must also meet certain
distribution requirements at the death
All deferred non-qualified annuity of an owner in order to be treated as
policies that are issued by AUSA Life an annuity policy. These
(or its affiliates) to the same owner diversification and distribution
during any calendar year are treated requirements are discussed in the
as one annuity for purposes of Statement of Additional Information.
determining the amount includable in PFL may modify the policy to attempt
the owner's income when a taxable to maintain favorable tax treatment.
distributions occurs.
Taxation of Death Benefit Proceeds
Withdrawals - Qualified Policies Amounts may be distributed from the
policy because of the death of an
owner or the annuitant. Generally,
The above information describing the such amounts are includable in the
taxation of nonqualified policies does income of the recipient:
not apply to qualified policies. There
are special rules that govern with . if distributed in a lump sum,
respect to qualified policies. these amounts are taxed in the
Generally, these rules restrict: same manner as a full surrender;
or
. the amount that can be contributed
to the policy during any year; and . if distributed under an annuity
payment option, these amounts are
. the time when amounts can be paid taxed in the same manner as
from the policies. annuity payments.
In addition, a penalty tax may be For these purposes, the "investment in
assessed on amounts withdrawn from the the contract" is not affected by the
policy prior to the date you reach age owner's or annuitant's death. That is,
59 1/2, unless you meet one of the the "investment in the contract"
exceptions to this rule. You may also remains generally the total premium
be required to begin taking minimum payments, less amounts received, which
distributions from the policy by a were not includable in gross income.
certain rule. The terms of the plan
may limit the rights otherwise Annuity Payments
available to you under the policies.
We have provided more information in
the Statement of Additional
Information.
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Although the tax consequences may vary Possible Tax Law Changes
depending on the annuity payment
option you select, in general, for Although the likelihood of legislative
nonqualified and certain qualified changes in uncertain, there is always
policies, only a portion of the the possibility that the tax treatment
annuity payments you receive will be of the policy could change by
includable in your gross income. legislation or otherwise. You should
consult a tax adviser with respect to
legislative developments and their
In general, the excludable portion of effect on the policy.
each annuity payment you receive will
be as follows: 7. SURRENDER VALUE
. Fixed payments - by dividing the
"investment in the contract" on the Surrenders
annuity commencement date by the total
expected value of the annuity payments You may not surrender any portion of a
for the term of the payments. This is contract unless either the Certain
the percentage of each annuity payment ------
that is excludable. Only or Life with Emergency Cash/SM/
payment option is selected. No other
--------
. Variable payments - by dividing the payment option allows surrenders. If
"investment in the contract" on the --------------------------------
annuity commencement date by the total you elect a Certain Only payment
number of expected periodic payments. option the surrender value is the
This is the amount of each annuity present value of the remaining
payment that is excludable. payments. If you select the Life with
Emergency Cash/SM/ payment option, we
will provide you with a Life with
The remainder of each annuity payment Emergency Cash/SM/ benefit schedule
is includable in gross income. Once that will allow you to determine how
the "investment in the contract" has much is available to surrender.
been fully recovered, the full amount
of any additional annuity payments is If a partial surrender is made, it
includable in gross income. must be at least 25% of the full
surrender value and all future
If you select more than one annuity payments will be reduced. Surrenders
payment option, special rules govern may have adverse tax consequences.
the allocation of the policy's entire
"investment in the contract" to each You should consult with your tax
such option, for purposes of advisor before requesting a full or
determining the excludable amount of partial surrender.
each payment received under that
option. We advise you to consult a Surrender Value
competent tax adviser as to the
potential tax effects of allocating There is no surrender charge
amounts to any particular annuity applicable to variable annuity
payment option. payments under the contract. In the
cases when the contract can be
If, after the annuity commencement surrendered (i.e., Certain Only or
date, annuity payments stop because an Life with Emergency Cash/SM/ options)
annuitant died, the excess (if any) of the determination of a surrender value
the "investment in the contract" as of depends on specific individual
the annuity commencement date over the circumstances such as the annuitant's
aggregate amount of annuity payments age and sex, the number of annuitants,
received that was excluded from gross the amount of the current payment
income is generally allowable as a (when the surrender is requested), and
deduction for your last taxable year. the number of payments already made.
Transfers, Assignments or Exchanges of If you select a Certain Only payment
Policies option with fixed and/or variable
annuity payments you may surrender all
A transfer of ownership or assignment or a portion of your contract. For
of a policy, the designation of an fixed annuity payments the surrender
annuitant or other beneficiary who is value is 98% of the present value of
not also the owner, the selection of the remaining payments (using PFL's
certain annuity commencement dates, or declared interest rates in effect at
a change of annuitant, may result in the time of the surrender). For
certain income or gift tax variable annuity payments, the
consequences to the owner that are surrender value is the present value
beyond the scope of this discussion. of future payments (which are assumed
An owner contemplating any such to be equal to the most recent
transfer, assignment, selection, or payment) discounted at an interest
change should contact a competent tax rate no greater than 4.5% (if you
adviser in respect to the potential
tax effects of such a transaction.
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have a 3.5% AIR) or no greater than 6% Appendix A contains performance
(if you have a 5% AIR). information that you may find useful.
It is divided into various parts,
depending upon the type of performance
If the Life with Emergency Cash/SM/ information shown. Future performance
option is selected, please refer to will vary and future results will not
the Emergency Cash/SM/ benefit be the same as the results shown.
schedule in your contract rider for
the information you need to determine 9. DEATH BENEFIT
your surrender value.
If the owner dies before the first
8. PERFORMANCE annuity payment, the premium (plus or
minus investment performance) will be
Performance information for the paid as a death benefit. More
subaccounts may appear in reports and information on how we pay it is in the
advertising. The performance Statement of Additional Information.
information is based on adjusted
historical investment experience of If an owner, who may or may not also
the subaccounts and the underlying be an annuitant, dies on or after the
portfolios and does not indicate or annuity starting date, we will pay the
represent future performance. remaining portion of the annuity
payments due under the contract, if
Total returns of the subaccounts may any, in the same manner and frequency
be advertised. Total returns are based (at least as rapidly) as under the
on the overall dollar or percentage method of distribution used before
change in value of a hypothetical such owner's death.
investment. Total return quotations
reflect changes in portfolio share If the deceased owner's surviving
price, the automatic reinvestment by spouse is the sole successor owner,
the separate account of all then on such owner's death such
distributions and the deduction of surviving spouse may elect to become
applicable annuity charges. the sole owner under the contract and
to continue the contract as his or her
A cumulative total return reflects own.
performance over a stated period of
time. An average annual total return If a non-natural person is named as an
reflects the hypothetical annually owner, then the primary annuitant, as
compounded return that would have defined in the Code, shall be treated
produced the same cumulative total as an owner solely for the purposes of
return if the performance had been the distribution at death rules. The
constant over the entire period. entire interest in the contract must
Because average annual total returns be distributed upon the annuitant's
tend to smooth out variations in a death, if the annuitant dies prior to
subaccount's returns, you should the first payment date.
recognize that they are not the same
as actual year-by-year results. If the deceased owner was also the
annuitant, then the annuitant's
Some subaccounts may also advertise beneficiary is entitled to the
yield. These measures reflect the proceeds described above in this
income generated by an investment in section (unless the deceased owner's
the subaccount over a specified period surviving spouse is the sole successor
of time. This income is annualized and owner). If no person is named as the
shown as a percentage. Yields do not beneficiary, the owner's estate shall
take into account capital gains or be deemed the beneficiary.
losses.
Note carefully. In instances where the
--------------
The VIP Money Market Subaccount may owner's estate is deemed to be the
advertise its current and effective successor owner or beneficiary, it may
yield. Current yield reflects the be necessary to open a probate estate
income generated by an investment in in order to exercise ownership rights
the subaccount over a seven day to, or receive death proceeds from,
period. Effective yield is calculated the contract. If no probate estate is
in a similar manner except that income opened because the owner has precluded
earned is assumed to be reinvested. the opening of a probate estate by
The VIP II Investment Grade Bond and means of a trust or other instrument,
the VIP High Income Subaccounts may unless we have received written notice
advertise a 30 day yield which of the trust as a successor owner or
reflects the income generated by an beneficiary prior to the owner's
investment in the subaccount over a 30 death, that trust may not exercise
day period. ownership rights to, or receive death
proceeds from, the contract.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
In all events, distributions upon the Information about the separate account
death of an owner will comply with can be reviewed and copied at the
section 72(s) of the Code. SEC's Public Reference Room in
Washington, D.C. You may obtain
10. OTHER INFORMATION information about the operation of the
public reference room by calling the
PFL Life Insurance Company Commission at 1-800-SEC-0330. In
addition, the SEC maintains a web site
PFL Life Insurance Company was (http://www.sec.gov) that contains
incorporated under the laws of the other information regarding the
State of Iowa on April 19, 1961 as NN separate account.
Investors Life Insurance Company, Inc.
It sells life and health insurance and Voting Rights
annuity contracts. PFL is a wholly-
owned indirect subsidiary of AEGON PFL will vote all shares of the
USA, Inc. All of the stock of AEGON underlying portfolios in accordance
USA, Inc., is indirectly owned by with instructions we receive from you
AEGON N.V. of The Netherlands, the and other owners that have voting
securities of which are publicly interests in the portfolios. We will
traded. AEGON N.V., a holding company, send you and other owners written
conducts its business through requests for instructions on how to
subsidiary companies engaged primarily vote those shares. When we receive
in the insurance business. PFL is those instructions, we will vote all
licensed in the District of Columbia, of the shares in proportion to those
Guam, and in all states except New instructions. If, however, we
York. determine that we are permitted to
vote the shares in our own right, we
All obligations arising under the may do so.
policies, including the promise to
make annuity payments, are general Each person having a voting interest
corporate obligations of PFL. will receive proxy material, reports,
and other materials relating to the
The Separate Account appropriate portfolio.
PFL established a separate account, Distributor of the Contracts
called the PFL Retirement Builder
Variable Annuity Account, under the AFSG Securities Corporation is the
laws of the State of Iowa on March 29, principal underwriter of the
1996. The separate account receives contracts. Like PFL, it is an indirect
and currently invests the premium wholly-owned subsidiary of AEGON USA,
payments under the contracts that are Inc. It is located at 4333 Edgewood
allocated to it for investment only in Road N.E., Cedar Rapids, IA 52499-
shares of One Group(R) Investment 0001. AFSG Securities Corporation is
Trust. Detailed information about the registered as a broker/dealer under
One Group(R) Investment Trust the Securities Exchange Act of 1934.
portfolios is contained in the It is a member of the National
prospectus that is attached to this Association of Securities Dealers,
prospectus. You should read the Inc. (NASD). It was incorporated in
prospectus for each of the underlying Pennsylvania in 1986.
portfolios of the One Group(R)
Investment Trust before you invest. Commissions of up to 6% of premium
payments will be paid to
The separate account is registered broker/dealers who sell the contracts
with the SEC as a unit investment under agreements with AFSG Securities
trust under the Investment Company Act Corporation. These commissions are not
of 1940. However, the SEC does not deducted from premium payments. In
supervise the management, the addition, certain production,
investment practices, or the policies persistency and managerial bonuses may
of the separate account or PFL. The be paid. PFL may also pay compensation
obligations to pay the benefits due to banks and other financial
under the contract are PFL's institutions for their services in
responsibility. connection with the sale and servicing
of the contracts.
The assets of the separate account are
held in PFL's name on behalf of the Non-participating Contract
separate account and belong to PFL.
However, those assets that underlie The contract does not participate or
the contracts are not chargeable with share in the profits or surplus
liabilities arising out of any other earnings of PFL. No dividends are
business PFL may conduct. payable on the contract.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Variations in Contract Provisions PFL is a member of the Insurance
Marketplace Standards Association
Ceratin provisions of the contracts (IMSA). IMSA members subscribe to a
may vary from the descriptions in this set of ethical standards involving the
prospectus in order to comply with sales and service of individually sold
different state laws. See your life insurance and annuities. As a
contract for variations since any such member, we may use the IMSA logo and
state variations will be included in language in advertisements.
your contract or in riders or
endorsemensts attached to your Delay of Payments
contract.
PFL may be permitted to delay any
Year 2000 Matters payments from the separate account if:
In May 1996, PFL Life Insurance . the New York Stock Exchange is
Company (PFL) adpoted and presently closed other than for usual
has in place a Year 2000 Project Plan weekends or holidays or trading
(the "Plan") to review and analyze on the Exchange is otherwise
existing hardware a and software restricted; or
systems, as well as voice and data
communications systems, to determine . an emergency exists as defined by
if they are Year 2000 compliant. As of the SEC or the SEC requires that
March 1, 1999, substantially all of trading be restricted; or
PFL's mission-critical systems are
Year 2000 compliant. The Year 2000 . the SEC permits a delay for the
Project Plan remains on track as PFL protection of owners.
continues with the validation of its
mission-critical and non-mission- In addition, transfers of amounts from
critical systems, including and within the subaccounts may be
revalidation testing in 1999. In deferred under these circumstances.
addition, PFL has undertaken
aggressive initiatives to test all Pursuant to the requirements of
systems that interface with any third certain state laws, we reserve the
parties and other business partners. right to defer fixed annuity payments
All of these steps are aimed at for up to six months.
allowing current operations to remain
unaffected by the year 2000 date If a check has been submitted as the
change. premium, we have the right to defer
any payments until the check has been
As of the date of this prospectus, PFL honored.
has identified and made available what
it believes are the appropriate Legal Proceedings
resources of hardware, people, and
dollars, including the engagement of There are no legal proceedings to
outside third parties, to ensure that which the separate account is a party
the Plan will be completed. or to which the assets of the account
are subject. PFL, like other life
The actions taken by management under insurance companies, is involved in
The Year 2000 Project Plan are lawsuits. In some class action and
intended to significantly reduce PFL's other lawsuits involving other
risk of a material business insurers, substantial damages have
interruption based on the Year 2000 been sought and/or material settlement
issues. It should be noted that the payments have been made. Although the
Year 2000 computer problem, and its outcome of any litigation cannot be
resolution, is complex and predicted with certainty, PFL believes
multifaceted, and any company's that at the present time there are no
success cannot be conclusively known pending or threatened lawsuits that
until the Year 2000 is reached. In are reasonably likely to have a
spite of its efforts or results, PFL's material adverse impact on the
ability to function unaffected to and separate account or PFL.
through the Year 2000 may be adversely
affected by actions, or failure to Financial Statements
act, of third parties beyond our
knowledge or control. The statutory-basis financial
statements of PFL are in the Statement
This statement is a Year 2000 of Additional Information. The
Readiness Disclosure pursuant to subaccounts began operations in 1999,
Section 3(9) of the Year 2000 and do not yet have any financial
Information and Readiness Disclosure history.
Act, 15 U.S.C. Section 1 (1998).
IMSA
</TABLE>
<PAGE>
Table of Contents of the Statement of Additional Informatiom
Glossary of Terms Records and Reports
The Contract--General Provisions Distribution of the Contracts
Federal Tax Matters Other Products
Investment Experience Custody of Assets
State Regulation of PFL Historical Performance Data
Administration Legal Matters
Independent Auditors
Other Information
Financial Statements
<PAGE>
APPENDIX A
HISTORICAL PERFORMANCE DATA
The following graph is showing how your annuity payments can fluctuate based on
past investment performance (net of all charges) of the portfolios through
December 31, 1998. The information presented is for periods prior to the
inception date of the subaccounts. PFL did not sell the contracts prior to the
date of this prospectus, and therefore, the graphs illustrate what annuity
payments might have been under a contract had one existed during the years
shown.
The graphs are based on the adjusted historical performance of the portfolios,
which means that the 1.35% separate account charge and the actual net expenses
of each portfolio for the year ended December 31, 1998, are reflected in the
graph for each portfolio. The graphs do not reflect any premium tax charge.
Each graph shows the effect that the portfolio's investment performance would
have had on the value of an annuity unit and, thus, the value of an annuity
payment if a contract with an AIR of 5%, providing an initial monthly annuity
payment of $500.00, was purchased on the date the portfolio commenced
operations. Each graph assumes that the entire premium of the hypothetical
contract was allocated to the subaccount being illustrated. Annuity payments
increase for a given month if the performance of the portfolio underlying the
subaccounts, net of all charges, for that month is higher than the AIR, and
decreases for a given month if the performance of the portfolio underlying the
subaccounts, net of all charges, for that month is lower than the AIR. The
premium necessary for an initial monthly annuity payment of $500.00 will vary
depending on the age and sex of the annuitant (and secondary annuitant, if any),
the payment option and the first annuity payment date. For example, suppose that
a 65 year old male who lives in a state that does not charge a premium tax
wishes to purchase $500.00 of an initial monthly variable annuity payment
beginning on the contract issue date with a life only payment option. If there
is no secondary annuitant, no guarantee period and he chooses a 5% AIR, the
premium needed would be $74,639. If the purchaser were female, the premium
necessary would be $81,847. This is because females have a longer life
expectancy than males.
The monthly payments depicted in the graphs are not based on actual contracts.
They are based on adjusted historical performance results of the portfolios and
are not projections or indications of future results. PFL does not guarantee and
does not suggest that any subaccount or contract issued by PFL will generate
these or similar average monthly payments for any period of time. The graphs are
for illustration purposes only and do not represent future variable annuity
payments or future investment returns. Variable annuity payments under a real
contract may be more or less than those forming the basis for the monthly
payments shown in these graphs, if the actual returns of the portfolios selected
by you are different from the adjusted historical returns of the portfolios. It
is very likely that a portfolio's investment performance will fluctuate over
time; therefore, you can expect that your variable annuity payments will
fluctuate. The total amount of variable annuity payments ultimately received
will depend upon the payment option selected by you.
* * *
<PAGE>
BOND PORTFOLIO
["BOND PORTFOLIO MONTHLY PAYMENT CHART APPEARS HERE"]
Chart Specifications:
- --------------------
.5% AIR
.$500 initial monthly annuity payment
.Fund inception date--March 1982
<TABLE>
<CAPTION>
===========================================================================================================================
Monthly Payment Adjusted Adjusted Historical Average Annual
Year Amounts at End Historical Annual Total Return*
of Years Total Return* (Periods Ended 12/31/1998)
===========================================================================================================================
<S> <C> <C> <C> <C>
1982 $521 N/A 1 Year 4.07%
- ----------------------------------------------------------------------------------------------------------------------------
1983 $535 7.69% 5 Years 3.90%
- ----------------------------------------------------------------------------------------------------------------------------
1984 $555 8.99% 10 Years 4.27%
- ----------------------------------------------------------------------------------------------------------------------------
1985 $564 6.67% Since Inception 5.39%
- ----------------------------------------------------------------------------------------------------------------------------
1986 $565 5.28%
- --------------------------------------------------------------------
1987 $565 5.03%
- --------------------------------------------------------------------
1988 $570 5.95%
- --------------------------------------------------------------------
1989 $585 7.72%
- --------------------------------------------------------------------
1990 $594 6.62%
- --------------------------------------------------------------------
1991 $592 4.69%
- --------------------------------------------------------------------
1992 $578 2.51%
- --------------------------------------------------------------------
1993 $561 1.86%
- --------------------------------------------------------------------
1994 $550 2.87%
- --------------------------------------------------------------------
1995 $547 4.47%
- --------------------------------------------------------------------
1996 $542 4.00%
- --------------------------------------------------------------------
1997 $537 4.08%
- --------------------------------------------------------------------
1998 $532 4.07%
===========================================================================================================================
</TABLE>
* The subaccount had not began operations as of the date of this prospectus.
Historical returns for periods prior to that date are total returns for the Bond
Portfolio, adjusted to reflect the 1.35% separate account charge.
<PAGE>
GOVERNMENT BOND PORTFOLIO
["GOVERNMENT BOND PORTFOLIO MONTHLY PAYMENT CHART APPEARS HERE"]
Chart Specifications:
- --------------------
.5% AIR
.$500 initial monthly annuity payment
.Fund inception date--September 1985
<TABLE>
<CAPTION>
==============================================================================================================================
Monthly Payment Adjusted Adjusted Historical Average Annual
Year Amounts at End of Historical Annual Total Return*
Years Total Return* (Periods Ended 12/31/1998)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1982 N/A N/A 1 Year (5.61)%
- ------------------------------------------------------------------------------------------------------------------------------
1983 N/A N/A 5 Years 7.34%
- ------------------------------------------------------------------------------------------------------------------------------
1984 N/A N/A 10 Years 9.58%
- ------------------------------------------------------------------------------------------------------------------------------
1985 $522 N/A Since Inception 9.60%
- ------------------------------------------------------------------------------------------------------------------------------
1986 $577 16.12%
- -----------------------------------------------------------
1987 $549 (0.13)%
- -----------------------------------------------------------
1988 $577 10.29%
- -----------------------------------------------------------
1989 $519 (5.56)%
- -----------------------------------------------------------
1990 $476 (3.71)%
----------------------------------------------------------
1991 $605 33.48%
- -----------------------------------------------------------
1992 $699 21.41%
- -----------------------------------------------------------
1993 $792 18.91%
- -----------------------------------------------------------
1994 $733 (2.86)%
- -----------------------------------------------------------
1995 $830 19.00%
- -----------------------------------------------------------
1996 $889 12.50%
- -----------------------------------------------------------
1997 $983 16.10%
- -----------------------------------------------------------
1998 $884 (5.61)%
==============================================================================================================================
</TABLE>
* The subaccount had not began operations as of the date of this prospectus.
Historical returns for periods prior to that date are total returns for the
Government Bond Portfolio, adjusted to reflect the 1.35% separate account
charge.
<PAGE>
BALANCED PORTFOLIO
["BALANCED PORTFOLIO MONTHLY PAYMENT CHART APPEARS HERE"]
Chart Specifications:
- --------------------
.5% AIR
.$500 initial monthly annuity payment
.Fund inception date--October 1986
<TABLE>
<CAPTION>
=================================================================================================================================
Monthly Payment Adjusted Adjusted Historical Average Annual
Year Amounts at End of Historical Annual Total Return*
Years Total Return* (Periods Ended 12/31/1998)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1982 N/A N/A 1 Year 10.14%
- ---------------------------------------------------------------------------------------------------------------------------------
1983 N/A N/A 5 Years 17.19%
- ---------------------------------------------------------------------------------------------------------------------------------
1984 N/A N/A 10 Years 14.08%
- ---------------------------------------------------------------------------------------------------------------------------------
1985 N/A N/A Since Inception 12.89%
- ---------------------------------------------------------------------------------------------------------------------------------
1986 $ 494 N/A
- ---------------------------------------------------------------
1987 $ 458 (2.76)%
- ---------------------------------------------------------------
1988 $ 529 21.34%
- ---------------------------------------------------------------
1989 $ 583 15.78%
- ---------------------------------------------------------------
1990 $ 464 (16.43)%
- ---------------------------------------------------------------
1991 $ 574 29.71%
- ---------------------------------------------------------------
1992 $ 630 15.41%
- ---------------------------------------------------------------
1993 $ 700 16.63%
- ---------------------------------------------------------------
1994 $ 704 5.64%
- ---------------------------------------------------------------
1995 $ 894 33.31%
- ---------------------------------------------------------------
1996 $ 960 12.75%
- ---------------------------------------------------------------
1997 $1156 26.41%
- ---------------------------------------------------------------
1998 $1213 %
=================================================================================================================================
</TABLE>
* The subaccount had not began operations as of the date of this prospectus.
Historical returns for periods prior to that date are total returns for the
Balanced Portfolio, adjusted to reflect the 1.35% separate account charge.
<PAGE>
LARGE CAP GROWTH PORTFOLIO
["LARGE CAP GROWTH PORTFOLIO MONTHLY PAYMENT CHART APPEARS HERE"]
Chart Specifications:
- --------------------
. 5% AIR
. $500 initial monthly annuity payment
. Fund inception date--October 1986
<TABLE>
<CAPTION>
==================================================================================================================
Monthly Payment Adjusted Adjusted Historical Average Annual Total
Year Amounts at End of Historical Annual Return*
Years Total Return* (Periods Ended 12/31/1998)
==================================================================================================================
<S> <C> <C> <C> <C>
1982 N/A N/A 1 Year 37.64%
- ------------------------------------------------------------------------------------------------------------------
1983 N/A N/A 5 Years 20.12%
- ------------------------------------------------------------------------------------------------------------------
1984 N/A N/A 10 Years 17.81%
- ------------------------------------------------------------------------------------------------------------------
1985 N/A N/A Since Inception 15.80%
- ------------------------------------------------------------------------------------------------------------------
1986 $ 494 N/A
- ----------------------------------------------------------------
1987 $ 481 2.18%
- ----------------------------------------------------------------
1988 $ 523 14.25%
- ----------------------------------------------------------------
1989 $ 646 29.66%
- ----------------------------------------------------------------
1990 $ 536 (12.93)%
- ----------------------------------------------------------------
1991 $ 733 43.59%
- ----------------------------------------------------------------
1992 $ 753 7.86%
- ----------------------------------------------------------------
1993 $ 845 17.78%
- ----------------------------------------------------------------
1994 $ 793 (1.36)%
- ----------------------------------------------------------------
1995 $1009 33.57%
- ----------------------------------------------------------------
1996 $1088 13.17%
- ----------------------------------------------------------------
1997 $1262 21.84%
- ----------------------------------------------------------------
1998 $1654 37.64%
==================================================================================================================
</TABLE>
* The subaccount had not began operations as of the date of this prospectus.
Historical returns for periods prior to that date are total returns for the
Large Cap Growth Portfolio, adjusted to reflect the 1.35% separate account
charge.
<PAGE>
EQUITY INDEX PORTFOLIO
["EQUITY INDEX MONTHLY PAYMENT CHART APPEARS HERE"]
Chart Specifications:
- --------------------
. 5% AIR
. $500 initial monthly annuity payment
. Fund inception date--January 1987
<TABLE>
<CAPTION>
==================================================================================================================
Monthly Payment Adjusted Historical Average Annual Total
Year Amounts at End of Adjusted Historical Return*
Years Annual Total Return* (Periods Ended 12/31/1998)
==================================================================================================================
<S> <C> <C> <C> <C>
1982 N/A N/A 1 Year 11.25%
- ------------------------------------------------------------------------------------------------------------------
1983 N/A N/A 5 Years 8.24%
- ------------------------------------------------------------------------------------------------------------------
1984 N/A N/A 10 Years 8.61%
- ------------------------------------------------------------------------------------------------------------------
1985 N/A N/A Since Inception 7.14%
- ------------------------------------------------------------------------------------------------------------------
1986 N/A N/A
- ---------------------------------------------------------------
1987 $446 N/A
- ---------------------------------------------------------------
1988 $453 6.68%
- ---------------------------------------------------------------
1989 $538 24.61%
- ---------------------------------------------------------------
1990 $497 (3.06)%
- ---------------------------------------------------------------
1991 $505 6.72%
- ---------------------------------------------------------------
1992 $424 (11.92)%
- ---------------------------------------------------------------
1993 $546 35.42%
- ---------------------------------------------------------------
1994 $522 0.37%
- ---------------------------------------------------------------
1995 $538 8.22%
- ---------------------------------------------------------------
1996 $572 11.70%
- ---------------------------------------------------------------
1997 $600 10.07%
- ---------------------------------------------------------------
1998 $636 11.25%
==================================================================================================================
</TABLE>
* The subaccount had not began operations as of the date of this prospectus.
Historical returns for periods prior to that date are total returns for the
Equity Index Portfolio, adjusted to reflect the 1.35% separate account
charge.
<PAGE>
DIVERSIFIED EQUITY PORTFOLIO
["DIVERSIFIED EQUITY PORTFOLIO MONTHLY PAYMENT CHART APPEARS HERE"]
Chart Specifications:
- --------------------
. 5% AIR
. $500 initial monthly annuity payment
. Fund inception date--June 1989
<TABLE>
<CAPTION>
===================================================================================================================
Monthly Payment Adjusted Historical Average Annual Total
Year Amounts at End of Adjusted Historical Return*
Years Annual Total Return* (Periods Ended 12/31/1998)
==================================================================================================================
<S> <C> <C> <C> <C>
1982 N/A N/A 1 Year 7.39%
- -------------------------------------------------------------------------------------------------------------------
1983 N/A N/A 5 Years 5.28%
- -------------------------------------------------------------------------------------------------------------------
1984 N/A N/A 10 Years N/A
- -------------------------------------------------------------------------------------------------------------------
1985 N/A N/A Since Inception 6.90%
-------------------------------------------------------------------------------------------------------------------
1986 N/A N/A
-------------------------------------------------------------
1987 N/A N/A
-------------------------------------------------------------
1988 N/A N/A
-------------------------------------------------------------
1989 $514 N/A
-------------------------------------------------------------
1990 $512 4.71%
-------------------------------------------------------------
1991 $561 14.94%
-------------------------------------------------------------
1992 $562 5.23%
-------------------------------------------------------------
1993 $586 9.48%
-------------------------------------------------------------
1994 $530 (5.04)%
-------------------------------------------------------------
1995 $584 15.76%
-------------------------------------------------------------
1996 $566 1.80%
-------------------------------------------------------------
1997 $580 7.61%
- --------------------------------------------------------------
1998 $594 7.39%
==================================================================================================================
</TABLE>
* The subaccount had not began operations as of the date of this prospectus.
Historical returns for periods prior to that date are total returns for the
Diversified Equity Portfolio, adjusted to reflect the 1.35% separate
account charge.
<PAGE>
MID CAP GROWTH PORTFOLIO
["MID CAP GROWTH PORTFOLIO MONTHLY PAYMENT CHART APPEARS HERE"]
Chart Specifications:
- --------------------
. 5% AIR
. $500 initial monthly annuity payment
. Fund inception date--May 1990
<TABLE>
<CAPTION>
===================================================================================================================
Monthly Payment Adjusted Historical Average Annual Total
Year Amounts at End of Adjusted Historical Return*
Years Annual Total Return* (Periods Ended 12/31/1998)
===================================================================================================================
<S> <C> <C> <C> <C>
1982 N/A N/A 1 Year 13.52%
- -------------------------------------------------------------------------------------------------------------------
1983 N/A N/A 5 Years 10.32%
- -------------------------------------------------------------------------------------------------------------------
1984 N/A N/A 10 Years N/A%
- -------------------------------------------------------------------------------------------------------------------
1985 N/A N/A Since Inception 12.27%
- -------------------------------------------------------------------------------------------------------------------
1986 N/A N/A
- -------------------------------------------------------------
1987 N/A N/A
- -------------------------------------------------------------
1988 N/A N/A
- -------------------------------------------------------------
1989 N/A N/A
- -------------------------------------------------------------
1990 $504 N/A
- -------------------------------------------------------------
1991 $581 20.93%
- -------------------------------------------------------------
1992 $610 10.38%
- -------------------------------------------------------------
1993 $694 19.44%
- -------------------------------------------------------------
1994 $613 (7.35)%
- -------------------------------------------------------------
1995 $673 15.40%
- -------------------------------------------------------------
1996 $725 13.07%
- -------------------------------------------------------------
1997 $822 19.05%
- -------------------------------------------------------------
1998 $888 13.52%
===================================================================================================================
</TABLE>
* The subaccount had not began operations as of the date of this prospectus.
Historical returns for periods prior to that date are total returns for the
Mid Cap Growth Portfolio, adjusted to reflect the 1.35% separate account
charge.
<PAGE>
DIVERSIFIED MID CAP PORTFOLIO
["DIVERSIFIED MID CAP PORTFOLIO MONTHLY PAYMENT CHART APPEARS HERE"]
Chart Specifications:
- --------------------
.5% AIR
.$500 initial monthly annuity payment
.Fund inception date--January 1995
<TABLE>
<CAPTION>
====================================================================================================================
Monthly Payment Adjusted Historical Adjusted Historical Average Annual Total
Year Amounts at End of Annual Total Return* Return*
Years (Periods Ended 12/31/1998)
====================================================================================================================
<S> <C> <C> <C> <C>
1982 N/A N/A 1 Year 16.00%
- --------------------------------------------------------------------------------------------------------------------
1983 N/A N/A 5 Years N/A
- --------------------------------------------------------------------------------------------------------------------
1984 N/A N/A 10 Years N/A
- --------------------------------------------------------------------------------------------------------------------
1985 N/A N/A Since Inception 19.86%
- --------------------------------------------------------------------------------------------------------------------
1986 N/A N/A
- ----------------------------------------------------------------
1987 N/A N/A
- ----------------------------------------------------------------
1988 N/A N/A
- ----------------------------------------------------------------
1989 N/A N/A
- ----------------------------------------------------------------
1990 N/A N/A
- ----------------------------------------------------------------
1991 N/A N/A
- ----------------------------------------------------------------
1992 N/A N/A
- ----------------------------------------------------------------
1993 N/A N/A
- ----------------------------------------------------------------
1994 N/A N/A
- ----------------------------------------------------------------
1995 $579 N/A
- ----------------------------------------------------------------
1996 $653 18.33%
- ----------------------------------------------------------------
1997 $767 23.41%
- ----------------------------------------------------------------
1998 $848 16.00%
====================================================================================================================
</TABLE>
* The subaccount had not began operations as of the date of this prospectus.
Historical returns for periods prior to that date are total returns for the
Diversified Mid Cap Portfolio, adjusted to reflect the 1.35% separate
account charge.
<PAGE>
MID CAP VALUE PORTFOLIO
["MID CAP VALUE PORTFOLIO MONTHLY PAYMENT CHART APPEARS HERE"]
Chart Specifications:
- --------------------
.5% AIR
.$500 initial monthly annuity payment
.Fund inception date--August 1992
<TABLE>
<CAPTION>
=====================================================================================================================
Monthly Payment Adjusted Historical Adjusted Historical Average Annual Total
Year Amounts at End of Annual Total Return* Return*
Years (Periods Ended 12/31/1998)
=====================================================================================================================
<S> <C> <C> <C> <C>
1982 N/A N/A 1 Year 26.62%
- ---------------------------------------------------------------------------------------------------------------------
1983 N/A N/A 5 Years 22.08%
- ---------------------------------------------------------------------------------------------------------------------
1984 N/A N/A 10 Years N/A
- ---------------------------------------------------------------------------------------------------------------------
1985 N/A N/A Since Inception 19.44%
- ---------------------------------------------------------------------------------------------------------------------
1986 N/A N/A
- -----------------------------------------------------------------
1987 N/A N/A
- -----------------------------------------------------------------
1988 N/A N/A
- -----------------------------------------------------------------
1989 N/A N/A
- -----------------------------------------------------------------
1990 N/A N/A
- -----------------------------------------------------------------
1991 N/A N/A
- -----------------------------------------------------------------
1992 $ 517 N/A
- -----------------------------------------------------------------
1993 $ 533 8.27%
- -----------------------------------------------------------------
1994 $ 506 (0.32)%
- -----------------------------------------------------------------
1995 $ 652 35.36%
- -----------------------------------------------------------------
1996 $ 753 21.18%
- -----------------------------------------------------------------
1997 $ 939 30.94%
- -----------------------------------------------------------------
1998 $1132 26.62%
=====================================================================================================================
</TABLE>
* The subaccount had not began operations as of the date of this prospectus.
Historical returns for periods prior to that date are total returns for the
Mid Cap Value Portfolio, adjusted to reflect the 1.35% separate account
charge.
<PAGE>
Additional Fund Information
Banc One Investment Advisors is the investment advisor for the underlying
portfolios and is a registered investment advisor under the Investment Advisors
Act of 1940. Banc One Investment Advisors is an indirect wholly-owned
subsidiary of Bank One Corporation. It makes the day-to-day investment
decisions for the portfolios and continuously reviews, supervises and
administers each portfolio's investment program. Banc One Investment Advisors
performs its responsibilities subject to the supervision of, and policies
established by, the Trustees of One Group Investment Trust. Banc One Investment
Advisors has served as investment advisor to the Trust since its inception. In
addition, Banc One Investment Advisors serves as investment advisor to other
mutual funds and individual corporate charitable, and retirement accounts. As
of December 31, 1998, Banc One Investment Advisors managed over $54 billion in
assets. Banc One Investment Advisors is entitled to a fee, which is calculated
daily and paid monthly, of the annual percentages of the average daily net
assets of each portfolio.
There is no assurance that any of the portfolios will achieve its investment
objective.
The One Group(R) Investment Trust prospectus should be read carefully before any
decision is made concerning the allocation of the premium to a particular
subaccount.
An investment in the separate account, or in any portfolio, including the VIP
Money Market Portfolio, is not insured or guaranteed by the U.S. government or
any government agency.
The investment objectives and policies of certain portfolios are similar to the
investment objectives and policies of other portfolios that may be managed by
Banc One Investment Advisors. The investment results of the portfolios,
however, may differ from the results of such other portfolios. There can be no
assurance, and no representation is made, that the investment results of any of
the portfolios will be comparable to the investment results of any other
portfolio, even if the other portfolio has the same investment advisor or
manager.
Addition, Deletion, or Substitution of Investments. We cannot and do not
- --------------------------------------------------
guarantee that any of the subaccounts will always be available to receive
premium allocations or transfers. We retain the right, subject to any
applicable law, to make certain changes in the separate account and its
investments. We reserve the right to eliminate the shares of any portfolio held
by a subaccount and to substitute shares of another portfolio of the funds or of
another registered open-end management investment company for the shares of any
portfolio, if the shares of the portfolio are no longer available for investment
or, if in our judgment, investment in any portfolio would be inappropriate in
view of the purposes of the separate account. To the extent required by the
1940 Act, substitutions of shares attributable to an owner's interest in a
subaccount will not be made without prior notice to the owner and the prior
approval of the SEC. Nothing contained herein shall prevent the separate
account from purchasing other securities for other series or classes of variable
annuity contracts or from effecting an exchange between series or classes of
variable annuity contracts on the basis of requests made by owners.
New subaccounts may be established when, in our sole discretion, marketing, tax,
investment or other conditions warrant. Any new subaccounts may be made
available to existing owners on a basis to be determined by us. Each additional
subaccount will purchase shares in a mutual fund portfolio or other investment
vehicle. We may also eliminate one or more subaccounts if, in our sole
discretion, marketing, tax, investment or other conditions warrant such change.
In the event any subaccount is eliminated, we will notify owners and request a
reallocation of the amounts invested in the eliminated subaccount. If no such
reallocation is provided by the owner, we will reinvest the amounts invested in
the eliminated subaccount in the subaccount that invests in the Money Market
Portfolio (or in a similar portfolio of money market instruments) or in another
subaccount, if appropriate.
<PAGE>
In the event of any such substitution or change, we may, by appropriate
endorsement, make such changes in the contracts as may be necessary or
appropriate to reflect such substitution or change. Furthermore, if deemed to
be in the best interests of persons having voting rights under the contracts,
the separate account may be:
. operated as a management company under the 1940 Act or any other form
permitted by law,
. deregistered under the 1940 Act in the event such registration is no longer
required, or
. combined with one or more other separate accounts.
To the extent permitted by applicable law, we also may
. transfer the assets of the separate account associated with the contracts
to another account or accounts,
. restrict or eliminate any voting rights of owners or other persons who have
voting rights as to the separate account,
. create new separate accounts,
. add new subaccounts to or remove existing subaccounts from the separate
account or combine subaccounts, or
. add new underlying funds, or substitute a new fund for an existing fund.
Resolving Material Conflicts. The One Group(R) Investment Trust portfolios are
- ----------------------------
available to separate accounts offering variable annuity and variable life
products of other participating insurance companies, as well as to the separate
account and other separate accounts we establish. Although we do not anticipate
any disadvantages to this, there is a possibility that a material conflict may
arise between the interest of the separate account and one or more of the other
separate accounts investing in the One Group(R) Investment Trust. A conflict
may occur due to a change in law affecting the operations of variable life
insurance and variable annuity separate accounts, differences in the voting
instructions we receive and instructions received by other companies, or some
other reason. In the event of a conflict, it is possible that the separate
account might be required to withdraw its investment in the underlying
portfolios. In the event of any conflict, we will take any steps necessary to
protect owners, annuitants, secondary annuitants and beneficiaries.
<PAGE>
APPENDIX B
ILLUSTRATIONS OF ANNUITY PAYMENT VALUES
The following graphs have been prepared to show how investment performance
affects your variable annuity payments over time. The graphs incorporate
hypothetical rates of return and PFL does not guarantee that you will earn these
returns for any one year or any sustained period of time. PFL did not sell
contracts prior to the date of this prospectus, and, therefore, the graphs
represent what annuity payments might have been under a contract had one existed
during the years shown. The graphs are for illustrative purposes only and do not
represent past or future investment returns.
Your variable annuity payment may be more or less than the income shown if the
actual returns of the subaccounts are different than those illustrated. Since it
is very likely that your investment returns will fluctuate over time, you can
expect that the amount of your annuity payment will also fluctuate. The total
amount of annuity payments ultimately received will, in addition to the
investment performance of the subaccounts, also depend on how long you live and
whether you choose a guarantee period option.
Another factor that determines the amount of your variable annuity payment is
the assumed investment return (AIR). Annuity payments will increase from one
variable annuity payment calculation date to the next if the performance of the
portfolio underlying the subaccounts, net of all charges, is greater than the
AIR and will decrease if the performance of the portfolio underlying the
subaccounts, net of all charges, is less than the AIR.
The "Hypothetical Illustration" graph below illustrates differences in monthly
variable annuity payments assuming different investment returns. The graph
assumes a single premium of $47,198; the entire premium was allocated to
variable annuity payments; the AIR is 5%; the payment option is Single Life
Annuity; a 79 year old male, and separate account charges of 1.35% and average
portfolio expenses of 0.63%. This results in the receipt of an initial annuity
payment in the amount of $500. The graph illustrates gross returns of 0.00%,
6.00%, and 10.00% (net returns after expenses are (1.98)%, 4.02%, and 8.02%,
respectively).
Hypothetical Illustration
Monthly Payments Assuming Different Gross Portfolio Returns
[GRAPH APPEARS HERE]
<PAGE>
<TABLE>
<CAPTION>
======================================================================================
Monthly Payments Assuming Different Gross Portfolio Returns
- --------------------------------------------------------------------------------------
Monthly Payment at the Gross Portfolio Returns*
End of Contract Year
--------------------------------------
0.0% 6.0% 10.0%
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assumed First Monthly Payment $500 $500 $500
- --------------------------------------------------------------------------------------
1 $467 $495 $514
- --------------------------------------------------------------------------------------
2 $436 $491 $529
- --------------------------------------------------------------------------------------
3 $407 $486 $544
- --------------------------------------------------------------------------------------
4 $380 $482 $560
- --------------------------------------------------------------------------------------
5 $354 $477 $576
- --------------------------------------------------------------------------------------
6 $331 $473 $593
- --------------------------------------------------------------------------------------
7 $309 $468 $610
- --------------------------------------------------------------------------------------
8 $288 $464 $627
- --------------------------------------------------------------------------------------
9 $269 $460 $645
- --------------------------------------------------------------------------------------
10 $251 $455 $664
- --------------------------------------------------------------------------------------
11 $235 $451 $683
- --------------------------------------------------------------------------------------
12 $219 $447 $703
- --------------------------------------------------------------------------------------
13 $204 $443 $723
- --------------------------------------------------------------------------------------
14 $191 $438 $744
- --------------------------------------------------------------------------------------
15 $178 $434 $765
- --------------------------------------------------------------------------------------
16 $166 $430 $787
- --------------------------------------------------------------------------------------
17 $155 $426 $810
- --------------------------------------------------------------------------------------
18 $145 $422 $833
- --------------------------------------------------------------------------------------
19 $135 $418 $857
- --------------------------------------------------------------------------------------
20 $126 $414 $882
======================================================================================
</TABLE>
* The corresponding net returns are (1.98)%, 4.02%, and 8.02%.
The "Monthly Payment Amounts with Different AIRs" graph below illustrates the
differences in variable annuity payments between selecting the 3.5% and 5% AIR.
The graph assumes a single premium of $47,198; the entire premium was allocated
to variable annuity payments; the payment option is a single Life Annuity; 79
year old male; separate account charges of 1.35%; average portfolio expenses of
0.63%; and an annual return of the portfolios, after all expenses of 6%. Monthly
variable annuity payments are shown with the 3.5% AIR and the 5% AIR.
<PAGE>
Monthly Payments Amounts
with Different AIR's
[GRAPH APPEARS HERE]
<PAGE>
<TABLE>
<CAPTION>
======================================================================================
Monthly Payments Assuming Different AIRs
(Net Portfolio Return = 6%, Gross Portfolio Return=7.98%)
--------------------------------------------------------------------------------------
Monthly Payment at the End of Year AIR
---------------------------------
3.5% 5%
--------------------------------------------------------------------------------------
<S> <C> <C>
Assumed First Monthly Payment $455 $500
--------------------------------------------------------------------------------------
1 $466 $505
--------------------------------------------------------------------------------------
2 $477 $510
--------------------------------------------------------------------------------------
3 $489 $514
--------------------------------------------------------------------------------------
4 $501 $519
--------------------------------------------------------------------------------------
5 $513 $524
--------------------------------------------------------------------------------------
6 $525 $529
--------------------------------------------------------------------------------------
7 $538 $534
--------------------------------------------------------------------------------------
8 $551 $539
--------------------------------------------------------------------------------------
9 $564 $545
--------------------------------------------------------------------------------------
10 $578 $550
--------------------------------------------------------------------------------------
11 $592 $555
--------------------------------------------------------------------------------------
12 $606 $560
--------------------------------------------------------------------------------------
13 $621 $566
--------------------------------------------------------------------------------------
14 $636 $571
--------------------------------------------------------------------------------------
15 $651 $576
--------------------------------------------------------------------------------------
16 $667 $582
--------------------------------------------------------------------------------------
17 $683 $587
--------------------------------------------------------------------------------------
18 $699 $593
--------------------------------------------------------------------------------------
19 $716 $599
--------------------------------------------------------------------------------------
20 $733 $604
======================================================================================
</TABLE>
The annuity payment amounts shown reflect the deduction of all fees and
expenses. Actual fees and expenses under the contract may be higher or lower,
will vary from year to year, and will depend on how you allocate among the
portfolios. The separate account charge is assumed to be at an annual rate of
1.35% of the average daily net assets.
Upon request, we will furnish a customized illustration based on your
individual circumstances and choice of annuity options.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE ONE INCOME ANNUITY
Issued through
PFL RETIREMENT BUILDER VARIABLE
ANNUITY ACCOUNT
Offered by
PFL LIFE INSURANCE COMPANY
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499-0001
This Statement of Additional Information expands upon subjects discussed in the
current prospectus for The One Income Annuity Contract offered by PFL Life
Insurance Company. You may obtain a copy of the prospectus dated
________________, by calling 1-800-544-3152, or by writing to the Administrative
and Service Office, Financial Markets Division-Variable Annuity Dept., 4333
Edgewood Road, N.E., Cedar Rapids, Iowa 52499-0001. The prospectus sets forth
information that a prospective investor should know before investing in a
contract. Terms used in the current prospectus for the contract are incorporated
in this Statement of Additional Information.
This Statement of Additional Information is not a prospectus and should be read
only in conjunction with the prospectus for the contract and the PFL Retirement
Builder Variable Annuity Account.
Dated: __________________, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
GLOSSARY OF TERMS
THE CONTRACT--GENERAL PROVISIONS
Transfers
Delay of Transfers
Entire Contract
Assignment
Beneficiary
Change of Beneficiary
Incontestability
Misstatement of Age or Sex
Modification of Contract
Nonparticipating
Owner
Proof of Death
Proof of Survival
Death Before First Payment Date
Protection of Proceeds
FEDERAL TAX MATTERS
Tax Status of the Contract
Diversification Requirements
Owner Control
Required Distributions
Taxation of PFL
INVESTMENT EXPERIENCE
STATE REGULATION OF PFL
ADMINISTRATION
RECORDS AND REPORTS
DISTRIBUTION OF THE CONTRACTS
OTHER PRODUCTS
CUSTODY OF ASSETS
HISTORICAL PERFORMANCE DATA
Money Market Yields
Other Subaccount Yields
Total Returns
Other Performance Data
Hypothetical Performance Data
LEGAL MATTERS
INDEPENDENT AUDITORS
OTHER INFORMATION
FINANCIAL STATEMENTS
</TABLE>
2
<PAGE>
GLOSSARY OF TERMS
Annuitant and Secondary Annuitant--The person upon whose life the annuity
payments are based. For joint options, annuity payments are based upon the lives
of both the annuitant and secondary annuitant. Either the annuitant or the
secondary annuitant generally must be no older than 80 years of age on the
contract issue date.
Annuity Payments--Payments made by us to the payee pursuant to the payment
option chosen. Annuity payments may be either fixed or variable or a combination
of both.
Application--A written application, order form, or any other information
received electronically or otherwise upon which the policy is issued and/or is
reflected on the data or specifications page.
Assumed Investment Return or AIR--The annual effective rate shown in the
contract specifications section of the contract that is used in the calculation
of each variable annuity payment.
Beneficiary(ies)--The person(s) who may receive death proceeds or guaranteed
payments under this contract when there is no longer a living annuitant (or last
annuitant for joint options).
Contract Issue Date--The date the contract becomes effective. This will be
stated in the contract. Generally, the date the initial premium is allocated to
the separate account.
Net Investment Factor--A unit of measure used to reflect the change in variable
annuity unit values in a subaccount from one valuation period to the next
valuation period.
Owner(s)--"You," "your," and "yours." The person or entity named in the contract
specifications section who may, while any annuitant is living, exercise all
rights granted by the contract. The annuitant must be the owner, if the contract
is a qualified contract. If there is a secondary annuitant, he or she may also
be an owner (except for a qualified contract, where only one owner is
permitted). The secondary annuitant is never required to be an owner.
Payee--The person or entity to whom annuity payments are paid.
Payment Date--The date an annuity payment is paid to the payee. We may require
evidence that any annuitant(s) and/or payee is/are alive on the payment date.
Separate Account--PFL Retirement Builder Variable Annuity Account.
Subaccount--The investment options or divisions of the separate account. Each
subaccount invests in a different portfolio of the funds. We may make additional
subaccounts available in the future.
Successor Owner--The person named by the owner to whom ownership of the contract
passes upon the owner's death. If the owner is also the annuitant, the
annuitant's beneficiary is entitled to the death proceeds of the contract. If no
person is named, the owner's estate shall be deemed the successor owner.
Valuation Day--Each day the New York Stock Exchange is open for trading and any
other day when the Securities and Exchange Commission requires mutual funds or
unit investment trusts to be valued. The determination of the variable annuity
unit value is made at the end of each valuation day.
Variable Annuity Unit--Variable annuity payments are expressed in terms of
variable annuity units, the value of which fluctuates in relation to the
selected subaccounts.
Variable Annuity Payment Calculation Date--The date, no more than seven business
days before each payment date, when the amount of the variable annuity payment
is determined. If the New York Stock Exchange is closed on a variable annuity
payment calculation date, we will determine the amount of annuity income on the
next day it is open.
3
<PAGE>
In order to supplement the description in the prospectus, the following provides
additional information about PFL and the contract which may be of interest to a
prospective purchaser. Words printed in italics in this Statement of Additional
Information are defined in the Glossary of Terms, found on page 3.
THE CONTRACT--GENERAL PROVISIONS
Transfers
You may transfer amounts within the various subaccounts. You may also transfer
amounts from variable to fixed annuity payments at any time. If you do, then the
payment option for the fixed annuity payments will be a continuation of the
payment option currently applicable to variable annuity payments. Transfers from
fixed to variable annuity payments are not permitted. We may charge a fee for
excessive transfers (we currently do not charge for transfers) or decline to
accept excessive transfers.
Excessive trading activity can disrupt portfolio management strategy and
increase portfolio expenses, which are borne by everyone participating in the
portfolio regardless of their transfer activity.
In some cases, contracts may be sold to individuals who independently utilize
the services of a firm or individual engaged in market timing. Generally, market
timing services obtain authorization from contract owner(s) to make transfers
and exchanges among the subaccounts on the basis of perceived market trends.
Because the large transfers of assets associated with market timing services may
disrupt the management of the portfolios of the underlying funds, such
transactions may hurt contract owners not utilizing the market timing service.
Therefore, we may restrict or eliminate the right to make transfers among
subaccounts if such rights are executed by a market timing firm or similar third
party authorized to initiate transfers or exchange transactions on behalf of a
contract owner(s).
In modifying such rights, we may, among other things, decline to accept:
. transfer or exchange instructions of any agent acting under a power of
attorney on behalf of more than one contract owner, or
. transfer or exchange instructions of individual contract owners who have
executed pre-authorized transfer or exchange forms which are submitted by
market timing firms or other third parties on behalf of more than one
contract owner at the same time.
We will impose such restrictions only if we believe (or Banc One Investment
Advisors believes) that doing so will prevent harm to other contract owners.
Delay of Transfers
When you transfer amounts among the subaccounts, we will redeem shares of the
appropriate portfolios at their prices as of the end of the current valuation
period. Generally any subaccount you transfer to is credited at the same time.
However, we may wait to credit the amount to a new subaccount until a subaccount
you transfer from becomes liquid. This will happen only if (1) the subaccount
you transfer to invests in a portfolio that accrues dividends on a daily basis
and requires federal funds before accepting a purchase order, and (2) the
subaccount you transfer from is investing in an equity portfolio in an illiquid
position due to substantial redemptions or transfers that require it to sell
portfolio securities in order to make funds available. The subaccount you
transfer from will be liquid when it receives proceeds from sales of portfolio
securities, the purchase of new contracts, or otherwise. During any period that
we wait to credit a subaccount for this reason, the amount you transfer will be
uninvested. After seven days the transfer will be made even if the subaccount
you transfer from is not liquid.
Entire Contract
The entire contract is made up of the contract, and any riders, endorsements, or
application (including any application supplement or investment allocation
form). No change in or waiver of any provision of the contract is valid unless
the change or waiver is signed by the President or Secretary of PFL.
Assignment
The option to assign is only available for non-tax qualified annuities. Only you
may make an assignment of this contract. You must notify us in writing to assign
this contract. No change will apply to any action taken by us before the written
notice was received. We are not responsible for the validity or the effect of an
assignment.
4
<PAGE>
Beneficiary
The beneficiary is named in the contract specifications section of the contract
or in a subsequent endorsement. More than one beneficiary may be named. The
rights of any beneficiary will be subject to all the provisions of the contract.
You may impose other limitations with our consent.
If any primary or contingent beneficiary dies before the annuitant, that
beneficiary's interest in this contract ends with that beneficiary's death. Only
those beneficiaries living at the time of the annuitant's death will be eligible
to receive their share of the death benefits. In the event no contingent
beneficiaries have been named and all primary beneficiaries have died before the
death benefits become payable, the owner(s) will become the beneficiary(ies)
unless elected otherwise. If both primary and contingent beneficiaries have been
named, payment will be made to the named primary beneficiaries living at the
time the death proceeds become payable. If there is more than one beneficiary
and you failed to specify their interest, they will share equally. Payment will
be made to the named contingent beneficiary(ies) only if all primary
beneficiaries have died before the death benefits become payable. If any primary
beneficiary is alive at the time the death benefits become payable, but dies
before receiving their payment, their share will be paid to their estate.
Change of Beneficiary
You may change the beneficiary while the annuitant is living, unless an
irrevocable one has been named. Change is made by written notice. The change
takes effect on the date the written notice was signed, and the written notice
must have been postmarked on or before the date of the annuitant's death. No
change will apply to any annuity payment made before the written notice was
received. We may require return of the contract for endorsement before making a
change.
Incontestability
The contract is incontestable from the contract issue date.
Misstatement of Sex or Age
If the age or sex of any annuitant has been misstated, the annuity payments will
be those which the premium paid would have purchased for the correct age and
sex. Any underpayment made by us will be paid with the next annuity payment. Any
overpayment made by us will be deducted from future annuity payments. Any
underpayment or overpayment will include interest at 5% per year, from the date
of the incorrect payment to the date of the adjustment.
Modification of Contract
No change in the contract is valid unless made in writing.
Nonparticipating
Your contract is nonparticipating. This means we do not pay dividends on it.
Your contract will not share in our profits or surplus earnings.
Owner
You, the owner, are named in the contract specifications section. You may, while
any annuitant is living, exercise all rights granted by the contract. These
rights are subject to the rights of any assignee or living irrevocable
beneficiary. "Irrevocable" means that you have given up your right to change the
beneficiary named.
Unless we have been notified of a community or marital property interest in the
contract, we will rely on our good faith belief that no such interest exists and
will assume no responsibility for inquiry.
Proof of Death
Any beneficiary claiming an interest in the contract must provide us in writing
with due proof of death of the payee/annuitant and/or secondary annuitant (if
any). We will not be responsible for annuity payments made before we receive due
proof of death at the Administrative and Service Office.
5
<PAGE>
Proof of Survival
If annuity payments under the contract depend on a person being alive on a given
date, proof of survival may be required by us prior to making annuity payments.
Death Before First Payment Date
If any owner, who is an annuitant, dies before the first payment date, the
amount of the death proceeds is the premium plus or minus the investment
performance of the subaccounts. If any owner, who is not an annuitant, dies
before the first payment date, the successor owner may direct the owner's
interest in the contract to be distributed as follows:
. one cash lump sum to be distributed within five years of the deceased owner's
death; or
. annuitize the value of the annuity payments over the lifetime of the
successor owner with payments to begin within one year of the owner's death;
or
. annuitize the value of the annuity payments over a period that does not
exceed the life expectancy of the successor owner, as defined by the Internal
Revenue Code of 1986, as amended (Code), with payments to begin within one
year of the owner's death.
If the deceased owner was also an annuitant, the annuitant's beneficiary is
entitled to the benefit described above. If no person is named as the successor
owner, the owner's estate shall be deemed the successor owner.
Non-natural successor owners may only choose a lump sum distribution. For
qualified contracts, any option chosen must meet the requirements of the Code.
Protection of Proceeds
Unless you so direct by filing written notice with us, no beneficiary may assign
payments under the contract before the same are due. To the extent permitted by
law, no payments under the contract will be subject to the claims of creditors
of any beneficiary.
Investment Allocation Models
General. Rather than selecting individual portfolios (i.e., being "Self-
- -------
Directed") you can select one of four investment allocation models that are
listed on the Investment Allocation Form (which is part of the application). The
amount invested in each subaccount will vary depending on the model's particular
asset allocation percentages. The asset allocation percentages for each model
are shown on the Investment Allocation Form. The four investment allocation
models, listed in descending percentage of equity holdings, are:
. Growth Model
. Growth & Income Model
. Balanced Model
. Conservative Growth Model
The models are general asset mixes. They were developed by Banc One Investment
Advisors Corporation and may or may not be appropriate for you. Banc One
Investment Advisors Corporation serves as an investment advisor to the One Group
Investment Trust Portfolios for which it receives a fee. There is no guarantee
that the models will achieve any desired results or objectives.
The models should not be considered personal investment advice or serve as the
sole or primary basis for making investment decisions. You should consider
factors such as your age, goals and risk tolerance in selecting a model. You are
responsible for determining if a model is right for you.
Before selecting a model, please note:
. only one model can be used at a time;
. you cannot allocate premium to any other subaccount if you select a model;
6
<PAGE>
. each model's allocation percentages may change (which terminates that model);
. transfers you make between the various subaccounts will terminate your model;
and
. transfers from variable to fixed payments will be pro rata from the
applicable subaccounts.
Rebalancing. Each model will be automatically rebalanced each year on the
- -----------
contract anniversary date. Rebalancing a model may involve transferring from
subaccounts with higher returns into subaccounts with relatively lower returns
in order to maintain the model's asset allocation percentages. Transfers made as
a result of automatic rebalancing are not counted against your 6 free transfers
(in the event transfer fees are imposed in the future). Automatic rebalancing
ends upon the termination of a model.
Termination. You can stop using (i.e., terminate) a model at any time by
- -----------
notifying us at our administrative and service office or by transferring amounts
between the various subaccounts.
A model will also terminate if you are notified that it will be replaced with a
"new" model with different asset allocation percentages. Before you can use the
"new" model, you must sign and return to us within 45 days after the date of the
notice, a consent form accepting the new asset allocation percentages. Absent
your timely affirmative consent, you will:
. keep your current asset allocation percentages;
. be considered "Self-Directed"; and
. not receive automatic rebalancing.
FEDERAL TAX MATTERS
Tax Status of the Contracts
The discussion in the prospectus assumes that the contracts qualify as "annuity
contracts" for federal income tax purposes under the Code.
Diversification Requirements. Section 817(h) of the Code provides that separate
- ----------------------------
account investments underlying a contract must be "adequately diversified" in
accordance with Treasury Department regulations in order for the contract to
qualify as an annuity contract under Section 72 of the Code. The separate
account, through each underlying fund, intends to comply with the
diversification requirements prescribed in regulations under Section 817(h) of
the Code, which affect how the assets in the various subaccounts may be
invested. Although PFL does not have direct control over the underlying funds in
which the separate account invests, PFL believes that each fund will meet the
diversification requirements, and therefore, the contract will be treated as an
annuity contract under the Code.
Owner Control. In certain circumstances, owners of variable annuity contracts
- -------------
may be considered the owners, for federal income tax purposes, of the assets of
the separate account used to support their contracts. In those circumstances,
income and gains from the separate account assets would be includable in the
variable annuity contract owner's gross income. The IRS has stated in published
rulings that a variable contract owner will be considered the owner of separate
account assets if the contract owner possessed incidents of ownership in those
assets, such as the ability to exercise investment control over the assets. The
Treasury Department has also announced, in connection with the issuance of
regulations concerning investment diversification, that those regulations "do
not provide guidance concerning the circumstances in which investor control of
the investments of a segregated asset account may cause the investor (i.e., the
contract owner), rather than the insurance company, to be treated as the owner
of the assets in the account." This announcement also stated that guidance would
be issued by way of regulations or rulings on the "extent to which policy-
holders may direct their investments to particular Sub-Accounts without being
treated as owners of the underlying assets."
The ownership rights under the contracts are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that contract owners were not owners of separate account assets. For
example, the contract owner has the choice of several subaccounts in which to
allocate the premium, and may be able to transfer among subaccounts more
frequently than in such rulings. In addition, the contract provides for more
subaccounts than did the variable contracts that were the subject of such
rulings. These differences could result in a contract owner being treated as the
owner of the assets of the separate account. In addition, PFL does not know what
standards will be set forth, if any, in the regulations or rulings which the
Treasury Department has stated it expects to issue. PFL therefore reserves the
right to modify the contract as necessary to attempt to prevent the contract
owner from being considered the owner of the separate account's assets.
7
<PAGE>
Required Distributions. In order to be treated as an annuity contract for
- ----------------------
federal income tax purposes, section 72(s) of the Code requires any non-
qualified contract to provide that: (a) if any contract owner dies on or after
the Annuity Starting Date (as defined in the prospectus) but prior to the time
the entire interest in the contract has been distributed, the remaining portion
of such interest will be distributed at least as rapidly as under the method of
distribution being used as of the date of that contract owner's death; and (b)
if any contract owner dies prior to the Annuity Staring Date, the entire
interest in the contract will be distributed within five years after the date of
the contract owner's death. These requirements will be considered satisfied as
to any portion of the contract owner's interest that is payable to or for the
benefit of a "designated beneficiary," and that is distributed over the life of
such designated beneficiary or over a period not extending beyond the life
expectancy of that beneficiary, provided that such distributions begin within
one year of that contract owner's death. The "designated beneficiary" for these
purposes is the person who becomes the new owner of the contract upon a contract
owner's death and must be a natural person. However, if the contract owner's
sole designated beneficiary is the surviving spouse of the contract owner, the
contract may be continued with the surviving spouse as the new contract owner.
The Code further provides that if the contract owner is not an individual, the
primary annuitant shall be treated as the contract owner for purposes of making
distributions that are required to be made upon the death of the contract owner.
(The primary annuitant is the individual the events in the life of whom are of
primary importance in effecting the timing and amount of the payout under the
contract. If there is a change in the primary annuitant, such change shall be
treated as the death of the contract owner. The contract does not permit a
change of the annuitants, however.
Non-qualified contracts contain provisions that are intended to comply with the
requirements of Section 72(s) of the Code, although no regulations interpreting
these requirements have yet been issued. PFL will review such provisions and
modify them if necessary to assure that they comply with the requirements of
Code Section 72(s) when clarified by regulation or otherwise. Qualified
contracts are subject to similar provisions.
Taxation of PFL
PFL at present is taxed as a life insurance company under part I of Subchapter L
of the Code. The separate account is treated as part of PFL and, accordingly,
will not be taxed separately as a "regulated investment company" under
Subchapter M of the Code. We do not expect to incur any federal income tax
liability with respect to investment income and net capital gains arising from
the activities of the separate account retained as part of the reserves under
the contract. Based on this expectation, it is anticipated that no charges will
be made against the separate account for federal income taxes. If, in future
years, any federal income taxes are incurred by PFL with respect to the separate
account, we may make a charge to the separate account.
INVESTMENT EXPERIENCE
A "net investment factor" is used to determine the value of variable annuity
units and to determine the amount of annuity payments as follows:
Annuity Unit Value and Annuity Payment Rates
The amount of variable annuity payments will vary with variable annuity unit
values. Variable annuity unit values rise if the net investment performance of
the subaccount exceeds the assumed investment return. Conversely, variable
annuity unit values fall if the net investment performance of the subaccount is
less than the assumed rate. The value of a variable annuity unit in each
subaccount was established at $1.00 on the date operations began for that
subaccount. The value of a variable annuity unit on any subsequent business day
is equal to (a) multiplied by (b) multiplied by (c), where:
(a) is the variable annuity unit value for that subaccount on the immediately
preceding business day;
(b) is the net investment factor for that subaccount for the valuation period;
and
(c) is the daily factor for the valuation period.
The daily factor for the valuation period is a discount factor that reflects the
assumed investment return. The valuation period is the period from the close of
the immediately preceding business day to the close of the current business day.
The net investment factor for the contract used to calculate the value of a
variable annuity unit in each subaccount for the valuation period is determined
by dividing (a) by (b) and subtracting (c) from the result, where:
(a) is the net result of:
8
<PAGE>
(1) the net asset value of a fund share held in that subaccount
determined at the end of the current valuation period; plus
(2) the per share amount of any dividend or capital gain distributions
made by the fund for shares held in that subaccount if the ex-
dividend date occurs during the valuation period; plus or minus
(3) a per share charge or credit for any taxes reserved for, which we
determine to have resulted from the investment operations of the
subaccount;
(b) is the net asset value of a fund share held in that subaccount determined
as of the end of the immediately preceding valuation period; and
(c) is an amount representing the separate account charge as shown in the
specifications section of the contract.
The dollar amount of subsequent variable annuity payments will depend upon
changes in applicable variable annuity unit values.
Illustrations of Calculations for Annuity Unit Value and Variable Annuity
-------------------------------------------------------------------------
Payments
--------
Formula and Illustration for Determining Annuity Unit Value in each Subaccount
Variable annuity unit value = V = A x B x C
Where: A = variable annuity unit value for the immediately preceding
valuation period.
B = net investment factor for the valuation period for which the
variable annuity unit value is being calculated.
C = a daily factor to neutralize the assumed investment return built
into the annuity tables used.
C = (1/(1+AIR)) /\ (1/365) = 0.999905754 (3.5% AIR) or 0.999866337
(5% AIR)
For example, if the AIR is 5% and: A = $20 on the day prior to the first
payment
B = 1.01
C = 1/(1.055)/ /\ /(1/365)/ = 0.999866337
Then, the variable annuity unit value is equal to V = A x B x C
= $20 x 1.01 x .999866337
= 20.1973
Formula and Illustration for Determining Amount of
First Monthly Variable Annuity Payment
First monthly variable annuity payment = P = (D x E)/$1,000
Where: D = the contract value as of the contract issue date.
E = the annuity purchase rate per $1,000 based upon the
option selected, the sex and adjusted age of the
annuitant according to the tables contained in the
contract.
For example if: D = $100,000
E = 7.00
Then, the first monthly variable annuity payment is equal to
P = (D x E)/$1,000
= ($100,000 x 7.00)/$1,000
= $700
9
<PAGE>
Formula and Illustration for Determining the Number of Annuity Units Represented
by Each Monthly Variable Annuity Payment (assuming investment in only one
Subaccount)
Number of variable annuity units = U = P/V
Where: P = the dollar amount of the first monthly variable annuity
payment.
V = the variable annuity unit value for the valuation date on
which the first monthly payment is due.
For example if: P = $700
V = 20.1973
Then, the variable annuity units is equal to U = P/V
= $700/20.1973
= 34.6581 units
Formula and Illustration for Determining a Future Monthly Variable Annuity
Payment investment in only one Subaccount)
Monthly variable annuity payment = P = U x V
Where: U = the variable annuity units
V = the variable annuity unit value for the valuation date on
which the future monthly payment is due.
For example if: U = 34.6581
V = 20.6970 (the variable annuity unit value increased since
issue)
Then, the amount of the monthly variable annuity payment = U x V
= 34.6581 x 20.6970
= $717.32
If the variable annuity unit value had actually decreased to V = 19.6970, the
resulting monthly variable annuity payment would = U x V
= 34.6581 x 19.6970
= $682.66
Illustration 4 assumes that no transfers or surrenders are made between
determining the number of variable annuity units and determining the future
monthly variable annuity payment; therefore, the number of variable annuity
units in Illustrations 3 and 4 are the same.
STATE REGULATION OF PFL
We are subject to the laws of Iowa governing insurance companies and to
regulation by the Iowa Division of Insurance. An annual statement in a
prescribed form is filed with the Division of Insurance each year covering our
operation for the preceding year and its financial condition as of the end of
such year. Regulation by the Division of Insurance includes periodic examination
to determine our contract liabilities and reserves so that the Division may
determine the items are correct. Our books and accounts are subject to review by
the Division of Insurance at all times and a full examination of its operations
is conducted periodically by the National Association of Insurance
Commissioners. In addition, we are subject to regulation under the insurance
laws of other jurisdictions in which we may operate.
ADMINISTRATION
We perform administrative services for the contracts. These services include
issuance of the contracts, maintenance of records concerning the contracts, and
certain valuation services.
10
<PAGE>
RECORDS AND REPORTS
All records and accounts relating to the separate account will be maintained by
us. As presently required by the Investment Company Act of 1940 and regulations
promulgated thereunder, we will mail to all owners at their last known address
of record, at least annually, reports containing such information as may be
required under that Act or by any other applicable law or regulation. Owners
will also receive confirmation of each financial transaction and any other
reports required by law or regulation.
DISTRIBUTION OF THE CONTRACTS
The contracts are offered to the public through brokers licensed under the
federal securities laws and state insurance laws. The offering of the contracts
is continuous and we do not anticipate discontinuing the offering of the
contracts. However, we reserve the right to discontinue the offering of the
contracts.
AFSG Securities Corporation, an affiliate of PFL, is the principal underwriter
of the contracts and may enter into agreements with broker-dealers for the
distribution of the contracts.
OTHER PRODUCTS
We make other variable annuity contracts available that may also be funded
through the separate account. These variable annuity contracts may have
different features, such as different investment options or charges.
CUSTODY OF ASSETS
The assets of each of the subaccounts of the separate account are held by us.
The assets of each of the subaccounts of the separate account are segregated and
held separate and apart from the assets of the other subaccounts and from our
general account assets. We maintain records of all purchases and redemptions of
shares of the underlying funds held by each of the subaccounts. Additional
protection for the assets of the separate account is afforded by our fidelity
bond, presently in the amount of $5,000,000, covering the acts of our officers
and employees.
HISTORICAL PERFORMANCE DATA
Subaccount Yields
We may from time to time advertise or disclose the current annualized yield of
one or more of the subaccounts of the separate account (except the Money Market
Subaccount) for 30-day periods. The annualized yield of a subaccount refers to
income generated by the subaccount over a specific 30-day period. Because the
yield is annualized, the yield generated by a subaccount during the 30-day
period is assumed to be generated each 30-day period over a 12-month period. The
yield is computed by: (i) dividing the net investment income of the subaccount
less subaccount expenses for the period, by (ii) the maximum offering price per
unit on the last day of the period times the daily average number of units
outstanding for the period, compounding that yield for a 6-month period, and
(iv) multiplying that result by 2. Expenses attributable to the subaccount
include the separate account charge. The 30-day yield is calculated according to
the following formula:
Yield = 2 x ((((NI-ES)/(U x UV)) + 1)/6/-1)
Where:
NI = net investment income of the subaccount for the 30-day period
attributable to the subaccount's unit.
ES = expenses of the subaccount for the 30-day period.
U = the average number of units outstanding.
UV = the unit value at the close (highest) of the last day in the 30-day
period.
Because of the charges imposed by the separate account, the yield for a
subaccount of the separate account will be lower than the yield for its
corresponding portfolio. The yield calculations do not reflect the effect of any
premium taxes or surrender charges that may be applicable to a particular
contract.
11
<PAGE>
The yield on amounts held in the subaccounts of the separate account normally
will fluctuate over time. Therefore, the disclosed yield for any given past
period is not an indication or representation of future yields or rates of
return. A subaccount's actual yield is affected by the types and quality of its
investments and its operating expenses.
Total Returns
We may from time to time also advertise or disclose total returns for one or
more of the subaccounts of the separate account for various periods of time. One
of the periods of time will include the period measured from the date the
subaccount commenced operations. When a subaccount has been in operation for 1,
5 and 10 years, respectively, the total return for these periods will be
provided. Total returns for other periods of time may from time to time also be
disclosed. Total returns represent the average annual compounded rates of return
that would equate an initial investment of $1,000 to the redemption value of
that investment as of the last day of each of the periods. The ending date for
each period for which total return quotations are provided will be for the most
recent month end practicable, considering the type and media of the
communication and will be stated in the communication.
Total returns will be calculated using subaccount unit values which we calculate
on each business day based on the performance of the subaccount's underlying
portfolio, and the deduction for the separate account charge. Total return
calculations will reflect the effect of surrender charges that may be applicable
to a particular period. The total return will then be calculated according to
the following formula:
P (1 + T)/n/ = ERV
Where:
T = the average annual total return net of subaccount recurring charges.
ERV = the ending redeemable value of the hypothetical account at the end of
the period.
P = a hypothetical initial payment of $1,000.
N = the number of years in the period.
Other Performance Data
We may from time to time also disclose average annual total returns in a non-
standard format in conjunction with the standard format described above.
We may from time to time also disclose cumulative total returns in conjunction
with the standard format described above. The cumulative returns will be
calculated using the following formula. The charges reflected in the cumulative
total returns include the actual total annual portfolio expenses of the
applicable fund and the separate account charge of 1.35%.
CTR = (ERV / P)-1
Where:
CTR = the cumulative total return net of subaccount recurring charges for the
period.
ERV = the ending redeemable value of the hypothetical investment at the end of
the period.
P = a hypothetical initial payment of $1,000.
All non-standard performance data will only be advertised if the standard
performance data for the same period, as well as for the required period, is
also disclosed.
Adjusted Historical Performance Data
From time to time, sales literature or advertisements may quote average annual
total returns for periods prior to the date the separate account commenced
operations. Such performance information for the subaccounts will be calculated
based on the
12
<PAGE>
performance of the various portfolios and the assumption that the subaccounts
were in existence for the same periods as those indicated for the portfolios,
with the level of contract charges that were in effect at the inception of the
subaccounts.
LEGAL MATTERS
Legal advice relating to certain matters under the federal securities laws
applicable to the issue and sale of the contracts has been provided to us by
Sutherland, Asbill & Brennan LLP, of Washington D.C.
INDEPENDENT AUDITORS
The statutory-basis financial statements and schedules of PFL as of December 31,
1998 and 1997, and for each of the three years in the period ended December 31,
1998, included in this Statement of Additional Information have been audited by
Ernst & Young LLP, Independent Auditors, Suite 3400, 801 Grand Avenue, Des
Moines, Iowa 50309.
OTHER INFORMATION
A registration statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, with respect to the
contracts discussed in this Statement of Additional Information. Not all of the
information set forth in the registration statement, amendments and exhibits
thereto has been included in the prospectus or this Statement of Additional
Information. Statements contained in the prospectus and this Statement of
Additional Information concerning the content of the contracts and other legal
instruments are intended to be summaries. For a complete statement of the terms
of these documents, reference should be made to the instruments filed with the
Securities and Exchange Commission.
FINANCIAL STATEMENTS
The values of the interest of owners in the separate account will be affected
solely by the investment results of the selected subaccount(s). The statutory-
basis financial statements of PFL, which are included in this Statement of
Additional Information, should be considered only as bearing on PFL's ability to
meet its obligations under the contracts. They should not be considered as
bearing on the investment performance of the assets held in the separate
account.
13
<PAGE>
PART C OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
All required financial statements are included in Part B of
this Registration Statement.
(b) Exhibits:
(1) (a) Resolution of the Board of Directors of PFL Life
Insurance Company authorizing establishment of
the Separate Account. Note 1
(2) Not Applicable.
(3) (a) Principal Underwriting Agreement by and between
PFL Life Insurance Company, on its own behalf
and on behalf of the Separate Account, and AFSG
Securities Corporation. Note 3
(b) Form of Broker/Dealer Supervision and Sales
Agreement by and between AFSG Securities
Corporation and the Broker/Dealer. Note 3
(4) (a) Form of Contract for The One Income Annuity.
Note 5
(5) (a) Form of Application for The One Income Annuity.
Note 6
(6) (a) Articles of Incorporation of PFL Life Insurance
Company. Note 1
(b) ByLaws of PFL Life Insurance Company. Note 1
(7) Not Applicable.
(8) (a) Participation Agreement by and among One Group
Investment Trust, Nationwide Advisory Services,
Nationwide Investors Services and PFL Life
Insurance Company. Note 7
(9) Opinion and Consent of Counsel. Note 6
(10) (a) Consent of Independent Auditors. Note 7
(10) (b) Opinion and Consent of Actuary. Note 6
(11) Not applicable.
(12) Not applicable.
(13) Performance Data Calculations. Note 7
(14) Powers of Attorney. (Patrick S. Baird, Craig D.
Vermie, William L. Busler, Douglas C. Kolsrud,
Robert J. Kontz) Note 1 (Brenda K. Clancy) Note
2 (Larry N. Norman) Note 4
<PAGE>
Note 1. Incorporated herein by reference to the Initial filing of Registrants
Form N-4 Registration Statement (File No. 333-7509) on July 3, 1996.
Note 2. Incorporated herein by reference to the Registrants filing of Pre-
Effective Amendment No. 1 to Form N-4 Registration Statement (File No.
333-7509) on December 6, 1996.
Note 3. Incorporated herein by reference to the Registrant's filing of Post-
Effective Amendment No. 4 to Form N-4 Registration Statement (File No.
333-7509) on April 30, 1998.
Note 4. Incorporated herein by reference to the Registrant's filing of Post-
Effective Amendment No. 5 to Form N-4 Registration Statement (File No.
333-7509) on July 16, 1998.
Note 5. Incorporated herein by reference to the Registrant's filing of Pre-
Effective Amendment No. 1 to Form N-4 Registration Statement (File No.
333-61063) on December 11, 1998.
Note 6. Filed herewith.
Note 7. To be filed by amendment.
<PAGE>
Item 25. Directors and Officers of the Depositor (PFL Life Insurance Company)
<TABLE>
<CAPTION>
Name and Business Address Principal Positions and Offices with Depositor
------------------------- ----------------------------------------------
<S> <C>
William L. Busler Director, Chairman of the Board and President
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499-0001
Patrick S. Baird Director, Senior Vice President and Chief Operating Officer
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499-0001
Craig D. Vermie Director, Vice President, Secretary and General Counsel
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499-0001
Douglas C. Kolsrud Director, Senior Vice President, Chief Investment Officer
4333 Edgewood Road, N.E. and Corporate Actuary
Cedar Rapids, Iowa 52499-0001
Larry N. Norman Director and Executive Vice President
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499-0001
Robert J. Kontz Vice President and Corporate Controller
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499-0001
Brenda K. Clancy Vice President, Treasurer and Chief Financial Officer
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499-0001
</TABLE>
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant
<TABLE>
<CAPTION>
Jurisdiction of Percent of Voting
Name Incorporation Securities Owned Business
- ---- ------------- ---------------- --------
<S> <C> <C> <C>
AEGON N.V. Netherlands 53.63% of Vereniging Holding company
Corporation AEGON Netherlands
Membership Association
Groninger Financieringen B.V. Netherlands 100% of AEGON N.V. Holding company
Corporation Netherlands Corporation
AEGON Netherland N.V. Netherlands 100% of AEGON N.V. Holding company
Corporation Netherlands Corporation
AEGON Nevak Holding B.V. Netherlands 100% of AEGON N.V. Holding company
Corporation Netherlands Corporation
AEGON International N.V. Netherlands 100% of AEGON N.V. Holding company
Corporation Netherlands Corporation
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Voting Trust Delaware Voting Trust
Trustees:
K.J. Storm
Donald J. Shepard
H.B. Van Wijk
Dennis Hersch
AEGON U.S. Holding Delaware 100% of Voting Trust Holding company
Corporation
Short Hills Management New Jersey 100% of AEGON U.S. Holding company
Company Holding Corporation
CORPA Reinsurance New York 100% of AEGON U.S. Holding company
Company Holding Corporation
AEGON Management Indiana 100% of AEGON U.S. Holding company
Company Holding Corporation
RCC North America Inc. Delaware 100% of AEGON U.S. Holding company
Holding Corporation
AEGON USA, Inc. Iowa 100% AEGON U.S. Holding company
Holding Corporation
AUSA Holding Company Maryland 100% AEGON USA, Inc. Holding company
Monumental General Insurance Maryland 100% AUSA Holding Co. Holding company
Group, Inc.
Trip Mate Insurance Agency, Inc. Kansas 100% Monumental General Sale/admin. of travel
Insurance Group, Inc. insurance
Monumental General Maryland 100% Monumental General Provides management
Administrators, Inc. Insurance Group, Inc. srvcs. to unaffiliated
third party
administrator
Executive Management and Maryland 100% Monumental General Provides actuarial
Consultant Services, Inc. Administrators, Inc. consulting services
Monumental General Mass Maryland 100% Monumental General Marketing arm for
Marketing, Inc. Insurance Group, Inc. sale of mass marketed
insurance coverages
Diversified Investment Delaware 100% AUSA Holding Co. Registered investment
Advisors, Inc. advisor
Diversified Investors Securities Delaware 100% Diversified Investment Broker-Dealer
Corp. Advisors, Inc.
AEGON USA Securities, Inc. Iowa 100% AUSA Holding Co. Broker-Dealer
Supplemental Ins. Division, Inc. Tennessee 100% AUSA Holding Co. Insurance
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Creditor Resources, Inc. Michigan 100% AUSA Holding Co. Credit insurance
CRC Creditor Resources Canada 100% Creditor Resources, Inc. Insurance agency
Canadian Dealer Network Inc.
AEGON USA Investment Iowa 100% AUSA Holding Co. Investment advisor
Management, Inc.
AEGON USA Realty Iowa 100% AUSA Holding Co. Provides real estate
Advisors, Inc. administrative and real
estate investment services
Quantra Corporation Delaware 100% AEGON USA Realty Real estate and financial
Advisors, Inc. software production and
sales
Quantra Software Corporation Delaware 100% Quantra Corporation Manufacture and sell
mortgage loan and security
management software
Landauer Realty Advisors, Inc. Iowa 100% AEGON USA Realty Real estate counseling
Advisors, Inc.
Landauer Associates, Inc. Delaware 100% AEGON USA Realty Real estate counseling
Advisors, Inc.
Realty Information Systems, Inc. Iowa 100% AEGON USA Realty Information Systems for
Advisors, Inc. real estate investment
management
AEGON USA Realty Iowa 100% AEGON USA Real estate management
Management, Inc Realty Advisors, Inc.
USP Real Estate Investment Trust Iowa 21.89% First AUSA Life Real estate investment
Ins. Co , 13.11% PFL Life trust
Ins. Co. 4.86% Bankers
United Life Assurance Co.
RCC Properties Limited Iowa AEGON USA Realty Limited Partnership
Partnership Advisors Inc. is General
Partner and 5% owner.
AUSA Financial Markets, Inc. Iowa 100% AUSA Holding Co. Marketing
Endeavor Investment Advisors California 49.9% AUSA Financial General Partnership
Markets, Inc.
Universal Benefits Corporation Iowa 100% AUSA Holding Co. Third party administrator
Investors Warranty of Iowa 100% AUSA Holding Co. Provider of automobile
America, Inc. extended maintenance
contracts
Massachusetts Fidelity Trust Co. Iowa 100% AUSA Holding Co. Trust company
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Money Services, Inc. Delaware 100% AUSA Holding Co. Provides financial
counseling for employees
and agents of affiliated
companies
Zahorik Company, Inc. California 100% AUSA Holding Co. Broker-Dealer
ZCI, Inc. Alabama 100% Zahorik Company, Inc. Insurance agency
AEGON Asset Management Delaware 100% AUSA Holding Co. Registered investment
Services, Inc. advisor
Intersecurities, Inc. Delaware 100% AUSA Holding Co. Broker-Dealer
Associated Mariner Financial Michigan 100% Intersecurities, Inc. Holding co./management
Group, Inc. services
Mariner Financial Services, Inc. Michigan 100% Associated Mariner Broker/Dealer
Financial Group, Inc.
Mariner Planning Corporation Michigan 100% Mariner Financial Financial planning
Services, Inc.
Associated Mariner Agency, Inc. Michigan 100% Associated Mariner Insurance agency
Financial Group, Inc.
Associated Mariner Agency Hawaii 100% Associated Mariner Insurance agency
of Hawaii, Inc. Agency, Inc.
Associated Mariner Ins. Agency Massachusetts 100% Associated Mariner Insurance agency
of Massachusetts, Inc. Agency, Inc.
Associated Mariner Agency Ohio 100% Associated Mariner Insurance agency
Ohio, Inc. Agency, Inc.
Associated Mariner Agency Texas 100% Associated Mariner Insurance agency
Texas, Inc. Agency, Inc.
Associated Mariner Agency New Mexico 100% Associated Mariner Insurance agency
New Mexico, Inc. Agency, Inc.
Mariner Mortgage Corp. Michigan 100% Associated Mariner Mortgage origination
Financial Group, Inc.
Idex Investor Services, Inc. Florida 100% AUSA Holding Co. Shareholder services
Idex Management, Inc. Delaware 50% AUSA Holding Co. Investment advisor
50% Janus Capital Corp.
IDEX Series Fund Massachusetts Various Mutual fund
First AUSA Life Insurance Maryland 100% AEGON USA, Inc. Insurance holding Company
company
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
AUSA Life Insurance New York 100% First AUSA Life Insurance
Company, Inc. Insurance Company
Life Investors Insurance Iowa 100% First AUSA Life Insurance
Company of America Ins. Co.
Life Investors Alliance, LLC Delaware 100% LIICA Purchases, own, and hold
the equity interest of other
entities
Bankers United Life Iowa 100% Life Investors Ins. Insurance
Assurance Company Company of America
Life Investors Agency Iowa 100% Life Investors Ins. Marketing
Group, Inc. Company of America
PFL Life Insurance Company Iowa 100% First AUSA Life Insurance
Ins. Co.
AEGON Financial Services Minnesota 100% PFL Life Insurance Co. Marketing
Group, Inc.
AEGON Assignment Corporation Kentucky 100% AEGON Financial Administrator of structured
of Kentucky Services Group, Inc. settlements
AEGON Assignment Corporation Illinois 100% AEGON Financial Administrator of structured
Services Group settlements
Southwest Equity Life Ins. Co. Arizona 100% of Common Voting Insurance
Stock
First AUSA Life Ins. Co.
Iowa Fidelity Life Insurance Co. Arizona 100% of Common Voting Insurance
Stock
First AUSA Life Ins. Co.
Western Reserve Life Assurance Ohio 100% First AUSA Life Insurance
Co. of Ohio Ins. Co.
WRL Series Fund, Inc. Maryland Various Mutual fund
WRL Investment Services, Inc. Florida 100% Western Reserve Life Provides administration for
Assurance Co. of Ohio affiliated mutual fund
WRL Investment Florida 100% Western Reserve Life Registered investment
Management, Inc. Assurance Co. of Ohio advisor
AEGON Equity Group, Inc. Florida 100% Western Reserve Life Insurance agency
Assurance Co. of Ohio
ISI Insurance Agency, Inc. California 100% Western Reserve Life Insurance agency
Assurance Co. of Ohio
ISI Insurance Agency Ohio 100% ISI Insurance Insurance agency
of Ohio, Inc. Agency Inc.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
ISI Insurance Agency Texas 100% ISI Insurance Insurance agency
of Texas, Inc. Agency Inc.
ISI Insurance Agency Massachusetts 100% ISI Insurance Insurance Agency
of Massachusetts, Inc. Agency Inc.
Monumental Life Insurance Co. Maryland 100% First AUSA Life Insurance
Ins. Co.
AEGON Special Markets Maryland 100% Monumental Life Marketing
Group, Inc. Ins. Co.
Monumental General Casualty Co. Maryland 100% First AUSA Life Insurance
Ins. Co.
United Financial Services, Inc. Maryland 100% First AUSA Life General agency
Ins. Co.
Bankers Financial Life Ins. Co. Arizona 100% First AUSA Life Insurance
Ins. Co.
The Whitestone Corporation Maryland 100% First AUSA Life Insurance agency
Ins. Co.
Cadet Holding Corp. Iowa 100% First AUSA Life Holding company
Ins. Co.
Commonwealth General Delaware 100% AEGON USA, Inc. Holding company
Corporation ("CGC")
PB Series Trust Massachusetts N/A Mutual fund
Monumental Agency Group, Inc. Kentucky 100% CGC Provider of srvcs. to ins.
cos.
Benefit Plans, Inc. Delaware 100% CGC TPA for Peoples Security
Life Insurance Company
Durco Agency, Inc. Virginia 100% Benefit Plans, Inc. General agent
Commonwealth General. Kentucky 100% CGC Administrator of structured
Assignment Corporation settlements
AFSG Securities Corporation Pennsylvania 100% CGC Broker-Dealer
PB Investment Advisors, Inc. Delaware 100% CGC Registered investment
advisor
Diversified Financial Products Inc. Delaware 100% CGC Provider of investment,
marketing and admin.
services to ins. cos.
AEGON USA Real Estate Delaware 100% Diversified Financial Real estate and mortgage
Services, Inc. Products Inc.. holding company
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Capital Real Estate Delaware 100% CGC Furniture and equipment
Development Corporation lessor
Capital General Development Delaware 100% CGC Holding company
Corporation
Ammest Realty Corporation Texas 100% Peoples Security Life Special purpose subsidiary
Insurance Company
JMH Operating Company, Inc. Mississippi 100% Peoples Security Life Real estate holdings
Insurance Company
Independence Automobile Florida 100% Capital Security Automobile Club
Association, Inc. Life Insurance Company
Independence Automobile Georgia 100% Capital Security Automobile Club
Club, Inc. Life Insurance Company
Capital 200 Block Corporation Delaware 100% CGC Real estate holdings
Capital Broadway Corporation Kentucky 100% CGC Real estate holdings
Southlife, Inc. Tennessee 100% CGC Investment subsidiary
Ampac Insurance Agency, Inc. Pennsylvania 100% CGC Provider of management
(EIN 23-1720755) support services
National Home Life Corporation Pennsylvania 100% Ampac Insurance Special-purpose subsidiary
Agency, Inc.
Compass Rose Development Pennsylvania 100% Ampac Insurance Special-purpose subsidiary
Corporation Agency, Inc.
Frazer Association Consultants, Illinois 100% Ampac Insurance TPA license-holder
Inc. Agency, Inc.
Valley Forge Associates, Inc. Pennsylvania 100% Ampac Insurance Furniture & equipment
Agency, Inc. lessor
Veterans Benefits Plans, Inc. Pennsylvania 100% Ampac Insurance Administrator of group
Agency, Inc. insurance programs
Veterans Insurance Services, Inc. Delaware 100% Ampac Insurance Special-purpose subsidiary
Agency, Inc.
Academy Insurance Group, Inc. Delaware 100% CGC Holding company
Academy Life Insurance Co. Missouri 100% Academy Insurance Insurance company
Group, Inc.
Pension Life Insurance New Jersey 100% Academy Insurance Insurance company
Company of America Group, Inc.
Academy Services, Inc. Delaware 100% Academy Insurance Special-purpose subsidiary
Group, Inc.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Ammest Development Corp. Inc. Kansas 100% Academy Insurance Special-purpose subsidiary
Group, Inc.
Ammest Insurance Agency, Inc. California 100% Academy Insurance General agent
Group, Inc.
Ammest Massachusetts Massachusetts 100% Academy Insurance Special-purpose subsidiary
Insurance Agency, Inc. Group, Inc.
Ammest Realty, Inc. Pennsylvania 100% Academy Insurance Special-purpose subsidiary
Group, Inc.
Ampac, Inc. Texas 100% Academy Insurance Managing general agent
Group, Inc.
Ampac Insurance Agency, Inc. Pennsylvania 100% Academy Insurance Special-purpose subsidiary
(EIN 23-2364438) Group, Inc.
Data/Mark Services, Inc. Delaware 100% Academy Insurance Provider of mgmt. services
Group, Inc.
Force Financial Group, Inc. Delaware 100% Academy Insurance Special-purpose subsidiary
Group, Inc.
Force Financial Services, Inc. Massachusetts 100% Force Fin. Group, Inc. Special-purpose subsidiary
Military Associates, Inc. Pennsylvania 100% Academy Insurance Special-purpose subsidiary
Group, Inc.
NCOA Motor Club, Inc. Georgia 100% Academy Insurance Automobile club
Group, Inc.
NCOAA Management Company Texas 100% Academy Insurance Special-purpose subsidiary
Group, Inc.
Unicom Administrative Pennsylvania 100% Academy Insurance Provider of admin.
Services, Inc. Group, Inc. services
Unicom Administrative Germany 100%Unicom Administrative Provider of admin.
Services, GmbH Services, Inc. services
Capital Liberty, L.P. Delaware 79.2% Commonwealth Life Holding Company
Insurance Company
19.8% Peoples Security Life
Insurance Company
1% CGC
Commonwealth General LLC Turks & 100% CGC Special-purpose subsidiary
Caicos Islands
Peoples Benefit Life Missouri 3.7% CGC Insurance company
Insurance Company 20% Capital Liberty, L.P.
76.3% Monumental Life
Insurance Co.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Veterans Life Insurance Co. Illinois 100% Peoples Benefit Insurance company
Life Insurance Company
Peoples Benefit Services, Inc. Pennsylvania 100% Veterans Life Ins. Co. Special-purpose subsidiary
</TABLE>
Item 27. Number of Contract Owners
As of December 31, 1998, there were no Contract owners.
Item 28. Indemnification
The Iowa Code (Sections 490.850 et. seq.) provides for permissive
-------
indemnification in certain situations, mandatory indemnification in other
situations, and prohibits indemnification in certain situations. The Code also
specifies producers for determining when indemnification payments can be made.
Insofar as indemnification for liabilities arising under the Securities Act of
933 may be permitted to directors, officers and controlling persons of the
Depositor pursuant to the foregoing provisions, or otherwise, the Depositor 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 Depositor of expenses incurred
or paid by a director, officer or controlling person in connection with the
securities being registered), the Depositor 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.
Item 29. Principal Underwriters
AFSG Securities Corporation
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499-0001
The directors and officers of AFSG Securities Corporation are as follows:
<TABLE>
<CAPTION>
<S> <C>
Larry N. Norman Sarah J. Stange
Director and President Director and Vice President
Frank A. Camp Bob Warner
Director and Secretary Assistant Compliance Officer
Lisa Wachendorf Linda Gilmer
Vice President and Treasurer/Controller
Chief Compliance Officer
Priscilla Hechler
Debra C. Cubero Assistant Vice President and Assistant Secretary
Vice President
Emily Bates Thomas Pierpan
Assistant Treasurer Assistant Vice President and Assistant Secretary
Clifton Flenniken Darin D. Smith
Assistant Treasurer Assistant Vice President and Assistant Secretary
</TABLE>
The principal business address of each person listed is AFSG Securities
Corporation, 4333 Edgewood Road, N.E., Cedar Rapids, IA 52499-0001.
<PAGE>
Commissions and Other Compensation Received by Principal Underwriter.
- --------------------------------------------------------------------
AFSG Securities Corporation, the broker/dealer, received $0 from the Registrant
for the year ending December 31, 1998, for its services in distributing the
Policies. No other commission or compensation was received by the principal
underwriter, directly or indirectly, from the Registrant during the fiscal year.
AFSG Securities Corporation serves as the principal underwriter for the PFL
Endeavor VA Separate Account, the PFL Retirement Builder Variable Annuity
Account, the PFL Life Variable Annuity Account A, the PFL Wright Variable
Annuity Account and the AUSA Endeavor Variable Annuity Account. These accounts
are separate accounts of PFL Life Insurance Company or AUSA Life Insurance
Company, Inc. AFSG Securities Corporation also serves as principal underwriter
for Separate Account I, Separate Account II, Separate Account IV and Separate
Account V of Peoples Benefit Life Insurance Company, and for Separate Account B
and Separate Account C of AUSA Life Insurance Company, Inc.
Item 30.Location of Accounts and Records
The records required to be maintained by Section 31(a) of the Investment Company
Act of 1940 and Rules 31a-1 to 31a-3 promulgated thereunder, are maintained by
PFL Life Insurance Company at 4333 Edgewood Road, N.E., Cedar Rapids, Iowa
52499-0001.
Item 31. Management Services.
All management Contracts are discussed in Part A or Part B.
Item 32. Undertakings
(a) Registrant undertakes that it will file a post-effective amendment to
this registration statement as frequently as necessary to ensure that
the audited financial statements in the registration statement are
never more than 16 months old for so long as Premiums under the
Contract may be accepted.
(b) Registrant undertakes that it will include either (i) a postcard or
similar written communication affixed to or included in the Prospectus
that the applicant can remove to send for a Statement of Additional
Information or (ii) a space in the Policy application that an applicant
can check to request 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 to PFL at the
address or phone number listed in the Prospectus.
(d) PFL Life Insurance Company hereby represents that the fees and charges
deducted under the contracts, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by PFL Life Insurance Company.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has caused this Registration Statement to be signed on its
behalf, in the City of Cedar Rapids and State of Iowa, on this 12th day of May,
1999.
PFL RETIREMENT BUILDER
VARIABLE ANNUITY ACCOUNT
PFL LIFE INSURANCE COMPANY
Depositor
*
--------------------------
William L. Busler
President
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities and on the duties indicated.
Signatures Title Date
- ---------- ----- ----
* Director May ____, 1999
- ---------------------
Patrick S. Baird
/s/ Craig D. Vermie Director May 12, 1999
- ---------------------
Craig D. Vermie
* Director May ____, 1999
- ---------------------
William L. Busler (Principal Executive Officer)
* Director May ____, 1999
- ---------------------
Larry N. Norman
* Director May ____, 1999
- ---------------------
Douglas C. Kolsrud
* Vice President and May ____, 1999
- ---------------------
Robert J. Kontz Corporate Controller
* Treasurer May ____, 1999
- ---------------------
Brenda K. Clancy
* By Craig D. Vermie, attorney in-fact.
<PAGE>
Registration No.
333-______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
EXHIBITS
TO
FORM N-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FOR
THE ONE INCOME ANNUITY
_______________
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Description of Exhibit Page No.*
- ----------- ---------------------- ---------
(5) (a) Form of Application.
(9) Opinion and Consent of Counsel
(10) (b) Opinion and Consent of Actuary
______________________
* Page numbers included only in manually executed original.
<PAGE>
EXHIBIT(5)(a)
-------------
FORM OF APPLICATION
<PAGE>
--------------------------------------------
Application for INDIVIDUAL VARIABLE ANNUITY
--------------------------------------------
NSURANCE COMPANY NAME and PRODUCT TYPE (please check one):
[_] American General Annuity Insurance Company ("AGAIC") - Fixed and Variable
Flexible Premium Deferred Annuity
[_] Nationwide Life and Annuity Insurance Company - Variable Flexible Premium
Deferred Annuity
[_] PFL Life Insurance Company - Fixed and Variable Single Premium Immediate
Annuity
- --------------------------------------------------------------------------------
OWNER:
NAME: _______________________________________ DAY PHONE:(____)_______________
ADDRESS: _________________________ CITY_____________ STATE _____ ZIP_________
SSN: _________________ DOB: ____/____/____ AGE: ____ SEX: [_] M [_] F
CITIZENSHIP: [_] U.S.; [_] Resident Alien (___________); [_] Non-Resident
Country
Alien (_____________)
Country
JOINT OWNER: (For Deferred Annuities Only; where applicable) / JOINT
ANNUITANT: (For Immediate Annuity Only; where applicable)
NAME: ________________________________________ DAY PHONE: (____)______________
ADDRESS: ___________________________ CITY____________ STATE _____ ZIP________
SSN: _______________ DOB: ____/____/____ AGE: ______ SEX: [_] M [_] F
RELATIONSHIP TO OWNER _______________________________________________
CITIZENSHIP: [_] U.S.; [_] Resident Alien (____________); [_] Non-Resident
Country
Alien (___________)
Country
Nationwide Only: By initialing here (Owner) _____ (Joint Owner) _____ you
are authorizing Nationwide to allow the exercise of Ownership rights (including
the right to make exchanges among investment options) independently by EITHER
the Owner or Joint Owner.
ANNUITANT: (Must be completed if different from Owner; Must be a natural
person)
NAME: ________________________________________ DAY PHONE: (____)______________
ADDRESS: ________________________ CITY___________ STATE _____ ZIP________
SSN: ______________ DOB: ____/____/_____ AGE:______ SEX: [_] M [_] F
CITIZENSHIP: [_] U.S.; [_] Resident Alien (___________); [_] Non-Resident
Country
Alien (__________)
Country
PAYEE: (PFL Life Only)
NAME: _______________________________________ DAY PHONE: (____)_______________
ADDRESS: ________________________ CITY_____________ STATE ______ ZIP_______
SSN: __________________________
- --------------------------------------------------------------------------------
BENEFICIARY DESIGNATION: [_] ADDITIONAL BENEFICIARIES
[_] (For AGAIC only) If you do not want the Joint Owner to be the Primary
Beneficiary, check here and name beneficiary below.
[_] PRIMARY BENEFICIARY:__________________________ PERCENTAGE: _________
RELATIONSHIP (to Annuitant): [_] Spouse [_] Nonspouse SSN: __________
DOB: _____/_____/______
INITIAL PREMIUM AMOUNT (check payable to Ins. Company): $___________
[_] WITH FUNDS [_] FUNDS WILL FOLLOW
TAX QUALIFIED STATUS: ANNUITY COMMENCEMENT DATE: ________________
[_] Non-Qualified [_] Roth IRA (Conversion Year _________, if applicable)
[_] 1035 Exchange
- -------------------------------------------------------------------------------
INVESTMENT ALLOCATION: [_] Traditional IRA - [_] Other - ___________
This application includes, and $_________ CONTRIBUTION FOR TAX YEAR _______
is not complete, without the $_________ TRUSTEE TRANSFER
INVESTMENT ALLOCATION $_________ ROLLOVER FROM _____________________
Form: Refer to Form FHL-612VS ______________________________________________
- --------------------------------------------------------------------------------
WILL THIS ANNUITY REPLACE ANY EXISTING ANNUITY OR LIFE INSURANCE CONTRACT?
[_] No [_] Yes, Company Name: _____________________________________________
I UNDERSTAND THAT ANNUITY PAYMENTS, SURRENDER VALUES, AND BENEFITS, WHEN BASED
UPON INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT
GUARANTEED AS TO A FIXED DOLLAR AMOUNT AND MAY INCREASE OR DECREASE IN VALUE.
RECEIPT OF A CURRENT PROSPECTUS(ES) IS (ARE) HEREBY ACKNOWLEDGED.
[_] Please send me a copy of the Statement of Additional Information to the
prospectus.
I/We have read, agreed to and affirm the information above and on the reverse
side.
Signed at _____________________________________________ _____/_____/_____
CITY STATE DATE
___________________________________ __________________________________________
OWNER SIGNATURE JOINT OWNER SIGNATURE (if applicable)
- --------------------------------------------------------------------------------
SELLING AGENT REPORT: I [_] do [_] do not believe this annuity replaces any
existing annuity or life insurance contract.
I have read, agreed to and affirm the information above and on the reverse side.
___________________ ____________________ (____)_______________ ___/____/___
AGENT SIGNATURE AGENT NAME PRINTED AGENT TELEPHONE NUMBER DATE
_______________________________________ ______________________________
AGENCY NAME AGENT SOCIAL SECURITY NUMBER
- --------------------------------------------------------------------------------
"SEE REVERSE SIDE FOR GENERAL INFORMATIOM
<PAGE>
Insurance Company Addresses:
. American General Annuity Insurance Company ("AGAIC") - P.O. Box 4342,
Houston, TX 77210-4342
. Nationwide Life and Annuity Insurance Company - One Nationwide Plaza 5th
Floor, Columbus, OH 43215
. PFL Life Insurance Company Home Office - 4333 Edgewood Road NE, Cedar
Rapids, IA 52499-0001
For Arizona Applicants: Upon your written request, the insurance company is
- -----------------------
required to provide, within a reasonable time, reasonable factual information
concerning the benefits and provisions of the contract to you. If for some
reason you are not satisfied with the contract, you may return it within ten
days after it is delivered and receive a refund equal to the premiums paid,
including any policy or contract fees or other charges, less the amounts
allocated to any separate accounts under the policy or contract, plus the value
of any separate accounts under the policy or contract on the date the returned
policy is received by the insurer.
For Colorado Applicants: It is unlawful to knowingly provide false, incomplete,
- ------------------------
or misleading facts or information to an insurance company for the purpose of
defrauding or attempting to defraud the insurance company. Penalties may
include imprisonment, fines, denial of insurance, and civil damages. Any
insurance company or agent of an insurance company who knowingly provides false,
incomplete, or misleading facts or information to a policyholder or claimant for
the purpose of defrauding or attempting to defraud the policyholder or claimant
with regard to a settlement or award payable from insurance proceeds shall be
reported to the Colorado Division of Insurance within the Department of
Regulatory Agencies.
Notice to all Applicants: Any person who knowingly and with intent to defraud
any insurance company or other person files an application for insurance or
statement of claim containing any materially false information or conceals for
the purpose of misleading, information concerning any fact material thereto
commits a fraudulent insurance act, which is a crime and subjects such person to
criminal and civil penalties.
Notice Regarding Community or Marital Property: Unless the insurance company
has been notified of a community or marital property interest in the policy, it
will rely on its good faith belief that no such interest exists and will assume
no responsibility for inquiry.
GENERAL INFORMATION
1. The Owner understands that when this application and payment are submitted,
the Owner will be entitled to the benefits and bound by the provisions of
the insurance company contract. Application is subject to acceptance by the
issuing insurance company.
2. The insurance company will not be liable for any loss, liability, cost, or
expense, for acting in accordance with instructions of the Owner or Joint
Owner.
3. The applicant, by signing the opposite side of this application, agrees to
the following statement:
I HAVE REVIEWED MY EXISTING ANNUITY COVERAGE AND FIND THIS POLICY IS
SUITABLE FOR MY NEEDS.
4. The agent, by signing the opposite side of this application, agrees to the
following statement:
I HAVE REVIEWED THE APPLICANT'S EXISTING ANNUITY COVERAGE AND FIND THIS
POLICY IS SUITABLE FOR HIS/HER NEEDS.
For AGAIC Only:
- ---------------
1. Under this Contract the Owner(s) and Annuitant(s) are the persons designated
on this application unless the insurance company receives a written request
for a change prior to the Annuity Commencement Date.
2. The Annuity Payment Option is assumed to be the standard Life Annuity Option
with 10 years certain unless the insurance company receives a written
request for a change prior to the Annuity Commencement Date.
3. For 403(b)s, the Owner understands that distributions generally will not be
permitted while employed with the sponsoring employer, until the Owner has
attained age 59 1/2. The Owner understands that there may be exceptions to
this general rule, as well as additional limitations imposed by the
employer's plan. The Owner understands that in many cases the following are
not subject to withdrawal restrictions: 1) employer contributions that were
made to a 403(b) annuity; 2) certain amounts that were in a 403(b) annuity
on 12/31/1988; 3) distributions on account of death, disability, or
financial hardship (elective deferrals only; no earnings); and 4) transfers
between qualifiying 403(b) investments.
4. If the Annuity Commencement Date is not selected, it will be the first day
of the month after the Annuitant's 90th birthday (70 1/2 for qualified
contracts and Traditional IRAs, but not Roth IRAs) unless the insurance
company receives a written request for a change.
For Nationwide Only:
- --------------------
1. If an Annuity Commencement Date is not selected, it will be the first day
of the month after the Annuitant's 90th birthday (70 1/2 for Traditional
IRAs) unless the insurance company receives a written request for a change.
2. Under this Contract the Owner(s) and Annuitant(s) are the persons
designated on this application unless the insurance company receives a
written request for a change prior to the Annuity Commencement Date.
3. The Annuity Payment Option is assumed to be the standard Life Annuity
Option with 10 years certain unless the insurance company receives a
written request for a change prior to the Annuity Commencement Date.
For PFL Life Only:
- ------------------
The annuity commencement date must be at least 30 days from purchase date.
If no date is entered, we will assume the first payment to be 30 days from
date of purchase.
<PAGE>
INVESTMENT ALLOCATION FORM/INCOME PAYOUT OPTIONS
FOR INDIVIDUAL VARIABLE ANNUITY
=============================================================================
PFL LIFE INSURANCE COMPANY: (select and complete 1. or 2., but not both; also
complete 3.)
[_] FOR NEW CONTRACT [_] FOR EXISTING CONTRACT #____________________
- -----------------------------------------------------------------------------
1. Asset Allocation Models: (check one model only; asset allocation
percentages shown directly below)
[_] Conservative Growth Model OR [_] Balanced Model OR [_] Growth & Income
Model OR [_] Growth Model
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
Asset Allocation Percentages For Each Model
-------------------------------------------------------------------------------------------------------------------------
Conservative Balanced Growth & Growth
Growth Model Model Income Model Model
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
One Group(R) Investment Trust:
Diversified Equity Portfolio 14% 13% 16% 22%
Equity Index Portfolio 7% 11% 12% 13%
Large Cap Growth Portfolio 3% 5% 8% 11%
Mid Cap Value Portfolio 3% 9% 11% 15%
Mid Cap Growth Portfolio 3% 9% 11% 15%
Diversified Mid Cap Portfolio 0% 0% 9% 14%
Government Bond Portfolio 35% 24% 14% 5%
Bond Portfolio 35% 24% 14% 5%
Balanced Portfolio 0% 5% 5% 0%
----- ------ ------ -----
Total 100% 100% 100% 100%
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
2. Self-Directed: (whole percentages only; must total 100%)
One Group(R) Investment Trust:
<TABLE>
<S> <C> <C>
____% Balanced Portfolio ____% Bond Portfolio ____% Diversified Equity Portfolio
____% Equity Index Portfolio ____% Gov't Bond Portfolio ____% Large Cap Growth Portfolio
____% Mid Cap Growth Portfolio ____% Mid Cap Value Portfolio ____% Diversified Mid Cap Portfolio
</TABLE>
3. Premium allocated to [_] Variable Payment $__________ and/or Premium for
[_] Fixed Payment $ __________
(Initial premium and subsequent dollars moved to the fixed payment must
remain allocated to fixed annuity payments. Please note if at time of
purchase 100% of premium is allocated to the fixed payment, policy form #
ASI232 8 298, which may vary by state, will be used.)
- --------------------------------------------------------------------------------
PFL LIFE PAYOUT OPTIONS (must be completed for new contracts only):
A. Assumed Investment Return (check one for variable payments only):
[_] 3.5% [_] 5.0%
B. Payment Frequency (First payment will be 30 days from date of purchase
unless otherwise specified):
[_] Monthly [_] Quarterly [_] Other:___________ Date Policy Owner is to
Receive First Payout: ____/____/_____
C. Annuity Payment Options (must check one option): [_] Certain Only ____
years guaranteed [_] Life Only [_] Life with Period Certain ____
years guaranteed [_] Life with Premium Refund [_] Life with
Emergency Cash Option - applies to variable payments only. If any part of
the premium is for fixed payments, a Life Contingent option for the fixed
payment must be checked.
[_] Life with ___ years guaranteed [_] Life with Premium Refund
[_] Life Only
D. Contract with Joint Annuitant:
[_] No reduction of payment upon death of either annuitant.
[_] Reduction upon death: [_] of primary annuitant or [_] of either
annuitant
Reduce to: [_] 50% [_] 67% [_] 75%
E. Income Tax Withholding: [_] Do not withhold Federal Income Tax
[_] Withhold Federal Income Tax on Taxable Portion of Payment at ____% or
$_______
[_] Withhold Federal Income Tax based on marital status and number of
allowances. Number of allowances _____
Marital Status: [_] Single [_] Married [_] Married, but withhold at
higher Single Rate
F. Direct Deposit: [_] Yes [_] No
- -------------------------------------------------------------------------------
The models listed in item 1 above are general asset mixes. The models were
developed by Banc One Investment Advisors Corporation and may or may not be
appropriate for you. Banc One Investment Advisors Corporation serves as advisor
to the One Group Investment Trust Portfolios for which it receives a fee. There
is no guarantee that the models will achieve any desired results or objectives.
I understand that Banc One Investment Advisors Corporation is not providing
investment advice or any other service to me and that I am solely responsible
for determining whether a model is right for me. The models should not be
considered personal investment advice or serve as the sole or primary basis for
making investment decisions. Purchase payments and exchanges allocated to an
investment model will be invested in each underlying investment option at the
percentages set forth above.
Each investment allocation model automatically allocates a portion of my annuity
to certain subaccounts. Each model will be automatically rebalanced each year
on the contract anniversary date. Automatically rebalancing a model may involve
transferring amounts from subaccounts with higher returns into subaccounts with
relatively lower returns in order to maintain the percentages as set forth
above. Transfers made as a result of automatic rebalancing are not counted
against your free transfers (in the event transfer fees are imposed in the
future). Automatic rebalancing ends upon the termination of a model (when a
model terminates is discussed on the back of this form).
I understand that the underlying investment options described above are NOT
available to the general public directly. They are only available as investment
options in variable life insurance policies or variable annuity contracts issued
by life insurance companies or, in some cases, through participation in certain
qualified pension or retirement plans.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
____________________________ _____________________ _______/_____/____ _________________________________
OWNER NAME (printed) OWNER SIGNATURE DATE SOCIAL SECURITY NUMBER*
____________________________ _______________________ __________________ (______)__________________________
AGENT NAME (printed) AGENT SIGNATURE AGENT SSN AGENT'S PHONE NO.
- ----------------------------------------------------------------------------------------------------------------------------
"See Reverse Side
</TABLE>
<PAGE>
PFL Life Insurance Company Home Office - 4333 Edgewood Road NE, Cedar Rapids, IA
52499-0001
By completing the Owner's Social Security Number or Taxpayer ID Number on the
front of this form, the owner acknowledges the following:
CERTIFICATION: under penalties of perjury, I hereby certify that (1) the Social
Security or Tax ID number listed is correct and (2) I am currently not subject
to backup withholding. Cross out #2 if not correct, see below for backup
withholding. The Internal Revenue Service does not require your consent to any
provision of this application other than the certifications required to avoid
backup withholding.**
**Purpose of Statement. This statement is for the payer (Insurance Company) of
interest, dividends, and certain other payments so that you will not be subject
to the 31% backup withholding that became effective January 1, 1984. This
statement is used to report and certify your taxpayer identification number
(TIN) to the payer, to certify that you are not subject to backup withholding
because of underreporting interest and dividends on your tax return, and to
claim exemption from backup withholding if you are an exempt payee. If you do
not certify your TIN, the payer may be required to withhold 31% of payments made
to you.
What is Backup Withholding. The Interest and Dividend Tax Compliance Act of 1983
requires payers to withhold and pay to the IRS 31% of payments of interest,
dividends, and certain other payments under certain conditions. This is called
"backup withholding". If you give your correct TIN, certify your TIN when
required, and report all your taxable interest and dividends on your tax return,
your payments will not be subject to backup withholding.
Payments will be subject to backup withholding if:
(1) You do not furnish your TIN to the payer, or: (2) IRS notifies the payer
that you furnished an incorrect TIN, or; (3) You are notified by the IRS that
you are subject to backup withholding because you failed to report all your
interest and dividends on your tax return (for interest and dividends accounts
only), or; (4) You fail to certify to the payer that you are not subject to
backup withholding under (3) above (for interest and dividend accounts opened
after 1983), or: (5) You fail to certify your TIN. This applies only to
interest, dividend broker, or barter exchange accounts opened after 1983, or
broker accounts considered inactive in 1983.
Notice of Withholding on Periodic Annuity Payments
The annuity payments may be subject to federal income tax withholding. If so,
withholding will only apply to the portion of the payment that has not been
taxed. Thus, there will be no withholding on the return of already taxed
contributions to the contract.
Your election will remain in effect until you revoke it. You may revoke it at
any time by completing and returning a new W-4P form to the Company.
If you elect not to have withholding apply to payments, or if you do not have
enough federal income tax withheld from your payments, you may be responsible
for payment of estimated tax. You may incur penalties under the estimated tax
rules if your withholding and estimated tax payments are not sufficient.
Termination of a Model I can stop using (i.e. terminate) a model at any time by
- ----------------------
notifying the insurance company or by transferring amounts between the various
subaccounts. A model will terminate if I am notified that it will be replaced
with a new model with different asset allocation percentages. Before I use a
new model, I must sign and return a consent form, accepting the new asset
allocation percentages, to the insurance company, within 45 days after the date
of the notice. If I don't, I will keep my current asset allocation percentages
(in which case I will be considered to be "self-directed" and not receive
automatic rebalancing).
<PAGE>
EXHIBIT (9)
-----------
OPINION AND CONSENT OF COUNSEL
<PAGE>
[LETTERHEAD OF PFL LIFE INSURANCE COMPANY APPEARS HERE]
May 10, 1999
PFL Life Insurance Company
4333 Edgewood Road N.E.
Cedar Rapids, Iowa 52499-0001
Dear Sir/Madam:
With reference to the Registration Statement on Form N-4 by PFL Life Insurance
Company and PFL Retirement Builder Variable Annuity Account with the Securities
and Exchange Commission covering immediate variable annuity contracts, I have
examined such documents and such law as I considered necessary and appropriate,
and on the basis of such examination, it is my opinion that:
1. PFL Life Insurance Company is duly organized and validly existing under the
laws of the State of Iowa and has been duly authorized to issue immediate
variable annuity contracts by the Department of Insurance of the State of
Iowa.
2. PFL Retirement Builder Variable Annuity Account is a duly authorized and
existing separate account established pursuant to the provisions of Section
508A.1 of the Iowa Insurance Code.
3. The Immediate Variable Annuity Contracts, when issued as contemplated by
said Form N-4 Registration Statement, will constitute legal, validly issued
and binding obligations of PFL Life Insurance Company.
I hereby consent to the filing of this opinion as an exhibit to said N-4
Registration Statement.
Very truly yours,
PFL LIFE INSURANCE COMPANY
/s/ Frank A. Camp
Frank A. Camp
Division General Counsel
Financial Markets Division
<PAGE>
EXHIBIT (10)(B)
---------------
OPINION AND CONSENT OF ACTUARY
<PAGE>
[LETTERHEAD OF PFL LIFE INSURANCE COMPANY APPEARS HERE]
May 10, 1999
PFL Life Insurance Company
4333 Edgewood Road NE
Cedar Rapids, Iowa 52499-0001
Re: PFL Retirement Builder Variable Annuity Account Registration on Form N-4
SEC File No. 333-_______
Dear Sir/Madam:
With regard to the above registration statement, I have examined such documents
and made such inquiries as I have deemed necessary and appropriate, and on the
basis of such examination, have the following opinions:
Fees and charges deducted under the PFL Immediate Income Annuity policies are
those deemed necessary to appropriately reflect:
(1) the expenses incurred in the acquisition and distribution of the Policies,
(2) the expenses associated with the development and servicing of the policies,
(3) the assumption of certain risks arising from the operation and management
of the Policies and that provides for a reasonable margin of profit.
Fees and charges assessed include:
(i) Separate Account Charge
(ii) Taxes (including Premium and other Taxes if applicable)
The magnitude of each of the individual charges listed above in (i) through (ii)
is established in the pricing of the PFL Immediate Income Annuity, to achieve a
reasonable Return on Investment (ROI), which is within the range of industry
practice with respect to comparable variable immediate annuity products.
<PAGE>
PFL Life Insurance Company
Page 2
May 10, 1999
In the process of determining the reasonable ROI, each individual charge is also
established within the reasonable range of industry practice. For example, in
conjunction with the pricing process the company has analyzed publicly available
information pertaining to similar industry products, taking into consideration
such factors as current charge levels, the existence of charge level guarantees,
and guaranteed annuity rates. The methodology and results of the comparative
surveys included in this analysis are maintained at the company's administrative
offices.
Except by coincidence, it is not expected that actual charges assessed in a
given year would exactly offset actual expenses incurred. Acquisition expenses
(as well as major product and/or systems development expenses) are incurred "up
front" and recovered, with a reasonable profit margin, through future years'
charges. In addition, the company cannot increase certain charges under the
Policies in the pricing process.
Therefore, in my opinion, the fees and charges deducted under the Policies, in
the aggregate, are reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by the company.
I hereby consent to the use of this opinion, which is included as an Exhibit to
the Registration Statement.
/s/ Roger Freeman
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Roger Freeman, MAAA
Vice President
PFL Life Insurance Company
